Sitting of 7 April 1976

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

    Land Acquisition and Management
    Mr. Sainsburyasked the Secretary of State for the Environment what is the total number of man-days that have been spent by staff in his Department in connection with land acquisition and management schemes submitted by local authorities.
    The Under Secretary of State for the Environment (Mr. Gordon Oakes): This work has been carried out by my Department's staff as part of their normal duties. No record has been kept of time spent specifically on land acquisition and management schemes.
    Mr. Sainsbury: Will the Minister say how much time would have been saved in his Department if more time had been allowed to local authorities to prepare these schemes or if some local authorities had not had these schemes imposed on them by the Department?
    Mr. Oakes: I can say that no Ministry staff are engaged and that if work on the land schemes was not going on the land availability problem bequeathed to us by hon. Gentlemen opposite would not simply have gone away, and no doubt just as much staff effort would have been needed for any other land policy devised to deal with the problem.
    Mr. Blenkinsop: Will my hon. Friend say how many staff would have been saved if the hon. Member for Hove (Mr. Sainsbury) had not tabled such Questions as this?
    Mr. Graham Page: Does the Minister not think this is an awful waste of time? However many people have been put on it, only 13,000 acres will be acquired by the local authorities in the next three years, and by that time the Community Land Act will have been repealed.
    Mr. Oakes: If the right hon. Gentleman is referring to my hon. Friend's question about a waste of time, I tend to agree with him. If he is talking about the Community Land Act, I can say that this is a major part of the Government's policy and I doubt very much whether Members of the party opposite, in three years' time—were they to be in office, which I doubt—would be allowed by their own authorities to sweep it away.
    The Secretary of State for the Environment (Mr. Anthony Crosland): That was a very suitable answer.

    Humber Bridge
    Mr. Brothertonasked the Secretary of State for the Environment what is the latest estimated cost of the Humber Bridge.
    Mr. Crosland: The latest estimated cost of the bridge and its immediate approach roads that has been published by the Humber Bridge Board is £45 million. This estimate was based on the situation obtaining in August 1975. I understand that the Board will soon be announcing an updated estimate.
    Mr. Brotherton: Does the Secretary of State agree that we shall tremble when that figure is published in his constituency and mine? Can he assure the House that even though this "white elephant" is being proceeded with it will not affect the construction of a decent east-west road system, which we require on the south bank of the Humber?
    Mr. Crosland: We never tremble in Grimsby, whatever people may do in Louth. As to the substantive part of the question, the hon. Gentleman knows very well that I am aware of the importance of the east-west roads, which affect both his constituency and mine. I can give him the assurance that despite what the expenditure White Paper announced we shall continue to give priority to roads giving access to ports, and there should be no delay.
    Mr. Ronald Atkins: Can my right hon. Friend tell us how, in road development schemes, whether bridges or otherwise, one distinguishes between "white elephants" and "non-white elephants"? Is there not a need for cost-benefit schemes for all road building development?
    Mr. Crosland: There is certainly a crying need for cost-benefit examination of all roads, whether bridges or not. The methods of my Department have come in for some criticism, and when we publish the consultative document shortly we shall describe our cost-benefit methods and ask for any public comment to be made upon them.

    Council House Sales
    Mr. McCrindleasked the Secretary of State for the Environment if he has received any representations from the Building Societies Association on the subject of the sale of council houses.
    Mr. John Huntasked the Secretary of State for the Environment what is his policy towards the sale of council houses to tenants; and if he will take account of the recent report of Mr. F. Fields for the Child Poverty Action Group in its formulation.
    The Minister for Housing and Construction (Mr. Reginald Freeson): The Government set out their attitude towards the sale of council houses in paragraph 35 of Circular 70/74. I am keeping the matter under consideration, in parallel with the review of housing finance. I have, of course, noted the views expressed by the Building Societies Association and the Catholic Housing Aid Society's publication.
    Mr. McCrindle: When such diverse bodies as the Building Societies Association and Mr. Frank Field, President of the CPAG, indicate that the sale of council houses can be advantageous, does the Minister not consider that he might be out of step? Whether it be in the interests of social justice, as the CPAG implies, or of a property-owning democracy, as the building societies imply, is it not time the Minister became less obstinate on the whole matter?
    Mr. Freeson: I am not sure that I understand the hon. Gentleman's refer-
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    ence to obstinacy. I do not think that he has reread the paragraph from the circular in question, to which I referred recently. If he had, he would realise that far from taking an obstinate line we are taking a far more realistic and flexible line than are the Opposition.
    Mr. George Rodgers: Does my hon. Friend not agree that it might be more sensible if the building societies concentrated their attention, and some of their funds, on providing loans to people in search of property at the lower end of the scale, and to people on low incomes?
    Mr. Freeson: This area of policy and practice is giving more concern to the Government and, indeed, to a growing number of people in the building societies movement, as well as in local government. Discussions are going on now between local authority association representatives and the BSA on this matter. I look forward to reading a report of the joint working party that has been set up which will be completed towards the end of this month.
    Mr. Hunt: Why did the hon. Gentleman make no specific reference to Mr. Frank Field in his original reply? Is this not a cavalier way of treating a fellow Socialist? Is the Minister aware that Mr. Field now holds the view that the sale of council houses acts as a means of redistributing wealth as well as increasing the freedom and mobility of tenants? Is this not an aim that appeals to him? Will he follow my hon. Friends' advice and, just for once, cast aside his politic prejudices in this matter?
    Mr. Freeson: Again, I must ask the hon. Gentleman to reread the policy statement on this matter, contained in the circular to which I referred. There is no question of obstinacy or anything like that.
    As to the publication itself, I referred to the body that sponsored it and for which Mr. Frank Field wrote it—the Catholic Housing Aid Society, not the CPAG. Regarding the basic underlying theme of that publication, I hope that the hon. Gentleman and his colleagues will do what I am going to do and what Mr. Frank Field asked us to do, namely, to think through the implications of what he was discussing.
    Mr. Raison: Will the Minister think again about his answers to this Question? It may be his last pronouncement from that Dispatch Box. Does he accept that my hon. Friends have made an overwhelming case for permitting and, indeed, encouraging the sale of council houses'? Is it not high time that the ban on the sale of new town houses was also brought to an end?
    Mr. Freeson: The hon. Gentleman could not have been listening as carefully as he normally does to his hon. Friends. They were not making out a case at all; they were saying that, because a certain publication by Mr. Frank Field had advocated a particular line of development to be thought through, it should therefore be adopted by the Government. That was not an argument. In their policy circular the Government have clearly put on record the fact that they continue to reject the rather gimmicky policy of indiscriminate disposal of these assets. There are situations in which, for a variety of reasons which I am prepared to discuss at length on another occasion, there could be an argument for doing what has been proposed. That is the Government's policy. What we object to is the stupid attitude that we should seek indiscriminately to get rid of 5 million dwellings from the rented market, which the Opposition complain has been reducing and declining for many years.

    Disabled Persons (Access to Buildings)
    Mr. Hannamasked the Secretary of State for the Environment if he will take steps to ensure that all planning applications for public buildings are approved by social service departments so as to provide access and facilities for disabled and handicapped people.
    Mr. Oakes: No, Sir. The development control system is not appropriate to secure the provision of access and facilities suitable for physically disabled persons. Local planning authorities have, however, been asked to draw the attention of developers to the provisions of Section 4 of the Chronically Sick and Disabled Persons Act 1970.
    Mr. Hannam: Is it not a disgrace in this day and age that modern public buildings, such as the National Theatre, are being constructed without adequate
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    access and facilities for disabled people? Would not a simple statutory provision for the involvement of social service directors at the planning stage show that we were not just paying lip service to the integration of the disabled?
    Mr. Oakes: Planning is concerned with the purposes for which land is to be used, and not the people who use it. Indeed, the planning system does not control internal fittings.
    I understand that the plans for the National Theatre were passed long before the circular was issued in 1970.
    Mr. Molloy: Is my hon. Friend aware that many local authorities desire to conform to the Act and wish to make access to public offices available to the disabled, but that, despite their endeavours, they are restricted by financial considerations in the changes which have to be made? Will he look sympathetically at applications that are made and perhaps devise a priority list to assist well-meaning local authorities who wish to carry out the provisions of the Act?
    Mr. Oakes: There should be no doubt in the House about the desirability of carrying out the aims of the Act. This is a matter for local authorities to decide. It is not a planning matter that requires us to issue further directives to them. However, pressure will and should arise from the authorities concerned to ensure that all public buildings are adapted for the disabled.
    Mr. Marten: In addition to the point made by my hon. Friend the Member for Exeter (Mr. Hannam), would it not be a good thing to encourage the disabled to get on to local councils to ensure that their interests are watched there?
    Mr. Oakes: It would, indeed. The social services departments of local authorities usually contain a number of people specifically nominated by the disabled groups.
    Mr. Speed: Does the hon. Gentleman agree that it is much cheaper and more effective to provide these facilities at the planning and design stage than later? Could the Government not give clear advice and guidance to the Property Services Agency, nationalised industries and local authorities to have these facilities

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    built in at an early stage, rather than have too many adaptations afterwards?
    Mr. Oakes: A circular issued by the Conservative Government on 17th August 1970 drew to the attention of all developers the need to conform to the 1970 Act and to the high desirability of access for disabled people to all premises to be considered at that stage. It is cheaper at that stage. It is not necessary to send out another circular. The planning system, as such, should not be the means of control.

    Building Societies Association
    Mr. Terry Walkerasked the Secretary of State for the Environment what discussions he is having with the Building Societies Association.
    Mr. Crosland: My Department maintains regular contacts with the Building Societies Association covering all matters affecting the housing market.
    Mr. Walker: Is my right hon. Friend aware that many owner-occupiers are hoping that this week the Building Societies Association will decide to reduce the mortgage interest rate? Has he discussed this matter with the BSA, and is it aware of the present position?
    Mr. Crosland: As my hon. Friend implied, the Council of the Building Societies Association is meeting on Friday this week. We have been keeping in close touch with the BSA on this crucial issue. I have no doubt that when it meets it will bear closely in mind the views exchanged in discussions, though at the end of the day the decision is for the BSA.
    Mr. Michael Latham: What matters more to the Government now—reducing the mortgage rate or increasing private housing output?
    Mr. Crosland: There is no simple alternative. The hon. Gentleman must know, having been involved in the industry before coming to this House, that there are no simple alternatives to choose between, such as the two that he put forward.
    Mr. Jay: Is it the Government's wish that the interest rate on mortgage loans should now be reduced?
    Mr. Crosland: The Government have made their views known to the Building Societies Association. That was done in the course of the confidential discussions that we had within the joint advisory council. If my hon. Friend will forgive me, I prefer to leave the matter there.
    Mr. Welsh: Is the right hon. Gentleman aware of the relatively low level of building society mortgage lending in Scotland, compared with deposits and repayments? What steps is he taking to encourage building societies to lend specifically in Scotland, especially to low income groups?
    Mr. Crosland: That question should be addressed to my right hon. Friend the Secretary of State for Scotland. I am not aware of the ratio of building societies in Scotland as compared with England. It is bound to be different, because the proportion of owner-occupiers in Scotland is lower than in England or Wales.
    Mr. Frank Allaun: Are not the building societies bursting with funds today? Will the Secretary of State ask the societies to lend 10 per cent. of their annual advances—now totalling £6 billion a year—to the local authorities so that they can grant mortgages to those needing them? Could not that be done at 10½ per cent., particularly as the present £100 million scheme is a flop and as, on average, only one in eight applications by the local authorities is being granted by the societies?
    Mr. Crosland: I think that the scheme is going better than that. On the primary point mentioned by my hon. Friend, on which he has introduced a Bill, he will know from past exchanges that I have great sympathy with what he seeks to achieve in this matter. I made it clear at Question Time three weeks ago that the question of the building societies lending at the lower end of the market is now No. 1 priority in housing policy. As the House knows, the Building Societies Association and the local authority associations are in discussion on this matter. They have had three meetings on the subject already and are due to have another this month. I do not propose to take a new initiative until I know the results of that meeting. However, I assure my hon. Friend that I share his anxiety.
    Mr. McCrindle: There is no doubt a very strong case for reducing the mortgage lending rate, but does not the Minister agree that all the predictions are that general interest rates will begin to rise again in the autumn? To that extent, would it not be better if he could recommend to the societies that any reduction should be restricted to ½ per cent., so that we shall not have the rate put down now only to have it put up again in the autumn?
    Mr. Crosland: These are all interesting reflections and speculations, on which we may all have our own views, but on the question of what the Government have or have not said to the societies I am afraid that I must rest where I stood in previous replies.

    Empty Council Houses
    Mr. Peter Morrisonasked the Secretary of State for the Environment how many empty council houses there are in England and Wales in whatever condition, including those classified as empty and unavailable for reletting.
    Mr. Freeson: The latest relets survey recorded about 22,000 of the 5 million council housing stock in England as vacant and available for letting and about 34,500 undergoing modernisation, repair or conversion. These figures represent about ½ per cent. and ¾ per cent., respectively, of the total local authority stock. This compares with an overall vacancy rate of 4 per cent.
    Mr. Morrison: Does the Minister agree that many of these empty council houses could be made habitable for homeless families at a far cheaper price than housing them in inadequate and expensive bed-and-breakfast accommodation?
    Mr. Freeson: I welcome the hon. Gentleman's support. Indeed, a very high proportion of the 34,500 properties to which I referred are properties which have been municipalised in a substandard condition and are having works done on them and modernisation undertaken for precisely the purpose to which the hon. Gentleman refers.
    Mr. Heffer: Is my hon. Friend aware of the fact that in certain large cities, such as Liverpool, we find that council houses are too often left lying empty for long periods and become vandalised, and that this means a loss of revenue to the
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    city, when there are long lists of people waiting for those empty houses? Will not my hon. Friend send out a circular, particularly to the Liverpool City Council, drawing attention to this fact and demanding that new methods of letting should be applied so that people can be got off the housing list and these houses can be let more quickly?
    Mr. Freeson: I do not think that there is a need for a general circular on the matter. However, there are certainly problems in particular localities. Liverpool has its share of those problems, such as those described by my hon. Friend. At this stage I shall just say that I have been in touch with Liverpool and other Merseyside authorities on various housing matters, including the matters to which my hon. Friend has referred, and I hope that we shall make progress in this matter in the near future.
    Mr. Wigley: In view of the long waiting lists for council houses in many areas, will the Minister consider the possibility of giving grants of up to, say, £500 for those on low incomes who want to buy their own houses for the first time, thereby lifting the pressure of those who are on the council waiting list? Perhaps such a scheme could be offered to all those already in the occupation of council houses, who could thereby perhaps find other homes.
    Mr. Freeson: That idea has been put forward to the Department by the NHBC in the context of the housing finance review. We are looking at a whole range of ideas and problems relating to first-time buyers. I would not wish to opt for one particular way of assisting them at this stage.
    Mr. Rossi: Is the Minister aware that there is widespread disbelief that the figures that he has given to the House are a comprehensive total of properties in council ownership that are empty today? Will he try to dispel that widespread disbelief by carrying out an urgent inquiry as to the manner in which the figures are calculated, to see whether they include all the empty properties? One is told that in London alone there are 100,000 empty properties in council ownership. That is from checks made by independent organisations. Instead of smiling and grinning in

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    the way that the Minister does, will he satisfy himself by undertaking a survey and investigate the way in which these figures are produced?
    Mr. Freeson: I certainly accept that the figures that I have quoted must be treated with some caution. They have been collected in the same way that figures were collected when similar relet surveys were undertaken by the hon. Gentleman's Government a few years ago. But if we are expected to act on the basis of the kind of wild allegations that we get constantly from the hon. Gentleman—of which we have just had another—it makes life a little difficult in establishing the facts for policy making. To suggest, even most faintly, that 100,000 council-owned properties in London are empty is ludicrous. That kind of nonsense really should be stopped.

    Rent Acts
    Mr. Budgenasked the Secretary of State for the Environment what arrangements are in existence for monitoring the effects of the Rent Act.
    Mr. Freeson: My Department has commissioned a small-scale survey into the effects of the Rent Act 1974 in London. Further and broader-based research into the private rented sector as a whole is being undertaken as part of the review of the Rent Acts.
    Mr. Budgen: Does the Minister agree that there should be a countrywide review of the effects of the Rent Acts in drying up the supply of private rented accommodation before more of the taxpayers' money is wasted on other sectors of the housing market?
    Mr. Freeson: Certainly the idea of reviewing the operation of the Rent Act 1974 is accepted. As I have indicated, it will be undertaken as part of the general review of rent legislation.
    Mr. George Cunningham: Has the Minister noticed the account of the case in the courts in which permanent residents in a hostel were held to be tenants and not licensees? Will he ensure that that aspect is examined urgently, so that legislation may be passed if that is necessary?
    Mr. Freeson: I shall certainly take aboard the case to which my hon. Friend refers and check the papers on the matter.
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    If there is a general problem here, or even the implications of a problem in law, I shall take it aboard in the review.
    Mr. Sainsbury: Does the Minister realise that there are certain areas, of which my constituency is an example, in which the private rented sector is of well above average importance? Will he consider implementing a review of those areas much more urgently than the general review?
    Mr. Freeson: I do not think that there is a particular need to select areas for the purpose of reviewing rent legislation. We are aware of the pattern of tenure, by and large, throughout the country. It varies from town to town and from one region to another, according to letting privately, owner-occupation, and the like. We can base our review of the legislation on the known information.

    Housing (Sewerage)
    Mr. Wellsasked the Secretary of State for the Environment what is his best estimate of the numbers of dwellings connected to no sewerage system at all, to septic tanks and to cesspit type systems, respectively.
    The Minister of State, Department of the Environment (Mr. Denis Howell):The water authorities estimate that about 900,000 domestic properties in England and Wales are not connected to main sewers. I have no information about what alternative systems these properties might have.
    Mr. Wells: Is the Minister aware that these unconnected properties cause a general health hazard to the entire population and that, therefore, the emptying and related services that are provided by councils ought to be borne equally on the rates as a service to the whole community, that individual householders should not be penalised and, furthermore, that the anomalies between one local authority and another should be ironed out?
    Mr. Howell: I doubt very much whether there are many properties that are not connected up to sewers, cesspits or septic tanks. The purpose of the Housing Act 1974 was, indeed, to offer grants for that purpose for houses that were not connected. If there is any

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    danger to public health, clearly that involves a duty for the local health authority to discharge.

    Layfield Report
    Mr. Ridleyasked the Secretary of State for the Environment if he will now make a statement on the Layfield Committee's Report.
    Mr. Crosland: No, Sir. I shall make a statement when the Report is published.
    Mr. Ridley: Is the long delay due to the tardiness—with one notable and noble exception—of the members of the Committee, or to the Minister? Will the Minister give an undertaking that as we are to have no more than 3 per cent. pay rises there will be no increase in the rates? That would be intolerable next year.
    Mr. Crosland: That supplementary question appears to go a little beyond the original Question. However, when the Report is published, no doubt the hon. Gentleman, along with other hon. Members, will have the goodness to make known to us their views on all the important matters which will no doubt have been discussed.
    Mr. Christopher Price: Although my right hon. Friend has not yet published the Report he is no doubt thinking about it. Does he agree that, in a considerable period of slow or even nil growth in some services, it is important that we should have a more delicate instrument than the block grant to ensure that the Labour Government's priority policies are carried out by local authorities? Does he agree that this is the general object to be achieved when he is considering the Layfield Report?
    Mr. Crosland: I seem to recognise the origins of my hon. Friend's question on this subject. He is concerned that when education targets are set for local authorities the amounts of money involved should always be spent. Whilst we want to carry out our policies, we must always search for the maximum degree of local authority freedom, and it is this balance which is difficult to discover.
    Mr. Charles Morrison: Am I correct in thinking, from what the Secretary of State has said, that he does not intend to publish his own conclusions at the same time
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    as the Report? If that is so, how long will it take for him to come to his conclusions, and when does he expect to do something about the rating system, which has been under consideration for so long?
    Mr. Crosland: I cannot answer the second part of this question until the publication of the Report. The hon. Member is correct on the first part of his question. The matter is of critical importance for local government and the subject has been debated for the past 20 years. For the Government to announce hard and fast conclusions on publication would be foolish and irresponsible, and I have no intention of doing that.

    Building Material Producers
    Mr. Michael Lathamasked the Secretary of State for the Environment when he next expects to meet representatives of the National Council of Building Materials Producers.
    Mr. Freeson: I, and my Department, have frequent and continuing discussions with the National Council of Building Material Producers.
    Mr. Latham: In view of that Council's generally good record for forecasting, how does the Minister react to its forecast the other day that the level of council house starts will begin to fall steadily from October this year?
    Mr. Freeson: I do not accept that prognostication.

    Rural Transport
    Mr. Shepherdasked the Secretary of State for the Environment what proposals he has for improving rural transport.
    Mr. David Steelasked the Secretary of State for the Environment when he expects to introduce legislation to assist the provision of transport in rural areas.
    The Under-Secretary of State for the Environment (Mr. Kenneth Marks): County Councils have the prime responsibility for public transport in their areas, but the Government intend to promote a number of experiments to explore with all the parties concerned, on the ground, what can be done to improve rural transport. Legislation relating to some features of the experiments will be introduced when an opportunity presents itself.
    Mr. Shepherd: Will the Minister recognise that there is a substantial degree of urgency in this matter now? Every month that goes by leads to a further migration of people from the countryside, leaving the elderly more exposed and more incapable of travel. Does he recognise that although transport costs are not much different in rural and urban areas they have also to be compared with costs in London? People in rural areas do not enjoy the benefits of London weighting allowances, and they are therefore put at a disadvantage——
    Mr. Speaker: Order. That is enough for an afternoon.
    Mr. Marks: The Government help the county councils—particularly, this year, the non-metropolitan county councils—with their transport responsibilities through bus revenue support. The experiments which are guaranteed will first be within existing laws, and the need for changes in the law will be examined.
    Mr. Madden: Does the Minister share my surprise at the claimed inability of the West Yorkshire bus authority to provide a bus service in a part of my constituency because the hill involved is too steep to take such a service? Will he consider setting up liaison machinery between bus authorities and bus manufacturers, to ensure that the authorities buy British buses and that the manufacturers produce buses that can go up steep hills?
    Mr. Marks: I am sure that the steering committee will examine that matter. I was in the West Yorkshire area at the weekend, looking at the various aspects of public transport, and nobody mentioned the hill to me.
    Mr. Luce: Will the Minister accept that as rural transport deteriorates a serious social problem is created in the villages? Instead of tinkering with the problem with local experiments, will he introduce modest legislation to relax public service licensing laws in rural areas?
    Mr. Marks: The problem would be the degree of modesty. Wholesale delicensing is not necessary, and it might result in a reduction in existing services. As the hon. Gentleman knows, we have to examine the problem. He recognised the importance of not ruining what is
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    left of the existing system in rural areas when he asked leave to bring in his Bill.
    Mr. Steel: While experiments are all very well, is it not the case that the Minister has given the impression that the Government are not fully seized of the urgency of the matter in rural areas? Is legislation to be introduced this Session, or next?
    Mr. Marks: No legislation is to be introduced at the moment, but in any case that is not a matter for me. We are aware of the urgency. A number of schemes operate, particularly in Scotland, where post buses are used more often than in England.
    Mr. Les Huckfield: Is my hon. Friend aware that many of us welcome what he said about wholesale delicensing? Does he agree that the answer to the problem might be more flexibility in the scope and operation of the National Bus Company?
    Mr. Marks: It is a subject that we must examine. Although we have to consider the views of trade unions and others about the maintenance of jobs, safety standards, and the proper maintenance of vehicles, we must recognise that there are many people who have access to neither bus services nor cars in such areas. We have to do our best for them.
    Sir John Hall: Is the Minister aware that in my constituency, which is only 30 or 40 miles from London, rural transport is at the point of breakdown? Will he consider the possibility of allowing Post Office vans to carry passengers as well as mail, as they do successfully in other countries?
    Mr. Marks: They also operate successfully in this country, and I hope for an extension in those services. Post vans are used most in Scotland and Wales with a few in England. There is nothing against them, except that the routes and the times of Post Office vans do not necessarily coincide with the times and routes of people who want to travel on local journeys.

    A6, Wilstead (Bypass)
    Mr. Hastingsasked the Secretary of State for the Environment on what

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    grounds he decided to approve construction of the bypass at Wilstead, on the A6.
    Mr. Marks: The bypass has been constructed on road safety and environmental grounds, as part of the general improvement of the A6 trunk road between Bedford and Luton.
    Mr. Hastings: Is the Minister aware that there is no comparison between the need for this bypass, which was in my view minimal, and the need for a bypass of Silsoe, which is five miles down the A6—where conditions are appalling—and a bypass of Ampthill, for which there is a crying need? Does he not agree that there is something seriously wrong with priorities when £330,000 can be so misapplied? Will the Minister please look into it?
    Mr. Marks: I am not aware of any objections to the bypass. It will bring benefits to the area. The question whether the Wilstead bypass should take precedence over bypasses at Silsoe and Ampthill is not a matter for the Government. The Silsoe scheme is taking longer to reach construction stage because of the Wrest Park ancient monument. The Ampthill scheme is the responsibility of the Bedfordshire County Council, within the framework of its transport policy.

    Council House Rents
    Mr. Arthur Jonesasked the Secretary of State for the Environment what will be the average increase in council rents caused by the cuts in housing subsidies announced by the Chancellor of the Exchequer in Command Paper No. 6393 for 1976–77, 1977–78 and 1978–79, assuming no corresponding increase in rate fund contribution.
    Mr. Crosland: No cut is proposed for 1976–77, and subsidy provided should enable local authorities to contain rent increases within a national average of about 60p a week. I am glad to see that this guideline figure is being generally observed. The savings forecast for each of the subsequent two years would be equivalent in England, in current conditions and at constant prices, to an average rent increase of roughly 35p a week net of rebates.
    Mr. Jones: In reply to my hon. Friend the Member for Aylesbury (Mr. Raison) on 28th July last year, the Government announced their aim, as stated in Cmnd. 6115—[HON. MEMBERS: "Reading."] If it is a quotation, how can I be expected to do other than read?
    Mr. Speaker: Order. It is not customary to quote during Questions. That has been long established.
    Mr. Jones: Thank you for that advice, Mr. Speaker.
    In that White Paper a figure of 60p a week was referred to as the allowance to cover—as I understood it—inflation in the economy generally. Do I take it that that figure remains the Government's objective for 1976–77, and that beyond that there will be the 35p a week that the right hon. Gentleman mentioned?
    Mr. Crosland: I have a great deal in common with my right hon. Friend the Member for Huyton (Mr. Wilson), who has just resigned as Prime Minister, but I do not have in common with him the faintest recollection of what I said on 28th July last year, I regret to say. The position is precisely as I stated it in my answer this afternoon, namely, that we expect that with the subsidies provided the average rent increase in 1976–77 will be 60p and that thereafter the effect of the cuts will be as announced this afternoon.
    Mr. Frank Allaun: Is it not a fact that Government subsidies to council house tenants are greatly exceeded by Government subsidies to owner-occupiers, in the form of tax relief? Therefore, will my right hon. Friend resist the proposed cut in council house subsidies, which will add seriously to the cost of living of millions of working people?
    Mr. Crosland: We must remember that the owner-occupier was clobbered by the Conservative Government during the years 1971–73, when the mortgage rate went up from 8½ per cent. to 11 per cent. and house prices doubled, and the period ended with a total famine of mortgages. We must not give the impression that over the past few years the owner-occupier has been unduly favourably treated when it comes to comparisons between him and the council tenant. As we discovered in the housing finance

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    review, one can reach 10 different answers according to what one brings into the comparisons. When we publish a document on the subject, I hope that there will be widespread public debate.
    Mr. Raison: Will the Secretary of State make absolutely clear what the 35p to which he referred is? Am I right in thinking that it represents an increase of 35p on top of the increase projected for next year? If so, what will be the expected total increase in rents for the next financial year?
    Mr. Crosland: I think that the hon. Gentleman means in the next financial year——
    Mr. Raison: Next year.
    Mr. Crosland: It depends when it starts. I can never remember whether it is 4th April or 6th April. If it is today, it is the next financial year. The 35p refers to an increase bigger than it would otherwise have been. The cuts in consequence of the announcement by my right hon. Friend the Chancellor of the Exchequer in his Budget Statement make it impossible to say what it will be until we know what the rate of inflation is. No Government have ever projected likely rent increases more than 12 months ahead.
    Mr. Raison: The White Paper projected a figure which, if inflation rose at a certain rate, would be adjusted. The White Paper, before the current figure was projected, gave a figure from which one can deduce rent increases for next year. Is it one to which we can add the 35p?
    Mr. Crosland: The White Paper projected no figure for rent increases; it projected a figure for subsidies. The effect of a given level of subsidies on rents depends centrally on the rate of inflation, and that the Government have not projected.

    Speed Limits (Fuel Saving)
    Mr. Knoxasked the Secretary of State for the Environment whether he will arrange for his Department to compile an estimate of the fuel saving effected by the 50 mph and 60 mph limits.
    Mr. Marks: We estimate that lower speeds, together with other changes in driving behaviour since the oil crisis, are reducing consumption of motor spirit by 3 per cent. to 4 per cent. It is, however, impossible to isolate the effect of the speed limits from other factors.
    Mr. Knox: How can the Minister justify the continuation of these speed limits when he does not know exactly how much fuel, if any, is saved by them?
    Mr. Marks: I was not aware that exact knowledge was necessary for Governments of either side before they made their decisions. The last survey showed that the proportion of drivers observing the limit was about 80 per cent. It is clear that most drivers appreciate the need for those limits.
    Mr. Norman Fowler: Is it not a fact that there is no evidence of substantial fuel saving? Given that the limits cause confusion to the motorist and enforcement difficulties for the police, why not just drop them?
    Mr. Marks: We shall examine all the available evidence when the present Order expires on 30th November. As for the criticisms of the difficulties of enforcement, I am aware that the complaints which reach hon. Members are in the main from people who have exceeded the limits and had their licences endorsed as a result.
    Mr. Lipton: Has my hon. Friend taken note of recent observations by the Assistant Commissioner of Police for the Metropolis that speed limits should be increased?
    Mr. Marks: I think that the Assistant Commissioner was referring to the 30 mph and 40 mph limits rather than the overall limit of 50 mph on ordinary rural roads and 60 mph on dual carriageways.
    Mr. Rost: Has not the Minister been advised that regular checking of points, plugs and tyres makes a bigger contribution to fuel economy than a variety of complicated, unenforceable speed limits?
    Mr. Marks: I have not had such advice. I hope that hon. Members who have evidence, which the Transport and Road Research Laboratory says that it cannot separate from all the other information, will let me or the Laboratory have it.

    Centre for Environmental Studies
    Mr. Dudley Smithasked the Secretary of State for the Environment whether his two senior officials, who act as assessors on the governing body of the Centre for Environmental Studies, represented the Government's views about the facilities provided by the Centre for a four-month visit by Mr. Mundey, ex-general secretary of the Australian Builders' Labour Federation, to instruct British building workers in techniques to ensure the blacking by building workers of any development of which they do not approve.
    Mr. Freeson: I do not think it right to disclose details of the proceedings of this governing body, or of any others of a largely autonomous nature, but I understand the purpose of the visit referred to was not as set out in the Question.
    Mr. Smith: Nevertheless, does it not strike the Minister as somewhat bizarre that taxpayers' money should be used to subsidise somebody who is apparently dedicated to disruption and anarchy?
    Mr. Russell Kerr: Who said so?
    Mr. Freeson: The Centre does not receive more than a proportion of its expenditure from Government sources. I can add nothing to my answer, that the purpose of the visit was not as the hon. Gentleman described it in his Question.
    Mr. Cryer: Does my hon. Friend agree that Jack Mundey and Australian trade unions might have much to contribute to the British trade union movement? Does he also agree that architects and town planners do not have sole knowledge in environmental design? Is it not true that many building workers and many people on the shop floor have just as much knowledge? For example, they might have warned the architects who designed Ronan Point that there were certain structural defects. Is it not important to get trade unionists involved more in design and development, in all walks of life?
    Mr. Freeson: I certainly agree that it is desirable to get trade union and other groups involved in environmental and planning decisions. In an indirect way, that was the purpose of the visit. It was
    420
    to consider urban and environmental planning in Britain, with particular reference to the parts played by trade unions and residential and citizen groups.
    Mr. Tebbit: Why could not the Minister have given that straightforward answer, saying what the purpose of the visit was, when my hon. Friend the Member for Warwick and Leamington (Mr. Smith) asked him? Why did he have to be so arrogant and uninformative until one of his hon. Friends asked a question?
    Hon. Members: Hear, hear.
    Mr. Freeson: I wish that the hon. Gentleman and his near-hearing hon. Friends had read the Question, which did not ask me for the purpose of the visit but told me, inaccurately, what it was.
    Mr. Russell Kerr: Is my hon. Friend aware that Mr. Jack Mundey, far from being the drug on the market that Conservative Members have suggested, has had a major influence on environmental matters, in particular, in and around Sydney which is my home town, and—this I find somewhat incongruous—has become the darling of Conservative interests in Sydney?
    Mr. Freeson: That may derive from the fact—a fact of which Mr. Mundey may not have been aware—that the environmental network pressures and influences in this country on that score are somewhat more developed than in my hon. Friend's home territory.

    Lorries and Lorry Drivers (Regulations)
    Mr. Les Huckfieldasked the Secretary of State for the Environment whether he will make a further statement on his progress in negotiations with his European counterparts on the tachograph, drivers' hours, Community operators' permits and gross vehicle weights.
    Mr. Marks: On drivers' hours, we are examining new proposals from the EEC Commission, with which we are continuing to discuss the position on tachographs. There have been no recent negotiations on Community permits and gross vehicle weights.
    Mr. Huckfield: Will the Minister bear in mind that many of us would not mind

    421
    if the gross vehicle weights were increased slightly, because it would not make any difference? Will he also recognise that many of us feel that the British quota in regard to international operating permits should be increased and that progress on the tachograph and drivers' hours should be as slow as possible?
    Mr. Marks: I agree wholeheartedly with the last part of my hon. Friend's supplementary question. Indeed, that is what we are doing. As for Community operators' permits, at present the United Kingdom receives 272 out of a total of 2,363 permits in the Community as a whole. The figure of 272 represents less than 5 per cent. of our international road haulage activity.
    Mr. David Steel: Is the Minister aware that there is one area in which we lag behind our Community partners, namely, in our failure to allow heavy goods vehicle licences to be given to drivers who wear contact lenses? There is surely no defence for that retrograde attitude by the Government.
    Mr. Marks: I take note of the hon. Gentleman's comments and shall write to him on the subject.
    Mr. Norman Fowler: On the wider question, will the Minister recognise that in Britain the regulations on drivers' hours will add massively to the costs of the road haulage industry and will knock out many road and bus services in Britain? Will he confirm that the aim is to achieve not a deferment of the Regulations but a change?
    Mr. Marks: The Regulations were accepted when the Conservative Government brought in the European Communities Bill. They comprise part of the Regulations brought forward in 1969, accepted by the original Six in 1972 and due to be brought into force. We have fought for deferment and we have achieved it.

    Tied Cottages
    Mr. Kilroy-Silkasked the Secretary of State for the Environment when he expects to be able to introduce legislation abolishing the agricultural tied cottage.
    Mr. Crosland: Next week.
    Mr. Kilroy-Silk: What day next week—and, indeed, at what time? Will my right hon. Friend accept that his announcement will be broadly welcomed by agricultural workers throughout the country? Will he confirm that the Bill will contain provisions giving to those workers the full protection of the Rent Acts and will not be a shoddy compromise with agricultural interests?
    Mr. Crosland: I am obliged to my hon. Friend for his congratulations to us on, I hope, solving a problem that has bedevilled the agriculture industry, not for years but for decades.
    Mr. Nicholas Winterton: Rubbish.
    Mr. Crosland: In reply to the second part of my hon. Friend's supplementary question, I must inform him that my Department never under any circumstances introduces shoddy compromises.
    Mr. Nicholas Winterton: Is the Secretary of State aware that the agricultural tied house has been part of the rural scene for many years and has contributed tremendously to the success of British agriculture? What is the NFU's attitude to the Government's proposals? Is the right hon. Gentleman further aware that restrictions on agricultural tied houses will be particularly damaging to the dairy and livestock industries?
    Mr. Crosland: There have been full consultations with all interested parties. I ask the hon. Gentleman to await the text of the Bill. I hope that in the meantime he will not make alarmist statements.
    Miss Maynard: Will my right hon. Friend say whether the Bill will dissociate a farm worker's employment from his home? Does he agree that it is quite unacceptable that any man's home should depend on his job? Finally, does he agree that farm workers are particularly vulnerable when that kind of situation exists, as was demonstrated only two days ago by the eviction of a man, his wife and family?
    Mr. Crosland: I agree with my lion. Friend's sentiments. I assure her that the Bill has been drawn up in the closest consultation with the NFU and with the union of which my hon. Friend is so distinguished an ornament.

    Steel Structures
    Mr. Costainasked the Secretary of State for the Environment if he will issue instructions to his Department to ensure that any steel structures which are designed or approved by them are designed or approved by it are designed to incorporate British Steel sections.
    Mr. Freeson: No, Sir. This would be contrary to the Treaty of Rome and would generally invite retaliation against British Steel, which exports over five times as much steel sections as are imported. However, steel structures designed or approved by my Department already incorporate steel of British origin to a very substantial extent.
    Mr. Costain: I am grateful for that answer. Is the Minister able to give the percentage of British steel involved? Is he aware that in certain buildings that are being erected, designed by his Department, British steel cannot be used? That surely cannot be in the interests of the nation.
    Mr. Freeson: I cannot quote the figures offhand, but I shall check the situation. If I can establish such detailed information, I shall write to the hon. Gentleman.

    British Rail (Chairman)
    Mr. Canavanasked the Secretary of State for the Environment whether he will make an announcement about the chairmanship of British Rail.
    Mr. Whiteheadasked the Secretary of State for the Environment when he expects to announce the name of the new Chairman of British Rail.
    Mr. Crosland: I am glad to be able to inform the House that Mr. Peter Parker has accepted my invitation to serve as Chairman of the British Railways Board for a term of five years, when Sir Richard Marsh's appointment comes to an end in September. With the agreement of Sir Richard Marsh, I am in the meantime appointing Mr. Parker as a part-time member of the Board.
    Mr. Canavan: I congratulate Mr. Parker on his appointment. Will my right hon. Friend point out to him the
    424
    need for more co-ordinated Socialist planning in running an essential public service such as British Rail? Will he express the hope that Mr. Parker will not turn out to be a butcher, like Lord Beeching, or a simple careerist, like Richard Marsh?
    Mr. Crosland: I very much resent the last remark made by my hon. Friend the Member for West Stirlingshire (Mr. Canavan). Whatever one may think about Sir Richard Marsh, whom I have known for many years, it is intolerable to call him a simple careerist. I greatly resent that suggestion. I do no think it is for me to lecture Mr. Peter Parker. He has been a member of the Labour Party for at least as long as has my hon. Friend the Member for West Stirlingshire. Mr. Parker has long been associated with the nationalised industries. Therefore, I would regard it as an impertinence on my part to lecture him on the principles of running a nationalised industry.
    Mr. Raison: I should like to add the congratulations of the Opposition to Mr. Parker and wish him good luck in the job—luck that he no doubt will need. At least he knows about profits. Has the Secretary of State told Mr. Parker about reports that the Government are proposing, as part of their new transport policy, to transfer subsidies from rail to bus services?
    Mr. Crosland: I must ask the hon. Gentleman to contain himself until next Tuesday, when we shall publish our consultative document on transport.
    Mr. Cryer: Will my right hon. Friend consider sympathetically any representations that Mr. Parker might make to ensure that British Rail is given a much greater proportion of freight traffic? Is he aware that in West Yorkshire British Rail has suggested that it could carry many more passengers and much more freight on the existing network, at a fraction of the cost of improving the motorway system?
    Mr. Crosland: I shall consider very sympathetically any points that Mr. Peter Parker may wish to put to me. However, I ask the House to await publication of the consultative document next week, which will give, in broad outline, the Government's transport strategy.
    Mr. Fry: May I congratulate the right hon. Gentleman on confirming one of the worst-kept Government secrets by announcing Mr. Parker's appointment? Will he instruct the new Chairman of British Rail to publish full statistics regarding losses on individual routes, so that accurate assessments may be made of where subsidies are going?
    Mr. Crosland: I hope that the consultative document will give the most detailed breakdown yet made in this country of where subsidy—not only for railways, but for transport as a whole—is going. As for this being one of the worst-kept secrets, I can think of far worse-kept secrets than this. I must remind the House that we believe in open government.
    Mr. Ron Lewis: May I, on behalf of the railway trade unions, congratulate my right hon. Friend on making this appointment? Will he suggest to the new Chairman that he takes the railway unions into his confidence a little more than has been the case hitherto?
    Mr. Crosland: My hon. Friend probably knows that Mr. Parker has specialised very strongly in industrial relations. Throughout his life, his relations with trade unions have been excellent. I am glad to say that Mr. Sidney Weighell the general secretary of my hon. Friend's union, issued a statement today welcoming the appointment.

SOCIAL SECURITY BENEFITS (INCREASES)
The Secretary of State for Social Services (Mrs. Barbara Castle): I will, with permission, Mr. Speaker, make a statement about increases in social security benefits. My right hon. Friend the Chancellor of the Exchequer yesterday announced the main features.
Before making my statement, Mr. Speaker, may I be permitted to place on record the deep sense of loss I am sure we feel on all sides of the House at the death of Brian O'Malley. He was a brilliant Minister, a formidable debater, a fair and honourable parliamentary opponent and, not least, a warm and loyal colleague and friend. His contribution
426
to the work of my Department was outstanding and I know he will be sorely missed by the whole House.
The increases in benefit will take effect in the week beginning 15th November. The standard single rate of retirement pension and of invalidity pension, and the rate of widow's pension, will be increased by £2 from £13·30 to £15·30. For a married couple the increase will be £3·30 from £21·20 to £24·50. There will be proportionate increases for younger widows, and for pensioners with pensions at modified rates, and an extra 95 pence for each dependent child of widows and other pensioners.
As my right hon. Friend indicated yesterday, now that the rate of inflation is coming down it would no longer be appropriate to base the uprating on a reference period which lies wholly in the past. However we are confident that the proposed increases of 15 per cent will be considerably larger than the actual and likely movement of earnings and prices from the time of the last uprating to November.
Since the Labour Government came into office in February 1974, the real value of the single pension has risen by 16½ per cent. and that for a married couple by over 15 per cent. The 1976 uprating will do more than maintain that advance; it will raise the real value of pensions to a new peak. It will also maintain the married pension rate at broadly one-half, and the single pension rate at broadly one-third, of net average earnings.
Similarly, short-term benefits for sickness and unemployment will be increased to take account of the actual and likely movement in prices from last November to this November, again with a comfortable margin to spare, but on this occasion we have decided in addition to make a proportionately bigger improvement in the short-term rates compared with the long-term ones, thus narrowing the gap between them. The weekly benefit for a single person will go up by £1·80 to £12·90 and for a married couple by £2·90 to £20·90, increases of more than 16 per cent. Maternity allowance and injury benefit will go up by the same amounts. Injury benefit will become £15·65 for the single person and £23·65 for the man with a dependent wife. Increases payable for

427
dependent children of people drawing short-term benefits will also be raised.
War and industrial injuries disablement and widows' pensions will go up in line with long-term benefits. For example, the pension for 100 per cent. disablement will for the former Army private and the person injured at work go up by £3·20 to £25. There will be comparable increases in the additional allowances which can be paid with these pensions. The therapeutic earnings limit will go up from £7 to £9.
The rate of mobility allowance, which was only recently introduced at a higher rate than originally announced, has also been reviewed but, as it will have been running for less than a year, we do not propose to increase it on this occasion.
As regards supplementary benefit, the increase in the main scale rates will be the same as those in the related national insurance benefits, and they will come into force at the same time. To coincide with the uprating, the Supplementary Benefits Commission will be making increases in the discretionary additions for extra heating. These will be over and above the increases in the scale rates and will operate from the same dates. The detailed increases are from 55p to 70p, from £1·10 to £1·40 and from £1·65 to £2·10—that is, in increase of more than 25 per cent. in each rate, as compared with the 15 per cent. or 16 per cent. by which benefits generally will rise. The discretionary additions for special dietary needs will also be increased from 60p to 75p and from £1·35 to £1·75.
My right hon. Friend the Secretary of State for the Environment has it in mind to make appropriate adjustments in the needs allowances for the rent and rate rebate and rent allowance schemes. He will shortly be consulting his Advisory Committee on Rent Rebates and Rent Allowances about this.
For the convenience of the House full details of the new rates of benefit are available in the Vote Office, and will be circulated in the Official Report. Shortly after the Easter Recess, I shall be laying a draft Uprating Order, under Section 124 of the Social Security Act, for affirmative Resolution. The Order will be accompanied by a Government Actuary's Report.
428
My right hon. Friend the Chancellor of the Exchequer also gave details of the improvements to be made to the family income supplement scheme. The new income limits and the higher maxima will take effect on 20th July. Details are included in the papers in the Vote Office and draft Regulations for affirmative Resolution will be laid after the Easter Recess.
As my right hon. Friend announced yesterday, the full year cost of the increases in long-term benefits is about £1,070 million. The short-term increases I have announced will cost some £290 million. All in all, the full-year cost of the whole of this uprating programme, including the increase in family income supplement and in the supplementary benefit heating and dietary additions, is about £1,390 million, of which just over £1,150 million will fall on the National Insurance Fund. The contribution rates which have just come into force will be sufficient this year to finance the rates of benefits which I have just announced.
Mr. Patrick Jenkin: The whole House will wish to be associated with the tribute paid by the right hon. Lady to Brian O'Malley and to extend to his widow and daughter our profound sympathy. We may have had disagreements with Brian O'Malley on political matters, but he earned great respect from this side of the House, not only as a knowledgeable and effective debater but as a man of charm and complete integrity. He will be very sadly missed.
Turning to the right hon. Lady's statement, is she aware that by fixing the level of benefits in this uprating by reference to future estimates of inflation, rather than by basing them on past inflation, she has effectively eliminated any protection for pensioners and others against the peak months of inflation, which were between March and November last year? Is she aware that this is not what the House and country understood by the pledge to keep upratings in line with prices or earnings, whichever was the more favourable, that she spelled out in the 1975 Act?
Is she aware that if it is the combination of the appalling level of inflation under this Government and the huge

429
prospective borrowing requirement announced by the Chancellor of the Exchequer yesterday which has forced this harsh decision upon her, it would have been a little more honest of the Chancellor to have made that clear instead of trying to pretend that by giving 15 per cent. he was conferring a benefit upon pensioners? Is she aware that if pensions had been uprated in line with past price rises, the increase would have been 22½ per cent?
Does she realise that many people will find it incredible that she has increased short-term benefits by more than she has increased long-term benefits, bearing in mind that long-term benefits are taxable, while short-term benefits are not?
Does the right hon. Lady realise that war widows will now get a smaller percentage increase than will the unemployed, even though the widows pension is taxed and unemployment benefit is tax-free? Where is the sense in that?
Does the right hon. Lady recognise that a 16 per cent. uprating in the short-term benefit is bound to widen the gap between the net income of the man at work and that of the man who is out of work? Take, for instance, a married man with two children earning £40 a week. That net increase for the man in work from the tax cut and the national insurance increase is £1·58 per week whereas for the man out of work the improvement in income will be £3·88. That is a widening of the gap by £2·30. How does that make sense?
The right hon. Lady has already announced the uprating in the contribution. Is she aware of the resentment caused among the self-employed by the substantial increase in the upper limit for the self-employed which raises the earnings-related contribution limit from £3,600 to £4,900? And that that means an extra contribution of £104 for the man at the top of the scale, for which he will receive no additional benefit?
Does the right hon. Lady realise, and did she tell the Chancellor of the Exchequer, that this more than offsets any reduction in tax, even if the TUC agree with the tax relief given by the Chancellor in his Budget yesterday?
In short, does the right hon. Lady believe—[HON. MEMBERS: "Too long."] I am not surprised that hon. Members
430
opposite do not like it. It is not a very palatable message for the country. Does the right hon. Lady believe that the country will understand or forgive an up-rating which helps the unemployed more than it helps war widows, creates added disincentives to work, deepens the poverty trap, penalises the self-employed and, most serious of all, comes before us as a disreputable attempt to conceal the harsh but inevitable fact that she cannot honour the pensions promises on which she and her party went into the last two elections?
Mrs. Castle: No doubt we shall have an opportunity to debate these matters. I should welcome such an opportunity to enable us to deal at length with the many points raised by the right hon. Gentleman. First and foremost, the Chancellor of the Exchequer said yesterday that the forecasting method would be used on this occasion. By his denigration of this costly and important uprating, the right hon. Gentleman has been trying to out-TUC the TUC, which has of course welcomed the increase as very substantial and as a fulfilment of the Government's policy.
I totally repudiate the right hon. Gentleman's suggestion that we have in any way gone back on our manifesto policies or on our declared attitude in the legislation that we introduced. As I said in my statement, the real value of pensions has increased substantially under the Labour Government, and it will continue to increase under this uprating. The pension rates introduced in last November's up-rating, were, by February of this year, still worth 10·7 per cent. more in real terms on the single rate and 9·4 per cent. more on the married rate than the rates obtaining in October 1973 under the Conservative Government. By next November, even at the end of the period of uprating, a margin of that real improvement will remain. An increase of 15 per cent. will then be added to it at a time when inflation is being brought under control. That will leave pensioners substantially better off in real terms than they ever were under a Conservative Government.
As for the short-term rates, the whole House should be showing a little concern at the widening gap between the short-term and long-term rates, particularly in a period of high unemployment. That is

431
why in this uprating we have sought deliberately to narrow the gap which has been growing to this disturbing extent.
Mr. George Cunningham: Is it the Government's intention in future to base all upratings on an estimate of earnings or prices in the year before the time when they take effect? If it is, what will they do if their estimate proves to be too modest? Will the difference be made up in the uprating the following year? Does the Secretary of State accept that there are many pensioners who feel that they suffered from having past inflation taken into account while inflation was getting worse, and that now, when inflation is going down, they will not get the benefit of having past inflation taken into account? Is not this a worrying feature to hon. Members on both sides of the House?
Mrs. Castle: I can only report to the House on the present uprating, and that is what I am doing. I am telling the House the reason for it and what it means. In a full year the uprating will cost over £1,300 million. That is more than the annual rate of the last uprating, which was just over £1,000 million, on the old method.
Therefore, in this situation of falling inflation it is clear that we have more than safeguarded the pensioners in terms both of prices and of the movement of earnings. Indeed, the House should realise the extent to which pensioners have been given preferential treatment during a time of acute economic stringency. Under the Labour Government, pensions have increased in real value by 16·5 per cent. for the single pensioner. During the same period gross earnings have risen by 4·7 per cent. It is clear that if we had this time adopted the historic method, an additional burden would have been put on the worker and the wage earner of £500 million for this uprating, and it would have had inevitable consequences in due course on the contribution rate.
I ask the House to say whether, in striking a balance at a time of difficulty between carrying out in full our promises to the pensioners and recognising the heavy sacrifices that we are asking wage-earners to make, we have not achieved social justice.
Mr. Paul Dean: May I add my tribute to the late Brian O'Malley, who succeeded me as Minister responsible for pensions? His passing is a great loss to all of us, particularly to those who are concerned with pensions.
Does the right hon. Lady recognise that in her statement she has announced a substantial change from previous policies and has shown an odd sense of priorities? In recent years the long-term beneficiaries—pensioners, war pensioners and widows—have always had a bigger increase than have the short-term beneficiaries, but she has reversed that policy in her statement.
Mrs. Castle: It was the Conservative Administration which started this differential treatment and linked the increase in short-term benefit to the movement in prices only, whereas the increase in long-term benefits under our legislation is linked to the movement of earnings or prices, whichever is the more favourable. We have continued a differential, but people connected with social affairs have been concerned at the extent to which the use of this formula has widened the gap between long-term and short-term benefits and caused undoubted hardship to certain unemployed and other short-term benefit families. We therefore thought that a modest adjustment was fully justified. Thus, instead of an increase of £1·60, which would have been payable if we had stuck to the old formula, we have an increase of £1·80—only a small gesture, but I am sure in the right direction.
Several Hon. Members Several Hon. Members rose——
Mr. Speaker: Order. I am in some difficulty. Obviously we cannot debate this matter now. There is a lot of other important business to be disposed of. I shall allow four short questions.
Mr. Dan Jones: I applaud the compassion of the Government and the Department in dealing with the old and the sick, but what is being done to eliminate the growing number of skivers who batten on to the social security system? I have had a large number of letters from my constituents who are becoming enraged at the flagrant abuse of social security benefits. Is the Department prepared to look at this problem with a view to eliminating it?
Mr. Speaker: Order. That would be considered a short question in Wales.
Mrs. Castle: I cannot accept my hon. Friend's contention that there is a growing number of skivers. At a time of exceptionally high unemployment that is a somewhat unwise statement to make. We are conscious, of course, that some abuses take place. That is why we have our inspectorate system and why we pursue any cases of abuse with the utmost rigour. Our successful prosecution rate is running at about 14,000 a year. That in itself is proof that where evidence is brought to us of abuse we pursue it, but a lot of the claims that abuses are taking place are not substantiated.
Mr. Penhaligon: I should like the Liberal Bench to be associated with the comments about Brian O'Malley. He was in charge of the first Standing Committee that I attended, and on many occasions his persuasive explanation of Government policy elicited my support.
Does the Secretary of State not understand that changing the reference period for the calculation of inflation will be seen by thousands of pensioners for what it is—little short of a money-saving fiddle? Can she not see that to put benefits up by 15 per cent. in the same year as incomes will rise by 3 per cent.—and that is how the public will see it—is not good public relations? Surely the time has arrived for a major restructuring of the supplementary benefits system.
Mrs. Castle: I am interested in the assumption behind the hon. Gentleman's question that there is something sacrosanct about the historical method. We were attacked for using it when we did use it. We were told that the forecasting method was more appropriate. But it is still in fulfilment of our policy that

DETAILS OF NEW RATES OF BENEFIT

The following are the new rates:

MAIN INCREASED CONTRIBUTORY AND NON-CONTRB3UTORY BENEFIT RATES

Existing Weekly Rate

Proposed Weekly Rate

£

£

Standard rate of invalidity, widow's and Category A retirement* pensions; Category B retirement pension at the higher rate* and widowed mother's allowance

…

…

…

…

13·30

15·30

Increase of invalidity pension and Category A retirement pension for wife or other adult dependant; Category B retirement pension at the lower rate*

…

…

…

…

7·90

9·20

we are giving complete forward cover for price increases.
Since last November's uprating up to mid-February the increase in the Retail Price Index was 3·9 per cent. That is still about 11 per cent. short of the figure by which pensions will rise in the autumn, and no one in this House will expect an inflation rate of 11 per cent. in nine months. Therefore we have given an ample margin of cover.
On earnings, the second guarantee was that pensions would rise in line with wages. Under this formula this time they will rise more rapidly than earnings.
Mrs. Bain: On behalf of my colleagues in the Scottish National Party I wish to pay tribute to Brian O'Malley, whom we all came to respect as a man of integrity and who was deeply concerned about the less-well-off sections of our community. Like the Government, we shall all regret his passing.
Am I right in assuming that widows' pensions and the child interim benefit will still be regarded as taxable income? Does the right hon. Lady envisage the situation where this will move towards non-taxable income, since these people now face the same responsibilities as married couples?
Mrs. Castle: Yes, of course, they are certainly taxable and they always have been.
Mr. Greville Janner: When does my right hon. Friend propose to review the rate for the mobility allowance?
Mrs. Castle: I have reviewed it this year, as I said in my statement, and as I am bound by statute to do. I have therefore reported that fact to the House. But as the enhanced rate has not been in operation for a year we do not propose to increase it this time.
Following is the information:

Existing Weekly Rate

Proposed Weekly Rate

£

£

Standard rate of unemployment and sickness benefits:

Higher rate

…

…

11·10

12·90

Increase for wife or other adult dependant

…

…

6·90

8·00

Lower rate

…

…

7·80

9·20

Widow's allowance (first 26 weeks of widowhood)

…

…

18·60

21·40

Maternity allowance

…

…

11·10

12·90

Invalidity allowance payable with invalidity pension, when incapacity began before age:

35

…

…

2·80

3·20

45

…

…

1·70

2·00

60 for men or 55 for women

…

…

0·85

1·00

Attendance allowance:

Higher rate

…

…

10·60

12·20

Lower rate

…

…

7·10

8·15

Retirement pension for persons over pensionable age on 5th July 1948 and for persons over 80†:

Higher rate

…

…

7·90

9·20

Lower rate

…

…

4·90

5·60

Non-contributory invalidity pension

…

…

7·90

9·20

Invalid care allowance

…

…

7·90

9·20

Increase of non-contributory invalidity pension and invalid care

allowance for wife or other adult dependant

…

…

4·90

5·60

Guardian's allowance

…

…

6·50

7·45

Child's special allowance; increases for children of widows,

invalidity, non-contributory invalidity and retirement pensioners and invalid care allowance beneficiaries:

First child

…

…

6·50

7·45

Any other child‡

…

…

5·00

5·95

Increases for children of all other beneficiaries:

First child

…

…

3·50

4·05

Any other child‡

…

…

2·00

2·55

* An age addition of 25p is payable to retirement pensioners who are aged 80 or over.

† Excluding the 25p age addition.

‡ Family allowances bring the total payments up to the amount payable for the first child.

MAIN INCREASED INDUSTRIAL INJURIES BENEFIT RATES

Existing Weekly Rate

Proposed Weekly Rate

£

£

Injury Benefit*†

…

…

13·85

15·65

Disablement benefit (100 per cent. assessment)*

…

…

21·80

25·00

Unemployability supplement ‡

…

…

13·30

15·30

Special hardship allowance (maximum)

…

…

8·72

10·00

Constant attendance allowance (normal maximum)

…

…

8·70

10·00

Exceptionally severe disablement allowance

…

…

8·70

10·00

Industrial death benefit:

Widow's pension during first 26 weeks of widowhood

…

…

18·60

21·40

Widow's pension now payable at £13·85 rate

…

…

13·85

15·85

Widow's pension now payable at £3·99 rate

…

…

3·99

4·59

* The Rates for beneficiaries not over the age of 18 will also be increased.

† Increases for adult dependants and children will be the same as those payable with unemployment and sickness benefits.

† Invalidity allowances and increases for adult dependants and children will be the same as those payable with invalidity pensions.

MAIN INCREASED WAR PENSION RATES

All ranks receive the same increases, officers' rates being expressed in pounds per annum.

Part I: Disablement Benefits

Existing Weekly Rate

Proposed Weekly Rate

£

£

Disablement pension for private at 100 per cent. rate

…

…

21·80

25·00

Unemployability allowances*:

Personal allowance

…

…

14·20

16·30

Increase for wife or other adult dependant

…

…

7·90

9·20

Existing Weekly Rate

Proposed Weekly Rate

£

£

Comforts allowance:

Higher rate

…

…

3·70

4·30

Lower rate

…

…

1·85

2·15

Allowance for lower standard of occupation (maximum)

…

…

8·72

10·00

Constant attendance allowance:

Special maximum

…

…

17·40

20·00

Special intermediate

…

…

13·05

15·00

Normal maximum

…

…

8·70

10·00

Half and quarter day

…

…

4·35

5·00

Age allowance with assessments of:

40 and 50 per cent.

…

…

1·60

1·80

60 and 70 per cent.

…

…

2·40

2·75

80 and 90 per cent.

…

…

3·40

3·90

100 per cent.

…

…

4·80

5·50

Exceptionally severe disablement allowance

…

…

8·70

10·00

Severe disablement occupational allowance

…

…

4·40

5·00

Existing Annual Rate

Proposed Annual Rate

Clothing allowance:

Higher rate

…

…

…

…

…

…

…

30·00

36·00

Lower rate

…

…

…

…

…

…

…

21·00

23·00

Part II: Death Benefits

Existing Weekly Rate

Proposed Weekly Rate

£

£

Widow's pension—private's widow:

Standard rate

…

…

17·20

19·80

Childless widow under 40

…

…

3·99

4·59

Rent allowance

…

…

6·70

7·50

Age allowance for elderly widows:

Between age 65 and 70

…

…

1·70

1·95

Over age 70

…

…

3·40

3·90

Widower's pension

…

…

17·20

19·80

Widow's children:

Eldest child

…

…

6·70

7·65

Other children with family allowances

…

…

5·70

6·65

Other children without family allowances

…

…

6·55

7·50

Motherless and fatherless children aged:

Under 15 Eldest child or other children with no family

…

…

6·70

7·65

Over 15 allowances

…

…

8·20

9·15

Under 15

…

…

5·70

6·65

Over 15 Other children with family allowances

…

…

7·20

8·15

Adult orphans

…

…

13·30

15·30

* Invalidity allowances and increases for children will be the same as those payable with invalidity pensions.

MAIN INCREASED SUPPLEMENTARY BENEFIT RATES

Existing Ordinary Rate

Existing Long-Term Rate*

Proposed Ordinary Weekly Rate

Proposed Long-Term Weekly Rate*

£

£

£

£

Ordinary scale:

Husband and wife

…

17·75

21·55

20·65

24·85

Person living alone

…

10·90

13·70

12·70

15·70

Any other person aged:

Not less than 18

…

8·70

11·00

10·15

12·60

Less than 18 but not less than 16

…

6·70

—

7·80

—

Less than 16 but not less than 13

…

5·60

—

6·50

—

Less than 13 but not less than 11

…

4·60

—

5·35

—

Less than 11 but not less than 5

…

3·75

—

4·35

—

Less than 5

…

3·10

—

3·60

—

Existing Ordinary Rate

Existing Long-term Rate*

Proposed Ordinary Weekly Rate

Proposed Long-term Weekly Rate*

£

£

£

£

Blind scale:

Husband and wife:

If one of them is blind

…

19·00

22·80

21·90

26·10

If both of them are blind

…

19·80

23·60

22·70

26·90

Any other blind person aged:

Not less than 18

…

12·15

14·95

13·95

16·95

Less than 18 but not less than 16

…

7·60

—

8·70

—

Less than 16 but not less than 13

…

5·60

—

6·50

—

Less than 13 but not less than 11

…

4·60

—

5·35

—

Less than 11 but not less than 5

…

3·75

—

4·35

—

Less than 5

…

3·10

—

3·60

—

Existing Weekly Rate

Proposed Weekly Rate

£

£

Non-householder rent allowance

…

…

…

…

…

1·00

1·20

Attendance requirements:

Higher rate

…

…

…

…

…

10·60

12·20

Lower rate

…

…

…

…

…

7·10

8·15

* Where the claimant or a dependant is aged 80 or over a further 25p is added to these long-term rates.

FAMILY INCOME SUPPLEMENT

Existing Amounts

Proposed Amounts*

£

£

Prescribed amount for a family which includes one child

…

…

31·50

39·00

Increase in the prescribed amount for children after the first

3·50

4·50

Maximum supplement payable for a one child family

…

…

7·00

8·50

Increase in maximum for each additional child

…

…

0·50

0·50

* From 20th July.

STATUTORY INSTRUMENTS &c.

Ordered,

That the draft Pool Competitions Act 1971 (Continuance) Order 1976 be referred to a Standing Committee on Statutory Instruments, &c—[Mr. Edward Short.]

OSTEOPATHS
3.55 p.m.
Mrs. Joyce Butler: I beg to move,
That leave be given to bring in a Bill to provide for the registration of osteopaths; and for purposes connected therewith.
There is a growing interest among the general public, and even within the medical profession, in various less orthodox medical procedures, of which osteopathy, or treatment by manipulation, is probably the best known. This interest often comes from practical experience of the success of such treatment when more usual methods have failed. Some of it is also undoubtedly a reaction against excessive drug therapy and a search for more natural methods of treatment. My experience here is probably typical.
Some years ago while on holiday in France I had a fall which made movement of my right arm very restricted and acutely painful. When I returned home, I visited an osteopath who told me that I had dislocated my shoulder. He put it back into place with what seemed a very simple movement of his hands. That speedy and skilled manipulation, which removed the injury, seemed quite miraculous to me at the time, but it was, of course, no miracle. It stemmed from a deep understanding of the cause and cure of such lesions by the osteopath concerned. Equally important, he worked on the arthritis which had set in at the site of the injury after my weeks of neglect, and with a few further treatments he cured that also.
Such accidents and injuries—pulled tendons and ligaments, strained muscles, slipped discs and even more serious dislocations of body movement—are common to most of us at some time in our lives. In particular, back troubles are widespread and crippling, and osteopaths have a special skill in dealing with such conditions. I believe, too, that osteopathy can be particularly helpful in keeping older people mobile and active, both by preventing the impairment of movement of various parts of the body from becoming chronic and in relieving or preventing arthritis.
This year is being celebrated as the centenary of osteopathy in the United States. That indicates that the treatment
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is not new-fangled but is a tried and tested therapy. Since osteopathy is an area of treatment not adequately covered in ordinary medical training, many doctors now regularly send patients to osteopaths for treatment. But the osteopath practises under common law and is completely free and independent of any other medical service. He is not a medical auxiliary, and therefore he receives his patients direct and not necessarily on the advice of a general practitioner.
Unfortunately, such osteopathic treatment is not available under the National Health Service and patients must therefore consult an osteopath privately or attend an osteopathic clinic; and they have, of course, to pay for this treatment. I believe it important that osteopathy should continue to be treated as a therapy in its own right and that practitioners should retain their right to carry out their own diagnoses. It is for this reason that the register proposed in the Bill will not be part of the Professions Supplementary to Medicine procedure.
At the same time, with the growing public interest in this form of treatment, it is important that it should be performed by adequately trained and experienced practitioners and that the public should be protected from those practising skills based on home study "quickie" courses and the like, or people who may put up glossy but worthless diplomas on their walls. In this country there are two training colleges for osteopathy, the British School for Osteopathy and the British College of Naturopathy and Osteopathy. Both have a full four-year course and strict entry requirements. These are recognised for student grants by the Inner London Education Authority and others. There is also the London College of Osteopathy which give a one-year course of training to doctors. These colleges have their own private register which intending patients can consult.
The Bill which I am seeking leave to introduce proposes that there should be a statutory register of all osteopaths who have followed such a recognised course of study for a required period. The Bill will set this out in greater detail and will, I believe, be an important contribution to the status and expansion of a very valuable profession. It will at the same time give additional protection to the

443
public. They can be certain that the practitioner they consult is fully qualified if his name is on this register. It is a simple and limited measure which I hope the House will approve.
Question put and agreed to.
Bill ordered to be brought in by Mrs. Joyce Butler, Mr. Tony Durant, Mr. Dan Jones, Miss Joan Maynard, Mr. William Molloy, Mr. Marcus Lipton, Mr. Alan Fitch and Mr. Paul B. Rose.

OSTEOPATHS
Mrs. Joyce Butler accordingly presented a Bill to provide for the registration of osteopaths; and for purposes connected therewith: and the same was read the First time; and ordered to be read a Second time upon Friday 7th May and to be printed. [Bill 113.]
ORDERS OF THE DAY
  WAYS AND MEANS
  Order read for resuming adjourned debate on Question [6th April].
  WAYS AND MEANS

    AMENDMENT OF THE LAW
    That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but, without prejudice to any authorisation by virtue of any resolution relating to value added tax, this Resolution does not extend to the making of amendments with respect to that tax so as to provide—

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

    (b) for refunding any amount of tax;

    (c) for reducing the rate at which tax is for the time being chargeable on any supply or importation otherwise than by reducing that rate in relation to all supplies and importations on which tax is for the time being chargeable at that rate; or

    (d) for any relief other than relief applicable to goods of whatever description or services of whatever description.—[Mr. Healey.]

    [Commission Documents Nos. R/622/76 and R/606/76 on Policy Guidelines for 1976.]

    Question again proposed.

BUDGET RESOLUTIONS AND ECONOMIC SITUATION
4.3 p.m.
Sir Geoffrey Howe: For all of us there come moments when on either side of the House we reflect on the nature and quality of the progress we have made in fulfilling the objectives which bring us all into the House, namely, to advance and improve the condition of the people of this country and the country as a whole. That kind of moment tends to come, obviously, with a change of Government. It comes as well, with perhaps less reason but certainly it comes, on a change of Prime Minister.
On this occasion, therefore, many of us had hoped that we might see something in the way of a new departure, a fresh beginning, on the part of right hon. Gentleman the Chancellor of the Exchequer in addressing himself to the country's economic problems. We are not wholly convinced that he would be able to set out in that way because it is

445
fair to say that the Prime Minister has not universally been regarded as the most successful Chancellor of the Exchequer since the War. Indeed, it might be said that in some respects the Prime Minister has been pioneering some of the paths that the Chancellor has been treading these last couple of years. He has been round some of the buoys before.
At all events, we were glad to hear the Prime Minister's early pronouncement in his very first broadcast to the people that we could not, as a nation, go on borrowing for ever, that it was time we began telling people the truth and time that we began seeking a policy that would unite the nation. He told us yesterday that we ought also to recognise the extent to which many of the shortcomings of our industrial scene result from mistakes over the last 30 years.
Against that background the Chancellor came to present what he himself described as the most important Budget of this Parliament. He proclaimed that he was learning, and intending to learn, from the mistakes of previous Administrations. We all had very high hopes of what that might produce. Certainly I can tell the Chancellor that if he had brought forward a Budget that represented, in our view, a right response to the needs of the nation, we on this side of the House would have been only too willing to support him and to respond to such a Budget presented with candour, sanity and courage.
The unfortunate fact is that the Chancellor, notwithstanding the situation, has failed, and failed seriously and fundamentally, to match the needs of the occasion. He has failed, in the first place, to apply himself and his Budget-making to the fundamental problems. He has not recognised, in action as opposed to words, the grave underlying weakness of British trade and industry. He certainly has not recognised, even in words, the dangers of continuing as he is with a public sector that is spending too much, much too much; a public sector that is taxing too much, far too much; and, above all, a public sector that is borrowing far too much.
It is a rather chilling thought that in each of the last three Budgets which the Chancellor has introduced he has set out, in words at least, to reduce the public
446
sector borrowing requirement. Only last year he set out to reduce that year's borrowing requirement by £1 billion and he stated that it was his intention to reduce the borrowing requirement for the year that has just begun by £3 billion. Therefore his target figure for the borrowing requirement for this year, when he spoke a year ago, was £7 billion.
This year he has wholly abandoned that objective, He has even abandoned the idea of seeking to make any reduction at all in that figure and is actually planning this year to increase the borrowing requirement by £1½ billion. If, when he is planning to increase it, he does anything like as well as he did when he was planning to reduce it, Heaven help us all ! He is ignoring the importance of that factor altogether and has ignored the other lessons of the past. Because of that, he has committed the nation to an economic strategy which in our view is doomed to failure.
I want to say something about the method by which the Chancellor has chosen to proceed. The truth is that he has not truly produced a Budget at all. If we look at the Red Book we see no outturn figures on which we can rely. He has come before the House with what is no more than an opening bid in negotiations yet to continue. Of course, I do not deny, and nobody will, the importance of the need to discuss with people outside this House, with outside bodies and with the public as well, the essential central features of the Government's economic policy, and I do not deny the importance of getting them understood and accepted. But to go about it as the Chancellor has done is an entirely different way of proceeding. The Chancellor has made it clear that he is handing the evolution, the working out, of the central part of his Budget package to the TUC.
I must ask how acceptable that procedure will be to all those who are not represented by or on that body. How acceptable will it be to middle management, who may find as a result of decisions taken by a body outside the House that differentials are once again suppressed, if not eliminated? How acceptable will be the decisions that are taken outside the House to impose a cutoff limit or a top limit in an incomes policy?

447
How acceptable a procedure will this be for widows? If the additional tax cuts do not come through they will find themselves, at the behest of an agency which does not represent them, paying tax on every pound that they earn.
How acceptable will it be to workers who are not represented by the TUC, who last year, on the Chancellor's own admission, found themselves being punished by higher taxes for the failure of the social contract? This year they find themselves being similarly clobbered by the disappearance of their tax allowances through no fault of their own.
I must warn the Government against finding themselves delivering yet further wrong-headed policies, policies which they may be obliged to deliver in the course of bargaining, promises and policies that should not be delivered, in exchange for promises that may never be fulfilled.
The truth is that the Chancellor has surrendered a large part of his duty and responsibility in a fashion that we must regard as being fraught with danger. He continues to preside over the disastrous devaluation of the pound, but he has now succeeded in devaluing the Budget as well. He has placed his high office, for the exercise of which he is responsible to the House, into the hands of a labour-only sub-contractor That will be seen by the country, as well as by the House, as an intolerable procedure.
But there are more fundamental problems. The Chancellor has not had the courage or the integrity to face the realities of the position and to spell them out honestly.
Before I come to the essentials of his strategy I shall give two illustrations. First, the House has recently been dealing with the way in which the increase in pensions has been handled. Yesterday, almost in a throw-away observation, the Chancellor said that an increase of £3 in the rate of pension for a married couple would be more than enough to match actual and likely movements in earnings in the 12 months to November, but he added to that figure another 30p. He received a cheer for his apparent generosity beyond the requirement.
But, as we have learned today, the last uprating went to March 1975. The present uprating is to go from November 1975 to November 1976. Therefore, he
448
has succeeded in missing out the increases in the Retail Price Index between March and November last year, the months in which the Retail Price Index increased by 15 per cent. That is an annual rate on the 8·4 per cent. basis—an approach with which the Chancellor is familiar—of 50 per cent. a year. Those are the months that the Chancellor has overlooked.
Whatever may be said about the merits or necessity of that conclusion, it may well be inescapable. It is a revealing insight into the state of the economy that the Chancellor and his colleagues regard the Budget as being so overspent that working people and pensioners have had to be denied the protection that beyond doubt they were promised.
On 18th March 1975 the Secretary of State for Social Services said:
"I need hardly stress the importance to pensioners of having these firm guarantees of full protection against inflation. In the original White Paper I described that protection as ' one of the most precious assets of the new scheme '."—[Official Report; 18th March 1975, Vol. 888, c. 1491.]
If the right hon. Gentleman's conclusion was inescapable, that may be an insight into the economy, but the fact that the Chancellor did not choose to tell the House about it yesterday, deciding to cover it up, is an even more revealing insight into the mind of this disreputable Chancellor. He did not have the guts to tell us the truth about what he was doing.
I have a second example of a similar kind. Yesterday the Chancellor positively oozed across the nation's television screens and in the House when he spoke of the importance of stability for industry. He referred to the importance of maintaining a stable pattern of corporation tax. I do not know how he has the nerve to do it. All that we know about the story of value added tax should put him totally to shame.
We all know why the right hon. Gentleman cut value added tax to 8 per cent. It was the basis of the 8·4 per cent. pretence on which he was elected to office in 1974. We have less idea why he chose to increase it to 25 per cent. over a whole range of products. As we pointed out at the time, it was an astonishing policy. An additional 1,000 civil servants were taken on for the sake of destroying the

449
jobs of tens of thousands working in industry. We warned him about it at the time, but he persisted for the sake of additional yield to the Exchequer, a yield which was less than the forecasting error of the yield of value added tax that is revealed in this year's Red Book. He now comes along and unctuously claims credit for going back to 12½ per cent.
The right hon. Gentleman knows as well as anyone in the House that he should go back to 10 per cent. across the board. He knows that he was wrong, twice wrong, and three times wrong, but once again he does not have the courage to admit it. It is a disastrous story of incompetence and deceit. The British people, in this respect as in so many others, have been obliged to try to cope with problems that have so often been created by the Chancellor himself. It has been said that a husband is someone who stands by you in troubles that you would not have had if you had not married him. Let it now be said that a Healey is someone who pretends to stand by you in troubles which you would not have had if you had not voted for him.
More serious than that is the deceit that is at the heart of the Chancellor's strategy. There should by now be no room for doubt about the gravity of the nation's problems. It is clear that they will not be quickly overcome. They will be overcome only by sacrifice—sacrifice not only by the people but by the Government. All commentators are agreed about the unprecedented scale of the growth of output and exports that is needed if unemployment is to have a ghost of a chance of coming down to the level that the Chancellor predicts. We are all agreed that that cannot be achieved with existing policies. We are impossibly constrained by the decline in the scale and vigour of the private sector and the scale of the trading deficit. It is still huge even at the trough of a recession.
Only the new Cambridge school purports to offer ways of squaring the circle. The Chancellor disdainfully, and rightly, rejected those prescriptions, but, as the Prime Minister has said, there are no easy solutions. It is only with honesty, realism and sacrifice, and above all with patience, that we can have a chance of
450
putting these things right. I stress patience most of all. We can put them right, but we cannot do so with existing policies.
The Chancellor made what seems to have been a pre-emptive bid in relation to the observations of the Expenditure Committee. It pointed out with commendable brevity that the achievement of the Government's objectives presupposes a substantial improvement in the performance of the economy—indeed, by United Kingdom standards, almost an economic miracle. The Chancellor is almost alone in believing that that will happen. I suggest that the Chancellor is not merely wrong but dangerously wrong to proceed on that assumption. By proceeding upon that miraculous assumption he is taking a quite unacceptable risk. He is assuming a 5½ per cent. growth in gross domestic product and more than 10 per cent. growth in exports. He is making the big assumption that effective control of the money supply will be sustained, that unprecedentedly effective control of public spending will be sustained, and that he will secure delivery throughout the second and much more difficult phase of the pay policy of a pay norm of 3 per cent.
A policy for incomes may well have a rôle to play in diminishing expectations and in checking unemployment. But we should remember that no such policy has been sustained for longer than two years, and that all of them have allowed—if that is the right word—actual earnings to rise several percentage points, generally twice as far as the stated norm. This policy assumes a 3 per cent. figure. It will be interesting to know whether the Chancellor regards that as the maximum throughout the next, the second, year, when differentials have been massively compressed this year, and when the figure last year was as high as 33 per cent. So even if the rest of the Chancellor's policy was right, it would be a rash gamble to bank on that turning out.
It is not likely that policy for incomes has a chance, however, because the Chancellor is actually planning to reflate and thereby to create circumstances in which the policy for incomes which he is setting out is far more likely to fail than succeed.

451
His speech yesterday contained the curious statement:
"I believe it is well worth accepting some increase in the public sector borrowing requirement in order to achieve a lower rate of inflation."—[Official Report, 6th April 1976; Vol. 909, c. 281.]
That surpasses even his record for economic illiteracy. To assume that all these miraculously desirable premises will be fulfilled is grossly irresponsible. The Chancellor knows that it is, or he ought to know it, even from his own Statement yesterday. Referring, presumably, to the British Leyland situation he said:
"Recent events illustrated more forcibly than any abstract argument that it can be highly dangerous to expand domestic demand without a firm assurance that our industry has both the will and the capacity to meet it."—[Official Report, 6th April 1976; Vol. 909, c. 241.]
There are warnings far more trenchant. The Public Expenditure White Paper, for which, presumably, the Chancellor accepts a lot of responsibility, said in paragraph 21, referring to the high-growth expectation,
"… it would be imprudent, in planning the public use of resources, to count on such an improvement until there is clear evidence that it is being achieved."
It goes on, in paragraph 22,
"But there are also greater risks on the downward side … The lower growth rate
. . should therefore be regarded as purely illustrative and not necessarily as a lower limit."
But the Chancellor has chosen to throw to the winds all the prudence that these warnings should have driven home to him.
There is an even more telling warning on the danger of believing economic miracles. I want to quote to him a passage from a previous Budget speech:
"Of course, it is possible that the previous Government would have achieved and maintained a 4 per cent. growth rate for the next four years in a row. I do not say that miracles cannot happen, but the programmes that we have taken over have been planned on the assumption that the miracles have already happened."—[Official Report, 11th November 1964; Vol. 701, c. 1030.]
That passage was from the speech made on 11th November 1964 by the Prime Minister when he was Chancellor of the Exchequer. It seems to have been heeded very little by the present Chancellor. The
452
Prime Minister has learnt a lot more about economic miracles since then, and even since succeeding to his present office. He went on in 1964 to help Mr. George Brown to construct the National Plan, but even with that experience behind him—a miracle which would have made the feeding of the 5,000 look like a three-card trick—he confirmed the present Chancellor in office. It was his first act as Prime Minister, and he may well find it to have been his most serious mistake.
I move on—[HON. MEMBERS: "Hear, hear."] I am sorry that hon. Members opposite do not welcome what I am saying, but they must face facts. I move on to telling the Chancellor what he should have done. First—and I am glad to say that he agrees with us—he needs to maintain proper control of money supply. I often wonder whether there is any sense of shock among hon. Members opposite below the Gangway at the frequency with which the Chancellor assents this. They have been taught for years that monetarism is second only to Fascism in the pantheon of sin. They must be shaken to have a Chancellor, for whom they vote night after night—or almost night after night—who is the greatest self-confessed monetarist of all.
Secondly, the Chancellor should set about restoring, and in a big way, the profitability of British industry. He had a lot to say yesterday about industry. He expressed concern about ensuring ample finance for industry. He spoke about production and an appropriate fiscal and economic environment so that industry could finance the necessary increase in investment during the recovery. He used lots of other comparable expressions. But he continued the process of treading delicately round the fundamental question of profitability. His only express reference to profits was when he referred to them rather pejoratively in saying that he hoped that money would not be "creamed off" in profits.
With the exception of the continuation of stock relief measures—even he could have hardly overlooked that—he did nothing of significance to strengthen profitability but confined himself to giving an assurance that, in considering the future of the Price Code, he would take full account of the needs of industry, and in particular of the need to

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allow sufficient recovery of profits to encourage new investment and the jobs which we know that new investment would bring. But that will be nothing like enough.
Without a large growth in profits, nothing on that side will come right. The truth is, when we look upon the historic cost definition basis, that although private sector profits may rise by 25 to 30 per cent., that will not be enough. After allowing for inflation, that suggests a rise in real terms of one-quarter or one-third over a two-year period. In 1975, the true rate of return on capital invested in British industry, adjusted for inflation, was minute. After deducting stock appreciation, computing depreciation and providing for replacement costs, the real pre-tax rate of return in the company sector as a whole was at most 2 per cent.—one-third of the level in the years 1970–74, one-fifth of the level in 1965–70, and one-seventh of the level before 1964, when it was over 10 per cent. Over the next two years, it might go up from 2 to 3 per cent., which is quite insufficient even to take us back to the low levels of four years ago. If that is what the Chancellor is aiming at in this respect, he will be driving yet another nail into the coffin of his economic miracle.
The Chancellor must have the courage to let real profits go up and to say that that is what he is doing. We cannot have more investment and more jobs unless he is prepared to see more profits and to explain that that means higher prices. He at least should have no difficulty in explaining the need for higher prices. After all, he has raised indirect taxes and allowed rates to rise so much that, in the last two years, his own actions have added 7½ per cent. to the Retail Price Index. I wish that he had shown half as much concern with getting that amount of money from the pockets of consumers into profits and investment as he has for collecting it for himself and the Exchequer.
Thirdly, the Chancellor needs to set about making it once more worth while to work. That means in the long run getting income tax down. But that is some hope with the present Chancellor. In the short run at least, it means putting himself into the position where he does not perpetually have to go on put-
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ting taxes up. But on the present plans, it will not be possible for him to arrive there even if the public spending cuts that he is planning go through and even if all the other assumptions are fulfilled, because, by his plans, the public sector will still be taking 53 per cent. of gross domestic product by the end of the period and taxes will still have to go up further.
One must ask whether the Chancellor has any real insight into human nature at all, as to what it is that makes people willing to work. In each of the last two years the burden of income tax on every family has gone shooting up. This year, even if the pay deal goes through, there will be more of the same. More and more people will find that they receive more by staying at home than they receive by going to work.
And the uprating of the short-term benefits, the untaxed unemployment benefit of which we have heard today, will make that position even worse and even more likely. We must regard that as a wholly unacceptable and intolerable situation. For example, as regards pensioners, a pensioner under the current arrangement getting between £40 and £50 a week will have every penny of those earnings taken away above £39 because of the earnings rule. On top of that, income tax will be payable at 35 per cent. He will therefore be paying a total effective marginal rate of 135 per cent. and at £50 a week will be £3·85 worse off than on £39 a week. So for pensioners, widows, middle management, senior management, every working family in this country, this is an economically intolerable situation.
My right hon. Friend the Leader of the Opposition the other day spelled out some of the figures about the increase in income taxes paid by every household since we left office. Certainly one figure was clear—that the income tax per household payable when we left office was £389, and my right hon. Friend said that in the year that had just finished it would be £724, an increase of £335 per household. My right hon. Friend may not have had time to notice that she was being unduly optimistic and unduly kind to the Government in using that figure because the outturn shows that the average income tax per family last year was £780. So the figure was

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actually up by £391 since we left office in April 1974.
If we look at what the Red Book holds for the year to come, the average income tax per family in the coming year will be up to £876, so it has gone up by almost £500 in the three years since we left office. It will have much more than doubled during the period that this Government has been in office. That will be part of the price which the people of this country are having to pay for the failures of Socialism.
My final and most insistent advice—and I make no apology for coming back to it—is this: it will not be possible for the Chancellor of the Exchequer to implement any of the advice I have given him unless he starts soon and quickly on cutting public expenditure and cutting it substantially. Unless he does that, he will not be able to cover his borrowing requirement, he will not be able, as he wants, to set free resources for the private sector for new jobs, he will not be able to avoid the danger of fresh outbursts of inflationary printing of money, and he will certainly not have a snowball's chance in hell of being able to reduce taxes ever again. He knows that.
This is not advice which the Chancellor should continue to treat with contempt or disdain, because it was one of the objectives which he set himself last year. All the tax increases he set out to impose were imposed, on his own statement, in order to reduce the public sector borrowing requirement by £1 billion, yet he ended up by spending almost £2 billion more. For this year he was planning to make cuts of over £1 billion, to get the borrowing requirement and the overspending down. In fact this year he has ended by spending £½ billion more than he originally intended when he set out to reduce it by £1 billion.
If he is to achieve any success in this direction it will require determination, discipline and the support of his colleagues and a united Government on a far more massive scale than anything we have seen from this Government so far.
If the Chancellor has one job that is more important than any other it is that of bringing public spending under control. It is the key job for the economic future of this country and in the performance of that job this Chancellor has so far been
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a catastrophic failure. The Chancellor knows that he ought to be doing it. He knows that it will require a far more rigorous attitude towards pay in the public sector, a far more rigorous attitude towards allowing programmes to creep up here, there and everywhere, so that he constantly ends up by spending more than he intended. It will require courage, but it can certainly be done.
I remember how little support my right hon. Friend the Chancellor of the Exchequer got in 1973 when he came before this House to announce his intention to carry through cuts of £1,200 million. But he did it, and the present Government achieved the astonishing feat of having swallowed that up as though it had never happened. They had a period during which they complained about the impact of these cuts, but they took them into account, and although we made cuts which would amount in today's terms to almost £2 billion this Government have brushed them aside and raised public expenditure. But we did it, and one day, sooner rather than later, this Government will have to find the courage to do the same.
It will be difficult, of course, and the Prime Minister knows as well as anybody how difficult it will be but how necessary it is. He has been through this whole process before and the sooner he tells his Chancellor of the Exchequer to start making plans now, and the sooner a start is made, the less painful it will be. The Prime Minister has said—and he is undoubtedly right—that we cannot go on as a country borrowing our way into debt. If the Prime Minister wants to give some meaning to his plea for unity, to his plea to end the years of indebtedness of this country, he ought now to instruct the Chancellor to prepare plans on public spending. He ought to set about discouraging some of the Socialist commitments on which his colleagues and this Government still seem disastrously determined. Nationalisation of land, oil, aircraft, shipbuilding: is it not time for the Prime Minister, if he wants us to take his intentions seriously, to set about calling a halt to some of that, to the continued destruction of the remaining grammar schools at a cost of tens of millions of pounds, to the exclusion of private patients and, along with these, of private

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doctors from the National Health Service? Is it not time to put an end to them? All these things cost money. The Financial Secretary is interrupting and asking whether this is an economic policy. If he does not have the sense to see that each one of these disastrous and unnecessary measures of Socialism not only does harm in itself but also costs the Exchequer money he is far less well informed than I thought.
It must be understood that the cutting of public expenditure requires substantial cuts in programmes, the cuts that were planned to take place in 1979–80 being brought forward, the reduction of subsidies beginning to come forward, the abandonment of massive expenditure on expensive policies of Socialism and the willingness of Government to realise that they must abandon these highly damaging, destructive and harmful aspects of Socialist government. If the Government are not prepared to start governing in the interests of a united nation, it is high time for them to make way for a Government who will.
4.39 p.m.
The Paymaster-General (Mr. Edmund Dell): I hope to give some answers to many of the points which the right hon. and learned Member for Surrey, East (Sir G. Howe) made, and I do so the more easily because we have heard much of his speech before. I must first do my duty, however, and refer to the fact that together with the Budget debate we are debating two EEC documents, R/606/76 and R/622/76, the second of which deals with the economic policy guidelines for 1976. The Scrutiny Committee recommended that these documents should be debated together with the Budget. The guidelines relating to the United Kingdom are in line with my right hon. Friend's Budget Statement and consistent with Government policy. The draft Decision, contained in R/622/76, stating that the member States pursue their economic policies in conformity with the guidelines, was accepted by my right hon. Friend at the meeting of Finance Ministers on 15th March subject to a waiting reserve to take account of the recommendation of the Scrutiny Committee. Following this debate, this reserve will be lifted.
I now come to the speech of the right hon. and learned Gentleman, and, in par-
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ticular, to his remarks about the commentators who have been writing about this Budget during the last 24 hours, and who, I might say, are a great deal less critical of and a great deal more favourable to the strategy that my right hon. Friend outlined to the House than was the right hon. Lady.
Remarkably, after considering the unprecedented structure of the Budget, the right hon. and learned Gentleman referred to the Report of the Expenditure Committee regarding economic miracles. I was pleased to see in this morning's Daily Mail a quotation from Mr. Terry Ward, who advised the Expenditure Committee. Speaking of the Chancellor's ambitious 5½ per cent. growth target for the next three years, he said—and this is what we said during the debate on the public expenditure White Paper—that
"It is not impossible, given the slack in the economy."
I saw in the same paper that Mr. Frank Blackaby, of the National Institute, said:
"The £1,000 million of tax reliefs in exchange for 3 per cent. wage increases is a major and rather sensible innovation. It is a more logical way of running the economy, and if he can bring this off it will be a formidable coup."
We have always made it clear, in spite of the public expenditure White Paper, that the major risk was a downside risk, but that what is proposed is far from impossible given the current slack in the economy.
I turn to what the right hon. and learned Gentleman said about public expenditure and the public sector berrowing requirement and, indeed, what the right hon. Lady said last night in her immediate response to the Budget Statement. I find it surprising, important though the limitation on borrowing is, that the Opposition should take the position that a public sector borrowing requirement of £12 billion overthrows the rest of the strategy. I understand the Opposition's sensitivity on this point, because, after all, it was their failure with the money supply that overthrew their incomes policy before 1974.
The right hon. and learned Gentleman tells us that our economic strategy is doomed to failure and he instructs us to exercise proper control over the money supply. He should show a little more

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sense of humour when he makes that sort of remark. He should compare the record of his Government with what my right hon. Friend is doing. To claim that this increase to £12 billion in the public sector borrowing requirement undermines the whole strategy seems to be entirely wrong. The right hon. and learned Gentleman said today, as he did during the debate on the public expenditure White Paper, that we must cut public expenditure. The proposals that he put forward during that debate for cutting public expenditure were not notable, and his specific proposals today were even less so.
I was amazed to hear that between 17th December 1973 and the end of February 1974, when the Conservatives went out of office, Lord Barber, as he now is, made all the public expenditure cuts that were proposed during December. That is an extraordinary claim and it would be impossible to justify. We have introduced further steps to improve control over public expenditure. Yesterday the Chief Secretary published the cash limits White Paper. There is nothing that the Opposition, on their record, have to teach us about control of public expenditure.
Mr. Nigel Lawson: I am sure that the right hon. Gentleman would not wish to mislead the House. Is he not aware that the Treasury gave evidence before the General Sub-Committee of the Expenditure Committee to the effect that the Barber cuts had been implemented and carried through and that subsequent increases were by the right hon. Gentleman's Government?
Mr. Dell: They could not have been implemented by the Government of which Lord Barber was Chancellor of the Exchequer.
The real key to the public sector borrowing requirement is whether we can finance it without crowding out other prior claims on national resources, without an undesirable expansion in the money supply, and without being forced by it into increases in interest rates. That is the test.
I now propose to say something about forecasts of the public sector borrowing requirement—something on which I suppose the Treasury, under various Chan-
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cellors of the Exchequer, is entitled to a little humility. The right hon. Lady said yesterday that my right hon. Friend's forecasts were always wrong in the wrong direction. That is not true. As she win see from the IMF letter, only three or four months ago we were expecting the figure to be higher.
As everyone knows, the public sector borrowing requirement, particularly in conditions of inflation and in conditions of depression, is extremely difficult to forecast. It includes borrowing by and for local authorities and for public corporations, that is, borrowing for productive enterprises. It is worth putting on record that the Government's forecast of the borrowing requirement for their own purposes was remarkably accurate, as will be seen if one examines the PSBR.
The Opposition put forward in this context what is in fact a "dig a hole" theory—dig a hole and then wait for investment and exports to fill it. The trouble with their theory is that there are strong political and economic reasons against it. It will increase unemployment in the short term if we cut the public sector borrowing requirement before the savings ratio falls, before investment in fact rises and before exports have risen more than they have already done.
I know that it is suggested by the Opposition—or by some members of the Opposition—that there is an alternative way of maintaining the level of unemployment—an alternative to maintaining it through public expenditure—and that is by making public expenditure cuts and compensating that by tax cuts. I explained during the debate on the public expenditure White Paper why we believe that in the short-term that would not work, and I have had no answer to the argument that I then deployed. If that course were adopted, the effect would be to increase the public sector borrowing requirement which the Opposition say they want to reduce.
The question is: can we finance the public sector borrowing requirement without increasing the money supply? I must draw the attention of the House to the fact that last year we did so, despite many forecasts to the contrary. The right hon. and learned Gentleman accused my right hon. Friend of economic illiteracy. It was he and others who

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said last year that the public sector borrowing requirement could not be financed without printing money, but my right hon. Friend achieved that. The question is whether we can do it without increasing interest rates, and I draw attention to the fact that last year we achieved falling interest rates. The question is: can we do it again this year? Can we finance it again this year?
The £12 billion is slightly lower than last year as a proportion of national income, and it is quite a bit lower than the public sector borrowing requirement that we estimated three or four months ago. We think that we can finance it this year, and for several reasons: first, because the savings level remains high. It is much higher than it traditionally is in this country. Indeed, this is a worldwide phenomenon. Throughout the industrialised world the savings ratio has gone up, and it is for this reason, among others, that throughout the world the borrowing requirements of central Governments are higher than they normally have been. Indeed, our Government's borrowing requirement is not out of line as a proportion of our national income. We believe that we can do it consistently with a fall in medium- and longer-term interest rates. We believe that at the moment, in the present economic conditions of the country, we can do it without crowding out other prior commitments on national resources because the rise in investment, which will come, will be gradual.
Conservative Members shake their heads, but I remind them mat they were shaking their heads on exactly the same matter a year ago. However, there is one proviso, and it is important in the context of the Budget—that is, to achieve a reasonable settlement on the pay front. Another among the many reasons for achieving a reasonable settlement is that only in this way can we hope to sustain the proposed public expenditure level in 1976–77. My right hon. Friend yesterday in his Budget speech drew attention to the fact that it was not only by monetary means that he might have 10 take action to avoid an explosion of the money supply. The implications will be clear to the House.
May I, as the Minister responsible for national savings, refer to the contribu-
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tion of national savings to the borrowing requirement? In 1975–76 national savings made a useful contribution to financing the borrowing requirement. Their direct contribution was some £460 million. In addition, the National and Trustee Savings Banks Investment Accounts financed a further £200 million by their take-up of public sector securities.
The two experimental index-linked savings securities have both met a social need and made an important contribution to the total. The elderly have bought some £250 million of the retirement certificate. Contracts under the Save-As-You-Earn Scheme now amount to £4 million a month. These two index-linked schemes appear to have achieved their aim of providing a degree of protection to two groups of savers who were particularly vulnerable to the effects of the very high rate of inflation which was experienced in 1975. Inflation is now falling, and our target is to bring the rate down to the level of that of our main competitors. Given this, the Government do not anticipate any further extension of the index-linked schemes.
I have one change to announce in the terms of national savings securities. In the past, Ministers have taken credit for announcing new issues with more generous terms, although those generous terms have been possible only because of the upward trend in interest rates and the rate of inflation over the last two decades. Today the position is reversed. Interest rates are generally lower now than a year ago, and significantly lower than two years ago, when this Government took office and when the present terms for most of the national savings securities were fixed. This fall in interest rates is a reflection of the success so far of our counter-inflation and monetary policy. But it has meant that we have had to look again at the costs of borrowing through national savings. We have decided to make a change in the terms of the British Savings Bond, which is the national savings security with terms most analogous to those of marketable securities. The next issue, to be introduced in mid summer, will have an 8½ per cent. coupon and a tax-free bonus of 4 per cent. on maturity after five years.
This next issue will be known as the Jubilee issue. The National Savings

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Committees for England and Wales and for Scotland are celebrating their sixtieth anniversaries this year. I am sure that Members on both sides of the House would wish to join me in paying a tribute to the work which has been done by the hundreds of thousands of voluntary workers who have contributed to the work of the movement over those years. During its history the movement has responded to a variety of challenges and demonstrated the essential flexibility which we have come to associate in this country with voluntary organisations. I hope hon. Members will join me in that tribute. Most recently, the movement has started to develop a new small savings scheme to replace the national savings stamp, which had outlived its purpose and was being abused rather than used. The stamp will be withdrawn from sale on 31st December 1976.
As the many hon. Members who concern themselves with the affairs of old-age pensioners will be aware, one use of the national saving stamps in the recent past has been as a means of enabling pensioners and others to save so that they could pay for their television licence. The Government have accepted that there is a need to provide some substitute when the national saving stamp is withdrawn, and the Home Office will today be making an announcement about the introduction of a new television licence stamp.
On behalf of the Government, I wish to express thanks to Lord Elgin and Sir John Anstey for their leadership of the national savings movement.
While I am dealing with these questions, it may be appropriate to refer to a proposal—which has come from many sources, such as the CBI, the Sandilands Committee and other bodies—for the establishment of a Royal Commission to review the tax system, an idea about which I believe that the Opposition are not enthusiastic.
Mr. John Pardoe: We are.
Mr. Dell: I think that the Liberals are enthusiastic, but I was seeking some encouragement from the attitude of the Conservative Opposition.
It is some 25 years since the last Royal Commission—the Radcliffe Commission
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—was set up. Since that Commission reported in 1955 the tax system has greatly changed. A review of the system in its entirety would be a massive task and would take many years to produce results. Effort that might be used for improving the tax system over the short term would be seriously diverted. My right hon. Friend the Chancellor has, therefore, authorised me to say that, having carefully considered the case for a major review of the tax system through the means of a Royal Commission, he has come to the conclusion that it would be neither opportune nor the best way of bringing about improvements in the system.
That improvements in the system are required we do not question. However, we believe that it is better to continue to employ existing consultation procedures which have been developed since the Radcliffe Commission reported, such as Green Papers, publication of draft clauses, and Select Committees on specific aspects of taxation, as well as consultation arrangements with representative bodies. It appears to us that, taken together with the means that are already at the disposal of the Government in examining aspects of the tax system and which will continue to be developed, these other methods are more effective and probably more speedy than a Royal Commission would be.
I have now finished my text and I can return to the speech of the right hon and learned Member for Surrey, East. He recommends to my right hon. Friend higher profitability for British industry. There has been criticism that the Budget does not provide sufficient incentive for British industry. I must say at once that there is every sign in British industry of growing confidence at this moment and a growing determination to take advantage of the opportunities that exist.
In a mixed economy, the private sector has a rôle which it should perform without constant cries for assistance which existing constraints make impossible. I leave aside, without detailed comment, the various matters which my right hon. Friend referred to in his Budget speech such as the extension and improvement of the stock appreciation scheme, the promises of stability in taxation, the various selective schemes developed over the last

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12 or more months and the encouragement which we are to give to provision of medium-term finance.
The main help to British industry would be encouragement to keep down industrial costs at a time of an expanding world market and to give it greater certainty about its costs, because one of the main difficulties and dangers from inflation is uncertainty about costs. If one can provide certainty in this respect, as the incomes policy—the £6 policy—is doing at the moment, and as the policies outlined by my right hon. Friend yesterday would do, this is the greatest possible assistance which could be given to British industry. Moreover, my right hon. Friend has ruled out any general reflation which would suck in imports and divert attention from export opportunities, which would end only in another stop. In short, British industry now has considerable opportunity and we are looking forward to export-led growth, which is the secret for the recovery of British industry.
I turn now to what was said by the right hon. and learned Gentleman about the constitutional issue and whether the Chancellor's proposals take away from the prestige or power of Parliament's right to legislate.
First, I assure right hon. and hon. Gentlemen opposite, were there any need, that Parliament will, as ever, determine the level of taxes. Parliament has two opportunities to debate these proposals. It can debate them now, and it will debate them in June when my right hon. Friend brings forward his final proposals.
There is nothing new in the fact that wage settlements affect economic management. They did so during the period of the Conservative Government under the right hon. Member for Sidcup (Mr. Heath). The incomes policy which he tried to work out with the unions should have affected the economic management policy of his Chancellor, because incomes policies have an effect on inflationary pressures.
My right hon. Friend's offer means that he is facing the country overtly with what has for years been the truth—that wage settlements are a vital factor in demand management. If my right hon. Friend had come forward with unconditional proposals and his assumptions re-
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garding wage settlements had proved wrong, he would have had to take corrective action. Would that have been regarded as detracting from the power, prestige or other quality of Parliament?
The real constitutional issue is whether the Government proceed by co-operation, which can mean lower employment, or by confrontation; in other words, by attempting to ignore the views and intentions of large and powerful sections of the community.
The real alternative to a policy of cooperation is the Phillips Curve—an attempt to reduce the power of organised labour through the mechanism of higher unemployment. Whatever justification there could be for such a policy—and we on the Government side of the House rule it out—there can be no justification for any such attitude given the co-operation of the TUC on the £6 policy and the success of that policy.
In the light of that success, the least that the Government can do is to show the TUC the facts as to what is required; to get inflation down, to get exports booming, and to get our industry revived and renewed. There is also the need to offer an incentive, as my right hon. Friend has done, to the adoption of an appropriate incomes policy.
I believe that the instinctive democratic reaction, as the Leader of the Opposition called it yesterday, was ill-advised. The right democratic instincts preach cooperation. I need only refer to one other notably democratic country—Norway—which last September, under rather different conditions, adopted a similar strategy.
Sir John Hall: Does the right hon. Gentleman agree that for the Chancellor to make his decision on possible tax changes dependent on the decision of a minority of people in this country is likely to be socially divisive? Is it not likely to make a large section of the population antagonistic towards the trade unions if they give an unfavourable reply?
Mr. Dell: I think that the large majority of people will understand that wage settlements are a decisive factor in economic management. That cannot be escaped. It was not only the decision of the TUC which made the £6 pay

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limit a success, but the general co-operation of the population as a whole. That is exactly what we hope to achieve on this occasion as well.
Mr. John Nott: Will the tax allowances be directly adjustable to the level which the Chancellor manages to agree with the TUC? If he gets £4 a week instead of £3 a week, will the tax allowances be directly adjustable to that amount? If by any chance the savings ratio changes between now and July, will that have any effect on the tax allowances which the Chancellor decides upon in July? Will the Paymaster-General enlighten us on that?
Mr. Dell: I am sure that the hon. Gentleman will remember a famous phrase which appears in the speeches of all Chancellors of the Exchequer and is the most relevant response to his question—namely, that my right hon. Friend will, as ever, stand ready to take any measures which the situation requires.
I come now to the question whether 3 per cent. is all that can be done if we are to meet an inflation rate target at the end of 1977 comparable with that of our main competitors. My right hon. Friend is not attempting to dictate either the amount of the pay increase or the structure of the policy for incomes—for example, how much should be by percentage and how much should be by flat rate or otherwise. He is saying what, in his judgment, is best for everyone.
First, I emphasise that 3 per cent. is the highest which can be conceded if we are to be able to rely on meeting our inflation target. Certainly 7½ per cent. or £5 will not meet the TUC objective of achieving a reduction in inflation well below 10 per cent.
Secondly, we do not achieve better standards of living—surely recent history proves this—if we go for larger settlements irrespective of increases in production and productivity. Last year, as my right hon. Friend said, income from employment went up 29 per cent. whereas real personal disposable incomes barely moved. In those circumstances, the only way of sustaining a higher standard of living is by borrowing abroad, and we cannot borrow abroad on the 1974 scale to sustain our standard of living.
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As the House will realise, 3 per cent. will not be the only influence on end-1977 price levels. Many other influences will affect price levels at that time whether the figure be 3 per cent. or any other. The first factor is the overhang from previous wage settlements. The £6 pay limit, together with the transitional provisions and the effect of the Equal Pay Act, is expected to result in increased earnings of something like 13 per cent. That is bound to have a continuing effect on prices at a time of decelerating inflation until about a year after the end of the wage round.
Another factor which affects prices is exchange rate depreciation, which compensates for the fact that our rate of inflation has been higher than that of our competitors. That, too, must have an effect on prices in the United Kingdom not only now, but ahead.
Then there is the movement of commodity prices. In 1975 we benefited from a fall in world commodity prices and from a sharp improvement, from our point of view, in the terms of trade. This year commodity prices may move against us as the world economy turns up. It is no use trying to compensate for that by higher pay.
Mr. Peter Hordern: The right hon. Gentleman cited the increase in past wage claims coming through. What does he estimate will be the increase in earnings from July this year to July next year?
Mr. Dell: That will obviously depend on the agreement which is made. The point I am making is that factors other than the nominal rate of pay limit will affect prices. Among them, in direct answer to the hon. Gentleman, are such matters as the amount of increasing overtime and the movement of people from job to job which becomes easier at a time of expanding economy. Such matters must have an effect on the working of the labour market and, therefore, on the actual result of any agreed pay limit. If we have a 3 per cent. pay limit, we should expect the final outturn to be more than that by 1 or 2 per cent. Indeed, even if we had a complete wage freeze there would be some earnings growth as people changed their jobs or worked more overtime.

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No doubt there will be long discussions regarding these figures, but I should like to make these positive points about the situation. First, my right hon. Friend's proposals regarding tax compensation mean that the majority of the working population will be better off at a lower limit than at a higher limit. Second, in this way, by accepting 3 per cent., we can at last release the forces of economic expansion from which we can all benefit, forces of economic expansion which will lead to higher exports and higher investment. This will make it possible for the economy really to take off into self-sustaining and faster growth, and that is the main interest of the whole of our working population. Moreover, thirdly, this is the way to get unemployment down and meet the 1979 target. If, on the contrary, we drift along at higher rates of inflation than those of our competitors, we shall never surmount our problems, even with North Sea oil, that exaggerated panacea. We shall have higher unemployment than we know now.
My right hon. Friend has opened up an opportunity, and I hope that the country takes it.
5.11 p.m.
Mr. Jeremy Thorpe: The right hon. Gentleman the Paymaster-General devoted the latter part of his speech to the question of the bargain that the Chancellor of the Exchequer has proposed in regard to the trade union movement about taxes and wages. I happen to think that this is the most important aspect and factor in this Budget. Not only is it the basis of this Budget; whether one agrees or disagrees, I think it is fair to say that the whole management of our economy depends upon the outcome of these negotiations.
I say straight away that I accept that constitutionally it is without precedent to have the budgetary decisions awaiting the subsequent approval or rejection of a non-parliamentary group. To that extent I am not altogether happy about it as a constitutional departure, but I say straight away, without equivocation, that I hope that it succeeds, and I think that it deserves to be supported. I say that because, whether or not we like it, it is a recognition of the present balance of power in our society. The fact remains
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that this is the power balance in which industry is now organised. I happen to believe that that power should be transformed. I should like to see ownership and management power more widely spread and shared at both shop floor and plant level. However, that is not the issue in this debate.
The fact remains, however, that other Governments, such as those of Norway, Sweden and West Germany, have entered into agreements with the trade union movements in their countries, to the benefit of not only the trade union movement but the country at large. Therefore, I believe that we should be very hesitant before we accept the almost automatic rejection of this policy by the official Opposition, because if this agreement could be reached it would be of immense value to our economy.
What the Chancellor is saying is that in return for about £1,000 million in tax rebates he would expect wage increases to be limited to 3 per cent., or £2. Without going into the details, I regret—if I am wrong, perhaps I may be corrected—that those tax rebates which are conditional include the single-parent family rebate. I should have liked that to be unconditional, but that is a point in passing.
This approach by the Government is a very different story from the approach of the Chancellor in his first 16 months of office. Then a Labour Government dismantled the apparatus of the Relativities Board, set up under phase 3, which might well have made an award within phase 3 that the miners were prepared to accept. Instead, the present Secretary of State for Employment, the right hon. Member for Ebbw Vale (Mr. Foot), entered into a settlement with the miners which was an indication to everyone else that the social contract meant just whatever one happened to want it to mean. We saw wages rise by 30 per cent. in one year, and we saw prices rise by 20 per cent. over the same period.
Therefore, we have had wage inflation coupled with inflated Government expenditure, which has now produced a sky-high level of unemployment, high inflation, an unparalleled balance of payments deficit and an enormous debt burden. In a sense, therefore, however difficult the case that the Government will

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have to argue to the TUC, the stringency of the case that they will have to put forward has been largely self-inflicted by the results of their initial period of office.
If anyone is in any doubt about the adequacy of the Government's economic policies, he need look only to an external commentary—namely, the fact that since February the pound has been devalued by a weighted average of about 7·3 per cent., which probably represents £800 million of real disposable income, or eight-tenths of the tax rebates that the Chancellor is now offering. Again, if one takes any account of the J curve, much beloved of economists, one finds that even that devaluation will have every little effect until about 18 months hence.
However, for the Government, this represents a dramatic change in their approach, and it is to be welcomed. I believe that the £6-a-week policy has given us a chance of surviving. I do not put it higher than that. It was an important start. The right hon. Gentleman the Paymaster-General said that the figure of increased earnings, in real terms, is not the 10 per cent. represented by the £6, which is £6 on wage rates, but something nearer 13 per cent. on earnings. I accept that figure. That is why I think that even if we achieve the 3 per cent., as the right hon. Gentleman said quite fairly, one cannot take into account what the percentage increase will be overall because one does not know how much uptake there will be in the economy, and how much people will be working more overtime. However, I should have said that it would be nearer 5 per cent.
I also deduce from what the Chancellor said, as it was being stated as negotiable, that if he was asked what he would like in the best of all possible worlds, it would be virtually a nil norm, and that clearly 3 per cent. is as far as he could possibly go in the current state of the economy. That should be made clear at the outset.
What I find interesting is that what the right hon. Gentleman proposes to do is to shell out tax rebates in return for a low norm as opposed to having a tax clawback, probably through an inflation tax on those who go beyond the norm. But even if he is successful or partially successful in the first objective—namely,
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using tax rebates for the purpose of achieving a low norm—he will still need some form of clawback either for those who breach the policy or for those who do not accept it.
The second problem that the Chancellor has to face is timing. He says that he wants this matter to be determined by June. I am not certain that he will be successful. I hope that I am wrong and that he succeeds. Len Murray has already said that the matter must go to the TUC. Even after a special conference of the TUC I think that we should find many individual unions wanting to put the matter to their members first. If that situation were to arise and there were a real chance of getting agreement, my advice would be not to be in too great a hurry, because the backdating of the rebates to the date of this Budget would still stand.
Then we must ask the question, what would happen in the interregnum between the expiry of the £6-a-week limit at the end of July and the possible agreement in September or October to the £2 or 3 per cent.? This will be a very difficult transitional period, and we must face that problem. What would happen? Would the £6-a-week limit be extended and would those who were in breach of that policy find that the only penalty was that which exists at present—namely, upon employers? If so, there would be a great risk of a rush to settle at £6, with the probability that by October one could settle for only £2. Those who got a settlement of £6 when the rest agreed to £2 could gain retrospective enjoyment of tax rebates as if they had settled for £2. This is a difficult problem. It may be that for that period of two or three months there will have to be a nil norm. It is certainly something that the Chancellor must think about.
However, let us suppose that the TUC agrees and that there are one or more unions that are out of step. What will be the position then? Will the Chancellor claw back the extent to which the rebate has been absorded in increased wages, and if the increase goes beyond that figure—which is highly probable, because we are not talking about immense sums—will he then have an inflation tax to claw back the surplus? Unless he does that it will be unfair

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to those who have settled under the TUC agreement and a further Finance Bill will be required in the autumn.
If the Government fail to reach agreement with the TUC the decision will rest with the House. The House will have to determine a norm, which may be the 3 per cent. or £2 mentioned, or a higher norm, with clawback powers through an inflation tax. If that happened the Government would, in effect, be introducing a statutory prices and incomes policy, however much they may wrap it up. I hope that when that happens the attitude of the two Front Benches will not be as automatic as it has been in the past. For instance in 1966, when the Labour Government tried to introduce control, the Tories automatically objected, and in 1973 the rôles were reversed. In 1975 there was a minor difference, because the Tory Front Bench merely abstained.
I can envisage a situation in which the Government of the day may not only find that they are faced by the opposition of the TUC, but will fail to get a majority of members of the Parliamentary Labour Party to support such a statutory prices and incomes policy. That would not be a new experience. We saw it last month, over public expenditure policy, and before that on the European issue. If that happens it will be the responsibility of the House try to agree a prices and incomes policy which may not have the majority support of the Labour Party but is one which will work. Nothing would give greater confidence to industry than for the House to agree on some form of control which would last.
If we fail to get an agreement along those lines, wages and prices will escalate. Higher wages and prices will increase demand and suck in imports. The balance of payments will worsen, with a further downward trend in the value of the pound. The outcome of the discussions is critical and the Government should be supported. I hope that they are successful.
The Chancellor of the Exchequer said that his first priority is to tackle inflation this year and public sector borrowing requirement the year after. We know what his objectives and targets are. He admitted that it would be a miracle if they were achieved. He has a greater belief in miracles than I. I regard his targets as wildly optimistic. The Chan-
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cellor has dismissed the view of the Cambridge economists—the Economic Policy Group. The Government are right to believe that they are likely to get growth in the first two years. But can it be sustained thereafter and can the Government keep their nerve and realise that the key to curing unemployment is to cure inflation first? In Germany, workers are more frightened of inflation than unemployment because they live in a society where there is some provision for unemployment, and there are historic reasons for fearing inflation.
The Cambridge group took the view that even if we were to reduce unemployment by one-third by 1980 we would require a 4 per cent. to 5 per cent. growth rate up to 1980 and that that would require a 20 per cent. cost advantage to the United Kingdom producers—equivalent to a nominal devalution in the pound of 40 per cent. with wages pegged at 7½ per cent. a year.
The Chancellor has rejected that strategy but has, understandably, been coy about the pound itself. How much is he prepared to tolerate a devalution? Are we to see the pound going to S1·50 by December or perhaps $1 in three years' time? The Chancellor has only three options. The first is to cut expenditure—I agree that this would have no immediate effect—the second is to increase taxation which has a disincentive effect, and the third is to print money. In two years under a Tory Government the money supply increased by about 60 per cent.—partly because they refused to cut expenditure—but finally in December 1973 the then Chancellor, now Lord Barber, got after the present Leader of the Opposition and the right hon. Member for Leeds, North-East (Sir K. Joseph), who were the great money spenders of that Administration. The tax cuts were regarded as a virility symbol of the Tories, and they therefore printed money.
The present Government have kept the money supply under close control. So long as the borrowing requirement is not financed by printing money, and comes out of savings, they deserve support. Although savings are high, at about 15 per cent., it has been possible to borrow money partly because there has not been much investment in industry. Industry is now running down its stocks, but when

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we get investment money again, the first thing we shall see is restocking followed by re-equipping. The Government will then find it more difficult to finance borrowing, and when that happens they must tell the House frankly what they are going to do about it.
The most important issue in the Budget is the result of the wage-tax bargain. The rest of the Budget is cosmetic face-saving, and the result of the zigzag political system in this country. It used to be a zigzag between the incoming Government and the outgoing Government, but now it is becoming a more refined process. It is now contained within one Government, between one Budget and the next. When a Tory or Labour Government went out of office they were promptly surrounded by academics, who were usually lunatics of the Left or the Right, and dictated lunatic policies which became part of the manifesto and therefore Holy Writ. We always expect Governments to bring in all the nonsense in the first two years and to bring in more sensible policies towards the end of their term of office. For that reason Professor Brittan said that a Labour Government deserved to lose in 1966, but of course they won, and that they deserved to win in 1970, but they lost.
We have had most of the stupid policies out of the present Government. They now recognise that the social contract cannot control inflation, and that is to be welcomed. The zigzags between the Budget this year and previous Budgets have been apparent. We all know that if the Chancellor knew last year what the effect of the 25 per cent. rate of VAT would be on the television tube industry he would not have introduced it. He was told what the effect would be in Committee debates on many occasions. He is now moving it down to 12 per cent., at a cost of £175 million. I do not see why he cannot bring it down to 8 per cent. for an extra £60 million. The television tube industry has sustained 41 different changes in taxes and hire purchase rates since 1960. No wonder there is uncertainty in the industry.
The Chancellor made changes in the higher rates of tax in March 1974. He moved the higher rate down from £5,000 to £4,500 but now he is moving it up to £5,000. It must be a nightmare to work
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in the Inland Revenue. He has given relief to small businesses, which we welcome. In March 1974 corporation tax was increased by 2 per cent., to 42 per cent., for small businesses. The Government have now seen the error of their ways and are saying that the profit level, for the lower rate of tax, should be increased from £25,000 to £30,000.
The Government have accepted as logical, fair and desirable every argument about capital transfer tax and farmers. They are now accepting the arguments which, a year ago, they rejected as totally impractical.
The Budget is a gamble to get an agreement. I hope that it succeeds. If not, Parliament will have to introduce some tough measures, and I doubt whether there will be a majority in any one party to carry the measures through the House.
I believe that what the country probably needs more than anything else is continuity, stability and certainty. A move in that direction on the questions of level of taxation and wages, incomes and prices would do more than anything else to restore confidence in our ability to expand and invest.
Sir Ronald McIntosh has suggested that policies for the NEDC should go beyond a single Parliament. I should have hoped for economic guidelines to go beyond not only a single Parliament but a single party. That would make people have some confidence in continuity and stability, as they have in West Germany, where whatever Government come in, there are basic economic guidelines which are certain and upon which people may bank and invest. If we have plenty of money to invest, there is little confidence at present to do so. That is what is required from the management of the economy.
I hope that in the short term the Government, in trying to fix the £2 or 3 per cent. wage limit in return for tax concessions, will meet with success.
5.31 p.m.
Mr. John Horam: If I had some difficulty in understanding my right hon. Friend when he delivered his Budget Statement, I am in even more difficulty after the speech of the Leader

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of the Opposition, such was the complexity of the various hypothetical situations he described.
Mr. Thorpe: I thank the hon. Gentleman for referring to me as the Leader of the Opposition. I take the point gratefully. I have always been told that if someone makes a speech on economics that no one else understands it must be good.
Mr. Horam: There is probably truth in that. However, I shall not follow the right hon. Gentleman down that path.
To the accompaniment of the usual massive support from the Labour Benches, nicely balanced between the Manifesto Group and various non-aligned Members, I should like to make a few observations, first, on personal taxation and, secondly, on the various strategies that the Government might have adopted to deal with the more fundamental problems.
We are all aware of the effect of inflation on the real burden of taxation. It affects everyone, but it it affects most harshly those at the bottom end of the income scale. The statistics show that the combined effect of inflation and taxation on the poorest members of our society is horrifying. At present, £750 million a year is collected from people earning less than supplementary benefit levels, that is, people who are below the poverty line. Many pensioners who have only a tiny pension in addition to their basic national pension are already paying tax, to their horror. Many war widows with pensions are now on the brink of paying tax for the first time. Thousands of families are the so-called poverty trap. The number may well be increasing despite the Budget.
Given all that, I am bound to support the general view of my right hon. Friend the Chancellor that we must restrain expenditure in order to hold down taxation. Some of my hon. Friends, not here now, argue differently. They say that we should accept the increased tax burden in order to pay for the increased public expenditure that they regard as essential. I disagree. I believe that the benefit accruing to an individual, particularly at the bottom end of the income scale, from a certain amount of extra money in his pocket is greater than the benefit he would
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receive from the social provision supplied by withholding that money and providing extra public services. All my experience in my constituency supports that view.
Therefore, I support the general reliefs that my right hon. Friend has given in personal taxation. I also like the way in which he has tried to link his policy with that of the counter-inflation policy. It is a mistake to believe that ordinary working people will not understand the trade-off between a higher wage award and extra taxation. They talk of nothing else in Gateshead, and probably in other parts of the country.
The only argument against the sort of personal relief which my right hon. Friend has granted is that he is possibly taking a slight risk in giving them, as the economy is, anyway, clearly on the upturn, especially as all the evidence suggests that the upturn may be rather fast. It is a familiar mistake—one which has plagued us throughout our post-war history. I think that my right hon. Friend was well aware of it when he referred to his Budget as "almost neutral", using that expression to try to discount the possibility that some might regard it as excessively reflationary.
I do not believe that that is a reason for not giving the amount of relief that my right hon. Friend is giving. However, it may be a reason for restraining public expenditure rather earlier and more quickly. That may be water under the bridge now. I made the point last year and it may be too late to do anything more now. I prefer to have these reliefs even if offset by earlier restraint of public expenditure, accepting some risk on the side of demand management.
I turn to the question of personal taxation over the longer period. I think that my right hon. Friend the Chancellor has shown himself well aware of the difficult area of taxation paid and benefits received, which has become wholly muddled under the taxation and benefits policies of successive Governments. I am aware of my right hon. Friend's other burdens, and I know that he is always being asked to do a great deal, but I should like him to reconsider negative income tax. I was opposed to the tax credit scheme that the previous Government worked out in some detail, and I made

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my reasons plain. It was excessively inflexible, and the arithmetic was suspect. But its general approach, which has wide support in my party as well as in the Conservative Party, is fruitful, and I think that the Government will ultimately have to return to it, if they are to sort out this messy area at the bottom of the tax scale, where benefits and taxation are so hopelessly muddled.
In the short term, I hope that my right hon. Friend will continue to give priority to the wage-earners on the lowest incomes. On the whole, the Government have done very well by those who are not earning—the pensioners and other people receiving benefits. Now they need to turn their attention—for the rest of this Parliament—to the wage earner, particularly at the bottom end of the scale.
I should like next to say something about alternative economic strategies. Across-the-board import controls constitute such a strategy. Given the plight that the country faces, we must examine any alternative economic strategy very seriously. I have carefully examined that strategy over the months since it was first advocated by members of my party, the trade unions, the Cambridge Economic Policy Group and others. It is deficient in three respects. First, even acknowledging the very poor performance of the British economy, I must say that the latest report of the Cambridge Economic Policy Group is excessively gloomy, partly because of the methodology that the group adopts. For example, the way in which it calculates future wage trends seems to me extraordinarily suspect. It is totally statistical in its orientation, leaving out entirely any effect of the incomes policy, which we are now pursuing rather sucessfully.
Secondly, even disregarding that, I cannot see how import controls can make us more efficient. The essence of our industrial problem is that we are too slow to change. By its nature, protection will make us even slower to accept change. We are also too insular. One of my favourite newspaper headlines is a famous one from the 1930s, when The Times is said to have had the headline:
"Fog in Channel
Continent isolated"
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We have not gone much further, even in the 1970s. The likelihood is that protection would make us even more insular.
Finally, a policy of massive, across-the-board import controls is not ultimately one that we can sustain, given our position as a free trading nation within a Western world of mixed economies. I do not think that we should have the political will to maintain it. Therefore, it is useless to go down that avenue except as a final, desperate last resort if the Economic Bulletin prognostications are proved correct. It would be a policy of despair.
We do need, however, a much more tough-minded trade strategy. I very much agree with my hon. Friend the Member for Norwich, South (Mr. Garrett), who made a very good speech on the subject in the debate on the White Paper on Public Expenditure. We have let industries be severely mauled by suspect foreign competition, almost at will. We have been too slow in reacting to the obvious and clear-cut foreign threats, which go well beyond any normal meaning of fair competition. We have damaged industries ourselves by our tax policies. There is some small recognition of that in the Budget, in the reduction of the higher rate of VAT. This is simply traditional British foolishness and it cannot go on. It has gone on for far too long. At least I welcome this small concession to reality in the Budget.
We are at last managing to operate our exchange rate policy sensibly. We were at one time constantly caught out in this area. At one time the French were smarter than we were. For once we have got ahead of them, much to their annoyance, and I am glad. It is time that we started to pursue a trade policy with far greater ruthlessness and regard for our own self-interest. Although we cannot carry this too far in a free trade world, there is room for a greater element of coherence and consistency in the way in which we approach our total trade policy.
I reject calls for a total siege economy, with all that means, but at least it is a clear strategy. What worries me about the present approach of the Labour Government is that, although there is much to be said for all individual items in the package, there is, I fear, beneath it a lack, not so much of strategy but of philosophy.

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Our national problem is one of excessive resistance to change, as I have said. What we take five years to do, our major competitors seem to manage in two or three years. It has much to do with what Willy Brandt recently called "our damned class system". We have deficient business management, over-defensive trade unions, decrepit institutions—indeed we are now sitting in one—and a fatal tendency to settle for the easy fife. These are the elements of the British disease.
If that is the truth, or near it, one of the best ways of shaking up this whole damned business is to expose as many people, companies and institutions as possible to competitive market environment. That sounds like a splendid Tory sentiment. But before I admit to that, I should point out that I have with me a pamphlet written by V. I. Lenin, written in 1917 and called "How to Organise Competition"—not all the best tunes are Tory!—in which he said:
"Far from extinguishing competition, socialism, on the contrary, for the first time creates the opportunity for employing it on a really wide and on a really mass scale, for actually drawing the majority of working people into a field of labour in which they can display their abilities, develop the capacities, and reveal those talents, so abundant among the people whom capitalism crushed, suppressed and strangled in thousands and millions. Now that a socialist government is in power our task is to organise competition."
Those are splendid sentiments.
I believe that there is great truth in the cross-party argument about the need for competition, but the problem of a return to competition by conventional means—in other words, within the conventional ownership framework—is that it is bound to stir up those very class antagonisms which are the albatross around our necks and the source and origin of many of our economic problems. Therefore, we must combine moves towards a more competitive environment and a more rigorous use of our resources with moves towards a wider ownership of industry, and to greater participation, whether one calls it workers' control or something else.
The revisionists in the Labour Party may thus have been wrong when they said that ownership was not the central issue in the Socialist debate. In addition to changes in ownership we also need a proper planning framework to handle the
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increased competition which I see as part of the regenerative process.
All this is an over-simplification, and of course there are many difficulties. It will take a long time to cover the ground, and we must proceed slowly. But market Socialism, which is what I am essentially talking about, has within it some elements that will contribute to a creative solution of the problems Britain faces.
Here I find myself agreeing with many of the sentiments and actions of my right hon. Friend the Secretary of State for Energy when he was in the Department of Industry. When we examine the three experiments he conducted—at Kirby, Meriden and Glasgow, with the Scottish Daily Express—despite all the Opposition said about those experiments at the time, we must agree that they achieved manning levels and wage restraint that would have been inconceivable in a conventional private or public ownership situation. That happened because the workers in those organisations felt that they were working for themselves. They felt that spirit that arises from a type of organisation where there is no longer the traditional kind of ownership.
There are possibilities in this respect, which clearly must be explored over a great length of time. We are only at the beginning of an intellectual understanding of the problems that arise from this pattern of ownership. But therein lies the possibility for uniting all the elements of British society—a society which at the moment is divided—so that they may contribute creatively towards a solution of our problems and perhaps even set an example to the Western world.
5.47 p.m.
Dr. Alan Glyn: I agree with the hon. Member for Gateshead, West (Mr. Horam) about the importance of competitive industry, although his remarks, judging by the quotation he made from Lenin, may have been based on a false premise. The hon. Gentleman also made a good point when he referred to the restriction of expenditure. Unfortunately, the Government have not achieved enough in that area.
The hon. Gentleman referred to negative income tax, and that comment will find agreement on the Opposition Benches as well as among some Labour Members. The hon. Gentleman also

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mentioned the difficulties involved in import controls and referred to the implications that would follow. I agree. We must rely on our competitiveness and not on import controls.
The Leader of the Liberal Party made an important point when he said that he hoped the Government's strategy would succeed, adding that if it did not succeed he anticipated that it would be necessary to make adjustments in an autumn Budget.
I thought that the Paymaster-General was extremely optimistic. He spoke of savings of £400 million. Savings comprise one of the most efficient and important ways of maintaining our growth, but they are very small compared with the figures—£12 billion—which we are discussing today. The Minister also mentioned wages, and nobody would dispute the importance of control in that area of the economy. He also referred to the astronomical rise in prices of commodities.
In a short contribution, I wish to deal with the question whether the Budget will lead to increased production and the future expansion of industry. I do not believe that it will. The Budget will have significant meaning not only to people at home but to people abroad. I believe that if its provisions do not succeed, it may affect future generations as well as ourselves. We must increase production and our export performance.
Let us examine the background of the situation. We are discussing the Government's strategy at a time when the economic climate of this country is serious. We are probably facing a more difficult and dangerous economic situation than existed in the 1930s. We also have a level of unemployment which is regarded as unacceptable by both sides of the House.
We must not keep saying what the Conservatives did in the past and what the Government are doing now. We have problems which are so immense that they require a national effort to solve them. I get slightly bored, as do other hon. Members, with the repeated invidious comparisons that we hear in the House. They may be necessary on occasions, but the crux of this debate is how to get out of an extremely dangerous situation.
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We were discussing the same problems last year, except that the pound was worth more than $2 then and it is now worth $1·8 and the balance of payments position has got worse. Twelve billion dollars has been borrowed, but not to finance a programme of increased production. Production is only fractionally higher now than during the three-day working week. This borrowing has not achieved the production increases for which we are all looking.
My right hon. Friend the Leader of the Opposition made some very important points yesterday and laid emphasis on the cardinal criminal in the current situation—public expenditure. If we continue to allow this monstrosity to increase, we shall be feeding one of the most danger-our animals in our society. We have allowed it to override everything else while also extending nationalisation. Neither of these actions can possibly help our productive capacity.
Of course we welcome any benefits in the Budget, but they are too small and they do not touch on the most vital issues.
It has been claimed that the Chancellor has handed over responsibility to the unions. My hon. Friends and I believe that we should have a working agreement with the unions but that we should always recognise that union members are not the only people in this country. I fear that the Government's proposal lays the foundation for control of our affairs to be taken away from Parliament.
The Paymaster-General said that Parliament retailed the right to control taxes. I agree, but I am not happy about the way in which the Government are handling the situation. We have put the cart before the horse. We should have an agreement with the unions, but it should be for Parliament to decide how our affairs should be conducted. Trade unions are an important element in this country and should be recognised as such.
Mr. J. W. Rooker: Would not the hon. Gentleman agree that it is absolutely vital that trade unions are brought into the central management of the economy? It was the constant boast of the right hon. Member for Sidcup (Mr. Heath) that he had got trade unions more involved in the management of the economy than any previous Prime Minister. That was probably

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so. If the previous Labour Government had done the same, the right hon. Gentleman would probably never have been Prime Minister. The Chancellor of the Exchequer is proposing an extension of what was started by the right hon. Member for Sidcup.
Dr. Glyn: I am glad I gave way. My right hon. Friend the Member for Sidcup (Mr. Heath) and my right hon. Friend the Leader of the Opposition adopt the same attitude as I adopt. We have to live and work with unions. They are an estate of the realm. We should negotiate with them, but we should not allow our affairs here to be dictated by them. The Government's policy is a tremendous gamble. If it does not work, the dangers to the country and the economy could be disastrous.
Reference was made earlier to the fact that an unemployed man with two children could be better off in our society than a man at work. I know of many such instances in my constituency. This is the sort of thing that this House should be considering and tackling. When an hon. Member opposite suggested that there were abuses, he was howled down. Of course there are abuses, and it is our job to stop them. There is nothing more frustrating than for a man at work to find that his unemployed neighbour is receiving more money through unemployment benefit and, possibly, working on the side as well. We know this happens. I do not think hon. Members would quarrel with me. I am sure that Labour Members would never be a party to this situation, and it is the job of the Government to ensure that abuses are minimised and, if possible, cut out altogether.
This is the Budget of a big spender. We are mortgaging our future, not only with capital but also in the servicing of the debt we are incurring because of Government policy. The Government will be dependent on the future possibilities of North Sea oil. Let us hope that it works, but it is a tremendous gamble. That is why I say that this is a gambler's Budget, and it is a very dangerous one.
The first thing we must do is to cut public expenditure, stop nationalisation, make it more attractive for people to save and work—with overtime if they wish—and create a situation in which working overtime and building up a business is laudable. This Budget does not do that.
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There are some reliefs for small farmers and small businesses, but they are not enough. Initiative and enterprise built up this country. If we lose these qualities, we lose both a great heritage and future.
The Government have overspent and should tell the country squarely that, as Lord Hailsham once said, we are in debt. The pound is in hock. The country faces severe economic dangers, and we cannot afford many of the schemes we would all like to see. I am convinced that we must take the people of the country into our confidence. If we want more hospitals, roads and schools, as my right hon. Friend the Leader of the Opposition said yesterday we must realise that they have to be paid for. We must adjust our expenditure according to our means.
That is not to say that this country has no future. We have the resources, the power and the initiative. It will take a long time to pay off the debts, but let us work together, let us have no factional discord, let us build up our production and our capacity, ensure our defences and go forward with free enterprise, showing the rest of the world that we are still a great country.
6.0 p.m.
Dr. Jeremy Bray: I am sure that the whole House shares the sentiment expressed by the hon. Member for Windsor and Maidenhead (Dr. Glyn) in wishing to encourage enterprise. That sentiment is shared by business men and trade unionists, and the Budget is concerned with the nation as a whole. I was interested in what the hon. Gentleman said about the powers of Parliament in relation to the proposals made by the Chancellor of the Exchequer in the Budget, and I shall return to that subject.
I congratulate my right hon. Friend the Chancellor on a remarkable Budget which contained some notable innovations. The courage and imagination of his conditional offer of tax reductions deserve to succeed, and in everything I say I shall try to help it to succeed. The proposition that the smaller the wage increase the bigger the rise in real take-home pay will take some putting across. The Chancellor did better in eight minutes on television last night than he did in two and a half hours in the House. I am told that the Cabinet spent rather

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less time than did the House on the Budget but understood it better than did hon. Members after the Chancellor's speech yesterday.
The first reaction of trade union leaders last night showed how wide of the mark was the Leader of the Opposition's criticism, echoed by the hon. Member for Windsor and Maidenhead, that the Chancellor was removing from Parliament the decision on taxes. The right hon. Lady made a remarkable speech, and that was perhaps one of the weaker passages in it. No one who saw and heard Len Murray, Hugh Scanlon and Jack Jones on television last night could mistake them for barons who had just been given control of the country's finances. A more perceptive remark was made by an Opposition Member who, when we were watching television upstairs, said he could not think why the Chancellor had not first squared the trade union leaders. I suggest that he did not do so out of respect and out of their respect for Parliament and our traditions, whether or not those traditions are unduly stuffy as my hon. Friend the Member for Gateshead, West (Mr. Horam) believes.
The real decision rests more firmly with the House now than it did before. It is not possible for the House to determine both the level of taxes and the effect on real demand. If we want to influence real demand, we want to know first the pay rises to which the nation will help itself, so that we can set the taxes accordingly. This increases rather than diminishes the control which Parliament exercises over the economy.
When we made our tax decisions previously, the Government, the Bank of Engand, the unions and industry made them mean something different from what we intended, whereas now the Chancellor has proposed that we should say what we intend to be the effect of the tax changes. Our final decision on the means we adopt follows after others—in this case at present the trade unions—have said what they will do. It is a principle, a recognition of realities which is bound to be extended, and it increases rather than diminishes the authority of Parliament in a democracy. It could be said to diminish the authority of Parliament only if Par-
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liament were assumed to be the absolute power in a totalitarian or authoritarian State, a view which the House would utterly reject.
Undoubtedly, the trade union leaders have been put on the spot—not perhaps in the Edgar Wallace sense of the word, but in a very real sense. I believe that they have the dexterity to use the situation to strengthen the unions and the country, as the Government are also seeking to do in ways which I shall suggest.
The trade union leaders have been put on the spot because 3 per cent. offers very little room for manoeuvre on differentials or productivity after a year of flat-rate increases. Workers as a whole may do better the smaller the wage increases. This year, most benefit will come in lower price increases and lower tax payments, neither of which will be seen as being directly achieved by the unions to which the workers belong or by the activities of their union leaders. There will be little scope within a 3 per cent. limit for any adjustment to the rate of pay of the miners relative to the average industrial wage, or to the differential between tool-room workers and production workers in motor car factories. The position of productivity deals, which have virtually been brought to a halt, will be difficult. Either the rules are lax, in which case everyone will drive a coach and horses through them, or they are tight, in which case productivity increases and necessary changes in working practices will be held up, as they are currently being held up.
I suggest that the situation is containable if the very respite which the Chancellor is in effect proposing on company-level wage bargaining for yet another year is used for putting plant, company and industry level bargaining on to a much more solid basis for next year and subsequent years, with a greatly extended scope for the subjects covered in collective bargaining.
The prize of conquering inflation should not be underrated. The persuasive powers of the Government, which I am sure they will bring to bear, will be effective in putting across the deal in the nation and on the shop floor, but the realities of industrial life and collective bargaining still call for other steps if the Government are to succeed.

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I suggest that the unions should be put in the position of saying to firms what the Chancellor is now saying to them—"If we do this, will you do that?" That should apply across the whole field of company policy, including investment, distribution, of dividends, marketing policy, new products, research and development and so on.
The unions, the Government and a great many employers are all trying to extend the scope of collective bargaining. To this end the Employment Protection Act requires employers to disclose to unions information without which, in the words of the Act, they would be impeded in collective bargaining. The Act does not say what that information is, still less does it say what use the unions or employers should make of it. I have suggested to a number of unions that the information they should ask for is not simply the management accounts, which they would find rather indigestible and which relate only to the past, but a financial model of the company which gives them the sort of choice at company level which the Chancellor has offered at national level in the Budget. It should relate alternative wage settlements and working practices to the prospects for employment and incomes in six months', a year's and two years' time and bring in the wider aspects of company policy. The response from the unions I have talked to has been remarkably enthusiastic.
It is far too early to say how it will work out. In normal circumstances I would hesitate to ventilate the proposal until we have gained more experience. But because it might just help in the present situation I shall venture to suggest how the Chancellor might offer the unions a realistic prospect of tackling differentials and productivity problems and give them a job to be getting on with now in preparing for the re-entry phase into free collective bargaining at the end of the second year. The re-entry phase is always the most difficult in incomes policy and it has often had least preparation when it should have had the most.
The negotiating unit, whether at plant, company or industry level, should produce on its own realistic assumptions—not assumptions dictated by the Government or by trade associations—figures for
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the next three years showing the effect of alternative wage settlements on the fortunes of the company. The alternatives should include one case giving a 3 per cent. per annum increase, the rate of increase of national productivity, in the average income per worker, and other cases giving higher or even lower rates of increases in incomes, in all cases giving their total effects on the well-being of the company.
Provided that the deal eventually agreed by unions and management met standards set in the particular industry and in relation to the firm's past, the firm would qualify for a grant or a tax allowance large enough to be difficult to ignore which would be divided appropriately between the employers and the enterprise. Management and unions would be free to seek the best deal they could get. By this means the Chancellor would be applying at the level of the particular enterprise the proposal that he is now seeking to apply in enormously difficult circumstances to the nation as a whole. At the enterprise level it would be a great deal more manageable.
The proposal still entails endless problems, the most obvious of which would be the treatment of non-commercial services and of the public sector. We already have a movement towards cash limits, and I see no reason why, within that framework, there should not be some scope for initiating agreements between management and union sides in putting forward proposals for wages and productivity jointly. That is a way of using management and unions as far as possible to monitor their own differentials and productivity changes while widening the scope of collective bargaining.
In an ideal world, I should like to see the experience of wider collective bargaining grow steadily, as indeed it will. But even initially it will offer greater scope and less rough justice than any alternatives I can visualise. It would certainly give the unions a great deal more immediate leverage at plant, company and industry levels.
Whether the unions in their own interest should accept the 3 per cent. which the Chancellor put to us yesterday will depend on how firmly the price and investment consequences will follow, in addition to the consequences of the tax

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proposals which are all that the Chancellor can guarantee. The price consequences affecting workers come mainly from other firms, and that calls for economy-wide measures which the Government will in any case be discussing with the TUC under the Price Code. But the investment, security of employment and future earnings prospects depend on actions within the workers' own firms which we on this side of the House feel that the unions should be in a better position to influence. That can be a part of this year's policy and negotiations, as soon as the unions can build up their interests in these matters at company level. I see no alternative to this widening of the scope of collective bargaining at plant, company and industry level which offers the flexibility needed to match, to succeed and to make a success of the Chancellor's remarkable Budget.
Dr. Glyn: Throughout the hon. Member's speech I have agreed with what he said about the importance of the unions and the workers. Surely it would be better to talk about the workers on the shop floor and the management, because there is a misunderstanding here. It is necessary that the ordinary man at the bench should understand what he is doing, rather as every soldier did under the late Field Marshal Lord Montgomery, and should appreciate the decisions. Those decisions should not be undertaken only by the unions and management.
Dr. Bray: The hon. Member is making the point that the basis of consultation and joint decision-making should extend throughout the whole structure of the company and right down to shop floor level. This is an important point which is advanced constantly by the trade unions and employers engaged in the actual business of industrial relations.
In defence of the Budget, may I say that I would have liked to see the Chancellor using much heavier guns than were used by the Chief Secretary in defending the Public Expenditure White Paper when he appeared before the Expenditure Committee, and by the Chancellor in the economic review at the beginning of his speech. I would not, and the Chancellor did not, minimise the importance of monetary factors in economic policy. But it is going far too far to say, as the Leader
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of the Opposition said, that the public sector deficit is
"the key to our future, and the size of the deficit dominates everything the Chancellor can do."—[Official Report, 6th April 1976; Vol. 909, c. 284.]
It is a factor certainly, but it is not the only factor, and precisely how it should be treated is a matter for the most searching examination.
There are rumblings in the foundations of economics of which I am sure the right hon. Lady herself must be aware because she takes an interest in these matters. The prescriptions of fashionable economics correspondents cannot always be relied upon to summarise the debate on policy or analysis, and the wise politician looks deeper into history and contemporary events.
In a book which has been fluttering the economic dovecots, perhaps more in the United States than this country, in recent months—"On Keynesian Economics and the Economics of Keynes"—Leijonhufvyd, who felt uneasy about the treatment of monetary factors by latter-day Keynesians, and looking for an analysis with which to compare them, found it in Keynes himself by going behind the "General Theory" to his earlier "Treatise on Money". He suggested that Keynes's main contribution to economics was that prices, and in particular the price of money—namely, the interest rate—could not be relied upon to convey information and to measure and compare values in the condition of disequilibrium in which, of course, the economy always is.
Leijonhufvyd argues that the flow of information needs independent analysis and suggests that the introduction of control theory, or the analysis of information on which decision is based, is the true Keynesian revolution which did not come off. Keynes was blocked from pursuing this development himself—and I know your long-standing interest in Keynes, Mr. Speaker, and I hope that you will not take it amiss if I pursue the argument a little further—by a curious irony in his own background. In his earlier book "A Treatise on Probability" he committed himself to a view of scientific method in economics which 20 years later led him to make a slashing and illiterate attack on the first recognisably modern analysis of the trade cycle by the economist Tinbergen. So Keynes was cut off

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from the line of Popper, Tinbergen, Theil and Phillips which has opened the way to the contemporary analysis of economic policy-making.
Unfortunately, the literature is rather technical and is, alas, not in the Library. Most British applied economists have simply not read the half-dozen rather highly mathematical books and the couple of dozen papers which form the core of modern work. So the debate has polarised at a rather superficial level into monetarists, Keynesians and neoclassicists without any coherent underlying logic. If one wants a good argument on economics these days, one has to go to the United States, Warsaw or Belgrade.
The occupants of the Opposition Front Bench dance around on that rather flimsy stage of the popular debate proclaiming at fourth or fifth hand that the public sector borrowing requirement is the key to economic policy. In more modern vein, my right hon. Friend the Paymaster-General announced last Friday in a Written Reply to myself that Professor Ball of the London Business School is to be chairman of a committee on policy optimisation which will advise the Treasury on its whole approach to the making of economic policy. Only in that framework is it possible to give a coherent treatment of the testing of economic theory, the uncertainty of forecasts and the pursuit of consistent priorities in face of uncertainty; and within that framework, as a particular case, of course, due consideration of monetary factors.
I cannot anticipate what Professor Ball's committee will recommend, still less the conclusions of any policy analysis that may result. From the work that has been done, however, it is difficult to sustain a general money-rain theory of the relationship between aggregate money supply, current price gross domestic product and the rate of inflation, of which one hears so often from the Benches opposite. As for more local theories, my hon. Friend the Member for Gateshead, West has already questioned the methodology of Wynn Godley's "Economic Policy Review". Having followed his work over the years, when I read in Appendix B in Section 2 on Economic Methodology that
"the parameters are assigned a priori"
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I fasten my seat belt for a bumpy ride. [interruption.] I assure you Mr. Speaker, that you are quite safe.
Mr. Speaker: I apologise. I did not intend to interrupt the hon. Gentleman. I merely said that I was putting on my own safety belt.
Dr. Bray: In Chapter 6, appositely entitled
"What is left of New Cambridge?"
Wynn Godley introduces a new variable—prices—into the balance between the public sector's borrowing and the deficit in the balance of payments. He can keep this theory going indefinitely by introducing a new explanatory variable each year, but he will not persuade many serious economists to listen to his analysis or advice.
By this time next year the House will have an opportunity to examine seriously the policy-making apparatus that the Treasury uses, because under Schedule 5 to the Industry Act, passed by this House at Report stage and redrafted by the Government in another place, the Treasury will be obliged to publish economic forecasts on alternative assumptions and to provide hon. Members—and, in fact, any person—access to the Treasury model, to make their own forecasts naturally on their own assumptions. I am sorry that we have not yet had any anticipation of that in the Budget this year because I myself am persuaded that, had we had that access, the job of the Chancellor in putting across his Budget would have been easier than it has been.
I am satisfied from what I know that the Budget reflects the priorities and takes the risks that I would regard as justified. But I would certainly conclude by saying that those risks contain a very large element of judgment on how the trade unions and our constituents will react to the remarkable proposals that the Chancellor has put.
I plead with hon. Members on both sides of the House, since this is very much a matter of public opinion across the country, to lend their weight to the proposals, which will enable the Chancellor to make the substantial cuts in personal taxation to which we all look forward.
6.24 p.m.
Mr. Peter Walker: We always listen with interest to the speech of the hon. Member for Motherwell and Wishaw (Dr. Bray). I was particularly interested in the first part of his speech in which he referred to what he considers to be the future relationship between employers and employees in negotiation. That was very important. Unlike those works not available in the Library, the hon. Gentleman's own work on worker control in industry is available there. Some may have read it, benefited and been very interested. The hon. Gentleman has now given evidence to the Bullock Commission on employee participation. If it was on the lines suggested in the early part of his speech, I hope that the Commission pays careful attention to it.
The hon. Gentleman referred to the public sector borrowing requirement and its relative importance. That is his view. If he shares it with the Chancellor, the Chancellor is a convert to that view, because we all remember the Chancellor's first Budget in which his most passionate passages about the wicked legacy he had inherited from the previous Government expressed his deep distress at having the enormous burden of £4 billion public sector borrowing requirement that he had inherited from the past Government and pledged his determination to reduce it. In the following year he had increased it to £7 billion, he is now increasing it to £10½ billion and he is predicting a figure of £12 billion for the coming year. Obviously, if the Chancellor treats that with some complacency he is a convert to the hon. Gentleman's view.
The interesting thing about this debate is the very considerable contrasts between it and the debate of last year, because last year, apart from my hon. Friend the Member for Leek (Mr. Knox) and myself, not one hon. Member on either side of the House, nor anyone on the Front Benches, was in any way advocating the importance of an incomes policy. Apart from one or two speeches, the subject was left out of the debate. The Government considered that they would obtain a tolerable relationship with the unions and that perhaps the social contract on restraint would work. I am not sure now, in an uncertain position, whether the Opposition Front Bench was against
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or for an incomes policy and, therefore, was in any way critical of the Government for not having one, whereas this year, 12 months later, the whole theme of the Budget—in my view, quite rightly—is the importance of continuing with an incomes policy.
There has been an interesting reaction. The constitutional reaction is interesting. I disagree with those who consider it wrong to make this type of approach to the unions. I was a member of the Government, as was my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe), who talked with the unions and endeavoured to come to a voluntary agreement with them in those many hours of discussion that we had with them. We certainly put forward concessions that we would make against policies in which basically we believed—for example, the question of council house rents. I was personally responsible for the Housing Finance Act that we agreed to bring in as a measure to ensure that during a period of wage restraint, adverse effects of any increases in council house rents would be tackled in a different way. It is interesting that the present Government have increased council house rents and there is no similar proposal so far in their package offer to the TUC.
Quite rightly, we as a Government endeavoured to come to an agreement. Having listened to the various approaches of the trade union leaders we were near to coming to such an agreement, and but for one or two of those leaders who were hostile, doubtless for perfectly genuine reasons, we would have reached agreement.
Personally, I am deeply critical of the Chancellor of the Exchequer. He is, in my judgment, by far the worst of all post-war Chancellors. He has done immense damage to the British economy. The legacy with which he is dealing in this year's Budget is primarily a legacy not of the previous Conservative Government but of the past two years, when we have had a Government who were willing to sit back and allow a 54 per cent. increase in earnings during a period in which there was a 4 per cent. fall in production. We cannot have a period in which earnings increase by 54 per cent. and production drops by 4 per cent. without very difficult and tough adjustments having to be made thereafter.

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The reason why this Budget is described as crucial is that it is a different Budget because it is the first in which the Chancellor has started to agree to pay the price for allowing a period of two years in which incomes went up by 54 per cent. while production dropped by 4 per cent. In terms of industry, he is right to take the action he has taken on stock appreciation. That is a most important measure.
I would like to make a suggestion as a former Secretary of State for Trade and Industry, I hope that he will see that his total package of measures together with the advantages of free depreciation and the obvious advantages of the stock appreciation proposals will be conveyed to individual firms and industries. One of the sad realities—this might be regrettable to those who have a passionate belief in the total efficiency of free market forces—is that many firms do not realise the many benefits and advantages they can obtain regardless of what the existing pattern of taxation might be.
As regards stock appreciation, we are now in a period in which, on taxation grounds, there are considerable advantages to be gained by industry if it invests. As someone who had the difficult task of trying to encourage industry to invest prior to the large consumer demand taking place, I give my support to those who seek to persuade industry to invest.
One of the reasons why the Government find it more difficult to persuade industry to invest now is that industry remembers the ghastly period of 1974, when, as a result of the Chancellor's first Budget, it suffered considerable cash flow problems. Those difficulties created conditions of alarm. The likelihood is that industry will be extremely cautious for a long time about putting itself in any danger of cash flow problems
Those of my right hon. and hon. Friends who want to see an increase in the profitability of British industry, a reduction in the public sector borrowing requirement and a decrease in public expenditure must recognise, as the Government have done belatedly, the immense impact of an incomes policy on all those factors. If the Government are successful in achieving their 3 per cent., that will do more to in-
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crease the profitability of British industry this coming year than any other measure in the Budget, or in any Budget for some years past.
Industry will have calculated the prices that it has quoted for the coming year not upon the basis of a 3 per cent. increase in wages but in the expectation of a far greater increase. If the Government are successful in achieving 3 per cent., their success will have an important impact upon profitability in wide sections of British industry.
I remind the House that we might well be alarmed that the public sector borrowing requirement is now £6½ billion more than when the Government came to power. Strangely enough, public sector wages and earnings are £6½ billion more than when the Government came to power. It is the massive 54 per cent. increase in incomes and earnings in the public sector which has had such a considerable effect in increasing the public sector borrowing requirement and the whole public sector problem.
I look upon the incomes policy as being of paramount importance. For any Government, Conservative or Labour, there are only four alternatives. The first is free collective bargaining. That is a concept which my Government supported when in office and which the present Government supported when they came to power. Both Governments discovered that they could not continue with it.
The power of the trade unions in negotiation is such that they negotiate not upon the basis of what a firm can afford but frequently upon the basis of what another powerful union has succeeded in obtaining. If the AUEW gets a 20 per cent. increase for its members, the Transport and General Workers' Union does not want to be seen getting only 10 per cent. for its members. That has been the reality. During the period in which the Government tried to operate the social contract there was a massive escalation of wages, but the unions are friendly towards the Government and union leaders are closely in association with the Government. The same thing happened to my Government. I argue that the first alternative has not succeeded because of the current power base of the trade unions.
The second alternative is that of collective bargaining after the power of the

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trade unions has been diminished. A number of my right hon. and hon. Friends advocate that approach. In a recent article in the Observer, my hon. Friend the Member for Aylesbury (Mr. Raison) advocated it. He said that, if we diminished the power of the unions by taking away social security payments from strikers' families, varying the law on picketing and perhaps ensuring that there were alternative work forces to man key industries in the event of strikes, we could bring about a balance in negotiations that would make collective bargaining mere sensible.
I reject that proposal. Any Government who endeavoured to do that would enter a period of tremendous conflict with the unions. Nor do I believe that it would be fair to weaken the negotiating power of the unions by withholding social security payments from strikers' families. If that policy were adopted, we should be treating in exactly the same way the chap who voted against a strike and the man who voted for it. We should be acting against those who had a perfectly legitimate reason for striking as opposed to those who had a rather bad reason for doing so.
The third alternative is to have an incomes policy. That is what the Government are doing and that was what my Government did. I argue—there can be very few Labour Members who argue differently—that phase 1 and phase 2 of the Government's incomes policy are less fair, less lenient and less flexible than the latter phases of the incomes policy introduced by my Government. If the Chancellor offered the unions the same tax cuts and switched his proposals to phase three of our proposals, most of the unions would happily accept phase 3. Both Governments discovered the necessity for an incomes policy.
The fourth alternative is to pursue policies that enable the Government gradually to return to free collective bargaining in the confidence that when it is achieved we shall have entered a period when responsibility is exercised by the negotiating parties. There would be a greater degree of rational decision-taking and we should achieve sensible decision-taking.
For those who believe in a free enterprise system and a mixed economy, a
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permanent incomes policy has colossal disadvantages. One disadvantage is the lack of flexibility. Another disadvantage is that differentials are not treated correctly. That means a positive discouragement to acquire skills and to apply effort. In the longer term, there are few in the House who want to see a permanent incomes policy.
We shall shift from the present position only when we show greater responsibility and logic in individual collective bargaining. That is why some of my comments and some of those of the hon. Member for Motherwell and Wishaw are closely allied.
If we are to shift to free collective bargaining after emerging from an incomes policy, we must have a range of policies that bring about a comprehension and understanding of both sides of industry. I should like to see my party pursue policies such as encouraging the moderates in unions by the facility of postal ballots.
I should go in for a statutory form of profit-sharing, as has been done in France. I should try to make genuine progress along the road of employee participation. If we want the free enterprise system to survive and if we want a responsible organisation, the reality is that such a situation will come about only if both sides of industry are operating not in conflict but in unison.
The nature of free enterprise in capitalism has changed over the past 100 years. In the main there is no longer a proprietor-employee relationship but a management-employee relationship, management being the employer. It should be possible for the House to pursue policies that create an understanding and comprehension of industry. That is what we have lacked as a result of the perpetuation of the nineteenth-century conflicts.
Mr. Douglas Jay: Do I understand that the right hon. Gentleman broadly supports, as I do, the incomes policy and the Government's approach to the trade union movement?
Mr. Walker: I said that I not only support it but believe that it is vital for the country that it should be accepted. I shall do all I can to persuade my constituents and any other quarters in which

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I have influence that it is the correct thing to do at present. I only regret that so much damage has been done because the policy was not pursued much earlier. We had the tragic period when incomes rose by 54 per cent. while production fell by 4 per cent. That is still and will remain an enormous burden. At last, however, the Government have faced reality.
Nothing could be more beneficial to the future progress of the economy than the Government's success in maintaining a 3 per cent. limit. If they fail—this is the real constitutional issue and threat to democracy—and we find, in the summer, that a number of unions are asking for 10 or 15 per cent., or whatever it may be, as the minimum, and the Government decide that such is their link with and dependence upon the unions that they will not advise Parliament to take action, democracy will be undermined, and Parliament with it. The attempt by the Government to offer benefits to the unions if they carry out what will be a tough policy on their part is a sensible and correct approach, and I wish it every success.
6.42 p.m.
Mr. J. W. Rooker: The right hon. Member for Worcester (Mr. Walker) never spoke more truly than when he said that if the 3 per cent. limit on wages were accepted it would be better than all the other measures for increasing the profitability of British industry. No one on this side would disagree, however, that what is the crunch is our concern about what happens to the profits. It is all very well my right hon. Friend the Chancellor of the Exchequer talking about shifting resources to manufacturing industry. I support such a shift, but there is no mechanism whereby the 3 per cent. limit will be translated into investment from profits. As the right hon. Member for Worcester said, industry would not invest even when he was Secretary of State for Trade and Industry.
I recall a meeting in Birmingham one morning in 1973. Ten Ministers were going round the country. They got together 4,000 or 5,000 so-called investors, managers and owners of industry. They told them that the fall in the value of the pound was such that exporting was now profitable and that they should go
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out and get business. At that time, the right hon. Gentleman was talking about the problems of success. That seems a long time ago, and the fact is that they still did not invest. I have no confidence in their capacity to make use of any spin-off from the incomes policy.
That is not to say that I am knocking the Budget. I support my right hon. Friend in getting the unions involved in detailed objectives, but at the back of it all must be the criticism that the Budget has not brought forward any means which give me confidence, in supporting its measures in their totality, that investment will take place at the end of the day. I want to see more detailed work on that aspect.
Last year the Government told my constituents that the £6 limit would be a means of stopping the rise in unemployment and of securing jobs. Those who are now unemployed, who were not unemployed then, do not see a lot of benefit from that policy. Other measures have to be taken so that any incomes policy, voluntary or quasi-voluntary, is seen to have a direct effect on unemployment levels. My right hon. Friend has moved forward a little on the issue of import controls.
Yesterday my hon. Friend the Member for Newport (Mr. Hughes) referred to the delegation of his constituents from the Hoover factory at Merthyr Tydfil about the situation caused by the dumping of Italian washing machines on our market. Firms in the West Midlands which manufacture washing machines know that the Italians are dumping, but it is extremely difficult to prove. Some action has to be taken in the selective areas which are identified.
The washing machine situation pinpoints the lack of investment. A few months ago, I wrote to the Chairman of the Midlands Electricity Board about the level of imports of foreign washing machines. He told me bluntly that three years ago the Board wanted to put its own brand into its showrooms to generate increased sales. It wrote to all the leading British manufacturers asking them to produce an "own brand" machine for it. Not one of them was interested. The Board then bought from Common Market countries. There has been a disastrous effect on our industry.

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Our managers and entrepreneurs, as they still like to call themselves, still failed to see the opportunity for business, simply because they could not put their own names on the product. That is an antiquated attitude. The consequent loss of business and jobs has been enormous.
The greatest criticism of the Budget in the media and by the Leader of the Opposition has been the so-called transfer of power to the trade unions. I do not accept that criticism. Of all the parts of the Budget, the part that pleases me most is the involvement of the unions. It is a great step forward. Those who argue that it is taking away the rights of Parliament fail to realise that Parliament does not control wage levels anyway. If we did control wage levels and were involved in collective bargaining and the rest, it could be argued that this proposal would be taking away our rights; but we do not possess such rights in any event. One may disapprove of the fact that Parliament is not so involved, but it is a fact of life. Therefore, it is only right and proper to use the wealth of experience and the willingness to co-operate on the shop floor in order to bring about what I hope will be irreversible changes in the economy.
In the attempt to involve organised labour by Governments of both parties since the war, we have paid the price for constant chops and changes. We in the Labour Party paid the price of four years in Opposition. The right hon. Member for Sidcup (Mr. Heath) used to boast of how much he was involving the unions in running the economy. That was also true of the Fast Labour Government, until they came into conflict with the unions in the late 1960s. The right hon. Member for Sidcup would probably not have become Prime Minister if we had not had that conflict. The country is still paying the price for it.
I welcome the moves towards a more planned economy. I do not accept that we have even a mixed economy in the general definition of the word, but we are moving towards a more planned economy. The TUC has identified many bastions of power and privilege that still remain. If we start at the level of wages and prices, we should involve representatives of organised labour and the workers themselves at a very early stage right at
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the centre where the decisions are to be made. It is no good our saying that here is a certain policy and that other people can sort it out.
By and large, there is a degree of flexibility in what the Chancellor said—at least, I hope there is. I hope that he will not hang himself on the figure of 3 per cent. Anyone who has experience knows that, in the psychology of collective bargaining, a manager never begins by putting his final offer on the table, and the shop steward never asks first for what he thinks he may have to settle. I hope that there will be flexibility on the 3 per cent. figure. The National Coal Board showed us in December 1973 how to hang ourselves by going into a negotiating situation and saying "This is it, this is the maximum, there is nothing else to come". What does that do to the other side of a negotiating team?
Dr. Bray: The Chancellor has made the very important point that in fact the lower the increase the bigger the real value of the take-home pay. This raises the curious situation that we might find the unions of the lowest-paid workers pushing down the rate of increase, because the lower the increase the better they will do.
Mr. Rooker: I understand that, but I think that we have to move in stages.
We have brought about considerable changes since we debated the last Budget a year ago in terms of management of incomes and prices. I am not saying it has been wholly successful, indeed, the £6 policy has in many ways been disastrous for some quarters of industry. I think there has to be a degree of flexibility because of the psychology of the situation. The National Coal Board proved that it was an absolute nonsense to hang oneself with a figure, because it takes away from the other side, however reasonable the consequences may be in terms of taxation changes, any chance of being able to be seen to achieve things. I do not want a cosmetic bargaining situation, because that would be a total nonsense, but it must not take away from the other side the feeling that it has made a meaningful contribution to the situation.
There is the consequence, of course, that involving the trade unions to this extent—my hon. Friend the Member for

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Motherwell and Wishaw (Dr. Bray) said "putting them on the spot", but I do not think that is quite the situation—and asking them to share the responsibility, and the consequences of it, no doubt, may be that some of them will shy away from that, because it is no part of the trade union movement's task to get itself tied up in having to sell the Government's total policies, which they might well feel that they have to do because of having to sell the issue of restraint on wages and the consequences of cuts in social services, and other matters. They may feel that all these things are getting tied up together and that, therefore, they have to withhold any criticism of other aspects of policy. I do not think they should be tied to that extent.
The real issue will be if the Government only talk in this very detailed way to the TUC on the question of wages. That would be totally wrong; and it would be counter-productive, because they would never do it twice. The TUC would not bite a second time. The TUC has a well co-ordinated, well thought out, total economic policy. It may not be totally in agreement with the Government's policy—in fact, it obviously is not—but the TUC has thought it out and it has a right, if it is to be asked to share the responsibility and all the consequences of the 3 per cent. and what is involved in that, to be heard and to be listened to, where it is reasonable and where it has a damned good case, such as on the issue of selective import controls, and on the specific areas that can be identified. It has a right to be involved to that extent as well. If it is not, it will not be there next year for the Chancellor, whoever he may be, to talk to about stage 3 or about a return to free collective bargaining because the unions will say "We will have none of it because you are not prepared to listen to us on the other aspects".
The shop stewards I spoke to last night resented being used for selling the £6 policy. While the Chancellor was speaking yesterday—because I said last year that I would never sit through another Budget Statement as long as that—I went and listended to some of the pundits on television upstairs. They had cameras at a factory at Greenwich, and it was extremely useful. There were shop stewards and other workers commenting on the
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details, and, no matter what sort of a gloss Len Murray put on it, it came across quite bluntly that the shop stewards, while they understood that there were economic problems, resented having to sell the rigid £6 policy because of the things happening in industry and the need for flexibility.
An hon. Gentleman opposite referred to free collective bargaining a while ago. Many of us on this side of the House and many trade union leaders have used this in the past as an excuse for a policy. In my view, by and large really free collective bargaining has not existed in this country since the war, and probably not since before then.
I am not happy about a return to a free-for-all in which the rules of the jungle prevail, as may be advocated by some hon. Members opposite. I am fearful that we have not passed enough legislation since I have been a Member of this House to protect the 3 million workers within the wages councils, who have been there for the past 50 years because they are in a weak bargaining position and are low paid. They are still at the bottom of the pecking order after 50 years, and I am not satisfied that we have passed enough legislation through this House to strengthen their position, notwithstanding the Employment Acts, or that they should have to go out into the market place, or be sent back like wild animals into the jungle, to survive as best they can. Quite frankly, I do not think they would. So if this is what is meant by free collective bargaining it would not be too good for those 3 million workers.
Nevertheless, whatever figure is arrived at, and whatever arrangements my right hon. Friend and his Government team come to with the trade unions, it is absolutely vital that two aspects be considered. The first is the need for flexibility. We should not tie ourselves to 3 per cent. and say it is that or nothing—that, or the whole thing is a failure. And, even so, does it have to be 3 per cent. for everybody? The £6 limit is easy to manage, some people in industry have said, and it cuts out all the day-to-day arguments, but all these things have been bottled up.
We have seen the problems of British Leyland in the past few weeks, with the strike of the 32 toolmakers. It was said

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that if they ran out of carburettors the whole factory would come to a halt, but supplies never did run out, although stocks were getting low. The 32 tool-makers said they wanted the £10 which had been promised to them last April to bring their pay into line with that of other toolmakers. But it was never written down; that was their problem.
Unlike the educational advisers who have just had £40 to £50 a week and £1,500 back pay because it was written down, tied up, the "i's" dotted and the "t's" crossed, men on the shop floor are not working with precise agreements such as one tends to have in the public sector, where there are incremental pay scales neatly codified. What happens in industry is that by and large wage negotiations go on every day of the week in tight little pockets of the factory. Problems arise and have to be solved. They cannot be put on one side, because, if they were, at the end of the day the work would not be done. I was asked once why the lorries were not loaded, and it was because the production lines had stopped because we had not solved one of those little problems.
If they were asked to stick to all this for a year or six months, or, worse, for two years, the whole thing would explode. I have to tell my right hon. and hon. Friends on the Treasury Bench that it would explode before the Government had a chance to change their policy. It would explode in the form we have seen in the past few weeks at British Leyland. Therefore there must be an understanding with manufacturing industry. It is not run like the Civil Service and local government, with everything codified. This is what is missing in the policy that is being put forward by my right hon. Friend, and this must be recognised.
Let me give one further example of the situation at British Leyland. This might be regarded as a fringe benefit, because I am a referring to the purchase of cars at a reduced rate. A white collar worker, a staff employee, gets a 19 per cent. discount on the basic price, but a blue collar worker, the chap who works in the press shop pressing out the body panels, gets a discount of only 16½ per cent. That sort of situation causes dissatisfaction and things blow up into
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a row, but if there is a move to put that right there might be difficulties in pay policy.
Will a change in that 2½ per cent. difference be stopped by anything that the Government are proposing? If the answer is "Yes", the workers on the shop floor will want no part of it because the result will be nothing for a few months, but then the situation will fester and other things will happen. The whole situation will blow up, and before we know where we are the supply of cars will dry up and everybody will be asking what has happened to British Leyland. Statistics will be produced about the number of days lost, and there will be a denigration of the British car worker and the industry as a whole. That is the situation that we have reached now, and that is a specific matter on which I should like the Financial Secretary to comment when he replies to the debate.
Another factor that we must bear in mind is the psychology involved in a bargaining situation. I have not mentioned the employer. One could argue that the individual employer is redundant in a wage bargaining situation. He certainly will be if the Government deal with the TUC on wage matters, and in many ways that will be no bad thing, because when the individual employer sits down to negotiate in a free collective bargaining situation he has no means of taking into account the requirements of the economy as a whole. He is concerned with the survival of his business; he is concerned with whether it means paying more to stop workers from going up the road to another factory because there is a wage fight. I was once faced with the situation of a new factory coming into operation. We had employers from other factories ringing up to ask whether we were paying over the odds. Of course we were, because we wanted to cream off the best people from other factories, and one gets the best people only by paying the best money.
As I said, the individual employer when taking part in wage negotiations, cannot take into account the requirements of the economy as a whole. Therefore, I disagree with Wilfred, Lord Brown, a former chairman and managing director of the Glacier Metal Co. Ltd., who has advocated the setting up of a national forum for trade unions or an industrial

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parliament alongside political and economic parliaments. Those are fine ideas, but I do not think that we should move to anything like that in the present situation. The change would be too abrupt. Lord Brown puts the argument that the employer is redundant in the real situation of the national economic state of affairs, and in the Chancellor's proposals for negotiation I do not see any room for the CBI or the Engineering Employers' Federation. I applaud that idea, with the proviso that the trade unions must be involved and listened to, and that much of what they say must be acted upon because they represent the interests of the majority of those who are generating the wealth of this country.
Differentials are a dodgy matter. The 3 per cent. provision contains no room for manoeuvre on differentials. I am not prepared to say that the present differential structure in industry is sacrosanct, but the politicians are not the people to change the pecking order. In every company in which I have worked, read about and heard about, the best job evaluation schemes—those that work and are practical and realistic—are not those imposed by the management but those that have been assembled and put together by the people working in the enterprise. Let them decide their own pecking order. I am not prepared to say that the pecking order of the differential structure is right and proper and should continue for ever, but it is difficult to change, and I ask the Government to make it clear that they and the politicians will not be involved in this matter. It should be left to the trade unions, the shop stewards and people in industry, who are best able to decide these things, to bring about a practical and realistic change in the differential structure of wages in industry.
7.5 p.m.
Mr. Peter Hordern: The hon. Member for Birmingham, Perry Barr (Mr. Rooker) gave the House some interesting examples of the difficulties of assessing differentials and of evolving a new wage policy.
The right hon. Gentleman the Paymaster-General indicated a further difficulty—the way in which the incomes policy will evolve after the £6 limit, the first phase of the incomes policy, has been completed. I thought I heard the
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right hon. Gentleman say that the whole question of differentials would have to be dealt with now that the flat-rate scheme had been completed. I thought I heard him say also that that may mean that the average increase from next July to the following year would be as much as 13 per cent., allowing for the payment of differentials and wage claims that had been held up by one means or another during the year, quite apart from the increase of 3 per cent. that the Chancellor has suggested. We need to know from the Financial Secretary what the effect of those increases will be, because I do not believe that we can make any assessment of it unless we know what the Government think will be the total effect of the increase in earnings that have been held up because of the rigidity of phase 1.
I enjoyed the hon. Gentleman's speech and some of the examples and difficulties to which he referred. Any incomes policy must, by its very nature, be rigid. It means that the problem of differentials is a difficult one. It means also that the ability of firms to introduce new processes and different scales of pay is very telling. The hon. Gentleman gave an extremely good example of what happened—I do not know whether this was during the period of the pay pause—in the case of a company that set up new processes and, because it required skilled men, paid over the rate for the job. It may have been paying far in excess of anything that the pay policy allowed. That is another example of the kind of difficulty with which we are bound to be confronted if there is a pay policy.
During my speech I shall revert to the excellent speech of my right hon. Friend the Member for Worcester (Mr. Walker) and the importance that he attaches to an incomes policy. I hope to follow his remarks, but to deal with the matter in a somewhat different way by referring to issues to which he did not refer, one of which is the looming shadow of the public expenditure borrowing requirement and the problem that this is bound to cause once the economy picks up.
Before I do that I should like to put to the Financial Secretary one or two presentational points about the control of public expenditure, because it is this control that is the most important feature in dealing with inflation and getting the economy right.

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I hope that in future we shall have the Budget presented at the same time as the public expenditure White Paper, and that we shall be able to compare like with like by comparing revenue with public expenditure proposals and by having available a number of details that are not at present shown in the public expenditure White Paper. I refer in particular to the level of charges for such things as school meals, milk, and health services, so that everybody can see the different ways of financing public expenditure.
Yesterday the Government produced a White Paper on cash limits. I welcome this innovation of cash limits as a means of putting at least some measurement on the level of public expenditure. I noticed that the cash limits referred to were about 60 per cent. of public expenditure. I noticed also that there is a difference between the cash limit treatment of nationalised industries, which are to produce figures every mouth, and the cash limit treatment of the various Departments—the block expenditure system. I understand that what the Departments have been asked to do is to present profiles of what their expenditure will be during the year, and that at the end of the year the Government will publish an outturn.
This is quite unsatisfactory. I hope that the Government will reconsider this and publish the cash limit outturns at least quarterly, if not monthly, so that we can see what is going on. The Public Accounts Committee has a right to call for this arrangement in any case, and I hope that it is something we shall also consider. I know that it is the rôle of the Opposition to oppose and criticise the Government, and that the Government must carry responsibility for their actions. However, they have recently been doing the job of the Opposition a great deal better than we could ever hope to do.
The greatest indictment of this Government is not the extraordinary increase in the cost of living, or the level of taxation or, indeed, the sorry state of the pound at present. Rather, it is that they have had to depend upon a wholly spurious set of economic forecasts for the future in the public expenditure White Paper. If we are to believe and understand the White Paper correctly we are about to have a period of unexampled
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economic growth and a vice-like control of public expenditure. It reminds me of Batman, who, with one bound, can break his chains and go free. That is the kind of extraordinary change that is to come over Government control of public expenditure.
I do not recall any Government White Paper being greeted with such universal derision. Apart from the well-justified views about the public expenditure forecasts themselves, we have good reason to doubt the capacity of Government Departments to monitor and control their own expenditure. Therefore, while the cash limit system is admirable, it will have to be supported by regular publication of profiles. Whether this is done on a quarterly or monthly basis does not much matter. I understand that this is an experimental period, but the House is entitled to see how that expenditure is being carried on, because in that way we shall be able to exert proper parliamentary control.
This leads me to the most significant part of the Chancellor's Budget Statement, which said, in effect, that the TUC is to set our income tax levels. We have already seen this Government's definition of democracy in terms of its legislation affecting the closed shop and the Dock Work Regulation Bill. That definition is "Government of the people by the trades unions and for the trades unions". However the prospect of changing the taxes of all our people and using Parliament as a rubber stamp carries to a new level the notion of a corporate Government. It is, as the hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) said yesterday, a constitutional outrage, but that is not what the leader of his party said today. However, I suppose one should not be surprised at differences within that party.
I am particularly concerned with the economic aspect of trying to control inflation by wage control alone, with or without the help of the TUC. I would refer to the remarks of my right hon. Friend the Member for Worcester, who, I am sorry to see, is not in his place at the moment, because he is a known exponent of the efficacy of incomes policy and he speaks a great deal about it. We have been down this path before. I recall that when Lord Barber was Chancellor we were told that every family in the land

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would be a pound a week better off and that that was all part of securing the cooperation of the trade unions.
We all know what happened, in retrospect. We can recall the endless negotiations and discussions between the Government and the trade unions, and the whole reshaping of Government policy under the advice of Lord Armstrong. All that time, during the period between 1972 and 1974, we had a growing Government deficit to finance. In 1972 we had a public sector borrowing requirement of £2,000 million, and in 1973 we had a PSBR of £4,000 million. The deficit was financed, but not by saving. There was not much saving, because the level of economic activity was growing very fast—about 6 per cent. a year. There was a lot of money chasing too few goods.
I would say that if this money exists in the economy already no incomes policy will be able to correct the rapid rise in inflation. The Labour Party opposed any form of incomes policy when their Members were in opposition. They supported every strike. The social contract was simply the final surrender on the Labour Government's part to the trade unions, as promised. While it has been in Government the Labour Party has allowed public expenditure to roar ahead and the public sector deficit to grow to an unimaginable figure.
It is the company sector which has suffered. That is why the PSBR is so low at present. The Chancellor was rather selective in his figures about company profits. I shall give him one of mine. The gross trading profits of companies before stock appreciation was 13·8 per cent. in the first quarter of 1974. Since the Labour Party has been in government it has fallen to 9·3 per cent. in the third quarter of 1975.
The Chancellor said that the level of imported manufactured goods increased during the period of the Conservative Administration. I am sure that it was entirely inadvertent. I looked at the figures for imported manufactured goods and noticed that between 1966 and 1968 the volume grew by 31 per cent., and grew by a further 24 per cent. in 1967–69—an unexampled growth for any four-year period. I forbear to mention the party that was in power at that time. However, with company profits so low it is no wonder that the money supply
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has not grown very much, or that the level of personal savings has become so high. The private sector of the economy has been quite demoralised by the Chancellor and has simply not been in the market for funds.
Now, we are told, all this is going to change. We are to have a growth rate of 4 per cent. this year; manfacturing output will increase by 8 per cent. and there will be an increase in manufacturing investment of 16 per cent. This, or something like it, will go on for the next three years, but if it does not we shall not get the growth we need to pay for the huge burden of public expenditure. If it does not come about we shall have an enormous increase in the demand for funds. Money will be needed to finance the growth of exports, which are to grow by 9 per cent. this year. It will also be needed to finance the growth of investment of 16 per cent. and to finance the inevitable high level of Stockbuilding. All this has to be financed at the same time as the Chancellor has to finance a PSBR of £12 thousand million.
I notice that the Chancellor gave a very useful concession by abolishing altogether the stamp duty on the issue of debentures and loan stocks for manufacturing companies. What does he imagine that concession will do? It means that it will be much easier than it has been—if it has not been entirely impossible before—for companies to finance themselves in this way. It is the way in which they would prefer to do it. But whom does the Chancellor think they will be taking money from, if not from the Government? Therefore, this concession, admirable though it is, will mean that people will be allowed to lend their money to anybody. If the choice lies between ICI and the Government, the Government must not be too surprised if, in the event, investors choose to lend their money to ICI and other companies rather than to the Government.
That cannot be done without increasing the money supply generally. If it was a difficult problem when we had a growth of output of 6 per cent. between 1972 and 1973, when we had a public sector borrowing requirement of £2,000 million, a lower rate of manufacturing output, a lower rate of private fixed

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investment and a lower rate of growth output generally, how much more of a problem will it be when we have to sustain a growth of manufacturing output of 8½ per cent. each year for the next three years with a public sector borrowing requirement of £12,000 million? It is a horrifying prospect. That is the real problem.
It is all very well to say that the public sector borrowing requirement is a much smaller proportion of GDP than it was the year before. But it does not alter the fact that £12,000 million has to be raised in the capital markets in this country. That is a problem in itself, besides the problem of raising money for manufacturing industry.
I do not know whether the Chancellor will succeed with his negotiations with the trade unions, but I suggest that they are totally irrelevant to the main issue, which is the problem of financing the public sector borrowing requirement without using inflationary means.
How long does the Chancellor think that a 3 per cent. limit will last once the upturn in the economy starts to grow well beyond our present productive potential? How will he control wage drift and plant settlements? The hon. Member for Birmingham, Perry Barr (Mr. Rooker) made that point earlier.
I am astonished that the Chancellor has apparently been taken in by the Treasury's arithmetic. I thought that Lord Armstrong had left the Civil Service, but somehow his influence lives on, and the Treasury builds, in his memory, ever more elaborate models which have no correspondence with the real world.
The Chancellor is like the captain of a ship at sea, tossed by tempests, the ship tilted to an almost impossible angle, buffeted from every side, calling for a meeting of the crew to consider a reduction in their rum ration. That is the position. His proposal will not and cannot work on its own. I am amazed that the Chancellor should refuse to take further action on public expenditure.
Nobody can be certain how the figures will turn out. It may be that the economic recovery will be much slower than we think—in which case there will
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not be so much competition for funds with the public sector—but I think that is unlikely. We are asked to suspend all our experience and turn faculties to thinking that output and investment and Government expenditure can grow every year in the next three years without increasing the supply of money by an intolerable amount.
I think that I detect already the smell of singeing scapegoats. I do not doubt the good will of the trade unions towards this Government. They will do their best. But it is quite wrong to ask them to do what no body of men can do, whether in Parliament or in the trade unions—to curb their wages while prices rise because of the supply of money injected into the economy by the Government and because of the fall in the value of the pound brought about almost deliberately by the Government. I say "almost deliberately" because, instead of cutting public expenditure and thereby reducing the borrowing requirement, the Government have gone on talking about our rate of inflation being so much higher than that of our competitors and doing nothing to restore the situation.
What action do the Government expect of overseas holders of sterling who can choose whether to invest in this country? It is the most obvious thing in the world that, if the Chancellor says that our rate of inflation is higher than that of other countries and that the pound may depreciate, those abroad who are intending to pay for goods in this country will delay payment and those who are seeking to pay for imports will advance payment and produce all the problems involved in that.
I am astonished at the commercial ignorance of the Government, and of the Chancellor, in particular. I am sure that some people will derive much comfort from the spectacle of the Government in earnest negotiations with the unions. Of course, it is essential to have a policy to help employment. I have always believed that it is right and useful to have continuing discussions with the trade unions, but the unions have not got the key to the door of inflation.
Which countries have the best record against inflation? They are the United States and West Germany. West Germany has never had an incomes policy of any

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kind. But for two short periods, the United States has not had an incomes policy. Both the United States and West Germany rely predominantly on monetary control. In the United States monetary policy is run by the Federal Reserve, which is entirely independent of the Government. The same is true of West Germany.
Why do we not set the growth of money supply and, for that matter, domestic credit expansion, now, for the year ahead? The Chancellor said that he expected M3 to grow more in line with money and GDP this year. I suspect that that figure will be about 15 per cent. too large. But let us have a figure, whatever it is, and stick to it.
That is what we shall have to do in any case if we have to borrow much more from the International Monetary Fund. Would it not be much better to put our own house in order before the IMF does it for us? It can be done. The IMF did it for us between 1968 and 1970. We can cut back inflation, reduce the public sector, and encourage the private sector, so that the economy can grow. We are not dependent on the TUC or any other body for this. It is a matter of political will and courage to take, on our own, the steps that are necessary. We need neither the TUC nor the IMF; we need a new Government, and that is all.
7.27 p.m.
Mr. Stan Thorne: The hon. Member for Horsham and Crawley (Mr. Hordern) in his closing remarks rejected the Trades Union Congress as being relevant to the problems facing Britain today. I do not wish to pursue that matter. I reject it completely as a way of approaching this problem.
What I am concerned about now and have been in the past is to contribute something to this kind of debate. I am aware that there are those in this Chamber who are far more expert than I in economic matters.
My hon. Friend the Member for Motherwell and Wishaw (Dr. Bray) trotted out the usual economic cliches associated with Keynes. I do not know whether Riccardo and Adam Smith came into his reckoning, but I suspect that they did. It seems that all that is reduced to naught when we reflect upon the recen
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statements made by economists about the whole problem of inflation. They all seem to be of one kind—that there are many explanations and many variables—and few have a ready answer to the problem.
I suggest that inflation is directly connected with the nature of our economy. We live in a capitalist society. It must be emphasised that, when the situation in a capitalist society, such as Britain, is contrasted with another country with a Socialist economy, we see no inflation within that other country's economic management. Therefore, it seems right to start by saying that inflation here stems from the nature of our capitalist system.
When we hear talk, as we heard earlier today, about the question of negotiations with trade unions, collective bargaining and so on, it is necessary to recall yet again that within capitalist society we are bound continuously to be in a conflict situation, in which, on the one hand, the private employer is purchasing labour power, and, on the other hand, labour power is seeking to sell its skill in a market that is at least able to provide a worker and his family with a reasonable standard of living.
It is precisely the high cost of living to which the Budget ought to have addressed itself. However, it seems yet again that it is a question of getting tougher with the workers.
The whole problem of our economic management in Britain is placed firmly on the backs of the workers, on the backs of the wage slaves who feed our capitalist system. We talk about unemployment but we make no real attack upon it, in spite of the fact that that, too, contributes to the inflation about which we are talking. Even Treasury Ministers have to reveal this in replies to Questions, as they did very recently when asked by one of my hon. Friends what was the cost of unemployment for a man with two children whose average income when in work was £3,000 a year. The Treasury's calculations, taking in the question of benefits, loss of tax and so on, revealed that the total was £3,187 a year. In other words, the cost can be and has been assessed, and it suggests that about £3,000 million a year is required to meet the tremendous unemployment figure that exists at present.

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The 3 per cent. norm will further reduce the purchasing power of workers and their families. It will, therefore, diminish the demand for goods—and this in a situation in which the Government are talking about expanding manufacturing industry.
As a Socialist, I take the view that the only real way in which we shall expand manufacturing industry is to have it totally in the hands of the Government, through public ownership, when we can apply a set of Socialist principles in terms of people's needs and, on determining needs, plan the resources. Unhappily, we are obviously not in that situation at present.
In the short term, the steps taken by the Chancellor to expand manufacturing are far from clear. In fact, it was during the debate on cuts in public expenditure two or three weeks ago that the Chancellor was challenged to indicate how we would get this shift of resources from the public sector to manufacturing industry. It seems to me yet again that although the Chancellor, grudgingly perhaps, has indicated some preparedness to look at the question of import controls, to talk about expanding manufacturing without a firm, across-the-board control of imports is also something of a nonsense. The high cost of imports is a contributory factor to the whole problem of inflation. In the event of our establishing real controls on imports, we would necessarily be involved in getting tough with the multinationals. We would probably be involved in doing something about transfer pricing. There is no mention of that sort of issue in the Budget.
When one looks at the Budget Statement closely, one can reasonably say that, on balance, big business has done rather well. This contrasts with the offer that is being made to the trade unions, which includes reference to lowered prices. Outside the areas of reduced VAT included in the Budget, however, prices will continue to rise. Food prices will certainly rise to some degree through the continuation of the common agricultural policy, for example, which emanates from Europe, and other EEC decisions will affect prices. This will produce an upward pressure on inflation. Therefore,
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we need some really effective price controls.
The Budget, and, indeed, the whole of the Treasury's economic policy over recent years, is based upon what I consider to be the false assumption that the inflation in which we are involved is primarily, almost entirely, a cost-push inflation, with wages and salaries being the main basis of that cost-push. No one seeks to argue—I do not think that Labour Members argue this in their contributions on this question—that wages do not have an effect on cost. Clearly they do. Recent analysis has shown, however, that wages represent about 40 per cent. of the problem. That leads us to look at the other 60 per cent., which includes the cost of raw materials, the cost of imports and of other inputs, the cost of servicing capital and so on.
Also relevant here are the restrictive practices pursued by monopolies and oligopolies in Britain, which determine in certain circumstances to restrict supply as a deliberate attempt to control the price mechanism. From a position of influencing supply and demand, they move across frontiers with this sort of concept in mind, the main purpose being to maintain higher prices as a basis for continuing high profits.
The right hon. Member for Worcester (Mr. Walker) let the cat out of the bag earlier this evening when he indicated quite firmly that low wages helped to improve profits in industry. I hope that the trade unions which will be involved in considering the Government's present offer will bear that factor in mind.
It is useful to recall that during the period from 1964 to 1970 the Labour Government held wages down and high profits were made in certain industries. But that did not result in any real investment in those industries which could have contributed to expanding our manufacturing base throughout Europe and the rest of the world. As was said in the past by my hon. Friend the Member for Bristol, Northwest (Mr. Thomas), the money was put into property investment and used in other ways for earning a quick buck.
In the previous debate on cuts in public expenditure, one of the aims stated by the Chancellor—the aim to which I have already referred—was to increase manufacturing production. I return to my previous point. If we reduce the power of

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the people to purchase the goods, in what way shall we get this so-called expansion?
It is claimed continually from the Government Front Bench that higher wages mean inflation. But why should this necessarily be so? If we have really effective controls of prices, if we seek to be tougher with the big business operators in Britain instead of with the lower-paid workers, if we establish controls of imports and if we restrict overseas investments, we can really begin to get to grips with the problem of inflation. Real governmental control of our financial institutions would have a part in such a plan. The type of investment that we need from our commercial and other banks is likely to emerge only when they are subject to Government control. The best way of establishing that control is to take all financial institutions into direct public ownership.
My hon. Friend the Member for Motherwell and Wishaw said that if £1·30 or some smaller sum was accepted under the Government's package of proposals the workers would be better off because they would improve their financial position by about 9·5 per cent. I suspect that, as in the past, trade unionists will be sceptical about that kind of arithmetic. There is a growing recognition of "con" tricks, and this emerged from comments on television last night.
I hope that trade unionists will read the statement by the right hon. Member for Worcester, because his analysis of the situation showed that we live in a capitalist society, in which the owners of the means of production pursue one aim—that is, of maximising their profits at the expense of the workers. Some say that that is not so and that a type of paternalism operates. It does, when it might lead to higher profits. Anyone who believes that what I have said is an unreal statement of the position cannot have had experience of working in the pits, on building sites or in engineering factories or had to sell his labour in that kind of competitive situation. It is not an equal struggle between capital and labour. It is an unequal struggle, because capital has the right to close doors, declare workers redundant and determine their rate of pay.
Happily, however, it has sometimes been possible for some trade unions to rally forces and to wring improved wages from the hands of capitalists. For wor-
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kers to relinquish the ability collectively to bargain with employers within our capitalist society is to invite disaster for the future of themselves and of their children.
7.44 p.m.
Mr. David Knox: The hon. Member for Preston, South (Mr. Thorne) will not be surprised that I disagree with almost everything he said. I hope that he will follow the logic of his argument and vote against the Government. He claimed that conflict was inevitable in a capitalist economy. I do not know where he has been in recent years, but he should know that we do not have a capitalist economy. We have had a mixed economy for many years. The kind of Socialist society he is talking about exists in those Eastern European countries in which there is no overt conflict, because it is kept under control by sheer, naked, military force.
Mr. Thorne: I did not say that there was no conflict; I said that there was no inflation in Socialist societies.
Mr. Knox: There has been inflation in many Socialist countries from time to time. The hon. Member said that conflict was inherent in capitalist societies but not in Socialist societies. That is clearly wrong.
I was in considerable agreement with the contents of the outstanding speech by my right hon. Friend the Member for Worcester (Mr. Walker). Like him, I welcome the concept of conditional tax relief in return for economic restraint which the Chancellor of the Exchequer announced yesterday. There are difficulties in such a concept, and, of course, one has reservations about handing over power to the TUC in this way. But it is arguable that that power is already vested in the TUC and that the Chancellor's proposals make no difference to the real situation. As the Leader of the Liberal Party said earlier, the Chancellor's proposals merely reflect the balance of power in today's society.
The Chancellor's concept is imaginative. It has a reasonable chance of providing a basis for an effective second phase of the present incomes policy. We must all realise that the successful implementation of phase two of the Government's incomes policy is of greater importance to the success of the Chancellor's strategy

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and to the country's economic recovery than anything else in the Budget, or anything else he may do outside the Budget.
It is only fair to give the Government some credit for the success of their £6- limit incomes policy. Wage and salary settlements in the past nine months have been lower than in the previous nine months, and consequently the rate of inflation has been brought back from the terrifying rate of nine months ago. I do not accept that that happened because of other measures, whether or not they involved the general deflationary policy of the Government or control of the money supply. The fact that so few people have settled for less than £6 is clear evidence of the relative ineffectiveness of market forces in the determination of wage increases.
If, as some claim, market forces do work, in the circumstances that exist today—with well over 1 million people out of work and the money supply under control—increases in wages and salaries in the past nine months would have been nil and not, as most have been, £6 a week. Nor is it consistent to argue, as some free market critics of incomes policy do, that the £6 limit has been inflationary on the grounds that if it had not been fixed at £6 many settlements would have been lower. I accept that there might be some truth in that, although I do not regard it as significant. If arguments about the market are correct, surely the market would have ensured settlements of less than £6. It has not done so, because the labour market does not work in that way.
In recent years the most significant factor in determining income increases has been the monopoly power of trade unions and professional bodies. That exists whether the demand for labour in relation to supply is high or low. That is why I believe that an incomes policy is essential if some control is to be exerted over inflation. That is why I welcomed the £6 limit last summer. It was not perfect, but incomes policies never are. It was a muddied compromise, but it achieved considerable success and it would be churlish to deny that. The Government are entitled to claim some credit for this success, but not as much as they claim—first, because the rate of
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inflation is still in double figures and we still have a long way to go before it is finally conquered, and, secondly, because the Government waited for far too long before they introduced this incomes policy.
Instead of presiding over and, indeed, encouraging the wages and salary explosion of 1974 and early 1975, the Government should have continued the incomes policy of the last Conservative Government. Had they done so, we should still have had inflation during the past year, but on nothing like the scale we have. Not only would a continuation of the Conservative Government's incomes policy have spared the country the hyperinflation of the past year; it would have spared us the consequences of withdrawing from that hyper-inflation.
Among those consequences should be included prominently the intolerably high level of unemployment. In terms of unemployment, we are paying the price for the absurd attitude adopted by the Labour Party—particularly its left wing, led by the Secretary of State for Employment—towards an incomes policy when they were in opposition and during their first 16 months in government. I ask them to search their consciences on that score today, for there is no doubt that the excessively high level of unemployment is one of the prices that the ordinary people of this country are paying for the abandonment of the Conservative Government's incomes policy and for the wage and salary free-for-all that continued from March 1974 until last July.
It is high time that the principle of an incomes policy was accepted by all political parties. After all, the last three Governments have been forced to introduce one, even though when elected they were opposed to doing so, and were pledged not to do so. The 1964–1970 Labour Government did it in 1966; the 1970–74 Conservative Government did it in 1972, and the present Labour Government did it last year. They were all forced to do it by absolute necessity, not because they wanted to, and not because they did not recognise that there are arguments against incomes policies and difficulties inherent in them. They introduced an incomes policy because the situation forced them to do so.

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Unfortunately, an incomes policy is an issues that Opposition parties can take up and make cheap party political capital out of it, and try to undermine it. It is not in the national interest that that should happen. It was not in the national interest for Members of the Labour Party to attack and undermine the incomes policy or the Conservative Government as they did. It would not be in the national interest for the Conservative Party to attack and undermine the Government's policy now. I am happy that, thus far, at least, my party has refrained from doing so.
If, as I believe, a national consensus is necessary to get an incomes policy accepted—this is particularly true in the second, third, and fourth phases of the policy—I hope the Government will widen the area of consultation about its current and future phases. I should like to see them include employers as well as trade unions in the negotiations about phase 2 of their present incomes policy. I should like to see them include consumer and tax-paying interests. They might also extend their consultation to include Opposition parties or, if that is going too far, individual non-Labour politicians. If we are to have continuity of incomes policy when there is a change of Government, it is necessary that there should be continuing involvement of politicians of all parties.
If that were done now it might help to some extent to meet the criticisms that have been made of the conditional tax reliefs. It might also help to convince the whole electorate that the incomes policy is fair. It is not enough to say that the £6 policy has worked, with consultation with the trade unions alone. It is the second and subsequent stages of an incomes policy that become more difficult, and for which an even greater degree of consensus is required than in the early stages.
I return to the question of unemployment. About 1,300,000 of our fellow citizens are out of work. I believe that before the next Budget this will be recognised as the major economic problem facing the country. I believe that ordinary people already think that it is. It is not fashionable to say this. It is rather more fashionable to say that the public are no longer concerned about unemployment.
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That has not been my experience in my constituency in the past few months, nor was it in 1972, when there were about 1 million people out of work, and it was not the finding of the survey undertaken by PEP, whose report was published last July. That showed that 77 per cent. of the population rejected the proposition that higher unemployment, which was then at 750,000 was preferable to inflation, then at an annual rate of 25 per cent., and that 61 per cent. strongly disagreed with that proposition. The survey also showed that whereas 57 per cent. in the South-East strongly disagreed with the proposition, the figure in the Northern Region was as high as 74 per cent.
The fact that most people who, in the media, comment on the public reaction to unemployment tend to come from London and the Home Counties may well explain why they think that people do not now care about unemployment. Most of us who represent constituencies north of Watford are aware that the reality is very different.
Of course, it is true that the material lot of the unemployed is much better than it was. The unemployed are no longer faced with the absolute grinding poverty of the 1930s. No one would wish those days to return. But the fact that unemployment benefits are rightly so much better today does not mean that the unemployed do not suffer materially. The great majority suffer a substanial cut in their living standards when they lose their jobs, especially if they are out of work for any length of time. This is always unpleasant. Their plans for the future have to be scrapped, and their savings are eaten into. Debts are accumulated.
It is always unpleasant and uncomfortable to have to live on less, but, however unpleasant and uncomfortable unemployment is materially, what is most offensive about it to the individual is the affront to human dignity. It is still a dreadful thing for a man to have to go home to his wife and children and say that he has lost his job, or to tell his mates in his club or pub. It is still a dreadful thing for a man to feel that he is no longer wanted, or needed.
Although that becomes worse the longer a person is out of work, we should always remember that it is bad even for the

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person who is out of work for only a few days, for until he is offered a fresh job he has no idea how long he will be unemployed. There is the uncertainty and worry associated with his not having a job, and there is still a stigma, however unfair it may be, about being unemployed. Let no one be under any illusion that it is unfair. Unemployment has more to do with the level of demand than anything else. It affects the good worker and the bad worker, the skilled worker and unskilled worker, the hard worker and the lazy worker alike.
Unemployment is ruthlessly unfair. It does not discriminate. It makes no moral judgments on the qualities of men, nor are its social effects short-term. Of course, we all hope that what is happening now will not be so bad as in the 1930s. We must never forget the ravages of unemployment at that time—not so much in material terms—although they were bad enough—or even in terms of the immediate affront to the human dignity of millions—although that, too, was bad enough—but in the respect that its effects and the fear that it might return have remained with many of those affected all their lives. It has dominated their attitudes and has had an adverse effect on the whole quality of their lives.
That experience and its consequent attitudes have been passed down to children and grandchildren, and have affected them in the same way. Unemployment in the 1930s left a terrible scar on British society. It would be tragic if that scar were again to become an open wound.
Despite what the Chancellor of the Exchequer said yesterday, his Budget does nothing about unemployment, other than to apply a few cosmetics. I believe that he will be forced by public opinion to do something within the next year. Certainly all the precedents point that way. The Government were forced to take action on unemployment in 1963 and also in 1972, when it reached levels regarded by the public as intolerable. The Chancellor took some cosmetic action last autumn, and he has again done so this spring, because the public again have become restive. I believe that in the coming year the public will become even more restive and that the Chancellor will have to take action.
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If the Chancellor is forced to act, as I believe will happen, it is necessary to emphasise the importance of an effective incomes policy. This underlines the importance of the acceptance of the package outlined yesterday by the Chancellor Long-term unemployment is not politically acceptable as a means of controlling wage and salary cost inflation. Before the next Budget I believe that the Chancellor will have to take more decisive action than he has taken thus far to deal with this serious social and economic problem.
8.6 p.m.
Mr. Ron Thomas: I welcome the fact that the hon. Member for Leek (Mr. Knox) finds unacceptable, and indeed deplorable, the present level of unemployment. I also welcome the fact that he puts it so high in his priorities. However, I find it a little strange and schizophrenic the attitude of Members on the Opposition Benches. Ever since I came to this House I have heard Conservatives clamouring for cuts in public expenditure, and I have then seen them vote against the Labour Government when they have tried to save jobs. In other words, the Tory attitude appears to have been aimed at supporting measures that will increase unemployment. Tory Members appear to shed crocodile tears over these matters, although I am not suggesting that that applies to the hon. Member for Leek.
Ever since I became a Member of the House, Conservative policies appear to have been weighted against any attempt by the Labour Government to defend jobs. The main plank of the policy of the Tories appears to have been based on their continual clamour for more and more cuts in public expenditure—cuts which clearly would lead to a much higher level of unemployment.
I shall deal with the subject of the incomes policy a little later in my remarks. I wish first to deal with the economic strategy on which the Budget is based and on which the Chancellor of the Exchequer had a good deal to say yesterday. I wish to deal with the question of how far that economic strategy will make any realistic contribution to reducing the unacceptable level of unemployment or to halting the dramatic and

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serious fall in the level of capital investment and how this relates to the situation in which manufacturing industry is caught in a spiral of contraction and decline.
Some would argue that the contraction and decline of our manufacturing industries flows from some unique, transitory and, indeed, temporary factor. When my right hon. Friend the Chancellor of the Exchequer presented his Budget a year ago, he placed most of his hopes on a strong recovery in world trade. Indeed, his remarks were punctuated by his belief that in a very short time there would be a strong recovery in world trade. The whole purpose and strategy of his Budget last year was aimed at ensuring that exports from Britain would take advantage of what was described as a sharp and strong recovery in world trade. Later in the year, when that strong recovery in world trade did not materialise, we were told that some kind of movement in the economy would result from the very depresion that we were experiencing because, it was said, companies would begin to restock.
However, we see from the statistics that the June 1975 figures were unique and that the amount of stocks held by companies naturally declined as the level of demand and production fell. To round off this economic strategy, we then had a White Paper calling for cuts in public provision. The strategy behind the White Paper meant that we should be expected to cut back on public expenditure and the social wage in order to release economic resources for exports and capital investment.
But we have been given no indication whatever of how those resources will find their way into exports or capital investment. We are asked to accept some undefined hidden mechanism within the capitalist system which will pick up these resources and direct them into exports or capital investment. This does not appear to be based on any priorities on planning as laid down in our manifesto. If that was the case, those resources so released would be given to the National Enterprise Board to be directed into capital investment or into export-earning industries.
That basic economic strategy has failed lamentably in the past. Time and again Chancellors of the Exchequer have said
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that we must cut living standards and public expenditure to release resources to deal with the balance of payments or with capital investment. But we hoped that, in line with our election manifesto, the NEB and planning agreements would be the mechanism by which we should achieve planning priorities on a Socialist basis.
Once again, we are offered in the Budget the forlorn hope that a recovery in world trade, increased stock-building and an undefined brighter outlook will bring about an economic environment in which we can increase our gross domestic product by 5½ per cent. a year in 1977, 1978 and 1979, increase our manufacturing output by 8½ per cent. a year over the same period and reduce unemployment to 3 per cent. in 1979.
We already have between 1¼ million and 1½ million people unemployed, about 200,000 on short-time working and another 600,000 who will join the labour market in the next year or two. We have to create 2 million new jobs to get unemployment down to 3 per cent., and there is considerable doubt on these Benches that these figures can be achieved with the policies now being advocated.
Unless resources are directed in a planned way, based on Socialist priorities, those figures are likely to become an absolute nonsense and we are likely to see unemployment rising in the next few months. Many people who have studied the problem suggest that it could reach 2 million.
The only thing we have heard from the Opposition Front Bench is a demand for higher profits to be allowed for the innovating entrepreneurs of industry. But they had that from 1970 to 1974, and all the higher profits and various tax reliefs found their way into obscene forms of property, land and commodity speculation and capital investment overseas. Many of us on the Government side believe that the growth rates forecast by the Chancellor can be achieved only if we adopt a totally different economic strategy.
There is no doubt that we would benefit to a certain extent, though the precise extent is a matter of argument, if the promised resurgence in world trade materialised. But I have asked Ministers many times for an indication of how much benefit will accrue to our exporters from

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this increase in world trade and what it will mean in terms of jobs. Will it create an extra 100,000, 200,000 or how many? Most of British manufacturing industry is working well below capacity and could increase production quite substantially tomorrow without taking on another worker.
During trade depression in Western capitalist countries, British exports have held up pretty well. There has been no dramatic fall which could be suggested as a significant contributory factor to the present levels of unemployment.
As my right hon. Friend the Chancellor of the Exchequer has pointed out, United Kingdom exporters increased their share of world trade during the first half of 1975. It is a fact of economic life that we tend to increase our share of international trade when there is a depression in that trade, but also that we tend to lose part of that increase when an upturn comes. One could argue that when the upsurge in world trade comes our competitors, who are now working below capacity utilisation will, unless we institute import controls, be exporting increasing amounts to the United Kingdom and that our exporters will come under severe competition in other markets.
The Chancellor of the Exchequer referred to the improving balance of payments position and said that, in volume terms, imports had fallen between 1974 and 1975. However, a table in the Trade and Industry Bulletin of 19th March this year shows a different picture. It shows that throughout 1975 there was a continual increase in the volume of imports of finished and semi-finished manufactured goods, especially road vehicles and motor cars.
Taking 1970 as 100, imports of semifinished manufactured goods had increased by 35 per cent. by 1975 and imports of finished manufactured goods rose by 83 per cent. Within that total, road vehicle imports increased by 103 per cent. but the imports of food, fuel and basic materials fell and, taking 1970 as 100, were recorded as 98, 89 and 78, respectively in 1975.
In 1975, semi-finished and finished manufactured goods accounted for almost half our total import bill of
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£24,000 million. If one takes out fuel, which distorts the statistics, these finished and semi-finished manufactured goods represented almost 60 per cent. of our import Bill. Ten years ago the figure was nearer 30 per cent. That is an indication of the situation we now face.
Due to a very large extent to the failure of British manufacturers to plough back capital investment—we all know the statistics about the amount of capital investment available in this country compared with our competitors—there has been a rapid and disastrous increase in imports, of finished and semi-finished manufactured goods. This has been a main contributory factor to the contraction and decline of our manufacturing industry and the level of unemployment.
The Chancellor of the Exchequer and other Ministers continue to insist that import controls will lead to retaliation. Many of us refute that. We have a crude trade deficit with most of the countries of origin of the bulk of the finished and semi-finished manufactured goods. We get almost £1,600 million worth of those goods from the United States, and in 1975 our crude trade deficit with that country was £600 million. From West Germany we imported £1,700 million worth of those goods, and we had a crude trade deficit with that country of over £700 million. With each of the countries from which we get the bulk of our finished and semi-finished manufactured goods—France, Japan, Italy, the Netherlands and Canada—we have a trade deficit. We are buying far more from those countries than we are selling to them. It is nonsense to think that those countries would cut off their noses to spite their faces if we had an import control mechanism.
We were told recently by my right hon. Friend the Secretary of State for Trade that visible and invisible payments account for about 30 per cent. of our gross national product. It was suggested to us at the Labour Party annual conference that it was the red badge of Socialist courage to plan wages. Is it suggested that we should turn our backs on 30 per cent. of the gross domestic product and say that we cannot control and plan it but must leave it to multinational companies, agents, international brokerage firms, importers and

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exporters? We reject that and point to the fact that France, the United States and Italy have all used import controls.
As a first essential of a different economic strategy it is necessary to have a planned trade policy. Linked with that, something will have to be done about the level of profit repatriated from capital invested overseas, the amount of capital investment overseas—which was almost £2,000 million in 1975—and the amount of military expenditure overseas. We need, in essence, a planned trade and international financial policy.
The only alternative is devaluation and deflation, which is happening at present. The pound is being manipulated in the hope of increasing exports and producing deflation, with the result that economic and human resources are being wasted. At the same time, capital investment must be directed into manufacturing industry. It has been estimated that during the lifetime of the present Labour Government about £7,000 million in investment allowances, stock relief and other assistance has been given to private industry. In our manifesto we promised to end the expenditure of millions of pounds of public money, year in and year out, without any public accountability.
Many of my hon. Friend are unhappy about the section of the Budget Statement which deals with the extension of the stock relief system, the financing of industry and selective support for investment, using Finance for Industry and private business. We thought that we had a mechanism for doing that—the National Enterprise Board linked to planning agreement.
We all welcome the increase in pensions and the decrease in VAT on certain items although I do not know why it was necessary to reduce VAT on luxury items such as boats and yachts. We welcome the measures for reducing tax avoidance, tax evasion and fringe benefits. We are getting sick of seeing in the financial newspapers advice on how to pay for private schooling and private hospitalisation at the taxpayers' expense and of being invited to attend conferences to learn how to pay less tax. I regret that the child allowance is not linked to the Child Benefit Bill. I also regret the changes in capital transfer tax and capital
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gains tax, because we still have a long way to go in the distribution of wealth and it is high time that we had a wealth tax on the stocks.
I find the proposals for the 3 per cent. wage increase and the change in tax thresholds disturbing. In the past, tax thresholds have been increased because of inflation. In the previous Budget several hundred million pounds was given to push up the tax thresholds. It is sleight of hand and a "con" trick to hold back a legitimate increase in the tax threshold because of the inflationary pressure. Table 4 of the information sheet shows that when allowances are increased the rich get rich and the poor get far less out of it. A man earning £2,000 a year gets £87. A man earning £25,000 a year will get £300, plus his 3 per cent., no doubt, and plus an increment.
I do not accept that working people and trade unions are responsible for inflation. I wish that some Opposition Members would take on the job of shop steward and have to argue with management. Workers have to produce a case which is based on previous inflationary levels. They have to show that prices have gone up by so much since the last pay increase, not that they might go up. No employer would give an increase on that basis.
I am opposed to incomes policies for a number of reasons, but basically because there is no mechanism in the capitalist system to transfer the wage claims that are given up by one group to the lower-paid in our society. Lower wage claims simply mean bigger profits for the firms concerned. They have not helped the low-paid workers, as every study of every incomes policy has shown.
There are some areas of the Budget which I welcome and others which I do not, but unless we change the economic strategy on which the Budget is based we will never come to grips with the fundamental problems of Britain's economic and industrial society.
8.30 p.m.
Mr. John MacGregor: Time now forbids my dealing with all the arguments put forward by the hon. Member for Bristol, North-West (Mr. Thomas), which is a pity because I am diametrically opposed to almost all of them. But might I just say to him that

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all Conservative Members share the same view of the tragic human impact of unemployment, put so eloquently by my hon. Friend the Member for Leek (Mr. Knox), and it is because of our concern about what might happen in this respect in even greater unemployment in the manufacturing sector if it is not given the slack for finance when the upturn comes that we have, among other reasons, been advocating public expenditure cuts.
Moreover the hon. Member for Bristol, North-West objected that VAT on boats and boat building had been cut. That higher rate had a catastrophic effect on unemployment in small rural areas where these industries are located. The hon. Member might consider the effects of VAT on unemployment in my constituency, where boat building of this sort is carried on, when he talks of unemployment.
The hon. Gentleman referred to the direction of capital investment. If he is talking about the direction of normal investment funds in pension funds and of bank deposits, he must realise that these belong to millions of working people who would not wish to see their hard-earned savings concentrated on nonviable new investments. All the investments which have been directed by the Cabinet against the advice of the experts on the Industrial Development Advisory Board since the Government came to power have been a disaster. He should be aware that the real reason for the lack of investment is that after tax and inflation there is practically a nil return on new capital at present. That is the real problem that must be tackled.
In the interests of other speakers, I shall not go over the major arguments about public expenditure and the public sector borrowing requirement, much as I should like to do so. It is sufficient to say that as a member of the General Sub-Committee of the Expenditure Committee I entirely subscribe to everything that was said in its recent Reports and therefore I support all that has been said in that respect from my side of the House. In view of the time, I wish to concentrate on two subjects which have not been much commented on today.
But first I give a modified welcome to the VAT and capital transfer tax changes—modified because the Chancellor is only
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correcting past mistakes. The Financial Secretary will recall from our long VAT debates in the hot summer of last year that we warned him repeatedly of the precise effects that would be created by the higher rate. I only regret that he did not go back to the straight 10 per cent. rate, which would have been much more sensible. The Financial Secretary was not present for our long and even more arduous and more critical debates on the CTT. Here he has belatedly taken on board the strong warnings we gave about the impact of that tax. Although it is to early to assess the effects, he has taken a step in the right direction.
On the wages strategy, I believe that the Chancellor is right to set 3 per cent. as the target as against the 5 or 6 per cent. which the National Institute and the Bank of England have recently advocated. But with the mistake of basing the present pay policy on a flat rate of £6, it is clear that the Chancellor will run into difficulties with the unions over this, especially on differentials. From the public relations point of view, I welcome too the fact that he has put over so clearly the case that net take-home pay could be maintained or even increased through tax reliefs as well as through heavy wage increases, not least because that has a more beneficial effect on exports by keeping down industrial costs.
I recognise the point made by the Paymaster-General this afternoon that there is an economic management effect in the negotiations with the trade unions which to some extent justifies what the Chancellor is trying to do. I am, however, still worried about what I regard as the sad development of shifting too much of the economic strategy of the Budget away from this House and concentrating it with the TUC. It means that many things that the Chancellor feels are fair for other non-TUC sections of the community will now depend on the TUC General Council. That is unfair to the many millions of self-employed, to the managers and to those not in unions, or not in unions which count.
The managers are now heavily dependent on the TUC's decision. The Chancellor rightly recognised that they have carried a greater share of the burden over the last two years. They are a small but vital group on whom we depend but who do not have much bargaining power. What

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worries me is that in this situation the TUC will bargain down the small reliefs given to the management groups, and this would be disastrous. It should be for Parliament to decide what should be given to these groups, and I hope that the Chancellor will stick to his package as a whole and not allow it to be negotiated.
The Chancellor showed a blinding flash of self-revelation in all the arguments he put forward yesterday on his wages strategy which directly contradicts all he has been trying to do in the last two years. It is a condemnation of the social contract which has failed, of the higher taxes he has imposed and of his failure to control public expenditure.
The first of the two main subjects on which I wish to concentrate is the unfair treatment of savers and the total lack of incentives for savings, about which this Budget has done absolutely nothing. I am not talking about savings for short-term rainy days. We all know that short-term savings in building societies and national savings are at present at a high level. A recent Bank of England study demonstrated that this is happening because people want some reserves, because of fear of unemployment or some other short-term bad effects on their total income. I am talking of the need to give incentives for long-term savings because I am a passionate believer in a capital-owning democracy and in people having more than just their own home as basic savings, having some capital which they can build up and on which they can rely in their old age.
The Chancellor, in looking first at capital gains tax, said that because he had not fully insulated incomes from inflation it would not be right to do so on capital gains tax. That is a fallacious argument. Income tax is about incomes and capital gains tax is about capital gains, and if someone is not making capital gains there is no reason why he should be taxed. At the present time, however, because of inflation many so-called gains regarded as capital gains are being taxed when they are not capital gains at all.
To a Question I asked in February I was given the answer that if someone had had £1,000 of assets in April 1965 and relinquished them in January 1976, to preserve their real value the figure would
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have had to be £2,533, on which, for no capital gain whatever, he would be taxed at a level of £460. The case for tapering our capital gains is clearly established and I hope that perhaps even this Chancellor will have second thoughts, as he indicated last year he might. Certainly, some future Government must do something about it.
The other worry is the return on savings. I am particularly concerned about the pensioner. The second Diamond Report showed very clearly that the vast majority of people with savings in stocks and shares were not rich people but were pensioners with comparatively small incomes. I find it most difficult when pensioners in my constituency with modest savings from hard earnings over a lifetime tell me that they do not see why they should have as an impost on those savings a tax of 50 per cent. annually when others who have not saved at all during their lifetime and have unfortunately become unemployed are getting much higher untaxed benefits and when young school leavers, for perfectly understandable reasons, are getting untaxed benefit at a fairly high rate.
I do not object to the latter, but there is a question of balance and justice and today we have not got it right for the pensioner living on a retirement income and on hard-earned savings. One other consequence is that children who see the effect on the pensioner parents will not themselves save. This could be dealt with by abolishing the investment income surcharge impost on pensioners and by the removal of dividend control, which would have a more beneficial effect for pensioners than for most.
For other savers the marginal tax for a person on a comparatively modest income with savings from a modest legacy is up to 75 per cent. With this combined with inflation as well as a negative real returns on savings even before tax, it hardly makes sense to save. It is no wonder that many people with savings feel that the only logical thing to do is to spend, spend, spend. To finish on the savings point, the main thing is to get inflation under control because it is that most of all which is eating into savings and the return on savings. Equally, however, more realistic returns on savings must be brought about through further tax relief on them.

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A second theme to which I wish to draw attention is the burden on direct taxation and the balance between direct and indirect taxation. The Chairman of the Inland Revenue himself said the other day that the balance between direct and indirect taxation had shifted from a ratio of 45:55 to a ratio of 65:35 within the last few years. That very clearly shows just how the balance has shifted. I recognise that much has been said in the past about the burden of direct taxation, but the facts now present an irrefutable case.
I would say to hon. Members on the Government side, and especially those of the Tribune Group, who in recent debates have called for more public expenditure and honestly said that more money must come from direct taxation, that they must recognise that there is now much more resentment, particularly among low-income groups, at the burden of direct taxation on them, especially vis-à-vis those with unemployment benefit and social security benefits which are untaxed, than there has ever been in the past.
The demands and political pressures now are for less direct taxation and not more public expenditure. At least the Chancellor has recognised that political reality. Yet the truth of this Budget is that the Chancellor has not only increased indirect taxation, as everyone recognises, but when the effects of inflation of 25 per cent. over the past year are taken into account he has also increased direct taxation as well. Practically every income group, except those who have been taken out of tax at the bottom end of the scale, will have to suffer an increased burden of direct taxation.
The relief which the Chancellor has given by way of personal allowances falls a long way short of what it should have been over the past two years of it had increased in line with inflation. That is a problem that manifests itself throughout all income scales.
Those in the lower income groups suffer the poverty trap, a problem which is now fully recognised and well known. For example, a person earning £35 a week finds that with a £6 pay increase his marginal tax rate becomes extraordinarily high and he loses the benefit of his increase. But the problem also exists the other way round. The person earning £45 per week who receives no
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benefits or FIS rebates and who pays a fairly high level of tax resents very much that someone earning £10 less than himself is taking home at least as much. He is resentful that many of those who are out of work or receiving social security benefit are better off than he is.
My postbag indicates that the main complaint about tax and social security does not involve abuses but concerns the fact that benefits are so high. They are unfair to those who are in work and who wish to remain in work. There is not a great deal of incentive for the lower income groups to work. The effect of high inflation, the indexing of all benefits and the failure to index the threshold point of tax and allowances means that the balance has shifted notwithstanding the changes that the Chancellor has introduced in his Budget.
I calculate on the basis of today's announcement that a man with two children under the age of 11 and on average earnings will be only about £4 better off in take-home pay than someone with a much lower income or someone who is out of work and relying on benefits. That must be nonsense. It is certainly unfair to the person who is in work.
At one time I thought that the right way to deal with the anomaly was to tax benefits. That would have dealt with tax clawback. However, I have now come to the conclusion that that would not make a great deal of difference. The answer must be to raise significantly the threshold—namely, the personal allowances for those who are in work. That is what the Chancellor has failed to do.
I turn to the average income group. As many of us now know only too clearly, the tax take from the national average income group has increased enormously over recent years. Yesterday the Chancellor used the argument that he could not impose any additional burden on indirect taxation because of the effect on the retail price index. But the effect of direct taxation on the average income earner is having a significant effect on the retail price index. That must be so with a marginal tax rate of over 40 per cent. on every extra pound that is earned. The average income earner naturally demands much higher wages. That subsequently has a direct effect on prices. The Chancellor can no longer use the

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argument that tax increases can be imposed on direct taxation but not on indirect taxation because of the effect on the RPI.
I am worried, too, because the average income earner regards the marginal tax rate that he now has to pay on each extra pound that is earned not only as burdensome but unfair. We are now beginning to see tax evasion throughout the income scale at a level which I believe has never been reached before. I do not like the way in which we now run the risk of widespread fiscal immorality because of the high burden of direct taxation.
I conclude by referring to the higher income group. I recognise that it is a group which does not command much support on the Government Back Benches, but I think that at least the Government now recognise that it is vital to economic recovery. The conditional reliefs which the Chancellor has given are nothing like enough to keep pace with inflation even over the past year. If the thresholds for the higher rates were increased appropriately, they would be well above the levels now existing under the right hon. Gentleman's proposals.
I give one or two figures to illustrate how the failure to increase thresholds for the higher rates of tax has had a dramatic affect on the higher income group. In 1961–62, the then Chancellor raised the starting point of surtax to £5,000. I asked the other day what level it should be at now—it is back, under the present proposals, to £5,000—to give that group of people the same net take-home pay in real terms as in 1961–62. The answer was the staggering figure of £15,750. One can argue about where the line should go in the scale between the two figures, but there is no doubt about the general effect of the failure to raise the tax thresholds for the higher income group in a time of rapidly-rising inflation.
The Chancellor referred to the third Diamond Report, which clearly demonstrated that over the past few years those in the group above the £5,000 a year level have not just not kept pace with inflation but have suffered a severe drop in living standards. I take a case at the extreme end of the scale. A person on £20,000 a year two years ago would now have to have a gross salary of £64,000 a
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year in order to maintain real living standards—and who has gone anywhere near that?
Apart from the unfairness, the other problem is that, on international comparisons, we are out of line for this group of people. Therefore, we see all too clearly so many of our hospital consultants, doctors, managers and engineers looking not just for temporary jobs but for permanent jobs abroad on a scale that we have not seen before. Even more dramatically, many recent cases have arisen where men serving overseas have refused promotion and an increase in salary to return here because the net take-home pay would have been lower. There are other examples of people who have refused promotion or to move around this country itself because it is not worth taking on extra responsibility.
The Chancellor recognised the problem yesterday when he said that the higher rates were the most he now felt able to propose. If the report in The Times of 26th February is to be believed, he put many of these arguments to the Parliamentary Labour Party. But then he says one thing one day and another thing the next. Only two years ago he said that he would tax the middle management groups until the pips squeaked. The pips have long since stopped squeaking, and the Chancellor is only slowly beginning to recognise the damage he has done.
To return to the main theme of excessive Government expenditure, the Chancellor was totally unable to deal with the problem of the impact of direct taxation in this Budget because he is boxed in by the ever higher levels of public expenditure and public borrowing. The result is that throughout all income scales there is great unfairness and indignation, which is bound to boil over unless some future Government very quickly do something about it.
8.49 p.m.
Mr. Russell Fairgrieve: I rise only to make two brief comments, but before I make them I would like to refer to the speeches of the hon. Members for Bristol, North-West (Mr. Thomas) and Preston, South (Mr. Thorne), who were here until recently but have now departed. Their speeches would have been quite good were the date 1876, but this is 1976 and there are

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not all that many bare-foot people running round Britain today. They should be reminded also that the nationalised industries also need capital. It is not just the prerogative of private enterprise; it is required by the publicly-owned sector as well. But, of course, so long as they and other Opposition hon. Members remain concerned only with the distribution of wealth and are not the least bit interested in its creation, so long will this country remain poor and our problems remain with us.
The first point I wish to make concerns value added tax. We know from what the Chancellor proposes to do that he knows he was wrong to introduce the 25 per cent. rate. There is one fundamental argument against multi-rates of VAT—that they go back to all the old stupidities of purchase tax. If there is one rate, it is left for the consumer to decide what is essential and what is a luxury. The minute multi-rates are put on we are back to the question of the man in Whitehall knowing best and deciding what one should buy. One of the main objects of the change from purchase tax to VAT was to have one rate, and a zero rate.
So what does the Chancellor do? He brings his gross 25 per cent. rate down to 12½ per cent. He says that 12½ per cent. is easy to calculate. On that basis, should not the 8 per cent. rate have been reduced to 7½ per cent.? There is a little difference between the new rates, but had the Chancellor gone back to a 10 per cent. VAT rate, which would be the simplest of the lot for retailers to operate, he would also have brought in more revenue.
My second point concerns the right hon. Gentleman's decision to increase the duty on Scotch whisky. This industry is at present going through a difficult period because of having to finance stocks at increased prices and increased duties, and there is some unemployment in it today. Apart from this not being in Scotland's interest, the Scotch whisky industry is one of our country's biggest export earners, and the one thing we are continually doing by putting up this duty is encouraging the people to whom we sell this commodity to do the same—and that always tends to mitigate against sales. The more we raise the duty in this
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country, the more we encourage the people to whom we sell to do the same in their own countries.
I therefore hope that when this Bill is considered in Committee these two points—bringing VAT back to one rate of 10 per cent. and a reconsideration of the duty on Scotch whisky—will be given earnest attention by the Committee and the Chancellor, with a view to changes being made in these two sectors.
8.53 p.m.
Mr. Ted Leadbitter: I have already made known my general views about the Budget. I have described it as the annual political tribal dance. It does not achieve anything but frustration. It amazes me that in the twentieth century, particularly in the 1970s, when we are supposed to be enjoying the white heat of technology, we should try to solve our national problems on one Budget Day followed by a most excitedly well-attended House of Commons debate. It seems to me that the country should become aware that we just cannot go on pretending to do our national business in this way. It is quite impossible. It has nothing to do with philosophies; it has nothing to do with Conservatism or Socialism; it has something to do with an archaic tribal custom which we do not, for some reason or other, want to get rid of. Therefore, I want to put a few pertinent points arising from this remarkable annual ceremony.
The first is that not a single man in my constituency who is worried about his job is affected by anything that has happened today or yesterday. Not a single man in my constituency who is worried about his job in the next two years is affected by what has been said today.
The House may be interested to know that in my constituency of Hartlepool, 3,313 men and women are out of work. By July, redundancies totalling 1,300 will have been announced in the oil rig construction industry. About 3,000-plus people will lose their jobs if the local steelworks closes, which is the proposal of the British Steel Corporation. In my constituency I have a net redundancy figure of 500 per annum, and therefore I am very much concerned with the problem of between 8,000 and 9,000 jobs in the next two years.

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I say to the Government that they should try to stop this nonsense of headlines which give those who do not smoke a sense of euphoria because they are not caught by the extra 3½p on cigarettes, or give those who smoke a pipe a sense of enjoyment in their retirement because they will not pay any extra for their tobacco, or give those who drive a few miles less per year a sense of relief because they will not be affected by the increase in the cost of petrol, or give those who hope to enjoy the benefit of the cut in VAT from 25 per cent to 12½ per cent. the idea that they will get something for nothing. Let us get down to dealing with things in a commonsense way and realise that when the need arises in any period in the year the Government have the instrument and the power to deal with that need.
The fits, starts and spasms that emanate from the House of Commons——
Mr. Nick Budgen: Will the hon. Gentleman tell the House what he is proposing the Government should do now?
Mr. Leadbitter: I indicated that some time ago, but in the short time that is left to me to make my speech I shall indicate it again. We should not deal with the problem in the way that we have been doing so far. We should not deal with it in the way that previous Governments, including the hon. Gentleman's, have done. We should get away from fits, starts and spasms. During recesses the Government should not do what the House of Commons does not want them to do.
We should try to adopt a new kind of general strategy. That phrase is used in a general way, for all sorts of reasons, by hon. Members, but if I may give a thumbnail sketch of what I mean by a new strategy, it is simply that we ought not to make cuts in public services without putting into industry the investment that is necessary to produce the wealth that can be directed to the public services. We do things the other way round. We say that we shall cut public services, cut the finances of public utilities, deal with social services and introduce a wages policy, and we then expect the working man to forgo the processes and principles of collective bargaining for the sake of a 3 per cent. carrot-and-
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stick philosophy that will be difficult to work out by the end of June.
We should make it clear that this country has the power, and we should use it—if it does not have the will to do that it should find it—to inject into industry the kind of generating forces that result in the productivity that is needed to make us competitive, to increase exports and to limit imports.
I shall not say a lot about imports because we heard a long speech on that subject earlier, but I suggest that the Government should consider how best to approach the problem facing us. The answer is quite simple: let us have less nonsense talked about profits. It is a word that seems to frighten some of my colleagues for some reason, but I want companies to have profits. I want companies to have a competitive edge in order that we can have flexibility in our society. Whether we like it or not we need an approach to industry that promotes and encourages profits and gives the trade union movement, politicians and management the conditions in which to produce the sort of economic climate which is essential.
In other words, we must remove the "them-and-us" situation inside this House in the same way as we seek to remove the "them-and-us" situation in industry.
I do not believe that this country is in the state of depression in which many people have tried to make it out to be. We have more cars per 1,000 families in the United Kingdom than any other country in Europe. We have more telephones per 1,000 families than any other country in Europe. We have more houses with hot water systems and inside toilets than any other country in Europe, and we have more electrical appliances and domestic labour-saving devices per 1,000 families than any other country in Europe. We are a country of great genius, drive and expertise. We are an inventive country. We should use these assets to tell the rest of the world that Great Britain is not in a state of decline. For too long we have been talking about depression rather than success.
I hope that my constituents will be able to read in the Press tomorrow not a note of despondency or division but one of complete unity in the House so

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that we show for once that Great Britain does not want us to talk nonsense or engage in the tribal dances that I have described. We should give the country the cutting edge it needs in order to face the world with success.
9.03 p.m.
Mr. Nicholas Ridley: I suppose the reason why the Government Benches have been almost totally abandoned thoughout the day is that so many hon. Members have been waiting near telephones and keeping close to the notice boards on this admittedly awkward and embarrassingly difficult day for so many of them. I would like to wish them all well and to congratulate the Prime Minister. No Prime Minister has ever had such a terrible task as to be sworn in at 5 o'clock on the Monday and to have his Budget done for him at 4 o'clock on the Tuesday. This seems, to me, a handicap and a hazard, and I hope he survives it.
The Chancellor has received his little compensation prize—he is the first to get an extended lease for his job. The Employment Secretary has been given a little sop and will open the debate on Monday. No doubt that is promotion for him. The Home Secretary will probably go in dudgeon to Europe. Now that 60 per cent. of the gross national product is taken by the State, which he said would be intolerable, I dare say he will leave us for more private enterprise shores.
The Budget has not been much discussed. I should like to make two points about its detail before coming to the two main themes that we have been debating today.
I must draw attention to the Chancellor's idea of motoring. The right hon. Gentleman believes that large cars must be taxed more when directors drive them. Incidentally, I am glad that Mr. Arthur Scargill's car has been included in this way. We thought last year that it was overdue for inclusion. The Chancellor has come down firmly against large cars owned by firms being driven by private individuals. Indeed, he has put a penny on the price of petrol to discourage the use of large cars. I appreciate that with our fuel policy it is sensible to get people to use less petrol and therefore to use smaller cars.
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The Chancellor said that he would keep the motor licence because, if he did not, we would all go for smaller cars and that would be bad for British Leyland. The right hon. Gentleman cannot have it both ways. He wants to force us into smaller cars and at the same time to force us to order bigger cars, according to his theory. The right hon. Gentleman said that this is so important that he must consult the Secretary of State for Industry on the industrial implications for the car industry. Is our economic miracle under State ownership progressing so well that these tinkerings will cause the car industry serious problems? Is that the confidence that we are to have in these measures?
I turn now to VAT. My hon. Friend the Member for Aberdeenshire, West (Mr. Fairgrieve) made the point, as did my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe), that it is silly of the Chancellor not to go back to the 10 per cent. rate. I know that it would have involved him eating his hat, and he is the kind of man who can never do that. But why can he not swallow his pride for once and admit that he has made a mistake? If he did that, he would achieve the lasting thanks and congratulations of traders all round. He would also achieve a certain increase in his reputation as a man who could occasionally admit that he was wrong. I do not want him to do it all the time, but he might do it once. It would improve his public standing if he did.
The Chancellor has missed his opportunity and has ended up with two complicated rates of 8 per cent. and 12½ per cent. It will mean less revenue, thoroughly rumpled feelings all round, and a great deal more complication than civil servants ever needed.
My right hon. Friend the Leader of the Opposition yesterday gave a brilliant diagnosis—that the nation is suffering from both influenza and cancer and that there is no need for the Government to get too encouraged if the patient is recovering from the influenza when the cancer runs on.
First, I want to talk about the influenza. The patient's temperature should be 98·4, and not just 8·4. I make that point in advance. We welcome the

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Chancellor's brave words on the question of money supply. If we are coming out of our influenza, it must in some degree be because he has had success in holding money supply. I do not think that it has all been good management. I believe that there has been a large element of luck, in that the economy was so stagnant that people preferred to lend to the Government than to invest in wealth producing assets. That is not a good thing in itself, although it has helped the Chancellor to control money supply.
The time must come—this point was made with considerable authority by my hon. Friend the Member for Horsham and Crawley (Mr. Hordern)—when the conflict with rising activity will cause the Government to have a problem over controlling the money supply and financing their deficit. My hon. Friend the Member for Windsor and Maidenhead (Dr. Glyn) was right when he said that the Government are gambling that they can do it again. Indeed, the Paymaster-General said that they did it last year and they can do it again this year, as though it were some great athletic feat, like climbing a mountain or jumping the high jump. It is not like that at all. The pressures upon available resources will be greater.
I do not know whether the right hon. Gentleman has realised it, but the link with the conditional reliefs in income tax and the money supply is a very real one. Will the Government have to find another £1,000 million in income tax reliefs, or not? This will make it an even more difficult financing problem.
Mr. Dell: I am grateful to the hon. Gentleman for telling me how to control money supply. I wonder how he knows.
Mr. Ridley: I do not follow that intervention. I do not quite see what it was about—unless it was made because I was suggesting that there might be difficulty in the future. I think that there will be difficulty. I want to know whether the right hon. Gentleman will be sticking to the Chancellor's insistence on the control of money supply, or whether demand management, lower interest rates and other considerations will predominate. In the Treasury's evidence to the Sub-Committee we could not get an answer to that question. It would be nice
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if, one day, the right hon. Gentleman would answer it.
I come now to the deal itself—the conditional reliefs. I have one or two preliminary questions to ask before discussing the main issue. This has been the main subject of the debate today. One of the worst aspects of this matter, apart from that of constitutional propriety, is the fact that we do not know our tax rates for the coming year. We are now well into fiscal 1976–77, and I do not know what tax rates I shall be paying; nor does anyone else.
Mr. Hordern: Guess.
Mr. Ridley: "Guess", says my hon. Friend—but it is not quite the same as knowing. It is quite wrong that citizens should be asked to conduct their financial affairs without having the slightest idea whether or not they will have a bigger personal allowance or married allowance, or whether the £5,000 band will be extended to £5,500, or whatever it may be. This is getting near to retrospective taxation, because if the change is made later in the summer it will affect people's plans very considerably.
There are some nasty questions to be answered. If we suddenly get refunds in the middle of the year because the bargain has been fixed up, the most enormous amount of money will suddenly be poured into the economy, because it dates back to yesterday—to the Budget. Presumably, about £500 million will suddenly be released in tax refunds to citizens. Is that how it will work? It does not seem to be a very clever idea. Many people may have assumed that they would get a refund and will have spent an extra amount. Whatever happens, it will not be a very easy situation for those, such as myself and everyone else in the House, who do not know what the outcome will be. It means a great deal of extra administrative nonsense to have two different codings for all taxpayers during this year.
Hon. Members have made the point that the unfairness of this proposal is quite considerable. This is not a major point, but it is pretty difficult to explain to middle managers, to widows, to those unable to get large pay rises, and to those who for some reason—perhaps being

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self-employed, or whatever it may be—do not come in within the main collective bargaining arrangements, that their tax arrangements will be entirely subject to the bargain between the Government and the TUC.
I have so often heard Labour Members talk about "our people" and about "ordinary working people". They talk about the population as though it consisted almost entirely of their supporters and friends, and as though the rest of the population were complete layabouts and parasites. It is extraordinary the way that Labour Members believe that the population consists only of trade unionists. The great bulk of the working population are not members of trade unions, and are not members of the Labour Party by any means, either. Everyone is useful. It must be remembered that
"They also serve who only stand and wait."
Everyone who performs a rôle in society has just as much right as anyone else to be consulted.
That is a serious criticism of the arrangements but, worse still, the poverty trap will deepen. If we have unconditional relief, a family earning £30 a week, with two children, will have 82p less tax to pay, and if the conditional relief arrangements come through there will be a further 86p a week less to pay. But that will not be enough to pull that family out of the poverty trap. The extra benefits will make the trap deeper. I have not had time to work out precisely what will happen as a result of the Secretary of State's announcement today, but it appears that far from alleviating the poverty trap the Government have made it worse. The House must be concerned about that when there are more people now who find that it does not pay to work, and others who would like to work more but are discouraged by the kind of figures we have had today.
The Treasury table in yesterday's Press release contains information about the new pay packet arrangements that will operate if the Chancellor's option of a 3 per cent. increase is accepted. It says that there will be an approximate gross pay value of a 2 per cent. price saving, which is put at £2 or £2·20 for a family with two children. The Chancellor is
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trying to tell people that the scheme will produce more money for them because their costs will be £2 less than they otherwise would be.
What evidence is there that prices will increase by 2 per cent. less than they would without the scheme? How can the Government justify that claim? It is like the Chancellor saying that he planned to buy a Rolls-Royce in 1979 and then decided against it, and claiming that he has thereby made a large saving. It is like saying that shop prices were to go up in the autumn but now they are not, so people are £2 a week richer. That £2 does not exist. It is a fraudulent prospectus. The Chancellor knows damned well that the £2 is not there and never would have been there. He knows that the rate of inflation is not determined solely by wages and that some people believe that wages have no effect at all on inflation. He will remember last year—that disastrous year—when wages were not controlled and when they rose by less than the increase in prices. It is false to argue that all that one has to do to make prices fall is to control wages. Last year prices rose by 25·9 per cent. and wages by 21 per cent.
The Chancellor of the Exchequer (Mr. Denis Healey): Earnings went up by 29 per cent.
Mr. Ridley: The Chancellor says that earnings went up by 29 per cent., but perhaps he is talking of a different year.
Mr. Healey: I am astonished by the hon. Member's argument, which I shall hang round his neck like a millstone for many debates to come. Earnings last year rose by 29 per cent., and prices went up. The result was that real living standards did not rise at all.
Mr. Ridley: The Chancellor is not the most reliable statistician. Many hon. Members still remember his 8·4 per cent. and now I always like to check his figures. The truth is that last year wages went up by less than the rise in prices. Commodity prices are bound to go up in the coming year—they are going up now. The fall in the value of the pound will put them up still further.
We know that the pressures will be heavy next year. They will exist if one believes that inflation is caused by high

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import prices and world events. If one believes that inflation is caused by increases in money supply, the pressures on the available resources are likely to send money supply up again. So, whichever way one looks at it, the chances are that there will be a return to inflation, perhaps not immediately but within a year or so.
The Government have to an extraordinary degree based their whole strategy on the assumption that because inflation is now going down—we welcome that—it will go on doing so for ever. We have the strange phenomenom that if the trade unions will accept a very small increase—3 per cent.—the Government will spend another £1,000 million, eventually creating more inflation. But if they fight for a higher increase and get it the Government will not spend so much. They will not remit the £1,000 million in tax allowances, thereby causing lower inflation. When the options are put plainly—a low wage increase and high inflation or a bigger wage increase and lower inflation—the answer is to reject the Chancellor's offer. That is carrying it ad absurdum, but he has got into rather an absurd position.
I do not believe that on an occasion like this one can solve the philosophical dispute about whether there should or not be compulsory control of pay and prices. My right hon. Friend the Member for Worcester (Mr. Walker) and my hon. Friend the Member for Leek (Mr. Knox) believe that it is an essential part of the economical apparatus that there should be. The hon. Member for Birmingham, Perry Barr (Mr. Rooker) made a most telling speech, describing the problems of differentials, due to the need for flexibility, which are the reality of industrial life in factories. What he said went a long way to explain why incomes policies have always got into trouble.
I could not help thinking that memories are a little short about the events leading up to February 1974 and the problems that brought that incomes policy to an end. Without going into that, I believe that there will be growing resentment in the country if people, whether they are for or against control of incomes by statute, think that it is really the trade unions and not this House and the Government which will be controlling them. That makes a subtle difference, which may
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make it much more difficult for the idea to be accepted. I hope that in their whole handling of the deal the Government will be very careful to make clear that the ultimate authority is this House, not the TUC. I do not want to overstress the point, because there has been some support for what the Chancellor is doing, but it seems to me that a vital part of the argument is that respect for the power of this House should remain.
I should like to mention briefly what my right hon. Friend described as a cancer—the deep-seated British industrial problem represented by the borrowing requirement of £12 billion and the ever-growing size of the public sector. In 1973–74 total spending was £33 billion, in 1974–75 it was £44 billion, last year it was £56 billion, and in the coming year the Chancellor expects to spend £64 billion. The amount has very nearly doubled since he became Chancellor. The feeling that public spending is totally out of control is perhaps the most depressing feature of the whole of our problem. It is not as if we are getting anything more for it, as it inexorably climbs to 60 per cent. of our gross national product.
Mr. Nicholas Winterton: We get less.
Mr. Ridley: I should like to give the Chancellor one or two interesting figures from a Government publication called "Priorities of Health and Personal Social Services in England". I see from this document that real spending in the National Health Service in the last four years has risen by 10 per cent., the number of cases has risen by 4 per cent., and the length of stay has fallen by 7 per cent. That is a considerable drop in productivity. But when one looks at maternity—the oldest industry in the world, not capable of modern technological change, and, indeed, an industry in which technology has not changed at all—one sees spending in real terms has increased by 14 per cent. but the number of births has fallen by 14 per cent. That is an increased cost, per birth, of 33 per cent.
Why do not the Government examine these matters? Are they not aware that this situation is to be laid at the door not of deteriorating standards in the National Health Service but of ever more people going into administration. For example, in 1959 there were 36,000

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administrators but by 1973 that figure had grown to 71,000. That means that a further 35,000 administrators joined the NHS to preside over 50,000 occupied beds per day.
I do not know whether I heard the Chancellor of the Exchequer cheering at that point. I do not know whether he thinks it a good thing that the number of administrators has increased from 36,000 to 71,000. I am talking not about doctors or nurses, but about administrators. Does the right hon. Gentleman think that the answer to all our problems is to load bureaucracy on top of bureaucracy?
Mr. Healey: I was cheering because I always enjoy an occasion on which the hon. Gentleman attacks his own Front Bench. He must be aware that the right hon. Member for Leeds, North-East (Sir K. Joseph) was personally and wholly responsible for the administrative increase mentioned by the hon. Gentleman. Furthermore, is he aware that in attacking the approach of the Government towards a voluntary incomes policy, he is attacking the policies of his own Front Bench colleagues, who have undertaken a U-turn on this matter?
Mr. Ridley: I was wrong to give way, because I wanted to stick to the point that the Chancellor's responsibility lies in controlling the public service. He should take a little more interest in the swelling ranks of the bureaucrats who are beginning to suffocate this nation. The sooner he takes his responsibility seriously, the better.
Finally, I turn to the economic miracle which has been such a feature of our debate today. I am tempted to quote the Chancellor. Indeed, I shall do so. He said:
"I have learned in my political career never to express pessimism or optimism, but only determination."
That was said in the context of a slightly different matter. It related to whether the right hon. Gentleman could turn 37 votes into 300 votes. This is the reverse of what the Chancellor is seeking to do about the economic miracle. He expresses extreme optimism, but shows no determination. The right hon. Gentle-
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man will not achieve that economic miracle in the small but welcome reliefs he has announced in respect of small businesses, capital transfers and stocks for depreciation. That will not be the key to unlock the economic miracle. It will certainly take more than that.
I turn to the speeches made by the hon. Members for Motherwell and Wishaw (Dr. Bray) and Gateshead, West (Mr. Horam). They dealt with the subject of how to get the private sector going. I agree with a good deal of the remarks made by those hon. Gentlemen, in the sense that there must be competition on the one hand and incentives and rewards on the other. I must tell the hon. Member for Motherwell and Wishaw that I am not a great planner. He plans much too much for me. However, the hon. Member for Gateshead, West is not such a planner. He understands the importance of incentive.
If ownership is to be diverse, who am I to be anything but delighted? If ownership can be spread widely in cooperatives, that is admirable. One thing is clear. The present arrangements are not working. The sort of regime erected by the Government is not working. Increasingly, it does not pay to work and, increasingly, trade unions are restricting output and proper manning schedules, and causing overmanning in all sorts of industries.
The taxation of managers, investors and those who take risks has become intolerable. One does not need to ask whether capitalism is failing. We know that it is not failing in Germany, Japan and the United States. The question is: why is capitalism failing in Britain? The Chancellor asked a similar question yesterday. He asked why we could not emulate the economic miracles that had been achieved in many other countries. The answer is that those countries do not have him and his right hon. Friends.
When the Chancellor of the Exchequer goes—which will not be long—and my right hon. Friends take over the Government, they will last for five years, or perhaps more, but they will have hanging over them the shadow of the Chancellor and his Friends. As long as there is a chance of further Socialist measures, the actions which even a Tory Government can take are restricted.

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The Chancellor has a very grave responsibility. If he were to give guarantees that he and his right hon. Friends would behave in a responsible fashion, he would get the investment he needs. If he said that the Government would not turn the screws of taxation but would rather unturn them; that they would not insist on price controls that squeeze margins; that they would not pass any more stupid Socialist laws interfering with the right of managers to manage; that they would not go on nationalising industries; and that they would behave in a less doctrinaire way, we would get some confidence going in this country.
The guarantees needed are the guarantees against Socialism beyond and through the next Tory Government.
9.33 p.m.
The Financial Secretary to the Treasury (Mr. Robert Sheldon): We have heard two particularly distinguished speeches from the Opposition Benches today. The speeches by the right hon. Member for Worcester (Mr. Walker) and the hon. Member for Leek (Mr. Knox) were distinguished not because they had doubts about the wisdom of the policy being pursued by their party but because they understood, in a way the Leader of the Opposition did not understand, the reason why my right hon. Friend the Chancellor of the Exchequer is pursuing the particular package and split which is the main innovation of the Budget.
Other hon. Members opposite also expressed doubts about our proposal, but those two speeches understood and appreciated what the Government are doing. The hon. Member for Cirencester and Tewkesbury (Mr. Ridley), in expressing his unease about the relationship of pay and prices, did not reflect much of today's debate.
One thing which has become abundantly clear in the House and the country is that when any Chancellor makes his Budget judgment there are many factors which he has to weigh and consider in deciding the levels of taxation for the year ahead. Chancellors must, and do, take into account pay settlements for the year ahead and the inflation which will result from them.
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In the past, Chancellors of the Exchequer have sat down with their advisers and made these calculations in the dark. They have presented them as matters of fact received from on high, and have then expressed them in the legislation which subsequently came before the House. My right hon. Friend said that there is this direct relationship, and in the past Chancellors frequently complained that they had not the power of foresight. My right hon. Friend accepted that and produced a package which is dependent in part on an outcome that has yet to be determined rather than attempting to make a very difficult assessment.
The hon. Member for Cirencester and Tewkesbury asked what evidence there was for this relationship between wages and prices. All hon. Members understand that direct relationship. It is not a one-to-one relationship, but it is a relationship which we know to be valid and on which economic policy is determined. When my right hon. Friend the Member for Huyton (Mr. Wilson) said that one man's wage increase was another man's price increase he was loudly applauded by Opposition Members. That is exactly what my right hon. Friend the Chancellor of the Exchequer is saying.
I grant that the relationship is determined by several factors, but one critical factor is the decision taken by the Trades Union Congress on the level of pay increases that it will demand in the normal course of its duties on behalf of its members.
Mr. Nicholas Winterton: What about the other 60 per cent.?
Mr. Sheldon: The hon. Gentleman asks about other employees who do not determine the way in which the TUC conducts its affairs. That those people exist is true, and it has always been true. There are those who determine their pay increases in a different way, but the main determinant for pay increases is now, has been in the past and almost certainly will be in the future the general policy that is agreed by the bulk of trade union leaders. Chancellors of the Exchequer, whether Conservative or Labour, have made their Budget judgments implicitly upon that understanding.

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The right hon. and learned Member for Surrey, East (Sir G. Howe) asked what representation widows have on the TUC. The answer is that they have the same representation as they have always had. The Chancellor of the Exchequer pitches his levels of tax to take into account what is required in equity for widows and other less fortunate people, but those levels are based on the level of inflation and the level of pay increases which he foresees.
The Chancellor of the Exchequer is absolutely right. Having reached this level of understanding with the trade unions for the first time in our history, we can arrange these matters not in a room in the Treasury with a handful of advisers but openly and publicly with the people who will create the conditions in which success is possible.
Mr. Nicholas Winterton: Will the hon. Gentleman give an assurance that in all future negotiations, in addition to negotiating with the TUC, he will consult the self-employed, small businesses, widows and all the others who are included in that 60 per cent.?
Mr. Sheldon: Perhaps the hon. Member is unaware that one of my functions is to meet representatives and delegates from the kind of bodies he has mentioned. I welcome these meetings in the Treasury. I hear representations and I offer further advice to the Chancellor on how these interests can best be met. However, the main point about the levels of pay is largely one for the trade union movement. The Chancellor is doing exactly what has been done by his predecessors, but he is doing it more openly and more rationally.
Mr. Budgen: In view of the wide-ranging changes that the Government are making, have they any plans for introducing legislation to give statutory authority for the abandonment of parliamentary democracy and the imposition instead of the corporate State?
Mr. Sheldon: The hon. Member may not fully have grasped my right hon. Friend's Budget Statement yesterday. He said quite clearly that he would be coming to the House with proposals in the usual way. They would be based on the understanding which would be reached so that, instead of the proposals
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being based upon guesswork, which has always been the way in which these matters have been undertaken, they would be based upon a better understanding of the future level of inflation.
Mr. Michael Heseltine: I understand the relationship between the 3 per cent. limit and the tax allowances which the Chancellor has offered. If the TUC suggested that it could not meet the 3 per cent. figure, would the tax allowances be scaled down proportionately?
Mr. Sheldon: My right hon. Friend mentioned this clearly in his Budget Statement yesterday. He said that, if the conditions were not met in the form he was suggesting,
"I would then move amendments to the Finance Bill at the appropriate stage so as to seek Parliament's authority for the second group of reliefs, either in whole or in part depending on the pay limit which is agreed."—[Official Report, 6th April 1976; Vol. 909. c 279.]
That is the situation.
Mr. Heseltine: Do we take it, therefore, that if the 3 per cent. figure were to be exceeded there would be a proportionate reduction in the allowances on offer?
Mr. Sheldon: I have nothing to add to what my right hon. Friend said yesterday. He was as clear as he could be at this stage of the negotiation. [Interruption.] The hon. Member for Henley (Mr. Heseltine) is smirking. Perhaps I may say something partly to remove that smirk. His right hon. Friends' performance in the last Conservative Parliament was hardly creditworthy. They tried unsuccessfully to create an accord with the trade unions; it was not available to them because of what they had done before. My right hon. Friend is conducting these relationships in a way which has every possibility of success. The main decision in this country about the level of pay increases sought by most working people lies with their trade unions. The way in which the economy is subsequently managed is a matter for the Chancellor, subject to the approval of Parliament.
We have altered the timetable so that those matters about which more will be known at a subsequent time will have

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their legislative implementation at that time. I very much regret that the right hon. and learned Member for Surrey, East and the Leader of the Opposition have not understood the way in which these matters come together. If they understood it, perhaps they might be a little less optimistic about the way in which Budget judgments are made in the absence of agreements of the kind we are currently seeking.
The relationship which has existed in the past between estimates of pay increases and of inflation and the requirements for tax allowance which form the Budget judgment is not a simple one but is one that can be made and which the Chancellor each year has to make. It is a great problem to make it comprehensible to Members of the House. My right hon. Friend is showing the relationship that exists in the normal Budget judgment between levels of pay settlement and changes in taxation, and is explaining to the people who have great responsibilities—namely, the trade unions—the mechanism that links the two. Instead of these decisions being made in the absence of an understanding of how economic policy is formulated and how tax changes are instrumental in economic policy, the trade unions will have the advantage of understanding this relationship and taking part in it.
I shall now say something on the higher-rate value added tax, because right hon. and hon. Members opposite will know that last year I set in motion the monitoring of this higher rate. I announced that I was doing this in the interests of industry to see was effect the introduction of the higher rate would have on industry. I said that I owed it to the House to provide this monitoring and that I would explain its scope and findings when these were finally produced. The main parts of British industry subjected to the higher-rate VAT were domestic electric appliances, radio and television, caravan building and boat building, and it was here that the monitoring report largely concentrated.
It was very difficult to distinguish the effects of the higher rate from the cyclical fluctuations occurring over a period of years as well as various aspects of seasonal fluctuations to which many of these industries are susceptible. As a
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result, some of our conclusions are a little more tenuous than others. Following the first results of the monitoring exercise, however, my right hon. Friend announced on 17th December last a number of relaxations in credit controls on goods to which the higher rate applied. These were largely electrical goods and television equipment. Under the relaxation, these goods could be purchased on 20 per cent. deposit with 30 months to pay. Boats and caravans were removed altogether from hire-purchase restrictions, and these relaxations were valuable and were widely welcomed in the industries concerned.
I grant to hon. Gentlemen that this followed a number of representations made to me personally to which I tried to be as receptive as I could. The monitoring exercise subsequently showed that there was considerable spare capacity in the higher-rate industries, and following meetings with a number of delegations it was pointed out that there were abnormally high levels of stocks in manufacturers' and retailers' premises, along with widespread short-time working and, in some cases, redundancies.
The boat-building and caravan industries also made representations to me through hon. Gentlemen opposite, and the difficulties, particularly of small firms, were explained to me in forceful terms. The larger boat builders did very much better. They had considerable export potential. They had it before and they continued to export satisfactorily. The caravan builders had a good export record, but following the oil crisis of autumn 1973 they have had a depressed market both at home and abroad from which they have been recovering only very slowly.
Following the introduction of the 25 per cent. rate, the industries explained to me personally that they were not in favour—neither are the Government—of frequent changes in the rate of any tax. The situation last year was exceptional because the Chancellor found himself with the need for considerable increases in taxation owing to the problem he then had of financing the deficit. Other factors were involved.
Another point that was put to me by a number of manufacturers—it was not put by many Conservative Members—was the need to avoid too great a

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stimulus. In 1971, under the Conservative Government, restrictions were relaxed too readily and too widely. There was a consequent flood of imports. Importers obtained a foothold which was maintained long after the industries received their stimulus.
My right hon. Friend had to strike a balance between over-stimulus and the need to assist firms with their redundancy problems, with the problems of clearing unsold stocks and with maintaining, and even increasing, the scale of their operations. I noted as a result of various representations that I received from some of my hon. Friends that much of that assistance was necessary as a result of the Conservative Government's policies of dispersal and redevelopment in development areas. Problems arose in the assisted areas, especially Wales, the South-West and the North-West.
I now turn to the industrial strategy, to which much reference has been made. Any Budget and any economic policy that is founded upon an industrial resurgence rightly demands some considerable increase in assistance to industry to enable it to plan over the long term. We have provided a range of such assistance to industry from which it should be able to take considerable advantage.
For example, stock relief was introduced. It is now to be available for at least another two years. The principle of stock relief is now established. The clear understanding has been given by my right hon. Friend that there is no question of a clawback of tax relief for those firms whose stock valuations and rates of investment are maintained. There is a change in the profits deduction which is to be calculated after the deduction of capital allowances. The consequence is that relief will be concentrated more and more on the companies that are expanding and investing.
The Sandilands Committee on inflation accounting recommended that 100 per cent. capital allowances should be continued. The Chancellor has given a commitment to continue the present system of capital allowances. The small companies rate increased from £25,000 to £30,000 with marginal relief increased.
Mr. Nicholas Winterton: Not enough.
Mr. Sheldon: I hope that at some stage it will be possible to go further. We have also the growth of medium-term finance for industry, and it will be made available more fully. We have had the loan capital changes and the assistance to exports through ECGD. The export assistance operated by our embassies and the realistic exchange rate give further opportunities to industry to export. [Interruption.] Opposition Members may laugh, but there are very few industrial countries in the world that have the range of possibilities that are open to companies in Britain. Scarcely any other country offers companies so much freedom from corporate taxation. Manufacturing companies which are investing and expanding are almost free of corporation tax. It is difficult to find that situation duplicated anywhere else in the world. As a result of that situation and of the commitment for such a long period ahead, our industrial companies are well placed to seize the opportunity open to them.
Many times in the past, Governments have criticised industrial companies for not expanding when those Governments thought that the conditions for such expansion existed. As a result of the Government's actions, through various incentives—for example, stock reliefs and capital allowances—for the first time a manufacturing company which reinvests its profits, whether it be in fixed or working capital, will be effectively relieved from corporation tax. The Budget allows industry to plan confidently upon that basis. This is something new. If Opposition Members say that industry will not take advantage of it, they are being much more pessimistic than anyone in industry itself or people overseas.
I want to say something about the introduction of cider duty. A number of Members from the South-West are particularly concerned about the Resolution that will bring cider into taxation for the first time since the First World War. The hon. Member for St. Ives (Mr. Nott) has a particular interest. The position of cider is rather different from what it was 10 years ago. Its marketing and consumption patterns have changed; it has become a nation-wide drink; and it is manufactured by the largest of companies. The promoters themselves are marketing cider as a competitor to beer in a way that it was not previously.

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The Chancellor has therefore undertaken to bring into duty this main new competitor of some of the more widely-established alcoholic drinks.
At the end of it all, the solutions to so many of our problems will not only be discovered in this House. What we can do is to set the standards by which changes can be made, but the main changes and the main successes are to be found on the factory floor and in the day-to-day production decisions, which will affect the future of the country much
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more than most of the decisions we take here. My right hon. Friend has established the framework for controlling inflation, for establishing and renewing the pay policy which is the basis of the Government's economic policy, and for allowing industry to make its crucial contribution to the sources of economic growth on which we all fundamentally depend.
Debate adjourned.—[Mr. Coleman.]
Debate to be resumed tomorrow.

MEDICINES (FEES) REGULATIONS
10.0 p.m.
Mrs. Lynda Chalker: I beg to move,
That an humble Address be presented to Her Majesty, praying that the Medicines (Fees) Regulations 1976 (S.I., 1976, No. 347), dated 4th March 1976, a copy of which was laid before this House on 5th March, be annulled.
There are three important reasons why my right hon. Friends and I have tabled this Prayer. First of all, we were very concerned by the timing of these Regulations and the uprating. Secondly, we were very concerned about the size of the increases to be introduced in 1976. Thirdly, we were very concerned about the effect on the industry both now and in the future. In this short debate I hope that the Minister will be able to answer the questions we have and to give some indication of the development that he sees taking place in the pharmaceutical industry.
At the start let me make the Opposition's attitude to medicines legislation quite clear. It is also the attitude of the pharmaceutical industry. There is an undisputed need for clear, decisive protective legislation for the manufacture, testing and sale of medicines for both animal and human needs. Of course, we accept its updating through Regulations. There is no doubt about that at all. And there is no question of the industry trying to evade its responsibility to the public. But there is a basic question how the pharmaceutical industry is allowed to work as it wishes to work alongside the Government, in consultation with the Government. It needs to discuss changes long enough ahead to include such changes in its forward planning. Let me give the House an example of what I mean.
Back in July 1971 my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) answered a Written Question on the Medicines Act 1968 and, as reported in col. 194 of the Official Report, he gave details of the comments from the industry on the proposals he had sent out three months earlier. Then, on 1st July that year, he announced to the House his revised proposals on the fees to be charged in connection with the licences and certificates under the Medicines Act. In view of the industry's comments, one
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of the major decisions announced in that same column was that
"The scale of fees should recognise the position of the smaller firms and be such as to avoid placing excessive burdens on them."—[Official Report, 1st July 1971; Vol. 820, c. 194.]
There were other major changes at that time which reduced the full cost of administering the licensing system from £750,000 per annum to £500,000 per annum, of which 60 per cent. was to be met by the industry on the initial scale of fees, namely £300,000.
I point not only to the ability of my right hon. Friend the Member for Leeds, North-Eeast to listen to the industry and respond to its needs but also to the further two months which elapsed before the Regulations became operative, for one month of which—I know it was in the summer—the House was in session.
So in September 1971 the system came into operation, and it began to settle down through 1972 and 1973. There were no other changes to the licensing Regulations until 1975. Last year a new Statutory Instrument No. 1975/366 was made on 12th March, was laid on 24th March and came into operation on 14th April 1975. And even last year the Government gave us a whole month between the laying of the regulations and their date of operation. At that time there were only minor modifications being made, changes in the method of payment and changes—increased flexibility, in fact—in some of the methods of calculation.
Yet, despite the known level of rising inflation last year, then around 20 per cent., the Government still only made two minor adjustments, both in a downwards direction and both special categories—one a cheaper manufacturing licence and the other a new special clinical trial and animal test certificate.
I think the House should take careful note that despite the inflation suffered in 1975 no attempts were made to change the fees upwards. There were no increased levels despite the administrative costs, which had gone up dramatically by this time. In fact, it is remarkable because in 1971 the then Secretary of State said:
"At future reviews it will be the objective to bring the receipts into line with the full costs …".
In 1975, against a background of commitment four years before, no action was taken.

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The then Secretary of State, my right hon. Friend the Member for Leeds, North-East, went on to say:
"Before any expansion of the scope of work falling within this revised definition there would be full consultation with the interested bodies."—[Official Repon, 1st July 1971; Vol. 820, c. 194.]
I mention the revised definition because this was a narrowing of the definition after the 1971 consultation. With that background, even when the Government had the chance to alter the policy, or alter the size of the fees 12 months ago, nothing happened and they remained unchanged.
I wonder why there was no action in 1974 on the Medicines Act. I can understand some of the reluctances to change things, but when one has a change of Government, and presumably a new philosophy, one would have thought that this was something that was to be examined. It is all the more remarkable since, in 1974, the Government stated clearly their philosophy was about the recovery of fees.
In fact, only this week in answer to a Question by the hon. Member for Warley, East (Mr. Faulds), the Paymaster-General said:
"Government fees and charges are generally set at a level which is designed to recover full costs and no more."
The Paymaster-General also said:
"The aim is to recover full costs on this basis, from 1st April 1974."
That was the answer given two years after the decision on Government policy, but when for two years Government policy had not been carried out. The right hon. Gentleman also said:
"Any trading deficits which existed before that date"
—that is 1st April 1974—
"were written off".
I ask again: why did we have no new regulations in 1974 and no upratings in 1975? Now, in 1976, we get these major fee increases. The Paymaster-General said:
"… the Government imposed on themselves rules analagous to those imposed on others in relation to counter-inflation policy."—[Official Report, Vol. 909, cc. 86–7.]
It is curious how the Government impose a policy of price restraint on the pharmaceutical industry—admittedly relaxing it gradually now—but are unable to accept
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the same policy of licence fee restraint in their demands to the industry. That would be inconvenient, so in one fell swoop the pharmaceutical industry is to suffer an increase in licence fees of 500 per cent. I am told that through some of the revised Regulations some increases could be as much as 3,000 per cent.
I ask the Minister to explain why, following the late autumn announcement last year, there has been such a rush to put the Regulations into operation. They were made on 4th March, laid before the House on 5th March, and became operative on 6th March. In any case, this constitutes a breach of the 21-day convention between the laying and coming into operation of a Statutory Instrument. After all the delays, I am amazed that the Government could not wait just 21 days more and would not listen to the industry. We know that the Minister has taken account of some of the comments made by the industry, but I hope he can explain this unseemly haste after four and a half years when we have done nothing about the Medicines (Fees) Regulations.
Why were these three weeks so vital? We were not even at that time involved in a change of Leader in the Government, so we cannot argue that the Government were busy doing that other important thing. I wonder why the Regulations now have to start with the date given in the Statutory Instrument and could not wait until the next financial year.
I now turn to the size of the increases. It is Government policy to give consideration
"to the effect which increases in charges may have on the lower paid and elderly."
I am concerned that many of the people who today buy proprietary medicines, which will undoubtedly go up in price as a result of these Regulations, will instead turn to the general practitioner when they do not really need his help. This will create even more pressure on our already overworked National Health Service. I wonder what consideration the Minister has given to this point? Will he tell us how he feels on this subject, because a little self-help, I suspect, will go a long way in the proprietary medicine field where individuals buy things to get rid of their colds and without frequent visits to the GP. There is

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a danger for many people that that will no longer remain so.
The action taken by the Government in suddenly increasing the industry's contribution in one step to a full payment of 100 per cent. is inflationary in itself. In 1971 the 60 per cent. contribution raised some £230,000. We know that the costs of the scheme have trebled and we also know that suddenly to impose a 500 per cent. increase, totalling £1·4 million, on the industry in 1975/76, will cause grave problems particularly to some of the smaller and more innovative firms. It will mean that a firm will be paying £10,000 a year now where last year it paid £2,000 or, if a larger firm, perhaps it will be paying £30,000 instead of £6,000. Some of the firms, particularly those in the animal health field with exports going to Africa and the Far East, will be very badly hit—as much as 3,000 per cent., because they have a wide range of small products for small countries with specialised needs.
I agree—and I am sure the Minister would not expect us to say otherwise—that there should be a movement towards the full recovery of costs. However, to take this step all at once will severely worsen a rapidly changing situation in the pharmaceutical industry in the United Kingdom.
The Minister, in a Written Answer to my right hon. Friend the Member for Wanstead and Woodford (Mr. Patrick Jenkin) on 20th February last—col. 856—said that in future fees would be reviewed annually. I think the pharmaceutical industry said "Thank heaven" when it read that. Such a situation of not paying its way must never be allowed to build up again. We consider that these modifications to the licensing fees could have been made over two or three years to help the industry through what is not an easy patch at the present time. What will happen now, in the case of prescribed medicines is that increased costs will fall on the National Health Service. The taxpayer will end up paying anyway. I have a distinct feeling that it would be better if the industry could be helped at this time rather than have layers of additional bureaucracy because the licence fee Regulations have been considerably expanded before the final
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cost has been taken into account. We are continuing to rob Peter to pay Paul.
This increased bureaucracy is something we could well do without. The good minds who no doubt will be put to working out the intricacies of the system could be far better put to working in the area of preventive medicine and trying to encourage health education so that fewer people become ill through disease. These increased fees will hit most particularly the firms heavily engaged in drug research where the initial fee for the product licence increases from £300 to £1,800—with the exception of homeopathic and herbal remedies in the main.
Apart from the annual licence fees going up to the highest level anywhere in the world—£7,500 for many of the products—it is important to know just how and when the industry will be forced into paying these amounts.
I ask specifically, what is the exact extent of the retrospective nature of this legislation? We do not know at the moment what amount will be paid between 6th March and the end of August this year. The Statutory Instruments Committee has already called for an explanatory memorandum on this point.
We also wish to know whether those firms which have paid fees for 1975–76 will be saddled with a further bill for the period from 6th March to 31st August. These matters are not clear at present.
I ask the Minister to consider what this one fell swoop of increases is doing to some of the new developments. I refer to just two drugs which have recently been pioneered in this country. One is Intal—a treatment for asthma. It is a big export earner. It is gaining new money for this country week by week. The other is Buffrin—a treatment for rheumatic pains. That, again, is a big export earner. Both drugs, made by United Kingdom companies, are being manufactured in this country and earning high income. We want more of these innovative products manufactured in this country. We want to see the export earnings of the pharmaceutical industry going up.
It is remarkable that the surplus on the balance of trade—exports less imports—in the pharmaceutical industry in 1975

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was £276 million—an increase of 32 per cent. on 1974. But, with Regulations such as we are discussing tonight, we are fast becoming the most expensive country in the world in which to develop and market drugs. That worries me when I look at the record of a good industry.
Beechams, back in the 1960s, made an unexpected discovery. At that time all its pharmaceutical production was in the United Kingdom. Its exports represented an extremely high percentage of its manufacturing income. Since that date most of the developing countries have called on that company and said "Come and manufacture here". Beechams has found it more profitable to expand in Belgium, Singapore, the United States, West Germany and Latin America. In 1974–75 Beechams' exports, including its consumer products, represented only 10 per cent. of its total sales—a very different story from the near 50 per cent. at one stage.
Looking at the industry as a whole, we see a balance of trade surplus which has increased by a factor of five over the last 10 years—a surplus of £56·4 million in 1965 rising to £106·3 million in 1970 and to £276 million in 1975. Over 10 years the export-import ratio has risen from three to one to nearly four to one now. It exceeds that of any other country, except for Switzerland, which has only marginally surpassed it.
With these facts and realising what the industry is trying to do for itself, the Minister must take a real look at the dramatic contribution that pharmaceuticals have made to our gross national product.
The Minister will know that 1974 was the first year when the value of exports by the pharmaceutical industry exceeded sales to the National Health Service—£301 million in exports compared with £280 million in sales to the NHS.
In the six years 1968 to 1974, the pharmaceutical industry had a productivity record of 9·7 per cent., which compares most favourably with 6·1 per cent. in the chemical industry and only 2 per cent. in manufacturing industry as a whole. It shows a good investment and work record, which does not deserve to be penalised.
The other hoary question we must examine about the industry is its profits.
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After Sainsbury, in 1967, there was a 27·2 per cent. return on capital, but through the actions of both Governments it fell in 1974 to 14·6 per cent. I remind the House that the industry needs 12 per cent. of that 14·6 per cent. to be used annually as investment for research projects which are, after all, a big income earner.
Prices in the pharmaceutical industry have not risen astronomically. We have only to look at what has happened there as compared with manufactured products as a whole over the four years 1970–74—a price increase of 52 per cent. in manufactured products as a whole as compared with a 27 per cent. price increase in the pharmaceutical industry. That is about half the rate of increase in prices.
We have a viable and a thrusting industry which wants to do better and to expand. It needs its profits for reinvestment and for the small specialist lines to open up new markets. It has in this country, as well as in Amercia, a great advance in vaccines and many of the products for animal health. Although some of these things may start as minor products, they increase in importance and become big income earners for the United Kingdom.
There is a grave danger of this investment going elsewhere. The House should consider for one moment a company with an average turnover of £3 million and 20 products on the market. If it has its initial product licence here, under the new Regulations it will now cost the company £1,800 and then an annual fee of £7,500. But if it were developed in America, it would have no initial licence fee and no annual fee of this nature. If it were developed in France, the initial fee would be £220, as compared with £1,800 here, and would have no annual licence fee, compared with £7,500 here. If it were developed in West Germany, there would be a big initial fee of £1,500, but then no annual licence fee. In Sweden the figures are high, but in Switzerland they are ridiculously low—a £50 initial fee and about a £14 annual fee.
I fear that the major competing countries will attract more development away from this country and more trial and initial production will be lost. There are

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many instances today in the pharmaceutical industry of products starting off here a few years back but now going elsewhere. In the case of a new product to manage ostomy conditions, the main manufacture will go to Ireland.
It is not only the fees. It is also the taxation involved. A new fermentation plant was due to go to a special development area in Britain, but that is now going to Italy because the company fears what will happen to the pharmaceutical industry here.
To sum up, the Government delayed in bringing the 1974 Government accounting procedures into action. This has to a large extent, because of the new sudden increases, destroyed confidence beyond all measure. The method of the discussion process is very much in question. I know that over the last couple of months the Minister has been busily engaged with the industry. However, I suggest that the whole discussion process badly needs revision. I hope that the Minister can give the House and the industry an assurance that we shall never get ourselves tied up in this situation in the future. I look forward to hearing what he has to say.
I must ask the Minister for some clarification of what fees are payable from 6th March to 31st August of this year, how back accounting methods will work; whether there will be rebates and then further bills, and whether there will be further levies on the year 1975–76.
My greatest concern is that the Government's practice in this field is seen to be very uncaring for the industry. I want to see it as a partnership. The industry needs a Minister who will work with it. I am sure that the Minister of State will do so. However, it is only happening after a great deal of discomfort on all sides, which was unnecessary.
I hope that we shall be reviewing the whole area of drugs, both on and off prescription, in the light of the real capability of the National Health Service and the real effect of prescription charges. I hope also that the Minister will consider whether there is any way of further alleviating the burden on the small companies in the pharmaceutical industry over the next year. He knows as well as we do that we need the export earnings. We
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need to get European expansion going in the United Kingdom.
The way in which we have dealt with the industry in the House is bad for the industry, bad for the National Health Service and bad for Britain. I hope that in the future we shall do a great deal better.
10.25 p.m.
Mr. Michael Grylls: I warmly congratulate my hon. Friend the Member for Wallasey (Mrs. Chalker) on the way in which she introduced the Prayer. The debate is important and it is a pity that it has not attracted many hon. Members from the Government side of the House. It is important because it involves an important industry. In her detailed and well-thought-out critique of the fees my hon. Friend drew attention to some of the achievements of the industry. Some people may feel that it is not an industry which needs to apologise for itself. It stands out from other British industries, for its shining success, particularly in its export record.
When the Secretary of State was royally entertained at a dinner given by the pharmaceutical industry a few months age, she said that she expected the industry to export and to achieve certain targets because it was important for it to do that. Most people involved in the industry took that as a challenge. Last year's figures showing £370 million worth of exports by the pharmaceutical industry should show the Government that it has responded well to the challege. The industry is not only established in Britain but has a large international element.
It is important for the industry to be sufficiently profitable to enable it to invest money into research in Britain and to attract foreign companies here to start research. It is also important for it to become involved in overseas research. The figures are startling. In 1975 £70 million was spent on research but if one adds world-wide research to that the figure is £900 million. All that research is available for us in this country.
Members of the Labour Party in the House and outside who complain about the price of medicines should recognise that the price of our pharmaceutical products is about half the average world price. The Health Service is a ready-made customer and gets a good deal.

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That is important at a time like this when we are looking at public expenditure. The Minister therefore is right to say that the costs of running the control of medicines has gone up and that the industry should contribute more. Few people would say that it should not pay a greater share in the cost of running the system and people do not object to that.
But people argue that if the Government are asking the industry to pay for the cost of running the system, it is fair for the industry to want to work with the Government in examining the system to ensure that it is as efficient as it should be. The old maxim of "he who pays the piper calls the tune" applies in this case. I do not think that the Minister quibbles at that because he has said that he wants to have talks with the industry on how the system works.
The fees reflect the bureaucratic costs of the licensing system. I do not necessarily criticise it for being bureaucratic. It must be, but the House will want to hear how the Minister intends to control the bureaucracy, and what the fees will be next year. Shall we have this massive inflation in the cost of running the system? Will it go on leap-frogging each year? In this time of high inflation and examination of costs to Government, does the Minister intend to get on top of the system and make sure that it is efficient? I hear comments that there are too many bureaucrats and not enough experts. I am sure that the Minister will want to mention efficiency and cost-effectiveness.
There are alarming figures about the length of time it takes to obtain a licence. I understand that it takes about eight months, which is a long time. It even takes that long for the same preparation in a slightly different formulation, such as an injectable form of a medicine already available for three years in tablet form. That seems absurd, and it has dangers for the industry.
There is also the question of research and development. Clinical trial certificates appear to be taking a long time to come through. Again, I have heard eight months quoted. Even variations in clinical trial certificates—for example, the varying of dosages, which is a relatively minor matter—can take two to six months.
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I know that the Minister takes the industry very seriously and realises its value in the health of the country. It has a vital role alongside the other parts of the National Health Service. He will recognise the importance of new drugs continuing to be introduced first in Britain, and I am sure that he would not want to bring in any system that made that less attractive to firms.
A recent survey by the magazine World Pharmaceutical Introductions showed that:
"The United Kingdom is ranking first place in new product launches."
There is no doubt because of the great amount of research done here. Our research is much more efficient than that in most other countries—about two and a half times as efficient as in the United States. It is important that the new drugs should go on being introduced here first.
We probably have some of the people most skilled in research. It is sad that more Government Members who make their criticisms of the industry, perfectly fairly, are not here tonight. It is important that people should understand the amount of valuable research done not only to try to get on top of disease in this country but to help exports.
When the Minister introduces increased fees, he should take the industry along with him, and I have a feeling that he wants to do that. I am sure that the Minister is well aware of the benefit of introducing drugs into this country first and of the fact that we do not want to do anything to make that more difficult.
Will the Minister examine the system to see whether it is the most efficient and not too bureaucratic? If it is too bureaucratic, will he try to take steps to make it less so? Will he try to make its processes work more quickly since that would be of great value to the industry? Although there is to be a steep increase in fees, the Minister would settle many of the industry's worries if he said "I guarantee to do all in my power in future to see that the costs of administering the system are kept to a bare minimum. "If the costs of the system go on escalating, it could well inflict a great deal of damage on the pharmaceutical industry. I hope that the Minister will be able to give me answers on these points.
10.36 p.m.
Mr. Graham Page: I wish to congratulate my hon. Friend the Member for Wallasey (Mrs. Chalker) on introducing a Prayer against these Regulations and on the way in which she set out in substance their merits and demerits. If I come down to the details of the Regulations, I hope that I shall not be accused of lowering the tone of the debate. However, there are some peculiarities about the form of the Regulations as they affect the pharmaceutical industry.
I wish first to draw attention to the dates set out at the top of the Regulations, as indeed did my hon. Friend the Member for Wallasey. The Regulations were made on one day, laid the next and came into operation on the third day. That is a peculiar way for Regulations to be brought in when they impose such a substantial burden of fees and involve so many complications. Similar provisions were laid last year at almost the same time of the year. They were made on 12th March 1975, laid before Parliament on 24th March, and came into operation on 14th April of that year, which is about the normal time span for such matters.
Mr. Patrick Jenkin: From his great experience as Chairman of the Select Committee on Statutory Instruments, can my right hon. Friend recall an occasion when an important measure imposing substantial new charges on the subject was introduced in such haste that it was not even available in print for several days after it came into force? Does this not mean that the taxpayer did not have any legal document to which to refer to ascertain whether charges he was being asked to pay were or were not legal?
Mr. Page: I was coming to the point of publication of the Regulations. I cannot recollect a measure of this kind which was made, laid and came into operation in three days. One frequently sees this type of procedure adopted in the case of Customs and Excise duties when it is necessary to avoid some member of the public jumping the gun, but the present Regulations involve no such matter and indeed are not taxation but involve payment of annual fees in an industry.
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I suppose one excuse may be that there were consultations between the Department and the industry and that the industry well knew what was contained in the Regulations and therefore that it did not matter that neither we in the House nor members of the public knew anything about them until they were printed a few days later. Indeed, it is true that there were consultations. They began as long ago as August 1975. But I understand that they were negotiations and consultations on the new fee for the licence year from 1st September 1975 to 31st August 1976. It is a peculiar year and not the financial year to which we are accustomed.
Apparently, the negotiations started only in August—a month before the licence year was due to start. I do not know when they were completed, but there was a rush to get the Regulations into operation when the negotiations were over.
It is said that such large sums of money are involved that the Government ought not to delay the Regulations for 21 days, but that is no excuse for bringing in the Regulations in this way. They should have been laid 21 days before 6th March and not brought into operation so suddenly. I understand that the licence fees are intended to cover the cost of operating the administration. We are told that we would have lost £200,000 if we had waited 21 days after 6th March before bringing the Regulations into operation. That is not what I have suggested, but does the administration cost that much? A figure of £200,000 in three weeks is a fantastic amount.
According to the Regulations, there is now a licence year from 6th March to 31st August 1976. That is a funny sort of year. I understand that those who apply for licences in that period will have to pay the annual fee for the year based on turnover for the full year between September 1975 and August 1976. This seems to be retrospective legislation. We are calling on some manufacturers who make applications between March and August this year to pay an annual fee based upon figures relating to the whole year from September 1975 to August 1976. I do not see how it can be claimed that this is not retrospective legislation. As I read the parent statute, the Secretary of State has no power to make

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retrospective legislation in applying these fees. It must fall to the Minister to explain what power the Secretary of State purports to have to make this retrospective legislation.
There are some peculiar drafting defects in the Regulations. I refer the Minister to Regulation 5(5) in which it is said:
"If the Minister … is satisfied that the applicant, in the course of a business carried on by him, did not manufacture or assemble …

(b) substances or articles the manufacture or assembly of which is subject to the restrictions…then:—

(i) during the period between 1st September 1972 and 31st August 1973, the additional sum payable in accordance with the provisions of paragraph (4)".

Is not "then" in the wrong place? Should not the passage read:
"during the period between 1st September 1972 and 31st August 1973, then the additional sum payable"
and so on through the other paragraphs? The periods mentioned in paragraphs (1), (2) and (3) are periods of non-manufacture or assembly and not retrospective periods during which the additional sum is payable. If they are retrospective periods during which the additional sum is payable then, again, the Statutory Instrument is retrospective legislation. If the wording remains as it is, it is retrospective and does not mean what it was intended to mean.
Regulation 7(2) is difficult to understand. The fee payable under paragraph (1) is £24. Will the total sum described in the previous seven lines ever be less than that? Presumably, if it is more than £25 the initial fee will be payable, as we see from the definition at the top of page 2 and in the Schedule. I ask the Minister to look at the wording of that paragraph.
Under Regulation 20(1)(a), if someone is liable to pay £10 under the 1975 Regulations in force before these Regulations came into force, and £50 under these Regulations, the minimum amount payable in respect of the licence years 1976 and 1977 is to be £10, but what is the maximum liability? Do both fees have to be paid? There is considerable doubt about what fees are payable.
My main complaint about the Regulations is that they seem to require the annual fee to be paid by those who apply
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in one half year, the fee to be calculated over a full year, six months of which fell before the Regulations came into force. To that extent the Regulations are retrospective legislation for which I doubt whether the Secretary of State has power under the parent statute.
10.50 p.m.
The Minister of State, Department of Health and Social Security (Dr. David Owen): The debate has ranged fairly widely, and opportunities have been taken to discuss the whole pharmaceutical industry. I do not want to deal with that at length, but I reiterate that the industry plays a very valuable role in the economy. It has a very good export record, and an expanding and improving one. I pay tribute to the effort being put in at all levels of the industry to achieve that record, and I hope that it can improve on it even more.
I wish to attract inward investment into the pharmaceutical industry in this country. I recognise that the Government of the day will not always see eye to eye with the industry on all aspects of policy. Despite some differences on some aspects, there is a very broad measure of agreement on what is necessary in the industry. As the hon. Member for Surrey, North-West (Mr. Grylls) said, the United Kingdom was first in the league table of new product launches, and that is very satisfactory.
I had not seen the figure which he quoted, but it means that many people, including foreign companies, feel that this is a very good country in which to invest and put their research and launch their products. That owes a great deal to the Medicines Act. They know that if they win the approval under the Act and of the medical profession here, a successful launch in this country is often the precursor to considerable world-wide market penetration.
The hon. Gentleman raised the point that in order to achieve the confidence of the international pharmaceutical industry, it is necessary that our procedures should be swift and that, in particular, product licences do not become bogged down by bureaucratic delays. We have to be careful here. In mentioning the word "bureaucracy", we tend to think of a large number of administrators. There are 98 professional licensing staff

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with 16 equivalent administrative staff—what one might call "bureaucrats", but they all have a detailed knowledge of the industry. The problem is to strike the right balance between achieving safety, which is so necessary, and not having unnecessary delay. Our record in comparison with that of many other countries which have very bureaucratic procedures is very good, but I watch the situation with great care.
I agree that, in recent years, there has been a slight tendency for the period to increase. Inasmuch as some of that has been due to increased testing necessary, that is unavoidable. But there was a period when we had some professional staff shortage, and we have tried to eradicate such delays. I attach great importance to this aspect, particularly when we are asking the industry to bear the full cost of the licensing procedure.
I apologise that this order was laid at such short notice. The right hon. Member for Crosby (Mr. Page) mentioned that I might use the excuse that there had been full consultation. There was full consultation. I do not think the Regulations came as any surprise to the industry. But the House also has a responsibility, and it deserves more time than I gave it on this occasion. I regret that and will do my utmost to ensure that it does not happen again. It happened for peculiar reasons. We went into detailed consultations on a number of alternative schemes, and we were not able to reach agreement. But I accept that there is need to give the House longer notice. We should do everything possible to keep to the normal 21 days. We shall do our best to do so in future.
The hon. Member for Wallasey (Mrs. Chalker) drew attention to the whole question, and quite fairly recited some of the history behind these Regulations, and I shall not go into it in great detail. As the hon. Lady knows, it has been broadly the decision of all Governments that the full cost should be borne. The question that needs some explaining is why we should have to face this large increase. It will be known that the industry does not bear the total cost. Only about half the total cost of the Medicines Act falls to be met out of the fees under the formula put to the House by the right hon. Member for Leeds, North-East (Sir K. Joseph).
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In 1971 the Conservative Government announced another concession—namely, a scale of fees which aimed to recover 60 per cent. of the reduced cost annually. However, the Conservative Government indicated that there would be future reviews with the object of bringing receipts into line with the whole of the costs. The fees remained at the level established by the 1971 Regulations until the 1975 Regulations.
The hon. Lady has belaboured me about the lack of change in that period, but matters remained unchanged because we continued the consultations that were started by the Conservative Government in 1973. There is a long tradition of taking a long time in consultation. I think that the consultation procedure continues for too long.
Mr. Patrick Jenkin: What happened between March 1974 and August 1975?
Dr. Owen: In 1975 we followed the same proposals that were put forward by the Conservative Government, but in August 1975 we went to the industry with substantial suggestions for a total change. The income from fees has never come up to the amount estimated. I make no criticism of Conservative Members. It was very difficult to estimate with any exactitude the number of licences for which application would be made and the income that would accrue before licensing began.
In the meantime, costs have risen considerably. In the first year of licensing the fees may have covered about 50 per cent. of total expenditure when we expected them to cover 60 per cent. By the 1974–75 financial year little more than 20 per cent. was covered by fees. The time had come for a major review and we instigated one in August 1975. It would have been possible to withdraw the original consultation and to produce a major scheme for change, but we decided not to do so. It took a long time to produce the changes with which we came forward in August 1975.
We may be accused of some delay, but there were reasons for not trying to increase costs during that period. There was a general tendency to try to hold down prices. Our proposals were drawn up with the object of securing an annual income of £1·4 million, which was the best estimate that could then be made

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of the current annual cost of operating the licensing scheme. It was our intention that the new proposals should come into operation in October.
The industry raised a great many objections to the proposals and I and my officials have gone to a great deal of trouble to discuss these matters with the representative bodies and to attempt to explain the policy and to deal with the points they have raised. It is for this reason that there has been the significant delay in bringing the Regulations into effect. Almost the whole of another financial year has gone by in which the income from fees has fallen well short of the total expenditure. The shortfall in 1975–76 will need to be taken into account in carrying out the next review of these fees which is due very shortly. The next set of Regulations will need to be in operation by 1st September 1976 and we aim to commence consultation on this in a few weeks' time.
The right hon. Gentleman in a Question he put to me in February suggested that the increase should be "phased" over not less than three years. It will be appreciated from what I have said that the increase envisaged by his right hon. Friend in 1971 has already been phased over five years, and in fact we shall clearly not have the accounts entirely right for at least another year. In effect, we have wiped off the debt accumulated in the first four financial years of licensing which must amount to well over a million pounds. That is a significant concession for the industry.
The general Government policy on this matter is conveniently set out in the Written Answer which appeared in Hansard on 6th April. This shows that the general procedure is that all arrears back to 1st April 1974 should be collected. In the present case it has been agreed that the date from which the required sum should be collected is 1st April 1975, and that is a concession to the industry. If by phasing the increase the Opposition have in mind some procedure whereby we waive the fees for another whole year and collect something less than full fees in the current financial year and next year, they are in effect asking for about £2 million, which would not seem appropriate in the present economic circumstances.
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A number of detailed points have been raised. I readily accept the need to cut the present administration cost and we shall do everything possible on that score. The industry has been given a great deal of facts and information on this. A reasonable exchange of information is required in such a situation. But the key to it is to try to improve our procedure so that the actual licensing takes less time, and that is what the industry is most concerned about. However, £200,000 is still a great deal of money.
Three drafting points have been raised. Regulation No. 5 simply deals with the case where a firm applies late and has thus been manufacturing without a licence. This is not a new provision. It was in the 1975 regulations. I shall write to the hon. Members concerned about the other points which were raised.
There has been a lot of talk about retrospection. There is some confusion over this. When the proposals were made in 1975 the industry objected to the feature by which a company which did not become liable to pay a product fee in 1975–76 because it made no application would, when it made an application become liable to a higher fee. The proposals were framed in accordance with the Medicines Act. The industry objected to this feature on the ground that the intention behind it was retrospective in that it would seek recovery from present licence holders of increases based on past fees when lower fees were payable. We do not accept this. However, as the point was controversial and since it would not have had much effect until September 1976 we deliberately omitted it from the present Regulations. We are discussing this issue with the industry at the moment. I hope that we can resolve it. There is no doubt about liability to the new fees. Any firm which makes an application about 6th March 1976 is liable to pay only the fee for 1975–76.
Mr. Graham Page: Does this mean that anyone applying after 6th March will be paying an annual fee which includes the period of six months before he made the application?
Dr. Owen: He will be paying the new annual fee. There is nothing new in this provision. The question whether

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there is any change in the earlier Regulations does not give rise, to any problem of retrospection, but I am prepared to look into this.
A number of other points have been raised on the whole question of the Regulations. I have seen it suggested in some quarters that the Government views the technique of turnover relation as providing a ready means of escalating the income from fees. I should like to assure the industry that the Government have no such plans in mind. The fees under the Act are to defray the cost of operating the Act and not to provide a general source of revenue. If any further increase is made it will be because it is necessary to cover these costs and not for any other purpose. Perhaps I should take this opportunity of making it clear that the fact that a large part of the income comes from fees does not mean that we are any less cost-conscious in this respect. I have covered this to some extent by explaining the basis of the fees to the industry.
There is one other feature of the new fee scale which perhaps deserves special mention. This is the fee of £1,800 which is the initial fee payable for certain classes of product licence. This is a very large figure, but it applies only to those cases where an application relates to a new chemical entity or to a product which has an entirely new use or application of an existing compound. Before such a product can be authorised for marketing it is clearly necessary that it should be examined very thoroughly. In practice, before a company submits an application to market such a product, it has to carry out very expensive trials and tests and the documentation is commonly voluminous. In the context of this situation I doubt whether an additional charge of £1,800 is significant.
Much has been made about comparable fees in other countries. One can interpret figures in a number of different ways. There are some countries, such as the United States, where it is fair to say that they are cheaper than in this country, but many European countries charge more than we do. We are not sufficiently out of line for the fears which the hon. Lady, the Member for Wallasey mentioned to act as an incentive to take away a new product launch. I agree
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that this has to be kept under constant attention.
This is very much an international industry, and international industry will, particularly in its investment policies, go where conditions are right. It is my belief that conditions in this country are very good for investment, both for research and development and for production and manufacture. I wish it to remain that way and for the export effort of the industry to go on improving.
Mr. Grylls: Will the Minister of State indicate that he will keep that point under review in consultation with the industry? If it is seen to be a deterrent and to be causing problems, particularly, as he mentioned, with multinational companies which can go to other countries, will he review the situation if those companies are going elsewhere?
Dr. Owen: The hon. Member raises the question of the £1,800?
Mr. Grylls: indicated assent.
Dr. Owen: Then I will give him that undertaking. One problem is to strike a balance between large and small companies, and one alternative answer is to try to do that.
It is difficult for the industry to reach unanimity because it represents a wide range of companies in size and it is difficult to put them in a position in which they all agree. Sometimes the Government have to decide what is fair. We have to try to achieve a fair balance between small and large companies. I recognise that the Regulations are attempting to do that.
We shall have an opportunity to discuss this matter again because no sooner are these proposals approved than we are going into further consultations about the Regulations to be submitted in September. We shall do everything in our power to see that there is a suitable period for discussion and that the Regulations are laid for a longer period than in the past. I hope that the House will agree to the Regulations.
11.8 p.m.
Mrs. Chalker: We understand and accept the Minister's apology over the bad timing of the Regulations. There was obviously some problem, but it is

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not just a problem of time. Government is never an easy matter, but nor is the management of industry in the special cash flow problems of the last few years. We should never forget that.
I am glad that the Minister has said that he will keep the comparable position with other countries, particularly European countries, under review, because we may have a number of instances where a major manufacturer is likely to go outside the United Kingdom. Although we would not say that the licence fee was the only matter driving them away, it is one more on top of the level of corporate taxation which the industry pays which is making this country less and less attractive for developments here.
I am also grateful for the undertaking given to my hon. Friend the Member for Surrey, North-West (Mr. Grylls) about the review of initial licences, the £1,800, because this is worrying smaller companies, particularly those in the international field and those manufacturing smaller quantities for export.
I feel that there are a number of matters raised by my right hon. Friend the Member for Crosby (Mr. Page) on which we are still not clear, I hope that by the time September comes and we are discussing yet another round of Medicines (Fees) Regulations we shall be a little clearer in looking at the subject, in our deliberations and in what we say to the industry, because it is the industry that has to work with the Regulations——
Mr. Graham Page: It would make the position clearer to the industry if it know that under last year's Regulations the fee period, the period for which a licence fee was paid, was 12 months from the date on which the licence was applied for. Under this Statutory Instrument, the licence year for which the payment is made is from September 1975 to August 1976. There is a complete difference in the system of payment. That is why I said that it was retrospective.
Mrs. Chalker: I am grateful to my right hon. Friend for that intervention. It clearly places another responsibility upon the Minister's shoulders to sort out the regulations that we have before us. However, in view of the consideration which the Minister, together with the in-
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dustry, has given to the whole matter, I beg to ask leave to withdraw the motion.
Motion, by leave, withdrawn.

LICENSING (SCOTLAND) BILL
Order for Second Reading read.
Motion made, and Question put forthwith pursuant to Standing Order No. 67 (Public Bills relating exclusively to Scotland),
That the Bill be committed to a Scottish Standing Committee.—[Mr. Snape.]
Question agreed to.

LICENSING (SCOTLAND) [MONEY]
Queen's Recommendation having been signified——
Resolved,
That, for the purposes of any Act of this Session to make provision as respects the licensing law of Scotland, it is expedient to authorise the payment of moneys provided by Parliament of any increase attributable to the said Act in the sums payable out of moneys so provided under any other enactment.—[Mr. Snape.]

LICENSING (SCOTLAND) [MONEY]
  ADJOURNMENT
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Snape.]

HOSPITAL SERVICES (DEVON)
11.12 p.m.
Mr. Peter Mills: I am grateful for this opportunity to put before the House a problem that concerns many of my constituents. Indeed, I am grateful to the Minister of State for coming to reply to the debate. I thought that a junior Minister would reply, and I am grateful to the hon. Gentleman for coming here tonight. It shows the importance that he attaches to the problem that we are experiencing in South-West England.
The reason for this debate is the real possibility of many small hospitals being closed in North Devon, West Devon and, indeed, over the South-West as a whole. That is the fear of many people. This is due to certain proposals that are now being made by district health authorities.

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They are having to cut back on expenditure and not overspend. I am not opposed to that. I am certain that that is the right thing to do, for inflation still rages and the Government have decided not to increase their support to cover the inflation bill.
A frantic search is being made to try to save money, and one can understand that. It is no good Opposition Members asking for cuts to be made if we do not ensure that every avenue is explored to see where money can be saved, though I still think that there are other ways of saving money. Indeed, I think that we must get our priorities right, but in the area as a whole £600,000 overspending is a considerable sum of money.
The hospitals about which I am talking include Winsford Hospital at Hal-will, Beaworthy, Torrington Hospital and Old Tree Hospital, Launceston. Those are the ones that we fear may be closed. Hon. Members who represent other parts of the South-West have fears about other hospitals that may be closed. I gave warning about the dangers of these closures some time ago. I am sure the Minister knows all about it because I have had various letters from him concerning the genuine fears of many people. He gave me an assurance that these small hospitals would not be closed, but, of course, at that time I do not think he fully appreciated the amount of overspending which was going on.
A serious situation exists for the many rural people in my area of West and North Devon. I do not want to cry "wolf" but I believe that people in rural areas have already suffered enough compared with towns. One sees this in the depopulation which is taking place and also in the loss of buses and rail services as well as the closure of many small village shops. Now, to their annoyance, there is the possible closure of their own small hospitals which they have supported so strongly and helped in many ways for many years. Many people, and I agree, are saying this is just not good enough. The reason for their anger and dismay, if these cuts take place, is the difficult position in which rural people will be placed if these hospitals are closed down.
The problem of transport for relatives to visit those in hospital is extremely
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difficult. It could mean 40 or 50 miles of travelling if one concentrated on the main Plymouth, Exeter and Barnstaple hospitals. It is important for relatives to visit those in hospital, and the cost is expensive in rural areas when there are no buses or trains and one has to beg a lift or go by car.
It is also felt, and I agree, that many minor operations can still be carried out in these small hospitals. They are done very successfully. In emergencies, too, I would much rather be treated in a tiny hospital and have something done quickly than be carted all the way down to Plymouth or Exeter. Everyone knows there are days when one can get to Exeter, Plymouth or Barnstaple quickly but there are days in the summer, when visitors are about, when it is very difficult.
There is also the whole question of waiting time. I am not an expert in these things but I understand that waiting times for minor operations can be considerable, particularly for things like varicose veins and hernias, and which could be done very effectively by a local physician or surgeon in the small hospitals. However, I fully realise that if one has a major illness, something which needs senior people to deal with, one will want to go to the three main hospitals in the South-West.
The fourth reason is one which I feel particularly strongly about and I hope the Minister will not feel I am exaggerating or getting emotional. It relates to terminal cases. I have found that many people go to Exeter, Plymouth or Barnstaple and undergo major surgery and then, sadly, they are told that they are terminal cases. What do they want to do? I would be in exactly the same position—I would want to die in my own small cottage hospital or geriatric hospital.
Many people, I know from experience come to these hospitals in the last days of their life. They are among friends. Relatives are able to visit them quickly. It is a terrible thing if this is denied to them. It is almost immoral that people should not be allowed to die close to where they have always lived instead of 60 miles away, even though it be in an efficient and modern hospital. But it is not the same. I make that point very strongly.

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I am told by the doctors that in a small town with a small hospital they like to keep their hand in, so to speak. They like to be able to treat their own patients in these 14-bed or 15-bed hospitals. That is to the benefit of medicine as a whole.
There is also the problem of remoteness for maternity treatment.
Mr. Robert Hicks: Old Tree.
Mr. Mills: Yes. I shall be coming to Old Tree later. That serves my area as well as North Cornwall. My hon. Friend the Member for Bodmin (Mr. Hicks) uses it, of course not personally—or I hope not—but, certainly his constituents do.
I have had thousands of signatures protesting against just one of the proposed closures—Winsford Hospital at Halwill, Beaworthy. The case has been put strongly to me by the chaplain, the Rev. Peter Ince, and by many others who feel strongly about it. The Minister knows about this matter. I hope that he will give some reassurance that this hospital will not be closed. Countless other people and councils have been in touch with me protesting at closures in North and West Devon and elsewhere. I believe that they are right in their dismay. I do not see why rural areas should be penalised.
I should like to give some interesting figures of the costs of a small hospital compared with a major hospital at Barnstaple. The Minister may care to make a note of them.
In 1974–75 at the Torrington Cottage Hospital the cost per bed per week was £74·10 compared with £155·50 per bed per week at the North Devon Infirmary—a difference of £81·40. That is a considerable saving.
If all those in-patients at Torrington Cottage Hospital were treated at the North Devon Infirmary instead, it would have been £39,356 more expensive in one year.
The cost of transporting all the casualties, out-patients and minor operations done at Torrington Cottage Hospital to the North Devon Infirmary casaulty department would have cost up to £29,000 per year.
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For this small catchment area there would be a difference of £81·40 per bed per week—a total saving in the year of £39,000—and then the cost of transportation of £29,000. It is amazing that there should be any argument about this matter.
The total sum of £68,000 is £22,000 more than the total cost of running Torrington Cottage Hospital and £9,000 greater than the estimated £59,000 saving in closing that hospital. In that one case alone the argument is proved, besides all the social and other advantages which I have mentioned. The case is proved on the cost of just running the place.
I turn now to Old Tree maternity home—a lovely name—which has served the community well for many years, it is near Launceston. I must confess that my wife had to be rushed to Plymouth when our children were born. They were booked into Old Tree, but they did not finally make it. However, Old Tree has served the area most satisfactorily for a long time.
I understand the problems at Old Tree. I am not against its closure because it has many problems—for example, staffing, it has not been modernised, and so on. But a maternity capability must be provided in the area, as I am sure my hon. Friend the Member for Bodmin would agree. Mothers may have to go 50 miles to Plymouth—the "dash to Plymouth". I understand that one baby was born in a lay-by just this side of the Tamar Bridge. Heaven knows what will happen. We do not want a death or something serious. Considering the holiday traffic and the difficulties of the winter, the dash to Plymouth—in spite of Plymouth being the Minister's own area and hospital—is a hazardous game for a mother with a baby on the way.
Provisions need to be made in the area. The journeys are too difficult, and we must have a capability somewhere in the area of Launceston.
Mr. Hicks: May I remind my hon. Friend that last year alone there were some 1,000 births in Plymouth and West Devon hospitals to parents who live on our side of the water? Is he aware that we had a similar exercise with the closure of the maternity home at Liskeard? I had an Adjournment debate in 1973, and

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one of the reasons given then to substantiate the closure of that maternity home was the availability of facilities at Launceston.
Mr. Mills: I understand that, and I am sure that the Minister will take note of the point. I now hurry on with my speech because another hon. Member wishes to make a brief contribution to the debate, and we want to give the Minister as much time as possible.
What needs to be done? It is no good just being critical about these things. I am not critical about the cuts. I am critical about how they are being applied. What the Secretary of State has said—and this is most encouraging—is that the South-West has not had a fair financial allocation and that we are to expect a plus-3½ per cent. of revenue growth. This will help. I hope that the area health authority will take this into account before it makes any closures at all. We should be able to save these hospitals and facilities in rural areas because of this. I hope so.
Savings will have to be made, but let us have them across the board, with each part bearing its share and not closures in certain areas. I still believe that there would be savings in administrative costs. In certain areas more could still be done, and some of the minor services could be saved as well.
The window-cleaning example at Yealmpton, about which the Minister will know, was very interesting. A pensioner was doing that job for one-third of the price of the modern contractors who were called in. I say, let the pensioner clean the windows, and save money.
Finally, to close hospitals such as Torrington, Winsford and others is an unacceptable error. If savings are to be made, they should be made over the whole region, rather than damaging one particular community.
I close with an analogy which I am sure the Minister will understand, being a doctor himself. If it is necessary for an overweight person to lose 2 stones, he may do it either by carefully dieting or by cutting off, for instance, one of his legs. Obviously the first course is the most sensible, and the cheapest in the long run. I hope that the area and district authorities will think again before they take such a drastic step as the latter.
11.28 p.m.
Mr. David Penhaligon: I am sure that the hon. Member for Devon, West (Mr. Mills) knows why my right hon. Friend the Member for Devon, North (Mr. Thorpe) is unable to speak in this debate. My right hon. Friend has asked me to make a few comments about South Molton Hospital.
I understand that South Molton Hospital serves an area of 400 square miles and a population of 13,000. In 1974–75 there were some 1,395 admissions. That represents 10 per cent. of the local population. The 11 beds had an occupancy rate of 10·1, which is really quite remarkable. Between Barnstaple and Taunton and Barnstaple and Tiverton, it is the only hospital.
We all know what has happened to rural bus services. They have been cut and continue to be cut. To Barnstaple on Sundays there are no buses at all from South Molton. This is an area where some industry is being implanted. That is probably one of the reasons why the casualty facilities are so important.
The hospital also offers some help towards geriatric cases and pensioners in the area.
Lastly, but by no means least, all the staff are local people. In an area in which fairly-well-paid jobs are at a premium that is important.
It is not up to my right hon. Friend the Member for Devon, North to suggest where cuts should be made, although he is accepting that some have to be made, but the Devon Area Health Authority has pointed out that the mere non-opening of the Kingsley Hospital could save in a year some £77,000.
I hope that the Minister will bear my remarks in mind.
11.30 p.m.
The Minister of State, Department of Health and Social Security (Dr. David Owen): It gives me pleasure to reply to the debate because it concerns an area of my county of which I am fond and I know many of the small hospitals involved.
The problem is that the Devon Area Health Authority was faced with a considerable overspending—probably between £1 million and £1,500,000. To curb the rate of overspending the management teams of each of the four districts for

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which the authority is responsible were given staffing reduction targets and, in addition, were instructed to make further savings during the new financial year proportionate to the current excess spending levels. In the case of North Devon the amount to be saved over and above that achieved from not filling a quota of vacancies was about £40,000.
The consultative document did no more than express five options each of which was thought to be capable of providing the reduction in expenditure levels required. Three of these options raised the possibility of closing a single small hospital—in each case a different hospital. Honourable Members will, therefore, appreciate that the present financial pressures on the health authority are unlikely to lead to the closure of more than one small hospital in the North Devon Health Care District, depending on which option is adopted. I am not certain whether it will adopt any of those options.
At this stage the area health authority will have to review the situation, and if it decides to close any of these hospitals it must follow the consultative procedure laid down by my Department. The community health authority would have an opportunity to make its views known, and if there was disagreement the matter would go to Ministers for a decision.
Resource allocations are important. The hon. Member for Devon, West (Mr. Mills) mentioned the South-West, and it is important also in Cornwall. The South-Western Region has turned out to be one of the more deprived regions—a fact which hon. Members and I have unsuccessfully argued for many years. The South-West Region is to receive a development addition, as well as an allocation to meet the revenue consequences of capital schemes, which represents a growth rate of just over 3·5 per cent. in 1976–77. But it is no use merely redistributing resources at a regional level unless it is accompanied within regions by a redistribution of resources to areas and between districts.
I am pleased that the Resource Allocation Working Party is now looking at the allocation to areas and districts and we are expecting regional health authorities to ensure that our commitment to the greater equalisation of resources is fulfilled at area as well as at regional level.
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The Devon area is to receive an additional revenue allocation of £2·4 million in the current year, and further adjustments will be made in the next few years to remove all disparities between area allocations by 1981. But I urge the Devon Area Health Authority not to drop its proposals to look for sensible economies, because money saved could be used to improve services which will ensure that the adjustment takes place with imagination and flexibility. The new district general hospitals being developed at Plymouth and Barnstaple will require heavy expenditure. But it would be foolish to ignore the fact that there is a different policy for small hospitals in rural areas than for those in urban areas.
The important question is: how can be used to improve services which will munity hospital which is not just a dumping ground for old people? If old people are to have active rehabilitation services they need the commitment of general practitioners. The hon. Member put his finger on the essential point when he said that these hospitals can make a very real contribution in terminal cases. I agree. It is one thing to be diagnosed in an acute district general hospital 20 or 30 miles away—a hospital that has good facilities and high diagnostic skills—but it is quite another to be asked to spend the last months of one's life in such an environment. If it is possible to provide, at reasonable cost, a hospital a little closer to people's homes, I would prefer that. I am prepared to pay a price for having a smaller district general hospital and using it successfully to get a better return on capital invested, and retaining community hospitals in order to help with the accident services or maternity services.
However, there are medical grounds for concentrating these facilities where one has good 24-hours-a-day, seven-days-a-week cover in such services. I know that many mothers wish to have deliveries in hospital. We have to take account of the perinatal mortality rate and the incidence of handicaps to the new-born. We must be prepared to offer facilities of a high standard. There must be the ability for caesarian section immediately, and to call in anaesthetists experienced in giving anaesthetics to pregnant mothers, which is often a highly skilled job.

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I recognise the problem in Cornwall. It is under discussion at present. I recognise the problems of the Cornish people. Some of them have to go to the district general hospital in Plymouth. One has to have wide catchment areas for each district general hospital. Perhaps in the past there was an objection to going to too large a district general hospital. But some movement across the River Tamar is inevitable. We can economise if we have good community services.
For the accident and emergency services we also need highly skilled staff. We can have a door on which it says "Accident and Emergency Services", but what the hon. Member was asking for was more short-term first-aid facilities, and that can be done in a community hospital. Such a hospital does not claim to provide accident and emergency services, and the ambulance services will know what is happening.
These are difficult problems. It may be possible for a hospital to be closed by concentrating facilities. Hon. Members would be surprised to know how many hospitals are taking patients from catchment areas well outside their own. This may be the case when we consider the five hospitals that have been mentioned. I ask people to consider the problem objectively. There is no question of closing all five. Let us see if we can make a sensible saving, while still
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improving the hospital services, out of the money that is going to Devon. There is a case for redeployment.
The Devon Area Health Authority has been careful not to increase its administrative staff, and since reorganisation there has been a reduction of about 25 in the administrative and clerical grades, which I welcome. There is much unfair criticism about the growth of administrative staff in the health services. There has been some growth which in present circumstances has perhaps not been justified. We should look for savings elsewhere and particularly in our health care resources, in the hope that if we can make savings in one area we may put resources into another area and generally improve the service.
In reply to the debate in this spirit I am conscious of the need to give special attention to the problems of people living in rural areas—not least to their transport problems. I am sure that the Devon Area Health Authority is conscious of these problems and will do what it can. I cannot say that it will not say that one of these five hospitals will have to be closed, but even then there will be full consultation and every opportunity for people to raise objections if they wish to continue to object.
Question put and agreed to.
Adjourned accordingly at twenty minutes to Twelve o'clock.

Second Reading Committee
Wednesday 7th April 1976

The Committee consisted of the following Members:

Miss Janet Fookes (in the Chair)

Atkins, Mr. Ronald (Preston, North)

Johnson, Mr. Walter (Derby, South)

Awdry, Mr. Daniel (Chippenham)

Kelley, Mr. Richard (Don Valley)

Banks, Mr Robert (Harrogate)

Lewis, Mr. Ron (Carlisle)

Edwards, Mr. Robert (Wolverhampton, South-East)

Marks, Mr. Kenneth (Under-Secretary of State for the Environment)

Fowler, Mr. Norman (Sutton Coldfield)

Ridsdale, Mr. Julian (Harwich)

Fry, Mr. Peter (Wellingborough)

Snape, Mr. Peter (West Bromwich, East)

Goodlad, Mr. Alastair (Northwich)

Stradling Thomas, Mr. John (Monmouth)

Huckfield. Mr. Les (Nuneaton)

Thomas, Mr. D. E. (Merioneth)

Hughes, Mr. Roy (Newport)

INTERNATIONAL CARRIAGE OF PERISHABLE FOODSTUFFS BILL [Lords]
10.30 a.m.
The Under-Secretary of State for the Environment (Mr. Kenneth Marks): I beg to move,
That the Chairman do now report to the House that the Committee recommend that the International Carriage of Perishable Foodstuffs Bill [Lords] ought to be read a Second time.
The purpose of this Bill is to enable the United Kingdom to accede to an international agreement known by the initials of its French title ATP. The agreement was made by the United Nations Economic Commission for Europe for the purpose of establishing common standards of efficiency for refrigerated and heat-insulated transport equipment used in the international carriage of perishable foodstuffs.
Up to the present, ATP has been signed and ratified by five countries—France, Spain, West Germany, the Soviet Union, and Yugoslavia. It will come into force as between those countries on 21st
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November of this year. Most other countries in Europe, including all the other members of the Common Market, are taking steps to become contracting parties, so we can expect that before long few countries in Europe will be left out.
The obligations which countries accept when they join the ATP are briefly these. First, they undertake to ensure that the perishable foods specified in the agreement shall not be carried in international transport, except in equipment—that means lorries, containers, and railway wagons—which has been tested and certified in accordance with the technical provisions laid down. The foodstuffs include all frozen foods, meat, meat products and red offal, game, poultry and rabbits, and milk, butter and other dairy products.
Secondly, the parties undertake to recognise one another's certificates, and thirdly they must see that the transport equipment is so selected and used that

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the temperature conditions prescribed for the various foodstuffs can be complied with throughout the journey.
There have been widely varying standards of efficiency in the refrigerated transport equipment used by different countries throughout Europe. The enforcement of these measures is expected to raise the standard of the lowest to the level of the best and so to ensure at the same time fair competition in this international haulage market and a high degree of safety in protecting perishable foods from deterioration in long-distance transport.
This country will not get much practical benefit from the adoption of European standards because our manufacturers and operators are already in the van of progress in this field. But the agreement concerns us closely because of our interests in the export of meat and frozen produce to the Continent, and as manufacturers of commercial vehicles and containers. Both these interests will suffer if we do not join ATP because we should then be unable to ensure that vehicles leaving these shores will carry the necessary documents to get them past the port and frontier controls of foreign countries.
The vital document concerned is called an ATP certificate. It can be issued only by the competent authorities of member countries, when they are satisfied after tests that the equipment concerned complies with the standards appropriate for its class. There are several classes according to the degree of refrigeration that the equipment is capable of maintaining. Some foods have to be kept at lower temperatures than others, so the ATP certificate can help the exporter to select the right equipment for his load.
This Bill will enable us to undertake the obligations of ATP membership. It will enable us to set up a statutory scheme for the testing and certification of vehicles, and to require all persons engaged in the international transport of perishable foods to use only approved equipment for that purpose. If this legislation were not passed, United Kingdom operators would have to get their vehicles tested and certified at ATP testing stations on the Continent, which would be costly to them in time and expense, and result in an un-
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necessary loss of foreign exchange for the country.
The Bill affects only international transport. In France, regulations were brought in some years ago requiring all refrigerated transport equipment, whether used for domestic or international carriage, to be tested and certified at a Government station. The cost of a full test there is about £400. Under a temporary bilateral arrangement which we have made with the French, British operators can have their vehicles examined and certified at a testing station in Cambridge, and the certificates are accepted by the French Customs. This arrangement will automatically come to an end when the agreement comes into force internationally in November. There is, therefore, some urgency about this Bill because there is a good deal of work to be done, in the making of regulations and the setting up of a statutory testing scheme, before we are in a position to deposit our Instrument of Accession to the ATP agreement with the Secretary-General of the United Nations.
10.35 a.m.
Mr. Peter Fry: I do not think that we need detain the Committee long this morning. In a week which has seen a new Prime Minister emerge, and in the aftermath of the Budget, the measure that we are here to discuss is not one that will attract widespread attention. Nor will it be regarded as the most significant event of this parliamentary session. But it seems to have the great advantage, too often lacking in deliberations in this House, that it has been almost universally approved, even by the transport users and hauliers on whom it will place greater responsibilities and a further increase in costs if they wish to undertake the international transport of perishable foodstuffs.
It is appreciated that the intention behind this measure is to enable the United Kingdom to accede to the ATP agreement which, in turn, has the motive of trying to ensure a high level of safety in the movement of perishable foodstuffs and, now that such movements are on the increase, high standards are very much in the interests of the consuming public. I do not think that we have much to learn in our internal movements. Our own haulage and transport industry already has very high standards.

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We should welcome the agreement because we hope that it will bring other countries up to the high levels maintained in this country. There will be a welcome for the Bill from this side of the Committee, but that does not mean that we do not think that there are one or two points that will require some clarification before the measure is given a Second Reading.
I turn first to Clause 1(2)(b) which states that the regulations may
"prescribe temperature limits for the international carriage of perishable foodstuffs."
This particular phrase follows Annexes 2 and 3 of the ATP itself, but I am sure that the Minister will agree that regulations for controlling the temperature limits in respect of the contents of vehicles actually during transit are not easy to enforce. I understand that, as yet, there is no international agreement on how this problem is to be overcome. Until there is such an agreement this kind of regulation cannot sensibly be made.
I hope that this morning we may receive from the Minister some indication of how negotiations are proceeding on this point. Obviously, to enable the ATP to achieve its full objectives a decision on this matter is essential.
My second point concerns Clause 2(3)(a) which allows the Secretary of State to provide as well as maintain testing stations. At the moment there is no intention to embark on Government-built stations. But I should like an assurance that the Government agree that the existing facilities of manufacturers' and body builders' depots are, or can easily be made, satisfactory for the purpose of these regulations and that there will be no need to set up Government-only testing points the cost of which would have to be borne by the transport industry and their customers.
If all the testing can be done within the arrangements that already exist, or which can be amended satisfactorily, there will be the minimum cost to the industry. Obviously, the most convenient place for the type of body or container to be approved is where it is being manufactured. There can then be no suspicion of any attempt to enlarge the already extensive empire of the Department of the Environment.
On this point, there appears to be a need to reassure the industry that Govern-
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ment centres are not to be created which would be partly subsidised by the fees from the plating and testing scheme for goods vehicles. I hope we can have that assurance this morning.
Although the existing facilities can easily be made satisfactory as regards road vehicles and containers, a query has been raised on the question of railway wagons. I wonder whether the Minister can give us some information on when, where and how these will be tested to satisfy the regulations.
Clause 6 relates to enforcement, and states that certain examiners are to be appointed. Can the Committee be given an idea today of how many examiners are likely to be appointed? Will this incur much extra expense, or can their duties be included in those presently being undertaken by the Department's staff?
I turn to offences under the Bill. Clause 7 provides that anyone responsible for the international carriage of perishable foodstuffs may be fined up to £100 for not having a certificate of compliance or for not exhibiting the designated mark. I believe that this is a somewhat unnecessary penalty. For example, if a haulage contractor sends a consignment of goods all the way to Spain or the USSR, who are both signatories to this agreement, and it is then turned back at the frontier, because of non-compliance of these conditions, he will inevitably incur a heavier penalty than £100. In fact, he will suffer considerable loss. I go further and say that if a vehicle is turned back, in almost any international transit, the operator will incur loss in excess of £100. Therefore, I question the need for this offence or penalty, especially as the clause goes on to create a statutory defence which, to my emphatically non-legal mind, could well lead to legal wrangles about conditions of carriage.
If the penalties under Clause 7 appear somewhat superfluous, I find the penalties suggested in Clauses 8 and 9 incongruous. We are concerned here with a Bill which is intended as an aid to a better standard of public health, and any attempt deliberately to get round the regulations undermines the whole purpose of the international agreement. If, under Clause 9, the forging of a certificate is considered to be so serious as to lead to imprisonment of up to two years and

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a fine of £200, why, under Clause 8, is the fine only up to £100 for intent to deceive by applying a mark resembling the designated mark? The intention in both offences is the same—that is, intent to deceive and to get round the regulations.
I hope that the Minister can explain the apparent discrepancy between the penalties in Clauses 8 and 9, particularly as the penalty in Clause 8 is the same as that in Clause 7 where, as I previously indicated, considerable financial loss is an inevitable consequence of noncompliance.
I have one final point to raise on the Bill. Clause 11 refers to foreign goods vehicles. I take it that when the Bill comes into force all foreign vehicles will have to comply, but will this be immediate, or will it immediately apply only to signatories of the ATP agreement? If all vehicles are to be included, presumably we shall have to extend to countries, which are not yet signatories or have not yet reached the same stage in legislation as ourselves, a period of temporary entitlement to access similar to that which we have in France at present and will have to enjoy until we are full members of the agreement. If so, how long does the Minister imagine it will be before the agreement can be fully operated? What assurances are to be sought from other countries in the interim period? Surely, the intention behind this Bill must be to move towards a situation where all European countries have the same regulations.
I make this last point because just as we are moving steadily towards the common regulation of international transport movements—the Bill is a small example of this—so is it clear that a certain amount of give and take and inter-nation agreement has to come about to achieve the long-term objectives. There is every sign that the transport industry in this country—be it haulage, our own transport operators or British Rail—has taken a most responsible attitude towards the Bill, and I think that that responsibility should be commended here this morning.
May I impress upon the Government the need to recognise this and to try to see that other countries transport opera-
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tors show a similar sense of responsibility. Whether it be over current negotiations taking place about drivers' hours, maximum axle weights or the number of permits issued to British operators in EEC countries, the Government have the opportunity to make progress not only towards a greater international agreement but also to secure for our own industry a fair share of the ever-increasing number of transport movements on the continent of Europe.
Finally, may I make it clear that we endorse the Bill because it is not only in the interests of public health, but it is also another step towards a deeper and greater co-operation in transport matters which can only follow from smaller agreements such as the ATP.
10.46 a.m.
Mr. Marks: I am grateful to the hon. Gentleman for his support of the Bill and his clear series of questions, which I hope to be able to answer.
On the question of control of temperatures en route, the provision of ATP Article 6 is somewhat ambiguous. But it is generally taken to mean that the contents of vehicles carrying perishables in international transport must be kept throughout the journey within the temperature limits specified in Annexes 2 and 3—for example, frozen meat below minus 10 degrees centigrade and butter below plus 6 degrees centigrade. This raises technical problems of importance which are recognised by all countries and are currently being studied by a working party in Vienna. Until international agreement is reached on a solution, we would propose not to attempt to make regulations on this subject under Clause 1 of the Bill.
I turn now to the question of the use of existing facilities. Existing facilities will be used in this particular sphere.
The situation in relation to railway wagons is rather different from that in respect of road transport. All refrigerated transport by rail between the United Kingdom and the Continent is effected in wagons which belong to Interfrigo and Transfesa—two international rolling stock companies whose headquarters are in Switzerland and Spain respectively. ATP certification of all these wagons is done on the Continent. British Rail, therefore, has little interest in the ATP.

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Regarding the cost for examiners there will be no increase in the existing staff for examination.
I do not think that I can give the hon. Gentleman a detailed answer to his question relating to fines. Penalties were decided by the Home Office to be in line with penalties under similar Acts, and perhaps it is a point that can be examined in Committee.
Clause 11 will apply to all foreign goods vehicles. We shall negotiate with France and other countries which make

THE FOLLOWING MEMBERS ATTENDED THE COMMITTEE:

Fookes, Miss Janet (Chairman)

Kelley, Mr.

Edwards, Mr. Robert

Lewis, Mr. Ron

Fry, Mr.

Marks, Mr.

Huckfield, Mr. Les

Snape, Mr.

Hughes, Mr. Roy

Stradling Thomas, Mr. John

regulations in the interim period to continue their recognition of the Cambridge certificates.
Question put and agreed to.
Ordered,
That the Chairman do now report to the House that the Committee recommend that the International Carriage of Perishable Foodstuffs Bill [Lords] ought to be read a Second time.
Committee rose at eleven minutes to Eleven o'clock.

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  Local Government Act 1966
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  Hotels (Fire Precautions)
  Hotels (Fire Precautions)
  Official Forms
  Official Forms
  Community Programmes
  Community Programmes
  Ethnic Minority Groups
  Ethnic Minority Groups
  Prisoners (Segregation)
  Prisoners (Segregation)
  Prisoners (Long Sentences)
  Prisoners (Long Sentences)
  Disabled Persons (Equipment Research)
  Disabled Persons (Equipment Research)
  Administration of Justice Act 1970
  Administration of Justice Act 1970
  Rhodesian Africans
  Rhodesian Africans
DEFENCE
  Multi-Role Combat Aircraft
  Multi-Role Combat Aircraft
  Foodstuffs
  Foodstuffs
  Canned Fish
  Canned Fish
  Forces Pay
  Forces Pay
  Disabled Persons (Equipment Research)
  Disabled Persons (Equipment Research)
EDUCATION AND SCIENCE
  Music
  Music
  Educational Advisers and Psychologists
  Educational Advisers and Psychologists
  Spina Bifida
  Spina Bifida
  Catholic Education (Reorganisation)
  Catholic Education (Reorganisation)
ENERGY
  Disabled Persons (Equipment Research)
  Disabled Persons (Equipment Research)
  Electricity Charges
  Electricity Charges
NATIONAL FINANCE
  Tax Allowances
  Tax Allowances
  Value Added Tax
  Value Added Tax
  Personal Incomes
  Personal Incomes
  Hotels (Fire Precautions)
  Hotels (Fire Precautions)
  Regional Fund Receipts
  Regional Fund Receipts
  Disabled Persons (Equipment Research)
  Disabled Persons (Equipment Research)
  Investment Income
  Investment Income
OVERSEAS DEVELOPMENT
  Disabled Persons (Equipment Research)
  Disabled Persons (Equipment Research)
INDUSTRY
  Post Offices (Scotland)
  Post Offices (Scotland)
  Machine Tools
  Machine Tools
  European Community
  European Community
  Disabled Persons (Equipment Research)
  Disabled Persons (Equipment Research)
TRADE
  Insurance Companies Act 1974 (Ministerial Advisers)
  Insurance Companies Act 1974 (Ministerial Advisers)
PRICES AND CONSUMER PROTECTION
  Price Changes Abroad
  Price Changes Abroad
WALES
  Tied Cottages (Eviction)
  Tied Cottages (Eviction)
  Welsh Place-Names (Advisory Committee)
  Welsh Place-Names (Advisory Committee)
  House Conversion and Improvement
  House Conversion and Improvement
  Tourist Board
  Tourist Board
  Welsh Language
  Welsh Language
  Road Signs
  Road Signs
  Devolution
  Devolution
  Penrad Group Ltd.
  Penrad Group Ltd.
  Invalid Vehicles
  Invalid Vehicles
  Disabled Persons (Equipment Research)
  Disabled Persons (Equipment Research)
  Towyn, Clwyd (Sea Wall)
  Towyn, Clwyd (Sea Wall)
  Community Reviews
  Community Reviews

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

LORD BROOKES
Sir Raymond Percival Brookes, Knight, having been created Baron Brookes, of West Bromwich in the County of West Midlands, for life—Was, in his robes, introduced between the Lord Carrington and the Lord Wilberforce.
The Earl Grey—Sat first in Parliament after the death of his kinsman.

MOTOR VEHICLE LAMP FAILURES
2.46 p.m.
Lord STRATHCARRON: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will introduce legislation to make compulsory the fitting of a lamp failure warning system to motor vehicles in the interest of road safety.
The PARLIAMENTARY UNDERSECRETARY, DEPARTMENT of the ENVIRONMENT (Baroness Birk): My Lords, available evidence indicates that failure of vehicle lamps is a relatively insignificant factor in causing accidents but the effectiveness of a lamp failure warning is yet unproven.
Lord STRATHCARRON: My Lords. I should like to thank the noble Baroness for that rather unsatisfactory reply. Is she aware that the motor industry spends enormous sums of money on implementing the various safety regulations in force, yet this very simple device would cost a manufacturer only approximately £1 to fit on to a new vehicle?
Baroness BIRK: My Lords, the problem is that there are a good many safety gadgets or instruments that could be
1646
applied to cars. My information is that, if it is fitted as original equipment, the cost would be about £8 per vehicle; that may be to the consumer and not to the manufacturer. Nevertheless, this would increase the cost of the car. We take the view that we have first to deal with those instruments which research and evidence have shown to be necessary for the safety of the vehicle and its occupants. Surveys carried out in 1971 by the TRRL indicated that about 30 fatal or serious accidents a year could be saved if all vehicles were fitted with a lamp failure monitor. This was a very small result compared with, say, fitting seat belts or something of that kind. We cannot afford all these things unless they are proved to be necessary.
Baroness EMMET of AMBERLEY: My Lords, may I ask the noble Baroness whether she realises how humiliating it is for a Member of this House such as myself, driving back to town with, I thought, both lights on, to be flagged down in Eton Square and told that my right-hand lamp is not working? I did not know it. It seems to me that this might happen to anybody in this House or, indeed, anywhere. It is a simple thing that could be put right by the suggestion of my noble friend.
Baroness BIRK: My Lords, there is simply no reason why any noble Lord or anyone else should not have this fitted. I was replying to the noble Lord's Question which implied a desire to make its fitting compulsory by legislation. The noble Baroness can very well have it fitted. I am sure the noble Lord will tell her how to set about it.
Lord WIGG: My Lords, will the Minister be kind enough to say whether there are any other countries which insist on this provision? I hope the Department does not forget that we are concerned with the export of cars. If other countries have this device, we ought to take it into account.
Baroness BIRK: My Lords, no other country, to my knowledge, insists on this device. If we go ahead and make it compulsory on cars, it will require an EEC Directive. The only cars, of which we are aware, that have this system fitted are Volvo cars. Since 1974 this system has been fitted to those cars. The cost

1647
of those vehicles, again, is in the higher bracket.
Lord LEATHERLAND: My Lords, is my noble friend aware that many of us—like the Wise Virgins—always check our lamps before we set out?
Lord STRATHCARRON: My Lords, if I may ask the noble Baroness a further question, would she agree that to drive a car with a faulty light bulb is an offence? Therefore this device would protect the motorist from an unwitting transgression of the law.
Baroness BIRK: My Lords, this would depend. I am sure the noble Lord is aware that, if he is driving his car and the lights fail, that is not an offence at that point. Our research shows that 50 per cent. of drivers of vehicles with these faults are perfectly aware of them at the time.
Lord THOMAS: My Lords, is the noble Baroness aware that the principle of road safety is both to see and to be seen, and that a faulty lighting system is a frequent cause of lack of safety on roads? As an ex-motor manufacturer, I cannot believe that the mark-up between £1 manufacturer's cost and £8 retail is realistic.
Baroness BIRK: My Lords, of course it is important for lamps to function correctly. All I am saying is that we have not had evidence to make us feel that there is a need to make compulsory the fitting of this system. If a number of noble Lords want to fit this warning system to their cars, there is no reason why they should not do so. We are not discouraging it at all.
Lord PAGET of NORTHAMPTON: My Lords, is the noble Baroness aware that a defective light involves the further appalling risk that you may be breathalysed?
Lord SLATER: My Lords, is my noble friend aware that we are apt to make too much of this Question? Surely a car owner knows when the car is due for servicing and in the course of servicing, the lighting system of the car is checked by the garage mechanic.
Baroness BIRK: My Lords, I am sure that my noble friend is right. It is a
1648
matter of when this happens in an emergency, but I think I have dealt with that.

SENEGAL DEVELOPMENT PLANS
Lord MERRIVALE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether, bearing in mind the general desire of the Senegalese Government to develop closer and more substantial relations with this country,

(a) they will consider committing themselves to participation in the development plan for the Senegal River Basin sponsored by the "OMVS";

(b) they are taking steps to assist British industrialists and businessmen to take advantage of the opportunities provided by that scheme; and

(c) they are aware of the opportunities that will accrue from Sene-Gambian development.

Lord WINTERBOTTOM: My Lords, the Answer to the first part of the Question is that the United Kingdom is not a member of the OMVS (and, for the benefit of your Lordships, may I translate that into words and English: the Organisation for the Development of the Senegal River) and we consider that assistance to OMVS projects would be best channelled through multilateral agencies to which Her Majesty's Government subscribes.
The Answer to the second part of the Question is that export opportunities, including those arising from multilaterally financed aid projects, are brought to the attention of British business interests through the British Overseas Trade Board's Export Intelligence Service and by other means. In answer to the third part of the Question, the first tangible opportunity will be the study by British consultants, financed from Ministry of Overseas Development technical assistance funds, to establish whether a barrage across the River Gambia is both feasible and cost effective. If that were so, doubtless other opportunities would thereby be created.
Lord MERRIVALE: My Lords, I am grateful to the noble Lord for his reply.

1649
Would he bear in mind that the following countries, which are not members of the OMVS, have committed themselves to participate in this scheme, Canada, France and Germany, as well as Iran, Kuwait and Saudi Arabia? Will Her Majesty's Government also bear in mind that feasibility studies are being carried out by German, Canadian and French firms? Therefore, in view of the benefits that will accrue to British businessmen and industrialists in the future, would the noble Lord agree, especially as our Ambassador is accredited to Senegal, Mauretania and Mali, that he should consult with the Heads of State of those countries possibly with a view to participating in the future?
Lord WINTERBOTTOM: My Lords, one of the reasons why Her Majesty's Government think it desirable to participate through multi-national channels is that Senegal has a comparatively high gross national product. We believe any money we may spend in the field of aid would better go to countries not so well supported as Senegal. May I also point out that there is coming to this country in the near future an inward commercial mission from the Senegal. We believe that this visit is of significance as the first initiative of its kind from an African Francophone country, and I am certain noble Lords will hear this visit in mind.
Lord THOMAS: My Lords, is the noble Lord aware that the timing device in the House is not working at the moment? Therefore the noble Lord the Leader of the House is bereft of one of his most powerful weapons.
The LORD PRIVY SEAL (Lord Shepherd): My Lords, I am glad that the noble Lord has reminded your Lordships that the clocks are not working. We will take that into account during the Question and Answer period.
Lord MERRIVALE: My Lords, as the noble Lord mentioned multi-national aid, and as we will be contributing to EDF4 approximately £320 million, could some of this money be earmarked for this project? Secondly, could the noble Lord say what is the current position regarding the new survey which is being undertaken by the United Nations development programme regarding the Gambia River?
Lord WINTERBOTTOM: My Lords, if we are talking about the one financed by our own Ministry of Overseas Development, that is in progress.

ARMAMENTS EXPORTS TO AVIATION JERSEY LTD.
2.57 p.m.
Lord HALE: 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 was the total value of armaments and parts exported with the authority of the Ministry of Defence to Aviation Jersey Limited and their declared ultimate destination, for the calendar years 1973, 1974 and 1975 respectively.
Lord WINTERBOTTOM: My Lords, my right honourable friend the Secretary of State for Defence has asked Sir Philip Allen, a Member of the Security Commission, to conduct an independent inquiry into Ministry of Defence transactions with Aviation Jersey Limited and I cannot comment further at present.
Lord HALE: My Lords, would my noble friend say why he cannot comment further? Is he is really claiming that the appointment by the Secretary of State for Defence of a member of the Civil Service to investigate something which happened in the Civil Service—which was of the type analogous to high treason—should prevent any further information being forthcoming? This is a matter of grave interest; it involves the question of whether, if we send our sons and daughters to Rhodesia—which God forbid!—it might mean that they would be mown down by tanks and weapons supplied illegally with either the knowledge or connivance of the Ministry of Defence.
Lord WINTERBOTTOM: My Lords, the matter is grave; therefore your Lordships will wish to be accurately informed. My right honourable friend the Secretary of State for Defence should be in a position soon to make a further Statement about this matter. I am afraid my noble friend must await the Statement.
Lord HALE: My Lords, would my noble friend wait before sending troops

1651
abroad, if we are to wait for information? Would he say whether the Minister of Defence was unaware that Jersey does not possess a Tank Corps? Therefore the supplying of tanks to Jersey in containers, which went straight to Johannesburg, was a matter which should have attracted the attention of everybody in the Ministry of Defence. Did the £41 million worth that was supplied to Jordan but which arrived in Johannesburg, contrary to the agreement, do so as a result of carelessness, lack of supervision or active participation? Would he realise that this is a matter than cannot lightly be forgotten and is of real gravity in connection with Britain's situation in South Africa at this moment?
Lord WINTERBOTTOM: My Lords, the Ministry of Defence were aware of what had happened; hence the inquiry.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, is the noble Lord aware that Sir Philip Allen is a gentleman who commands very wide respect in all quarters of your Lordships' House?

THE CROWN AGENTS
Baroness WARD of NORTH TYNESIDE: 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 action it is proposed to take about the financial losses of the Crown Agents, and in particular about their operation which resulted in the loss to a firm in the North of England of their part of the contract for the Saudi Arabian University.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, on the particular point raised by the noble Baroness, as my noble friend Lord Winterbottom assured the noble Baroness on 19th February, there was no interference at any time to the detriment of the firm to which she refers, either by the Crown Agents or the Millbank Technical Services. In answer to the noble Baroness's general point, may I ask her to wait for the publication next week of the White Paper on the future of the Crown Agents?
Baroness WARD of NORTH TYNESIDE: My Lords, while thanking the noble Baroness for that reply, may I say I am fully aware that this was a matter which related to both Governments, and may I ask: is it not peculiar that up to the moment the large sums of money which appear to have been lost by the Crown Agents never seem to have been mentioned at all? With regard to the second point, may I say that as the Crown Agents were involved in arranging that an order which would have come to this country went instead to North America, I am still not satisfied that we have really got to the bottom of what happened? May I further ask: when this White Paper is published, are we then to know what will happen to the Crown Agents and to all the money that has been lost?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, as I am sure the House will agree—
Baroness WARD of NORTH TYNESIDE: Speak up, please!
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, I do not have the noble Baroness's natural advantages! In fact, as I say, I am sure the House will agree, that we have debated many times the situation of the Crown Agents, and the House knows that the Government are behind the Crown Agents in settling their affairs and in arranging their future. If I may turn to what the noble Baroness said about this particular transaction, I am afraid that in spite of many explanations she has still not understood the situation. There has been and there is no question of the Crown Agents or their subsidiary having arranged for this firm to lose any contract at all. On the other hand, what they stand for is to try to help any British firm which is involved in this kind of transaction.
Baroness WARD of NORTH TYNESIDE: My Lords, while thanking the noble Baroness for that reply and for always answering the second part of my Questions rather than the first, may I ask her whether she is aware that, so far as I am aware, nobody has ever said anything about the vast sums of money that have been lost by the Crown Agents? Is it not a little odd, even though long debates

1653
have taken place concerning the Crown Agents, that nobody seems to be able to say anything about the money that has been lost? May I ask the noble Baroness whether she saw the "Money" programme on TV twice last week, as I think it was? May I ask whether that had no effect at all on Her Majesty's Government?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, one of the difficulties in which I find myself is that the second part of the noble Baroness's question beans no relation to the first. Nevertheless, I am sure the House is aware that the particular losses have been debated in great detail over and over again. May I add that I did see the "Money" programme, not once but twice—
Baroness WARD of NORTH TYNESIDE: Good!
Baroness LLEWELYN-DAVIES of HASTOE:—I saw it not once but twice, because I thought it my duty to do so. It was a fascinating programme. I must admit that in some ways I thought it was one-sided. It made no reference to the tremendous services the Crown Agents perform for developing nations, nor to the positive side of their work. But we do not complain. This is perfectly all right. It was a programme which was interesting of itself.

SOCIAL SECURITY BENEFITS
3.4 p.m.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, my right honourable friend the Secretary of State for Social Services is making a Statement in another place on social security benefits. With the leave of the House, I will arrange for it to be circulated in the Official Report. This has been agreed through the usual channels, in view of the complex nature of the Statement.
Following is the Statement referred to:
"I will, with permission, Mr. Speaker, make a Statement about increases in social security benefits. My right honourable friend the Chancellor of the Exchequer yesterday announced the main features.
"The increases in benefit will take effect in the week beginning 15th November. The standard single rate of retirement pension and of invalidity pension, and the rate of widow's
1654
pension, will be increased by £2 from £13·30 to £15·30. For a married couple the increase will be £3·30 from £2120 to £24·50. There will be proportionate increases for younger widows, and for pensioners with pensions at modified rates, and an extra 95p for each dependent child of widows and other pensioners. As my right honourable friend indicated yesterday, now that the rate of inflation is coming down it would no longer be appropriate to base the uprating on a reference period which lies wholly in the past. However we are confident that the proposed increases of 15 per cent. will however be considerably larger than the actual or likely movement of earnings and prices from the time of the last uprating to November. Since the Labour Government came into office in February 1974 the real value of the single pension has risen by 16½ per cent. and that for a married couple by over 15 per cent. The 1976 uprating will do more than maintain that advance; it will raise the real value of pensions to a new peak. It will also maintain the married pension rate at broadly one-half, and the single pension rate at broadly one-third, of net average earnings.
"Similarly short-term benefits for sickness and unemployment will be increased to take account of the actual and likely movement in prices from last November to this November, again with a comfortable margin to spare, but on this occasion we have decided in addition to make a proportionately bigger improvement in the short-term rates compared with the long-term ones, thus narrowing the gap between them. The weekly benefit for a single person will go up by £1·80 to £12·90 and for a married couple by £2·90 to £20·90, increases of over 16 per cent. Maternity allowance and injury benefit will go up by the same amounts. Injury benefit will become £15·65 for the single person and £23·65 for the man with a dependent wife. Increases payable for dependent children of people drawing short-term benefits will also be raised.
"War and industrial injuries disablement and widows' pensions will go up in line with long-term benefits. For example, the pension for 100 per cent. disablement will for the former Army private and the person injured at work go up by £3·20 to £25. There will be comparable increases in the additional allowances which can be paid with these pensions. The therapeutic earnings limit will go up from £7 to £9.
"The rate of mobility allowance, which was only recently introduced at a higher rate than originally announced, has also been reviewed but, as it will have been running for less than a year, we do not propose to increase it on this occasion.
"As regards supplementary benefit the increase in the main scale rates will be the same as those in the related National Insurance benefits, and they will come into force at the same time. To coincide with the uprating the Supplementary Benefits Commission will he making increases in the discretionary additions for extra heating. These will be over and above the increases in the scale rates and will operate from the same dates. The detailed increases are from 55p

1655
to 70p, from £1·10 to £1·40 and from £1·65 to £2·10; that is, an increase of more than 25 per cent. in each rate, as compared with the 15 per cent. or 16 per cent. by which benefits generally will rise. The discretionary additions for special dietary needs will also be increased from 60p to 75p and from £1·35 to £1·75.
"My right honourable friend, the Secretary of State for the Environment, has it in mind to make appropriate adjustments in the needs allowances for the rent and rate rebate and rent allowance schemes. He will shortly be consulting his Advisory Committee on Rent Rebates and Rent Allowances about this.
"For the convenience of the House full details of the new rates of benefit are available in the Vote Office, and will be circulated in the Official Report. Shortly after the Easter Recess I shall be laying a draft Uprating Order, under Section 124 of the Social Security Act, for Affirmative Resolution. The order will be accompanied by a Government Actuary's Report.

DETAILS OF NEW RATES OF BENEFIT

The following are the new rates:

MAIN INCREASED CONTRIBUTORY AND NON-CONTRIBUTORY BENEFIT RATES

Existing Weekly Rate £

Proposed Weekly Rate £

Standard rate of invalidity, widow's and Category A retirement* pensions; Category B retirement pension at the higher rate* and widowed mother's allowance

13·30

15·30

Increase of invalidity pension and Category A retirement pension for wife or other adult dependant; Category B retirement pension at the lower rate*

7·90

9·20

Standard rate of unemployment and sickness benefits:

Higher rate

11·10

12·90

Increase for wife or other adult dependant

6·90

8·00

Lower rate

7·80

9·20

Widow's allowance (first 26 weeks of widowhood)

18·60

21·40

Maternity allowance

11·10

12·90

Invalidity allowance payable with invalidity pension, when in capacity began before age:

35

2·80

3·20

45

1·70

2·00

60 for men or 55 for women

0·85

1·00

Attendance allowance:

Higher rate

10·60

12·20

Lower rate

7·10

8·15

Retirement pension for persons over pensionable age on 5th July 1948 and for persons over 80†:

Higher rate

7·90

9·20

Lower rate

4·90

5·60

Non-contributory invalidity pension

7·90

9·20

Invalid care allowance

7·90

9·20

Increase of non-contributory invalidity pension and invalid care allowance for wife or other adult dependant

4·90

5·60

Guardian's allowance

6·50

7·45

Child's special allowance; increases for children of widows, invalidity, non-contributory invalidity and retirement pensioners, and invalid care allowance beneficiaries:

First child

6·50

7·45

Any other child

5·00

5·95

"My right honourable friend the Chancellor of the Exchequer also gave details of the improvements to be made to the Family Income Supplement scheme. The new income limits and the higher maxima will take effect on 20th July. Details are included in the papers in the Vote Office and draft regulations for Affirmative Resolution will be laid after the Easter Recess.
"As my right honourable friend announced yesterday, the full year cost of the increases in the full year cost of the increases in long-term benefits is about £1,070 million. The short-term increases I have announced will cost some £290 million. All in all, the full year cost of the whole of this uprating programme, including the increase in family income supplement and in the supplementary benefit heating and dietary additions, is about £1,390 million, of which just over £1,150 million will fall on the National Insurance Fund. The Contribution rates which have just come into force will be sufficient this year to finance the rates of benefits which I have just announced.
Following is the information:

Existing Weekly Rate £

Proposed Weekly Rate £

Increases for children of all other beneficiaries:

First child

3·50

4·05

Any other child

2·00

2·55

* An age addition of 25p is payable to retirement pensioners who are aged 80 or over.

†Excluding the 25p age addition.

‡Family allowances bring the total payments up to the amount payable for the first child.

MAIN INCREASED INDUSTRIAL INJURIES BENEFIT RATES

Existing Weekly Rate£

Proposed Weekly Rate£

Injury Benefit*†

13·85

15·65

Disablement benefit (100 per cent. assessment)*

21·80

25·00

Unemployability supplement‡

13·30

15·30

Special hardship allowance (maximum)

8·72

10·00

Constant attendance allowance (normal maximum)

8·70

10·00

Exceptionally severe disablement allowance

8·70

10·00

Industrial death benefit:

Widow's pension during first 26 weeks of widowhood

18·60

21·40

Widow's pension now payable at £13·85 rate

13·85

15·85

Widow's pension now payable at £3·99 rate

3·99

4·59

* The Rates for beneficiaries not over the age of 18 will also be increased.

† Increases for adult dependants and children will be the same as those payable with unemployment and sickness benefits.

‡ Invalidity allowances and increases for adult dependants and children will be the same as those payable with invalidity pensions.

MAIN INCREASED WAR PENSION RATES

All ranks receive the same increases, officers' rates being expressed in pounds per annum.

Part I: Disablement Benefits

Existing Weekly Rate£

Proposed Weekly Rate£

Disablement pension for private at 100 per cent. rate

21·80

25·00

Unemployability allowances*:

Personal allowance

14·20

16·30

Increase for wife or other adult dependant

7·90

9·20

Comforts allowance:

Higher rate

3·70

4·30

Lower rate

1·85

2·15

Allowance for lower standard of occupation (maximum)

8·72

10·00

Constant attendance allowance:

Special maximum

17·40

20·00

Special intermediate

13·05

15·00

Normal maximum

8·70

10·00

Half and quarter day

4·35

5·00

Age allowance with assessments of:

40 and 50 per cent.

1·60

1·80

60 and 70 per cent.

2·40

2·75

80 and 90 per cent.

3·40

3·90

100 per cent.

4·80

5·50

Exceptionally severe disablement allowance

8·70

10·00

Severe disablement occupational allowance

4·40

5·00

Clothing allowance:

Higher rate

30·00

36·00

Lower rate

21·00

23·00

* Invalidity allowances and increases for children will be the same as those payable with invalidity pensions.

Part II: Death Benefits

Existing Annual Rate£

Proposed Annual Rate£

Widow's pension—private's widow:

Standard rate

17·20

19·80

Childless widow under 40

3·99

4·59

Rent allowance

6·70

7·50

Age allowance for elderly widows:

Between age 65 and 70

1·70

1·95

Over age 70

3·40

3·90

Widower's pension

17·20

19·80

Widow's children:

Eldest child

6·70

7·65

Other children with family allowances

5·70

6·65

Other children without family allowances

6·55

7·50

Motherless and fatherless children aged:

Under Eldest 15 child or other children with no family allowances

6·70

7·65

Over 15 Eldest child or other children with no family allowances

8·20

9·15

Under 15 Other children with family allowances

5·70

6·65

Over 15 Other children with family allowances

7·20

8·15

Adult orphans

13·30

15·30

FAMILY INCOME SUPPLIMENT

Existing Amounts £

Proposed Amounts* £

Prescribed amount for a family which includes one child

31·50

39·00

Increase in the prescribed amount for children after the first

3·50

4·50

Maximum supplement payable for a one child family

7·00

8·50

Increase in maximum for each additional child

0·50

0·50

* From 20th July.

TRAINING FACILITIES FOR INDUSTRY
3.5 p.m.
Lord LEE of NEWTON Lord LEE of NEWTON rose to call attention to the need for an expansion of training facilities for the skills necessary for industry; and to move for Papers. The noble Lord said: My Lords, may I ask permission to move the Motion standing in my name on the Order Paper. I notice that there is a goodly array of noble Lords who have intimated their intention to speak and I am very grateful to all of them for showing such interest in what I believe to be a vital question. I notice that there are to be two maiden speeches. I am sure that both will receive the usual very generous reception in your Lordships' House and that we shall be looking forward very much to what they have to say to us on this subject.
A week ago today, on 31st March, we had a debate on the conditions and outlook in British universities, and I tend to look upon that debate as a first part to the debate which I am opening now. I know that a week can be a long time in politics, and that one or two of what Mr. Macmillan would undoubtedly have described as "little local incidents" have taken place since then. Therefore your. Lordships may perhaps need a little reminder of what was said during that debate. Therefore, with apologies, I will quote one or two of them. There is a continuity, as I see it, in some of the things that were said then and what we are debating today. The noble Lord, Lord Fulton, in opening that debate, said he felt that there was now perhaps a certain frigidity in the attitudes of many people towards the universities which had replaced the popular acclaim which sustained them during the expansion which followed the Robbins Report. Indeed a number of speakers in that debate made similar references.
In part, the debate resolved itself into an argument on the question of why that
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had happened, and so on. It seemed to me that the noble Lord, Lord Robbins, himself supplied the answer to some of those apprehensions. My noble friend Lady Gaitskell asked the noble Lord, Lord Robbins, whether the expansion of the universities had been followed by greater productivity in the country, and the noble Lord replied as follows at col. 1121:
"I have never believed that there is an exact correlation between the expansion of higher education and the rate of growth of GNP. I do not know any historical examples which show a startling correlation of any statistical respectability."—(Official Report, 31/3/76.)
It may or may not be unfair, but when a nation has invested huge sums such as have been invested by this nation in the expansion of the universities, may I say with the greatest respect that they are entitled to expect that there will be a correlation between the two things.
I believe that we are now living in a nation which is sick and tired of a permanent economic crisis, of a failure to expand our economy, of a sinking pound and of a balance of payments deficit which almost seems to dominate the whole of our lives. It certainly expects—and I believe it is entitled to expect—a tangible return on its investment in education, whether that education is described as higher or lower, which leads me to the specific issue of training for skill.
I should have thought that in a manufacturing nation not blessed with a plentiful supply of indigenous raw materials, and therefore utterly dependent on their import—and, incidentally, their import is becoming dearer as the pound sinks—the obvious strategy must be to ensure that when those raw materials are converted into manufactured goods for export they contain a high degree of skilled labour and a small amount of raw material. That may be a blinding flash of the obvious, but I think that at times we do not follow that strategy very well.
Given the productive methods which the technological revolution now makes essential, I believe that we do, and will, require increasingly higher ratios of skilled to unskilled people than ever we had before.
I suggest that since the end of the war we have been less successful than have very many of our competitors in achieving that. Indeed, your Lordships will all recall that each upturn of demand in our economy has revealed a shortage of skilled workers, which has contributed largely to the dreary story of industrial bottlenecks, failure to meet delivery dates, cancelled orders and further reductions in our share of world trade. Indeed, the one thing that one can prophesy with certainty about the world slump through which we have been moving and which we hope is now giving way to an upturn, in which we devoutly trust we shall share, is that we shall be once again confronted with large-scale shortages of skilled labour. Given the higher levels of unemployment which have been quite common since 1966, we may well find ourselves in the utterly absurd situation of having large-scale unemployment among unskilled people and an equally large demand for non-existent craftsmen and technologists—surely the very end so far as planning ability is concerned.
I also suggest that it is unsafe for us to rely on a pick-up of world trade to solve our economic problems, without adequate training for our young people and retraining for very many of our older ones. Because of the time factor, I shall not develop a great deal today the point about the older ones. But many of your Lordships will know that there are parts of this country which, had it not been for splendid planning in the retraining of older people, would be derelict areas of this nation. I am thinking of the North-East, Scotland, Merseyside and so on. Therefore, there has been imaginative planning so far as older people are concerned, but I think that a great deal more has yet to be done. However, today I want to concentrate more on younger people.
We are all knowledgeable of the fact that this is the worst slump since the pre-war 1930s period, and I remind noble Lords that we did not plan our way out
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of that. We got out of it because of a war, and also because hundreds of thousands of people were retrained for work they had never done before. They came into the engineering industry, for instance, under the dilution agreements which we then signed. I hope there will be no future war, but there will certainly be no dilution agreements to pull us out of the problem we now face. In the Queen's Speech, the Government announced their intention of giving priority within available resources to the vocational preparation of young people aged between 16 and 19. This reflected the Government's concern that, despite the considerable expansion of higher and further education, there remain large numbers of young people who leave school each year to enter jobs with very little or no opportunity for systematic further education or training.
I have been reading some material produced by the Department of Employment and by the Department of Education and Science, and I am grateful to them for sending me those pamphlets which are indeed most revealing. One of the good developments which we have seen is the creation of the Manpower Services Commission, and nothing I say today should be interpreted as a criticism of them because as yet they have had no time whatever to put their ideas into being. I like what I have read about the training and the priorities which they have announced. But the magnitude of the task which they now face is utterly formidable, and the attitudes of many educationists, employers and trade unionists will need to alter quite dramatically if we are to change what I believe is an extremely bleak situation.
In their publication, Getting Ready for Work, the Department of Education and Science inform us that about 750,000 young people leave school each year, more than half at the minimum school leaving age of 16. Some 600,000 of those young people enter the labour market directly, and about half of them receive no further education and very little training indeed. It seems to me to be a complete and utter scandal that that should be the situation we now face. We have recently received alarming reports of the incidence of unemployment among young people, and that means a great many more are not now receiving any

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tuition under the industrial training boards, which in the main cater for young people working in certain industries.
For a great many years, the Labour Party—and, I believe, both of the other Parties—have been stressing the need for day or block release. Indeed, I think it is about 17 years since the Crowther Committee recommended one day's compulsory release for all young persons in employment. Today it is neither compulsory nor is it even permitted to over 300,000, at least, of those who leave school before the age of 18. On page 12 of, Vocational Training for Young Persons, by the Training Services Agency, it is stated that the proportion of young persons under 18 receiving release was 19 per cent. in 1964, 24·7 per cent. in 1969, 22·4 per cent. in 1971 and 22·6 per cent. in 1973, the latest year for which information is available. I recall that during last Wednesday's debate the noble Lord, Lord Annan, asked my noble friend Lord Crowther-Hunt whether that was the situation and also inquired about the position in certain other nations. I be reply my noble friend gave was that we must compare those figures with some 85 per cent. in Western Germany, Sweden, and other European nations. How, in heaven's name!, do we compete with those nations under the conditions which I have been reciting to your Lordships today?
Those nations have gone ahead not only in those industries where skilled labour is used; a great deal of the training facilities in those nations are offered to young people who are working in what we would term "blind alley" occupations, whose only prospects are as labourers and so on. Our attitude is to write them off as dead. Those nations, however, are training them and giving them the incentive to get into the science-based industries, and in consequence they are reaping that which they have sowed. The result is a huge increase in the number of young people who are training to acquire skills, who are training for science, and so on. Therefore, the kind of training which they are receiving must be the price which we shall certainly have to meet if we are to hope to compete on equal terms with those nations.
I have never been quite certain that we were right to raise the school leaving age to 16. I wonder whether we should
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have done better to leave the official school leaving age at 15 and then to give three years of theoretical training in the technical colleges, plus practical work in the factories—either on alternate days, or alternate weeks, or whatever. This is an issue which we had better look at, because I for one am dissatisfied. I do not believe that the educational system has adapted itself to the extra year of schooling. If we are to improve upon these dismal figures, I believe that we had better begin to look at the possibility of training facilities in the technical colleges, plus practical work in the factories.
In the summary of their conclusions, the TSA give what I believe is a profound warning of what may well be to come. They say:
"In the view of the TSA, there is a risk that in the absence of new initiatives the shortfall in the amount of training of adequate standard for young people in occupations requiring long-term transferable skills will actually get worse following the Employment and Training Act of 1973".
In a small number of productive industries such as engineering, there is an improved record of day and block release, more especially when compared with the days not so long ago when a few very large firms provided all the training and the rest of the employers creamed off the products as they produced them. I am happy to think that that situation has largely disappeared. However, when we consider that employment in manufacturing industry has probably declined both absolutely and relatively since 1966, while the proportion engaged in administration and in the service industries has increased, what we are witnessing is a movement, or an expansion, of the very industries which provide no training away from those which do. So far as this nation is concerned, there is no future in that kind of movement.
The point may well be taken that, because of the new techniques of the technological revolution, the manufacturing industries can sustain the loss of employees, as have the coal and railway industries. But is it not the case that we are all apprehensive about the degree of capital investment which we have failed to achieve in manufacturing industry? In this respect also we are well behind our competitors. If we were indeed modernising at the pace at which we

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should modernise, I could understand a quantitative decrease being more than compensated for by qualitative improvements in plant and so on. Therefore, the workforce would not need to be so high. However, we are not providing anything like enough training for the number of people who are entering manufacturing industry. At the same time, we are deploring the fact that we are not giving to those industries the modern equipment which would give a qualitative improvement to the productive methods. In that respect again we are in dire trouble.
While listening to the debate last week, I was struck by the attitudes shown towards manufacturing industries among teachers at all levels, no matter what type of education we are talking about. I listened to the very remarkable speech of my noble friend Lord Bowden, who is Principal of the Manchester College of Technology, a college for which I have the very greatest respect. After quoting the Secretary of State for Education, Mr. Mulley, who had said in another place that schoolmasters had told him, "Of course, our brighter boys don't want to go into industry", my noble friend went on to say:
"A few months ago I myself lectured to 200 headmasters and asked them why they did not send their students to college or university, to study engineering. They all said the same thing: 'But of course if one of our brighter boys ends up at the age of 30 in a factory everyone, including himself, his family, his friends, and his schoolmates, will account him a failure who could do nothing better.'".—[Official Report; 31/3/76; col. 1193.]
I care not how much is spent upon training or education; if we do not change that attitude, there is no point about it all. I am not asking that every boy and girl in every phase of education should be constantly reminded about the job that they will be required to do, but I am asking that there should be a serious and practical approach to the fact that at the end of the day the manufacturing industries provide us with our bread and butter and that we shall be able to afford only the classical education which the wealth production of this nation allows us to afford.
Since my noble friend told the House that headmasters, many of whom are the
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products of the universities, look upon work in a factory in the way that he described, I believe that the whole question of attitudes towards employment must be reconsidered. One looks back upon one's own life. I can recall that when I first went into a great engineering factory where highly skilled men were swinging huge turbine shafts, lathes and so on, I looked upon them almost as heroes: how in Heaven's name! could anybody accept responsibility of that type? The efficiency, the calmness, the way in which they would accept that this was their daily job was, I thought, the height to which man could aspire in practical manufacturing work. I still believe that, and I should like to see far more emphasis placed upon that kind of work rather than the kind of reaction which I have spoken about that appeared to me to come out of last week's debate.
In Monday's Guardian I read an article that commented on a survey that was carried out by the National Economic Development Office. It claimed that skilled workers—the men interviewed in this case were pattern makers—are leaving factories to take jobs as gardeners, entertainers, carpet fitters and safari park wardens because they feel that they can obtain more security and higher pay in those jobs. I have never disguised from the House my belief in a long-term, constructive incomes policy. If ever I saw the proof of the need for such a policy, it is there. If, indeed, the people upon whom this nation depends for its manufacturing exports are not deemed to be worthy of better consideration than safari park attendants, then I suggest that we are in a very bad state indeed.
My noble friend Lord Bowden mentioned the machine tool industry—I happen to know something about this industry—and the virtual collapse of that industry in the Manchester area. One of the most remarkable things we have seen in recent years is that the shares of one of the greatest components of the machine tool industry in Britain, Herberts Limited, are overvalued at 6p, while the Government put £1,000 million into the motor-car industry. I believe we are getting our priorities wrong when we see that kind of thing happening.
I mentioned the percentages of people receiving any tuition. Within them, the

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figure for girls is 8 per cent. It seems to me as though some employers regard them not only as a different sex but as a different species. It would seem that it is not considered proper for a girl to learn craftsmanship. I can recall during the war we brought literally thousands of girls and women into my factory and under the dilution agreement a huge percentage of them were, after a while, being paid the skilled men's rate. What a comment on our present position! I doubt whether there are as many women in industry now, receiving the skilled men's rate as there were 30 years ago. That is progress! So 8 per cent. of girls are now receiving tuition.
I started by suggesting that we needed a far greater proportion of skilled to unskilled people than ever before. At a time when most of the heavy work has gone out of skilled work are we really going to condemn hundreds of thousands of girls now leaving our schools to either semiskilled work or work which is not considered as being essential to our manufacturing and export efforts? This seems to me to be utterly tragic. The idea that we can do that kind of thing in 1976 is fantastic in the extreme.
Baroness SUMMERSKILL: My Lords, may I ask my noble friend a question? As we know, the girls want to do this job but surely both sides of industry, the employers and the trade unions, are so prejudiced that they refuse to allow girls to have apprenticeships. Is that not basic to the problem?
Lord LEE of NEWTON: My Lords, that has been the position but I doubt whether it obtains now in many industries. As a matter of fact, there has been an increase in the number of girls taking apprenticeships but it is infinitesimal as against the possibilities of the number of girls who are leaving school. I therefore suggest that there must be a vast increase in the ratio. My Lords, I hope your Lordships believe, with me, that this is one of the utterly vital issues which this nation now has to face. I see that my old friend Lord Carr of Hadley is to address the House. He and I have debated this issue—I almost said "man and boy"—in another place: I know that his approach to these things is progressive and I look forward to what he has to say.
In conclusion, I hope your Lordships will find that today we are debating a
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matter which is quite as vital as being able to lift the capital investment programme; quite as vital as any single issue which this nation can discuss in trying to get out of the shocking position which we are all now in and which we all detest. For upon this will depend how soon we can all raise our heads as a great industrial nation in this world. My Lords, I beg to move for Papers.
3.34 p.m.
Lord CARR of HADLEY: My Lords, I am sure we are all grateful to the noble Lord, Lord Lee of Newton, for raising this immensely important subject this afternoon. He does so, of course, from great experience. I should like to reciprocate the pleasure he expressed at the opportunity which I now have for renewing our old friendship in debate on this and other subjects. Quite properly, with the seniority in which trade unionists so well and truly believe, the man preceded me to another place and I am glad that the boy has now caught him up! Like the noble Lord, Lord Lee, I wish to say to the noble Countess, Lady Mar, and to the noble Earl, Lord Northesk, how much we are looking forward to their maiden speeches a little later this afternoon. As someone who took this particular plunge only two weeks ago today may I comfort them and assure them that they will find it a warming and not a chilling process.
The essential need for training is better recognised in Britain now than it was 10 or 20 years ago. But I still do not believe that it is given as much priority as it is in other major industrial countries, particularly those whose economic and industrial performance in recent years has been more successful than ours. We are all agreed that the ultimate restoration of Britain's strength and prosperity depends on reviving the competitive efficiency and the dynamism of Britain's manufacturing industries. I think we are all agreed also—although there may be strong differences about how to achieve it—that one of the essential ingredients in this revival is a large increase in the scale and quality of new productive investment in British industry and in the effectiveness with which we use the plant and machinery already installed in our factories.
However, I do not think there is as yet the same widespread and active

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recognition of the equally important need for an increase in the scale and effectiveness of our investment in people in British industry. In previous attempts by successive Governments of both Parties since the war to get the British economy moving faster, one of the first, most obstinate and damaging bottlenecks we have run into time and time again is a shortage of skilled workers. That shortage causes shortfalls in production. I believe it also plays a serious part in setting off the spiralling of inflationary labour costs. Another handicap which I believe is suffered by Britain as compared with other currently more successful industrial countries has been the rigidity in our pattern of employment—the comparative lack of mobility of workers in Britain between one type of job and one type of skill and another. But with the modern speed of innovation and technological development generally, full employment, now and in the future, can never be achieved by people sticking to the same sort of job throughout their working lives. The ability to secure full employment now depends to an increasing extent on the ability to secure constant changes in the pattern of skills, and freedom, lack of fear and sense of opportunity with which people in their working lives can move from one job and one skill to another.
Fundamental structural changes are going on in the pattern of jobs available in this country. On the one hand there is a considerable, continuing, and I believe growing, decrease in the proportion of unskilled jobs and also in the proportion of skilled manual jobs supplied in the past by the old type of traditional time-serving apprenticeships. Against this decrease there is a continuing increase in the proportion of semiskilled jobs and also jobs requiring technical skills and knowledge. The industrial and economic need for a strong, continuing increase in the quantity and quality of training is therefore clear. But if the industrial and economic need is strong, so also is the social need. Easy access to a wide variety of training courses, both after leaving full-time education and throughout their working life, is surely the best way of giving individual people the opportunity to improve their economic prospects and also to achieve
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greater satisfaction from their jobs throughout their working lives.
My Lords, I have had the very good fortune in my own political career to have been brought into close contact and responsibility with this field of training on two occasions. First, about 20 years ago now, in my first ever ministerial job, as Parliamentary Secretary to the Ministry of Labour—as the Department of Employment was then called—I had the honour to be appointed the chairman of a committee of trade union and employers leaders, a committee which I am proud to say became known, for a period at least, as the Carr Committee. I think all of us believe, looking back, that our Report Training for Skills, which was published about this time of year in 1958, did lead by direct stages to the Industrial Training Act of 1964.
Secondly, as Secretary of State for Employment, much more recently, as well as being responsible for certain activities which caused much more controversy than the subject we are dealing with today, I am glad to say I was responsible for publishing, in December 1971 and in February 1972, the companion documents, People and Jobs, which outlined plans for the modernisation of our employment services, and the second document, Training for the Future, which outlined plans for the further expansion and modernisation of our training services in this country. Those two documents led directly, after proper consultation, to the Employment and Training Act 1973, together with the establishment of the Manpower Services Commission and its two executive arms, the Training Services Agency and the Employment Service Agency.
It is against this background of personal involvement that I would like to express, to assess, and to criticise, although I hope constructively, what is being achieved and what needs to be done. Like the noble Lord, Lord Lee, may I underline that in making what appear to be criticisms, and indeed will be criticisms, I am not seeking to criticise what has already been achieved by the Manpower Services Commission and members of their staffs, because, as the noble Lord said, they have been in existence for a negligible time so far.

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The first Act I referred to, the 1964 Act, was aimed principally at stimulating an increase in the quantity and quality of the training carried out by employers for their own perceived needs. It is, of course, a fact that the quantity of the training carried out by employers has always provided, and must always provide, the great bulk of training in this or indeed any other industrial country. The 1973 Act, while seeking further to stimulate the employers' own training efforts, was aimed perhaps principally at two different targets. First, it was aimed at bringing about a massive increase in the training facilities provided by Government themselves; because although the training opportunities provided by Government themselves will always be small compared with the total of those provided by industry as a whole, the Government's contribution is nevertheless a vital topping-up supplement, both in scale and in type of training provided, to that which is provided by employers themselves, particularly, of course, in times of economic depression or structural change.
The second target at which the 1973 Act was aimed was to provide a new organisation for initiating, co-ordinating and guiding our training effort in this country, in which the responsibilty for this and other manpower services in Britain would in future be actively shared by industry, by both trade unions and employers. Perhaps I may say at this juncture—I am glad this is not a very controversial debate today—that one of the few parts of the present Government's economic and industrial policies which I wholly and warmly welcome is that they have continued to maintain and indeed to increase the momentum of the great new surge in our training effort which was put in hand by the last Conservative Government, and which I am sure would have been put in hand by any Government early in the 1970s. This has all-Party support in Parliament and outside, and there is no doubt that improved results are being obtained. But are these improvements yet enough, and are they yet as well directed as they could and should be? I do not think they are, and I want to make some suggestions, indeed some criticisms, under a number of headings.
First, tile training opportunities provided by government itself. In 1970
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the Government provided training opportunities for 17,000 people a year. The Conservative Government at that time embarked on a massive expansion of this number to provide opportunities for not less than 60,000 to 70,000 people a year by 1975, instead of only 17,000, and set a target of 100,000 for achievement as soon as possible. I believe we are on target on this expansion. I should like to ask the Government today to reaffirm—I have no reason to think they will do anything else, but I think it would be worth while that the Government of the day should put it on record—their continued acceptance of that target of 100,000. Indeed I should like to ask them whether they would go further and fix a still higher ultimate target in this field for the future. I do not believe that we can stop at a level of 100,000 in this element of the training field, if we are to have in Britain better industrial relations, more effective policies, and generally get results, in human as well as in economic terms, that we want to have.
The second heading which I want to speak about is the one on which the noble Lord, Lord Lee of Newton, particularly dwelt; namely, the really urgent need for more provision for young school-leavers. It is a fact that each year in Britain certainly 200,000, and perhaps as many as 300,000 boys and girls entering employment receive little or no training when they have done so. The noble Lord, Lord Lee, said this was only about half of those entering industry. I sometimes wonder whether it is even as much as that. Whatever the percentage, it is profoundly unsatisfactory, and it compares, as he pointed out, sharply and badly with other countries in Western Europe. The sharp and bad effect shows itself not only in economic performance but in the general state of our industrial relations and the general happiness of our working life. Something radical has to be done to improve this.
Last year, as the noble Lord pointed out, the Training Services Agency produced a discussion paper called Vocational Preparation for Young People, which contained proposals for tackling this problem. What, may I ask Her Majesty's Government, is happening to these proposals? If by any chance the Government and both sides of

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industry do not agree with these proposals, what alternative proposals do they recommend, when will they be put forward, and when will action be started to implement them? This problem, I repeat, cannot be left unattended if we are to have greater efficiency in industry, better industrial relations and a happier working society.
The third heading under which I want to speak briefly is the need for much more extensive training for adults also. This too is an urgent need because, as I have already stressed, a modern economy, with its rapid changes in technology and type of product means that if people are to remain productively employed they will need throughout their working lives to keep on adding new skills to their present collection of skills, and even at times to change basically from one skill to another. Moreover, many people find that they made a wrong choice when, as young men or women, they started out in their careers, and they need new training if they are to have any opportunity to transfer to a different career and to put their orginal mistake, in their terms, right.
I believe that in this area of adult training further action is required by employers, by trade unions, and by Government. I can only mention one or two areas under each heading. I think that employers must give much greater attention than they currently do as a generality—of course there are always honourable exceptions—to the possibility of upgrading their existing employees. An inquiry was made recently into the nature of the vacancies being registered by a number of employers with employment offices throughout the country. This produced a rather interesting by-product result. It showed that many of the vacancies which employers were registering at our employment offices could have been filled from within their own ranks by their existing employees if only the companies had been more alive to this possibility. So we need in British industry to give a much higher priority, and a much more positive approach, to employment policy.
In the United States of America a recent survey of 62 corporations showed that in no less a third of them the executives in charge of the training and deve-
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lopment function reported direct to the chief executive of the corporation. That is a most important measure of the importance which they give to the training and development function. On the whole, I am afraid you do not find the same measure of importance given to it in British industry. This is what employers have to do. I think trade unions have to show a much greater readiness to grant full craft status to men and women who receive at least part of their training as adults. Whatever may have been the rightness of it in the past, the tradition that full and equal craft status can be acquired only by serving an apprenticeship between the ages of 15 and 21 is now absolutely outdated not only in economic terms but also in terms of fairness to many individual people. It does not matter when a person acquires his skills so long as he acquires them and, having acquired them at whatever age, he should be fully encouraged, welcomed and brought into full rank and opportunity which his skills command for him.
As for the Government, there are no doubt many things that they should do. I am not making a Party political point here; I am talking about any Government and not just this Labour Government. I think that the Government should give serious consideration to the possibility of following the French example which, under a recently introduced scheme, gives all employees the right to accumulate during their working lives the right to certain periods of release for further training and education. This is a right which is accumulated rather like one acquires rights to redundancy payments and length of notice, and so forth. If we want to encourage more adult training I suggest that this is something we ought seriously to consider in this country as well, although no doubt the exact form of it would need to be different to meet our different conditions. In short, what we must do most urgently is to seek to achieve a position in which training is not seen as a once and for all exercise at the beginning of a person's career, but a position where access to further education and training is available at all stages of working life, and where there is a constant motivation and encouragement to people to make use of what is provided.

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The fourth heading I want to mention is the need to give attention to more training for the disadvantaged people in the community. The most obvious category of need here is training for the disabled. Here we seem to have reached a somewhat static situation. By and large, 1975 saw big increases in training, but I am sorry to say that in the field of training of the disabled the number who completed training in 1975 was almost identical with that who completed training in 1974, a mere 3,300.
The needs of other special categories are, I believe, highlighted by the present recession and the unfortunately high level of unemployment. The young school-leavers we have already referred to. May I just say in passing that having had the honour of the chance of launching the Community Employment Scheme, I was delighted to hear the Chancellor in his Budget speech yesterday giving that scheme a still further boost. The other major category which has come to light is the older workers of 50 and over, including redundant managers. We must not think only of this in a production worker, or relatively low and humbler grades of administrative worker. There is a disturbing increase in the number of redundant managers, particularly of middle and older age. It is a feature of our present unemployment that it is hitting hardest the young people immediately on leaving school, and the numbers and length of unemployment among older workers. If we look back to the 1930s, on the whole the people in the prime of life were hit hardest. Everybody was hit hard, but, on the whole, the statistics show that the main emphasis fell on those in their 30s and early 40s. Now it is tending to fall on the really young and the much older.
Then we must face up to the special need for training of coloured people in this country. I do not want to belittle the need for the right sort of race relations legislation. I simply want to say that I believe that, in practice, attention to vocational education and training for the coloured people in this country could do more positive good for the state of race relations than race relations legislation itself. There are many other disadvantaged categories to which I am sure other noble Lords could refer.
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Next may I say something briefly about the type of training available, because I have a strong feeling that the types of course available are still too stereotyped. I think in training skill centres the courses are often longer than they need be. They are still perhaps too much confined, for example, to six months' courses on a too limited range of traditional skills. Training courses taken by people are, I suspect, too much determined by what is available rather than by what they feel they want and need; and what is available is too much determined by tradition rather than by a sensitive and flexible response to people's needs. I think that this is particularly true in the field of management training. Within management knowledge is relatively easy to acquire and pass on. But management is a practical skill, and more management training ought, in my opinion, to be training by doing throughout working life. In the field of management we require many more action-centred schemes based on job training which all the time relate theory to practice.
May I mention what could be a delicate subject but I hope will not be taken amiss; that is, the need of training for trade union officials and members. I feel strongly that if we are to get more effective and acceptable management, together with greater co-operation and growing participation by staff at all levels, and generally to achieve really productive progress in what we call in the modern age industrial democracy, then training for trade unions, for their officials, shop stewards and their members, is just as important as training for management. Trade unions are, of course, doing quite a bit about this themselves; but, with respect, I doubt very much whether it is enough, and I therefore ask the Government whether the Training Services Agency has this matter on its agenda because I believe that nowadays, just as other people do in the training area, the unions would accept and could benefit from help.
I notice that some in-company training programmes are using the same material for training both shop stewards and management staff, and that trade union officials as well as managers are playing a big part in giving those courses. I

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think that common experience and common courses are very valuable in promoting at least a common outlook in the way in which problems are analysed, and one is halfway to getting agreement if one can identify the problem in a common way.
Finally, I wish to raise the question whether we are really using effectively and efficiently the resources which we now devote to training. I am afraid I do not believe that we are; at least, I believe strongly that we could achieve a further substantial increase in both the quantity and quality of training with the resources of men, buildings and equipment which we already have. I have already said something about courses. But what about buildings and plant? I appreciate that it is difficult, but why should colleges of further education be left more or less empty for a good many weeks in the year, during holiday periods? Compare that with our need in this country. I am not satisfied that Government skill centres need all be closed in the evenings; perhaps they are not all closed, but I know that many of them are, or at least were. What about employers' own training establishments? By contracting out training, cannot the Training Services Agency make more use of employers' own training establishments, which are often not fully used by companies' own training needs?
My Lords, this is a huge subject and I have touched, rather superficially, on only a few of the salient issues, yet in doing that I am in danger of having spoken for too long already. I do not want to belittle what has been done or is being achieved, but in my view this is a field in which divine discontent is essential. Whatever else we do in this country, we shall never match the performance of other, more successful, industrial countries until we also match the importance which they attach to investment in people as well as to investment in machines.
4.3 p.m.
Lord BYERS: My Lords, I wish, first, to congratulate the noble Lord, Lord Lee of Newton, on selecting this very important subject for debate today and particularly for the contents of his speech, with which I entirely agreed. I have made a number of speeches in the past, as have my noble friends—the noble Lord, Lord
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Rochester, and the noble Baroness, Lady Seear—on the need for training and retraining in this country. But today I will spend a few minutes on a slightly different aspect of industrial training—I hope that Lord Lee will forgive me for widening the discussion—on what I might call the software; that is, not the hardware in terms of craft skills and craft training but training to meet the new obligations which are now facing management and workforce alike either because of legislation or by reason of industrial trends.
In many ways this training can be just as important as our conventional craft training and retraining, because a better informed workforce is usually a much more competent one. I want to deal with only two areas of what I have called the software side of training. The first is the training which is required if we are to make participation, involvement and industrial democracy a success. The second area, one which is just as urgent, is that of pensions, in which I have a particular interest, and particularly the Social Security Pensions Act which comes into operation in April 1978 and for which a good deal of training and education will be needed. What a real loss all of us in the pensions movement and indeed in the nation have sustained with the death of Mr. Brian O'Malley, the Minister of State. It is a tremendous loss because he had a great career ahead of him and he had a tremendous grip of his subject. It may not be without significance that the last discussion I had with him, just before he went into hospital, was on the need for widening the educational training programme in order to make the new Social Security Pensions Act a real success.
In the industrial democracy sphere, quite a lot of preparation and training is under way at the moment. The more progressive firms appreciate the need for research and training if people are to understand the business in which they are to be full participants and, what is more important, to get the extra efficiency which the country needs at the present time. A great deal of good work is being done by such institutions as the Industrial Society, by the trade unions and by other agencies, but one gets the feeling that there is scope for a vast extension of educational programmes in this field if we are to produce a state of effective

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employer-employee relationship and co-operation. I will give only two short examples.
First, I am impressed by the work being done by the British Oxygen Transhield Company. There are main distributors for Marks and Spencer—they run the lorries that deliver the goods—and it is a relatively young company with about only 1,100 employees. About four years ago the company embarked on the task of developing a truly participative system. It formed two committees at national level and a local joint committee at each depot mainly for consultation. The two main unions were brought into the picture right at the beginning, a national agreement was negotiated containing a charter of human relations which outlines the agreed employment policies and which amounts to an industrial relations constitution. During the four years that it took to develop this system—this shows how long is involved in developing these things; this was a four-year programme—a great deal of attention was given to methods of training people at all levels so that the national agreement could be effectively implemented.
This training specifically covered briefing groups, group discussions and group problem-solving; to many people these are entirely new skills. Courses were run by trade union officers, with the assistance of the company, for shop stewards and staff representatives together, as the noble Lord, Lord Carr of Hadley, indicated during his speech. The training included developing the skills necessary to lead group discussions and to handle briefing sessions. Emphasis was laid on the need for developing the best form of communication, which lead to a higher sense of commitment on the part of the total workforce. There must be many similar examples but the point I want to stress is that in developing industrial democracy to improve efficiency, the design of the training programmes is of paramount importance.
The second example I take from the public sector and, indeed, from the Civil Service Department itself, and I am glad to see the noble Lord the Leader of the House in his place. As I understand it, for about two years a small group has been working in selected social security offices of the Department of Health and
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Social Security to improve job satisfaction and service to the public. The first pilot scheme was in Swansea. A small team went to the local office and carried out, with the help of the local staff, a radical reorganisation of that office. There was full consultation and acceptance by the staff, but after a time it was not difficult to identify certain errors, and I give the Civil Service Department full marks for identifying those errors and confessing to them because that it how we learn, by experience. They found that by leaning too heavily on the experimental approach, the team were seen as operating from London and it was seen to be by-passing the regional office in Wales, and this caused trouble. The pace of change was too quick and many staff were left behind and felt uninvolved.
It was clear that a more gradual and deeper approach was needed and this was developed in the second stage, which took place at Wallsend and Wakefield. On this occasion, two small teams each with one of the original Swansea team and a member of the regional staff spent a month in the regional office explaining to the senior staff what the project entailed and thereby enlisting their support and backing. It was decided not to enforce any changes from outside the office. Instead, they would work through the issues arising with the management on the job, in situ. Then the team spent a week in a training session specially arranged by the Civil Service Training College. I feel that that was clever. The result of that approach was quite different. Over a period of months, staff at all levels concerned themselves with analysing and improving their work and methods. This resulted in new counter arrangements, more sensitivity to public reaction and better relations with local authorities and other local social services. There were imaginative efforts to improve training and communications while all this was going on. I understand that the result was a real success. What this amounted to was a continuous system of training and retraining in order to achieve higher standards all the time. Here, believe, there is a big lesson to be learned by the private sector as well as the public sector.
I have drawn attention to these two cases to show that training to improve industrial efficiency need not be costly.

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Nor need it necessarily lead to increased public expenditure. Much training can be carried out inside an organisation with the help of professional bodies and the trade unions.
Finally, I turn to the question of pensions. In this case, we have to work to a very much tighter schedule and to an earlier deadline. Provision has been made in the Social Security Pensions Act 1975 for all employers to consult their staff on the decision whether to use the State earnings related pensions scheme or to provide a good occupational scheme and to contract out. It is the intention that this consultation shall be real and shall not be a formality, as has often been the case in the past. If so, there is a great deal of education and training of employees, and, indeed, employers, to be undertaken before the end of next year. To the extent that this understanding of what is involved is successful so does the likelihood of there being an improvement in industrial relations and greater efficiency increase. My own organisation, the Company Pensions Information Centre, of which I am chairman, is providing a public service in this educational field, explaining what the Act is about. The Industrial Society and the trade unions are doing the same and we are anxious to play our full part in educating the massive numbers of people who must learn to understand what this is all about and the TUC has produced a very useful booklet on the subject. However, I am convinced that a great deal more remains to be done if the workforce as a whole—employers and employees—is to understand the options which are available and the impact of the decisions which will have to be made on the profitability of the companies, their reserves and so on. It is a massive task and it will be breaking ground in a new field.
It does not stop there. The Occupational Pensions Board under Sir Philip Allen—and he seems to be mentioned practically every hour in this House—has done a very good report on solvency, disclosure of information and member participation in occupational pensions schemes. The Board has not recommended a statutory requirement for member participation in the running of the schemes but it has proposed legislation
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about disclosure of information. It has said that a comprehensive list of information should be available to members and their representatives either automatically or on demand. It has made other recommendations, including that there should be an extension of existing training facilities for member and employer representatives on their pension provisions. It is not much good disclosing information if people have not been trained in how to use it. That could lead to serious misunderstandings unless there is real provision to explain what it is all about.
This is a far cry from the old, paternalistic days which I remember, when the employer treated the details of the pension scheme as something which was covered by the Official Secrets Act. We have moved into the period of more open government and discussion and we have a real job on our hands if we are to train people to make the most of that. I have stressed the need for training in what I call the "software" side of the industry, not to decry the need for training in physical skills but to emphasise that both have their part to play in improving job satisfaction, our industrial and administrative efficiency and, indeed, our profitability. I am well aware of the excellent work being done in managerial training by all sorts of institutions but, no matter how much there is at the moment nor how many facilities exist, it is, in my view, unlikely to be enough to meet all the demands which ought to be made and will be made on these resources in the very near future.
4.16 p.m.
The Countess of MAR: My Lords, this is the first time I stand to speak in your Lordships' House, so I am more than a little apprehensive; I hope your Lordships will understand that. I have neither the years nor the experience of the three previous speakers, though I by no means intend that as a slur. May I ask for your Lordships' usual indulgence? The noble Lord, Lord Byers, has just been speaking about the software in training. I work in the Post Office and I have had immense advantages from the training which it provides. My interest today is more in the hardware side, however.
I live in an area in the West Midlands which was formerly known as the Black Country where, for many decades, the workers have not

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known what unemployment is. Now they are beginning to realise and to find out what are its attendant hardships. Many of these men and women left school in the 1950s and 1960s when there were more job vacancies than people seeking jobs. Simply because the availability of work was so good, little attention was paid to the acquisition of further educational qualifications and skills. Indeed, many of those who now find themselves unemployed left school with no educational qualifications whatever. The great sadness is that there must been a vast reservoir of ability which remained untapped during those decades. Youngsters were possibly ill advised or lacked motivation in those times of easy money. As your Lordships know, the country is in the throes of a recession and there are many and various ideas as to when we shall turn the corner. My personal feeling is that this turning point will come when we, as individuals, lift ourselves from our apathy and pull together. We rose to greatness through our application, enterprise and ability. These qualities seem to have been swamped by the attitudes of the "swinging 'sixties", when knocking the Establishment with one fist while taking its handouts with the other was in vogue. Those of us who tolerated those attitudes are now having to face the results.
The great ability of our race cannot have entirely disappeared. It needs to be awakened from its dormancy. In some industries there has been stagnation and a lack of forward planning, as well as a general feeling among both workers and managements that because we are British we cannot go down. These industries are now in trouble. Fortunately, we have the example of others—and the noble Lord, Lord Byers, mentioned one or two—who have had foresight and are succeeding despite all the trials of our time. I feel that we need now to take stock. We have almost 1½ million registered unemployed, at least a quarter of whom are suitable for training or retraining in the skills required by industry for the present and the coming years. There must also be a large number of people who are under-employed—people of ability who have been unable fully to utilise their capabilities and are unaware of the many means available to them for advancement.
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On the other side, we have the resources for training in a great many trades and skills. Private establishments run by industry itself, technical colleges and skill centres run by the State can be found side by side, occasionally even duplicating facilities. Technical training requires extensive capital equipment. Tools and machines in workshops are in operation for at most one-third of their capacity and in many instances for less. We need some form of co-ordinating force to bring together the capital and manpower resources required to provide training and our wealth of native ability. Physical expansion may prove to be necessary. Monetary expenditure clearly will. I understand that it costs about £2,000 to put a person through a 26 weeks' training course at a skill centre. This is a small investment, as the likelihood of his being placed in work after training is greater than if he had remained on the register of unemployed.
I am told that the placement success rate varies from region to region, and obviously factors such as this, the motivation of those wanting training, and the question of their ability to complete the course must be considered at the time of selection. There is no point in training a person in a particular skill if there is little demand for that skill from employers and little likelihood of his obtaining a job, either at once or after the lapse of a short period of time. Money spent now is likely to be more than repaid in the future by the growth in the expertise held by the workforce, We must be prepared to move forward to keep up with the constant changes brought about by technological innovation, and to train people in new skills as their old ones become redundant. This is something which is particularly important in the West Midlands where things are changing considerably. We have only to look to Sweden to observe the benefits of a continuing commitment to training in industry. My Lords, there is no doubt that a more rapid expansion in the training programmes than was planned is required, though we must beware of using training establishments as a social dumping ground in order to reduce the unemployment figures. Our slender resources must be extended, but not exploited.
4.21 p.m.
Lord SAINSBURY: My Lords, it is my very great pleasure to be the first to congratulate the noble Countess, Lady Mar, on her maiden speech. In my opinion, it had all the virtues. It was presented with great charm, it was based on knowledge and experience and it was just the right length for a maiden speech. I am sure that I am expressing the wishes of all your Lordships when I say—and I really mean this—that we hope that the noble Countess will frequent this House and make many contributions to our debates.
Secondly, I want to render my thanks to my noble friend Lord Lee of Newton for giving us this opportunity to debate such a nationally important subject, and for presenting his Motion with such great knowledge and vigour. Thirdly, I have to make an apology to your Lordships, because I will be unable to stay until the end of the debate owing to an engagement arranged a considerable time ago. I mean no discourtesy to your Lordships' House by so doing.
My Lords, the reason for my brief intervention in the debate is that during my business career not only did I have a strong belief in the value and importance of education, but I endeavoured to put that belief into practice. Therefore, I welcome recent developments, particularly the establishment in 1973 of the Manpower Services Commission and its Training Services Agency. As those of your Lordships taking part in the debate no doubt know, the Training Services Agency co-ordinates the work of the 24 industrial training boards and provides assistance and advice with the object of maintaining a high and appropriate standard of training, which is so vital. We must train not only workers, but also training officers.
As your Lordships know, the Training Services Agency also has a vital role to play in those areas of commerce and industry not covered by the work of the boards. Therefore, it is clear that considerable progress has been made over the past decade in the provision of training by both Government and industry. But the training of new entrants into industry is only one aspect, albeit an important aspect, of training.
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Two other categories must be considered. One is the retraining of those, who for one reason or another, have made the wrong first choice of career and have perhaps landed themselves in a dead-end job. This has already been referred to by my noble friend Lord Lee of Newton, and by other noble Lords. Such people must be able to have a second choice, to retrain for a job that really interests them, and for which they have genuine aptitude. Second is the retraining of workers from declining industries, such as textiles and industries in which over-manning is rife; for example, the docks and the steel industry. Unfortunately, new and expanding industries that are labour intensive, rather than capital intensive, are not so easy to determine as those that are declining.
In my opinion, if we are to make the best use of our manpower and to help make our industry more competitive, several million people will have to change their jobs in the next decade. Therefore, I welcome the recent and projected expansion of the training opportunities scheme which is run by the Training Services Agency. This scheme caters in particular for those who want to train to a higher level of skill.
The noble Lord, Lord Carr of Hadley, quoted figures similar to those I am about to quote; namely, that there were 29,000 training completions in 1972, and that this figure doubled to 60,000 in 1975. As the noble Lord, Lord Carr, said, the aim is to reach 100,000 as soon as possible. In my view, above all it is vital that we do not let what might be described as the "gold watch" mentality dominate our thinking. Long service, though often valuable to companies and a natural source of pride to individuals, is not always a virtue.
For too long the worker has been led to expect that he has a lifetime's entitlement to work in a particular firm, or industry, or area. More people must overcome their understandable reluctance to move to a new district and a new community. Of course, we all know the importance of housing; how important a factor it is in mobility, particularly, I am told, when workers have to move from the industrial North to the South, where council housing may not be so easily

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available. In my opinion, both the Government and the trade unions have a vital, educative role to play. Full employment today cannot mean full employment in the same job in the same area during a worker's lifetime.
In conclusion, my Lords, I am sure your Lordships will all agree on the value of training and particularly for new skills in expanding industries. We must recognise, and give credit to, what has been already achieved under the Governments of both Parties. Above all, we must never lose sight of the importance of the quality of the training provided, as well as the numbers receiving training.
4.31 p.m.
The Earl of NORTHESK: My Lords, I stand here very much in awe in attempting to deliver a few personal opinions and ideas. I am afraid I shall not be able to emulate in any way the debating skill of some of the previous speakers. It is quite obvious that they have had a great deal of training. While I am of course most grateful to the noble Lord, Lord Lee of Newton, for introducing this subject, as I had expected most of the discussion has so far been concerned with industry in the accepted meaning of that word. But agriculture is an industry as well, and this gives me an opportunity to say one or two brief words about it. I hope I may be forgiven if what I say appears to be too detailed, but this is perhaps the only way that I am able to demonstrate the plight of agriculture and also, perhaps, hopefully, two possible ways of introducing training and re-training to people in industry as well.
Agriculture and its allied trades are in need of extra training facilities, especially in some particular skills. It is true to say that there is a considerable number of agricultural schools and colleges, that machinery manufacturers also run courses and that there was at one time in the past the Agricultural Training Board, all of them providing excellent training facilities. Although I am not conversant with the number of personnel that these organisations produce, I am very much aware, purely from a practical point of view, of the lack of trained people in a number of specialised skills, for some of the machinery in agriculture today is highly sophisticated and tech-
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nical Perhaps I may give an example. In order to facilitate the collection of milk from farms by bulk tankers rather than by means of the old-fashioned churns, all dairy fanners, by and large, are obliged to keep their milk in large, refrigerated milk tanks until the tanker calls daily to collect the milk from their farm. In order to save space and finance, a farmer normally buys a tank sufficient to hold only the amount of milk that his cows will produce in any one day; but this refrigerated vat is a complicated piece of equipment, and like even the best of machinery it can from time to time go wrong. When this happens the milk is not cooled sufficiently to allow the tanker driver to take delivery of it, or, at worst, the milk turns sour. In either case, of course, this means a considerable loss to the farmer.
I suppose it might be suggested that the farmer or the herdsman—and these days I must say, of course, the herds-woman as well—should be able to cope with problems such as these. But I would suggest that it would not really be practical or possible for the farmer or the farmworker to be an expert in all the very many technical skills that are part of agriculture today; and, therefore, fairly naturally, the farmer has to resort to outside expert help. It might also be thought that this is very easy to obtain—just by calling out the local electrician or technician. But the local people are very rarely trained to cope with the complications of some of the present-day farm equipment; so it can happen that a farmer may have to wait for two or three days before he obtains the services of the man that he requires. This may seem a very small incident, but taken over the whole country, and when one considers all the other breakdowns or complications that may occur to milking plant, to combined harvesters, to grain-drying plants or to the other highly sophisticated equipment that the farmer has to use, one sees that it must result in a considerable overall loss on a national scale.
It is not easy, I admit, to see a solution to this problem, because I do not believe it would be right to spend a considerable amount of money on training people solely to look after the needs of agriculture, for some of this equipment is used during only a part of the year, and

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it is only then that it is at risk. Therefore, it would be senseless to suggest that there should be people to service only that equipment and then, for the rest of the year, to remain idle. Nevertheless, rather than having to resort to attempting to obtain someone from many miles away, there is a need for many more local experts to maintain that plant which is in constant use; namely, milking plant, temperature and humidity controlled pig or poultry units, electronic and automatic feeding systems, incubator and factory systems and such things as these. When this sort of equipment breaks down the delay in getting it repaired can, as I have already said, cause considerable loss, not only in production but also, in some cases, of the animal itself and, therefore, a loss of capital. As there are in any case considerable numbers of mechanics, electricians and other craftsmen in all parts of the country who all have the basic knowledge of their craft and of similar and more simple equipment, but who do not have the particular expertise which is so often required by agriculture, what, then, therefore, is the possibility of producing a scheme that would induce would-be technicians, or even possibly provide an incentive to existing technicians, to take the necessary training to service agriculture more efficiently?
My Lords, to turn to another aspect of the difficulties in agriculture which are causing even more concern, probably, as I have already mentioned there exist a large number of excellent colleges which provide training facilities—I might add, primarily to farm management rather than to farmworkers. Far be it from me, therefore, to criticise what they are doing, because they are doing an excellent job. Nevertheless, on looking through the "Situations Vacant" column in a local newspaper I saw that, out of 63 advertisements for farmworkers, 45 were for people to look after farm stock—that is, cattle, sheep and pigs.
Every year it is the practical experience of the farmer that the stockman or woman is becoming more and more difficult to obtain. Such a job frightens many people because of the long hours and the tie imposed on those who look after animals; and in some respects, and pos-
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sibly to overcome the dedication that arises, a real interest is required. I do not believe that you can train people to be efficient in any particular skill without first creating an interest. For instance, not long ago when I was farming very much more actively, than I am now, and when schools were smaller and more localised and possibly the teachers had more authority over what they were allowed or not allowed to do—and far be it from me to question the rights or wrongs of that—in those days we used to have parties of school children from all over the country visiting various farms and having explained to them the general principles of stockmanship and other farm skills.
One was constantly amazed at the ignorance and lack of understanding of even the simplest things and of where, for instance, many of their basic foods came from. Nevertheless, it was a rewarding experience both for the farmers and, I believe, for the children because the interest shown by the questions that were asked was quite remarkable. More important was the fact that a number of those children used to return to the various farms, my own included, to ask for holiday jobs, and not only for holiday jobs but also for advice on obtaining permanent jobs in agriculture. It may be that it is not considered appropriate these days to take children from the centre of places like Birmingham and London out into the country and introduce them to a different way of life; but unless these children are given the opportunity to see for themselves what working on a farm is like there is really no way for them to obtain the necessary interest and dedication.
Farming almost always seems to be the Aunt Sally in any Government's policy and it often feels that it is a forgotten industry. It may be that, because the land and the animals dictate in such a way that they demand to be looked after, it becomes impossible for agriculture to partake in what I believe is called "industrial action". Agriculture has a magnificent record for increased production and in every other respect. Therefore, if I may say so, I hope that if any consideration is given to increased training facilities, agriculture may have it fair share.
4.46 p.m.
Lord McCARTHY: My Lords, I should like to join in the congratulations already offered to the noble Countess, Lady Mar, on her interesting speech. I thought that here we had one Lady who needs no training in verbal skills. I should like to be the first to congratulate the noble Earl, Lord Northesk, on his speech which I think was a model of its kind because he gave us the depth of his practical experience and knowledge. He gave some positive and useful suggestions to us and, with all that, he was commendably brief. I hope that we shall hear from him again.
In listening to this debate this afternoon I have been very conscious, as I think many of your Lordships have, of the, in some ways more momentous, debate going on at this time in another place. I must say, listening yesterday to the Chancellor of the Exchequer—which I did for the first time from the standpoint of the excellent accommodation provided for your Lordships—I had much the same reaction as had Mr. Peter Jay this morning in The Times. I thought that I was back in 1964. It seemed to me that the Chancellor on many occasions was talking very much in the way that Chancellors spoke in the days of the National Plan. We had the same 4 per cent. growth rate, the same concentration on bottlenecks and the need to overcome those bottlenecks and the same imprecision as we had in 1964 and subsequently on precisely how those bottlenecks were to be removed.
I think that I would agree entirely with Mr. Jay when he said that it was hard not to be reminded of the National Plan of 1965 which in much the same way set out what splendid economic results could be achieved if output were to grow at 4 per cent. a year while the balance of payments came back spontaneously from a large deficit into equilibrium. What the National Plan conspicuously failed to explain was how the balance of payments was going to be made to come back into equilibrium with the economy expanding at the rate envisaged. I think that in many ways we are back in that situation. Once again we are being told that we are to have a given rate of expansion. We are being told what the bottlenecks are; and one of the bottlenecks we are being told today, as we were told in the 1960s,
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is the bottleneck on skills, which bottleneck is to be removed by training. But once again we are not being told precisely how the skill gap is to be removed and precisely how the mismatch is to be corrected.
In many ways this is not surprising. It has taken us a long time to create the kind of institutional framework required in order to tackle this problem and, along with the remarks made earlier by the noble Lord, Lord Carr of Hadley, and others, I would not want to say anything against what I now think are the excellent institutional arrangements that we have for tackling this problem under the Manpower Services Commission. But, as has also been said, it is too early for us to be able to judge the impact that the Manpower Services Commission is making.
The point I want to raise is how far we are right to go on in a position in which we assume the objectives for the Manpower Services Commission and the priorities for the Manpower Services Commission which we pick up from those institutions from which we have copied the Manpower Services Commission. What we have done is to borrow a Scandinavian model. The Manpower Services Commission is a Scandinavian model. It looks increasingly like the Swedish Labour Market Board and it is designed to follow out much the same kind of policies. I think it worth speculating for a moment on just how accurate, comprehensive and suitable those policies are for this country.
The first assumption of the Swedish model is that early in the upswing in the period of economic growth, skill shortages develop which, as the noble Lord, Lord Carr of Hadley, said, cut off the growth process and lead to an increase in the inflation process unless there is at that time a skill reserve—in particular, a craft skill reserve and especially in those parts of the country where those skills will be required. The second assumption is that even at the top of the upswing there will be a progressive problem of regional imbalance and structural unemployment which can be solved only by a massive infusion of retraining. Unless this retraining is of sufficient size, the unemployment problem will remain, even at the height of the upswing.

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The third assumption on which the Swedish Labour Market Board is based is that during the whole of the growth cycle there are to be certain groups which have difficulty in finding a employment: the unskilled, the young, the disabled, the over-fifties declared redundant and so on. Therefore, the Training Service must specialise in a counselling service for their special needs. Finally—and this is something recently added to the mix, I would say—the Labour Board concept argues that if the Government are to be allowed to moderate the upswing of the cycle by forms of demand management which will have some impact, there must be special provision for job creation so that the full employment effects of demand management are not going to be felt to their fullest extent in the trough of the downswing.
These are the basic assumptions of the manpower model. As I have said, by an expanding training agency, by the new placement service, by co-ordinating all this under the Manpower Services Commission, we now have a system for expanding and developing training and placement which is as good in institutional terms as that which exists in most other countries. If we had had that in the middle 'fifties and early 'sixties it would have made a significant contribution by now to the process of economic growth.
The problem is that, as is quite a reasonable assumption to make in other countries like Sweden, it assumes that the basic problem of training and skill and mis-match is an exogenous problem from the point of the growth process itself. It assumes that you can fire growth process by some other method, and then you will come up against certain constraints which skill shortage produce, and if only you can blow through those constraints with a training programme the growth process will continue. It is almost as though we had a kind of oil-can view of training: what we need training for is not to produce the growth process, but to allow the growth process to move forward. Indeed, in our present situation we are in danger of having a mixture of an oil-can view of training and a pumpkin approach. It is almost as though we thought that almost overnight by enough training, properly arranged,
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we could turn workers who are not needed into workers who are needed: that we could turn pattern makers into computer operators, dockers into oil technologists and car workers into the group we need most in industrial relations today, first-class labour lawyers.
The problem is that although retraining is essential, although it is needed, what is needed more in this country is the conviction that the training process can contribute more directly and specifically to the growth process itself. What we need to believe—and what those who run the Manpower Services Commission need to believe—is that there will be jobs waiting when the retraining process ends. This is the basic dilemma underneath the retraining process, and it is the basic insecurity of those who undertake training at the moment.
Unless we can believe this, and unless somehow training can assist in this process, there will be no way of solving the problem of structural imbalance or the problem of regional unemployment until at last somebody in this country invents the magic product. What we need most of all in this country is the magic product; a product which only Britons can make; the product which is labour-intensive; the product which requires skills in large numbers very much for men over 50 located in some place North of the Wash. The trouble is that what the world is producing are products which anyone can make, products which are capital-intensive, products which are produced as well by girls as by men, and products which, on the whole, managers are producing in Surbiton and Slough. This is our basic problem.
It is for these reasons that I suggest it is time to ask a new question about training, and about the facilities and the institutions of training. It is time to ask not what does growth mean for training, but what can training do for growth? To so ask is to focus away, I regret to say, from those displaced or threatened by economic change—important though they are—towards those who are still at work, and particularly towards those who are at work in positions of authority; in positions where they can make some impact on the credibility of the growth process. What this means—as has been said by speakers on the other side of the

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House immediately before me—is focusing on management.
If we can find a way, by raising the skills of British management, to increase their performance by 5 per cent., 10 per cent. or 20 per cent., the economic miracle of which the Chancellor of the Exchequer spoke yesterday might in fact come to be. If we could find a way so that the less effective of British managers knew about and were competent in the skills of market forecasting, materials handling and production control, if they were as skilled as the best in the social problems of gaining consent for the kind of changes they need inside their plants, then the economic miracle would be on its way.
I shall be told that management development has been accepted now as a special concern of the MSC and TSA. This is perefectly true. In the five-year plan of the MSC they say that they are taking management development as one of their specialist concerns. I wonder whether they give it enough priority, and whether the suggestions they make in their document, which is mainly to suggest the Agency itself will merely strengthen the number and abilities of their specialist management development staff, really represent coming to terms with this major problem. I should also be told that increasing management development and training is the job of the business schools, the polytechnics and colleges of further education.
The reply to that is that they are mainly effective—and many of them are effective—in respect of new entrants and, at the bottom of the market, in respect to foreman training, commercial training, accountancy training and so on, and not on-the-job training of existing managers at middle level. This is an area where the business schools, polytechnics and colleges of further education have not managed to make much of an impact. I know this is so in respect of one area, the area of my own concern: industrial relations. I know that this is so in respect of management training in industrial relations partly from my own experience of this and partly because I recently served on a Working Party of the NEDO office on industrial relations training under the chairmanship of the late Pat
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Fisher, the late Manpower Director of NEDO.
At the cost of boring the House for two moments, I should like to reiterate the conclusions of that Working Party. They discovered that there had been no significant expansion of training for management in industrial relations over the past five years. They discovered there had been no significant improvement in the quality of management training in industrial relations over the past few years. They discovered that there were a relatively few good firms who in fact obtained good value from their industrial relations training for managers, but only if it was part of their overall industrial relations policies, only if top management were involved and only if the specialised industrial relations negotiators were prepared to take time off to participate in the courses. They also found that there is an enormous need for effective textbooks for managers in this field. These textbooks do not exist. Bodies such as the Social Science Research Council cannot fund them because they are not pure research. Publishers these days cannot afford to finance them, either. Therefore they will probably continue to be unavailable. The Manpower Services Commission, following the publication of this Report through the TSA, has undertaken to look at the central suggestion in the report for the creation of an industrial relations resource centre.
I am merely talking about industrial relations and management training in industrial relations because it is my own area of concern. I suggest that there are many other areas in management training where we should put the central focus in the next five years; that it is time for us to ask what training can do for growth rather than what growth means for training. Bernard Shaw said in St. Joan that a miracle is either an act that creates faith in the faithless or one that reinforces faith in the faithful. What we now need are a series of acts from the Government which create and sustain our faith in economic growth; and acts in the field of industrial training are some of the most important.
4.59 p.m.
Baroness VICKERS: My Lords, I should like to congratulate the Countess of Mar on her excellent speech. I am

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sorry she is not in her place at the moment. I noticed that the sun came out as she rose to speak, and I hope that it will continue to shine on her in the future, and we shall hear many more excellent speeches such as she made today. I should also like to thank the noble Earl, Lord Northesk, because agriculture is extremely important. In fact I believe I am right in saying it is the largest single industry in the country with the smallest workforce. I agree with him very much about children and others visiting farms. When I was doing my casualty training in Islington some years ago, one of the things we did was to take children down to farms, and I agree with the noble Lord that it was extremely instructive—indeed, sometimes shocking—to realise how little they knew about how their food was grown and where milk came from.
May I say to the noble Lord, Lord Lee of Newton, that I am delighted that he should have introduced this debate today and I should like to congratulate him, if that does not sound impudent, on his speech. I agree with him entirely about school-leavers. As he may remember, in another place we were, I think, both against the raising of the school-leaving age, because we knew perfectly well that anybody could stay on if they wished to. At one time, 20 per cent. of the 15-year-olds went into Her Majesty's Services and I think it is a very great pity that this was stopped. This was most beneficial to them because not only did they have the Service training but most of them also had some skill training before leaving the Service.
I should like now to refer to the question of women and employment, because I was very interested when on 17th December last year the Manpower Services Commission stated that there should be more training for women, to give them a much greater variety of work and work of better quality and that, in particular, there should be more opportunities for women to train for management, the professions and as technicians. I thought those were very important recommendations. I also thought that the Training Services Agency's document was well set out and very readable. During the war, I had the opportunity of working in Royal Ordnance factories and of doing welfare work in some of them; and I realise how
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monotonous a great deal of such work can be for women. But if, for instance, engineering jobs are broken down, women are capable of doing intricate work in the engineering line.
I have also looked at the survey of the training of men and women in Europe, and it is interesting to note the difference in attitude between the Europeans and ourselves. For example, six countries in the EEC favour the younger woman rather than the older woman. This country, together with Ireland and Denmark, favour women over the age of 55; and the graphs give interesting contrasts here. All the EEC countries agreed that vocational training showed discrimination against women, particularly on the question of studies. According to the list, this was the lowest percentage in all the nine countries.
Women in this country form 39 per cent. of the working population, but few have received any formal training either in industry or in the skilled occupations. I think it is a great pity that school careers officers are not given special training, because I have found that many of them know little about industry and are often apt to persuade girls to go into what might be called the "normal" jobs for women. Women are turning away from what I call the monotonous jobs. They want to show their skills because they have had far better education than used to be the case. I think, too, that women's magazines must bear some of the blame, because they do not help women at all to accept the idea that they might take jobs other than the ones normally considered beneficial for women.
Recently, during the period of unemployment—I may say that I am living in the country now—I have been able to decorate my house purely with the help of women, none of whom had done this kind of work before. I can tell your Lordships that it is extremely well done, and if anybody here would like to come and visit my home I shall be pleased to show them what has been done.
Facilities in different countries are varied. For example, as regards crèches, if we want to get more women to go out to work it is most necessary that there should be more facilities for their children. More flexible hours are also

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needed, it would appear from these reports. The Training Opportunities Scheme tries to meet the needs of individuals, but I do not think it has been very successful. I feel a little more should be concentrated on those who have not had the opportunity of training when they were younger and who now need some training for the work they might wish to undertake.
In 1975 the TOPS courses took 60,000 people to train, but only 44 per cent. of them were women. Women are in training for lathe-turning and plumbing, for electric welding and sheet metal work; and they have been very successful. But the demand is still for clerical and commercial occupations. The professional and scientific services, the distribution, insurance, banking and finance sectors mainly concern work which is done by women. The percentage there is very much higher than it is for men. Of total technician levels, 27 per cent. are women and most of them are medical and laboratory technicians. There are 18 per cent. of them now working with computers. But it is electrical engineering, transport, textiles, mechanical engineering and chemicals which employ the highest proportion of men.
Five years ago I persuaded the Admiralty to admit women apprentices into the Royal Dockyards. This, of course, is very largely a man's preserve, as your Lordships will know. The experiment has been intensely successful. Rosyth were the winners for the first year—perhaps I should have mentioned that I gave a cup to encourage the women and to give them something to work for and to look forward to. Portsmouth was next; and I am pleased to say that Devonport has won this year. Recently, the Royal Marines at Devon-port had trouble with their electricity, and much to their astonishment—I think they were astonished because they even told me about it, and I am not living there at the moment—a woman came along and did the electrical repairs. What is more, it was agreed by everybody that she had done those repairs more quickly than was usual. Therefore, I think that if women are given the opportunities they are capable of doing many jobs which have so far been considered only suitable for men.
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When one turns to the skill centres, 17,000-plus men trained there in 1974 and only 87 women. Women fared rather better in colleges of further education. Over 21,000 people were trained, of whom 16,000 were women. Then there are the employers' establishments and the residential training colleges. Here again, 45,000 men were trained, with 17,000 women. There is in France a very able woman whose name is Mlle. Varese. She is Director-General of the Social Affairs Committee for Action in Europe. She has stated, I think quite correctly, that discrimination begins in childhood and education; and she has said in particular that education needs rethinking. This has been proved by our own Manpower Services Commission, because in July 1975 they said that the number of women in skill centres in 1974 was 0·51 per cent. of the total trained. In 1975 the percentage was only 0·52: that was in the first quarter. There are 9 million women working in this country, only 2·5 per cent. of whom join trade unions. Perhaps one of the reasons why they do not get on as well as they should is because they do not have the backing of the trade unions concerned. And women are often blamed for absenteeism, yet I gather from reading various reports that the figure for women is no worse than that for men—in fact, the average period of absenteeism for women is one week, whereas the average for men is 2 to 3 weeks. This has been proved in a number of factories that I have visited, where I have found that women rarely stay away from work unless they are really sick.
There is, of course, the other side. I should declare an interest here because I am President of the Institute of Qualified Private Secretaries. The idea of the Institute is to train women to be good administrators, and I think that those of your Lordships who are concerned with industry will agree that without a really good, qualified secretary many men would be completely lost. When I go to our periodical conferences, I am amazed to learn what our members do and how powerful they are in their firms. I am very glad to know that the City and Guilds courses, in respect of which the Lord Mayor of London has been kind enough yearly to present certificates to those who qualify—both men and women,

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of course—are now progressing. It is extremely important that this training should go on, because industry needs administrators.
Women are able to turn their hands to very many different jobs. I should like to cite one very eminent woman gynaecologist who decided, when she was having children, that she would study for the Bar. She has now become a qualified barrister and is on the Bar Council. I mention that fact because any training given to women is not wasted, as is so often thought. I understand that under Article 5 grants are available from the Social Fund of the EEC, and I should like to know how much has been given for the retraining of women because, as has been said, there is not very much money.
To end on a lighter note, I do not know whether your Lordships read an article in the Daily Telegraph of 6th April, headed "Spared blushes cost women their pay parity". It read:
"Women quality control workers at a Kraft cheese factory were refused equal pay because the management barred them from using a catwalk between two departments—to spare them embarrassment in case men working below looked up and saw their legs".
That is rather old-fashioned, because most women now wear either tights or slacks so it was not a very valid argument. But it meant the difference between £30 a week and £42·45 which their male counterparts received. In this case, Mr. Connor, the area organiser for the Union of Shop Distributive and Allied Workers, said:
"We have been trying to get Kraft's to give equal pay for women workers in their quality control department at their Kirkby works".
Another excuse given by the firm was that women could not do the bacteriological work which has to be done at night. One of the women said—and I do not know whether this report is accurate—that she thought this rule should be changed and that women should be allowed to work at night. But she added that the company does not have a licence for women night workers. During the war, women worked day and night in the Royal Ordnance factories, as I know because I visited them.
There was an interesting article in the next column of that newspaper, headed "Angry men stay out on strike". It
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appears that 200 labourers went out on strike because they wanted equal pay with women. That is the other way round. Some of your Lordships probably listened to the report on the radio. I do not know how that problem will be solved, but we shall have some difficulties under the Sex Discrimination Act. I realise that we shall have to work out this problem gradually but, with your Lordships' wisdom, we may eventually be able to find some solution.
Finally, I should like to say that I am a member of the Advisory Committee on the Employment of Women at the Department of Employment, and I should like to give my thanks to Miss Orton, the Secretary, and others who advise the Committee, particularly at their meetings.
5.13 p.m.
Lord COLLISON: My Lords, I am sure that we owe a debt of gratitude to the noble Lord, Lord Lee of Newton, for introducing this debate. Also, I must add my congratulations to those of other noble Lords to the noble Countess, Lady Mar, on her maiden speech which was delivered with great clarity and precision—qualities which I admire and seek to emulate, not always successfully. I should also like to congratulate the noble Earl, Lord Northesk, particularly because he introduced the subject of agriculture into a debate which could easily forget all about that industry. I shall, of course, speak about agriculture and agricultural training; but, while it is in my mind, may I say to the noble Lord, Lord Byers, that I, too, know about the model office experiment in Swansea and Wallsend. I visited both offices. I went to Swansea in the early stages and was able to see some of the difficulties which emerged; then at Wallsend I saw how the team had learned with very great success from what they had found at Swansea. That is a fine example of consultation at all staff levels and the team deserve to be congratulated.
With regard to what the noble Earl said, there may still be people up and down the country who do not know or do not seek to discover what happens in agriculture, particularly in the sphere of agricultural training. It is true that, in the sphere of training as in other matters, agriculture—which is perhaps the greatest industry—lags behind others. Other industries had their apprenticeship schemes long before agriculture thought

1705
of introducing one. Indeed, when I worked on the land I learned the job the hard way. A farm worker usually followed his father who taught him the jobs. One went with horses and dragged behind them the wagons, ploughs and other equipment and learned how to use them. A farmer's son often learned the job the same way, except that in later years a farmer's son was usually sent to one of the agricultural institutions.
A number of people in the industry and I were concerned about the lack of facilities in the industry in a number of directions, including training. In this respect, my friends and I were supported and heleped by forward-looking people on the other side of industry. We wanted to achieve some kind of training machinery and we thought we could establish an Apprenticeship Council, which we did with the help of my noble friend Lord Hilton—who, unfortunately, is not here because he is very ill indeed—the noble Lord, Lord Netherthorpe, and the noble Lord, Lord Woolley. We had our first meeting in 1948, but it took some years to decide how to proceed, and we began operations in 1953. We had three chairmen from then until the time the scheme finished, who were the noble Lord, Lord Woolley, Basil Neame and finally myself.
About six months ago, I signed the last certificate which went to an apprentice who had gone through the Apprenticeship Council training scheme. During those years we saw a number of apprentices go through the three-year course and achieve certification, and by 1973 the number had reached 2,000. By the time I signed that last certificate there had been about 2,800 apprentices. Those certificates meant that those people would qualify for a plus rate under the Agricultural Wages Board orders because they were able to show that they were craftsmen.
In 1971, we changed the title of the scheme to the New Entrants' Apprenticeship Training Scheme and responsibility for its continuation passed to the Agricultural Training Board. The Agricultural Training Board was not itself an easy thing to achieve. We had a long hard battle but, thanks to the wisdom of far-sighted people, including those I have mentioned, we eventually got the Board. But almost from its inception it
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has been faced with the problem of insufficient funds to do the job for which it was established. Initially there was difficulty about getting money through the levy scheme, but I do not want to dwell upon that aspect. That difficulty was at last overcome by a changeover from a levy scheme to a direct Government grant as part of their support system for agriculture. But there can be no doubt at all about the importance of the Board and the contribution that it is making and will continue to make to the well-being of the industry, for the existence of the Board ensures that new corners to the industry and others in the industry are properly trained to craft standards. Indeed, the Agricultural Training Board has just announced an extension of its existing system of direct cash support for proficiency testing.
In future, the Board will be able to make grants to everybody who comes within the scope of a new scheme which goes beyond apprentices and can help those people who are studying work in other directions in agriculture. Also, it has the enormous advantage of contributing to the industry's future manpower needs. At the end of 1974–75, the number of apprentices and new entrant trainees was just over 4,000, and there is every indication that the corresponding figure for this year will be greater. Indeed, up to March 1976 it was around 4,700, so the number of people who are coming into the scheme is increasing quite rapidly and significantly.
The noble Earl has mentioned at least one of the problems which the industry must tackle namely, the lack of skill and of technical knowledge to deal with certain problems. Indeed, the Agricultural Development and Advisory Service, among others, has identified these problems. They have also been highlighted in the farming Press, notably in the Farmers' Weekly of 16th May, 1975. This article starts by saying:
"Dont misunderstand us".
I want to underline that. The article continues:
"We believe that the United Kingdom farmers are efficient—top of the league, in fact—experts in their field who can teach other industries a thing or two about using resources well".
What they say about farmers I will claim for farm workers as well. However, the

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article outlines some of the findings of the Agricultural Development and Advisory Service about the shortfall in terms of what profit, income and production could be made in agriculture in certain sectors. For example, it tells us that the uncontrolled foliar disease of cereals costs the country £50 million. It says that losses through a badly set combine harvester, "likely badly setting a lawn-mover", cost the country £23 million; that hay waste in making, storing and feeding costs £105 million; that potato damage in handling and storage costs £25 million; and that the inaccurate application of sprays and fertilisers costs £30 million. Other items are listed, too, and the article goes on to say:
"This is the best part of £900 million".
That is a very great deal of money to lose. Obviously training is the answer and must be developed.
So far as the economic policy is concerned, the Government's White Paper, Food front our Own Resources, which was published a year ago underlines what I am saying. Paragraph 17 of the White Paper states:
"Agricultural workers will have a key part to play if higher output is to be achieved. Looking to the future and to continuing advances in technology, the level of skills within the workforce will assume increasing importance and workers will need adequate incentives and the facilities to acquire and sustain the necessary standard of skills. Incentives are a matter for the industry itself, whether on the part of individual employers and employees, or nationally through the medium of the Agricultural Wages Board which has paved the way with its premium structure for craftsmen and graded workers. In addition, the industry needs young recruits. In 1974, there was a record level of recruits to the Agricultural Training Board schemes for new entrants. The Government are concerned that the Training Board should have the resources necessary to fulfil its part in equipping the industry with a sufficiently large and skilled labour force."
As I have already indicated, not only is it recognised that the need for training in agriculture is there, but I can say with certitude that it is a fact that there is an increasing demand. The annual report of the Training Board contains evidence of that. In his foreword the Chairman, Sir George Huckle, says that the problem is not to get more trainees but to ensure that the demands for training which the industry makes upon the Board can be met out of resources. In the introduction
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to the report it is made clear that the estimate given by the Board last year about the amount of increased demand was an underestimate, and it looks as though that will continue to be so.
As the Government document says, the Board has to have sufficient resources to enable it to do the job for which it was established. In 1974–75 the Ministry of Agriculture provided a grant in aid of £1·6 million from the Annual Farm Price Review to finance the Board. In arriving at that figure, the Minister was aware that the Board's budget for the year totalled £1,995,000 but he took into account the Board's working capital which at 1st April 1974 was £555,000. Subsequently a supplementary grant in
aid of £225,000 was paid to the Board to cover additional expenditure, due to inflation. But it is not only inflation which is reducing the value of money and, therefore, requiring more; it is the increased demand and the increased staff needed to supply that demand. The excess of expenditure over income for the year was £443,000 which reduced the working capital to £122,000. The total expenditure for the year was £2,309,000 which exceeded the budget by £314,000. As I said at the outset, the problem of insufficient funds to do the job for which it was established has been a factor in the situation. The changeover from the levy system to the direct Government grant system certainly simplified and made more easy the funding problem, but I believe that despite the £99,000 inflow through the Manpower Services Commission at the end of last year there is a need for a more generous response by the Government through the Commission. I hope that the Government will take that point seriously because training in agriculture is just as important as training in any other industry.
The noble Lord. Lord Lee of Newton, mentioned the problem of time off—the day release courses and the block release. We and the Board have been concerned about that point, and it is rather nice to be able to say that in agriculture time off increased from 10 per cent. in 1961 to well over 30 per cent. 12 years later. But there is still plenty of room for improvement. It is a good fact that employers are more co-operative than they used to be, although some areas are more backward than others. But I believe

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that as the orginal intention was that day release—block release—should be made compulsory so there is a need for a mandate to be placed upon the industry—I will not say on employers only, but on workers too—to take advantage of block release.
Finally, the Hudson Committee, which was called the Joint Advisory Committee on Agricultural Education, suggested that the local authorities should wherever possible relax barriers to allow what I will call "free trade" in student places. It means that students would then be able to attend the course in which they are interested even if it was outside their educational administrative area and there was nothing near to them to which they could go. I believe that this, too, is an issue of some importance and it may be that the matter should not be left entirely to the good will and the understanding of local authorities but perhaps something mandatory should be done here as well. I am grateful to your Lordships for listening to me and I repeat my gratitude to the noble Lord, Lord Lee, for having introduced this debate.
5.31 p.m.
Lord ENERGLYN: My Lords, I, too, would like to express congratulations to the noble Countess and to the noble Earl for two splendid and relevant maiden speeches, and I echo the thoughts of others in hoping that we shall hear them again on many occasions.
I also wish to thank the noble Lord, Lord Lee of Newton, for introducing this Motion. It enables a number of us to take a direct look at the problem and, as I wish to do, to take an oblique look at it. In taking an oblique look at it, we ought perhaps to consider it relevant to examine the strengths and weaknesses of our competitors in international trade. But before we do that we ought to look inwards at the labour force. Unless, as many other noble Lords have said, we can convince the youth of this country that the future of the country is in their hands, then the provision of training courses is really quite academic.
So I pose the question: how are we going to arrest this great flood of young people into white collar occupations: young people who rush in to study psychology, political science and the so
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called social sciences? These are subjects which have no material end product, and quite frankly they require only a modicum of memory in order to pass the examinations. To counter this, it seems to me it is only the thrill of acquiring technical prowess which will replace this trend, and it is the projection of the adventurous nature of new inter-prises which will convert youth to travel the rough road of technology from which we hope to achieve material abundance.
As your Lordships will see, there is no shortage of young people attracted to the thrill of winning oil from beneath the sea. But how can there be any glamour in working on a production line at the end of which is a motor-car which one never sees? Is there any glamour left in the coalmining industry? There could be, if the industry was geared for exports. At the moment we have a directive from across the Channel which suggests that we ought to stockpile the coal: to pile coal as temporarily useless mounds won by human endeavour from the bowels of the earth. What a prospect! But, convert those stockpiles into exports and then we give a meaningful character to mining. Germany needs 30 million tons to make up its industrial shortfall. Where do they get it from? From Poland. Why not from us—but, my Lords, at our prices. Japan cannot exist without about 90 million tons of coal. She gets it from all over the world. Why not some from us? If we were exporting coal there would be no problem of wage awards to miners. The miners would be paid not with paper money but with hard currency won by exports.
The bureaucrats will say, "The noble Lord is talking a lot of nonsense". Nonsense, indeed! There are already machines which can double the output of our coal mines with the present labour force. Therefore, I say, attract young men into the mining industry, where they will become highly skilled, machine-based miners. What we have to do is somehow or other to get this message across from the top in order to breach the generation gap and to infuse into the youth the enthusiasm for doing something really worth while other than pushing pieces of paper from one office to another. I repeat: the essence of this Motion is to get the message across the generation gap and to infuse the girls

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and boys who are in school now—not those just going out into occupations.
I also venture to suggest that it is not irrelevant to scan the post-war years in the context of this Motion. Germany was the mainspring of a geo-political venture to creat a military empire. At the end it was left with a disciplined labour force which it then turned towards developing a geo-political industrial empire. There is nothing wrong with that. In the same way, Japan set out to form a military empire and failed, but with its disciplined labour force it then created an industrial empire. The Japanese empire shows no sign of relaxation. The German empire is showing the inevitable signs. It is a well established fact that no land-based country can develop any kind of empire indefinitely. Only an island can so do. At the moment, pockets of unemployment appear which mark the end state of growth of a land-based empire of any kind. Here we see Germany and ourselves with hardly what one would call pockets of unemployment, but they are symptomatic of the fact that the traditional characteristics of an industrial scene need radical change. So I suggest with all humility that it is a moment in time when we should consider, not politics, but new ventures; new ventures to creat the thrill of developing new expertise, of expanding one's energies when one is young, and directing those energies into areas which have no limitations.
I recently published two maps showing the trade routes of Great Britain in 1939 and the trade routes of Japan in 1972. The one map was a mirror image of the other. This, my Lords, I respectfully suggest, poses the central problem. Do we try to recapture those trade routes or do we go into those areas of the world into which the Japanese cannot enter? I suggest we do the latter. But to do this we have to have a rationale and to have it all at our fingertips. I therefore respectfully suggest to Her Majesty's Government that they might give serious consideration to the formation of an international enterprise board. The first task of this board, as I visualise it, would be to harness the trade attaché system throughout the world, and to have trade attaches with great industrial experience who become not only the salesmen of British products but also the touchstone
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for telling Britain what it should produce and where the markets lie in which it can be sold.
So I end with the point at which I began; namely, let us get across this gap, let us get into the youngsters of this country enthusiasm for creating new things. That is the first big obstacle. The training facilities are there. We have the Requirements Board with all its money to develop the research and development necessary to accommodate any new idea. So I suggest that in presenting this debate the noble Lord, Lord Lee, deserves more than our congratulations; he deserves our grateful thanks, because it has given some of us an opportunity to express optimism, based on the belief that Britain is still a country with imagination, drive and genius.
5.43 p.m.
Lord PARRY: My Lords, almost exactly three hours ago the noble Lord, Lord Lee of Newton, rose to call attention to the need for an expansion of the training facilities for the skills necessary for industry. He has been very much congratulated on that. I would congratulate him on the power and the vigour with which he presented his original speech, which set the tone of what has been an excellent debate. I would also wish, of course, in the traditions of this House and out of personal pleasure, to congratulate the noble Countess, Lady Mar, who made her maiden speech this afternoon, and also the noble Earl, Lord Northesk. When one's own maiden speech is recent one remembers the neryousness that accompanies the first venture.
Sir Arnold Weinstock, who is the managing director of GEC, recently blamed the teachers in the schools of Britain for the difficulties facing the economy. In an article in The Times Educational Supplement entitled "I Blame the Teachers" Sir Arnold said this:
"Last year engineering employers failed to recruit as many apprentices as they wanted because not enough school-leavers achieved adequate educational standards."
I think at the end of this debate, or moving towards the end of this debate, we should examine this serious remark and give it the attention it needs. Weinstock voiced other misgivings. He said that the products of our schools were

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illiterate, they were innumerate, they were lacking in the basic skills, they were inarticulate, and, most seriously of all, in the context of this debate, they were biased against industry.
I now must confess my own interest, as a teacher serving in the education service and coming occasionally to this House, and as a member of an association of teachers. I say that I do not think the teachers need fear the charge which has been placed on them by Sir Arnold Weinstock. They should look at it, they should analyse it, but they should not fear it. I am proposing this afternoon to take a little of your Lordships' time, in this very important debate to look at the question.
Sir Arnold Weinstock also said the teachers themselves, because of the nature of their disciplines and training, had an anti-industry bias, and they reflected this and passed it on to their pupils. He said that they should concentrate on the development of sensible attitudes to productive work and the effective teaching of the basic mathematical and literate skills. There is no one here who would disagree with that contention. It is the major job of the teacher, and one which the teacher has long recognised, to produce the fundamental basic skills because without them no one is able to fit into any sort of life at all, much less contribute to the community life of others.
Teachers know the difficulties that are involved in transition from school to industry. Very little has been said about that this afternoon because the specialists here have been concentrating at other levels. But they have not shunned industry; there is no sense in which the main body of teachers in the schools have shunned industry. They have seen their first task, and should always see their first task, as preparing their pupils for life, for living. Of course, work is basic to life and living. So any teacher would be a poor teacher who did not see it as part of his work to orientate the pupil within his class towards the industry which is the basis of the community in which he is to live.
I want to go on and say this. There have been a number of schemes for easing the transition from the schools into industry. These schemes, many of them
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put together under the generic title "link courses", have been composed of elements such as refresher courses for the pupils of lower ability who will be going out into the lower reaches of employment. When I say "lower", I mean only in the specific sense that I have been careful to lay it out here, in the educative sense. There are also very important link courses with colleges of further education, a very important aspect of our recent educational development. In these courses in 1975, 40,000 pupils of the schools of Britain actually were introduced to work taking place in colleges of further education, and they received some very basic benefits from that which will ultimately accrue to the benefit of British industry. For example, they worked with adults, many for the first time working in an adult environment with others. They used specialist equipment which would not be available to them even in the specialist departments of their sometimes highly developed secondary schools. They worked to industrial discipline, a very important thing for people going into industry, and they contacted other workers.
The principal of a college of education in West Wales told me the other evening that one of the most important by-products that he had found of the "link" courses was in a general philosophical, educative, as well as a specific workshop sense; because, he said, the young people going into his college were surprised to find men of 30, 40 and 45 and even 50 years of age following courses in their own time and in the firm's time in order to make themselves better workmen. These lads were saying to their teachers "Why is this? We did not realise that men went back to school of their own accord in order to re-equip themselves and qualify themselves for the new technologies". So there was a spin-off, which is too often forgotten when we list what has not been achieved in the educative service towards preparation for industry.
I want to go on to take up points which were very carefully expressed by my noble friend Lord Lee, and by the noble Baroness, Lady Vickers, on the other side of the House. They very carefully expressed their assessment of the raising of the school-leaving age. They did not condemn it in an out-of-hand

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sense, but they expressed some concern that the high hopes for the raising of the school-leaving age had perhaps not been met in some of the achievements in education. We could all go further than that, really. We could say that there are people in some areas, industrial conurbations and elsewhere, who are deeply concerned that some of those staying on after the raising of the school-leaving age have not had the benefit from it that some of us had hoped for. I would go even further than that. But I want to say to my noble friend, to the noble Baroness, and to the House, that things have not stood still since the raising of the school-leaving age, and there have been many developments, some of which I shall outline this afternoon.
The system used in the raising of the school-leaving age concept was to give work experience. If your Lordships are interested you will find a publication which will give further information about this, on work experience in secondary schools. I can give a specific reference to it when I come to it in my notes and I will feed it into Hansard. These schemes allow pupils to work in industry, in commerce, and in public service, under the Work Experience Act 1973. In their last year of compulsory schooling many pupils are getting great benefit because they are following such schemes. They are meant to give insight into the work situation. I go back deliberately to this article of Sir Arnold Weinstock, a very important industrialist, who finally sneered at some of the schemes which were being carried out in the schools as, "amateur attempts at vocational training". I want to say that they are not amateur attempts; they are carefully researched studies upon which some of the finest brains, from both industry and experienced education, have been brought to bear in order to do something about integrating and linking the school, the community, and the school and the industry upon which the community is based.
I go on to say that such schemes are not aimed only at pupils of limited academic ability. Sometimes we tend to think only in terms of such people, and of such schemes. On the other hand, we may, in the context of the earlier
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debate last week which was close to this subject, think in terms of those people who are highly equipped academically. I want to say here that it is my belief that there is a real need for the education services of this country to look again at the broad mass of the people, within the two extremes in the schools, to see whether the funds which are being spent on education are in fact going as they should be, and enough of them, to this broad band of middle-range ability; because a great deal of British industry is carried by the broad middle banders of this world, a great deal of the talent is the talent which was overlooked earlier, perhaps even in the industry itself, and certainly in the schools to which many of these people went originally.
I can now give your Lordships the reference I was looking for earlier. It is a pamphlet published by the National Union of Teachers and called, Work Experience in the Secondary Schools. I have studied this and other pamphlets in preparation for this debate and if it were only that the schools were giving these young people experience of visits to industry and that sort of thing, and leaving it there, it would not be of much value, but in fact the schools themselves prepare very carefully. There is advanced preparation; there is post-course discussion, and there is course content assessment carried out in the schools.
Teachers see two benefits in such schemes for industry and for the pupil. They bridge the gap between school work and industrial work, and they mature those who are participating in the scheme. May I point out one way in which they do that. They show the pupil of the school that the school is a community organised around him, when very often the workshop is a place to which a man goes and in which he puts his time, and where it is not in fact organised specifically for him. Here they see a fundamental difference between the school as a workplace and industry as the workplace into which they will eventually go.
I think that it is at this point that some attention of your Lordships and of others might be focused. I believe that industrialists fail to convince us, some of the time, that they are aware that industry too, in exactly the same way as the school, exists to serve the community.

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The most caring of them realise this, and the most caring firms and the smaller firms take in their stride the challenge; but some give us the impression that they believe industry simply exists in order to make profit so that that profit might at some point be ploughed back into the community. We must all of us moderate our views, and we are in process of so doing in this crisis, but I wanted to make that one specific point.
The noble Baroness, Lady Vickers, referred to the City and Guilds of London and the Institute Foundation courses. She referred to one aspect of them. I want to refer to several: the work initiation course, the work experience course, careers guidance on selected theme courses, and motivation from work experience, which is channelled back into classroom studies and benefits the whole of the curriculum, an aspect which we sometimes forget in our industrial relationship questions. There are pilot guide courses under the City and Guilds which are mainly based on colleges of further education—some in secondary schools, but lacking the specialist equipment that colleges of education can provide.
The Inner London Education Authority has a Working Party operating at the moment, and a report on this can be seen in The Times. I seem to be backing The Times today, although The Times has never noticeably backed some of the ideas I have been putting forward. On 2nd April, 1976, The Times reported on the Inner London Education Authority's Working Party report, which is concerned to improve educational provision by schools and colleges for the low-achieving 15 to 19-year old group. Groups of children of all ages visit factories and workplaces, and there is also general school provision for prospective employees who visit the schools regularly and take part in careers guidance. In case I should have been too hard on the industrial context itself, I discovered that the CBI runs a scheme seconding teachers to commercial and industrial undertakings in order that they, the teachers, might be given experience of workshop conditions. But few local education authorities in this period of crisis have responded. They may lack interest. I think it is more likely that they lack funds. I am certain that they would not lack response from many teachers who
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would be very interested in widening their experience and expertise.
Industrial staff and teachers have requested joint meetings, and they suggest that industrial training officers might be seconded to schools. There is a further suggestion that I might make, again with a personal interest, that the network of teacher centres, some 580 to 600 of them, set up throughout the country, might be used as bases where men from the middle management of industry and from the shop floor of industry could meet with members of the schools' senior staffs and from the classroom floor in the schools in order to interchange ideas of joint benefit. I come back to the point that schools are acutely aware that the standards of basic academic skills of school-leavers are not high enough. So we make that point ourselves, because we do not need, as I said originally, to fear it. We do not burke the issue, nor shirk the problems. Secondary schools have remedial departments in order to cope with that, and under the Bullock Report each school has to evolve a language policy across the curriculum.
Perhaps your Lordships will bear with me at this late point in the debate, and I think within my time, if I were to say that teachers and educationists are now much more interested in language as the key to the wholye learning process than as a discipline in itself. It may well be that some of the difficulties that have been touched on in this debate are difficulties of communication, are difficulties across culture groups from which people find it hard to communicate because they do not have the expertise in linguistics that they have the right to expect after five or six years in secondary education. To look at that question we have to examine not just the teachers, not just the scholars, not just the schools, but the whole educative system and the financial granting provision made to education in this country by successive Governments.
Having said that language is the key to the whole learning process, may I go on to say that it is no longer sufficient to emphasise memory skills. Here I pick up a point made by my fellow countryman, the noble Lord, Lord Energlyn. I apologise to anyone who is offended by the fact that of late a great many Welshmen appear in so many holes in this House.

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First-hand experience of work and leisure contribute to the curriculum; pupils actually participate. Curriculum innovations by teachers, by the Schools Council, by other bodies—the Welsh Joint Committee in the case of Wales—and by other academic boards aim at developing self-reliance, decision-making, problem-solving and self-evaluation. Unless they are being pompous, those would seem to me to be the very skills for which industrialists are looking on the workshop floor, and there sits in front of me one to whom I am glad to pay tribute, my noble friend Lord Davies of Leek, who for a very long time has been arguing the need for what he calls "the democracy of the toolbox", envisaging an articulate workforce able to contribute properly and adequately to the processes of industrial development.
Such skills, if acquired, are much more valuable to the adolescent than are those educational dexterities that should be taught in industrial training schemes. I do not want to see the schools becoming places where they are teaching the skills and dexterities of industry; what they want to be doing is developing the range of the personality so that the skills can come naturally in the proper context. And anybody who knows the coalmining industry of Wales, or the structure of the industry based on that, knows that they have for long had their ladder of education where lads going in, whatever their promise, have had that promise developed within the structure. There are many other industries which do as well, and I do not hesitate to say that there is a very good record of that by industries in the public service, which have done a great deal to educate a great many people beyond what was originally considered to be their potential in terms of their contribution to industry.
I will not go on about the breakdown of the courses. I could give details of the composition of courses that are being followed leading up to careers guidance, but I leave that subject because course choices have to be widened, and I am moving now to the sixth-form level from the general school. Courses have to be widened because more young people are staying on at school. Some are doing this voluntarily, and this we welcome, and some are doing it under
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the pressure of a lack of employment; they are staying on at school because there is nowhere for them to go. As a result, some of our sixth forms have become very much bigger and they have had to widen the scope of the offering they make, and so there has been a development of courses to take account of these larger sixth forms—not that the academic ones among them should have less academic content but that those who are not designed to follow such courses should have courses of their own, running in parallel.
For example, in Walsall these courses are orientated to the community. When I was doing my note reading and was being advised on this matter, I discovered that in Walsall there are CSE courses in leather technology which are relevant to that area and that they are run through to examination level. I take up a point made by the noble Earl, Lord Northesk, in his maiden speech, about the agricultural industry and a point made by the noble Lord, Lord Collison, who spoke from a lifetime of service in that industry, when I say that in Pembrokeshire there is a Mode 3 examination syllabus agreed at secondary level worked out in the teachers' centre and applied to all the secondary schools under which rural education studies are followed on an environmental studies basis and a Mode 3 examination result is given so that prospective employers within the industry can find out what experience people have had of farm visits. There are a great many courses in rural schools based on the farmyard and the neighbouring college of agricultural technology. There is a 16-plus involvement in social and community projects, which are themselves valuable, and I have mentioned the principle of a technical college in this context.
The Llanelly College of Further Education has a middle management course which attracts some 40 people from the local industries, many coming from small firms, and these people, aged downwards from 45 to 21, are people who have begun to be active on the shop floor, in a managerial or trade union sense, and they get the benefit of a specific course which is partly residential, and they work there, under the guidance of people who have been recruited from

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industry into the teaching force in order to pass on their expertise.
When Her Majesty's inspectors examined the subject of careers education in 1973 they found that in British schools it was inefficient. Only 25 per cent. of schools carried careers education for all or some of their pupils; that is in the third year of their education, when the choices are made. About 72 per cent. of schools carried them for fourth year pupils and 48 per cent. carried them for the fifth year. We were told that careers teachers had minimal training for their jobs and inadequate support resources. That was a serious challenge made by Her Majesty's inspectors; a serious criticism of the linking of the school with the community. Since then, however, there has been a tremendous improvement.
I gather from signals which I am receiving from my Front Bench that they would welcome the debate drawing to a close, so I will conclude my contribution by saying that, simultaneously, local education authorities created their own careers service. It was to replace the old youth employment service, which in some cases had done a good job, but both developments have been and are being frustrated by the old curse of a lack of funds, and, when we come down to it, what we are doing is not blaming individual elements within the teaching service but blaming the lack of sufficient funds, or perhaps an analysis of the application of those funds already available to see whether they can be redisposed within education and to achieve the things that we all want.
I do not think that the acquisition of basic skills and adult attitudes in pupils will solve the problems of British industry. I take comfort from a remark made by the noble Lord, Lord Alexander, in an earlier debate who also blamed the system but who said that the plain fact was that we had over-invested in the minority who went on to full-time and higher education and that we had under-invested in the great majority who had a major contribution to make to the economic growth of Great Britain.
My Lords, I end by drawing the attention of noble Lords to a problem from which we in West Wales suffer. We have there what I choose to call, borrowing from the Italian, the growth of "white widows". I have in mind an area de
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populated by lack of employment opportunity. Very often when criticism is made of the man who does not want to work, it is not remembered that there are a very great many people who want to work but cannot find work, and that there are a great many people who go to work all the time but who are very much under-rewarded for doing so. In the extremities of this country—in West Wales, to name one—we have had for all my lifetime chronic unemployment levels, and they are rising high at the present time. There are other high employment levels, higher than the English ones, and I recited them in the last debate in which I took part.
Some men wanted to work so badly that, having sensed the beginning of a new technology in Pembrokeshire with the arrival of the possibility of Celtic offshore oil development, they tried to involve themselves in that development at every level; they joined the big construction companies and learnt new techniques. Many of them were paid very high wages and when the refineries had been built and the piers constructed, those men went away overseas, leaving behind their wives and children. A very high proportion indeed of the school children in many of the peripheral areas of Britain are the children of "white widows" who are bringing them up in homes with one parent while the fathers, all over the world, are trying to continue to earn the money at the levels that their new skills have made them capable of earning.
It is the next generation, however, that worries me, and that is what this debate is all about. As a new generation comes along and as we enter a new half century, will we discover oil in the Celtic Sea in the same proportions, percentage-wise, as it has been found in the North Sea, only to find that we are bringing in men from outside, from other parts of Europe—from Norway, Spain and all over—who will be following up, as our men are following up, their opportunity because our own young people have not, in the interim, been trained to meet the challenge of a new development?
Your Lordships have been very patient. It was Montaigne who said that every man is three things: that is what he thinks he is himself, what other men think he is, and what he really is. I

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believe, with the noble Lord, Lord Energlyn, that, if a man is given a opportunity during his working time to discover the true potential which is in him, and if that, in turn, is allied to the expansion of his industry and he gets the credit and some of the profit from it, he will find himself and, in so doing, will release a new energy into Britain's affairs.
6.11 p.m.
Lord MOTTISTONE: My Lords, I must begin by congratulating the noble Countess, Lady Mar, and my noble friend Lord Northesk on their splendid maiden speeches. My noble friend suggested that he needed training and that perhaps we did not. I should have thought that his brevity and pointed remarks, as well as those of the noble Countess, had something to teach us. I shall therefore endeavour not to detain your Lordships for too long,. I should also like to thank the noble Lord, Lord Lee of Newton, for having introduced this subject. It is some time since we had a debate on industrial training and today's discussion has ranged far and wide and has produced one or two ideas. However, I have some things to say towards the end which will not he so appealing in this context.
My reason for speaking is that, for the past 6½ years, I have had the great privilege of being Chief Executive of the Distributive Industry Training Board—a most interesting, exciting and thoroughly worthwhile task and one from which I have learnt a great deal. I shall endeavour very briefly to mention some of the main lessons which I have learnt. The first is that everybody feels he is an expert on training. Everybody also feels he is an expert on education. Everybody tries to argue about the difference between the two. I shall not attempt that task. However, one thing I have learnt in that connection is that, speaking very broadly, those who are the more expert are those who are the closer to the job in which the training must be done. On the whole, the further away one is—and, when we get to Westminster, we cannot be further away—from the task for which training has to be devised and for which training needs have to be established, the less likely one is to be able to give good advice on how it should be carried out and on what sort of resources should be provided for it. That is the first lesson
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I have learnt. Perhaps I may in that context also say that I trust and believe that the Manpower Services Commission and its agencies will remember that, if they have not already discovered it, and carefully endeavour to use their resources and their interest in such a way as not to impose ideas on people who may know a little better than they do or who may be nearer to the task.
Again, I feel that it may be helpful to Governments—and here I speak of Governments in general regardless of Party—not to pressure bodies such as the Manpower Services Commission to produce rabbits out of a hat when they really have no hat. There is a slight tendency for people to say: "We have set up a great organisation and it is therefore bound to produce the answer for us: why, for example, aren't all the young people in the further education colleges?" The noble Lord, Lord Lee, made that point. There are all sorts of reasons for that. One cannot suddenly make young people appear in the further education colleges by devising the Manpower Services Commission, its agencies, the training boards and so on. It does not happen in that way, but there is a tendency to feel that it should do so.
A key matter, as I believe I have discovered during the last few years, was that we found ourselves talking not so much about training as about the development of human potential for which training is but a means to an end. Speaking in business terms, perhaps one should speak about the development of human resources. It is interesting that a manager, who is sometimes described as a controller of resources, will spend much time, energy and money on the problems of developing his material and financial resources, but will take the development of his human resources as something any fool can do. I shall not plug that point, but the most important lesson is that it is the development of human potential which is the key to the problem.
The question of how that is best done depends on the attitude of mind of the people involved—the attitude of mind of those whose potential could be developed, of those who manage them and of those who run the company in which they work. It might perhaps be better to say the enterprise in which they work, because this applies in all sorts of activity,

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and even to your Lordships' House. The attitude of people is what governs whether one will get results from training. The results if training is properly applied can be a greatly improved profitability in a profit-making organisation and a greatly improved sense of achievement and wellbeing on the part of the people in the enterprise. I think it very important that we should raise our ideas above the rather mundane level of simple training and should think in that sort of way because, if we do so, it will be easier to get the priorities right.
The next point which we in the Board discovered was that management training is much more important than the training of junior staff. All too frequently, junior staff are the ones who are trained. They are let loose with expensive machinery and therefore there is a feeling that they must be trained. They are the ones in whom the trade unions take an interest and they are the ones in many industries for which there is a good record past training for whom people automatically think training must be available. All too frequently, too, firms think that they have met the training requirements and done all that is needed if they have a good training programme for the new entrant, the junior staff and, just possibly, for the chap who is made a supervisor. In point of fact, however, the lesson which we learnt was not only that the training needs to be primarily for managers but that, roughly speaking, the more senior a person is the more he should be trained. We have recently suffered the sad death of one of our Members on this side, the noble Viscount, Lord Montgomery. Nobody questioned his approach to the task of training. He would not allow any general or field marshal of any nation who served with or under him—and I first met him when he was in NATO—suffer the thought that they themselves did not require training. The more senior they were, the more rigorous the training he imposed upon them. That attitude of mind is what we need in this country in enterprises, in businesses and in the Government service alike. It is not until—and this we discovered—the chief executive of an enterprise himself wants to be trained, that one can know that one is on the way to establishing the right attitude in any enterprise. That is the key.
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In view of my opening remarks I am watching the clock very carefully, but apart from what I have just said I must add that management training is needed not only at the very top but also in the middle. All too frequently some middle managers will resist training, partly because they feel that they lose face by admitting that they require it, and partly by genuinely feeling that they do not need it. One of the biggest areas of difficulty is in both divising the correct training form and then persuading the middle managers to undergo it. It is the need for training that must be established before it can be decided what training has to be done. It is the need for training that must be worked out before it can be decided whether the resources necessary to do the training are available.
Therefore, it is necessary to identify what everybody has to do, because until that has been identified—and this includes the chief executive; perhaps it includes your Lordships, too—the training need cannot be established. Until the training need is established the training plan cannot be devised, and until the training plan is devised it is not known what resources are required to carry it out. It is a simple, logical process; and it is that simple, logical process that was the next important thing that we learnt.
The other thing we learnt was that there is a great waste of resources in this country, particularly in the further education system, as has been touched upon by several noble Lords. Quite often this is felt to be due to the fact that recalcitrant employers will not send the young people to do the courses, or that narrow-minded employees will not do the courses, and so on. All kinds of arguments are created to explain why young people will not do training which ought to be done. As the noble Lord, Lord Lee of Newton, reminded us, countries in Europe, like Germany, have further education programmes which, on the face of it, are vastly superior to ours, and they seem to have no difficulty. I believe that the Germans have been undertaking further education since 1912 on a compulsory basis, but that is not the point.
The point is why these resources, although they are there, are not used. I suspect that the reason is more deep-rooted than might appear, and this was

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touched upon by the noble Lord, Lord Energlyn. He said that what we require are successful enterprises which young people will want to join. Your Lordships will recall that he talked about exporting coal and putting a different complexion on the coal industry so that people want to go into it. When people go into a successful firm, they will listen to arguments about training and about going to further education colleges. But sadly, on the whole, there is in this country too much of a feeling that enterprise is not a particularly good thing. I was extremely disappointed that in that otherwise excellent address on television the other night the new Prime Minister missed out what, for me, are two key words. One is "enterprise" and the other "opportunity". He did not mention either of them. I trust and believe that this was an oversight, and not due to a deep-rooted lack of thought on his part. But if it were, God help us!
I have some doubts which perhaps I might mention briefly. The Motion refers to the need for an expansion of training facilities. Like my noble friend Lord Carr of Hadley, I suggest that we should use what we have before we start thinking of expanding. I believe that in this country, though probably not in all areas, we have a great deal of training facilities which are not being used to the maximum extent. We really ought to concentrate on that aspect before we think of expansion.
There is also the question of expansion of day release. I have already talked about this matter, but I wish to repeat a point. The day release problem will not be solved by saying that something ought to happen. Things do not happen that way. People will not go and do something just because they ought to; there must be a fundamental reason for doing it. That means that the courses and facilities provided by the further education colleges must be the kind which satisfy the needs of the potential customers. The colleges must develop an attitude of mind which calls upon them to go out and sell their facilities to potential customers; not expect the customers to come flooding in just because they ought to.
At the start of my speech I said that I was delighted about this debate but that towards the end I might make points
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which were perhaps at variance with that remark. What I mean is that on both sides of this House and on both sides of another place, we are, in general, in entire agreement on this question of training. The various Acts of Parliament put through by my noble friend Lord Carr of Hadley, and inspired by him in the earlier stages, have had all-Party support in both Houses, and since I first had the privilege of sitting in your Lordships' House I have attended perhaps half a dozen extra debates on this subject. But none of this seems to have achieved very much.
We must ask ourselves why the attitude of the country towards training is not more effective. Why, we must ask, in many cases do people not want to be trained? Why, in many cases, do employers not want to spare people to be trained? It seems so obvious to me and to most of your Lordships, but why can those involved not see that the development of human potential is the key to the success of this country? There must be a good reason for this. We ought to tackle this matter. We ought not to think whether it is a good plan to put such and such a programme across, or whether the latest publication produced by the Manpower Services Commission is a good thing; what we ought to do is tackle the matter at source. There is this great agreement at the rather distant level, and this comes back to the point that I was making earlier; namely, that the further one is from the firing line, the less useful one's thinking is on the practicalities of life: Perhaps it is that. I believe that we should investigate why people are reluctant, and we should accept the fact that it is no good going round exhorting them to do things when they do not want to do them.
6.28 p.m.
Lord DAVIES of LEEK: My Lords, I am sure that the House enjoyed the speech of the noble Lord who has just sat down. His speech contained much that was based on experience from the post he held. Strangely enough, I believe that part of the answer to the question he asked is contained in a little pamphlet on the case for community service for the young adult. The case is put forward by the English Speaking Board. The pamphlet says:
"…the discipline of knowing how to learn, rather than the doubtful discipline of constantly needing to be taught."

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is one of the things in a transition period that is really needed. Sometimes I think that this is often forgotten. I must sympathise with the House. We have had a long and fascinating debate. The noble Baroness, Lady Seear, has been present throughout. As a university teacher and lecturer she always has something useful to say to your Lordships, and I assure her that my speech will not be too long. If I were to speak at length I should only be repeating much that has been said.
As has been said many times already, we are all grateful to my noble friend Lord Lee of Newton. I was quite honoured when he said to me, "Will you take part in this debate?", because I know how important this is to him. To the noble Countess, too, I would say how much I enjoyed her cogent, precise, constructive and—I use the wrong adjective, but since she is so beautiful I shall still use it—delicious speech. As for the farmer, I would say that I am a country bumpkin myself who was taught in a village school in West Wales how to separate milk. Yes, we did practical things in those days because we had to. Our boots were thick. I used to have home-made boots at ten shillings or five shillings a pair made by the village cobbler. We were taught practical things, redolent of the country—and the redolence was sometimes delicious despite the pigs and the cows that would be running round the fields.
We have moved away from that in this sophisticated world which used the unfortunate phrase, "You've never had it so good". I do not want to make a political point about it because we all said it, and it was said on farm, in factory and politically. I think we made a big mistake in emphasising that material amoral phrase, "You've never had it so good". What are the consequences today? I hear lots of things on my car radio. I heard a fellow of just nearly 16 grumbling about the job he was going to because he had to get up early in the morning; it was too early for him. He could hardly speak English. He was illiterate and completely innumerate (and I am not going to blame the teachers; I shall come on to that) and when he was asked how much a week he wanted he said, "Thirty quid"—be used the word "quid". It made me see stars. What is happening to the world when somebody of 16 with
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no qualifications at all expects to step out of the schoolroom into industry and earn that amount of money? It is not his fault; it is something which is wrong in the nature of the society in which we are living.
How delighted I was with my noble friend—not when he referred to me; I do not mean that—when he referred to Sir Alan Bullock's report of the Committee of Inquiry into Linguistics. It can be obtained in the Printed Paper Office, and it is a magnificent report. He smites this down at the beginning, and I think this entire debate revolves around it. It is strange that my noble friend should pick it up; but I quote his words on page 79:
"The purpose of reading is the reconstruction of meaning. A good reader is required to engage in critical and creative thinking, relating what he reads to what he already knows".
This is, of course, what he should do; he should relate these things. This is the first skill. No matter what anybody's skills may be—and the noble Lord, Lord Platt, as anybody who has read his fascinating little book knows, has gone through a world of surgery, medicine, physician and music—and no matter whether they went to a public school or to a little country bumpkin school in a remote part of Scotland, Wales or England, their skills all began when they mastered the art of reading. I do not know when I learned to read. I think I could read when I was about three and a half to four. I had a funny old grandfather who used to bump me about telling me what words were—and some of them were not very good ones, either! I sincerely believe that the mastery of the English language is neglected today. The inarticulate people I sometimes hear being interviewed casually in the street—I could weep for them, because they cannot bring their mother tongue to bear. If they come out of school at 15 or 16 like that, how does one expect them to go into the progressive skills and training needed in modern industry?
We know about the need for the expansion of training. Quite a lot has been said about it, and it would be simply platitudinous for me to repeat it now. The country needs these skills; and true education or training—whatever definition people may argue about philosophically—is needed. Once you have

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the basic numerate skills and the basic mastery of the skills of reading—and here I am with my noble friend Lord Lee—then the need arises for more vocational skills. We should get rid of the snobbishness which is given to a man who may have his City and Guilds Gold Medal, which is equal to any degree. We must get rid of that innate snobbishness which seems to have grown up. It was not there at the beginning of the 19th century, because then we had the old mechanics institutes. As an extramural lecturer myself, I was working with Dick Crossman and others, and also Pachmann, who was at Oxford. We did a lot of extramural work in the adult education field; and out of the old mechanics institutes grew men who developed those great 19th century skills. If you look at some of these men—the Telfords, the bridge-builders and the others—they may not have had deep academic education, but they had learned the art of mastering the things that they had to deal with, and they had the courage to puzzle them out. Today, no children seem to want to puzzle a thing out; they get bored.
Here I want to come to the defence of the school teacher, teaching in a world that is surrounded, as it is, with the attractions of television. Kids know more about the world at five years of age than I knew at 15, because they are brought up with a series of images. Why learn to read when the television "yap-yaps" at you from two years of age until you are about 90? When you are from two to about ten you keep it on all day, and when you are about 70 to 90 it is your only friendship because everybody else has died. We have a world where literacy is less important than image building. I have never studied this in depth, but I think research should be made into it. In some way it is affecting the art of study in depth. The trivialisation of the reality of life is due to the saturation of life by television—or so I believe. I had better qualify it by adding that because it sounds a bit pompous.
Now the tragedy of vandalism. Everybody talks about it, but I have got my copies of The Listener back to 1933—it used to be the best threepenny magazine on the market—and I was looking at a report on juvenile delinquency in 1931. It was there, and some of us here are old
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enough to remember it. There was the grumbling about the teachers, there were the Weinstocks of 1931 saying, "I have had children from school who cannot read, and neither can they write". That has been going on through the ages. Sometimes the parents themselves say, "'I have got two of the biggest rascals you could possibly have". They cannot manage two, but in my day they expected a teacher to manage 80. The children were crowded like animals in a pen. What dignity, what creative thinking, can you give to one poor teacher who deals with 30 or 40 children? It is now 30. In my day—I will not tell you my first job—we had 80 kids in one class. I was fortunate to be a moderately good rugby player, and I used to bounce them around a bit. I did not really hurt them, but you are not allowed to do that today. We have become soft in the teaching; and I think that if Britain wants to regain its place we must start that energetic discipline—I do not mean the fascist approach—that joyously brings to a young man the art of learning without being taught by somebody else; because the road is open, his mind has been made creative.
I have two other points, and then I will leave it to the noble Baroness opposite who sits patiently waiting. I think I must make this case, because everything else, more or less, has been said. Without sounding too critical, may I put it in an interrogative way? I have got masses of figures, but it would be foolish to quote them tonight. Are we being a little foolish about defence expenditure? Everybody says, "More on guns, more on ships, more on planes". All right; but if you have an illiterate crowd of people without a knowledge of electronics, who are innumerate and who can hardly read or write, what is the good of the sophisticated instruments of modern life?
Have no illusions: in the 19th century elementary education started with people like my great-great-grandfather—not the one who was the champion milker of Wales, but the one who took part in engineering with Crochet Bailey. If he let some yobo drive his engine who did not know how to read, for example, the words "Put oil in every month", or "See that the water reaches this level", then he would "bust" the engine. It paid him to give a donation to the local

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church school and to support elementary education and he stressed "elementary" for he did not want them to learn too many secrets. People were taught to read and write not through any altruistic motives, but because if they were not taught then all the sophisticated steam engines—and we had 289 of these before the rest of the world had any—would have gone up in the air because the people driving them could not read or write. Like medicine and isolation hospitals, reading and schooling became a necessity.
I can name our greatest defence, our greatest wealth—and I shall again quote Ruskin's famous essay, Unto This Last from which comes the phrase: "There is no wealth but life". While we are talking here, there are 11 million schoolchildren in 37,000 schools in Britain. But I am looking now at another age group, the in-between group, those on the threshold, those between the ages of 15 and 16. We must fill in that year. It must not become a lacuna; it must not be left blank. Some of the money spent on defence may well be shifted over to training here—and the noble Lord is looking at me with his farming point of view in mind.
Farming is one of the front lines of our defence. We should have people trained. If the figures given by my noble friend Lord Collison are correct—they are magic figures but figures of a great loss in agriculture, sometimes because of the lack of skills—then money which is spent, even if we dip into the defence pool, on retraining and pushing forward the point of view of my noble friend Lord Lee of Newton would be money well spent.
6.42 p.m.
Baroness GAITSKELL: My Lords, it is always tempting to gate-crash into a debate after my noble friend Lord Davies of Leek has spoken, but I owe an apology to the noble Baroness, Lady Seear, for intervening after taking my name off the list—but it was done from proper modesty, because I had not the time to do my homework. I will make only a very few, brief comments. My noble friend Lord Lee, in his excellent and comprehensive speech referred to the universities debate as a curtain raiser to this one. That is so true. He also referred to the fact that really our educa-
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tion was run on a caste system, the universities and the schools, and that there was still class feeling about industry and our attitude to industry. I remember many years ago when the Universities of Oxford and Cambridge were described as semi-monastic sporting clubs. That is really quite a description of how our education stood, say 50 years ago.
My noble friend Lord Lee mentioned the loss of women to the engineering industry. I was most interested in this, because during the war my husband and I visited any number of factories and there were the women in engineering factories working hard and absolutely loving it. So that there is no excuse, no arguments about its being too hard for them. They enjoyed it and they should still be in these industries if we need them. We have referred during the debate to the training needed for graduates; but I should like to stress the fact that training is needed for school-leavers. If we want to educate most of our children and more of our children to a higher level than we are doing at this moment, then we have not to use the arguments against comprehensive education, we must give up using the arguments of elitism and simply advocating direct grant schools and private education and all those things, because our task today is to educate as many children as possible to their highest potential as this is what the scientific and technological age requires.
The noble Lord, Lord Carr—and I have his pamphlet which was the only one I succeeded in reading before I came here—stressed, I think, the role of the employers. I hope that I am right in thinking that he said that the role of the employers in retraining and training was more important than the Government role. Perhaps I was wrong about this, but the conclusions in his pamphlet when comparing the differences between training in Britain and France, Germany and Sweden, showed that the role of the Government is much stronger in the training there.
Lord CARR of HADLEY: My Lords, may I briefly say that the point I was making was that in terms of the sheer volume of training the role of the employers is the massive majority: but the importance of the Government role,

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although much smaller, is very great indeed.
Baroness GAITSKELL: My Lords, I am not trying to denigrate the role of the private employer or the employer generally, but this is what I read in Lord Carr's pamphlet. In these countries there was more money spent on industrial training. This pamphlet was published in 1972. I believe there have been many changes and we have become much better about this now. I think the noble Lord, Lord Byers, asked for training in economics for trade unionists—
Lord BYERS: My Lords, it was not me. It was some other noble Lord.
Baroness GAITSKELL: My Lords, I apologise. Perhaps it was just wishful thinking. This is one of the bees in my bonnet. Trade unionists need and require training and knowledge in economics. It was the noble Lord, Lord Carr, who asked this. Finally, I wish to add my congratulations to the very practical maiden speeches which graced this very interesting debate.
6.48 p.m.
Baroness SEEAR: My Lords, the hour is already late and your Lordships will not want to hear me for very long. I should like to add my congratulations to those given to the noble Lord, Lord Lee of Newton. It was extremely timely of him to introduce this debate and in such a practical way. Knowing the industrial "stable"—if he will forgive that term—from which I know the noble Lord, Lord Lee, came, and how he was exposed in early years therefore to a first-class industrial training, in the days when industrial training was not the fashionable subject it is, he spoke with great authority based on years of experience. I also join in in congratulating the noble Countess, Lady Mar, and the noble Earl, Lord Northesk. How nice it was to hear the noble Countess, Lady Mar, talking so obviously from personal experience of a practical kind, about which she had plainly thought a great deal. The freshness of her speech owed so much to the fact that it came directly out of what she herself had experienced.
My Lords, what I want to talk about this evening is the importance of stressing training as an element in a macro-
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economic policy. Training should not be regarded as something which is just added on as an optional extra when the rest of the economic strategy has been discussed. I listened in another place yesterday to the extremely interesting speech of the Chancellor of the Exchequer, and I hoped at one point—but I was disappointed—that he was going to make the point about training as an element in his economic strategy. He got up to the fence and then did not quite jump. I do not think the point that training is an integral part of our economic strategy is incorporated into our thinking about economic development. It is about that that I want to talk this evening.
We have to ask in what areas and for what purposes are we training. The noble Lord, Lord McCarthy, made the point very strongly that it is no use training unless there are jobs at the end, and jobs at the end depend on the successful development of industry. He was putting the responsibility on management training, calling attention to the need for management training, believing that only when managers were adequately trained would there be the growth and success in industry which would indicate the areas in which training was needed further down the fine. I agree with him that management training, and a more professional management—a greater degree of professionalism throughout industry—is something we greatly need. I do not think you can just leave it at that. That is just one aspect of making sure of getting the industrial success without which it is a waste of time and a source of great disillusionment to train people.
We have to look at our training needs in three stages: what we need to do immediately; what we need for the middle term; and what we need for the long-term economic development in the country. Before Christmas the Training Services Agency produced a publication in which they drew attention to what they called persistent job shortages, jobs which they are unable to fill. In a debate before Christmas I asked the Government what steps were being taken to train people for these jobs for which there was a persistent shortage, and I asked what success they were having. I had an interim statement from the noble Lord, Lord Jacques, in reply to that question. Christmas is quite a long time ago and,

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so far as I know, the persistent shortages still persist. If they do not, it would be interesting to know whether the situation is better. At least we could be told what the Government training facilities have done to see that these shortages have become less dominant than they were; what training facilities have been provided; what the response there has been to the training facilities; and, if there has, not been a response, why not and what are we doing about it.
The list given in the publication—I will not read out all the items because time is short—included occupations such as those of accountants, systems analysts and computer programmers, nurses and certified midwives, electrical and electronic engineers, engineering draughtsmen, personal secretaries, shorthand writers and shorthand typists, et cetera, other typists, office machine operators, postmen, mail sorters and messengers, chefs and cooks, waiters and waitresses, ladies' hairdressers, sewing machinists, tool makers, tool fitters, markers out, sheet metal workers, et cetera. These are jobs of a wide range of skills. They are not jobs just at the bottom level of the occupational hierarchy. A great many of them are jobs which are widely spread across the country. The demand for such people is not concentrated in particular geographical areas.
This publication came out at the end of 1975—four months ago. Could we know what has been done through the training services, and with what success, to fill these jobs? I have said before in your Lordships' House that it is ridiculous that we have achieved the most extraordinary hat-trick: Not only have we unemployment and inflation—which we used to be told was something we would not have together—but we have unemployment, inflation and shortage of labour. I would add to that an example of another kind of shortage of labour. I will not name the company, but it is in the Home Counties and exports over 60 per cent. of its output—and we are talking about export-led recovery. It is in high technology. It is turning down orders because of a shortage of labour. This is an absurd situation. In the immediate present we should be focusing on filling these vacancies and using training as a means to do so. May I say in connection with the company which is
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turning down orders that this is, in part, a housing problem. When I last spoke about this, the noble Lord, Lord Jacques, agreed that there had to be a blitz on the housing problem where it was holding up essential economic development, and it is linked with training. When the training has taken place, unless you can find housing in which people can live where the jobs are, then the training once again is wasted.
Turning from the immediate situation to the middle distance, in the Budget speech yesterday the Chancellor of the Exchequer said that, so far as manufacturing industry was concerned, he was anticipating a growth rate of 8 per cent. Some of us may think that this is starry-eyed optimism, but there is a lot of slack to be taken up. Even if it is not 8 per cent., if the rest of the Government strategy is to be successful there has to be a considerable growth rate in manufacturing industry. As soon as we begin to get anywhere near 8 per cent.—indeed, long before we get near that percentage—there will be an accute shortage in a number of key skills. It will be unforgivable if we get caught again. This as happened again and again. The country will not forgive the Government if, having been warned so often by experience and words, they fail to see that these shortages do not recur. I have asked in previous debates what the shortages would be if we had a 1 per cent. increase in the growth rate. I would add to this: what will be the shortages if we have a 3 per cent. increase in the growth rate, and a 5 per cent increase in the growth rate?
This is what I mean by saying that training should be part of the macroeconomic strategy. If you are planning—as the Chancellor of the Exchequer said—an 8 per cent. growth rate in manufacturing industry, there should be a related programme for training based on anticipation of skill shortages, and using all the resources, which are considerable, at your disposal, to see that those shortages do not arise. Now is the time to do it. The need to use training countercyclically is very important.
The point has already been made that people do not accept training when the labour market is brisk, when there are plenty of jobs that pay well to be obtained by just walking up the road. With

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all the income policies in the world, once the labour market looks up all sorts of jobs will begin to pay very well, as everybody knows. Then people are not going to undertake training. The time to put people into training is now, when jobs are difficult to get, based on an anticipation of what is going to be needed. There is this immensely important middle term programme which is needed linking the economic development with the training programme, to match the expectations which the Chancellor of the Exchequer gave in his Budget yesterday.
Then, there is the even more important long-term picture. Nobody in their senses, if they were starting from scratch in this country, would have the kind of distribution of manpower and capital resources that we have. We have inherited it; it is part of our misfortune of having been the first in the field. We have inherited a most inefficient distribution of resources. We know that we need a restructuring of industry. That restructuring has to be geared to retraining. We need to focus our resources on the high profitability industries. It cannot be achieved overnight, but it can be done in a planned way over a period of years: encouraging people from industries in which there is a very low level of profit and, in future, very little expectation of improvement in profit, into industries which are in the high profitability category. If that means capital-intensive industry, so be it, because if we have high profitability and capital-intensive industry, this will create the surplus of profit out of which we can buy the services both public and private which are very labour intensive and which we all want but cannot afford at the present time. We need to look at the kind of industrial structure we should like to have in this country and to move steadily towards it, using training as an instrument for getting there.
However, if we are to do this, we cannot force people to do it; we have to make people see that it is worth their while to move in this direction. The first step would be for the Government to make clear that they want to achieve this kind of restructuring and that they want to concentrate our precious resources of manpower where they will be used
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to the best advantage for themselves and for the country as a whole. I believe that if that was made clear to people and if the path was mapped out to show people where they are and how we should proceed to get to where we ought to be, with training incorporated into this as an essential ingredient in making the translation from our present deplorable situation to the kind of set-up we could have, then I believe we should begin to get the response to the training opportunities that we need to have. But there has got to be a big difference between the overall rewards of the people who are going into the more profitable industries and into those industries which we need to develop and the rewards of the people who stay where they are in declining industries which are bolstered up in one way or another and enabled to go on in areas where we ought to be thinning out, if not shutting down.
So for individuals there must be a real incentive to move. Other countries have been able to do this, and any amount of money (I do not think it is an exaggeration to say that) is paid to re-train and re-house people to go into the industries of the future, into the high profitability areas of the future, and out of the low-profitability, declining industries of the past, instead of bolstering them up, which is what we tend to do—because at any given moment it is always easier and politically more satisfactory for the time being to go on in that way, and of course we live "in the time being" again and again, and never get on with the changes we need to make. So it must be made plain to individuals that this is something which is very worth while for them: in other words, to make changes. Anyone who has ever been concerned with the teaching world knows that you cannot just do things without training. People have to be made to see, "This is where the advantage for me lies."
People also have to be convinced that this kind of social change is absolutely essential if the country is ever to do more than merely have a spasmodic recovery and then sink back into the kind of situation we are in at present. This must happen, and there must be social support for it to happen. I believe that support would be forthcoming if the Government were to give a lead and to operate their training on the required scale, with

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enthusiasm, and as part of a real economic plan for making possible the recovery of this country and putting it permanently on a sound basis. If such a lead were to be given by the Government, then, not at once but over a few years if need be, more and more people would move in the direction in which it is necessary that they should go.
7.4 p.m.
Lord JACQUES: My Lords, first of all I should like to thank my noble friend Lord Lee of Newton for putting down this Motion, and particularly would I congratulate him on the way in which he moved it. I would also congratulate the two maiden speakers on their appropriate and very concise speeches, and join with other noble Lords in hoping that we shall hear from them often in the future. It is also a pleasure to have leading for the Opposition for this occasion the noble Lord, Lord Can of Hadley, who is known as a man of moderation and a man with great experience of training, whose views we respect even when we disagree with him.
It has been agreed in all parts of the House that in the post-war period we have had a persistent shortage of skilled labour. That shortage, in some parts of the country and in some trades, has existed even in the depression. I believe that two main causes can be identified. The first is a tendency on the part of employers to underestimate their requirements of apprentices and other labour for training. They all feel that, in so far as they have underestimated, they will be able to "top up" from the adult market if necessary. Consequently, when they all want to top up, the adult market is not there for them to top up from and there is indeed a shortage.
Particularly is there a tendency to underestimate requirements in the depression. Page 6 of Vocational Preparation for Young People, a discussion paper produced by the Training Services Agency, shows a graph in which the intake of apprentices follows exactly the curve of notified vacancies, so that the numbers of apprentices go up and down with the cycle. The same document gives us a probable cure for this particular problem. My noble friend Lord Lee read part of the quotation, but not
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all of it. On page 19 the Training Services Agency say that it,
"…considers it very likely that in the absence of a new initiative there will be a continuing shortfall in the amount of training of adequate standard for young people in long-term transferable skills, and that there is a real risk that this will actually get worse following the 1973 Act. The Agency suggest that the best hope of securing a radical improvement would be through measures which enable individual employers to be refunded the full cost of all training off the job, at any rate for the first year, through a collective funding arrangement of some kind and which also makes decisions about numbers, subject to sonic form of influence going beyond the short-term outlook of the individual employers."
That, I believe, would go a long way towards the solution of the particular problem. I am informed that the Agency consider that the full cost for the first year of off-the-job training should include not merely the cost of training but also the wages paid to apprentices taking the training.
I believe if there were that kind of cost-sharing we might, at least in part, overcome our principal problem. But there is a secondary problem, which is lack of opportunity. In any country it is inevitable that there will be places where young people want to be trained for a certain skill but the facilities are lacking. That is inevitable. But in a country in which there are depressed areas with huge populations the whole problem is made very much worse. That is the problem we have. We have areas in the country where young people desire certain training but cannot get it unless they move home almost immediately after leaving school. That is a problem we have to tackle.
This is a matter for the training boards. I think we should tackle it in places such as Newcastle and Liverpool by having training centres, so that we can bring together young people from the whole neighbourhood—say, within 20 or 30 miles—for training. Their selection should be in consultation with a future employer as well as with the training board. There should be an understanding on both sides, on the part of the youngster and the parents, that he or she will take employment with the firm as an apprentice after, say, a year in a different part of the country; and on the part of the training board and the

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employer that a place will be reserved for that individual. That would also deal with the problem of the depressed areas in a way in which it has not been wholly dealt with up to now.
Our main problem has been to move industry into the depressed areas. We must also, at the same time, try to move people out, but if we wait until they are middle-aged and thrown out of work that will be too late. If we try to move them when they are young there will be a better chance. Fifty years ago a brother of mine, at the age of 17, was moved from the North-East to be a toolmaker on the West side of London, and he has been doing that job there ever since. It is something which can be done and which has been done, but which has not been done on the necessary scale. Also, it has not been done in the rather delicate way I have suggested. Instead of moving a youngster straight from, say, the North-East to the South-East, let him first be moved 20 miles away for one year for training, and then let him go to the place where he will find his work. If we tackle that second problem in that way we ought to get some results.
I should now like to say a word about group training associations which have an important place in our training work. The Training Services Agency gave these attention almost immediately after its establishment. It is of the opinion, quite rightly, that the development of group training associations would facilitate not merely the pooling and saving of resources, but also the employment of specialist labour, such as training officers. A good deal of work of that kind had already been done by the industrial training boards, but the Agency issued guidelines in order to speed up the formation of those associations and there has been marked progress in the last 10 years. In 1964, there were 60 such associations, while in 1975 there were 750 covering 1,500,000 employees, or 10 per cent. of those under the industrial training boards. These associations can be of very great value, especially to the small employer, and this progress so soon after the establishment of the Training Services Agency—but bearing in mind the work done by the training boards earlier—is to be commended. I would say at this stage to the noble Lord, Lord Carr, that all
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of the proposals for the vocational preparation of young people are at present under discussion between the Manpower Services Commission and the Government, and I believe that we can expect progress relatively soon.
I should now like to come to the question of girls, which has been mentioned by many speakers. They go into different employment from that of boys. Since the formation of the industrial training boards, giving us the levy grants system, the percentage of boys going into apprenticeships has increased from 36 per cent. in 1964 to 43 per cent. in 1974, and there has been a corresponding increase in the number receiving further education. But, in the case of girls, the percentage has remained fairly static at 6 to 8 per cent. Very few girls go into apprenticeships, but what we must bear in mind is the fact that, to a far greater extent than boys, girls have full-time vocational training before they go into employment. The youngsters receiving full-time education before they go into employment are predominantly girls, rather than boys. So that whereas the boys get the training while in employment, the girls tend to get a good deal of their training before going into it. That is because of the nature of the employment into which they go. For example, while only 7 per cent. of boys go into clerical work, 40 per cent. of girls go into such work and many of them have had some vocational training before they start employment.
Nevertheless, this is a matter which has received the special attention of the Training Services Agency, which is of the opinion that there should be much more, broad-based training for junior occupations, especially for girls, and it visualises the possibility of pilot schemes. It believes that such training should not be only in the occupations where girls tend to go at the present time, but also in the occupations where the employment of girls is rare. They have in mind even the skilled and technical levels of the manufacturing and construction industries, and the possibility of some kind of incentive schemes to encourage firms to give girls off-the-job training, particularly for technicians. At the present time they are in consultation with the engineering industry's training board, with a view to agreeing an incentive scheme for girl technicians in that industry. I

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should explain that I am advised that technicians are people who have a job that is somewhat different from skilled craftsmen, in that they usually need to have higher academic qualifications and are concerned with the planning of the technical work, rather than with the actual doing of it. Consequently, it would seem that there is scope for girls among technicians.
Baroness SEEAR: My Lords, I am sorry to interrupt, but is the noble Lord implying that girls would not be capable of doing technical work?
Lord JACQUES: No, my Lords; I am not implying that they would not be capable of doing it. I am implying that they would more like to do technicians' work than apprentices' work. That is my opinion, from my contact with the girls. I would also agree with the noble Baroness, Lady Vickers, that there is certainly scope for the employment of girls as electricians—possibly more as electricians than as engineers. She asked about grants that have been paid to this country by the EEC for the training of females. I am afraid that our records are so carefully non-discriminatory that I cannot tell her how much we have had for girls as distinct from boys. This is information which would have to be dug out, and I should have to write to the noble Baroness.
Lord PARRY: My Lords, will my noble friend agree, in regard to the figures that were given earlier, that of all the developed nations Britain has the lowest number of 16 to 19-year olds in compulsory full-time or part-lime education? It was not stated that the figure is as low as 20 per cent.; and whereas four boys in every 10 get day release, only one girl in every 10 gets it.
Lord JACQUES: My Lords, my noble friend should he content with making one speech, and should not make one in the middle of mine. I do not contest those figures in any way, but I was going on to say, as my noble friend Lord Lee pointed out, that it was stated in the Queen's Speech that the Government intended to give some priority to vocational preparation. I am informed that a good deal of the work which is necessary in order to come to conclusions as to the best way in which this can be done
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has already been carried out and that we can expect shortly a public Statement. Following that Statement, my guess is that there will be pilot schemes.
I wish now to turn to the Training Opportunities Scheme which deals with adults of 19 years and upwards. This Scheme has a dual purpose. First of all, it has a social purpose, in that it provides opportunities outside employment for those wishing to acquire new skills. Also, it has the economic purpose of facilitating the mobility of labour between trades. The training is done in three ways. It is done first in 58 skill centres, which I regard as a fancy word for "training centres", and another 14 centres have already been authorised. There are about 60 courses in those training centres. The second avenue of training is provided with the co-operation of 700 colleges of further education and, thirdly, with the facilities of about 200 approved employers for training on the job. When these three sources of training are added together, the number of courses available is increased from 60 in the skill centres alone to 500, taking together the three kinds of facilities that are available.
The increases have been spectacular. In 1971, the number of adults going through the Training Opportunities Scheme was 15,500; in 1975 it was 61,000; in 1976 it is expected to be 80,000 and will, 7 hope, include some of the training which the noble Baroness has in mind. I should also like to give to the noble Lord, Lord Carr of Hadley, the assurance that the target is still 100,000; and I am advised that it is an immediate and not a long-term target. In reply to the noble Lord may I also say that the former craft courses have been much expanded and now include operational and commercial skills—in particular, management skills. Special facilities are made available for redundant managers. That answers a question which was asked by the noble Lord. Those who are interested in the retraining of women will be pleased to know that more than 40 per cent. of the retraining that is taking place in the Training Opportunities Scheme concerns women, not men.
A number of points were raised which are associated with the Training Opportunities Scheme. The question of the training of shop stewards was raised by

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the noble Lord. It is known to the Government that some of the training boards are undertaking this training, and it is known to me personally that some of the colleges of further education are undertaking this training in co-operation with the TUC which have provided the syllabus. I think that the training of shop stewards should be undertaken more systematically and on a bigger scale, and it is my intention to ensure that the suggestion which has been made is directed to the attention of the Agency. I would say the same about training for participation in pensions. These questions should be directed to the attention of the Agency and I will undertake to ensure that they are so directed.
On the question of immigrants, may I point out that immigrants were particularly identified in the five-year plan which was published by the Agency. To return to the training of shop stewards, may I also reply to a point which was raised by my noble friend Lord McCarthy. The Training Services Agency has secured the agreement of the Manpower Services Commission to the establishment of an industrial relations training centre to promote the training of managers in industrial relations. There has, therefore, been more progress than the noble Lord realises.
I come now to the special measures which have been taken in 1975 and 1976. Throughout 1975, the Chancellor made available to the Manpower Services Commission an additional £70 million for training. As a result of those special measures, an additional 30,000 places of various kinds have been made available. First of all, 12,000 grants have been made available to firms which are willing to take apprentices over and above their normal or planned intake. Secondly, special steps have been taken to continue the training of apprentices who otherwise would have been made redundant. In some cases, their training has had to be continued off the job; in other cases it has been possible to find them a suitable job. Thirdly, 7,300 awards have been made to the industrial training boards for young people who want apprenticeships but who have not yet found an employer. The intention is to give training off the job to these
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young people prior to their being placed in apprenticeships. Fourthly, 1,000 grants have been made available to encourage employers to promote industrial training for college-based, sandwich course students. Finally, 6,300 special grants have been made available to encourage employers in the construction industries to recruit more apprentices. They have perhaps been the most hard hit in the last few years.
So far as the 1976 programme is concerned, up to now the Chancellor has made available an additional £55 million and in its communications to the industrial training boards the Manpower Services Commission has identified three areas of special concern. First, it has identified and given top priority to those cases where some incentive would permit training to continue where otherwise there would have been redundancy. Secondly, it has identified the preservation of under-used training facilities. Thirdly, it has identified medium-term training below craft level as requiring particular attention.
Next, I should like to say a word about Sweden which has been mentioned by two or three speakers. I understand that Sweden has two principal methods of training. First of all, Sweden does not have an apprenticeship system such as we have in this country. That has practically gone. In its place, Sweden provides training in the upper secondary schools, and this takes place immediately after the end of compulsory schooling—maybe for up to two years. I believe that gradually we shall move towards that situation, but I hope that we do not move wholly to it. I have always taken the view that the most valuable training is that which takes place on the shop floor. The only danger of on the shop floor training is that sometimes it is not provided; there is pretence at training but it is not provided. Consequently, the advantage of off-the-job training is that there is some guarantee that it is being provided. However, I still have a good deal of confidence in on-the-job training and hope that we shall never go so far as the Swedes have gone, which would mean that our apprenticeship system would virtually disappear. However, we are moving in that direction, and as we mechanise more and more, it is inevitable that we shall.

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The second trend of training in the Swedish system is the labour market training, which of course is quite similar to our Training Opportunities Scheme but on a much bigger scale. Our Training Opportunities Scheme has extended very greatly in the last few years, as the figures I have given have shown, but it would have to extend at five to six times the present level to get anything near the Swedish level. That cannot be done overnight. I think we must appreciate that a training and educational system within a country's economy is part of that economy, and it is not something one can change overnight without a great deal of dislocation. There are psychological problems. Before we can get to the stage which the Swedes have reached in this labour market training we should have to do a good deal of work in persuading our people that it is good for them to re-train, and sometimes good for them to move after they have re-trained. This work has to be done by all possible agencies before we can ever do labour market training on the same scale as the Swedes; but the progress of the Training Opportunities Scheme shows that in this respect also we are following the same line as the Swedes. We are getting there slowly.
I should like to refer to the speech made by my noble friend Lord Bowden in the debate last week. He made a speech which was remarkable for its interest and information, but it was almost a heartbreaking speech—a speech which no one could either hear or read without sadness. Here was a man who had built up one of our foremost faculties of engineering and he was finding that with all the possible facilities there, with one of the best institutes in Europe, he had empty places because the number of British people wanting that training had so badly fallen off that places were now available to overseas students and to some extent were not being used at all. I also had a good deal of sympathy with his analysis of the causes, but when he ended by blaming the Treasury, as we all do, I thought that was going a bit far. I have been in communication with him and have pointed out that for the
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last four years at least there has been a 100 per cent. depreciation allowance on plant but it does not seem to have encouraged very much investment. I think it was only last night that the noble Lord replied: "Oh yes, but that is replacement at historic cost. What about the replacement value?" My reply, which I am giving now, is that in deserving cases there have never been more or bigger grants available than there are now.
I should like to conclude by giving the House some more optimistic figures than the noble Lord was able to give. In spite of everything that has been said, we should note that whereas in 1963–64 only 6,000 graduates went into industry, in 1973 there were 12,000. In 10 years we doubled the number going into industry. So our efforts over the last 10 years have not been as bad as we thought, and let us hope that they will be even better in the next 10 years.
7.34 p.m.
Lord LEE of NEWTON: My Lords, when I tabled this Motion for Papers in the hope that your Lordships would debate it, I give you my solemn word that I had no idea we were going to have an apprentice Prime Minister. I am much concerned about his training and his skill in the future and, that being so, I could not possibly advise him to do anything better than to read this debate. If I may say so, I think the House has been absolutely at its best; the quality of every speech has been first-class. All had something to contribute on a vital and important subject. Your Lordships today have placed this subject squarely as one of the great issues which cannot possibly be neglected if we are to achieve that which every one of us wishes to achieve in seeing our economy go ahead at a faster pace. I am most grateful to everyone who has spoken in the debate, and most sincere in expressing my gratitude for the way in which your Lordships have received this debate and the really constructive approach which every speaker has made to it. Having said that, I beg leave to withdraw the Motion for Papers.
Motion for Papers, by leave, withdrawn.

CENTRAL LONDON PARKING FACILITIES
7.36 p.m.
The Earl of KIMBERLEY The Earl of KIMBERLEY rose to ask Her Majesty's Government whether they consider that action is necessary to halt the reduction of parking facilities in Central London, in view of the hardship which this causes both during the day and at night. The noble Earl said: My Lords, when I tabled my original Unstarred Question it was worded somewhat differently and it was specifically aimed at the widespread hardship which is caused to cinema, theatre and restaurant patrons in the West End at night time. However the noble Lord, Lord Orr-Ewing, was both lucky and unlucky simultaneously in the ballot for Short Debates to be held on 14th April in your Lordships' House, because although he won, it was impossible for him to be here on that day for that debate. As a result, I reframed my Question, with the complete concurrence and agreement of the noble Lord, so that it now covers a much wider, if not the whole, field of parking restrictions. I am also very happy that the noble Baroness, Lady Stedman, is answering for the Government, as the noble Baroness is a very sympathetic person.
However, I shall only speak about matters concerning my original Question and I shall let the noble Lord, Lord Orr-Ewing, and other noble Lords deal with the rest of the widespread problem; namely, the daytime, when for different reasons which no doubt will be explained to your Lordships, hardship, irritation and frustration are caused to perfectly normal, law-abiding citizens through the often irrational and unreasonable restrictions imposed largely by legislation but invoked by people who in many instances appear to have no idea what they are doing. In spite of this preamble, my Lords, I can assure you that I shall be brief.
Let us first consider the object of the existence of the motor-car. Briefly, it is to enable the individual, his family and his friends to travel independently from A to B for their own reasons, whether these be for business or for pleasure. Alas! today, with the present legislation, the motorist is hounded and persecuted from every side and I am
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speaking about only one aspect of his persecution; that is, when his vehicle is not even moving. As soon as he stops, he has potentially changed from a normal law-abiding citizen into a criminal through matters which are often beyond his control.
Before I go into these matters in slightly greater detail, I would ask your Lordships to bear with me and to consider the revenue that the Government obtain from the motorist. Last year the car road fund licence fee was increased from £25 to £40, and the total revenue from that is about £532 million a year. In addition, there is on, for instance, four star petrol, VAT of 15·3p per gallon and an excise duty of 22·5p per gallon, which makes a total of 37·8p on every gallon of petrol he uses. In 1974, 3,930 million gallons of petrol were consumed and if my arithmetic is correct this comes to the astronomical figure of £1,485,540,000. Since auditing this figure, which I did this afternoon, after yesterday's Budget we must add yet another £39,300,000.
Lastly, when a new car is purchased, there is the addition of 8 per cent. VAT, producing £122·3 million and a 10 per cent. car tax which produces £155 million. Once again, if we add the whole of these figures into the grand total we have the absolutely staggering sum of £2,332,173,000 produced by the motorist for the Chancellor. Therefore I feel there can be nobody who would deny that a certain sympathy should be extended to this long-suffering human being.
I am fully aware that in our cities, and in particular in London, we must have some form of control of the traffic—but only up to a certain point. It is the position where this point is reached that is the crux of the matter. My Lords, where-ever you go today, in any city, town or hamlet, there are proliferations of yellow paint. During the day time in London—and London is the specific subject of this Question—I would agree that the streets must be kept clearer than at night, so that people may go about their business. But after 6.30 p.m., when the meter's duty is done—and here I would add that many meters are positioned in the most ridiculous places, very often in a narrow street opposite each other, whereby they cause more congestion—I fail entirely to understand why the law of the double yellow line should still reign supreme.
When parking meters were originally installed their prime object, so we were told, was to provide revenue for off-street parking. This, alas!, has not come to pass, or certainly does not appear to have done to any great extent. In fact I believe that with the ever-increasing number of traffic wardens in certain cases not only do meters produce no revenue they actually produce a loss—this in spite of the fixed penalty being raised to the unjustifiable and unfair amount of £6. These details will, I know, be debated by other noble Lords.
Your Lordships will also be interested to know that in theatreland, as I like to call it, the actual spaces in garages total only 1,610. It must also be borne in mind that of those 1,600-odd spaces probably quite a lot are taken up by other people who have nothing to do with the itinerant traffic to the West End at night. Perhaps, further, in many instances it is the staffs at the restaurants who occupy these places. Many cinemas and many theatres sometimes blame VAT for the bad trade they do, but I am sure that one of the more realistic reasons is lack of parking facilities. The average cost for a short stay in one of these garages, if you can get in, is just over £1. The snag here is that many of these garages shut at midnight, so how can you go to the theatre or the cinema, come out between 10.30 and 11, and have dinner afterwards? You have no motor-car because the garage is shut, if you have got in.
I asked a Question for Written Answer the other day about how many policemen are used at night for removing cars from the West End, and how much this cost in overtime. I received a somewhat cryptic Answer, that from Monday to Friday two police constables and eight civilian vehicle removal officers are employed primarily—whatever that may mean—from 4 a.m. to midnight. As the Answer arrived on 1st April I thought it must be an April fool. It transpired that it was a typographical error and should have read 4 p.m. to midnight. In addition, on Saturday nights an additional sergeant and four further constables are used. The cost in overtime was not available. So far as removals go, these figures may be correct. The other night I went to the cinema, and I lost count of the number of police I saw in a very small area, who were not just checking for bombs but were taking the registration numbers of
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parked cars, from which no doubt in due course the owner will receive a summons for obstruction and doubtless get fined £6, or perhaps more if the car is removed; in that case I believe it costs £15 to retrieve it, plus, probably, your taxi fare to wherever the car pound may be. I should like to add here that on this particular trip to the cinema I also found out that there are some double yellow lines where you may leave your car with impunity. This state of affairs appears to me to bring the whole system into complete disrepute.
Lastly, I feel very inclined to the belief that somewhere along the line most of this trouble is caused by the organisers of public transport, who for some extraordinary reason want to do away with the individual, and they want to do away with the private motor car. My Lords, we must also remember the fact that public transport is totally unsatisfactory and abysmally bad after midnight, and taxis are prohibitive in price. There are, it is true, a few Underground trains from the West End after midnight, but any time after 10 p.m. one is, I am told, in danger of being "mugged". The day buses end at midnight, and at best there is one an hour or at worst two a night, depending on the route, leaving from the Charing Cross area.
My Lords, what is needed is a proper policy on parking. When asked what can be done the Home Office apparently sometimes say it is a matter for the local authority. In this instance I feel very strongly that this cannot be the right answer. I will agree that there are many narrow streets in the West End where parking by day or night is impossible. But there are many other double yellow line streets where there is plenty of room at night and where no congestion or obstruction would be caused. So I will be very grateful if the noble Baroness. Lady Stedman, would very sincerely and earnestly consider my Question, and what can be done to improve the lot of the private citizen taking his pleasure after his day's work is done, so that the frustration and hardship, both mental and financial, can be alleviated.
7.46 p.m.
Lord ORR-EWING: My Lords, I think we owe a debt of gratitude to the noble Earl, Lord Kimberley, for having

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raised this matter. Perhaps I should say, by the way, that I have noticed that when the digital clocks which normally record the length of speeches are not operating the length of all speeches goes up by 20 per cent., judging from the previous debate. So I will try to be succinct in my remarks. I think it shows the advantage of clocks in reminding us that we are standing too long on our feet. I was rung up while in Switzerland to say that I had drawn the ballot for the debate which I had long hoped to draw on Wednesday. Unfortunately, I was not able to do it. It so happened that I had had an accident that day and broken my hand. So I was very happy to change the date and co-ordinate my debate with the Unstarred Question by Lord Kimberley. I think we all owe him a debt of gratitude.
My Lords, I perfectly concede that the administration of parking and the treatment of the motorist in Central London must be primarily the responsibility of the GLC—and I am delighted to see that the noble Lord, Lord Pitt, who has such a great knowledge of these matters, is going to follow me in this debate—and, of course, also the responsibility of the boroughs. The fact that the noble Baroness, Lady Stedman, is going to reply reminds us of the fact that no Government can opt out of the wellbeing of the capital city of the country, and it is about the well-being of London, particularly the West End of London, that I am primarily concerned.
I cannot help feeling that the Government must be very mindful, with our present imbalance of payments, of the need to attract tourists to London. We literally have hundreds of thousands of people who come, now it seems almost every month of the year, to take advantage of our shops, our amenities, theatres, concerts, our cinemas and everything that London can offer. If we make it virtually impossible for these people to arrive at the places they have chosen either to shop at or for their recreation, then I think we are dealing a very savage blow to the invisible exports of tourism, and these are vitally important to us. I may say that anyone who was born, as I was, in London, and has grown up in London, is proud to see the way in which London
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continues to attract tourists from every nation of the world.
There has been some confusion. After the war, for a decade or perhaps two decades, every time a new building was built it was mandatory to provide under that building parking facilities. I think very prudently the Government of the day thought that this parking would get cars off the road, and perhaps they also had in mind that should the worst happen it might be useful as possible air raid shelters. Therefore, a lot of capital was invested in providing these facilities. Now the doctrine has changed, and many of the owners of these facilities are being urged not to allow their staff to come in and leave their cars parked under these buildings.
It was in 1963 that Colin Buchanan published his very thoughtful and deep report on the way in which our cities were developing and the part that motor cars had to play in the development of our cities. I think he influenced successive Governments' minds and the minds of the GLC and others who have responsibilities for our main cities. It was in the early 1960s that we started seeing the installation of meters in the various boroughs of London. At that time they were six old dinari for half an hour. They are rather more expensive now. The sixpence has been progressively abolished, against the wishes of many people in the population, and made useless through inflation. Do not let us forget the fact that the object of installing these was to make enough money to institute off-street parking facilities. When one looks at the results, one sees that very few boroughs have actually used the income from their meters for this purpose. I have the GLC Report up to 31st March 1975—and I am most grateful to our Library, who are extremely conscientious and efficient in this manner, for providing it—and we find that of the 29 Inner and Greater London boroughs, 20 of them are not making a profit out of their meters, but a loss.
Obviously, the whole principle of using these tremendous funds for this purpose of off-street parking has gone. I understand that wardens now have to be paid something between £40 and £50 a week for carrying out their duties, which is very much more than most professional people. No doubt this, with

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other overheads, has aggravated the losses which are now being made. In fact, the total net loss in the London boroughs is now £585,933—over half a million pounds loss. I am glad to say, without making too strong a political point, that it is only Kensington and Chelsea and Westminster who are making a profit. Noble Lords will quickly draw their own conclusions about that. In fact the profit in Westminster is £5·4 million. I concede that they have special circumstances. In Kensington and Chelsea it is £1·6 million. Incidentally, that and the City of London are the only boroughs who have used their profits to construct off-street parking; a total investment of £422,000 in off-street parking.
Now I look at the number of meters. There was a time when these were going up progressively. We have the figures for 1975 in the GLC publication, and they were about 39,000. The AA figures are rather lower. In addition to these parking meters, which are mainly for short-term parking, there are the residents' parking meters which number another 36,000. So we have a more or less stable population of meters since 1971, but now we learn—it was announced last year, and perhaps we could have clarification of this at the end of this debate—that the GLC has demanded that of this total number 8,000 should be removed, and 1,000 should be taken away from Westminster. I would ask how many residents' parking lots are provided in the place of these meters.
Of course, there has been pressure to keep commuters out of London, and there has been an equal promise that public transport will be immensely improved. Now if this was coming about I could understand that the policy made sense, and that it might be sensible to withdraw some of these meters. When I see some of the queues at our bus stops, when I know of the shortage of bus crews (which have been difficult to recruit), when I recognise that sometimes my wife or my friends have to wait 20 or 30 minutes for a bus, and when they come they come in convoys—particularly No. 11 s—one can understand that this policy of switching from the private motorist to public transport is not wildly popular with the population of our capital city.
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Of course, in the reports made by the GLC, they rightly say that the biggest growth has not been in commuter traffic—and one has only to travel to London Airport early in the morning to see the desperate blocks on the M4 of all those commuters who are trying to get into London, and the waste of time and the frustration that that causes—but the fact that we have not developed our orbital roads and the box to try to persuade through-going traffic to go round. It is the through-going traffic which has really grown—not the commuters, not the short-time parkers—which finds it convenient to use the main roads of London as their way through from the South to the North or vice versa. I cannot help feeling that both the Government and the GLC ought to re-examine the case of trying to divert some of these heavy lorries round the centre of London, and not to destroy the centre of London by allowing them to pass through and shake it to death.
I would mention that having represented North Hendon for 20 years, a highly marginal seat, I am mindful of the commuters' problem of trying to get into London. They say that the Northern Line is rather like living in a permanent sardine tin; the only difference is that you keep your head, but only just. I had some problem in trying to persuade the mainline railways. British Railways, which went through Mill Hill Broadway to Kings Cross to stay in business as one way of alleviating the pressure of travelling to London—and, by the way, trying to discourage people. I would ask the Government and the GLC not only to consider the traffic problems and the tube problems, but also to try to bring pressure on our main lines to increase the number of stops so that they can collect extra passengers and use the capital investment of our main lines to help carry people in and out of London.
I cannot help feeling that we really are in danger of depopulating the centre of our capital city. If we do not do something about it, we are going to make it totally uneconomic for shops to be here, for commerce to be here, for professional people to set up their offices in the centre of London, and what applies to London has already applied in other cities of the world. New York is already feeling the rotting denigration of the centre of that

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city. Friends who live in Manchester tell me that the same thing is happening up there. It is impossible to pay the very high rates and the very high rents for shops in the centre of London if you do not have the facilities for your stock to be delivered and if you have not got facilities for your customers to buy and to carry their goods away.
My son recently delivered a few dozen educational books to Hamleys. They were very heavy and they could not possibly have been sent by parcel post—you could not afford it these days, even if you were sure they would arrive. A few dozen educational books are heavy, so my son went round for half an hour trying to find some place to park in Regent Street. He found it utterly impossible. He parked on a yellow line; he incurred a risk to his discs, and other things, from carrying this very heavy load of books into Hamleys. He came out 15 minutes later and found, of course, that the car had been towed away to a pound and he had to pay £20 to get it out. While I do not want to give personal examples, that is one instance of the sort of thing that happens.
Why are we not making arrangements for the commercial delivery of goods? In Paris they insist that all lorries deliver goods before the commuter traffic starts. Should we not be doing the same in this country, or perhaps after the commuter traffic has gone? We must do something if we are to persuade shopkeepers to remain in expensive areas and offer facilities to their customers. What chance does a customer have in some streets? In my view it is not by accident that if one looks at the popular shopping streets—Piccadilly, for example—one finds them full not of shops wishing to sell goods but of prestige airlines, because one does not there have to take goods away but simply hand over a credit card to buy the product. In that area there is no chance of parking and carrying goods away. This will go on, and progressively those who are catering for consumers and customers—including many tourist customers—will move to the peripheries of our cities. This will be bad for the centre of London and will make it totally unviable and economically desperately difficult. In my view, it is not by acci-
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dent that in the expensive areas of London we now see prestige offices, airline offices and high cost small goods establishments like jewellers, silversmiths and camera shops—shops selling things which people can carry away with them because there is no chance of them being able to park their cars anywhere near. My noble friend made the point about the arts. We are famous in the eyes of our tourists; we offer in our theatres acting and standards of production which are second to none in the world, but if we do not make it possible for people to be able to travel to the theatres, I am afraid that these establishments will be in grave financial difficulty.
My Lords, I appreciate that the policy is to discourage the car and to encourage public transport, but I believe that this is unrealistic, however desirable it might be. Once the car has made an individual or a family free to travel when and where they want, they will not give it up, and every survey shows that families will give up their television, washing machine, everything, before giving up their car. One must, therefore, recognise that the car in our cities has got to be lived with and not banished. If we do not do this, urban renewal and literally urban survival will be a mockery.
8.3 p.m.
Lord PITT of HAMPSTEAD: My Lords, the limited amount of road space available to us must be used to the best possible extent. I do not think there will be any disagreement about that in this House. Let us remember that traffic congestion itself causes hardship and also has serious effects on the environment. It causes delays in business and commercial journeys and it hinders the efficient operation of the public transport bus services. In all the discussions that the GLC has had with London Transport that particular point has been paramount; that before we can get the bus services we want, we must create some easement on the roads. That is basic to the policy. The Council's policy of traffic restraint is aimed at reducing the volume of traffic in order to provide greater freedom of movement for essential business traffic, improve bus operations and remove the worst effects of noise and air pollution from the environment. That is the basic policy and that is the objective.

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There are, and always have been, many suggestions as to the weapons which should be used. At the moment parking control is the main instrument of restraint policy which the GLC uses and it is directed especially at discouraging those motorists who could reasonably use public transport from bringing their cars into Central London, particularly commuters who merely travel in and leave their cars parked all day. It is not the Council's intention to hamper London's commercial activities, and discussions are constantly being held with the consultative group of the Greater London Chambers of Commerce, the idea being to find ways and means of meeting the parking problems encountered by business users, because we recognise that if the City is to thrive, then the business and commercial community must be able to get about.
The noble Lord, Lord Orr-Ewing, is of course right to bring up the question of Paris, but the truth is that we have had two different approaches. Paris, in terms of dealing with commerce, is more concerned about the congestion effect. We are more concerned about the environmental effect, and that is basically what the problem is about. For example, if deliveries can be made only in the early morning, then the commercial vehicles must travel at night, and that must involve them disturbing people who are trying to sleep. It is an arguable point, and we have argued several times which approach we should follow, but up to now the approach has been that the environmental effect should be allowed to prevail; in other words, that people should not have their sleep disturbed in this way and that it is better to take the small amount—I accept that probably it is a large amount—of congestion that we must face as a consequence of allowing the environmental effect to be paramount. That is really the approach. I understand Lord Orr-Ewing's attitude on this and I assure him that he has allies on the other side of the river, but the majority view is that the environmental effect should still be paramount.
The Council also recognises the importance of London as an entertainment and cultural centre, and generally does not seek to impose restrictions on leisure traffic in the evenings and at weekends.
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I am sorry that the experiences of the noble Earl, Lord Kimberley, have been as he described, but the truth is that normally the supply of parking in the evenings should be adequate, although of course not everyone will be able to park next-door to the theatre, cinema or restaurant being visited. Much of the control of on-street parking, including meters, is relaxed after 6.30 p.m. and many spaces in off-street car parks are available after the daytime users have left. Our approach, therefore, has always been that it should be possible in the evening for people to be able to attend theatres and other places of entertainment without too much difficulty because the control of traffic then is nothing like the control that we enforce during the daytime. If there is need for a further look at the evening period in terms of relaxation, I believe that the Council would want to do that, because it wants people to be free to move around in the evening and to be able to use their cars if they wish.
Lord ORR-EWING: My Lords, the Greater London Council published a very interesting pamphlet of which I am sure the noble Lord, Lord Pitt, will know. It is called Living with Traffic, and among its recommendations is one on page 4 which says,
"In central London the provision of new public car parking must be generally curtailed."
The next recommendation says,
"The number of temporary car parks in central and inner London should be reduced."
If that is the Council's whole policy, how can those who wish to attend restaurants or other places of recreation use something which is to be cut down under that policy?
Lord PITT of HAMPSTEAD: My Lords, what I was saying was that, in effect, relaxation takes place in the evening. The control is during the daytime. Although, if the noble Lord, Lord On-Ewing, was making a case about the daytime, I should have to accept it, in the case of the evening the whole approach is that, having controlled parking very firmly during the daytime, it should be possible to relax that control in the evening so that people can go to a place of entertainment. That is the basic policy.
The Earl of KIMBERLEY: May I say that this is exactly what I have been complaining of? The control is not relaxed. The double yellow lines are still inviolable at night.
Lord PITT of HAMPSTEAD: My Lords, the noble Lord is quite right and I am quite prepared to concede, as the officers in control would probably be prepared to concede, that, in terms of relaxation in the evenings, there may be a case for looking at some of these double yellow lines. There is no question that the policy is that in the evening there should be that relaxation. Having said that, however, I must repeat that it is not so as far as the daytime is concerned.
It was very nice to listen to the figures which the noble Lord gave about the cost of the meters. The truth is that, whatever may have been the original objective, the objective now is to control the traffic. Making a profit is not now one of the objectives of the meters. The objective is to use the meters to prevent those who do not need to use the roads from using them, so that the available road space can be better used. That is basically what it is all about and even the loss of £½ million is cheap compared with what it would cost us to provide additional road space. That is the whole point about the control of parking.
Of course we have deliberately been reducing the number of parking meters and parking spaces. What is more, at this moment we are trying very hard to control the permanent public car parks by a licensing process, because it is necessary to limit them in the same way as it is possible to limit the number of meters. We need to be able to limit them because, in effect, the whole policy is one of making it difficult to park a car, so that people do not bring their cars into Central London unless they have to. We are asking the Government to give us power to control the public car parks. The noble Lord is quite right about that.
We began by thinking that all we needed to do was to provide off-street car parks and the streets would then be clear; people would park and that would be that. We found that it was not so and that it did not work. The car parks merely created additional traffic. All we get is people coming from somewhere else into Central London, parking their
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cars in private car parks all day and, having created congestion when they came in, creating more congestion when they go out. Therefore, we need to be able to control those car parks. We have not the power at present and we must rely on central Government to enable us to do it. The policy which we have adopted is one of asking to be allowed to licence car parks, because at the present time there are 97,000 parking spaces in London and 51,000 of those are in private car parks in office blocks. Whatever we may think about our ability to use parking as a means of restraint, we are not in a position to do it until and unless we can control the private car parks. I am hoping that the Minister, when she replies, will tell us that we can hope for some support and help in that direction, because it is crucial to the whole issue.
The noble Lord. Lord Orr-Ewing mentioned British Rail. We are constantly in discussion with British Rail about buying services for London. We have just bought services on the Broad Street to Richmond Line which British Rail were going to close. We offered to pay a certain amount to keep the service going, and we are hoping to be able to negotiate a proper figure. This is all part of our policy of providing suitable public transport but at the same time making it possible for all those who are using the roads—that is, both public and private transport—to be able to travel along them. If we merely allowed uncontrolled travel, the roads would not be able to take that degree of traffic. There is a choice between pulling down large numbers of houses to build additional roads or exercising some control.
The noble Lord, Lord Orr-Ewing, and I are at one on the question of the orbital road. I am hoping that the Minister will tell us that the Government are willing to build that road—Ringway 3 as it was on the original map—around London, because we think that there should be such a road to keep those who do not need to come into London from doing so and to allow them merely to bypass it. It is not a road that we can build. Central Government will have to build it, and it is a question of whether and how soon they are willing to do so.
I have endeavoured to indicate to your Lordships the way the Greater London

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Council sees this problem. We admit that public transport is not as good as we want it to be. I can assure your Lordships that we have our battles trying to improve public transport and that we are determined to do it. We are determined to make it possible for people to get around London on public transport easily and readily; but we have accepted that, in order to make that possible in so far as the buses are concerned, we must provide some easement on the roads. That casement can only be provided by there being fewer people sitting one at a time in cars.
8.20 p.m.
Lord BROADBRIDGE: My Lords, in rising at this late hour I will try to be as brief as possible. As the clock is not working I hope that the noble Lord, Lord Orr-Ewing, will blow a digital raspberry every five minutes. I should warn your Lordships that I speak from deeply held convictions and bitter experience, and such matters often require more than a few short sentences to do them justice. I live in the London Borough of Islington; parking facilities are closely related to traffic flow, and a disproportionately large amount of London's traffic flows through my borough; hence, my convictions, experience and bitterness.
The basic problem of London's traffic was well stated in the GLC document Living with Traffic, which has already been referred to, and which was published in March, 1973. It stated, on page 26:
"In its simplest terms the basic problem of traffic in London is that with its present road system there is too much, particularly in central London, the inner ring, the suburban centres and residential areas. There is no scientific way of deciding by how much traffic levels should be reduced to produce a more pleasant environment…".
The document went on to suggest a level of 10 to 15 per cent. Thus, excessive traffic, as we all here know, leads, first, to congestion, and, secondly, a nasty place to be in. The original ideas to combat this were formulated 10 to 15 years ago and relied upon the two policies of: first, provision of public off-street parking, as we have heard, largely to be paid for by metering on-street parking; and, secondly, the active encouragement, as we have again heard, of private off-
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street parking. Noble Lords will recall that new offices had to provide a substantial amount of parking facility, usually underground, in order to regain the required planning permission of the day.
Thus, it was hoped and, indeed, believed, that the streets would be cleared of vehicles and the traffic would flow. The main emphasis then was on relief of congestion; people were not so worried about traffic loading and environmental effects of vibration, noise, lead in petrol exhaust fumes and so on. Over the period from the early 1960s to the early 1970s this policy was essentially put into effect. What, then, have been the results?—results which I presume have led to the noble Earl's Question to Her Majesty's Government in the form on the Order Paper today.
A year ago, in March 1975 (which is fairly up-to-date as traffic statistics go) the Greater London Intelligence Quarterly published figures which showed the results of measurements, or estimates, of the number of cars entering Central London during the morning peak. I do not want us to become punch-drunk with statistics, but noble Lords may be relieved to know that these will be quite simple. The dates of comparison are 1962 to 1974, a 12-year span. The number of cars destined for public and private car parks in the centre rose by 8,000. Public car parks fell by 15,000, but private ones rose by 23,000. A rise of 8,000 should be seen against a base of 129,000 cars coming into Central London in 1974. But the through traffic had risen by 29,000 cars, from 19,000 to 48,000, over the same period. So there was a net increase in total for all purposes of 37,000 cars coming in during each morning peak, of which 29,000, or 78 per cent., constituted through traffic.
Therefore, partly because of an enormous per capita increase in car ownership, but despite the policy of the provision of more car parking spaces on and off street, flow has increased, and so has congestion and traffic loading. Indeed, this conclusion was endorsed by the findings, published in March 1973 in the GLC document, Living with Traffic, from which I have already quoted, of a July 1972 GLC Paper for public discussion entitled Traffic and the

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Environment, where there was shown to be a public feeling of an
"increasing conflict between the pressure of traffic and the desire for a better environment."
The Paper, it was said, provoked wide public interest.
The essence of the public reaction was said to be one of strong agreement on the following five points:
"positive measures are needed to deal with the problem of the ever-increasing demand for the available road space
"full recognition must be given to the relationship between traffic and the environment
"restrictions on the car, though necessary, must be accompanied by improvements to public transport
"better enforcement of traffic regulations is basic to the success of traffic restraint policies
"heavy lorries are often the worst offenders against the environment, particularly in shopping and residential streets."
The GLC accepted these views. There was less agreement on the three points:
"the priorities to be accorded to traffic in relation to the needs of the environment
"the priorities to be given to different types of traffic
"whether existing methods of traffic control are adequate or new methods are needed."
However, the GLC believed that new methods of control would be needed, but that there was no simple answer to:
"the question of priority between different types of traffic, nor to the different economic and environmental needs of the community, one of which is the reasonable use of motor vehicles".
The GLC further stated that restraint methods should be both fair and effective, and I am sure we all here agree with this principle. Restraint, it said, should be applied in such a way as to limit traffic which is of the least importance, and the greatest nuisance, and where the journeys can most easily be made by public transport. To gauge the priority to be given to different types of traffic, it set out four broad groups, and these were:
"First, buses, taxis and other public vehicles—which should be allowed to go wherever required.
"Second, commercial vehicles and cars making business trips—which as far as possible should be allowed to make the journeys they wish but might have to be excluded from areas where they had no business.
"Third, cars being used for shopping and leisure outside the busiest hours and the
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most congested areas—which should be kept away from sensitive areas where they have no business and should only be more generally restrained if they put too large a load on the roads they use.
"Fourth, cars being used for journeys in the peak hours in congested areas, such as the journeys made by car commuters to work in Central London—which should be the first to be limited."
These priorities are, I think, broadly right today.
The GLC stated two principles which it believed should be generally followed:
"First, through traffic should be directed away from the busiest centres and vulnerable residential areas wherever there are other routes which on balance are better able to take it. Second, the total amount of parking space in an area, on and off the street, must he related to the capacity of its roads to take the traffic generated."
I make no apology for quoting the GLC at some length because that body, with the exception of the major trunk roads which are under the DOE, is the executive authority for London's roads together, of course, with the local boroughs.
I should like to reiterate the second point because it is central to the Question before us this evening:
"…the total amount of parking space in an area, on and off the street, must be related to the capacity of its roads to take the traffic generated".
The direct implication is that by March 1973 there was a realisation that the provision of on- and off-street parking space in an area generates and encourages traffic.
This brings me back to the point that if we provide more parking space, we shall encourage the empirically observed situation described by the statistics I quoted earlier; that is, that marginally less cars will drive in to park, but this number will be overwhelmed by the number that find it possible—and free of cost—to pass through. I answer the noble Earl's Question, therefore, by saying that, despite alleged hardship, we must continue to reduce parking facilities in Central London, but with the essential rider that this alone is not a solution.
The only solution is to charge all traffic entering the central area, whether travelling through or stopping. Feasible measures are outlined in the GLC's document, here in my hand, Supplementary Licensing, dated 1974, and I believe these are the measures for which the GLC should

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be seeking powers. Perhaps central Government should be supporting the GLC, as the Question today perhaps implies. The preface to this document said that it had,
"…been prepared by a group of officers from the GLC, the Department of the Environment, the Metropolitan Police and the London Boroughs Association. The group was set up by the GLC to assess the practicability and effects of a supplementary licensing scheme designed to give control of traffic to central London by the mid-1970s. However, the GLC has in no sense committed itself to introduce any scheme of supplementary licensing, and is anxious to keep an open mind on the matter until the public and interested bodies have had an opportunity to study what would be involved, and to express their reactions. This publication is intended to give them such an opportunity".
Unfortunately and surprisingly, some two weeks after the period for this Paper's public representations had ended the GLC announced that the proposals for supplementary licensing had been dropped. I say "surprisingly" because in March 1973 the GLC, in Living with Traffic, on the reduction of traffic levels, said:
"Restraint on traffic by parking control alone cannot achieve this. The shortcomings of parking control have been pointed out, the principal one being that it cannot stop through traffic. Indeed even if parking control could reduce the amount of traffic in central London by 10 to 15 per cent., through traffic would increase to take advantage of the less congested conditions and cancel out some of the advantage gained.
"…A method must be found which controls through traffic. There are two possibilities for immediate consideration: restraint by physical means and restraint by fiscal means…
"…The success of this form of restraint depends on how much these conditions apply and on traffic response".
The study produced a good document, in my opinion—and I think the noble Lord, Lord Pitt of Hampstead, is nodding his head in agreement. I think it was thought through in the greatest depth. It was not one of those woolly documents full of principles and good intentions but failing to say who would actually do what, when and to whom. Indeed, it actually illustrated four designs for car window stickers for monthly and daily supplementary licences. They are in the document here. In short, it went into the greatest possible detail.
It is, I believe, very significant that these proposals received the support of LATA, the London Amenity and Trans-
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port Association. LATA is an association of some 50 affiliated members, these being groups right across the GLC area with amenity and transport interests. In case I am accused of special pleading, I should perhaps state that I am not an officer of LATA, although I am vice-chairman of the Islington Society, a leading borough amenity society, of which I am glad to observe the noble Lord, Lord Castle, is President, and this society is affiliated to LATA. LATA gives the reasons for its support of the supplementary licensing proposal in a Paper of July 1975 as follows—and according to the custom of this House I take personal responsibility for these statements, and gladly, because they happen to agree exactly with my own, less well expressed thoughts. They say:
"LATA supports the proposal because we are convinced of the need to reduce present traffic volumes in London and we believe that supplementary licensing offers the only prospect of doing so in the reasonably near future. We do not necessarily believe that the arrangements proposed by the GLC are the best. It might be better to extend the geographical scope of the scheme to include some of inner as well as central London or to cover some of the major suburban centres. There might be a case for having the scheme operating for longer hours at least in a smaller area such as the West End. The charges may not be exactly right. We have not been able to consider such modifications of detail, but we regard the GLC's scheme as good if not necessarily ideal".
I should also like to quote very briefly their words under a heading "Freedom and Equity"—an area which I believe may be troubling the noble Earl in whose name this Question stands, and since the noble Lord, Lord Orr-Ewing, has not blown a digital raspberry yet I hope I may do that. They say:
"Part of the objection to supplementary licensing seems to spring from a dislike of any kind of traffic restraint, a dislike felt particularly by those who cannot rid themselves of the view that the aim of transport policy should be to accommodate as many cars as possible and that any kind of restraint represents an infringment of personal freedom. We have already pointed out that all modes contribute to mobility, especially in London; a restriction on one mode which makes movement as a whole easier should be regarded as increasing rather than diminishing freedom".
In summary, my Lords, I believe that the only solution to London's traffic problems lies in a further significant reduction in the total number of vehicles coming into the City, for whatever purpose, but

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within agreed priorities; and that, broadly, a continued reduction in parking facilities in Central London is an essential part of this solution. Any hardship resulting must be endured for the greater good of all, and particularly for those living in the inner London boroughs. Finally, may I ask the noble Baroness who is to reply to accept my apologies if, first, I have spoken at rather great length and, secondly, if I have to leave without hearing all her reply. I shall, I assure her, read it very carefully tomorrow; but I have a long-standing engagement—one for which I would not be as late as I certainly shall be were London's traffic not so congested.
8.35 p.m.
Lord MOWBRAY and STOURTON: My Lords, the noble Earl, Lord Kimberley, and my noble friend Lord Orr-Ewing have today raised points which highlight a most serious problem which is of constant daily concern to thousands, indeed hundreds of thousands, of Londoners and people from the Home Counties. We have had very interesting contributions today, putting many sides of the question, and it is fairly obvious to all of us that the modern city depends for its survival on very highly complex technology and support systems; and a sophisticated transport network is clearly absolutely indispensable. A city in which people cannot move around properly is a city in which people cannot live and work properly. All this is doubly true of London, and, given the awe-inspiring magnitude of our capital, the mind really has to get down to thinking what we are trying to do.
My Lords, in mentioning this problem of the motor-car I should like to say that, as a Conservative, I am a believer in personal freedom. I believe in the right to be able to do as many as possible of the things one would like to do. We all know freedom must have statutory controls, or it becomes unbridled licence. But when we get to the question of the motor-car, I often think that noble Lords opposite are living in another world when they begin to lecture the House. I do not accuse the noble Baroness or her noble friend the Captain of the Yeomen of the Guard, either, of this; but, in general, the Government tend to talk about people who own motor-cars as
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though they are people who belong to a capitalist age and are capitalists. Those days, my Lords, have long since gone. Today, the motor-car is the prerogative of most people. Only the other day in a debate one of the noble Lords behind the Government Benches spoke to me as though people in the country, agricultural workmen, did not have motor-cars. "How could they afford them?", he said.
My Lords, these days most people have cars. There arc, as your Lordships probably know, 14 million cars in private hands, and there are 2 million commercial vehicles. These figures speak for themselves. The revenue which the Government receive from motorists is, I think, even greater than the noble Earl suggested. My information is that taxes on motoring back in 1973–74 brought in some £2,141 million, and that by 1975–76 the figure had risen to £2,920 million. Furthermore, if The Times this morning is correct, this year's Budget has added another £265 million to that figure, making a total return from the motor industry, broadly across the spectrum, of £3,185 million. What are the Government spending? If I am correct, spending on all roads by both central and local government, on all buildings, road building and maintenance, lighting and its administration, and on parking administration, amounted, I am told, to only £1,200 million in 1975–76. This sum, £1,200 million, is a lot of money, but, compared to £3,185 million, there is a handsome profit.
I merely say to the Government that they cannot complain too much that the roads and motorists are a nuisance. Of course they are, Things which are popular with too many people at the same time become a nuisance. We must learn how to control these things, but, as I have pointed out, there is a handsome profit in their hands. The motorist is contributing. I am not pro-motorist and anti-railway and I am not pro-railway and anti-motorist: I try to be impartial. The railways, apart from the large subsidies put into them as capital, are still costing the Government, over and above fares. £500 million a year. That is another point.
Having made these essential points first, I should like now to consider some more points about London. If the completion of the River Line were possible,

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it would open up the Docklands and the Thamesmead area and the extension of the Fleet Line to Lewisham would ease many of the hardships for people in South-East London. One must look at these methods of public transport. The noble Lord, Lord Pitt of Hampstead, spoke of what the Greater London Council were doing; but, as he said, without Government help nothing can be done. This is the sort of help which the Government can and should be considering.
Many other exciting schemes are offered. A report on the London railways, in particular, was, as the noble Baroness knows, instigated by the Conservative Government. There are suggestions of a Chelsea-Hackney line which, with long-term provision of through running and orbital systems, would be in the long run of enormous benefit. The Fleet Line and Heathrow Link are coming into being now. The Fleet Line is half completed and the Heathrow Link will soon be so. These will help.
To maximise and ease the facility of the London Transport Executive and British Rail services ought we not to be trying to get more through-ticket and more flexibility of season ticket provision? I ask and suggest. Particularly, I should have thought we want to encourage commuters to use London Transport and therefore we should consult with the Railways Board about the possibility of greater differentials between season ticket rates and ordinary fares.
How recently have bus routes been changed? Are we looking at this problem carefully enough? I often wonder why it is necessary for the No. 14 bus always to follow its particular route, or the No. 30 bus to follow its. I agree I am a stupid person. I should hate to think that they would keep changing, for I would lose my way. Nevertheless, there is a case for looking at bus routing carefully. What about a more flexible bus system aligned to present-day schemes? Have we thought about research into a new bus system geared to modern needs, extending the mini-bus and the dial-a-bus systems? These are suggestions only.
I think we have got to agree, despite the times in which we live, in which we have a falling pound and in which we have an all-time-high in borrowing from abroad, that a large measure of public investment is still going to be
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necessary in London for the transport system. I think we have got to reject ever-increasing subsidies from rates. I accept that the Government must invest. I suggest that the priorities should be for reliability and quality of service which will give value for money. Traffic in London is now flowing as fast as it did ten years ago; and in the central area it is quite considerably faster. With all the increased traffic this is a great measure of improvement and I think the GLC should be given credit for this because credit is due.
As I began by saying, I and the Party for which I stand do not believe in "clobbering" the motorist. It is obvious that in the outer suburbs in particular it is not practical to provide a public transport system that can ever compete with the convenience of the motor-car. Therefore, we must pursue an increasing programme of the up-grading of road junctions and other bottlenecks to remove so much that frustrates the motorist in London. Although we appreciated the dangers of the unrestricted use of the car to the environment we did not spare efforts to relieve residential and shopping streets of the heavy flow of through traffic. I think that the provision of environmental release routes for through traffic is a need we must get vocally expressed by local people. We should always attempt to put any new roads in tunnels and overhead rather than through existing streets. We must reduce to a minimum the conflict between the pedestrian and the motor-car.
Nobody has mentioned today the Hugh Dykes Act of Parliament which provides for the designation of lorry routes. I think that a lot of the problems of London are to be found in this particular point which I should like to see used much more. Only yesterday I got behind an enormously long lorry which had some of the longest iron girders I have ever seen. I felt sorry for the driver of that lorry. He had to get right into the right-hand lane to make a quite small left-hand turn. He had to have someone looking out to see that he was not squeezing another vehicle. It was totally unsuitable for Central London.
My Lords, I should like to take issue with the noble Lord, Lord Pitt of Hampstead, on one point. He spoke of Paris. I admire the work of the Paris road

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authorities. They tackle their work totally differently from our way in London. I suppose the Gallic and British systems will always be different. Vive la différence! as they say. Nevertheless, I cannot accept Lord Pitt's theory that environmental issues are at stake if deliveries have to be done at night. My experience is that once one goes to sleep in London one is vaguely used to a background of noise. I do not believe that the odd lorry, passing through or unloading, will disturb the average citizen. If the noble Lord really wants to rid London of day-time traffic blocks, the Paris system of night deliveries is the biggest single contributory factor to that aim. I do not believe that the normal sleeper will be awakened by the average lorry going through. The average workman who is unloading a lorry does not try to make more noise than he has to make. I agree that there is a certain amount of noise endemic to any unloading or loading. Normally it is done on the ground floor; not many people live in areas where there are big shopping centres, stores and factories. I do not accept the noble Lord's condemnation of the Paris scene. It is a scene which we could follow.
Lord PITT of HAMPSTEAD: My Lords, I wonder whether the noble Lord is aware of the amount of trouble that we have had over the proposed lorry routes, and the number of people who have complained about the fact that their roads are now designated as lorry routes. If the noble Lord had any knowledge of the extent to which we have had these protests, he would understand why we hesitate to adopt the policy he has suggested.
Lord MOWBRAY and STOURTON: My Lords, I totally accept and sympathise with the noble Lord and his friends who have to designate these routes. I know that wherever a route is designated there will always be opposition. But it is a matter of choosing the lesser of two evils. Some evils are obviously much less evil than others. It is a hard choice, I accept.
Getting back to supplementary licensing, I do not believe that will be a fair way of controlling traffic in London. I remember a few years ago, when I was in the DOE, going over to the Road Research Laboratory and seeing a black
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box. There were going to be little electronic devices in London. There were going to be more of them in Central London. As your car passed them another little black box in the car would go "click, click", like a taxi meter, and the more you motored about Central London the more tax you would have to pay. I accept there are such systems. It is rationing by the purse, which I do not think the noble Lord, or his Party, would particularly appreciate; and I do not think it is right, either.
The commuter can be encouraged by other means to leave his car at home. For instance, it is vital, as I have said, that the GLC gets control by Parliament of private off-street car parking in Central London. More must be done to provide free or cheap car parks at outer London stations. If we aim for efficiency, we believe that the commuter can be encouraged to leave his car and, given the first-class public transport system that we are always hearing about and are always hoping is just round the corner, he will be delighted to use it and not feel that he is being penalised. Change by encouragement and not by dictation should be our prime modus operandi. We should consider all these measures very carefully. The noble Lord, Lord Orr-Ewing, pointed out that business is done by men who have to move efficiently. It is not good enough to be told that there is a bus round the corner which, if you get it, will eventually take you somewhere. A good businessman does not have that time. His time is valuable.One of the advantages of living in a civilised society ought to be that one can in some way think about what the future is going to bring about, that one may make sensible choices as to a pattern of life which one wishes to adopt based on rational planning and forethought. In this spirit, many Londoners of modest means were attracted out of the centre of London in the 'fifties and 'sixties by the lure of cheaper housing and the proximity of the countryside, thereby affording better conditions in which to bring up their children. These were often the same people who had been attracted by the promises of the '45 Labour Government. In the following 13 years they realised that solid prosperity is a rather more dependable commodity than the most romantic of promises. A basic

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assumption which all these people who moved out of London made was that they would be able to benefit from travel to work in London by fast, convenient and cheap rail services. It must be stressed that they were encouraged and influenced by successive Governments, and by the Greater London Council.
Today, this picture, as we all know, has changed. It has become very different: the ordinary, hard-working middle class people have, over the past three or four years, faced what amounts to a crisis in their living standards. Their salaries have been restrained and they have had to shoulder increasing burdens of taxation, both direct and indirect. Their children's education has been threatened by dogmatic schemes of reorganisation, occasionally involving the destruction of schools of proven merit and achievement, and at the same time some of them have faced increases of up to 100 per cent. on the cost of their travel season tickets.
The problem of car parking has to be seen in the context of a larger question of a transport policy for the London area. I hope that I can claim the indulgence of your Lordships in ranging over this subject rather widely. At the moment we are rapidly approaching a stage at which we have physical control over the movement of cars into London. These controls, as we know, are congestion and parking restrictions. Few people would argue that we can allow totally unrestricted movement of cars and vehicles generally into London. We know it is arguable that what is required is an impartial study of the question, and much more information is still needed to facilitate rational debate. If, in the future this means a restrictive policy in respect of provision of parking spaces, the corollary ought to be that a free market situation is allowed to develop. At present if a car conies into London with just one passenger, it is uneconomic. If it has two passengers, costs break even. With more than two, economic arguments are strongly in favour of the motor car.
With great respect, I would suggest that the present Government apparently are coming out against the motor car being used, and they are trying to make everyone use public transport more. But as I started off by saying, what they have to realise is that the vast majority of the
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British population own a motor car and wish to own one. Therefore, all I beg of the Government is that when they assist the GLC in their admittedly extremely difficult task, they do not make a public enemy out of the private motorist. That is a policy which, in my humble opinion, is doomed to failure.
8.59 p.m.
Baroness STEDMAN: My Lords, this debate has developed somewhat wider than parking in Central London; but that was probably inevitable once the subject got on to our Order Paper. There are in London alone nearly 2 million licensed cars. I think there can be little doubt that the great majority of those nearly 2 million motorists—whom we accept do so much to help the Chancellor, particularly at a time like this—would support much of what has been said today about the parking problems in Central London. What we have to accept is that in our lifetime the motor car has brought many advantages to the private individual, not least—as the noble Earl, Lord Kimberley, has reminded us—in providing him with personalised transport, the convenience of which cannot be bettered. In warmth and comfort the car can, in our dreams at least, convey the motorist direct from door to door with none of the inconveniences attendant upon public transport, particularly when changes of mode or line may be involved.
However, I think it is wrong for the noble Lord opposite to assume that my Government are against cars and car owners, because it is these very aspects of the convenience of the private car that have been eroded as more and more people own cars but will not at the same time concede the concurrent demands for more road space in our city centres on which to use them. These basic conflicts reflect our split personality—as user on the one hand and urban conservationist on the other. Striking a balance is never easy. But is not this what we are really talking about today? The plain truth of the matter is that the number of cars in London is still growing despite there being less people and fewer jobs. Over the last 20 years the volume of traffic has grown steadily at the rate of about 5 per cent. a year. The sharp increase in the price of fuel oils has resulted in a slight pause in the rate of growth, but the longer-term

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indications are that growth will continue, even though at a slightly lower rate. There is no doubt that the London roads network has coped surprisingly well with the growth of traffic during the past 20 years. Improved vehicle performance and traffic schemes, as the noble Lord, Lord Mowbray and Stourton, said have even led to slightly higher speeds and greater safety for vehicles than ever before on the roads in Central London.
The noble Lord, Lord Broadbridge, produced figures of the present-day volume of traffic; but there is a limit to the amount of traffic that can be catered for. Indeed, we must question very seriously whether that limit has not been reached in Central London. There is a consensus that London is now a city with too much traffic for the size of its road systems. To try to cater for unrestricted traffic in London would need a massive programme of road building.
Quite apart from the enormous costs involved, both the Government and the Greater London Council are resolutely opposed to the hardship, disruption, the loss of homes, the harm to the fabric and the widespread damage to the environment that would result from a major road-building programme. In Central London, about which we are most concerned today, no one suggests any longer the creation of new road space as a solution. We learned that lesson years ago.
The policy on which the Government and the Council agree is to make the best use of the present roads by restraining the amount of traffic and by schemes for the better management and improvement of the existing network; and on this, again, we have the support of the noble Lord, Lord Broadbridge. As my noble friend Lord Pitt has said, the broad aim of the Council's traffic restraint policy is to reduce the amount of traffic congestion in Central London, thereby creating better conditions for pedestrians, for those motorists and lorry and van drivers who really need to use their vehicles in the central area, and so to improve public transport operating conditions to the benefit of users and potential users alike.
One essential element in this strategy is to discourage those parkers who can reasonably transfer to public transport,
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particularly the long-term commuter parker. It would not be reasonable to expect all car users to transfer to public transport for all their journeys. As the noble Lord, Lord Orr-Ewing, has said, car parks, and in particular short-term parking spaces, are required for businessmen who have to use their cars during the day, for people delivering or collecting goods, for employees working unusual hours, for disabled people, and for those people living in areas badly served by public transport. But surely the car commuter who uses his car solely as a means of transporting himself to and from work, when a reasonable bus or train service exists, merely adds unnecessarily to the congestion, and his all-day occupancy of public parking space makes parking so much more difficult for the essential short-term parker. Consequently, many motorists in Central London have to drive around in search of a meter or space in a public off-street car park so often filled by the long-term commuter parker.
Here perhaps I might remind my noble friend Lord Pitt that the orbital road around London is already in the Government's road programme for trunk road construction. It will be the M25 and should be completed by the mid-1980s. Parts of it are already open. As the noble Lord, Lord Mowbray and Stourton, knows, the road programme has been cut in response to pleas from noble Lords opposite, and in another place, to cut back on public expenditure. Therefore we must make use of the Transport Consultative Document to see how best to spend our money to the best advantage of the people in London and elsewhere.
Overall responsibility for traffic management and parking policy, which of course are the main instruments of control in Central London, rests with the Greater London Council. Here I am not trying to pass the buck to my noble friend Lord Pitt, but the Council has powers to make traffic regulation orders regulating traffic and restricting waiting by vehicles and, usually on the application of the London boroughs, to make orders designating parking places on-street where charges are made.
In addition to making application to the GLC for the making of orders designating parking places on-street where

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charges are made, the London boroughs, as "parking authorities", are empowered to provide off-street parking facilities and to make a charge for the use of these facilities. The parking authorities for the West End are the City of Westminster and the London Borough of Camden. I have no doubt that my noble friend Lord Pitt has noted the comments made by the noble Lord, Lord. Mowbray and Stourton, about the lorry routes and, equally, that the noble Lord, Lord Mowbray and Stourton, will have noted the comments of the noble Lord, Lord Pitt, concerning the GLC's difficulties in this respect. One way to control the use of car parks is through the charging structure, subject to the conditions laid down in the Price Code. Local authorities can fix charges within their own car parks. The Greater London Council also has powers to license public car parks in private ownership and can specify the charges to be made, times of opening and closing and the balance to be struck between the number of long-term and short-term parkers. The use of these powers within the framework of price control is being considered by the GLC. Proposals to license car parks in part of the central area have been discussed with Westminster and Camden Councils, and we envisage that charges will be adjusted to give preference to short and medium-term parkers over long-term commuters.
A further element in the Council's restraint policy to reduce congestion in Central London, to improve public transport so that there is no cause to use cars for journeys which could be made by public transport and, also—we must not forget—to provide convenient travel for those people who do not have cars, is a reduction in the number of meters in those congested areas where the Council believes there are too many at the present time. I can assure the noble Lord, Lord Orr-Ewing, that the Council has given an assurance that meters will not be removed indiscriminately, but will be taken from congested streets where removal would be in the interest of safety and efficient traffic management, from streets which ought to be freed of parked cars for environmental reasons and from streets where short-term parking is available in nearby public car parks. The Council will take care not to penalise those car
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users who are vital to London's economic life, who will continue to be provided for at meters and in off-street car parks. The intention is to reduce the number of meters in Central London from 19,000 to 15,000, but of the 4,000 reduction over half will be turned over to residents' parking.
The on-street parking control is virtually complete in the central area, which comprises some 10·4 square miles bounded roughly by the four main railway termini. In addition to the spaces available at parking meters, there are in Central London a further 28,000 spaces in public off-street car parks. Of these, 21,000 are in permanent sites, which shows an increase of 1,000 since 1973. It is the Council's policy to accept such increases only where it can be shown that the parking is necessary, because public transport is unsuitable and cannot be provided for by better use of existing facilities. The remaining 7,000 spaces are in temporary car parks, and this is a reduction of 5,000 spaces since 1973. Renewal of planning permissions for temporary car parks is refused by the Council unless the condition which I have just outlined, that parking is necessary because public transport is unsuitable, holds good.
In putting his Question, the noble Earl made particular reference to the alleged hardship caused to theatre and cinema-goers and restaurant patrons, because of the difficulty of finding somewhere to park in the evening in the West End. The leisure facilities situated in this area of course attract a considerable number of patrons in the evenings, and the growing rate of car ownership inevitably means that more and more of those visitors wish to avail themselves of the door-to-door convenience which the car provides. But motorists have to accept that this is a physical impossibility. Imagine if you will, my Lords, but a quarter of the patrons of any West End theatre trying to park their cars on-street in close proximity to the theatre. Then multiply that by the heavy concentration of theatres, clubs, restaurants, cinemas and other centres of evening activity in the West End, and one very soon realises the difficulties of accommodating all the cars whose owners wish

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to park on-street close to their destination, even allowing for the partial relaxation of parking controls that applies after 6.30 p.m.
During periods of parking control—that is, from 8.30 a.m. until 6.30 p.m. from Monday to Friday, and from 8.30 a.m. to 1.30 p.m. on Saturday—and despite the fact that the noble Earl, Lord Kimberley, told us that there are some 1,600 spaces, there are, in fact, just over 3,000 parking meter spaces available in the West End, which we take as the area bounded by Oxford Street, Kings-way, the Strand, Piccadilly, Pall Mall and Park Lane. Outside the periods of control it is estimated, having regard to the laws of obstruction, that a further 4,000 cars could park on single yellow lines in that area. In addition to this on-street availability, there are off-street parking spaces for a further 8,000 cars in 40 car parks, 3,200 of which spaces are provided in the eight car parks operated on behalf of the Westminster City Council, and my information is that there are at least 1,900 unused spaces in these eight car parks on any evening. If the same ratio applies in the remainder of the car parks in the West End as in those operated on behalf of the Westminster City Council, then on any evening of the week there will be a total of around 4,500 vacant off-street parking spaces available in the West End.
An evening parking survey of that area of Soho bounded by Oxford Street, Regent Street and Shaftesbury Avenue, carried out jointly by the Greater London Council and the Westminster City Council in May 1974 in order to provide an estimate of the evening demand for parking, supports the indications of parking availability for the West End as a whole. Soho, in the heart of the West End, is, as noble Lords know, an area of many narrow streets and presents particular problems for traffic regulation and parking control. Also, it is an area of very high fire risk, and to enable fire appliances and other emergency vehicles to have access to any incident, as well as to allow for the normal flow of traffic, necessitates extensive double yellow lines in that area. But, even so, that survey showed that less than 40 per cent. of the spaces in the off-street car parks in Soho were occupied at the peak time; a little
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over 800 spaces were occupied out of a total of 2,100. There are 480 meter spaces available in the area and they are well used, but they were never at any time during the survey totally occupied. The same was true of the estimated 650 spaces for cars on single yellow lines outside restricted hours. Yet despite the availability of so much unused off-street parking, the survey showed that there is considerable illegal parking on double yellow lines. On any one evening, something like 600 or more cars will be illegally parked on double yellow lines in Soho alone. Indeed, when the Soho evening parking survey was carried out in 1974 there was a total of 836 vehicles illegally parked on double yellow lines.
I do not accept that this is an indication of a lack of parking space. Indeed, the evidence is to the contrary. It is, I feel, symptomatic of the selfish attitude of many motorists today to disregard the parking controls which are so essential to the movement of traffic and to ignore the needs of the community at large, in particular the emergency services and public transport which have to move freely and without hindrance.
The noble Earl, Lord Kimberley, asked why evening parking cannot be allowed on double yellow lines. I should point out that double yellow lines do not necessarily imply a total prohibition on parking but simply that parking restrictions extend beyond the normal day. There may, therefore, be periods when parking on double yellow lines is permissible, although it is probably true to say that this is rare in the central area. But there will always be plates adjacent to the double yellow lines, and the onus is on the motorist to check at what time he can park on those lines.
As noble Lords will know, the criteria for the laying down of yellow lines are high traffic volumes in relation to street width, the need to prevent obstruction in the vicinity of junctions, the need to prevent obstruction of emergency and essential services, and the safety of pedestrians and other users. Given that any or all of these criteria are met, it is for the Greater London Council to determine the hours during which parking restrictions should apply. If its decision is that such restrictions should apply during the evening or, indeed, at any other time outside the normal working day, then

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clearly it would be against the general public interest to allow parking on double yellow lines at that time.
In all the circumstances, I cannot accept that there is any serious hardship caused to evening visitors to the West End through lack of parking space, since the evidence which we have clearly implies that this is not so. That the parking space may not be immediately adjacent to the premises that the motorist wishes to visit may well be true, but in no circumstances can I imagine a short walk for any motorist as constituting real hardship. I am sure that the GLC have no immediate plans to impose any further restrictions on evening parking.
The reductions that have already been made and that are proposed for the future by the GLC in the amount of parking space in Central London must be set against, and in the context of, the Council's overall strategy to reduce congestion, to improve public transport and, by an effective pricing policy, to ensure that the long-term parker, particularly the commuter motorist, is deterred and discouraged from occupying parking space which ought to be available, as the noble Lord, Lord Orr-Ewing, has said, to meet the needs of those whose business in London depends on their being able to use and to park a car. At the risk of losing the reputation given to me earlier for being sympathetic, I must repeat that the responsibility for traffic management in London vests in the Greater London Council and that that Council has the support of the Government in the direction of the policies that it is pursuing.
Notwithstanding what has been said on this matter today, there appears to me to be no good reason to justify interfering with the way in which the Council is at
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present exercising its responsibility. However, I am sure that the points which have been raised in today's debate will be taken note of both by the Government and by my noble friend Lord Pitt of Hampstead. But the fact remains, as I said earlier, that there is a limit to the amount of traffic that can be catered for and we must question seriously whether that limit has not now been reached.

METHODIST CHURCH BILL [H.L.]
Reported from the Select Committee with Amendments, and recommitted to an Unopposed Bill Committee.
  THE NATIONAL DEBT
  THE NATIONAL DEBT