Sitting of 22 July 1975

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

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

  McDERMOTT SCOTLAND ORDER CONFIRMATION BILL
  Read the Third time and passed.
ORAL ANSWERS TO QUESTIONS
  DEFENCE

    Naval Building Programme
    Mr. Teddy Taylorasked the Secretary of State for Defence if he will make a statement on the naval building programme.
    The Minister of State for Defence (Mr. William Rodgers): The naval shipbuilding programme is proceeding as planned.
    Mr. Taylor: Does the Minister agree that British naval shipbuilders like Yarrow and Vosper Thornycroft have a superb record of building ships for the Royal Navy and for foreign Governments, at the same time providing secure employment and profitability for British industry? As these firms believe that nationalisation will do them a great deal of damage, will the Minister discuss with his colleagues, especially the Secretary of State for Industry, whether the nationalisation Bill might be dropped or amended?
    Mr. Rodgers: I agree with the opening remarks of the hon. Gentleman that the shipbuilding yards have a very good
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    record, by and large, and I was delighted to discuss the work of Yarrow with Sir Eric Yarrow and his colleagues earlier this year, but I do not honestly think that the discussions which the hon. Gentleman proposes would serve a useful purpose. We intend to take the shipbuilding industry into public ownership.
    Mr. Dalyell: Will the Minister state what is the latest decision concerning the deep-sea search and recovery vessel which is so badly needed in the North Sea?
    Mr. Rodgers: The position is as it was when my hon. Friend the Under-Secretary of State for Defence for the Royal Navy last reported to the House.
    Mr. Trotter: Will the Minister confirm reports in the Press on Tyneside that no fleet auxiliaries will be going to Tyneside for repair after December, and say how these reports compare with ministerial utterances that the unemployment situation in the North would be borne in mind? Might I suggest that more Type 42 destroyer orders be allocated to Swan Hunter?
    Mr. Rodgers: I cannot now and would never seek to confirm reports in the Press, but I am not aware of a change of policy here. I shall look at it and write to the hon. Gentleman.
    Mr. R. C. Mitchell: Is it not a fact that naval shipbuilding firms have far more to fear from defence cuts than from nationalisation? What assurance will my right hon. Friend give us that the naval shipbuilding programme will continue?
    Mr. Rodgers: It is always very difficult to give an assurance of the kind that my hon. Friend mentions. He is absolutely right to draw attention to the fact that we cannot have continued substantial savings on defence, particularly on defence equipment, without there being consequences for employment, but the position is as previously reported to the House. We do not at the moment anticipate any changes in what was announced in the Defence White Paper.

    Beira Patrol
    Mr. James Johnsonasked the Secretary of State for Defence how many Royal Navy ships and men have been involved in the Beira Patrol during its operation.
    The Under-Secretary of State for Defence for the Royal Navy (Mr. Frank Judd): Seventy-six Royal Navy ships and 28 Royal Fleet auxiliaries have taken part in the Beira Patrol. About 24,000 RN personnel were involved.
    Mr. Johnson: Despite the persistent cynicism of Conservative Members as to the value of this naval exercise, will my hon. Friend feel assured that Members on the Government benches and, in my view, all patriotic British citizens outside the House will agree that the Royal Navy has done a gallant and first-class job in blockading the illegal Smith régime? Does my hon. Friend expect to have more cooperation now from the new Government in Mozambique than he received from the Portuguese authorities before the revolution?
    Mr. Judd: I thank my hon. Friend for the tribute in the first part of his question, and I am sure we would all wish to associate ourselves with what he said. To anyone who has looked at the work of the Beira Patrol it is clear that it was carried out, often under the most difficult circumstances, with great distinction by all personnel concerned over the years of its existence. As to the latter part of the question, that would be appropriately addressed to my right hon. Friend the Foreign Secretary.
    Mr. Wall: While associating myself with the Minister's tribute to the Royal Navy, may I ask him why he is so coy in giving the total cost of the Beira Patrol since its inception? The Question has been asked on a number of occasions and the hon. Gentleman has refused to answer, in spite of the fact that answers have been given over the years. Therefore, will the Minister now give us an answer, or is he still coy about letting the country know how much money has been wasted on this operation?
    Mr. Judd: I do not regard myself as being any more coy on this subject than hon. Gentlemen opposite who might have held my post before me. The fact is that the Beira Patrol has always been operated as part of wider naval operations. Therefore a costing of the kind that the hon. Member suggests would not be relevant.

    Pensions (NCOs' Widows)
    Mr. Sandelsonasked the Secretary of State for Defence whether he will make
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    a progress report on his study into the possibility of awarding pensions to widows of non-commissioned Service men who retired before 1950.
    Mr. Judd: The matter is still under consideration.
    Mr. Sandelson: I thank my hon. Friend for that reply. Does he agree that it is an extraordinary anomaly that the widows of non-commissioned Service men who served the country before 1950 in the Royal Navy, the Royal Air Force and the Army in precisely the same way as those who were commissioned should get no pension at all? Does he not think that this is an intolerable position for a Labour Government to allow to continue?
    Mr. Judd: I can assure my hon. Friend that we understand the strength of feeling behind his Question among a great many people. We are looking at the issue seriously. I shall report to the House as soon as possible.
    Mr. Viggers: What is there to consider? Is not the hon. Gentleman making heavy weather of a simple decision about whether to award pensions to widows, to decide on a date and to set a priority?
    Mr. Judd: I appreciate the hon. Gentleman's deep concern, which he has expressed frequently in the House and elsewhere. His right hon. and hon. Friends were unable to come to a positive decision on this matter during their years of office. We are looking at it actively. It is not an easy matter. There are repercussions for the remainder of the public service. We hope to make a decision as soon as possible.
    Mr. Goodhart: Following the real improvement in Service pensions which the previous Conservative Government were able to put into effect, does the hon. Gentleman recognise that the major ex-Service organisations now agree that the first priority must be the care of widows?
    Mr. Judd: Following the implementation of the last stage of the improvements in pension conditions introduced by the present Government—which we were glad to do—I can assure the hon. Gentleman that we understand this is a matter on which the ex-Service associations have expressed themselves forcefully.

    Diego Garcia
    Mr. Robin F. Cookasked the Secretary of State for Defence when he expects the proposed expansion of facilities at Diego Garcia to be completed.
    The Secretary of State for Defence (Mr. Roy Mason): I understand that the Americans are planning to complete the proposed expansion by 1978, subject to congressional approval.
    Mr. Cook: Can my right hon. Friend say whether the agreement with the United States of America for the use of the facilities at Diego Garcia precludes the handling or storage of nuclear weapons there, in view of the interest of neighbouring Slates in having the ocean declared a nuclear-free zone? Can he assure the House that the proposed expansion does not go beyond the modest one which he announced last December?
    Mr. Mason: I can assure my hon. Friend on that latter point. He knows, however, that it is not the policy of any Government—ourselves or any previous administration—to confirm or deny the presence of nuclear weapons in locations, ships or aircraft. But because of the very modest developments on Diego Garcia, nuclear facilities will not be available.
    Mr. Townsend: Does the Secretary of State agree that it is very much in our interests that this base should be developed, bearing in mind that the American fleet has to rely on Subic Bay, 4,000 miles away, for re-supply facilities? In view also of the increased Soviet interest in that part of the world, is it not important that our allies should have proper bases from which to operate?
    Mr. Mason: I want first to correct the impression that it is a base. It is not a base. It is only a very austere communications facility for aircraft and ships. If the Americans manage to get congressional approval for this £37·8 million improvement, it will still be a very austere communications facility.
    Mr. Dalyell: What is the difference between a base and an austere communications facility?
    Mr. Mason: A base will supply facilities for replenishment, stores and recrea-
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    tion, as distinct from merely signals and communications.
    Mr. Younger: Can the Secretary of State say in what way the facility at Diego Garcia is regarded, if it is, as an alternative for the abandonment of Gan? In the context of the abandonment of Gan, what steps has the right hon. Gentleman taken to ensure that the facilities there, which were paid for by our money, will be denied to a hostile Power in the future?
    Mr. Mason: The future of Gan will be subject to discussions through the Foreign Office with the Maldivian Government. But there is no comparison between Diego Garcia and Gan. Gan was a major air staging post on the Far East route. Diego Garcia is just a communications facility at this stage with an 8,000-ft. airstrip, which will be improved to 12,000 ft. if the Americans get congressional approval.

    Trawler "Coral Bank"
    Mr. Hendersonasked the Secretary of State for Defence if he will make a statement on the discovery of an unexploded bomb by the fishing vessel "Coral Bank" on 5th July.
    Mr. William Rodgers: The Royal Navy authorities were informed by Her Majesty's Coastguard at 0815 hours on 6th July that the trawler "Coral Bank" had reported picking up an object which appeared to be a bomb. The skipper was advised of alternative courses he might follow and in the event chose to dump and buoy it where it had been picked up. The object has since been recovered by HMS "Jura" and proved to be an inert practice round.
    Mr. Henderson: I thank the right hon. Gentleman for his reply, and I am glad to hear about this happy outcome to the incident. Is he aware, however, that the skipper of the vessel was extremely alarmed to be asked to convey this bomb almost 140 miles to Peterhead in my constituency and to beach it there? If a citizen were to find a bomb in the street, he would not be asked to put it in his car and take it to a police station. Why should a fisherman be expected to take it up in his trawl at great hazard and to take it to land?
    Mr. Rodgers: There are long-standing rules about the way to deal with objects

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    of this kind based on the best advice that the Royal Navy can give. I am not aware of any problems of the kind that the hon. Gentleman mentions in the recent past. But I appreciate his concern. I have looked carefully into the course of events. If there are lessons to be learnt, they will be learnt.

    Hydrographic Service
    Mr. Woodallasked the Secretary of State for Defence what arrangements he is making for the implementation of the proposals by the special working party on the future of the hydrographic service.
    Mr. Judd: The report of the Hydro-graphic Study Group is still under consideration. A statement will be made as soon as possible. Meanwhile, I shall arrange for a copy of the report to be placed in the Library.
    Mr. Woodall: I thank my hon. Friend for that reply. Does he anticipate the expenditure of more public funds? If so, will a Vote of the House be required?
    Mr. Judd: I refer my hon. Friend to our recent debate on the Royal Navy when I said that only the part of hydrographic work necessary for the work and operations of the Royal Navy could be financed out of the defence budget. Any other funds required will obviously have to come from other sources. This is what is being considered.
    Mr. Blaker: Did not the Hydrographer of the Royal Navy say in 1973 that many of our charts were already obsolete? Is it not more important today than in former years to keep them up to date, bearing in mind the needs of oil exploration? Does what the hon. Gentleman has just said mean that the proposals that the financing of the hydrographic service should be separate from the defence budget are accepted, or is he going less far than that?
    Mr. Judd: The Hydrographer, in fighting for his unrivalled service in terms of hydrographic services anywhere else in the world, has spoken frequently of the quality of the service and of the problems that it faces. Obviously the Government are concerned to maintain the highest standard of charts. As to the issue of a separate Vote, this is under active consideration. The serious argu-
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    ments put forward are being examined closely.

    Suez Canal
    Mr. Molloyasked the Secretary of State for Defence if he will make a statement of the implication for NATO of the reopening of the Suez Canal.
    Mr. Mason: I would refer my hon. Friend to the answer I gave to the hon. Member for Esher (Mr. Mather) on 24th June.—[Vol. 894, c. 212.]
    Mr. Molloy: Does not my right hon. Friend agree that the opening of the Suez Canal means that the Royal Navy can operate east of the Cape without Simonstown?
    Mr. Mason: Yes, this is pointedly so. But my right hon. Friend the Minister of State has tried to indicate in the past that with or without the Suez Canal we can operate east of the Cape and that we have many major ports which we can use on a customer basis if we request them—especially Karachi, Colombo, Singapore and minor ones at Mauritius and Mombasa.
    Mr. Buck: Does not the opening of the Suez Canal make nonsense of the NATO geographical guidelines? Will the right hon. Gentleman and the Prime Minister initiate a happening in NATO to make sure that this matter is aired, bearing in mind that he will find that quite a lot of preliminary work was done on this matter by his predecessors in NATO circles?
    Mr. Mason: The hon. and learned Gentleman is merely reminding the House of what it knows already. The Supreme Allied Commander, Atlantic embarked upon a study of the protection of shipping during war time east of the Cape in 1972.

    Army Juniors
    Mr. Gouldasked the Secretary of State for Defence if he will review the system under which boys of 16 years of age can bind themselves to serve in the Army for periods of up to six years.
    The Under-Secretary of State for Defence for the Army (Mr. Robert C. Brown): No, Sir. This matter was reviewed recently by Lord Donaldson's

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    Committee on Boy Entrants and Young Servicemen, and the Army's terms of engagement now incorporate certain options designed to safeguard the interests of junior entrants.
    Mr. Gould: Will my hon. Friend accept that in any case it is to the advantage of neither the Army nor the boy concerned that the boy should be kept in the Army against his will and that it cannot do any good for the Army's long-term recruiting prospects? How does my hon. Friend justify the use of the police to enforce this sort of obligation, as has been illustrated recently in the case of a 17-year-old constituent of mine? Is it not time that contracts of service contained the normal civilised provisions for termination by either side on the giving of adequate notice?
    Mr. Brown: There are two issues involved. First, it is fair to say and to expect that a young man of 17 years will feel the pangs of homesickness and so on. In my view it would not be good to concede immediate release for a boy who was feeling the pangs of homesickness because it would probably deprive him of the opportunity to have a worthwhile and rewarding career later in life.
    Enlistment into the Armed Forces does not involve entering into a contract. The engagement of members of the Armed Forces is at the discretion of the Crown. Consequently the law relating to contracts as it affects citizens does not apply.
    Mr. Thompson: Although I recognise that Scottish law allows a 16-year-old to enter into the lifelong commitment of matrimony, may I ask whether the Minister agrees that many 16-year-olds are too immature psychologically to enter into even six-year commitments in the Armed Services, especially bearing in mind the alluring advertisements used by the Services to attract these young men which fail to point out that they will be trained to kill and to be killed?
    Mr. Brown: I accept what the hon. Gentleman has said about the immaturity of 16-year-olds. That is exactly why all junior entrants may leave as of right at any time during the first six months of service.

    Military Bands
    Mr. Litterickasked the Secretary of State for Defence if he will initiate a review of the purposes being served by the maintenance of military bands by his Department.
    Mr. Robert C. Brown: A review of all Service bands was completed as part of the recent defence review. I have no plans to conduct any further examination.
    Mr. Litterick: Does my hon. Friend agree that in the context of nuclear missiles and electronic guidance systems the 95 bands are no longer relevant for any military purpose? Does he also agree that the public relations and recruitment functions, which for a long time appear to have been a large part of the bands' activities, are now best carried out by the media and that, therefore, the bands' contributions to the cultural life of the nation might be better served if they were demobilised and reformed as civilian organisations forming music centres throughout the British Isles?
    Mr. Brown: My hon. Friend will not be surprised when I say that I do not agree that the military bands are irrelevant. In my view silver, brass and military bands are a part of the tradition of this country which I hope we shall never lose. I think that my view is shared by the vast majority of the population.
    Mr. Jessel: The Minister's reply will be warmly welcomed since the British Army bands are the envy of the world. In my constituency we are very proud of Kneller Hall where they are all trained. The Minister was very welcome on his recent visit there, as was the Secretary of State last week. Does the hon. Gentleman agree that, apart from the vital function of being morale boosters, these bands are worth their weight in gold because they are a big draw for tourists?
    Mr. Brown: I cannot disagree with anything that the hon. Gentleman has said. I endorse all he has said about Kneller Hall. I should like to invite my hon. Friend the Member for Birmingham, Selly Oak (Mr. Litterick) to go to Kneller Hall and enjoy a band concert. Although military bands are much loved in this

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    country, in my area brass bands from miners' lodges are loved just as much.
    Mr. Hardy: Without in any way dissenting from the views advanced by my hon. Friend, may I ask him to be realistic and tell us whether the military bands actually earn any money either in Britain or abroad? If so, how much does it amount to in an ordinary year?
    Mr. William Hamilton: And where does it go?
    Mr. Brown: I certainly could not hope to give a direct answer to that question, because I am sure my hon. Friend the Member for Rother Valley (Mr. Hardy) will appreciate that the value of military bands in terms of tourism alone is incalculable.
    Mr. Goodhart: Although I welcome the Minister's robust reply, may I ask him to remind his hon. Friends that both the Soviet Army and the Chinese People's Republic Army attach high importance to maintaining military bands?
    Mr. Brown: I am sure that the people of the Soviet Union and of the Chinese People's Republic enjoy military band music, and indeed, silver and brass band music, as much as I and the majority of the people of this country enjoy it.

    Young Persons (Service Wastage)
    Mr. Dempseyasked the Secretary of State for Defence what progress he has made concerning his study about the wastage of young persons in Her Majesty's Services; and if he will make a statement.
    The Under-Secretary of State for Defence for the Royal Air Force (Mr. Brynmor John): I have nothing to add to the reply I gave my hon. Friend on 24th June 1975.
    Mr. Dempsey: Will my hon. Friend accept my thanks for the very courteous letter he sent me in connection with this subject? May I remind him that in general industry all apprenticeships can be terminated at the end of three years? Why should he not consider a similar provision for the Services? Would it not be in everyone's interests for recruits who have lost their enthusiasm to go, as they have an unsettling influence on other young people who are anxious to make a success of a Service career?
    Mr. John: My hon. Friend asked a Question specifically about the wastage of young people. Apprentices form a very small proportion of the total intake of the Services. We are undertaking this study precisely to establish where the wastage is and in what numbers. I hope that we shall complete it as quickly as possible.

    Egypt
    Mr. Aitkenasked the Secretary of State for Defence if he will make a statement on his recent meeting with the Deputy Prime Minister of Egypt.
    Mr. Mason: I have not met him.
    Mr. Aitken: Is the right hon. Gentleman aware that the Deputy Prime Minister and the Foreign Minister of Egypt came here with a shopping list for £450 million worth of arms which they were successfully able to buy? Surely the right hon. Gentleman, as Secretary of State for Defence, should have seen a successful buyer of £450 million worth of British arms and should not have delegated this responsibility to a Foreign Office Minister, who might not know one end of a missile from another?
    Mr. Mason: The hon. Gentleman is as completely misinformed in his supplementary question as he was in his original Question.
    Mr. Frank Allaun: Let me put a question to the Secretary of State which does concern him. Apart from the obvious danger of pouring more arms into either side in this tinder-box which may start a world war, is he satisfied that we shall be paid for these orders, since Egypt already owes $3 billion to the West for arms supplied to her?
    Mr. Mason: The Question was whether I met the Deputy Prime Minister of Egypt. The answer was "No, Sir." My hon. Friend the Member for Salford, East (Mr. Allaun) has referred to major contracts in the offing. No firm proposals have been put to me yet.
    Mr. Younger: In courtesy to my hon. Friend the Member for Thanet, East (Mr. Aitken), the right hon. Gentleman owes him an explanation of why he said he was misinformed.
    Mr. Mason: I have just given the reason. There are no firm proposals.

    Recruitment
    Mr. Canavanasked the Secretary of State for Defence whether he is satisfied with the recruitment procedure of the Armed Forces.
    Mr. John: In general, yes, Sir.
    Mr. Canavan: In view of the very bleak employment prospects faced by young school leavers in many areas of the country, will my hon. Friend issue instructions to recruiting officers not to use undue pressure to exert unfair advantage on young people, many of whom are possibly faced with the dilemma of joining either the Forces or the dole queue? In particular will he do something about the recruiting officers who go into schools to lure young people into the Forces with the help of audio-visual aids which often give a misleading and exaggerated view of life in the Forces, because such practices are often tantamount to baby snatching?
    Mr. John: In so far as I follow the burden of my hon. Friend's supplementary question, the situation is that we accept only one in three of all applicants who come before the Service Recruiting Agency. I should have thought that that was sufficient rebuttal of his point that we are anxious to snatch whoever comes into a recruiting office.
    Secondly, Service officers and personnel go into schools, as do other careers advisers, to give factual information about careers open to young people. I am anxious that they should give as realistic a picture of life in the Forces as possible. It does not suit our book to have glamorised pictures which the reality does not match.
    Mr. Michael McNair-Wilson: Will the Under-Secretary tell us the present cost of recruiting a soldier? Secondly, in his review of recruiting has he decided to close any of the recruiting centres?
    Mr. John: I cannot give the figure offhand. Recruiting centres are constantly under review. Only those that are the most cost-effective will be kept open. We are satisfied that the recruiting offices
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    which are open are fulfilling a useful function.
    Mrs. Winifred Ewing: The hon. Gentleman said that the hard facts were issued to persons who were being recruited. Does he agree that one of the vital hard facts concerns the roof over the head of a Service man when his term of service is over? Is the hon. Gentleman aware of my oft-repeated suggestion that Service men should be treated no less favourably than civilians by being given the right to have their names put on the local authority housing list of their choice on entry or on marriage, whichever happens later? Is he aware that that suggestion has been welcomed by Members of Parliament of all parties, whatever their views? Is it not time that the Ministry of Defence now came out with some hard facts on what it proposes to do about the mountainous problem of local authorities with bases in their areas which cannot accommodate the men who have served for many years and have nowhere to stay at the end of their service?
    Mr. John: The hon. Lady, not for the first time, is under a complete misapprehension about the responsibility of the Ministry of Defence. The Department of the Environment, the Welsh Office and the Scottish Office are responsible for housing in this country. I could understand what the hon. Lady's comments would be if the Ministry of Defence was responsible for Scottish housing.
    Mr. Woodall: Is my hon. Friend aware that recruiting officers for any branch of the Services go on to school premises only with the express permission of the school governing body and that the more enlightened governing bodies, such as in my area, always consistently refuse to give that permission?
    Mr. John: I am sorry to hear that my hon. Friend's local education authority refuses to give permission. In my view, no education authority or anyone else should seek arbitrarily to deny the choice of a career to young people. What they have a right to ask for, and what we merely present, are the facts about a career in the Forces. It is then left to the young men and women concerned to choose that career if they wish.

    NATO Defence Concept
    Mr. Blakerasked the Secretary of State for Defence if he will give further details of the guidelines laid down by the NATO Defence Ministers on the adoption of a long-range defence concept.
    Mr. Mason: I would refer the hon. Member of the annex to the communiqué issued after the NATO Defence Planning Committee ministerial meeting on 22nd and 23rd May which is available in the Library of the House.
    Mr. Blaker: Is it the desire of the NATO Defence Ministers as a whole to agree on a long-range defence concept connected with the production, harmonising and standardising of weapons procurement? If so, how is it related to the decision of the Eurogroup Defence Ministers in 1972 to agree on tactical concepts?
    Mr. Mason: The hon. Gentleman is right on the first point. We shall now have to be more keen than before in using our resources more sensibly and wisely. Therefore, rationalisation and standardisation and greater co-operative efforts between the NATO nations is more than ever necessary.
    Secondly, because of the rethinking on the long-range defence concept, we must bear in mind that because of the sophistication of new weaponry and the longer time scales before it goes into production and development, instead of planning on a seven-year cycle we must plan for much longer.
    Mr. Dalyell: On the question of greater co-operative effort, in the light of the Belgian decision on the F16 and the well-known future problems of Dassault, what is the thinking of the Ministry of Defence about involving the French in, at any rate, the next stage of the multi-rôle combat aircraft?
    Mr. Mason: I do not know to what extent the French would be interested in the MRCA, but we are particularly keen to involve them in the activities of the Eurogroup. There is a chair available for the French Government to become involved. From then on they would be involved in the co-operative efforts of the Eurogroup nations which are particularly keen to develop the standardisation of weaponry in Europe.

    United States U2 Aircraft
    Mr. Cryerasked the Secretary of State for Defence if United States U2 planes are currently using facilities in this country.
    Mr. John: Yes, Sir.
    Mr. Cryer: Does my hon. Friend agree that these aircraft are notorious for their spying activities? Will he assure the House that they are not being used in spying activities? Does he agree that if they were so used détente could be seriously damaged? Will he make clear to the Americans that if these planes are used for spying elsewhere, they are not welcome here? Will he press the Americans to get rid of them as practice for the future in getting rid of American Polaris bases here?
    Mr. John: As I made clear to my hon. Friend the Member for Salford, East (Mr. Allaun) on 11th June, they are not on spying missions, they are not taking photographs and they are not armed. In those circumstances we have no intention of asking the Americans to terminate the trials, which are of a precision high altitude and navigation system.

    Southampton Area Establishments
    Mr. R. C. Mitchellasked the Secretary of State for Defence if he will pay a visit to defence establishments in the Southampton area.
    Mr. Mason: I have no plans at present to do so.
    Mr. Mitchell: When the Secretary of State next visits the Southampton area, will he visit Netley military hospital, which is due to close in the next couple of years, and do his best to reassure the civilian employees there that his Department will do everything possible to find them alternative employment?
    Mr. Mason: When next I visit Southampton I shall try to fulfil my hon. Friend's wishes.

    Malta (Naval Medical Facilities)
    Mr. Alan Lee Williamsasked the Secretary of State for Defence whether he will make a statement on implementation of arrangements for the population

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    of Malta to have access to naval medical facilities.
    Mr. Judd: Arrangements have long existed for Maltese locally-entered personnel, their dependants and Maltese locally-entered civilians injured at work to receive treatment in the Royal Naval Hospital, Malta. In addition the Maltese Government have recently accepted our offer of beds in the Royal Naval Hospital's maternity unit for other patients at rates based on the extra costs arising from their attendance.
    Mr. Williams: I congratulate my hon. Friend on achieving this agreement because I know that he has worked hard and long to reach this arrangement with the Maltese. Does he agree that the principle is important because it means the sensible use of existing facilities? Will he assure the House that if this principle can be applied elsewhere he will not hesitate to apply it?
    Mr. Judd: I certainly assure my hon. Friend that wherever we can co-operate in ways of this kind we are anxious to do so.
    Mr. Buck: I should like to add my congratulations to the hon. Gentleman on what he has achieved. Will he move a little further down the Mediterranean and tell us whether he has had any success in Gibraltar along similar lines with the hospital there?
    Mr. Judd: The hon. and learned Gentleman knows that that is a completely different question. If he cares to put it down, I shall be more than willing to answer it on a subsequent occasion.

    North Sea Oil Installations
    Mr. Hooleyasked the Secretary of State for Defence if he will explore with the Norwegian Government arrangements for joint defence of oil rigs in the North Sea.
    Mr. William Rodgers: The defence of North Sea oil installations against external attack is covered by NATO planning procedures. The protection of these installations in peace time is already under discussion outside NATO by the United Kingdom and Norway, together with other interested countries.
    Mr. Hooley: I welcome the second part of that answer. Is Norway constructing special vessels for the purpose? If so, could we not co-operate with Norway in the construction and design of such vessels?
    Mr. Rodgers: My hon. Friend is correct in saying that Norway has recently announced a programme of vessels rather similar to our own. It is not altogether clear whether there is room for co-operation in design and building since we have already placed our orders and the time scale is rather different. Certainly there will be co-operation as far as we are concerned.
    Mr. Donald Stewart: How are oil rigs in the North Sea defended at the moment?
    Mr. Rodgers: As the hon. Gentleman knows, it is important to distinguish between what happens in war-time circumstances, when the full resources of NATO and the Royal Navy would be available, and what happens in very different circumstances in peace time, for which we have new provisions about which the hon. Gentleman also knows.
    Mr. Alexander Wilson: Will the Minister consider not only the safety of the oil rigs but also the safety of the men who work on them and urge his right hon. Friend the Secretary of State for Employment to bring all North Sea and offshore installations connected with the oil industry within the ambit of the Health and Safety at Work etc. Act?
    Mr. Rodgers: I am sure my right hon. Friend will note what my hon. Friend says and will write to him if necessary.
    Mr. Mates: Is the right hon. Gentleman aware that there is a great deal of confusion in the House about the different threats against which we are trying to defend the oil rigs? Is he aware that I think the installations are virtually indefensible in war time against a conventional enemy but that there could be a threat from subversion and sabotage, which would require a different solution? Can the right hon. Gentleman tell us what steps his Ministry is taking to defend the rigs against subversion and sabotage, as opposed to the threat from the Warsaw Pact countries or anywhere else in war time?
    Mr. Rodgers: The hon. Gentleman is correct in saying that there is a confusion between these different rôles. We have attempted to make plain the difference on a number of occasions. I made a statement in the House earlier this year about the peace-time rôle, and, in the last two or three weeks we have announced that the order has been placed for the vessels to carry out this requirement. We can only repeat that there is a distinction and that, as far as possible, we are providing against both sorts of danger.

    Northern Ireland
    Mr. Biggs-Davisonasked the Secretary of State for Defence whether he will make a statement on the military rôle and operations in Northern Ireland.
    Mr. Michael McNair-Wilsonasked the Secretary of State for Defence if he will make a statement about the current operations of the security forces in Northern Ireland.
    Mr. Robert C. Brown: I would refer the hon. Members to the reply my right hon. Friend gave on 13th May 1975. The Army continues to assist the Royal Ulster Constabulary in the difficult task of combating violence and terrorism in the Province, and the level of is operations continues to be related to the level of violence which occurs.
    Mr. Biggs-Davison: In view of the atrocious ambush near Forkill in which four very brave soldiers, one from Belfast and the others from Great Britain, died in defence of the United Kingdom, and in view of the references by the Secretary of State for Northern Ireland yesterday to the fragility of the so-called cease-fire, can we be assured that security forces are on the fullest alert and that they have their eyes on the known organisers of terrorism who are at present openly at large?
    Mr. Brown: Yes, Sir.
    Mr. McNair-Wilson: Can the hon. Gentleman tell us the number of security forces now in Northern Ireland and give an assurance that while the level of violence remains as intense as it is now there will be no reduction in the forces?
    Mr. Brown: The number of forces in Northern Ireland at the moment is about
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    14,000. Any question of a reduction would depend entirely on the prevailing situation.

    Brunei (Gurkha Battalion)
    Mr. Trotterasked the Secretary of State for Defence what consideration he has given to the representations made by the Sultan about the withdrawal of the Gurkha battalion from Brunei; and if he will make a statement.
    Mr. Mason: As my right. hon. Friend the Minister of State for Foreign and Commonwealth Affairs explained on 12th March, the talks have been adjourned while both sides study certain questions further. That remains the situation, and there will be further consultations with the Sultan before a final decision is taken on the withdrawal date.
    Mr. Trotter: Can the Secretary of State inform the House of any reason, other than a dogmatic desire to please the Left Wing, for this withdrawal, which will not save the taxpayers any money and will deprive the Gurkhas of a useful training area outside Hong Kong?
    Mr. Mason: We recognise that this is not a cost-saving measure, but during the defence review commitments and capabilities were reviewed and this was one of the commitments. Subject to consultations with the Sultan, it is the intention to plan for a withdrawal. We shall have to await the next round of talks.

    TUC AND CBI (TALKS)
    Mr. Whiteheadasked the Prime Minister what recent consultations he has had with the TUC and CBI.
    The Prime Minister (Mr. Harold Wilson): I refer my hon. Friend to the statement which I made to the House on 11th July, Sir.
    Mr. Whitehead: Is my right hon. Friend aware that many of us who will support him wholeheartedly in the Lobby tonight welcome the support he has received from trade unions at the Durham Miners' Gala and elsewhere? However, is he also aware that we do not believe that support will continue to be forthcoming if there are further massive cuts in public expenditure? Is he aware that there is probably only a short time

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    in which to work out a satisfactory voluntary incomes policy that avoids re-entry into either the thickets of a statutory policy which would be unworkable or the morass of so-called free collective bargaining?
    The Prime Minister: I thank my hon. Friend. My right hon. Friends and I who attended the Durham Gala were gratified by the wholehearted reaction of that great mining community to the Government's proposals. With regard to public expenditure, that was dealt with very fully by my right hon. Friend the Chancellor of the Exchequer in his speech yesterday afternoon. I agree with my hon. Friend—and this was a point made by the Leader of the Opposition on 11th July—that we must use this year to work out some satisfactory plan for the period that follows. We must avoid the re-entry problems that almost invariably follow a period of this kind.
    Mr. Baker: Can the Prime Minister say whether it is likely, in his view, that by the winter of 1976–77 unemployment will be at 2 million?
    The Prime Minister: That is not, in our view, likely. It is a fact that we are facing a very serious rise in unemployment in common with every other advanced country in the world. The fact that it has not risen as much in this country up to the present time and that exports have been maintained and industrial production has fallen less is no cause for satisfaction for anyone. The Western world—this came out clearly at the Heads of Government conference last week—is deeply concerned about the virulence and depth of the world depression which, as many of us forecast, is now as bad as the 1930s in many respects.

    DURHAM
    Mr. Cartwrightasked the Prime Minister if he will pay an official visit to Durham.
    The Prime Minister: I was at the Durham Miners' Gala on 19th July, Sir, and I have at present no plans for a further visit to the area.
    Mr. Cartwright: Can my right hon. Friend say whether he has found, in Dur-
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    ham or anywhere else, any appreciation of the attitude of the official Opposition, who claim that they want a more dramatic cut in the rate of inflation than that proposed by the Government while at the same time demanding cuts in housing and food subsidies, which would simply increase the cost of living of the ordinary worker and, therefore, make inflation still worse?
    The Prime Minister: I found no support for the views of the Opposition whether from the Durham miners or the leaders of other coalfields who were present at the gala. I think that some of the miners felt it might have been a good idea if they had invited leaders of the Opposition to Durham. If they spent more time with mineworkers and less with monetarists, they would learn a great deal more about not only the muscle and backbone but also the heart of Britain.
    Mr. Ridley: Even if the Prime Minister cannot visit Durham, can he find a way of telling the Durham miners why he had abandoned his commitment to free collective bargaining and done a U-turn in favour of statutory controls which he has opposed in the past few years?
    The Prime Minister: The hon. Gentleman will be aware that we said in our manifesto that these matters should be dealt with in consultation with the trade union movement. That movement has now made a historic pronouncement which the previous Prime Minister spent many months trying to get. He was right to do so. We are fortifying with legislation, which is to be debated tomorrow, measures and protections required to make a reality of the voluntary proposals and policy of the TUC.
    Mr. Mark Hughes: Will my right hon, Friend accept that my constituents and I are deeply touched by the solicitude of my hon. Friend the Member for Woolwich, East (Mr. Cartwright) in asking my right hon. Friend to visit us? Will he, however, comment on the most notable speech of Mr. Lawrence Daly last Saturday from the platform at Durham?
    The Prime Minister: It was indeed a notable speech. Mr. Daly made certain comments about Members' pay which might not be totally acceptable in all

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    quarters of the House, but what he said about the decision of the NUM executive and the advice he was giving in respect of the coalfield ballot this year was extremely encouraging, coming as it did after the decision of the executive. I should like to hear some praise and support from the Opposition Front Bench for what Mr. Daly had the courage to say last Saturday.
    Mr. Cyril Smith: If the Prime Minister finds it possible to go to Durham, he could do so by going through my constituency of Rochdale. If he did that, would he be prepared to tell the textile workers in my constituency when he proposes that the Government should make their statement on textiles? Is he aware that I have in my hand a telegram from the trade union movement in Rochdale certifying that the closure of another textile mill affecting 250 employees has been announced in Rochdale today? When are we to know the Government's policy on this matter?
    The Prime Minister: The hon. Member is perfectly fair in what he says. If one went to Durham through the textile areas of Yorkshire and Lancashire I am sure that one would hear expressed the sense of urgency to which the hon. Member referred. My right hon. Friend has made clear that a statement will be made within the next few days.
    Mrs. Thatcher: As the Prime Minister has returned to the point about the Government's policy on inflation, will he say something about the reserve powers? Is he saying that he will drop the reserve powers in the Bill if he cannot find a way of absolving the unions from the consequences of refusing to abide by a court's decision, or will he go ahead with them in any event?
    The Prime Minister: We have not said that at all. The House will be debating these matters further, and I hope to catch your eye this afternoon, Mr. Speaker. The Bill which we have said we will hold in reserve and would introduce if the general strategy was imperilled would not involve the problem about which the right hon. Lady is rightly concerned. The question she has put raises issues which do not arise.

    ECONOMIC AFFAIRS (PRIME MINISTER'S SPEECH)
    Mr. Adleyasked the Prime Minister if he will place in the Library a copy of his public speech to the National Union of Mineworkers at Scarborough on 7th July on economic matters.
    Mr. Hurdasked the Prime Minister if he will place in the Library a copy of his public speech on the economic situation to the National Union of Mineworkers at Scarborough on 7th July.
    Mr. Aitkenasked the Prime Minister if he will place in the Library of the House a copy of his public speech on inflation to the National Union of Mineworkers conference at Scarborough on 7th July.
    The Prime Minister: I did so on the same day, Sir.
    Mr. Adley: Is the Prime Minister aware that many people outside the Parliamentary Labour Party will welcome the way in which the executive of the National Union of Mineworkers has agreed not to try to sabotage immediately what many people have described as phase 4 of the last Conservative Government's incomes policy? Will he accept that he should be grateful that on this occasion Her Majesty's Opposition are not acting as Scargill's parliamentary fifth column, trying to destroy Her Majesty's Government regardless of the effects on the nation or inflation?
    The Prime Minister: I rather formed the view, from reading a story, which I am sure will be denied by the Opposition Front Bench, about some motion that the Opposition were putting down on the Order Paper to reject the means of carrying out the White Paper proposals, that they were specifically identifying themselves with the fifth column of those who want to see the White Paper fail. I may be wrong. Perhaps that was for them just a rush of blood to the head after midnight. However, the motion certainly appeared on the Order Paper. If the Opposition are to vote against the Bill which is the legislative vehicle for the White Paper, which I am sure in general they wish to commend to the House, I believe that that would be an act of parliamentary sabotage.
    Mr. Bidwell: When my right hon. Friend is speaking in the country, will he carefully explain that the aspect of wage restraint in the White Paper and in the Government's policy reflects only one side of TUC policy and that a lot of TUC policy has been rejected so far by the Government? Will he undertake to continue discussions with the TUC about the rest of its statement?
    The Prime Minister: I am glad that my hon. Friend responds to the initiative taken by the TUC. He knows that this is the substantial majority view of the General Council and that since the General Council decision union after union has come into line with it. I am sure that in forming his view about the proposals before the House my hon. Friend will attach great weight to the fact that the policy has been agreed with the TUC. We discussed and debated in direct discussions with the TUC, at NEDC and at yesterday morning's meeting of the liaison committee all aspects of the TUC's proposals and wider issues of economic policy.
    Mr. Thorpe: As one who hopes that the White Paper will be successful and who will be voting for it tonight, I hope the Prime Minister is aware that many of us who have grave reservations about details of the legislation to be debated tomorrow and the reserve powers which have not been disclosed believe that it would be very much better if they were disclosed to the TUC, the CBI and the House of Commons. Why are the Government so coy about telling us precisely what reserve powers they have in mind?
    The Prime Minister: The right hon. Gentleman has made clear his general support for the White Paper. He will have every opportunity to debate on the Bill later this week any anxieties he may have about the operation of the legislation before the House. As for the measure that we have said we must keep in reserve, hoping that we shall never have to introduce it but which we shall introduce if the general strategy is threatened, this was dealt with fully by my right hon. Friend the Chancellor of the Exchequer yesterday afternoon.
    Mr. Hurd: In the speech to which the Questions refer the Prime Minister rightly
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    stressed the need for consent, and that obviously goes far wider than the miners. Will the right hon. Gentleman clarify the position of employers in the light of his answers today? After 1st August, will not employers be entering into commitments with their work force which might constitute a legal offence of which they have no knowledge, carrying a penalty of which they have no idea? Is not the only certainty that they will receive no protection if other people try to force them to break the law?
    The Prime Minister: The hon. Member has misunderstood the situation. There is no question of employers entering into commitments after 1st August which they might find retrospectively to be against the law. There has been a misunderstanding here and I understand why, but the hon. Gentleman need have no anxieties on that score.
    Mr. Mike Thomas: Is my right hon. Friend aware that he will find it much less pleasant to address the NUM in 12 months' time if the rate of inflation is still between 15 per cent, and 18 per cent.? Will he concede that there is a real prospect of that, given the increases in the pipeline from last year's and this year's wage round and from raw material price increases? Will he take action to tighten up the prices side of the package to try to make sure that this does not happen?
    The Prime Minister: I agree that that would be the position in a year's time if what my hon. Friend predicts were to happen. No one realises this more clearly than the NUM and the other unions, and that is why they are taking such a robust line in support of the Government's policy. On the question of the Price Code, and this is to some extent involved in the legislation before the House tomorrow, my right hon. Friend the Secretary of State for Prices and Consumer Protection—I do not think that Hansard is yet available with the full record of what she said—dealt fully with some of these matters last night. She made clear that apart from the specific measures she is proposing, some by way of legislation, it is not the case that the present level of profits in some of the key sectors of wholesale, retail and manufacturing are such that it will be

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    possible greatly to tighten them up without very serious effects, possibly on employment.
    Mr. Aitken: I welcome much of the Prime Minister's rather belated conversion to realism as demonstrated in his Scarborough speech. Will he explain why he spent so long blaming the problems of the economy on such bogies as wet hens running around the cocktail circuit and why he did not speak in blunt language to the miners and the other unions much sooner?
    The Prime Minister: I did. I gave my view to the TUC last September. On the point about a quotation from a broadcast some weeks ago, this was because there was a concerted drive against sterling based on a lot of gossip at the very time when it was becoming clear that our balance of payments deficit was falling to one quarter of what it was a year ago. Since then successively we have had very good export and trade figures. In the first six months of this year we achieved a current deficit of less than £500 million—an annual rate of £1,000 million—against estimates of £4 billion and £5 billion last year. This is a remarkable achievement and justifies what I said about some who are selling sterling short.
    Mr. Donald Stewart: As the House and the people have been conned on several occasions into buying the gold brick of a statutory incomes policy, is it not sheer gall that we are presented with it once again, except that on this occasion the gold brick will not even pass before our very eyes?
    The Prime Minister: I do not know about the gold bricks and the gall around here. However, the position was made clear by my right hon. Friend the Chancellor of the Exchequer that the legislation which we are asking the House to pass to fortify the voluntary policy agreed with the TUC will be debated by the House tomorrow. Any other legislation will be in reserve only in case the strategy breaks down. The House would have the first opportunity of debating that legislation before it could possibly become law. As to what the legislation will contain, my right hon. Friend the Chancellor of the Exchequer explained in
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    detailed terms yesterday what the Government have in mind.
    Several Hon. Members—
    Mr. Speaker: Order. There are 75 hon. Members who wish to speak in the debate which is to follow.

BUSINESS OF THE HOUSE (SUPPLY)
Ordered,
That this day, as soon as the House has entered upon the Business of Supply, Mr. Speaker shall put forthwith the Question which, under the provisions of paragraph 11 of Standing Order No. 18 (Business of Supply), he is directed to put at Ten o'clock.—[Prime Minister.]

HIGH COURT ATTENDANCES (OFFICERS OF THE HOUSE)
Mr. Maxwell-Hyslop: On a point of order, Mr. Speaker. Will you confirm, with respect to Item No. 6 on the Order Paper—the ill-starred motion by the Attorney-General—that the fact that it has lost its star means that it is not debatable in the House tonight and that it merely receives unanimous assent, or, given one objection, it again fails? Would you be good enough to confirm that to the House? I think there is general interest in it.
Mr. Speaker: The star—the asterisk has nothing to do with it. The point is that it is now on the Order Paper, and the hon. Member will know that it can proceed only if it is not objected to.

Ordered,
That the Local Land Charges Bill [Lords] be referred to a Second Reading Committee.—[Mr. David Stoddart.]

STATUTORY INSTRUMENTS
Ordered,
That the Regional Employment Premium (Continuation of Payment) (Winsford) (Amendment) Order 1975 be referred to a Standing Committee on Statutory Instruments.—[Mr. Edward Short.]

RENT ACT 1974 (AMENDMENT)
3.33 p.m.
Mr. John Ovenden: I beg to move,
That leave be given to bring in a Bill to extend security of tenure and rent regulations to tenants of non-resident landlords where meals are provided which are not prepared on the premises.
The Bill that I seek leave to introduce is part of a continuing fight against evasion of the laws guaranteeing security of tenure to tenants. Every time Parliament acts to protect tenants from excessive rents or eviction at the whim of a landlord, the more cunning and unscrupulous landlords embark on the search for loopholes in the law.
When the tenants of unfurnished accommodation were granted security of tenure and tenants of furnished accommodation were not, it was common practice for many landlords to seek to provide a collection of cheap, tatty and often delapidated furniture to transform their accommodation into the furnished category. Now, despite the synthetic indignation of the estate agents and the Conservative Party, that distinction has been abolished in the 1974 Rent Act.
Now there is evidence that an even more ingenious and dishonest device is being used to ensure that accommodation can be portrayed as something that it patently is not so that tenants can be charged extortionate rents and be kicked out if they complain. That device is the provision of food—not food cooked on the premises by the proprietor and served to his tenants but food delivered by the landlords as a device to seek to have their accommodation regarded as hotels rather than as rented accommodation.
Such meals are not available to tenants as optional extras or as service provided by catering landlords deeply concerned with the nutrition of their tenants. The acceptance of meals is a condition imposed on those seeking housing—a condition imposed in order to deprive them of their other rights. The accommodation provided is not that of a five star or even a no-star hotel. It is a strange hotel indeed that provides no bed linen, or installs meters for all gas and electricity,
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It is a pretty poor hotel that fails even to provide breakfast on most mornings when it has contracted to provide it.
The landlords involved in this scandalous practice are driving a coach and horses right through the 1974 Rent Act. In this case it is a coach disguised as a food wagon. This meals-on-wheels service provides, without doubt, the most expensive food in the country. The provision of a few eggs and bacon can increase the income from the property tenfold. By the evasion of Rents Acts one estate agent in the Medway towns, namely, C. O. Bills Ltd., is already charging two families occupying one house a total of £50 a week in rent. One of the firm's directors, Mr. Michael Bills, is planning to build himself a £300,000 golf course—paid for, no doubt, by his ill-gotten gains extorted from homeless families.
This company's victims cone not just from the Gillingham area in which this estate agent's premises are situated, but they include constituents of mine on the council waiting lists in Medway and Gravesham. The company's directors grow rich while its tenants live in rodent-infested, damp and inadequate accommodation. The rents are too high for most people to afford so the county council's social services department has to contribute to them from the ratepayers' money. These firms are, therefore, concerned not only in exploiting the homeless but also in milking the ratepayers.
The Bill is not aimed at eliminating the genuine hotel or boarding house. It is intended to clip the wings of those unscrupulous landlords and estate agents who pose as hoteliers because they see the chance of making extortionate profit from sub-standard accommodation and the opportunity to line their pockets at the expense of the homeless or the ratepayers.
The unscrupulous people involved in this racket are not making extra accommodation available. Their activities are actually reducing the number of permanent homes which are available. They create ther own demand by ensuring that the sort of accommodation which people need is not available to them.
I ask the House for leave to introduce the Bill so that we may put an end to the scurrilous activities of these parasitic landlords before this practice grows and

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becomes a national scandal instead of a local council scandal.
Question put and agreed to.
Bill ordered to be brought in by Mr. John Ovenden, Mr. Ivor Clemitson, Mr. Martin Flannery, Mr. Bruce George, Mr. Bryan Gould, Mr. Mike Noble, Mr. George Rodgers, Mr. J. W. Rooker and Mr. Ron Thomas.

RENT ACT 1974 (AMENDMENT)
Mr. John Ovenden accordingly presented the Bill to extend security of tenure and rent regulations to tenants of nonresident landlords where meals are provided which are not prepared on the premises: and the same was read the First time; and ordered to be read a Second time tomorrow, and to be printed. [Bill 219.]
ORDERS OF THE DAY
  SUPPLY
  [29TH ALLOTTED DAY],—considered.
  SUPPLY

    DEFENCE AND CIVIL ESTIMATES 1975–76 (OUTSTANDING VOTES)
    MR. SPEAKER proceeded, pursuant to the Order this day, to put forthwith the Question,
    That a sum, not exceeding £19,647,600,900, be granted to Her Majesty out of the Consolidated Fund to complete or defray the charges for Defence and Civil Services for the year ending on 31st March 1976.
    Question agreed to
    Bill ordered to be brought in upon the foregoing resolution by the Chairman of Ways and Means, the Chancellor of the Exchequer, Mr. Edmund Dell, Mr. Joel Barnett, Mr. Robert Sheldon and Mr. Denzil Davies.

    CONSOLIDATED FUND (APPROPRIATION)
    Bill to apply certain sums out of the Consolidated Fund to the service of the years ending on 31st March 1976, presented accordingly and read the First time; to be read a Second time tomorrow and to be printed. [Bill 220.]

  ATTACK ON INFLATION
  Order read for resuming adjourned debate on Question [21 st July],
  That this House approves the White Paper on The Attack on Inflation (Command Paper No. 6151).
  Amendment proposed, to leave out from "House" to the end of the Question and to add instead thereof:
  "supports Her Majesty's Government's belated commitment to reduce the disastrous rate of inflation and their acceptance of the need both for strict cash limits throughout the public sector and for a substantial reduction in the level of pay settlements; regrets, however, Her Majesty's Government's prolonged failure to reduce public spending and to promote the prosperity of the private sector; and deplores their decision to increase indiscriminate subsidies and to proceed with further measures of nationalisation, which are damaging in themselves and inconsistent with the conquest of inflation".—[Mrs. Thatcher.]
  Question again proposed, That the amendment be made.
  3.39 p.m.
  Sir Geoffrey Howe: Yesterday my right hon. Friends concentrated on an analysis of the Government's responsibility for the present disastrous situation and the extent to which the proposals contained in the White Paper fall short of what is necessary. I intend today to devote some time to expounding the case set out in the amendment moved by my right hon. Friend the Leader of the Opposition. I begin by explaining our approach and the way in which Parliament should approach matters of this kind.
  It is the function of the House of Commons, and most of all in a crisis such as the present, to hammer out policies which are in the interests of the nation, and to push and to persuade the Government in the right direction. When the Government are moving in that direction, the function is to offer them support and certainly not to oppose them. That is the simple reason why we shall not be asking my right hon. and hon. Friends to vote against the White Paper itself tonight.
  We have been urging the Government to take action on inflation for months. When the Prime Minister and the Chancellor of the Exchequer and their colleagues were saying that all was well, we were urging him to take action. When the Chancellor was saying that
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  inflation was running at 8·4 per cent., we were urging him to take action. Month after month since then we have been urging them to do just that, so we certainly welcome their belated repentance now, so far as it is well conceived.
  Those who thought that we should have acted otherwise must have been expecting us to follow the example of the Opposition when it was led by the right hon. Gentleman the Prime Minister. I can give him this assurance. We shall not follow his example. Some may have been expecting us to seek to undermine the authority of Government, as he did. We shall not follow him in that respect either. It is worth devoting a moment or two to the record of the Prime Minister.
  The Prime Minister (Mr. Harold Wilson): These are interesting revelations. However, although I am sorry to be a minute or two late in getting in, may I ask the right hon. and learned Gentleman, in view of what he has said, whether this means that the Opposition will not be voting against the Second Reading of the Remuneration, Charges and Grants Bill?
  Sir G. Howe: The right hon. Gentleman certainly has some effrontery in interrupting my speech within seconds of his arrival without having heard the beginning of it. Let me answer the question. We have tabled an amendment drawing the Government's attention to our clear reasons for anxiety about the Bill which is now before the House. We shall be debating it tomorrow. The Government will have every opportunity of indicating how far they will respond to our anxiety, and how far they will respond to the amendments already on the Notice Paper. If they fail to do that we shall certainly vote in support of our amendment. [Interruption.]
  I want to examine the record of the over-talkative Prime Minister—if he can contain himself for a moment—because it is almost 13 years since the right hon. Gentleman replaced the late Hugh Gaitskell as the Leader of the Labour Party. I do not know what verdict his party will pronounce on the record of those 13 years, although I can make some guesses. [HON. MEMBERS: "Wasted years."] The nation can hardly congratulate itself on the impact of his service

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  during those 13 wasted years—as my hon. Friends describe them. [Interruption.] The Patronage Secretary says that the right hon. Gentleman has won four General Elections. That is about the beginning and the end of the standards the Prime Minister has set himself.
  They have been years in which the Prime Minister has sought to deceive his party and the nation and has ended up deceiving no one but himself. They have been years of false expectations, beginning with the "white heat of the technological revolution"—what a faded phrase that now seems—and ending with the social contract, described by the Prime Minister last September as
  "The boldest experiment in civilised Government that Britain has ever seen."
  They have been years in which the Prime Minister has taken up policies only to dispose of them a few months later when others, under the leadership of my right hon. Friend the Member for Sidcup (Mr. Heath), have applied themselves to the same task—in relation to the Prime Minister's position on Europe, on the reform of industrial relations and, above all, on his position on the conquest of inflation. Having himself been driven, despite all his earlier protestations, rightly or wrongly, to adopt a statutory policy, when the time came for our Government to do the same he uttered not a syllable in support. Last January the cry was "A victory for the mineworkers will be a victory for the nation." Tragically, it was not. In 1972 and 1974, as in 1975, it was a victory for inflation. Yet until two weeks ago the Prime Minister has continued to march in the opposite direction.
  When the history of our time comes to be written, the verdict on the right hon. Gentleman's 13 Houdini years as Leader of the Labour Party will be harsh indeed.
  Mr. John Tomlinson: What a turgid old bore you are.
  Sir G. Howe: The Prime Minister will be seen to have done more harm to the social and economic fabric of this country than any other party leader in our history—13 wasted years indeed.
  I turn now to consider the condition of the nation's economy, over which the Prime Minister continues to preside. The OECD had produced a report about the
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  condition of our nation. It confirms that production is stagnant at best and that our trade balance is still very far from right.
  When the Prime Minister dealt with this in the last debate, he had a tendency towards euphoria, to which he returned during Question Time this afternoon. He paid tribute to the remarkable achievement of his Government in going so far to redress the balance of trade. I join with him and anyone else who pays tribute to our exporters, but the Prime Minister, in this as in so many other matters, really must not deceive himself. The truth is that many factors in the underlying recent improvements in the balance of trade conceal unsatisfactory features for the future. Exports are up by 1 per cent. only. Why have they risen by only that extent? It is because prices are growing at about 20 per cent. per annum. while those of our competitors are growing at about half that rate—10 per cent. per annum? [Interruption.] Of course they have fallen—but wait for it! The volume of our exports fell by 28 per cent. in the first two quarters of the year, faster that the fall in world trade—and because of the excessive rate of price increases. That is why the Prime Minister is being driven to take action now. Those factors are already sapping the position and adding to the serious effects of declining world trade. The other half of the balance has improved because the volume of imports fell by 28 per cent. between the first two quarters of this year, much faster than the 8 per cent. fall in industrial production.
  That position cannot be sustained. The present trend is unsustainable. I take no pleasure in saying that. I merely wish that the Prime Minister would from time to time have the courage to face the facts instead of leaping at any statistic that seems to point in his favour. [Interruption.] I need no lectures on patriotism from the Chancellor of the Exchequer.
  Unemployment, according to the OECD forecast figures, will be almost twice what it is today. Again according to those forecasts, inflation will be well in double figures. On these policies, which the House is now debating, we shall still be facing a long and rocky road ahead.
  Mr. Tam Dalyell: Is it not also a fact that German unemployment is markedly higher than our own and that German exports have fallen dramatically?
  Sir G. Howe: German unemployment is not, I think, now higher than ours. [HON. MEMBERS: "It is."] Not markedly higher. The hon. Gentleman must try to analyse the gravity of the situation. If one could point to the massive accumulated surpluses of Germany, to their booming investment record and to a society in which the Social Democratic Party had had the good sense to discard socialism, we too might well be on the way.
  However, the Prime Minister has never really implied that the situation is as serious as it is. Last February the Labour Party, in its manifesto, was said to be "ready with policies essential to rescue the nation." In October the magic phrase appeared in its manifesto:
  "At the heart of … our programme to save the nation lies the Social Contract."
  If during the last 16 months we have been witnessing the salvation of the nation, heaven save us from the second coming of this particular saviour.
  We may be forgiven a feeling of anxiety when we see set out in paragraph 48 of the White Paper a plan that is once again described as "a plan to save our country", and we are still more anxious when the Prime Minister qualifies the position still further by calling on the nation, as he put it, to "give a year to Britain". The nation is certainly ready to make sacrifices provided the policies set before it are firm enough, and, I would say, severe enough, and provided the people have some conviction that they will be maintained, because the situation is now so grave that every one of the options now before us is immensely hard.
  Reductions in living standards are inescapable, so let the Prime Minister spell that out with a great deal more clarity than he has done so far. Cuts in social programmes are inescapable. Let him spell that out with greater clarity, as well. A period of rising unemployment is unavoidable. Let him spell that out with equal clarity. The question facing us is whether our society, our system of government, can sustain these things, and,
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  if so, for how long? The choice is horrific, and on present plans all these things will need to be sustained for a number of years.
  One asks oneself whether it can be done. Certainly, it cannot unless these prospects are more clearly understood and spelt out. That is why, first of all, we call on the Prime Minister to demonstrate a far greater candour than he has so far displayed. This is why we have to state the case for even more severe measures now. We have constantly said that the longer action is delayed, the more severe that action will have to be. That is why we indict the Government for the prolonged delay which has landed us in this position.
  There are two other matters with which I want to deal first, on which no doubt the Prime Minister is more than capable of trying once again to misrepresent the position of our party. First of all, on unemployment. The Conservative Party abhors the idea of enforced and unavoidable idleness for a single individual. We wish to return, and so does everyone else in this House, as soon as it is consistent with the conquest of inflation, to the "high and stable level of employment" set out in the 1944 White Paper. [Interruption.] I will deal with the Prime Minister's petty interruptions in a moment. I need no lectures from right hon. Gentlemen opposite about the evils of the alternative, high unemployment, for I was born and brought up in South Wales.
  Several Hon. Members: Oh!
  Sir G. Howe: Hon. Gentlemen opposite may moan, but it is a fact that we on this side of the House know at least as much as they do about the social consequences of unemployment. I saw for myself the length and the horror of dole queues. But let there be no misunderstanding—[Interruption.]
  The Parliamentary Secretary to the Treasury (Mr. Robert Mellish): How can the right hon. and learned Gentleman remain a Tory?
  Sir G. Howe: Because I have more sense than the right hon. Gentleman. Let there be no misunderstanding about the present position. A Socialist Government are now presiding over an

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  increase in unemployment. Unemployment has risen under a Socialist Government from 588,000 in March of last year to 810,000 this year and is expected to rise to about 1½ million next year. This Socialist Government are doing, and can do, nothing to prevent it. In the words of the White Paper, they are "shackled" by the burden of inflation. We take no pleasure whatsoever in that. It is an inevitable accompaniment of the attack on inflation to which the Government are committed. It is a consequence of their failure, which we deplore, to act sooner than they have done. Let us hear nothing from the Prime Minister to the effect that our policies will create unemployment.
  The Chancellor of the Exchequer (Mr. Denis Healey): If the right hon. and learned Gentleman will allow me, the amendment which he and his Friends have tabled asks for large increases in the cuts in public expenditure for the current year. Could he answer the question which his Leader consistently failed to answer yesterday: how big an increase in unemployment is he prepared to accept as a consequence of these cuts? Let him not dodge the question as his Leader did yesterday, because if he really takes seriously the problem of unemployment, as he has just told us, he must be honest about this and not conceal his views.
  Sir G. Howe: We reach a fine pass when anyone in this House has to take lectures—
  Mr. Healey: Answer the question.
  Sir G. Howe: The right hon. Gentleman will have an answer to his question, which is more than he gave my right hon. Friends yesterday. The right hon. Gentleman is not in a position to give me lectures in honesty.
  Mr. Healey Mr. Healey rose—
  Hon. Members: 8·4 per cent.
  Sir G. Howe: I will deal with the public expenditure point later, but I will tell the right hon. Gentleman now that if this Government had had the courage to restrain public expenditure sooner than they did we would not now be facing the prospect of high and rising unemployment. We have now reached a situation
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  in which whatever any Government may do the prospect of unemployment is inevitable.
  Mr. Healey: Answer the question.
  Sir G. Howe: I am going to do so. The right hon. Gentleman must contain his arrogance and his impatience, if that is possible. We have reached a situation where we have to make cuts in public spending now to prevent the prospect of still higher unemployment in the future, after that, and there is no escape from that. Action now on these lines—rather than action this year, next year, sometime, never—is an essential foundation for long-term strategy to restore the economy.
  Mr. Healey Mr. Healey rose—
  Hon. Members: Sit down.
  Mr. Speaker: Order. I did indicate that we have 75 hon. and right hon. Gentlemen who want to speak. Can we have a fairly good tempered debate?
  Mr. Healey Mr. Healey rose—
  Hon. Members: Order.
  Mr. Healey: On a point of order, Mr. Speaker, the right hon. and learned Gentleman has just—[Interruption.]
  Mr. Speaker: Order. If the right hon. Gentleman rises on a point of order I must be allowed to hear him.
  Mr. Healey: Thank you, Mr. Speaker. The right hon. and learned Gentleman has just undertaken to answer the question which I put to him. He has failed to do it. Is it in order, Mr. Speaker, for the right hon. and learned Gentleman to break an undertaking which he has made to the House within 10 seconds of making it?
  Mr. Speaker: The right hon. Gentleman knows that that is a matter of argument, not a point of order.
  Sir G. Howe: I have answered the right hon. Gentleman's question, Mr. Speaker. I do so again. The Chancellor of the Exchequer is adept at using his hectoring and bullying manner to distract attention from the focal point. The position, which he ought to have had the candour to explain, is that we are now in a situation in which the prospect of unemployment for a substantial period ahead is inescapable. The question is how quickly we can improve on that, and the

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  only cuts in public expenditure we are advocating are a more certain way of getting us back on the road to recovery than any alternative.
  Mr. Norman Tebbit Mr. Norman Tebbit (Chingford) rose—
  Sir G. Howe: Let us hear nothing further from the Prime Minister to the effect that our policies will create unemployment. His policies are doing so, and it is inescapable. It is part of the price that the British people have to pay for his earlier delusions. It would be very easy for us to jibe, as he jibed at my right hon. Friend, "Dole queue millionaire", but we shall not do so. It would be easy for us to agitate upon the basis that there is at least one honour that the right hon. Gentleman will share with Ramsey McDonald, that of being the second Socialist Prime Minister this century to preside over more than 1 million unemployed in this country. We shall not do that. There is now no escape from this vale of tears and the tragedy is that the Prime Minister has never had the courage to be as frank as he ought to have been about this.
  The second point that I want to deal with is the one which provoked the Prime Minister's other sedentary interruption on monetary policy. Monetary policy, properly managed, is an essential of economic management. It is not in itself sufficient. [An HON. MEMBER: "Enoch said so."] The right hon. Member for Down, South (Mr. Powell) may have said it, but there are sources nearer home than that. [Interruption.] The Prime Minister, interrupting from a sitting position, says that he did not mention monetary policy. No he did not. He muttered sotto voce, as he is so often inclined to do, "What about Joseph?" referring to my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph).
  The Prime Minister: I made a reference to the fact that when the last unemployment figures came out the right hon. and learned Gentleman made light of them, and said that unemployment was only about a third of what the figures showed. Will the right hon. and learned Gentleman comment on that?
  Sir G. Howe: The Prime Minister knows perfectly well that analysts on all sides of politics—
  Mr. Healey: Answer the question.
  Sir G. Howe: I shall. The right hon. Gentleman must have the patience to allow me to finish a sentence.
  The Prime Minister knows perfectly well that analysts on all sides of politics have been studying the shape and accuracy of the unemployment statistics. But if he suggests that my right hon. Friend the Member for Leeds, North-East cares less than he does about the impact or unemployment—[HON. MEMBERS: "Answer the question."] I am answering the question. My right hon. Friend and all hon. Members on this side of the House care about unemployment, and wish to see it reduced.
  Let me deal with the second point. The White Paper says that the Government:
  "will continue to use the full range of instruments available to them to keep the growth of the money supply under firm control."
  Fine. In the Labour Party's last manifesto we find the following sentence:
  "We have: Stopped printing money to finance unnecessary expenditure."
  Fine. Let this be noted, then. The Prime Minister and the Labour Party are self-confessed monetarists and, if they are to stick to this aspect of their manifesto, intend to remain so. If the cap fits, let the Prime Minister have the courage to wear it from now on without any further deception.
  The Prime Minister and the Chancellor are fond of blaming part of their present troubles on the monetary policy of the last Government. If so, so be it. But let the Prime Minister understand why it came about. I commend to him the excellent speech, among so many others, made by the Paymaster-General to the Canada Club on 1st July, when he said:
  "It should not be imagined that Governments that have in the past allowed the money supply to get out of control have done so out of a particuular love for printing money. It is done under political pressure."
  Let the Prime Minister ask himself this: by whom was that political pressure orchestrated? To his shame, it was orchestrated by the Prime Minister himself.
  The Conservative Party will not seek to undermine the Prime Minister's position. It is a tragedy for the nation that

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  we cannot expect similar support from him. So let the Prime Minister write out of his speech now the misleading and hypocritical attack that he has no doubt already prepared on my right hon. Friends the Leader of the Opposition and the Member for Leeds, North-East, because both my right hon. Friends have higher standards of integrity than any to which the Prime Minister could ever hope to aspire.
  What, then, of the other elements in the policy? We shall be discussing some of the details tomorrow. There is the Government's commitment to the use of cash limits to contain public expenditure —at last. We have long pressed them to do just that. It is essential that those limits should be strictly defined tnd rigorously enforced. They need to be supported by much clearer policies than we have yet seen for local government, and carried through with no weakening of will. We shall certainly support them if they are.
  But is that enough for public spending? I am driven to the conclusion that it is not. I endorse the Chancellor's programme to cut back in the years ahead. Sadly, that will impinge on social programmes. God knows, there is more than enough that we all wish to do in social reform. Here, too, the Labour Party has no monopoly of care and concern. I have presided in the constituency of the hon. Member for Bethnal Green and Bow (Mr. Mikardo) over a comprehensive school where it was manifest for all to see that we needed far more resources to improve the conditions in which the children were being taught.
  Under the last Labour Government I reported to the late Richard Crossman on conditions in Ely hospital, in South Wales. Heaven knows, that hospital needed help. We all want to help people —the elderly, the frail, the sick, the young, the dependent—in our community. Let there be no doubt about that.
  But if we are to do it—and to do better in that respect, as we must, can and shall —we must return to the creation of wealth before we spend it. The conquest of inflation is an essential prerequisite to that, and so is an end to the Government's habit of living beyond their means,
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  and continued dependence on international credit, which leaves them perilously at risk. So, too, is the transfer of resources into investment, above all into profitable private industry, returning as soon as possible into the pockets of our people.
  That is why we believe that the Chancellor needs to go still further, sooner, in reducing public expenditure. Last year he told the CBI at its annual dinner:
  "I have planned a drastic cut in the public sector borrowing requirement."
  Yet he ended up with a public sector borrowing requirement three times larger than that for which he had planned. Therefore, we trembled when we heard him make a similar commitment in this year's Budget speech, and we trembled still more when we saw published last week, and saw brought on to the Floor of the House only half an hour ago, Supplementary Estimates for the first three months of this year falling just short of £2,000 million. Already in the first three months of this year public expenditure is 31 per cent. up at an annual rate, on what the Chancellor said it would be in his Budget speech.
  The horrifying thing about that is that last year the right hon. Gentleman missed the target by only 25 per cent., so this year he is doing even worse than last year. That is why we are apprehensive about his approach, and why we criticise —[Interruption.] The Chancellor may laugh, but £2 billion excess spending is not much of a laughing matter.
  Mr. Healey Mr. Healey rose—
  Hon. Members: Sit down.
  Sir G. Howe: Therefore, we criticise the further planned growth of subsidies and the failure to reduce those in payment. We understand the temptations—
  Mr. Eric S. Heffer Mr. Eric S. Heffer (Liverpool, Walton) rose—
  Sir G. Howe: I shall not give way at present.
  Mr. Healey: I had 24 interruptions.
  Sir G. Howe: I dare say the right hon. Gentleman needed them.
  We succumbed to the temptation to make subsidy payments. Some may be justifiable in some circumstances.
  Mr. Heifer Mr. Heifer rose—
  Sir G. Howe: I shall give way to the hon. Gentleman at the end of this section of my speech, which will not be long.
  The Chancellor now takes credit for his reduction of the price subsidies payable to the nationalised industries. So be it. That is an inevitable part of the temporary reduction in our standard of living that we face. That is why the Prime Minister needs to be so much more candid than he has been.
  The Secretary of State for the Environment has argued in recent weeks and months the case for higher rents and lower housing subsidies. What a pity he was not more frank about that in the face of our own fair rents legislation! The Secretary of State for Prices and Consumer Protection has been explaining in recent weeks and months why food subsidies will have to go. What a pity the Labour Party did not say the same when we explained that such subsidies would not solve our problems.
  That is why we regret the fact that the Government are not now prepared to take further action to reduce public spending along these lines. Action now is an essential part of a long-term strategy. The sooner we are through these unpalatable policies, the sooner we can resume the path towards prosperity. The Government's failure to act in that direction is only one of the reasons set out in our amendment why we shall not be able to support them tonight.
  Mr. Heffer: The right hon. and learned Gentleman has said that the bread subsidies should not be increased, and that there should be no food subsidies. As that will mean further price increases, and that is not the end of the story as far as he is concerned, will he explain in which other directions there would be cuts in public expenditure if we had a Conservative Government? Would he like to spell out in detail what this will mean to the people?
  Sir G. Howe: I have been explaining the areas which cry out for early reduction—housing subsidies, which are now running at double what they were two years ago, and food subsidies and subsidies to nationalised industries, which are all running at substantial figures. [Interruption.] The Chancellor says that
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  that would bring about an increase in the retail price index, but so does the reduction of the subsidies to nationalised industries.
  So, too, when the Chancellor imposed increases in taxation. There can be no escape from changes of that kind if we are to move from this vale of tears. The Chancellor should be more candid about it. It is not that we do not wish to help homeless families. However, it is irrational and absurd for families earning incomes in excess of £100 a week to receive huge subsidies towards their rents when others are in need. That is the essential case which we put forward.
  There is an even more compelling reason for criticising the Government. I refer to the Government's obstinate insistence in going ahead with their nationalisation programme—land, oil, ships, aircraft. In heaven's name, why? What reasonable Government could wish to drive our greatest asset, North Sea oil, into following, for example, the dynamic example set by the Post Office? What sensible Government could possibly wish to drive our aviation and shipbuilding industries to emulate the enterprising profitability of British Rail or British Steel?
  The Prime Minister: That is very cheap.
  Sir G. Howe: The Prime Minister says "very cheap". But that is the reality. When a Socialist Government have demonstrated that nationalisation improves the management of an industry, that will be the time to put forward further cases in that direction.
  Whom will the Prime Minister be able to persuade to take on the Herculean tasks of running these new giants? Does he hope to absorb the energies of the growing army of disenchanted ex-Ministers now on his back benches—jobs for the hon. Member for Liverpool, Walton (Mr. Heffer), for the right hon. Member for Lanark (Mrs. Hart) or for the hon. Member for Aberdeen, North (Mr. Hughes)?
  Mr. Arthur Lewis Mr. Arthur Lewis (Newham, North-West) rose—
  Sir. G. Howe: It is much more serious than that. The extension of the public sector enlarges—
  Mr. Arthur Lewis Mr. Arthur Lewis rose—
  Mr. Deputy Speaker (Mr. George Thomas): Hon. Members must control themselves. The Attorney-General is entitled to address the House. [Interruption.] Order. At least everyone Knows when I am wrong.
  Sir G. Howe: I do not know whether to be flattered or dismayed by that.
  Mr. Arthur Lewis: On a point of order. You have rebuked me, Mr. Deputy Speaker. I should like to apologise to you and to say that my apology is sincerely meant. It is reserved for you, Mr. Deputy Speaker. The right hon. and learned Member for Surrey, East (Sir G. Howe) will never give way, so I must get my point in. Perhaps he is being hypocritical because he knows that his wife has just been appointed a chairman of a board at £7,000 a year, although he claims that he supports wage restraint.
  Mr. Deputy Speaker: The trouble is that in getting his point in, the hon. Member got me into trouble.
  Sir G. Howe: The situation is more serious than that. The extension of the public sector enlarges the scope of inefficiency within our economy. It is also serious in economic terms. Last week the Prime Minister suggested that nationalisation made no addition to public sector expenditure. Nationalisation goes far beyond its implications for demand within the economy. It increases the cash total of public expenditure. It pushes up the borrowing and interest rates. The profit inflow to the Government from the nationalised industries is less than the interest payable on compensation. The longer-term effects of nationalisation lead inevitably to declining profitability and efficiency, loss making and a waste of the community's resources.
  The Government are entitled to call upon the nation to make sacrifices for the sake of economic sanity and for salvation from the great dangers facing us. But the Government are not entitled by any standards to call upon the nation to make further sacrifices simply for the sake of Socialism. We reject that. That is one more reason for our amendment. That is why we cannot support the Government.
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  We point to the Government's failure to recognise the need to promote the prosperity of the private sector, which is recognised in the White Paper, yet which faces still tighter price control and a vastly egalitarian Price Code. In that respect the Prime Minister produced a policy which could transform the brain drain, of which he once complained, into a tidal wave of emigration. That is another reason why we cannot support the Government.
  Pay restraint is necessary for the reasons given by the Leader of the Opposition yesterday. Above all, it is necessary in the public sector. But what a horror it is that we must enter this tunnel, and do so in this fashion. In his approach to this question the Prime Minister surpassed even his own records in equivocation. Is the policy statutory? Yesterday the Chancellor of the Exchequer described it as a voluntary policy with powerful sanctions and support from legislation. That does not exactly reek of voluntarism. Indeed, there is to be a Bill. Or are we to see two Bills?
  Let us examine the Title of the Bill. It reads "Remuneration, Charges, and Grants Bill." What skill there is in that! The word "income" is translated into "remuneration". The word "prices" is translated into "charges". I suppose it is some comfort to know that the Prime Minister still has the time and energy to thumb his way through Roget's "Thesaurus". Clause 1(1) says that there is a contractual obligation to pay money above the limits when
  "the limitation is no greater than necessary to keep the remuneration within the limits imposed by the policy set out".
  The Bill seeks to set aside contractual rights within the limits imposed by the policy set out in the White Paper. What will happen if the limpid draftsmanship of Congress House, annexed to this White Paper, is less than clear? That is easy. Clause 1(5) reads:
  "Any question arising under this section whether any remuneration exceeds the limits mentioned therein shall be referred to and determined by the Secretary of State".
  That refers to the Secretary of State for Employment. What a farce this is! There he sits, the champion of the rights of man, as he used to be, the defender of the rule

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  of law, as he used to be, the upholder of parliamentary sovereignty. In the good old days he used to speak about those subjects as if he had invented them. He was the hammer of the European Court of Justice and the scourge of Sir John Donaldson in the "political court". Under this legislation the Secretary of State for Employment alone is to be the prosecutor, judge, jury and court of appeal in one. Indeed, we should not be surprised to find him going for the job of Official Solicitor as well. Everything is to rest upon the sagging shoulders of the commissar for Ebbw Vale. What a fall is this! But that is not all.
  We have been told that there will be another Bill, upon which all will depend. The Chancellor of the Exchequer said that the Bill would contain no sanctions against work people. But will it contain, as in 1966, sanctions against trade unions? How are we to judge?
  Another question must be asked. Where is this phantom Bill, this ectoplasmic document? It must exist. The Chancellor quoted from it. The Prime Minister, heaven help us, has even promised to publish it. But when will it be published? [HON. MEMBERS: "Answer."] I will offer an answer to my hon. Friends—in the next volume of the Prime Minister's memoirs perhaps. That may come a great deal sooner than he thinks. We very much hope it will, but even that will not be soon enough. Even then we might not be satisfied, because the Attorney-General might appear before the House and move a writ to prohibit publication.
  This is no way to treat Parliament, and it is no way to treat the nation. It is one last reason, going beyond our amendment, why we cannot vote for the Government tonight. We cannot be expected to vote for a phantom pig within a phantom poke. These are the reasons why we shall not vote for the Government tonight—because of their contempt for Parliament and the nation, because of their continued commitment to disastrous and expensive measures of Socialism, because of their failure to satisfy the House that they have yet come to the end of their rake's progress of public spending, because of the failure of their present strategy for the recovery of the private sector. Those are the
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  reasons why we cannot support the Government in the Lobby tonight.
  I will say something to the Prime Minister which he has never said to us. I shall tell him why we shall not be voting against him tonight—because we support his commitment at last to attack the inflation that is destroying our society and we support his commitment at last to set strict cash limits to the size of public spending. I will add something else which he has never said to us. When the time comes for him to stand firm upon those commitments, from wherever the challenge may come, the Conservative Party will give him or any other elected Government of this country our positive and united support. We shall give him that support not because the Prime Minister has done anything to deserve it—he certainly has not—
  Mr. Healey Mr. Healey rose—
  Mr. Deputy Speaker: Order. Only one right hon. Gentleman at a time.
  Sir G. Howe: We shall give the Prime Minister our support not because he has done anything to deserve it—he has not. We shall give him our support not even because he is the best Prime Minister we have—he is not that either. We shall give him support at that time because the survival of democratic government in this country depends upon the willingness of the House of Commons to give just that kind of support to its elected Government. That support will certainly be forthcoming from the Conservative Party, and when the time comes for us to resume the government of the country we must devoutly hope that the Labour Party will by then at least have found a Leader with the guts to say the same.
  4.23 p.m.
  The Prime Minister (Mr. Harold Wilson): Before I come to the general debate, I wish to congratulate the hon. Member for Woolwich, West (Mr. Bottomley) on his maiden speech yesterday and to thank him for his reference to Bill Hamling. I personally treasure the fact that when the hon. Member took his seat—which is rather an awesome moment for a new Member after a byelection—just before he read the Oath he turned round to me and expressed sympathy to me on the death of my Parliamentary Private Secretary. I am sure that the hon. Member will have a

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  great welcome in the House, particularly as he expressed himself as desirous of following the standards set in Woolwich, West by my former hon. Friend.
  The debate so far has shown the contrast between the Government, with a clear and courageous policy, and the will and determination to carry it through, and an Opposition with no clear policy to assert. We read—and the right hon. and learned Member for Surrey, East (Sir G. Howe) confirmed—that the Opposition propose not to vote against the Government or the White Paper tonight but that they will then vote against the legislative vehicle which makes the White Paper policy a reality. I have never heard such humbug in my life. I will come to the point about the Opposition's intended vote later in my speech.
  As for the speech made by the right hon. and learned Gentleman, it is a matter of common observation in the House that when an Opposition have no policy or are divided three ways—as are the Conservative Opposition—they usually do only one of two things: either they get preoccupied with picking petty procedural points, as the right hon. and learned Gentleman did, or they get preoccupied and ride off from the lack of policy by attacking personalities. In fact, the right hon. and learned Gentleman spent his whole speech doing both.
  We are talking about consensus and the consent of the nation, and the right hon. and learned Gentleman should realise that one of the biggest problems we have had in helping to reach agreement in a disastrously divided nation is his responsibility for the Industrial Relations Act and his sneering contempt of the House throughout its passage.
  The crisis we are debating—and here I agree to some extent with speeches which have been made, indeed from the Opposition Benches; the world crisis, crisis for Britain—was endemic in 1973. It was in the making even before the decisions of the Middle East oil producers. Already, before the oil crisis, the feverish industrial boom had petered out. Industrial production had reached its peak in the second quarter of 1973. Manufacturing investment, which had never under our predecessors even regained its 1970 peak, was beginning to fall back. The current balance of pay-
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  ments deficit in the fourth quarter was running at an annual rate of some £2,000 million, and that was before the increase in oil prices had hit this country more than marginally.
  As regards inflation and unemployment, in January 1974, when sections of the Conservative Press—and Conservative leadership—were urging an early snap election, the most true blue newspapers at that time were forecasting price increases of 15 per cent. rising to 20 per cent. and heavy unemployment within a few months—so, they pressed, have an election and get back before it all happens. All that was happening before Labour came into power.
  When we became the Government, it was clear that we faced rapidly rising prices—partly through world factors and oil and the commodity boom—but also, as the right hon. and learned Gentleman fairly said yesterday, through the inevitable re-entry problems which follow a period of freeze and statutory control, the anomalies and relativities, and the catching up of those groups who had been left behind, some of them for years. It was also clear at that time that we faced the prospect of sharply rising unemployment, stemming from world inflation, and that our balance of payments was deteriorating sharply.
  These undeniable facts were clearly stated by all the party leaders in the February election and again in the October election. All of us warned about the impact of world prices and what they would mean for inflation and unemployment. All of us—however much we might disagree about the right domestic policy to follow—made clear the nature of the danger the country would face if to these world factors we added further aggravation by actions taken here in our own country. Where we disagreed was on the right policies to avoid that aggravation.
  These warnings were spelled out again and again. At the meeting of Prime Ministers and other party leaders of the Socialist International at Chequers on 30th June last year, I said this:
  "I believe that the nub of the problem—the problem of 1974 and 1975—is this. Over the last year or two, world prices have soared —not only oil but raw materials of manufacturing industries, and of grain, meat and other produce … But the danger for 1975–76 is

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  that, as these outside pressures ease, the inflation problem will become increasingly caused by internal factors—as month by month incomes rise to meet last month's price increases. This is certainly the situation which we in Britain have had to face."
  Throughout the October election I warned, as did the right hon. Member for Sidcup (Mr. Heath), the then Leader of the Opposition, that we were facing the prospect of the worst world depression since the 1930s. All of us emphasised that while in 1974 the world inflation and its inevitable aftermath was caused by world prices, in 1975 the danger would arise mainly from a further aggravation caused by our internal cost structure, from industrial costs reflecting internal incomes settlements.
  While the consequences of world depression have joined with our encouraging export record—our export record is extremely encouraging but I concede that imports have been affected by the world depression—in reducing the balance of payments deficit to a figure well under £500 million in the first half of this year, only a quarter of what it was last year, we have suffered the inevitable consequences both in terms of unemployment and in the rise in costs and prices.
  I believe that the House will be ready, as were the EEC Heads of Government last week, to recognise the gravity and magnitude of the world depression. It was world inflation that we talked about two years ago but it is now world depression. That recognition has confirmed the predictions that we all made last year about this being the worst depression world-wide since the 1930s.
  The five-fold increase in oil prices has enriched some countries and caused strains for many others of us. It has hit hardest all those countries with no oil, with no high priced raw materials, countries needing oil and other imports and unable to pay for them, countries, some of them, through primeval poverty or through natural disasters, such as flood or drought, which are living on the very margin of subsistence, the very margin of life itself.
  What my European Prime Ministerial colleagues expressed so clearly last week —I think that the whole House will agree with this—was that the world has rightly
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  condemned the depression of the 1930s, the cost of which was tens of millions of workers throughout the world losing their jobs, but the consequence of the world prices of today can be the loss of hundreds of thousands of lives in wide areas of Asia and Africa, where starvation was already endemic.
  There has been a considerable easement in world commodity prices over recent months, though not, of course, oil prices. I will not speculate today—and I do not think that anyone else would—either about the possibilities of further oil price increases or on the future movements of commodities, particularly with the uncertainty now surrounding world harvests, where the prospects are for a high yield in North America, drought in Western Europe and scorched crops in the Soviet Union.
  The reductions in commodity prices which have already occurred have begun to be reflected in some of the more important internal indices here, and notably two published last week, the import cost index and the increase in wholesale prices. Both indices are significant in presaging what can happen in future. The import cost index and the increase in wholesale prices show the lowest increase since April 1973, some two and a quarter years ago. Let it be remembered that in April 1973 we had a full 100 per cent. price freeze. The fact that they show the lowest increase since 1973 is encouraging, but the challenge still remains. It is a challenge to Government, to industry, to trade unions and to the whole nation. If world prices continue to ease, we must not, by increased internal costs, reject the prospect of profiting from easier world prices. If they were to worsen again, all the more would we have the obligation to ensure that we do not add to that worsening in the world by harmful actions or harmful attitudes within our own economy. That is the inspiration of the White Paper that the House is being asked to approve tonight.
  I know that right hon. and hon. Members have shown some impatience about the time that was taken before the policy could be announced. I believe that it was right to seek the maximum agreement with the trade union movement in a situation which had so much to deal—not exclusively, but so much—with incomes. The right hon. Member for Sidcup, my

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  predecessor, spent many months in discussion with the TUC in the pursuit of a voluntary policy. He was right to do so. The right hon. Gentleman told the House on many occasions of the number of meetings that he had with the TUC and the number of hours he spent in discussions with it. We, for our part, were not only entitled but duty bound to give whatever time was needed to achieve the aim the right hon. Gentleman set himself.
  Whatever the views of hon. Members on either side of the House—and I hope that we shall sec less of the crabbing attitude that has been displayed as regards what the TUC has done—the decision of the TUC General Council is historic. No less significant has been the increasing rallying to that lead over the past 10 days, including the response of certain unions which had voted against the TUC General Council's policy of a fortnight ago, and of those unions whose attitude at ground level was in doubt. The response of the mineworkers' executive has been clearly backed, as my right hon. and hon. Friends who were with me can confirm, by the support we were given last Saturday by the mineworkers of Durham. The three to one vote of the NUR conference will have been noted by the whole House, as will the response of other unions.
  A vote against the White Paper tonight is a vote against the TUC decision. Still more, it is a clear signal from this House that we do not want the TUC's help and that the House thinks it can do better on its own. In a democracy, no anti-inflation policy can be successful which does not carry the consent of the great majority of those principally affected by it.
  The aim of us all, of Government, the TUC and the CBI—and, I believe, an overwhelming majority in the country—is to get the rate of inflation down to 10 per cent. by the end of the coming pay round, by the late summer or early autumn of next year, and to single figures by the end of next year. The overriding pay limit of £6 which we have set—and the TUC has agreed—is consistent with that target inflation rate. Equally, the achievement of that target is utterly dependent on the limitation of incomes which we have said must be honoured.
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  No other proposals put forward from either side of the House or from any part of the country, however wide-ranging, and regardless of whether they include import controls or controls on movements of capital, can ignore the central fact—indeed, some other proposals would demand even more than the Government's policy, even more than that which the Government are proposing— that they must be buttressed by a comprehensive and tough policy on incomes, and—
  Mr. Heffer: My right hon. Friend has said that if there is a vote against the White Paper it will be a vote against the TUC. Will my right hon. Friend say whether it will be a vote against the 19 who were the majority or the 13 who were in the minority, who themselves were against the Government's position?
  The Prime Minister: I am glad that my hon. Friend has picked up that point. Those who vote against the White Paper tonight will be voting against the TUC. It will be a vote against the TUC General Council. Any hon. Member who decides so to vote will be voting against what was, admittedly, a majority decision. My hon. Friend will have noticed—and I hope that he was gratified—the fact that some of those who voted for the minority have reversed their decision either by conference decision, executive decision or by reconsideration. For example, I believe that USDAW found the proposal that the Government were making to be very different from that which it had been led to believe.
  Therefore, I say again that a vote tonight against the White Paper—I understand that it would be a perfectly honest thing to do, a perfectly fair and reasonable attitude for anyone to take against the background of particular views—will be a vote against the TUC. Let those who vote in that way not again talk about the TUC. Let them not, after voting in that way, talk about what we said in our manifesto about reaching agreement with the TUC and the agreed view of the trade union and political Labour movement. That is what it is about. Hon. Members may disagree with the TUC, but if they vote against the White Paper tonight do not let them pretend that they are safeguarding TUC interests. They will be flying in the face of a previous decision.
  Mr. Ron Thomas: Does my right hon. Friend ask us to accept that it was an agreement in the accepted sense of the word when for a number of weeks the TUC had been told that unless it came to some such agreement statutory controls would be introduced? I am afraid that we see this as a piece of blackmail as far as the TUC is concerned.
  The Prime Minister: My hon. Friend cannot get away with that. He must recognise that the TUC General Council is composed of responsible, adult, mature people with a great deal more experience of trade unions and of life that has my hon. Friend. They are not the sort of people who would be blackmailed. They put forward proposals on their own initiative before the Government made any recommendations on the matter. My hon. Friend may vote against the proposals, but do not let him pretend that he is saving the soul of the TUC, or that he knows better than they.
  Mr. Daniel Awdry: As one is tempted to vote for the Government's White Paper, may I put a question to the right hon. Gentleman? How can the Prime Minister offer any concessions to people, such as myself, who are worried about nationalisation plans and feel that they will spoil the chance of any success for the Government's policy? Is there anything he can offer to people such as myself who are listening to his speech and deciding how to vote tonight?
  The Prime Minister: That is a fair question, and no doubt it is in the minds of those Conservative Members who are considering this matter. I shall be dealing with it a little later. I hope that what I say will be of some help to the hon. Gentleman. I cannot guarantee anything, so I must leave the matter to him to decide for himself.
  We have made clear—and the House and the country should be in no doubt about this—our total commitment and determination to carry this policy through. This is the year of fight back—fight back against inflation and against the steadily, remorselessly rising unemployment figures. This year, as we have all agreed—and I refer to the remarks of the right hon. Lady the Leader of the Opposition about ten days ago—must be used
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  to work out the policies for the period which follows. This year, starting in the public sector, the Government as employer will ensure that all settlements in respect of its employees in the Civil Service, National Health Service and the Armed Forces comply with the pay limits.
  We have discussed with the chairmen of the boards of publicly-owned industries and services the measures for enforcing the limit over that substantial part of the public sector. Both in our meetings with the chairmen and in public announcements and broadcast statements by nationalised industry chairmen, we have had their full, and indeed their enthusiastic, assent for the policy. Nobody realises better than they what are the implications of measures designed to bring down the level of inflation in their predominantly Labour-intensive industries.
  Mr. Hugh Dykes Mr. Hugh Dykes (Harrow, East) rose—
  The Prime Minister: The right hon. and learned Member for Surrey, East (Sir G. Howe) gave way on very few occasions indeed. I have not yet finished the point. Perhaps the hon. Gentleman can intervene a little later. I shall signal to him when I have reached that point.
  The money available to the chairmen of publicly-owned industries will be strictly controlled and there will be not a penny for the payment of increases over the agreed limit. We have made clear to them, as I did in the House, that no money will be made available for excess settlements, whether by subsidies, by permission to borrow, by loading excess costs on the public, or by increased costs or charges.
  I believe that the majority of workers in these industries have understood what the alternative would mean if they secured settlements over the limit. It would mean an inevitable and sharp offsetting cutback in the operations of the public boards, other than incomes. In these predominantly labour-intensive industries this could only mean a loss of jobs. In the coal-mining industry, to which reference has been made, it would mean inhibiting the expenditure which the Government have sanctioned for the sake of saving pits or of making pits economic and viable in already hard-hit coalfields.

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  Yorkshire's wage increases would have been Scotland's pit closure, and that of Wales and other areas, too.
  Mr. Dykes: Now that the chairmen of the nationalised industries are precluded from salary increases because of the stipulations in the White Paper, will the Prime Minister confirm that it will be Government policy—if the Government last that long—to restrain those chairmen from having any increase at all until the operational performance of those industries improves tangibly and significantly?
  The Prime Minister: That is not in the White Paper, nor is it in our policy. Last year we stated on other grounds the Government position in relation to top salaries, including these salaries. I am satisfied—as I am sure are former Conservative Ministers who held responsibility in the nationalised industries in respect of transport, energy and other industries — that those chairmen, appointed by the previous Government or by the present Government, have their hearts in their jobs and are skilled in management. We have to make changes from time to time, and changes might be required, but the hon. Gentleman's suggestion, although the House might like to study it, is not the right way of securing what he has in mind.
  Similarly in local government, the White Paper sets out a stringent system to ensure that local authorities adhere strictly to the Government's policy. Parallel with what is proposed in the new extension of price control for private employers, rate support grant will be withheld from local authorities who exceed the pay limit. In the event of a national pay settlement which exceeds the limit, no grant will be paid on the excess. In the case of an individual authority which breaks the limit, the Government will be taking powers to withhold not just any excess over the £6 but the full amount of the settlement. If an individual local authority seeks to finance an evasion of the limit by manipulation of its capital finance, the Government have made clear that they will use all their existing powers to control, case by case, that authority's borrowing, including access to the capital market.
  Mr. Nigel Lawson: I am grateful to the Prime Minister for giving way.
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  The right hon. Gentleman has been helpful to the House by spelling out some of the consequences to the local authority sector, to nationalised industries and particularly to mining if there is an increase in excess of the limits set in the White Paper. What he has not said, and what the House wants to know, is whether one the consequences will involve bringing in the reserve powers.
  The Prime Minister: Is the hon. Gentleman referring to reserve powers in existing Acts?
  Mr. Lawson: No. Will the other legislation be brought in if the nationalised industries agree to excessive pay increases?
  The Prime Minister: The hon. Gentleman must appreciate that I cannot simultaneously make speeches about local authorities, about public industries and about the private sector. They are matters which should be dealt with later.
  Mr. Lawson Mr. Lawson rose—
  The Prime Minister: Perhaps the hon. Gentleman will contain his soul in patience until a little later. I have given way five times. The right hon. Lady gave way six times, and her right hon. and learned Friend hardly at all.
  Dealing with the local authorities, we have also made clear in the White Paper that the Government will reconsider the scale of the rate support grant provision if local authorities fail to exercise tight control over staff numbers.
  In the private sector my right hon. Friend last night set out in detail how the price control system will operate in support of the White Paper policy. We have also made clear that companies that break the pay limit must not expect selective assistance under the Industry Act. This may appear harsh, but Parliament has voted assistance under the Industry Act—and this is equally true in the case of British Leyland and will also be the case in schemes for industrial modernisation, including those announced in the Budget by my right hon. Friend.
  Parliament clearly intends that such funds should be available specifically to preserve or provide jobs, to encourage modernisation and firms' consequent viability on a competitive basis. The

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  Government believe that it will be inconsistent with these objectives to underwrite income settlements higher than the country can afford. In other words, we do not want to see an alienation of money, designed to help jobs, in fact going to increased salary levels.
  In regard to the private sector, my right hon. Friend the Chancellor of the Exchequer yesterday referred to the powers in the reserve Bill. I have noticed a great deal of interest in this matter among the Opposition. It is a fact that when they have no policy, they take up positions on procedure.
  My right hon. Friend made clear what would be in the Bill in broad terms. He made it absolutely clear, and was right to do so, that while there are a number of queries, as well as discussions with the various interests concerned, such as the CBI and the retail consortia, we cannot finalise these matters, nor would it be right to publish them in legislative form. However, I would reiterate what my right hon. Friend said. If we have to bring in statutory powers, the CBI accepts that it would have to fall only on individual employers and that it would have to be protected against suits for conspiracy. It was then said that we would consider publication. We shall decide that probably in relation to the debate.
  My right hon. Friend has told the House as much as any Government can about legislation which we hope we shall not have to bring in. It is legislation that the Government do not intend to bring in unless it becomes necessary through the breakdown of the policies for which we are asking the support of the House and the support of the Opposition tomorrow.
  Against this clearly defined policy, and the Government's equally clear determination to make it effective—[Interruption.]
  Mr. David Price Mr. David Price (Eastleigh) rose—
  Mr. Deputy Speaker: Order. The Prime Minister is addressing the House.
  The Prime Minister:—we have to set the reactions expressed in this debate from the official Opposition. Their amendment has been moved and it has, of course, been studied by the House.
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  The right hon. Lady yesterday, in a brief philosophical passage—as reported at col. 79 of Hansard—seemed distinctly sceptical about the possibility of success of any incomes policy at all. She set out the problems, I thought perfectly fairly, referring to the problems of the successive phases of an incomes policy—the initial phase; the second phase, when rigidities set in, and anomalies and differentials and all the rest; and then the third phase, when, she said, everything breaks down.
  This was, of course, an instinctive but not uncharacteristic repudiation of her own Government, because that is exactly what happened. We had to deal with all those anomalies, rigidities and hard cases, such as the groups which had been left out for years on end, for example the nurses, and what are now known as the re-entry problems.
  I did not understand from what she said yesterday whether she agreed with her own Government's policy at that time or whether she disagreed with it but kept tactically silent about it.
  Nevertheless, in what she said I think there were one or two important truths. One was that, on the day when the White Paper was published, she stressed as she did again yesterday, the need this year to ensure that enough thought is given to preparing for what she rightly described as the re-entry period. She is obviously right about that. I think also that there was some validity in her three-phase criticism, on which not only the Government but the whole House must be ready with ideas. But the simple fact about her speech yesterday is that she did not spell out any alternative policy whatsoever to what the Government propose.
  When she was referring to these three-phase difficulties, she entirely failed to draw a distinction between an imposed policy, such as that upon which her own Government in the end had to insist, and a voluntary policy such as her Government sought to get but failed to get—a policy which we have secured by agreement, which I think some members of her Government would have dearly liked to get. It is a policy which carries with it the general agreement of the trade union movement, and now, as our policy is becoming increasingly apparent, it has also the strong support of the country.

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  As to her own policies, she was repeatedly challenged by my right hon. Friend the Chancellor of the Exchequer —and, indeed, by the Leader of the Liberal Party—but she had none to put forward yesterday. All she could do, in answer to every challenge she had yesterday, was to plead the fifth amendment and to say that she was only the Leader of the Opposition and that her party did not have to have a policy.
  But her amendment to this motion, and to some extent her speech, centred on her party's ululations about what it regards as our failure to reduce public expenditure. There were also the usual ritual incantations about subsidies and about measures now going through the House, or in another place, or shortly to be brought before the House, on nationalisation and other things in relation to the regeneration of industry, including the extension of the public sector in cases where public funds are committed.
  On public expenditure, I told the right hon. Lady in the debate in May that not only the House but the country would like to have the privilege of being made privy to her secret thoughts about those items of expenditure which ought to be cut. I am disappointed yet again by her response yesterday. I thought we might have had it spelled out more clearly yesterday. I know that the country will also be disappointed.
  Perhaps I could correct one thing that she said yesterday about public expenditure—to the effect that in the major OECD countries there has been
  "no real increase since 1973".—[Official Report, 21st July 1975; Vol. 896, c. 88.]
  That is not true of the USA, and it is above all not true of France and Germany. It is not true in regard to public consumption of any major OECD country—Japan, the USA, France, Germany, Italy and Canada. Apart from that she got it about right. I thought it right, perhaps, to have that statement in its correct setting.
  She welcomes our determination substantially to expand the use of cash limits both with direct Government spending and more widely in the public sector. She agrees that that is good doctrine. In that case, why did not her Government
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  apply that doctrine of cash limits between 1970 and 1974?
  She is against the totality of Government expenditure in general, but, apart from food and housing subsidies, she shows an uncharacteristic coyness about identifying specific reductions to which she would put her name and pledge the authority of her party.
  The House knows that any possible analysis of her proposals here in the House and her speeches outside the House must lead to one simple, incontrovertible conclusion. It is not that she is against public expenditure, whatever she may say. It is that her proposed reductions in expenditure add up to far less than the increased expenditure for which she has so frequently and urgently called, as has her party.
  First, in successive defence debates over the past year her party has consistently opposed the reductions we have made in defence expenditure—more than £600 million over this year and next. On the Social Security Bill her party voted to spend £145 million more, over three years, as a result of its vote on the earnings rule. She talked of the public sector borrowing requirement. Her party added £50 million to £60 million more to the public sector borrowing requirement by its vote last Thursday night.
  Every time we debate food subsidies or housing subsidies her party complains that these subsidies are indiscriminate. I think that on radio or television she asked why the bread and cheese she eats or I eat should be subsidised. On that argument, why should the colour television that she watches and that I watch benefit from the expensive vote her party carried through the House the other day, if she does not believe in these discriminations?
  Yesterday the economies that she specified in non-capital spending were food and housing subsidies. Surely she must realise that food subsidies are important not only in their effect on the Retail Price Index. Still more important, she must know that rising food prices, for whatever reason, are psychologically important in leading to pressure—almost irresistible pressure—for wage claims.
  As for housing subsidies, has she no sense of the psychology of ordinary people? Has she no sense of what would

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  be the impact of rent increases of £1 a week at this time? We stopped the previous Government's rent increases in April and October last year. Had we not done so the results for inflation would have been a great deal worse. In this situation does not she agree with us—I do not suggest that she should necessarily rush in straight away with an answer—that it is right to temper the increases now in prospect after the freeze that we have had for the last 16 months?
  When she dealt with housing on BBC radio the Sunday after the White Paper, she complained that housing subsidies had doubled. That, she said,
  "really is ridiculous. It is not as if the housing problem is any better now than it was two years ago."
  Is housing no better than two years ago? In the public sector there have been 34,000 more starts in 1974 than in 1973; 39,000 more houses in new contracts approved; over 12,000 new houses, standing unsold because of mortgage famine, acquired from private developers, since we came into office, and 23,000 existing houses, many of them empty, acquired by local authorities from private owners. In the first five months of this year, starts were up by 7 per cent., completions were up by 26 per cent., and houses in new contracts let by local authorities were up by 19 per cent. compared with the same period for 1974. Yet the right hon. Lady says that there are no improvements. I could give her the figures in the private sector, too.
  I am surprised that in this debate the right hon. Lady refers to housing at all. In her General Election bribe last October, she said that she would reduce mortgage interest rates, which her Government had not succeeded in bringing down, from 11 per cent. to 9½ per cent. This would have cost £180 million a year. The estimate of the building societies was £300 million a year, but I settle for the lower figure.
  That was not all. She said that she would abolish rates and transfer teachers' salaries to the Exchequer. That would have cost the Exchequer £1,500 million. Oh, yes, it would have fallen on the taxpayer—the taxpayer who, the right hon. Lady so often says, has been pressed against the utter upper limit of taxable capacity.
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  Then again, in two elections the right hon. Lady's party was committed to her Government's tax credit scheme, with £2,300 million to be handed out, but we never heard how it was to be paid for.
  These are the increased expenditures to which the right hon. Lady is committed, to which her Government were committed and to which her party is committed: defence, plus £300 million a year; mortgage interest rates, £180 million; rates, £1,500 million; the tax credit scheme, £2,300 million—getting on for £3,000 million of increased expenditure, excluding the abolition of rates. All this and Maplin, too, and the Channel Tunnel, rail-link and all—and the Opposition talk about cutting Government expenditure. On the right hon. Lady's own commitments, on her own speeches, on her own election bribes, she starts with an increased expenditure of thousands of millions of pounds before she ever begins to tell us what she would cut.
  But I must ask the right hon. Lady, since she referred to housing yesterday, how she thinks her election housing proposal would help to create a more united country? She knows that there are well over 5 million families living in local authority and new town houses—all kinds of people, and not just the old and the disabled. During the last election campaign she said that she would like to see the end of council housing apart from local authority housing for old-age pensioners, slum clearance schemes and special cases.
  Does the right hon. Lady seriously suggest that we would have had any chance of getting the co-operation of millions of workers in our nationalised industries and services on the basis of condemning the old, the disabled and the disadvantaged to live out their lives in ghettos? [HON. MEMBERS: "Come off it."] That is what the right hon. Lady proposed—as Nye Bevan once described the policy of a previous Tory leader, housing estates exclusively populated by old-age pensioners watching the funerals of their neighbours through lace curtains. That is what the right hon. Lady proposed during the last election campaign, and I do not believe that any of the Opposition Members who are bellowing now dissociated himself from it at the time.
  An increasing proportion of public expenditure over successive Governments

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  has been in the area of local authorities. The White Paper sets out the policy. My right hon. Friend yesterday and I today have said plainly what this means. We have not yet heard in detail from the right hon. Lady the views of the Conservative Party. I think that the Opposition agree substantially with what I have said about local authorities, but we have not had this in any detail.
  I hope to spend only a minute replying to the right hon. Lady's philosophy on public ownership in relation to public expenditure. As I understand it, she would like to halt the Government's legislation on North Sea oil and the National Enterprise Board and, of course, the Scottish and Welsh Development Agencies. She should go to Scotland and Wales and tell them about it. She would also like to halt the Community Land Bill.
  Does not the right hon. Lady realise the simple economic distinction between expenditure which involves a call on resources and expenditure which involves the simple transfer of assets between one ownership and another? As for Government participation in North Sea oil, the economic effect is exactly the same whether multinational oil companies raise the money by borrowing on the market or, where Government participation involves financing part of the capital cost, whether the Government borrow the same money on that same market. The effects on resources are the same. I grant that the effect is not the same in respect of the public sector borrowing requirement. But, in terms of resources—and inflation is a matter of a call on resources—a transfer of assets has no effect at all. That is why these arguments are fallacious.
  I grant that the effect on the public sector borrowing requirement is not the same—
  Sir G. Howe: The right hon. Gentleman is returning again to his half-presentation of this fact. In his own public expenditure White Paper, it is stated that it is wrong to look at these matters simply in demand terms and to look at them simply because they have a low direct demand content. It goes on:
  "The indirect effects arising from the financing of such expenditure will also need to be carefully considered",
  and that we
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  "… must pay full regard not only to their direct demand on resources, but also to their implications for the money supply, interest rates, and general financial conditions in the economy."
  That is why we urge him to take back this plan.
  The Prime Minister: As the right hon. and learned Gentleman will have noticed, I was able to complete the quotation that he had in mind. I have stressed that it is important to consider the resources expenditure. That is the main feature in inflation and, in his quotation, the right hon. and learned Gentleman picked up that point. But that is not the only one. I have just said that it was not the only one. I have referred twice to the public sector borrowing requirement, to the financial operations involved and the financial market conditions, which is what the right hon. and learned Gentleman was dredging out of that document.
  If that is the argument which the Opposition intend to press—that all that matters is the total and not the increase —they could easily make a fictitious, phantom saving in Government expenditure and in public sector borrowing by, for example, handing over the whole hospital building programme to a private organisation. That would save a fictitious amount of money. They could hand it over to Aims of Industry, or whatever alias it goes under these days. They could save this money for bookkeeping purposes, which is what concerns them, if the whole school building programme were undertaken by a consortium of private builders, who would then have to borrow from the market. Local authorities have to borrow. There is no economic distinction in real resource terms.
  I am still dealing with the public sector. Does the right hon. Lady object to the public expenditure involved in her own Government's Industry Bill, which we are using as her Government did? Everything that she said about this was equally a condemnation of her own Government's Industry Bill. Or is she simply saying that, when money is paid out to help a firm to maintain employment, we should forgo any suggestion that, where Government money goes, so should go a corresponding degree of participation, control and share in the ultimate profits?

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  So I come to the question of the vote tonight. I am still not clear, having listened to the right hon. and learned Gentleman, how the Opposition will vote tonight, still less how they will vote tomorrow. I am not sure that they are all that clear themselves. But I hope that the right hon. Lady will allow me to plead with her. I ask her to forget the monetarists for a moment, if she can. I ask her to forget the picking over of detail and the procedural niceties. I suggest that, because we are all interested in the maintenance of democray, she should not pin the future of her party on monetarism. It is only a reaction from her Government's monetary irresponsibility in the early 1970s. The remorse which follows a hang-over is no basis for a life-time of abstention, still less is it a basis for abstaining tonight.
  After making it clear that the right hon. Lady is still running away—that is what the right hon. and learned Gentleman made clear—from the decision "Yes" or "No" to the White Paper—and the Opposition will have to decide in about five hours—we read this morning that, following some extraordinary psychological phenomenon in the Shadow Cabinet room last night—it must have been collective —the right hon. Lady now intends, not having opposed the White Paper, to vote against the legislative vehicle necessary to support the White Paper policy—the Bill now before the House.
  That is incredible. I cannot believe it. I read it in The Times, in The Telegraph and in a motion on the Order Paper—and that was when I began to believe it. This means that they will abstain on the end but tomorrow night will reject the means. Their reasons, apparently, are that the White Paper cannot now be amended. This is important. I want to deal with the matter seriously, because I am sure that the right hon. Lady would like to find a way out—if not three ways out, for all the sections of her party. Apparently their anxiety is that the White Paper cannot be amended. But nor could the Pay Code under their own legislation be amended.
  The legislation now before the House, apart from the specific provisions for local authorities, and the amendment of the Price Code, which was described by my right hon. Friend last night, relieves em-
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  ployers of certain obligations. The Opposition's motion objects to the relief of employers of certain obligations, but this is necessary for the employers if this policy is to work. The CBI wants it but the right hon. Lady in her motion says that they should not have it. I hope that she will think again.
  Their other midnight objection—I understand that they put this motion down after midnight—is that it will be a Minister not a judge who will construe the measure before the House.
  Under the Pay Code that job was laid on an appointed chairman of the Pay Board together with his members. It was not laid even on a Minister elected and accountable to this House. It was not under the control—we certainly did not support it—of a Minister who had been elected to anything or by anybody at any time. We saw this, as we warned, in the most tragic farce at the end of 1973, when certainly the then Secretary of State for Employment, as we think, would have wished the Code to be interpreted in a way which would have ended the coalmining dispute by the inclusion of waiting time and so on. That should have been done at the end of December, but whatever the Secretary of State for Employment wanted, whatever the House wanted and whatever everybody else wanted, it was the Pay Board which frustrated the clear wishes of at least one Minister and, I believe, of the whole House. That was why we had the three-day week for another two months. I submit that it is right that if a Minister is to be responsible, he should be responsible and accountable to this House.
  Therefore, in conclusion I say to the right hon. Lady that now, as I hope, the Shadow Cabinet have awakened to what they did last night—some day there will be a mass psychological explanation of what happened—they must realise the gravity of their proposed course of action. They know that the vast majority of the people in this country, of all parties, trade unionists, and non-trade unionists, desperately want to see the Government's White Paper policy succeed.
  By one single, ill-considered and perhaps wilful act in pursuit of some procedural objective with which they are concerned, the right hon. Lady and her colleagues are, by the motion on the Order Paper, telling the country that they

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  know better and that if their manoeuvre as presented on the Order Paper succeeds, they will frustrate our policy, which is supported by almost the entire nation, by denying it the necessary legislative support. That is why I describe as utter humbug some of the things said by the right hon. and learned Member for Surrey, East about how they will support the Government. They cannot say that and still let the motion remain on the Order Paper. I call on the right hon. Lady to think again and I equally call on the House, in the Division Lobby tonight, to accord to the Government White Paper the same measure of support and resolve as the British people all over the country themselves demand.
  5.14 p.m.
  Mr. Edward Heath: I have not sought to intervene in an economic debate in the House since the one on 18th December 1974 which, no doubt, many right hon. and hon. Gentlemen will remember. I should have thought it a matter of regret for the whole House that the forecasts then made about the economic situation of this country have come all too true, and perhaps much more quickly than any of us thought at the time.
  I have no desire tonight to go over the past. This was dealt with yesterday very effectively by my right hon. Friend the Leader of the Opposition and again today by my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe). I wish to bring the House back to the central issue of this two-day debate and that is the question, is it necessary for this Government to embark upon the incomes policy which is set out in the White Paper? That is, I believe, for the whole House and for the country the crucial issue with which we are now confronted. My answer to it is a quite unequivocal "Yes".
  I believe it is essential that this Government should now pursue the incomes policy set out in the White Paper. I do not wish to haggle about the definition of it—a voluntary policy backed by statutory powers. However, if that is the case, in a voluntary policy in a free society anyone, be he an employer or trade unionist, has the freedom and the opportunity not to follow it. It therefore becomes essential, if the policy is to hold
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  good, that there should be sanctions behind it.
  This is where the Prime Minister should not make it more difficult than is necessary for those who wish to support his policy to do so. To say that the Bill is prepared and not to bring it to the House is indefensible. More than that, not to give any reason for not bringing it to the House is offensive to it. If the Bill is not prepared and not ready I for one will quite understand, because we have had to handle the difficulties concerning this matter ourselves: but let the Prime Minister or the Chancellor tell the House so quite frankly. At any rate we could then judge the Government on their incompetence rather than suspect their motives. On the whole, I have always believed the former to be better than the latter.
  I ask the Prime Minister, or whomsoever winds up the debate, to clear the air on this matter and not to make it more difficult. If a voluntary policy of the kind set out is to succeed, we must know the sanctions which are to lie behind it. With the House due to rise for the Summer Recess it is intolerable that one should be asked to accept that people should become liable to penalties retrospectively to 1st August when the legislation has not been seen and not been passed. I must ask the Prime Minister and the Cabinet to think further about this matter.
  The Prime Minister: The right hon. Gentleman is being helpful. He may not have been present at Question Time. I was asked that particular question, and I said that there was no question of it.
  Mr. Heath: If the Prime Minister is saying that there is no question of retrospection of any kind—
  The Prime Minister: I was asked exactly the same question and I gave the answer that there was no question of it. I was asked exactly the same question as the right hon. Gentleman has just asked.
  Mr. Heath: That clears the air on the question of retrospection, but it does not remove the offence to the House of not presenting the Bill or, alternatively, not saying why it has not been presented today.
  One sanction announced by the Secretary of State for Industry is that the

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  chairmen of the nationalised industry boards wil be sacked. The present Secretary of State for Industry has the fewest chairmen of nationalised boards under his influence. As I recall it, he has only the Chairman of the British Steel Corporation, the one nationalised industry chairman who has attempted to put his industry in order by removing overmanning, and has been prevented from doing so. It seems to me that even this threat to a chairman of a nationalised industry—I have seen the problems with which those industries are consistently beset—is almost an incitement to bust the policy. I should have thought that any chairman of a nationalised board still in his senses, given this opportunity, would offer his workers at least £10 a week, get the sack, go off with a golden handshake and live happily ever after. I accept that this is not the intention of the Secretary of State for Industry.
  Why have I come to this conclusion about the Government's incomes policy? The reason is that, faced with inflation now at 26 per cent. a month on a year ago and still rising—I am told that it is 48 per cent. a month on three months ago; faced with the rising unemployment, which may now be over a million, according to official statistics; faced with the continuing depreciation of sterling, some of which may be acceptable to the Chancellor because of its effect on export prices but unacceptable because of its effect on foodstuffs and raw materials; faced with a Budget deficit which may be as much as £12 billion, certainly £9 billion or more; faced with the difficulties of raising this money either at home or by continuing loans overseas; faced with the possibility that at any rate the supply of loans will begin to dry up and that some may possibly be withdrawn—it is inevitable and inescapable that the Government must take this action. No other solution I have seen proposed can possibly act in time. Again, I do not wish to go over the past, the reason why the time has been wasted. But no other solution could act in time.
  Two possible solutions, broadly speaking, have been put forward. One was put forward from the benches below the Gangway, but even those who are most enthusiastic for it would not say that it would deal with our present inflationary
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  situation. It might over the longer term transform the nature of our economy. Indeed, many of us believe that it would act greatly to the detriment of the freedom of most people in this country. However, I do not believe that it will deal with our immediate inflationary problems.
  Alternatively, there are those who say that by budgetary and monetary measures alone we can succeed, but those who have most propounded this doctrine are now saying that the level of inflation is such, and inflationary expectations are so high, that they do not now believe that purely monetary policies can deal with the situation.
  What I regret in so many ways is that those who wish to pursue monetary policies and public ownership have sought to elevate those matters to a doctrinal significance which it requires a person of almost Papal infallibility to handle. It is unlike the British House of Commons or people, known for their pragmatic approach, to elevate a particular policy to a doctrinal level of that kind. We shall be able to deal with this economy only if we accept that monetary policy has an important purpose and that there are areas of public ownership which there is now little chance of reversing. Let us accept both those matters without elevating them to that level which makes it impossible to carry on what I believe to be a correct, balanced policy for this country. Neither of these solutions will in any event deal with the national crisis which we face.
  I do not wish to go into detail on other parts of the White Paper. I say to the Prime Minister that I am sorry that, with his experience of the 1960s, the White Paper gives so little impression that the lessons of incomes policy and its handling have been learned. It may be that with further discussions these matters can be adjusted, but there are many lessons to be learned.
  There is also the question of local government expenditure. In our experience, that was the biggest loophole for inflation in the years 1972 to 1974. In my view, the steps proposed in the White Paper go part of the way, but they still leave a massive loophole for local authorities to indulge in expenditure which is then put on the rates without grants.
  One of my reflections is that so many of the classic solutions of our institutions

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  today no longer work as effectively as they once did, if in fact they did. The sanctions on local authorities for over-expenditure are, to say the least, slow, and certainly do not have the speed to catch up with inflation. With the mixed composition of local authorities, very few sanctions will deal drastically with local government expenditure unless pressure is put upon them. I fear that these steps, although steps forward regarding local government and its financial control, but not, local councillors would say, its freedom, will not be sufficient to deal with this loophole in inflation.
  I should like to emphasise what, I believe, are three dangers to the policy of the Prime Minister and the Chancellor of the Exchequer.
  First, the Prime Minister said that the policy can function only with consent. With that I agree. I have said that I do not wish to go into the past. All I would say is that, regarding the incomes policy of 1972–74, in the freeze and in stages 2 and 3, more than 10 million trade unionists accepted and acquiesced in it. We were challenged by only one union. Consent is necessary, but it is necessary over a far wider area than just that of trade unions, the CBI and the Government. It is necessary over the great majority of people in this country who do not belong to trade unions or take part in CBI activities. They represent very large numbers indeed.
  Consent is also required of this House. I ask the Prime Minister to remember this, because there are many things which can be done to allow the House to speak with a more united voice than it has in the past. I say, just as much to hon. Gentlemen below the Gangway, with their views, as to some hon. Members of my own party, who are, perhaps, further to the Right wing than myself with the views which they honestly hold, that it is vital that out of this debate today should go to the nation—a nation faced with crisis—the view that we believe that this policy ought to have consent. After that we can start discussing the details and getting them more suitable, acceptable and adaptable than they seem to be at the moment.
  Secondly, what this country faces today in this crisis—everybody has in general
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  said this—is a reduction in its standard of living, but it has never been brought home to the people of this country what that reduction in living standards will be. At the weekend the right hon. Member for Lanark (Mrs. Hart), who formerly held ministerial office, said that she believed that it would be 9 per cent. It depends whether we make the calculation on overseas loans, on the balance of payments, or on Government deficit borrowing. Whichever it is, it must be between 5 per cent. and 10 per cent. That is a substantial reduction in the standard of living and an enormous amount to demand of the people of this country. But they should be told what the position is.
  I believe that we can then consider further how the burdens are to be borne, who can best bear them, and who should be helped. That becomes a basis for a sound economic and social policy. Therefore, I ask the Prime Minister and his colleagues to tell the nation facing a crisis precisely what is before it.
  What is the reason? Part of the reason is that we are seeing a massive transfer of resources from each country of the Western world to the oil-producing countries. That means that we cannot have those resources for our own standard of living. Of course, there is recycling, but that is no permanent answer. Unless the economy is strong, recycling cannot be maintained. Therefore, it is vital to point out that that is one of the reasons, and that it will go on.
  For too long—perhaps over 30 years—we have seen that the payments that we make to ourselves are greater than our production of resources to meet them. At the moment our production is stagnant. The gap between our general production in the second quarter of 1973 and the first quarter of 1975 has widened by 51 per cent. In manufacturing industry it has widened by 9½ per cent. That is the capacity not being used. This is the worsening position which we see in our manufacturing industry. It is another reason why we cannot maintain our present standard of living. I firmly believe that, till the country is told this graphically, and sees what the situation is, we shall not get the response which is absolutely necessary for our survival.
  Thirdly, the steps being taken by the Chancellor on the wages front will not

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  deal with inflation. The public have a general impression that £6 a week is equivalent to 10 per cent. across the board and that there will be 10 per cent. inflation. The Chancellor may be right when he gets to the end of the period, but those who make settlements in the autumn will find a continuous and rapid rise in prices. All this is in the pipeline as a result of the wage arrangements of the last year. No price controls can stop them except by bankrupting the firms concerned.
  This point has not got though to people. The danger is that, having accepted £6 a week as a settlement, they will find early in the new year that the rise in prices has gone past that settlement and they will then turn on the Government, and, indeed, on this House, and say that they were misled by the arrangement which was made. That is not to say that they will not accept it if it is explained to them now at the beginning as being essential for the survival of our economy.
  Mr. Healey: I think that the right lion. Gentleman was present when I spoke yesterday. I am sure that he will agree that I spelt out in great detail that the rate of inflation year on year was bound to increase for some months. Because of the increases in the pipeline and the low base in the third quarter of last year the real benefit from the lower rate of wage increases will not begin till next year. It will take up to six months for that benefit to come through. I think the right hon. Gentleman will agree that I made that point very clearly yesterday. However, I agree with the point he is now making.
  Mr. Heath: The Chancellor of the Exchequer certainly said that in his speech. I recollect it clearly, but that is not what the people understand, and they do not recognise what "month on month over the year" means. By January the rate will be coming down, but they will find postal charges and national industry charges going up. Let us remember that a £6 a week wage increase for nationalised industry workers will cost £600 million and for local government workers the cost will be £900 million. This money has to be found somewhere. With the decreasing production in industry come
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  higher unit costs, and these also have to be taken care of somehow. The Chancellor of the Exchequer also mentioned the depreciation of sterling and this will mean that prices continue to rise. It is vital that all this should be made clear now.
  My third point is that unemployment will continue to rise very substantially. OECD reports are based on information provided by Government Departments, although the information may often be unknown to Ministers, and today's report states that, even on the best projections, unemployment will reach 1½ million next year.
  Mr. Healey: I think I should correct the right hon. Gentleman. The report projects a figure of 1¼ million by the middle of next year.
  Mr. Heath: I accept that. The figure is much higher than anybody has been told before, certainly by the Government.
  The Government adhere to the position that these forecasts are not made, but in our situation of crisis the country should be told what is going to happen to unemployment. I believe it will go higher than the projected figures. Some people say that, if the present figures are analysed, they show that not all the people are unemployed, but I do not share that view. What is, however, true is that very large numbers of people are kept on the payroll when they are not economically productive. As the Price Code bears harder on employers they will have no alternative but to stand off these people.
  If the country is told that unemployment will, as I believe, rise higher than the current projections, and that the £6 a week pay limit will not stop that from happening, we shall have a better chance of the country's understanding the situation and at least tolerating it for a period till it can be put right. Perhaps in the 1920s unemployment was effective in dealing with wage levels, but it is far less effective now, and unemployment is less acceptable to people than it was in the 1920s and 1930s.
  Mr. Jeremy Thorpe: OECD says the figure is 1½ million. The Chancellor is wrong.
  Mr. Heath: If the Chancellor admits it, it would not be the first time he has been wrong. I always check the accuracy of my figures carefully.
  My anxiety is that workers on the shop floor today are not prepared to see unemployment rising to what they would describe as unacceptable levels. They expect our institutions and economic system to deal with the matter.
  I must warn my hon. and right hon. Friends that there is a great danger to free enterprise here. We may see those on the shop floor turning on free enterprise and saying that the system is not capable of providing employment for those who want it. Hon. Members below the Gangway will be the first to play on this, and it would not surprise me to see the new Secretary of State for Energy playing a prominent part, because it is his honest belief that employment cannot be provided by private enterprise. He would be at their head. This would be a grave danger to this country and to democracy. It is not the fault of private enterprise. If, as the Prime Minister says, he believes in a mixed economy it is time he created the conditions to ensure the survival of a mixed economy.
  I urge the Prime Minister to give attention to these three aspects of his policy with great speed. In part, it is a matter of communication—but who am I to talk about communication? But till the nation is asked to recognise these facts in all their stark horror we shall not get a response.
  The Chancellor of the Exchequer said he was now thinking in terms of several years for working out what should happen. Nobody who has had any experience in Government could possibly want an incomes policy laid down by the Government with statutory backing. All the difficulties have been mentioned by my right hon. Friend the Leader of the Opposition.
  Of course, there are unfairnesses, but I must say that they are not as bad as the unfairnesses of roaring inflation. To those who talk of free wage negotiations I say that many of the unfairnesses to which the Prime Minister alluded stem from free wage negotiations. These have also been elevated to a doctrine which cannot be maintained. Those below the Gangway will be the first to insist on wage councils,
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  but they were established by legislation by the 1945 Labour Government following on the policies of Mr. Ernest Bevin. Those below the Gangway are also the first to ask for a minimum wage policy, backing up the TUC, but how can we have that except by Government intervention and legislation? Let us not elevate this to a great doctrine either.
  Anyone who has been in Government thinks of the hours spent by officials, Cabinet committees and the Cabinet itself on settling the whole approach to a statutory pay and prices policy and all that arises from it. Some may want such a policy, but I would never want it for a moment, if it could possibly be avoided. I hope the right hon. Gentlemen on the Government Front Bench will agree with me.
  The Chancellor of the Exchequer and the Prime Minister ought to ask themselves why we have never been able to run our economy at a reasonable rate in the last 30 years without crises of this kind. The fundamental answer is that this is an unbalanced economy in many ways—regionally, for one, and in the developing power of trade unions, for another. The whole problem of what part the Government should play in a modern, complex society like our own is probably the most searching we now face. Our policy now should he concentrated on turning our economy into one with reasonable balance through its distribution regionally, or through wealth, trade union power, management expertise and so on, in the same way, broadly, as the economy of the Federal Republic of Germany is balanced today. That is how we can get away from statutory or voluntary policies or price controls of this kind. That is the way a free and democratic society ought to move.
  Looking back on the referendum campaign, one thing stands out clearly. There were many people, probably from both sides, who had previously played no part in our institutions. Suddenly they felt they had a purpose to fulfil and they did it with enormous skill and enthusiasm. I believe they ought to be mobilised in the general battle against inflation, and that is what I mean by obtaining a wider consent than that of trade unions or the CBI.
  The other thing which emerged from the campaign was that, although in the

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  beginning there were all the detailed arguments, what finally settled the issue was not the niceties of the renegotiations and little differences here and there, because in the last ten days or a fortnight all that dropped out of the public discussion. What happened was that the public recognised this as a big issue which, perhaps, might not affect them so much as it would affect their children and, even more, their grandchildren. It was one of the highest issues, because it involved the peace of the European Continent and the means of getting prosperity for its people; and when that issue was put to the people they responded. Who on earth thought that there would be a 66 per cent. poll? How on earth could it have been achieved had the people not responded to the big issue of the day?
  The issue which we have been debating this week is just such a big issue, the major issue of peace time since 1931. It requires to be lifted to a level at which people can see that the future of their whole standard of living is at stake. For that purpose there will be a sacrifice which will have to be fairly borne. It will have to be a heavy sacrifice for a period till we can start moving forward again. The responsibility lies on this House to show the nation that this is the issue, and that it is to this issue that it can respond.
  Hon. Members: Hear, hear.
  Mr. William Hamilton: Come back, Ted. All is forgiven.
  5.41 p.m.
  Mr. John Mendelson: It is appropriate that the first back bencher who is called to speak after the right hon Member for Sidcup (Mr. Heath) should with care and some modesty say that he has been present on an historic occasion. This is the first speech that the right hon. Gentleman has made on domestic economic policy since he gave up the office of Prime Minister, and it was his first opportunity to put forward his ideas, not as the official spokesman for Her Majesty's Government but as a Member of the House of Commons. He has shown a good example of the democracy of the House of Commons in the way in which he was heard and the impact which he has made.
  Just as he did not deal with the past and dwell on the details of old disagreements, so the occasion requires those who
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  speak after him to concentrate on the task in hand and to deal immediately with the ideas and proposals that the Government have put before the House, reflecting on what the right hon. Gentleman said. That does not mean that one necessarily accepts all the analyses that he has made of the past, where he dealt with the past. There will be other opportunities to continue the critical examination of the part the right hon. Gentleman played in the history of the last seven years when an incomes policy was part of our public debate.
  The Government's proposals contain one element on which I wish to commend the Government. I am conscious that on this occasion I do not carry the full support of my hon. and right hon. Friends who over the last seven years have agreed with me on these matters. I believe that the Government have kept close to the TUC and have taken the counsel of the trade union movement over the last year. I believe that these consultations have been good for the Government and good for the country. The result of the discussions is to be seen in the proposals which have the support of some leaders of the trade union movement who put forward such propositions before they constituted Government policy. These are simple facts which have not yet been put on the record by any back bencher so far in the debate.
  It is to the credit of the trade union movement that at some point over the last six months the leader of the Transport and General Workers' Union, the General Secretary of the National Union of Mineworkers and other trade union leaders, on their own initiative, looking at the economic situation and analysing the rate at which inflation was advancing, themselves started to put forward a number of propositions of how the country should deal with the situation.
  It is the duty of anybody, particularly my hon. Friends, to start from that proposition if history is to be properly recorded. That is not something to sneer at. No policy in industry is worth the paper it is written on unless it has the broad consent of those who work in industry. It does not matter what sort of policy is advanced. If it is to be carried through—and I want to link this point later with some more critical

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  remarks I shall say about the Government's proposals—it must have the support of the work people or it will not succeed.
  It is often said that the view of the trade union movement is not important in consideration of a Government's foreign policy, whether that policy applies to Vietnam or some other far-off place. What of it if a lot of people working in industry do not agree with a particular aspect of foreign policy? It is suggested that perhaps the Government and the House of Commons know better, anyway. But no industrial policy can continue for 12 months without the support and active co-operation of the people who work in industry. The policy simply comes apart in the Government's hands.
  It is possible that in the later stages of the capitalist economic system a rate of inflation of perhaps up to 9 per cent. is acceptable and containable. Economists in Britain and the United States have even maintained over the last 25 years that with a falling rate of profit a provocative level of inflation of 5, 6 or 7 per cent. is necessary to make the capitalist system work. It is profoundly true, however, that no Government can sit idly by and let a situation continue in which inflation is running at perhaps 30 per cent. That situation hits hardest those who can least afford to bear it.
  When those who earn wages and salaries or who draw pensions, whether retirement, widow or disability pensions, find the money in their hand is suddenly worth 30 per cent. less than they expect, a corrosive, destructive element creeps in to destroy the social cohesion of the community and present a profound danger to any kind of social advance and reform.
  People frightened by such a level of inflation do not listen to the proposals of Socialist theoreticians to my hon. Friends or to me. They begin to wish for strong men who bring quick, immediate solutions, who lead them to panaceas, who do away with the slow parliamentary process of reform and bring sudden solutions that are hostile to Socialism and parliamentary democracy. Although dangers will be involved, those are the implied dangers of a rate of inflation of 25 per cent to
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  30 per cent. Any analysis that does not begin from that starting point is blind to the political dangers that such a rate of inflation brings with it and brings about.
  Having justified to my satisfaction the need for action, I turn to the kind of action that the Government have taken. The Opposition are profoundly misguided in making such a fuss about what they call compulsory powers and whether Bills are produced at one time or another. If they agree—as by their silence some Conservative Members seem to agree—that the situation is as serious as I have described, by blowing up this disagreement over the production of certain statutory proposals into a major argument of crisis proportions they are behaving in a rather small and petty way.
  The Opposition should understand that there has been an argument within the Government over this. They should also understand that the Government cannot say to the trade union movement, "We are proposing, in response in part to some of the ideas proposed by some of your leaders, a voluntary policy", and then, if the trade unions agree that there should be a voluntary policy, at the same time be so appallingly idiotic as to produce a set of proposals, bang them on the table and say, "Hey, voluntary policy here, voluntary there, but this is what you will get if we cannot agree on a policy". A Government would be out of their senses if, in such a situation, they decided to rush in and produce proposals which at present they do not want to implement.
  What is wrong with not producing a Bill that we shall not be asked to pass? It is right not to introduce a Bill that the House of Commons will not be asked to pass. If we were facing a situation in which the Government were to say "We shall ask you anyhow to pass it", we should have reason for complaint. As it is, we have no reason for complaint on that score.
  Mr. Victor Goodhew: Will the hon. Gentleman give way?
  Mr. Mendelson: I do not want to give way. Other hon. Members have had to answer many questions and, therefore, many hon. Members will not have a chance to speak. My speech will not be as prolonged as some other speeches.

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  I turn to my third and penultimate contribution to the discussion. It links with what I call my more critical views about the Government's proposals. I profoundly believe that the White Paper and the Government's position on price control is wholly unsatisfactory. I urge them to reconsider the whole position. From recent discussions with members of the trade union movement—which members of the Government must have also had—I am profoundly convinced that with the support of the Trades Union Congress and the support of many individual active trade unionists, this policy will be implemented. If it is found that because of the controlled price rises, brought about by the many reasons that have been rehearsed in this debate, there is a further increase of 25 per cent. by December or January in the level of prices, particularly in those expenditure types which are essential to every working-class household, lower-middle-class home and many middle-class homes where people are living on small margins—it is not a matter that affects only the industrial working class—the whole policy will come apart in the Government's hands.
  Whereas there is now a good and reasonable case to be made for people in the mining areas and in the various industrial districts of the United Kingdom—which I fully support and am prepared to argue up and down my part of the country—it will not be possible nor would it be right, to say to working-class people, many of whom will be on average and not high working-class incomes, "In spite of the fact that there has been this large, further rise in prices, you must go on accepting a very small increase in your wages". What would have been a justifiable policy would have turned into the opposite. Those who support the policy because they are in favour of a reduction by 15 per cent. to 20 per cent. in working-class living standards had better come clean if that is what they want. I shall not support such a policy.
  If, by the end of the year and the beginning of next year, such a reduction in the standard of living for working people comes about, my support for this policy will cease publicly and in this House for the reasons I have given. Many people in the trade union and Labour movement will take the same view. Therefore, I
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  say frankly to the Government that the explanations given so far by both my right hon. Friend the Chancellor and my right hon. Friend the Secretary of State for Prices and Consumer Protection are unsatisfactory and unconvincing.
  As some of my colleagues who were with me on a parliamentary visit to France recently will testify, the French Government have found it possible to select ten essential items that are important to the average family and have imposed a price freeze on them. It is not true to say, as the CBI have argued, that all firms that would be involved are in such a poor position that they could not afford it. Nor could it be argued—this brings me to my last point—that these firms in the past have used the profits they have made for further investment. That is a propaganda argument which they have invented. I wish they had, but they have not. However, where the investment argument holds true, it has more profound implications for the Government.
  As the former Prime Minister, the right hon. Member for Sidcup, knows very well, the Government have an uphill task with regard to investment. In spite of the fact that some of the firms would have enough to invest and are reluctant to do so, there will be others that do not have the necessary capital. In the early summer of 1973 the right hon. Gentleman in an article in the Director, which reprinted an address he had given to the Institute of Directors, chided British industry and told them "You told us that the rate of taxation was too high. I have reduced it. You told us that there was not enough money left to you for investment. I have seen that there was enough money left to you for investment, and yet you were not prepared to invest". The right hon. Gentleman is on record out of his own mouth as the chief critic of British industry, saying that it did not do the job for the nation.
  The Government have no right to adopt a one-sided policy of suspending the right to free collective bargaining over the next year if at the same time they shirk the task of also doing something about investment. The Government have a perfectly moral right and duty to argue for control over institutions that accumulate a great deal of capital but refuse to invest, and instead spend their money on speculative buying of property

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  abroad with money earned in this country—instead of fulfilling their moral and economic obligations to the country in which they earn the money. In a year in which we take some control over the collective bargaining freedom of our trade unions, we have a right to take control of some of the investment capital of British financial institutions. One has only to go to Hamburg, Paris, or Brussels to appreciate that the British property speculator is a well-known personality over there.
  If the Government have the courage of their convictions, they ought forthwith to introduce measures backed by legislation, without waiting for next year or the year thereafter—legislation which is already to some extent well advanced in the minds and the research laboratory of the Labour Party. The Government ought to work that up into proper legislative proposals and to produce in double quick time a body of legislation which would allow them to direct investment where it is needed for the nation.
  Mr. Julian Amery: Does not the hon. Gentleman realise that in the present short-term crisis confronting the Government they will be basing all their efforts on persuading the public and the institutions to buy gilts to help them finance the borrowing requirement?
  Mr. Mendelson: I have already said that the first task—this was obvious from the way in which I used the first 10 minutes of my speech—is to give support to the proposals that the trade union movement and the Government have worked out together and that I would do so. I said that I would also do that in the months that lie ahead, but that unless something drastic is done about price control and, secondly, unless we deal with the problem of investment—which the right hon. Member for Sidcup also identified as one of the decisive weaknesses of our economy—this policy will not produce the desired result in itself. Therefore, what I am talking about is not something that must happen next Friday afternoon. However, it must happen over the next 12 months, and it must be prepared now. The Government must have the courage to do it.
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  At present the greatest danger to this policy is that—although it is not meant to be so—it will be attacked as a completely one-sided further attempt to solve another British economic crisis only at the expense of the industrial working class. If there is to be a defence against that charge, the measures on prices and investment that I have proposed must be taken forthwith to turn the policy into a complete whole, acceptable to the progressive and Socialist movement in Britain. But while we are doing that and I am demanding that, I am saying, first, that the present policy is an honest attempt, which has become necessary in this dangerous situation for the nation, to deal with inflation, and it is a policy which must be started and carried out straight away. But if it is to be a policy that is to succeed, the other measures are as essential and must be taken without delay.
  In those proposals there is a beginning. This policy is a difficult one for my right hon. Friends in the Government and for the trade union movement, who have worked it out together in good faith, starting from the same principles from which the rest of us here start. In these proposals there is the germ of laying the ground work not only for the immediate but for the long-term support for what they are trying to do, for linking the immediate necessity to the long-term policy to the working out of which my right hon. Friend the Secretary of State for Employment has made such a large contribution. I wish that the Government could be persuaded to embrace such a programme. If they do not do so, this policy will work for a short time but it will not last.
  6.6 p.m.
  Mr. F. A. Burden: It is generally accepted on all sides of the House that the present economic crisis of this nation demanded stern measures. It is also a feature of this debate so far that the support for the measures that the Government have introduced has come mainly from the Opposition side of the House, and that the criticisms and fears have come from the Government side of the House, especially below the Gangway. Indeed, I think that many Labour Members would consider that the Government have failed.

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  I believe that that is true. The White Paper that we are debating is an illustration of the failure of the Labour Government. In the foreword to the Labour Party manifesto for the last General Election, the Prime Minister stated:
  "In February we but before the Britsh people our manifesto, Labour's Way Out of the Crisis."
  The Prime Minister went on to say:
  "It was a programme for getting Britain back to work, for overcoming what was universally acknowledged to be the gravest economic crisis Britain had faced since the war … Labour formed the Government, got Britain hack to work and showed our determination to fulfil the programme which we had put before the people. No post-war British government has achieved more in six months."
  There was then an acceptance on the part of the Government that the country was in a crisis. But then the next election came along, and the crisis was minimised. As has been mentioned on many occasions, the Chancellor of the Exchequer then told the country that inflation was down to 8½ per cent. To substantiate the claim made in October and the Chancellor's statement that inflation was down to just over 8 per cent., it was necessary for the Labour Government to prove that they had done more in their first six months of Government than any previous Government and that they had taken great steps towards solving the economic crisis which they had stated the country was in when they came to power. Otherwise, their claims were not only misleading but meaningless political jargon, with the one idea of getting returned to power at the last General Election.
  If they were so successful, why do we have this White Paper? However it is viewed, it must be an admission of total failure. It is proof that if they believed their claims, the Prime Minister and his Cabinet were either completely out of touch with reality or—and this is the only alternative—they deliberately misled Parliament and conned the nation.
  Just what have this Government achieved in the last 15 months towards solving the economic crisis? One can disregard the Chancellor's flights into the realms of fantasy last September and concentrate on what he said during one of his more responsible moments, in the statement he made almost a year ago to the very day. Speaking on the economy on 23rd July last he stated:
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  "When the present Government took power live months ago the rate of inflation was already over 13 per cent. It is now 164 per cent."
  and yet two months later he told the country that he had halved the rate and that it was down to 8 per cent. The Chancellor must have known that that was untrue. He had stated in this debate only three months earlier that it was running at l6½ per cent.; an increase of 3 per cent. in five months, or a rate of about 7½ per cent. a year. On the same day he stated:
  "Our central problem is a rate of inflation which"—
  and it is well for us to mark the right hon. Gentleman's words—
  "some say could have been 20 per cent. by the end of this year …".
  By October 1974 the rate had reached 17·1 per cent., not a great increase. Now, a year later—a year after it was 16½ per cent.—it is not 17 per cent. or even 20 per cent.; it is nearer 30 per cent. During the same debate a year ago the right hon. Gentleman the Prime Minister stated:
  "The prices of materials and fuels purchased by industry last month showed the first fall for over two years. These will work through."—[Official Report, 24th July 1974; Vol. 974, c. 1312–1628]
  In other words, the right hon. Gentleman was saying that these falls would work through in lower prices. That statement—an admission that the prices of raw materials and fuels for industry were falling—and the subsequent galloping rise in inflation are surely a measure of the abysmal failure of the Government to deal with the crisis. As pointed out by hon. Members opposite, the effect of continuing inflation on the lower paid, people living on fixed incomes and pensioners, and their savings was offensive to every decent person in the land.
  What about jobs? The Labour Government have always stated that it is the right of every man to be found a job and to be able to work if he so wills. They have stated what we all know—that inflation is the enemy of full employment, but they failed abysmally to control it. What of the Government's record on jobs? Let us look at that. In February 1974 there were 628,800 out of work, representing 2·7 per cent. In October, 1974 there were 643,400—a rate of 2·8 per cent. By February, 1975 the total had reached

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  791,800, or 3·4 per cent. I remember Hugh Gaitskell saying in this House on several occasions that 3 per cent. unemployment was the highest acceptable figure to any Labour Government.
  By last June—the month with the latest available figures—there were 869,822, unemployed—a rate of 3·7 per cent. Half a million school leavers will soon come looking for jobs. We know, too, as the right hon. Member for Sidcup (Mr. Heath) has pointed out, that there is overmanning in a great many of our industries, while there is not that overmanning in many industries abroad. This is falsely keeping down the unemployment figure in this country, but one wonders for how long that can continue if firms suffer further setbacks in profits.
  Fully to appreciate the scale of the Government's failure we must turn again to the debate on the economic situation on 23rd and 24th July last year. The Chancellor of the Exchequer apologised to the hon. Member for Cornwall North (Mr. Pardoe), saying:
  "I unwittingly misled the House on the employment effect on the total package of measures I announced yesterday. The figure of 20,000 reduction in unemployment by the end of next year which I quoted is a bare minimum … The total effect is likely to be more than twice that … The total effect on employment of all the measures I announced yesterday could be to increase employment by the end of next year by between 100,000 and 150,000."—[Official Report, 23rd July 1974; Vol. 974, c. 1324.]
  Compare that with the situation today and those promises with what has happened. Can anyone have any confidence in the future forecasting or actions of a Chancellor or a Government who have failed so abysmally in all their projections about the economic results of inflation and the effect on jobs?
  There are other factors showing where they have failed lamentably in both these areas, but I must speak shortly so that other hon. Members may catch your eye Mr. Deputy Speaker. The figures throw a light of stark reality on the Government's record. What has given concern to many people in this country has been the growing similarity of the parallel between what happened under the Weimar Republic in Germany in the 1920s and what is happening here. It is all very
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  well for hon. Gentlemen opposite to laugh. Inflation ran away, and there was a great increase in unemployment, with results that the hon. Member for Penistone (Mr. Mendelson) feared might happen in similar circumstances here.
  In a speech at Tolpuddle last weekend the Chancellor said unless the measures now proposed were successful, unemployment in this country could reach a figure not of 1½ million, not of 2 million, but of 3 million—[Interruption.] Is it possible, Mr. Deputy Speaker, to protect myself from the constant remarks made by the hon. Member for Newham, North-West (Mr. A. Lewis) from a sedentary position?
  Mr. Arthur Lewis: On a point of order, Mr. Deputy Speaker, I confess to having made my first interjection, which is not unsual. The hon. Member for Gillingham (Mr. Burden) is the last one to complain, because he does so constantly.
  Mr. Deputy Speaker: I know that we shall be as polite to each other as we always are.
  Mr. Burden: We have had an enormous debt hanging around our neck as a result of borrowings by the Government. No one knows their full extent, or the terms of such borrowings, but we all know that the cost will go on during this and future generations. In the White Paper there is no hint that the vast nationalisation plans will be abandoned or shelved. I believe that there will be no money from overseas to purchase those industries. Money to do so will either have to be printed or raised in loans in this country—and I find it difficult to believe that they will be available; or will they be acquired by confiscatory measures, without reasonable compensation?
  The Government must realise that if they continue to try to placate the Left, by watering down the measures necessary for the economic survival of this country, it is the duty of this Government to put the survival of the country and the interests of Britain above papering over the enormous cracks that are beginning to appear between the Left and the moderate part of the Labour Party. The Government should immediately, or before the end of this debate, make it clear that there will be no more nationalisation,

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  certainly for the next two or three years while we are going through this crisis.
  Many hon. Members on the Government benches suffer from the belief that bigness is a virtue in itself, that the creation of big, monolithic industries means the creation of good and successful industries. That is what they think about nationalisation. The idea is entirely false. Every Government should encourage small businesses. They should give people the opportunity to start businesses and make it possible for them to be profitable. They can make a great contribution to the future standards of living of our people.
  We should stop further overseas borrowing, and live within our means. That will have to be done sooner or later. No Government, any more than a private person or a company, can borrow their way out of bankruptcy. The Government's ability to borrow has almost come to an end. Unless we start to live within our means, the consequences will indeed be desperate. We should stop printing money, because printing money merely reduces the value of everything we have and increases inflation and unemployment.
  Above all, this country must live by its exports. I believe that much of our industry is now suffering from age. It has not had enough innovation in recent years. The most urgent task for any Government, if we are to restore the economy and ensure a rising standard of life for our people, is to see that the country becomes technologically as advanced as any of our industrial competitors, or more so. It is not enough to be just an industrial country. We must be a great technological country.
  I hope that the steps taken today will be the first steps towards this country's recovery, although taken belatedly by the Government. But I shall stand aside, and see what happens, because it is the Government who are being judged, not me. I do not think that the steps go far enough. That is why I cannot support them in the Lobby. We shall have to see whether the Government fail to take the next steps, in order to ensure that the right hon. Members for Ebbw Vale (Mr. Foot), Bristol, South-East (Mr. Benn), and some others who are critical even of these steps, remain in the Government.
  Mr. Deputy Speaker: Before I call the next hon. Member to speak, I remind the House that there is a long queue of hon. Members wishing to speak. I hope that those who are fortunate enough to be called will bear in mind those who are waiting.
  6.23 p.m.
  Mr. A. E. P. Duffy: I regard the White Paper as essentially a political document designed to gain the co-operation of the TUC and the CBI. Judged from that standpoint, it is undoubtedly a skilful compromise, and has a reasonable chance of achieving its purpose. Even its most surprising single feature—the fact that reserve powers to make it illegal for employers to exceed the pay limit are to be contained in separate legislation—makes some sort of sense.
  The support of the TUC for the Government a fortnight ago, by 19 votes to 13, is significant. The majority of trade union leaders realise that the recession will go deeper, and unemployment will mount even more steeply, if some such counter-inflationary measures are not adopted. We were told this afternoon that those trade union leaders, reinforced by my right hon. Friend the Prime Minister, would disagree, therefore, with the first point made by some of my hon. Friends in their letter in today's issue of The Times. They would certainly think that if the present measures had not been taken—
  Mr. Arthur Lewis: On a point of order, Mr. Deputy Speaker. When you have a few minutes to spare, will you look at the Hansard reports of all our economic debates? You will find that the same hon. Members are continually called. Will you suggest to Mr. Speaker that he puts it around a bit?
  Mr. Deputy Speaker: The hon. Gentleman knows that Mr. Speaker's choice of right hon. and hon. Members who are called to speak is not open to question.
  Mr. Duffy: My hon. Friends responsible for the letter to which I have referred may find, when they consult today's OECD report on the economies of the member nations, that that report is also at variance not only with their first point but with the remaining points.

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  In spite of this defiance by my hon. Friends, and any lengths to which it might be taken later tonight, there are growing signs that the British Labour movement is coming to terms with economic realities, that a slow but sure understanding is calculated to prove far more effective than compulsion by State decree. I believe that the social contract has assisted the growth of that understanding.
  None of us can any longer be in doubt, in view of what happened to it, that the trade unions are not equipped to enforce a wages policy on their own. They simply cannot deliver. Nevertheless, they know that someone must deliver. There must be a policy, and if they cannot enforce it someone must—and who better than a Labour Government?
  Moreover, opinion polls demonstrate a remarkable unanimity among all types of voters that an incomes policy must be introduced if inflation is to be defeated. A joint conference at the grass roots of the Park and Attercliffe Constituency Labour Parties in Sheffield on Sunday produced only one implacable opponent of the White Paper. The same person also accused the Labour Government of reneging on the social contract. The record suggests that, whoever might have undermined it, the Labour Government certainly did not, as my right hon. Friend the Prime Minister reminded the Yorkshire miners at their annual conference in Barnsley a month ago.
  Several of those present at the Sheffield conference had reservations about the White Paper. In the main, the reservations came down to the fact that, for it to remain acceptable, the Government, and especially my right hon. Friend the Chancellor of the Exchequer, must be fair and must have continuing regard for the acute needs of the deprived areas of Sheffield and South Yorkshire.
  Mr. John H. Osborn: Can the hon. Gentleman say what the attitude of those two associations was when the Conservatives imposed their policy four years ago?
  Mr. Duffy: That was not discussed.
  My hon. Friends may be interested to know that the greatest indignation was reserved for those Labour Members who
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  failed to support a Labour Government in the Division Lobby.
  Mr. Ian Mikardo: That does not frighten me.
  Mr. Duffy: Once the immediate problem of acceptability is overcome, however, the effectiveness of the policy as a means of controlling inflation must be considered. Will it work? Any comment must be prefaced by a reminder that an incomes policy is designed to alter the climate of expectation and keep unemployment lower than it might otherwise have had to be, but that it is bound to produce distortions, whose practical effect becomes more serious as time goes by.
  Of course, an incomes policy is difficult. But one must acknowledge that if other incomes policies have failed, or been abjured by parties in advance of their coming to power, all Governments since 1959 have found it necessary to bring one in.
  The White Paper makes it clear that the Government mean to maintain anti-inflationary policies of some sort over a number of years, and that agreement will have to be reached
  "on how to arrange our affairs so as to avoid a resurgence of rapid inflation".
  If that points to difficulties for the future—and, clearly, there must be more sensitive and sophisticated guidelines a year hence—the White Paper is at least more realistic than its predecessors.
  The White Paper is concerned primarily concerned with wage settlements and has relatively little to say about the control of public spending and the public sector borrowing requirement. or about the use of monetary policy. Yet for the control of inflation, as opposed to limiting the unpleasant effects of bringing it under control, these are matters of primary importance. Not that public expenditure, even in the present grave circumstances, would have come in for such pressing scrutiny if economic growth had not seriously faltered.
  The success of the policy depends ultimately on public opinion. As the TUC has already pointed out, individual unions and their members must associate themselves with the policy if it is to succeed. Public opinion therefore remains the ultimate sanction on pay.

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  The real bite of the policy, though, will ultimately come not from the sanctions which ostensibly back it up, let alone those which the Government are brandishing in the background; its most telling thrust will come from the worsening economic climate.
  Past incomes policies have often faltered because they were brought in to deal with the inflation generated by economic expansion. Employers and workers had the incentive and the opportunity to break those policies, but not so this time. Against the background of contracting markets at home and abroad, it is already true, as the Prime Minister reminded us, that one man's pay increase is another man's price increase, and may also mean the loss of his own or his neighbour's job. Until that is realised there can be little hope of remedying our nation's economic ills.
  In the last resort, any incomes policy, voluntary or otherwise, depends on public opinion. The right hon. Member for Sidcup (Mr. Heath), the former Prime Minister, who spoke earlier, did not have the support of public opinion, perhaps because people were more afraid of disruption than of inflation. The difference now is that every family in the land has experienced inflation and is aware of its reality. Contrary to what some of my hon. Friends have said since the 2nd July statement, we are not now reliving the years between 1970 and 1971, much less the years between 1966 and 1970. These are changed circumstances.
  Perhaps the real hope for salvation lies in the general truism, and its wider acceptance, that unemployment can be restrained only if inflation is brought under control. It is a vicious circle. But one vital aspect is that while, theoretically—if wages match the inflation rate—standards of living can be maintained, in practice that can happen only if an industry or firm forgoes something else. It is impossible, theoretically, for a firm or industry to maintain an all-round balance if it tries to match total revenue with total expenditure on wages. A firm cannot ensure that its revenue matches increased spending on wages, but those which cannot maintain a balance are setting their workers' jobs at risk.
  Every income earner needs to recognise that his contribution to the battle
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  against inflation is decisive. Any section of the economy has the power to destroy the rest and in the end to destroy itself. By contrast, a general acceptance of the need for moderation provides the indispensable key to stability. Nowhere is this recognition more necessary and yet more possible than in the ranks of the trade unions. Concern for others is at the roots of trade unionism. To abandon those aims and ideals for a continued free-for-all scramble against a policy which seeks to safeguard the interests of all is surely to adopt a position which is untenable in the eyes of the people. Last Sunday I consulted my constituency party and that in a neighbouring constituency. I am left in no doubt that such an attitude of the workers, whether organised or not, would be unacceptable.
  The months ahead will not be easy for the Government. Labour Governments always prefer to proceed on the basis of voluntarism and consent. No one can say that this Government have not persevered with such policies, or that they have abandoned them. However, earlier this month the Government were left in no doubt that they must strike out in a new direction. They were left with no choice but to adopt an unshakeable and immutable commitment to reduce sharply the rate of rise of inflation by the end of next year. If the Government are resolute and keep their nerve during the coming year they will receive the overwhelming support of the people, especially in their movement for policies which they consider are necessary for the achievement of their target.
  6.30 p.m.
  Mr. Joseph Godber: I listened to the hon. Member for Sheffield, Attercliffe (Mr. Duffy) with interest. I do not disagree with a good deal of what he said. However, it seemed to me that many of his remarks were addressed to his hon. Friends sitting below the Gangway. I do not seek to interfere in a dispute within his party. However, he made one remark about the policies of the right hon. Member for Sidcup (Mr. Heath) which I should like to take up, especially in the light of the remarkable speech made by my right hon. Friend this afternoon.
  The hon. Gentleman said that my right hon. Friend did not have public support

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  for his incomes policy. My right hon. Friend reminded us that phase 3 of his policy received the support and acquiescence of over 10 million workers. Only one trade union stood out against it. Had the Labour Party, which was at that time in Opposition, supported the then Conservative Government, I do not believe that that trade union would have stood out. The failure of this House to speak with one voice caused the problems which led to the Labour Government taking over and to the disastrous economic situation that has developed since then.
  The Labour Party bitterly complained that my right hon. Friends said that we will not vote for the White Paper. The Government should go down on their knees in thanks for the undertaking given this afternoon by my right hon. and learned Friend for Surrey, East (Sir G. Howe), who pledged a substantial degree of support for the Government. Had the Conservative Government received anything like the same degree of support from the then Labour Opposition we would now be in a different situation. That is the answer to those who claim that the Opposition should vote with the Government tonight.
  I should like to refer to ways in which the Government could encourage us. In considering whether the Government deserve support for their measures, it is necessary to consider not only the measure themselves but also the Government record in the area of wages, salaries and prices since coming to office in March last year. It is also relevant to bear in mind the other major factors in the Government economic strategy, and especially the degree of Government spending and borrowing.
  Part of the Government case is an appeal for national unity and for a combined attempt to overcome inflation. It is pertinent to ask what real attempt the Government are making to create unity in the country. After all, what controversial measures, what Socialist doctrines or what divisive legislation are they jettisoning, or are they prepared to jettison, to create the good will and the united approach required to overcome our economic difficulties?
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  After the speeches made this afternoon by my right hon. and learned Friend the Member for Surrey, East and my right hon. Friend the Member for Sidcup compared with the Prime Minister's speech, my conclusion is that it is the Prime Minister who failed the nation. He spent at least one-third of his speech indulging in petty abuse and chiding the Conservative Party. He should remember that we represent nearly as many voters as does the Labour Party. If he wants to invoke the passages on national unity contained in the last two paragraphs of the White Paper to which he referred the other day, he should speak as a national leader and not as a party leader. That was his failure today.
  I turn to the Government record on incomes and prices since they took over in March last year. The official figures show that at the time they took over prices were rising at an annual rate of 13·5 per cent. and average earnings were rising at 14·1 per cent.—in other words, salaries and wages were keeping ahead of prices. But that was against the background of the enormous upsurge of world prices which had started 18 months before and with which the then Conservative Government had had to contend. The Economist sterling index of world commodity prices records that in March of last year the rise in commodity prices over the preceding 12 months was 52·3 per cent. So the picture when the Labour Government took over was one of earnings rising at 14·1 per cent., prices at 13·5 per cent. and world prices at over 52 per cent.
  Putting it at its lowest, therefore, it is undeniable that the British people at that time were being protected from the worst effects of world inflation. I was the Minister responsible for food prices in that Conservative Government and I clearly recall the shouts of rage and indignation when I reported to the House the monthly figures showing the percentage change in the retail price index. It was in vain that I pointed out to the House that world prices were rising much faster. The Labour Opposition were loud in their condemnation of the Government for failing to keep down the cost of living. The concern that many Labour Members showed at that time for the poor housewives seems to be strangely muted now.

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  I have here the whole range of the three sets of figures to which I referred, from March last year to the latest available. Together, they constitute the biggest indictment of any Government that it is possible to imagine. Under the baleful influence of the totally bogus social contract, earnings rose with extreme rapidity. In June last year they had reached 16·1 per cent., in August 20·5 per cent., in November 25·3 per cent. and in April 30·5 per cent. The figures announced yesterday show a slight fall to 28·3 per cent., but that figure is of earnings, and the wage rate continues to rise. The total abdication of the Government from this vital sector of the economy has meant a rise in wage and salary payments of more than double in just over a year.
  While this was going on, all the country got from the General Secretary of the TUC were pious platitudes and incantations about the social contract. All we got from the right hon. Gentleman now on the Government Front Bench—the Secretary of State for Employment—was apparent paralysis; no action at all.
  Turning to the prices side, the inevitable result is there for all to see. The sudden rise in earnings was reflected in the inexorable rise in prices. The Prime Minister's phrase that one man's pay rise is another man's price rise has been used in the House today. In Durham at the weekend the Prime Minister enlarged that phrase to include another man's dole queue. However it is expressed, that is what has happened.
  In June last year the retail price index had risen to 16·5 per cent. By November it was 18·3 per cent., and by March this year 21·2 per cent.—and the latest figure is 26·1 per cent., which is almost double the figure when the Government took over. The movement in those two sets of figures is painfully evident to us all, but it is the contrast between what has happened to earnings and prices on the one hand and to world commodity prices on the other which I want to emphasise.
  The movement in world commodity prices has been in precisely the opposite direction. At the time the Government came to office that index showed a rise of just over 52 per cent. By June last year it had dropped to 23·6 per cent., by
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  December it was 1·9 per cent., by March this year it was minus 17·5 per cent. and then, in June, when the fall in the value of the pound affected it, it was minus 13·9 per cent. For the current month the figure is minus 5·8 per cent. Since January this year, world commodity prices have been falling, and in spite of the lowered value of sterling they are still lower, in terms of sterling, than they were this time last year.
  Therefore, the main element in pushing up the cost of living when the Labour Government came to power is no longer a problem. A rise of 50 per cent. has not only been eliminated, it has been replaced by a fall in commodity prices which, if other things were equal, would mean that we should be entitled to look for reductions in prices. The external pressure on prices has eliminated itself, and what the country suffers from at this time is a totally self-inflicted wound. It is the enormous rise in wages and salaries which is largely responsible for the Latin American level of inflation we have reached. To the impartial observer there is nothing particularly surprising in that. What should surprise him is that any Government should ever establish a régime in which prices are controlled while wages are not. It is the surest recipe for inflation which could ever be devised, and so it has proved. For the last 16 months the country has been suffering from the economics of a "Mad Hatter's Tea Party".
  That, then, is the picture of incomes and prices, and it justifies up to the hilt the introduction of measures designed to bring this runaway wage and salary inflation under control. What we have to consider, however, is whether the Government's proposed measures are adequate and whether they are likely to be effective. Before examining those measures I should like to consider another aspect of the Government's economic policy which has added fuel to the fire of inflation. I refer to Government borrowing.
  The previous Conservative Government engaged in deficit financing. As a member of that Government I accept my share of responsibility for that, and I am ready to admit, with the benefit of hindsight, that in doing this we erred. If we were

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  at fault, however, the Labour Government have made our sins seem very small by comparison with their activities.
  The public sector borrowing for 1973–74 for which we were responsible showed a final outturn of £4,465 million. For 1974–75, the estimate given by the Chancellor of the Exchequer last November was £6,331 million. In his last Budget speech he gave the provisional outturn as £7,602 million, but the final quarterly figures for the first three quarters are now out, and they show, for those three quarters alone, a total of £6,436 million. Based on those figures the final outturn for a full financial year will amount to £8,581 million. As the figure was rising sharply in the third quarter there is every likelihood that the final figure will be even higher. Even on that basis, public sector borrowing has doubled in a year.
  For the current financial year the Chancellor's Budget estimate was £9,055 million. No later official figures have been made available to us. I heard suggestions in the House today that it might be £12,000 million, and there are suggestions in the Press that it might be £13,000 million. I have no means of knowing whether any of these guesses are correct, but such a growth of borrowing would not be out of line with the Rake's Progress of the previous year.
  A growth of public sector borrowing of this order must have already created enormous inflationary pressures. So far we have heard virtually nothing of plans to curb the present level of Government borrowing. Indeed, on 11 th July the Prime Minister talked about another £150 million. When Labour Members shout at my right hon. Friends on the Opposition Front Bench "What would you do?", my answer would be "We would not have increased Government borrowing, as you have done. You have increased it by this amount. It is your duty to choose where the cuts should come." It is a cheap device to claim that the Opposition should declare what the cuts should be. I am saying that the Government should not have allowed this runaway inflation in their spending to occur.
  That is the background to the anti-inflationary measures. What of the measures themselves? The first thing
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  to note is that there was a definite softening of the proposals between the Chancellor's statement on 1st July and the Prime Minister's statement on 11th July. The Chancellor said that he was determined to bring down wage inflation to 10 per cent. per annum, but it is questionable now whether the limit of £6 a week will achieve that. Secondly, the loading of all responsibility on the employer is unreasonable and unfair. However, as the Government are, in various forms, the country's largest employer, it would not be unreasonable to proceed on that basis, provided the Government refused every threat and every blandishment to get them, in their capacity as employers, to weaken their resolve. We have had certain assurances about that, but we shall want to see the results.
  Thirdly, there is the total absence of any attempt to cut back the public borrowing requirement to a more tolerable level. I have demonstrated the devastating way in which the borrowing requirement is growing. Fourthly, there is the lack of any detailed knowledge of the powers which it is said are being held in reserve. It is not sufficient that we should be called upon to take such matters on trust. In any case, it is my belief that such powers as are envisaged should be placed on the statute book now, so that they are available immediately if the need should arise.
  I do not understand or accept the argument put forward by the Government that there is no need to bring the powers forward at this stage. If anything happened during the recess I suppose we would be called back immediately to enact the new legislation. That should be a requirement, otherwise the whole programme could break down. It is folly for us to rise for the recess without being told what is involved.
  Fifthly, there is the appeal in the last two paragraphs of the White Paper which the Prime Minister commended so strongly to the House on 11th July. I believe myself to be as patriotically minded as most hon. Members, but I am bound to ask what right this Government have to seek the support of the nation unless they acknowledge the attitudes, desires and feelings of the whole nation. This is a Government which, on any analysis, have never had more than

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  the flimsiest claim to a mandate. Because of the number of small opposition groups, in addition to the main opposition party, the Government are able to carry out their policies, but at this very moment their majority rests on the absent vote of the right hon. Member for Walsall, North (Mr. Stonehouse).
  Mr. Tomlinson: You have absent friends who never turn up.
  Mr. J. Enoch Powell: Some of them have turned up.
  Mr. Godber: Yet the Government have not hesitated to bring forward a range of measures that are controversial and divisive in the extreme. Furthermore, many of the Government's measures are costly in terms of Government expenditure. To name only one, there is the Community Land Bill. Then there are all the nationalisation measures which we have been promised. If the Government want national unity, let them start by trying to unite the country instead of dividing it.
  The Government talk of sacrifices. Let them set an example by dropping some of their measures, which are urgent only in the eyes of dedicated Socialists. They may be urgent in their eyes, but they should recognise that there are many people who do not share their views. Many of the measures that the Government promise are anathema to many people.
  I say that the Government have failed the nation in many ways. Nevertheless, I have to admit that the proposals that we are considering, although inadequate and dangerously late, at least show that the Government have at last started to realise the need for action on their part. They will find that they have a great deal further to go if they are to restore our economy. In my view, the Government's proposals represent the first, faltering steps in the right direction. They are nothing more than that, but because they are in the right direction I shall not oppose them. However, I shall vote for the amendment standing in the names of my right hon. Friends. Although we support the need to limit wage inflation, the amendment emphasises the areas of economic policy in which the Government are still failing the nation.
  Mr. Leslie Huckfield: Now we have it.
  Mr. Godber: Labour Members who jeer should understand that our approach goes a great deal further than anyone had the guts to do in the Labour Opposition when we were in Government and were confronted with the same problem. I suggest that they remember that and show a little more humility in future.
  6.57 p.m.
  Dr. John A. Cunningham: I do not intend to take up the arguments of the right hon. Member for Grantham (Mr. Godber), except to say that although his tortuous explanation of his decision on how he will vote may be clear to him it left the rest of the House in some puzzlement. The right hon. Gentleman's speech contrasted markedly with that of his right hon. Friend the Member for Sidcup (Mr. Heath). who at least had the honesty, in an interesting speech, to admit that over his four years of office—a period when the right hon. Member for Grantham was also in office—he had learned some lessons.
  Apparently the right hon. Member for Grantham learned very few lessons from his four years in government. One of the lessons that he has not learned is that statutory incomes policies have been an abysmal failure throughout history. The acceptance of the right hon. Gentleman's suggestion that a Bill giving effect to statutory measures should be published would serve no useful purpose other than to create further problems in a situation which is already very complex and difficult.
  This country has been in this economic crisis since 1973 at least, and the right hon. Gentleman was a member of a Conservative Government whose policies on money supply laid the foundations for the present difficulties. Two General Elections were fought in which the Labour Party argued against the then Conservative Government that we were actually facing an economic crisis. Apparently the nation is beginning to accept the realities of the situation which many of us have been trying to face them with for a long time.
  As well as the economic crisis, we have been going through a political crisis. The previous Conservative administration

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  must accept its share of the responsibility. It was that Government which produced the kind of confrontation and lack of consensus about which Conservative Members have been arguing. However, I hope that behind the present package which the Government are introducing some measure of consensus will be reconstructed.
  In my view, the most significant feature of the Government's activities in the last few weeks has been the lengths to which the Cabinet has gone to carry with it the General Council of the TUC, and also the CBI. It was fundamentally important that any decision on a wages policy should be based on consent and, without any coercion from the Government, that it should be acceptable to the TUC. A good deal has been said in this debate about coercion, and it is interesting to note that nobody on the General Council of the TUC has seriously argued that point. In fact, the situation is quite the reverse.
  Mr. Brian Sedgemore: That is not true.
  Dr. Cunningham: Does my hon. Friend wish to intervene?
  Mr. Sedgemore: Will my hon. Friend take it from me that at least one leading member of the TUC has seen a number of us, and certainly what my hon. Friend said about the General Council is not correct.
  Dr. Cunningham: That is an interesting intervention. I was making the point that, publicly at least, members of the General Council have not made the assertion which my hon. Friend attributes to them. However I still believe that this is the most significant feature of the Government's approach to this aspect of the package. Statutory policies have failed, will fail, and should be avoided at all costs.
  It is crucial that the Government should now start working to ensure that agreement follows at the end of the 12 months' period of agreement. The problem with incomes policies in the past has been not that many of them have not had a limited measure of success but simply that, the moment they have ended, the whole framework of control, in terms of agree-
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  ment on the policy, has vanished and a free-for-all has resulted. This has been disastrous and has immediately eroded any good flowing from sacrifices made in the previous period of control. It is crucial that the Government should now be working with the TUC—as, indeed, I understand is happening—and with the CBI to ensure that this does not happen on this occasion. I do not accept that wages are the only problem, or, indeed, the main problem that we face, but I would argue strongly that they play a very important part in the economic crisis.
  Much has been said about the failure of industrial investment. As with many other generalisations, that statement is not true. It is certainly not a valid criticism of the chemical and petro-chemical industry which has an excellent record of investment, and other industries can also point to good investment records. If we want to create the circumstances in which industry, either in the private or public sector, has a good record of investment, we must bring about a situation in which industries can make profits. There is a dangerously schizophrenic attitude in the Labour Party about profitability. We cannot have good working conditions, high wages and many of the things we want in the Employment Protection Bill, and other measures which are part of our package, if industry is not in a profitable situation. The argument should not be about profits in industry; it should be about the way in which profits are deployed after they have been made.
  The United Kingdom faces not only the problem of lack of investment in industry, but also—and this point was made by the right hon. Member for Sidcup—the problem of a distorted industrial economy. Currently, the Northern Region has the highest percentage of unemployment in the United Kingdom. This is not a new situation for people in that region, but it is all too often the case. As well as seeking to increase our record of investment in industry, the Labour Government—and indeed all Governments—-should be taking a fundamental look at the distribution of industrial investment throughout the United Kingdom as a whole. I welcome the work carried out by the Northern Region strategy team, and I give the Opposition the credit for at least establishing that team during the time of the Conservative

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  Government. I welcome the team's report, and also its attempts to produce a map on a regional basis showing the distribution of public investment in the United Kingdom. From the Government's point of view, that area is far too obscure. Although I appreciate that there must inevitably be some falling off in the level of public expenditure among local authorities and the like, I believe that such a course will be more crucial than ever in a period of austerity, in face of deprived regions, regions with major urban problems, and areas with higher-than-average unemployment.
  I support the package, but I also wish to comment on the alternative proposals made by several of my hon. Friends below the Gangway. The problem is not that I disagree with their arguments—indeed, I am very much in support of many of their arguments—but that I believe those arguments would have no immediate effect on the crisis that we face—and, in my view, the effect they would have would exacerbate rather than help the situation. The road to Socialism will not be built on a litter of bankrupt industries, unemployment and a collapse in the economy of the United Kingdom. Any suggestion that that is a quick way to obtain the objectives of this movement is misleading to our supporters.
  Mr. Mikardo: What my hon. Friend says is correct, but he is directing his homily to the wrong quarter. It should be addressed not to his right, but straight in front of him.
  Dr. Cunningham: My hon. Friend will forgive me if I gave the impression that I was addressing my remarks solely to him and to his colleagues. Of course, I am addressing myself to the Opposition, too. From what we have heard so far. I wonder which of the "Oppositions" will muster the most votes in the Lobbies tonight. My point is that my hon. Friends are not so much fiddling while Rome burns; they are still composing the music. We have not time to dally in that way.
  I believe that people will accept firm action from the Government in respect of public expenditure, incomes, and all other aspects of the package, but there are many dangers. I believe that people in general would have accepted the social contract. The trouble with the social contract, from the point of view of the
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  Labour Government and the Labour movement, was not that it was unworkable or unacceptable, but that it was damned with faint praise. That was the attitude of a number of people who are now loudest in their complaints about the present package. We on the Government side cannot have it all ways. We are running out of options, in terms of policies. If we are to resolve the political crisis that surrounds the whole debate about incomes in the United Kingdom, we must be prepared to stand up and be counted—in a way that too few people were willing to do when we were saying that the social contract was central to the whole economic strategy of the Labour Government. If those steps were central to our strategy and all our other policies that flowed from it, it must be said that a number of people were careless with the social contract and also with the rest of the Labour Government programme, which I wholeheartedly support.
  I mentioned unemployment briefly a little while ago. I want to finish by talking about unemployment in the Northern Region and in areas like West Cumbria, in which my constituency is situated. For too many years—for many decades, in fact—areas like this have had a raw deal from successive Governments. Many of us want to see, once and for all, an end to this kind of "poor relation" area in the country.
  It is time for the Government to act, and it is opportune in terms of the review of public expenditure and of industrial policies. I favour the National Enterprise Board and planning agreements. We do not, however, have a short-term industrial strategy, any more than a short-term strategy for wages, but the time is right for a fundamental review of regional policies, not only in terms of the provision of new jobs but of the whole effect of Government expenditure in the peripheral areas of the United Kingdom. I hope that the Government will accept that that case has been made and will look very closely at what they intend to do in the future.
  I end with a question to my right hon. Friend the Secretary of State for Employment on this whole subject of unemployment. Many of us on this side of the House remember participating in a demonstration here in 1972–73 under a Conservative Government, when the

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  figure of 1 million unemployed was reached. What advice has he to give us if that figure is reached under a Labour Government?
  7.11 p.m.
  Mr. J. Enoch Powell: A certain element of drama, which was introduced into this debate at an earlier stage—not actually by the Prime Minister—might have given the impression that there was an equally striking novelty about the subject that we are debating. In fact, what is remarkable about the subject we are debating is its staggering lack of novelty.
  Apart from the title—which does show a certain variation from the titles of the White Papers on the same subject which have drearily preceded it at intervals of about three or four years each—the contents are easily recognisable. There is the proposal of a freeze, in this case at the flat rate of £6; the indication that, if that does not work, then, of course, compulsion must be introduced; the realisation that out beyond all flat rates lies the insoluble problem of variety and differentials; and, finally, the concluding exhortation to "give us time to find the answer." That is expressed with a certain novelty that ought to be recognised: the words in paragraph 47 of the White Paper are
  "reach agreement on how to arrange our affairs so as to avoid a resurgence."
  Otherwise we know exactly the pattern, and it is a pattern which right hon. Gentlemen who are putting forward this White Paper know perfectly well.
  They know it from beginning to end. They have agonised on it under their own administration. They have destroyed it when it was put forward by their political opponents. The right hon. Member for Ebbw Vale (Mr. Foot) was one of the chief destroyers of the Prices and Incomes Policy of 1972–74, and I joined in the work gaily with him. They knew then—and, of course, the right hon. Gentleman explored with glee and in detail—the inherent impracticabilities of the course on which they are now setting out. They do not come to this as strangers.
  There might have been a time, 10 or 15 years ago, when this was a new adventure and some of them actually thought that it might work. But these men, Mr.
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  Speaker, are not fools. They have been through it all before, many times, and they are not so stupid as to think that it will turn out as advertised. They know perfectly well by now that such a policy is irrelevant to the causes and therefore to the cure of inflation.
  There is a certain amount of badinage which goes on, and it is well understood—the motives of the right hon. Gentleman the Prime Minister are well understood—about monetarism; but, as the right hon. and learned Member for Surrey, East (Sir G. Howe) remarked in an earlier debate, we are all monetarists now, and even the hon. Member for Whitehaven (Dr. Cunningham) has just stated that the basis of our present troubles was the increase of the money supply by the previous administration.
  Dr. Cunningham: One of the bases.
  Mr. Powell: One of them—all right. As for the right hon. Gentleman the Chancellor of the Exchequer, whence his anxiety about the size of the net borrowing requirement, his recurrent preoccupation with it and the possibility of financing it? It is not that the Labour Party are averse either to public expenditure or to borrowing the money for public expenditure. It is, of course, that the right hon. Gentleman realises perfectly well that inflation is built upon the monetary consequences of an uncovered deficit on public expenditure.
  As The Times put it, with delightful brevity, in one exceptionally lucid and unambiguous—both at the same time—leading article on 15th April 1975:
  "Inflation is a monetary problem susceptible alone to monetary cures."
  The right hon. Gentleman the Chancellor of the Exchequer knows all that perfectly well. He is not so "economically illiterate", if I may borrow a phrase, as to imagine that the effect of trade union action is other than to alter relative prices. He knows perfectly well that wage pressures, and so on, only alter relative wages: they put up some wages in relation to others, strong bargaining increases one group of wages in relation to the rest. Again, he is not so ignorant as to imagine that the rise of the price of an imported commodity, be it food or be it oil, causes the rise in all prices; for he is not guilty of the vulgar confusion between real prices

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  and inflation—between relative prices, the change of one price in relation to another, which all those causes can produce, and inflation, which can alone be produced by a relative glut of money itself.
  So the House is confronted with the question: why is it, then, that once again Members on both sides of the House, Government and Opposition—who know all this perfectly well, at any rate, by now—are setting off on the old, old adventure? I believe the answer is connected with unemployment. I believe that it is in the fear—I almost said the magic—of unemployment that the key to the problem posed to us is to be found.
  The right hon. Gentleman the Chancellor of the Exchequer intends to reduce—or foresees that there will be a reduction of—the rate of inflation from the present 25–26 per cent. to 10 per cent. over the next 12 months. He knows what the consequences of such an unprecedented fall in the rate of inflation—something of which we have no knowledge or experience in this country—will be upon employment. He knows that in itself a fall in the rate of inflation from 25 to 10 per cent. in one year does mean massive unemployment. Indeed, he suspects that the present rise in unemployment is due to that trend towards a lower rate of inflation, which gives him the confidence to talk about rates of 10 per cent. or less in 10 to 15 months' time. So as inflation diminishes—if it does diminish—he sees himself facing the emergence of rates of unemployment with which, except for brief periods, we have also been unacquainted.
  This connection of the fall in the rate of inflation with unemployment should not be misunderstood, though many have a vested interest in causing it to be misunderstood. It is not the unemployment which causes the rate of inflation to fall. The unemployment emerges as one of the consequences of the fall in the rate of inflation, which demands that a different pattern of economic activity shall be established to correspond with the expectation of 10 per cent. and not 25 per cent. inflation and more in the few months ahead.
  Neither is the unemployment caused by any reduction of public expenditure to eliminate the part of public borrowing which is financed by inflation. Inflation
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  is a form of taxation: inflation is a method whereby resources are withdrawn from the private sector and entrusted to the public sector. Therefore, except for transitional and frictional effects, the elimination of public expenditure financed by inflation no more causes unemployment than does the elimination of public expenditure financed by borrowing from the public or of public expenditure financed by taxation. There is an automatic balance between the two: the resources which are not claimed in the public sector are left available—are still there, the demand is still there—in the private sector. In short, the unemployment is the automatic, unavoidable consequence of doing what sooner or later we have to do—namely, ensure that the, rate of inflation does come down from 25 per cent. to 10 per cent. and stays there.
  At this point, all Governments—like this one at this present time—take avoiding action. They do so by pivoting upon the myth or fallacy that, if the fall of inflation from 25 per cent. to 10 per cent. is brought about by the voluntary or compulsory behaviour of all elements in the community, it will not hurt anyone, and there will not be any unemployment—in other words, that we can come down from 25 per cent. to 10 per cent. and not notice it because it will not hurt.
  Now this is not so, for the reasons already given. But I will illustrate the point further by an assumption even more improbable than that this policy will work on a voluntary basis, or indeed work at all. My assumption is that we send up a national prayer—perhaps we have a national day of prayer—to be liberated from the scourge of inflation or at any rate to be liberated from the difference between 10 per cent. and 25 per cent inflation, and that our prayer, like that of so many unfortunate persons before us is heard and that as from tomorrow morning "all with one accord", as it says in the Acts of the Apostles, behave in such a way that inflation falls to 10 per cent. Still, the mere fact that it happened in the manner in which I have described—which might be regarded as the marginal case for a prices and incomes policy—would not alter the dislocation which is inherent in the fall in the rate of inflation.
  So the purpose of this policy is to act as a guilt transfer mechanism. It is the

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  action of men who are not prepared to tell the people what is the cause of our difficulties and what will be the price of ending our difficulties. It is the action of men who are looking for scapegoats, who want to take the credit if perchance there should be such a decline in inflation, but who want to be able to say, if there is no decline or when the unemployment emerges, "If you had only done what we told you, obeyed the guidelines and complied with whatever was the phase of our prices and incomes policy at the time, it would not have hurt you." They want to say to the people, "It is your fault and not ours." That is what the right hon. Member for Sidcup (Mr. Heath) said throughout his version of this adventure. It was always the people who were wrong because they were not behaving as he told them they should be behaving and, consequently, the appropriate consequences were not following.
  This is the mystification which is being practised on a grand scale upon the nation, in place of telling the nation what it is that has to be done, how it is to be done and what the price will be.
  There has already been more than one reference in the debate to the Tolpuddle speech—how evocative—of the Chancellor of the Exchequer at the weekend. He dared to say to the public:
  "For the past 18 months we have been living above what we were earning. We have been able to do this because foreigners have been prepared to back us with their money"
  I do not know who that "we" was intended to mean to those whom he was addressing. But I am sure that he did not spell it out to the audience at Tolpuddle, because he has not spelt it out to any audience, that the people living above their means were the Government.
  It is the Government's deficit that is being borrowed from overseas, or which has been borrowed hitherto; and our deficit on current account is simply the unavoidable contra of that borrowing which, fortunately for us and for the Government, they have been able to accomplish in order to meet their determination—not to live above the nation's means, because it is our means that have been used—but to live above what even this Government were willing to obtain by taxation or were able to borrow.
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  It is a strange irony that in this same Sitting during which we are to vote on the White Paper, we shall proceed afterwards—though I hope not, because I shall vote against it—to award ourselves some more money. If anyone wants to see the people who are guilty of inflation and whose fault it is, they are not the people to whom White Papers and Tolpuddle speeches are addressed. They are right hon. and hon. Members in this Chamber, who sustain Governments, who form Governments and who fail adequately to criticise Governments. It is their actions not just in the present but in the past, too, which were bound to produce this effect, which it was predicted would produce this effect, and which did produce this effect.
  I shall not trench upon the debates which are to follow later tonight save to say that at other times many considerations might have been passed in review when we awarded ourselves what we consider to be our appropriate "remuneration", to use the terms of the Bill. But tonight one is outstanding. It is that the people who, by their actions over the years, are solely responsible for the scourge of inflation in this country will be taking steps, on a scale which they purport not to permit to anyone else, to protect themselves against the consequences of inflation. I do not know how with any sense of shame or decency they can do that.
  However, that is to come after 10 o'clock. At 10 o'clock, by omission or commission, once again, instead of telling the people of this country what they need to be told about the cause and the cure and the price of the cure of their ailment, we shall embark on the course of make-believe of which everyone knows the main elements and items, and a majority will vote for the piece of buffoonery between the covers of the White Paper entitled "The Attack"—the attack, forsooth, from the predators themselves—"on Inflation."
  But the dereliction of duty lies not by any means wholly upon the Treasury Bench. At a time like this, when the nation needs to be told, that function falls pre-eminently upon Her Majesty's Opposition, untrammelled as they are by the immediate consequences of what they do and say and not subject to the pressures

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  day to day which rest upon all administrations. That is why at historic moments it has been Her Majesty's Opposition that have had the duty and privilege to speak for England.
  However, on your left, Mr. Deputy Speaker, you survey what is largely a vacuum. The right hon. Ladies and Gentlemen on the Front Bench bear a certain resemblance to barnyard fowl—say, a hen and chickens—huddled together in one corner, for fear that someone will ask them the inevitable question to which they are not prepared to give the answer. The function of an Opposition is to be in the position to replace the Government. No Opposition, when it is challenged to say what in this grave hour needs to be done, dare reply, "You got us into this mess. It is your business to get us out of it." That is non-opposition. That is the renunciation of the constitutional function of Her Majesty's Opposition in the House and in the country.
  The practice has already been inaugurated in this Session, by none other than the right hon. Member for Sidcup, of quoting, of all people, the Marquess of Salisbury—the great Marquess of Salisbury. I shall conclude with a quotation from 1872. The right hon. Member for Sidcup quoted from 1867. The Marquess of Salisbury said:
  "The plea of necessity, the claim of party fealty, the fear of making bad worse, or the hope of mitigating the inevitable, are motives of real cogency … and though after the event they are seen to afford no defence for a shifty policy, they often appear at the time sufficient".
  He continued
  "Such pleas may serve to excuse exceptional deviations from the consistency which the law of honour requires between the promises of opposition and the performances of office—but only so long as they are exceptional. If ever they become so habitual to any party that leaders can plan them without scruple, and followers can be brought to accept them—"
  how contemporary it all is—
  "without shame or resistance, that party must renounce, unless the English character shall greatly change, all substantial share in the councils of the nation."
  The tragedy of the nation at present is that that description, as some Labour Members to their credit have recognised, applies not to one great party in the State but to two.
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  The Marquess of Salisbury attached to that statement, as will have been observed, the qualification:
  "unless the English character shall greatly change".
  There are those, throughout the world and in this country, who say that it has changed and that this is now a nation which expects to be deceived, which looks to its party politicians to deceive it, which wants not to be told the truth, and which will muddle or be bamboozled along to the edge of the abyss and over it.
  The moral issue behind these debates is whether or not we have become the reflection of a nation whose character has indeed changed or whether temporarily we in this House are misrepresenting the nation. For my own part I shall not, as long as I live, believe that the character of this nation has changed. I shall never believe it—never, never, never.
  7.35 p.m.
  Mr. Doug Hoyle: I certainly agree with the right hon. Member for Down, South (Mr. Powell) that whilst time may change the solutions offered to the House by successive Governments have not changed one bit. Perhaps we may also agree that this is the fifth or sixth time that these measures have been tried. I am sure that just as they were found to be wanting in the past they will be found to be lacking in exactly the same respects in the future.
  I am sorry that I cannot agree with the solutions offered by the right hon. Member for Down, South but I certainly agree that it is time that both Front Benches rejected the advice of the Treasury mandarins, who have been wrong on every occasion since the war. They have been wrong from the time when they said that the American loan should be convertible and it disappeared overnight. Yet theirs comes forward as the respected view. It is accepted. We hear the same part-worn arguments and platitudes from both sides. We hear about the strong Government and their determination to force through measures whatever the cost. When the analysis is placed before the House it is always said—this time it has not been lacking—that the people are behind the Government that the measures are necessary, and that they will receive full backing.

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  It is natural that with raging inflation people should be desirous of seeking a solution. What inevitably happens, as night follows day, is that six months later, as the full effects of a policy become known, it becomes unpopular. Those who supported it begin to re-examine the policy. I suggest that we shall follow that pattern.
  We have been told today—and I am sure we shall be told later in the debate—that this is not a statutory policy. It is like a horse that is drawing a cart. A person can tell the horse that the whip is in the locker but not in his hand, and that if the horse does not follow the route the man wishes he will bring the whip out. What else can that be but a warning that even worse is to follow. That is what is now happening. A statutory policy will follow.
  Looking back on the actions of successive Governments we have seen the policy fail and unemployment begin to rise. I tell my hon. Friend the Member for Whitehaven (Dr. Cunningham) that this policy will do nothing for his constituents. Indeed, the position of Whitehaven and the Northern Region, in which unemployment is already high, will be made worse.
  Dr. John A. Cunningham: Certainly the present rate of inflation is doing something for the people of Whitehaven. It is rapidly destroying their standard of living. They will welcome any action in the short term which will militate against that. If my hon. Friend wants to advance the argument that what I am supporting will not do anything for the people of Whitehaven, perhaps he will explain how his proposals will do something for them in the immediate future.
  Mr. Hoyle: I am saying not only that it will do nothing for them, but that unemployment will rise. I predict that by the beginning of next year unemployment will rise to 1½ million. If there is no redress before the end of the year, it will reach 2 million. I suggest that, then, if not before, a different tune will be played by the Front Bench and those who support it.
  My hon. Friend has been critical of the alternative measures which we put forward. He rightly said that they do
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  not help in the short term, but they do help in the long term. If the Government would follow the policies advocated in the manifestos on which they fought two elections, it would be more relevant to the crisis now facing us. At that time they said that a statutory incomes policy would fail and that the way to tackle inflation was first to tackle prices. We are saying that if we began to combat price rises of essential goods and services—for example, foodstuffs, rents and rates—that, by its very nature, would take out the anticipatory nature of wage bargaining. I suggest that at the wage bargaining table it must be in the region of at least 12 per cent. If we took that element out by our attack on prices, as we advocated at the election, it would be an immediate measure that the Government had taken and on which they were elected to office.
  I think that my hon. Friend the Member for Whitehaven and I are in agreement. The measures that we are suggesting—import controls, the re-establishment and re-equipment of British industry through the National Enterprise Board and the setting up of public industry in the regions—are the longer-term measures. But a start must be made now if we are to prevent the erosion of the base of manufacturing industry. That is what I and some of my hon. Friends put forward as the alternative strategy.
  I know that many hon. Members still wish to take part in the debate, so I will conclude on this note: the late Aneurin Bevan said that it was no use looking into the crystal when one could read the book. The measure that is being proposed tonight is the same well-worn book that, so often in the past, has been taken down from the library shelf, read, put into practice, and has failed. I suggest that it is time that the Labour Party and, indeed, the Labour Government, threw that book away if we are not to follow the same path as we followed from 1966 to 1970 and the path which destroyed the Conservative administration.
  7.43 p.m.
  Mr. David Knox: In a few minutes I should like to try to take a balanced view of a statutory incomes policy, but at this stage I should like to

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  dispute the point made by the hon. Member for Nelson and Colne (Mr. Hoyle) that statutory incomes policies quickly become unpopular with the public. During the February election campaign, polls showed the same 70 per cent.-plus support for such polices as the recent poll on the policy put forward by this Government. The hon. Gentleman may recall that in the February election about 17 million people voted for the Conservative and Liberal Parties, who were then in favour of statutory incomes polices, compared with only 11 million who voted for the Labour Party, which was against such policies. Something of a myth has arisen about this matter and it is only right to put it in its proper perspective.
  I should like to join those who have paid tribute to the speech made by my right hon. Friend the Member for Sid-cup (Mr. Heath). It was one of the most outstanding speeches that I have heard during the five years that I have been a Member of this House. I found myself in considerable agreement with the points made by my right hon. Friend. In particular, I should like to endorse his remarks about the effect of a high level of unemployment on people's attitudes to free enterprise. Those who advocate unemployment are no friends of the free enterprise system. I wish that from time to time some of the more extreme monetarists would recognise that if free enterprise is to survive in this country it must be seen to be successful, and success is not measured by people in Britain by a high level of unemployment.
  Having believed in an incomes policy for some time and particularly that the last incomes policy should not have been stopped, it would be churlish not to welcome the proposals in the White Paper. They are a considerable step forward after the dither, delay and incompetence of the last 17 months since this Government came to power. The White Paper deserves a welcome because it is the first real attempt by the Labour Government to deal with the major economic problem facing us—inflation—a problem which has got worse since the present Government came to power. The White Paper is to be welcomed because it is better later than never.
  The amendment rightly mentions the Government's belated commitment to reduce the disastrous rate of inflation. It
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  might also have mentioned the considerable escalation in the rate of inflation over which the Government have presided. While prices rose by 13 per cent. in the year to February 1974—the last year of the Conservation Goverment—they have risen by 26 per cent. in the year to June 1975 under this Government. While most of the increases in the year to February 1974 was the result of the steep rise in import prices, particularly oil, over which we had very limited control, most of the increase in prices during the past year has been due to excessive increases in incomes. I use the word "incomes" advisedly, because I include salaries quite as much as wages.
  What is particularly worrying about these figures is that whereas British prices went up by about the average of the OECD countries in the last year of the Conservative Government, they have gone up by double the average increase in the OECD countries during the past year.
  Why has this escalation in inflation happened? It has not happened as the inevitable consequence of the Conservative Government's statutory incomes policy. It has happened simply because the present Government abandoned that prices and incomes policy and put nothing in its place They gave the green light to everyone to ask for and get as big a wage and salary increase as possible. The Government have encouraged every trade union and professional body to exploit their monopolistic powers to the full. They have pretended during the last 17 months, that everything in the garden was lovely. Today's inflation is the inevitable consequence not of the Conservative Government's prices and incomes policy but of the Labour Government's absence of any meaningful incomes policy so far.
  Now, after 17 wasted months in which great harm has been done to the British economy in terms of inflation, unemployment and the balance of payments, at Ion last the Government have introduced a statutory incomes policy which they said they would never do. They have done what the 1964–70 Labour Government found they had to do even though they disliked doing it and what the 1970–74 Conservative Government found they had to do even though they disliked

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  doing it. It is a pity that Government's in Britain will not learn from the bitter experience of their predecessors.
  Even though I condemn the Government's attitude, until very recently, towards incomes policies, I welcome the White Paper and the Government's conversion to an incomes policy. This does not mean that I agree with every detail of the White Paper—far from it. Every incomes policy has defects which should be criticised and discussed even if one accepts the principle of the policy.
  Phases 1, 2 and 3 of the Conservative Government's policy had defects but I supported all three in principle. It would be surprising if phase 4 did not also have defects. For this is phase 4 of that policy. That is how I see the White Paper proposals and I suspect that most people in the country will see them in the same way.
  The Prime Minister has explained that his previous objections to statutory incomes policies were not really objections to a statutory policy but only against criminal sanctions on workers. I hope that he believes this explanation, because very few other people do. If it enables him to convince himself that he has not changed his mind and that he is the personification of consistency, so be it. The rest of us prefer to take a different view.
  In welcoming phase 4 of the incomes policy, I hope that it will have at least as much success as phases 1, 2 and 3. Despite the myths that have arisen, these phases were undoubtedly much more successful than unsuccessful.
  As my right hon. Friend the Member for Farnham (Mr. Macmillan) said in the Second Reading debate on the Finance (No. 2) Bill,
  "That policy was not such a failure as it is sometimes made out to be … when we were forced to move to a statutory policy, despite the fact that world prices and commodity costs were escalating to an unprecedented degree, we contained inflation and prevented the hyperinflation that would otherwise have happened. We obtained the consent of the great mass of work people, including the trade unions, right up to the end."—[Official Report, 8th May 1975; Vol. 999, c. 1672.]
  In the same debate, the hon. Member for Berwick and East Lothian (Mr.
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  Mackintosh) concurred in this view. Certainly the Conservative Government's statutory incomes policy succeeded in keeping inflation at a lower level than it has been since, despite the escalation of import prices during phases 1, 2 and 3. Certainly the Conservative Government's policy did not cause anything like the industrial strife that is claimed. There were far fewer days lost through strikes than there were before or have been since.
  Of course phase 3 finally came unstuck as a result of the General Election defeat of the Conservative Government in February last year, but it would be wrong to judge statutory incomes policies on that one reverse, serious though it undoubtedly was. If a true judgment is to be made, one must look at the whole, and phases 1, 2 and 3 had many more successes than failures. I hope that phase 4 will be equally successful.
  My main worry about the Government's proposals is the absence of real teeth in the policy. After the complete failure of the social contract, one inevitably has doubts about toothless monsters. I am particularly concerned about the lack of direct powers to ensure that the pay limits are observed in both the public and the private sectors. It is not enough to threaten to sack the chairman of a nationalised industry if the limit is exceeded or for the Government to say, as the White Paper does, that it
  "will not foot the bill for excessive settlements in the nationalised industries through subsidies, by permitting extra borrowing, or by allowing excess costs to be loaded on the public through increased prices or charges."
  The White Paper continues:
  "All this means that excessive pay settlements will affect employment in the industry concerned."
  The Government know perfectly well that they could not and would not sack miners if there were an excessive settlement in that industry. Nor is it enough for the Government to threaten action through the Price Code to deal with the private sector. We need much stronger powers of a more direct nature over pay—both wages and salaries—and I hope that the Government will think again about this. Perhaps they might even let us see their back-up proposals. It would be even better if they introduced statutory back-up powers with real teeth that would have some effect.

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  Despite some reservations, I believe that the White Paper deserves support in principle. Its authors have not earned any support. Their behaviour in Opposition to every move by the last Conservative Government to deal with inflation was nothing short of disgraceful. They supported every wage and salary claim, no matter how exorbitant. They did everything in their power to undermine the Conservative's Government policy against inflation.
  However tempting it may be for the Conservative Party to launch an all out attack on the White Paper, this is rightly being resisted. If this Government's proposals fail, Britain will fail. The British people will suffer. The Government should get our support now, but if they are to keep it, they must earn it. There must be no backsliding on the policy and the White Paper. If there is, the Government will forfeit any right to support or respect. Belatedly, they have acted. For as long as they act with decision and resolution, they should be supported.
  Mr. Deputy Speaker (Sir Myer Galpern): I would remind hon. Members that the wind-up speeches are due to begin at 9 p.m. It is now almost 8 p.m.
  7.58 p.m.
  Mr. John Cronin: The hon. Member for Leek (Mr. Knox) made an interesting speech. It was reassuring to hear him welcome the White Paper. He said he hoped that there would be no backsliding from the White Paper. I hope there will be no blacksliding from his speech and that he will join us in the Lobby this evening.
  I congratulate the Chancellor of the Exchequer and the Secretary of State for Employment on their joint effort. It has obviously involved considerable political disturbance to them. The White Paper has one unique quality which escaped the right hon. Member for Down, South (Mr. Powell). He said that it was the same as before, and claimed that there was a staggering similarity to other wage policies we have had in the past. The one important difference is that this policy has the support of the TUC General Council, the principal unions and the general public. That is the important difference between this policy and the
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  other five we have had in the last 10 years, and that is why it is more likely to be successful.
  It would be gracious to express some appreciation of the trade union leaders who have taken considerable personal risks to make a substantial contribution to this policy. Jack Jones, Joe Gormley and others have put themselves in considerable personal jeopardy with some members of their unions in order to support a policy whch they believe to be in the best interests of the nation.
  I have some sympathy with my hon. Friends who feel that they cannot support the White Paper. There is no doubt that it involves a substantial departure from the manifesto, and we accept that it will cause some heartsearching among many active workers in the Labour Party throughout the country. I shall probably have some difficulty in explaining the White Paper to the Loughborough Constituency Labour Party. However, the manifesto cannot be regarded as tablets of stone coming down from the mountain, to be adhered to rigidly, when we face a national crisis of the greatest magnitude.
  I am therefore sorry that some of my hon. Friends have put down an amendment and that some, I understand, are to vote against the White Paper. It is unfortunate that at a time of national crisis we cannot have more solidarity on the Government benches. I am surprised at some aspects of the amendment. One of its principle demands is for import controls. It is generally agreed that import controls always produce reciprocal import controls in other countries—
  Mr. Mikardo: That is not at all true.
  Mr. Cronin: I could imagine nothing more deleterious to our trade situation.
  My hon. Friends seem to have in mind some direct control of private investment into public investment. When done on the scale envisaged by my hon. Friends I can imagine nothing more calculated to reduce international commercial confidence in this country. The crisis we face is very much a crisis of confidence.
  It is suggested in the amendment that we should mobilise our overseas assets. Surely that simply means spending our

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  reserves. What does "mobilise" mean, if it does not mean spending the reserves?
  Mr. Mikardo: I am sorry that my hon. Friend has not read the amendment more closely, or studied the documents which explain it. We are proposing to mobilise a sector of private portfolio holdings. The effect of that would not be to dissipate them it would mean that certain liabilities which we now have to discharge across the exchanges could be discharged in sterling. It is as simple as that.
  Mr. Cronin: What my hon. Friend suggests is simple but my point is that it would have disastrous effects. I understand perfectly what he wants to do. What my hon. Friends have in mind would immediately cause a great reduction in the living standards of this country.
  Mr. Mikardo: What does my hon. Friend expect of the White Paper?
  Mr. Cronin: It is extraordinary that the amendment suggests nothing for coping with the unquestionable problem of wage inflation. Yesterday my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) said that wage increases were not an important element in the present inflation; that they had merely a marginal effect. I should have thought that both sides of the House, practically all economists, and anyone who has any dealings with political economies, accepted that the principal crisis is created by wage inflation.
  When I heard my hon. Friend assuring us that increased wages were not an important part of inflation I felt that I was listening to him in some sort of nightmare, hearing him say that the earth was flat. Everyone except for a very small section agrees that wage inflation is the biggest cause of our troubles.
  Mr. Mikardo: My hon. Friend certainly will have difficulties in Loughborough.
  Mr. Cronin: I trust that I will not have the same difficulties as those which my right hon. Friend the Member for Newham, North-East (Mr. Prentice) is having, because although there are those who disagree with my views, there are not the manoeuvres which are taking place in my right hon. Friend's constituency.
  Hon. Members on both sides of the House have suggested that the Bill which
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  provides sanctions against breaking what is at present a voluntary policy should be published. There is a respectable argument for that case. It is tiresome to debate a White Paper, the ultimate sanction of which is a Bill which has not yet been published. It is clear that our overseas creditors would like to see sanctions with teeth. The financial institutions would like a Bill with sanctions. It would greatly increase confidence. We must realise, however, that this is the most sensitive part of the White Paper policy, and since, in September, the TUC General Council and leading trade unionists will be trying to steer the Trades Union Congress into agreement with the White Paper policies, it would be absolute folly to publish the Bill at this stage. The Bill is not necessary, and its absence does not cause any injustice.
  Mr. Tom Swain: Will the consultants and the British Medical Association follow the guidelines laid down by the TUC?
  Mr. Cronin: I cannot speak for my professional colleagues, but I assume that they will have to do so. The most they can get is an increase of £6 per week—[Interruption.] Speaking as one who believes in the White Paper, I think the answer to my hon. Friend's question must be "Yes".
  The policy base of this White Paper will not produce successful results immediately. There will be continuing price increases as a result of what is already in the pipeline, and all the economic indicators show that there will be a deepening recession in this country. Obviously, through the next few months there will be great pressure on the Government to abandon or modify the policy. I hope that my right hon. Friend the Secretary of State for Employment will make it clear that the Government will adhere rigidly to the policy. Unless they do, the present deplorable economic situation will rapidly deteriorate further.
  This is a psychological exercise, and the whole effect of the White Paper will depend on creating the realisation that the Government mean what they say and will pursue their policy. Yesterday, my right hon. Friend the Chancellor said that there would be a review of public expenditure, and in the Budget he sought to put in hand measures to reduce public spending

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  by about £900 million in 1976–77. There has been an enormous runaway increase in public expenditure. Even a few hours after the White Paper was published there was a request for Supplementary Estimates of £2 billion. There has been a 44 per cent. increase in public expenditure, which is now approaching 50 per cent. of the GNP.
  As a Socialist I welcome public expenditure, because it is a redistribution of resources. Obviously we need more public expenditure on such things as homes, better medical services, better education and better social security benefits. But public expenditure has now increased to an extraordinary degree, and that applies to the increases in local authority rates. I hear ceaseless complaints from my constituents about the rate increases, as, no doubt, do all other hon. Members. I hope, therefore, that after the review the Chancellor will take more effective action to keep public expenditure under control, while maintaining all the necessary Socialist priorities. Public expenditure must be decreased in the immediate future.
  I entirely accept that it would be most unwise to attempt any short-term cuts in public expenditure. However, public expenditure always has to compete with capital investment and with consumer expenditure. Capital investment is inadequate at present and it is politically impossible without enormous increases in taxation, to reduce consumer expenditure to the substantial degree necessary to keep public expenditure at its present rate. I hope that the Chancellor will be firm when dealing with that cause of inflation.
  The right hon. and learned Member for Surrey, East (Sir G. Howe) and the right hon. Lady the Leader of the Opposition have said that the present economic crisis is the fourth which this Government have experienced. I suggest that this is totally untrue, because there would never have been this enormous escalation of wages had it not been provoked by the attitude of the previous Conservative Government. If we had not had the Industrial Relations Act and the confrontation with the miners, there would be a more helpful attitude on the part of the trade unions.
  The Conservative Government expanded the monetary supply in a most reckless way—they induced Lord Barber to trans-
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  fer his activities to an entirely different place. Everyone knows that increases in the money supply take approximately two years to work through. In 1972 Lord Barber increased the money supply by 22 per cent. and in 1973 by 24 per cent. We are now beginning to feel the real effects of this. For right hon. Gentlemen opposite to indicate that the present crisis is the Government's doing is as hypocritical as their intention to abstain tonight. It is extraordinary that at a time of great national crisis all we can expect from the Opposition is that they will reserve their judgment and abstain. History will not forgive them, but will remember the toughness, courage and determination of my right hon. Friends on the Government Front Bench, who will enforce this policy.
  8.13 p.m.
  Mr William Clark: The House has listened with great interest to the remarks made by the hon. Member for Loughborough (Mr. Cronin) and is pleased with the sort of chat he had with his hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo). The House is indebted to the hon. Member for Loughborough for demolishing the manifesto myth that seems to keep cropping up. He should have gone on to say that only 39 per cent. of those who voted went along with that manifesto.
  It has come out in the debate that the action that the Government have taken has been too late. It has been delayed for 17 months. Our competitors, especially in Europe, have taken action against inflation. I shall not bore the House with the figures of their rates of inflation, because those figures have been bandied about sufficiently. It is obvious that in the United Kingdom we cannot measure up to the records of our overseas competitors.
  One thing that upsets the public is the effrontery of the Prime Minister. A few days ago when the Prime Minister was being pressed on what he would do about inflation, he said that no panic measures were necessary, as if our inflation had just crept up on him the day before. Inflation has been going on for some time. The Government bear heavy responsibility for allowing it to continue for as long as it has. Now we have a package deal, and many people are asking the question: will it work? We

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  all agree that the enemy is inflation. We differ only on how to tackle it. The Conservative Party believes that inflation should be tackled one way and the Labour Party believes that it should be tackled another. No doubt the Liberal Party has its own solution to the problem. It has emerged from this two-days' debate that all hon. Members agree—even the hon. Member for Loughborough conceded this—that public expenditure has got out of hand and that we are spending too much money that we do not have.
  It is all very well for the hon. Member for Loughborough to say that to increase public expenditure or to have a high public expenditure means a redistribution of wealth or resources. However, this does not apply if the country does not have the money. This is the trouble we are in, and this is what I cannot understand about the White Paper.
  Having regard to the position of sterling and our international financial standing in the world, foreigners will say that as a country we are living above our means, and consequently we must cut Government expenditure. It is complete madness for the White Paper to contain proposals for increasing Government expenditure. I know that £200 million is a drop in the ocean, but it is a step in the wrong direction. The Government should be going the other way and reducing their expenditure. This is why sterling is so weak.
  Mr. Ivor Clemitson: Put up the rates.
  Mr. Clark: It does not matter what we do. Labour Members do not seem to understand that we can only go on for so long spending money that we do not have. Eventually the situation catches up with us and the price becomes greater and greater the longer we continue.
  Mr. Mikardo: Cut defence.
  Mr. Clark: At last the Government have accepted, in the White Paper, that there will be cash limits on the nationalised industries. That is a step in the right direction. The other day a Minister said that if a chairman of a nationalised industry exceeded the £6
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  guideline he would be sacked. That is an interesting remark. I should have thought, with our parliamentary tradition, that the Minister in charge of the Department which dealt with that nationalised industry should also be sacked. There are many anomalies. Labour Members may laugh but a Minister cannot shed responsibility to the chairman of a nationalised industry. He must take some responsibility himself. Many more anomalies will arise from this £6 guideline.
  The point has been made, and it is worth repeating, that although the flat-rate £6 guideline sounds attractive, it does, at the end of the day, upset the differentials between the craftsman and the labourer. Therefore, more trouble is being stored up for the country. The rate of inflation is 26 per cent. and the Chancellor is trying to reduce it to 10 per cent. within one year. As the right hon. Member for Down, South (Mr. Powell) said, this will be a painful operation.
  I should like to remind the Minister that when the Conservative Government were in power they took action against inflation when it was running at only 9 per cent., 10 per cent., and 11 per cent. This Government have waited until inflation has reached 26 per cent. before thinking that some action should be taken.
  One thing that we do understand is that people want increased wages or salaries. However, insufficient attention is given to what rate of production will result. It is no good comparing the United Kingdom with Germany and saying that the Germans receive high wages. The Germans have a high rate of production, whereas our rate of production is low and stagnant. It is no good our sitting in cloud-cuckoo land and expecting a German day's pay for a British day's work. We have to increase our production—
  Mr. Clemitson: Or investment.
  Mr. Clark: I am grateful to the hon. Gentleman for reminding me about investment. What we must realise, from the indications internationally, is that, probably towards the end of next year but certainly in 1977, world trade will take a reasonable upturn. As an industrial nation, we should now be planning to take advantage of that upturn.

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  That brings me to investment. I am engaged in industry. Investment in industry depends on two things—confidence and profitability. The question is whether one can get one's money back after a period. So much is said by Labour Members—as it is in one of the amendments on the Order Paper—to the effect that investment must be directed. What is not said is how it will be paid for. As far as I can see, there will be confiscation. We cannot direct investment without confiscation, and it is no good Labour Members below the Gangway thinking that we can.
  Investment in Britain is slack for many reasons. It might be a good idea if the Minister got rid of the myth that investment depends on a political party. It has nothing to do with that at all. It might be a good idea for the Government to undertake an investigation into why business men do or do not invest. The results of such an investigation would be very salutary for many Labour Members. If one is to invest, obviously one must get one's money back. We cannot get people to lend money for new machinery, or whatever it is, on any other basis.
  There are many reasons why British business men are not investing. One reason is the lack of confidence, about which there can be no doubt. We have high taxation, advance corporation tax, capital transfer tax, dividend limitation and price control, and as if that is not good enough, we shall probably have a wealth tax in addition. What incentive is there for any business man, or anyone for that matter, to invest, with all these shackles on him? The investor may be a foreigner, and he will look at this country and its strike record. We must get back to realism if we are to have an upturn in investment. One cannot legislate for investment.
  Mr. Mikardo: That sounds beautiful, but can the hon. Gentleman say why it was that in the three years 1971, 1972 and 1973, when the profits of manufacturing industry rose by a half and its taxation was reduced by one-third, its investment still fell by one-third?
  Mr. Clark: The investment continued. The rate of growth of the investment did not rise as fast as it had been rising. That is very different from saying that it fell by one-third. It was the rate of growth in investment that fell.
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  If we are to have investment we must have an adequate return on capital.
  Mr. Mikardo: They had it then.
  Mr. Clark: I do not want to delay the House for too long.
  Mr. Tom Litterick: Answer the question.
  Mr. Clark: There is also the question of the Government's nationalisation policy. When we have a national crisis on our hands, to devote our energies to trying to take over this or that industry, whether or not it takes resources, when all our energies should be directed at trying to solve the crisis, is complete madness. Of our exports, 97 per cent. come from private enterprise. If we keep nationalising the manufacturers of goods for export, our exports are bound to drop. Hon. Members on both sides of the House know that the efficiency of the nationalised industries cannot compare with that of private enterprise. [Interruption.] Labour Members below the Gangway must do their homework. They ought to look into private enterprise, which last year paid £3,000 million in tax. If we had taxed the nationalised industries, how much tax would they have paid? They would not have paid anything. Consequently, the nationalisation proposals are irrelevant and absolute nonsense. They are merely a sop to the Left wing of the Labour Party and to the detriment of Britain. The more people talk about this matter, the better.
  We must let industry get on with its job. We want less Government intervention in industry. One cannot direct investment or legislate for prosperity. We must also stop trying to hide the unpalatable facts. We should tell the public the absolute truth, which is that the standard of living in Britain must come down before we can get out of this trouble.
  I am not a critic of the trade union movement. I agree with it wholeheartedly.
  Mr. Mikardo: That is kind.
  Mr. Clark: It is not a question of being kind. It would not be a bad idea if some Labour Members below the Gangway were sometimes to say something good

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  about capitalism. However, we must avoid putting the TUC on such a pinnacle, as though if the TUC says something, it is gospel. There are only 10 million trade unionists out of 55 million people in Britain. Let us keep them in perspective. Of course, they are an important part of our economic life, but let us not exaggerate their importance.
  In order to get out of our difficulty we must be united. One thing that the Conservative Party will always do, including this occasion, is support anything that is in the national interest—unlike what happened when the miners confronted the democratically elected Government of the day and when Labour Members not only did not support the Conservative Government but actively worked against that Government, working up a feeling that the Conservative Government were against the trade unionists. Labour Members knew that that was untrue and unfair. What they did was done for party political purposes. We all know that. However, in this case the Conservative Party will not play the same game.
  8.27 p.m.
  Mr. Ian Mikardo: I never like to sound discourteous even to hon. Members with whom I profoundly disagree, but I am bound to say, in all honesty, that the only description that can be applied to the speech to which we have just listened is one which I shall have to borrow from the right hon. Member for Down, South (Mr. Powell). It was a niece of economic illiteracy. The hon. Member for Croydon, South (Mr. Clark) said in a blinding flash of original thought that we are all against inflation and disagree only on how to deal with it. The reason we disagree about how to deal with it is that we disagree about what causes it. We write different prescriptions because we make different diagnoses.
  But one diagnosis which has been made over and over again today deserves some examination. The hon. Member for Leek (Mr. Knox) and my hon. Friend the Member for Loughborough (Mr. Cronin) made speeches which were virtually identical and would qualify both for office as junior ministers—I should think very junior ministers—in a coalition government. They made exactly the same speech and
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  both said that the only cause of our inflation is the rise in wages and salaries. I do not blame them altogether, for many others have said it, including one Minister of Her Majesty's Government who ought to know better.
  I want to look at that assertion. It is true, of course, that wages are a contributory cause, and a significant one, of price rises; but we have only to examine some figures to see, first, that they are not the only cause; secondly, that they are not the principal cause; and thirdly, that they are not even the largest cause. I invite the hon. Members for Leek and Loughborough, and any other hon. Gentlemen who wishes, to do a very simple piece of arithmetic. Perhaps it is not all that simple for it involves a little research. They should get two sheets of paper. On one they should calculate what has been the contribution, over the last 12 months, to the increase in the retail price index of all wage and salary rises. That is not an easy calculation but it can be made. I am sure that it has been made by the Department of Employment which will have the figure.
  Hon. Gentlemen should then take another sheet of paper and write down all the things the Government have themselves done which have increased prices—and we shall find that there are quite a lot of them. They should then do the arithmetic to quantify that. There are, for example, increases in indirect taxation which are inflationary, VAT and the second rate of VAT. I am not saying whether these actions were right. I am only saying that they are major contributors to inflation. Then there are the results of the insistence on charging economic prices for the products of nationalised industries. Again, I do not say whether this is right or wrong, but there have been increases in postal and telephone charges, and gas and electricity, and all the rest. These can be quantified as a contributor.
  There is the increased cost of imports derived from the progressive devaluation of the pound which is, of course, Government policy; and one can quantify what contribution that has made to the increase in prices. There is our membership of the Common Market. There is the cancellation, now happily slightly

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  reversed, of rent controls, with a considerable consequent rise in rents. If one adds all up all those one gets the figure of the contribution which direct action, direct decisions, by the Government—whether they were right or wrong decisions—has made. And it will be found that the contribution made to inflation by all the increases that there have been in wages and salaries is a very small fraction of the increases which have been made as a direct result of governmental decisions and governmental policy. There are, of course, other contributors to inflation, so to start with the idea that we have only to hold down wages and salaries and we have got rid of the problem of inflation is absolutely nonsensical.
  I will speak of my attitude towards wages and salaries. I begin by saying that I do not believe in unregulated, free wage bargaining. I never have done. I differ from many of my hon. Friends and many members of my trade union in that. I am not a new convert to this idea. I wrote a pamphlet explaining the need for, and setting out a method for, the planning of the wages sector more than 20 years ago—I would guess long before any member of the Cabinet or the Shadow Cabinet ever began to think about the problem.
  The reason I took that view, and still do, is simple. I am a Socialist and therefore I believe in a planned economy, and of course it is a nonsense to say that we can have a planned economy with an unplanned wages sector. But that coin has an obverse and a reverse. There is another side to the coin. If we cannot have a planned economy with an unplanned wages sector, we cannot have a planned wages sector in an otherwise unplanned economy—and that is what the Government are trying to create. This is why their analysis has gone absolutely wrong. I am not saying that we have to wait for a complete, beautifully, tidily planned economy and a Socialist State before we can plan a wages sector. But I am saying that the planning of the one and of the other have to go along part passu.
  The Government's and our party's commitment to full employment has been abandoned. For the first time for many years we heard the Chancellor of the Exchequer say, in a speech horrifyingly similar to that of one of his predecessors,
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  Philip Snowden, in May 1931, that he will introduce measures deliberately to create unemployment. That is not planning.
  We have a price control which is at best marginal and at worst ineffective. We have no control over capital outlays, no control over imports, no control over investment, no measures generally to stimulate investment. We had an Industry Bill, which was to correct the defects that the right hon. Member for Sidcup (Mr. Heath) listed in that speech which my hon. Friend the Member for Penistone (Mr. Mendelson) quoted this afternoon, in which he condemned the private sector of industry for its failure to invest, and invest intelligently. The vitals have been cut out of that Bill, to make sure that the Government have no power to put right those defects.
  My hon. Friend the Member for White-haven (Dr. Cunningham) spoke of the necessity not merely to increase investment but to spread it out better. He spoke with feeling of the had economic situation in his area of West Cumbria. Under our original Industry Bill plans, under the Bill as we envisaged it and described it in considerable detail in the Labour Party's election programme, the Government would have been able to help my hon. Friend to stimulate the economy of West Cumbria. He said that it could be done through planning agreements. We have now ensured that there will be no planning agreements, except when a company asks for them. I do not know any company in West Cumbria which will tell the Government "Please make us out a planning agreement." That is no sort of planning as the other side of the medal of a planned wages sector.
  We are to have sharp cuts in the social services. We are not told what they are, but I can inform the House when we shall be told. It will be in the second week in September, the week after the Annual Congress of the TUC. The wraps will come off then. The cuts are being kept carefully under wraps in the hope that they will not cause the annual congress of the TUC to lose confidence in the Government's policy.
  What contribution will those cuts make to what was the core of the thesis on which we won two elections last year, that we were seeking to create a fundamental

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  and irreversible shift in the balance of wealth and power towards working people and their families? If we cut the social wage, if we reduce spending on education, the health services, the welfare services and other services of local authorities, what contribution are we making there?
  It was an interesting coincidence that a few minutes before we began our debate my hon. Friend the Member for Gravesend (Mr. Ovenden) sought leave to introduce a Bill under the Ten Minutes Rule. He referred in his speech to the activities of a gentleman who has made enough profit recently out of finding a loophole in the rent legislation, and rent racketeering on working people, to build himself a £300,000 golf course. How can we allow that to go on and then say "Nevertheless, we must have controls over wages"?
  A contract is a bi-partisan matter. Both sides have obligations. I do not believe that the Government have done nearly enough. Those who say that they have done nothing are at best grossly exaggerating and at worst wrong. But I do not think that the Government have done nearly enough to honour their side of the contract to give themselves the authority to demand a real control over wages. I say to my right hon. Friend the Prime Minister, although he is the last man who needs to be told, that the social contract was not a contract only with the General Council of the TUC. It was a contract with the nation. The people who elected the Labour Government feel let down, as the Government are not carrying out the policy on which they were elected.
  I must explain why I shall vote against this White Paper. I never pretend to speak for anybody but myself. I shall vote against the White Paper for two reasons. The first is that I shall not have the opportunity of expressing my views by voting for the amendment in the name of my hon. Friend the Member for Liverpool, Walton (Mr. Heffer). I understand that there are procedural reasons why that could not be taken, although I judge from what Mr. Speaker said yesterday that if the debate had finished a little earlier that vote could have been taken. However, I do not want to become involved in procedural questions.
  That amendment contains a policy alternative to that proposed by the
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  Government. Whether right hon. and hon. Members agree or not, they cannot dismiss it. Nobody argued that its contents were wrong, although the right hon. Member for Sidcup and my hon. Friend the Member for Whitehaven said that the policy might be all right but that it would not take effect quickly. I do not agree. Some of its measures would take effect quickly.
  The basic policy in the amendment was first put forward by us in 1966. That policy has since been continually refined, improved, extended and updated. We were told that the policy would not have an immediate effect. However, if someone had acted on it in 1966 we should be reaping the benefits of it in 1975. It was said that the policy would have no effect. I stake what little reputation I have as a forecaster of future events on the prediction that within 12 months the Government will have adopted at least two of the measures contained in the amendment but with which they do not now agree.
  My second reason for voting against the White Paper is the unpublished, secret Bill. My hon. Friend the Member for Penistone said that the Opposition were indulging in a parliamentary gimmick act about the secrecy of the Bill and were making a great point about what the Prime Minister did or did not say, and whether he made a slip of the tongue. However, this is a real and serious point.
  I am curious to see the Bill. I have not seen it. I know that it does not establish a statutory incomes policy. How do I know that? All my right hon. Friends have been telling me for years that only over their dead bodies would there be a statutory incomes policy. I know that none of them is in the mood for suicide. Therefore, I know that the Bill does not contain a statutory incomes policy.
  Next Tuesday will mark the 30th anniversary of my election to Parliament. In all that time I have not seen—I am very curious to see it—a statute containing non-statutory provisions. That will be remarkable.
  However, that is not the reason which compels me to go into the Lobby. I should like to spell out the reason. The Bill is mentioned in the White Paper, it has figured prominently in the debate and yesterday the Chancellor of the Exchequer

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  gave an indication of what was in it, although we do not know everything that is in it. When that Bill is introduced in four or five months' time, if there is no Division on the White Paper my right hon. Friends would have the right to say to me "What are you beefing about? You had your opportunity to vote against the White Paper. What are you beefing about now that the Bill has been introduced?"
  We hear phrases such as "a voluntary policy with sanctions", and so on. I am concerned about Joe Bloggs, the ordinary bloke on the shop floor. Whatever esoteric phraseology the Government use and whatever etiolated formulae the Government give birth to, they will not persuade me that if Joe Bloggs cannot get an increase which he is claiming because he is prevented from claiming it, that is a statutory policy, whereas if Joe Bloggs cannot get the increase he is claiming because his employer is statutorily forbidden to give it to him, that is not a statutory policy. That is nonsense.
  I wish to say something to the Prime Minister in his absence and I hope that he will read it, busy as he is. He turned to us on the benches below the Gangway and, waving a metaphorical, admonitory finger, he said, "You naughty boys. If you vote tonight you will be voting against a decision of the TUC". I do not need any curtain lectures from the Prime Minister about the proper relations between the House and the trade union movement and between the Labour Party and the trade union movement.
  As is well known, the Prime Minister has a phenomenal memory. He has much the best memory of any man I ever met, but he also has a very good "forgettery". At times he has a convenient "forgettery". When he waves that metaphorical, admonitory finger at me telling me that I must not do something because it is against what the trade unions want, my less good memory goes back to the years between 1968 and 1970. I wonder whether the Prime Minister has forgotten that during that time he consistently spat in the eye of the General Council of the TUC. He derided what it said and he trod on all the TUC's desires and feelings.
  Some of us opposed him in that. I do not know whether my right hon. Friend the Prime Minister still remembers, but
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  I bet that my right hon. Friend the Secretary of State for Employment remembers. He was the leading and most effective figure amongst those who constantly told the Prime Minister that he would not succeed and that he would engineer a defeat for the Labour Government—which unhappily proved all too true. I do not want any curtain lectures from the Prime Minister about that.
  I am delighted that there has been a closer relationship between the Government and the TUC in the last few years. It started when the Conservative Government were in office. There has been over the past three years a tripartite committee of, first, the Shadow Cabinet and now the Cabinet as one party, the Labour Party as the second party and the General Council of the TUC as the third party. It has met regularly over the past three years. I have been a member of that committee ever since it was established. I am delighted with it. It has done a marvellous job of work and it continues to do so. My only regret is that we did not have it in 1966. If we had had the committee we should have avoided the mistakes of that awful period from 1966 to 1970, and we would not have lost the 1970 election. However, better late than never. We now have the committee and I hope that it will go from strength to strength.
  Having said that, I believe that I am sent here by my electors to exercise my judgment and not to take a Messianic view of anybody. I do not believe in tablets of stone. I do not accept the doctrine that I have to accept what somebody says because he comes down out of a cloud from the top of a mountain. I would not take tablets of stone from any Conservative Member, and in my early days I refused to take them from Herbert Morrison. I will not take them from the Prime Minister. I will not even take them from my good and dear friend Jack Jones, for whom I have the greatest admiration. I want to think things out for myself. I shall vote tonight in the way that I believe is right and not because X says so, Y says so or even Jones says so, God bless him.
  I think that the Prime Minister's little intervention was a little below his normal standard. Of course, it is true that the General Council has given support to

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  what the Government are doing, and I can understand the importance that the Government attach to that. But let us wait six months. Let us see what the trade union movement's attitude is on 22nd January 1976 when it discovers that not all workers will get the £6, when it discovers that some employers, with Government encouragement, will resist even the £6 increase. That is the first shock that the boys on the General Council will get.
  When unemployment rises above 1,500,000—and to my deep regret I fear that will almost certainly happen—when the trade union movement, and above all its members, finds that price increases are still much higher than the Chancellor has forecast, and that the cut in the real standard of living is much greater than forecast, and when it finds that the secret Bill is enacted, many trade union leaders will take a different view.
  My hon. Friend the Member for Sheffield, Attercliffe (Mr. Duffy) has said that his constituents took a certain view at a meeting last Sunday. I invite my hon. Friend to have another constituency meeting on 22nd January 1976 after all the events that I have mentioned have taken place, and especially after the Bill has come to light.
  I noticed today that my right hon. Friend the Prime Minister replied vigorously to every question that was put to him except one. That was the question about what happens if an employer seeks an injunction against workers who go for more than £6 and how one legislates against such employers. In other words, how does one legislate along the lines described by my right hon. Friend the Chancellor of the Exchequer yesterday without creating—I put it no higher—the possibility that workers may be sued for contempt of court? My right hon. Friend the Prime Minister did not answer that question. Perhaps he did not know the answer. Perhaps the Government are still thinking about it. If that is the case, they are asking for a blank cheque. I shall not go into the Lobby tonight to give them a blank cheque.
  Finally, I apologise for trespassing on the time of the House and for boring the House with what the French call an
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  Explication do vote. Since I shall not be called tomorrow, perhaps I can give an Explication de mon vote demain. Although I shall vote against the White Paper, I shall not vote against the Second Reading of the Bill which is to come later because it contains a couple of provisions that I applaud. My hon. Friends and I have tabled some rough, tough amendments to that Bill. In Committee, I assure the Government, we shall pursue those amendments with all the power at our command.
  Since in this speech I have fallen into the habit of quoting the French, I wish to remind the House that the French also have a saying to the effect that what is worse than a crime is a mistake. My hon. Friend the Member for Penistone said, "Let us not get all doctrinal about statutory policy". Let me say to my dear hon. Friend that it is not the doctrine that matters, or whether that doctrine is good or bad. What worries me about propositions in the White Paper is not whether they are doctrinally beautiful or whether they shine in a blazing light surrounded by cherubim and seraphim. What worries me is that they "ain't gonna work". It is not that the propositions are wrong but that they will be unsuccessful. My objection to them is not a moral one but a practical one. We have been through all this before—at least that applies to some of us. It is like waking from a nightmare and being relieved that one has awakened, then taking a sip of water and returning to sleep and having the nightmare over again. It is for that reason that I shall not be in the Government Lobby tonight.
  9.58 p.m.
  Mr. James Prior: I am sorry that the hon. Member for Bethnal Green and Bow (Mr. Mikardo) went on for so long that the hon. Member for Cornwall, North (Mr. Pardoe) was unable to take part in the debate.
  I can understand the hon. Member for Bethnal Green and Bow saying that he feels that he has awakened after a nightmare. I am only a little worried that the right hon. Gentleman the Secretary of State for Employment may tonight find himself in a position of still being in a nightmare and of never waking again.
  It is no surprise to us that the Secretary of State for Employment has been

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  asked to reply to the debate. After two difficult days of debate, he is expected to provide one of his firework displays—[HON. MEMBERS: "He has gone."] I do not know where the right hon. Gentleman has gone. Obviously he is expected to stir the hearts of the Tribune Group before they lose the battle, having taken their Socialist consciences through the Lobby. Unfortunately, some of the right hon. Gentleman's Socialist fire and powder has got a little damp after the last year or so.
  The right hon. Gentleman must look back with nostalgia to the days when he was a back bencher below the Gangway or when, as a new Minister heady with power, he would tell the House that the miners could have all that they wanted and no harm would come of it or, on the other hand, that the Pay Board was to be wound up and that the social contract would deal with everything. He has said:
  "I regard the whole apparatus of the statutory control of incomes as a cancerous institutional growth."
  In the feast of broken promises and pledges that the Government are now having to chew their way through, the right hon. Gentleman's plate is heaped especially high, and it ill becomes the Chancellor of the Exchequer or the Prime Minister to ask us what is our policy. For a Government who have changed their policy completely in the space of a few weeks it really is quite extraordinary that they should have the nerve even to mention policy to us.
  Tonight we are taking part in a burial—a burial of the social contract. It really is quite remarkable that that old fraud, of which we have heard so little during this debate, has become the great unmentionable. It is a bit odd when we recall some of the things said about it in the recent past—the Prime Minister, of course, taking the first prize for hyperbole. He said, at Bury, on 26th September 1974:
  "The Social Contract is our answer in the short term, the medium term and the long term to the problems of a modern industrialised society".
  At Cardigan, on 28th September 1974, he described it as
  "the boldest experiment in civilised government that Britain has ever seen"
  The right hon. Gentleman won the last election on those slogans, and, even as
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  the social contract began to founder, he and his colleagues went on telling us that it was really working—or perhaps I should say that it would have worked if only Sir Kenneth Keith, the BBC, Henry Ford and others had made it work. Even if it was not working, the impression was given that there was no alternative. While it was conspicuously a total flop, there was the feeling that it was unpatriotic to say so—rather like making criticisms of the England cricket team. Even Labour Ministers began making a few critical noises. When the Minister for Overseas Development, for example, noted the blindingly obvious fact that some unions had welshed on the social contract, he was condemned as "economically illiterate" by the Secretary of State for Employment, and had his wrist slapped by the Prime Minister.
  But now we know that the social contract is dead and buried. The Daily Mirror has said so. A couple of weeks ago it told us:
  "Let's face it, the Social Contract is shameful flop; a national sick joke".
  What an extraordinary about-turn. It is rather like Pravda attacking the Red Army. There could be no surprise, therefore, at the speech of the Prime Minister. I must say that I should have thought that for the winding up of a debate of this nature the Prime Minister and Chancellor of the Exchequer would have had the courtesy to attend. They talk a great deal about the importance of Parliament but they treat it with scant respect.
  The Secretary of State for Employment—who has always regarded himself as a great parliamentarian—will, I hope, convey to the Prime Minister and the Chancellor of the Exchequer that when the concluding speeches begin at 9 o'clock they ought at least to have the decency to be here to take part in them. But, of course, we have had no apology, no appreciation from the Prime Minister of where his policies have taken us, no understanding of the enormity of the about-face and the about-turn that he has performed. As the hon. Gentleman the Member for Bethnal Green and Bow has so well put it, the Prime Minister has a very good memory but he has an equally good "forgettery".
  Characteristically, we have had the defence from the Prime Minister today

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  that the course which he is following is the course that he meant to follow all along. Condemning statutory pay policies totally and without condition really meant not using criminal sanctions against workers. Although he thus explains away the situation, the question posed yesterday by the hon. Member for Liverpool, Walton (Mr. Heffer) has received no answer.
  We ought to ask the Secretary of State. The hon. Member for Walton asked yesterday about a situation in which the Government used their statutory powers, under the Bill which we have not seen, to roll back a settlement that an employer had reached with the unions so that it conformed to the statutory pay limit. If an injunction were taken out by the employer against his workers, who then went on strike, and if the workers were then taken to court and refused to go to court, would this not give rise to a committal for contempt of court? We have had no answer from the Government to that question.
  The pathetic answer that we had from the Chancellor of the Exchequer when he was asked a similar question by my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) was that that was precisely one of the drafting points still under consideration. A drafting point? How long has the Chancellor of the Exchequer to be a member of the Government to think that this is a drafting point?
  The Prime Minister has tried hard to convince us that what we have here is not a statutory wages policy but a voluntary remuneration, charges and grants policy. How a policy which removes from employers a contractual obligation to make pay settlements above the norm can be described as "voluntary", I do not know.
  I should like to take up one more point which was made strongly by my right hon. Friend the Member for Sidcup (Mr. Heath) and which the Prime Minister apparently dealt with at Question Time and interrupted my right hon. Friend to say again that any retrospection of powers under the statutory policy would not apply. However, discussing the Bill which he have not seen, the Chancellor of the Exchequer said yesterday:
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  "The Bill would, thirdly, provide for compulsory notification of all wage settlements and, fourthly, once passed, it would enable the Government to reduce to the White Paper level any settlements made after 1st August 1975.'—[Official Report, 21st July 1975; Vol. 896 c. 58.]
  Who is right? Who is responsible for this policy? Will the Secretary of State tell us tonight whether any reserve powers Bill will enable the Government to reduce to the pay limit any award made, or is it not to operate retrospectively, as the Prime Minister now says is the case?
  All this merely points out the need for this Bill to be published forthwith. The hon. Member for Bethnal Green and Bow said that the Government were asking for a blank cheque. They are. But they are asking for a good deal more than that from the House of Commons. They are asking us to judge the determination and effectiveness of what they seek to do, but to do so without any of the information on which to base our decision.
  The Government whisper to us. They tell their creditors abroad rather less coyly that there is a great statutory weapon in their bottom drawer. Therefore, this policy is voluntary, except that it needs statutory powers to make it work, and, if it does not work, new statutory powers will be introduced.
  Is this a voluntary policy, a voluntary statutory policy or a statutory voluntary policy? We just do not know. The Government play with words and think that they are taking everyone in. They are intent only on finding some reasonable words which will provide a fig leaf for the right hon. Gentleman so that he does not have to go naked in to the conference chamber with the Tribune Group. With or without his fig leaf, we are optimistic about his chances. His right hon. Friend the Prime Minister also takes that view, because, like many before him, he believes that the Left can speak to the Left. We take a simpler view. We know that a paper tiger can speak to a paper tiger.
  The White Paper leaves many questions unanswered. How do the Government intend to obtain information about pay settlements if the supply of voluntary information is not coming forward in the required amount, particularly if, afterwards, the reserve powers are brought in

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  to penalise an employer for exceeding the limit? Who will monitor the policy? Will it be the right hon. Gentleman, or some high and mighty authority on which the right hon. Gentleman has always poured scorn? What about the position of small firms? Certainly some will pay over the odds. This policy can lead only to a sense of unfairness, which will break it. If there is to be a statutory policy or a pay policy, should there not be a mandatory system of reporting claims as well as settlements?
  What about increments? How are they to be monitored? What is the difference between an incremental scale and a structured merit review? If some people get increments, others will also want them. There will be unfairness all round, especially to the blue collar workers.
  What are the policy guidelines? What will be the position of an agreement made, for example, in May for a further increase later in the year, or for a threshold agreement later in the year? Will that fall outside the pay limit or within it? What about an agreement made before 1st August, or before the publication of the White Paper—an agreement which is due to come into operation during the course of the year, having already been negotiated, as, for example, in the electrical contracting industry?
  What will happen to pensions, which have been mentioned by my right hon. and hon. Friends? What will happen to those people whose pay is being scaled down in their last year and whose pensions depend upon their salary in the last three years of their service? Will they receive the same sort of treatment as, apparently, Members of Parliament, or will they he held down? What is the position of someone who has some sort of index-linked Pension and who expects an increase perhaps in excess of £6? Will he be allowed to have it?
  Those are all perfectly fair questions, which the Government should answer. Without those answers we are in no position to judge the effectiveness of the policy.
  What happens when the year is over? We all know—the right hon. Gentleman has told us time and again—that the difficulties created by the statutory policy resulted in the flexible use of the social contract. The difficulties, anomalies and
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  differentials had to be cleared up. Yet the Government have gone for the one type of policy, the fixed lump sum, which creates the most difficulties when we start to come out at the other end.
  I turn to the attitude of the TUC. The TUC has done the Government and the country proud. It has gone very much further than before, and we should all recognise that fact. But we should also recognise, as the hon. Member for Sheffield, Attercliffe (Mr. Duffy) said, that the situation is much more serious. Unemployment is rising rapidly and inflation is at the astronomical level of 26 per cent.
  There has been a feeling, certainly in the rank and file of trade unionists, of disillusionment with national leadership, to which the leadership has had to respond on this occasion. But, as my right hon. Friend the Member for Sidcup said in his great speech today, why must we go so far downhill before recognition of the problem breaks through?
  The unions and the work force are enormously powerful in many industries, particularly the nationalised industries, the computer industry and the car industry. They can hold the rest of the country to ransom. Until we come to terms with that power and seek to understand it, and until we learn to live with it and harness it for the good of all, no economic policy, no statutory policy, no voluntary policy or monetarist policy can work in Britain.
  It is not that our wages are too high; it is that our productivity is too low. We push up our paper wages, we devalue our currency, and we fall further behind our competitors. Compare what has happened in Germany since about 1965 with what has happened in Britain. We have had far bigger paper increases in cash, but a far smaller real increase in proper terms.
  My hon. Friend the Member for Croydon, South (Mr. Clark) said that we must all learn that investment comes from profits and that profits come from using new investment to the full. It is only after that that increases in real pay become possible.
  It is significant to see how the Germans have dealt with this matter, compared with ourselves. Some 12 million German workers this year settled for a wage increase averaging 6·8 per cent. The employers argued that today's profits were tomorrow's investments and the day after

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  tomorrow's jobs and mass incomes. That is the lesson that we in Britain have not learned since the war. Therefore, we are and will go on struggling until we learn that lesson.
  The Government must play their part. Looking back to the time when we were in government, I recall that at last, after great difficulty, we were getting profit margins up. But who were the people who condemned us for allowing profits to rise in the way that they were rising at that time? Who can blame industrialists for being slow to invest? We wanted them to invest much quicker than they did, but they were not prepared to invest until, first, they could see the market and, secondly, the labour situation improving. That is the lesson that we must learn.
  I believe that there is a much greater understanding of this problem on the shop floor than is generally recognised. Leaders need the support of their rank and file. They need the confidence that comes from that massive support. The actions of unions, just like the actions of certain political parties, are not always representative of their total membership.
  We believe that further efforts to improve participation in union affairs is absolutely essential to the success of the nation. Why cannot we bring in a Bill now which will provide an opportunity for a free postal ballot for unions? Why cannot we bring before this House a measure, which we know is overdue, which will provide that employer's time is made available on the employer's premises for election to union office at local level? These are matters which would enormously aid the democratisation of trade unions. They would give power and authority to trade union leaders which they lack at the moment. So many trade union leaders tell me that they have to go to the left in order to hold their memberships—[HON. MEMBERS: "Name them."] I could name them, but I am not going to embarrass them in public. Hon. Members know who they are and the Government Front Bench knows only too well.
  Mr. Neil Kinnock: The central part of the right hon. Gentleman's policies is what he calls the democratisation of unions. He claims, on the basis of personal acquaintance of trade union
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  leaders, that they have told him they are forced to the left because of the absence of these policies. The right hon. Gentleman has an obligation to this House to name the people to whom he is referring.
  Mr. Prior: It conies very ill from the party opposite to demand that I name anyone or anything. They cannot even produce a Bill to the House. They cannot expect me to name these trade union leaders. I have no intention of doing so. I am already getting behind with what I wish to say.
  I agree very much with my right hon. and learned Friend, the Member for Surrey, East and what he has said today about unemployment. High unemployment is a scourge, and I do not want young people of today to look back at 1975 and 1976 as their grandfathers look back on the 1920s and 1930s.
  A statutory pay policy in an emergency such as this can help us to reduce what would otherwise be high unemployment. I do not like it, but it is infinitely preferable to high unemployment. The rest of the policy militates against success in what the Government hope to achieve. Nowhere is this more marked than in the lack of a policy to deal with unemployment. We had a debate two months ago about school leavers and drew attention to the fact that they would have great difficulty in getting jobs this summer. The Government have been complacent in the extreme. An additional 3,000 apprenticeships have been granted by the Engineering Industry Training Board and a similar number have been provided by other boards, but generally not enough is being done to help school leavers.
  Not enough is being done to create the skills which we may not need at the moment but we hope we shall need in two or three years' time. Nothing is being done to keep school leavers off the streets and out of trouble. If they cannot find work, we shall have to pay them unemployment benefit or social security. We urge the Government to do much more than they are doing at the moment. Let us have from the Government tonight a greater commitment to the training scheme, and if it costs money, adding to public expenditure, let us do that instead of subsidising food

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  and rents. If the Government asked my constituents whether they preferred a job or a penny less on a loaf of bread, they would soon get their answer, as it has been given to me. The British regard jobs as more important than anything. The Government are going about this in precisely the wrong way.
  Right hon. and hon. Members on the Labour side have made a number of charges against the Opposition which I should like to deal with. First they argued that our policy could only lead again to a three-day working week throughout British industry, and to increasing unemployment. That is what they said at the two General Elections in 1974. That argument is a little difficult for them now to maintain. Currently, industrial production is actually lower than it was during the three-day working week, and unemployment has increased by 120,000 in a month, to the worst June figures ever recorded. We know there is much worse to come.
  The Prime Minister and his right hon. Friends spent much of their time at the last General Election saying that our policies, particularly what was proposed by my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), would lead to a massive increase in unemployment. The Prime Minister told us:
  "We won't have our people unemployed."
  Who is unemployed now, and what is the Prime Minister's message for them? He said:
  "The Opposition want panic measures; we won't take panic measures."
  I am sure that most people who have read the White Paper will agree that never have measures been cobbled together with so much haste, with so little thought, and in so much evident panic.
  It is all very well for the Secretary of State to shake his head. If he had been here as he should have been at the start of my speech he might have been able to answer certain questions which were not answered by the Prime Minister when he spoke. It comes to something when the Prime Minister has to borrow from his friend, the Editor of The Times, the suggestion that we are being indecisive and even unpatriotic. The Prime Minister put up his former propaganda Minister
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  to say that last weekend. Let me explode that charge, too.
  The Government's policies have doubled the rate of inflation, while in other countries it has been halved or cut even further. The social contract was a grossly irresponsible electoral fraud. For months we have urged the Government to tackle inflation, and now they have been impelled by events, by our creditors, by the plummeting pound, to act. With the rest of the nation the Opposition heave a sigh of relief. But even now the Government are doing too little, much too late. So we are now telling them patiently, once again, what they must do, and we are giving them another shove in the right direction.
  This afternoon my hon. Friend the Member for Chippenham (Mr. Awdry) told the Prime Minister that he wanted to support the Government's measures because they were moving in the right direction, but would the Government not make any concession in respect of nationalisation? Of course, we have had not the slightest indication from the Government that they are prepared to vary their policies in any way in order to help win our support in the Lobby. We shall push the Prime Minister in the right direction, but he cannot expect us to slap him on the back.
  I can promise him that when he and his colleagues are fighting to hold the line against an inflationary pay demand or an increase in a charge for a service, or to cut public expenditure, as they will have to do if their policy is to succeed, we shall support them. We shall remember what they did in a similar situation when they were in opposition. We shall remember the industrial action which regularly received the Labour Party's seal of approval. We shall remember how the Deputy Leader of the Labour Party even found it impossible, under a Conservative Government, to tell the people to obey the law. We shall remember all that, but we shall still support the Government when the fight against inflation and even the future of parliamentary democracy hangs in the balance. The terrible irony, which was made all the more poignant by the moving and masterly speech by my right hon. Friend the Member for Sidcup this afternoon—[Interruption.] How Labour Members can cheer his speech now, when

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  they did what they did to him in December 1973 and January 1974, I do not know.
  The Prime Minister is having to take these measures today, at a time when we are poised on the very brink of hyperinflation, precisely because he and his colleagues refused to give us a scintilla of support when we were fighting the battle against rising prices. The events of the past year and the suffering and hardship that we shall have to experience over the next two, three or four years, as right hon. Gentlemen have told us, is, in great part, the price we have to pay for the attitude of the right hon. Gentleman when he was Leader of the Opposition. However, when the right hon. Gentleman has to hold the line—as he will if this policy is to succeed—when his resolution and that of many of his colleagues melts like the snow in spring, we shall support him. I hope that for the sake of our country he has the courage to deserve it.
  9.32 p.m.
  The Secretary of State for Employment (Mr. Michael Foot): The right hon. Member for Lowestoft (Mr. Prior) has asked me a number of general and detailed questions, as have many right hon. and hon. Gentlemen who have spoken in this debate. I shall do my best to deal with most of those questions. If I fail to answer all the detailed questions, perhaps I shall be forgiven and an opportunity will arise in the debate tomorrow to deal with some of them further. As the right hon. Member for Sidcup (Mr. Heath) said, in any such policy as this, there are a number of details that have to be worked out and I believe that some of those can best be dealt with tomorrow.
  However, I shall try to deal tonight with the main questions which the right hon. Member for Lowestoft has put to me. I hope that he will allow me to start my remarks by referring, first, to the speech made by my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo), who certainly made some critical remarks on which I shall comment. My hon. Friend underlined what he calls the central core of the policy which the Labour Party has fought to pursue in recent years. That central core is concerned with the association between the Labour Party and the trade union
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  movement which we sought to build in the years before the 1974 General Election and which we have sought to sustain since. Certainly the basis on which I and the Government have sought to act during the period since March 1974 has been of strengthening that association. That has been part of the meaning, as I have understood it, of the much-derided but still extant social contract.
  At one stage the right hon. Member for Lowestoft paid tribute to the statesmanship of the TUC and he paid an even more glowing tribute to the contribution it has made in recent days than that paid by any other right hon. or hon. Conservative Member. But the title of the document to which he was paying tribute, the document which the General Council of the TUC has recently drawn up, is "The Development of the Social Contract", so whatever the right hon. Gentleman may say about it, the TUC certainly has not altered its view about the central part which the social contract must play in all our affairs.
  It has been on that basis that we have sought to sustain a close relationship between the Government and the TUC during all of this period. Sometimes we have been attacked for that; but I believe that, especially in a time of national crisis—and I certainly believe that it is a time of national crisis, as described by many who have contributed to the debate from one side of the House or the other—it has been of immense importance for this country that we have had such a close relationship on which we are able to build.
  Long before my right hon. Friend the Chancellor of the Exchequer made his statement to the House on 1st July, which is the origin of the discussions we are having now—indeed, for some months before—we had been having conversations with the representatives of the General Council on the way in which we would devise a new social contract or new guidelines under the social contract to govern the period ahead. We had the most detailed discussions, and out of those discussions a framework of policy was devised. It was a framework in which we still had to fix the figures. But a framework had been devised, and a framework which is of great importance in the policy we are devising now.

  425
  Perhaps I may remind the House of what were some of the central propositions to which the spokesmen of the General Council committed themselves, as we did, during those conversations. I believe that they are propositions most apposite to the crisis we face, propositions that cannot be denied by right hon. or hon. Members in any part of the House.
  The first proposition was that they agreed with us that the current rate of inflation imposed an intolerable burden on our society and our economic prospects. It constituted a serious threat of a most grave kind to employment, and particularly to employment in the export trades over the coming weeks and months. How many people might be thrown out of their jobs if the rate of inflation continued in Britain at a level twice, or perhaps even more than twice, the level of that in many of the other countries in the Western World? That was the first general proposition on which we were agreed.
  The second proposition in which they also concurred—this was not so easy for them, particularly in view of the wild and grotesque statements that were made about greedy trade unionists grabbing for money and all the rest of it—was that one factor, not by any means the sole factor, contributing to the inflationary situation was wages.
  My hon. Friend the Member for Bethnal Green and Bow and my right hon. Friend the Member for Lanark (Mrs. Hart) have referred to some of these questions. But we went into these figures in great detail in our discussions, and if they had agreed with the figures produced by my right hon. Friend the Member for Lanark, certainly the TUC would not have agreed with the statement which was included in the proposition which we put to the General Council a week ago. But the fact remains that they said that wages, too, are playing a major part in this development at the present time.
  A third proposition to which we agreed was that there should and must be dramatic and deliberate efforts made to break the vicious inflationary spiral and that it should be done by direct intervention, by having a flat-rate concept to deal with the next wage round. These were the propositions on which they
  426
  agreed, and all of that was the framework established long before my right hon. Friend came to the House and made his statement on 1st July. This was to be achieved, also, by voluntary means, by persuasion and consent, and not by any system of statutory enforcement.
  The right hon. Lady the Leader of the Opposition yesterday quoted a statement of mine on the statutory policy in which I said—and I still hold to the view—that I believed that it would be quite wrong for people to imagine that these problems can be solved by the establishment of some vast central apparatus, a point to which I shall return. I wish to underline that we have had these intimate discussions with representatives of the General Council over the whole of this period. We had devised a general framework of policy to try to deal with the problems facing the country and had come near to agreement upon those policies.
  It was one of my fears and anxieties when my right hon. Friend the Chancellor of the Exchequer made his statement and told us of the situation that he felt impelled him to ask for those measures, that the work that had been done between the Government and the TUC to build up the arrangements by which we were to deal with the problem were to be undermined and destroyed because of the attempt to establish a legislative method of dealing with the problems. It has not turned out in that sense. We renewed our discussions during the subsequent 10 days and out of those discussions secured the voluntary approval of the TUC of the proposals to be incorporated in the plan to be put to this House. I believe that the House would be most unwise to disregard the significance of what the TUC has done in making these proposals to us.
  My hon. Friend said it was an historic gesture by the TUC. I believe that it was an act by the TUC which can be of incalculable significance in enabling us all to try to devise the policy for dealing with our problems—and what I think was so important was that the TUC felt that it was the immediate test that had to be faced, that it was not possible for anybody to dodge it or to say, "We will postpone it to see what other policies can be devised. They did so, I think,

  427
  because they understood how impossible it was for this country to continue with the rate of inflation prevailing at the time, and accepted that action had to be taken to deal with it in the immediate future.
  The TUC saw that danger and therefore were prepared for the action to be taken, but they also saw the possibilities, too. They saw that a great prize was available. They were not only concerned about the danger if the current rate of inflation were allowed to persist; they were not only determined to take action and not to be deflected from that course; they also saw the great advantage that could be secured if this policy could be carried out and if, over the next 12 months, we achieved the objectives on which the Government and the TUC had agreed together. If we did achieve them, there would be a transformation in this country. We should be all the better able to proceed with all the other policies that we wish to pursue.
  That was the situation. I believe that it was the right course for the TUC and the Government to take and that it would have been impossible for us to turn aside from it. We had to face the challenge of that time. Nobody could dodge it.
  Some of my hon. Friends and other hon. Members have raised important objections. They ask "Is this a statutory policy or not?" I am not interested in any semantic quibbles.
  Mr. Tim Renton: Will the right hon. Gentleman confirm that the price of his staying in the Cabinet was the non-publication of the statutory reserve powers Bill? If so, how is that compatible with his oft-proclaimed belief in a sovereign Parliament and open Government?
  Mr. Foot: I shall come to that point.
  Under the so-called secret reserve powers Bill, to which reference has been made, there would be powers making it an offence for an employer to pay above a particular figure. It would be a quibble, and one that would hardly be successful, to deny that that is a statutory policy, so I am not denying it.
  If such a reserve powers Bill were to be introduced, I should certainly have great difficulties. Indeed, I think that I
  428
  should hardly be the proper person to do it—but I do not want to add enticement to the dish. If that were the case, I think that that would be a statutory policy. It would certainly be very much opposed to what I have argued for through many years.
  But I am very gratified that much earlier in the White Paper is a phrase to which much less attention is paid, the statement in paragraph 9, long before there is any reference to reserve powers, that
  "The Government have made and will continue to make every possible effort to achieve the necessary restraint on incomes by consent."
  Mr. Leon Brittan: Is there a real difference between a policy that has been agreed to under the threat of the implementation of a reserve power that is already stated to exist in draft and the implementation of the draft?
  Mr. Foot: The sentence that I have just read was perfectly well understood by the TUC in all our conversations. One of my hon. Friends talked of blackmail in the methods by which agreement was induced. There was nothing of the sort. There was a perfectly sensible agreement between the Government and the TUC that it was much better to try to deal with these matters by consent and voluntary actions. I believe that that proposition will command general assent, though not, of course, among Opposition Members who have always favoured a statutory policy. However, I should have thought that it would command general support on this side of the House. Certainly, that is the right way in which we should proceed. I believe that we should proceed by those means.
  The Opposition asked me about retrospection. That matter was properly dealt with by the Prime Minister this afternoon. He said that there was no question of employers entering into commitments after 1st August which they might find retrospectively to be against the law. I trust and believe that such a Bill will never be introduced. The dangers referred to by my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) are never likely to arise. If such legislation were ever produced, it would contain safeguards guaranteeing against that situation.

  429
  I listened carefully to those who spoke about retrospection and constitutional rights. Nothing would be more offensive to proper constitutional practice than that the Government should introduce such a Bill and brandish it in the face of the House of Commons and the country. That would not be the right way to proceed. I trust that such a Bill will never see the light of day and will never be passed by the House of Commons.
  Much the best course is to proceed upon the basis of the voluntary agreement we have reached with the TUC. That is the only way in which any policy can be satisfactorily secured.
  Mr. Alexander Fletcher: Have any of the details of the reserve powers Bill been made known to members of the TUC?
  Mr. Foot: What was said to the TUC on the subject was the same as was said by the Chancellor of the Exchequer in the House of Commons yesterday.
  If we said that such a policy could be carried through only by force—by statutory enactment in that sense—we would be near a situation in which that policy had failed. I hope that the House will support the voluntary policy, which is not defined by the measure to be presented tomorrow. It is not a measure of statutory enforcement in the sense in which statutory policies on wages have operated before. It is a policy to enable the voluntary agreement with the TUC to be carried through. It is no good the Opposition laughing. It seems that the Opposition are in no fit mood to be educated tonight. We must do that tomorrow.
  If it were not for the measure which we shall propose tomorrow, it would be impossible to carry out the voluntary policy. Indeed if the voluntary policy is to be carried out we must lift from employers the contractual obligations to pay more than £6. There is no possibility of altering that fact.
  Mr. Amery: The drift of the right hon. Gentleman's speech is that nothing matters except the understanding between the Government and the TUC. If I understood him rightly, he went further than that and took on the hypothetical position that if the TUC did not accept the Government's proposals and a statutory policy had to be introduced he would not be the
  430
  man to commend it to the House. Am I right in understanding that?
  Mr. Foot: I was not dealing with a hypothetical situation. I was explaining the position, I hope clearly enough for the right hon. Gentleman to comprehend. It has been my view throughout all these discussions—I am sorry to repeat it and underline it but I believe it to be of paramount importance—that if we are to deal with inflation—and it cannot be dodged—if we are to deal with the economic crisis —and we cannot run away from it—we can do so only in association with the TUC and the trade union movement as a whole.
  We should have learned by now that Governments which try to go to war with the trade union movement will not solve the problem of inflation or any other problem. We face not only inflation but the kindred, interwoven problem which is as serious as inflation, and that is the menace of unemployment, which is at a hideous level already, still rising and likely to rise for some period ahead. I understand perfectly the anxieties and fears not only of my hon. Friends but of millions of people throughout the country. Those fears dominate the whole country. That is one of the paramount reasons why the Government believe it is essential to proceed with these measures. We face an economic typhoon of unparalleled ferocity, a combination of inflation and unemployment, and we cannot run away from it. We cannot imagine that the problem will disappear on its own account.
  There are many measures which the Government seek to carry through, measures which have been described by many of my hon. Friends, for dealing with the fundamental problems of our society in industry, investment and the rest. There remains the necessity of facing the immediate challenge of overcoming inflation, curbing the danger and ensuring that we survive to be able to deal with these problems. I believe that the response from the country to our policy will be better than the response which has been given by many hon. Members.
  It is our duty in the House to speak plainly and boldly. I believe that the response from the country may be better than collectively we deserve. It will be a response which the country will give to a Government who say that they

  431
  will not make war upon the trade union movement but will solve the problems in company with those who have helped to bring it to power and whose policies we are determined to carry through.
  Mr. Patrick Cormack: We have heard the most outrageous display of hypocrisy that a Minister has ever subjected the House to. The right hon. Gentleman has ignored every question that has been asked, he has treated the House with gross contempt, and he should resign. By doing
  so he would lend credibility to his Government's policy which it manifestly lacks at the moment.
  Mr. Walter Harrison (Treasurer of Her Majesty's Household)rose in his place and claimed to move, That the Question be now put.
  Question, That the Question be now put, put and agreed to.
  Question put accordingly, That the amendment be made:—
  The House divided: Ayes 269, Noes 327.

  Division No. 291.]

  AYES

  [9.59 p.m.

  Adley, Robert

  Eden, Rt Hon Sir John

  Johnson Smith, G. (E Grinstead)

  Aitken, Jonathan

  Edwards, Nicholas (Pembroke)

  Jones, Arthur (Daventry)

  Alison, Michael

  Elliott, Sir William

  Jopling, Michael

  Amery, Rt Hon Julian

  Emery, Peter

  Joseph, Rt Hon Sir Keith

  Arnold, Tom

  Eyre, Reginald

  Kaberry, Sir Donald

  Atkins, Rt Hon H. (Spelthorne)

  Fairbairn, Nicholas

  Kellett-Bowman, Mrs Elaine

  Awdry, Daniel

  Fairgrieve, Russell

  Kershaw, Anthony

  Baker, Kenneth

  Farr, John

  Kimball, Marcus

  Banks, Robert

  Fell, Anthony

  King, Evelyn (South Dorset)

  Bell, Ronald

  Finsberg, Geoffrey

  King, Tom (Bridgwater)

  Bennett, Sir Frederic (Torbay)

  Fisher, Sir Nigel

  Kitson, Sir Timothy

  Bennett, Dr Reginald (Fareham)

  Fletcher Alex (Edinburgh N)

  Knight, Mrs Jill

  Benyon, W.

  Fletcher-Cooke, Charles

  Knox, David

  Berry, Hon Anthony

  Fookes, Miss Janet

  Lamont, Norman

  Biffen, John

  Fowler, Norman (Sutton C 'f'd)

  Lane, David

  Biggs-Davison, John

  Fox, Marcus

  Langford-Holt, Sir John

  Blaker, Peter

  Fraser, Rt Hon H. (Stafford & St)

  Latham, Michael (Melton)

  Body, Richard

  Fry, Peter

  Lawrence, Ivan

  Boscawen, Hon Robert

  Galbraith, Hon T. G. D.

  Lawson, Nigel

  Bottomley, Peter

  Gardiner, George (Reigale)

  Le Marchant, Spencer

  Bowden, A. (Brighton, Kemptown)

  Gardner, Edward (S Fylde)

  Lester, Jim (Beeston)

  Boyson, Dr Rhodes (Brent)

  Gilmour, Rt Hon Ian (Chesham)

  Lewis, Kenneth (Rutland)

  Bradford, Rev Robert

  Gilmour, Sir John (East Fife)

  Lloyd, Ian

  Braine, Sir Bernard

  Glyn, Dr Alan

  Loveridge, John

  Brittan, Leon

  Godber, Rt Hon Joseph

  Luce, Richard

  Brotherton, Michael

  Goodhart, Philip

  McAdden, Sir Stephen

  Brown, Sir Edward (Bath)

  Goodhew, Victor

  McCrindle, Robert

  Bryan, Sir Paul

  Goodlad, Alastair

  McCusker, H.

  Buchanan-Smith, Alick

  Gorst, John

  Macfarlane, Neil

  Buck, Antony

  Gow, Ian (Eastbourne)

  MacGregor, John

  Budgen, Nick

  Gower, Sir Raymond (Barry)

  Macmillan, Rt Hon M. (Farnham)

  Bulmer, Esmond

  Grant, Anthony (Harrow C)

  McNair-Wilson, M. (Newbury)

  Burden, F. A.

  Gray, Hamish

  McNair-Wilson, P. (New Forest)

  Carlisle, Mark

  Grieve, Percy

  Madel, David

  Carr, Rt Hon Robert

  Griffiths, Eldon

  Marshall, Michael (Arundel)

  Carson, John

  Grist, Ian

  Marten, Neil

  Chalker, Mrs Lynda

  Hall-Davis, A. G. F.

  Mates, Michael

  Channon, Paul

  Hamilton, Michael (Salisbury)

  Mather, Carol

  Churchill, W. S.

  Hampson, Dr Kieth

  Maude, Angus

  Clark, Alan (Plymouth, Sutton)

  Hannam, John

  Mawby, Ray

  Clark, William (Croydon S)

  Harrison, Col Sir Harwood (Eye)

  Maxwell-Hyslop, Robin

  Clarke, Kenneth (Rushcliffe)

  Harvie Anderson, Rt Hon Miss

  Mayhew, Patrick

  Clegg, Walter

  Havers, Sir Michael

  Meyer, Sir Anthony

  Cockcroft, John

  Hawkins, Paul

  Miller, Hal (Bromsgrove)

  Cooke, Robert (Bristol W)

  Hayhoe, Barney

  Mills, Peter

  Cope, John

  Heath, Rt Hon Edward

  Miscampbell, Norman

  Cormack, Patrick

  Heseltine, Michael

  Mitchell, David (Basingstoke)

  Corrie, John

  Hicks, Robert

  Moate, Roger

  Costain, A. P.

  Holland, Philip

  Molyneaux, James

  Critchley, Julian

  Hordern, Peter

  Monro, Hector

  Crouch, David

  Howe, Rt Hon Sir Geoffrey

  Montgomery, Fergus

  Crowder, F. P.

  Howell, David (Guildford)

  Moore, John (Croydon C)

  Davies, Rt Hon J. (Knutsford)

  Howell, Ralph (North Norfolk)

  More, Jasper (Ludlow)

  Dean, Paul (N Somerset)

  Hunt, John

  Morgan, Geraint

  Dodsworth, Geoffrey

  Hurd, Douglas

  Morgan-Giles, Rear-Admiral

  Douglas-Hamilton, Lord James

  Hutchison, Michael Clark

  Morris, Michael (Northampton S)

  Drayson, Burnaby

  Irvine, Bryant Godman (Rye)

  Morrison, Charles (Devizes)

  du Cann, Rt Hon Edward

  Irving, Charles (Cheltenham)

  Morrison, Hon Peter (Chester)

  Dunlop, John

  James, David

  Mudd, David

  Durant, Tony

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

  Neave, Airey

  Dykes, Hugh

  Jessel, Toby

  Nelson, Anthony

  Neubert, Michael

  Rodgers, Sir John (Sevenoaks)

  Taylor, R. (Croydon NW)

  Newton, Tony

  Ross, William (Londonderry)

  Taylor, Teddy (Cathcart)

  Normanton, Tom

  Rossi, Hugh (Hornsey)

  Tebbit, Norman

  Nott, John

  Rost, Peter (SE Derbyshire)

  Temple-Morris, Peter

  Oppenheim, Mrs Sally

  Royle, Sir Anthony

  Thatcher, Rt Hon Margaret

  Osborn, John

  Sainsbury, Tim

  Thomas, Rt Hon P. (Hendon S)

  Page, John (Harrow West)

  St. John-Stevas, Norman

  Townsend, Cyril D.

  Page, Rt Hon R. Graham (Crosby)

  Scott, Nicholas

  Trotter, Neville

  Pattie, Geoffrey

  Shaw, Giles (Pudsey)

  Tugendhat, Christopher

  Percival, Ian

  Shaw, Michael (Scarborough)

  van Straubenzee, W. R.

  Peyton, Rt Hon John

  Shelton, William (Streatham)

  Vaughan, Dr Gerard

  Pink, R. Bonner

  Shepherd, Colin

  Viggers, Peter

  Powell, Rt Hon J. Enoch

  Shersby, Michael

  Wakeham, John

  Price, David (Eastleigh)

  Silvester, Fred

  Walker, Rt Hon P. (Worcester)

  Prior, Rt Hon James

  Sims, Roger

  Walker-Smith, Rt Hon Sir Derek

  Pym, Rt Hon Francis

  Sinclair, Sir George

  Wall, Patrick

  Raison, Timothy

  Skeet, T. H. H.

  Walters, Dennis

  Rathbone, Tim

  Smith, Dudley (Warwick)

  Warren, Kenneth

  Rawlinson, Rt Hon Sir Peter

  Speed, Keith

  Weatherill, Bernard

  Rees, Peter (Dover & Deal)

  Spence, John

  Wells, John

  Rees-Davies, W. R.

  Spicer, Jim (W Dorset)

  Whitelaw, Rt Hon William

  Renton, Rt Hon Sir D. (Hunts)

  Spicer, Michael (S Worcester)

  Wiggin, Jerry

  Renton, Tim (Mid-Sussex)

  Sproat, Iain

  Winterton, Nicholas

  Rhys Williams, Sir Brandon

  Stanbrook, Ivor

  Wood, Rt Hon Richard

  Ridley, Hon Nicholas

  Stanley, John

  Young, Sir G. (Ealing, Acton)

  Ridsdale, Julian

  Steen, Anthony (Wavertree)

  Younger, Hon George

  Rifkind Malcolm

  Stewart, Ian (Hitchin)

  Rippon, Rt Hon Geoffrey

  Stokes, John

  TELLERS FOR THE AYES:

  Roberts, Michael (Cardiff NW)

  Stradling Thomas, J

  Mr. Adam Butler and

  Roberts, Wyn (Conway)

  Tapsell, Peter

  Mr. Cecil Parkinson.

  NOES

  Abse, Leo

  Corbett, Robin

  Fowler, Gerald (The Wrekin)

  Allaun, Frank

  Cox, Thomas (Tooting)

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

  Anderson, Donald

  Craigen, J. M. (Maryhill)

  Freeson, Reginald

  Archer, Peter

  Crawford, Douglas

  Freud, Clement

  Armstrong, Ernest

  Crawshaw, Richard

  Garrett, John (Norwich S)

  Ashley, Jack

  Cronin, John

  Garrett, W. E. (Wallsend)

  Ashton, Joe

  Crosland, Rt Hon Anthony

  George, Bruce

  Atkins, Ronald (Preston N)

  Cryer, Bob

  Gilbert, Dr John

  Atkinson, Norman

  Cunningham, G. (Islington S)

  Ginsburg, David

  Bagier, Gordon A. T.

  Cunningham, Dr J. (Whiten)

  Golding, John

  Bain, Mrs Margaret

  Dalyell, Tam

  Gould, Bryan

  Barnett, Guy (Greenwich)

  Davidson, Arthur

  Gourlay, Harry

  Barnett, Rt Hon Joel (Heywood)

  Davies, Bryan (Enfield N)

  Graham, Ted

  Bates, Alt

  Davies, Denzil (Llanelli)

  Grant, John (Islington C)

  Bean, R. E.

  Davies, Ifor (Gower)

  Grimond, Rt Hon J.

  Beith, A. J.

  Davis, Clinton (Hackney C)

  Grocott, Bruce

  Benn, Rt Hon Anthony Wedgwood

  Deakins, Eric

  Hamilton, James (Bothwell)

  Bennett, Andrew (Stockport N)

  Dean, Joseph (Leeds West)

  Hamilton, W. W. (Central Fife)

  Bidwell, Sydney

  Delargy, Hugh

  Hardy, Peter

  Bishop, E. S.

  Dell, Rt Hon Edmund

  Harrison, Waller (Wakefield)

  Bienkinsop, Arthur

  Dempsey, James

  Hart, Rt Hon Judith

  Boardman, H.

  Doig, Peter

  Hattersley, Rt Hon Roy

  Booth, Albert

  Dormand, J. D.

  Hatton, Frank

  Boothroyd, Miss Betty

  Douglas-Mann, Bruce

  Hayman, Mrs Helena

  Bottomley, Rt Hon Arthur

  Duffy, A. E. P.

  Healey, Rt Hon Denis

  Boyden, James (Bish Auck)

  Dunn, James A.

  Heffer, Eric S.

  Bradley, Tom

  Dunnett, Jack

  Henderson, Douglas

  Bray, Dr Jeremy

  Dunwoody, Mrs Gwyneth

  Hooley, Frank

  Brown, Hugh D. (Provan)

  Eadie, Alex

  Hooson, Emlyn

  Brown, Robert C. (Newcastle W)

  Edelman, Maurice

  Horam, John

  Brown, Ronald (Hackney S)

  Edge, Geoff

  Howell, Denis (B'ham Sm H)

  Buchan, Norman

  Edwards, Robert (Wolv SE)

  Hoyle, Doug (Nelson)

  Buchanan, Richard

  Ellis, John (Brigg & Scun)

  Huckfield, Les

  Butler, Mrs Joyce (Wood Green)

  Ellis, Tom (Wrexham)

  Hughes, Rt Hon C. (Anglesey)

  Callaghan, Rt Hon J. (Cardiff SE)

  English, Michael

  Hughes, Mark (Durham)

  Callaghan, Jim (Middleton & P)

  Ennals, David

  Hughes, Robert (Aberdeen N)

  Campbell, Ian

  Evans, Fred (Caerphilly)

  Hughes, Roy (Newport)

  Canavan, Dennis

  Evans, Gwynfor (Carmarthen)

  Hunter, Adam

  Cant, R. B.

  Evans, loan (Aberdare)

  Irvine, Rt Hon Sir A. (Edge Hill)

  Carmichael, Neil

  Evans, John (Newton)

  Irving, Rt Hon S. (Dartford)

  Carter, Ray

  Ewing, Harry (Stirling)

  Jackson, Colin(Brlghouse)

  Carter-Jones, Lewis

  Ewing, Mrs Winifred (Moray)

  Jackson, Miss Margaret (Lincoln)

  Cartwright, John

  Faulds, Andrew

  Janner, Greville

  Castle, Rt Hon Barbara

  Fernyhough, Rt Hon E.

  Jay, Rt Hon Douglas

  Clemitson, Ivor

  Fitch, Alan (Wigan)

  Jeger, Mrs Lena

  Cocks, Michael (Bristol S)

  Flannery, Martin

  Jenkins, Hugh (Putney)

  Cohen, Stanley

  Fletcher Raymond (Ilkeston)

  Jenkins, Rt Hon Roy (Stechford)

  Coleman, Donald

  Fletcher, Ted (Darlington)

  John, Brynmor

  Concannon, J. D.

  Foot, Rt Hon Michael

  Johnson, James (Hull West)

  Conlan, Bernard

  Ford, Ben

  Johnson, Walter (Derby S)

  Cook, Robin F. (Edin C)

  Forrester, John

  Johnston, Russell (Inverness)

  434

  435

  Jones, Alec (Rhondda)

  Moyle, Roland

  Spearing, Nigel

  Jones, Barry (East Flint)

  Mulley, Rt Hon Frederick

  Spriggs, Leslie

  Jones, Dan (Burnley)

  Murray, Rt Hon Ronald King

  Stallard, A. W.

  Judd, Frank

  Newens, Stanley

  Steel, David (Roxburgh)

  Kaufman, Gerald

  Noble, Mike

  Stewart, Donald (Western Isles)

  Kelley, Richard

  Ogden, Eric

  Stewart, Rt Hon M. (Fulham)

  Kerr, Russell

  O'Halloran, Michael

  Stoddart, David

  Kilfedder, James

  O'Malley, Rt Hon Brian

  Stott, Roger

  Kilroy-Silk, Robert

  Orbach, Maurice

  Strauss, Rt Hon G. R.

  Kinnock, Neil

  Orme, Rt Hon Stanley

  Summerskill, Hon Dr Shirley

  Lambie, David

  Ovenden, John

  Swain, Thomas

  Lamborn, Harry

  Owen, Dr David

  Taylor, Mrs Ann (Bolton W)

  Lamond, James

  Padley, Walter

  Thomas, Jeffrey (Abertillery)

  Leadbitter, Ted

  Palmer, Arthur

  Thomas, Mike (Newcastle E)

  Lee, John

  Pardoe, John

  Thomas, Ron (Bristol NW)

  Lestor, Miss Joan (Eton & Slough)

  Park, George

  Thompson, George

  Lever, Rt Hon Harold

  Parker, John

  Thorne, Stan (Preston South)

  Lewis, Arthur (Newham N)

  Parry, Robert

  Thorpe, Rt Hon Jeremy (N Devon)

  Lewis, Ron (Carlisle)

  Pendry, Tom

  Tierney, Sydney

  Lipton, Marcus

  Penhaligon, David

  Tinn, James

  Litterick, Tom

  Perry, Ernest

  Tomlinson, John

  Lomas, Kenneth

  Phipps, Dr Colin

  Torney, Tom

  Loyden, Eddie

  Prentice, Rt Hon Reg

  Tuck, Raphael

  Luard, Evan

  Prescott, John

  Urwin, T. W.

  Lyon, Alexander (York)

  Price, C. (Lewisham W)

  Varley, Rt Hon Eric G.

  Lyons, Edward (Bradford W)

  Price, William (Rugby)

  Wainwright, Edwin (Dearne V)

  McCartney, Hugh

  Radice, Giles

  Wainwright, Richard (Colne V)

  MacCormick, Iain

  Rees, Rt Hon Merlyn (Leeds S)

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

  McElhone, Frank

  Reid, George

  Walker, Harold (Doncaster)

  MacFarquhar, Roderick

  Richardson, Miss Jo

  Walker, Terry (Kingswood)

  McGuire, Michael (Ince)

  Roberts, Albert (Normanton)

  Ward, Michael

  Mackenzie, Gregor

  Roberts, Gwilym (Cannock)

  Watkins, David

  Mackintosh, John P.

  Robertson, John (Paisley)

  Watkinson, John

  Maclennan, Robert

  Roderick, Caerwyn

  Weetch, Ken

  McMillan, Tom (Glasgow C)

  Rodgers, George (Chorley)

  Weitzman, David

  McNamara, Kevin

  Rodgers, William (Stockton)

  Wellbeloved, James

  Madden, Max

  Rooker, J. W.

  White, Frank R. (Bury)

  Magee, Bryan

  Roper, John

  White, James (Pollok)

  Maguire, Frank (Fermanagh)

  Rose, Paul B.

  Whitehead, Phillip

  Mahon, Simon

  Ross, Stephen (Isle of Wight)

  Whitlock, William

  Mallalieu, J. P. W

  Ross, Rt Hon W. (Kilmarnock)

  Wigley, Dafydd

  Marks, Kenneth

  Rowlands, Ted

  Willey, Rt Hon Frederick

  Marquand, David

  Ryman, John

  Williams, Alan (Swansea W)

  Marshall, Dr Edmund (Goole)

  Sandelson, Neville

  Williams, Alan Lee (Hornch'ch)

  Marshall, Jim (Leicester S)

  Sedgemore, Brian

  Williams, Rt Hon Shirley (Hertford)

  Mason, Rt Hon Roy

  Selby, Harry

  Williams, W. T. (Warrington)

  Maynard, Miss Joan

  Shaw, Arnold (Ilford South)

  Wilson, Alexander (Hamilton)

  Meacher, Michael

  Sheldon, Robert (Ashton-u-Lyne)

  Wilson, Gordon (Dundee E)

  Mellish, Rt Hon Robert

  Shore, Rt Hon Peter

  Wilson, Rt Hon H. (Huyton)

  Mendelson, John

  Short, Rt Hon E. (Newcastle C)

  Wilson, William (Coventry SE)

  Mikardo, Ian

  Short, Mrs Renée (Wolv NE)

  Wise, Mrs Audrey

  Millan, Bruce

  Silkin, Rt Hon John (Deptford)

  Woodall, Alec

  Miller, Dr M. S. (E Kilbride)

  Silkin, Rt Hon S. C. (Dulwich)

  Woof, Robert

  Miller, Mrs Millie (Ilford N)

  Sillars, James

  Young, David (Bolton E)

  Mitchell, R. C. (Soton, ltchen)

  Silverman, Julius

  Molloy, William

  Skinner, Dennis

  TELLERS FOR THE NOES:

  Moonman, Eric

  Small, William

  Mr. Joseph Harper and

  Morris, Alfred (Wythenshawe)

  Smith, Cyril (Rochdale)

  Mr. Laurie Pavitt.

  Morris, Charles R. (Openshaw)

  Smith, John (N Lanarkshire)

  Morris, Rt Hon J. (Aberavon)

  Snape, Peter

  Qusetion accordingly negatived.
  Main Question put:—
  The House divided: Ayes 262, Noes 54.

  Division No. 292.]

  AYES

  [10.14 p.m.

  Abse, Leo

  Boyden, James (Bish Auck)

  Clemitson, Ivor

  Anderson, Donald

  Bradley, Tom

  Cocks, Michael (Bristol S)

  Archer, Peter

  Bray, Dr Jeremy

  Cohen, Stanley

  Armstrong, Ernest

  Brown, Hugh D. (Provan)

  Coleman, Donald

  Ashley, Jack

  Brown, Robert C. (Newcastle W)

  Concannon, J. D.

  Bagier, Gordon A. T.

  Brown, Ronald (Hackney S)

  Conlan, Bernard

  Barnett, Rt Hon Joel (Heywood)

  Buchanan, Richard

  Corbett, Robin

  Bates, Alf

  Butler, Mrs Joyce (Wood Green)

  Cox, Thomas (Tooting)

  Bean, R. E.

  Callaghan, Rt Hon J. (Cardiff SE)

  Craigen, J. M. (Maryhill)

  Beith, A. J.

  Campbell, Ian

  Crawshaw, Richard

  Benn, Rt Hon Anthony Wedgwood

  Cant, R. B.

  Cronin, John

  Bishop, E. S.

  Carmichael, Neil

  Crosland, Rt Hon Anthony

  Blenkinsop, Arthur

  Carter, Ray

  Cunningham, G. (Islington S)

  Boardman, H.

  Carter-Jones, Lewis

  Cunningham, Dr J. (Whiteh)

  Booth, Albert

  Cartwright, John

  Dalyell, Tam

  Boothroyd, Miss Betty

  Castle, Rt Hon Barbara

  Davidson, Arthur

  Davies, Bryan (Enfield N)

  Jenkins, Rt Hon Roy (Stechford)

  Radice, Giles

  Davies, Denzil (Llanelli)

  John, Brynmor

  Rees, Rt Hon Merlyn (Leeds S)

  Davies, Ifor (Gower)

  Johnson, James (Hull West)

  Roberts, Albert (Normanton)

  Davis, Clinton (Hackney C)

  Johnson, Walter (Derby S)

  Roberts, Gwilym (Cannock)

  Deakins, Eric

  Johnston, Russell (Inverness)

  Rodgers, William (Stockton)

  Dean, Joseph (Leeds West)

  Jones, Alec (Rhondda)

  Rooker, J. W.

  Delargy, Hugh

  Jones, Barry (East Flint)

  Roper, John

  Dell, Rt Hon Edmund

  Jones, Dan (Burnley)

  Rose, Paul B.

  Dempsey, James

  Judd, Frank

  Ross, Stephen (Isle of Wight)

  Dodsworth, Geoffrey

  Kaufman, Gerald

  Ross, Rt Hon W. (Kilmarnock)

  Doig, Peter

  Kilfedder, James

  Rowlands, Ted

  Dormand, J. D.

  Kilroy-Silk, Robert

  Ryman, John

  Douglas-Mann, Bruce

  Lamborn, Harry

  Sandelson, Neville

  Duffy, A. E. P.

  Leadbitter, Ted

  Shaw, Arnold (Ilford South)

  Dunn, James A.

  Lestor, Miss Joan (Eton & Slough)

  Sheldon, Robert (Ashton-u-Lyne)

  Dunnett, Jack

  Lever, Rt Hon Harold

  Shore, Rt Hon Peter

  Dunwoody, Mrs Gwyneth

  Lewis, Ron (Carlisle)

  Short, Rt Hon E. (Newcastle C)

  Eadie, Alex

  Lipton, Marcus

  Silkin, Rt Hon John (Deptford)

  Edelman, Maurice

  Lomas, Kenneth

  Silkin, Rt Hon S. C. (Dulwich)

  Edwards, Robert (Wolv SE)

  Luard, Evan

  Silverman, Julius

  Ellis, John (Brigg & Scun)

  Lyon, Alexander (York)

  Small, William

  Ellis, Tom (Wrexham)

  Lyons, Edward (Bradford W)

  Smith, Cyril (Rochdale)

  English, Michael

  McCartney, Hugh

  Smith, John (N Lanarkshire)

  Ennals, David

  McElhone, Frank

  Spearing, Nigel

  Evans, loan (Aberdare)

  MacFarquhar, Roderick

  Spriggs, Leslie

  Evans, John (Newton)

  McGuire, Michael (Ince)

  Stallard, A. W.

  Ewing, Harry (Stirling)

  Mackenzie, Gregor

  Steel, David (Roxburgh)

  Faulds, Andrew

  Mackintosh, John P.

  Stewart, Rt Hon M. (Fulham)

  Fernyhough, Rt Hon E.

  Maclennan, Robert

  Stoddart, David

  Fitch, Alan (Wigan)

  McMillan, Tom (Glasgow C)

  Stott, Roger

  Fletcher Raymond (Ilkeston)

  McNamara, Kevin

  Strauss, Rt Hon G. R.

  Foot, Rt Hon Michael

  Magee, Bryan

  Summerskill, Hon Dr Shirley

  Ford, Ben

  Maguire, Frank (Fermanagh)

  Taylor, Mrs Ann (Bolton W)

  Forrester, John

  Mahon, Simon

  Thomas, Jeffrey (Abertillery)

  Fowler, Gerald (The Wrekin)

  Mallalieu, J. P. W.

  Thomas, Mike (Newcastle E)

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

  Marks, Kenneth

  Thorpe, Rt Hon Jeremy (N Devon)

  Freeson, Reginald

  Marquand, David

  Tierney, Sydney

  Freud, Clement

  Marshall, Dr Edmund (Goole)

  Tinn, James

  Garrett, W. E. (Wallsend)

  Mason, Rt Hon Roy

  Tomlinson, John

  George, Bruce

  Mawby, Ray

  Tuck, Raphael

  Gilbert, Dr John

  Meacher, Michael

  Urwin, T. W.

  Ginsburg, David

  Mellish, Rt Hon Robert

  Varley, Rt Hon Eric G.

  Golding, John

  Mendelson, John

  Wainwright, Edwin (Dearne V)

  Gould, Bryan

  Millan, Bruce

  Wainwright, Richard (Colne V)

  Gourlay, Harry

  Mitchell, R. C. (Soton, Itchen)

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

  Graham, Ted

  Molloy, William

  Walker, Harold (Doncaster)

  Grant, John (Islington C)

  Moonman, Eric

  Walker, Terry (Kingswood)

  Grimond, Rt Hon J.

  Morris, Alfred (Wythenshawe)

  Ward, Michael

  Grocott, Bruce

  Morris, Charles R. (Openshaw)

  Watkins, David

  Hamilton, James (Bothwell)

  Morris, Rt Hon J. (Aberavon)

  Watkinson, John

  Hamilton, W. W. (Central Fife)

  Movie, Roland

  Weetch, Ken

  Hardy, Peter

  Mulley, Rt Hon Frederick

  Weitzman, David

  Harrison, Walter (Wakefield)

  Murray, Rt Hon Ronald King

  Wellbeloved, James

  Hattersley, Rt Hon Roy

  Noble, Mike

  White, Frank R. (Bury)

  Hatton, Frank

  Ogden, Eric

  White, James (Pollok)

  Hayman, Mrs Helena

  O'Halloran, Michael

  Whitehead, Phillip

  Healey, Rt Hon Denis

  O'Malley, Rt Hon Brian

  Whitlock, William

  Hooley, Frank

  Orbach, Maurice

  Willey, Rt Hon Frederick

  Hoosort, Emlyn

  Orme, Rt Hon Stanley

  Williams, Alan (Swansea W)

  Horam, John

  Ovenden, John

  Williams, Alan Lee (Hornch'ch)

  Howell, Denis (B'ham Sm H)

  Owen, Dr David

  Williams, Rt Hon Shirley (Hertford)

  Huckfield, Les

  Padley, Walter

  Williams, W. T. (Warrington)

  Hughes, Rt Hon C. (Anglesey)

  Palmer, Arthur

  Wilson, Alexander (Hamilton)

  Hughes, Mark (Durham)

  Pardoe, John

  Wilson, Rt Hon H. (Huyton)

  Hunter, Adam

  Park, George

  Wilson, William (Coventry SE)

  Irvine, Rt Hon Sir A. (Edge Hill)

  Parker, John

  Woodall, Alec

  Irving, Rt Hon S. (Dartford)

  Pendry, Tom

  Woof, Robert

  Jackson, Colin(Brighouse)

  Penhaligon, David

  Young, David (Bolton E)

  Jackson, Miss Margaret (Lincoln)

  Perry, Ernest

  Janner, Greville

  Phipps, Dr Colin

  TELLERS FOR THE AYES:

  Jay, Rt Hon Douglas

  Prentice, Rt Hon Reg

  Mr. Joseph Harper and

  Jeger, Mrs Lena

  Price, C. (Lewisham W)

  Mr. Laurie Pavitt.

  Jenkins, Hugh (Putney)

  Price, William (Rugby)

  NOES

  Allaun, Frank

  Buchan, Norman

  Fell, Anthony

  Atkins, Ronald (Preston N)

  Callaghan, Jim (Middleton & P)

  Flannery, Martin

  Atkinson, Norman

  Canavan, Dennis

  Hart, Rt Hon Judith

  Bain, Mrs Margaret

  Carson, John

  Heller, Eric S.

  Bennett, Andrew (Stockport N)

  Crawford, Douglas

  Henderson, Douglas

  Bidwell, Sydney

  Cryer, Bob

  Hoyle, Doug (Nelson)

  Bradford, Rev Robert

  Evans, Gwynfor (Carmarthen)

  Hughes, Robert (Aberdeen N)

  Brotherton, Michael

  Ewing, Mrs Winifred (Moray)

  Hughes, Roy (Newport)

  438

  439

  Lambie, David

  Parry, Robert

  Thomas, Ron (Bristol NW)

  Lee, John

  Powell, Rt Hon J. Enoch

  Thompson, George

  Lewis, Arthur (Newham N)

  Reid, George

  Thorne, Stan (Preston South)

  Litterick, Tom

  Richardson, Miss Jo

  Wigley, Datydd

  Loyden, Eddie

  Rodgers, George (Chorley)

  Wilson, Gordon (Dundee E)

  MacCormick, Iain

  Ross, William (Londonderry)

  Wise, Mrs Audrey

  McCusker, H.

  Sedgemore, Brian

  Madden, Max

  Selby, Harry

  TELLERS FOR THE NOES:

  Maynard, Miss Joan

  Skeet, T. H. H.

  Mr. Russell Kerr and

  Miller, Mrs Millie (Ilford N)

  Skinner, Dennis

  Mr. Ian Mikardo.

  Molyneaux, James

  Stewart, Donald (Western Isles)

  Newens, Stanley

  Swain, Thomas

  Question accordingly agreed to.
  Resolved,
  That this House approves the White Paper on The Attack on Inflation (Command Paper No. 6151).

  BUSINESS OF THE HOUSE
  Ordered,
  That, at this day's sitting, the Motions relating to Members' Salaries, Parliamentary Expenses and Parliamentary Remuneration may be proceeded with, though opposed, until any hour.—[Mr. David Stoddart.]

  REMUNERATION, CHARGES AND GRANTS BILL
  Order for Second Reading read.
  Bill to be read a Second time tomorrow.

  MEMBERS (PAY AND ALLOWANCES)
  10.27 p.m.
  The Lord President of the Council and Leader of the House of Commons (Mr. Edward Short): I beg to move,
  That in the opinion of this House it is desirable in principle that the salaries of Members should be regulated to correspond with the amounts of the salary paid to a specified grade in the Public Service.
  Mr. Speaker: I hope that it will be for the convenience of the House if with this motion we take the two other motions in the name of the Leader of the House.
  The first concerns parliamentary expenses:
  That, in the opinion of this House, further Provision with respect to allowances, facilities and other payments for Members of this House should be made as follows:—

  (1) the rate of the supplementary London allowance (£228 a year under the 1974 Resolution) to be £340 a year in respect of periods beginning on or after 13th June 1975, but as and when thereafter any change is made in the Civil Service rate of Inner London weighting, the rate payable in respect of Members entitled to the allowance to correspond to that Civil Service rate, omitting the element in it which represents the cost of travel to work;

  (2) the annual limit on the additional costs allowance (£1,050 under the 1974 Resolution) to be—

  (a) for the period 1st April 1979 to 31st March 1976, 1,639, and

  (b) for any subsequent period of twelve months ending with 31st March, an amount equal to 144 times the Class A(i) London rate (regular visitors) for a night's subsistence, as obtaining in the Civil Service in that period, and allowing for any
  442
  change in the rate in the period by taking a weighted average;

  (3) the annual limit on secretarial allowance (£1,750 under the 1974 Resolution) to be replaced by a limit of £2,910 for the period from 1st April 1975 to 31st March 1976, and £3,200 for any subsequent period of twelve months beginning with 1st April;

  (4) the car mileage allowance (7·7 pence a mile under the 1974 Resolution) to be 10·2 pence per mile for journeys commenced on or after 13th June 1975, but as from when the corresponding Civil Service rate is next altered thereafter, the allowance for Members of this House to be the same as that corresponding rate (which is the rate for cars over 1,750 cc used for journeys on official business);

  (5) the number of return journeys for which, in accordance with the 1971 Resolution, facilities for free travel are available to the spouses of Members of this House (ten journeys a year under that Resolution) to be fifteen for the period of twelve months ending with 31st December 1975 or any subsesequent period of twelve months beginning with 1st January.

  In this Resolution—
  'the 1971 Resolution' means the Resolution relating to Parliamentary Expenses which was passed by this House on 20th December 1971;
  'the 1974 Resolution' means the Resolution relating to such expenses passed by this House on 30th July 1974.
  The second concerns parliamentary remuneration:
  That, in the opinion of this House, the following provision should be made with respect to the salaries and pensions of Members of this House:—

  (1) the salary payable to a Member (other than one who is for the time being an officer of the House or a salaried holder of Ministerial office) to be at the rate of £5,750 a year;

  (2) the salary payable to a Member who is for the time being an officer of the House or a salaried holder of Ministerial office, but is not a member of the Cabinet, to be at the rate of £3,700 a year;

  (3) the salary payable to a Member who is for the time being a holder of Ministerial office and a member of the Cabinet to continue at the rate of £3,000 a year, as under the resolution passed by this House on 20th December 1971;

  (4) the proper rate of salary under head (1) of this Resolution is £8,000 a year, and in the case of all Members their ordinary salary for pension purposes (and in particular for the purposes of enactments relating to contributory pensions and the deduction of contributions from salary) is to be regarded as being at the rate of

  443
  £8,000 a year notwithstanding that payment at that rate is not actually made;

  (5) each Member is, by way of supplement to his salary payable under head (1), (2) or (3) above, to be credited with £112–50 a year (that is to say a yearly amount equal to 5 per cent. of the difference between £5,750 and £8,000);

  (6) this Resolution has effect as respect service on and after 13th June 1975.

  In this Resolution—

  (a) 'salaried' means for the time being in receipt of a salary under the Ministerial and other Salaries Act 1975; and

  (b) 'Ministerial office' means the same as in section 2 of the House of Commons Disqualification Act 1975, as that Act is for the time being in force.

  The contents of all the amendments will be relevant to the discussion on the main Questions, but I have selected for Division the amendment to the first motion, in the name of the hon. Member for Bassetlaw (Mr. Ashton) and his hon. Friends, to leave out from 'with' to end and add
  'a point on the scale paid to an Assistant Secretary in the public service, not later than three months after the next General Election, and annually until that date, the salaries of Members should be increased by not less than the same amount of increase as these Assistant Secretaries'.
  I have also selected the amendment to the motion on parliamentary remuneration, in the name of the hon. Member for Islington, South and Finsbury (Mr. Cunningham), in paragraph (1), leave out '£5,750' and insert '£6,300'.
  Finally, I have selected the amendment to the motion on parliamentary remuneration, in the name of the hon. Member for Derby, South (Mr. Johnson), in paragraph (1), leave out '£5,750 a year' and insert '£4,812 a year, being an increase of £6 a week'.
  Mr. Edward Short: I have put down the first motion to give Members an opportunity to express their views on the important issue whether their salaries should be linked to that of a grade in the public service. If that were done, parliamentary salaries would automatically follow those of the particular grade.
  The Review Body considered this and was not attracted to the idea of a pay link because of the unique nature of an MP's job and the absence of any real justification in terms of job comparability. However when I announced the
  444
  Government's recommendations on Members' pay and allowances last week, I said that we would be carrying out consultations on whether or not the time had come to establish a link between the salaries of Members of Parliament and some other salary groups. This motion will give Members an opportunity to express their points of view on the issue of principle. If it is carried, we will have to consider the best way in which a linkage could be established, and I should he very glad to hear the views of hon. Members on this point. The matter will, of course, have to be considered again by the House before any proposal could be implemented.
  A Civil Service grade is not the only possibility. A link might, for example, be made with one of the staff grades of this House. Progress in this direction will be subject to the constraints of the current counter-inflation policies, but we could be preparing for the time when it would be opportune to put a fresh motion before the House about parliamentary salaries. It is, I believe, common ground that a better way must be found for settling this difficult and sensitive pay problem—a way which commands the support both of the public and of Members themselves.
  I should say a word here about the amendment in the name of my hon. Friend the Member for Bassetlaw (Mr. Ashton) and others. When I discussed this with my hon. Friend, I made it clear that the Government's first concern was to find out the view of the House on the issue of principle and that the implementation of any decision would have to be considered subsequently. I cannot therefore accept this amendment, which would tie the House and the Government to one particular Civil Service scale and a particular time scale —neither of which might be found to be appropriate.
  I have honoured my promise that hon. Members would be able to express their views on the issue of principle. I have given the House the opportunity to decide this matter for the first time ever. I hope that the House will not try to take advantage of the opportunity I have given to force us into too hasty a conclusion on a very difficult subject. As I have already said, Members' salaries will for the future have to be subject to incomes

  445
  policy and the constraints of our current economic situation, and the implementation of any linkage will have to be considered in relation to the difficult problem for all sectors of the economy of reentry from a period of severe pay restraint. When the Government have considered the matter in the light of all the circumstances, I will certainly undertake to bring proposals before the House. In view of this undertaking, I hope that my hon. Friend will feel able to withdraw his amendment.
  The next two motions give effect to the proposals I put before the House on 16th July. That on parliamentary expenses deals with the improvements in Members' allowances recommended in the Boyle Report and accepted in full by the Government. It covers the increase in secretarial allowance, additional costs allowance, London supplement, car mileage allowance and the free travel warrants for the wife or husband of a Member. The secretarial allowance will now be available to provide any combination of secretarial and research assistance, as recommended by the Review Body. I hope that this will reassure the hon. Member for Lewes (Mr. Rathbone), whose amendment was not selected for discussion. General office expenses will, I understand, be dealt with by Lord Boyle in part 2 of his report later this year.
  The implementation in full of the Review Body's recommendation on secretarial allowance will allow hon. Members who wish to do so to employ a fulltime secretary. This meets the substance of a major recommendation of the Select Committee on Assistance to Private Members under the chairmanship of the hon. Member for Wokingham (Mr. van Straubenzee). I think it will be most appropriate for the other recommendations on the report to be considered at the same time as part 2 of the Review Body's Report which is to deal with the difficult question of pensions for secretarial and research assistants.
  A number of Members have asked me about some of the more obscure figures in the motion. In the case of additional costs allowance and secretarial allowance, the annual limits are expressed in cash terms for the current financial year. These amounts are those which are obtained for the current financial year
  446
  by implementing the increases recommended in the Boyle Report with effect from 13th June 1975 and, in the case of the additional costs allowance, take account of a further increase now being introduced with effect from 1st July in the Civil Service rate of night subsistence allowance. This means that the additional costs allowance will go up to £1,639 this year and to £1,814 in a full year on the basis of the current subsistence rate for the Civil Service. From now on, the additional cost will be calculated on the basis of the formula set out in paragraph 2(b) of the motion. The motion also provides for automatic increases in London supplement, additional costs allowance and car mileage allowance in line with corresponding Civil Service rates as recommended by the Review Body.
  The motion on parliamentary remuneration increases parliamentary salaries to £5,750. Parliamentary salaries for Ministers outside the Cabinet go up to £3,700, but there will be no increase in the parliamentary salary drawn by Cabinet Ministers who are also Members of this House.
  The third motion enables Members to have their pensions calculated on a salary of £8,000 in accordance with the proposal made in my statement. To achieve that end the motion accepts that £8,000 is the proper rate for the job. As I explained last Wednesday, the Government accept that the Boyle recommendation is justified although they cannot support its full implementation at this time when Members are being asked to make a contribution in the fight against inflation.
  I am sure that many Members will ask when they will receive the £8,000 a year which the motion recognises is the proper rate for the job, and which will be promulgated as such if this motion is carried. I have said that the Government accept that this recommendation is justified, but in the light of the economic circumstances of the country I regret that I can give no firm date for its implementation.
  Perhaps I may explain how this will work. In order to qualify for a pension based on £8,000, it will be necessary for Members to make contributions based on that figure. Provision is therefore being made in the motion to credit

  447
  Members with the extra cost of the contributions they will have to pay to enable their pensions to be based on the full £8,000. This extra cost works out at £112.50 a year, that is to say 5 per cent. of the difference between £5,750 and £8,000. This extra sum will form part of the Members' taxable pay, but Members are entitled to tax relief on their contributions, so in practice there will be no extra tax to pay on this amount.
  I should make it clear that in the next Session a retrospective amendment to the Parliamentary and other Pensions Act, 1972, will be necessary, among other reasons, in order to bring it into conformity with the terms of the motion which I am inviting the House to approve tonight. In the meantime, in the remote likelihood of any financial point arising on the construction and operation of the 1972 Act, payment of the extra pension would be deferred until the amendment had been made, but Parliament will be asked to make it in the next Session.
  I am only to well aware that the increase in salary which the Government have felt able to recommend is a disappointment to many hon. Members. It will mean that they have had a smaller percentage increase since the beginning of 1972 than any other group of workers in the community. At the same time, they have to incur more expenses than almost any other group. And whilst the increases I am proposing in expense allowances are reasonable, it should be understood—and it is not—outside the House that not all of a M.P's expenses can be categorised, and certainly not all are covered by the allowances. I need only mention entertaining or the many subscriptions to the numerous good causes in our constituencies.
  In the light of what has been said in the Press and elsewhere about the first salary increase which Members are being asked to award themselves after 3½ years, perhaps I could make it clear beyond any possible doubt that these increases are within current pay policy requirements. The new pay limit of £6 a week applies to settlements with an operative date from 1st August onwards. Agreements before this date may be settled within the existing social contract guidelines. Hon. Members will see what I mean from para. 3 of the Appendix to the White Paper.
  Mr. Mike Thomas: Will my right hon. Friend go a little further and answer the question I asked him when he made the announcement and say whether the whole of the award would have been within the guidelines?
  Mr. Short: Yes. The whole of the award would have been within the guidelines.
  I often wish that some of the nameless commentators in the Press would show a little more objectivity and honesty in reporting and commenting on these matters. I have in mind two leading articles which appeared in the Daily Mail and the Daily Express. Perhaps we might be told what percentage increases the leader writers on those two newspapers have had since 1972. I am quite sure that hon. Members would settle for the same percentage increases. Perhaps we can have a little more honesty in the reporting of these matters in the Press.
  In the extremely grave economic situation in which we have only just reached agreement on a firm but voluntary policy to restrain incomes, these proposals form a rather harsh but, I believe, tolerable package. I commend them to the House and I ask hon. Members to carry them without amendment.
  Mr. Speaker: The Leader of the House having moved the first motion, I want to make absolutely clear what the procedure will be. I intend to allow a debate on all three motions and on the three amendments that I have selected for Division. As I have said, the other amendments may be discussed but cannot be voted upon. I shall deal with the formalities of putting those three amendments later. The Question which I now propose relates to the first motion, which has been moved by the Leader of the House.
  10.41 p.m.
  Mr. Peter Emery: It is a culmination of the muddles made by the Government in dealing with the Boyle recommendations that we are discussing this matter at this hour of the night. I have tried to make my view quite clear in an amendment I have tabled to the motion dealing with parliamentary expenses.
  The Boyle Committee is an independent Committee. No Member of this House

  449
  sits on it and nor—as has frequently been suggested by the Press—have recommendations been made by hon. Members which will benefit themselves. The Government should make it absolutely clear that they will have carried out the recommendation before the last day of this Parliament—the last day on which this Parliament can act—because we cannot commit another Parliament that has not yet been elected.
  If that is stated, it is right that the House should now give a better example to the country than they are asking of any wage or salary earner or worker. The dignity of the House would be preserved if we were to set a maximum limit for the next 12 months, which we are asking many other people to accept from 1st August, 1975 to 31st July, 1976.
  The argument that it is understood by those outside this House, that we fall within the old social contract—heaven preserve us from whatever that may or may not mean—is just not correct. Therefore, we should be setting an example. It is an example that many hon. Members would follow if the Government were to give us a lead and if they knew that the Government had accepted, ultimately, within the aegis of this Parliament, the overall recommendation of the Boyle Committee.
  Mr. William Hamilton: If the hon. Gentleman is developing that point, would it not be proper for him to declare, first, what increases he has had in outside emoluments and, secondly, what outside interests he has?
  Mr. Emery: I am more than delighted to do so. I would refer the hon. Gentleman to Who's Who, where everything that I do has, over—
  Mr. Hamilton: How much?
  Mr. Emery: —the last 15 years, been included. Secondly—[HON. MEMBERS: "Tell us how much."]—I have had no increase in salary since the position I took when I ceased to be a member—[HON. MEMBERS: "How much?"]—The interesting fact about this debate—
  Mr. Peter Hardy: Give us a figure.
  Mr. Emery: —is that surely we, as a House of Commons, ought to be in the position to lead, and not to have to fol-
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  low. Surely we should be able to set an example which is accepted by everyone in the nation.
  The last part of the amendment which I have placed on the Order Paper seeks to ensure that the expenses and allowances which Members could claim should be thoroughly understood by people outside the House as being only the reimbursement of expenditure which Members have incurred. Many people interpret the allowances as a mass amount which automatically is given and automatically, therefore, is an increase in salary. That is not true and it is well that it should be properly understood that allowances and expenses are paid to Members only to reimburse them for actual amounts they are claiming which they have properly spent in their parliamentary duties. That point needs to be hammered home.
  I believe that the Government would do a service to the House if, even at this time of economic problems for the nation, they would ask the House to do exactly what they are asking the rest of the country to do.
  10.47 p.m.
  Mr. David Steel: I want to begin by making it clear that in common with, I suspect, most hon. Members who will take part in the debate, I speak only for myself. Even though I have consulted my colleagues about what I might say, I do not pretend that I shall carry all of them with me on every point.
  First, I support the principle of linking. I think that the Boyle Committee was wrong in its conclusions on page 9 of its report, where it said,
  "The adoption of such a link might well do no more than shift the focus of the political sensitivity which attaches to MP's pay to the pay of the group with which the link was established."
  I do not accept that for one moment. The basic flaw in the Boyle Committee's consideration was that it did not attach enough weight to the fact that we are the only group in this country who are left in the invidious position of deciding our own salaries. That is a grave weakness of the present system.
  However, I am not certain that the motion moved by the Leader of the House is correct. Even though on balance I would vote for the first motion, I invite

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  him to consider the possibility that instead of linking to some specified grade in the public service, by which I assume he means the Civil Service—and that would be an undesirable principle; I am glad to see the right hon. Gentleman shaking his head—there is another option. That is that we might be linked to some average of earnings of different groups of people in different areas of the public service, so that we are not clearly identified as being involved automatically in the wage negotiations of any one group. If that is in the mind of the Leader of the House—and I am glad to see him indicating some assent to this—one specific grade in the public service would not be the right solution. Some form of average may be the best approach.
  Secondly, it is time that the House faced up to the difficult question of Members' outside earnings. We have just introduced a register of interests. There is no question that there is a big difference between the Member who has no outside interests, or virtually none, and who does a full-time job here, and other hon. Members who may, quite properly and possibly even to the benefit of Parliament. have substantial outside interests and who may therefore regard their membership of this House as part time, to a varying degree—a quarter of their time, four-fifths, or whatever it is.
  One of my predecessors as Liberal Chief Whip in a previous Parliament, the then hon. Member for Orpington, Mr. Lubbock, now the noble Lord, Lord Avebury, put forward a very radical proposition when he suggested that Members of Parliament should be obliged to publish their tax returns. I do not necessarily go as far as that, but I believe that he was on to a good point. We in this House have inflicted on the nation as a whole about 44 different means tests. I see no reason in principle why the parliamentary salary should not be subject to some form of limited means test, why we should not establish a minimum salary to which every hon. Member is entitled but with a full-time salary much higher, to which Members who did not have an outside income should be entitled. There is no reason why a sliding scale could not be adopted.
  Mr. Norman Tebbit: What the hon. Gentleman is talking about
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  is not full-time and part-time Members. He is distinguishing between Members, whether full-time or not, who have an outside income, and Members whether full-time or not, who do not. Those who have outside incomes will lose in tax a substantial part of any salary award from here, particularly if it is high. Therefore, the point is taken care of, without the elaborate facade that the hon. Gentleman is developing.
  Mr. Steel: That, is a point of argument. I am merely putting forward my view. It has been suggested outside the House, and may well be suggested in the debate, that there should be a differential in payment between those who serve on Standing Committees, for example, and those who do not. That would be an impossible situation. It is far better to look at the needs of Members as a whole.
  Thirdly, whatever our views on the subject, the Government certainly cannot be congratulated on their handling of the question. There is no doubt that in a time of high inflation since the end of 1971 the whole matter should have been referred to the Boyle Committee much earlier. Moreover, when the committee reported, action should have been taken, instead of leaving us until we got into the most difficult of political and economic situations, in which it became impossible for the Government to act.
  Having got into this situation, we start from here. I believe that it would be impossible for the House to accept the Boyle Committee's recommendations in full. We have no alternative but to accept as a temporary measure the Government's salary proposals.
  It is extremely important that we look again at the whole question of parliamentary expenses. In a letter in The Scotsman the other day, one of the officials responsible for negotiating the salaries of chief executives of local authorities referred to parliamentary pay and to the non-taxable part of MPs' remuneration. There is no such thing as the non-taxable part of MPs' remuneration. But, sadly, the system of going on paying substantial expenses is open to that interpretation. The Government should wake up to the fact that if they go on extending the cash expenses and restricting the salary they are laying open temptations for abuse of that system which should not be encouraged.

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  The hon. Member for Warley, East (Mr. Faulds) made a fair point when the Leader of the House made his announcement. The chief executive of a local authority, or anyone else in a responsible position in the public service, has a secretary provided for him and not a cash payment out of which he is expected to pay a secretary. It is time we moved to such a system, with our secretaries on the public payroll, though with it still open to us to appoint or sack them.
  I am convinced that the average member of the public who does not follow these matters closely believes that the member of any legislature is in a sufficiently important position to merit having a secretary on the public payroll to help him. I should like the cash allowances to be diminished, in return for the creation of the facilities we need to do our job. We should then have a proper cash salary, taxable like everybody else's assessed on the basis of the job, as the Boyle Committee attempted to assess it.
  It is time we got the relation of salary and expenses right. I do not think that the Government have done that, but, faced with the present economic situation, we can do nothing else for the present but accept their proposals.
  10.55 p.m.
  Mr. Arthur Lewis: The Leader of the House said that the proposed increase in Members' salaries was the first adjustment since 1972. I have corresponded with him. I now point out, especially for the benefit of the hon. Member for Honiton (Mr. Emery), that we waited from 1964 until 1972, a period of 8½ years, for the last award. It was not opportune then. Hon. Members were told that they should wait and that it was not economically wise to implement it then. The salaries of Members of Parliament have been adjusted on five occasions in the period 1937 to 1975. I include this award, which we have not yet received, in that total. There was a period of 8½ years between each review. Why? On every occasion we were either entering or coming out of an economic crisis. We have always responded to the request not to take the increases which were awarded.
  The hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) mentioned the average wage. In 1937, Members of
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  Parliament received a wage of £600 a year.
  Mr. W. R. Rees-Davies: The hon. Member for Newham, North-West (Mr. Lewis) is not right. At that time it was expenses. It was not a salary. The sum was treated wholly as expenses. It was not until after the war that the salary was allowed.
  Mr. Lewis: I am sorry that I gave way to the hon. and learned Gentleman. I have a document produced by the finest service—the House of Commons Library. Thanks to your excellent staff, Mr. Speaker, I have all the facts.
  In 1937 Members of Parliament received £600 a year. The average wage was about £3 a week. Members of Parliament then received on average four times the national average wage. I do not know what is the current national average wage. It depends on the part of the country in which we live. It could vary between £30 and £50 a week. Members of Parliament do not at present receive four times the national average wage. No group of workers can say that their pay has been adjusted on only five occasions since 1937.
  I asked the Secretary of State for Employment whether he could state the position on wages. He said that on average the workers in almost every industry received an annual increment. That may or may not be true. We must thank the Civil Service for initiating the wage freeze and anti-inflation policies. My hon. Friends laugh. The last freeze was initiated by Mr. Armstrong. Before he did so he raised the salaries of the top civil servants. The freeze followed. He was knighted. He retired and became the chairman of a bank, at a salary of £20,000 a year, on top of a pension of about £20,000 a year.
  I resent the fact that journalists, radio commentators and Members of Parliament who receive—I do not say earn—more as a result of their five-minute or 10-minute contributions on radio and television than the average worker earns in one week should come here and say that they are in favour of a wage freeze or an incomes policy and in favour of showing an example.
  The Sunday Express has a rotation system whereby several Conservative right

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  hon. Members and the ex-Lord Chancellor share the centre page of the newspaper. For the past 18 months they have been writing articles demanding a wage freeze, an anti-inflation policy and all the rest, for each of which they receive £300, £400 or £500.
  The same applies to the most highly paid lawyers. Tonight the Shadow Chancellor told us that he is in favour of wage control and setting an example to the public. I am told that lawyers arrange their own fees. A big case is being heard in the courts at the moment which I must not mention, and I read in the newspaper that one of the great Liberal pioneers is to receive several thousands of pounds plus refreshers of £300 or £400 a day. I understand "refresher" to be trade union jargon. In industry it is known as beer money.
  Let us have honesty in debating these issues. Any hon. Member who conscientiously feels that he does not need the increase can telephone or visit the Fees Office and say that he does not want it and ask for it to go to the Exchequer. I have heard this issue debated over many years, and each time it is debated many hon. Members on both sides of the House say that they will not draw the increase. I have taken the trouble to ask the Fees Office, and I have been told that only on one occasion did one hon. Member fail to draw the increase, and that was the former hon. Member for Wimbledon, Sir Cyril Black. I believe that he is a director of about 150 companies. Perhaps it was too much trouble for him to draw it.
  Editors have suites in hotels for entertaining, and they receive virtually unlimited expenses. Then they have the audacity to write articles that they know are not true. They deliberately try to foster opinion against the House of Commons and against Members on both sides of the House.
  I do not think that that is good for Parliament. By all means let us have criticism. Let constituents write to their Members of Parliament if they want to ask for information, but if anyone wants to criticise, let that person examine the facts. Let it be remembered that on average the elector pays about 1 p a week for his Member of Parliament. I think that most constituents will agree that on
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  that basis, whatever the political persuasion of the Member of Parliament who represents their constituency, that they are getting value for money.
  Some hon. Members are solicitors. What do solicitors charge for advice and for the sending of letters? I am sure that most of us have had constituents come to our surgeries when they have found that their solicitors or lawyers have led them into a bit of a muddle. That often happens after they have paid a lot of money. Constituents then expect their Member of Parliament to help them.
  My approach is to support the recommendations of the Boyle Report without equivocation. I am disappointed in the attitude adopted by the Government on the whole subject.
  11.7 p.m.
  Mr. Evelyn King: I am sure that we have all been fascinated by the speech of the hon. Member for Newham, North-West (Mr. Lewis). It is a good speech and I have heard it many times. It has more to do with the salaries and rates of pay of various other professions than with the remuneration of Members of Parliament. Perhaps I might bring the House back to the salaries of Members.
  I must make the point that we are discussing two matters at once and that it would be better to separate them out. First, what remuneration is appropriate for a Member of Parliament in normal times? Secondly, if we are able to arrive at an answer to that question, how far should the figure be conditioned by existing circumstances?
  Mr. Nicholas Ridley: Does my hon. Friend not think that normal times now are periods in the middle of economic crises?
  Mr. King: That may be so, but what I said still stands.
  I hold the view that it is not right for any man to fix his own salary. Insofar as it is possible to evade that position, we should evade it. The hon. Member for Newham, North-West and myself came into the House at approximately the same time and we know that on the five occasions on which Members' salaries have been discussed, and in progression, we have had a worse Press and we have done ourselves more harm. There has

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  been unreasonable criticism and we have added more to the disrepute of the House on this matter than on any other. The five occasions have so far been widely separated out, but given the present state of inflation this is likely to become an annual or six-monthly debate.
  The most important thing to do is to remove this area of debate from the Floor of the House. How can that best be done? I accept the Lord President's view that there should be linkage. However, I do not accept his view or the view of the Boyle Committee there should be at link with the Civil Service. Incidentally, I think the Civil Service is overpaid. That may be an unpopular view, but I am sure it is correct. I also believe that it is unwise to be linked to a professional occupation over which we have no direct control. Indeed, I believe that it is unwise to link it with any single scale. If there is to be a linkage, I believe that we should be linked with two or three professions. One could speculate as to which two or three it should be, but I need not be didactic.
  My strong view is that never again in the lifetime of sitting Members of Parliament should this discussion be held on the Floor of the House. I would go to great length to achieve that situation. I believe that, above all, we should bring in the average national wage. At least if we take the national average wage, we are following what the rest of the country is doing.
  I must now turn to the second and probably more difficult part of my argument. It is only a matter of weeks since the Government said that no wage increase after 1st August should exceed £6 per week. Therefore, it seems to me to be monstrous that we should seek to do something else for ourselves. I cannot defend this move because I regard it as wrong.
  Mr. William Hamilton: What are the hon. Gentleman's outside interests?
  Mr. King: I am happy to answer that question. As the hon. Gentleman well knows, our outside interests are declared on a register, and he can look at that register at any time he wishes.
  Mr. William Hamilton Mr. William Hamilton rose—
  Mr. Deputy Speaker (Mr. Oscar Murton): The hon. Gentleman does not desire to give way.
  Mr. William Hamilton: He must de so.
  Mr. Phillip Whitehead: Is it not possible, Mr. Deputy Speaker, for you to give a ruling at this stage? We cannot have speeches made in which there are constant cries about interests having to be declared. Serious points are being made in this debate and constant interventions asking for Member's outside interests to be declared are neither here nor there.
  Mr. Deputy Speaker: It is entirely a matter for the discretion of the hon. Member concerned.
  Mr. William Hamilton: Could you make a clear ruling on this important matter, Mr. Deputy Speaker. If we are to have to listen to lectures from Members of Parliament about our accepting £6 a week, surely it is right that we should know exactly the situation of hon. Members who make such a claim in relation to their outside interests in money terms.
  Mr. Deputy Speaker: Order. This debate is concerned with a matter of public policy, and it is for a Member to decide whether he should declare his interest during the debate which is now taking place.
  Mr. King: I am obliged to both hon. Members for their interruptions, particularly the hon. Member for Derby, North (Mr. Whitehead.) We have to vote tonight upon the legal and authorised salary of a Member of Parliament. We are not concerned to express an opinion on the earnings of the hon. Member for Fife, Central (Mr. Hamilton), my earnings, or anybody else's earnings, but on the salary of a Member of Parliament, and nothing else. I continue to express my view—which I believe is widely and rightly held in the country, and certainly in my constituency—that to ask other persons not to accept any wage increase beyond £6 a week and then to put ourselves in breach of that Governmental undertaking is a wrong and a foolish thing to do, and that it ought not to be done.
  11 16 p.m.
  Mr. Raphael Tuck: The hon. Member for Dorset, South (Mr. King) and the hon. Member for Honiton (Mr. Emery) are, I think, confusing two matters. The £6 beyond which nobody must go refers to prospective increases.

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  The Members of Parliament who wish the Boyle Report to be implemented are referring to retrospective increases from 1972 onwards. From 1972, judges, lawyers, civil servants, miners, and so on, have received increases on three or four occasions. We are not referring to those increases when we refer to the £6 limit. The increases that Members of Parliament want are increases retrospective from 1972 to now. They are not demanding increases from now onwards.
  Mr. Ridley: Will the hon. Gentleman tell the House how little he earns outside this House, so that we can understand why he is making such a big pay claim?
  Mr. Tuck: I will. I find that my legal practice has gone down very much because of my parliamentary duties. I am earning enough to cover my legal expenses, which are somewhere between £2,000 and £2,500 a year, and before I earn one penny I have to pay that out. In some years I have made a loss at the Bar.
  The hon. Member for Honiton has asked us to make a sacrifice and to show a lead in not accepting more than £6 a week above that which we were getting in 1972. I am willing to make that sacrifice provided that it is not only Members of Parliament who are asked to make it and provided that the sacrifice is general. That means that lord justices, for example, instead of receiving £18,675, would receive the salary they received in 1972—£15,750—plus £6 a week. Circuit judges would be in the same position. A permanent secretary in the Civil Service, instead of receiving £18,000, would receive £15,000 plus £6 a week. Miners, instead of receiving £61 a week, would receive £34·50 plus £6 a week. If we are all to receive no more than £6 a week above what we were receiving in 1972, then, and then only, I am willing to make that sacrifice. Members of Parliament should not be called upon to make that sacrifice alone. It should be a general sacrifice throughout the country.
  11.20 p.m.
  Mr. A. G. F. Hall-Davis: I want to draw attention to one action in contemplation which I find wholly objectionable. It is the proposal in paragraph (4) of Motion No. 5 to relate the pensions of Members of this
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  House to a notional salary of £8,000 a year. I believe that by doing this we shall create for ourselves a privilege which will be deeply resented outside this House when it is understood.
  I have to declare an interest, because it explains why I feel so strongly on this subject. It is that I am chairman of the trustees of an occupational pension fund and for some years I have been concerned with the attempt to secure the best possible pension benefits for members of that fund.
  By this motion, we are establishing for Members of this House a position of advantage which, as I understand it, is not available to the member of any occupational pension fund in the country. We are doing so by a resolution of this House relating to Members' remuneration and conditions, and not by an amendment of the general law of the land.
  Mr. Mike Thomas: In fact, quite the reverse of what the hon. Gentleman is saying is the case. We are taking a pension that is our entitlement and forgoing the salary, rather than taking it the other way and suggesting that we are cheating on the pension. We are forgoing more than £2,000 of the salary which an independent arbitration tribunal has awarded us and which every other group in a similar position to us in the pipeline will get—and the £6.
  Mr. Hall-Davis: I am interested to hear that comment. However, as I hope to illustrate, that is not how people outside this House will see it, nor do I think they will be very sympathetic with the hon. Gentleman's comment.
  Members of pension schemes outside this House are governed by the Finance Acts and the Revenue Rules laid down under those Acts. So far as I know, there is no legal provision in any of those Acts for any occupational pension fund to pay a pension related to a salary which is not being paid and has not been paid to the member of the fund going on pension.
  I wish to quote two specific examples of the kind of situation which will give rise to the resentment to which I refer. The first is the simple one which I am sure is evident to all hon. Members. It is the case of the man approaching pensionable age, perhaps anticipating retiring

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  at this time next year. If he is on average industrial earnings, with a salary equivalent to £3,000 a year, under the interpretation of the social contract which was ruling until two or three weeks ago he could have anticipated an increase in salary of no less than £750 a year—25 per cent., in line with the increase in the cost of living—and that could have been reflected in a pension increase of £500 had he been fortunate enough to have a 40-year entitlement under his pension scheme. Now he will get an increase of £312 and a pension uplift over the next 12 months of £208. That is a very substantial forgoing of pension.
  My other example is that of the man who is being made redundant, perhaps two years before his normal retirement date under the rules of his scheme. We have to remember that these rules are governed by Acts of Parliament. If he retires before his normal retiring date, there is no way by which his employer can give him his full anticipated pension if he has not at the time of retirement completed 40 years' pensionable service.
  The simple solution which many employers would like to follow is the very course of action proposed by the Lord President. They would like to relate that man's pensionable salary to a notional salary—that which he would have expected to receive in two years' time. They are not able to do that because it is against the law of the land, which, as I understand it, is being overridden by a resolution of the House for the benefit of hon. Members and of hon. Members alone.
  Mr. Arthur Lewis: Is the hon. Member for Morecambe and Lonsdale (Mr. Hall-Davis) aware that at present there are civil servants who are forgoing incremental increases and are having their pensions based on increments which they are forgoing?
  I appreciate the point about someone getting the sack or suffering redundancy, but I have done nearly 31 years in the House, and if my parliamentary seat were redistributed out of existence tomorrow—[HON. MEMBERS: "Hear, hear."]—I hope hon. Members will try to be a little serious for a moment. If hon. Members, even the laughing hyenas behind me, have seats redistributed out of existence, they will find that they cannot draw pensions until they reach 65.
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  They may well have difficulty in finding employment for the period before reaching pension age. It is regrettable for people in that situation. It is exactly the same for hon. Members.
  Mr. Hall-Davis: I would not disagree with the hon. Member for Newham North-west (Mr. Lewis) that many occupational schemes in the private sector are more generous for their members than that in the House.
  Mr. G. R. Strauss: The hon. Member was protesting that this change in pension practice was being brought about in favour of hon. Members by resolution without a change in the law, but I should like to give him an assurance that legislation will have to be brought forward to effect this change and that it cannot be effected without that legislation.
  Mr. Hall-Davis: If that is the case, I should like the Lord President to give an assurance that if legislation is brought forward, private occupational pension schemes will be able to anticipate this and be safe in doing so, as is apparently to be the case for Members of this House.
  This proposal is objectionable because it conveys to Members of the House a benefit of a size not appreciated by those not conversant with these matters. The TUC document "The Development of the Social Contract", published as an appendix to the White Paper, said:
  "Negotiators will be expected to offset any improvement in non-wage benefits against the pay figure"
  I always hesitate in making a rough judgment on a pension costing, but if one looks at the pamphlet with which we are provided, it tells us that the Chancellor of the Exchequer contributes three times the Member's contribution to the Members' Pension Fund. I think the Actuary's report of April is not yet available. I have not, at any rate, been able to find it. But if one takes the notional figure of £2,250, 15 per cent., three times the Member's contribution conies to £337·50 in respect of each Member. More than that. We are not being called upon even to pay our own 5 per cent., so that this proposal means that the increase in cost falling on the Exchequer, in my approximate estimate, is no less than £450 per annum.

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  I do not know whether the Government will observe the TUC development guideline. If they do I shall find it totally unacceptable that we are making ourselves an exception of this kind.
  To make it clear to hon. Members opposite—and this will be within the recollection of the Lord President—I said that the course of action I felt should be followed was that we should have had a resolution to pay a salary increase of £1,800 per annum, precisely in line with the statutory fixed increases and the strict interpretation of the social contract, and should have related our pensions to that figure until we had a higher salary.
  Mr. Walter Johnson: On a point of order, Mr. Speaker. I think that it would be helpful to the House if you would guide us on how the debate is to be conducted, particularly as we are having a wide-ranging general discussion. You have said that we may speak to all the amendments. If we carry on like this it will be four or five o'clock in the morning before we get to the amendments which you have selected for Division, with an almost empty House debating the important aspects of this policy. I ask for your guidance on this matter.
  Mr. Speaker: I am grateful to the hon. Gentleman for raising this matter. It is present to my mind. I am at the disposal of the House. I am prepared to sit up all night, but I doubt whether that is what the House would wish. I think that we want to come to a conclusion by voting on these issues. I have selected three amendments to be voted upon. It was put to me that it would be the wish of the House to have a general debate on the three motions together. I hoped that we could soon dispose of those in one way or another and get on to other matters.
  Another way, before voting on the first amendment, would be to present the arguments for all the amendments and then, as quickly as possible, having done that, come to the voting later and the formal proposals, and so on. I am very much in the hands of the House. I think that it is the general wish that these matters should be debated together. I am willing to hear what anybody has to say on the matter.
  Mr. Kevin McNamara: On a point of order, Mr. Speaker. We have not yet had one of the amendments moved. I wonder whether it is possible to have some discussion by the protagonists on the amendments which you have selected.
  Mr. Eric Ogden: Further to that point of order, Mr. Speaker. Part of our difficulty might lie in the calling of speakers. This is no criticism of your predecessor in the Chair. Those hon. Members who have spoken have had to speak in ignorance, or at least in guesswork, of what the proposers of the three amendments will say in their support. We think we know what they will say, but it might be for the convenience of the House if those who are to speak to the three amendments were allowed to do so now. Then any comments on the amendments would be made on what they have said tonight, not on what we think they may have said.
  Mr. Speaker: If that is what the House would like, I am willing to follow that course. That being so, I call the hon. Member for Bassetlaw (Mr. Ashton).
  Mr. Michael English: Further to that point of order, Mr. Speaker. The House accepted your original suggestion and has been proceeding with an interesting debate. The first objection came from the prospective mover of one of the amendments, my hon. Friend the Member for Derby, South (Mr. Johnson). I think that the House was prepared to and did accept your original ruling.
  Mr. Ronald Bell: On a point of order, Mr. Speaker. I put it to you, that, since we have embarked on this procedure, it would be the worst of all possible worlds to change it now. I think that the procedure will work admirably if only we could have short speeches.
  Mr. Speaker: I do not think there is any conflict. If I call the hon. Member for Bassetlaw (Mr. Ashton) now, that will not prevent the hon. Member for Nottingham, West (Mr. English) from speaking afterwards. I will allow the proposer of each amendment to develop his argument and then put the Questions to the vote as we come to them.

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  The hon. and learned Member for Beaconsfield (Mr. Bell) made a most valid point about short speeches.
  11.33 p.m.
  Mr. Joseph Ashton: I beg to move to leave out from "with" to the end of the Question and to add instead thereof,
  'a point on the scale paid to an Assistant Secretary in the public service, not later than three months after the next General Election, and annually until that date, the salaries of Members should he increased by not less than the same amount of increase as these Assistant Secretaries'.
  Earlier we listened to a major statement from the Leader of the House. As usual, in his courteous way, he tried to answer many of the points which might be made.
  My colleagues and I have discussed this matter at length over many hours in the past two to three weeks. I refer not only to the 13 hon. Members whose names are down to my amendment but to perhaps 80 or 90 other back benchers.
  The Leader of the House must be more specific. Some of us have become extremely wary of what we have been told and promised in the last two to three weeks in view of what has eventually turned out to be the case. I mean no disrespect to my right hon. Friend. However, the collective wisdom of back benchers on what would happen to Boyle was apparent in March when 142 of my hon. Friends signed a letter, which I personally handed to the Leader of the House, in which we said that we would run into trouble in the summer, because inflation would continue and Government measures would be necessary. We said that it was in the interests of everybody in the House, in politics and in general, that Boyle should produce an interim report by March which simply recommended a cost of living increase and left it at that.
  I regret to say that that advice was not acted upon by the Boyle Committee. It was passed on to it but not acted upon. We ran into an unfortunate period of Tea Room winks and nods. There is no other phrase for it. It was the sort of inflection that suggested, "Boyle will be published after the referendum", "Keep quiet for a week or two because there looks like being a National Union of Railwaymen strike",
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  "There is a Woolwich by-election next Thursday." It was not put quite as blatantly as that. It was, "It is in the interests of all politicians of all parties not to press too hard at this time." There is never a right time.
  Suddenly, three weeks ago today, up got the Chancellor to make an announcement and the back benches on both sides could see the door beginning to close. That was probably the beginning of this so-called "shop stewards' committee" when 13 Members—those who have signed the amendment—sent an instant deputation to see my right hon. Friend the Leader of the House. He met us courteously and asked us to see the Prime Minister. I regret to say that we did not see the Prime Minister.
  It was an unfortunate action on the Prime Minister's part. I am trying to be fair. Maybe he was too busy to see us. I do not know what it was, but it rebounded instantly right across the back benches. Unfortunately Divisions were taking place when 75 angry back benchers met the Chief Whip and demanded to see the Prime Minister at once. It was not a very good way to conduct wage negotiations, when it was clear that Boyle would not be acted upon. Any personnel officer in any factory in the country would at least have met the lads from the shop floor when they were marching to see him.
  We were told that it would be a Cabinet decision, that there was no one man who would make the decision, and that the way to go about it was to put pressure on members of the Cabinet to implement the Boyle Report in full. Of the 13 names, there were seven Parliamentary Private Secretaries to members of the Cabinet. But we were warned that we had better act quickly because the Cabinet were meeting the day after—Thursday morning—and on Wednesday evening they were all at Hampton Court at some big "do". We had to act pretty quickly.
  In effect, it was the beginning of the charade. There is no other word for it. We went to see the Prime Minister at quarter to three. He said, "It has all been arranged. On Question No. 5 the leader of the liaison committee will stand up and catch Mr. Speaker's eye"— [HON. MEMBERS: "Oh".] I regret having to divulge this sort of information but I feel strongly that we ought to put this

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  on the record. One of the reasons why we have tabled this amendment is that we are determined that this should not happen again.
  Never ever again will I be a party to any sort of wage negotiation on the basis of the sort of promises we have had in the past three weeks. Some of us feel very angry about it and we are determined that this motion should be more specific.
  I wrote down some of the things said at that meeting with the Prime Minister. "We cannot give you figures now but it will not be a bad settlement". "It is not the size of the package that is the problem, it is the timing. We are involved in delicate trade union negotiations on the White Paper". I am sorry if I am offending people by revealing this, but I have been a trade unionist since I was 15. I have sat around tables talking to employers since I was 15. I do not believe in conducting wage negotiations with inferences of this sort behind people's backs. I believe in doing it openly and above board.
  When I give these quotations they are not quotations from the Leader of the House. This is the Prime Minister. A question was asked of the Prime Minister —did he realise that if MPs got even £1 a week rise it would bring down opprobrium from the Press? The answer was, "That will be opprobrium worth having".
  Perhaps I am breaking the rules by divulging this sort of thing. I am sorry if I am, but perhaps I am an honest, open and gullible guy. I am disgusted at what has happened—the moulding of public opinion, the softening up of the Press and the demands by trade union leaders that Members of Parliament should have only modest pay rises when those leaders have had damned good pay rises themselves in the past three years. The popular Press has been conned. There were leaks that Cabinet Ministers would be accepting a cut of £2,000 a year in their pay. The so-called shop stewards have been the villians for standing up for a cost-of-living increase and those who were taking the £2,000-a-year cut have been the heroes.
  We were being told that a statement would be made in the House within 10
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  days, within a week and within a day, but eventually my hon. Friend the Member for Liverpool, West Derby (Mr. Ogden) had to raise a point of order to get the statement. I have tremendous respect for my right hon. Friend. He has been saddled with a bad job by his Cabinet colleagues and has done his best. Even at this late stage he has made substantial amendments to the proposals in an attempt to help back benchers. I have no respect for those faceless men in the Cabinet who took a hard line and never appeared for questioning or met us round the table.
  Our amendment is designed to make sure that this sort of disgraceful episode never happens again. I have been ashamed of what has happened. The shop stewards have had to take criticism from our constituents. We did not mind. We knew that we were representing a substantial body of opinion. I accept that we do not represent everybody in the House or even all back benchers on this side, but what I have said needed to be put on the record, and I hope that it helps to persuade hon. Members that the only way to stop this situation from arising is by linkage. As politicians, we cannot afford the loss of still more respect by having these debates and arguments.
  We welcome the thoughts of the Leader of the House in bringing forward his amendment on linkage, but if we are to adopt the principle, we cannot have any more pie in the sky such as the Boyle Report. We do not want jam tomorrow. We are not fools. We know that the end of this period will be followed by wage ceilings of £7 or 8 per cent. or whatever. Most people would agree that we are going to have a wages policy for the rest of this Parliament and that the only way we can have proper linkage is to link after the next election. There is a good precedent from 1964 when the Lawrence Committee reviewed Members' pay. It was very near the election and both sides agreed that whoever was in power after the election would implement the report —and they did. It was a very delicate time for the Labour Government which had a majority of three or four, but the House implemented the report and stood by it. The Government kept their word, and that sort of action builds up respect.
  If we pass the amendment we shall have a time scale. It would not be my right

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  hon. Friends the Prime Minister and the Leader of the House who would have to worry about implementing it; it would be the next Parliament, but that Parliament would be committed. The second point therefore is to keep us in line with a grade until that situation arises. If we did nothing until three months after the next election, the grade with which we were linked would by then be receiving double what we were and our salaries would have to be doubled. That would again attract the opprobrium of the public and once more we should be in trouble. We therefore must hang on to the coat tails of the grade we select to be linked to until after the next General Election. That would mean that when they got £6 a week we would get it.
  But we then come to the most important point of having to name a grade. Everybody in the House has a different idea of what we should link to. Some people say that we should set up a Select Committee, but that would sit for a couple of years and not come to a conclusive agreement. We should be in the position of trying to amend the £5,750.
  We looked at the grade which was nearest to the Boyle Report recommendations. That is the assistant secretary, who earns £8,000 and a few hundreds. We decided that since that figure was the nearest to what Boyle recommended we should be linked to that grade. That is a bit drastic and it ties the Government down, but in view of the happenings of the last few weeks I feel strongly that we have to tie down a little the people who are in charge of our salaries. I hope that arising out of this we might get some negotiations going so that we can get our proposals implemented in time.
  Mr. Speaker: Order. We are in difficulties here. Would it be a good idea if I first call hon. Members who wish to speak on the linkage question? We could then move on to the next point dealing with allowances and so on and then on to the third motion.
  Mr. Edward Short: On a point of order, Mr. Speaker. I think that we should continue on the course which we have started. All these matters are closely related. My hon. Friend the Member for Bassetlaw (Mr. Ashton) dealt with all these matters. Can we not continue with
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  a general debate and take all the votes separately at the end?
  Mr. George Cunningham: I thought that we were to have a general debate in the sense that anyone could speak on any of the motions and any of the amendments and that no votes would be taken until the end, when all the various Questions would be put formally. What surprised some of us, Mr. Speaker, was that you did not call to speak at an early stage the hon. Members whose amendments you have selected. I understand that you will not want to call in series the three whose amendments you have selected because that would mean calling three Labour Members in succession, but if you could alternate in the normal way but bring those three hon. Members into the debate reasonably soon we would all be happy.
  Mr. John Peyton: I agree with the lion. Member for Islington, South and Finsbury (Mr. Cunningham). What he suggests would be preferable to attempting artificially to segregate the three debates.
  Mr. Speaker: All I shall say in my own defence is that there was an extremely strong representation by a mover of one of the amendments which led me to say what I said, but I am in the hands of the House in this matter.
  11.50 p.m.
  Mr. Peter Hordern: I wish to address my remarks to the third motion, which concerns the pension proposals. As the House will be aware, we are proposing a pension which is based on a salary which we are not yet receiving, although we shall soon be receiving it.
  I wish to refer to a group of people—a dwindling band of people—who were Members of Parliament, who retired before October, 1964 or who were defeated at the polls at that time, and who are not entitled to any form of pension. I hope that the House will allow some consideration to be given to what I consider to be an important part of our affairs. The position, as the House will know, is that those who served for ten years before 1964 and who remained Members of Parliament after 1964 are allowed pensions and are entitled to pensions reckonable as from 1954.

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  The position is that those who retired in 1964, however many years they may have served, are entitled to no form of pension of any kind. There are some Members in this House today who served in this House before 1964 for some years—perhaps for three or four years—but who were defeated at the polls in 1964 and who subsequently came back having, perhaps, been elected for another constituency. Those hon. Members are entitled to a pension which is reckonable from the time at which they first came to this House.
  So far as I am aware, there is no group within the public service today which has no pension entitlement as of right. This small and dwindling group of people is the only one in the public service which is not entitled to this right.
  Mr. English: I have every sympathy with the point that the hon. Gentleman is putting forward, but the Leader of the House has said that the second part of the Boyle Committee's deliberations would relate to pensions and that there would be another debate later in the year. The hon. Member is discussing the one subject that is not included within these motions.
  Mr. Hordern: With respect, I do not agree with the hon. Gentleman and I am glad that you do not either. Mr. Speaker. I agree with the hon. Gentleman that there will be time to return to this matter later —I hope.
  It is right to draw attention to the condition of service of these people. When I first raised the subject with the Leader of the House he said that it was a matter for the Boyle Committee. When I raised it with the Boyle Committee I was told that it was not within its terms of reference. I am glad to say that as a result of pressure from several hon. Members on both sides of the House, the Leader of the House was able to persuade the Boyle Committee that it should consider this matter. I understand that it is to do so in the second part of its report.
  The argument advanced by the Lord President's Office is that there are no precedents for short-term civil servants to have pensions granted in this way. There are people who come into the Civil Service for a short period, and they know that they will not be entitled to any pension at the end of that period. However, I draw the distinction that there
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  is every difference between that situation and the situation of a Member of Parliament who may be here for a short space of time but for whom special provisions are now being made in respect of pensions.
  It is right to make pensions available for Members of Parliament who have been here for some time and it is, surely right that some entitlement should be made available to those Members who retired before October 1964. Those hon. Members in that position are allowed to apply to what is known as the Members' Fund. Hon. Members will know that this is a procedure which does not appeal to many of those who retired in 1964, besides which, it is a means-tested benefit. This aspect of the matter is one which cannot appeal to hon. Members who have severe doubts about this sort of practice anyway. It should not apply to those who have served their country, many with distinction, and who deserve better consideration.
  It may be said that there is no precedent for granting a section of the population a pension of this sort. I would only refer to the time when the Government whom I supported introduced a pension for the over-80s, who then had no entitlement whatsoever because they were too old to join the original National Insurance Scheme. There is a precedent which we can follow.
  Therefore, I hope that when the time comes, as I hope and trust that it will on the second part of the Boyle Report, hon. Members on both sides of the House will feel that those ladies and gentlemen who retired before 1964, with a reckonable period of service of perhaps some 10 years, ought to be given proper consideration and some form of pension as of right.
  11.56 p.m.
  Mr. George Cunningham: I have tabled an amendment to the third motion in the trio that we are debating, which is in paragraph (1) of that motion, to leave out "£5,750" and insert "£6,300".
  The manner in which we are considering these motions is necessarily confused because the Government's proposals depart from the proposals put forward by the Boyle Committee. Some hon. Members seem to be hoping for something

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  which they can never have. They think that they can avoid taking decisions upon this matter by appointing either the Boyle Committee or a Select Committee, or by picking a basket of circuit judges and goodness knows what, to determine salary. One of those formulae might provide us with a guide for the decision which we take, but any Member who is elected to this place must face the fact that he is elected here to take all decisions.
  This is one of the embarrassing decisions. My threshold for embarrassment may be higher than that of others. I do not find it embarrassing, but if others find it embarrassing they should remember that this is one of the decisions that they are elected here to take. We cannot have a decision as intimate to the legislature as this one taken in the end by anyone except the legislature.
  Though I am a colleague of my hon. Friend the Member for Bassetlaw (Mr. Ashton) in the discussions which took place, I shall not add to his revelations. I must say to him that I shall not do so because I believe that private discussions must be private and not revealed afterwards.
  As I have said my amendment is to substitute for the figure of £5,750 the alternative figure of £6,300. There is nothing magic about the figure of £6,300. I shall try to explain, briefly, why I put forward that figure, and why I invite the serious support of hon. Members for it.
  First, it is a modest figure. It is not the figure recommended by the independent review body which we set up particularly for the purpose, which was £8,000. It is not the figure said by Boyle to be needed to make up for inflation, which is about £7,500. It is not even within £1,000 of that second figure. By any standards it is, therefore, a modest figure. It is, for example, equivalent to £3,900 in January 1972, which is 13 per cent. less than we determined was proper for a Member of Parliament at that time. The Government's proposal for £5,750 is equivalent to £3,550 in January 1972, which is 20 per cent. below what we decided was proper at that time. Therefore, I make no apology for putting forward an increase. But it is a very modest figure indeed.
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  The second very serious point—which I am very glad the Lord President dealt with—is that it is not against any rules of the pay policy. The Lord President made that perfectly clear. The pay policy does not bite upon this demon. It precedes the pay policy. I should like to back up what the Lord President said by referring to a letter which I have received from the Secretary of State for Education and Science in respect of a similar situation concerning the pay of university teachers. Thet relevant paragraph of the letter stated that the board of arbitration on university teachers' pay announced its award on 2nd June, and that its decision will result, with effect from October 1975, in an overall increase of just over 21 per cent. in the present remuneration of university teachers. It also said that the salary scales determined by the Board of Arbitration would be implemented with effect from 1st October 1975.
  We are not saying that Members of Parliament are a special, unique case. We are applying to ourselves the same rules as apply to others, but we are applying them much more ferociously. That is the main point that we must dispose of.
  Then it is said that it may not be against the rules but that we have to set an example, particularly to the trade unions. The first point about that is that, if it is not against the rules, the problem technically does not arise. But let us face the broader background. How have the economic crisis and the pay policy arisen? Have they arisen because Members of Parliament have indulged themselves with excessive pay rises over the past three or four years? No. Some people say that the economic crisis is in part a result of excessive public expenditure. If the unions have expressed any view on that, it is to support the current levels of public expenditure.
  Is our economic crisis perhaps attributable to excessive wage settlements? People differ about whether it is wholly attributable to them, or a bit attributable to them. But no one denies that it is attributable to them at least in part.
  Mr. J. Enoch Powell: I do.
  Mr. Cunningham: I know that the right hon. Gentleman, with whom, to my

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  surprise. I often find myself in agreement, disagrees with that. But he and his supporters are in a minority on that matter.
  Many people believe that excessive wage settlements have played a significant part in the situation in which we find ourselves. We have set an example, and I find it obscene that any trade union leader should then tell Members "We have not followed your example. Please set us a more painful example, and maybe we shall follow it."
  It is not part of my conception of the role of a Member that he should indulge in self-flagellation in public—[AN HON. MEMBER: "Or in private"]—and I do not think that the public would respect him for it. Is it a worthy spectacle for the public to see Members doing a sort of political striptease on their pay, with one saying "I'll take only £6", someone else being popular for taking only £5, and our ending up with no clothes? I do not think that that would be good for Members individually, and I am certain that it would not be good for the House and good government.
  Next there is the question of public opinion in general. We all know what the public think of Members of Parliament. Whenever we knock on a door, the member of the public who answers says "You are all in it to feather your own nests." Then one asks "Am I in it to feather my nest?", and he replies "I don't mean it about you." The public never mean it about any Member whom they know. It is just habit for everyone to abuse Members, and we must put up with it but not take decisions as if that were a serious view.
  If we are serious about good government, it is preposterous that a Member of Parliament should be paid less than an assistant borough secretary in a London borough. It is preposterous that he should be paid less than a person in a No. 4 position in a social services department in a local authority. It is preposterous that 29 political advisers to Ministers, advisers who have excited no public opprobrium, should be paid on average just under £6,000—more than a Member is paid now, and more than the Government propose that he should be paid in the future.
  Mr. Hugh Dykes: Will the hon. Gentleman confirm that in the last election campaign he made known to the constituents in his division his views on the level of pay of Members of Parliament?
  Mr. Cunningham: The hon. Gentleman is one of my constituents. He bombards me with letters about council points. He is entitled to ask the question. I do not remember whether anyone asked me that question. If they asked it, or if I raised it, this is the kind of remark I should have made. If the hon. Gentleman can find any evidence of inconsistency on my part, let him go ahead. I do not think that he will find that evidence.
  Broader implications of the pay of Members of Parliament must be faced. My amendment does not have an effect upon Ministers' salaries. I stress that. The justification which I put forward relates to Ministers' salaries. It does not affect Ministers' salaries. The salary of £6,300 is bearable and payable, even in present circumstances. If the Government feel that the situation is so serious, that relations with the unions are so delicate and that no addition to public expenditure can be borne, they can make a decision to find the cost of this increase by a modest abatement of ministerial salaries.
  Ministerial salaries are the great untouched subject in this House. That is a most important subject for the working of the House. The ratio between the pay of ministerial and non-ministerial Members of Parliament is delicate and far reaching in its effect. A Cabinet Minister is now paid £16,200. A full Minister who is not in the Cabinet is paid £12,700. A Minister of State receives £10,700. A Parliamentary Secretary is paid £8,700. These sums include ministerial and parliamentary figures and the London allowance.
  The Government proposal provides for a not insignificant increase in most of those salaries, although not in the case of a Cabinet Minister, except to an infinitesimal degree. The Government's proposal is that the pay of a full Minister outside the Cabinet should go up from £12,700 to £13,500, that of a Minister of State from £10,700 to £11,500, and that of a Parliamentary Secretary from £8,700 to £9,500—an increase in, the last case of 10 per cent.

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  It is not commensurate that a Member of Parliament who is not a Minister should be asked to forgo £2,250 of the Boyle recommendation if highly-paid Ministers are not proposing any reduction in their salaries.
  Mr. John Gorst: I do not wish to come to the aid of some less competent members of the Government Front Bench. However, Ministers, of whatever level, are not able to take on outside appointments, as can back benchers. Indeed back benchers should, in the present economic climate, be encouraged to do so. After all, they have long holidays, which are not available to Ministers.
  Mr. Cunningham: Of course any Minister has those restrictions which do not apply to back benchers. We all know that. There is no need to draw attention to it. To suggest that in present circumstances the situation of the country is so severe that Members of Parliament should take their attention away from this place and earn extra money elsewhere is an attitude towards the proper government of the country which is not my attitude. To suggest that they can do this by taking themselves off Committees—which is what it means—and taking a holiday job to supplement their salary is laughable.
  The increase in Members' pay which I am suggesting could be paid for if necessary by an adaptation of ministerial remuneration—and I give what is only an illustration. It could be paid for by cutting the ministerial part of a Minister's remuneration by rather less than half and at the same time increasing his parliamentary salary to the proper level equivalent to a Member of Parliament's pay of £6,300, which is about £4,500. In their total remuneration Ministers would suffer decreases ranging from 30 per cent. for Cabinet Ministers down to only 6 per cent. for the most junior Ministers. Those are pre-tax figures. A member of the Cabinet would lose just under £5,000 gross salary, and he would lose in cash, after tax, under £2,000 upon any assumptions about allowances and outgoings.
  The back-bench Member suffering £2,250 loss in his gross salary will at the basic rate of tax lose £1,500 in cash. At a time when Members are being asked to take that loss of £1,500 in cash, it is
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  not incommensurate that Cabinet Ministers should be prepared to take a loss of less than £2,000 in cash.
  In the last few months we have heard a lot about the broadest backs taking the strain, the need for sacrifice and the year for Britain. I resent the fact that the year for Britain will probably be a burden upon back-bench Members and not upon members of the Cabinet and junior Ministers unless my amendment is carried, as I hope it will be.
  12.13 a.m.
  Mr. J. Enoch Powell: I wish to make three brief observations, one on each of the three motions. I am not in agreement, for the reasons given by the hon. Member for Islington, South and Finsbury (Mr. Cunningham), with the principle of linkage. The proposition which I wish to put to the Leader of the House, of which I have given him brief notice and to which I hope he may respond, is that whether or not the motion is carried in its present form, this matter should be maturely considered by a Select Committee of the House. It is inappropriate for us to take a snap decision on the motion. If the amendment is passed, the House will have bound itself to a specific method of dealing with the matter. I suggest that it is unwise and inappropriate for a matter of principle of this sort to be decided in the course of this debate alone, and that it is proper to be considered by a Select Committee of the House.
  After considering the various ways in which linkage could be achieved, the Select Committee might come to the conclusion that linkage itself in principle did not have the attractions which at first sight it appeared to have. I hope that there will be some move in that respect from the Government Front Bench.
  As regards parliamentary expenses, the point that I put to the House is that there are now considerable sums of public money being claimed by hon. Members for reimbursement. The House is the ultimate guardian of public money and it is to the House that the Comptroller and Auditor General is responsible. It is in no disrespect to the House and its Members—much to the contrary—that I suggest that it is no longer appropriate that such sums should be claimed on merely the ipse dixit of hon. Members.

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  In every other case where sums of this magnitude are reimbursed, some form of voucher, evidence or receipt would be required to be produced. Certainly the Comptroller and Auditor General would return a severe comment to the House if he found payments being made in any other context as little vouched for as those that are made to hon. Members. I hope that that practice will be reconsidered. Indeed, it would be a protection to the House against the danger that the hon. Member for Warley, East (Mr. Faulds) has foreseen.
  Finally, I turn to remuneration. I have earlier today, in the course of my argument in the debate on the anti-inflation measures, expressed the view that as it is the House which has ultimate responsibility for inflation, it is inappropriate that we should now adjust our remuneration to take account of inflation. Therefore, it would be disingenuous of me not to indicate to the House that if Tellers are put in against the motion, I shall vote against it. Nevertheless, I do not wish to shelter behind that argument from making two further observations—
  Mr. Peter Snape: I think that we all appreciate the right hon. Gentleman's sincerity in disagreeing so bitterly with the policies of the previous Conservative Government. We appreciate that he had the courage not to stand for re-election under the political banner of the Conservative Party. However, does not the right hon. Gentleman agree that those of us on this side of the House who feel no responsibility for the current rate of inflation, and who have tried to share some part of his own courage by disagreeing in the House with the policies of our own Government, should regard ourselves as being worthy of an increase? Like the right hon. Gentleman, we have no responsibility for the present situation.
  Mr. Powell: I hope that I chose my words in such a way as to show that I believe the conclusion which I have drawn, and which I hope I shall have an opportunity of drawing in the Lobby, to be one which is binding upon myself only.
  I turn to two further observations from which I think I should not be stopped by the decision that I have just mentioned.
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  First, I agree most strongly with the hon. Member for Morecambe and Lonsdale (Mr. Hall-Davis). It is true, as the Father of the House has pointed out, that we shall have to give legislative sanction to what we are proposing to do, otherwise irregularly, in respect of our pensions. But the very fact that we have to make a special Act of Parliament to cover the situation goes very far to make his point. It will be in the literal sense of the term a private law, a special law for ourselves. It will be a privilege. I do not believe that it is the type of privilege that we should be enacting for ourselves.
  Secondly, I do not believe—and we are all speaking for ourselves in this debate—that there is any justification for an increase in our parliamentary remuneration. The remuneration today is greater in purchasing power than it was when I first entered the House in 1950. I have ascertained that on the retail price index in June—the latest available—the present salary is still in purchasing power well above the remuneration of an hon. Member entering the House in the year 1950. I have therefore personally opposed every successive stage—
  Mr. William Hamilton: Why has the right hon. Gentleman taken the money then?
  Mr. Powell: I shall answer that before I sit down. I have opposed every stage at which there has been an increase proposed in that remuneration. The principle I have adopted in consequence is never to accept any increase in remuneration brought in during the course of a Parliament unless it was specifically indicated at the time of the election at which that Parliament began. I shall follow that principle on this occasion. I thought it better that I disclose that fact here rather than anywhere else.
  12.22 a.m.
  Mr. Michael English: The logic of the right hon. Member for Down, South (Mr. Powell) appears for once to have failed him. He compared the salary of an hon. Member with what it was in real terms in 1950. As one who came into the House in 1964, I can assure him that the salary in real terms has declined considerably since then. But that kind of chopping about with dates impresses nobody.

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  I do not think there can be said to be complete unanimity in this debate, except on the issue that the matter has been absolutely mishandled. That has been said from behind the Government as well as in front of them. It is equally true that there is not a single person in this House who wishes this system to continue. But the real mishandling I must attribute to the members of the Cabinet. I congratulate my right hon. Friend the Secretary of State for Employment on being one of the two members of Cabinet now present. I think that perhaps the right hon. Member for Antrim South (Mr. Molyneaux), the leader of the Unionist Party, should be congratulated. He is the only leader of any party in this House who did not walk out before the decision was taken on what his back benchers should be paid.
  We are sitting here—and only the House of Commons could do it—discussing the first breach of a White Paper which we passed only at ten o'clock yesterday evening. It is not a breach people expected. It is not a breach by a trade union asking for a massive increase. It is a breach of the provision in relation to formal arbitration awards if they were referred, not merely adjudged, before the White Paper came out. This matter was not merely referred long before the White Paper. The judgment was made on 13th June—long before 1st August, the date in the White Paper. The Government with their usual savoir faire in these matters, are going forward saying "We said something at ten o'clock, but at about one o'clock we shall say something different". It does not inspire much trust in this House or outside it. In 1964 much the same thing happened. I remember it well. The Lawrence Committee reported on that earlier occasion and came up with a sum of money. Back benchers received the sum due, but Ministers had their award chopped by half. I do not remember at any subssequent election any citizen of this country mentioning to me that he was impressed by the fact that at one point a Labour Government said that it would cut recommended Ministers' salaries by half. I do not think it gained a vote. Now we have it the other way round.
  When the Boyle Committee reported in 1971 it found, not unjustly, that
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  Ministers were paid too little. Several of the Conservative Government's junior Ministers had stated that if they did not receive an increase they would have to cease to be Ministers. They simply could not support their wives and families on the salary then paid. The last Boyle Committee produced a reasonable recommendation for Ministers' pay, though, quite frankly, it was not particularly reasonable for back benchers by comparison.
  I heard no one in this debate so far mention wives and families. I rather understand why that is so. Most Members are married and have families, and perhaps they felt a little too shy or embarrassed to speak for themselves. Maybe as a bachelor I can speak for them. Is any person seriously claiming that Members looking for this sum of money are doing so for themselves alone, or that they do not support their wives and children? If we should make a sacrifice, why is it that the wives and children of my honourable colleagues should be forced to make sacrifices too?
  I feel a little sorry that several speakers in the debate have blamed the Press as a whole for some of the comments made. I think we have a certain responsibility, too. I also think that we should be fair to papers like The Guardian, The Sun, and even the News of the World, which have supported our case, unlike the Daily Express and the Daily Mirror, which have attacked it. If I might say so, the News of the World and The Sun are a great deal more successful in circulation terms than the papers which have attacked us. It may be relevant that one of the least successful editors in Fleet Street is one of our principal attackers.
  The Secretary of State for Employment (Mr. Michael Foot): For other reasons.
  Mr. English: Perhaps he is struggling for readership and thinks that the cheapest method of getting it is the best. That may not be wholly dissociated from the reason.
  But there is another group that we should mention. Several trade union secretaries have suggested that we should not get what their members and they themselves have got. I took the trouble, after Jack Jones made his speech about our pay to telephone his office, and I

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  only wanted the answer to a simple question. I did not want to show a morbid interest in his income. I do not agree with those who have been shouting at Members to declare their income. I was always in favour of declaring interests but not income. I think it is very largely morbid curiosity that drives a mant to want to know whether someone else is earning more or less than he is himself.
  I made it clear that I did not want to know Jack Jones' income but just the percentage change in it since 1st January 1972. For the benefit of Conservative Members, it is not fixed quite as publicly as ours. It is not fixed, as I understand it, at a Transport and General Workers' Union conference, meeting in public. It is at the National Executive Committee, which meets in private and contains a large number of trade union officers, who are also paid rates fixed in the same way. It will not, perhaps, surprise Members to know that Jack Jones did not provide the information, even though I did not want to know the exact sum. But perhaps I achieved my object, because he has not commented on our salaries since.
  It really is a ludicrous system, and we should change it. While we are on the system, though I shall support the amendment from my hon. Friend the Member for Bassetlaw (Mr. Ashton) to link us to the position of an Assistant Secretary in the Civil Service, I am doing that basically because the Leader of the House has suggested linking us to a grade in the public service.
  I believe, as one Opposition Member said, that we should link ourselves to the average earnings index of the United Kingdom. The earnings index is much more subtle than people think. In the past few years, it would have done us slightly better than the Boyle recommendation. But, at the moment, the rate of increase in average earnings has dropped to zero, strangly enough, because it reflects matters like overtime, the level of production and so forth. However, it is a more accurate index than any other.
  But I object to those hon. Members, even Ministers, who have suggested, "We shall not put up the salary because that would be inconvenient and bad publicity. But do not worry. We shall give you
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  all of it in allowances. We shall put up your allowances." As the hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) said, we are in danger of creating a world in which people seek for money in terms of allowances—a fiddler's paradise. I do not think that it has happened yet, but we are on the verge of it. If we continue to increase allowances and not salaries, we are in danger of creating a fiddler's paradise.
  Only yesterday there was a letter in the Evening Standard from a taxi driver saying that he was allowed to charge only 7·7p a mile in London and that he could not understand how anyone could justify civil servants or Members of Parliament getting 10·2p a mile. We are in danger of getting these comments and of encouraging Members of Parliament to pay their secretaries less than their secretarial allowance and to siphon the extra money off elsewhere. Many of us do not wish to see that. Some of us do not wish to receive a secretarial allowance but simply to have a secretary, as everyone else does. I am sure that the editor of the Daily Express does not get a secretarial allowance and have to pay a secretary out of it. Lord Beaverbrook's Daily Express pays the secretary. That is all that we want.
  I am sorry that Mr. Speaker did not select my amendment on this point. It had wide suport on both sides of the House. But the van Straubenzee Report, which was a unanimous one, is far more important in some ways than merely increasing the allowances, because it gives Members the option of having the Exchequer pay their secretaries just like a civil servant's secretary. We would not have to touch the money. I think that that would improve the conditions of secretaries. It was an altruistic proposal. It would not have made a penny for a single hon. Member, but it would have benefited secretaries in this House.
  I hope, therefore, that my hon. Friend will assure us that he will bring that report forward as soon as possible after the Summer Recess. Meanwhile, the Government have acted in a way which shows that they are frightened of a little publicity which probably will be forgotten next week. What is more, when all is said and done, I think that they have acted rather cheaply.
  12.34 a.m.
  Mr. John Peyton: Anyone from either Front Bench who tenders advice on this subject at this hour would do well to be careful. If I were to be so bold, I would suggest that we might be misunderstood if we carried this discussion right on into the small hours of the morning. I do not recall a single occasion on which this subject has come up when the air has not become thick with charges and counter-charges of greed, hypocrisy and the rest of it. The only certain conclusion is that Parliament has not benefited as a result.
  I do not recall ever before taking part in one of these debates, and I can say quite honestly that I do not greatly look forward to doing so tonight.
  There are several propositions which, though there may be some conflict between them, command fairly general consent. The first is that there never is a good time to do these things, with the result that we get so nervous and wrought up about it that we tend to attract criticism and biting comment from rather predatory persons who take a lofty view of it all.
  The least awful time to do it is at the very beginning of a Parliament when everybody says with a laugh which they almost enjoy, "Now we know why they were so keen to get in and we understand it very well"—and there is a bit of a cynical laugh and it is gone. However, I doubt the wisdom of having special reviews and getting into the habit of rejecting their conclusions.
  I suggest also that the worst possible time is immediately following the announcement of restrictions, however necesary, in the national interest, because, no matter how clearly the small print is laid down to satisfy all those with legal minds, the public have received a different measure, and that invites the kind of comment we have had.
  The Leader of the House has an unhappy rôle from time to time and never more so than in handling this problem. He has been saddled fairly and squarely by his colleagues with carrying out their edicts whatever his wishes may be. When he says that this issue should be settled in a way which commands the approval both of hon. Members and of the public, I think he is sailing into the area of Never-Never Land and of wishful thinking—
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  an ideal world which will never exist. But we have to search for some means of making the clash a little less bitter and unpleasant.
  I look very much askance at the idea of linking the salary of Members of Parliament with that of a particular rank in the Civil Service, for the reason given by the hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) and by my hon. Friend the Member for Dorset, South (Mr. King). They both took exception to this on the ground that we ourselves were so near to being in control of the salaries of civil servants that it would look unpleasantly like a trick.
  The right hon. Member for Down, South (Mr. Powell) was right in suggesting that we would make a mistake if we made a sudden snap decision on this motion at this hour. Much the best thing is to have it considered quickly by a Select Committee. I am talking now about linkage. That could be considered. The right hon. Member for Down, South is right in suggesting that this is a matter which could suitably be submitted to a Select Committee.
  On the question of expenses, particularly secretarial expenses, I rather agree with those who have said that we have to tidy this up a bit. It should be made to look a little respectable. There should be the kind of proof of payment which would not be humiliating to Members of Parliament. It is a formality which we ought to be seen to require of ourselves.
  On pensions, I echo the anxieties expressed by hon. Members who have called attention to the questionable proposals that a contribution should now be made by Members of Parliament as if they were being paid at the rate of £8,000 a year, and that the extra cost should be contributed by the taxpayer free of tax to Members of Parliament. That is creating a very privileged position and we should be careful about pursuing it. There are arguments on both sides. I am merely sounding a note of caution, and the House would do well to take note of it.
  I do not wish to make a long speech, but I ought to refer to the passionate call made by the hon. Member for Newham, North-West (Mr. Lewis) who said that we should examine the facts. The hon. Gentleman did so with the air of one who is determined to do nothing of the kind.

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  I think that many of us felt like intruders in a private discussion when the hon. Member for Bassetlaw (Mr. Ashton) was on his feet. At least, one could not help but be fascinated by the quotation, "That will be opprobrium worth having". As if we could not guess the source of such gallant sentiments—the right hon. Gentleman the Prime Minister himself. Whether the Prime Minister will feel that his attempted gallantry and obvious confidence in the hon. Member for Bassetlaw have been reciprocated and welcomed in the manner he would like, I leave to him. It will be interesting to see how it is received. I am sorry that the Prime Minister was not here tonight, because that would have rounded the circle and made us all feel very happy.
  I know that we are not discussing pensions tonight, but I should like to take this opportunity, since my hon. Friend the Member for Horsham and Crawley (Mr. Hordern) mentioned it, of saying that those who ceased to be Members of Parliament in 1964 and are without pensions of any kind are deserving of consideration even at times like this.
  The hon. Member for Islington, South and Finsbury (Mr. Cunningham) made one of his characteristically interesting contributions. I shall not follow him at any length. I do not think that he was particularly wise in wishing to impose upon Cabinet Ministers some punitive experience. I only wish that I had some grounds for praising Members of the present Cabinet, but I believe that it would be wrong to think that this country's interests would be well served if we persisted, as we have in the past, in under-paying Ministers.
  Mr. George Cunningham: Or Members.
  Mr. Peyton: I am not challenging that. I am just taking up the point made by the hon. Gentleman.
  The hon. Member for Nottingham, West (Mr. English) commented that the matter had been badly handled. I think that we must all agree about that. The fact that there has been no consultation with the Opposition and the timing of the whole matter singles it out for that description. The House would be wrong to single out the Leader of the House, who has probably done his best in this
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  matter, for special blame when it should be fully shared with his colleagues.
  As I said when I started, this is a thoroughly unpleasant subject. The public discussion of it at great length, with heat, does no good to the House of Commons. Of that there can be no doubt, on whichever side of the controversy we may find ourselves. I repeat the advice I was bold enough to tender at the beginning of my remarks, namely that to carry this discussion into the small hours of the morning would serve ill the purposes of those who wish, for good reasons, to see Members properly paid.
  12.45 a.m.
  Mr. Walter Johnson: I think it would be for the convenience of the House if I moved the amendments standing in my name—
  Mr. Deputy Speaker (Mr. George Thomas): Order. The hon. Gentleman may discuss the amendments. He can move them formally later.
  Mr. Johnson: This debate has clearly been disgraceful. It is one of the worst debates ever to have taken place in the House. I agree with those who have said that some way must be found to take this subject out of the House, either by linking Members' pay with the salary levels of civil servants or deciding that this issue should be considered in the light of the average increase over the whole of the Civil Service. The Leader of the House might also like to consider the method whereby the House regularly enacts Pensions (Increase) Measures designed to compensate for the effect of the cost of living on Service pensioners and others similarly placed.
  I ask the Leader of the House to find some way of taking this subject away from the House. The effect of the two amendments standing in my name will be to limit the pay increase to £6, which seems to be the right and proper way of handling this subject. We completed our debate on the Government's policy for attacking inflation at ten o'clock this evening. The main provision in that policy is that the pay of workers should be restricted, across the board, to an increase of £6 from 1st August. By a masterly stroke of timing, having spent the past two days debating that important subject dealing with the interests of

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  the entire nation, we then go on to debate our own salaries and allowances.
  This is shocking, and those responsible bear a heavy burden for the tone of this debate. There have been a number of references to allowances. This is a package deal. We last had a pay increase in 1972. The secretarial allowance stood at £1,000 per annum at that time. The additional costs allowance stood at £750 when it was introduced in 1972. In August 1974 it was raised to £1,050. On the Order Paper today the figure is £1,639. Even leaving aside the secretarial allowance increase, which is substantial—and those who employ a full-time secretary or research assistance make full use of the £3,200—the House must take into account the improvement in the out-of-London allowance. As a result of further information that has come to us today, this allowance is known to represent £589 per annum. In other words, it is £11 a week free of tax. I believe that it was overdue.
  If there has been any real hardship, it has been among hon. Members who have had to keep two homes going. At present tax rates, an £11-a-week increase is worth £15 a week and if the House agrees with my suggested amendment this will be increased by another £6 a week. This leaves aside the secretarial allowance which will help hon. Members because, when the figure was £1,000 hon. Members had to fork out of their own pockets to make up the difference, but the new figure is enough to pay for a full-time secretary.
  Mr. Nigel Spearing: Will my hon. Friend not agree that the figures he has just given do not apply to hon. Members in the London area? Assuming that they pay their secretaries the full allowance, they face a cut in their purchasing power of 20 per cent. since 1972. Can he also say how many hon. Members who signed his amendment have other interests?
  Mr. Johnson: I accept the point the hon. Member makes about London Members. They are paid a London allowance and are in a different position. However, they get the car allowance and one must take into account the fact that the secretarial allowance is the top rate and would allow an hon. Member to
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  employ a first-class secretary, even with the high rates now being paid in the London area.
  The amendment asks hon. Members to face the facts of life—
  Mr. John Golding: My hon. Friend for Newham, South (Mr. Spearing) asked which Members who signed the amendment in the name of my hon. Friend for Derby, South (Mr. Johnson) had outside interests. I hope to catch your eye and to speak in this debate, Mr. Deputy Speaker, but I have an outside interest. I am paid just under £3,600 by the Post Office Engineering Union, and I hope, Mr. Deputy Speaker, to be able to explain in the debate why I feel that we should back the £6, even though I am more fortunate than many hon. Members on this side of the House.
  Mr. Johnson: I was coming to the point about outside interests. I am honorary national officer of a trade union and for that I receive £100 honorarium a year plus meal expenses if I attend meetings on behalf of the union. That should clear up some of the points my hon. Friends have found a little disturbing.
  We are asking hon. Members on both sides, at this very difficult time for our country, to support the £6 limit of the Government's policy. This is essential if we are to get the backing of the people of this country, particularly the trade union movement, for the policy.
  I am as aware as anyone else of the way in which the cost of living has affected Members and I am aware that prices have risen by 65 per cent. since we had the last increase. I am aware that average earnings have gone up by 85 per cent., and were we not in the grip of one of the worst economic crises in our history there would be a very strong case for implementing the Boyle recommendations in full.
  But we must win the battle of inflation. By setting an example to the nation we shall make it possible for the Government's policy on inflation to succeed. Our action would be a massive boost to the attack on inflation and it would be enthusiastically received by the country. It would make it far easier for trade union national officers to get the

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  policy accepted. Only yesterday the finance and general purposes committee of the TUC gave its views on Members' salaries. I believe that it did so not in a spirit of selfishness, greed or vindictiveness. [HON. MEMBERS: "Oh."]— That is my opinion and I probably have more dealings with members of the committee than many of the hon. Members who are making all the noises. The committee adopted that view because it could see the difficulty of getting the Government's policy accepted by the rank and file.
  The amendment provides the House with a great opportunity to win back the confidence of the people who sent us here. It will mean sacrifice and in some cases real hardship, but if we are prepared to put the nation first we shall give a massive boost to the Government's policy for attacking inflation. I ask for support for the amendment.
  12.58 p.m.
  Mr. Norman Tebbit: There were moments when the hon. Member for Derby, South (Mr. Johnson) seemed to lose the sympathy of the House.
  None of us seems to have gained much in stature or public affection from the way in which this affair has been handled. What an odd debate we have had. Sometimes we almost got round to talking about what Members of Parliament should be paid as Members of Parliament. All too often, however, we have drifted off into what Members of Parliament ought to earn in total with their other interests included. Some hon. Members, undoubtedly highly principled, think that we should take no more from this place but that it would be all right if we took as much as we could from outside. That is a reasonable principle.
  I listened carefully to my right hon. Friend the Member for Down, South (Mr. Powell), and, as always, I respect greatly the intellect that he brings to bear on these matters. The understanding on which I stood again for this Parliament was that there would be a Boyle Report, now, and that there would be one in each Parliament of normal length, or approximately every four years. I am not unduly timorous, therefore, when I say that Members are entitled to some increase in remuneration, in spite of my right hon. Friend's views.
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  The curious thing is that as usual most hon. Members who have spoken have seen the national interest coinciding closely with our own personal interests. We have had Members baring their breasts on the subject of their personal income, although one or two have not bared their breasts as fully as they might. After all, one did not have to say exactly what was the income of one's wife. All these things are rather important to the view that a man takes when he decides the extent of the sacrifice that he should make.
  I confess that I have had a great deal of sympathy in recent weeks with the Leader of the House. He has just become a natural target for custard pies from every direction. I believe that he has done his best with the pretty ghastly mess that he has been offered. I welcome his proposal for linkages. Indeed, I welcome the proposal by the hon. Member for Bassetlaw (Mr. Ashton) also, although I would not want us to be linked with a Civil Service grade. [AN HON. MEMBER: "What about the airline pilots?"] The hon. Gentleman suggests airline pilots. I confess that I should not mind that. There are two objections to being linked to the Civil Service. First, it is wrong that we should link our pay to salaries that we immediately and directly set. Secondly, it is unhealthy that when a Member of Parliament looks across the table at a civil servant, the latter should have at the back of his mind "This chap is two grades below me."
  Mr. George Cunningham: That is what he thinks now.
  Mr. Tebbit: With great respect, that is not what he thinks now. It was most certainly not what he thought when hon. Members received no pay whatever. However, that thought would be in his mind if we were linked directly to a Civil Service grade.
  My own preference is for some form of linking to the judiciary. That is probably as near as we can get. It is not the easiest of things to do. The House would be wise this evening to take the view that our pay should be linked. I do not believe that this would be the all-time answer, because then a resolution of this House would be required to activate that complete linkage proposal on each and every occasion.
  Mr. Evelyn King: No.
  Mr. Tebbit: My hon. Friend says "No". It would depend on how we legislated, but I believe that it would be proper, even if we linked our pay, that we should still leave ourselves the option of taking it or leaving it on every occasion. This would solve most of the problems and the power would still remain in our own hands.
  There has been a great deal of comment on the proposal put forward by the hon. Member for Islington, South and Finsbury (Mr. Cunningham) that if people had strong views on public expenditure and inflation, any increase that we might take could be covered by reducing the salaries of Ministers. I normally would have no sympathy with that view because I believe that, if anything, Ministers are under-paid. However, if the Prime Minister and the Cabinet hold the view, as seems to be the case, that being a Member of this House is a privilege for which hon. Members should pay out of their own pockets, I am driven to the conclusion that to be a Minister is an even greater privilege and that one should, therefore, pay even more for it —which is a pretty rough justice form of sauce for the goose and gander
  I should certainly oppose any suggestion of two scales of pay for those who are so-called full-timers and those who are so-called part-timers. I believe myself to be more or less a full-timer. I have no real wish to do very much work outside this House, outside parliamentary affairs. I do some, primarily because I need to earn extra money in order to do my job as a Member of Parliament. That is probably the case with most of us.
  I think that most of us find, as I do, that we subsidise our role as Members of Parliament out of our earnings from outside. Some of us subsidise it to a considerable extent. Some, like the hon. Member for Derby, South take the view that we ought not to pay ourselves any more than £6 a week more, or indeed, some say nothing more at all. They quote the public attitude about this. I wonder what the public attitude in fact is about this matter.
  As hon. Members will know, I have not been reticent in saying that I believe that Members have more than given an example on pay restraint. I do not be-
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  lieve that I have been reticent in saying that Members deserve at least that which the Government have recommended should be paid to them. I have received only one letter criticising my point of view. I have read in the newspapers far more accounts of how wicked I have been but only one letter from a member of the public criticising my view on this matter.
  Perhaps the electorate is a little more sophisticated about this than we think. Perhaps the electorate has noted that it is not the cheapest assembly in Europe that has been the most successful assembly in controlling the problems of inflation. Perhaps they think that if we could concentrate our minds a little more on the business of the House, we would do a little better. Perhaps they think that if all of us were able to get in to attend Standing Committees and Select Committees, this place would run better and we might even have a better chance of controlling the executive from time to time.
  My attitude to the whole of this problem can be summed up quite simply. Above all, I do not believe that this place ought to be a club only for rich men. We got rid of that concept some years ago. Each time we take a salary cut by allowing inflation to erode Members' salaries, we are moving back towards the days when this was a place for rich Members, or some sort of rag-tag popular image of what a trade union leader ought to be or what a Labour Member ought to be—a cloth-capped fellow eating cow-heel sandwiches in the Tea Room.
  I should like to see a far more professional—in the best sense of that word —approach to the way we run this place. I do not believe that we shall get that approach while we continue to reduce the pay of Members.
  1.9 a.m.
  Mr. Kevin McNamara: I wonder whether I could be the first Member who has spoken in the debate to declare his interest? I have a parliamentary salary. I earn a little money from television and radio, and a little by illiterate scribblings. The total of those outside earnings does not amount to more than about £500 or £600 a year. I have two £1 shares in the Hull and East Riding Co-operative Society,

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  five £1 shares in the Hull Kingston Rovers Football Club, and four family allowances. Only one of those sources of income—apart from tonight—can I see any prospect of increasing—and then, chance would be a fine opportunity.
  But that is the lot of the provincial Member, the lot of most Members who have no outside interest, and who therefore do not take too kindly to Members who have substantial interests lecturing them on tightening their belts and setting an example, or telling their wives and children to set an example.
  My wife shops at the same shops as my constituents. Costs have risen for her as they have for the rest of society. I am not claiming that we are on the poverty level or that we are starving, but we want a proper living standard. Our salary, worth £4,500 in 1972, is now worth £2,773 in 1972 terms. A salary to keep up with inflation, on the May figures, would be £7,302, and a salary to keep up with the increase in average earnings to April would be £7,849.
  Our case is not based on how much better we are than the rest of society and that we must be a privileged class. It is simply that, having gone to arbitration, we should have received the rate for the job, the rate that we were denied by the Government, who allowed the matter to drift. The sacrifice will not be made by us. We shall have our invitations to free lunches and dinners and embassy parties. We can have our status and ride first class on the train. But our immediate families are being asked to bear the brunt. The Member is here five days a week.
  It is not right to ask our wives and families to make the sacrifice, which is what hon. Members on both sides of the House are suggesting, whether they have two union incomes or union expenses, whether they are at the Bar, are directors, or whatever. They are saying to Members who basically want to do a job for which they were elected "You set the example, and we shall go along with increases in allowances, because increases in allowances are tax-free". I claim five children on my taxes—five legitimately, anyway. If thought were father to the deed—but unfortunately it is not.
  What we have sought from the Government in justice, not something to take us
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  above the poverty line. I do not see myself in penury compared with a man sleeping on the steps of Caxton Hall or at Charing Cross. I want just to live properly. That is why I bitterly resent the way in which the Government have treated us.
  My hon. Friend the Member for Bassetlaw (Mr. Ashton) has made a great step forward with the linkage amendment, to which my name is attached. I welcomed what he said about it, but if we are to have more revelations of secret talks let us give credit where it is due. The suggestion for the amendment came from my right hon. Friend the Prime Minister when we went to see him. Incidentally, I do not know how successful my hon. Friend was in his union negotiations, but whenever I negotiated with anyone I did not spill all the beans, because I might have to negotiate with him again.
  My hon. Friend has said his piece. He is courageous, and I admire what he has done to help to organise us on the back benches. It is vital that we reject the advice of my right hon. Friend the Leader of the House and support my hon. Friend's amendment. If we do not, we shall have debates of this nature again. We shall for ever wonder when to pluck up courage to ask what will be done about salaries, how long we shall have to wait, and how much the increase will be. Let us get rid of that.
  I did not come here to spend my time debating what my wages would be. I came to Parliament to do a job. I do not even want allowances for secretaries. I want somebody else to pay them. I do not want to fill in forms for anybody else. We want a system which provides decency and certainty. The Government have not treated us decently. Our amendment gives back benchers certainty for the future.
  1.16 a.m.
  Mr. Tim Rathbone: I do not entirely agree with what was said by the hon. Member for Kingston upon Hull, Central (Mr. McNamara). Nor do I believe that the debate has been disgusting or degrading. Members have stated their honestly held views. I should like to share my views with hon. Members as reflected in some of my amendments.

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  I declare the fact that I have a business interest outside the House, as indicated on the parliamentary register. It is a business interest. I do not depend entirely on a parliamentary salary.
  I refer first to the linking of the pay of Members of Parliament to a level of pay in the Civil Service or elsewhere. The matter is dealt with on pages 8 and 9 of the Boyle Report. The report is right. I share the worries of other Members about linking our pay to that of a Civil Service sector. We should not link our pay to that of any other group of salaries elsewhere. If we did that we would give ourselves the advantage of protection against wage and price movements which the electorate do not enjoy.
  The Boyle Report says that the frequency of review is at fault. If the frequency of review is increased to every two years, the review of our own pay will no longer be a problem.
  The Government are flying in the face of many of the Boyle Committee recommendations by showing too little appreciation of the careful consideration and thought which the distinguished and objective members of that Committee brought to bear on the true costs of being a Member of Parliament and the justifiable salary for doing that job. By almost any comparison or assessment, the arguments for expenses and salary increases as recommended by the Boyle Committee are almost irrefutable. I hope that one day soon the increase will be fully implemented. However, I believe that that day is not now.
  Before developing the reasons for my view I should like to separate the two elements which became muddled in many of the speeches this evening. They have also been muddled by Press and television commentators on this subject. I refer to the difference between recompense for some of the expenses of doing the job of a Member of Parliament and the remuneration due to him for doing that job. I do not believe that Mr. David Wood of The Times rendered a service in his article of a week ago.
  Many of the so-called benefits described as being enjoyed by back benchers are simply the accepted services which go with any office job—a desk, a chair, no office for some, certainly no office for me, a telephone, stationery, postage, travel and
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  expenses concerned with living away from home on parliamentary work. A secretary is essential for parliamentary work as for any office work, and that is why an allowance is given for secretarial assistance.
  The amendment in my name is designed to draw attention to the fact that the new so-called secretarial allowance of £3,200 covers not only secretarial costs but general office expenses and, if there is anything left over, the cost of research assistance. Perhaps now there may be something left over for research assistance, which more than anything else might improve the efficiency of Members at a time when our efficiency should be at a premium providing, as it does, one of the most potent checks on the steadily increasing power of the executive.
  I applaud the suggestion which was made by the right hon. Member for Down, South (Mr. Powell) for the provision of vouchers to support the expenses incurred. That is normal business practice outside the House and it would give greater credibility to the expenses incurred.
  So much for the cost of doing the job. What of the timing of the Government's announcement of the increased rate for doing it? I am struck, as other hon. Members have been, by the peculiar juxtaposition of the introduction of the White Paper "The Attack on Inflation" one Friday morning, and the Government's suggestion on the following Wednesday that Members of Parliament should drive a gaping hole in the basic tenet of the attack and in the £6 a week wage increase. The small print in the White Paper may allow it, as it will allow many other increases between now and 1st August. Because the small print allows it, I believe that we have a special role to play as Members of Parliament in trying to lead the country out of the inflationary cycle.
  Mr. Ogden: The hon Gentleman seems to be getting his past and future tenses mixed up. He eventually accepted that the proposals in the Boyle Report are entirely within the guidelines of any social contract or wages legislation in the past three-and-a-half years. We should still not get the back pay but merely be brought up to date. Will the hon. Gentleman please get his tenses right.
  Mr. Rathbone: I thank the hon. Gentleman for his interjection, but I do not think that I am mixing up my tenses. I am making exactly that point. By accepting the suggested increase we should be showing ourselves not to be giving absolute priority to the fight against inflation. We should not be following the principle of no special cases, no exceptions, no jumping the queue before 1st August, which was so emphatically stated by the Prime Minister when he introduced the White Paper.
  All hon. Members will accept that any limit to pay increases is rough justice and that injustice and anomalies will abound. That is perhaps a major reason why any pay limitation should be short and sharp. But if a national limit to pay increases is to sound sincere it must be applied at the level of those who dictate it. That is what is meant by leadership and trust in leadership. Hon. Members who have been in the House for three-and-a-half years have not set an example by not having an increase for three-and-a-half years because the statement was not made at the start of that period. This is the example we are setting.
  I turn to the pension suggestions. This is a matter of importance not only for hon. Members but for the country. Others have had a chance to develop their arguments and I intend to develop mine. The Lord President suggested that a special pension deal be given to hon. Members, a deal the likes of which I rather doubt would be accepted by the Inland Revenue if it were suggested by a private employer.
  I join my hon. Friend the Member for Morecambe and Lonsdale (Mr. Hall-Davis) in the views that he has expressed. Given the job that we do and the character of the job, the Government's recommendation on pay does not go far enough, but given the present economic conditions the Government's recommendation in this respect goes too far. To use the Prime Minister's own words, it is the Government who are now the rogue employer. It is the Government who are now in breach. This is an example of "Don't do as I do, do as I say". It is for that reason that I tabled the amendments to the motion. If it is called, I intend to support the amendment of the hon. Member for Derby, South (Mr. Johnson).
  1.26 a.m.
  The Parliamentary Secretary to the Privy Council Office (Mr. William Price): May I thank the right hon. Member for Yeovil (Mr. Peyton) for the way in which he approached the debate. I sense general support for his view that this discussion should not be prolonged for any longer than necessary.
  This has been in many ways a miserable debate. It cannot be a happy spectacle when we have to argue about our own pay, given the wide differences of opinion amongst us. I suspect that if there is one matter on which we are all agreed it is that the sooner we end this nonsense the better. I could never understand why the House accepted the Boyle recommendation that there should be one review every Parliament. If that was not storing up trouble for ourselves it is difficult to know what was. It could be argued that no one at that time envisaged the inflation of the past three or four years and that the possibility of Boyle recommending an increase of £3,500 all in one go was remote, but it happened.
  It was against a background of economic crisis, demands for sacrifices from many people and of cuts in public expenditure that my right hon. Friend the Lord President had to make his statement last week. I know that he expected to make few friends in the Chamber and even fewer outside. One matter on which many of my constituents are quite clear, although interestingly enough I have not had one letter about it, is that the award should be £6 and no more. That is the clear impression that I gained over the weekend. The Government recommended a compromise which satisfied few people.
  I suggest that the three motions, taken together, are fair and realistic. Most important of all, they point the way forward. If we can once and for all take the question of pay out of public controversy, the argument over the current award will have served a useful purpose. The sooner we take an income of £4,500 away from the Top Salary Review Body the better. I wonder how it ever got there in the first place.
  Mr. Nicholas Winterton: We are top people.
  Mr. Price: But we do not get top salaries.

  501
  I found the suggestion of the hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) that our salary should be based on a set of averages rather than upon one specific grade an attractive proposition. That will be considered along with other proposals.
  The hon. Member for Dorset, South (Mr. King) asked what was an appropriate salary in normal times. He knows as well as I do that there are no normal times for Members of Parliament. There never will be an occasion on which any increase, however small or large, will be popular in the country. The hon. Gentleman said that it was monstrous for us to award ourselves more than £6 a week. What he did not say was whether he himself intends to take the money.
  My hon. Friend the Member for Watford (Mr. Tuck) talked of the need for general sacrifice. I agree, but I find it strange that certain hon. Members who want restraint upon our salaries did not deploy the same arguments about the salaries of judges, military personnel and consultants. [HON. MEMBERS: "We did."] Some did but not all.
  The hon. Member for Morecambe and Lonsdale (Mr. Hall-Davis) asked whether the same treatment on pensions will be conceded to other groups. I know that this is a matter that is worrying many hon. Members. There are those who wish to have their pensions related to what their pay might have been but for the Government's counter-inflation policy. The answer is that the circumstances are different. First, there was a three-and-a-half year interval since Members had their last increase, and there is the generally recognised fact that there is a unique, complex problem surrounding the proper determination of proper pay and pensions for hon. Members.
  Paragraph (4) of the motion determines £8,000 a year as the rate for the job, even though the whole amount will not —and cannot—be paid at this time. That is the logical conclusion of the motion put to the House on 16th July in which the Government accepted the concept that the Boyle recommendations were justified. There are Civil Service precedents for basing pensions on the full amount of the pay award, even though part of it is temporarily deferred on incomes policy grounds. In particular, Assistant Secretaries have their pensions related to the
  502
  full amount of the latest pay award, even though part of their award was deferred and at that time no date could be set for full implementation.
  Mr. Michael McGuire: Will there not be an anomaly in that the rate for the job is to be set at £8,000? Will the death benefit to hon. Members be based on a salary at that rate?
  Mr. Price: Yes. My understanding is that that benefit will be based on the £8,000 figure.
  Mr. Ogden: If any of us lives long enough to collect it.
  Mr. Price: I agree—if hon. Members live long enough to collect it.
  My hon. Friend the Member for Bassetlaw (Mr. Ashton) wanted us to be more specific. My right hon. Friend the Leader of the House has made clear that the question of linkage will be urgently considered. I was at the meeting at which my right hon. Friend offered to discuss the matter in detail with shop stewards and many other Members in this House who wished to make representations. There are many opinions about linkage. It is right that they should be considered carefully, and my right hon. Friend the Lord President of the Council will bring forward proposals in due course. That seems to me to be sensible and logical.
  The right hon. Member for Down, South (Mr. Powell) wanted a Select Committee. We shall have discussions to establish whether there is a general demand for such a move. The right hon. Gentleman argued that it was wrong to protect ourselves from inflation. We are entitled to remind him that we are not doing so. The retail price index has risen 66 per cent., whereas our salary has increased by 28 per cent. We are not protecting ourselves from the inflation we have seen since the last increase.
  My hon. Friend the Member for Derby, South (Mr. Johnson) made a speech which I am sure he would agree was controversial. I respect his honesty and sincerity. Again, there was one element missing. He did not say whether he would take the money. If he believes that he should not take it, I put it to him that there is a simple remedy.

  503
  It is doubtful whether any pay increase in recent years has attracted as much attention as our own, and I make no complaint about that because we must expect to be scrutinised. But one wonders whether some of our friends in Fleet Street are as fair and objective as they might be. It is right to recognise, as my hon. Friend the Member for Nottingham, West (Mr. English) did, that some newspapers have supported us. Others have approached this matter with a vindictiveness and a malice which ought not to go without reply, and I hope that the House will allow me a few minutes in which to explain to Members and to the empty Gallery just what I have in mind.
  I speak as a journalist by trade. In the five years prior to my election to this House I was Midlands Secretary of the National Union of Journalists. I know what goes on in the newspaper business, and I am bound to say that on this matter some of my old colleagues are hypocrites.
  We have suffered abuse from such august quarters as Mr. Alexander of the Daily Mail, a failed would-be Member of Parliament, and from Mr. Woodrow Wyatt, that well-known paupe from Bosworth, who made it twice and was kicked out twice.
  We have suffered abuse, above all, from the Mirror group of newspapers. I am astonished how their journalists have been able to write those stories and those leader articles when they themselves have just received an extra £23 a week. I quote from this month's edition of The Journalist: "Mirror accept £1,167".
  We have had to incur the wrath of the whole of the Mirror staff—none more so than Mr. Keith Waterhouse who I understands receives between £11,000 and £13,000 a year from the Mirror for two short pieces a week, and whose income from all sources, I suspect, puts him in the £40,000 a year pay bracket. It is difficult to take lectures on restraint from a man whose earnings, if I am right, are around 10 times that of the back-bench Members of Parliament upon whom he is laying his abuse.
  We could also consider Mr. Alastair Burnet, Editor of the Daily Express, who produced quite the most wicked editorial
  504
  of the lot, entitled "The Gravy Train". He described our performance as disgraceful. He said that we are all part-timers. We are, he said, in receipt of £5,000 worth of perks. It is quite astonishing how those expenses which to a newspaper editor are legitimate—secretary, postage, telephone, car mileage—become perks when applied to Members of this House. Mr. Burnet offered to take a salary cut if others would do the same. He can afford to do so. His contract has been variously reported as being worth between £20,000 and £35,000 a year, depending on which rival newspaper one happens to take.
  There has been a lot of talk tonight about linkage with the Civil Service, or with some grade in this House. I think we have got it wrong.
  Mr. Gorst: Surely the Minister is not going to compare the reputation that these journalists have with the public with the reputation that Members of Parliament have with the public?
  Mr. Price: If I may say so, I would not be prepared to judge our success rate against that of the Daily Express.
  I think we have the question of linkage all wrong. Here I can speak only for myself and not for the Government. I do not believe that we should link with the Civil Service at all but with Fleet Street editors.
  Perhaps I might mention one final figure. It is difficult to know which increases these journalists have had in the last 3½ years, because they have replaced national negotiations with house agreements, but I have the basic salary for journalists on the Financial Times. It is about the only figure available in the Library. I am sorry, because this is one newspaper which has been supporting us, and it is right to recognise that, but I suspect that their increase is similar to the rest, and the figure given me by the Library is that since 1971 the basic rate for journalists on the Financial Times has increased by 131 per cent.
  I have dealt with journalists at some length because I believe that they have done much to sour the attitude of our constituents towards the whole question of our pay. There are some honourable exceptions in the Gallery and I, for one, am grateful to them.
  Mr. Tebbit: I do not differ very much from the hon. Gentleman, but there is one caveat which we should bear in mind. It is that these gentlemen are paid from private funds whereas we are paid from public funds. Therefore, although I do not differ from the hon. Gentleman, we have to be just a little careful before we carry this too far.
  Mr. Price: I agree about that. I also think that there is a limit to what we should be expected to take here without someone, preferably one of them—and it happens to be me—giving them back some of their stick. In any case, I do not regard newspapers' money as private. It really is not. Newspapers are financed out of what I pay for my newspapers and out of what my wife pays for every commodity advertised in them. Therefore, it is as much public money as the salaries of Members of Parliament. But I agree that we should not overdo it.
  My right hon. Friend has been well aware of the strength of feeling on both sides of the House for and against Boyle, and I believe that he has come as near a consensus as was possible. It is interesting that practically no one, certainly not the Government, has criticised the Boyle Report. The argument has been whether we could implement part of it, all of it, or what on a realistic assessment we thought was acceptable not only to hon. Members but to our constituents. We have a good case. We are setting an example and one for which some trade union leaders would do well to give us a little credit. How many of them would be prepared to go back to their members to tell them that they were to receive little more than a third of the amount recommended by an independent review body? Not one of them would dare try it.
  Having listened to all the arguments—and it has been a good debate, although a miserable one—it is clear to me that this House is deeply divided over the matter. But I have come to the view after a lot of thought that possibly my right hon. Friend has it about right—and certainly I put it no higher than that. On that basis, I ask the House to accept the motions and to reject the amendments. If we do that, I for one will be quite prepared to argue my case this weekend in any pub in my constituency.
  1.43 a.m.
  Mr. John Stokes Mr. John Stokes (Halesowen and Stourbridge) rose—
  Hon. Members: Vote.
  Mr. Stokes: I have been sitting here since the debate started. I have listened to every speech. I have not interrupted once. I have been asked to be brief, and I shall be brief. Therefore, I hope that, for a few minutes, Government supporters will have the courtesy to listen to what I have to say.
  I speak only because I have spent many years of my life dealing professionally with salaries and salary levels—and I declare an interest in that respect. I am bound to say that the Government's handling of this matter and the subsequent debate are hardly in line with the highest standards of practice in personnel management. We seem, in fact, to have got the worst of all worlds and to have upset everyone.
  My first comment is about Ministers salaries. These are far too low, being below the salaries of the top civil servants. That, in my view, is an absurdity. They are also far below those of many outside levels of jobs carrying comparable responsibility. For instance, surely the Prime Minister should receive at least £30,000 per anum and Ministers £20,000
  My second comment is even more important. It is that Members' salaries cannot and should not strictly be compared with anyone else's. It cannot be too strongly emphasised that the job of a Member of Parliament is unique. For this reason, I am opposed to Members' salaries being tied by any linkage or other means to that of any other body. It might lead in time to an attempt to pay Members for attendance, for hours within the House—and all those things should be resisted. It is all part of an attempt to make us full-time salaried officials and we must hold out to the end against that.
  I think that Lord Boyle got his £8,000 about right, and even that figure—no one else has made this point today—will still make the House of Commons one of the lowest-paid assemblies, in the Western world. I nevertheless believe that it would not be seemly for us to receive such an increase now.

  507
  We are unfortunately the victims of circumstances and of Government mishandling and we have to accept the £5,750 with a good grace. We have made a sacrifice and should not be ashamed to say so. I should like to know of another class of person who has made a similar sacrifice.
  Nevertheless, we should make a contribution to try to lessen the increase in public expenditure and we must also never forget the self-employed, many of whose incomes have not kept pace with the cost of living.
  I deplore the pension proposals. To earn one's salary and receive a pension entitlement based on a notional figure is not only unnecessarily complex but places us in an invidious and especially favoured category. Nevertheless, the whole pension scheme badly needs re-examination. It bears down particularly hardly on the older Members due to retire.
  So strong is envy in some sections of our society now and so great is the force of egalitarianism that sometimes all salaries above average earnings come under attack. High taxation in any event so greatly reduces net take-home pay that the latter figure should always be quoted in addition to gross salary. I do not see why the arrangements which apply in so many private firms should not apply also in this House.
  The Parliamentary Secretary to the Treasury (Mr. Robert Mellish)rose in his place and claimed to move, That the Question be now put.
  Question, That the Question be now put, put and agreed to.
  Question put accordingly, That the amendment be made:—
  The House divided: Ayes, 128; Noes, 127.

  Division No. 293.]

  AYES

  [1.49 a.m.

  Atkinson, Norman

  Hoyle, Doug (Nelson)

  Orme, Rt Hon Stanley

  Bagier, Gordon A. T.

  Huckfield, Les

  Ovenden, John

  Barnett, Guy (Greenwich)

  Hughes, Mark (Durham)

  Park, George

  Bates, Alf

  Hughes, Roy (Newport)

  Parker, John

  Beith, A. J.

  Hunt, John

  Parry, Robert

  Bottomley, Peter

  Hurd, Douglas

  Radice, Giles

  Bray, Dr Jeremy

  Irving, Charles (Cheltenham)

  Reid, George

  Brotherton, Michael

  Jackson, Miss Margaret (Lincoln)

  Rhys Williams, Sir Brandon

  Buchanan, Richard

  Janner, Greville

  Richardson, Miss Jo

  Buck, Antony

  Jay, Rt Hon Douglas

  Robertson, John (Paisley)

  Cant, R B.

  Kilroy-Silk, Robert

  Roderick, Caerwyn

  Cartwright, John

  Kinnock, Neil

  Rooker, J. W.

  Clarke, Kenneth (Rushcliffs)

  Kitson, Sir Timothy

  Roper, John

  Cockcroft, John

  Knox, David

  Shaw, Arnold (Ilford South)

  Cohen, Stanley

  Lambie, David

  Sillars, James

  Conlan, Bernard

  Lamond, James

  Sims, Roger

  Cook, Robin F. (Edin C)

  Lamont, Norman

  Smith, Cyril (Rochdale)

  Crawshaw, Richard

  Leadbitter, Ted

  Snape, Peter

  Cunningham, G. (Islington S)

  Lestor, Miss Joan (Eton & Slough)

  Spearing, Nigel

  Dean, Joseph (Leeds West)

  Lewis, Arthur (Newham N)

  Spriggs, Leslie

  Doig, Peter

  Lyon, Alexander (York)

  Stewart, Donald (Western Isles)

  Duffy, A. E. P.

  Lyons, Edward (Bradford W)

  Stott, Roger

  Dunwoody, Mrs Gwyneth

  McCartney, Hugh

  Swain, Thomas

  Edwards, Robert (Wolv SE)

  MacCormick, Iain

  Thomas, Mike (Newcastle E)

  Ellis, John (Brigg & Scun)

  McElhone, Frank

  Thomas, Ron (Bristol NW)

  Ellis, Tom (Wrexham)

  McGuire, Michael (Ince)

  Thorne, Stan (Preston South)

  English, Michael

  McMillan, Tom (Glasgow C)

  Tinn, James

  Evans, loan (Aberdare)

  McNamara, Kevin

  Tugendhat, Christopher

  Evans, John (Newton)

  Mahon, Simon

  Urwin, T. W.

  Faulds, Andrew

  Marshall, Jim (Leicester S)

  Viggers, Peter

  Fletcher Alex (Edinburgh N)

  Maxwell-Hyslop, Robin

  Wainwright, Edwin (Dearne V)

  Gardiner, George (Reigate)

  Mendelson, John

  Ward, Michael

  Garrett, John (Norwich S)

  Mikardo, Ian

  Watkins, David

  Garrett, W. E. (Wallsend)

  Miller, Dr M. S. (E Kilbride)

  Watkinson, John

  Glyn, Dr Alan

  Miller, Mrs Millie (Ilford N)

  White, Frank R (Bury)

  Gourlay, Harry

  Miscampbell, Norman

  Wiggin, Jerry

  Graham, Ted

  Mitchell, R. C. (Soton, Itchen)

  Wilson, Alexander (Hamilton)

  Gray, Hamish

  Molloy, William

  Wilson, Gordon (Dundee E)

  Hamilton, W. W. (Central Fife)

  Nelson, Anthony

  Winterton, Nicholas

  Hardy, Peter

  Newton, Tony

  Hatton, Frank

  Noble, Mike

  TELLERS FOR THE AYES:

  Hayhoe, Barney

  Ogden, Eric

  Mr. Joseph Ashton and

  Henderson, Douglas

  O'Halloran, Michael

  Dr. John A. Cunningham.

  Horam, John

  Orbach, Maurice

  NOES

  Archer, Peter

  Forrester, John

  Mulley, Rt Hon Frederick

  Armstrong, Ernest

  Fowler, Gerald (The Wrekin)

  Newens, Stanley

  Arnold, Tom

  Fox, Marcus

  Page, John (Harrow West)

  Benn, Rt Hon Anthony Wedgwood

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

  Pavitt, Laurie

  Bishop, E. S.

  Freeson, Reginald

  Pendry, Tom

  Blenkinsop, Arthur

  George, Bruce

  Penhaligon, David

  Boothroyd, Miss Betty

  Golding, John

  Powell, Rt Hon J. Enoch

  Boscawen, Hon Robert

  Goodhart, Philip

  Price, William (Rugby)

  Boyden, James (Bish Auck)

  Gorst, John

  Rathbone, Tim

  Bradford, Rev Robert

  Gow, Ian (Eastbourne)

  Rees, Rt Hon Merlyn (Leeds S)

  Brown, Hugh D. (Provan)

  Grant, John (Islington C)

  Rees-Devies, W. R.

  Brown, Robert C. (Newcastle W)

  Hall-Davis, A. G. F.

  Roberts, Albert (Normanton)

  Brown, Ronald (Hackney S)

  Hamilton, James (Bothwell)

  Rodgers, George (Chorley)

  Canavan, Dennis

  Harrison, Col Sir Harwood (Eye)

  Ross, Stephen (Isle of Wight)

  Carmichael, Neil

  Harrison, Walter (Wakefield)

  Ross, Rt Hon W. (Kilmarnock)

  Carson, John

  Hughes, Rt Hon C. (Anglesey)

  Ross, William (Londonderry)

  Castle, Rt Hon Barbara

  Hunter, Adam

  Sandelson, Neville

  Channon, Paul

  Irving, Rt Hon S. (Dartford)

  Short, Rt Hon E. (Newcastle C)

  Clemitson, Ivor

  John, Brynmor

  Silverman, Julius

  Cocks, Michael (Bristol S)

  Johnson, James (Hull West)

  Skinner, Dennis

  Coleman, Donald

  Johnson, Walter (Derby S)

  Small, William

  Concannon, J. D.

  Johnson Smith, G. (E Grinstead)

  Smith, John (N Lanarkshire)

  Cooke, Robert (Bristol W)

  Jones, Barry (East Flint)

  Spicer, Jim (W Dorset)

  Costain, A. P.

  Jones, Dan (Burnley)

  Sproat, Iain

  Cox, Thomas (Tooting)

  Kaufman, Gerald

  Steel, David (Roxburgh)

  Craigen, J. M. (Maryhill)

  King, Evelyn (South Dorset)

  Stewart, Rt Hon M. (Fulham)

  Cryer, Bob

  Lamborn, Harry

  Stokes, John

  Dalyell, Tam

  Lane, David

  Strauss, Rt Hon G. R.

  Davies, Bryan (Enfield N)

  Lawrence, Ivan

  Taylor, Mrs Ann (Bolton W)

  Davies, Ifor (Gower)

  Litterick, Tom

  Taylor, R. (Croydon NW)

  Davis, Clinton (Hackney C)

  MacFarquhar, Roderick

  Tierney, Sydney

  Dempsey, James

  MacGregor, John

  Tomlinson, John

  Dormand, J. D.

  Madden, Max

  Vaughan, Dr Gerard

  Douglas-Mann, Bruce

  Mallalieu, J. P. W.

  Walker, Terry (Kingswood)

  Drayson, Burnaby

  Marks, Kenneth

  Wellbeloved, James

  Dunlop, John

  Mason, Rt Hon Roy

  Whitehead, Phillip

  Dunn, James A.

  Mates, Michael

  Williams, Alan (Swansea W)

  Durant, Tony

  Mather, Carol

  Williams, Alan Lee (Hornch'ch)

  Dykes, Hugh

  Mellish, Rt Hon Robert

  Woof, Robert

  Emery, Peter

  Millan, Bruce

  Ewing, Harry (Stirling)

  Miller, Hal (Bromsgrove)

  TELLERS FOR THE NOES:

  Fairbairn, Nicholas

  Mitchell, David (Basingstoke)

  Mr. Joseph Harper and

  Fernyhough, Rt Hon E.

  Molyneaux, James

  Mr. David Stoddart.

  Foot, Rt Hon Michael

  Morris, Charles R. (Openshaw)

  Question accordingly agreed to.
  Main Question, as amended, put:
  The House divided: Ayes 160, Noes 70.

  Division No. 294.]

  AYES

  [2.00 a.m.

  Aitken, Jonathan

  Cox, Thomas (Tooting)

  Hamilton, W. W. (Central Fife)

  Archer, Peter

  Crawshaw, Richard

  Hardy, Peter

  Arnold, Tom

  Cunningham, G. (Islington S)

  Hatton, Frank

  Atkinson, Norman

  Dean, Joseph (Leeds West)

  Hayhoe, Barney

  Bagier, Gordon A. T.

  Dempsey, James

  Henderson, Douglas

  Barnett, Guy (Greenwich)

  Doig, Peter

  Horam, John

  Bates, Alf

  Duffy, A. E. P.

  Hoyle, Doug (Nelson)

  Beith, A. J.

  Dunn, James A.

  Huckfield, Les

  Benn, Rt Hon Anthony Wedgwood

  Dunwoody, Mrs Gwyneth

  Hughes, Mark (Durham)

  Bitten, John

  Edwards, Robert (Wolv SE)

  Hughes, Roy (Newport)

  Bottomley, Peter

  Ellis, John (Brigg & Scun)

  Hunt, John

  Bowden, A. (Brighton, Kemptown)

  Ellis, Tom (Wrexham)

  Hunter, Adam

  Boyden, James (Bish Auck)

  English, Michael

  Hurd, Douglas

  Bray, Dr Jeremy

  Evans, Ioan (Aberdare)

  Irving, Charles (Cheltenham)

  Brotherton, Michael

  Evans, John (Newton)

  Jackson, Miss Margaret (Lincoln)

  Buchanan, Richard

  Faulds, Andrew

  Janner, Greville

  Buck, Antony

  Fernyhough, Rt Hon E.

  Jay, Rt Hon Douglas

  Canavan, Dennis

  Fletcher Alex (Edinburgh N)

  Jones, Barry (East Flint)

  Cant, R. B.

  Foot, Rt Hon Michael

  Kilroy-Silk, Robert

  Carmichael, Neil

  Forrester, John

  Kinnock, Neil

  Cartwright, John

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

  Kitson, Sir Timothy

  Channon, Paul

  Gardiner, George (Reigate)

  Knox, David

  Clarke, Kenneth (Rushcliffe)

  Garrett, John (Norwich S)

  Lambie, David

  Clemitson, Ivor

  Garrett, W. E. (Wallsend)

  Lamborn, Harry

  Cohen, Stanley

  Gourlay, Harry

  Lamond, James

  Coleman, Donald

  Graham, Ted

  Lamont, Norman

  Concannon, J. D.

  Grant, John (Islington C)

  Leadbitter, Ted

  Conlan, Bernard

  Gray, Hamish

  Lestor, Miss Joan (Eton & Slough)

  Cook, Robin F. (Edin C)

  Hamilton, James (Bothwell)

  Lewis, Arthur (Newham N)

  Litterick, Tom

  O'Halloran, Michael

  Stanley, John

  Lomas, Kenneth

  Orbach, Maurice

  Steel, David (Roxburgh)

  Lyon, Alexander (York)

  Orme, Rt Hon Stanley

  Stewart, Donald (Western Isles)

  Lyons, Edward (Bradford W)

  Ovenden, John

  Stott, Roger

  McCartney, Hugh

  Park, George

  Swain, Thomas

  MacCormick, Iain

  Parker, John

  Taylor, Mrs Ann (Bolton W)

  McElhone, Frank

  Parry, Robert

  Thomas, Mike (Newcastle E)

  MacGregor, John

  Prescott, John

  Thomas, Ron (Bristol NW)

  McGuire, Michael (Ince)

  Radice, Giles

  Thorne, Stan (Preston South)

  McMillan, Tom (Glasgow C)

  Rees-Davies, W. R.

  Tierney, Sydney

  McNamara, Kevin

  Reid, George

  Tinn, James

  Mahon, Simon

  Rhys Williams, Sir Brandon

  Tugendhat, Christopher

  Mallalieu, J. P. W.

  Richardson, Miss Jo

  Urwin, T. W.

  Marshall, Jim (Leicester S)

  Robertson, John (Paisley)

  Viggers, Peter

  Marshall, Michael (Arundel)

  Roderick, Caerwyn

  Wainwright, Edwin (Dearne V)

  Maxwell-Hyslop, Robin

  Rodgers, George (Chorley)

  Ward, Michael

  Mendelson, John

  Rooker, J. W.

  Watkins, David

  Meyer, Sir Anthony

  Roper, John

  Watkinson, John

  Mikardo, Ian

  Ross, Stephen (Isle of Wight)

  White, Frank R. (Bury)

  Miller, Dr M. S. (E Kilbride)

  Sandelson, Neville

  Wiggin, Jerry

  Miller, Mrs Millie (Ilford N)

  Shaw, Arnold (Ilford South)

  Wilson, Alexander (Hamilton)

  Miscampbell, Norman

  Sillars, James

  Wilson, Gordon (Dundee E)

  Mitchell, R. C. (Soton, Itchen)

  Silverman, Julius

  Winterton, Nicholas

  Molloy, William

  Sims, Roger

  Woof, Robert

  Mulley, Rt Hon Frederick

  Smith, Cyril (Rochdale)

  Nelson, Anthony

  Snape, Peter

  TELLERS FOR THE AYES

  Newton, Tony

  Spearing, Nigel

  Mr. Joseph Ashton and

  Noble, Mike

  Spriggs, Leslie

  Dr. John A. Cunningham

  Ogden, Eric

  Stallard, A. W.

  NOES

  Boscawen, Hon Robert

  Golding, John

  Pendry, Tom

  Bradford, Rev Robert

  Goodhart, Philip

  Penhaligon, David

  Brown, Hugh D. (Provan)

  Gorst, John

  Powell, Rt Hon J. Enoch

  Brown, Robert C. (Newcastle W)

  Gow, Ian (Eastbourne)

  Price, William (Rugby)

  Butler, Adam (Bosworth)

  Hall-Davis, A. G. F.

  Rees, Rt Hon Merlyn (Leeds S)

  Carson, John

  Harrison, Col Sir Harwood (Eye)

  Roberts, Albert (Normanton)

  Clegg, Walter

  Irving, Rt Hon S. (Dartford)

  Ross, Rt Hon W. (Kilmarnock)

  Cocks, Michael (Bristol S)

  Johnson, James (Hull West)

  Ross, William (Londonderry)

  Cooke, Robert (Bristol W)

  Johnson Smith, G. (E Grinstead)

  Short, Rt Hon E. (Newcastle C)

  Costain, A. P.

  Jones, Dan (Burnley)

  Skinner, Dennis

  Cryer, Bob

  King, Evelyn (South Dorset)

  Smith, John (N Lanarkshire)

  Dalyell, Tam

  Lane, David

  Spicer, Jim (W Dorset)

  Davies, Bryan (Enfield N)

  Lawrence, Ivan

  Stewart, Rt Hon M. (Fulham)

  Davies, Ifor (Gower)

  MacFarquhar, Roderick

  Stoddart, David

  Dormand, J. D.

  Madden, Max

  Stokes, John

  Dunlop, John

  Mason, Rt Hon Roy

  Strauss, Rt Hon G. R.

  Durant, Tony

  Mather, Carol

  Taylor, R. (Croydon NW)

  Dykes, Hugh

  Millan, Bruce

  Vaughan, Dr Gerard

  Emery, Peter

  Miller, Hal (Bromsgrove)

  Williams, Alan Lee (Hornch'ch)

  Ewing, Harry (Stirling)

  Mitchell, David (Basingstoke)

  Wise, Mrs Audrey

  Fairbairn, Nicholas

  Molyneaux, James

  Fowler, Gerald (The Wrekin)

  Morris, Charles R. (Openshaw)

  TELLERS FOR THE NOES

  Freeson, Reginald

  Newens, Stanley

  Mr. Tim Rathbone and

  George, Bruce

  Page, John (Harrow West)

  Mr. Michael Mates.

  Glyn, Dr Alan

  Pavitt, Laurie

  Question accordingly agreed to.
  Resolved,
  That in the opinion of this House it is desirable in principle that the salaries of Members should be regulated to correspond with a point on the scale paid to an Assistant Secretary in the public service, not later than three months after the next General Election, and annually until that date, the salaries of Members should be increased by not less than the same amount of increase as these Assistant Secretaries.
  Resolved,
  That, in the opinion of this House, further Provision with respect to allowances, facilities and other payments for Members of this House should be made as follows:—

  (1) the rate of the supplementary London allowance (£228 a year under the 1974 Resolution) to be £340 a year in respect of periods
  512
  beginning on or after 13th June 1975, but as and when thereafter any change is made in the Civil Service rate of Inner London weighting, the rate payable in respect of Members entitled to the allowance to correspond to that Civil Service rate, omitting the element in it which represents the cost of travel to work;

  (2) the annual limit on the additional costs allowance (£1,050 under the 1974 Resolution) to be—

  (a) for the period 1st April 1975 to 31st March 1976, £1,639, and

  (b) for any subsequent period of twelve months ending with 31st March, an amount equal to 144 times the Class A(i) London rate (regular visitors) for a night's subsistence, as obtaining in the Civil Service in that period, and allowing for any change in the rate in the period by taking a weighted average;

  513

  (3) the annual limit on the secretarial allowance (£1,750 under the 1974 Resolution) to be replaced by a limit of £2,910 for the period from 1st April 1975 to 31st March 1976, and £3,200 for any subsequent period of twelve months beginning with 1st April;

  (4) the car mileage allowance (7·7 pence a mile under the 1974 Resolution) to be 10·2 pence per mile for journeys commenced on or after 13th June 1975, but as from when the corresponding Civil Service rate is next altered thereafter, the allowance for Members of this House to be the same as that corresponding rate (which is the rate for cars over 1,750 cc used for journeys on official business);

  (5) the number of return journeys for which, in accordance with the 1971 Resolution, facilities for free travel are available to the spouses of Members of this House (ten journeys a year under that Resolution) to be fifteen for the period of twelve months ending with 31st December 1975 or any subsequent period of twelve months beginning with 1st January.

  In this Resolution—
  'the 1971 Resolution' means the Resolution relating to Parliamentary Expenses which was passed by this House on 20th December 1971;
  'the 1974 Resolution' means the Resolution relating to such expenses passed by this House on 30th July 1974.—[Mr. Walter Harrison.]
  Question proposed,
  That, in the opinion of this House, the following provision should be made with respect to the salaries and pensions of Members of this House:—

  (1) the salary payable to a Member (other than one who is for the time being an officer of the House or a salaried holder of Ministerial office) to be at the rate of £5,750 a year;

  (2) the salary payable to a Member who is for the time being an officer of the House or a salaried holder of Ministerial office, but is not a member of the Cabinet, to be at the rate of £3,700 a year;

  (3) the salary payable to a Member who is for the time being a holder of Ministerial office and a member of the Cabinet to continue at the rate of £3,000 a year, as under the resolution passed by this House on 20th December 1971;
  (4) the proper rate of salary under head (1) of this Resolution is £8,000 a year, and in the case of all Members of their ordinary salary for pension purposes (and in particular for the purposes of enactments relating to contributory pensions and the deduction of contributions from salary) is to be regarded as being at the rate of £8,000 a year notwithstanding that payment at that rate is not actually made;
  (5) each Member is, by way of supplement to his salary payable under head (1), (2) or (3) above, to be credited with £112.50 a year (that is to say a yearly amount equal to 5 per cent. of the difference between £5,750 and £8,000).
  (6) This Resolution has effect as respect service on and after 13th June 1975.
  In this Resolution—

  (a) 'salaried' means for the time being in receipt of a salary under the Ministerial and other Salaries Act 1975; and

  (b) 'Ministerial office' means the same as in section 2 of the House of Commons Disqualification Act 1975, as that Act is for the time being in force.—[Mr. Walter Harrison.]

  Amendment proposed: In paragraph (1), leave out '£5,750' and insert '£6,300'.—[Mr. George Cunningham.]
  Question, That the amendment be made, put and negatived.
  Amendment proposed: In paragraph (1), to leave out '£5,750 a year' and insert
  '£4,812 a year, being an increase of £6 a week'.—[Mr. Walter Johnson.]
  Question put, That the amendment be made:—
  The House divided: Ayes 37, Noes 197.

  Division No. 295.]

  AYES

  [2.12 a.m.

  Biffen, John

  King, Evelyn (South Dorset)

  Spicer, Jim (W Dorset)

  Blenkinsop, Arthur

  Lane, David

  Sproat, Iain

  Brown, Ronald (Hackney S)

  Litterick, Tom

  Taylor, Mrs Ann (Bolton W)

  Canavan, Dennis

  MacFarquhar, Roderick

  Taylor, R. (Croydon NW)

  Carson, John

  Mather, Carol

  Tierney, Sydney

  Clegg, Walter

  Maxwell-Hyslop, Robin

  Vaughan, Dr Gerard

  Dunlop, John

  Meyer, Sir Anthony

  Viggers, Peter

  Dykes, Hugh

  Miller, Hal (Bromsgrove)

  Wellbeloved, James

  Emery, Peter

  Mitchell, David (Basingstoke)

  Williams, Alan Lee (Hornch'ch)

  Fox, Marcus

  Molyneaux, James

  Goodhart, Philip

  Pattie, Geoffrey

  TELLERS FOR THE AYES:

  Gow, Ian (Eastbourne)

  Penhaligon, David

  Mr. John Golding and

  Irving, Charles (Cheltenham)

  Rathbone, Tim

  Mr. Phillip Whitehead.

  Johnson, Walter (Derby S)

  Skinner, Dennis

  NOES

  Aitken, Jonathan

  Arnold, Tom

  Bagier, Gordon A. T.

  Archer, Peter

  Ashton, Joe

  Barnett, Guy (Greenwich)

  Armstrong, Ernest

  Atkinson, Norman

  Bates, Alf

  Beith, A. J.

  Hamilton, James (Bothwell)

  O'Halloran, Michael

  Benn, Rt Hon Anthony Wedgwood

  Hamilton, W. W. (Central Fife)

  Orbach, Maurice

  Bidwell, Sydney

  Hardy, Peter

  Orme, Rt Hon Stanley

  Bishop, E. S.

  Harrison, Col Sir Harwood (Eye)

  Ovenden, John

  Boothroyd, Miss Betty

  Harrison, Walter (Wakefield)

  Park, George

  Boscawen, Hon Robert

  Nation, Frank

  Parker, John

  Bottomley, Peter

  Hayhoe, Barney

  Parry, Robert

  Bowden, A. (Brighton, Kemptown)

  Henderson, Douglas

  Pavitt, Laurie

  Boyden, James (Bish Auck)

  Horam, John

  Pendry, Tom

  Bray, Dr Jeremy

  Hoyle, Doug (Nelson)

  Price, William (Rugby)

  Brotherton, Michael

  Huckfield, Les

  Radice, Giles

  Brown, Hugh D. (Provan)

  Hughes, Rt Hon C. (Anglesey)

  Rees, Rt Hon Merlyn (Leeds S)

  Brown, Robert C. (Newcastle W)

  Hughes, Mark (Durham)

  Rees-Davies, W. R.

  Buchanan, Richard

  Hughes, Roy (Newport)

  Reid, George

  Cant, R. B.

  Hunt, John

  Richardson, Miss Jo

  Carmichael, Neil

  Hunter, Adam

  Roberts, Albert (Normanton)

  Cartwright, John

  Hurd, Douglas

  Robertson, John (Paisley)

  Castle, Rt Hon Barbara

  Irving, Rt Hon S. (Dartford)

  Rodgers, George (Chorley)

  Channon, Paul

  Janner, Greville

  Rooker, J. W.

  Clemitson, Ivor

  Jay, Rt Hon Douglas

  Roper, John

  Cocks, Michael (Bristol S)

  John, Brynmor

  Ross, Stephen (Isle of Wight)

  Cohen, Stanley

  Johnson, James (Hull West)

  Ross, Rt Hon W. (Kilmarnock)

  Coleman, Donald

  Johnson Smith, G. (E Grinstead)

  Sandelson, Neville

  Concannon, J. D.

  Jones, Barry (East Flint)

  Shaw, Arnold (Ilford South)

  Conlan, Bernard

  Jones, Dan (Burnley)

  Short, Rt Hon E. (Newcastle C)

  Cook, Robin F. (Edin C)

  Kaufman, Gerald

  Sillars, James

  Cox, Thomas (Tooting)

  Kilroy-Silk, Robert

  Silverman, Julius

  Crawshaw, Richard

  Kinnock, Neil

  Sims, Roger

  Cunningham, G. (Islington S)

  Lambie, David

  Small, William

  Cunningham, Dr J. (Whiteh)

  Lamborn, Harry

  Smith, Cyril (Rochdale)

  Dalyell, Tam

  Lamond, James

  Smith, John (N Lanarkshire)

  Davies, Bryan (Enfield N)

  Lamont, Norman

  Snape, Peter

  Davies, Ifor (Gower)

  Leadbitter, Ted

  Spearing, Nigel

  Davis, Clinton (Hackney C)

  Lestor, Miss Joan (Eton & Slough)

  Spriggs, Leslie

  Dean, Joseph (Leeds West)

  Lewis, Arthur (Newham N)

  Stanley, John

  Dempsey, James

  Lomas, Kenneth

  Steel, David (Roxburgh)

  Doig, peter

  McCartney, Hugh

  Stewart, Rt Hon M. (Fulham)

  Dormand, J. D.

  MacCormick, Iain

  Stott, Roger

  Drayson, Burnaby

  McElhone, Frank

  Strauss, Rt Hon G. R

  Duffy, A. E. P.

  MacGregor, John

  Swain, Thomas

  Dunn, James A.

  McGuire, Michael (Ince)

  Tebbit, Norman

  Dunwoody, Mrs Gwyneth

  McMillan, Tom (Glasgow C)

  Thomas, Mike (Newcastle E)

  Durant, Tony

  McNamara, Kevin

  Thomas, Ron (Bristol NW)

  Edwards, Robert (Wolv SE)

  Mahon, Simon

  Thorne, Stan (Preston South)

  Ellis, John (Brigg & Scun)

  Mallalieu, J. P. W.

  Tinn, James

  Ellis, Tom (Wrexham)

  Marks, Kenneth

  Tomlinson, John

  English, Michael

  Marshall, Jim (Leicester S)

  Tugendhat, Christopher

  Evans,Ioan (Aberdare)

  Mason, Rt Hon Roy

  Urwin, T. W.

  Evans, John (Newton)

  Mates, Michael

  Wainwright, Edwin (Dearne V)

  Ewing, Harry (Stirling)

  Mellish, Rt Hon Robert

  Walker, Terry (Kingswood)

  Faulds, Andrew

  Mendelson, John

  Ward, Michael

  Fernyhough, Rt Hon E.

  Mikardo, Ian

  Watkins, David

  Fletcher Alex (Edinburgh N)

  Millan, Bruce

  Watkinson, John

  Foot, Rt Hon Michael

  Miller, Dr M. S. (E Kilbride)

  White, Frank R. (Bury)

  Forrester, John

  Miller, Mrs Millie (Ilford N)

  Wiggin, Jerry

  Fowler, Gerald (The Wrekin)

  Miscampbell, Norman

  Williams, Alan (Swansea W)

  Freeson, Reginald

  Mitchell, R. C. (Soton, Itchen)

  Wilson, Alexander (Hamilton)

  Gardiner, George (Reigate)

  Molloy, William

  Wilson, Gordon (Dundee E)

  Garrett, John (Norwich S)

  Morris, Charles R. (Openshaw)

  Winterton, Nicholas

  Garrett, W. E. (Wallsend)

  Mulley, Rt Hon Frederick

  Woof, Robert

  Graham, Ted

  Nelson, Anthony

  Grant, John (Islington C)

  Newton, Tony

  TELLERS FOR THE NOES:

  Gray, Hamish

  Noble, Mike

  Mr. Joseph Harper and

  Hall-Davis, A. G. F.

  Ogden, Eric

  Mr. David Stoddart.

  Question accordingly negatived.
  Main Question put and agreed to.

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

  CARNOCK PRIMARY SCHOOL
  2.21 a.m.
  Mr. Adam Hunter: I make no apologies for raising the simple, straightforward subject of the Carnock Primary School in the early hours of the morning in this Adjournment debate. It is an important constituency matter.
  In a previous Adjournment debate which I initiated on a Scottish subject, the reply was given not by a Scottish Minister but by a Treasury Minister. That was a formidable experience for me. Tonight the situation is much better and I am less apprehensive because, due to certain circumstances, the Minister who should have replied is not here. Fortunately for me, the Minister in his place is one of my colleagues from the county of Fife, so I am expecting a great deal of sympathy and consideration.
  It is necessary to raise the subject of the future of the Carnock Primary School for numerous reasons, but I shall confine myself to two main reasons. One is that it is wrong to deprive a community of full primary education. This is the crux of the matter. The parents' action committee and I want to know whether full primary education will be restored to the village of Carnock. That presupposes that there will be a new school some day in the not too distant future providing full primary education.
  The former Under-Secretary of State, my hon. Friend the Member for Aberdeen, North (Mr. Hughes), knows the case which I could put forward on behalf of the Carnock community. The Minister who is to reply also knows the case well. I am sure that since last night he has been able to obtain some information about the matter.
  The hon. Member for Aberdeen, North listened courteously to our deputation. We met him on 18th April this year. After almost an hour with the deputation he must have realised that before him were representatives of a young and growing community voicing fears which to this day are not yet dispelled.
  There has been full primary education in Carnock for 100 years. Carnock is an old village. The majority of the present community came to live in the village seven or eight years ago, attracted by new, private housing developments.
  518
  The old school having a limited life, it was natural to expect a new school in due course. That was the main reason for the quick growth of the community. It was on the list of priorities at one time. There was never any doubt that the school would materialise. Uncertainty has been created by the Fife Education Authority. Therefore, I appeal to the Minister to state clearly what are the parents' rights for their children to be educated in the school of their choice.
  The education authority in Fife has not been forthcoming about the school's future. It decided to stabilise the school at around 100 to 120 pupils in the primary 1 to primary 4 range and to transfer the top class to Inzievar School in Oakley, which is about two miles away. When that decision was first communicated to the Carnock people they were angry, because it seemed to be the thin end of the wedge which would deny them primary school facilities in the future. The action committee was also displeased about the way the transfer was intimated to it.
  Despite my intervention by correspondence and parents' efforts through discussion with education officials, in addition to their correspondence over a six-month period, there was no disclosure of the fact that the current decision by the education authority could be implemented only on the basis of the approval of the Secretary of State. Regrettably it was only after I had raised the matter on the Floor of the House that the education authority took this step.
  Despite our meeting with my hon. Friend the Member for Aberdeen, North, the transfer goes on. The action committee's request for temporary accommodation until a new school is built has been rejected. Its fears about primary pupils having to travel to school, thereby encountering danger on the road, were ignored. Free school transport was promised, but no mention was made of whether the children will have this facility to return home for their midday meal. The cost of transport will continue and increase year by year. It would have been cheaper to have built or temporarily to have rented accommodation for the top classes.
  Unfortunately, and fortuitously, Inzievar School is situated in Oakley. It was

  519
  a former secondary school but for various reasons it was not successful as such. Even with the Carnock children added there will still be spare capacity for more pupils. Will this school be filled to capacity with other primary school pupils? The Carnock people have the right to know the education authority's long-term plans.
  Two regional councillors have tried to extract an unequivocal answer from the regional council about this school's future. One of the councillors felt he had received a firm assurance that Carnock school would be maintained indefinitely. He is not so sure now because, having pressed the matter again with the education convener, he had the same reply as I received from the director of education dated 30th May 1975. I quote the main part of that reply:
  "An assurance was given by the Chairman of the Schools Sub-Committee that, apart from the older children being accommodated in Inzievar primary school from the beginning of session 1975–76, there would be no further reduction in primary educational facilities being provided at Carnock. The situation would be examined annually, however, in the light of prevailing circumstances. The Chairman of the Schools Sub-Committee was not prepared to say anything further about the future of Carnock school."
  One sentence is a critical factor in that reply, and I am sure that the future hinges on it. I shall read it again:
  "The situation would be examined annually, however, in the light of prevailing circumstances."
  That could mean anything, but I am sure it does not mean that there will not be a further reduction in the school population in the existing Carnock school or that we shall be guaranteed a new school in Carnock in the future.
  In view of what I have said, does not my hon. Friend feel that the Carnock community has grounds for feeling aggrieved and alarmed? The village of Carnock is one of several similar villages in that part of Fife west of Dunfermline. All are integrated community units with most of the essential social services at their disposal. There are primary schools, community centres, general practitioners and public cleansing services, and the larger communities have a health centre and public transport.
  Before the February 1974 General Election, although those communities
  520
  were not in my constituency, I worked there and gave the service that a Member of Parliament gives to his own constituency. In several of the villages there appeared then to be efforts to erode the normal and general services. This trend was arrested.
  It is galling to think that in the years to come Carnock could be without a school which provides full primary facilities, or even without any school. Some of the villages in the area I have mentioned are in desperate need of new schools. One school is celebrating this year its hundredth anniversary. Housing conditions could be improved in other villages, for example in Blairhall.
  It is the duty of councillors and Members of Parliament to see that the interests and way of life of the villagers are preserved. My hon. Friend the Minister can make a contribution to this end by extracting from the Fife Regional Council information about the future of Carnock school. The parents' action committee, the Provost of the Dunfermline District Council, some regional councillors and I have so far failed. I trust that my hon. Friend has more success.
  2.34 a.m.
  The Under-Secretary of State for Scotland (Mr. Harry Ewing): As my hon. Friend the Member for Dunfermline (Mr. Hunter) said at the beginning, this set of circumstances is beyond the control of my hon. Friend and myself.
  I share a common bond with my hon. Friend in that we both live in that rather beautiful part of Scotland known as the county of Fife. I do not know where you intend to spend the Summer Recess, Mr. Deputy Speaker, but I assure you that you would receive a warm welcome should you visit that county.
  I know also the geography of the area to which my hon. Friend refers. Carnock is a beautiful village. It is a self-contained unit. It is an area through which I pass regularly on my way from my home to my constituency. Therefore, I recognise the sincerity and the feeling that my hon. Friend expresses when he raises this important constituency matter. I know also the dedicated way in which he has pursued this matter

  521
  on behalf of the people whom he represents in Carnock. I welcome the opportunity to reply to the debate as it gives me the chance to set the record straight on the rôle of my right hon. Friend the Secretary of State in approving changes in educational provision in an authority's area.
  Under Section 1 of the Education (Scotland) Act 1962 it is the duty of each education authority—and since May, as my hon. Friend knows, it is the duty of the regional and island councils—to provide adequate and efficient education for its area. Under Section 7 of the same Act an authority's functions—and these include provision of primary education—must be exercised in accordance with schemes approved by the Secretary of State. Decisions on the way primary education is to be provided locally, therefore, are basically for the education authority to make, with the Secretary of State having a general oversight and an overall responsibility for ensuring that standards of provision are satisfactory. The Secretary of State, however, expects authorities to take the initiative in suggesting changes in provision.
  In considering whether or not to grant approval to any such changes my right hon. Friend is required, under Section 29(1) of the Act, to have regard to parents' wishes. That is important in the context of what we are discussing. Additionally my right hon. Friend would wish, before reaching a decision, to be assured that the education authority concerned had also fulfilled its duty to have regard to parents' wishes. This is not to say that parents' wishes are the overriding factor in any decision, although they are, of course, very important. The Act, for example, mentions the provision of suitable instruction and training and the avoidance of unreasonable public expenditure as factors to be taken into consideration, and other factors not specifically mentioned by the Act may be taken into account. The statutory duty on an authority will have been fulfilled if the authority has duly considered parents' wishes even if it decides not to accede to them. It is most important that at least consultations have been held and that the parents' wishes have been considered.
  522
  I turn now to the particular case raised this morning. Earlier this year, as my hon. Friend rightly said, Fife Education Authority put to the Secretary of State a proposal that, because of overcrowding at Carnock Primary School, some of the older children there should transfer to Inzievar Primary School, a mile and a half away in Oakley, where there was a good deal of spare accommodation. The authority planned to transfer P5 and P6 children, only at the start of next session. As my hon. Friend knows, these children are in the age groups 9 and 10 years. These children would then complete their primary education at Inzievar. The authority felt that P7 children should remain at Carnock so that they would not have to change school twice in two years. In succeeding years the authority proposed to transfer to Inzievar as many senior primary classes as would be necessary to restrict the numbers at Carnock to the accommodation available.
  A number of objections were received from parents, particularly from the Carnock New School Action Committee, which expressed keen disappointment that the authority appeared to have removed from its priority school building programme a replacement for the existing Carnock Primary School. The committee made the case for continuing to have all stages of primary education in Carnock and suggested that to relieve the overcrowding a temporary extension should be erected at the present school.
  As my hon. Friend has mentioned, the then Under-Secretary of State met a deputation from the action committee—a deputation led by my hon. Friend—in April and they had a full exchange of views.
  In reaching a decision on the authority's proposals following that meeting, my right hon. Friend took into account all representations received. He was of the view, however, that the balance of educational advantage lay in the transfer of this limited number of Carnock pupils to Inzievar to superior accommodation in a much newer building. He was content that the authority had fully considered the Carnock parents' views, although it had not acceded to the parents' wishes. He therefore decided to approve

  523
  the change in the scheme which the proposals required. The authority may therefore transfer the pupils to Inzievar from the beginning of next session.
  I turn now to the future of Carnock Primary School, an important element in my hon. Friend's argument. This is for Fife Education Authority to determine, although if it were to propose that the school should be closed it would require my right hon. Friend's approval under Section 22(1)(b) of the 1962 Act. There is no question of the Fife Education Authority taking a decision to close the Carnock Primary School without in the first place receiving the approval of my right hon. Friend under that provision of the 1962 Act. I should stress, however, that no such proposal has been received from the authority, and I believe that no such proposal is likely, at least in the short term. I understand that while the authority has not decided against ever providing a new school at Carnock, it felt it wrong to spend money on temporary buildings there when there was so much under-used accommodation nearby at the Inzievar school in Oakley. I can only support the decision which has been taken, however disappointing this might be for my hon. Friend.
  Before the Secretary of State would agree to any proposal to close Carnock school completely he would consider a large number of factors, including the wishes of parents. We would expect that if such a move were made by Fife Education Authority, parents would make fresh representations to my right hon. Friend, and those wishes would be considered. These factors might include the reasons for the proposed closure, such as the state of the building, a falling roll, overcrowding or difficulties in staffing, and he would take into account details of the alternative accommodation arrangements and facilities suggested, details of travel arrangements proposed for pupils displaced—details which are not unimportant—and financial considerations. I must emphasise that each proposal that a school should close is considered on its individual merits at the time of the proposal and not against the background of anything which might have happened in the past or which might happen in the future.
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  I should like to return now to the arguments put forward by parents against the proposed transfer to Inzievar. My hon. Friend has already mentioned several of these points. With regard to the cost of hired transport and school meals, parents claimed that it would be less expensive to meet loan charges on temporary classrooms at Carnock to accommodate the excess numbers than to pay for transport to Inzievar for children concerned together with the deficit on the extra school meals for these pupils. This was not an argument upon which we could properly reach a view. We felt, however, that the authority's decision not to provide temporary classrooms was reasonable in view of the availability of good accommodation at Inzievar and because of the present restrictions on capital investment—again, not an unimportant consideration.
  Parents suggested that the existing Carnock building would eventually be replaced and that a new school, if it were to cater only for P1 to P4, would be relatively more expensive. There are two points which I can make. First, the authority is not committed to replacing the building at Carnock. Secondly, and on the other hand, the Secretary of State's approval of the change proposed by the authority does not preclude the authority's seeking approval to accommodating once again all P1 to P7 children in Carnock in the future. That possibility is not excluded by the decision that has been taken.
  Parents felt that transfer of Carnock pupils to Inzievar, despite the available accommodation there, would result in too high a roll at the receiving school. My right hon. Friend did not feel that this was a particular valid point as the roll at Inzievar next session, increased by about 40 pupils from Carnock, will still be only about 400. This is well below the capacity of many fairly recently-built primary schools. We would however, consider this point afresh if any question arose of the complete closure of the school.
  The action committee claimed that 175 pupils—more than the present school roll of about 150—could be accommodated in the five available classrooms at 35 per class at Carnock. They suggested that the authority were too ready to introduce the

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  new SED staffing standards with an average class size of 30. However, even under the old standards the school was full to capacity. Allowance has to be made for the free time which the head teacher and staff require to discharge their non-teaching responsibilities, and the true capacity of Carnock is only 149 under the old standards and 125 under the Scottish Education Department's new standards. In wishing to meet the new standards in Carnock, Fife is acting as in other schools in its area.
  The parents expressed concern about pupils' safety. They were worried about lunchtime supervision at Inzievar and that the transfer of the older children to Inzievar would prevent them from escorting their younger brothers and sisters within Carnock village itself. My right hon. Friend believed that the arrangements at Inzievar would be satisfactory. I understand that they are to be similar to those in operation at other schools in the county of Fife. While it was appreciated that there might be some extra risk in Carnock for the younger children, it was suggested that parents if they felt that the risk was increased, might take up with the Fife Education Authority the possibility of crossing patrols being introduced.
  Parents also complained that the authority had not fully consulted them before deciding to change arrangements at Carnock. This is a point quite rightly brought out by my hon. Friend. While I agree that the authority may have been slow to consult before approaching my right hon. Friend, the Scottish Education
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  Department made certain that the authority acquainted itself fully with parents' views and that these views were considered by the authority before the proposals were agreed. The Secretary of State indeed always ensures, before reaching a decision on a proposal, that the authority concerned has consulted parents.
  Parents represented that the need to change primary school at P5 would be to the educational disadvantage of the children concerned. However, where the curriculum is properly co-ordinated between the sending and the receiving schools there need be no disadvantage. Indeed, there can be advantages in separate, and therefore smaller, schools for younger children. Transfer at the middle stages of primary education occurs in other areas in Scotland and quite widely here in England. I thought that that would be an interesting point to make.
  To sum up, therefore, the decision has been made and I can see no reason why the new arrangements should not be to the benefit of all concerned. I believe that on 10th June the head teacher of Inzievar school met parents of Carnock pupils who will transfer at the beginning of next session—
  The Question having been proposed after Ten o'clock on Tuesday evening 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 nine minutes to Three o'clock a.m.

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

NHS ADMINISTRATIVE STAFF
Lord WALLACE of COSLANY: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what steps are being taken to avoid an excessive growth of administrative staff in the re-organised National Health Service operating against the primary objective of patient care.
Lord WELLS-PESTELL: My Lords, my noble friend will be aware that my right honourable friend the Secretary of State for Social Services has expressed dissatisfaction with the management arrangements resulting from the form of reorganisation introduced by the previous Administration. However, we are doing our best to ensure that management costs are kept to the minimum necessary to maintain an acceptable standard of patient care. A planning system is being introduced to ensure that health authorities bring commitments, including staff employed in administration, into balance with resources according to established priorities. Authorities are fully aware of the need for strict economy in appointments to management posts generally.
Lord WALLACE of COSLANY: My Lords, while thanking my noble friend for that Answer, may I express my sympathy with the Secretary of State for the legacy she inherited? May I ask my noble friend whether he is aware that drastic economies can and must be made by the reorganised Service without affecting the care of patients? Would he agree that in any event there is a logical case for either the reduction or the abolition of Regional Health Authorities, where much planning is done in ivory castles but
148
very little by way of practical care for the patient?
Lord WELLS-PESTELL: My Lords, broadly speaking, the Government would accept what my noble friend has said. Nevertheless, we are in a position where we have to accept the reorganisation and structure as it is. We are not unmindful that a good deal has to be done on the administrative side. This is a matter which my right honourable friend has very much in mind, and in hand.
Lord PANNELL: My Lords, may I ask my noble friend whether the Secretary of State has looked at the way in which the salaries of the administrative staff have spiralled? Will he also look into the question of how far their salaries are fixed by bodies over which the Minister appears to have no control?
Lord WELLS-PESTELL: My Lords, I can say to your Lordships that we have this matter in mind. Some senior and middle management grades are subject to control by the Department. These are posts which start at about £4,008, rising to £4,983. An allocation of a quota of posts has been imposed on each region.
Baroness SUMMERSKILL: My Lords, can my noble friend tell me how the ratio between the administrative and nursing staffs has altered, and to what extent?
Lord WELLS-PESTELL: My Lords, the ratio of administrative and clerical staff to consultants, doctors, nursing and ancillary staff is as follows. In 1970, there was one administrative person as against 7·6 consultants, doctors, nurses and ancillary staff. The ratio fell in 1971 to one as against 7·5; it fell again in 1972 to one as against 7·4; and in 1973 the ratio was one as against 6·9. I am sorry that I cannot give your Lordships the 1974 figures, because these are not available.
Lord ABERDARE: My Lords, is the noble Lord aware that there are naturally difficulties in any reorganised Service, because it takes time to settle down? Is he also aware that the reorganised National Health Service absorbed whole departments from the local authority health departments? Therefore, necessarily, the administrative staffs increased and I do not think it either generous or right of

149
the noble Lord to blame all his difficulties on the previous Government.
Lord WELLS-PESTELL: My Lords, I was not aware that I had done that. I merely said that I did not like it, which is rather different. It is not true to say—I am not suggesting that the noble Lord said this, but he may have implied it—that all the staff employed by local authority health departments were transferred on 1st April 1974. The fact is that we are alive to the situation, and I want to assure your Lordships that we are dealing with it.
Lord SLATER: My Lords—
Several Noble Lords: Order!—
The LORD PRIVY SEAL (Lord Shepherd): My Lords, with respect to my noble friend, the noble Baroness, Lady Robson, has been trying unsuccessfully for some moments to put a question.
Baroness ROBSON of KIDDINGTON: I thank your lordships very much. I am very polite, my Lords, so I do not start speaking until I get on my feet. May I ask if the noble Lord, Lord Wells-Pestell, agrees that, irrespective of whether or not one agrees with the present structure of the National Health Service, a large part of the high administrative costs can be attributed to the proliferation of designated posts at all levels of the Service coming out from the departments? Is the noble Lord aware that it seems to many working within the Service that posts such as area linen service managers and sector administrators are unnecessary at this time of shortage of money? Also, will the noble Lord agree that the Whitley machinery is to a certain extent being used to advance career structures by creating posts at high levels?
Lord WELLS-PESTELL: My Lords, we are not unmindful of what the noble Baroness has said, but I said in my Answer to my noble friend that a planning system is being introduced to ensure that health authorities bring these commitments into balance with resources and priorities. This is one of the matters we are dealing with.
Lord PLATT: My Lords, is the Minister aware that this is the fourth time that I have tried to speak? Will Her Majesty's Government accept that improvements and economies which could
150
be made in the Health Service can be made only by the co-operation of the administrative and medical staffs, and that this co-operation has been made a great deal more difficult by the re-organisation of the Health Service?
Lord WELLS-PESTELL: My Lords, I do not think any useful purpose would be served by my saying that I agree. What we must give our minds to is the fact that certain difficulties exist. It is not much use thinking in terms of the past, but rather we should deal with the problems that face us at the moment and try to do something about them.
Lord SLATER: My Lords, is my noble friend aware that I should not have been so keen to ask the question which I am now going to ask if it had not been for his first Answer, which suggested that the previous Government were responsible for the changeover? Can my noble friend tell me, as a past member of a hospital management committee, whether the new organisation which now exists is more efficient than the organisation it replaced?
Lord WELLS-PESTELL: My Lords, I do not think the Government are in any way questioning peoples' efficiency. What we are concerned about is keeping some trends within certain limitations.

NHS AUTHORITIES: CHAIRMEN'S REMUNERATION
2.44 p.m.
Lord WALLACE of COSLANY: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is the annual cost of fees and allowances paid respectively to chairmen of Regional Health Authorities and chairmen of Area Health Authorities in the reorganised National Health Service.
Lord WELLS-PESTELL: My Lords, chairmen of each of the 14 Regional Health Authorities and 90 Area Health Authorities in England and the eight Area Health Authorities in Wales are entitled to taxable remuneration of £2,000 per annum. Not all chairmen have drawn

151
their remuneration. Chairmen are also entitled to travelling and subsistence allowances at prescribed rates.
Lord WALLACE of COSLANY: My Lords, is my noble friend aware that this provision is an absolute nonsense and is not justifiable? Many unremunerated members of Area Health Authorities and Regional Health Authorities do as much work, if not more, and do not ask for any reward other than that of giving service to the Health Service. Should not this arrangement be abolished?
Lord WELLS-PESTELL: My Lords, the thinking of the Government is that it is desirable to have a level of remuneration so that the responsibilities which go with the job of being chairman can be fully discharged. It is felt that, in the circumstances, some remuneration is desirable.
Lord WALLACE of COSLANY: My Lords, is my noble friend aware that this procedure was never carried out when we had hospital management committees taking equal responsibility in those very difficult days, and there is no justification for it? Would it not be advisable to have a general debate on this question and to seek to amend the Act?
Lord WELLS-PESTELL: My Lords, obviously I will take note of what my noble friend has said and will certainly see that his remarks are conveyed to my right honourable friend the Secretary of State.
Lord INGLEWOOD: My Lords, may I ask the noble Lord whether a way has yet been found whereby co-opted members of these authorities are entitled to the same allowances as appointed members, when both categories do exactly the same work?
Lord WELLS-PESTELL: My Lords, that is a slightly different question from the one I have been asked to answer. It is a matter I should like to look into and if I have anything to say about it I will write to the noble Lord.
Lord INGLEWOOD: My Lords, I thank the noble Lord.

CIVIL AVIATION POLICY
Lord BALFOUR of INCHRYE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether, before making any Ministerial announcement of a new civil aviation policy prepared by Government Departments, they will consider setting up an independent committee, on the lines of the former Edwards Committee, in order to allow private and Government operators and other interested parties opportunity for their views on future civil aviation policy for the United Kingdom to be made known to and considered by that committee, which would report its findings and recommendations to Her Majesty's Government.
The MINISTER of STATE, DEPARTMENT of INDUSTRY (Lord Beswick): My Lords, the airlines and other interested parties were given an opportunity to make their views known in the course of the Review of Civil Aviation Policy which has recently been completed. My right honourable friend the Secretary of State for Trade considers that it would be in the best interests of the airline industry if he were to end uncertainty by announcing his decisions on the Review as soon as possible.
Lord BALFOUR of INCHRYE: My Lords, may we expect in the near future, before the Summer Recess, a declaration by Her Majesty's Government of policy on civil aviation? Secondly, would it not command a wider measure of public support and support from operators, Government and private, if before such a policy declaration was made, the policy proposed had been reviewed and its possibilities, present and future, reported upon by an independent committee of experts such as the Edwards Committee on whose Report the present policy is founded?
Lord BESWICK: My Lords, I was a great supporter of the kind of review we had which resulted in the Edwards Report, but I do not think it would have been advisable to have another wide-ranging and long-sitting committee

153
again going into the industry. As to the first part of the noble Lord's question, although the Governmental machine tends to become a little snarled up at this time of year, I hope it will be possible to make a statement before the Recess.
The Earl of KINNOULL: My Lords, can the Minister give an undertaking that, if a major decision is to be made possibly affecting the future of British Caledonian, the evidence the Government have as a result of this Review will be published before that decision is made?
Lord BESWICK: My Lords, I suppose it depends upon what one means by a "major decision". If a decision was so major—I am talking in hypothetical terms—it may even be necessary to have legislation. As for the evidence given to the Review Committee, I shall see whether it is possible to publish factual statistical information.

ISRAEL AND THE UNITED NATIONS
2.50 p.m.
Lord JANNER: 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 steps they are taking about,

(1) the decision of the Jeddah Conference urging the exclusion of Israel from the United Nations, and

(2) the violation of the UN Charter by some of the Special Agencies which refuse to allow the full participation of Israel in their activities.

The PARLIAMENTARY UNDERSECRETARY of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, we are closely watching the situation referred to in the first part of the Question, and are in touch with a number of Governments about it. As for the second part, UNESCO is the only specialised Agency which has limited the participation of Israel in its activities. The United Kingdom voted against the UNESCO resolution which invited the Director-General to withhold assistance from Israel in the
154
fields of education, science and culture. We voted in favour of Israel's being allowed to participate in the European Regional Grouping.
Lord JANNER: My Lords, I thank my noble friend for the first part of his reply. In the event of the kind of strategy that at present is being used against Israel by five or six of the specialised Agencies and the ultimate consequent result, that a resolution was passed at the Jeddah Conference, is ray noble friend prepared to say categorically that if these vicious schemes are pursued to the extent of receiving a satisfactory reply to those views at the United Nations he will join America in vetoing any such suggestion? May I further ask him whether he will reconsider the matter of the specialised Agencies because four or five, if not more, of the specialised Agencies have passed resolutions against Israel although they know very well that Israel is foremost in her work in carrying out the objectives of those specialised Agencies?
Lord GORONWY-ROBERTS: My Lords, UNESCO is the only specialised Agency which has limited the participation of Israel in its activities. Other Agencies may from time to time have passed resolutions or expressed opinions on certain matters involving Israel. On the first point in my noble friend's question, we shall certainly vote against any move to suspend or expel Israel from the United Nations Organisation.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, is there not a general point of great importance here? Is it not essential for the future of the United Nations that it should be the Parliament of mankind and not a select company of the elect of mankind? If we start to exclude Members of whom we do not approve, I wonder how many Members the Government think will be left?
Baroness GAITSKELL: My Lords, is it not becoming very urgent—
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, I should like an answer to my question.
Lord GORONWY-ROBERTS: My Lords, the answer is that the noble Lord has put fully and conclusively the view of

155
Her Majesty's Government on the situation.
Baroness GAITSKELL: My Lords, in view of the fact that the procedures in the United Nations are becoming so complex and so unfair, may I ask the Minister whether it is not very urgent at this time that both Britain and the Western countries should get together to oppose this double standard, in view of the Afro-Asian majority in the United Nations and in view, too, of the double standards about human rights? If we do not do this, is it not possible that Britain herself will be on the list for expulsion because she has suspended certain human rights in Northern Ireland during the Emergency there?
Lord GORONWY-ROBERTS: My Lords, my noble friend draws attention to the unmistakable implications of the kind of policy and attitude which for some years now has increasingly been adopted by certain countries in the United Nations Organisation. I think we could join what my noble friend has said to what has been said by the noble and learned Lord, Lord Hailsham of Saint Marylebone. Together their views represent the view of Her Majesty's Government and, I believe, that of the whole House in relation to this serious threat to the survival of the United Nations as an organisation.
Lord MAYBRAY-KING: My Lords, is the noble Lord aware that, despite the Jeddah decision, this is a critical point of time in Middle East relations? There is a possibility of peace in the Middle East, and most of the Members of this House will wish both our friends in Egypt and our friends in Israel to agree to the settlement which is now within their grasp.
Lord GORONWY-ROBERTS: My Lords, there is certainly the possibility of a settlement. The discussions which are now taking place hold out some hope for such a settlement, and it is precisely at that point that the danger of this kind of move is most marked.
Lord PAGET of NORTHAMPTON: My Lords, does not the difficulty go a little further? Now that the United Nations is a Fascist organisation, in the
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sense that a permanent majority are ruled by one-Party States subject to dictatorship, and a racialist organisation, in the sense that a permanent minority deny equal rights to their citizens because of religious and racialist reasons, is not the point coming when we shall have seriously to consider whether our continued membership is consistent with our principles?
Lord GORONWY-ROBERTS: My Lords, I am certainly very glad to join my noble friend in any denunciation of religious and racial prejudice.
Lord GLADWYN: My Lords, may I ask the Minister whether or not it is a fact that in 1952 Egypt refused to abide by a perfectly valid decision of the Security Council regarding the free passage of Israeli merchantmen through the Suez Canal, and that there was then no question of Egypt being excluded from the Security Council or expelled from the United Nations?
Lord GORONWY-ROBERTS: My Lords, with great respect, it may be more helpful if we do not go into historical detail and apportion blame in a situation whore, as my noble friend Lord Maybray-King has said, there is the possibility of a settlement if everybody will behave with basic common sense and good will.
The Earl of ONSLOW: My Lords, is the noble Lord aware that many of us who think that the Arabs have been badly done by and badly treated by the establishment of the State of Israel and by their further expansion, believe that it is not in the interests of the Arabs for this narrow-minded attitude of mind to be taken to the expulsion of Israel not only from the United Nations but also from the Agencies of the United Nations?
Lord JANNER: My Lords, may I ask the noble Lord a further question? In addition to the United Nations Agency which he has mentioned—UNESCO—there is the World Health Organisation and the recent Women's Year meeting which was held in Mexico when, of all things, a resolution was passed in which an attack was made on the basic principles of the most democratic country in the Middle East, Israel, where women's

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rights are fully respected and where a woman has been Prime Minister. Is it not a fact that we abstain on some of these occasions from voting against such resolutions, and does not my noble friend realise that by doing so we are giving an incentive to those who wish to destroy Israel to carry on with their work of destruction?
Lord GORONWY-ROBERTS: My Lords, I repeat that the only specialised Agency which has limited Israel's participation is UNESCO. I repeat also that from time to time other Agencies have no doubt misused the agenda and procedure to express opinions on the behaviour of one State or another, often that of the State of Israel. I want to make absolutely clear to my noble friend that this country has consistently resisted any attempt to condemn Israel on political grounds during discussion on the agendas of Special Agencies. Sometimes a resolution has been tabled which contains the gravamen of the purpose of the Conference but mixed with it a political attack. In such a situation, an explanation of abstention of vote is recognised to be a resistance to the political part of the resolution while an acceptance of the proper part of the resolution relating to the proper business of the Conference.
Lord BROCKWAY: My Lords, while very strongly welcoming the decision of Her Majesty's Government to oppose the exclusion of Israel from the United Nations on the principles so admirably stated by the noble and learned Lord, Lord Hailsham, may I ask whether it is relevant to the present situation, and not just past history, that we should also urge Israel to carry out the resolutions which were adopted by the Security Council and which Israel has ignored?
Lord GORONWY-ROBERTS: Yes, of course, my Lords, and the resolutions to which my noble friend refers have the unanimous support of the entire UNO; and the negotiations now going on, with some prospect of success, as I have said, are designed to get the various parties together to observe and implement precisely those resolutions. This is not an easy matter, and it is not helped by partisan moves of this kind to exclude one of the parties from membership of the world authority.
Lord SHEPHERD: My Lords, I suggest that we should now move to next business.

PEERS' EXPENSES
3.2 p.m.
Lord SHEPHERD: My Lords, there was no selfish thought in my mind when I made that suggestion! It has been the normal practice in the past with matters relating to expenses, particularly car travel, that a Resolution should be moved in your Lordships' House at the same time as in another place. My understanding is that another place will not be debating these matters until a very late hour tonight, if not a very early hour tomorrow morning. Therefore I suggest that, in those circumstances, it may be prudent not to move this Motion this afternoon but to take it on another day. In not moving the Motion, it does not in any way affect the operative date under which these proposals will be brought forward.

IRON AND STEEL BILL [H.L.]
3.3 p.m.
The LORD CHANCELLOR (LORD ELWYN-JONES): My Lords, I beg to move that the House do now resolve itself into Committee on Recommitment on this Bill.
Moved, that the House do now resolve itself into Committee on Recommitment.—(The Lord Chancellor.)
On Question, Motion agreed to.
House in Committee accordingly.
[The Earl of LISTOWEL in the Chair.]
The CHAIRMAN of COMMITTEES (THE EARL OF LISTOWEL): This Bill has been amended by the Joint Committee on Consolidation Bills. There are further Amendments to be considered in Committee on recommitment this afternoon and I will therefore go through the Bill in the usual way.
Clause 1 agreed to.
Clause 2 [General duty of the Corporation]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 1:
Page 2, line 35, leave out ("in pursuance of section 4(4) of this Act") and insert ("from

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time to time with the approval of the Secretary of State").
The noble and learned Lord said: Where the British Steel Corporation carry out any measure of reorganisation or work of development which involves a substantial outlay of capital, they are required to act in acordance with a general programme settled from time to time with the aproval of the Secretary of State. This duty, imposed by Section 4(2) of the Iron and Steel Act 1949 as revived by Section 7(1) of the Iron and Steel Act 1967, is reproduced in Clause 4(4) of the Bill. Section 4(3) of the 1949 Act as so revived further requires the Corporation to act,
"in accordance with a general programme settled as aforesaid"
in discharging duties under Section 3(1)(d) of the 1967 Act with respect to the promotion of research and the doing of work to enable the results of research to be turned to account.
It is this latter provision, re-enacted in Clause 2(1)(d), which is now proposed to be amended. Under the existing statutory requirements the Corporation may carry out research work in accordance with a general programme approved by the Secretary of State which is not part of the general programme of reorganisation or development involving substantial capital expenditure so approved and the Amendment is required in order to make that clear, as I hope it does. I beg to move.
On Question, Amendment agreed to.
Clause 2, as amended, agreed to.
Clauses 3 to 15 agreed to.
Clause 16 [Borrowing powers of the Corporation and publicly-owned companies]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 2:
Page 14, line 18, leave out from the first ("the") to ("any") in line 19 and insert ("repayment of").
The noble and learned Lord said: This is a paving Amendment for Amendment No. 3. The opportunity is taken to improve the wording of Clause 16(2)(e) to substitute the words "the repayment of any money" for the words "the payment of any money" which now appear
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in Section 19(2)(e) of the Iron and Steel Act 1967. I beg to move.
On Question, Amendment agreed to.
Clause 16, as amended, agreed to.
Clause 17 agreed to.
Clause 18 [Commencing capital debt of the Corporation]:
On Question, Whether Clause 18 shall stand part of the Bill?
The LORD CHANCELLOR: Under Section 18(1) of the Iron and Steel Act 1967 as amended by Section 1 of the 1969 Act, the Corporation are treated as having assumed on 28th July 1967, which was the vesting date under the 1967 Act, a debt of £133,988,359·20 due to the Secretary of State. Since the Bill was introduced it has been drawn to the attention of the draftsman that this commencing capital debt was repaid in full by the Corporation on 29th July 1974. The provisions of Clause 18 concerning this debt, the rate of interest payable, the arrangements for repayment and other terms of the debt, and the disposal of sums received by way of interest or repayment of the debt, are therefore no longer required, and Clause 18 is now unnecessary.
On Question, Clause 18 disagreed to.
Clause 19 agreed to.
Clause 20 [Limit on borrowing by, and investment in, the Corporation]:
The LORD CHANCELLOR The LORD CHANCELLOR moved Amendment No. 3:
Page 17, line 18, leave out ("the debt referred to in section 18(1) of this Act") and insert ("their commencing capital debt, being the debt of £133,988,359·20 which the Corporation were treated as having assumed on 28th July 1967")
The noble and learned Lord said: This Amendment is consequential on the omission of Clause 18, relating to the Corporation's commencing capital debt. Although that debt has now been paid off, it is necessary to retain in paragraph (a) of Clause 20 a reference to the moneys borrowed for the repayment of that debt, as under the enactments which this clause reproduces, these moneys are excluded from the limit on the total of the moneys

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which may be borrowed by, or invested in the Corporation. I beg to move.
On Question, Amendment agreed to.
Clause 20, as amended, agreed to.
Clause 21 [Accounts of the Secretary of State]:
The LORD CHANCELLOR: I beg to move Amendment No. 4, which is purely consequential upon leaving out Clause 18.
Amendment moved—
Page 17, line 31, leave out ("18(2)").—(The Lord Chancellor.)
On Question, Amendment agreed to.
Clause 21, as amended, agreed to.
Remaining clauses and Schedules agreed to.
House resumed: Bill reported with the Amendments.

INDUSTRY BILL
3.12 p.m.
Lord BESWICK: My Lords, I beg to move that the House do again resolve itself into Committee on this Bill.
Moved, that the House do now again resolve itself into Committee.—(Lord Beswick.)
On Question, Motion agreed to.
House in Committee accordingly.
[The Earl of Listowel in the Chair.]
Clause 2 [General purposes and functions.]:
Lord ABERDARE Lord ABERDARE moved Amendment No. 29:
Page 2, line 42, leave out ("industrial democracy in") and insert ("good industrial relations in, and appropriate means of employee involvement in the affairs of,").
The noble Lord said: I beg to move Amendment No. 29. We are discussing Clause 2 of the Bill which includes the purposes for which the Board can exercise their functions. We made considerable improvements in this clause in the course of yesterday's Sitting, and we now come to the purpose in paragraph (d) which says:
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"promoting industrial democracy in undertakings which the Board control".
The purpose of the Amendment is to define rather more closely the words "industrial democracy" and to substitute the words,
"good industrial relations in, and appropriate means of employee involvement in the affairs of undertakings which the Board control".
We put down this Amendment following on Amendments that were put down and which found favour in Committee in the course of the Scottish and Welsh Development Agency Bills. In the course of the fairly extensive debates we had on both those Agency Bills, opinions were expressed that the term "industrial democracy" was hopelessly vague, and could mean anything to anybody. In one instance, in the course of the debate on the Scottish Development Agency Bill on 10th June 1975, the noble Lord, Lord Taylor of Gryfe, for example, expressed an opinion which I should like to quote. The noble Lord said:
"When I read this phrase in the Bill I consulted a variety of sources—for example, the Institute of Management, the Institute of Personnel Management and some trade unions—and I got a variety of interpretations as to what 'industrial democracy' means. To that extent it is dangerous to put it in the Bill because if people are trade unionists, they feel that industrial democracy means something different. In these days with the popularity of the concept of workers' control. 'industrial democracy', for many trade unionists, involves a degree of workers' control."—(Official Report, 10/6/75; col. 174.)
That was the opinion of the noble Lord, Lord Taylor of Gryfe. All I would say is that it is open to a multitude of different interpretations. To some on the extreme Left it can mean worker control of industry. To the TUC it seems to mean worker directors on the board. To the CBI, it probably means appropriate ways of involving those in the employment of the company, in a particular firm, with the fortunes of that firm. To others it means greater influence for shareholders, or for others still, it may mean a more democratic form of election of trade union officials. It covers a whole spectrum of different concepts. There is no exact definition of the term.
I really do not think that it is right in a Bill of this sort to lay a legal obligation on the National Enterprise Board to promote something which nobody can define. Therefore, I think it important that we

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should find more exact words. We have repeated in this Bill the words which have been inserted in the Scottish and Welsh Development Agency Bills, as a result of decisions taken by your Lordships. Even in the course of discussing the matter then, we were quite freely saying that these particular words may not be exactly right, and that we would be open to any suggestions to improve them. I would hope that the Government, too, might help us, if they prefer other words that more accurately define what they have in mind, rather than this vague phrase "industrial democracy". Or if they prefer, let us amend the interpretation clause to give the definition of what these words mean. But so far as I am concerned at the moment, these are the words which seem to come nearest to what we have in mind. I hope your Lordships will agree that this is a sensible Amendment. I beg to move.
Baroness WOOTTON of ABINGER: It may well be true that the phrase "industrial democracy" is rather vague. The same is true of the word "democracy" without any kind of prefix. There is one thread running through every use of that term, which is that it implies that movements and initiatives should come from the bottom upwards as well as the top downwards. An important difficulty about the words suggested by the noble Lord, Lord Aberdare, is that they seem to me to be essentially paternalistic and to come from the top downwards. We are to have "good industrial relations"—that can be two-way!—"and appropriate means of employee involvement". Who decides what is appropriate? Who decides the measure of involvement. It seems to suggest that this should come from the top downwards.
I am reminded of the famous remark alleged to have been made by the late Beatrice Webb when she was about to marry Sidney Webb, her fellow industrial/social investigator. She said: "When we are married, Sidney will decide all the important things. I shall decide all the unimportant things. I shall decide which are the important things." I think the noble Lord, Lord Aberdare, must have taken that as his motto in choosing his form of words.
It appears to me that management has decided what are the important things, and the workers, or the employees, or the
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shareholders, as the case may be, are to be left with the unimportant things. Therefore, I suggest that the words "industrial democracy" have a clear, though not exact and precise meaning. They have a very clear indication about movement from the bottom up, not just from the top down. There is the implication of a two-way movement. The words chosen by the noble Lord, Lord Aberdare, have a paternalistic ring, as coming from papa to the children.
3.20 p.m.
Baroness LEE of ASHERIDGE: I should like to support what Lady Wootton has said, and perhaps put before the Committee one further argument. Industrial life has taken away all pride of craftsmanship from very many men and women. Even in the mining industry, as some of my colleagues on these Benches know, the old miner had a great sense of craft, and this is true throughout practically the whole of industry. How can we give back to men and women a sense of achievement, of craftsmanship, of creating something? Of course, we cannot go back to handloom weaving, but we can give them this sense of belonging—whether they are making boots, motor cars or whatever it may be—if they are consulted on a dignified basis; if their minds and hearts are involved as well as their hands; if they, too, are thinking, "What is wrong with our foreign market? How can we increase exports?", if it is an exporting industry; if they feel that far from endangering their job they are improving it when they have suggestions about new ways of doing things that could be labour saving. What is deeply wrong at the moment is that so many men and women, who have no capital at all except being able to earn their daily bread, say, "Well, it is their affair. Let them get on with it." If we could only change that mood into: "This is our affair, too; we are involved in all those senses", I think that is the one great revolution that could save this country from chaos and worse.
I am not enthusiastic about the wording. I think we might as well stick to "industrial democracy", although I agree with what has been said by the noble Lord, Lord Aberdare, that that, too, is a phrase that can be used in many senses. But what is important is that we should understand the reality, should understand

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that there is a very high level of trade union leadership in this country, that we have men on the shop floor who are as fit, and sometimes fitter, for management as those at the top. I am not saying that they are all good at the bottom and all bad at the top, and I am not saying it the other way round, because neither would be true. But we still have an opportunity in this country to do something in this field of involvement that could help to bring Lenin's prophecy true; because even Lenin said once upon a time, a long time ago, that this might be the one country that could go forward to form a civilised democratic socialism without all the agony and suffering of a bloody revolution.
Lord ROCHESTER: We on these Benches would be happier for the paragraph to be amended in the way suggested in this Amendment, for the Bill would then emphasise the importance not of the general concept of industrial democracy—significant though that term is so far as the Liberal Party is concerned—but of more precise things that, as the noble Lord, Lord Aberdare, said, everyone can understand in the same way; namely, good industrial relations and employee involvement. As I see it, and I may be wrong, this Amendment is in some sense a protestation against the idea that our industrial problems can be solved merely by passing laws; for example, that information should be disclosed to representatives of relevant trade unions.
It seems to me also that, more positively, it is something of an affirmation that what we should together aim at is the every day involvement of employees in the affairs of their companies, particularly at the level where they are most affected by decisions that are taken; namely, the shop floor level. I know from my own experience that this is something that employees really want, perhaps more than anything else in this sphere, and that when they get it they are satisfied. I would, if I may, respond to the noble Baroness, Lady Wootton, by saying that in my experience involvement of this kind can, and does, emanate from the bottom and work up, and that improvements in this sphere are often initiated by workpeople rather than by management alone. For these reasons we are in sympathy with the terms of this Amendment.
Lord LEE of NEWTON: I think it was Winston Churchill who suggested that democracy is the worst system, with the exception of all others. When we begin to try to define "industrial democracy" we get into an even worse situation than when we try to define "political democracy". Industrial democracy presupposes that there is equality on the two sides, and that can never be. Indeed, in terms of industrial democracy trade unions must always be a permanent opposition; in other words, they cannot have an election in which they change places with the employer and assume his responsibility. It is a different type of responsibility.
Although I agree with a great deal of what the noble Lord, Lord Aberdare, said about the words "industrial democracy" I suggest that the words in his Amendment do not form the basis of that which we all understand by industrial democracy. As he said, within the trade union movement itself there are some who advocate workers' control as being the equivalent of industrial democracy, but many other trade unions would not accept that at all. Indeed, throughout the TUC one finds that some trade unions will give it that interpretation, while others say, "Management is no concern of ours. Our job is to get the best terms and conditions for our members". Both attitudes are defensible, but you cannot marry the two. This is one of the problems which we meet when we try to define how far we go with industrial democracy.
In the days when there was pretty massive unemployment and people were threatened with even more, I accepted reductions in piecework prices, and so on, in order to win a contract. The winning of that contract determined whether or not many hundreds of my people retained their jobs. But I would never have accepted reductions had the firm not opened its books to me and proved to me that unless we could tender at a certain level we would not get that contract. There is nothing in the noble Lord's Amendment which would have induced me to accept lower conditions in order to get a contract. Unless we can decide how we bring together problems of this sort, I think the expression "industrial democracy", which is now widely understood, must remain.

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I said that there is a great division, a very honourable division, between trade unions and their leadership as to their attitude towards industrial democracy, meaning either workers' control or that it is their job to get the best conditions they can for their members. But in spite of those differences, there is a general acceptance that where you improve conditions of employment, where you are taking the workforce more and more into your confidence—in other words, some of the things which my colleagues in the Government are trying to achieve in other ways—and as long as it can be seen that advances are taking place, we are fulfilling that which we understand by industrial democracy.
I thoroughly agree with what my noble friend Lady Wootton said. These things can hardly be defined. I suppose these are the reasons why the French think we are illogical, but the fact is that ours work and theirs do not. At this stage, I would ask the noble Lord not to press too far with this kind of Amendment. There is a huge fund of good will within the TUC and the CBI. Both of them are now meeting to try to find new ways of working the NEDC arrangements. Again, we are thinking in terms of how we can improve the performance of the Little Neddies. These are both spheres in which employers and trade unions are meeting to try to find a common answer to these difficult problems. Therefore, if we begin to delete at this stage such expressions as "industrial democracy" from our legislation, it would be a very backward step indeed.
Baroness EMMET of AMBERLEY: I wonder whether I might suggest a simple solution, because I am sensitive to the criticism the noble Baroness, Lady Wootton, has made about the words "appropriate means". If those two words were left out the Amendment would read:
"good industrial relations in, and of employee involvement in the affairs of,"
It seems to me that that would take out the two offending words which have been mentioned by the noble Baroness.
3.33 p.m.
Lord BRUCE of DONINGTON: I hope that we shall be able to persuade
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the noble Lord, Lord Aberdare, to withdraw his Amendment. In my view, this subsection is one of the most important parts of the Bill because it provides the opportunity for us to be able to extend not merely worker involvement in industry or in the affairs of the companies where they happen to be, but also progressive worker participation in the affairs of the company until we get rather nearer to what becomes generally understood as industrial democracy.
We are a long way off those days when, if one went to the industrial Midlands or to parts of the East End of London, one saw notices outside factories saying, "Hands wanted". In those days all the managements of the firms were interested in was "hands". They did not even want people; they did not want people's thought. They merely wanted "hands", physical labour within their factory. I know we have progressed a good deal since those days, but in my mind I somehow detected just a trace, and perhaps more, of that philosophy in the Amendment put forward by the noble Lord.
If one goes into an industrial firm these days, be it large or small, one most depressing thing to be observed is the amount of wasted talent and intellect of the people employed. Most people who work in factories these days use only a small fraction of their understanding of the world, its events, their knowledge of techniques, and even their knowledge of economics and management. Only a fraction at any one time of a person's real capability is used within the factory in which he or she works. This is part of our general social problem. It means that men and women, knowing perfectly well that they have capabilities far beyond the limited capabilities that are used by them on the production line, become frustrated. They lack purpose, they feel themselves condemned for a long period of time in doing a job that is really far below their capabilities. A good number of social ills arise from this.
Returning to the factory or the workshop itself, over the country as a whole the quality of management it not very even. There are companies with exceptionally good managements. There

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are companies, to which I alluded yesterday, which must have very bad managements indeed, and where the attitudes of the workers in the factories must reflect a degree of discontent and must ultimately cause the whole production within the factory to be far lower than it could properly be. The steps taken in this Bill, the purposes that are asked for in this Bill, are very modest. There are other countries in Europe, notably Germany, the Netherlands, Belgium, Austria, Norway, Sweden, where worker participation in the management of industry is given the full force of law. That is not even asked for in this Bill.
One has only to go to Germany to find out just how worker participation works. An employee in a factory feels that he is really part of the undertaking, and can use an ever increasing amount of his own intellect towards guiding its destinies. As is well known, already in Germany they have supervisory boards where, by law, about half of the persons on the board represent the management, about half the trade unions, with the odd sprinkling of so-called independent and neutral people to hold the balance. It is quite true that the German performance in industry as compared with our own has been considerably better owing to a far better rate of capital investment, to which I have referred in earlier speeches that I have been privileged to make here, but there can be no doubt that part of the success of German industry is due to the fact that in Germany the worker, in relation to management and to the enterprise in which he works, occupies a far higher status, a far more equal status than his counterpart at present has in many, indeed most, of the industrial companies in this country.
I hope that the noble Lord, Lord Aberdare, will have second thoughts about his Amendment. If he leaves the Bill as it is I do not think he will find that the forces of violent revolution, of Leftist subversion, will be let loose on the country, because we in this country always proceed gradually, step by step, and this clause in the Bill is just one step in one of the most important Bills ever to come before your Lordships. Therefore I hope that the whole Committee will put itself solidly behind this clause.
Viscount MASSEREENE and FERRARD: I would agree to a certain extent with the noble Lord who has just sat down when he says that there are many employees who would like to take an active interest in their company. However, with reference to what the noble Baroness opposite said about the difficulties of employees acquiring capital, may I point out that there are many firms in this country who give shares to their employees, but I am afraid it has not been very successful. They have found that the majority of the employees sell them instantly. I do not know how they spend the money, whether on beer or gambling, but apparently they do not want to acquire capital. If you give them free shares, why do they not keep them and amass them?
The Earl of ONSLOW: Will the noble Viscount give way for one moment?
Viscount MASSEREENE and FERRARD: No; I am sorry, I will not give way. I have often spoken in this House in encouragement of employees taking an active interest in the management of their company. I have tried it. I have appointed a worker to the board of a company. While he was a very intelligent person we found that once he was on the board many other employees—and I much prefer the word "employee" to "worker"; everybody works—disregarded him.
Baroness WOOTTON of ABINGER: Does the noble Viscount think it is characteristic of industrial democracy or any democracy that he should appoint? Democracy implies that the movement comes from below. When the noble Viscount says, "I appointed a person to the board", does he think that that is a democratic method of choosing that person?
Viscount MASSEREE NE and FERRARD: I am afraid I cannot agree with the noble Baroness. The ancient Greeks invented democracy, and the democracy of ancient Greece was a democracy of the élite; Greece was founded on the slave State. When the noble Baroness says that democracy comes from below I really cannot agree with her. I certainly agree that here, in this country in these times, we have a completely different democracy

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from that of the ancient Greeks. I do not quarrel with that at all; but I would certainly quarrel with the democracy of the ancient Greeks. I am saying that I am all for worker participation—for those workers who want it—in the management of their company. But many of them may not have the knowledge to understand the problems of management or capital. Perhaps some firms run management courses. That is an excellent idea. Do the nationalised industries run courses for their workers to teach them about management and capital? Perhaps they do; I do not know. To appoint a workers' committee to run a company when the workers have had no experience in management or economics or capital is the same as if I was appointed to a committee to advise on nuclear fission, about which I know absolutely nothing. I am all for participation, but for Heaven's sake let us have sensible participation! There is another point here—
A Noble Lord: Shut up!
Viscount MASSEREENE and FERRARD: No, I will not shut up! We hear the cry, "No taxation without representation"—I quite agree that that does not apply to your Lordships—but you might as well say in regard to workers' control, "No control without financial responsibility". What is sauce for the goose is sauce for the gander. We have to be very careful in the use of this vague term "industrial democracy" that we do not fall into industrial anarchy. I will now sit down and would say that I heartily support the Amendment.
The Earl of ONSLOW: I wonder—
Lord LOVELL-DAVIS: Would the noble Earl give way for a moment? We have gone on for a very long time on this one Amendment and we have a long way to go. I wonder whether I might be allowed to answer.
The Earl of ONSLOW: Just four seconds. I was very sympathetic to the Amendment moved by the noble Lord, Lord Aberdare, until I listened to the speech by my noble friend Lord Massereene and Ferrard and also to the speech of the noble Baroness, Lady Lee of Asheridge. It seems to me absolutely right that workpeople or staff—call people
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who work for you what you will—should have the maximum say in how an industry is run, and it is also to the sensible employer's interest. I speak only from my own experience in agriculture. I do not employ very many men but I get an enormous amount of sound advice from them, and I think the more that industry follows this sort of practice and not that of, "Oh, they don't know anything about it", as epitomised by the speech of the noble Viscount, Lord Massereene and Ferrard, the better.
Viscount MASSEREENE and FERRARD: Nonsense!
The Earl of ONSLOW: That attitude explains to me why in some industries we have very bad industrial relations. I should like to make one point. The words "industrial democracy" have certain shibboleths attached to them. In other words, it has become a bit of class warfare, and the Amendment, as proposed by my noble friend Lord Aberdare, and the point then taken by the noble Baroness, Lady Wootton, changed for the better by my noble friend Lady Emmett, would seem to me to get it about right. It takes that element of sloganising out of the words "industrial democracy". But because of my sympathy for the Amendment of the noble Lord, Lord Aberdare, please do not let anybody think that I should like anything other than the maximum amount of use of human beings' brains and the dignity of the people who work for you. It is in the employers' interest so to do and that seems to me a good bargain.
Lord LOVELL-DAVIS: This Amendment has come up with monotonous regularity in various stages of the Scottish Development Agency and the Welsh Development Agency Bills in both Houses, and here it comes again in connection with the Bill before us, having been thoroughly aired in another place. The noble Lord, Lord Aberdare, has said that the Amendments to the Scottish and the Welsh Agency Bills found favour in your Lordships' House. They certainly did not find favour on this side of the House, and of course they are being reinstated in another place.
Noble Lords have argued that the term is imprecise, and unclear, but I think it is clear to all those who have thought

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objectively without unreasonable prejudice about the concept against the background of our past and present industrial problems. Our industrial achievement has been and is constantly handicapped by the lack of proper contact, of shared involvement between the management and the managed, between those who contribute one thing and those who contribute another, both essential to the common end. As the noble Lord, Lord Rochester, pointed out, this is not the whole story, but anyone who has tried to create and sustain enthusiasm in a company where there is a lack of a sense of identity with the aims of the company—what my noble friend Lady Lee referred to as a sense of belonging—will know how hopeless a task it is. That is why progressive companies—and unhappily I have seen more of them while abroad on business than I have here at home—already operate some form of industrial democracy, taking employees into their confidence and involving them in decision-making.
We are talking about participation and, as my noble friend Lord Bruce has said, perhaps this is the most important matter. To achieve it means fundamental changes in attitudes, in the class structure of industry and in the balance of power and responsibility in industry. It is not just a matter of handing out a few shares as suggested by the noble Viscount, Lord Massereene and Ferrard. His whole approach and the tone of his intervention were utterly at variance with my view of what constitutes industrial democracy. Increasingly, speaking to ex-colleagues—directors and managers of companies, even those who are not exactly cheer-leading for the present Government—I find that the concept of industrial democracy carries much wider acceptance than one would imagine to be the case from what has been said by noble Lords opposite during the Welsh and Scottish Development Agency Bills, and during the passage of this Bill.
The words "promoting industrial democracy" have been used quite deliberately in the Bill, because the Government are committed to a far-reaching extension of industrial democracy in both the public and private sectors of the economy. The Government have announced their firm intention to introduce legislation in the 1976–77 Session and the NEB will be
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expected to be among the first to implement the proposals which the Government make. The word "democracy" has been used advisedly. "Employee involvement" is too weak a term. "Industrial democracy" does not mean just involvement, but involvement in a way which parallels political democracy. It means provision for the proper democratic representation of everyone who contributes to the performance and success of a company.
It is not necessary to define "industrial democracy" in detail; it can take many forms, just as different countries have evolved different forms of political democracy appropriate to their circumstances. As my noble friend Lady Wootton pointed out, it is a two-way movement, not a movement from the top to the bottom. The difference between industrial democracy and employee involvement is the difference between sharing decisions and consulting about decisions, and that is not simply involvement when and if it suits management on terms dictated by management, which is just the sort of paternalism to which my noble friend Lady Wootton referred.
To attempt to provide a watertight legal definition of "industrial democracy" for the purposes of this Bill would be an impossible task and a quite unnecessary one. The fact remains that the broad concept is fundamental to the solution of our industrial problems. My noble friend Lord Bruce of Donington put his finger on the salient point in my argument, when he said that we cannot afford to waste, as we are wasting, the talent available to us. We must draw out and use the full potential of all our people, because it is there if we want to use it. I hope, therefore, that the noble Lord, Lord Aberdare, will accept my argument and decide to withdraw his Amendment.
Lord ABERDARE: We have had a great deal of advice from all quarters of the Committee and, in my view, it has been a valuable debate. There is not much difference between what we and the Government are seeking to achieve, and I agree with my noble friend Lord Onslow on that subject; he seemed to have the ideas which we share in common. In particular, I was deeply interested in what was said by the noble Baroness, Lady Lee of Asheridge, when she spoke

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of the need to involve the minds and hearts of workers. This is precisely what we meant by our use of the word "involvement" in the Amendment, but she did not like our form of words, nor did the noble Baroness, Lady Wootton. There is the difficulty that the words are imprecise and it is difficult, once one starts defining them, not to have people criticising various aspects of them. Nevertheless, what we are after is involvement, or what the noble Lord, Lord Bruce or Donington, preferred to call "participation", which seems to be much the same sort of word; the noble Lord, Lord Bruce, is always very challenging and it is difficult to avoid wanting to spend hours arguing with him.
Let me simply say that the situation in Germany is extremely different from what it is here. First, the trade union organisation is different and usually they have to deal with only one trade union in a major industry and not, as in our case, with a large number. Secondly, the whole system of encouragement of free enterprise and profitability is a very different scene there from what we have, but I will not go into a long discussion of that at this stage. With one thing the noble Lord, Lord Lovell-Davis, said I agree entirely, and I wish that I had said it; namely, that a great many firms in this country already practise what we have in mind. It can take various forms in different firms and this is something about which we shall have to think more closely, but for the present I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
3.55 p.m.
Lord LLOYD of KILGERRAN Lord LLOYD of KILGERRAN moved Amendment No. 31:
Page 2, line 44, at end insert—
"( ) promoting invention and innovation in industrial undertakings; and".
The noble Lord said: This Amendment is brief and simple. It is designed simply to ensure that the four functions of the Enterprise Board as set out in Clause 2 shall be increased by one; namely, that it shall be a function of the Board to assist in the promotion of invention and industrial innovation in industrial undertakings. This Amendment may not be politically exciting, but I urge it on the Government
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as being of immense potential importance to the United Kingdom economy. It conforms with the general main purposes of the Bill and it is the duty of the Government at all times to foster and assist, and always to be seen to be fostering and assisting, the development of invention and innovation for the benefit of industrial undertakings.
Of course, the main object of improving innovation in companies is to improve their profitability and, to borrow words which were used in your Lordships' House yesterday, this should assist in enthusing and revitalising industry. I should, perhaps, declare some interest in this matter, in that only recently I have been elected President of the Institute of Inventors and Patentees, and all my professional life at the Bar has been concerned with inventions and technical matters both nationally and internationally.
The word "innovation" in an industrial context is often misunderstood and, as your Lordships will be aware, it is often the subject of a plethora of platitudes. It may be of help, therefore, if I reminded the Committee of the definition of "innovation" as adopted by the Central Advisory Council on Science and Technology, and it is a definition which, as many of your Lordships will know, is accepted not only by experts in the United Kingdom but also in America. The definition is that innovation comprises the technical, industrial and commercial steps which lead to the marketing of new manufactured products and to the commercial use of technical processes and equipment. I emphasise at this stage that in this definition the word "marketing" in relation to innovation is important and that the words "commercial use" are of importance in understanding what is meant by innovation.
Quite simply, the development of innovation in an industrial undertaking involves a wide range of talents among employees, from research to marketing, and this aspect is sometimes not fully understood. Successful innovation in an industrial undertaking therefore implies taking a new process or a new product to the stage where it earns substantial profits for the undertaking. As your Lordships will be aware, successive Governments have from time to time emphasised

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the importance of supporting the development of innovation and they have referred to the benefits in industrial undertakings. It has been said that if an industrial undertaking does not innovate it will decay. However, it is well known—and to some extent I agree with the noble Lord, Lord Bruce of Donington, on this—that a large number of United Kingdom industrial undertakings, particularly at management level, fail to appreciate the factors which are crucial to determining success in innovation.
It seems to me, therefore, that the Government should seek every opportunity, directly and indirectly, to enthuse and revitalise industry by referring to the need to promote and by assisting to promote innovation along the general lines to which I have referred. This is not merely a matter of increasing the efficiency of a firm or increasing its international competitiveness. At the present time many United Kingdom firms can improve their efficiency and competitiveness without much innovation. In this Committee noble Lords who have spoken for the Government have described the important purposes of this Bill and the need, as I have said, to enthuse and revitalise industry. My Amendment is an attempt to help the Government in their declared tasks, directly arid indirectly, to assist the growth of the economy, and in that way to encourage the increase in profitability of British industry by making some reference to invention and innovation as a function of the Enterprise Board.
It may be that the wording in the Amendment is capable of some improvement, but I hope that the Government will take an opportunity of making reference to invention and innovation in some form or other as a declared function of the National Enterprise Board, rather than merely allow this important aspect of industrial development to be inferred from the very general terms of Clause 2. I beg to move.
Lord BESWICK: First, I feel that it is appropriate to congratulate the noble Lord, Lord Lloyd of Kilgerran, on his appointment, election or selection as President of the Institute of Inventors. I wish him well. The spirit underlying his Amendment and what he said command great support from this side of the Committee, and I assure him that it will be
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our view that the National Enterprise Board will have failed unless it promotes new technologies and ideas, and gives assistance to those companies which are promoting such technologies and ideas. However, the difficulty of accepting the wording which is proposed and, indeed, of putting this duty into the clause as one of the primary functions of the NEB, is that there is already, as the noble Lord will know, a body in existence which has specifically these responsibilities. I refer, of course, to the National Research and Development Corporation. I feel that it would be a mistake to appear to be duplicating the work of the Corporation, though I am certain that there will be close collaboration between the two organisations. I believe therefore that, though I give an assurance that it will be an objective of the NEB to see that new technologies are assisted and promoted, it would be unwise to have this apparent conflict or duplication between the Board and another body which has been set up specifically for the purpose in question.
Lord LEE of NEWTON: While I agree with what my noble friend has said, there is perhaps an aspect of the proposals of the noble Lord, Lord Lloyd of Kilgerran, which we could look at; that is, the question of innovation in the way we treat human beings. In some industries, we have now reached the stage of assembly lines where it would be an appropriate punishment to place people who commit criminal offences. I feel that a great deal ought to be done to try to spare those who are condemned to this kind of operation from the hours of monotony which they endure. I believe that this has a profound effect upon industrial relations in general. I shall not go into detail for reasons of time, but I could prove that in some industries a great deal of time lost in industrial disputes emanates from this terrible monotony of repetitive processes which the human mind ought not to be asked to endure. In the context of the noble Lord's remarks, I feel that we really should look in the field of innovation at what we are doing to human beings and should try to rectify that.
Lord BESWICK: While agreeing with what my noble friend said, I hope that this is a factor which will be borne very much in mind in the development of

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industrial democracy. Industrial democracy itself will fail unless it takes account of the needs to which the noble Lord has called our attention.
Lord LLOYD of KILGERRAN: I am obliged to the noble Lord for the sympathetic way in which he has received my efforts to suggest to the Government that they should be very specific in supporting innovation, and in putting the words which I proposed into the Bill. He referred to the National Research and Development Corporation, but the function of that body is quite different from that which it is anticipated the National Enterprise Board will have. So far as I understand it, the NRDC receives and exploits inventions on behalf of individuals and firms, and I have been very closely associated with some of its activities. However, I rather had in mind that the Government, by means of education, example and assistance, should try to get over the difficulties which management in some parts of industry finds at the present time in conceiving what is meant by "technical innovation" in its broadest sense. I believe it is fair to say that I am in some way reflecting the views expressed in a recent paper by the Government Scientific Adviser, Sir Ian Maddox. However, in view of the assurance given to me by the noble Lord, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.8 p.m.
Lord ABERDARE Lord ABERDARE moved Amendment No. 32:
Page 3, line 3, at end insert—
("( ) In carrying out its functions under subsection (2) above, the Board shall ensure that on all appropriate occasions all relevant parties are consulted and for the purposes of this subsection the expression "relevant parties" shall particularly include employers, employees, shareholders, customers, and suppliers.")
The noble Lord said: The purpose of the Amendment, even if it is not acceptable to the Government, is to obtain some assurance that the National Enterprise Board, when they start their operations, will enter into consultation with all those people whose interests are liable to be affected when the Board have carried out their purpose. Certainly, in the course of their work they will be involved in, for example, schemes of reorganisation within
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a firm which may well be of advantage to that firm but which will have important repercussions on other people. The Amendment attempts to list some of the people whose interests could be affected, calling them "relevant parties". They are, first, the employers, for it would hardly be feasible that the National Enterprise Board should plan to reorganise a firm without consulting those who run it. However, for accuracy, they are included. Next come employees. I cannot imagine that any of your Lordships would object to consultation with employees after the debate which we have had on Amendment No. 29.
However, important people whose interests are not so often considered nor, indeed, so frequently mentioned in the Bill are, first, the shareholders, though it is they who are the owners of the company and who have certain legal rights under the Companies' Acts. They certainly have to be consulted about major changes in a company's status and we would hope that they would be taken fully into the confidence of the National Enterprise Board and of their firm's board of directors when any plans were formulated about the reorganisation of that firm.
Finally, there are the customers and suppliers, whose interests are very real but who often tend to be overlooked. Decisions taken by a company can vitally affect the interests of those who supply it and of those who buy goods from it, and only too often such firms are presented with a fait accompli and suffer unnecessarily for want of prior consultation. It is for this reason that we have put down the Amendment. It seems sensible and practical to require the National Enterprise Board to consult in the course of their operations. I have no reason to suppose that they would not do so, but I hope that the noble Lord will give us some assurance at least, even if he cannot accept the Amendment. I beg to move.
Lord BESWICK: I am glad to give the noble Lord the assurance he asks for. Any successful company will have to consider the interests of, and get the opinions of, those bodies concerned in any area of decision-making. As the noble Lord said, there are too often cases in industry where customers and suppliers are not

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properly consulted. This would not apply to a successful company in this country. There are shareholders in many companies who would say they are not consulted as closely as they would wish and many shareholders who do not seem to want to be consulted when the annual general meeting is called. Nevertheless, if we are to have a new spirit in industry the widest area of consultation should be encouraged.
I think it would be onerous to have these words in the Bill. It would be unreasonable to expect the National Enterprise Board, or companies working as associates of the National Enterprise Board, to be bound by Statute to consult all these people. Admittedly, the Amendment includes the words "where appropriate", but I give the assurance that where appropriate they would be consulted. On that basis, I hope the noble Lord will feel able to withdraw the Amendment.
Lord ABERDARE: I am grateful to the noble Lord and beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.12 p.m.
The Earl of BALFOUR The Earl of BALFOUR moved Amendment No. 33:
Page 3, line 5, leave out ("or elsewhere").
The noble Earl said In moving this Amendment I should like also to speak to Amendment No. 34. I would refer your Lordships to the subsection which reads:
"The Board may do anything, whether in the United Kingdom…".
or outside the United Kingdom to facilitate the functions specified in subsection (2). Let us look at that subsection. It says that the functions of the Board shall be "…maintaining or developing…the establishment…of any industrial undertaking" overseas; or "promoting or assisting the reorganisation of an industry" overseas; or perhaps, if our Amendment is defeated in another place, "extending public ownership into profitable areas of manufacturing industry" overseas; or, perhaps, "promoting industrial democracy in undertakings which the Board control", or may in future control overseas.
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So far as I can see, they have powers here to take over a publicly-owned security or property that might be overseas. Let us not forget that the Government have no capital as such. If they want to do anything, they must borrow money, usually at a very high rate of interest as it is at the moment; and, I would say, at a higher rate of interest than they could ever expect to get in dividends from capital invested in industry. Furthermore, we must remember that when the Government are spending money on an enterprise, such as the National Enterprise Board, they are using taxpayers' money. There is nothing here that could encourage taxpayers or encourage faith in the pound. Perhaps this is the Government's intention. I beg to move.
Lord MELCHETT: Before getting on to the extravagant language of discouragement of faith in the pound, I hope that I may be able to set the noble Earl's mind at rest. I think the Amendment is based on a simple misunderstanding. As I understand it, the National Enterprise Board have to exercise their power in conformity with their purposes. Their purposes are set out in Clause 2(1) and they are specifically limited to the United Kingdom. It may help the Committee if I explain why the National Enterprise Board will have power to operate outside the United Kingdom. In exercising their purposes through the exercise of its functions, the Board may need to establish facilities abroad; for example, sales outlets. Rolls-Royce and British Leyland, both vested in the National Enterprise Board, already have extensive operations overseas. In our view and I am sure the noble Earl will agree, it would be very damaging to the interests of these companies and to the national interest if the NEB were obliged to discontinue these activities and operate solely through foreign agents. That is the purpose of the words to which I think the noble Earl is objecting. I think he is misunderstanding slightly the basis on which the clause is to operate and I hope he will feel able to withdraw the Amendment.
The Earl of BALFOUR: I merely read out the words in the Bill and I do not think I misread them. If in line 6 the Government care to delete the word "functions" and put in "purposes" and

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accept my second Amendment and put in "(1)", then I should agree with every word the noble Lord said. Let me remind the Committee of the Government Amendment, Amendment No. 42, which says that they can go into overseas aid, which is on the next page of our massive Marshalled List. I think I must ask for some further explanation.
Lord MELCHETT: Perhaps we can leave Amendment No. 42 until we get to it; I do not think it has anything to do with the Amendment we are now discussing. I still think that the noble Earl does not fully understand the position. The purposes for which the Board may exercise their functions are set out in Clause 2(1)—the purposes are set out and not the functions; and the purposes are limited to the United Kingdom. To fulfil various purposes within the United Kingdom, it may be necessary to establish, for example, overseas sales outlets. That is why it is necessary to give the Board powers to do things overseas. They may not, as the noble Earl said they may, buy up publicly-owned companies in other countries. That would have nothing to do with the purposes set out in Clause 2(1), all of which are limited to the United Kingdom. I hope that with that further explanation I have satisfied the noble Earl.
The Earl of ONSLOW: I should like a litttle explanation of Clause 2(1)(d) which reads:
"…the promotion in any part of the United Kingdom of industrial efficiency and international competitiveness".
Presumably where it says, "and international competitiveness", this could mean that to promote international competitiveness it would be sound commercial practice to buy up a company overseas which could be a subcontractor making parts or spare parts for you. Does the Bill allow this to happen? As I understand it, it could. I believe that Fords in Germany have parts made in England to be shipped to Germany. You could have an industrial company in this country having spare parts made overseas by a subcontractor and it could promote international competitiveness to buy up that subcontractor.
Lord MELCHETT: We dealt with this at length yesterday when we pointed out that the Board would have power
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to set up a new company in this country to make spare parts if, for example, it helped the balance of payments. I think that paragraph (b) is clear. It says:
"the promotion in any part of the United Kingdom".
That is where we are: in the United Kingdom. We are promoting industrial efficiency and international competitiveness in the United Kingdom. I do not think it can be said that we are promoting international competitiveness in the United Kingdom to start firms in Peru or Bolivia. If one wants to promote international competitiveness in the United Kingdom one sets up companies in the United Kingdom to produce spare parts. That is the position under the Bill. I think it is clear and it has been accepted by both sides of the Committee in another place and by noble Lords opposite.
The Earl of BALFOUR: Would the noble Lord have another think between now and Report stage regarding the drafting? I have not been completely satisfied. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.20 p.m.
Lord ABERDARE Lord ABERDARE moved Amendment No. 35:
Page 3, line 10, at end insert ("provided that disposal of these securities is achieved as soon as is practicable and reasonable.")
The noble Lord said: This is an Amendment which we discussed earlier on the Scottish and Welsh Development Agency Bills. Once again, we are anxious to establish that the National Enterprise Board will not just be a body which collects more and more companies and never disposes of the ownership of any of them. That that is not the intention, certainly in the case of the Scottish Development Agency, is clear from what the noble Lord, Lord Hughes, said in the debates on that Agency on 10th June at column 191 of Hansard. He said:
"…what I accept is a right conception of the way to use money—to have a rolling fund."
That is precisely what we hope will be the objective of the National Enterprise Board. We hope that they will not go on getting greater and greater capital sums out of the Government in order to acquire more and more companies, but

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will make use of the capital they already have, so that when they have a reasonable opportunity of selling off a company they will do so; in other words, they will use their capital in the way the noble Lord, Lord Hughes, speaking for the Government, said was the right conception, as a rolling fund.
There is nothing unreasonably restrictive about the Amendment. It is slightly different from what we had in the case of the Agencies, which used the words, "reasonably practicable". What we now suggest is that the disposal of the securities should be practicable; in other words, there must be some body available to buy them. Secondly, it must also be reasonable; in other words, there is no question of the shares being sold when it would not be profitable so to do, nor when there were other good reasons why they should not sell. The Board are left with entire discretion as to whether disposal is practicable and reasonable, so I should not have thought there would be a great inhibition on their activities. What I am anxious to establish from the noble Lord is that the Board will from time to time sell or dispose of their shares in one or other of the companies under their control. I beg to move.
Lord LOVELL-DAVIS: As the noble Lord, Lord Aberdare, has said, this Amendment is an old friend. Once again I am sorry to have to tell him that it is not an Amendment which we can accept. However, I can assure him on one or two points. The fact is that the nation has to participate fully in the rewards which come from the use of public capital. The Amendment is an attempt to impose a restriction on the NEB which noble Lords opposite would never think of applying to a private holding company, and for which there is no justification. If the NEB are to make a significant contribution to and mark on the industrial scene, they must be able to employ their investment funds in the way they consider best to further their objectives. This Amendment, if accepted, would make that impossible. As my noble friend Lord Mackie of Benshie pointed out on a similar question during the Committee stage of the Scottish Development Agency Bill, it is not practicable to ask people to run a company in a businesslike way if they are forced to sell their
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holdings. This is the matter of dispute here.
The White Paper stated that the NEB will in general retain the holdings they acquire. The idea of a permanent public share in profitable industry, in return for increased investment through the mobilisation of public funds, is central to the philosophy underlying the NEB. But the Bill states clearly that the NEB has the power to dispose of holdings. Like any other company, they would dispose of them when they wished to do so, when it was necessary for them to do so. But we feel it is not right that they should be forced to dispose of their shareholdings. We feel it is right that where the Board help to develop a company they should take an appropriate share of the equity of the company. The holdings acquired have to be managed as efficiently as possible on behalf of the nation. Disposal may be appropriate from time to time, but a specific requirement for holdings to be disposed of as soon as is practicable and reasonable is not in the public interest.
The NEB will be providing risk capital with the prospect in the long term of high rewards, but also substantial risk. The nation, as will any private investor, must participate fully in the rewards which may come from the use of the Government's resources. We feel that this Amendment, if pressed, would devalue the NEB and turn them into an institution for putting splints onto the legs of lame ducks and then returning them to the duckpond. But the Government have always made clear that the NEB have a wider role than this. They are also to be a State holding company, to acquire, hold and manage on a long term basis State holdings in industry. I do not want to keep referring to other countries in any sense which appears detrimental to ours, but the fact is that in many other developed countries it is taken for granted that there should be such an institution.
Baroness WOOTTON of ABINGER:This Amendment appears to cut right at the root of the conception of the NEB which is held on this side of the Committee, and presents an entirely opposite conception. I should have thought it was contrary to the conception held by noble Lords opposite, that that the NEB would be an element in a mixed economy. This

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does not make it an element in a mixed economy; in a mixed economy there is an equal sharing, or sharing on equal principles, in which each party is free to acquire its resources, dispose of its resources and extend its resources as circumstances may dictate. It appears that this Amendment imposes a rule that when you have got hold of a good thing you must get rid of it as fast as you can. That is not a rule which is imposed on private enterprise. This cuts not merely at any possible development of the NEB into a more extended collective mixed economy, but cuts across the rule of a mixed economy which I believe is acceptable to noble Lords opposite.
The Earl of ONSLOW: If the NEB buy up a badly run company and inject capital into it, or buy a big equity shareholding, and then feel that the shares in that company have become over-valued—which has happened—and, as the noble Lord rightly said, the nation is fully entitled to the rewards from its capital, in circumstances like that the selling off of shares at a profit to raise further capital for the NEB would surely be a sensible way of raising money, as opposed to going cap in hand to the taxpayer. Furthermore, the Board must not just hoard for the sake of hoarding. Could the noble Lord give an undertaking on that?
Lord MACKIE of BENSHIE: The noble Lord addressed me as his noble friend, which I am happy to accept. Perhaps there has been a slight mistake. I said that any enterprise, national, mixed or otherwise, must not be restricted regarding its having to sell. But I made no secret of the fact—and, in fact, I stipulated it—that I hoped the Scottish Development Agency would encourage new enterprises and would not sit holding fat and perhaps over-priced shares. I should like to make that clear, in view of the earlier quotations.
Lord LOVELL-DAVIS: I entirely accept what the noble Lord said, and I hope he did not take any offence when I quoted him. I did not quote him out of context in any unfair way. Regarding the remarks of the noble Earl, Lord Onslow, this is quite within the terms of the Bill The Agency is free to dispose
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of any acquisitions. It might well make good sense at a certain time to dispose of a shareholding in order to get the best possible price and generate the capital. Under the terms of the Bill the Agency would be free to do that.
Lord ABERDARE: I am not sure that there is not some discrepancy between what the noble Lord has just told us is the policy for the National Enterprise Board and what we were told by the noble Lord, Lord Hughes, was to be a rolling fund. He seemed to envisage much more use of the powers for disposing of shares by the National Enterprise Board than is obviously in the mind of the noble Lord who is replying today. May I just say to the noble Baroness, Lady Wootton, that I do not think she is being her usual logical self. We certainly have to operate a mixed economy, but that does not mean that we wish to see an extension of the public sector in that mixed economy, and therefore we do not approve of the National Enterprise Board buying their way into profitable areas of industry.
Baroness WOOTTON of ABINGER: I hope the noble Lord will forgive me, and that I am being logical. He intends, in a mixed economy, to impose limitations upon one part of it which he would not dream of imposing on the other part.
Lord ABERDARE: Not altogether, because the National Enterprise Board are financed by public money, and that is quite different from a private company operating on private money. I am anxious that when the National Enterprise Board run out of money, which they certainly will do, rather than the Secretary of State or the Treasury handing out further dollops of our money—and this was the point made by my noble friend Lord Onslow—some pressure should be put on the Board to disgorge some of the capital they have already acquired by employing some of the money they have had, and not continually to come back for more.
Baroness WOOTTON of ABINGER: If I may interrupt again, that is not what the Amendment says. It does not say that when the National Enterprise Board are rolling in money they must dispose of it: it says they must dispose of it as soon as it is reasonable and practicable.
Lord ABERDARE: The Amendment, of course, is not necessarily the last word. We should like to see a Board which helped companies in the private sector when it was thought wise so to do; but as soon as the company was back on its feet and capable of working profitably on its own, then we think there should be no further reason for the National Enterprise Board to continue to own it.
Lord BESWICK: Would the noble Lord help me by saying exactly what he does mean? Is he really saying that the NEB should help unprofitable organisations but not profitable ones? Is that the situation he wants to achieve?
Lord ABERDARE: I certainly think that the National Enterprise Board should indeed help a number of unprofitable enterprises. At the moment, for instance, they have taken over a company such as British Leyland. They may well bring British Leyland into such a position that it is once again a flourishing company. Then I would see no reason at all why, if there are those who are willing to put up the money which will show a profit to the National Enterprise Board, the Board should not dispose of that company and let it return to the private sector.
Lord BESWICK: That is not the question I asked. Does the noble Lord visualise a public body which is there only for the purpose of helping unprofitable companies and that when they become profitable the Board must dispose of them?
Lord ABERDARE: Yes, that is my concept of what the Government should be doing. They should be trying to help private enterprise through difficult periods, and trying to help companies to survive those difficult periods. We cannot go on with question and answer in this way. Our views on this matter are totally different, as I am sure the noble Lord would agree. I am interested to hear what the noble Lord has said, but I do not think it is very satisfactory from our point of view. We have been through this before, and so I will ask leave to withdraw the Amendment at this stage.
The Earl of ONSLOW: Before that is done, may I add just one more point in an attempt to back up what the noble Lord, Lord Aberdare, has said about British Leyland. It would seem to be
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very much in the national interest if, having bought British Leyland—and I suppose one ought to say one is a shareholder—at 10p per share, or whatever it is, then the National Enterprise Board could float off some of the shares which they own at, say, 25p per share. Thus the country has got a very good return on its money; it has made a very good deal. I see the point of a National Enterprise Board as being that they help where necessary and then they make a profit for themselves and for the country. Nobody—least of all I—would say that they should not make a profit, but they are doing nothing but good in that kind of situation.
Lord MACKIE of BENSHIE: Before the noble Lord replies, I should like to clarify a point which has been made. Surely the National Enterprise Board are not going to exist purely to rescue ailing companies in the private sector. Surely they would go in with prosperous companies, providing capital, and then they might reasonably, having made a profit, use such money as a revolving fund. Surely the Board would not be used just to help ailing companies? I should like to have some clarification on this, because this is surely not the concept behind the Bill.
Lord BESWICK: It is not our concept, but apparently it is the concept of noble Lords on the other side.
Amendment, by leave, withdrawn.
4.36 p.m.
Lord ABERDARE Lord ABERDARE moved Amendment No. 36:
Page 3, leave out line 11.
The noble Lord said: I spoke to this Amendment in moving Amendment No. 26 yesterday and I therefore hope that the Government are prepared to accept this Amendment without further debate.
Lord LOVELL-DAVIS: I am sorry to have to tell the noble Lord that we are not. This Amendment and those like it continue to astonish me. One of the great developments of recent centuries has been the evolution of the limited company. This has been a framework which has proved effective and flexible as a means of organisation. A particular aspect of it has been the group of companies with wholly-owned subsidiaries. That has proved a remarkably successful form of

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organisation, permitting delegation of responsibility and decentralisation, while preserving at the same time the accountability of those to whom the delegation is made and the ultimate power of control in the centre which is needed to prevent fragmentation. I am surprised that noble Lords opposite should seek to impede the NEB's use of a system which has contributed greatly to the efficiency in the market economy.
It is worth pointing out that the previous Government formed Rolls-Royce (1971) Limited as a new company to manage the Government's acquisition of assets of the old company from the receiver, and formed the Govan Shipbuilders to look after its Clyde shipbuilding activities. If it was right for them to form bodies corporate, why is it now not right for the NEB to do so? Perhaps they do not want the NEB to do anything directly but only to help other companies to do things, as the noble Lord, Lord Aberdare, has just admitted. The function of establishing new industrial undertakings is a vital and central part of the NEB's role, and without it the NEB's potential for contributing to industrial regeneration and economic recovery would be seriously inhibited. Shorn of this power, the NEB would be in no position to initiate actions designed to improve industrial efficiency and combat unemployment, particularly unemployment in the hardest-hit assisted English areas.
They would be something like a State merchant bank, able to provide advice and financial assistance and to manage Government holdings in industry transferred to them. They would still be able to expand through the acquisition of manufacturing concerns. But important though these activities would be, the NEB would not be able to make the positive new contribution to industrial development which is essential. Fears that this power will be used to establish undertakings which would undermine the public sector through unfair subsidised competition are unfounded. We have already made this point many times. The NEB will be subject to proper commercial discipline, and the Treasury and the Secretary of State must ensure that the various financial objectives, taken together, will result in an adequate return on capital.
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Noble Lords opposite must admit that it is part of their philosophy that fair competition can be only stimulating and beneficial to industrial effort. The Opposition argue that this function of the NEB is damaging to industrial confidence. I am surprised that they do not seem to appreciate the benefits it will have for the private sector. One of the most fruitful areas of the Board's activities, as the Prime Minister has indicated, will be the field of joint ventures with the private sector; and this could be a potent weapon in the struggle against unemployment. The White Paper spoke of a closer, clearer and more positive relationship between Government and industry. It is in that spirit that the NEB will conduct their affairs. To speak of the damage to confidence is to damage confidence. A better understanding of what the NEB can do for the private sector in partnership with it would do a great deal to boost industrial confidence, and I believe that this will come about in time, just as it did in the case of the IRC.
Lord ABERDARE: I am absolutely astonished that the noble Lord should not see that this particular Amendment hangs together with Amendment No. 26. We have already removed from the Board the power to establish an industrial undertaking. What is the difference between establishing an industrial undertaking and forming a body corporate? This is precisely the same Amendment as we moved on the Scottish and the Welsh Development Agency Bills. We moved the first Amendment to the purposes and functions. We debated them. There was a Division on it, which the Government lost, but they were, in my view, reasonable and practical about it and accepted the consequential Amendments.
Lord BESWICK: The noble Lord is talking about establishing new undertakings. Suppose the NEB were not establishing a new undertaking, but already have responsibility, or part responsibility, for an undertaking and wish to form a body corporate out of a division of that undertaking, with everyone agreeing that that was a sensible method of direction and holding that particular activity. Is the noble Lord then going to deprive

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them of this opportunity of using this modern means of corporate ownership?
Lord ABERDARE: I am interested to hear that point of view because it certainly was not raised in the case of either the Scottish or the Welsh Development Agency Bills. The noble Lord is one ahead of his colleagues. But if that is a serious argument which the noble Lord put forward, which I will accept, will he agree that I should put down a further Amendment at Report stage limiting this power to forming bodies corporate within companies that are already owned by the National Enterprise Board? Is that agreeable to the noble Lord?
Lord BESWICK: The noble Lord is free to do anything he likes on Report stage, and I have no doubt he will do so. Certainly what I put forward was put forward as a serious consideration.
The Earl of BALFOUR: May I say a few words here? If your Lordships will look at Clause 9(3) it will be seen that, the Board having acquired a 30 per cent. share, they go to the—
Lord BESWICK: The noble Earl is very considerate. I wonder whether he will allow me—
The Earl of BALFOUR: I want to say only a few words; I shall not be long. It is an important point. The Board have acquired a 30 per cent. share. They then take advantage of the third part, get permission of the Secretary of State and form a body corporate and take over the rest under Clause 2(4)(b)—the provision we are dealing with now. I am certain I am quite right. In other words, so far as I can see, this is a straightforward process of nationalising everything that the Board can possibly nationalise.
Lord BESWICK: The noble Earl is dealing there with an entirely different sphere of the Secretary of State's activities, not necessarily anything to do with the NEB at all. I suggest we wait until we reach Clause 9 before we deal with it.
Lord ABERDARE: I am in some difficulty, but if the noble Lord, Lord Beswick, is seriously prepared to think about this point I will bring it up again at Report stage. I have had an opportunity
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of thinking about what he said. I hardly think it is a formidable point because the National Enterprise Board, controlling companies as they do, are not likely to want to set up a new company as a subsidiary of a subsidiary, when the whole point of public liability companies is rather more suited to the private sector than to the corporate sector. However, on the understanding that I shall return to the matter with an Amendment at Report, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.46 p.m.
Lord ABERDARE Lord ABERDARE moved Amendment No. 37:
Page 3, line 22, at end insert—
("( ) Unless the Secretary of State otherwise directs in accordance with the provisions of section 6 of this Act, the powers mentioned in paragraphs (a), (c) and (d) of subsection (4) above may be exercised only in connection with the Board's function of providing finance for persons carrying on or intending to carry on industrial undertakings.")
The noble Lord said: Amendment No. 37 is a probing Amendment. It takes some words which appear in the Scottish and the Welsh Development Agency Bills and applies them to this Bill with a view to inquiring from the Government why it is that the two Agencies have this restriction on their powers while the National Enterprise Board do not. In the case of the Scottish Development Agency and the Welsh Development Agency, they each have power to acquire, hold and dispose of securities, to form partnerships with other persons, and to make loans. But they are each restricted in the exercise of those powers in that, without direction or approval from the Secretary of State, they may exercise them only in connection with their function of providing finance for persons carrying on, or intending to carry on, industrial undertakings.
I want to inquire why this restriction is not laid upon the National Enterprise Board, and whether, therefore, the Board could exercise powers in England, Scotland and Wales which were not available to either the Scottish or Welsh Agencies because they are limited in this way. I beg to move.
Lord LOVELL-DAVIS: I should like initially to discuss this Amendment in a

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broader way. In our view, the Amendment is unsatisfactory because the Board do not have the function of
"providing finance for persons carrying on, or intending to carry on, industrial undertakings."
Their functions are set out in Clause 2(2) and the power described above might or might not arise in the course of all of them. The power described in subsection (4)(a), "to acquire, hold and dispose of securities", should certainly not be exercisable only in providing finance or when directed by the Secretary of State. It is, for example, one of the specific functions of the Board, set out in Clause 2(2)(b) against which no Amendment was raised, that the Board should promote and assist reorganisation. This is a most useful function of the IRC and will be a valuable function of the NEB.
It is very likely that we will provide for acquiring, holding and disposing of securities. It is desirable that the NEB should be able to carry out this function on their own initiative on a commercial basis and free from the political atmosphere which might be generally created by a direction from the Secretary of State. More generally, it is the Government's intention—and one I should think the Opposition will welcome—that the NEB should be a body normally acting independently, not merely as the arm of the Secretary of State.
I will not argue in detail the need for the power to form partnerships, but it could be a necessary power to enter a joint venture with private industry. Many of us on this side of the Committee feel that such partnerships, which bridge the gap between nationalised and privately-owned industry, may be a valuable role of the National Enterprise Board. As to why this point is not written into the Scottish Development Agency and the Welsh Development Agency Bills, there is no reason why it should be. A point we must make clear is that those Bills were not necessarily drawn up on precisely the same lines because in certain respects the Agencies fulfil different purposes.
The Earl of ONSLOW: Is the noble Lord absolutely certain that the NEB do not have the power to provide finance for persons carrying on, or intending to
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carry on, industrial undertakings? Clause 2(4)(c) says:
"to form partnerships with other persons".
A partner in a partnership is somebody who has unlimited liability. Whether or not this is the intention of the wording I do not know, but if you form a partnership with someone presumably you find finance for them. This paragraph distinctly allows the Board to provide finance for persons with whom they may go into partnership. It says so.
Lord BESWICK: The point is that the Welsh and Scottish Development Agencies have certain functions which the National Enterprise Board do not have to perform. For example, they have certain functions to perform in environmental matters. The restriction was imposed upon them because of those functions peculiar to the Scottish and Welsh Development Agencies. These are not shared by the National Enterprise Board, and because the National Enterprise Board do not have the same functions as the Scottish and Welsh Development Agencies it was not thought necessary to have the same restrictions. I hope that answers the point.
Lord ABERDARE: The noble Lord has put his finger on the answer I was hoping to obtain. Therefore, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
4.51 p.m.
Lord DRUMALBYN Lord DRUMALBYN moved Amendment No. 38:
Page 3, line 27, at end insert ("and without prejudice to the generality of the foregoing it is hereby further and specifically declared that the Board shall be required to comply with the provisions of section 33 of the Companies Act 1967 and shall be subject to the provisions of Part V of the Fair Trading Act 1973.")
The noble Lord said: I beg to move Amendment No. 38. The Amendment places on the National Enterprise Board a requirement to comply with Section 33 of the Companies Act 1967 which says that if any person acquires shares in a company, the nominal value of which, taken together with any shares he already has, give him one-tenth or more of the nominal value of that share capital he must notify the company in writing of the occurrence and the date of the event whereby he came to have one-tenth of the capital or more. Equally, he must notify

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the company of the occurrence, date and event whereby he ceased to hold one-tenth of the share capital.
The object of this part of the Amendment is to invite the Minister who is to answer—the noble Lord, Lord Melchett, because he has already dealt with this point to a certain extent—to say, first, whether the National Enterprise Board, described as "a body" in Clause 1, is a person within the meaning of Section 33 of the Companies Act. I believe that the noble Lord, Lord Melchett, said this yesterday and no doubt he will confirm it. Secondly, whether the Bill gives power to the National Enterprise Board to acquire shares from nominees, including subsidiary companies, and, if so, in what clause it does this—for example, Clause 2(4)(a) appears to give the Board themselves power to acquire shares; thirdly, if it does give that power, whether the Board would be able to acquire shares through different nominees so that it could hold more than 10 per cent. of the share capital without the company knowing that it was holding more than 10 per cent. This may or may not be done with the object of warehousing. Assurances have been given that the Board will not indulge in warehousing but I do not see any such prohibition in the Bill.
One must remember that the Board will have lawyers. They will look only to limitations on their actions which are inserted in the Bill or contained in directives. There is a great deal of latitude in the interpretation of guidelines. I understood the noble Lord to say that guidelines should be issued, but they are not legally binding unless the Bill makes them so, which it does not appear to do. I incurred the displeasure of the noble Lord, Lord Beswick, during the Second Reading debate by using the words "weaseling into profitable shares". I am not convinced that under the Bill there is no possibility of their doing so. The National Enterprise Board is an agency of the Government. We are entitled to expect open government, especially since, it is public not private money that is being employed in investment by the Board.
I turn to the second part of the Amendment. The Government have stated that it is their intention that the National Enterprise Board will be subject to the
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provisions of the Fair Trading Act so far as monopoly practices are concerned. If that is their intention, surely there should be no objection to putting it into the Bill. In this connection we are dealing with Part V of the Fair Trading Act which relates to mergers and the power of the Secretary of State to refer them to the Monopolies Commission where more than a certain proportion of the total supply of a commodity or services will be supplied by the two companies which it is proposed to merge. That proportion is now 25 per cent. In other words, if the merger results in the two companies holding more than one-quarter of the total supply in this country the matter can be referred to the Monopolies Commission. This appears in Sections 63 and 64 of the Fair Trading Act. Section 65 deals with enterprises which cease to be distinct enterprises.
My question is whether it is the intention of the Government that these activities should be subject to reference to the Monopolies Commission in the same way as any other mergers would be subject to reference to the commission, since the result would be a monopoly within the meaning of the Fair Trading Act. There is a difference between not authorising the disregard by the Board of any enactment and making them subject to the supervision of the Office of Fair Trading and the Monopolies Commission. There is no suggestion that this would come under Clause 2(3). This is quite beside the point because that deals only with the disregarding by the Board of any enactment. However, this would not arise under Part V of the Fair Trading Act.
I hope that the noble Lord has considered this point and will be able to reply. I hope also that he will be able to satisfy your Lordships that there will be no obstacle to the activities of the Board being investigated by the Monopolies Commission in the same way as those of any other organisation, should mergers be involved. I beg to move.
4.59 p.m.
Lord CULLEN of ASHBOURNE: I should like to add my name to this Amendment which has been moved by my noble friend, in particular the question of making use of the names of nominees. It is very important that the

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National Enterprise Board can be identified as a purchaser. I am not suggesting for one moment that the National Enterprise Board would wish to purchase shares by stealth but there is no doubt that a company would attach great significance to the appearance of the National Enterprise Board on its shares register.
In the event of shares being bought by another company—perhaps a company in the same line of business—there is always the possibility that this purchase is the forerunner of take-over negotiations. However, the purchase of shares by the National Enterprise Board could be the forerunner of eventual nationalisation. As I said earlier, I am not suggesting that the National Enterprise Board would wish to acquire shares by stealth. In fact, I expect that, since the Government hope to develop a spirit of partnership between the National Enterprise Board and industry, the National Enterprise Board would not buy shares in a company without having informed that company beforehand of their intention.
I would go further, and hope that the NEB would not buy shares in a company without that company's consent. There could be a number of reasons for a company to resist the inclusion of the NEB on its share register, since the potential threat of nationalisation could damage its prospects. In any event, it is important that purchases should be made in the name of the NEB or in that of a subsidiary company. Clearly, if a good spirit is to be engendered between the NEB and both industry and other investors, it is vital that the behaviour of the NEB should be immaculate.
Lord MACKIE of BENSHIE: Before the noble Lord replies, I should like to say that this Amendment appears to me to be entirely reasonable. If the Government wish for the confidence of industry in the National Enterprise Board, it should surely be seen that they are acting in an open manner and will not choose nominees to take over companies. In other words, their reasons for buying shares in any company should be seen to be reasonable, right and proper and there should certainly be no need to resort to nominees or anything else.
Lord MELCHETT: Before the noble Lord, Lord Mackie of Benshie, intervened I was not going to start off by saying that the effects of the Amendment would be virtually nil, because as I understood it the noble Lord, Lord Drumalbyn, was really seeking information. Section 33 of the 1967 Companies Act and all relevant provisions of the Fair Trading Act 1973 will automatically apply to the National Enterprise Board as they do to any other person, and I think I made it perfectly clear to the Committee when we were discussing Amendment No. 18 that for this legal purpose the National Enterprise Board is a legal person. In addition, this has been made even plainer, if possible, by adding subsection (5) to Clause 2 in Committee in another place. That subsection states that the National Enterprise Board will not be exempted from any statutory requirements or obligations which could be held to apply.
Under Section 33 of the Companies Act, any person who builds up an interest in more than 10 per cent. of the voting shares in a company, whether directly or indirectly, must notify the company. If I may stress this, it is absolutely clear that that provision is binding on the National Enterprise Board. There is also no doubt that it is a person in the legal sense and Section 33 must therefore apply. For that reason, there is no need to spell it out in the Bill as this Amendment would do. The same is true with regard to the application of the fair trading legislation and in particular to Part V of it.
On the monopolies and mergers legislation, which the noble Lord, Lord Drumalbyn, raised, the NEB will be subject to the full range of that legislation as well but, in our view, it is desirable to go further to ensure that the NEB do not even embark on a course which might result in their being referred to the Monopolies Commission; in other words, to ensure that there will be no question of their being involved in undesirable activities. Arrangements which will be set out in the guidelines will therefore be made for the National Enterprise Board to consult the Director General of Fair Trading, before doing anything which could lead to a reference. The Director General of Fair Trading is aware of these proposed arrangements, and I should like to stress that these do not imply any form of special treatment of

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the NEB in the sense of special treatment being any special privilege, but rather the reverse. It is our intention to take special care that the NEB are not involved in this legislation. I think we got slightly off the point in discussing nominees, shareholders and warehousing, which will arise on a later clause, and it might be desirable if I were to leave them to that stage in the Bill when my noble friend Lord Beswick will deal with the matters in detail.
Lord DRUMALBYN: I am grateful for what the noble Lord has said and I am quite prepared to leave the question of nominees until later. But I am not certain that the noble Lord was right when he said that even greater care will be taken with the National Enterprise Board than is taken in the case of other mergers. He said that care will be taken that no question can arise of a reference to the Monopolies Commission and, in order to ensure that, there are to be consultations with the Director General of Fair Trading. If by that he means that the Director General of Fair Trading will give a sort of prospective exemption from the provisions of Part V and any possible reference, then that is not—and I stress this strongly—carrying the matter further. It is making very considerable reduction.
Lord MELCHETT: If I may—
Lord DRUMALBYN: No, please allow me to continue. The Director General of Fair Trading cannot possibly assume the mantle of the Monopolies Commission and say whether or not something will be in the public interest. He would have to refer the matter to the Monopolies Commission before he could say that. I do not understand, if what the noble Lord is saying is that the Director General will be consulted with a view to a reference to the Monopolies Commission before a merger takes place. But that is not what he said. If not, one has to admit that the National Enterprise Board will be more favourably treated than other enterprises, because, in effect, that reference will exempt them from a reference to the Monopolies Commission. That is not right.
Lord MELCHETT: I do not think I said that any consultations with the Director General of Fair Trading would
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exempt the National Enterprise Board from legislation which affected everybody else. In fact, I was particularly careful to say that the fair trading legislation applies to the National Enterprise Board, and I also prefaced my remarks about the consultations with the Monopolies Commission by saying that the National Enterprise Board would be subject to the full range of the monopolies and mergers legislation. There is absolutely no question about that.
What I am trying to do—and I am sorry to have got myself into trouble; I should have kept quiet—is to convince noble Lords opposite of how fair, reasonable, conciliatory and sensible we are being in the whole range of activities which the National Enterprise Board will be carrying out. We are going to take extra special trouble to make sure that the Board never even get into the position where they might be felt to be infringing this legislation, and therefore there will be prior consultation. But that does not detract from the fact that they will be subject to the same rules and laws as everybody else, where they are relevant.
Lord DRUMALBYN: I understand now what the noble Lord is saying. When he says "to make sure" he means do their best to take steps to ensure that this will not happen, so that here will not be a reference. He is not saying that there cannot be a reference afterwards. I take that point. I am sorry if I misinterpreted what he said, and I am glad that there will be this additional step taken before any merger can take place which may lead to investigation by the Monopolies Commission. Does the noble Lord wish to intervene?
Lord BESWICK: I think my noble friend had it absolutely right and I believe he satisfied the noble Lord, Lord Drumalbyn, but the noble Lord might like to take it into account because I think he was implying earlier that there would be some special arrangement between the Director General of Fair Trading and the NEB which was not accorded to other bodies. If he looks at Clause 76 of the Fair Trading Act 1973, it says:
"It shall be the duty of the Director to take all such steps as are reasonably practicable for keeping himself informed about actual or prospective arrangements or transactions

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which may constitute or result in the creation of merger situations qualifying for investigation."
Having kept himself informed, he makes recommendations to the Secretary of State if he thinks fit. He would be keeping himself informed by having consultations with the NEB, and he would warn the NEB that if they proceeded along this course it would be his duty to make a recommendation to the Secretary of State.
Lord DRUMALBYN: That is the other side of the coin. He is watching, and the Secretary of State is watching. I appreciate that. This was a probing Amendment and I beg leave to withdraw it.
Amendment, by leave, withdrawn.
Clause 2, as amended, agreed to.
Clause 3 [Exercise of Board of powers to give selective financial assistance under Industry Act 1972]:
5.10 p.m.
The Earl of BALFOUR The Earl of BALFOUR moved Amendment No. 39:
Page 3, line 37, at end insert ("and that direction shall not be varied without approval from the Select Committee on nationalised industries").
The noble Earl said: Unfortunately, this was a case where my Amendments were put down before those of the Government. But I am hoping that where the Secretary of State has given directions to the Board, the Board could not vary them without going back to someone—in my Amendment I named the Select Committee on Nationalised Industries. But I was concerned with the wording of that part which is being deleted in the next Amendment. I will be brief in my speech. I hope that the point I have tried to cover is covered by the next Amendment. I beg to move.
Lord BESWICK: I would suggest to the noble Earl, Lord Balfour, that this Amendment is unnecessary. The power to vary directions has been put in so that financial assistance can be withdrawn, or its terms varied, where appropriate. If the Secretary of State agrees to give assistance himself under the 1972 Act, he can withdraw it if he feels such a course is necessary. We are suggesting the same freedom should exist when assistance is channelled through the National
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Enterprise Board. Specific safeguards are provided in subsection (5) for companies receiving selective financial assistance through the National Enterprise Board. A direction from the Secretary of State varying or revoking a previous direction would not release the NEB from any contractual obligation to implement the initial direction. It will be for the other place to decide which Select Committee will oversee this particular aspect of the activities of the Board. It would not be within the competence of the House of Lords to say to a Commons Select Committee what it should investigate and what it should not.
The Earl of BALFOUR: Of course I did not wish to insult the other place. I wished to insert the Select Committee on Nationalised Industries because I thought that would be the most appropriate Select Committee, and I hope it is not taken as meaning any offence. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord MELCHETT Lord MELCHETT moved Amendment No. 40:
Page 4, line 3, leave out from beginning to ("nothing") in line 5.
The noble Lord said: With the permission of the Committee, I should like to speak to Amendments Nos. 52, 53 and 287 while dealing with this Amendment No. 40. These are all straightforward, tidying-up Amendments under which a general provision is made that the various powers for the Secretary of State to give directions to the National Enterprise Board, both general and specific (under Clause 6) or relating to the retention of interests in the media (under Clause 8) and for the Secretary of State to determine the Board's financial duties (under Clause 5), may be varied or revoked by subsequent directions or determinations. This is a standard provision which allows for the necessary flexibility in the exercise of control over the National Enterprise Board by the Secretary of State. It is probably already implicit in the powers to give directions and to make determinations, but I hope your Lordships will agree that it is desirable for it to be made clear. I beg to move.
Lord ABERDARE: Since this is a very appropriate Amendment, "leave out from beginning to 'nothing' ", we have no quarrel with it, although I have not been

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so clever as to look so far ahead at Amendment No. 287 to see why this Amendment was merely a tidying-up Amendment. However, I have no objection to it.
On Question, Amendment agreed to.
Lord MELCHETT: I spoke to Amendment No. 41 when I was speaking to Amendment No. 16. I beg to move.
Amendment moved—
Page 5, line 27, at end insert—
("(18) For the avoidance of doubt it is hereby declared, without prejudice to the generality of section 1(7) above, that powers exercised by the Board under this section are not exercised on behalf of the Crown or of any Government department.")—(Lord Melchett.)
On Question, Amendment agreed to.
Clause 3, as amended, agreed to.
5.15 p.m.
Lord MELCHETT Lord MELCHETT moved Amendment No. 42.
After Clause 3 insert the following new clause:
Overseas aid
". The Board may, with the consent of the Secretary of State, enter into and carry out agreements with the Minister of Overseas Development under which the Board act, at the expense of that Minister, as the instrument by means of which technical assistance is furnished by the Minister in exercise of the power conferred by section 1(1) of the Overseas Aid Act 1966; and the Board may, with the consent of both the Secretary of State and' the said Minister, enter into and carry out agreements under which the Board, for any purpose specified in the said section 1(1), furnish technical assistance in a country or territory outside the United Kingdom against reimbursement to them of the cost of furnishing that assistance."
The noble Lord said: The purpose of this Amendment is to ensure that the National Enterprise Board has power to make the skills and experience which it will develop available to Governments and other authorities and bodies of the developing countries, if it is invited to do so. The Minister of Overseas Development provides technical assistance as well as financial assistance to developing countries in a wide range of matters. This assistance includes the provision of experts, training, consultancy services, surveys, equipment and research. Many public bodies in Britain possess experience and skills which can be of value to developing countries, and my right honourable friend the Minister of Overseas
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Development, at whose request the Amendment has been put down, is anxious that as many as possible of such bodies should have the power to provide technical assistance overseas. A number of public corporations already have these powers. For example, the National Coal Board has helped a number of developing countries with its extensive knowledge and experience of mining technology; and the NEB's managerial and entrepreneurial skills might in due course be particularly useful to developing countries seeking to establish new industries.
There is no question of the NEB being obliged to comply with any request from the Minister of Overseas Development or from a developing country. The object of the Amendment is to ensure that there should be no legal obstacle to the assistance being provided, if all involved so desire in any particular case.
The new clause covers two rather different situations. The first is where the NEB and the Minister for Overseas Development enter into an agreement for technical assistance to be provided as part of the official British overseas aid programme, in which case the consent of the Secretary of State for Industry is required before the agreement is concluded. The costs would then be met out of the overall amount available for the overseas aid programme. The second provides for a direct agreement between the NEB and the Government of the developing country, or with some other appropriate body, including an international organisation, which would not form part of the aid programme, but for which the NEB would be reimbursed directly by the Government or organisation assisted. In these cases, the consent of both the Secretary of State and the Minister for Overseas Development would be required.
The provision of technical assistance overseas will of course be a very minor part of the NEB's activities, and in our view unlikely to occur at all in the early years of the Board's existence in which it establishes its organisation and develops its expertise over its wide range of duties and functions in the United Kingdom. In the longer term, the main practical application of the new clause, so far as can be foreseen at present, is for the NEB to be able to release staff for assignments in developing countries for the provision of technical advice and

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training. I hope your Lordships will agree that this clause is thoroughly worth while, and a constructive addition to the Bill. I beg to move.
Lord ABERDARE: We have no quarrel with this clause. However, I should like to ask whether this is consistent with Clause 1(7). This new clause allows the Board to act as the instrument of the Ministry of Overseas Development. Clause 1(7) says:
"It is hereby declared that the Board shall not be regarded as performing any function…as the servant or agent of the Crown…"
If, as the noble Lord, Lord Melchett, suggested, the Board is to act on behalf of, or in conjunction with, overseas companies, I wonder whether it would not be acting as the servant or agent of the Crown in such a case. Perhaps this is an unfair technical question to ask, but if the noble Lord would look at it, I should be grateful.
The Earl of BALFOUR: May I ask a second question? Should we not be considering taking better advantage of the facilities in the European Economic Community arrangements in this field, rather than trying to stand on our own feet? I sympathise with this Amendment, but I feel that with our present financial crisis it is, perhaps, not quite the right kind of thing, particularly where there are obviously costs involved.
Lord DRUMALBYN: Those of us who have spoken for the Department of Trade and Industry are of course, familiar with this kind of clause, and we have no objection to it, but on one understanding; that is, that the intention should not be that there should necessarily be any kind of channelling to the NEB of these operations for technical aid, or even between the National Enterprise Board and Governments. In other words, Her Majesty's representative abroad would not necessarily suggest that the best or only agency to help the overseas Government would be the National Enterprise Board.
I am sure it is not intended that this should be so, but I remember occasions when we have been handling legislation of this kind in the past. Those who give expert assistance of this kind, and are highly organisated to do so, would not be in any way by-passed. Indeed,
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it would be highly desirable that the National Enterprise Board should work with them, and possibly even direct foreign Governments towards them, rather than do the work themselves, where appropriate—I do not say in every case, but where appropriate. If that were so, I do not think anything but good could come of this, but I think it is important that one should not envisage the building up of some kind of nationally-sponsored expertise of this kind. When Governments are giving advice to foreign Governments on whom they should employ, they should be very careful always to advise the best firm for the job and not necessarily a firm because it has public money in it.
Lord MELCHETT: I certainly take the point the noble Lord, Lord Drumalbyn, has made, and, of course, it would always be our view that the people most suited to do the job should do it. The purpose of this Amendment is merely, as I have said, that where it is felt that the National Enterprise Board have some appropriate skill or expertise to offer countries overseas should not be denied it. To turn to the point the noble Lord, Lord Aberdare, made, I think I am right in saying we have now amended Clause 1(7) by Amendments Nos. 16 and 17, which I moved and your Lordships accepted. In line 11 we deleted the words "servant or agent of" and in the next line we deleted the words "or any government department". I understand that with these Amendments, which we have already accepted, this new clause is now in line with Clause 1(7).
The noble Earl, Lord Balfour, raised the question of working with the EEC. Of course, we would hope that that would continue and expand, but I think the point is still valid that the skills and expertise which the National Enterprise Board will have should be available, when they are particularly appropriate, to countries overseas.
Lord ABERDARE: I think the noble Lord is not quite right, because we have not removed the words "servant or agent". I agree that we deleted the words, "or any government department". It now reads, so far as I know:
"It is hereby declared that the Board shall not be regarded as the servant or agent of the Crown…"

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It struck me that when dealing with an overseas Government, that overseas Government might consider, if the Board were acting on behalf of the Ministry of Overseas Development, that they were indeed dealing with a Crown body. I do not want to press it any further. I am sure the noble Lord will look into it.
On Question, Amendment agreed to.
5.25 p.m.
The Earl of BALFOUR The Earl of BALFOUR moved Amendment No. 43:
After Clause 3, insert the following new clause:
Appeal against the decision of the Board
".—(1) A body corporate, industrial undertaking or any person having an interest in a decision made by the Board in the exercise of its functions under section 2 or of powers conferred on it by section 2 or 3 above may at any time within a period of not more than four weeks from the date of the decision appeal to the Secretary of State against that decision.
(2) An appeal under this section shall be made by notice in writing to the Secretary of State, which shall indicate the grounds of the appeal and state the facts on which it is based; and on any such appeal the Secretary of State shall, if either the appellant or the Board so desire, afford to each of them an opportunity to appear before, and be heard by a person appointed by the Secretary of State for the purpose.
(3) Where an appeal is brought under this section from a decision of the Board, the Secretary of State may allow or dismiss the appeal, or may reverse or vary any part of the decision of the Board, whether the appeal relates to that part thereof or not, and may deal with the decision as if it had been made by him in the first instance.
(4) Where an appeal is brought under this section, the decision of the Board shall be of no effect pending the final determination or the withdrawal of the appeal.
(5) The decision of the Secretary of State on any appeal under this section shall be final."
The noble Earl said: A great deal of discussion took place in another place to the effect that there should be provision for an appeal against any decision that the Board may make. I have worded this Amendment very tightly so that there is no doubt whatever that the Secretary of State has the final say. But I feel that in anything of this nature, particularly in its first few years of operation, it is terribly easy for something to go wrong, and I hope that some appeal procedure can be provided for where there is disagreement.
This kind of appeal could even arise by controversy, which can happen in the best of organisations, between the National Enterprise Board and, say, the Scottish or Welsh Development Agencies. Without being specific, they both have functions under Sections 7 and 8 of the Industry Act 1972. Equally, it might very easily arise where there is a case of a great deal of unemployment in one area; the National Enterprise Board could come in and invest and develop some industry in that area that might have the subsequent effect of putting people out of work in another area. Let us be slightly more specific. Supposing there was a development of a certain new process of making paper, and they decided to back this up and gave tremendous advantage, say, to one of the leading paper companies like Wiggins Teape. It might then be detrimental to one of the main competitors, say the Inveresk Paper Group. If in that case the Inveresk Paper Group can go to the Secretary of State and appeal under the provisions of this clause, I hope that that will lead to democracy, not to the Board completely dominating the position, which it might otherwise do. I beg to move.
Lord LOVELL-DAVIS: With the greatest respect to the noble Earl, we feel that an appeals procedure of this sort would have some justification only if the NEB had powers of compulsion, or perhaps if they enjoyed monopolies enabling them to operate unfairly against other concerns. As has been made clear repeatedly in this Committee, the NEB will have no such powers or privileges. But to be effective the NEB must be able to operate with the same degree of freedom as a private sector body, against a background of accountability to the Secretary of State and through him to Parliament. The NEB will be subject to the City Code on Takeovers and Mergers, to the Fair Trading Act, and all the appropriate provisions of commercial law.
This Amendment would set up a procedure which, as drafted, could be used by any competitor to delay all commercial decisions by the Board and thus act as a means of harassment to the NEB in the day-to-day execution of its functions. It may be conceived as a means of protecting companies against takeover bids by the Board, but if the NEB decide

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to make an offer for shares in the company, the owners of the shares will be in exactly the same position as they would be if a private concern were making the offer. Under Clause 9, the Secretary of State's consent is necessary for any action of the NEB whereby they would, under the City Code, be in a position in which they were obliged to make a full takeover bid. The rights of individual shareholders are adequately protected. There is no need for an appeal to the Secretary of State, who would in the case of a takeover bid already have authorised the Board's actions.
The Earl of BALFOUR: At the very last the noble Lord said that the Secretary of State would have given the directions. I was under the impression that the Board could well act on their own after being given a broad direction. It is the very last words that the noble Lord said that I feel I should like to question again.
Lord LOVELL-DAVIS: In the matter of a take-over bid, yes, the Secretary of State would have to authorise the Board's actions. I do not know whether that is the point the noble Earl is querying.
Lord DRUMALBYN: What perhaps my noble friend has in mind that the Secretary of State should hear the other party before making up his mind in the case of a take-over of this kind.
Lord LOVELL-DAVIS: I think that the Secretary of State would no doubt take all matters into consideration, but what is being proposed here is an automatic right of appeal. That is a very different matter indeed.
The Earl of BALFOUR: I shall obviously withdraw this Amendment, but I should like to think that there is no way whereby the National Enterprise Board can act unfairly without the individual being able to go to the Secretary of State. If they could assure me of that, I should not take it any further. I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
Clause 4 [Transfer of publicly-owned property to Board]:
5.32 p.m.
Lord ABERDARE Lord ABERDARE moved Amendment No. 44:
Page 5, line 32, leave out from beginning to ("of").
The noble Lord said: I beg to move Amendment No. 44, and perhaps I may speak also to Amendment No. 46 as it is on the same point. The clause refers to the transfer of publicly-owned property to the Board, and it goes on "or the Board's nominees". Equally, subsection (2) states:
"Publicly-owned securities and other publicly-owned property may only be transferred to the Board or the Board's nominees with the consent of the Secretary of State…".
What I am seeking to find out is who are the Board's nominees, and whether it is desirable that there should be power to transfer publicly-owned property to their nominees. I beg to move.
Lord MELCHETT: The words that these two Amendments seek to delete were added to the Bill by the Government in another place because of a technical defect in drafting. Section 1(1) of the Companies Act 1948 provides that a company must consist of at least seven persons (or at least two in the case of a private company). When one company is wholly-owned by another, nominees of the controlling company must therefore hold some of the shares in the subsidiary for the requirements of the 1948 Act to be fulfilled. Thus it is also necessary for some shares in companies which are 100 per cent. owned by the Government (such as Rolls Royce 1971) to be transferred to the nominees of the NEB as well as to the Board, since in law the Board is one person. I hope that this answers the point which the noble Lord raised.
Lord ABERDARE: Yes, I understand. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord DRUMALBYN Lord DRUMALBYN moved Amendment No. 45:
Page 5, line 33, at end insert ("but any property or securities owned by any organisation established by Act of Parliament or by any of their subsidiaries shall not be transferred except with its consent to the transfer and to the terms and conditions on which the property or the securities, as the case may be, are to be transferred.").
The noble Lord said: We are here talking of the transfer of publicly-owned property and securities to the National Enterprise Board, and the purpose of this Amendment is to get some explanation from the Government of the policy they envisage in regard to transferring property or securities owned by nationalised industries, or by subsidiaries of nationalised industries, to the National Enterprise Board holding company. I understand that it is the intention to transfer publicly-owned securities in firms like ICL to the NEB or a holding company for that kind of operation. But do publicly-owned securities include holdings in subsidiaries of nationalised industries, whether wholly owned or part owned? If so, is it the intention that some of these subsidiaries, or shares in subsidiaries, should be transferred from the nationalised industries to the NEB, and will this be done with the consent of the nationalised industry or by direction, which power I understand Ministers possess under other Acts?
If it is with their consent, obviously the price to be paid is a vital consideration in the negotiations. Nobody will consent unless he thinks he is getting the right price for what he is disposing of. This is not like transferring non-revenue-making assets. We have often had discussions in this House on local authority Bills about the transfer of non-revenue-making assets from one local authority to another. It is nothing like that. Whenever we suggested that in some cases nationalised industries might do better to dispose of some subsidiaries, noble Lords opposite never tired of pointing out that the nationalised industry might lose some profitable assets. We explained that they would be paid for the assets and securities disposed of and so would be able to reduce their debts, and if the subsidiary was profitable the price paid for the assets would have reflected their profitability. I say that because the noble Lord made a slightly quizzical smile.
Lord BESWICK: Before the noble Lord leaves that point (because I am interested in this) may I ask him to tell me what was paid by British Caledonian for the assets involved in the West African routes when they were transferred from British Airways to British Caledonian?
Lord DRUMALBYN: I remember arguing at great length that it was a licence that was transferred and that that was not an asset. It seems incontestable that the price should be agreed before the assets are transferred, since the price is material to the transfer of assets. I appreciate that in cases other than nationalised industries this may not always be possible, and I have no doubt that is why the noble Lord is about to move some Amendments on the Marshalled List. I hope that the noble Lord will be able to tell us that transfers from the nationalised industries will fall under subsection (4), as he proposes to amend it, and not under his new subsection (5). I beg to move.
Lord SLATER: There is one thing that can be said, and that is that the noble Lord, Lord Drumalbyn, and the members of the Party to which he belongs are consistent in their approach to legislation. I should like to take the noble Lord's mind back to what they did with a nationalised undertaking, the Coal Board. The Coal Board had attached to it certain subsidiaries; it had pig flats, farms, et cetera, and these subsidiaries were making profitable returns. It was under the direction of the Government at that time that such assets were taken away from the National Coal Board and disposed of into other forms of operation, under new ownership. If I follow the Amendment as moved by the noble Lord, I begin to wonder whether a nationalised industry which has these most profitable assets will be forced into a situation where it must get rid of them and pass them on to this new Board that is to be set up.
My second point—if my noble friend will bear with me for a moment or two—is one in which I am very interested, because of other matters which I should like to mention regarding conciliation and so on. It is in regard to the National Health Service on which we had a Question on the Order Paper today. At one time in this country, under local government administration many hospitals had their own farms. I have in mind two hospitals in the constituency which I represented. They had four farms and then they received instructions through the Ministry of the noble Lord's Government that they had to dispose of their farms by sale to the highest bidder. This meant a

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great loss to the hospital service and to the patients. In one mental hospital there were over 2,000 patients who were receiving a form of treatment appropriate to the nature of their complaint, and the work which they did under proper supervision was taken away from them. When the noble Lord proposes this type of Amendment I begin to wonder where we stop, and where there will be enforcement in regard to nationalised industries which have these subsidiary undertakings. Are they to be taken away from them, if it can be proved that they are assets to an industry, to be passed on to the NEB?
Lord DRUMALBYN: I thank the noble Lord for what he has said, but I do not think he has understood the purport of the Amendment. I was inquiring what was to be the policy of Her Majesty's Government in regard to the transfer of assets from nationalised industries. I was neither advocating it nor discouraging it. I was merely asking what the policy would be, and I suspect that in any case it would have to be manufacturing assets and not farms.
Lord BESWICK: I, too, wondered a little about the solicitude of the noble Lord for public enterprise, but I can give him the assurance for which he asked. This clause—indeed the Bill—does not empower the NEB to acquire compulsorily the assets of a nationalised industry, nor does it empower the Secretary of State to take away any property from any organisation established by Act of Parliament, without the agreement of that body. If any transfer of assets is proposed by the Board, there would be a normal commercial transaction to effect it, subject to the consent of the Secretary of State in the appropriate manner as specified in the clause. If any transfer were proposed by the Secretary of State, he would have to obtain the agreement of the transferor. I can therefore assure the noble Lord that the Amendment is unnecessary. It may be desirable for certain of the assets of the nationalised industries to be transferred to the NEB. I cannot think of any at the moment, but there could be peripheral activities more closely allied to the activities of the NEB than those of the public corporation concerned. In that case it would, as I say, be a matter for consultation and agreement.
Lord DRUMALBYN: I am grateful for what the noble Lord has said, but I still attach importance to the necessity for having this agreed under subsection (4) and not subsection (5). It seems to me absolutely vital that there should be agreement on price before there is any question of transfer. I think that in making it clear that there is no power to acquire compulsorily, and that there is no intention on the part of any Minister of directing that any of these assets should be transferred to the NEB, the noble Lord has gone a long way towards satisfying me. It is interesting to note that this is put not in the active sense that the Minister will transfer, but that transfers may be made—it does not say from whom it leaves it wide open—of any aspect of publicly-owned assets. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord LOVELL-DAVIS Lord LOVELL-DAVIS moved Amendment No. 47:
Page 5, line 41, leave out from beginning to ("shall") at page 6, line 1, and insert—
("(4) Subject to subsections (5) and (6) below, if—

(a) the Secretary of State has given a consent under subsection (2) above; and

(b) the consideration for the transfer has been determined; and

(c) its amount exceeds £1 million, the Secretary of State").

The noble Lord said: Amendments Nos. 47 and 48 are proposed with the transfer of Government-owned property in mind. They are designed solely to fill a loophole which has been discovered in the provision requiring a statement to Parliament when the Secretary of State gives his consent for the transfer to the Board of publicly-owned property worth more than £1 million. It is possible that some of the publicly-owned shareholdings will be transferred to the Board, before the Board and the Government have reached agreement on the capital debt to be assumed by the Board as a result of the transfer.
It is clearly desirable that the Board's expertise should be brought to bear on the Government's shareholdings as soon as possible, but the valuation of shareholdings (particularly when they are not publicly quoted) can be a complicated and time-consuming business. With the Bill as it now stands, the Secretary of

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State could defer his statement to Parliament until the consideration for the transfer had been determined. The Government feel that Parliament is entitled to know about the transaction without such delay, so the Amendment provides for Parliament to be informed of everything other than the consideration, and for the consideration to be reported later. I beg to move.
On Question, Amendment agreed to.
Lord LOVELL-DAVIS Lord LOVELL-DAVIS: I beg to move Amendment No. 48.
Amendment moved—
Page 6, line 6, at end insert—
("(5) If the Secretary of State has given a consent under subsection (2) above before the amount of the consideration for the transfer has been determined, he shall lay before each House of Parliament, unless it appears to him to be unlikely that the amount of the consideration will exceed £1 million, a statement specifying the matters, other than the consideration, that are required to be specified in a statement under subsection (4) above.
(6) When a statement has been laid under subsection (5) above, the Secretary of State shall lay before each House of Parliament a statement specifying the consideration for the transfer as soon as practicable after its amount has been determined.").—(Lord Lovell-Davis.)
On Question, Amendment agreed to.
Clause 4, as amended, agreed to.
Clause 5 [Financial duties of Board]:
The Earl of BALFOUR The Earl of BALFOUR moved Amendment No. 49:
Page 6, line 14, at end insert—
("( ) The Treasury shall not give approval to a determination in subsection (2) above, which would enable the Board to use more than 7 per cent. of the maximum amount available under subsection (1) of section 7 in carrying out any powers in subsection (4) of section 2 in any one industry, unless it has been approved by resolution of the House of Commons.").
The noble Earl said: This Amendment is designed to ensure that the Board spread out some of the money which they can use, rather than limit it to any one company. Seven per cent. of the £700 million that would be available under Clause 7 would amount to £49 million, or £70 million if they had the higher figure. That limits the Board to being involved with no more than 14 companies and uses up almost the whole amount. I am still concerned that the Board could take a rather
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unfair advantage in the stock market and acquire a tremendous holding in one company. I hope that this will not happen, but I feel that under the wording of the Bill as it stands it could. I feel that the House of Commons, which deals with financial matters, should have the final say in any decision of this nature.
Lord MELCHETT: I was hoping that the noble Earl intended to give a rather more detailed explanation of where he got the figure of 7 per cent.; he obviously has a particular attraction to multiples of seven, because he is limiting the NEB to 14 companies. However, I think the noble Earl slightly misunderstood the purpose of this clause and the determinations made under it.
The purpose of Clause 5 is to enable realistic financial targets to be set for the NEB by the Secretary of State and the Treasury. It may be necessary to set different objectives for different types of activity or for different subsidiaries or groups of subsidiaries, because the Board will have such a wide range of activities. Different objectives may be necessary for assets acquired at the initiative of the Board and those vested in them by the Secretary of State, as an example. It may be necessary to distinguish between investment in profitable industry and investments made in order to promote reorganisation which may not be profitable for the first few years, and between investments in wholly-owned subsidiaries and those in companies which the Board do not control, and that is the purpose for the determinations made under this clause. I hope that that has put the matter straight for the noble Earl, and that he will feel able to withdraw the Amendment.
The Earl of BALFOUR: I wanted to ensure that the Board could not spend too much of their money on one enterprise. Having been reasonably satisfied by the noble Lord's reply, I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
5.53 p.m.
The Earl of BALFOUR The Earl of BALFOUR moved Amendment No. 50:
Page 6, line 17, leave out ("taken together").
The noble Earl said: This is a probing Amendment, because I do not quite understand the meaning of the provision

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as drafted. When the phrase "taken together" is used, is it the Secretary of State and the Treasury taken together, or is it the Board and the Secretary of State or the Board and the Treasury? I am sorry to have to put it in such an obscure way, but I do not understand the expression "taken together" and I move the Amendment to discover with whom or with what these aspects are taken together.
Lord BESWICK: What should be taken together are the activities of the NEB. The requirement is that they shall have an adequate financial return on monies invested and that is "taking together" the activities of the NEB. Some activities may be very profitable, others less so, and it may, as my noble friend Lord Melchett said, on occasion be advantageous to take over or invest in something which at the moment is not profitable, but which eventually may become profitable. Taken together, all these investments must provide an adequate return.
The Earl of BALFOUR: I am grateful to the noble Lord for that explanation and I beg leave to—
Lord DRUMALBYN: Before my noble friend seeks to withdraw his Amendment, may I ask the noble Lord, Lord Beswick, whether he is right in saying that it is the activities which should be taken together? I thought it was the financial duties which should be taken together.
The Earl of BALFOUR: I, too, would like that question answered.
Lord BESWICK: I think the noble Lord, Lord Drumalbyn, has asked that question having read the rubric to the clause. The answer is that the financial duties are related to the activities.
The Earl of BALFOUR: I am grateful to the noble Lord for that explanation, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord ABERDARE Lord ABERDARE moved Amendment No. 51:
Page 6, line 19, at end insert ("and that these duties are in accordance with the practice of fair competition in any case in which
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any private enterprise is in competition with any public enterprise").
The noble Lord said: While we are discussing the question of fair competition, perhaps it would be convenient if we discussed at the same time Amendment No. 58, which also deals with it. Unfortunately, there is a misprint in Amendment No. 58; the reference to "subsection (3) above" in the final paragraph should read "subsection (b) above". Consistently throughout the Committee stage, today and yesterday, we have heard from noble Lords opposite that the Board will compete with private industry but only in a fair way, and there is no question that they will indulge in any form of unfair competition. I have had, and have expressed, some doubts about whether it is possible to decide what is fair competition between a company backed by the NEB and a company in the private sector, but I am not concerned with that at the moment. What I am concerned to see is that the various assurances given by noble Lords opposite are expressed in the Bill.
We have repeatedly said that there is a feeling of doubt and worry on the part of the private sector of industry about the arrival of the NEB in their midst, and we have continually asked for some concessions to be made by the Government to try to ease that anxiety and so increase the confidence of the private sector in the actions of the NEB. To my mind, there is no doubt that to write into the Bill some requirement on the NEB that they should observe the rules of fair competition where private enterprise is in competition with public enterprise would be a big step forward, and it is for that reason that Amendment No. 51 has been tabled.
I hope the Government will feel able to accept this Amendment. They have asked for constructive Amendments, but we have not yet succeeded in having one accepted without a Division. This Amendment may not be in the right place and possibly it is not even correctly worded, but whatever its deficiencies may be I ask sincerely whether the Government would not accept the principle that underlies it; that somewhere in the Bill there should be a requirement on the Board to fulfil their duties in accordance with the practice of fair competition. We go on to Amendment No. 58, which gives

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the procedure whereby a private company which feels it has been adversely affected because of unfair competition could have some recourse to the Minister, who could take action and appoint a referee, as it were, a person to hear the complaint and the Minister could then take action if that person found that there had been unfair competition. I need not go through that Amendment in detail, because clearly set out is our proposal for this procedure. I hope that both Amendments will appeal, at least in principle, to the Government. I beg to move.
Baroness WOOTTON of ABINGER: Could the noble Lord make it clear why he is so sure that unfair competition will be only one way round? It has been known for large private enterprises to sell below cost in order to extend their markets.
Lord ABERDARE: What I am talking about is something new. We have not had this type of National Enterprise Board before, and it has caused a very great deal of apprehension in the private sector. What I am trying to do is restore confidence in the private sector. If the noble Baroness cares to put down another Amendment on her point, of course we shall consider it.
Viscount MASSEREENE and FERRARD: May I give an example of unfair competition? Where I farm in the West of Scotland, one is not allowed to take one's stock to market except in Government lorries, unless one owns a lorry. One cannot hire a lorry from a private firm. That is a complete State monopoly. It applies also to the steamers. I would call that unfair competition and when one has State monopolies which control all the electricity and the power, the noble Baroness will know how the public can be blackmailed as a result.
Lord HARMAR-NICHOLLS: The noble Baroness raised a point which, if left just like that, might give the appearance that there is another side to the coin which was so clearly described by my noble friend Lord Aberdare. If a private concern, by operating what is known as a "loss-leader"—selling an item at less than the true price in order to gain custom—does not judge the price level correctly and overdoes the reduction, it
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has to pay the cost by going bankrupt or getting into financial difficulties. On the other hand, if the body concerned is supported by rates or taxes, it may be encouraged to try to scoop the market by loss-leading or something of that kind and it will not have to bear the pain of overdoing it. I believe that that is a real distinction which should be borne in mind in listening to the comments of the noble Baroness which, if left alone, might seem impressive.
There are many examples of this, though not on the scale that could flow from the rather bigger agencies we are discussing now. For instance, I have always been very concerned that, at a time when the hotel and catering industry is facing great problems in terms of costs, rate increases and all the expenses which go with the trade, we should, in a university town during the vacations, have the universities—which do not have to set alongside their costs when competing with private enterprise the cost of rates and staffing, which come under the student section—competing with private enterprise. I do not want to discourage students from playing a part in the vacation nor to prevent the universities from trying to cover some of their expenses in this way, but I have always felt it a little unfair to the private traders, who have to pay their rates and taxes and who have to pay wages according to the rate set down by the Department of Employment, to have to meet this sort of competition which is really financed out of public funds.
We have an example in the Palace of Westminster. Many may not approve of the outside catering which has now been brought to the Palace of Westminster; though they will understand that, in order to keep the price of food at something like a level we can pay, that perhaps adds a little to the budget. But in this great city we have private industry which operates under great expense and with heavy commitments and, if it has to meet the competition of the Palace of Westminster, which does not have to pay rates or the overheads which go with other businesses, I think it unfair.
I quote these only as examples of the way that, even when it is well intentioned, one can kill the goose which lays the golden egg; that is, the private enterprise concerns which, at the end of the day, by

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their tax on profits and their rates, are usually paying for the upkeep of all these very desirable things. I believe that my noble friend Lord Aberdare was on a very fair wicket when he put it to the Minister that a provision ought to be written in to try to minimise the possibilities of this unfairness. It would not be deliberately intended. I gathered from the tone of my noble friend's words that he was not suggesting at this stage—though I do not rule it out as a risk—that anyone would deliberately undercut in order to bring down the private enterprise system. He is not arguing that. What my noble friend is saying is that—and I think the tone made it perfectly clear—it might be that an over-enthusiastic officer could, inadvertently and quite innocently, be doing things by using public money which would be unfair to private enterprise people who have not the same resources to fall back upon—resources which really do not belong to the people who are making use of them in this way.
I hope that, in answering the very reasonable plea made by my noble friend, the Minister will, in that spirit of trying to give confidence to the private enterprise industries, say that there will be no innocent or inadvertent unfairness and that this will be done by writing into the Bill that we must be very careful. I should have thought that the case was well made. I feel that it is very desirable and well within the spirit of what Ministers have been saying about the Bill during recent months.
Lord LOVELL-DAVIS: These lengthy Amendments basically follow Section 30 of the Iron and Steel Act 1967—a section which, incidentally, was repealed by the last Conservative Government.
Anyway, the 1967 provision was designed to meet a unique situation in which the private sector steel companies were competing with the nationalised sector in sales of finished steel and, at the same time, were dependent on it as a monopoly supplier of supplies of semi-finished steel. The NEB's position is in no way analagous, because they will have no monopoly power and will operate in competition with the private sector. The noble Viscount, Lord Massereene and Ferrard, quoted an instance which has
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nothing to do with the NEB. We are not talking about a State or any other monopoly. We are talking about the National Enterprise Board, who are not a monopoly. As we have said many times this afternoon, the full range of fair trading legislation will apply to the NEB, so that in their dealing with both publicly and privately-owned industry, they will be bound by all the existing legislation aimed at preventing restrictive trading practices.
The proposed Amendments make no attempt to define an unfair practice. Anyone losing a contract to the NEB or in any way bested by them could allege unfair practices, which could have a psychologically inhibiting effect on the public sector. As my noble friend Lady Wootton has said, there is no reason why this provision should apply only to unfair practice by public sector enterprises. Why should it not apply equally to unfair practices by the private sector? In any case, I am advised that the Amendments are technically defective. "Public enterprise" is defined to include all nationalised industries, yet the procedure requires all complaints to be dealt with by the Minister vis-à-vis the NEB. I am afraid that we cannot accept the Amendment.
Lord ABERDARE: I was not expecting that the noble Lord would accept the Amendment, but I was expecting that he might have been a little more helpful, in view of the way in which I moved the Amendment, in going some way to meet a proposal of this sort which would emphasise that the Board would compete fairly with private industry. When that has been said time and time again by noble Lords opposite, why cannot we put it in the Bill? I accept that it might not be all that effective and that one might not be able to carry it too far. All I am telling the Minister is that it would cause a great deal of anxiety to be removed from private industry if the assurances which have already been giver, could be put into the Bill.
Lord BESWICK: Why is the noble Lord so doubtful about the efficacy of the fair trading legislation?
Lord ABERDARE: Probably that is rather more formal than the fair trading I am thinking about. That covers certain

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activities only, and I wonder whether it is quite sufficient for what I have in mind, though I shall consider that point. I do not wish to press the Amendment at this stage. I should like to give the matter further thought and possibly return to it at a later stage. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord MELCHETT: I spoke to Amendments Nos. 52 and 53 with Amendment No. 40. With the leave of the Committee I should like to move them en bloc. I beg to move.
Amendments moved—
Page 6, line 22, at end insert ("and").
Page 6, line 23, leave out from ("provisions") to end of line 24.—(Lord Melchett.)
On Question, Amendments agreed to.
Lord ABERDARE Lord ABERDARE moved Amendment No. 54:
Page 6, line 24, at end insert—
("( ) shall specify the financial criteria for any decision of the Board on the making of any investment (otherwise than under section 7 or section 8 of the Industry Act 1972) in any enterprise, by indicating the minimum projected earnings of the investment required calculated on a discounted cash flow basis in real terms being a percentage equal to the text discount rate of the Treasury in operation at the time of its determination").
The noble Lord said: I beg to move Amendment No. 54 and I should like to speak to Amendments Nos. 55, 56 and 57. These are Amendments concerned with the gist of this clause. The clause states that the Secretary of State has a duty "to determine the financial duties of the Board", but it does not go very much further in defining what those duties shall be. The White Paper on which the Bill is based said that the National Enterprise Board are expected to operate in accordance with suitable financial objectives. Their financial objective will be to secure an adequate return on that part of the nation's capital for which they are responsible.
What I am trying to probe from the Government through these Amendments is what are these suitable financial objectives and what is an adequate return on capital. The noble Lord, Lord Melchett, in reply to my noble friend Lord Balfour on Amendment No. 49, went a
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little of the way and told us something about the Government's concept of an adequate return. He spoke of different returns in respect of different companies operating within the NEB ambit. Is it possible to go further in explaining how the financial duties laid on the Board will be determined?
Amendment No. 54 is intended to bring the Board into line with the nationalised industries generally and with the specific reference in the White Paper of November 1967, Nationalised Industries, a review of the economic and financial objectives. The Amendment refers to a "text" rate of discount. It should read "test discount rate". There is a textual mistake there. It refers to a test discount rate of the Treasury. The object of this Amendment is therefore to bring the Board within the same kind of overall framework as the nationalised industries so far as return on capital is concerned.
The next two Amendments, Nos. 55 and 56, are alternative ways of making a determination of this financial return. Amendment No. 57 stands on its own in requiring the Board in their annual report to specify how they have fulfilled their financial duties in the course of the year. I hope that the noble Lord may be able to help us towards the ideas that are set out in Amendments Nos. 54 to 56; but I hope that, in any case, he will be able to assure us that, whatever the financial objectives laid on the Board, they will be reported on in the annual report according to Amendment No. 57.
Lord BESWICK: I am sure this is another example where the noble Lord, Lord Aberdare, is trying to be constructive and I have considerable sympathy with the intention of the Amendments now before us. The difficulty is that although I agree with what he is after, if I may put it that way, these are not really matters which are appropriately included in legislation. As part of satisfying themselves that the duties they are imposing will result in an adequate overall rate of return on capital employed, the Government will require the Board to adopt a realistic test discount rate in assessing the desirability of investments. We will be discussing financial criteria and targets for the Board with the NEB organising committee.

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The evaluation of the projected rates of return on investments, as the noble Lord will probably understand, is not as simple as the Amendments suggest. It would be difficult to provide a form of words that would cover the range of eventualities which the NEB could have to face. The White Paper pointed out that financial arrangements would have to be carefully worked out to safeguard against uneconomic allocation of the nation's resources. The Amendments before us seek a minimum rate of return on the Board's capital of 5 per cent. in real terms. Acceptable rates of return on capital vary from industry to industry, and it would not be sensible to specify arbitrary definitions of an adequate return without reference to the types of activity which the Board undertake.
The noble Lord—and I am trying to call attention to the contradictions in the argument opposite—has indicated that on occasion it will be necessary to take an interest in or take over by agreement an organisation or a company which is not showing the necessary rate of return over a given time. Obviously different criteria will have to be applied in that case and life will be made difficult if we are to accept the policy of noble Lords opposite that when you get an adequate rate of return is the time when you should hand it back to the original owners.
Leaving that aside for the moment, I am trying to put it to the noble Lord that we are concerned with a somewhat complicated commercial exercise. The overall principle is that there should be a proper rate of return; and techniques have been evolved by the Treasury and by the sponsoring Departments for measuring and analysing the rate of return on investment of nationalised industries. That kind of technique will be applied in the case of the NEB. As an additional argument in trying to persuade the noble Lord that we are not unaware of the points that he is making, I would call his attention to Schedule 2 where he will find that the financial duties are set out in some detail.
Lord ABERDARE: I am grateful to the noble Lord. He has taken a great deal of trouble to answer the points I raised. Will these determinations be known generally and published or will
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they be presented to Parliament? Will they be in the annual report and will the annual report reflect the way in which the Board is fulfilling the different standards setting these cases?
Lord BESWICK: I should be misleading the Committee if I said that the form and content of the annual report has been determined already. That is not so. The Prime Minister has given an undertaking in one case, that of British Leyland, that there will be in the annual report the sort of information that people are asking for and the noble Lord is asking for. That was in the case of a very major investment. I can see that there could be smaller operations where it would be unsuitable or impracticable to include such information in the annual report. The general idea, I hope—and certainly this is the point I would express to my colleagues—is to give the maximum information possible in the annual report; but I could not give a guarantee in every case that all the detail that noble Lord has asked for will be set out.
The Earl of ONSLOW: In the annual report of the various companies would it be possible to separate in the financial account the amount put in for social and employment purposes? We do not like it, but it has been accepted by Parliament that the NEB should take over profitable firms. Those should be run, as is done by private industry, to make a profit. The NEB are also going to take over certain lame ducks which perhaps can never be made profitable. Can one have a separation of the social monies and the financial monies involved?
Lord BESWICK: We have made clear at earlier stages that this is exactly what will be done. Any activity undertaken at the behest of the Secretary of State through the provisions of Sections 7 and 8 of the 1972 Act, which involves the social consideration that the noble Earl has in mind, will be set out separately. Otherwise one would be detracting from the incentive which we wish the Board to have.
The Earl of BALFOUR: As my noble friend Lord Aberdare has spoken to other Amendments and mentioned Amendment No. 57, may I say a word on that? This is an important point. The Board are involved with public money and I would appreciate it if something on the lines

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of Amendment No. 57 could be considered by the Government, even if they do not accept that wording. It is basically a good Amendment and a lot of thought has gone into it. Parliament has a right to know where the Board have made a success or have not made a success. I feel it is possible, as the Bill is worded, for the Board to be rather secretive. I can understand this if they are acting commercially; this can be desirable in some cases. But as it is public money a full report of their activities is something of importance.
Lord BESWICK: I do not think I can add to what I have said to the noble Lord, Lord Aberdare. There will be a full report, and in that report there will be set out separately those activities which have been undertaken under the provisions of the 1972 Industry Act. Financial targets will have to be determined, and I am fairly confident that they will be published. The noble Earl spoke about secrecy; he is being unduly suspicious. There could be cases where confidential dealings of companies should not be set out in the annual report. But the idea will be to give the fullest possible information.
Lord ABERDARE: I am grateful to the noble Lord for his assurance. There is nothing in the clause which mentions any public knowledge of these determinations. The Secretary of State makes the determination with the approval of the Treasury and, after consultation with the Board, gives the Board notice of determination. The noble Lord has given us the assurance that in all normal circumstances this will be fully reported in the annual report, and I am satisfied with that assurance. I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
Clause 5, as amended, agreed to.
Clause 6 [General power of Secretary of State to give Board directions]:
6.25 p.m.
Baroness WARD of NORTH TYNESIDE Baroness WARD of NORTH TYNESIDE moved Amendment No. 59:
Page 6, line 26, leave out ("or specific")
The noble Baroness said: This is a small Amendment asking the Government to remove two words, "or specific". I
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hope that if I move the Amendment satisfactorily the Government will be able to acquiesce. Appropriately, in setting up statutory bodies it has been usual in the past to provide that Ministers should give only general directions. As an example, I want to quote the Gas Act 1972. I shall not read out all the details, because I imagine that the Gas Act 1972 will be very well known to Ministers opposite. I am sure the Committee will be delighted that I am not going to read out the details.
Several Noble Lords: Hear, hear!
Baroness WARD of NORTH TYNESIDE: I am glad about that! Using the words "or specific" has many disadvantages. Can the Minister explain in some detail the alteration in the Industry Bill? It seems a little odd that suddenly in this Bill the words "or specific" have been added. It seems to me rather extraordinary that in this new Bill which already contains many powers, the Board seem to be taking more powers. Having listened in very great detail for a long time to all the points which have been made, it seems to me that the Minister has enough new powers in the Industry Bill without waiting to add any more. I should have thought he would have been happier if he just had the usual powers of giving general directions, and I find it difficult to understand why he should suddenly want to take any new powers. Apart from that, there are certain very real disadvantages in the words that I am trying to remove by my Amendment. It is worth noting in passing that the powers in the Gas Act are given so that directions may be made in relation to matters which appear to the Secretary of State to affect the national interest. I am sure, from the general discussions that have gone on both on this side of the Committee and the Government's side of the Committee—
Lord DAVIES of LEEK: Will the noble Baroness give way?
A noble Lord: Why?
Lord DAVIES of LEEK: Because this is an absolutely vital point. In the Gas Act there is not the expression "after consultation with the Board". The Secretary of State cannot take these specific or general activities without first—and it is in the next clause of the Bill—having

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consultation with the Board. That is not in the Gas Act.
Baroness WARD of NORTH TYNESIDE: That is very interesting indeed; but I must move my Amendment in the way I want to move it. I was trying to get the agreement of the Government, not the agreement of the noble Lord opposite. I thank him very much indeed for the point he has made. He has as much experience as I have in politics, and one knows that in politics one can always produce an answer. I am trying to persuade the Minister to deal with the matter, and I must now go on with what I was trying to say. Whatever the noble Lord opposite may say, I am sure he agrees with me that it is very important that in this new Bill the Minister should be concerned with powers which help to—
Lord DAVIES of LEEK: I agree!
Baroness WARD of NORTH TYNESIDE: The noble Lord agrees; that is marvellous! If the Government wish to retain the words "or specific" in the Bill, words should be added which similarly limit the power of direction to major matters. I shall not go into further detail, but I would hope that the noble Lord opposite, having listened to this very long debate, would agree that the Minister had enough to do without wanting to add to his powers. Perhaps the noble Lord who is to reply will, for once—and I do not say more than "for once"—agree with me that through my Amendment, which is supported by my noble friends, we are all trying to help the Minister. He should not have to undertake further duties since we think he has already enough to do in looking after the national interest. I beg to move.
Lord ABERDARE: May I very briefly rise to support my noble friend, who has moved this Amendment with such eloquence that there is nothing for me to add, except to say that it seems to us that the Secretary of State should have powers of general direction. However, to give him powers of specific direction tends to give the impression that he might interfere with the day-to-day working of the Board. Since the Board members will be highly responsible people, it would not seem correct for the Secretary of State to do that. Therefore I fully support what
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has been said so eloquently by my noble friend.
Lord MELCHETT: The noble Baroness said that she had to convince the Minister and would not worry about my noble friends behind me, but I can assure her that we on this side take great note of what is said on the Benches behind us. Therefore, I think perhaps the noble Baroness could well have concentrated on convincing all of us on the soundness of her arguments, and not just myself.
The functions of the National Enterprise Board are more diverse and less clearly charted than those of other public corporations. The NEB will have at their disposal large sums of money and their terms of reference give them large areas of discretion. They do not have a simple single object, such as making gas or mining coal. Therefore it is more than usually desirable that the Secretary of State should have the power to intervene in the last resort; yet it is particularly difficult to foresee all occasions when intervention may be desirable and to provide specifically for them. Therefore a flexible power is needed. As I understand the noble Baroness, she was saying: "My Amendment may not be very good, but why don't you do it as it is done in the Gas Act?" She said also that we on these Benches knew a great deal about the Gas Act. I think she will see from what I have already said that even the wording of the Gas Act 1972 would not be acceptable. We want to be able to use the powers not only on matters of national interest but also because the Bill does not attempt to provide for direction on individual issues; rather it relies on the general terms of Clause 6.
To take a specific example, it is the general wish of your Lordships as a whole that the NEB should follow the provisions of the Takeover Code. It would be undesirable for this to be a matter of legislation. To write it in would be to delegate to the City Panel the powers to make Regulations which would bind the NEB, and this would be unconstitutional. But by use of specific directions we could ensure, if the NEB did not willingly agree, that the Board followed this Code. Would this affect the national interest? I would suggest to your Lordships that views would differ on this. To our minds, it illustrates the limitations and obscurities

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which this Amendment would bring with it. The fact that directions must be published in the Board's annual report means that the extent of Government control over the National Enterprise Board will be made public. This should help to reduce the informal pressures which have characterised relations between the Government and nationalised industries in the past.
The Chairman of the NEB will be able to resist informal pressures more successfully if he or she can point out to the Minister that there is provision for the Minister's wishes to be imposed openly and with binding force. The Government believe that this will provide a significant measure of increased public accountability. The Secretary of State will be answerable to Parliament for his or her use of the powers of direction, or for not using them in any particular case. Powers to issue general directions to nationalised industries have long been in existence but it has often been found, when the use of the powers was contemplated, that there was no clear line dividing the general from the specific. The powers have been used only on very rare occasions. Since it is important for the Government to be sure that they can exercise control over the NEB should the need arise, there needs to be a power for specific, as well as general, directions to be given.
I hope I have explained to the noble Baroness at some length and with detailed reference to the Gas Act 1972, why we do not find her Amendment acceptable. We therefore hope that she will see fit to withdraw it.
Baroness WARD of NORTH TYNESIDE: I find that reply very disappointing and rather disconcerting I am sure that the noble Lord will not really expect me to say that I understood what he said. It seems to me—though I fully understand that my mind will not necessarily correlate with his—easy to understand that if the Minister has the power to make general directions, that should surely be sufficient. I would hope that my Amendment would be fully supported by the CBI and the TUC and also by consumers and similar bodies of people who are interested in this new Industry Bill. I would have thought that, if the Minister had a general directive right in the national interest, that would he sufficient. Would the noble Lord explain to me
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how he will differentiate between the national interest, the general direction and the specific detail?—because, although I fully understand some of the difficulties of the Industry Bill, I would have thought the Minister would get more general cooperation if he accepted an Amendment of this kind. Even with my small experience of industry, I know very well that there can be too much interference with the people you have called upon to work for you. I do not like the Minister's reply one little bit.
Lord MELCHETT: May I say to the noble Baroness before anyone else intervenes—so that she remembers what she has said when I come to comment on the reply—that I am frankly astonished that she did not understand what I said. I am even more astonished that she should find it disappointing if she did not understand it.
Baroness WARD of NORTH TYNESIDE: That is rather silly.
Lord MELCHETT: May I suggest that the noble Baroness reads what I have said in Hansard at her leisure, and then she may find it a little more understandable. I thought what I had said was perfectly clear. Indeed the noble Baroness demonstrated that she had not understood my reply when she asked me how the Government were to differentiate between directions given in the national interest and specific directions. I was trying to make the point that this distinction is well-nigh impossible, and that is why the Amendment moved by the noble Baroness is not acceptable.
Baroness WARD of NORTH TYNESIDE: May I finish by saying that the noble Lord and I really have different interpretations of "understandable". I did not mean I did not really understand what he was saying; I was trying to be polite. Obviously the noble Lord does not understand how anybody like me can try to be polite and helpful. I would have said that what he was saying was nonsense, but I said it was "not understandable"—taking the blame on myself, which is quite unusual.
The Earl of ONSLOW: I was attempting to draw comparisons between hot air and the Gas Act, but I thought that might not be polite to your Lordships.

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There is much point in what the noble Baroness, Lady Ward, said. Earlier in this debate we spoke about industrial democracy and the right of people to be consulted and helped to run the concerns which the NEB own. If we give the Minister the power to say: "Move that chair from left to right"—the provision says "specific" even though he has to consult under the next paragraph—then of course he will be tempted to use that power. Of course, to speak about moving a chair from left to right is reductio ad absurdum. The Minister must be allowed to delegate. He must not be encouraged to interfere. The word "specific" actively encourages him to interfere in the day-to-day running of British Leyland, Rolls-Royce or whatever other company the NEB may take over. Ministers should be discouraged from this habit.
Lord MELCHETT: May I ask the noble Earl a question as he has returned to that point? Does he accept that the Minister would look rather silly when the annual report is published if it contains a statement to the effect that the Minister told the board of British Leyland to move a chair from left to right? That surely is the biggest discouragement to Ministers interfering in matters where they should not interfere. Maybe the noble Earl could also take on board a point I made and which was not answered by the noble Baroness. Do noble Lords opposite accept that the Takeover Code should apply to the NEB, and, if so, do they accept that there may be theoretical need for specific directions to be given to make sure that the NEB comply with that Code?
The Earl of ONSLOW: Perhaps it is not for me to answer wholly for people on this side of the Committee, but I should certainly like to answer that question for myself. I should have thought that that was not a specific instruction but a general instruction. He is not saying he will accept the Takeover Code, or amend it. It is surely a general instruction. Also, with the Government's assurances given by the noble Lord opposite that this is necessary, I should have thought that the National Enterprise Board would have done this in any event. If not, perhaps they ought not to be members of that Board.
Lord DRUMALBYN: May I ask the noble Lord a question, in all seriousness? We all know there have been great difficulties about giving general directions in the past. If there is a difficulty about distinguishing between general and specific directions, why bother to say "general" or "specific" at all? Might it not make things a good deal easier if it were merely stated:
"The Secretary of State may give the Board directions as to the exercise of their functions"?
For example, in Clause 3 the Secretary of State is given powers to direct, and the provision goes on to say: "the direction may specify…". Is that a general direction which becomes specific at certain times, or what is it? I should have thought that the time has now come to abolish the distinction between a general and a specific direction in cases such as this.
Lord MELCHETT: It looks as if we have got into trouble by being too honest again. Here we are making it perfectly clear that the Secretary of State will be empowered to make specific directions. As the noble Lord says, in the past this has not been the practice and it has caused difficulties. We are being honest and open about it and putting it quite clearly in the Bill. Had we put in the Bill,
"the Secretary of State may have power to give directions…"
I am absolutely certain that noble Lords opposite would have been standing up in this Committee and saying: "Here you are trying to sneak in new powers for the Secretary of State to give any sort of direction he wishes, without making it clear in the Bill that that is what you are doing." We are making it clear that we want the Secretary of State to be able to give specific powers, for the reasons I have given at great length and in great detail, and I think the noble Lord might accept that provision in the spirit in which it was included in the Bill.
Lord DRUMALBYN: I think the noble Lord is being unduly testy about this. It is a very serious and important matter. We are grateful to him for the explanation he has given. All I am saying is, on a much wider sphere, has not the time come to abolish this distinction between general and specific

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directions? If general directions cannot be given—and only one has ever been given to a nationalised industry, so far as I am aware—why continue to make the distinction? It is an important and serious matter and ought to be treated more seriously than the noble Lord treated it.
Lord BESWICK: May I assure the noble Lord that we are treating the point seriously. May I further suggest to him that if it were suggested to the present chairman of nationalised industries that there should be general and specific powers vested in the respective Secretaries of State, there would be cause for considerable concern. It would need a good deal more argument. As the noble Lord knows, there have been difficulties and they will not be solved just by having the kind of Amendment he suggests. On the other hand, as my noble friend has said, when we come to the NEB we are dealing with a completely different kind of animal. There are specific duties; there are small and large companies within their compass, and it may well be necessary to have a more selective instrument in the armoury of the Secretary of State. That is why this provision is in the Bill.
Lord DRUMALBYN: I am grateful for that explanation, but I still think there is a point here which is worth considering. We were not moving an Amendment; I was merely suggesting that the time has come to reconsider the whole matter.
Baroness WARD of NORTH TYNESIDE: Whatever may happen in the future, it is with very great regret that I beg leave to withdraw my Amendment.
Amendment, by leave, withdrawn.
6.47 p.m.
The Earl of BALFOUR The Earl of BALFOUR moved Amendment No. 60:
Page 6, line 30, at end insert—
("( ) The Secretary of State shall not give a direction to the Board concerning any one industry without considering, in consultation with the Board the effect of that direction on any other similar industry anywhere in the United Kingdom.")
The noble Lord said: To carry on from the last Amendment, I am here seriously concerned because the Bill states that the Secretary of State may give the Board directions of a specific character as to
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the exercise of their functions. The purpose of this Amendment is to ensure that when the Board have been given a direction—although the Bill says the Secretary of State shall consult the Board about any proposed direction—no one industry is treated as a special case to the detriment of another industry. May I remind your Lordships of earlier parts of the Bill. The NEB can go in for a joint venture or a partnership, make a loan or guarantee an obligation, or provide a service in relation to management.
Let us take a highly competitive industry such as tool-making or light engineering. With high unemployment in one area, the Board might feel that a development grant and other assistance—even the acquisition of shares and investment of capital—would put a particular tool-making or light engineering concern firmly on its feet so that it could employ many more people. It would, however, be disastrous if because this firm was made so much more competitive a lot of other small firms went out of business.
Lord DAVIES of LEEK: That is the purpose of private enterprise—
The Earl of BALFOUR:—or, so far as I can see, of nationalised industries. Let us take another example. Agricultural tractors are made by a number of companies, including British Leyland. It the National Enterprise Board spent a lot of money on research to develop the British Leyland tractor and make it a very good one, it would be a pity if that forced a considerable reduction in the sales of, say, Ford or David Brown or some other maker.
May I leave this as a general idea. In particular, I am asking that after a direction from the Secretary of State the Board should consider the effect of that direction on similar industry anywhere in the United Kingdom. It is up to the Government to be fair to all parties involved. Even with an organisation such as the National Enterprise Board there is a risk that for political, economic or social reasons some kind of favouritism might be created that could be to the detriment of another company, particularly with the kind of financial backing and, perhaps, political directive that they may have. I know that occasionally this kind of thing happens in private industry, but one has

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the Monopolies Commission to prevent too much of it—or perhaps action can be taken by the Government. Even if the Confederation of British Industry were brought in, this would be a safeguard. I beg to move.
6.51 p.m.
Lord BESWICK: May I say straight away that if the Secretary of State gave a direction to any one company—I am not quite sure what the noble Earl is talking about when he refers to a direction to an industry, because the Board cannot give a direction to an industry—it would have regard to the effect on other parts of that industry or other aspects of the British economy. May I remind the noble Earl—I am sure he will accept this—of the procedure which is involved? Clause 6(2) provides that the Secretary of State must consult the National Enterprise Board before giving any direction under Clause 6. A direction must be concerned with the discharge of the functions of the National Enterprise Board as specified in Clause 2. Clause 2 specifies that these functions are to be exercised only for certain designated purposes—the assistance of the United Kingdom economy, for example.
It would be quite inconceivable that the Secretary of State should give a direction which would have as its purpose the detriment of some other company or industry. The Secretary of State has in mind the assistance of the economy of the United Kingdom. The other function would be the promotion of industrial efficiency and international competitiveness in the United Kingdom. Again, the noble Earl will understand that it would be contrary to that function if the Secretary of State were to put out of business, as he said, two or three other companies. All of these functions of the National Enterprise Board imply a concern for the United Kingdom economy as a whole. I assure the noble Earl that whatever feelings he may have about Secretaries of State who are of a different political colour from his own, they all bear in mind the need to improve the economy of the United Kingdom as a whole. I hope he will accept that that will be in the background of any direction that is given.
The Earl of BALFOUR: I shall be very interested to read what the noble Lord has said. I am not sure that I agree entirely with what he has said, but at this stage I am quite prepared to withdraw the Amendment.
Amendment, by leave, withdrawn.
6.54 p.m.
Lord ABERDARE Lord ABERDARE moved Amendment No. 61:
Page 6, line 37, at end insert—
("( ) No direction given under this section shall empower or require the Board or any of its subsidiaries to do any act which a company incorporated under the Companies Acts 1948 to 1967 whose Memorandum of Association included the matters specified in section 2(2) of this Act could not do, nor shall any such direction exempt the Board or any of its subsidiaries from the duty to comply with any provision of law with which any such company would have to comply.").
The noble Lord said: I beg to move Amendment No. 61. Perhaps we could take in conjunction with it Amendments Nos. 62 and 63.
Lord MELCHETT: Could the noble Lord also speak to Amendment No. 64?
Lord ABERDARE: Amendment No. 64 relates to another point, but I will deal with it now. Amendment No. 61 is intended to ensure that no direction shall place the Board or any of their subsidiaries in a situation different from that in which a company in the private sector would be. Amendments Nos. 62 and 63 specify that the Board and their subsidiaries shall act in accordance with the best practice, and in accordance with the same extraneous influences as affect a company in the private sector. Therefore, these three Amendments are seeking to ensure that the giving of these directions does not require the Board to do anything which is not normal practice in the private sector.
The noble Lord asked me to speak to Amendment No. 64 at the same time. This is a very different point. It is a matter of finance and is a little complicated. Clause 7 makes provision for limiting the finance available to the Board. However, the Board's total assets also include acquisitions and income under Clause 2(4). For example, these are securities acquired under paragraph (a) of that subsection, land and other property

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acquired under paragraph (f) and income derived from services provided under paragraph (h). If the Board should find themselves approaching the financial limits under Clause 7, they could raise cash by stepping up their provision of services, by selling land or other property or by selling securities. The purpose behind Amendment No. 64 is to ensure that the Board's finances shall be governed by Clause 7, as is intended by the Government. Therefore, it is a slightly different concept from that which governs the other three Amendments. I beg to move the first Amendment, Amendment No. 61.
6.58 p.m.
Lord MELCHETT: I am very grateful to the noble Lord for taking these four Amendments together, in the hope that we may make a little faster progress than we have made to date. To take first Amendment No. 61, it is the Government's view that any directions to the Board to do things not covered by their general purposes and functions as set out in Clause 2, or to do things which other Statutes prohibit, would be ultra vires and would therefore not be binding on the Board. The Secretary of State does not have the power any more than the Board have the power to override or set aside laws made by Parliament. The Government have already amended Clause 2 to make it absolutely clear that there is nothing in that clause which shall be construed as authorising the disregard by the Board of any enactment or rule of law. Directions under Clause 6 relate to the exercise of the Board's functions. These are laid down in Clause 2 and are limited in the way set out in that clause. The Board cannot be directed under Clause 6 to do things which are outside the scope of those functions.
To turn to Amendments Nos. 62 and 63, the Board will be expected to have high standards, but the interpretation of what would constitute the "best practice" would be a matter of opinion. Where it is possible to be more specific, we are already meeting this point in the Bill. For example, Schedule 2 provides for the Board's statement of accounts to conform to the best commercial practice. The Government have also made it clear that the Board will follow certain appropriate codes of standards of general importance,
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such as the Takeover Code which I mentioned when I dealt with the previous Amendment. If noble Lords are concerned about any other specific code, we on this side would certainly be prepared to consider it. But a blanket requirement of the kind suggested in these Amendments begs the question of what is "best practice" or relevant, and is not therefore, in our view, appropriate. The obligation on the Secretary of State to consult the Board before giving directions will ensure that any possible conflict between the requirements imposed by directions and those of codes of practice observed by the National Enterprise Board can be identified, and taken into account before directions are made by the Secretary of State. In the unlikely event of the Board seriously failing to maintain appropriate standards, the power of direction will provide a means of ensuring that the shortcomings can be rectified.
So far as Amendment No. 64 is concerned, the White Paper indicated that in order to avoid conflict between its objectives and the interests of private shareholders, the National Enterprise Board will need a number of companies in which they hold 100 per cent. of the equity capital. In general, the disposal of minority interests in NEB subsidiaries seems unlikely to be something that the NEB would often want to do. However, there seems to be no reason to prevent the Board converting one of their wholly-owned subsidiaries into a joint venture which would be part owned by another company, if this is what the partner wanted. More generally, I do not see why the NEB should be prevented from selling part interests in their subsidiaries if there are willing buyers. I hope that that has answered the points raised by the noble Lord, Lord Aberdare, and that he will see fit to withdraw the Amendment.
The Earl of ONSLOW: Can the noble Lord tell us about the codes of practice which he mentioned, such as the City Takeover Codes of Practice? Can he later publish these Codes of Practice and will it be known what they are? Secondly, on the point of disposing of minority interests, surely this is where we go back to the discussion we had earlier when the noble Lord, Lord Lovell-Davis, said that the citizens of the State must be fully rewarded for its capital. Is this not

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something which in some cases should be encouraged, to get outside capital into something that the National Enterprise Board are doing, together with getting a good return to the State for the use of their capital.
Lord MELCHETT: The Takeover Code is already published and annually reviewed and I do not think it would be necessary for the Board to do anything more to publicise that Code. On the second point, if I understood it correctly—
The Earl of ONSLOW: The noble Lord specifically said "codes of practice" in the plural, and I wondered what other codes of practice he was talking about or whether it was only the takeover panel code—or does he not know?
Lord MELCHETT: I gave that code as a specific example and invited noble Lords opposite to suggest others if they wanted to. The noble Earl is saying that I did nothing of the sort. I was reading very carefully at the time, and I can assure the noble Earl that I know what I said and if he looks in Hansard he will see that I said: "If noble Lords are concerned about some other specific code, this could be considered"—and I said that we on this side of the Committee would be quite willing to consider it. I think the noble Earl is being a little uncharitable in murmering into his bow tie that I did not say that when in fact I did.
On the second point that he raised, the disposal of assets, I think he was arguing in favour of what I had said and not what the noble Lord on his Front Bench had said; namely, that the NEB, if they wanted to, should be in a position to dispose of assets in this way if there were willing buyers.
Lord ABERDARE: I am grateful to the noble Lord for what he has said, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Clause 6 agreed to.
Clause 7 [Financial Limits]:
7.5 p.m.
Lord ABERDARE Lord ABERDARE moved Amendment No. 65:
Page 7, line 5, leave out ("wholly owned").
The noble Lord said: Together with this Amendment, I should like to speak to Amendments Nos. 70 and 71 if that is convenient to the Committee. Clause 7 places a limit on the National Enterprise Board's borrowing powers of £700 million or up to £1,000 million with the consent of the Treasury. This limit applies to the Board and their wholly-owned subsidiaries. The point of this Amendment is to raise the question of the position of the Board and their borrowing powers with regard to those subsidiaries that are not wholly owned. For example, there could be a company in which the National Enterprise Board held 90 per cent. of the shares, and in that case they would not be inhibited by the overall borrowing control which relates only to wholly-owned subsidiaries and through that company the National Enterprise Board would be able to borrow without regard to the overall limits set on their borrowing powers with regard to the wholly-owned subsidiaries.
All I am asking is whether there is a loophole and whether there is a means by which the National Enterprise Board could borrow in excess of the £700 million limit without receiving consent from the Treasury. The idea behind these three Amendments is that they should include the borrowing by partly-owned subsidiaries in their overall limit but only in proportion to the National Enterprise Board's share of the equity capital of a company that was not wholly-owned. I beg to move.
Lord BESWICK: I can give an undertaking that there is not a loophole here so far as the purpose of the Clause 7 limit is concerned. The purpose of that financial limit in Clause 7 is to limit the public funds on which the NEB can call and the extent of borrowing which they can make and which would be directly competitive with the borrowing by the Government. Let us see what is involved here. In so far as public funds are invested in any subsidiary of the Board, whether or not wholly-owned, they will count against the financial limits. I think that is understood. If any borrowing by a subsidiary, wholly-owned or not, is guaranteed by the NEB so that their own credit is directly at stake, then again it will count against the financial limits specified in Clause 7.

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The Amendment which the noble Lord has moved would not therefore limit the call on public funds, and I hope that that is what he is primarily concerned with. However, I put it to him that if he wants to go beyond that purpose he would be wrong to maintain that the fact that Clause 7 includes only borrowing by the NEB's owned subsidiaries within the specified overall financial limit means that the NEB will have unlimited access to funds raised by non-wholly-owned subsidiaries which could then be used for its own purposes. This is not so. The Board will not be able to channel funds from non-wholly-owned subsidiaries to themselves without restraint. Paragraph 1(3) of Schedule 2 provides that the Board will be able to borrow in sterling only on a long-term basis from the Secretary of State, or with his consent and the approval of the Treasury, from the EEC Commission or from the European Investment Bank. Thus the NEB would only be able to borrow long-term from its non-wholly owned subsidiaries in a currency other than sterling. That, I suggest to the noble Lord, is a fairly remote possibility, and in any case this too would require the consent of the Secretary of State and the approval of the Treasury.
There is one case which I would put to the noble Lord, even if it were possible to do what he is suggesting. Let us suppose that the NEB had a substantial investment in a company which required to borrow, but the NEB was up against its financial limit. I am sure that the noble Lord would not wish to handicap that company by making it impossible to borrow in the market, simply because there was an equity holding of the NEB. That would be the effect of the Amendment and I am sure that is not the intention.
Lord ABERDARE: I am grateful to the noble Lord. I found those reassurances absolutely satisfactory and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
7.10 p.m.
Lord DRUMALBYN Lord DRUMALBYN moved Amendment No. 66:
Page 7, line 5, at end insert ("including any sums lent to the Board by the Secretary of State under paragraph 2 of Schedule 2.").
The noble Lord said: From what the noble Lord has just said it seems to me that this Amendment is unnecessary. It was put down purely in order to obtain clarification of the phrase "general external borrowing." Perhaps the noble Lord would confirm that. I beg to move.
Lord LOVELL-DAVIS: I am glad to assure the noble Lord, Lord Drumalbyn, that the sums lent to the Board under Schedule 2 paragraph (2), will, without doubt, count against the overall financial limit. "General external borrowing" clearly includes all borrowing, no matter from what source, other than the specific borrowing excepted under subsection (4). Paragraphs (1) and (2) of Schedule 2 mention the borrowing powers of the Board, and the powers of the Secretary of State to lend, so sums borrowed under paragraph (2) clearly constitute borrowing. I am assured that there is no doubt that the Secretary of State is "external" to the Board.
Lord DRUMALBYN: That is in contrast to internal financing? Is that it?
Lord LOVELL-DAVIS: Yes, that is right.
Lord DRUMALBYN: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
The Earl of BALFOUR The Earl of BALFOUR moved Amendment No. 67:
Page 7, line 12, at end insert—
("(e) the Board's liability on any holding or securities in any body corporate in which the Board holds over 25 per cent. of the share capital or where the Board has granted a loan or grant of not less than £5 million.").
The noble Earl said: In Clause 7(1) we are dealing with the aggregate amount which can be up to the limit in subsection (2). I wondered whether, in this aggregate, there should be some insertion in respect of the liability of the Board on any holding or securities in which the Board hold over 25 per cent. I am not an expert on company law, but I was under the impression you could have very distinct liabilities if you had more than a 25 per cent. holding or security of a Board, or perhaps its suppliers, or in some sales guarantee, or in spheres of this nature. This is very much a probing Amendment to try to discover whether the Board's acquisition of shares or securities, or that kind of thing, could place a liability on

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them that, perhaps, could be embarrassing. I beg to move.
Lord BESWICK: There ought to be a little probing on this side of the Committee, because I am not able to see what the noble Earl is really seeking to do so far as the wording of the Amendment is concerned. The purpose of the Amendment seems to be to make borrowings by non-wholly owned subsidiaries of the National Enterprise Board, and by other concerns assisted by the NEB, count against the financial limit of the National Enterprise Board, although in law they do not. The purpose of Clause 7 is to set limits to the amount of public funds available to the National Enterprise Board. I thought I made that clear on previous Amendments. All the money which the Board invest in shares or loan capital in companies, or give as grants, must be found from within this overall allocation, or from generated profits. There is no reason to deduct from the amount available the liability of companies to third parties, since these will not represent an enforceable call on the finances of the National Enterprise Board.
Of course, if the Board guarantee any borrowing by other concerns, the amount guaranteed will count against the limit by virtue of subsection (1)(b) of Clause 7. The Amendment would serve only to place a savage constraint on the amount of money available to the Board in the task they are undertaking. I am sure that, in the light of what I have said, that is not what the noble Earl is after.
The Earl of BALFOUR: I am very grateful for that explanation. This was a point I was not clear about. The noble Lord, Lord Beswick, has explained it, and I now understand it very much better. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
7.15 p.m.
Lord ABERDARE Lord ABERDARE moved Amendment No. 68:
Page 7, line 13, at end insert:
("( ) Payments made by the Board to the Secretary of State in accordance with sub-paragraph 5(3) of Schedule 2 below shall not for any purpose be deemed to be repayments of sums paid to the Board by the Secretary of State under sub-paragraph 5(1) of that Schedule.")
The noble Lord said: The purpose of this Amendment is somewhat similar to
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that of Amendment No. 64, in order to prevent contra-accounting and surreptitiously avoiding restrictions provided by Clause 7. The payments made by the Board to the Secretary of State under paragraph 5(3) of Schedule 2, in effect, are dividends on the public dividend capital which has been provided by the Secretary of State to the Board. Paragraph 5(3) closes by providing that these sums
"shall be paid into the Consolidated Fund".
The purpose of this Amendment is to ensure that such sums are regarded as income accruing to the public, and not as repayments of advances made in the form of public dividend capital. I beg to move.
Lord LOVELL-DAVIS: I can give the noble Lord, Lord Aberdare, the assurance he is seeking in this Amendment. It is already implicit in the provisions in the Bill relating to public dividend capital that the dividends the Board pay on PDC are not to be counted as repayments of that capital. There is a clear analogy between public dividend capital and equity in the private sector and, like equity, PDC is non-repayable. The dividends paid cannot therefore be deducted from the aggregate amount outstanding in respect of the PDC which has been paid to the Board, and there will not be any increase in the overall financial allocation of the National Enterprise Board as a result of dividends being paid on the Board's private dividend capital.
Lord ABERDARE: I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
The DEPUTY CHAIRMAN of COMMITTEES (Lord Derwent): I must point out that, if Amendment No. 69 is agreed to, I will not be able to call Amendments Nos. 70 or 71.
The Earl of BALFOUR The Earl of BALFOUR moved Amendment No. 69:
Page 7, line 19, leave out subsection (4) and insert—
("(4) In subsection (1) above "general external borrowing" means—

(a) sums borrowed by the Board other than—

(i) sums borrowed from a body corporate which is one of the Board's wholly owned subsidiaries at the time of the loan;

(ii) any sums mentioned in subsection (1)(b) above; or

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(iii) sums borrowed by the Board for the purpose of giving assistance under section 3 above; and

(b) sums borrowed by a wholly owned subsidiary of the Board or from another wholly owned subsidiary of the Board;

but does not include any debt assumed by the Board under paragraph 6(1) of Schedule 2 below or any sums borrowed by a partially owned subsidiary of the Board.")
The noble Earl said: To a very great extent this is a probing Amendment, partly because of the wording in the Bill. I put down this Amendment because I really do not understand exactly what was involved in general external borrowing under subsection (4). I am not attempting to change what it is in subsection (4). I am not altogether happy with the wording in paragraph (b). Line 31 says:
"…sums borrowed by it when it was such a subsidiary other than sums borrowed from the Board…".
I am not quite certain in this case when it was a subsidiary, and when it was not. I have read this two or three times, and simply do not understand what paragraph (b) really means.
While I am speaking to this, I should like to ask one or two questions. Does the general external borrowing of the Board include fulfilling the powers under Clause 2(4), a direction of the Secretary of State under Clause 5 or 6, or provisions of Schedule 2, paragraphs 1 and 2? What about the cost of grants or loans under Clause 3? What capital expenditure are the National Enterprise Board allowed to spend in acquiring a proportion of share capital in various industries? How long is the £700 million supposed to last—one year, two years, or perhaps a few months? If I can come back to my Amendment, I hope I have not put anything in because I have misunderstood what is in the Bill. If there is a difference between us here, I would be grateful for an explanation. With those few words, I beg to move.
Lord BESWICK: I hope the noble Earl will not think me unhelpful if I say that the very cogent questions he posed were so complicated that I would like time to consider them. I will read Hansard, and, if necessary, write to him. The last question, as to how long the £700 million would last, is one I will not be able to answer, because we do not know. If there were the sort of débacle we had
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with British Leyland, it is possible that it would last a shorter time than otherwise. It depends how the enterprise goes. I could not give a sensible answer to that question. If the noble Earl is agreeable to my studying his questions and letting him have the best possible answers I can, I will undertake to do that.
The Earl of ONSLOW: I think that the amount of time this £700 million to £1,000 million is going to last seems extremely important. I quite understand the difficulties over some disaster like British Leyland, or whoever it might be. This would present enormous complications. But if that money is going to be used up, say, at the worst in six months or a year—I am taking the absolute worst now—presumably Her Majesty's present advisers would have to come back to Parliament and ask for more, and this would be a very unsatisfactory state of affairs. Can the noble Lord give an undertaking that he will try to get a more detailed forecast of the Government's thinking along these lines, how they propose to spend it, how they propose to invest it and so on and so forth?
Lord BESWICK: I cannot, and I do not think it is reasonable to ask. When this conception of the Bill first saw the light of day and was studied, I doubt whether anyone in the country thought that British Leyland would meet the sort of situation they eventually reached. I do not know what may happen in two or three months in other parts of the British economy. It would therefore be unreasonable to give any forecast at all. If the £700 million limit is reached, then it will be necessary for an appropriate Order to be laid before Parliament, before the House of Commons, and I have no doubt that the matter would be thoroughly discussed before the additional £300 million was made available.
The Earl of BALFOUR: I wonder whether I could press the noble Lord a little further, and if he could explain whether there is any difference between what I have put down in my Amendment and what is in the Bill? Have I got it right or wrong? Also, I am wondering whether "general external borrowing" covers the provisions in Schedule 2, paragraphs 1 and 2. I feel that quite a lot of money could be involved here, and it

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would be nice to have some idea of what these maximums are.
Lord BESWICK: I can comment on the Amendment the noble Earl has put down. What I cannot do is to give answers to the questions he posed, which in the main had nothing to do with the Amendment he has put down. If I may take the redraft of subsection (4), it appears to have three purposes. The noble Earl is saying explicitly that sums borrowed by non-wholly-owned subsidiaries of the Board do not count towards the Board's general external borrowing. This was implicit in the Bill any how, so that there is no difference there. He goes on to say that it includes in the Board's external borrowing, which counts towards its financial limit, sums borrowed by a wholly-owned subsidiary of the Board before it became a wholly-owned subsidiary of the Board. Such sums are specifically excluded at present. Then included in the Board's general external borrowing are sums borrowed by one wholly-owned subsidiary from another wholly-owned subsidiary. Such borrowings are specifically excluded at the present time.
The Earl of BALFOUR: I am very grateful for that explanation. I beg leave to withdraw this Amendment.
Amendment, by leave, withdrawn.
Clause 7 agreed to.
Clause 8 [The Board and the media]:
7.25 p.m.
Lord LOVELL-DAVIS Lord LOVELL-DAVIS moved Amendment No. 72:
Page 8, line 31, leave out from ("State") to end of line 37 and insert ("may direct that the Board or a subsidiary of the Board shall not be under any duty imposed by subsection (5) or (6) above during such time as the direction is in force.")
The noble Lord said: This Amend-men has two purposes, the first of which is to make the drafting of subsection (7) more concise. It is not really necessary to specify the duty of the Board in their own right and their duty in respect of their subsidiaries separately, as is at present done in subsection (7)(b). The second object of the Amendment is to make it rather clearer—although this was in fact implicit—that directions given by the Secretary of State to allow the Board
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or their subsidiaries to retain media interests are not intended to be permanent. The Government's intention is that these directions shall continue in operation only so long as there exists the danger of serious commercial injury to a newspaper or periodical if the National Enterprise Board or their subsidiaries are obliged to dispose of their interests. I beg to move.
On Question, Amendment agreed to.
Lord DRUMALBYN Lord DRUMALBYN moved Amendment No. 73:
Page 8, line 41, insert—
"( ) Where the Secretary of State has given any such direction as is mentioned in subsection (7) above, it shall be the duty of the Board to dispose of its interests in the body corporate as soon as is practicable and reasonable.")
The noble Lord said: I do not think it is possible to make clear what this Amendment and Amendment No. 75 are about without going in some detail into what the whole clause is about. I think perhaps it is unfortunate that we have such a thin Committee to discuss, at this time of night, a clause which has not been debated in another place; it was moved under the guillotine. It might have been more convenient if we had simply moved to leave out the clause and had a general debate on the clause at the start. I hone the Committee will bear with me if I explain what the clause is about and then explain the effect of my Amendments. All we have had so far are a few remarks about the Government's new clause and what the noble Lord, Lord Beswick, said in his Second Reading speech. He said then:
"The NEB might indirectly acquire an interest in a media company as part of a larger acquisition, but it will be required to divest itself of the interest, unless this would clearly harm the media company…"—[Official Report, 10/7/75, col. 912.]
By "this" he meant that divesting itself of the interest would harm the media company, as the noble Lord, Lord Lovell-Davis, has just explained.
The clause prohibits the Board and their subsidiaries from starting up as publishers of newspapers, magazines or other periodicals for sale to the public and from contracting with the IBA for the provision of programmes. This is as I understand it, and I hope the noble Lord will correct me whenever I am wrong. It

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also debars them from acquiring any of the share capital of a body corporate which engages substantially in either of those types of activity or the share capital of a holding company controlling companies which do so engage in those types of activity. Subsection (4) then, paradoxically, says that nevertheless the Board or one of their subsidiaries can acquire such share capital if the Secretary of State tells them to; that is by means of a direction. But if so, it goes on, in subsection (5), the resulting voting power must be so exercised as to secure the disposal of the business—that is, as it is described, the business of publishing or programme contracting—by the body corporate as soon as possible.
In passing, I would say that that is rather different from the Board divesting themselves of their interest, because there is no specific requirement on the NEB, so far as I can see, to divest themselves of their interest in a holding company one of whose companies—not the company for which help was originally envisaged—carried on such a business. It would be quite possible for a holding company to control a group of companies, some of which were engaged in publishing or in the provision of programmes, and one of which had got into difficulties, and the object of the Secretary of State was essentially to come to the aid of that one which had got into difficulties. There is possibly a drafting difficulty here, and perhaps the noble Lord would have a look at that.
Subsection (7), which we have just amended, says that the Secretary of State may direct that the Board or their subsidiary shall not be under a duty to exercise their voting power in that way while the direction remains in force; that is, to exercise their voting powers to secure the disposal of the business, not necessarily the whole business, as I have explained. This plainly envisages a situation where the company, or group, are in such a parlous situation that nobody will buy them out, so the Board or their subsidiary is, so to say, locked in. In that state they cannot exercise any power to control or influence the company or holding company, except in relation to financial or commercial matters, and my second Amendment is to leave out "or commercial".
My reason for putting down that Amendment is that in the business of publishing newspapers, magazines and periodicals, almost everything is a commercial matter. What is a commercial matter? It is the business of publishing; publishing news, opinions, features, advertisements and notices. That is the business, and it is all done commercially to sell the product. One might almost ask: what is not a commercial matter? But I suppose it would be possible to separate the purely financial aspects. If the aim is to prevent the Board from controlling or influencing what a paper prints, then it certainly cannot be achieved by allowing the Board to exercise control or influence in commercial matters.
I cannot understand the difficulty here, or why we have all these additional subsections. All that is needed is to have a clause clearly linking help in the case of the media to the powers under Sections 7 or 8 in the Industry Act 1972, but debarring the Board from taking any shares in publishing or broadcast contracting enterprises. Unfortunately, the Government have a "thing" about this: they have to take shares in it. Surely the Government are not so doctrinaire about the Board acquiring shares as to discard this quite obvious solution. There is no other way of preventing the Board from exercising control over commercial matters, which includes the whole gamut of what is printed. The result of this would be to retain only subsections (1), (2), (3), and (11), and to scrap subsections (4) to (10). The noble Lord may well say that that is not what my Amendment is about, but we are only at the Committee stage and, at the very least, I should have thought that the Government ought to accept both my Amendments and limit the powers of control to financial matters.
It is manifestly improper that the NEB should hold any shares in any media communicating with the general public. The Government clearly understand this and have gone to a great deal of trouble to try to limit their control over the content of the publications. In my view, they have failed and the noble Lord will have great difficulty in arguing that "commercial" does not include the whole gamut of the publishing industry. The Government clearly understand the difficulty, but unfortunately they have not yet grasped

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at the nettle and drawn the logical conclusion. I hope they will do so. In the meantime, I beg to move.
7.36 p.m.
Lord LOVELL-DAVIS: I should like to deal specifically with the two Amendments which the noble Lord has put down, and hope that the answers to his other questions will come out of it. If I may, I should like to take both Amendments No. 73 and No. 75. There is one point which I should like to clear up. He drew specific attention to subsection (4). He was asking why the NEB should be able to acquire share capital in a company engaged in media activities, if directed to do so under Clause 3. The fact is that this would simply be if it were necessary in terms of a rescue operation under the Industry Act, that is all, and this provision ensures that the Board would not be precluded from taking a shareholding in a newspaper under such circumstances if this were the most appropriate way of providing assistance. Having said that, the situation is that the Board must then divest themselves of that interest as soon as is practically possible.
The Government have already put down Amendment No. 72, to which I have just spoken, by which we intend to make the intention of Clause 8 explicit. The Amendment makes it clear that the Board and its subsidiaries are released from their duty to dispose of media interests only for so long as a direction from the Secretary of State is in force. The Secretary of State will maintain his direction only so long as he is of the opinion that without the direction serious commercial injury could be caused. The Government do not intend that directions should continue in force longer than necessary, and the Government Amendment is in line with the intention of this Amendment.
May I refer to this matter of "financial" and "commercial"? I hope that I shall be able to satisfy the noble Lord on this matter. I recognise the point that he is making, but I think that this is a reasonable answer to it. The purpose of the present wording of Clause 8(10) is to make it clear that in cases where the NEB, or one of their subsidiaries, are in a position to influence the editorial policy of a newspaper or television programme
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company, they should keep the use of their powers on a purely business footing and not use their position for political ends or propaganda purposes. In the strictest sense, limiting the Board's control to financial matters would not ultimately prevent the Board from exercising that control to influence editorial policy, if the content of the publication was so unappealing to the public that the newspaper was making severe financial losses. In such a case it would be quite right for the Board to secure the dismissal of an incompetent editor if it had a substantial stake in the company concerned.
But, by the same token, the provision that the Board's control of media companies is limited to commercial as well as financial matters is a reasonable provision. This will ensure that commercial problems may be the subject of action by the NEB before they are of such a magnitude as to be properly also regarded as financial matters. I think that this is also spelled out in subsection (10), which is a further safeguard intended to prevent the Board from interfering improperly with the editorial freedom of any publishing or programme contracting company in which it has acquired an interest. Taken together with both financial and commercial problems, I think that this is a reasonable protection.
I take the noble Lord's point—I am an old newspaper man myself—that "commercial" could extend over features and all sorts of things but in the sense in which I have explained it I think it is important that we should retain commercial as well as financial problems. There should be the ability of the Board to intervene before it became strictly necessary, before there is any serious financial trouble. I do not see how one could define that, except by this form of words.
The purpose of the clause is to ensure that the NEB do not abuse any financial interest in the media for political or propaganda purposes. I believe that it achieves that purpose well. As I say, I accept that the boundary between financial and commercial matters is not clear cut. But to limit the NEB wholly to financial matters might unduly limit their necessary power to secure efficient commercial management. I hope that this reply will satisfy the noble Lord and that, without going over them in detail, I have

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not left out any serious points he has raised.
Lord DRUMALBYN: The noble Lord has very courteously and painstakingly gone through my points, but I do not think he would expect me not to have anticipated the points he made. It was precisely because I thought that the Government thought in that way that I put down these Amendments. I do not quarrel at all with the Government's objective, as I understand it, in seeking to ensure that the National Enterprise Board should not be able to interfere with the editorial content and editorial responsibility. What I really take leave to doubt is that, however hard they have tried to secure this, they have secured that result by the drafting which the Government have adopted in this case. We are in a very great difficulty here. There has not been an opportunity to amend this in another place and it rests entirely with us. All I can say—subject to anything my noble friend may wish to say—is that at this stage and this hour of the night probably the best thing would be for us both to think further about this. I do not think we have a difference in purpose.
I have suggested a clear way out—by not allowing the Board to give assistance in any way which would give them any type of control—which would make certain that this result would be achieved. The noble Lord may feel that this is going too far, but it would still mean in normal practice that, if the assistance was given, there would at least be a representative on the Board who without any statutory requirement—and statutory requirement is the difficulty—would be able to influence the policy of the Board. I am sure he would have the sense not to influence it and he would not have the power to influence the editorial policy. This is the way that I am suggesting it should be dealt with.
I agree that the first of my Amendments is not necessary. The noble Lord has argued that "financial" in itself if left without "or commercial" would still enable the Board to intervene to get an incompetent editor sacked, but if the sales were going down at that rate I would not have thought it would be necessary for the Board to intervene. I think this formula should be looked at again and perhaps the noble Lord would
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be good enough to take it up with his right honourable friend. I am quite certain that we have no different objectives or aims in this case. It is merely a question of making sure by the way the Bill is framed and drafted that we achieve the objective.
Lord LOVELL-DAVIS: I take the noble Lord's point and I can assure him that we take this matter very seriously. We have tried very hard to put ourselves in the position where there is no question of interfering. It is difficult to work out the sort of formula which will satisfy that and at the same time give the proper sort of control and involvement with the commercial and financial operation. We have done the best we can, but we will certainly look at this again, as I am sure will the noble Lord, and if he has any further ideas on the subject no doubt he will get in touch with us.
Lord DRUMALBYN: I am grateful to the noble Lord and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord BESWICK Lord BESWICK moved Amendment No. 74:
Page 9, line 5, leave out ("activities such as are mentioned in paragraph (b) of that subsection") and insert ("the activities of a programme contractor").
The noble Lord said: This is a drafting Amendment: fewer words are involved in saying "the activities of a programme contractor" than in referring back to these activities as specified in subsection (1)(b), and the meaning of the subsection is more immediately evident. I hope that, being sensible, this will be accepted by your Lordships.
Lord DRUMALBYN: I welcome this as a great and unusual improvement.
On Question, Amendment agreed to.
Clause 8, as amended, agreed to.
Clause 9 [Other limits on Board's powers]:
7.48 p.m.
Lord ABERDARE Lord ABERDARE moved Amendment No. 76:
Page 9, line 11, leave out ("Neither") and insert ("Whenever").
The noble Lord said: I beg to move Amendment No. 76, and with this Amendment I should like to speak to

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Amendments Nos. 77, 78, 79, 81, 82, 84, 86 and 87. If these Amendments were to be incorporated in this clause subsection (1) would then read as follows:
"Whenever the Board or any of their subsidiaries intend to acquire any of the share capital of a body corporate otherwise than with the consent of the Secretary of State or in accordance with any general authority given by the Secretary of State, and its acquisition would entitle the Board to exercise or control the exercise of 30 per cent. or more of the votes at a general meeting of the body corporate; or the value of the consideration for its acquisition, together with the value of any consideration paid for share capital of that body corporate previously acquired, would exceed £5 million then the Board or the subsidiary as the case may be shall take no action to implement that intention until the Secretary of State has given his consent thereto, and the Secretary of State shall not give his consent otherwise than by giving a direction in accordance with the same procedures as are set out in Section 3 of this Act."
The present subsection restricts the activity of the Board and their subsidiaries to the extent that the Secretary of State's approval for the acquisition of shares in a company is needed if 30 per cent. or more of the voting rights in the company would be acquired or if the cost of the acquisition would exceed £10 million. The Amendment provides a slight further limitation in the restrictions, and also makes sure that the intention to acquire is made public. It makes a slight additional restriction, in that unless the intention to acquire is in accord with the consent already given by the Secretary of State, or with the general authority already given by him, action could be taken to implement the intention to acquire only when the Secretary of State has given a direction in accordance with Clause 3, which requires the Secretary of State to lay that statement before Parliament.
This is really the major objective that lies behind this series of Amendments. It is to ensure that when the Secretary of State gives his consent, it is by direction under Clause 3 and therefore comes to some extent within the control of Parliament. I should also mention that Amendment No. 86 reduces the figure of £10 million that is in the Bill as a restriction on the capital of the body corporate to £5 million. Again, this is a further restriction that we think would be valuable.
Lord MELCHETT: May I suggest for the convenience of the Committee that we discuss Amendment No. 85 which stands in the name of the noble Earl, Lord Balfour, as we are discussing Amendment No. 86 and they cover a very similar point?
The Earl of BALFOUR: I agree to that course, but I should like to mention before the noble Lord replies to my noble friend Lord Aberdare that in the original White Paper the figure was £5 million. I have not kept it to £5 million, although I think that despite inflation £10 million is very much too high. I therefore do not go quite so far as my noble friend Lord Aberdare, but certainly it should be reduced.
Lord MELCHETT: I am grateful to the noble Earl for referring to Amendment No. 85, because it covers broadly the same ground as Amendment No. 86, although the figures differ. Once again the noble Earl has plumped for "seven" and maybe one day he will tell us why he so favours the figure seven. On the long string of Amendments moved by the noble Lord, Lord Aberdare, the requirement for Parliament to be informed when the Secretary of State gives consent to specific acquisitions by the NEB is, in our view, unnecessary since when the Board are making a takeover bid the board of the company involved and the company's shareholders will be informed and the hid will become public knowledge. This is, of course, in line with the regulations in the City Code on takeovers and mergers.
The EARL of BALFOUR: The noble Lord referred to takeover bids. I thought it had been made perfectly clear at an earlier stage that any acquisition would he mainly in terms of assistance and that this clause would not be a stepping-off post for a complete takeover hid. Have I misunderstood the position? Is the idea of this clause that it should act as a first step to a complete takeover bid?
Lord MELCHETT: I think the noble Earl has misunderstood. It will be possible for the NEB to buy shares, if they wish to do so, in another company, and when I use the term "takeover bid" I am referring to takeover bids as defined by the City Code, and the noble Earl will

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be aware that this document runs to several pages. The existence of a takeover bid is laid out clearly and the normal commercial practice is laid out in great detail. As we have made clear throughout the Committee stage, the NEB will conform with these rules and regulations just as any other company would.
The other way in which this series of Amendments would affect the NEB is when an acquisition results in the ownership of more than £5 million, £7 million or £10 million worth of voting shares, depending on which one we take, but does not bring the NEB's or their subsidiary's share in the company concerned above the 30 per cent. limit, then there does not seem to be any particular need in our view for Parliament to be informed, because such an acquisition would not represent the acquisition of any significant amount of control over a company by the NEB. The acquisition would, in any event, figure in the Board's annual report.
Coming to the level at which the Secretary of State's consent for further acquisition will be required, as the noble Earl pointed out the figure was raised from the £5 million mentioned in the White Paper to the £10 million now in the Bill. The reasons for this were made perfectly clear in Committee in another place, and I have to tell noble Lords opposite that the Government see no reason to go back on their decision in this matter. The White Paper proposed the limit of £5 million by analogy with the limit of £5 million in the Industry Act 1972 for selective financial assistance under Section 8. The analogy is, however, of limited relevance since the 1972 Act is concerned with financial assistance, whereas the sums covered by this provision in this Bill are those paid by the NEB for the acquisition of shares in pursuit of their commercial objectives. Following consultation with the noble Lord, Lord Ryder, as Chairman of the Organising Committee, the Government decided that the Board's share acquisitions at a £5 million limit were unduly restrictive and it was for that reason that the figure of £10 million was substituted.
I think noble Lords will agree—indeed, the divergence of views already expressed
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underlines the fact—that there are no simple rules by which these matters can be determined. It was a question of reaching a reasonable balance between giving the Board, with the very distinguished and high quality of membership which we intended it to have, the necessary authority to do the job that has been laid down for it and the provision of a reasonable opportunity for the Government to check when big decisions are being taken, that what is intended accords with its purposes as approved by Parliament through this legislation. On advice and further reflection, we came to the conclusion that £10 million would provide a reasonable balance. The requirement that the NEB will need the Secretary of State's consent for acquisitions of more than 30 per cent. of a company's voting capital remains unchanged, as I have said, and provides an important control in cases where the cumulative costs of the NEB's acquisition of a company's shares are less than the £10 million figure.
The Earl of BALFOUR: It is the duty of any Government to produce a Bill which, so far as possible, is founded on the lines of the White Paper which preceded it. I therefore believe that to have increased the maximum of £5 million in the White Paper by 100 per cent., to £10 million, is taking things rather further than was intended at the time of the White Paper, which did not indicate that the Board would have anything like the extremely wide powers that exist in Clause 9. I do not think there is a provision in this Bill that would cause me more worry if I were a foreign investor putting money into this country than Clause 9. I entirely uphold what my noble friend has put forward. I think he has been absolutely right in moving the Amendment, which I feel is a very good one. It brings in Government control in a way which is almost totally absent in Part I of the Bill. We are almost at the end of Part I, which was considerably complained about in another place, and with good grounds. I feel that my noble friends Lord Aberdare and Lord Campbell of Croy have gone to a great deal of trouble over this and have put a lot of thought into it. I hope that, even if they do not move it at this stage, something will be done to try to bring in a measure of Parliamentary

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democracy which seems totally absent in this part of the Bill.
Lord ABERDARE: I thank my noble friend for his kind words on behalf of my noble friend Lord Campbell of Croy and myself. I agree with him that this was what I was after. I have wanted to get a little more not so much Parliamentary control as Parliamentary involvement in a particularly important field. It seems to me that where the NEB are to acquire control by exercising more than 30 per cent. of the votes or by an investment of more than £10 million—and I do not wish to quibble at this stage about whether it should be £10 million, £7 million or £5 million—that is of such major importance that it would not be unreasonable to expect the Secretary of State to inform Parliament.
I take the point made by the noble Lord, Lord Melchett, that any bid of this size would undoubtedly be revealed in the Press by the company concerned, but that does not seem to me to be quite as adequate or respectful to Parliament as it would be if the Secretary of State himself had to make a statement to Parliament saying that he had authorised an acquisition of this size.
Lord MELCHETT: I believe that the noble Lord is not entirely right, though of course his experience in these matters is much greater than mine. My understanding is that a company is under an obligation to publicise the position to all its shareholders and, after all, it is the shareholders who are affected by a takeover bid. It is much more important that they should know than that Parliament should know.
Lord ABERDARE: Perhaps I did not express myself very clearly. I realise that the company would inform the shareholders but Members of Parliament would learn about the bid only from the Press, whereas it seems to me that it would be more courteous and not over burdensome to the Secretary of State if he had to inform Parliament when giving consents of this size and importance. However, I will think about the matter and I do not wish to proceed further this evening. I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
8.3 p.m.
Lord DRUMALBYN Lord DRUMALBYN moved Amendment No. 80:
p>Page 9, line 13, leave out from ("State") to end of line 14.
The noble Lord said: My noble friend Lord Aberdare read out the clause as it would have been had the Amendment been accepted. As it stands, it now reads:
"Neither the Board nor any of their subsidiaries shall acquire any of the share capital of a body corporate except with the consent of the Secretary of State or in accordance with any general authority given by the Secretary of State—

(a) if its acquisition would entitle the Board to exercise or control the exercise of 30 per cent. or more of the votes at any general meeting of the body corporate; or

(b) if the value of the consideration for its acquisition, together with the value of any consideration paid for the share capital of that body corporate previously acquired, would exceed £10,000,000."

The Amendment proposes to leave out the words,
"or in accordance with any general authority given by the Secretary of State".
One looks back at the White Paper which says that, within the framework of their constitution and the funds made available to them, the Board will be free to exercise their commercial judgment in carrying out the functions described by paragraph 24. They will, however, require the consent of the Government before they take a controlling interest in any enterprise—and I emphasise those words—or a minority interest exceeding £5 million. This is not the first time that the words,
"in accordance with any general authority given by the Secretary of State"
have been used. They have already been used in Clause 4 in relation to the transfer of publicly owned securities and other public property. The provision says that they may be transferred to the Board or their nominees only with the consent of the Secretary of State in accordance with his general authority. That is a perfectly understandable case for a general authority, but I do not know what the words mean in the present case. The Secretary of State could give a general authority in relation to a specific acquisition by indicating that there was a general authority to purchase certain shares, not at 105p or whatever it might

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be, but, for example, at up to 120p. That would be a general authority, I suppose, or it could be so interpreted. Alternatively, the Secretary of State might give a general authority for the acquisition of any of the share capital of a body corporate. In a case like that, the phrase "a body corporate" could mean any body corporate, but I am not certain whether that is intended. I feel that it it is extremely important to be absolutely clear what these words mean.
Personally, in view of what the White Paper says, I should be inclined strongly to resist any general authority to acquire shares over the limit specified in subparagraphs (a) and (b). I believe that we need a clear assurance that the first of the explanations which I offered is the right one and not the second. I beg to move.
Lord BESWICK: The noble Lord fairly stated what the position was, but he omitted to say that in another place on Report stage the Government accepted the Opposition's contention that the restrictions of the Board in Clause 9 should apply to all the Board's subsidiaries. That is a difference from the original wording of the Bill. The Government accepted that it should apply to all the Board's subsidiaries, rather than to their wholly owned subsidiaries only. So the Board will now require the Secretary of State's permission for them or any of their subsidiaries to acquire shareholdings of more than 30 per cent. in companies or to invest more than £10 million in the shares of the company.
Lord DRUMALBYN: I hope the noble Lord did not mean that I had omitted something. I merely read out what the clause said.
Lord BESWICK: I believe I said that the noble Lord had clearly stated the position, but it is important to note that there was this extension as a result of the proposals put forward by the Opposition in the other place. That makes a difference which I shall explain. It means that companies such as Rolls-Royce and British Leyland, if—as I imagine they will—they become the responsibility of the Board, will be subject to this requirement. I put it to the noble Lord that it would be a waste of resources and would mean unnecessary inefficiency if
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every small acquisition made by Rolls-Royce or British Leyland had to be the subject of an authority by the Secretary of State. What is intended here is a sort of general authority to a subsidiary which will enable it to carry on its business in a proper businesslike way, without having to come back to the Secretary of State for every minor acquisition it might conceivably make.
The clause as drafted gives the Secretary of State discretion whether or not to approve each specific acquisition. If he makes clear that there are certain classes of acquisition that he would certainly approve, that does not seem to widen his discretion. I understand the noble Lord's anxiety in this respect, but I hope he will accept that the present wording is designed not to give unlimited authority to anyone but simply to cover the category of cases I had in mind.
Lord DRUMALBYN: I am grateful to the noble Lord. As I understand it, I was substantially right; it is the first alternative I suggested. Each general authority is related to a particular firm to avoid the necessity, each time one wishes to make a further acquisition of shares of over this amount, to come back to the Secretary of State and get his authority for those purchases. Is that so, or is it a general authority relating to several firms, or is it a general authority that once you achieved the 30 per cent. you could go on acquiring shares in any firm which had already reached these limits?
In that case, the consent would be given at the point where you were about to achieve a 30 per cent. acquisition of shares, whether at one go or at several. After that, you might have a general authority to go on acquiring shares once you had reached those limits. Is that so? I am anxious that it should not mean that there should be a general authority which would dispense with the requirements in (a) and (b). That it is essential to avoid. The consent to exceed the 30 per cent. or the £10 million must be the subject of a consent related to the event in each case.
Lord BESWICK: I wish to be absolutely frank with the noble Lord. I know what the intention is. It is to relate it to the first case. Whether the effect would be to limit it to that case, I am not absolutely certain. I should like to take

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advice on this and we could return to it again at the Report stage.
Lord DRUMALBYN: The fact that we do not have a large number of speakers on this Amendment does not indicate that this is my opinion alone. It is a matter of considerable importance. I am grateful to the noble Lord for his willingness to look into it, and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
8.15 p.m.
The Earl of BALFOUR The Earl of BALFOUR moved Amendment No. 83:
Page 9, line 16, leave out ("30") and insert ("25").
The noble Earl said: I am not familiar with this position but perhaps I might briefly try to explain. As I understand it, if a person holds more than 20 per cent. of a company's shares he may consolidate his earnings as a holding company in respect of a profit and loss account. If a person holds more than 25 per cent. of a company's shares, he has the right to appoint directors to the board and has control of the dispersal of major assets or the raising of share capital. It is surely at the stage of 25 per cent. that the board have almost all the power they need. As I understand it, if a person (or for that matter the NEB) has 30·1 per cent. of the shares of a company he can then make a takeover bid for the balance of the shares.
The difference between the 30 per cent. in the Bill and the 30·1 per cent, which permits a takeover bid is really too narrow. I am not an expert in this field, but I would seriously ask the Government to consider that 30 per cent. is too high and too demanding. Again I say that I am certain that this is just the kind of thing which will not encourage investment in British industry, and particularly investment in which the Board have even a very small percentage of shares. I would ask the Government to consider this again in view of what they say in other places of trying to create confidence in British industry. I beg to move.
Lord MELCHETT: I think the noble Earl is being a little extravagant in talking about the Government discouraging investment and destroying the confidence
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of industry. So far as I am aware—and we have taken careful advice about this—there are no extra obligations which would fall on the NEB or any other person who acquired only 25 per cent. of a company. We are not aware of any additional obligations or liabilities which come into effect on a 25 per cent. holding. The 30 per cent. holding is the stage where the City Code on Takeovers and Mergers starts to bite and where an unconditional offer to the other shareholders must be made. It is for that reason that the 30 per cent. figure is in the Bill. If the noble Earl knows something that we do not know then we shall be interested to hear of it. My advice is that there is no special significance in the 25 per cent. figure, and therefore we have used the 30 per cent. figure in the Bill.
Lord DRUMALBYN: The special significance in the 25 per cent. is that it is lower than 30 per cent. If you allow the threshold to be raised to exactly the same threshold where the City Code and the Company Act bite, then you are in danger. At all costs the threshold here ought to be below that threshold; there ought to be a safety margin between the two. I do not say that 25 per cent. is the right figure; perhaps it could be 28 per cent. But it is too dangerous to bring it right up to the legal threshold. I think he is on to a very good point and I hope the noble Lord will look at it.
Lord MELCHETT: I do not see the terrible dangers that the noble Lord speaks of. The reason for the 30 per cent. is because at that stage the NEB will have to go to the Secretary of State to get his permission before making an unconditional offer. Thirty per cent. is the figure that the City Code lays down and the Government have nut that figure into the Bill. What terrible dangers arise between 29 per cent. and 28 per cent. or wherever the noble Lord envisages them, I fail to see.
Lord DRUMALBYN: It is only because we have been talking already in terms of a gradual build-up. It is very difficulty to say exactly at what point you are going to go over 30 per cent. It may be the Board would go to the Secretary of State for consent before reaching that particular level if they were acquiring shares gradually. There is considerable merit in getting a safety margin

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so that the Secretary of State's permission would have to be granted to exceed that margin, and that would carry with it implicitly the permission to go on above the 30 per cent. level. There is something to be said for this, and I hope the noble Lord will think about it.
Lord MELCHETT: I will certainly consider this matter, as the noble Lord has raised it. From looking at Clause 9, he will see that the Board will always have to go to the Secretary of State before they acquire 30 per cent. because they have to consult him when they are about to make an acquisition which will give them 30 per cent. That seems to be all the safety margin that could be needed. I do not think the noble Lord is disagreeing with me that 30 per cent. is the right figure before consultation should take place. The fact is the NEB will have to go to the Secretary of State when they are about to make an acquisition which will give them up to 30 per cent. But I will look at this matter again.
The Earl of BALFOUR: I feel there is a serious risk of going just over the 30 per cent. It is, so far as I can understand, a threshold figure between not having control and virtually being able to take over the assets of a company.
Lord MELCHETT: If I may correct the noble Earl, that is not the case at at which the Code on Takeovers and all. The 30 per cent. figure is the figure mergers says the company has to make its offer unconditional. I am being nodded at by noble Lords opposite who know a great deal more about that than I do, so I am sure I am right. There is no question of the Board having power to buy things up lock, stock and barrel. It is a provision to protect shareholders of the company, not for the benefit of the Board.
Lord DRUMALBYN: There are two cases: the Board could acquire a block of shares which would give them more than 30 per cent., or there is the case where they are building up their interest. Is there any circumstance that could lead to the Board inadvertently going over the 30 per cent. without knowing it, and therefore being involved in the Stock Exchange takeover requirements? If so, then the limit at which permission from the Secretary of State should be
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obtained should be below the point where the Board are obliged by law to bring into operation the legal provisions.
Lord MELCHETT: So far as I know, the answer is, "No". It would not be possible. It would be very difficult to buy shares by accident; but if, having considered the matter, I am advised that there may be occasions where the NEB could find themselves suddenly with more shares in a company than they thought they had, or buying more shares, I will let the noble Lord know. My first reaction is to say quite definitely, "No".
The Earl of BALFOUR: I am grateful for that assurance. If the noble Lord, Lord Melchett, will go into this I will he much obliged. I beg leave to withdraw the Amendment
Amendment, by leave, withdrawn.
8.25 p.m.
Lord ABERDARE Lord ABERDARE moved Amendment No. 91:
Page 9, line 33, at end insert—
("( ) Neither the Board nor any of their subsidiaries shall acquire any of the share capital of a body corporate otherwise than in the name of the Board or subsidiary as the case may be.")
The noble Lord said: The three Amendments which we put down, Nos. 89, 90 and 91, were all designed with the same object in view, which was to deal with "warehousing" by the NEB. I know very well from assurances I have had from the Government, and from the noble Lord, Lord Ryder, that the Board have no intention whatever of being involved in "warehousing". At the same time, it is right we should put a provision in the Bill. If it is obviously agreed on all sides that it should not happen, it is better to have it in the Bill where we can see it is prevented from happening.
The suggestions which were included in Amendments No. 89 and 90, which I have not moved, were those discussed in another place, that the NEB should let the board of a company know when they were bidding for the company's shares before they had officially to do so at the 10 per cent. level. Once they acquire 10 per cent. of the shares then, under the Companies Act, they have to disclose the fact to the board. This is where they are buying shares under 10 per cent. of the total, and where it would

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be possible to buy shares through nominees or subsidiary companies and build up a shareholding of more than 10 per cent.
I am attracted therefore only to the third Amendment, Amendment No. 91, which is a simple Amendment saying:
"Neither the Board nor any of their subsidiaries shall acquire any of the share capital of a body corporate otherwise than in the name of the Board or a subsidiary as the case may be".
This is a straightforward way for the Board to operate. It would mean that the board of directors of any company that was threatened with shares being bought by the NEB by keeping a close watch on its share register, could easily see whether the NEB or subsidiaries of the NEB were buying its shares. This would be a very helpful Amendment. It does not seem a difficult one, and I hope that the noble Lord will see his way at the end of this long day to accept at least one Amendment. I beg to move.
Lord BESWICK: Nothing would give me greater pleasure than to accept this Amendment, though I am sorry to have to say at the outset that I cannot do that in this form. But I have given assurances and I will repeat them. The Government have been committed all along to the basic principle that the NEB should, within a framework of Ministerial and Parliamentary control, be subject to neither more nor fewer restrictions than comparable private sector concerns. This means that, like the former IRC, they should have the power to make a contested takeover bid if there is a situation which seems to warrant that. They would be buying shares from willing sellers at mutually agreed prices—if the consent of the Secretary of State has been given. There will be no compulsory powers of acquisition. Up to that point I am sure we are in agreement. It is expected that acquisitions by the NEB will normally be with the full agreement of the existing management, but it would not be desirable for management to have an absolute right of veto over the right of the NEB to seek to acquire shares in a company. There may be cases where shareholders are dissatisfied with the management and wish to dispose of their shares, and the management will be against having
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another large shareholder. Nevertheless, it would be quite wrong to prevent shareholders from selling shares if they wished.
The requirement of Sections 7 and 8 of the 1972 Industry Act, providing for the Secretary of State to secure the consent of companies before acquiring their shares, is in any event not a convincing precedent. The Industry Act is concerned with financial assistance, and here we are dealing with something quite different. On the point of the name in which shares would be bought, we have made it quite clear that Section 33 of the 1967 Companies Act, which applies to a person, will apply automatically to the NEB, so that the normal safeguards against warehousing and acquisitions by nominees which apply to private sector companies bite on the activities of the NEB. Thus if the NEB, acting through nominees, were to build up an interest of more than 10 per cent. of the voting shares in a company, it would have to notify the company. That is the practice as required by the Companies Act.
I said on Second Reading, in response to questions put to me by the noble Viscount, Lord Watkinson, that the NEB would in no circumstances indulge in warehousing; that is, building up a major shareholding in secret by acting through a number of separate associates. This is going further than the Companies Act requires. As I have said, this undertaking will be honoured. I am advised that it will be technically impossible to require the NEB always to act in their own name. In fact, the Government have found it necessary to put down Amendments ensuring that securities may be transferred to nominees, so that the provisions of the Companies Act stating that a public company must consist of at least seven persons were not infringed. We referred to this point earlier. There may well be nominees simply to conform with the Companies Act, and it may be possible that those nominees would seek to buy shares at the behest of the subsidiary company. But I have given an undertaking that if those nominees each purchased less than 10 per cent. but together equalled 10 per cent. or more, that would be made known as if the NEB themselves or one nominee had bought 10 per cent. I hope that with that assurance the noble Lord will be able to withdraw his Amendment.
Lord ABERDARE: I understand the reason why the nominees were brought in on the previous occasion, but I still do not understand why these nominees need buy shares. I should have thought that the NEB or one of their subsidiary companies could certainly buy shares, and I really do not follow why there is any difficulty. I was simply following the words used by the noble Lord on Second Reading and trying to put something into the Bill which would reflect the fact that the NEB were certainly not going to indulge in any warehousing.
Lord CULLEN of ASHBOURNE: If nominees are used, will the names they use be identifiable ones? For example, if they are to be called "NEB nominees" or "British Leyland nominees" that is one thing; but if it is to be "Barclay's Bank nominees", that is quite another.
Lord BESWICK: So far as I know, there is no intention of surreptitiously buying shares for the purpose of warehousing, and I have given an undertaking in that respect. As regards making it a requirement that the nominee should say, "I am a nominee of the NEB or of a subsidiary company", I am not certain that it would be right to give that undertaking, in so far as such a requirement is not called for in the case of a nominee acting for any other private company. As I have said, we have openly said that the requirement placed upon other private companies will be placed upon the NEB. With that ought to go the fact that we do not place anything on the NEB additional to that which is placed upon a private company's nominee. However, there is one case that I think is reasonable. It would be quite wrong for a public company to act under cover of nominees to acquire more than 10 per cent.
Lord ABERDARE: I am grateful to the noble Lord and I beg leave to withdraw the Amendment.
Amendment, by leave, withdrawn.
Lord MELCHETT Lord MELCHETT moved Amendment No. 92:
After Clause 9, page 9, line 33, at end insert ("Part II").
The noble Lord said: In moving this important Amendment. I am glad to be able to assure the Committee that its implementation will be under the close
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personal supervision of my noble friend Lord Beswick, who has strong feelings about the matter. I beg to move.
Lord ABERDARE: The Government having accepted no Amendments of mine, I do not feel very well disposed towards accepting this one. But I would point out that the Amendment of my noble friend Lord Balfour—that is, Amendment No. 93—should surely come in front of this Amendment on Part II. But that is another day's work.
Lord BESWICK: Should we inadvertently accept the noble Earl's Amendment, we shall be in some difficulty. But I hope I shall be able to quote this as an additional reason for the Committee's not accepting it.
On Question, Amendment agreed to.
House resumed.

EUROPEAN COMMUNITIES COMMITTEE: SECOND SPECIAL REPORT
8.37 p.m.
The PRINCIPAL DEPUTY CHAIRMAN of COMMITTEES (Baroness Tweedsmuir of Belhelvie)The PRINCIPAL DEPUTY CHAIRMAN of COMMITTEES (Baroness Tweedsmuir of Belhelvie) rose to move, That this House takes note of the Second Special Report of the Select Committee on the European Communities. The noble Baroness said: My Lords, I beg to move that this House takes note of the Second Special Report of the Select Committee on the European Communities. This House enjoined the Select Committee, and I quote:
"to review the scope of its functions in the context of its terms of reference and to report to the House after a year's experience."
That year ended, of course, in the month of May, but owing to the referendum we thought it wise to postpone finishing our Report and having this debate until after the result was known.
I feel it an honour to present this Report on behalf of the 18 members of the Select Committee. They have, together with the 32 co-opted Members of this House, done an immense amount of work, and they have done so during a time when ever more serious economic difficulties crowd upon this country and inevitably upon each individual. But despite all this, the work of the Select Committee has been undertaken with

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energy, with skill and, I believe, with real interest. Whatever our political views—for we represent all Parties and none in this House—we have worked as a very happy team, and that has meant a great deal to their chairman. I should like to thank every noble Lord for his cheerful support.
Last November I inherited the excellent arrangements made by the noble Lord, Lord Diamond, of five Sub-Committees. I added a sixth. Perhaps the House may not always realise the responsibility which is placed on Sub-Committee chairmen. This includes studying the documents first, arranging the programme of work and the taking of evidence. During the year, three chairmen have left for other work: the noble Lords, Lord Drumalbyn, Lord Walston, and Lord Lloyd of Kilgerran. They have been succeeded by the noble and learned Lord, Lord Diplock, the noble Earl. Lord Selkirk, and the noble Lord, Lord Raglan. The European Parliament then claimed the noble Lord, Lord Bethell, who was succeeded by the noble Lord, Lord Pritchard. I should like to say, on behalf of all noble Lords who have worked with us, that we could not have done without the unstinted work of many people in this House We knew that we were short of staff. We knew we could not remedy it before the referendum, and many officers of this House have added our work to their normal duties; and to them, on behalf of the Committee, I should like to express our most deep gratitude.
I understand that it is the custom of this House that officers of the House should do all kinds of work. Nevertheless, I do not think it can continue to the same extent. Therefore, I am grateful to the Offices Committee for considering this problem this afternoon, and also to the Clerk of the Parliaments for the way in which he has so well tried to reallocate some of the duties within the staff of this House. I should like to say to the noble Lord the Leader of the House how glad I am that he is going to reply to this debate, because he has consistently been very helpful—maybe because he was a distinguished member of the Maybray-King Committee. But it has meant a great deal to us. I should like also to thank the Government as a whole and their Departments in work which,
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after all, has been novel to us all. Not that we have not had our problems—and where the Report lists them it is only because Parliament wished us to become as efficient as possible.
As chairman, I have had the task of sifting all the documents which come to us from the Commission. I have tried to exercise my judgment as to those documents which are of political or factual importance. These have been listed under "B." The others are listed as "A." I have added another category which is, B for information, where I do not wish the Sub-Committee to study the problem in depth, but I think they certainly should be aware of it.
From November, when this Committee was reconstituted in this Parliament, until 24th June, which is our cut-off date, there have been sifted 700 documents. Those which have been sifted as "B"—in other words, should be studied by the Sub-Committee—total 33·9 per cent. There are left for the Committee under consideration now 33 documents. The House will be aware that we have overcome the backlog and therefore we study the documents rather more closely and take wider evidence, and we have been helped from time to time with advice and research of five specialist advisers. It is not always easy to achieve the right balance between what is called in modern terms, I think, a study in depth and an appreciation of the broad political, legal and practical consequences of proposals.
For example, there is now sitting a Royal Commission on Environmental Pollution whose work will probably take about two years. When a proposal on an environmental question comes before us from the Commission, in a Regulation which is binding on this country or a Directive that we must carry out, or a Consultative Document which gives us the thinking for the future, we must remember that, however expert the knowledge which is available to us, we must try not to become too involved in the specialist detail but to study the Parliamentary and political consequences in the United Kingdom of the proposal and to make a report and recommend it either for information or debate. In the time from November until 24th June, the Select Committee have recommended for information 47 documents to this House; and for debate, 17.
When it come to debate, luckily it is possible to group some of these Reports together. But is it a tribute to the usual channels that we have discussed every single Report, except three. One is a very important document on energy, which is to be debated in the autumn; one is a long-term document from Lord Diamond's Committee which is on the harmonisation of VAT, and the other is on the budgetary powers of the European Parliament, which will be discussed together with an Affirmative Order which will be laid before the House by the Government.
We have been lucky in having the noble Lord, Lord Chelwood, as a former member of the European Parliament, to be a member of our Committee. He had hoped to speak tonight but simply cannot come here due to other engagements. Nor indeed can the noble Lord, Lord Hill of Luton, the chairman of Sub-Committee C, who I regret to say is unwell. But we have been fortunate in that we have managed to co-opt to our service the noble Lord, Lord O'Hagan, who has only so recently left the European Parliament. And, of course, whenever we are fortunate to have members of the Parliament with us such as the noble Earl, Lord Bessborough, they are very welcome to our Committees, as indeed are all Members of this House, who have the right to attend and to speak but not of course to vote. We manage to exchange the documents from the European Parliament so that we know what is being discussed in committee there; and I believe it is true to say that sometimes we have been in advance of some of debate which has happened in the European Parliament at Strasbourg.
When it comes to debates, I think I should like to draw the attention of the noble Lord the Leader of the House to a recommendation made in the Maybray-King Report—and he will recall this as a member of that Committee—that we should have certain Motions placed before the House from the Select Committee to approve certain documents; not only to take note, which is what we do now, but to approve the opinion of the Committee, because our terms of reference are wide enough not only to make a recommendation but also to express an opinion. There are occasions when it may well be that we shall need
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to have short urgent debates. I do not know how widely known it is that any noble Lord can put down a Motion for debate at the end of Business and it can be taken. I think it is rather interesting to recall that on three days in April we rose before 6 o'clock, on one day in June, and on one day in July. That is not taking into account the times when we rise before seven or before eight. Therefore there really is more time available, perhaps, than everybody realises.
It is incumbent on me to say about our terms of reference that we are content with them. We found them wide enough. We want no change. We should however like to have a larger number of members on our Select Committee. At the moment we are allowed to have about 15, which means 18 in practice. We should like to have about 22. Sometimes there are occasions when a member of the main Committee cannot attend a Sub-Committee and it would be very useful if we could have this number enlarged. We hope also that the Procedure Committee will consider a measure of continuity of the Committee. This was recommended in the First Special Report by the noble Lord, Lord Diamond. He recommended that it should be for the duration of a Parliament because then it avoids delay in setting up the Committee at the start of each Session. I understand that similar arrangements were proposed for the Committee in another place and these have been already granted.
Many people who do not serve on our Committees may think: "How is it that there is a Committee in another place and a Committee in this House? Surely, they are merely overlapping and doing the same work." I hope that one day we shall indeed have a Joint Committee, but I do not see it happening in the immediate future. Therefore, I should like to tell the House what it is that we are trying to do. We exchange all documents and there is therefore a tacit agreement not to duplicate if possible.
If, for example, we have taken evidence on some subject, another place will not take that evidence. And, of course, there are certain subjects, which are tacitly left to each Committee. For example, there is the Budget. That is discussed by another place, although we do now study the Budget as background

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to the economic decisions. However, if you take company law, some very far-reaching proposals are now being studied very carefully indeed by both Sub-Committee E, the Legal Committee, and Sub-Committee A, the Economic and Financial Committee. Therefore, I think that without saying so the study of company law is largely left to us.
There are, of course, some subjects which are of interest to both Houses. For example, both Houses have had debates on the stock-taking of the Common Agricultural Policy and no doubt both Houses will have further debates on energy. We have had freedom of establishment debates in Sub-Committee C, and we shall consider the Treaty of Lome and through it our relations with the developing countries in the Commonwealth—I hope in a general debate on this subject. This is studied by Sub-Committee B. Indeed, they are about to undertake a study of the different types of treaties which come before us. The Legal Committee is presided over by my noble and learned friend Lord Diplock. We in this House are extraordinarily fortunate to have him here and I would recommend every noble Lord who is genuinely interested in our future in Europe to read Annex C to our Report which was written by the noble and learned Lord, Lord Diplock, and which is termed "The Legal Structure of the EEC. Theory and Reality." It is on this that the future role of Parliamentary scrutiny is based in Part 2 of our Report. We are also very fortunate in having as Counsel to the Select Committee, Sir Charles Sopwith. I do not know whether it is realised that every document which conies from the Commission is studied by Sub-Committee E. We owe a very great deal to Sir Charles Sopwith for the enormous work he has undertaken. Our recommendations include some which are the responsibility of the Council and the Commission. When the United Kingdom takes on the Presidency, I hope it will be able to manoeuvre something to improve the procedure. However, some recommendations do, of course, involve the Government. I am glad to see that the recommendations we have made are the same as those which are recommended by the Select Committee on Procedure in another place. Therefore, I hope
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that in both Houses this will have an effect.
The noble Lord, Lord GoronwyRoberts, when winding up the debate on the First Report, said this in col. 636:
"It is a major aim of Her Majesty's Government to ensure that the views of Parliament can be brought to bear before British Ministers subscribe to decisions."
As a former Minister at the Foreign and Commonwealth Office, I felt, and still feel, that to be effective scrutiny must involve Parliamentary debate on important matters before the Ministers take decisions in the Council. However, I feel also that it is important that Ministers should not have their hands tied in Council to the irritation of their colleagues and the possible postponement or even loss of a decision. It follows, therefore, that if scrutiny is to work certain definite things must be done. First, one must take early warning of what is to come. The Maybray-King Report said, and I quote:
"Scrutiny should be carried out as early as possible."
In other words, we should be prepared before the formal document comes to us from the Commission. We do not ask to be involved in a formal way in what is colloquially known as the Avant-Projet strategy. We do not think this is our job but we do know that when the Commission has a working document which it circulates to all Nine Member countries it consults not only the civil servants of those countries but also the interested specialist organisations. Of course, members of the Select Committee and those who are co-opted are often members of these specialist committees. I do not think it is right that they should go to a meeting of a committee outside Parliament to find that there is a working document under study of which they are not aware. Therefore, I suggest that the Government should informally advise us of what is in the mind of the Commission and of what is being circulated in this country so that we are prepared in time for the arrival of the formal document.
So far as documents are concerned, I believe that the Explanatory Memorandum has been of very great help, but I suggest that added to it there should be the financial implications which are important for us and also details of the

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organisations which are consulted and what they said—not only that so-and-so was consulted but what their view was—because we shall have to find it out somehow, anyway. Perhaps it is most important to recall that the Maybray-King Committee recommended that the Select Committee on the European Communities should follow up any document which they had studied and recommended for debate—in other words, the important documents. When they reach the Council of Ministers, the Council often say: "We do not like this. We should like the working groups of the Council to look at it and to amend it". Often the result is that the document upon which a decision is made is, in fact, quite different from the document which came before us in the first instance. We have an extremely efficient organisation in Brussels and many members of my Committee and I are grateful to them for what they have done whenever we have visited Brussels. However, I suggest that it would not be difficult to have a document amended and brought up to date without revealing the negotiating position of the other Governments concerned.
There is a new procedure which is creeping into the European Communities. This is referred to by the noble and learned Lord, Lord Diplock, in Annex C to the Report. It is that we now have meetings of the Summit—it is called the European Council—which were not foreseen in the Treaties and, indeed, meetings of Foreign Ministers four times a year. Often they give guidelines on policy or else instruct the Commission that this and that should be done. Where there are major subjects like this, I suggest that the Government should inform us of what is going on. After the Referendum we now live within the political realities of the European Community. The object of the Select Committee is to take away some of the burden from this House. It follows that our evolving procedures should be as efficient as possible and I believe that as a member of the Community there will be more for us to do.
I submit that it may be that some of the methods of work of European scrutiny could be applied to the study of our domestic legislation as Parliament is forced to reform itself to cope with the
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pressures of a modern State. One day the European Parliament will no doubt take on our work after direct elections, but it may well be that even then the United Kingdom Parliament will still wish to have some insight into legislation proposed in a European context that will affect our daily lives. Until then, while scrutiny is directed to the interests of our national Parliament, I submit that the effect of working in this Select Committee is to acquire in a natural way the "feel" of a European dimension. So that in many ways it becomes clear where the interests of the national and the European dimensions can merge, and to that end I believe the work of the Select Committee is worth the doing and will grow now that we are firmly a member and can share in shaping our European future. I beg to move.
Moved, That this House takes note of the Second Special Report of the Select Committee on the European Communities.—(Baroness Tweedsnutir of Belhelvie.)
9.0 p.m.
Earl COWLEY: My Lords, I should first like to express the gratitude and thanks of my noble friends and myself to my noble friend Lady Tweedsmuir of Belhelvie for the remarkable work that she has carried out as Chairman of the Select Committee on the European Communities. Similarly, the whole House is, I am certain, grateful to all those noble Lords and noble Baronesses who are either members of the Select Committee itself or were co-opted on to one of its Sub-Committees, for without the tremendous effort that they have put into the running of the Scrutiny Committee it would not have achieved its objectives so successfully, and the mass of Regulations, Directives, secondary legislation and other documents emanating from Brussels would not have been examined with so much detail and thoroughness.
I believe that it is a testament to the Select Committee's work and selectivity that this House has been able to debate all except three of the Reports that the Committee has recommended for debate this Session. The bright prospects hinted at in the Select Committee's First Special Report, which the House debated last November, have certainly been borne out by this Second Special Report. While

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I recognise that it was not, and quite rightly so, within the Scrutiny Committee's terms of reference to get involved in the pro- and anti-Common Market divisions within the country, the result of the referendum has, as the Report states in paragraph 47, "removed one of the major obstacles to effective scrutiny". But of possible equal importance to the removal of the uncertainty about Britain's membership of the EEC was the decision by the Labour Party to take up its share of the seats available to it at the European Parliament. Perhaps in the future, with more Members of this House with a dual mandate, attendance at the Select Committee and its Sub-Committees will increase.
The ability of noble Lords who are also Members of the European Parliament to attend the Select Committee other than rarely was raised in the Report. I think the fact that they are unable to go as often as one might wish is a shortcoming, and it would be useful to the Committee as a whole to have another source of information and opinion. Furthermore, in view of the growing power and influence of the European Parliament in relation to the other EEC institutions, especially the Commission, it is not before time that this country decided to send a complete delegation to the Parliament at Strasbourg.
There are a number of points which I should like to raise on the Report itself. I personally feel that this document is an excellent summary of the workings of, and the problems faced by, the Select Committee during the last year, and many of these problems will be there next Session. I am glad that the Select Committee is working in close liaison with its opposite number in another place, and that there is a free exchange of information. However, it is important to remember that the remits of each Committee are not identical, since the Select Committee in this House deals with more than just secondary legislation. Consequently, it would be regrettable, to say the least, if the wider responsibilities of our Select Committee suffered because the financing and the staffing tended to be concentrated on the more limited remit of the Committee in another place. This was a point that I felt was being alluded to in paragraph 18 of the Report. Within
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this context, I hope that the noble Lord the Leader of the House will look at the facilities being offered by the Library of this House to see whether any improvements need to be made in this area.
Another problem that seems to have raised its head throughout the Report is the question of the effective dissemination of information, whether it is between the Select Committee and the public at large, or between the European Community and the Select Committee in this House via the Government. The Report is right when it states in paragraph 34:
"The Committee consider that it is important that both Parliament and public should be provided with fullest information about the European Communities. The Committee have been impressed during their work with the considerable lack of public understanding of the EEC. Efforts should be made in particular by the Government to overcome this lack of information."
So far as the public are concerned, much is dependent upon the willingness of the mass media to publicise the proceedings of the Scrutiny Committees in both Houses. Perhaps the mass media itself will look at the emphasis it places upon those proceedings.
The introduction of a broadsheet to be distributed to those noble Lords who request it has certainly helped so far as this House is concerned, and removed one of the criticisms that was raised in the November debate last year. Part of the problem, as the Report states in paragraphs 32(c) and 36, results from the interminable delay in the translation of Community documents into English and the printing of Select Committee Reports and evidence. For example, the Government have made time available this evening to debate this Second Special Report, and yet I was unable to get a copy of it from the Printed Paper Office until last Friday morning. Thus for many noble Lords who do not come to the House on Fridays unless it is sitting, for all intents and purposes the Report was not available until yesterday morning. I really do not think that 24 hours is enough time to give the Report the proper study that it merits and deserves. Thus I should be grateful if the noble Lord the Leader of the House could look into this problem and see whether any of the procedures of this House need to be changed in the light of this problem.

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While the Committee expresses its appreciation to the Government for the speed with which it supplies the EEC proposals and explanatory memoranda, it appears from paragraphs 39 to 42 that it is at Government level that many of the real shortcomings have to be solved. Unless there is proper and continual provision of information from the Government at all stages of the passage of EEC and secondary legislation, from its inception by the Commission to its adulthood as Community law, effective scrutiny becomes more difficult. The early warning mechanism suggested in paragraph 40, and mentioned also by my noble friend, would, I believe, be of great benefit to the Select Committee, especially if it was coupled to an early and late scrutiny procedure as recommended both in the Maybray-King and the Select Committee Reports. This would necessarily involve an increased burden upon Government Departments, since it would require more than the current provision of documents and memoranda being provided. Even the divulgence of more information on an informal basis would be an improvement, and a necessary one, in view of the tendency to alter secondary legislation after it has been scrutinised by this House. However, I should like to hear the views of the noble Lord the Lord Privy Seal on this point.
My Lords, I do not feel in my own mind that there is any real doubt about the need for better and more substantial information about the work being carried out by the Council of Ministers and at the more informal Summit meetings. This point was raised by my noble friend. However, the Government showed that their heart is in the right place when they stated in their White Paper, Membership of the European Community. A Report on Re-negotiation,
"The Government intend to continue to develop these arrangements "—
in other words, for Parliamentary scrutiny of EEC proposals—
"so as to make them more effective and to enable Parliament to express its views on draft Community legislation in the most appropriate way."
I hope and trust that the Government live up to these very worth while intentions.
In paragraph 44, the Report once again raises the question of the continuity of the Committee and advocates the appointment
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of the Committee for the duration of a Parliament, rather than just for one Session. An alternative solution might be to adopt the same procedure as that used for the appointment of members of the European Parliament from this House; in other words, the House would appoint the Committee until it decided otherwise. Thus, the disadvantages raised by the dissolution of the Committee at the end of each Session, and also the disadvantages which would equally apply if it was dissolved at the end of each Parliament, would be removed by this procedure, since the Committee could be extended over from one Parliament to another. I feel there are very convincing reasons for altering the present procedure. Perhaps the noble Lord the Leader of the House can say what consultations he has had on this question, and with what results. Perhaps he could also say what his attitude happens to be on this point.
My Lords, lastly I should just like to express once again the gratitude of those on this side of the House to those noble Lords and noble Baronesses, and the officials and experts who have assisted them, for their exceptionally hard work in making this Select Committee a viable and valuable entity.
9.13 p.m.
Lord WALSTON: My Lords, may I, first of all, thank the noble Baroness, Lady Tweedsmuir of Belhelvie, for the admirable way in which she has introduced this debate, and for giving us a chance of directing our attention to this Report of the Select Committee. More important, may I say how great a pleasure it has been to me to have the privilege of sitting under the firm, wise and benevolent chairmanship of the noble Baroness, and how admirably she has filled the gap left by my noble friend Lord Diamond. We have been lucky indeed in our two chairmen. For me, it is very much a source of sorrow that I am no longer a member of the Committee of the noble Baroness.
My Lords, in the broadest terms the general objectives of this Select Committee are to look at Community legislation, and to give this House the opportunity of discussing all legislation being proposed in the Community which appears to be of significance, and by so doing to enable our discusions in this

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Chamber to influence Government policy, and to give guidance to our Ministers when they go to Brussels as to the way this House is thinking—and, to a large extent, I believe, the country.
I believe that in the relatively short time that the Select Committee has been in existence it has done its job well. That does not mean to say that it has done a perfect job. It does not mean to say that its job cannot be improved. I am quite sure it can be improved and I am quite sure it will be improved. It is especially important that this should be done now that the referendum is behind us, now that we have confirmed our membership of the European Economic Community, and more than that, because we are now embarking on the second stage of the development in the Community; that is, towards direct elections to the European Parliament and with those direct elections the increased power, the increased authority of that Parliament.
I believe very strongly that the deliberations in both Houses of Parliament in this country will increase in importance as the powers of the European Parliament increase. So we cannot look back and say, "Soon we will have done our job. There will be a European Parliament and there is no more for us to do". We must say, "We have yet more jobs to do, yet more responsibilities to fulfill, and during this time we must perfect our organisation to see that we can do these jobs properly". Already I believe that the deliberations of the Select Committee have had some influence on the Government, but in order to enable us to exert yet more influence there are various things that are needed. They have already been mentioned by the first two speakers, but there are one or two of them I should like to emphasise and take up.
First, the Committee must have quick information as to what is being proposed and what is being carried out in Brussels by the Commission in their deliberations. There must be quick information so as to give the Select Committee and its Sub-Committees time to examine, time to take evidence, time to deliberate, and, after all those things have taken place, time for your Lordships here to debate the recommendations of the Committee. We must not fool ourselves; whatever influence the Select Committee may have in its
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recommendations, that influence is small compared with the influence of a consensus of your Lordships' opinion as expressed in full debate in this Chamber.
I believe, in addition to that, there is need, as the noble Earl, Lord Cowley, said, for increased public involvement in all our activities here. We already have a very considerable amount of involvement on the part of interested parties, trade associations and so on, who are well aware of what is happening in Brussels, what the proposals are, and are only too ready to give evidence before the Select Committee and its Sub-Committees on matters affecting them. But it is not only those with special interests who should be involved in this; it is the public at large.
There is still a feeling, a very understandable feeling, that the Community is run by faceless bureaucrats who issue edicts from their ivory tower in Brussels to which the whole of the country has to submit. But we know that is very far from the case. What we must do is to make sure that the ordinary people who are affected by this legislation not only know that we are at work here in this House, that the Select Committee is at work investigating all these proposals, but that they have the opportunity not only to come to listen to these deliberations but to participate, by giving evidence, expressing their own views. If that is done, if it is known that that can be done, there will then be no reason for people to think that it is the faceless bureaucrats who are controlling their lives; they will realise that they are participating in the legislation.
Lord INGLEWOOD: My Lords, if I may interrupt the noble Lord, would he not agree that it is extremely sad that his last few sentences, which are so very important to all the people in this country, are most unlikely to be given even one line in any national newspaper tomorrow?
Lord WALSTON: My Lords. I could not agree more with what the noble Lord has said. I frequently feel that it is very sad that the pearls of wisdom which drop from my lips and those of other noble Lords are ignored by all except the very select body who are in this Chamber tonight. In addition to this public involvement—the public at large—there is also,

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and must be increasingly, the closest possible contact with our British Government officials who are concerned with all aspects of Community legislation; those in Whitehall. and those in Brussels. It can be said that admirable contact has been established with them in the past, and for that we should all be grateful. That concept must be fostered and developed, because it is by an understanding of what is going on in their minds, what they understand is going on in Brussels, and by their understanding of the way that we think, that we can get the most effective results of our labours. I apologise: I say "our" the whole time as though I were still a Member of this Select Committee, but I should not do that and I shall try to be more accurate in my speaking.
There must also be closer liaison than in the past with the Commission in Brussels. As the noble Baroness said, there have been visits of herself and others of her colleagues to Brussels, and these have proved extremely valuable. It is not only what one has learnt in going there, but the personal contacts one has made which can, and must, develop over the months ahead, so that there can be the possibility of relying not only on official communication but on the sort of understanding which so often exists in any large organisation which can short-circuit occasionally some of the official methods of communication and bring about the right sort of co-operation and working together, which is the only way that can lead to full success.
There must also be an increasingly close liaison with the members of the European Parliament from this country. I am very new, and so I can speak with no experience whatsoever, but I have learned enough to know that the job of being a member of the European Parliament—and the noble Earl, Lord Bess-borough, will undoubtedly bear me out—is an arduous one, and it gives little time for attendance at the Select Committee and its sub-committees. But I am quite sure that, wherever possible, that should be done by members of the European Parliament. Even when it is not possible for them to attend at the meetings, to have understandings and conversations on a purely personal basis between Members of the Select Committee and Members of
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the European Parliament would be of enormous importance.
In addition to all these different ways of contacts and co-operation between the various people involved, it is important for the Select Committee to have as much forewarning as possible of what is in the minds of the Commission, or in the minds of those who are responsible for promulgating new legislation. I know that it is not strictly within the terms of reference of the Select Committee to attempt to influence legislation in the early stages; it is, strictly speaking, to report on that legislation which already has been promulgated. But undoubtedly the job of the Select Committee will be made much easier, and the efficacy of the objectives of the Committee—in other words, the control as much as possible by the Parliament of this country of its own destiny subject to legislation of the European Community—will be made very much easier if we know what is likely to happen and can be forewarned, and in that way forearmed, and discuss the matters before they actually become projects.
What I personally should like to see is the introduction of something on the lines of our own Government's Green Papers, so that we can debate in the early stages—first, in the sub-committees, then in the Select Committee, and then, if it is of sufficient importance, in this Chamber—the projects at the Green Paper stage, or the White Paper stage, before they come to be incorporated in a Bill.
My Lords, I repeat that I believe the Select Committee in its short life has done a good job. I am quite sure that it is a very important job, and I believe that under the wise guidance of its chairman and with the co-operation of all those concerned, it will continue to advance in its importance and significance so that at the end of the day, or even half way through the day, there will be every prospect of being able to say that the influence of the British Parliament on Community legislation—whether or not that be a directly elected Parliament—is sufficient to satisfy all of us who believe that we have a lot to offer to the proper workings of the European Economic Community.
9.26 p.m.
Lord DIPLOCK: My Lords, there is one respect in which I should wish to

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correct the balance of the Report on the activities of the Committee given by the noble Baroness who moved this Motion. She omitted to tell this House how much the work of that Committee owes to her chairmanship. A Committee can be as good as its Chairman; it cannot be better. The possibility of the Committee working as efficiently as it can has been due very largely indeed to her efforts.
In a debate which starts at 8.30 in the evening I am sure that this House would be grateful if I restricted myself to the one point arising out of this Report which I think is the most important. It is dealt with on page 11 of Annex C, the Child's Guide to the Common Market and deals with the question of enactment. One of the most important distinctions between Community and domestic legislation is that Parliament, largely by the Luxembourg Accord, can influence Community legislation before the legislation is made, but that exhausts its influence. It cannot secure subsequent amendment of that legislation if it has made a mistake. There is the difficulty of initiation, the difficulty of getting the consent of all the other Member-States.
There are two stages in Community legislation. The first stage—the proposal by the Commission, the consultation with the European Parliament—is legislation in public. We have no difficulty about that. The documents are there, we can consider them, criticise them or approve them. But in practice, after that stage, important amendments may be made, and frequently in the most important and difficult legislation are made, in the Council working groups. The danger is that these amendments are legislation in secret, and I regard as the most vital requirement that the Scrutiny Committee should have an opportunity to consider and report on these amendments before they finally come before the Council for decision. The problem, which we have to solve, is to ensure that that information gets to the Scrutiny Committee in time for it to be reported and for a debate if necessary to be held in this House.
The difficulties I understand, but they are, I believe, fairly easy of resolution. The working groups are really a combination of the Committee stage of a Bill in domestic legislation, and the negotiation
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of an international commercial convention and, as a result of the working group's activity, there emerges a document which contains two matters; first, all the amendments which have been proposed by any Member-State during the course of the working group's debates; and, second, indications of the bargaining stance or attitude of the various Member-States. That second part, the haggling that is going on, is rightly confidential and not to be disclosed, but on the first part, the amendments that have been proposed which are going before the Council and will be discussed and voted on then, there can be no objection to informing the Scrutiny Committee of what they are.
I have made inquiries of the legel services of the Community, and I understand that there is no objection—certainly, there ought not to be any objection—to disclosing what amendments are going before the Council and, generally, there would be no practical difficulty in the Government producing not confidential documents, of course, but simply the amendments that will come before the Council when it meets, so that there can be information and, if necessary, a debate on them because they make great differences to the original Commission's proposals. The procedure rules of the Community require that there should be at least 10 days between the Committee of Permanent Representatives, which is where the working group's document eventually gets before it gets to the Minister, and the Council meetings. It is important that we should not, by introducing this procedure, delay decisions in the Council, because such delays have accounted for a good deal of trouble and tension in the past.
One must bear in mind that it may be important, because the meeting of Ministers concerned—agriculture, or whatever it may be—will take place in the next 12 days or so, and if that meeting cannot be caught it may be delayed for another two or three months. So we must be careful not to cause that sort of delay. But I understand from the inquiries I have made that before—and indeed, some time before—the matter finally gets to Coreper, to use the acronym common in the Community, the Government representative on the working group would be able, without much

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difficulty, to provide a list of those amendments which were likely to go forward to the Coreper meeting and thence on to the Council. In the ordinary way, this would not be necessary because there would be time enough when it got to Coreper, but it might be necessary in some cases.
I would stress to the Government—for this seems to be the most important lesson I have learned during the nine months I have been a member of the Committee—that unless we can get some machinery for doing this we shall fail in the task that this House and another place ought to be carrying out in the Community structure, and which is necessary if the Community is to be a success; because to be a success it must carry the consent of the peoples of its Member-States as manifested through their Parliaments. I urge the noble Lord the Leader of the House to consider very carefully whether this can be done.
9.36 p.m.
The Earl of BESSBOROUGH: My Lords, as the hour is late, I shall try to obey the Egremont rules, but I felt that I could not leave the Chamber without congratulating my noble friend Lady Tweedsmuir on a most lucid and useful Report, of which I have carefully read every paragraph, and I nearly got through Annex C of the noble and learned Lord, Lord Diplock, while he was speaking. I was of course particularly interested in paragraph 20 regarding the Committee's relations in the European Parliament. It is true that members of the European Parliament have not so often been able to attend meetings of the Select Committee or its Sub-Committees. By a curious chance, when the Select Committee was first set up I was on certain occasions able to attend meetings which dealt with my particular specialities. Fortunately, they happened to fall on days following meetings of Committees of the European Parliament in Brussels, but recently the dates of these meetings have not dovetailed in very well. If it were possible—which I suppose would be very difficult—to arrange for meetings of the relevant Sub-Committees here to be on days when we were not in Brussels, Luxembourg, Strasbourg or elsewhere, I believe that the whole system could work more happily both at a European and a national level.
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There is no doubt that members of the European Parliament can sometimes act as a useful early warning system. There are no Council officials or national Government officials present at European Parliament Committees when the Commissioners and/or their officials address us in great detail and answer our questions off the record. That brings me to the very valid points which the noble and learned Lord, Lord Diplock, has just made. In his Annex, I see that he says that in so far as the Parliament is concerned, co-operation with the Council is less close. I believe that what he has said in regard to the Council Working Parties and the ability of the Scrutiny Committees to monitor their work is not impossible and I would strongly endorse what he has said. I hope the Government will take this matter up.
Of course, when it comes to a disagreement between the European Parliament and the Council, then we have the conciliation procedure that we are not monitoring at those points between the Commission proposals going forward and becoming adopted by the Council. At all events, so far as Parliament is concerned, I hope it will be possible to arrange a schedule of meetings which might enable members in our place on the Continent to come to meetings here more frequently. I hope the point made by my noble friend Lord Cowley will prove correct in so far as we now have more Peers—and I see some of them here tonight—who will be going to Brussels, Strasbourg and Luxembourg and therefore perhaps between us, on whichever side of the House we sit, we might be able to keep my noble friend's Select Committee and her Sub-Committees more frequently informed of thinking within the European Community institutions.
The flow of information must be two-way. I may say that in the case of one committee, as my noble friend mentioned, they have been so successful in catching up with the backlog, indeed, running neck and neck with a similar committee in Brussels, that in one case they were even ahead of us and I was able on a Monday or Tuesday to listen to evidence given by the competent officials from the Department concerned in one of the noble Baroness's Sub-Committees

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and then go to Brussels the next day and be able to take part in a similar debate on the same subject more intelligently and, I hope, more effectively.
My Lords, I am particularly glad that the Lords' Sub-Committees can meet in confidence without a transcript. This must facilitate a two-way flow of opinions and, I think, make the meeting more useful. Perhaps there should be more private meetings or meetings with the chairman of a Sub-Committee off the record. I think it important that the members of the electorate in this country should recognise that they can make representations on EEC Commission proposals through either their national or the European Parliament or through both.
My Lords, I am glad that the Select Committee have noted the informal new procedures which are evolving within the EEC without any formal modification of the Treaty: the Summit meetings, the D'Avignon procedure and the conciliation procedure which I have already mentioned. One criticism in the Select Committee's Report that I strongly endorse—and it also applies to the Committees of the European Parliament—is that the Commission proposals are sometimes presented to the Council at such short notice before the Council meets that the relevant Committee of the European Parliament and the relevant committee here often have insufficient time to give their opinion. This is a somewhat different case from that cited by the noble and learned Lord. Often we have insufficient time to give our opinion which certainly the European Parliament must do—and I underline the word "must"—under the terms of the Treaties.
I found this to be particularly so in regard to my own report on Energy Research and Development actions which the noble Earl, Lord Lauderdale, knows well. I was asked to get out the comments of my Committee on very first reading, even without a draft before me. We had to agree what our reactions were to these proposals. This was quite inadequate, almost ridiculous. In fact, due to the referendum, the Council did not hold its earlier meeting, as it thought it would, and the European Parliament's Committee could have taken more time over it.
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However, the Council have now adopted that programme and accepted certain suggestions by the European Parliament and its Energy Committee which will now be monitoring the programme closely as it is continuously reviewed.
I strongly endorse what the Select Committee says in paragraph 32 about the burdens laid on the staff of this House and the problems connected with printing requirements, and, if I may so describe it, the Byzantine folly of the four different sets of EEC reference numbers; namely, those used by the Commission, by the Council and the two adopted by the European Parliament. Now we even have a new number when the document comes to this House. This is ludicrous, and I strongly support the Committee's suggestion that Her Majesty's Government should seek to initiate on the Council a review of this situation. I hope that the Government will take this up as a matter of urgency.
However—and I come towards the end—by far the most interesting part of this Report is the beginning of Part II, pages 16 and 17 on the future role of the Parliamentary Scrutiny Committee and the analysis of the balance between the collective interest of the Community that is to say the "European dimension" and the possible conflicting interests of individual Member States, that is to say, the "National dimension". It is, of course, the responsibility of the Commission and, I would judge, the members of the European Parliament, to preserve the European dimension, not over-influenced by pressure from national Governments or national Parliaments, leaving it to that country's representative on the Council to safeguard national interests.
This, in my view, is the heart of the Report and is of very great interest. It poses the fundamental question as to whether European union is likely ultimately to develop into a federation or confederation of States, with the European dimension becoming more important than the national. In history nation States have retained considerable influence for many years before they have yielded powers to federal Governments. We remember how the Troubetskoys held out against the Tzars in Irkutz; how the Texans resisted, and perhaps to some extent still resent, incorporation into the

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United States. We know, too, that those federations created since the war have not been conspicuously successful. As Mr. Chase, the American Chief Justice, said in 1869:
"Federalism looks to an indestructible union composed of indestructible States".
For Europe I do not know what the ultimate framework will be. Whatever it is, whether on the lines of the Bertrand and Patijn proposals which have been adopted by the European Parliament, or on the lines of the Commission's own proposals recently published, which are federalistic in their nature, or something different, I cannot tell.
On these questions we must await the report of Mr. Tindemans, the Prime Minister of Belgium to the Council. Whatever the tenor of the Tindemans Report, I feel sure the European Community will remain a fairly loose union of States for some time, a loose union consisting—if I may put it this way—of dispersed power centres which safeguard individual, local and national liberties. In this way the national dimension referred to in my noble friend's Report may well remain for years as important as the European dimension. But in this age of rapid communications, it could be that the European dimension will expand faster than perhaps it has historically done, and that therefore federalism, or confederalism, may come about sooner than some of us might have expected.
After two and a half years in the European Parliament, I have now become, like my leader Mr. Kirk, a convinced European federalist. I feel that Europe must become more organically united than it is at present if we, the Western Europeans, are to have that influence in the world which the electorate, judging by our recent Referendum, appears to desire. It may be true that during the Referendum, federalistic aspects of European Union were to some extent played down, but in addressing many audiences up and down the country I found that the young certainly wanted us to go faster than the old and that there were many ardent federalists among them. I would not deny them this prize, for the future really belongs to them. That is why I think it is so important that in designating Members to the European Parliament we should send as many
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young persons as possible, for it is they and not the older Members who will see the achievement of that union which I believe a clear majority in the country have called for.
Lord WYNNE-JONES: My Lords, before the noble Earl sits down, I wonder whether he can explain to the House how he thinks the Commission is able to work without continuing criticism from bodies such as the Select Committee of this House? The noble Earl may agree that in some respects the Commission has shown itself remarkably inept at producing policies which are adequate for the situation. This can be very serious for the future. Can the noble Earl give us any indication of how he thinks the Commission can be brought to face its duties more effectively?
The Earl of BESSBOROUGH: My Lords, I have already broken the Egremont rules. I apologise to the House, but if I may comment quickly on what the noble Lord has said, I think the arrival of this country within the European Community has already been very beneficial. I think it will be seen that some of the Commission's proposals—and I agree with the noble Lord that they are sometimes inadequate and not very well put together, which is largely due to translation difficulties—will gradually improve, particularly as British officials consult with Commission officials at a fairly early stage, as well as during later stages. I agree that the quality of the documents and the way in which they are produced is often quite inadequate, as compared with the official documents produced by our own Government.
9.53 p.m.
Lord LLOYD of KILGERRAN: My Lords, I hope it will not appear to be too incongruous if, in the light of the history of Party political attitudes and involvement in Europe, I rise from the loneliness of these Benches, so committed are the Liberals to the European idea, to make a brief contribution to this debate at this late hour. In a personal capacity, I should like to say what a privilege it has been to serve on the Select Committee under the remarkable Chairmanship of the noble Baroness. Lady Tweedsmuir. If I may echo her words, it has been a privilege to me in

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a very small way to help this House, however inadequately I may have done so, to acquire the "feel" of the European dimension, to use words more apt than any I could myself think of.
In adding my congratulations on the work of the noble Baroness, may I direct your Lordships' attention to the word "sifting" which appears throughout this Report. Sifting is done by the noble Baroness, and she certainly undertakes a remarkable amount of work in looking at all these documents and preparing papers for the rest of us to consider. She also participates in the work of many of the Sub-Committees; and it is indeed a remarkable Chairman that we have guiding this Select Committee.
I wish to make only two points very briefly. I should like to take the words of the Report and urge the Government, first of all, regarding recommendation (b) on page 23:
"up-dated memoranda should be provided by the Government in the case of proposals substantially amended in the Council."
The noble and learned Lord, Lord Dip-lock, has dealt fully with that matter, and I shall listen with great interest to what the noble Lord, Lord Shepherd, has to say about it.
My last point is that I should like also to draw attention to the Committee's recommendation (d) on page 24:
"the staffing of the Committee should be considered by the Offices Committee"—
and may I add, "as soon as possible"? Those of us who have worked particularly on Committee F, under the brilliant chairmanship of the noble Earl, Lord Lauderdale, will know what a remarkable amount of work is done by the members of the staff of that Committee in assisting all its members. Without that devotion and work of the staff, the work of this Committee would be brought to an end. My contribution to this debate, my Lords, is merely to ask the Government to pay urgent attention to recommendations (b) and (d).
9.57 p.m.
The Earl of LAUDERDALE: My Lords, whatever else may be said about the Select Committee, it at least answers Emerson's adage that in politics and in
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trade bruisers and pirates are of better promise than talkers and clerks. If our Select Committee has won any acclaim, it is due entirely to our lady chairman In 1714 Mrs. Manley wrote that politics is not the business of a woman: but I have heard it said by a noble Lord in this House that behind every successful man there stands an astonished woman. As Chairman of one of Lady Tweedsmuir's Sub-Committees it would be churlish of me to say a word without first of all thanking my colleagues; thanking our clerical staff, and thanking our specialist advisers, all of whom have worked hard, have been steady under fire, and assiduous in their attention. It would also be churlish not to take this opportunity of thanking my noble friend Lord Bessborough for his attendance from time to time despite the difficulties of his dual mandate.
There are constitutional issues and I do not believe it serves any purpose to obscure them. The Tammany representative Timothy Campbell wrote to President Cleveland in 1885: "What's the constitution between friends?" But the first constitutional issue has already been dealt with by the noble and learned Lord, Lord Diplock. This is the question of information about what goes on in the secret closets of the Council of Ministers. I ask the question whether it is quite sufficient to say, as we have suggested in this Report, that we should rely on the Executive, on our own Government, to provide the information. Parliament's success in acquiring Parliamentary power down the centuries has derived from Parliament's insistence that the Executive should not just get away with things. We have had an experience recently, which will be fresh within the recollection of this House, when some questions were raised by others as well as myself, for example, about the Executive's treatment of Parliament in the choice of our European Parliamentarians. But without delving further into that, and without covering again the ground covered by Lord Diplock, may I ask this question? I hope that the noble Lord the Leader—I was just going to say "the noble Shepherd"—Lord Shepherd, may be able to tell us when we may expect that council resolutions are listed in a recognisable numbered reference system on the yellow list. This has been asked for earlier.

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The second constitutional aspect relates to the Maybray-King Report. May I draw your Lordships' attention to paragraph 139A of that Report which states that:
"Ministerial statements on Community matters have not always been entirely satisfactory".
The Report goes on to recommend in the following terms:
"The Committee recommend that it should be open to any Lord to propose that such statements should be referred to the Select Committee".
While it is perfectly possible for any noble Lord at any time to put down a Motion on the Order Paper drawing attention to a Ministerial statement and proposing that it should be referred to the Select Committee, what is needed and what, in fact, was intended, in my view, by the Maybray-King recommendation was a right for noble Lords without notice, at the time that a Ministerial Statement is made, to move that it be referred to a Select Committee. It would be for the Select Committee to take it seriously or not and to go into it or not, but the right of any noble Lord in this House, at the time a Statement is made, to move without notice that the Statement should be referred to a Select Committee is one which has been slurred over hitherto and which should, I believe, be looked at by the Procedure Committee as a first step.
There is another aspect which has not come through the careful and courteous wording of this Report that is, the quality of evidence sometimes offered by our friends in Whitehall Departments to Sub-Committees of the main Committee. One would not wish to dot i's and cross t's in any disagreeable fashion but when sitting in the chair one has sometimes been reminded of Samuel Butler's words that:
"Learned nonsense has a deeper sound Than easy sense. And goes for more profound".
I know of an instance when a Minister came to give evidence on a document which not only clearly he had not read, but on which quite clearly he had not been properly briefed. That is not yet a sufficiently serious performance in relation to what the standing of a Select Committee of this House ought to be. When the Minister was questioned, he
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showed some irritation that the questions went beyond the list of questions that had been sent to him in advance purely as a matter of courtesy. He had imagined that he could get away with written answers to those questions. One almost felt him saying under his breath with Byron:
"I loathe that low vice of curiosity".
It is a late hour. However, there is an astonishing situation which I must mention regarding evidence that was given to our Sub-Committee on wind-screen safety glass in motor cars. The Government memorandum told us that industry did not want the safety glass that the Community were recommending. In those early days we were just coming out of our innocence and thought we had better make a double check. Therefore, we got hold of the industry which said the very opposite. Is that really worthy content for a Government memorandum which was sent in all seriousness to a Select Committee of your Lordships' House?
Several noble Lords, notably the noble Earl, Lord Cowley, and the noble Earl, Lord Bessborough, have referred to another matter which I believe to be of constitutional importance, and that is the constriction of our work through printing delays. We are well aware that this is a delicate field for a whole host of reasons, but how can members of the Select Committee be asked to work against the clock, to work at weekends, to work without the help even of secretarial staff at weekends to get Reports out if they are then hung up by the printers for a couple of months? Eventually people tire of the endeavour. Parliament has encountered the printing problem in other respects. Already as Parliament we have our own workshops: is there any reason why we should not have our own print shop, and this as a service to Parliament as a whole? Minor points I will not stress, but as to the Government memoranda which come with these documents, some of them are so anodyne that they really compel one to read the document itself.
The Scrutiny Committee is still opening up new areas of Parliamentary and constitutional experience. I believe that in our attitude to the Executive and to its backup land in Whitehall we should

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indeed be "suaviter in modo, fortiter in re" in Lord Chesterfield's phrase—firm in our resolve, but meantime perhaps philosopically good humoured and not too carping in our approach. After all, a little nonsense now and then is relished by the wisest men.
10.8 p.m.
Lord HINTON of BANKSIDE: My Lords, as compared with the noble Lords who have preceded me in this debate, I occupy an extremely humble position in that I am no more than a co-opted member of Sub-Committee F and speak only from my narrow experience within that Committee, but there are two points to which I should like to draw your Lordships' attention. The first, I think, underlines a point which I believe the noble Baroness, Lady Tweedsmuir, made when she introduced the debate and which was again made by the noble Lord, Lord Walston. Although I no longer have any business connections with the electricity supply industry I am on one of their independent committees which advises them on research. In that capacity I receive certain publicity and broadsheet information which they circulate, including documents from their overseas relations branch. Among those circulars is one which aims to keep the electricity supply industry informed of the proceedings and decisions of the European Economic Community.
Surprisingly, from time to time I find that this document contains information which relates to the work of Sub-Committee F but which, so far as I know, has not been made available to that Sub-Committee. I am making inquiries about the sources of this information, but so far as I can see at present it comes from frequent visits to Brussels, from personal contacts and through the various international organisations which aim to keep the energy industries of different countries in touch with one another. But, if I am right in believing that the electricity supply industry is better informed than your Lordships' Sub-Committee, it seems to me that this is a matter which might be looked at.
The second point I should like to raise is whether sufficient expert consideration is given to the papers which are prepared by the Commission for submission to the
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Council, while those papers are still at the drafting stage. At one of the meetings of Sub-Committee F, a witness from one of the Government Departments, who. I would point out, was most helpful and clear in his evidence, was asked about the preparation of a document that we were considering. He had sat on the committee which had prepared that document. His answer was that the committee had been made up of so-called experts. He was asked what a so-called expert was, and with very great frankness he said, "Well, they are people like myself. I am an administrative civil servant. Like me, they have been told to specialise on a specific subject and, like myself, they have made themselves as familiar with it as possible."
My Lords, I do not for one moment want to denigrate the work of men like that who represent us in Brussels, but I get the impression that many of the proposals which came before Sub-Committee F would not have been made if they had been considered by those real experts who have had a lifetime's experience on the subject under review. I wonder whether it might not ultimately save time and trouble if real experts could be called in by the Commission to give practical advice when technical proposals are being prepared.
10.13 p.m.
The Earl of SELKIRK: My Lords, may I say a word or two in place of the noble Lord, Lord Chelwood. Many extremely powerful, colourful and appropriate remarks have been made about the noble Baroness who chaired the Committee. I am left in doubt as to which of the many remarks is most suitable and which of them I would myself like to adopt. The noble Lord, Lord Lloyd of Kilgerran, expressed it very well, if I may say so, but by only a very narrow margin. Many other very fine and appropriate remarks have been made.
My Lords, I shall speak for only a short time on one thing. We are going into an astonishing experiment, and none of us knows quite how this will work out. The noble and learned Lord, Lord Diplock, pointed out that the theory and practice have already shown quite a wide separation. I have myself been surprised at the measure of flexibility which the

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Treaty of Rome has shown already. I do not know how much wider it will go, but it is not going to work out precisely as it was originally intended that it should.
Of course, there are many very curious matters which have to be sorted out, and translation is one. I am afraid that a kind of language is growing up in Brussels which I think we must stop before it goes much further. Things are getting just a little dangerous, and we must try to kill it. But there are certain things, I believe, which are fundamental to this. Of course we must watch what has happened, but, more important, we must remember that we should give this country confidence in what is happening in Brussels. The only way to do that is to know what is happening. This is one of the tasks which falls directly to the Select Committee. A second point is that we must remember that the Member-States are the source of power—power in the most raw and blunt sense of the word. Brussels is close to it, and it is very dangerous to separate Government from power. We must remember this point when we are thinking about going into this organisation.
My Lords, the third point I would make is on the subject of personal responsibility. I believe that the success of the Constitution of this country is our personal responsibility. We can charge the noble Lord the Leader of the House with a notional responsibility for every blessed thing the Government do it may be notional, but still we can charge him with it. This is one of the strong points of the way in which our Constitution has evolved. Let us be quite frank: there is no one in Europe we can charge with responsibility for these things. These are all points we have got to watch if we are to make this a success, and I believe these are points which this Committee has perhaps begun, in these initial stages, to formulate in the correct way. I am very glad to have served on this Committee. I must admit that when we started, under the chairmanship of Lord Diamond, I wondered how we were to start, and I feel that under two chairmen quite considerable and important progress has been made.
10.16 p.m
Lord SHEPHERD: My Lords, I am very happy to reply to tonight's debate for two reasons First of all, I served
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with the noble Earl, Lord Lauderdale, and the noble Lord, Lord Brooke (who was in his place a few moments ago), on the Maybray-King Committee, the Committee which your Lordships' House set up to decide what framework we should have for scrutiny of EEC legislation. I am delighted to say that the recommendations that we made, which were accepted by your Lordships' House, have been successful. I believe that with our system we need not be too worried, too concerned in comparison with another place. I think we succeeded because we looked at the problem in very considerable depth.
My second pleasure is to be able to join with other noble Lords in praising the noble Baroness, Lady Tweedsmuir, for her chairmanship. I have a feeling that the praise that is given to her could equally be borne by myself. I well remember—and the noble Earl will recall—in the days when we were considering the Scrutiny Committee, we asked what we should look for in a chairman. There were some who thought we should look for someone who would be a smooth coordinator. I took the view—and I think the noble Earl shared my view—that we needed somebody with political flair, and that if the person who was chairman had not got political flair he would not survive very long in this matter of high politics. Therefore, I was delighted that my noble friend Lord Diamond was appointed initially, and I think great credit must be given to him for the way in which the machinery of scrutiny was started.
When, unfortunately, my noble friend left, I was able, as Leader of the House, to use a certain amount of influence with the Front Bench opposite. I said there was one person I wanted, and that was the noble Baroness, because she really has political flair. She has also got drive, and I must say that when the noble Lord, Lord Lloyd, talks about staffing, I do not think there is any problem where the noble Baroness is concerned; there is no—I nearly said depth—to which she would not go in order to see that the framework and the support for her Committee are achieved. I would say to the noble Lord. Lord Lloyd, that this is a matter that has already been through the Offices Committee today, and I think it was favourably received; although I think it would be fair to say to the noble Lord,

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and to the noble Baroness, that we are living in a period of constraint; we have really got to look at not just this committee but the whole framework of government. I do not believe we can go on taking on staff solely because there is a need; I think we have got to look, in some degree, at our priorities here.
I have read this Report, and, like the noble Earl, Lord Cowley, I only saw sight of it properly at the weekend. Some criticism has been made in terms of the printing of this and other Reports of the Committee. We have to face the fact that Her Majesty's Stationery Office and the printing department that supports it, particularly at this time of the year, are pressed to nearly insufferable proportions. Parliament increasingly places tremendous demands upon them. I have direct responsibility for this side of the printing, and I know that HMSO have done a great deal and that a great deal of ingenuity is being used here. But Parliament places increasing demands on them, and I fear that unless we increase capacity the sort of problem that has arisen will continue to arise.
Lord INGLEWOOD: My Lords, I am grateful to the noble Lord for giving way. Would he not agree, as someone who has been in Parliament for many years, that the appalling inconvenience to which we have recently been subjected through these interruptions and delays in our printing is something that is comparatively recent? Something must lie at the bottom of it, and it cannot just be an increase in work and workload. It is something to look into.
Lord SHEPHERD: My Lords, I can only say that if you were to look at the lists of Amendments to Bills, tabled, shall we say, on Friday night for consideration on Monday, you would see the tremendous pressures that are laid on our printing to meet the demands of your Lordships' House and of another place. These are matters which give me considerable anxiety, and if there are ways and means of overcoming them I shall be happy to adopt them.
The noble Baroness and noble Lords have drawn attention to a number of recommendations in the Report. On the terms of reference, I am glad that this does not need change. It caused difficulty
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when the noble Baroness was in office, and equally it caused me difficulty, too. But I think that the Select Committee have used a degree of wisdom and restraint in not exercising the very wide powers given by their terms of reference, and I hope that this will continue. In regard to the size of the Select Committee, no one can dispute the amount of work that is involved, and I should have thought that the recommended increase is one that ought to be accepted; but this is very much within the competence of the Committee of Selection, and I would hope that this is a matter that could be referred to them quickly.
In regard to the period of appointment, this raises some problems. I know that there is pressure from the Back-Benches that there should be a continuing flow of membership to the House Committees, and there is a degree of reluctance to appoint committees for too long a period. On the other hand, I believe that this is a Committee on which there ought to be continuity. Since this is very much a House judgment, we ought to refer it to the Procedure Committee, and I suggest that we so do immediately after the Recess.
Several noble Lords stressed the recommendation in paragraphs 27 to 29, listed as (b) in the Summary of Conclusions, that the Government should inform the House and the Select Committee of significant amendments proposed in the course of the discussion of proposals in Council working groups. There are genuine difficulties here, of which the noble Baroness will be fully aware. The procedures at the Council are unlike our own, where one can identify particular stages in the process of consideration, but this is something that we should look at and I believe that another place is giving anxious thought to this matter. And as this is something which is of importance to the two Houses, I will refrain from saying anything more here, except to comment that the Government fully appreciate the spirit in which this recommendation was put forward, and if it is possible we will seek to overcome the genuine and real difficulties that now exist.
In paragraph 43, the Select Committee raises the very interesting question of the balance between reports for debates and

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reports for the information of the House, and I was asked whether it would be right and proper on occasion to have Motions for approval of a Select Committee report. Personally, I feel that the "take note" Motion, particularly if it is a Motion being introduced by the chairman of a sub-committee, is the right formula, and I think it would be wrong if we were to have a form of confrontation between the Government and the chairman of a sub-committee. These debates are mainly to provide information to the House as a whole and to influence the Government, but also to hear from the Government their views on the matter; and I feel that if one were to get on to a Motion of approval, one could reach the stage when the close relationship between the Executive and the Select Committee could be placed in some jeopardy. If there were a Motion of approval, I feel that it should come from a member of the Back-Benches, not a member of the subcommittee; in other words, it should come from the private initiative of a Member. But I should have thought that the present processes have, certainly from the Government's point of view, done all that we would wish.
I think it would be wrong to believe that a report has been taken note of only when one has debated a Motion. I have made a number of inquiries in the last few months about the way in which Departments have taken note of reports and I can assure the House that they have been very helpful indeed and have been well received. I understand that the noble Earl, Lord Lauderdale, expresses his wrath from time to time about some civil servant producing a piece of paper which he thinks is a load of nonsense—
The Earl of LAUDERDALE: May I interrupt the noble Lord?
Lord SHEPHERD: My Lords, let me just add that the noble Earl is not the only one who, inside or outside Ministerial office, feels that what is offered is not always quite what is required, but I feel that taken as a whole—and that was the spirit of the Report—the Committee genuinely believes that the Government and our Civil Service have sought to render a full contribution to the Select Committee.
The Earl of LAUDERDALE: My Lords, I am only surprised that the noble Lord should think that I am ever wrathful. It is the last thing I am. But this might be an opportunity to let him know about one piece of delay which was due to some files of evidence on energy being sent to the Commons Committee on Violence in Marriage. Sometimes things do go astray.
Lord SHEPHERD: I suggest that the noble Earl should improve his handwriting! My noble friend Lord Walston asked that the Government should provide a full explanation in cases where there are fast-moving proposals for which no adequate time for scrutiny at this end has been provided. I have been advised that the Departments are already working on this and I hope we shall be able to see solid improvement in the service.
The noble Earl, Lord Lauderdale, asked whether we could have a consolidated list of Community proposals which are in progress and that this should be provided for the information of Parliament. I gather that this is a proposal which has been raised by the Procedure Committee in another place and I understand that contact has already been made between officials and the House authorities to explore the practicalities of this.
The noble Earl, Lord Bessborough, said that the Government should seek to initiate a common reference system for EEC proposals. We shall give this interesting suggestion very careful consideration. I should think that there is a lot to be said for it, but it is often difficult to persuade even Departments to change their reference numbers.
My noble friend Lord Walston and the noble Baroness, Lady Tweedsmuir, said that the Government should informally give information to the Committee about important proposals before publication. This is a matter which is very close to my heart, as the noble Baroness will remember when I was in Opposition. However, there are difficulties here, but difficulties may be overcome. I shall look into the matter and communicate with the noble Baroness.
The noble Baroness also asked that the details of important consultations undertaken by the Government on EEC proposals should be given in an explanatory memorandum. The Departments already

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include information about outside bodies which they have consulted. The memoranda are mainly produced at an early stage. Therefore, they may not be fully complete. However, I feel that there is difficulty—apart from giving the names of those whom we have consulted—in giving a report as to what advice the Government may have received from those bodies, because much of that advice is naturally given in confidence. The noble Baroness also suggested that steps should be taken to provide fuller information about Council decisions and that an improvement in Council procedures should be sought. We shall look at this. We are always in favour of improvements in Council procedures, provided that they do not rob the Council of the necessary flexibility in dealing with urgent matters.
I must say to the noble and learned Lord, Lord Diplock, that I was very impressed with his speech and with that part of the Report which the noble Baroness attributed to him. I do not intend to reply to him this evening. I should much prefer to look at this and many other matters in the Report in some detail and with some care. If the noble and learned Lord agrees, I should like to have the opportunity of discussing his paper with some of my officials, in order to get the full benefit of the advice he has given and, perhaps, some of the advice which he has decided not to disclose at this stage.
I join with the noble Baroness in paying sincere tribute to the noble and learned Lord, Lord Diplock. It is a very great feature of this House that a Lord of Appeal who, heaven knows! must have enough problems and work, should give so much of his time to Parliamentary matters. These words must equally apply to other noble Lords who serve on these Committees and also to those who, like the noble Lord, Lord Hinton of Bankside, are co-opted. I think one of the great strengths of our Select Committee procedure is that we keep the numbers of regular members fairly small but have this power to co-opt. This, more than anything else, gives us a degree of flexibility.
There is much else in this Report that I could deal with and there may be much
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in this debate to which I have not replied. But we can all take pride that in a relatively short period of time—some 18 months—we have set up a completely novel procedure in this House, a procedure of scrutiny of legislation within the European Economic Community. As the noble Earl, Lord Lauderdale, will remember in our discussions in more convivial places than this House during our examinations of this matter under the chairmanship of the noble Lord, Lord Maybray-King, I felt that if this procedure were a success it might be a procedure that we could well adopt in domestic affairs. I believe that in this way we can really get to the heart of problems with a real understanding and deal with some of the problems that confront us.
But that is of the future. A great deal has been achieved and we should all be very grateful to all those who have taken part in this particular venture. I should not like to think that this Report and this debate bring this particular era to an end. I know that if I thought so I should quickly be disillusioned by the noble Baroness. I should like to suggest that, perhaps in three months' or six months' time, when the Report has been properly digested, and when as a consequence lessons have been learned and greater co-operation established, the noble Baroness will go through her recommendations as though she were the pilot of an aircraft, doing "checks", and then come to me, if I should still he here as Leader, to see what progress has been made and to see what the difficulties are and whether we could overcome them.
My Lords, this is the beginning of a new exercise, a new function. I think it has been extraordinarily successful. Much still could be done, but I believe it will be done more by co-operation behind the scenes than in debate in this House, despite its great worth. So far as the Government are concerned, we are happy with the way in which this Committee has worked. If it has been a gain to the House, it has been a gain to the Government. I hope it will continue and we will certainly help to the best of our ability. We are grateful to the noble Baroness and all noble Lords who served on this Committee.
10.30 p.m.
Baroness TWEEDSMUIR of BELHELVIE: My Lords, it falls to me in replying briefly to this debate to thank all noble Lords who have taken part. There have been no less than five present or former Chairmen of Sub-Committees taking part. There has also been a distinguished member of the European Parliament and a very distinguished member of sub-Committee F. I should like to thank my noble friend Lord Cowley for his contribution on the question, above all of information. I think this has been the theme of many speeches that we have listened to tonight. I myself found it almost impossible to convey information to the public on what we do. Therefore, it is for the Government to devise ways by which this can be done.
I am grateful to the noble Lord the Leader of the House for the very helpful response that he has made to some very important points, notably membership of the Committee and its continuity, and for the promise he gave the House that he would look at this important question on how we are to get at the amended documents in the Council working groups, which was referred to by many noble Lords who have spoken. I should like to take up his invitation to come in three to six months' time—if we are all still alive in this economic situation!—and discuss with him how the various recommendations have been carried out, and how we can improve the working of our Committee. I feel that the Leader of the House, as a member of the Maybray-King Committee, has his heart in this exercise. He wants to succeed, and he has the same enthusiasm about it as is so evident in the members who give so much of their time to the Select Committee. Therefore, we have made a good start and with his help, and those of the members of the Committee, I hope we shall continue to do so. I should like to thank all those who have taken part in this debate.
On Question, Motion agreed to.

GREATER LONDON COUNCIL MONEY BILL
Reported with Amendments.
HOUSE OF LORDS OFFICES
Fourth Report from the Select Committee, made and to be printed.
  POSSESSION ORDERS
  POSSESSION ORDERS
  THERAPEUTIC ABORTIONS
  THERAPEUTIC ABORTIONS