Sitting of 11 January 1977

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

    Earnings Rule
    Mr. Townsendasked the Secretary of State for Social Services, what assessment he has made of the extent to which the earnings rule acts as a disincentive to work.
    The Minister for Social Security (Mr. Stanley Orme): A survey is currently being carried out into the reasons for retirement, and its findings, which are expected this year, will provide information on the effect of the earnings rule. However, it does not seem likely in view of the present level of earnings which a retirement pensioner can have before his pension is affected, and of the present unemployment situation, that the rule has much disincentive effect.
    Mr. Townsend: Is the Minister aware of the large number of verbal and written complaints that I have received from my constituents about this miserable form of taxation? What plans has he, first, to reduce and, finally, to eliminate this taxation, which discriminates against elderly people and discourages them from making a sensible contribution towards the community?
    Mr. Orme: The hon. Gentleman will be aware that since the raising of the earnings rule a great number of people have now been taken out of its effect. In consequence, in July 1976, under the present earnings rule limit of £35 a week, 3,600 people had their pensions extinguished and 2,000 had them reduced. That is a considerable reduction.

    Elizabeth Garrett Anderson Hospital
    Miss Fookesasked the Secretary of State for Social Services whether he will make a statement on the latest situation at the Elizabeth Garrett Anderson Hospital.
    The Minister of State, Department of Health and Social Security (Mr. Roland Moyle): Interim facilities of 70 beds are to be provided at the Whittington Hospital by mid-February, when it is expected that all in-patient facilities at Euston Road will be closed. It is intended to establish a final facility of perhaps about 100 beds identifiable under the name of Elizabeth Garrett Anderson at the Whittington Hospital. This is still under discussion by a project team of the area health authority, on which the Elizabeth Garrett Anderson Hospital and the Whittington Hospital are both represented. Such a facility cannot be established before the commissioning of the diagnostic block at the Whittington Hospital later this year, when a greater degree of rearrangement of that hospital will be possible.
    Miss Fookes: How much count has the Minister given to the loss of staff morale and possible excellence when these facilities are dispersed within a bigger institution, which is what it comes to?
    Mr. Moyle: We have given considerable consideration to the question of the staff and the possible loss of morale. We believe that we can offer most of them jobs at the Whittington or in other parts of the health service.
    Mrs. Jeger: In view of the feelings of the staff, and the fact that inferior accommodation is temporarily being provided at Whittington for in-patients while the old hospital is being preserved for outpatients, surely there should be a minimum saving in this situation? It would be much more sensible to leave things as they are until a final provision could be made for an identifiable Elizabeth Garrett Anderson Hospital.
    Mr. Moyle: That might incur a considerable expenditure on the existing site, and we have already started to transfer a number of beds from the Elizabeth Garrett Anderson Hospital to Whittington Hospital.
    Mr. Patrick Jenkin: Is not the situation even more disturbing than as outlined by my hon. Friend the Member for Plymouth, Drake (Miss Fookes)? As there has now been such a long delay it must be questionable whether the undertaking of the right hon. Member for Blackburn (Mrs. Castle) will effectively be implemented at all, because there will not be much left to transfer.
    Mr. Moyle: A process of transfer is already going on. It is our intention that the Elizabeth Garrett Anderson facilities will be established, to the extent that I have indicated, at the Whittington General Hospital.

    Disabled Persons (Mobility)
    Mr. Newtonasked the Secretary of State for Social Services if he will make a further statement on mobility for the disabled and, in particular, on progress towards safeguarding the position of those currently possessing the tricycle.
    The Secretary of State for Social Ser-Vices (Mr. David Ennals): I have written individually to all holders of tricycles and private car allowances issued under the old vehicle scheme to tell them what is being done to safeguard their position. For at least five years, and possibly for longer, we expect to be able to replace tricycles and to provide spares for drivers supplied under the old scheme. Disabled people are to be given the option of a no-age-limit mobility allowance. Furthermore, we shall be continuing to look on home and world markets for specialised vehicles for those who will still need them when tricycles can no longer be replaced.
    Mr. Newton: Does the Secretary of State accept that despite a long series of either clarificatory or allegedly reassuring statements there remains a high degree of anxiety? Will he give a clear-cut undertaking that those who are currently enjoying mobility via the trike will not be allowed to lose that mobility either because they cannot afford it or because there will not be a suitable vehicle available? An undertaking of that kind will be required to reassure people who are now worried.
    Mr. Ennals: Let me say first that the response that I have already had to the
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    letter that I sent out proves that many people had been misled by propaganda and misleading statements. I received one letter this morning stating:
    "What a relief to have your communication. Thank you very much. How one was misled through the media."
    I am afraid that is true. I accept that whatever the Government may be able to do to increase the mobility allowance further, some of the existing tricycle drivers will still need a specialised vehicle when their tricycles can no longer be replaced. We shall be looking at what is available on home and world markets to help such people. Our aim will be to do all we can to ensure that no one who has a tricycle issued under the old scheme is made immobile by the phasing out of the tricycle.
    Mr. Frank Allaun: I appreciate the great reforms for the disabled that this Government have introduced, but will my right hon. Friend nevertheless repeat his last statement, to the effect that there is anxiety on the part of those who fear that, at the end of five years, they will be deprived of their vehicles? Why cannot the Government say that they will ensure that at the end of five years those who need a vehicle will be able to continue either with a tricycle or with a four-wheeled vehicle suitably adapted?
    Mr. Ennals: Perhaps I may quote from the letter which I sent to every tricycle holder. I said:
    "What we shall be trying to do, of course, is to make sure that no one who is now mobile is made immobile by the phasing out of the tricycle except where increasing disability makes that unavoidable."
    I do not see how I can go much further.
    Dr. Vaughan: Does the right hon. Gentleman agree that it is confusing for disabled people that funds for mobility should be available both from his Department and from the Department of Employment? Has he considered proposals for commuting the sums available to enable the payment of a lump sum for someone to buy his own vehicle?
    Mr. Ennals: Commuting is a subject that is being discussed by the Central Council for the Disabled. It may be that the council will have proposals to put forward, although there are financial difficulties. The responsibility of the Employment Service Agency, under the

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    Department of Employment, is particularly relevant to those who need assistance in getting to and from work. I am in touch with my colleagues in the Department of Employment to see whether there are ways in which we can make it simpler. As for general mobility, it is very much more satisfactory for disabled people that so many more of them now can have assistance than was ever possible before. We are now in the course of trebling the amount that this Government are spending on disabled people.
    Mr. Thompson: Apart from looking at the world market and the home market for specialised four-wheeled vehicles, have the Government commissioned research into such vehicles? Would not it be a good idea, in this International Rheumatism Year, for the Government to undertake this sort of research?
    Mr. Ennals: We have not commissioned new research, but we are following developments that are going on. Interesting work is going on in the constituency of my right hon. Friend the Minister of State, and I have seen other work in other parts of the country. This is a matter that we are following very closely.

    Occupational Pensions
    Dr. McDonaldasked the Secretary of State for Social Services what progress he has made with consultations on member participation in occupational pension schemes; and when the Government proposes to introduce legislation on this topic.
    Mr. Ennals: We have had extensive and productive consultations—which are still continuing—with organisations representing many shades of opinion. Legislation will be introduced as soon as parliamentary time permits.
    Dr. McDonald: In view of the importance of these proposals and the extension of industrial democracy, and in view of their importance to workers since part of their own wages is used for investment purposes in occupational pension schemes, cannot we have a firm date for the introduction of these proposals?
    Mr. Ennals: I agree with my hon. Friend about the great importance of these proposals. Increasingly, workers and members of schemes are demanding a say in
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    how what is, after all, deferred pay is administered. I agree with my hon. Friend's sense of urgency. I cannot give a date. I said on 14th November that the Government wanted to introduce a Bill as soon as time was available. It is only time that is the problem. Consultation will have to continue before we reach the state of introducing legislation.
    Mr. Boscawen: Does the right hon. Gentleman agree that we want more information, as soon as possible, about whether schemes will be introduced under a system of voluntary or statutory participation? People want to know what it is to be.
    Mr. Ennals: We are to introduce a new report following the White Paper published before. On the central issue, in terms of representation, the views of the Government have not changed; it is the Government's view that effective representation should be achieved through recognised independent trade unions. But the method of implementing this is a matter that we are considering with those especially concerned.
    Mr. McCrindle: Is the right hon. Gentleman aware that many people who are entirely behind the idea of membership participation in occupational pension schemes continue to take exception to the Government's proposals that membership participation must be only through trade unions? Will not he reconsider this matter yet again and say that although legislation will require membership participation it will not be on the basis of membership of a trade union?
    Mr. Ennals: I will not give that assurance. That would break with precedent that we have already established in the Health and Safety at Work Act and the Employment Protection Act. I find it very difficult to uncover evidence, or even people who will say that it is their view, that those who are nominated by trade unions are likely to act irresponsibly or without regard to the best interests of the membership as a whole. They are obliged to do so under trust law.

    Supplementary Benefit Recipients
    Mr. Michael Marshallasked the Secretary of State for Social Services what steps he is taking to reduce the number of people on supplementary benefit.
    Mr. Ennals: The build-up of earnings-related pensions for retirement, widow-hood and invalidity, which will start in 1978, and the associated development of good occupational schemes, will reduce the rôle which means testing plays at present in our social security provisions.
    Mr. Marshall: Is the Secretary of State aware that 150,000 people could, without loss of income, be transferred from supplementary benefit to housing benefit? What steps is he taking to achieve that?
    Mr. Ennals: This is a matter that I shall have to discuss with my right hon. Friend the Secretary of State for the Environment. The proposal is not as simple as the hon. Gentleman suggests.
    Mr. Sproat: Does the right hon. Gentleman accept that one of the most sensible ways of reducing the number of people on supplementary benefit would be to introduce a residential qualification? Is not it unjust—indeed, insulting—to hard working men and women that people can come here from overseas and, without doing a day's work or paying a penny in tax, be eligible for benefit?
    Mr. Ennals: In view of the fact that Britain has joined the EEC, it is extraordinary that the hon. Gentleman should take this attitude towards fellow members of the Community. He talks about an insult to the people of this country. I find his own behaviour excessively insulting to the people of this country. We shall shortly be giving an analysis of the very "evidence" which the hon. Gentleman has produced, showing that most of his allegations are totally false and are themselves an insult to the people of this country.
    Mr. Skinner: Does my right hon. Friend agree that, probably, many taxpayers and others who make contributions to the country's revenue resent forking out some of their money to pay the wages and all the "perks" of the hon. Member for Aberdeen, South (Mr. Sproat)? Is not it a fact that many people on supplementary benefit and in receipt of unemployment benefit are not scroungers and never could be called scroungers? Is my right hon. Friend aware that the man who won the "Supermind" contest—an amalgamation of people from "Mastermind", Mensa and the "Brain of Britain"—was actually on
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    the dole at the time that he won the contest?
    Mr. Ennals: I was aware of that, and I wondered whether there was not a rôle for him in this House, on one side or the other, where his skills and knowledge might have been well used. I agree with the first part of my hon. Friend's question. The way in which some newspapers and some Opposition Members suggest that those who are on either supplementary benefit or unemployment benefit are scroungers is disgraceful. The vast majority of them certainly do not wish to be unemployed.

    Earnings Rule
    Mr. van Straubenzeeasked the Secretary of State for Social Services how many statisticians have been used by his Department to calculate the effect of changes in the earnings rule.
    Mr. Orme: None, Sir. Estimates are based on advice from the Government Actuary.
    Mr. van Straubenzee: The next time the Secretary of State puts this matter of the earnings rule—which is what this Question is about—to the Government Actuary, will he also put to him a new factor, which is that we now know from Mr. Jack Jones that in this year we have all to work like beavers? Ought not that to apply to those people who have reached retirement age and who are anxious and willing to work hard? Will the right hon. Gentleman seek to remove any rule which inhibits them from doing that?
    Mr. Orme: I accept the point that the hon. Gentleman makes. In fact, the adjustment of the earnings rule to £35, which in future will be indexed, gives the majority of people who want to continue working and at the same time obtain a retirement pension the opportunity to be able to do so.
    Mrs. Chalker: Will the Minister confirm that rather than there being a reduction in the numbers on deferred retirement from 120,000 to 70,000, the figure of 135,000 now deferring retirement, given in a Written Answer last November, is the correct figure on which we should be working?
    Mr. Orme: I know the hon. Lady's fascination for figures, as she has raised

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    this point before. We shall deal with this in more detail on the Bill.

    Deferred Retirement
    Mrs. Chalkerasked the Secretary of State for Social Services what trends he anticipates in the number of persons deferring retirement beyond normal pensionable age over the next five years.
    Mr. Orme: The number of people deferring retirement beyond the minimum State pension age will be affected by the level of unemployment and by changes in the earnings rule. But, these factors apart, we expect a very gradual reduction over the next few years.
    Mrs. Chalker: Will the right hon. Gentleman explain why, on the figures published so far, there has been a complete turn around? Rather than a decrease, there has been an increase in the number of people deferring retirement. Will the right hon. Gentleman tell us what gain he anticipates to the National Insurance Fund, through contributions, if this goes on?
    Mr. Orme: The economic situation has affected retirement and the desire of people to maintain their earnings. However, I still believe that it is the desire of most people on reaching retirement age, to retire on a decent pension, and that is still our objective.
    Mr. Peter Bottomley: Will the Minister tell us why he finds the argument of his right hon. Friend the Member for Battersea, North (Mr. Jay) unconvincing? This argument is that more people should work longer as more are living longer.
    Mr. Orme: I do not quite follow the hon. Member's argument. In actual fact, on arguments about retirement, there is a genuine desire in some quarters to retire earlier and in other areas to work longer. The question of flexibility of retirement will come into the general discussions that we have over the next few years.

    Home Help Service
    Mr. Steenasked the Secretary of State for Social Services whether it is the Government's intention that the home help service should still expand by 2 per cent. per annum in the light of the Chancellor of the Exchequer's recent economic statement.
    Mr. Moyle: The consultative document on priorities on health and personal social services suggested priority in the home help service which would entail an average growth in total of 2 per cent. per annum over the next years 1975–76 to 1979–80.
    My right hon. Friend and I are now reviewing this and other proposals in the consultative document in the light of comments received and more up-to-date financial information. We shall where necessary issue revised advice later in the year, but in the meantime my right hon. Friend has suggested that the general strategy should be to protect field and domiciliary services, of which home helps are a part, at the expense, where necessary, of other services.
    Mr. Steen: Does the Minister realise that if he destatutorised the home help service in urban areas and encouraged self-help groups of mothers and community organisations to care for their neighbours, it would be cheaper and better, and would transfer community responsibility to the neighbourhood itself?
    Mr. Moyle: I think that both ideas should be pursued—a statutory home help service and the good neighbour scheme of my right hon. Friend, which is designed to do just what the hon. Member has suggested.
    Mr. Carter-Jones: Does my hon. Friend not agree that the home help service has done more to keep elderly and disabled people within the community than any other single factor? Therefore, will he decide to spend a substantially larger sum of money on preserving and expanding this vital service?
    Mr. Moyle: I agree entirely. We shall continue to spend a relatively large sum of money on this service compared with other services.
    Dr. Vaughan: Are we to take it that the Minister is standing by the statement in the circular to local authorities and social services that there will not be any significant increase in real terms in available resources in the next few years, and that this applies to the home help service as well as other welfare services?
    Mr. Moyle: The question of allocating money between various welfare services is a matter for the local authorities to

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    decide. Next year the amount available for expenditure in personal social services will increase by 1½ per cent. to 2 per cent.

    Unemployed Persons (Supplementary Benefit)
    Mr. Lawrenceasked the Secretary of State for Social Services how many registered unemployed are currently in receipt of supplementary benefit only.
    The Under-Secretary of State for Health and Social Security (Mr. Eric Deakins): The latest available information relates to August 1976, when the figure stood at about 730,000.
    Mr. Lawrence: Is the Minister aware that that is a truly astonishing figure? If only half the unemployed are in receipt of unemployment benefits, why are the other half not receiving them? Are they not entitled to draw unemployment benefits because they have been unemployed for more than a year? If this is the case, is it not a shocking commentary on the effect of the social contract?
    Mr. Deakins: It has got nothing whatever to do with the social contract but everything to do with the way in which our national insurance system works. In May last year 43 per cent. of the registered unemployed receiving supplementary benefit did so only because their entitlement to unemployment benefit had lapsed. In addition, 44 per cent. got supplementary benefit and not full unemployment benefit because their contribution records were deficient in some way.
    Mr. Ovenden: Does the Minister agree that far too many unemployed people are receiving only supplementary benefit for their children and dependants because of intolerable delays in settling their appeals against disqualification from benefit? This has caused hardship to hundreds of workers in my constituency who were formerly employed on the Isle of Grain power station site and who find that they are still disqualified six months after becoming unemployed.
    Mr. Deakins: My hon. Friend has raised a special case, which I shall look into. In general, I am not aware of any delay in settling appeals which is caus
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    ing people to suffer unduly. My hon. Friend should note the point that 50 per cent. of the unemployed are not getting unemployment benefit, and this should be taken account of when considering abuse and fraud.
    Mr. Budgen: Does the Minister agree that the whole system of supplementary benefits is undermined by increasing fraud and abuse? Is it not right that one of the most important ways in which that fraud is perpetrated is by persons claiming under false names? Is it not possible to check that by requiring that all claimants should produce identity cards before receiving supplementary benefits?
    Mr. Deakins: We are looking at many ways of cracking down on fraud and abuse. My right hon. Friend the Minister for Social Security made a statement on 21st September last year, a copy of which will be published in today's Official Report in answer to a later Question. In that statement my right hon. Friend gave an undertaking to devote resources to the pursuit of wrongdoers, but he emphasised that such action should not discourage genuine claimants. This remains our policy.
    Mr. Flannery: Does my hon. Friend agree that the so-called dodgers in respect of supplementary benefit are as nothing compared with those people who do not claim benefits at all? Is it not a fact that the sum of £6 million or so—to which this massive propaganda effort is being devoted—is tiny compared with the vast amount of money that could be claimed honourably by people who do not claim at all? Also, does he agree that the exaggeration of figures of unemployment would be nothing to what there would be if public expenditure cuts urged by the Conservatives were put into effect? Their cuts would double unemployment.
    Mr. DeakinsMy hon. Friend has made a number of valid points. About three quarters of the amount of supplementary benefit paid out are paid to retirement pensioners, and I do not think that anyone is going to accuse them of fraud and abuse.
    Mrs. Knight: Will the Minister say whether the 3,276 qualified nurses who are currently unemployed constitute a record?
    Mr. Deakins: I cannot say without notice.

    Pensions
    Mr. Anthony Grantasked the Secretary of State for Social Services what recent discussions he has had with representatives of the TUC concerning pension problems.
    Mr. Ennals: I met a deputation from the TUC on 20th December, when several matters relating to pensions were discussed.
    Mr. Grant: When the Minister next meets the TUC will he tell it that since he was soundly defeated this morning in Committee on the question of unemployment benefits for occupational pensioners he has absolutely no intention of seeking to restore the change on Report?
    Mr. Ennals: The position of the Opposition on this matter is quite typical. They constantly demand cuts in public expenditure and then they vote against measures designed to carry those cuts through. They have behaved irresponsibly. The position of my hon. Friends is totally different. On the question of public expenditure they take a completely different position from that adopted by the Opposition.
    I understand that this morning the Opposition had an alternative proposal, which was to increase prescription charges. Presumably that was to be added to the other proposals they have in mind—proposals for charging people to go to the doctor and to go into hospital. My right hon. Friend and I will now have to consider the position that we take in view of this morning's vote.
    Mrs. Castle: Will my right hon. Friend represent to the Chancellor how important it is in the next round of pay policy to allow scope for adequate improvements in pensions so as to prepare for the introduction of the Bill to provide better pensions in 1978 and therefore avoid any possibility of delay in the introduction of that scheme?
    Mr. Ennals: I agree with my right hon. Friend. Occupational pension schemes were included in the pay policy because, as fringe benefits, they add to labour costs. They will, however, be discussed in the talks on the next stage of pay
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    policy. A valuable easement was allowed from last August. Improvements designed to bring the scheme up to the level required to meet the contracting-out requirements of the new scheme could be negotiated and implemented. There should be no reluctance on the part of employers or employers' representatives to put in hand the work required to meet the contracting-out date of April 1978.
    Mr. Patrick Jenkin: The right hon. Gentleman has missed the point. Is he aware that no one will go through all the elaborate procedures if the scheme which results is no better than what the State can offer? Does he recognise that there is now a very difficult time scale? Employers must know that they will be able to negotiate beyond the minimum figure in time for them to go through the necessary procedures by the deadline in the Bill introduced by the right hon. Member for Blackburn (Mrs. Castle).
    Mr. Ennals: I agree with the point made by my right hon. Friend. It is important that this issue should be made clear as soon as possible. That is why I gave an assurance on behalf of the Chancellor and my other right hon. Friends that this is a matter that can be taken up as part of the next stage of pay policy.

    National Insurance Fund
    Mr. Skinnerasked the Secretary of State for Social Services if he will take steps to reduce the surplus in the National Insurance Fund.
    Mr. Ennals: No, Sir, for reasons which I have explained in a note available to all hon. Members.
    Mr. Skinner: Does my right hon. Friend agree that at present there is a surplus of about £900 million in the fund? I am told that it could be calculated at about £2·5 billion over the next three years. Will my right hon. Friend take the advice of his hon. Friend the Under-Secretary, who suggested that local authorities should reallocate resources within their departments? My right hon. Friend could do the same. He should reallocate some of this National Insurance Fund to get rid of prescription, teeth and spectacle charges, to raise old-age pensions, and to restore the £10 Christmas bonus.
    Mr. Ennals: It is not as simple as that—I wish that it were—because spending all the surpluses would require either that we spent less on other things or that we raised more from other sources. A third possibility is that we should borrow from elsewhere. My hon. Friend will see, therefore, that this simply is not on. The balance in the fund now amounts to about three months' expenditure. It is proper and fair, and good housekeeping, that we should make certain that we can meet any demands that might come upon us in the event of, say, an influenza epidemic, or something like that. There was time when the National Insurance Fund held as much as two years' payments. Now it holds only three months' payments, so that as the payments go up the surplus must go up too.
    Mrs. Chalker: Will the right hon. Gentleman confirm that the reserve in the fund now totals about £3,000 million?
    Mr. Ennals: The figure is about £2,200 million. I shall be answering a Question today giving the precise figures, which show a marginal and not a dramatic increase. In any case, these are matters that can be taken up by the House in the debate this evening on the re-rating order.
    Mr. George Cunningham: I accept the general point about public finance, but how can my right hon. Friend justify charging a higher national insurance contribution in 1977–78 than is necessary to meet the due payment out of the fund, especially to people who expect to retire at about the end of that year? Surely they will be paying an amount beyond what is required to pay for their benefits?
    Mr. Ennals: Let me ask my hon. Friend how one could justify, in this year, exempting from increases in payment those people who receive more than £95 a week. He is suggesting that the general tradition by which those who receive more should pay more should somehow be ended. One of the effects of the order is that we are raising not only the ceiling but the floor, and this will exclude from payment some of those who are very low earners.

    Disabled Persons (Benefits)
    Mr. Rifkindasked the Secretary of State for Social Services what further
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    proposals he has to introduce additional benefits for the disabled.
    Mr. Ennals: The phased introduction of mobility allowance will continue, and claims can now be made on behalf of handicapped children in the age group 5 to 10 for payment from April of this year. Furthermore, the new non-contributory invalidity pension for married women is to be introduced in November of this year. Payments of earnings-related invalidity pension will begin in 1979.
    Mr. Rifkind: Those improvements are certainly welcome, but does the Minister not agree that the increasing number of conflicting and overlapping grants, benefits and allowances available to different classes of the disabled causes the maximum of confusion to the public and the minimum of help to the disabled? Does he accept that we should be urgently moving towards a single disablement benefit, eligibility for which could be determined solely on medical criteria?
    Mr. Ennals: I find the hon. Member's proposal very strange. We can introduce new benefits only gradually, partly for administrative reasons. The difficulties are mostly in terms of Civil Service time and staff, and public expenditure. I am glad that the hon. Gentleman said that he was pleased that we were making progress, and I believe that it is rather impressive that we are continuing to expand the facilities available to disabled people on a substantial basis in spite of the economic pressures on the economy. The hon. Gentleman is saying that we should do it all at once. I wish that we could. The mobility allowance is being phased in so that it requires the minimum of staff, including medical staff, and also so that we can meet the requirements of our economic ability to pay.
    Mr. Carter-Jones: Does my right hon. Friend not agree that it seems a long time ago that this House accepted without a Division that benefits should be paid on the NCIP basis for disabled housewives? These people are in the greatest need, and it is sad that administrative reasons are being advanced for the delay and that these people are suffering all the time.
    Mr. Ennals: I agree with my hon. Friend. I am certain that my right hon.

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    Friend the Member for Blackburn (Mrs. Castle)—who was responsible for introducing the benefit—would like me, have liked it to be introduced earlier this year. It will be introduced some months later than we had originally hoped. The reasons are not only to do with administration; public expenditure comes into it as well. However, we must express some satisfaction that this long-awaited benefit, which will affect 40,000 severely handicapped women, will be introduced in 1977 in spite of our economic difficulties.
    Mr. Luce: Does the right hon. Gentleman accept that the one thing that matters to disabled youngsters when they reach the age of 16 is to be able to be independent in relation to their own families? If this can be achieved by means of an invalid trike that is fine, but the £5 mobility allowance is insufficient to cover that requirement.
    Mr. Ennals: I think that the hon. Gentleman will be aware of the announcement that I made some time ago that the £5 invalidity pension will also be uprated during the course of this year. I hope that it will be possible, in spite of our economic difficulties, to uprate the mobility allowance more than the amount needed simply to cover the change of value since the announcement was first made. I agree that young people need some support in mobility, but under the Conservative Party young people who will be benefiting from mobility allowance would be getting no assistance.

    Ambulance Service (Essex)
    Mr. Newensasked the Secretary of State for Social Services if he will make a statement on the progress achieved in resolving all outstanding issues arising out of the recent dispute affecting the ambulance service in Essex.
    Mr. Deakins: I am glad to say that this dispute has been settled and full normal working was resumed on 14th December. The question of the payment of meal allowances has been refered to the Joint Secretaries of the Ambulancemen's Whitley Council and a claim on behalf of some men that they were entitled to full pay for the period of the dispute has been referred to independent assessors.
    Mr. Newens: Is it not true that the cost to the public of paying 40 per cent. of the wages of those men who were involved in the dispute was nearly three times as great as the cost would have been of meeting in full the demands of the protected men about meal allowances, which led to the dispute? In view of this disgraceful waste of public money, is it not necessary that in future instructions should be given that men shall not be refused permission to man ambulances merely on the grounds that they have refused to undertake minor aspects of their duties?
    Mr. Deakins: I do not think that the House is a place for a Minister to comment on a settlement of a very complex industrial dispute, which is not yet finalised. My hon. Friend, together with other hon. Friends, is coming to see me, and we can go into these matters in greater detail then.
    Mr. Newton: Without attempting to judge the specific issues of the dispute, may I ask the Minister if he is aware that from representations that have been made to me there seems to be genuine concern about how effective the normal procedures are for dealing with grievances? Has he himself considered this aspect? If so, does he think that there is something he can do to help?
    Mr. Deakins: Yes, there is something we can do. We have the report of Lord McCarthy on the whole of the Whitley Council machinery, also making strong recommendations for the development of a better joint consultative machinery in the areas and the regions of the National Health Service. These proposals are now up for discussion with all parties and I hope that eventually we shall develop a very much better industrial relations machinery than we have had in the past.
    Mr. Speaker: Mr. Durant, No. 17.
    Sir Bernard Braine: On a point of order, Mr. Speaker.
    Mr. Speaker: I must ask the hon. Gentleman to raise his point of order after Questions.
    Sir Bernard Braine: This dispute, Mr. Speaker, affected my constituency and that of the hon. Member for Basildon (Mr. Moonman) more than any other——
    Mr. Speaker: Is this a point of order? It is taking up time.
    Sir Bernard Braine: Does not the hon. Gentleman accept——
    Mr. Speaker: No. Is there a point of order?
    Sir Bernard Braine: I thought that you were calling me, Mr. Speaker.

    Statisticians
    Mr. Durantasked the Secretary of State for Social Services how many statisticians are employed by his Department; and what is the cost of employing them.
    Mr. Deakins: My Department employs 37 statisticians, and the cost of employing them is estimated to be about £460,000 per year, including salaries, national insurance and all on costs such as superannuation, accommodation, typing and other services.
    Mr. Durant: Are these the same statiticians who, in May 1976, forecast that the surplus on the National Insurance Fund would be £389 million and only seven months later forecast that it would be £932 million?
    Mr. Deakins: The statisticians are merely collating information received in connection with the national insurance system generally. There are also statisticians who have to be employed, for example, by the Office of Population Censuses and Surveys, and also the Government Actuary himself, who is responsible for the report to Parliament to which the hon. Gentleman has referred.
    Mr. Christopher Price: Does my hon. Friend remember that in the summer I asked the Department a question about mental health statistics and that it had to re-answer it a few weeks ago saying that it had got all the statistics wrong? Will he have another look at his statistical department, particularly as it relates to mental health figures, because it says that half the figures are unobtainable and the half that it gives in answers are all wrong.
    Mr. Deakins: I must come to the defence of the statisticians in my Department. They are dependent on getting statistics from organisations in the National Health Service and local authority social service departments to provide
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    the answers that my hon. Friends and hon. Gentlemen want. If the basic information is wrong, the collating that goes on in my Department is also wrong.

    TUC
    Mr. Gwilym Robertsasked the Prime Minister when he next expects to meet the TUC.
    The Prime Minister (Mr. James Callaghan): I refer my hon. Friend to the reply which I gave my hon. Friend the Member for Gravesend (Mr. Ovenden) on 7th December.
    Mr. Roberts: In view of the accelerating growth of long-term structural unemployment, will my right hon. Friend discuss with the TUC the development of a strategy to share out the working hours available by reducing the working week, the working year, and possibly the working life?
    The Prime Minister: My hon. Friend is right to concentrate on the fact that some unemployment is of a structural character and needs a great deal of examination. I hope to be able to embark upon that internationally. As regards shortening the working week, or even the working life, we must first get to the position in which we are paying our way in the world before we can do that. I have expressed the view in the past, and I do so again today, that the nature of unemployment is changing and we may well have to embark upon the kind of remedies that my hon. Friend has spoken of.
    Mr. Tim Renton: In his discussions with the TUC, to what extent has the Prime Minister learned of the number of trade unions which do not wish to have trade union representatives on company boards? Will the right hon. Gentleman assure the House that he will not trade with the TUC another year of virtual wage freeze in exchange for trades union representatives statutorily imposed on company boards?
    The Prime Minister: I do not expect to be discussing this matter with the TUC at my next meeting, but if I do so I shall tell the hon. Gentleman.
    Mr. Ioan Evans: Will my right hon. Friend comment on the Basle agreement on the sterling reserves? In view of the

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    good news that has come from Switzerland, will he consider meeting. the TUC and the CBI and in the forthcoming year have a campaign to reduce unemployment and reduce interest rates charged to manufacturing industry?
    The Prime Minister: My right hon. Friend the Chancellor of the Exchequer will be making a statement on the Basle agreement at 3.30 pm, and perhaps I should not anticipate that. However, I think it is at least fair to say that this new agreement, combined with the IMF loan and the firm control that we have over public expenditure, certainly gives us a very healthy start to 1977.

    PRIME MINISTER (ENGAGEMENTS)
    Mr. Blakerasked the Prime Minister if he will list his engagements during the recess.
    The Prime Minister: It is not in accordance with previous practice to do so. However, if the hon. Member has a specific point on my official engagements during the recess, I shall be glad to consider it.
    Mr. Blaker: Did the Prime Minister, during the recess, pay any attention to the case of Mr. Vladimir Bukovsky? As Mr. Bukovsky is now in England, is the Prime Minister prepared to meet him?
    The Prime Minister: I watched Mr. Bukovsky on television and I read some of the Press reports of what he said. I was very glad to see that he regarded this country as a welcome sanctuary. We are very glad that he should feel that we are. As we have repeatedly made clear, we as a Government will be satisfied with the Helsinki agreement only when all its parts are implemented by the individual countries. I do not think that I wish to meet Mr. Bukovsky. I would be ready to do so, but I do not think that there is any particular occasion for me to do so.
    Mr. James Lamond: If my right hon. Friend was watching television during the recess, did he see a programme on 1st January called "Jim'll Fix It" when the right hon. Lady the Leader of the Opposition appeared and made the astonishing allegation that she spent her time devising alternative policies? Is there any chance
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    of her revealing, for example, the Opposition's policy on devolution or, perhaps, the exact areas in which they would make the slashing public expenditure cuts that they are always calling for?
    The Prime Minister: I managed to watch a certain number of comedy programmes during the recess, but I cannot say that I recall this one. As for devising alternative strategies, I hope that the Tribune Group will not fall into bad company with the Leader of the Opposition, because I cannot think of a more volatile combination than those two.
    Mr. Emery: Will the Prime Minister, on behalf of the British people, issue an invitation to President-elect Carter to come to this country in order that a summit meeting may be held as soon as possible?
    The Prime Minister: I am obliged to the hon. Gentleman for rising that matter. When I sent a greeting to President-elect Carter on his election I assured him that he would get a warm welcome when he came here. We all know that he has said that he does not wish to travel abroad during his first year of office, for reasons which we can understand. I shall be discussing with Vice-President-elect Mondale proposals for a summit meeting. President-elect Carter has indicated that he intends to telephone some of the leaders of Western Europe this week. Certainly if there is a desire for a summit meeting in London we shall be happy to accommodate it here, or to go elsewhere if there is general agreement.

    SECRETARY OF STATE FOR ENERGY (SPEECH)
    Mr. Michael Lathamasked the Prime Minister whether the public speech of the Secretary of State for Energy regarding the democratic process on 10th December at Bristol University represents the policy of Her Majesty's Government.
    Mr. Wyn Robertsasked the Prime Minister if the speech of the Secretary of State for Energy on the democratic process, at Bristol on 10th December, represents Government policy.
    The Prime Minister: My right hon. Friend's speech raised no issues of Government policy.
    Mr. Latham: The Prime Minister may wish to shuffle off responsibility for some of the wilder utterances of Cabinet Ministers, but does he agree with the Secretary of State for Energy that Marxism is a source of inspiration to the Labour Party? If so, is not one such source of inspiration currently sitting inactive in Transport House, as National Youth Officer?
    The Prime Minister: I realise that the Opposition are hard put to it to find sticks with which to attempt to belabour the Government, especially this afternoon. I sympathise with their difficulty. But I do not intend to answer for matters for which there is no ministerial responsibility. I am trying to get a little order into Parliamentary Questions, and sometimes I should like assistance from the Opposition in doing so.
    Mr. Roberts: Does the Prime Minister accept that Cabinet Ministers are Cabinet Ministers wherever they are and whatever audiences they address? Does the right hon. Gentleman and his colleagues accept collective Cabinet responsibility for their utterances on policy, such as the speech by the Secretary of State for Energy in Bristol?
    The Prime Minister: Yes, Sir.
    Mr. Heffer: Is my right hon. Friend aware that our right hon. Friend the Secretary of State for Energy made the point that Marxism was one of the sources of inspiration to the Labour Party? Is he also aware that recently I came across a book by Keir Hardie and that in the bibliography the first book that Keir Hardie suggested that those who read his book ought to read was "Das Kapital"?
    The Prime Minister: These are not matters for which there are ministerial responsibilities—not even my hon. Friend's reading list during the recess. Although they are very interesting subjects for speculation, they are not matters for which I have responsibility to answer at the Dispatch Box.

    FRENCH PRIME MINISTER (VISIT)
    Mr. Martenasked the Prime Minister if he will make a statement on the visit of the French Prime Minister.
    The Prime Minister: The French Prime Minister is paying a private visit to the United Kingdom today. He will call on me later this afternoon, and also on my right hon. Friend the Chancellor of the Exchequer.
    Mr. Marten: Will the Prime Minister give the French Prime Minister a copy of yesterday's Hansard, so that he can read the criticisms made in this House about the common agricultural policy? Does he agree that the CAP, which has to put up the price of butter from 45p a pound to 72p a pound this year, and an intervention board that buys in skimmed milk at over £500 per ton and sells it back to the farmers at £100 a ton, can only be regarded as crazy, that the CAP should be totally scrapped, and that a national agricultural policy should be substituted for it? Otherwise the poor will suffer, because of the price of food.
    The Prime Minister: I think that the Prime Minister of France is very well aware of our attitude to the common agricultural policy. It is a matter of great significance and importance to France, because of the great numbers of people employed on the land there who depend upon this policy.
    Mrs. Castle: Others depend on eating.
    The Prime Minister: My right hon. Friend the Member for Blackburn (Mrs. Castle), not for the first time, has given vent to a considerable truism. It is a matter of negotiating our way through this problem. The French Government are in no doubt that we shall continue to return to it on the occasion of price reviews and on all other occasions.
    Mr. Lee: Are we prepared to use the veto? Is not the situation that the longer we are in the Common Market the more we are integrated into this absurd agricultural policy? Can we not make it absolutely clear to our partners in this organisation that the CAP is totally intolerable and that in the end it will certainly have to be destroyed, even if we stay in the Market?
    The Prime Minister: We must be careful. We are benefiting from certain aspects of the policy to the tune of about £500 million a year—[Interruption.] It is a very considerable figure, anyway. We

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    must take all these factors into account. I agree with my hon. Friend if his view is that the so-called common agricultural policy is not based on the best use of resources in the Community or, indeed, in some of the member States. We should address ourselves to that aspect and try to get an efficient agricultural policy. If there are social reasons why it is not possible for individual members of the Community entirely to disregard assistance, I suggest that it would be better if it were borne on national funds or on some other funds.
    Mr. Tebbit: As the French Prime Minister is a stranger to British politics, will the right hon. Gentleman explain to him how it is that in a country which has a doctrine of collective responsibility the Prime Minister can stand at that Dispatch Box and say that it is nothing to do with him when one of his Cabinet Ministers states that he belongs to a Marxist coalition party, and that it is a very good thing? Surely the Prime Minister ought to explain that to one of our partners.

    TUC AND CBI
    Mr. Ioan Evansasked the Prime Minister when he next expects to meet the TUC and the CBI.
    The Prime Minister: I refer my hon. Friend to the reply which my right hon. Friend the Lord President of the Council gave on my behalf to my hon. Friend the Member for Bolsover (Mr. Skinner) on 30th November.
    Mr. Evans: In view of our improving financial situation, will the Prime Minister try to meet the TUC and the CBI at an early date and get down to the question of bringing down the unemployment rate? Will he make that a prime aim of the Government in this coming year?
    The Prime Minister: Yes. I think that unemployment and the problem of inflation are the two real issues that will concern us during the course of this year. I think that we can expect to see an improving situation on our balance of payments, and therefore that handicap will be removed. I believe that we must get more international action regarding unemployment, in addition to overcoming our domestic inflation problems.
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    I shall be discussing these kinds of issue with the French Prime Minister this afternoon, and in 10 days' time with Chancellor Schmidt as well as with American leaders.
    Mr. Adley: When the Prime Minister meets the TUC and the CBI, will he discuss with them the rights of workers to ballot about working conditions at their places of work? Does he agree that the rights of workers to ballot whether they should be able to join a trade union at their places of work are no more and no less important than their rights to ballot whether they should be compulsorily enrolled in a closed shop?
    The Prime Minister: We shall consider those matters in due course.
    Mr. Hooley: Will the Prime Minister discuss with the TUC and the CBI what effective steps can be taken to stern the appalling outflow of capital into manufacturing industry abroad when the Government's policy is to direct that capital into improving the efficiency of British industry?
    The Prime Minister: I am not sure that I altogether agree with my hon. Friend on that matter. I have been into it on a number of occasions, and so has the Chancellor. There is a considerable case for overseas investment, especially nowadays, when it is not possible for this country to export completely finished products. Industry needs to embark on considerable overseas investment if it is to retain control.
    Mr. Lawrence: At the meeting with the TUC and CBI will the Prime Minister consider why the index of industrial productivity under a Labour Government is lower than it was under a Conservative Government?
    The Prime Minister: I am not aware that that is so.

MR. ROY AND MR. PRASAD
Mr. Thorpe(by Private Notice) asked the Secretary of State for the Home Department whether he will make a statement on his refusal to grant political asylum to two Indian monks, Mr. Roy and Mr. Prasad, and on his decision to order their immediate deportation from this country.
The Secretary of State for the Home Department (Mr. Merlyn Rees): Mr. Prasad and Mr. Roy are citizens of India who in 1975 left that country and went to live in Nepal. In December 1976 they travelled to Stockholm via Dacca and London, were refused leave to enter Sweden for political asylum and when their return flight arrived at London Airport on 14th December they sought leave to enter the United Kingdom for political asylum. They were detained pending a decision.
Their application rested on their membership of the Ananda Marga movement, which is banned in India. I have weighed these applications with great care, taking into account the various representations I have received, and other information available to me. I concluded that Mr. Prasad and Mr. Roy should be refused leave to enter the United Kingdom on the grounds that their presence here would not be conducive to the public good. I do not consider that they have established a well-founded fear of persecution if returned to Nepal, a country in which they have lived since 1975. Accordingly, arrangements have been made for their return to that country by a route which does not entail their travelling via India.
Removal was to have taken place today but will now be deferred as their flight has been cancelled. I understand an application has today been made to the High Court concerning their case.
Mr. Thorpe: I thank the Secretary of State for that reply and for his correspondence with me on the matter. These men fled from Nepal following a police raid on their homes. Has the Secretary of State ascertained whether they were in danger of being accused of political offences in Nepal or whether the raid took place at the request of the Indian Central Bureau of Intelligence? Has the right hon. Gentleman received any undertaking from the Nepal Government that if they are returned to Nepal they will not be transferred to India—which occurred on a previous occasion—where they will be subject to immediate imprisonment without trial for belonging to an illegal organisation?
Is the Secretary of State aware that both these gentlemen hold valid International Red Cross travel documents and
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that both have the status of United Nations refugees? To refuse these men political asylum in these circumstances casts doubt on whether we are not in breach of a UN convention on refugees to which we are signatories, and this causes grave disquiet to many people.
Mr. Rees: I have considered the question of refugee status very carefully. Under the terms of the relevant 1951 convention I find that the men have not been admitted to Sweden, Thailand, Canada, the United States and Australia. There are two wings to this organisation. On the question of refugee status, I am sure that in the general sense there is no problem about their going to the country where they have lived for some time.
On the issue of their presence not being conducive to the public good, I believe that, given the nature of the organisation, I am protecting the people of this country by not allowing them in.
Mr. Moonman: Does my right hon Friend not accept that he has made a statement which is sad and which is perhaps the most worrying regarding personal liberty which has been made in this country for many a generation? Will my right hon. Friend say in specific terms why it is not possible for the two men to stay here? What does he mean by not
"conducive to the public good"?
Is it not the case that the two monks have no political record whatsoever and that there is a great danger that they face being incarcerated in gaol? Will my right hon. Friend please reconsider his decision?
Mr. Rees: I have taken these matters carefully into account. I do not regard it as a case of libertarianism that will stand for many generations and I firmly disagree with my right hon. Friend. There is no question of deportation because the two men have never entered the country under the immigration rules. I state bluntly that it is not a case of deportation.
If I am told that everyone who is a monk in this organisation has only to appear at London Airport to be admitted to this country, I say firmly that that is not libertarianism but crass foolishness. I am unrepentant about the decision that I have made.
Mr. Carlisle: Is the Secretary of State aware that he has the support of many in

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the use of his discretion when he refuses people entry into the country if he considers that their entry is not conducive to the public good? Will he assist the House by giving further reasons for coming to his decision which I am sure is one in which he must use his discretion?
Mr. Rees: The basis, in terms of not approving entry, is that they were not in the country in the first place. There is a violent wing to this organisation. I do not believe that this country should be a haven for people who have engaged in violence of this nature. I am responsible for law and order. I do not believe that there is a question of refugee status. If there were, I would consider it carefully. My hon. Friends would be wrong to think that this is a case of liberty, because, in this instance, the two men can go back to Nepal where they have been before. In my view there is no problem about that.
Mr. Whitelaw: In such cases the Secretary of State has to make a difficult decision bearing in mind the interests of the people of this country and of security. Is he aware that when he makes such a decision I believe that he should have the support of hon. Members on both sides of the House?
Mr. Christopher Price: Is my right hon. Friend aware that there are two discrepancies of fact between his information and the information that some hon. Members have received? Is he aware that many hon. Members on this side of the House feel that the tradition that Britain should be a haven for people who are being persecuted abroad is a very noble and honourable one which should not be overthrown lightly? Will he confirm that our attitude towards and our relationship with the Government of India has not been a factor that has been taken into consideration?
Mr. Rees: I assure my hon. Friend that our relationship with the Government of India has not been a factor in the decision. A number of members of the Ananda Marga movement are lawfully in this country and I do not believe that their presence is a threat to the country. I have not dealt with the matter on the basis of the organisation as a whole but on an individual basis. There is a
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violent wing to the organisation. It is not a question of refugee status. I do not believe that it is right that they should come into the country bearing in mind my responsibility for law and order.
Mr. Thorpe: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the reply, I give notice that I shall seek to raise this matter at the earliest possible opportunity.

STERLING BALANCES
The Chancellor of the Exchequer (Mr. Denis Healey): With permission, I shall make a statement.
I told the House on 15th December that the Government have been concerned to remove the pressures exerted on the exchange rate by the overhang of the sterling balances. Other countries share our view that fluctuations in the official sterling balances have been disruptive not only to British economic policy but also to the international monetary system.
The House will be glad to know that the discussions we have held on this subject resulted yesterday in a broad agreement between Central Bank Governors in Basle on the setting up of a facility for the official sterling balances. A statement announcing this agreement was issued last night by the Bank for International Settlements in Basle.
The purpose of the agreement is not only to achieve greater international monetary stability and to ensure that sterling and the exchange markets cease to be affected by pressures associated with any rundown of the official sterling holdings but also to enable the British Government to achieve an orderly reduction in the rôle of sterling as a reserve currency.
The agreement will in no way reduce the existing freedom of non-resident sterling holders to manage their holdings as they wish. The Government will, however, be offering official holders the option to convert any part of their holdings in sterling into negotiable medium-term foreign currency bonds to be issued by Her Majesty's Government on market-related terms.
The new facility, which will be available as soon as all the technical details have been worked out, is for a total

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amount of $3 billion. It will be operated by the Bank for International Settlements, with the support of central bankers in other Group of Ten countries and Switzerland. Over a two-year period the United Kingdom will be able to draw on the facility in respect of any net reductions in the official sterling holdings from December levels, other than reductions arising from conversion to the foreign currency bonds. There is also provision for an extension of the draw down period for a third year, if all the participants agree. Repayment will be over a period of four years from the end of the draw down period.
The facility covers only official sterling balances because it is these that have been the unstable element in recent years. But the United Kingdom would not wish large new inflows into private holdings to be a means of financing the United Kingdom balance of payments deficit on current account.
As the statement by the Bank for International Settlements makes clear, this agreement has been possible because there has been general approval of our economic and financial policies as set out in my letter of 15th December to the managing director of the International Monetary Fund. The new facility for the official balances assumes that these policies will be continued. The managing director of the IMF has been associated with these discussions and has been asked to assist in implementing the agreement.
I will in due course make available to the House further information about the technical aspects of the agreement. The terms of the foreign currency bonds to be offered to sterling holders will also be made available at a later stage. In the meantime I am sure the House will agree that the establishment of this new facility will make a powerful contribution to the stability of the international monetary system as a whole and reduce the vulnerability of the British economy to external factors beyond its control. I should like to express our appreciation to all those who have made it possible. It makes a good start to the New Year.
Sir G. Howe: Is the Chancellor aware that the House would not wish to deny him the satisfaction that he gains from making this announcement today but that there are a number of aspects that the
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House would want to look at with interest? In particular, we should like to know what the right hon. Gentleman can tell us about the rates of interest likely to be payable, whether under the standby or under the foreign currency bonds.
Is the right hon. Gentleman also aware that we recognise it as an improvement on the agreement negotiated in 1968 by the previous Labour Government that there is no guarantee of the exchange value of sterling holdings to future holders, as there was at that time?
However, does it not follow, even so, that the country is still undertaking an obligation to offer foreign currency bonds to present official holders at a value that will he maintained whatever happens to sterling and that they will therefore get the benefit of any appreciation in sterling rates that may take place but that we shall have to compensate them substantially if there is any further decline in the value of sterling? Is it not a fact, despite what the Chancellor of the Duchy of Lancaster says, that we shall have to compensate them through foreign currencies if there is a decline in the value of sterling in the years ahead? Does that not underline the need for continued competence in the management of our economy under the supervision of the International Monetary Fund, because any further loss of confidence could certainly cost us dear in this respect?
Will the Chancellor say whether this announcement means that there will now be an end to any further borrowing by the nationalised industries and the public sector with benefit of guarantees against exchange control losses of the kind that we have seen over the last year or two?
Finally, does not the fact that this agreement has now been entered into underline the need not a repeat the folly of the period 1974–76, when the Chancellor so foolishly rejoiced at the temporary inflow of funds the sudden withdrawal of which was the cause of the dreadful tribulations of the last three months?
Mr. Healey: I am glad for the right hon. and learned Gentleman's sake that he did not seek to rob the Government or the country of their satisfaction at the conclusion of this agreement, because I doubt whether anything that he could

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have have said would rob us of this satisfaction.
The rates of interest on the foreign currency bonds which will be made available to existing official holders will be roughly half the rates of interest on existing sterling deposits, but the precise level of interest rates, as I say, will be stated in relation to the particular currencies made available in a paper that I shall later submit to the House.
The rate of interest on drawings on the standby will be about 5 per cent.—that is, 9 per cent. less than the rate of interest on existing holdings. The House and the country should recognise, therefore, that in terms of interest as well as in terms of the stability of replacing volatile short-term berrowings by stable long-term borrowings, this is a very good deal indeed for the country.
I think that the right hon. and learned Gentleman is right in saying that this is an improvement on the 1968 agreement because there are no guarantees to existing sterling holders, and of course. I would agree with him. The right hon. and learned Gentleman will recall that the purpose of the 1968 agreement was to guarantee the then existing sterling holdings.
As to the right hon. and learned Gentleman's last remark, let me remind him that it was his Government, in 1973, who started the policy of borrowing abroad by the nationalised industries. They made roughly $1 billion worth of medium-term borrowing, and I have no reason to give up this type of borrowing if it proves to be suitable for our purposes.
On the question of the build-up of balances in 1974, I am bound to remind the right hon. and learned Gentleman—and this was a factor in our negotiations—that most of our friends abroad were very disappointed that the previous Conservative Government, of which he was a member, did nothing to implement the undertaking given by the right hon. and learned Member for Hexham (Mr. Rippon) to seek an orderly rundown of the sterling balances, and in fact the sterling balances rose by one-third, by nearly £1 billion, in the two years following an undertaking by the previous Government to reduce them.
Dr. BrayWere any assurances given about either the amounts or the interest rates on the foreign currency bonds to the Bank for International Settlements? Were any targets set for the amount of the foreign currency bonds to be sold?
Mr. Healey: No. It is our intention, as the Prime Minister and I have made clear on many occasions, to do our best to reduce existing holdings, but we can give no undertaking as to the take-up of foreign currency bonds, because we wish to leave existing holders entirely free to decide whether to leave their money in sterling here, to take it out, or to replace their holdings with foreign currency bonds.
Sir G. Howe: Perhaps I may return to a technical point, which is of some importance. The Chancellor has said that there is no guarantee for future official sterling holders under these arrangements. I follow that entirely. However, is it not right that the offering of an option to present official holders to convert any part of their holdings in sterling into foreign currency bonds to be issued by the Government means that the Government underwrite the foreign currency value of present official sterling balances? It is important that that should be understood, and that is how I understand it.
Mr. Healey: With great respect, since the 1968 agreement, all the world's currencies have gone on to floating rates, so it is not open to any country in the world to guarantee the particular value of any bond, however denominated, in terms either of other currencies or even of its own.
Mr. Pardoe: Is the Chancellor aware that we welcome this announcement as a sign that at last a British Government intend to end the reserve rôle of sterling? But is he also aware that successive Governments have announced their intention of doing so over several years and have always run away from it? How sure can we be that this will be carried out? On a technical point about the bonds, what does the right hon. Gentleman mean by "medium term"? Will they be capable of being liquidated in case of need by the holders? If not, what is their attraction to foreign countries?
Mr. Healey: In the first place, as I said, I will give the House details of these bonds at a later stage. The rate of interest, as I have said, will be market-related—that is to say, related by the market to the interest now available on the currencies in which the bonds are issued. Most of the bonds will be issued in dollars but I hope that some will be issued in other currencies. The term of the bonds is one of the details which are now under discussion and which I will convey to the House at a later date. The bonds will be fully marketable.
Mr. Wrigglesworth: Will my right hon. Friend accept our congratulations on the success that the Government have achieved in overcoming this problem, which has done so much damage to the British economy in recent years? Would he say more about the private balances? Is he taking any steps to ensure that there is no growth in those balances and therefore that there is no backdoor seepage of official balances into this sector, from Europe or from other sources?
Mr. Healey: I thank my hon. Friend for his congratulations. I think that this announcement will be widely welcomed in the country, irrespective of party. As for seepage, the Government are concerned, as are all participants in the facility, that there shall not be a shift of official holdings into private holdings under some sort of disguise. We are concerned to avoid that. We shall seek to avoid a build-up in private holdings, but my hon. Friend will know that none of the countries which have sought to prevent, and have had some success in preventing, a build-up in that type of balance, has had full success. That is why I cannot guarantee full success in this regard. The really important thing is that we undertake not to use any buildup in private holdings which may take place to finance our current account deficit.
Mr. Powell: Is the right hon. Gentleman aware that it cannot be in the public interest that foreign Governments who own British Government debt should be protected against all or part of the consequences of a depreciation in the value of that debt—either at our expense or at anybody else's? The right hon. Gentleman referred to the Government's intention to endeavour to avoid an increase in
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private holdings of British Government debt and to avoid that increase coming into the balance of payments. How can he do that?
Mr. Healey: The right hon. Gentleman will know that other countries have faced this type of problem—Germany, Switzerland and France in the less recent past—and that they have all had some success by various methods in dealing with the problem of that build-up in private holdings. However, as I said, none has had full success.
Mr. Tapsell: Is the right hon. Gentleman aware that it is very difficult for the House to assess the value of these proposals until we have far more technical details and that the key is how future official deposits in sterling will be treated? For instance, taking the example of a British Government-guaranteed National Coal Board issue quoted at present in dollars and yielding a little over 8 per cent., and comparing that with a comparably dated British Government security yielding at present a little over 14 per cent., when this new foreign security bond has been issued, how will depositors be treated as the differential between the US dollar and sterling varies?
Mr. Healey: That is exactly the point I made in reply to an earlier question—that the idea that any guarantee of the value of the security can be given in any currency disappeared when the whole world went on to floating rates. There is no longer any measure against which a guarantee can be given. I know that the hon. Gentleman has some difficulty in appreciating the value of the agreement, but I do not think that hon. Members on this side have any difficulty. Nor has the Liberal Party—nor, I am glad to say, have the international markets.
Mr. Jay: In warmly welcoming this most successful agreement, may I ask why it is that while the United States, Canada, Sweden, Switzerland and other countries have joined this venture, France has apparently remained outside?
Mr. Healey: It is possible that France and Italy, which are the two members of the Group of Ten who have not so far joined the agreement, may do so later, but it is well known that those

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countries have some economic problems similar to our own.
Mr. Lawson: Is not the Chancellor aware that he has got himself into something of a muddle here? Is it not the case that any sterling holder who exercises his right to convert, say, into dollar bonds, is thereby guaranteed against any subsequent depreciation of the pound against the dollar—and guaranteed by the British Government? Is it not further the case that it was this implicit guarantee or right to acquire a guarantee which persuaded those countries to enter this arrangement?
Mr. Healey: Of course, if a man borrows in dollars, he is not guaranteed sterling in dollars: he simply has a dollar bond. No doubt countries which at present hold sterling balances will calculate carefully whether sterling is likely to move up against the dollar, as it has done in recent months, or move down against the dollar, as it has in the more distant past.
Mr. Gould: My right hon. Friend is certainly entitled to congratulations, but is there not a real danger that we shall end up, in the short term at any rate, with an exchange rate which will kill stone dead all export-led growth? Is not the Bank of England's unwillingness to let interest rates fall a very bad omen in this respect?
Mr. Healey: No, Sir. My hon. Friend and I have had many exchanges on this matter, but I would refer him again to the pellucid clarity of my statement on the Government's exchange rate policy in my recent letter to the managing director of the IMF. He will see from that statement that his fears are unjustified.
Mr. Ian Stewart: How on earth will the right hon. Gentleman reduce the reserve currency function of sterling?
Mr. Healey: I have just been explaining that to the House over the past quarter of an hour. I suggest that the hon Gentleman reads Hansard tomorrow.
Mr. Higgins: Will the right hon. Gentleman confirm that, following the completion of this agreement, there will be no outstanding guarantees to any foreign holders of sterling? Is it not the
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case that if bonds are issued denominated in a foreign currency the responsibility for paying those—the capital sum and the interest—will be higher if the sterling rate subsequently depreciates?
Mr. Healey: On the first point, I can give a categorical assurance that that is so. On the second point, what the hon. Member says can be argued to be true—in the form in which he put the point—but the important point is that which I made earlier, that the rate of interest paid on foreign currency bonds will be about half that which is paid on existing holdings. In addition to a very much lower rate of interest, we shall have the advantage of stable, medium-term deposits, as against very volatile short-term ones. It is a very nice question where the balance of advantage would come down in any particular movement of the sterling rate.
Mr. Emery: Would the right hon. Gentleman make it clear that this statement should do nothing to discourage international business from being conducted in sterling or the financing of exports and imports throughout the world in sterling? Both are most important to this country. Second, would he say something about the maturity dates of these bonds, because that is the hidden catch to the benefits? Third, is it not something of a condemnation of the Government that to lend in sterling one has to pay twice as much as if one lends in another currency? Will the right hon. Gentleman therefore be working to bring the interest rates of the two types of currency exactly into line?
Mr. Healey: I hope that the balances, both private and public, held in London will end up as normal working balances, financing normal transactions. That is already the case with private holdings, which have risen, not fallen, over recent years. They have not tended to rise above what is required as normal working balances. I hope that the official holdings will fall to the level required for normal working.
But I do not think that it is in the country's interest that we should use sterling to finance all international transactions. That is why I put a prohibition on the use of sterling for trade between third parties. This has already produced a helpful reflux of money into this country in recent weeks.

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With regard to the maturity question, I have said that details of the bonds will be given to the House when they are available.
Mr. Ronald Bell: Is it not difficult to assess the value of what the Chancellor has said without knowing more of the details? For example, does the option between sterling and a foreign currency persist through to maturity or is it exhausted at the time of choosing the foreign currency bond? If a holder of sterling chooses a foreign currency bond, do the Government propose to fund their foreign exchange liability at the time the bond is taken up or to defer that obligation until the maturity of the bond?
Mr. Healey: If an official holder decides that he wants to convert an existing sterling holding into these foreign currency negotiable bonds, he will do so, and in doing so will liquidate the Government's existing sterling obligation. That is what conversion implies. I shall give the House details of the bonds at a later stage.
I am a little perplexed by the Conservative Opposition's difficulty in making up their mind on the value of this arrangement, when the international money markets have had no difficulty whatsoever in doing so. The Opposition would gain more credit in the country if they were prepared to give credit where credit is clearly due.

BILL PRESENTED

  EDUCATION ACT 1944 (AMENDMENT)
  Mr. Hal Miller,supported by Mr. Robert Boscawen, Mr. David Crouch,
  1270
  Mr. Fred Evans, Mr Ian Gow, Mr. Roderick MacFarquhar, Mr. Charles Morrison, Mr. John Watkinson, and Mr. William Wilson, presented a Bill to amend sections 39 and 55 of the Education Act 1944; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 28th January and to be printed. [Bill 42.]

  STATUTORY INSTRUMENTS, &c
  Mr. Speaker: In order to save time I wish to put the Questions on the seven motions related to Statutory Instruments together.
  Ordered,
  That the Horse Breeding (Amendment) Rules 1976 (S.I., 1976, No. 1992) be referred to a Standing Committee on Statutory Instruments, &c.
  That the Colouring Matter in Food (Amendment) Regulations 1976 (S.I., 1976, No. 2086), be referred to a Standing Committee on Statutory Instruments, &c.
  That the Beef Cow Scheme 1976 (S.I., 1976, No. 2057) be referred to a Standing Committee on Statutory Instruments, &c.
  That the Beef Cow Subsidy Payment Order 1976 (S.I., 1976, No. 2058) be referred to a Standing Committee on Statutory Instruments, &c.
  That the Petroleum Stocks Order 1976 (S.I., 1976, No. 2162) be referred to a Standing Committee on Statutory Instruments, &c.
  That the Counter-Inflation (Price Code) Order 1976 (Amendment) Order 1976 (S.I., 1976, No. 2207) be referred to a Standing Committee on Statutory Instruments, &c.
  That the Herring (Restrictions on Landing) Order 1976 (S.I., 1976, No. 2095) be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Bates.]

ORDERS OF THE DAY

  COVENT GARDEN MARKET (FINANCIAL PROVISIONS) BILL
  Order for Second Reading read.
  4.3 p.m.
  The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. E. S. Bishop): I beg to move, That the Bill be now read a Second time.
  Mr. Speaker: I have not selected either of the reasoned amendments on the Order Paper.
  Mr. Bishop: The Bill is intended to provide a sound financial framework for the new Covent Garden Market at Nine Elms. As hon. Members know, this is the largest and most important wholesale horticultural market in the country. It is run by the Covent Garden Market Authority, which is a single-purpose body with no other source of income than from the market and its associated office block.
  The Authority was established by the Covent Garden Market Act 1961 to take over the old Covent Garden Market from private ownership and to improve or replace it in the Covent Garden area. Rebuilding the market on its original site was shown later to be impracticable and the Authority obtained powers under the Covent Garden Market Act 1966 to move the market to Nine Elms.
  Major construction work was deferred in 1966 under the Government economic restrictions at that time, and major building work was not started until 1971. The final capital cost is estimated at about £43 million. About £10 million of this will be provided from the grants which have been available under the Agriculture and Horticulture Act 1964 for the modernisation or rebuilding of wholesale horticultural markets of national importance. The balance is funded by long-term loans at normal rates of interest from the National Loans Fund.
  In 1970 the then Government sanctioned the principle of initial sub-economic rents, in order to ensure a successful move and to give traders an opportunity to settle in. Rents were finally agreed between the traders and the Authority on this basis. These
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  included provision for services and were fixed for six years from November 1974—when trading started at the new market—with an increase of 10 per cent. after the third year.
  The unforeseen effects of inflation on the cost of construction and loan interest rates, and on the costs of providing services, led to accumulating loan charges and a deficit in the year ending October 1975 of £3·9 million, with little prospect of early improvement. In December 1975, the Authority officially informed my right hon. Friend's predecessor of its doubts of meeting its financial duty to break even.
  We considered closely what action we should take. As I have said, this is the largest wholesale horticultural market in the United Kingdom, with about 250 traders. It supplies not only London and the Home Counties but is the first point of distribution for much of the country. It provides a wide range of produce and fulfils a national price-setting rôle, helping to stabilise prices. Its closure or disposal for other purposes would result in wide disruption of the distribution of horticultural production to consumers and would deprive many of our horticultural producers of an important channel of distribution. Its disposal for continued use as a market under the control of some other body would not wipe out the debt which has already been incurred.
  Mr. Reginald Eyre: The hon. Gentleman knows that there is very strong feeling in Birmingham, where there is a similar problem over the wholesale horticultural market, which also serves a great part of the country. It would help hon. Members on both sides of the House in considering the Bill if the Minister would give an assurance that he will meet a deputation from Birmingham to discuss the problem there, and if he will assure us that there will be treatment to deal with the Birmingham problem comparable with that set out in the Bill.
  Mr. Bishop: I believe that a deputation from Birmingham has been received. I seem to remember that happening in my early days in the Ministry.
  Strong representations have been made by the hon. Gentleman and some of my hon. Friends about Birmingham and other local authority markets. I submit that

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  there is a difference. First, the Covent Garden Market is entirely supported by Government aid or revenues from traders and those who rent in the area. In addition, there has been a substantial grant—paid to the maximum, I believe, for Birmingham and Manchester, within the powers of the Ministry—and the local authority markets have access to other funds to which the Covent Garden Market does not have access. There are the rate funds, and the rate support grant also makes a contribution to local authorities, which can decide the priorities of their own spending. I am not unaware of the problems facing some of our local authority markets, and I am not unsympathetic.
  Mr. Eyre: I am grateful for the consideration the Minister is giving. All that I ask him to do is to receive a deputation. It would help us in forming our attitude to the Bill if the hon. Gentleman would receive a further deputation to discuss those details.
  Mr. Bishop: I am sure that if the hon. Gentleman has a chance to take part in the debate he will be able to put a case which my hon. Friend the Parliamentary Secretary will consider before winding up the debate.
  There was, in addition, a more important consideration. The Authority's borrowing powers are limited by the 1966 Act to £45 million, which could be reached in a little over a year. Therefore, it is a matter of urgency. Primary legislation would be needed to increase that limit. The financial reconstruction proposed in the Bill will not involve any increase in public expenditure, although repayment of some debts will be delayed or forgone. However, we see no practical alternative to what we propose. We are merely facing the realities, as I am sure all hon. Members will realise.
  I should like to turn now to the more important provisions of the Bill. Clause 1 will reduce the debt liabilities of the Authority by writing off £13 million and by suspending a maximum of £25 million. This should leave an initial active debt of some £6 million or £7 million on normal National Loans Fund terms.
  First, there is the write-off. This is justified by the unique circumstances of the Authority. Its position differs from
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  that of local authorities in a number of important respects. I have pointed out its single-purpose nature. But there is a further important factor. The net return to the Authority from the sale of the market in the old Covent Garden site was—partially due to the historic nature of some of the buildings there—relatively small. But the social benefits to the whole community in relieving this important central area of the serious congestion from which it suffered for so long are very considerable and far outweigh the net benefit to the Authority's finances.
  I turn now to loans to be suspended. These are not, of course, written off but no interest is chargeable on them and they do not have to be repaid while they are suspended. When they are revived, the loans will bear interest in accordance with their original conditions and will be repaid as specified at the time of revival.
  The Bill makes no provision for further suspension of debt once the reconstruction has taken place. This applies also to revived loans which cannot be resuspended. Nor can other loans which were left active after the first and only suspension be suspended at a later date.
  Clause 2 provides my right hon. Friend with power to direct the Authority, after consultation with it, to dispose of assets if this will promote the proper exercise of the Authority's powers or duties. In seeking this power my right hon. Friend is in no way implying any lack of confidence in the Authority's will to seek to dispose of such assets if it appears to it to be proper to do so. It has always acted in respect of its assets in a highly responsible way. But we are seeking here to provide for unforeseen eventualities when this power could be used to support the Authority in the public interest.
  Clause 3 amends certain provisions of the Covent Garden Market Act 1961. The most significant of these concern the powers of direction over the Authority's financial affairs. They arise from the reduction of liabilities effected by Clause 1.
  The most important is in subsection (2), which requires the approval of the Treasury and prior consultation with the Authority. This retains the provision of Section 37 of the 1961 Act in that the Authority is required at least to break

  1275
  even, taking one year with another, but it adds a duty to achieve further financial targets as set by the Minister and provides power for the Minister to direct the Authority to use its powers to achieve financial objectives. I should stress that no extension of the Authority's powers is proposed.
  I have dealt so far with those elements of a sound financial framework which require legislation. They are concerned primarily with the reconstruction of the Authority's finances and represent the taxpayers' contribution through the Exchequer. The aim of the measures proposed is to leave the Authority with a manageable debt.
  However, other elements are involved. The market traders and users must also contribute to putting the market on a sounder financial basis. I know that those concerned are running on fine margins, but it is not unreasonable to expect income from the use of the market initially at least to cover the running costs of the market and to contribute increasingly in the longer term to the cost of the capital assets. An additional contribution of something over £500,000 a year at today's prices is called for.
  Negotiations between the Authority and the interests concerned have already begun on ways of providing the increased revenues. I hope that there will be early agreement, but if necessary my right hon. Friend may have to use his powers of direction to ensure a proper contribution from traders and users.
  Having made their contributions, both taxpayers and traders have the right to expect the market to be run economically and efficiently. I know that the chairman and members of the Authority—people who have a proven record of running concerns efficiently—have been giving much thought to this.
  They have to take into account the fact that the nature of the Authority's task is changing. For the past few years they have been concerned with the planning and building of a new market and the move, without disrupting trade, of the country's biggest horticultural market to a completely new site. I believe that they performed that task singularly well. I also believe that they can perform equally well their new task—the efficient run-
  1276
  ning of an established market. The Authority is considering with great care how to ensure this, and it will work on this matter in close co-operation with market traders and other users, as well as with my own Department.
  To sum up, this Bill is the statutory part of a package designed to put Covent Garden Market on a continuing viable basis.
  Mr. A. P. CostainDoes the Minister agree that the task of the Authority would be made more viable if permission were given to develop some of its spare land and some of its excellent sites? Will he do something to put some ginger behind the GLC so that these matters can be agreed and permission can be given?
  Mr. Bishop: I am aware of the assets to which the hon. Gentleman refers. There are a number of assets within the control of the Authority within the area of the market itself, including the market tower. I can assure the hon. Gentleman that the future use of the Authority's assets will be taken into acocunt by the Authority and the Goverment. My right hon. Friend will have the opportunity of consulting on these and other matters.
  It is right that the taxpayer rather than the traders should meet those costs attributable to the unique circumstances of the market but that the traders should meet the costs of running the market, including, as soon as it is practicable, a proper contribution to its capital costs. Although no one can forecast with accuracy the pattern of horticultural distribution for a long period ahead and although changes are coming about all the time, an efficient and viable wholesale market at Covent Garden will be a key element for as far as can be foreseen. I believe that the Bill will help to bring that about.
  4.18 p.m.
  Mr. Michael Jopling: We are grateful to the Minister of State for introducing the Bill, but we feel that his opening remarks have been extraordinarily brief. Clearly, this is a complicated and important Bill. I am disappointed that he has not touched on a good many parts of the affairs of the Covent Garden Market Authority.

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  We do not oppose the Bill. We concede that over the years a measure of this sort has become necessary. However, although we feel that it is a necessary measure we are not unnaturally disturbed that the Authority's finances have reached such a state as to make essential the financial provisions that are contained within the Bill.
  I hope that those remarks will not be taken in any way as implying criticism of the Authority. On looking back at the events that have assailed it and the move of the market from the old site to the Nine Elms site, I do not see how it could have avoided this situation. That applies to the entire extent of the situation in which it finds itself.
  I hope that the Minister agrees with those remarks and that when the Parliamentary Secretary replies to the debate he will agree that the reasons that have led to the introduction of the Bill do not reflect in any way a record of incompetence or neglect on the part of the Authority. It is right that the House should put those comments on the record at this stage.
  On the face of it, it appears that we are either writing off or suspending a great deal of money, namely, £38 million. Over the past few years I think that the Authority has been lucky to have had as chairman two such distinguished and capable figures as Sir Henry Hardman and Sir Samuel Goldman to look after its affairs and to supervise the move of the market from the old site to the new. The two chairmen were saddled with a nightmare situation that was not basically of their own making.
  As for the way in which the Authority has been run and organised, it is as well to put on record that there have been a few criticisms of the Authority. Some of the tenants believe that the Authority is somewhat overstaffed. I am in no position to confirm or deny those allegations. I have see no definite evidence that the Authority is overstaffed, but at a time when the whole financial structure of the Authority is being built it is important that when tenants have reservations about the way in which the Authority conducts its affairs the Government should do their best to settle expressions of disquiet.
  The 14th annual report of the Authority underlines the fact that administra-
  1278
  tive costs are running at a rate of £129,000 per year and that the estate's revenue account shows a figure for salaries, pensions, and other contributions of a further £244,000. In the last month or so the Minister has declined to answer specific questions on staffing put to him by my hon. Friend the Member for Maidstone (Mr. Wells). The Authority's operations in the market were also questioned, and the Minister suggested that the Authority might provide some figures on staffing.
  I am sure that the Minister can give us a little more help on these matters, because I understand that the staff inspection and evaluation branch of the Civil Service Department has recently carried out a survey of the staffing at the market and in the Authority. I hope that the Minister will refer to that survey. This is a golden opportunity to confirm or confound the tenants' claims about over-staffing.
  I labour this point because it is important at this stage that as may as possible of the reservations held within the market can be dealt with. I hope that the Minister will be able to say that the Civil Service Department's report shows that staffing in the Authority is not overgenerous. I know that the Authority is taking steps to deal with the staffing situation. I gather that it intends to install automatic toll gates at the entrances to the market, which will reduce the number of staff.
  I turn to the current problems of the market, and the Minister dealt with some of these matters in his speech. I am sure that hon. Members will agree that many problems have been caused almost entirely by circumstances outside the Authority's control. What has caused more trouble than almost anything else stems from the decision to schedule certain buildings within the old Covent Garden Market as listed buildings. In 1973 many of the buildings within the area of 6½ acres were listed.
  This is not the place or the time to argue the merits of that decision. The decision was taken after a great public outcry, but it is not unfair to point out that the property owned by the Authority in the old market which it has sold, according to the 14th report, for £9·1 million would have been worth about £20 million, judging by a recent estimate,

  1279
  if the buildings within the market had not been listed. When those who are keen on conservation get to work and cause buildings to be listed, it can be an expensive operation for the public purse.
  I hope that my remarks will not be construed as an attack on conservationists or on conservation policies. Indeed, coming from the Lake District I regard myself as a conservationist, but it is true to say that if those buildings had not been listed the Authority would have been £10 million better off and the financial crisis would have been considerably lessened.
  The second major problem which has assailed the Authority since the new market was thought up in the early 1960s stemmed from the immense increase in building costs. The Minister said that £43 million had been spent on developing the new market at Nine Elms. I understand from the Authority that in 1964 the estimated cost of carrying out this work was about £31 million. As a result of increased building costs, the Authority has found itself saddled with extra costs to the tune of £12 million. This has led to the great indebtedness on the part of the Authority that leads us to consider this Bill today. These factors have caused the Authority to run into debt to the tune of over £20 million.
  Matters have been made considerably worse since the concept of the new market was first born by the pause to which the Minister referred—a situation that led to a three-year delay in starting work. The market would have been open at a very much earlier date if it had not been for the restraint on public expenditure imposed by the Labour Government in 1966. Indeed, the delay meant that no further work, apart from minor operations, could be done until 1969. If that delay had been avoided, the massive cost increase to which I referred could have been partly avoided and the Authority would have been in much easier financial straits than it is today.
  Furthermore, the Authority has been assailed by the tremendous increase in interest rates in the same period. The Authority has already drawn attention to
  1280
  the increased burden of interest charges which it has had to bear.
  I recently asked the Authority how much it was paying in extra interest charges. It estimates that the rate of interest on these loans has gone up by about 3 per cent. during recent years. According to the figures in the 14th report of the Authority for 1974–75, interest charges for that year were £3·3 million on loans amounting to about £32 million. That is an interest rate of about 10 per cent. The Authority originally based its calculations on an interest rate of about 7 per cent. Therefore, rising interest rates are costing the Authority about £1 million a year. The Authority has been put in a difficult position as a result of events over which it has had little control.
  The Authority faces an added difficulty to which the Minister referred. I am sure that the Authority was right in attempting to move all trade from the old market into the new because it would have been catastrophic if a rump had been left behind in the old market. Therefore, low rents had to be offered to traders initially as an inducement for them to move to the new market, and that has added to the Authority's problems.
  I have frequently referred throughout my speech to the Authority's latest statement of accounts, but that statement only goes up to 30th September 1975. Yet in January 1977 we are discussing a Bill to deal with the Covent Garden Market Authority's current financial problems. That puts the House in a difficult position. We are trying to deal with a current financial situation on the basis of 16-month-old figures.
  However, I notice in the 14th report that the Authority must send a statement of financial affairs to the Minister. I recently asked the Authority for a copy of that statement, but it refused me because it felt that the statement was the Minister's property and that it would not be right to release it to me. I do not complain about that, but hon. Members will be put in an intolerable position in Committee if up-to-date figures giving the current situation of the Authority are not made available. It will be impossible for us to do our work unless the exact positon is made known.

  1281
  There is an easy way out of this problem and it would be helpful if the Parliamentary Secretary could help us find it. I understand from the Authority that the latest annual figures up to 30th September 1976—only four months ago—have been audited and are now awaiting printing before being sent to the Minister, according to the statutory duty of the Authority. It would therefore be of the greatest assistance to both sides of the House if the Minister could make the draft accounts available.
  Mr. Nigel Spearing: The hon. Member for Westmorland (Mr. Jopling) has referred to the Committee stage of the Bill. He may have noticed a motion on the Order Paper in the names of some of my hon. Friends and myself referring to this matter. Would he comment on the relative merits of the Bill being considered by a Standing Committee or a Select Committee.
  Mr. Jopling: I saw the motion on the Order Paper. I am not absolutely sure about the advantages of a Select Committee over the normal Standing Committee. I do not see any merit in it, but if the hon. Member for Newham, South (Mr. Spearing) speaks later, I shall listen to him with great care.
  I hope that the Parliamentary Secretary will ensure that an up-to-date account of the Authority's financial situation will be made available. The Authority is currently running an annual deficit of £4 million, of which interest charges for 1976 must be about £3·5 million. Interest charges for the previous year were £3·2 million and they will have to be financed, so I do not think that I have made an unfair estimate. On 30th September 1975, the total amount owed to the National Loans Fund was about £32 million. It is clear that something must be done. This Bill is the Government's response and it is one with which the Opposition agree.
  Although the Government are taking certain steps, there are measures which the Authority and market tenants can take to help themselves. I hope that the Authority will let the market towers soon. I understand that there is a possibility that a tenant will be found shortly and that it is likely to be a Government body. That would cause a considerable
  1282
  improvement in the Authority's current finances.
  I also understand that the part of the building which is already let brings in about £200,000 a year. When the rest is let, that should add another £800,000 a year, giving a return of over £1 million. The Minister of State hardly referred to this point at all and that is a pity because the sooner the towers are let, the sooner the finances of the Authority—particularly its current account—will be improved.
  Mr. Stephen Ross: Is that not a good reason for appointing a Select Committee that could find out which Government Department will bail out the Authority by renting additional space?
  Mr. Jopling: I hope that the Parliamentary Secretary will tell us about the letting of the market towers. I hope that the Ministry of Agriculture is not thinking of moving in staff. There are enough of them already and I am sure that they have enough space.
  There is another method by which the Authority can help itself if given a chance to do so. The Authority has shown that it is anxious to develop three spare pieces of land, one on the riverside and two others within the market complex. I am told that a rough estimate would put the value of these pieces of land at about £1 million. There may be some people in the market who do not feel that this is a significant sum, but I believe that an extra £1 million for the Authority would be a tremendous shelp at this difficult time. My hon. Friend the Member for Hampstead (Mr. Finsberg), who will be winding up the debate for the Opposition, will have a great deal to say about the disposal and development of these pieces of land.
  I say only that from the record it appears that Wandsworth Borough Council has not been particularly helpful in this matter. I hope that the sentiments expressed by my hon. Friend the Member for Folkestone and Hythe (Mr. Costain) will be taken on board by the Minister of State and that he will get together with the Secretary of State for the Environment to try to stir the council and to get it to be a little more helpful.
  I think that the tenants ought to be asked to do something as well. The

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  Minister is asking them to contribute an extra £500,000 to finance the running costs of the market. I have talked to representatives of the tenants and I understand their reluctance to pay this extra money. They are being squeezed like everybody else in private business because of the activities of the Government, but a document sent to me by the Authority says:
  "The provision of some extra £0·5 million per annum is necessary to enable the Authority to break-even with an active capital of approximately £7 million immediately after reconstruction. The whole of this active capital will be serviced by the income from Market Towers and the extra revenue will in effect be needed to enable the market to cover its running costs. Even with this extra revenue the market (as distinct from Market Towers) will be making no real contribution towards the capital invested in its facilities."
  The implication of that document is that the extra £500,000 is necessary for the running of the market rather than for the servicing of capital, and it is not unreasonable for the Government to ask for a contribution from the tenants. If the statement from the Authority is true —and I have no reason to suppose that it is not—it is hard to argue against the raising of an extra £500,000, but there are two questions that I should like to ask the Minister about the contributions to be made by tenants.
  I understand that there is a strong possibility that the £500,000 will be raised through a sales tax. If so, will this mean that the traders will be given a full statutory right to collect that levy from buyers, in the same way that other traders collect VAT from the people with whom they do business? The Minister will know that much of the business in the market is conducted on a commission basis and a sales tax would cause a number of difficulties.
  Has the Minister fully considered the title of the Covent Garden Market Act 1966? It assures traders that they will be enabled to compete on fair and equal terms with other persons carrying on in Greater London the business of selling horticultural products by wholesale. It would be helpful if the Parliamentary Secretary could comment on this matter, because it would be wrong for the traders in Covent Garden to be put at a disadvantage compared with traders carrying on similar business in other parts of
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  London. Have the Government taken the powers in Clause 3(2) in order to give themselves stronger powers to see that the £500,000 is raised in the way they have proposed?
  The principal feature of the Bill is its proposal to write off £13 million of the Authority's loans. I shall be grateful if the Parliamentary Secretary will confirm that £13 million is the accrued deficit of the last three full years and most of the current year up to the time that the money will become available.
  In the past two years, for only one of which we have seen the accounts, there has been a deficit of about £4 million a year. In the previous year, up to the end of 1974, the deficit was £2½ million. That leaves a possible deficit of £2½ million for this year to total £13 million.
  If this is the way in which the Government have arrived at the figure of £13 million, I do not argue with it. It is not an unreasonable way of deciding how much of the debt should be written off immediately.
  The second part of Clause 1 deals with the suspension of a further £20 million of debt. I understand that the effect on the Treasury of these two measures will be to cost it about £4 million a year in loss of interest and amortisation.
  I do not understand—the Minister did not refer to them—the provisions of Clause 1(4). They say that the suspended debt need not, except to the extent to which it has become repayable, be included in the accounts or shown in the statement of accounts. This seems to be a curiously ostrich-like provision. I am sure that I shall take my hon. Friend the Member for Maidstone with me when I say that there seems to be little point in including this provision. The Minister of State said that this sum was not being written off and that this was the reason it was being excluded from the accounts. That does not make sense.
  The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Gavin Strang): It might be helpful if I intervene now to prevent other hon. Members from making too much of a meal of this point. There is no intention not to refer to this matter in the accounts. This is more of a technical accounting provision. It will be referred to, perhaps in the form of a note. There

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  is no question of not making reference to the suspended debt in each report.
  Mr. Jopling: I am grateful to the Parliamentary Secretary for answering me at this stage. I would prefer it to be the other way round. I would rather see the figure put into the account with a note at the bottom saying that it is suspended and for the time being no interest is payable on that part of the loan.
  I do not want to speak on it at length this afternoon because it is principally a Committee matter. I do not know whether there is any difficulty in putting the figure into the accounts. The advice I have had is that the inclusion of the suspended figure in the accounts would not necessarily mean that the depreciation charges would be higher. That is not a good point. We shall want to refer to this matter in Committee.
  I should like to know in greater detail the Government's long-term plans for the future of the suspended £25 million. The Minister of State referred to the eventual repayment of that part of the loan. It would be as well to have it laid firmly on the line whether the Government's intention is to forget about it or whether they feel there must be action by the Authority to lift the suspension and repay that part of the loan. It would be helpful to us all to know the Government's attitude.
  The Opposition support the Bill and believe it to be necessary. We hope that the new Covent Garden Market at Nine Elms will build on the good start it has already made. The market is of huge importance to London and the South of England. It is also of importance to the entire country because to a large extent it sets the tone of the market and handles certain produce which is distributed nationally.
  The market is modern and efficient. It is virtually fully occupied. From the figures available to us, it seems that turnover is increasing—although the figures are somewhat out of date. The speed of the transactions is far greater than it used to be. It is surely a good thing that a large, efficient market should be established in place of the old Covent Garden Market, which suffered from appalling traffic congestion.
  For the visitor, the new market is a very impressive spectacle. In the summer of 1975, with my right hon. Friend the
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  Leader of the Opposition I visited the market and saw the efficient way in which it operated. Let us hope that the Bill will enable the prosperity of the market to grow so that all consumers will benefit from fresher fruit and vegetables being brought to them more efficiently. I hope that my hon. Friends will give the Bill a fair wind and that we shall soon see its effect in helping the operation of this great market.
  4.55 p.m.
  Mr. J. W. Rooker: It is abundantly clear to me that the Minister and the Government intend to railroad the Bill through by 7 o'clock tonight. A Second Reading speech of 15 minutes' length is not good enough on a Bill which authorises the expenditure of £38 million of taxpayers' money. We sometimes spend hours debating matters which involve the expenditure of much smaller sums. Yesterday, after Question Time, we spent about 45 minutes discussing expenditure of £1 million on the Meriden Motor Cycle Co-operative. That was not even on the Second Reading of a Bill. My hon. Friend the Minister did himself less than justice. It is clear that the Government will not get their Bill by 7 o'clock. They do not deserve to; they do not deserve to get the Bill at all. I have heard nothing from my hon. Friend that convinces me that I should support the Bill.
  I do not intend to debate at length the problems in Birmingham because I should be ruled out of order. Nevertheless, the amendments which I tabled during the recess are valid. The Minister said that Covent Garden is a national market serving areas wider than London. I make exactly the same point about Birmingham, as did the hon. Member for Birmingham, Hall Green (Mr. Eyre) in his intervention.
  I wish to expand on one or two matters raised by the hon. Member for Westmorland (Mr. Jopling). Here we are in January 1977 debating the Bill. Normally accounts are published and made available to the House in the February following the financial year to which they relate. In a few weeks' time we shall have before us the up-to-date accounts. I see no reason why the Government should try to push the Bill through its Second Reading on the basis of out-of-date information when, within a few

  1287
  weeks, up-to-date information will be available.
  Bearing in mind the content of the Bill, I am deeply suspicious that we have not been given the substance of the up-to-date accounts or, alternatively, that the Government have not delayed the Second Reading until after publication of the accounts. What do the accounts contain that so terrifies the Government that they want to be in a position when the accounts are published to say that a Bill is going through the House that will clear up the mess?
  The accounts for the past two or three years—particularly the latest accounts—tell a sorry tale. The Authority knew that it was heading for serious financial trouble and that the statutory limitations on the finance that was available would be reached. Clearly those limits have been reached in the accounts for the year which we have not seen. On page 21 of the latest accounts it is made clear that serious doubts exist whether the Authority will be able to fulfil its statutory duty to break even, taking one year with another. Reference was made to a report that, by implication, the Minister must have had.
  On page 26 of the latest accounts to which the Minister in his speech did not have time to allude is an item "contingent liabilities". It contains two sentences to the effect that the market has received claims from the traders, relating to the transfer of the market from the old Covent Garden site to the new site, for which the market has no legal liability. If we had the latest accounts, we should know the figure for that item—it may be £10,000, £100,000 or £1 million, we do not know. The House is entitled to this information. It ill becomes the Government to treat the House with such contempt on this matter. It is not a party political matter. It is a straightforward issue.
  The Opposition will clearly not vote against the Bill. They were supporting further increases in public expenditure this afternoon. We are talking about £38 million of taxpayers' money. My constituents in Birmingham and the constituents of my hon. Friends with Manchester constituencies will have to fork out money for the Covent Garden Market Authority in addition to finding money
  1288
  for the markets in their own constituencies which are in severe financial difficulties. I hope that the Minister, when he replies, will give us some information on the matters referred to in Schedule 10 of the accounts.
  My hon. Friend the Parliamentary Secretary, in his intervention—which I did not fully understand—explained Clause 1(4). As it stands, reading the subsection and the sentence in the Explanatory Memorandum, it appears to me as a non-lawyer that the obligation to repay this £25 million debt and the interest that accrues does not need to be shown in the Authority's report each year.
  Before I vote for the Bill I would like some examples, whether in the private or the public sector, of accounting techniques being used so that debts are suspended, interest is not payable on the suspended debts and, furthermore, the whole caboodle is not shown in the annual reports. I would like examples of a nationalised industry or a public corporation which has the power to hide these debts away from the public and from people who are interested in them, so that only those in the know—civil servants and others in the trade or in the industry—know about them.
  It is taxpayers' money which is involved, not a private consortium. I want another example from the private sector where this system operates. Where in the Companies Acts or Finance Acts has power been given to private companies to hide away debts and liabilities until such time as someone decides to pay something off? This smacks of an Orwellian "newspeak" technique. We are twisting the meaning of words by this technique which the Parliamentary Secretary did not adequately explain in his intervention.
  When we go a little deeper into the background of this Authority we find, as was said by the hon. Member for Westmorland, that this problem would not have arisen if the buildings had not been listed. Approximately £10 million could have been taken off the cost. I accept that the hon. Member for Westmorland said what he did with the best of intentions as a conservationist, but the boot is on the other foot. It ought not to be the case that private developers can make their plans and buy their land and

  1289
  erect buildings on the basis that they will buy and sell other properties on the free market without any account being taken of conservation policy. My hon. Friend used the argument of traffic control, but I can think of other places in the country where £13 million could be spent to ease traffic control.
  In this case I consider that the Authority has been a property developer. It ill becomes it to make forward plans on the basis of what could be obtained on the open market without taking account of any conservation policy, the need to retain old buildings and to keep communities together. The Authority ought not to make the plans on the basis of taking what it can get. We have reached the point where the Authority has been a property developer. There are several indications in the latest report that the Authority experienced some difficulty because it obtained a few properties and was not able to sell them in time or had bought them and was unable to let them in time.
  I looked into the background of a few members of the Authority and noticed that they had left the Services during the past 14 or 15 years. One of the members was Sir Alex Samuels. I am not knocking Sir Alex. He has obviously done a lot of good work on the Authority but he has been one of the foremost property speculators in this country, as well as being a member of the British Waterways Board which is rising fast in the league of property speculators. Members of the Authority have done a bit of work in the docks area, closed down wharves and put a few dockers out of work in the reaches of the Thames by Tower Bridge. Clearly the Authority has been led over the past 14 or 15 years by such men as Sir Alex Samuels.
  We do not have to look far behind the figures in the accounts to see that the Authority has been involved in property speculation. This is probably why the Authority had its fingers burned and why the money of taxpayers, including those in my constituency, is being used to bail them out. I do not think that this is justified. It ill becomes people from the private sector who get on to public boards to bring in their seedy little policies and taint and discredit public sector authorities such as the Covent
  1290
  Garden Market Authority with the techniques of private immorality which have been involved in property speculation in the past 10 to 15 years, thus sullying the good name of the public sector and of public enterprise.
  This brings into question the way in which we appoint people to the boards of these authorities. Since we do not have the latest report we do not know whether there have been any changes in the composition of the Covent Garden Market Authority. The Minister has made no mention of any proposed changes on the board. It may be that the contents of the latest report will mean that there will have to be a clean sweep of everyone on the Authority. The Minister may have to appoint a few new people to get out of any trouble in which he may find himself when the Bill goes into Standing Committee. It may be that there are a few surprises round the corner for members of the Authority. I should add that Sir Alex Samuels left the Authority in 1974.
  I shall make only a few remarks about Birmingham. The Minister said, in answer to the hon. Member for Birmingham, Hall Green, that the aid given to Birmingham was given in the terms of legislation, and therefore, by implication, that the Government's hands were tied. But their hands are also tied over the Covent Garden Market Authority. That is why we are discussing this Bill which is meant to give greater powers to dish out money from public funds.
  Mrs. Jill Knight: Does the hon. Member agree that the tone of the reply given by the Minister in answer to that intervention—namely that he semed to be reluctant to accept a deputation from Birmingham —has caused him as much disappointment as it has me? Since the earlier deputation with which the hon. Member was involved this whole Bill has come into being. The Bill did not exist when that deputation was seen. Surely the situation has changed. I hope that the hon. Member will join me in requesting a new deputation.
  Mr. Rooker: I am coming to that point. Birmingham City Council sent a deputation to see the former Minister of Agriculture in May 1975. I remember the deputation well. I was at the meeting in the Minister's conference room. In June 1975

  1291
  an innovation occurred in this country, namely, the referendum on the Common Market issue. It was clearly implied across the conference table that if the public did not vote "Yes" in that referendum Birmingham would lose Common Market grants for its markets. This was used as pro-Common Market propaganda in Birmingham, something which I and many of my hon. Friends resented.
  The question of the Nine Elms site was raised at this meeting, almost two years ago. It was raised not by a politician but by the general manager of the Birmingham Markets Department, Mr. Colin Mitchell. I clearly remember what he said and Mr. Mitchell has refreshed my memory and the memories of other hon. Members who represent the city. He has refreshed my memory about what he said at the meeting by sending a memorandum.
  At the meeting, he pointed out the similarities between the Birmingham and Covent Garden market problems. He suggested that it would not be long before a Government were asked to write-off these large, outstanding Covent Garden market debts, which the trade could never hope to clear off by normal rent payments. However, the Minister at the meeting said that we were not there to discuss that matter and in any case it would not arise.
  Since then, we have pursued the question of the Birmingham situation, always on an all-party basis. About a year ago, there was an Adjournment debate initiated by my hon. Friend the Member for Birmingham Northfield (Mr. Carter) and replied to by my hon. Friend the Parliamentary Secretary. We did not get any further. But all the time I have had a mental note to watch out for the Covent Garden Market Bill.
  When the Bill was put down for First Reading last November, I telephoned the general manager of the Birmingham Market Department and told him "I do not know what is in the Bill, but any Bill entitled Covent Garden Market (Financial Provisions) Bill" has to be something to do with writing off debts, as was forecast would happen at our meeting with the Minister". I then sent a copy of the Bill to Birmingham and the authorities there have clearly indicated that it does for the Covent Garden market what we
  1292
  asked should be done for the Birmingham market.
  The similarities between the two situations are apparent. Much of the food coming into the country has its first point of call at Covent Garden. But an increasing amount of it has its first call at the new Birmingham market because in some cases it is even more convenient to get to. Now that the A45 has been improved, the ports of East Anglia can be used because road transport from there can reach Birmingham easily along the motorways.
  I visited the market in October. It is now fully open on its new site. The increased international traffic was pointed out to me. Indeed, traders are coming to it from as far afield as Scotland. I do not want to exaggerate the advantages of the Birmingham market, however. In considering my own amendment to the motion for Second Reading, I had no idea of the amendment that the hon. Member for Manchester, Withington (Mr. Silvester) has put down. I have had no consultations with him about it. I do not seek to set Birmingham against London or vice versa. I simply do not see why Birmingham should not have the same sort of help. It is no good my hon. Friend saying that Birmingham has another source of income through the rates. We have gone to the rates to the tune of £500,000 this year for the market. Next year, the figure will be about the same, but it may be more the year after.
  Mr. Ernest G. Perry: Would it be true to say that the Birmingham market is a municipal market?
  Mr. Rooker: It is a municipal market. It was constructed by the city. There are many municipal markets in the country. Birmingham takes great pride in the market. Birmingham has always been a forerunner in municipal enterprise. I see nothing to criticise in the market being municipally owned. But it does not serve Birmingham alone. It serves London, Manchester, Sheffield, parts of Scotland and the Welsh coast. Yet the only resource to which the market can go—that extra kitty referred to by the Minister—is the Birmingham ratepayer. It cannot go the West Midlands County Council. It cannot even go to neighbouring towns such as Wolverhampton and ask

  1293
  their ratepayers for a contribution to a market from which their residents benefit daily. It cannot go to Wales or to Scotland, which are also benefiting, for money. Birmingham can go only to the Government for help with the market. Our problems are the same as those of the Covent Garden market—escalation in building costs and the rate of inflation, which was fuelled by the last Government. Birmingham had a great advantage compared with London. It was able to do something that London was unable to do for various reasons—it built the new market exactly on the site of the old one. The planning and the length of time involved in ensuring that the traders were not thrown out while work went on delayed construction, and that is why the costs vastly increased. But the site was the best possible because of access by road and rail.
  Mr. Spearing: Is the market in Birmingham served other than by road?
  Mr. Rooker: Yes. It is served by both road and rail. It is in the city centre, almost next to a railway station, and the motorways go right into the centre. It is a brand-new market, one of the largest in Europe, and it cost £11 million.
  However, I wish to conclude because many of my hon. Friends wish to speak. I hope that they will not be railroaded by the Government's wish to get the Second Reading by 7 o'clock.
  I have received a letter from the general manager saying that in the opinion of the Birmingham market's committee—the elected representatives of Birmingham—it would be grossly unfair to single out Nine Elms for special treatment. The letter goes on:
  "It would be inequitable for Nine Elms to have a large proportion of capital debt written off and interest rates fragmented at the expense of the Taxpayers whilst Birmingham Ratepayers would find themselves doubly penalised, firstly by having to subsidise the Birmingham Markets from Rates…and at the same time meeting part of the £38 million in tax which is required for this Bill, or part of the £4 million a year that this Bill is supposed to cost the Treasury."
  I hope that the Minister will not poohpooh the idea that the Bill is doing what two years ago we said that it would do. I ask him to reconsider the Birmingham problem—indeed, the problem which is also faced by other markets in the coun-
  1294
  try which do not serve only the immediate area in which they are situated. It is not as though our large cities have their kitties full to the brim of money and are spending money unwisely.
  The fact is that without these other markets, largely municipally-owned, the food distribution system of the country would break down. Parts of the country could well survive without the Covent Garden market, but not without the municipal markets which in many cases have been reconstructed in the last 10 years with the aid made available by previous Governments. The whole situation of the markets in our large cities needs looking at again.
  It is no good my hon. Friend saying "We have gone to the limit of our powers". That is what all Governments say. The House of Commons is here to give governments powers, although I have seen many cases in which Governments have simply taken powers. Today, I ask the Minister to ask the House for further powers so that he can give more aid to these large city markets, which would obviate the need for their ratepayers to be doubly taxed.
  I am not saying that the Covent Garden Market Authority should not have the aid proposed in the Bill, but if my simple requests are not met and my simple questions are not adequately answered, I shall be forced into the position of having to——
  Mr. Bishop: We shall ensure that the maximum amount of information is available to the House and to the Standing Committee when the Bill progresses. I would add, for the benefit of the hon. Member for Birmingham, Edgbaston (Mrs. Knight) as well as of my hon. Friend the Member for Birmingham, Perry Bar (Mr. Rooker), that there has never been any reluctance by the Ministry to consider any representations from Birmingham or elsewhere. I have met a deputation from Birmingham on this matter, as has my right hon. Friend. We are still open to representations. We have not closed our minds. My possibly commendable brevity in opening was in recognition that many hon. Members wished to take part in the debate and that time was limited.
  Mr. Rooker: My hon. Friend will not expect me to believe that he speaks with

  1295
  a great and deep sincerity with regard to the last point that he made. Ministers come to this House—I dare say the same occurs with the Conservatives—and take up nearly all the time on important orders or important Second Readings and deliberately crowd out Back Benchers. It is their deliberate intention to crowd out Bank Benchers.
  The deliberate intention today was not to give the House enough substance to go on, so that any hon. Member who had not done any background work would pick up nothing of substance in the Minister's speech. That would enable the Government to railroad the Bill through the House before 7 o'clock, as they intended, so that they can get through the next business without too much difficulty.
  As I was saying before my hon. Friend intervened, representations are all right. We keep having them. But we have had Questions and debates in this House and we are not getting anywhere. Therefore, unless something positive is said before this debate concludes I shall be forced, as any Back Bencher is, to use the only weapon that he has, and that is to seek to divide the House.
  5.21 p.m.
  Mr. John Wells: I should declare an interest as one who both buys and sells in Covent Garden Market and also as Master-Elect of the Worshipful Company of Fruiterers that has among its members some of the leading fruit-growers and traders in the country.
  I am glad that my hon. Friend the Member for Hampstead (Mr. Finsberg) is on the Opposition Front Bench because it is my contention that all Covent Garden Bills, from the time of Sir Christopher Soames up to today, have got everything wrong. It has nothing whatever to do with the Minister of Agriculture. From the brevity and inadequacy of the Minister's speech, that is quite clear. It is entirely to do with the Greater London Council.
  Old Covent Garden had to be moved because of the desires of the old LCC. Sir Christopher Soames got it wrong. I was proud to be sitting on the Back Bench—where the hon. Member for Newham, South (Mr. Spearing) who is still a member of the GLC is sitting now
  1296
  —and to tell Sir Christopher Soames all those years ago that he got it wrong.
  The Covent Garden move was entirely to do with London traffic on the one hand and pilfering on the other. That is a dirty word. All the members of the unions concerned hold up their hands and say "Oh no, none of our members ever knocked off a box of oranges." But with the move from Covent Garden to Nine Elms great improvements came to the industry.
  Both the Minister and my hon. Friend the Member for Westmorland (Mr. Jopling) were right to point out the improved efficiency that the new market has brought. They were both absolutely right in congratulating both Sir Henry Hardman, the past Chairman of the Covent Garden Market Authority, the reigning chairman and their staff for their ability and enthusiasm during the move.
  The Minister was right when he said that this is the legislative tip of the iceberg. What affects the trade, both growers and people in the market, is the bit of the iceberg that is deep down underneath. All this talk that we have had today about the £½ million to be raised yearly from the market is the sunken bit of the iceberg. As the Minister said, it is a package deal.
  The people who work and operate in the market are extremely concerned about what is going on. We are all aware that the present Minister of Agriculture is an extremely astute negotiator. We wish he was more astute in Brussels and a bit less astute when dealing with his fellow countrymen in Nine Elms. If he tries to out-smart them, which may be the case, it will have disastrous repercussions because the Government must bear in mind that in the main the firms in Covent Garden Market at Nine Elms are the same firms trading in Birmingham, Sheffield, Manchester and all the great markets of this country. They are trading in Spitalfields and the Western International Market, one within the City of London and the other not far outside the GLC area.
  If the market traders get disgruntled at what goes on, and feel that the charges being put upon them are unfair, those firms will move their business away from Nine Elms and that splendid new market will suddenly fall flat on its face.

  1297
  The only two sectors left if this disaster were to occur would be first, the flower market which is highly successful and profitable. My hon. Friend the Member for Westmorland said the market was virtually fully occupied. That applies to the flower market but it does not quite apply to the main part of the market. There are a number of vacancies there although I cannot give a figure of percentage occupancy.
  Mr. Jopling: The figure I used was based on the information I had from the Authority which suggested that only 3 per cent. of the space was unoccupied.
  Mr. Wells: I accept that percentage figure, but there are many large stall holders who are taking up more space than they really need. There is a masked un-occupancy. That must be realised. A large number of national firms feel that they have a duty—it is a very loyal industry—to support the Authority to the hilt. If the Authority in its turn does not support the traders then the traders will withdraw that support.
  The second sector of the market that must be examined is the Grower-Wholesaler sector which merely gets a covered roof and drives its trucks in. It also has a telephone booth. The facilities offered to this sector are minimal.
  I agree that these traders are not paying high rents for the facilities that they get but the facilities are not great. In recent months they have felt aggrieved by the demand put upon them that they should employ more porters who are the unionised part of the labour force because they felt that they had entered into an agreement whereby each Grower-Wholesaler employed one man when they first went in. They are now being asked to employ more without getting any greater facilities or services. They feel that this is due to the backing down of some of the larger firms as well as this lack of full occupancy.
  That is a truer measure of the lack of full occupancy. These are the two viable Covent Garden sectors. If the Authority goes sour on the traders the rest of the market could as well and they could go elsewhere.
  A visit to Spitalfields Market will show the excellent service that can be given by the City authority. Admittedly it
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  suffers from the hugger-mugger transport situation suffered in the old Covent Garden but Spitalfields Market is of its sort highly efficient and the rents are very much less in real terms than those that are being extracted from the traders at Nine Elms.
  I would also refer to the conditions of work. For a principal in the business, or a man who is free to fix his own hours of work, the conditions are comparatively good. He can come early and go early. He does not need to do his shopping and his other daily business there. Because of the efficiency of the market, he can get through his day's work a great deal quicker than he used to be able to do in the old market.
  But, supporting every principal in a business, there is a host of secretaries, clerks and telephonists who are expected to arrive quite early in the morning and then keep conventional office hours. It is unfortunate that there is not a single Lady Member present in the Chamber. I am sure that my hon. Friend the Member for Birmingham, Edgbaston (Mrs. Knight) would have agreed about the importance to a secretary, for example, of a place to get her hair done, a place to buy her cosmetics, and a place where she could buy a beefsteak for her boy friend's dinner. Female staff require all sorts of day-to-day facilities.
  The giggle name for the new market is "Colditz". That is just what it is like. There are one or two traders on the bridges owning shops which perform an extremely important service in providing such facilities as they can for the staff employed in the market. But the fact remains that this Colditz-like atmosphere is one of the gloomiest features and it making it very difficult for traders in the market to hire and retain staff of good quality. I am not speaking of the professionals on the floor but of the ancillary staff needed behind the scenes to maintain a successful operation.
  It is imperative that the market tenants should be given a fair deal, and not merely in the raising of the £½ million, because the Authority must look again at the disposal of some of its assets with a view to getting other trades within the compound. I know that the market Authority is doing all that it can in disposing of the railway arches and so on

  1299
  where they are suitable. But, here again, we come up against the GLC, or possibly it is the Wandsworth Borough Council. The planning authority has been notably unhelpful, just as the GLC was over the old site. Again without wanting to drag in personalities, it must be said that some of the arch conservationists of the GLC have now married and pushed off to the countryside, ceasing to be members of the GLC. Some of the best-known conservationists, who mucked up this whole project, have now vanished to Northamptonshire and will not be seen in London again. This is a deplorable state of affairs, because one or two people have caused tremendous financial hardship to a great market authority.
  I want to come back to the Wandsworth point, because I am sure that the local Member will have his own contribution to make about it. I am not trying to depict members of the Wandsworth Council as villains. However, they do not understand the problems of the people working in the market, and this is a point that I seek to put to them through this House and via their local Member.
  Planning permission must be given for modest shopping facilities to make working conditions tolerable for the people within the Colditz wall. This must be a duty of the local authority, and it should see to it. Then the riverside site could be of immense value in terms of cash and other amenities. There could be a pub, and the site could be developed in a way which would be both financially profitable and pleasant for the people living there. However, the local authority has decreed that it shall be an open space. There are plenty of pleasant open spaces in that part of London. It is not deprived of open spaces. If that little strip of land could be developed as a riverside shopping area, with a pub and a small open space, it would be helpful. It is imperative that the local authority look sympathetically at attempts by the Authority to improve conditions for those who work there.
  Mr. Spearing: In fact, I am not a member of the GLC, although at one time I was a member of its planning committee. The hon. Gentleman referred to the riverside strip. Does he not agree
  1300
  that orginally it was envisaged that craft from the Port of London could unload here and even that coastal vessels from the Netherlands could come straight to this wharf? Would not that have been an advantage, had it been put in, and would not it be a good idea to maintain it as a safeguarded future possibility?
  Mr. Wells: The hon. Member for Newham, South and I share a common interest in the inland waterways movement. I very much deplored the attack which was mounted earlier on a member of the British Waterways Board, and it was my intention to come to that gentleman's defence later in my remarks. But it is not practicable that that should be a riverside site for loading and offloading today. The size of vessel is different today. Everything is containerised. It is far more important not to lose sight of the rail element. When we thought that we were to get a Channel Tunnel, this was of great importance. Even so, the possibility of a rail link should still be maintained. However, I do not want to be side-tracked into that. As far as possible, I wish to restrict my remarks to the Bill.
  A most important feature which must be emphasised is the success of the Authority in reducing pilfering. It is one of the Authority's great success stories. In the old days the wags used to say that they stole boxes of oranges. Now they steal a palletful. I know that one or two palletfuls have been stolen, but, by and large, the Authority and its staff have done a very good job in this respect, and they are to be congratulated.
  As I said earlier, I have been opposed to the attitude of successive Governments to Covent Garden. Quite the most disgraceful feature of the previous Labour Prime Minister's last Government came in the July 1966 cuts when the right hon. Gentleman had the impertinence to lump in the new Covent Garden with municipal swimming baths and suchlike amenity and frivolity measures. This was a matter of great national economic importance, and, had the right hon. Member for Huyton (Sir H. Wilson) not set it back by three years at that time, we should not be in the difficulty that we are in today.
  If the Covent Garden Market Authority is to be allowed to expand its assets

  1301
  as widely as possible, it is important that it should look at the possibility of expanding into other commodities. It has the space available, and there are other trades within the food sector which are definitely interested in having new and up-to-date facilities.
  Mr. Ernest G. Perry: The hon. Gentleman has touched on a most important aspect of this matter. Would he include Smithfield, Billingsgate, Spitalfields and the Borough markets? There is plenty of room at Covent Garden to embrace all those markets.
  Mr. Wells: There is plenty of room to embrace them, but I remind the hon. Gentleman of what I said earlier about the City Corporation running extremely efficient markets at a very much lower price. If market traders were forced to move from the City markets to Nine Elms, the cost of our food would increase quite sharply. I am not suggesting that there should be any compulsory move. It was necessary that there should be a compulsory move from the old Covent Garden site to Nine Elms, and that is why the Authority was saddled with the high capital cost of the buildings which it had to buy in order to move the market lock, stock and barrel. But there is this possibility of getting in other trades.
  The Birmingham contingent—if one can refer in that way to hon. Members from Birmingham who have intervened with the point of view of that city—are sitting on a mixed market, and if their mixed market is in financial difficulties it must be for other reasons. I know it would be out of order to spend too much time discussing Birmingham, but I hope that the Minister will see the deputation which wants to visit him, because clearly the Birmingham taxpayers are being asked to subsidise the London market and as ratepayers they are asked to subsidise their own local markets as well. It is worth drawing the attention of hon. Members to the contrast between the efficiently run City of London markets and the less efficient running of some municipal markets elsewhere.
  The market towers have been discussed at considerable length, and the Authority has done an extremely good job in negotiating leases at appropriate prices. It has not given way and has not in any
  1302
  way panicked, and it is to be congratulated on that. It is also important, when one congratulates the Authority on the one hand for getting a good price for some assets, to bear in mind the need to maintain subsidised rents in other aspects, such as those in shopping facilities, and to take other measures to make the market complex more attractive to other traders.
  I want to consider some of the details of the £½ million package. We are in some difficulty here because we have not got the package in front of us. The Minister was very brief in opening the debate. There are all sorts of rumours flying around and I do not see how we can discuss this matter in Standing Committee. A conventional Standing Committee on this Bill will be a comparatively laughable matter, because it will not be able to go into the complexities of the package deal. I would be very attracted to a Select Committee in lieu of a Standing Committee. If this is not possible, it would be helpful if the Parliamentary Secretary gave some guidance to the House about the way in which Parliament can examine and share with the Department the responsibility for seeing how the £½ million is to be raised. We would not be realists if we did not appreciate fully that if the Government are to write off this very large sum of money there must be a quid pro quo and the trade must find a large sum.
  The people in the trade are extremely worried about rumours of a sales tax. My hon. Friend the Member for Westmorland was right to point out the defects of a sales tax if it is to be levied on commission sales. Is it to be levied on goods going through the gates, or on goods handled in those offices? If it is levied on all goods handled by the offices of firms which have stands in the market, these firms will withdraw and trade from Spitalfields, Birmingham, or Western International or some other point. The Government must tread very delicately when dealing with a sales tax.
  The question has also been raised about tolls on goods going in and out of the premises. When the market started, there were to be no tolls at all. Then a modest charge was imposed for driving a car or a lorry into the market, and this is now creeping up. My hon. Friend touched on the concept of an automatic

  1303
  toll gate to save administrative costs, but we all want to know a great deal more about the negotiations. I understand that the National Farmers' Union is not averse to playing its part provided that the market tenants play their part. Also, what about people importing from overseas? If British produce is to be penalised, it is essential that imported produce should carry a burden also.
  We all talk about burdens but the point is that in the end it is the British housewife who pays. For this reason many British housewives would much rather buy their goods in the small, scruffy Maidstone market, for example, than in the smart, slick new market at Nine Elms. An example of this is that my daughter-in-law, who is a constituent of the hon. Member for Battersea, South (Mr. Perry), buys nearly all her vegetables from a street market around the corner. She asked the street trader where he bought his produce and he told her that he went to Maidstone and got it there. If we get too clever in building up extra taxes on the traders, it will be the housewife, and no one else, who pays at the end of the day. I believe that the housewife must be the final arbiter, because she is both the consumer and the taxpayer.
  The market Authority has done an extremely good job, but the tenants have passed a resolution opposing their part of the £1½ million. However, they are perfectly reasonable people and I am sure that they will come around if a reasonable package is presented to them. It is the essence of the matter that the Minister should be seen to be reasonable. The hon. Member for Birmingham, Perry Barr (Mr. Rooker) said the Minister was trying to railroad this Bill through the House. It would be far more frightening if the Minister tried to railroad it through the market, because then he would come unstuck.
  I hope that we shall have an opportunity to discuss this matter again at a later date, and not in the conventional Standing Committee because that would be absolutely useless. It is imperative that the position should be far more fully understood because this is only the tip of the iceberg, which is so far hidden under the water.
  5.48 p.m.
  Mr. Frank Hatton: In a leading article in the Estates Times on Friday, 10th December, a comment was made about this Bill:
  "The bill is an admission that early optimism that the market could be immediately self-financing was unfounded.
  It's principal objective is to restructure the new market's finances and leave them at a level which the market 'should reasonably be able to support'.
  It has been drawn up to take account of the 'exceptional circumstances' which arose because of resiting of the market, such as high interest rates and escalating building costs."
  I want to refer to the question of exceptional circumstances in relation to other areas of the country, in particular my own city of Manchester. In Manchester there is very strong resentment among members of the city council, and in particular those members who are also members of the markets committee and are responsible for the abattoir in Manchester. They resent the fact that citizens should be called upon in terms of taxation to assist exceptional circumstances in London and at the same time be asked to provide out of their own rateable resources for the annual deficits of their own undertakings, particularly the Manchester abattoir.
  Reference has been made by the hon. Member for Birmingham, Hall Green (Mr. Eyre) and my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) to the situation in Birmingham. Requests have been made to the Minister to receive a deputation from the city. As far as Manchester is concerned, deputations have been seen by the Minister, and what we are concerned about now is some positive action. I shall not be satisfied about supporting this Bill this evening until I get some assurance that the Government, who have a responsibility for distribution of our foodstuffs, recognise the responsible rôle played by municipal undertakings outside the London area in the provision of food supplies.
  It is proposed this afternoon to wipe out part of the debt incurred by the Covent Garden Market Authority and to freeze most of the remainder. I accept that the debt is insurmountable. However, when that sort of thing is proposed, Manchester Members can be excused from

  1305
  feeling that there is one law for London and another for the North-West.
  As recently as November my hon. Friend the Parliamentary Secretary met a deputation from Manchester which consisted of the chairman and the deputy chairman of the markets committee, the director of markets and the chairman of the finance committee. The deputation was supported by hon. Members representing Manchester constituencies. The subject of the deputation was the Manchester abattoir, and the Minister conceded that because of the changes that have occurred in the slaughtering industry since the abattoir was first planned, Manchester's claims for assistance deserved special consideration.
  While he did not accept that the situations affecting Covent Garden and Manchester were exactly parallel, he conceded that there was a similarity between the plights facing the authorities responsible for the administration of the two projects. I therefore suggest that we are entitled to hear from the Minister today that the Government are prepared to give the same sort of consideration to the problems of the Manchester abattoir as they have given to the problems of the Covent Garden market.
  The abattoir was designed and planned about 20 years ago in full consultation with the Ministry of Agriculture. Since then exceptional circumstances have cut the input into the abattoir. Those circumstances are the Irish Free Trade Agreement which was signed in 1966 and the Agriculture (Miscellaneous Provisions) Act 1972 which removed the requirement on local authorities to ensure that there was adequate slaughtering provision in their areas. The Act also removed many of the controls that local authorities had over the establishment of private abattoirs. At that time Manchester MPs were extremely concerned at the possible effect of the legislation on the Manchester abattoir, but the Government of the day enacted the Bill just the same and that made matters very much worse.
  A further blow has now been delivered. The sum of £20 million is being set aside for the development of the slaughtering industry in this country. Since local authorities are not now required to provide abattoirs, it is unlikely that any great proportion of this money will go to the public sector. Instead, almost all of it
  1306
  will be used to subsidise private enterprise which will compete with abattoirs such as that at Manchester.
  These problems can be dealt with only by the wiping out of the debt which had been incurred by Manchester abattoir. Ever since it was opened the city council has attempted to improve its financial standing. However, during its period of operation, operating costs have risen by 125 per cent. while income has increased by 216 per cent. The problem is that the abattoir operates at only 43 per cent. capacity and it has an annual deficit of £400,000. That is the amount that the city has to find, on top of financing its social services, education and housing. If the Government are to support the new Covent Garden market, I believe they should also remove the debt which hangs over Manchester abattoir.
  We are expecting some positive results from the deputation and I shall await with interest what the Minister says in winding up the debate. Unless I have an assurance that some assistance will be given to Manchester to deal with the deficit on the abattoir I shall be unable to support the Government in the vote tonight.
  Mr. Wells: I wanted to ask the hon. Member for Manchester, Moss Side (Mr. Hatton) a question before he sat down. Will he tell the House what Manchester abattoir, which deals with meat, has to do with Covent Garden market which is situated at Nine Elms and handles only horticultural produce? He is not comparing like with like. If he were dealing with, say, Birmingham market, which deals with fruit and vegetables, I could understand his point.
  5.58 p.m.
  Mr. Stephen Ross: Perhaps I may deal with the point that was raised by the hon. Member for Maidstone (Mr. Wells). I used to be an agricultural auctioneer selling cattle. I have been into many abattoirs. I have every sympathy with the plea by the hon. Member for Manchester, Moss Side (Mr. Hatton) because I have yet to discover a public abattoir which is paying its way, unless it is a very old one. The new ones cost a great deal of money to establish and I guess that they are all losing substantial sums. The plea that the hon. Member made on behalf of Manchester could

  1307
  doubtless be made for other parts of the country where new abattoirs have been built in recent years.
  I could make such a plea for my own constituency. We need a new abattoir. The present situation is a disgrace. There are at present two private abattoirs, one in the centre of the town, and there are times when blood runs down the street. We are unlikely to get a new abattoir, however, because the local authority simply does not have the necessary finance. The cost of construction is extremely high. That is a good reason why State aid must be given not only to abattoirs, but to the subject of this debate—Covent Garden. The Government must help the Covent Garden Market Authority through this Bill.
  About two years ago I received deputations from the horticultural section of the National Farmers Union regarding the site at Covent Garden. Tenants were worried about the charges imposed by way of tolls. They pointed out that the Covent Garden Market Authority was £30 million in debt and that the situation was getting worse. The hon. Member for Maidstone, whose knowledge of this subject is far greater than mine, has already expressed the fear that, if greatly increased charges have to be made to meet this terrific debt, tenants will withdraw and go to other markets which have been mentioned—Spitalfields, Brentford and elsewhere.
  The Government must consider carefully the question of the £500,000. Many Covent Garden tenants are near pulling out point now. If they have to face additional costs, some will pull out and the whole scheme will come unstuck. That would be a great pity, because it has many advantages.
  I welcome the fact that we did not have the complete redevelopment of the old Covent Garden site. As a conservationist, I think that was one of our better decisions. However, it put the Authority in great difficulty, because it was expecting to realise about £20 million from the sale or redevelopment of parts of the old site.
  But there have been benefits in other directions. People have been able to move back into the area because they can afford the rents. They would certainly not have been able to afford the rents which would have been asked had
  1308
  there been a complete redevelopment with new buildings. if that had happened, we would have had blocks of offices and goodness knows what standing empty, and people who had traded in that area for generations would have been forced out.
  This point was brought home to me vividly during the recess when I was looking at small industrial premises. An old Army fort in my constituency has been converted into small industrial units which have been let at 30p per foot. They are fully occupied. They have provided the opportunity for small manufacturers to get off the ground, as it were. However, new industrial premises are standing empty because the rents demanded are over £1 per foot and small business men cannot afford such rents. Therefore, the fact that we have been able to convert the old Covent Garden buildings into realistically priced units has been a boon. I am glad that has happened, although it has worked against the new Covent Garden Market Authority.
  At the moment the new Covent Garden is not connected to the rail network, although the railway line passes through the middle of it. Recently I visted Southampton docks. I found to my delight that 70 per cent. of the container traffic from Southampton goes by rail. I also discovered that the South African fruit trade would be containerised some time this year. It seems commensense that that containerised traffic should go by rail from Southampton direct to Covent Garden. That may be beyond the remit of this Bill, but the Minister has some power over the Authority. If, as I hope, the Bill goes through, I trust that pressure will be put on the Authority to ensure that a rail link is put in so that there is a direct link with the fruit trade from South Africa via Southampton. It seems commonsense to do that.
  If the additional costs are to be imposed some will undoubtedly fall back on the growers. I accept that in the end it is the housewife who pays, but growers in the United Kingdom—there are many in my constituency—have had a rough time during the last three or four years. I think that point is generally accepted. I do not think that the Ministry of Agriculture has been over-generous to our horticulturists, who have fared badly compared with their European counterparts and with those in Southern Ireland.

  1309
  Growers in the South and in my constituency want this rail link with Southampton. I had a plea from the local branch of the NFU in my constituency about that matter only two years ago. If growers have further costs put upon them for sending goods into Covent Garden, it will be a retrograde step. Many have managed to stay in business only by the skin of their teeth. Many have put new investment into glass houses and modern techniques. The price of heating oil has hit them particularly hard. If they are to suffer further charges for sending goods to Covent Garden, it will be a further blow to them.
  I welcome the Bill. I sympathise with the pleas which have been made regarding Birmingham. I think that State aid must be provided for the establishment of new and big markets. I do not know of any new cattle market which has been built in the last few years which has managed to pay its way. Huge rentals fall on auctioneers. I know of a number of cattle markets which are not paying their way. Indeed, I know of one which went bust. Therefore, the State must play some rôle. It did so in the hotel industry five or six years ago. I think that the State must consult the local authorities, because the abattoirs in many parts of the country are in a disgraceful state. We must get our standards up. When new markets have to be built, there should be a joint deal between the State and the local authorities.
  6.7 p.m.
  Mr. Fred Silvester: My hon. Friend the Member for Maidstone (Mr. Wells) asked what the Manchester abattoir had to do with the Bill. I propose to tell him. It is one of those features which will affect the votes of some hon. Members on this Bill. The abattoir deals with meat and Covent Garden does not—at least not yet. However, I notice that it is making a bid in that respect. The Manchester abattoir and Covent Garden are nevertheless on all fours in the sense that we have encouraged, persuaded, and allowed local authorities to take on a regional rôle in the provision of markets and we have left them holding the baby.
  I do not propose to go through all the details. The hon. Member for Manchester, Moss Side (Mr. Hatton) has already done
  1310
  that. I want to put a simple proposition to the House about the Manchester abattoir—a proposition which has been made about Birmingham and which will no doubt be made about other parts of the country.
  The Manchester abattoir was constructed in about 1961. It now has an outstanding debt of £3·8 million. The abattoir was built in circumstances which were governed by the Government of the day. It was the subject of consultation with the Government, and the throughput has been governed by Government policies, by international agreements in 1966, and subsequently. The running of that abattoir or market is governed in many ways by factors outside our control.
  My hon. Friend the Member for Westmorland (Mr. Jopling) referred to the debt burden on Covent Garden. Exactly the same provisions apply to Manchester. The Manchester abattoir finances its debt in a different way, but rolling forward the debt year after year it is also picking up higher interest rates as it goes along. Comments made about Covent Garden today can be duplicated for the Manchester abattoir. Indeed, I am sure that many of the same points can be made about Birmingham and other markets.
  The Bill is no doubt admirable and meets a need which has to be met. But, because it is Covent Garden, because it gets national attention, because it is part of the heritage and has an association with Nell Gwynne, and so on, it gets more consideration than other parts of the country. The time has come to say that will not do any more.
  The Manchester abattoir has not had a grant at any stage of its provision, so far as I can make out, whereas Covent Garden has already had grants under Section 10 of the 1954 Act. We are therefore talking about circumstances about which we are paralysed to do anything and we can only come to the House to try to get some relief. This Bill seems as good an opportunity as we are likely to get to express that view.
  The people who run the abattoir have cut the annual operating losses over the past 10 years. Ten years ago the losses were 25 per cent. of the operating costs and now they make a surplus on operating costs of 9 per cent. But the debt charges will continue to drag them down

  1311
  and there is nothing that we can do about it. The taxpayers of Manchester have to pay £400,000 a year—more than is spent on nursery schools, mental health and services for the blind. Cities such as Manchester, Birmingham and Sheffield have an accumulation of problems but in this case £400,000 is going down the chute with no return to the citizens and we are simply left with the cost.
  The situation must change. The Minister met a deputation recently but nothing has happened. I have no doubt—and I am looking for signs to the contrary—that the Minister has nothing in mind. There is no indication of relief for the citizens of Birmingham and Manchester but we will not continue in this way.
  I have no doubt that Covent Garden will get the money, and that is a good thing. But if the Minister of Agriculture happened to overlook the River Mersey instead of the River Thames, would not Manchester have received more attention? If we are honest we shall find that the answer is "Yes". This has happened many times before. It has happened far too often. Now it is time that policies were changed.
  6.13 p.m.
  Mr. Ernest G. Perry: Covent Garden is important to people like myself who have been interested in the problem since it was first raised in the early 1960s. I agree with the hon. Member for Manchester, Withington (Mr. Silvester) that consideration should be given to other local authorities handling markets and abattoirs. We cannot treat Covent Garden as a separate entity, because all the markets are bound together.
  I was the deputy leader of the old Battersea Borough Council when the first town planning application was made to build at Nine Elms by the relevant Covent Garden committee. The committee selected that site after surveying a number of other possibilities. It decided on Nine Elms because of the number of disused railway lines in Battersea. They were a great sore at that time and Battersea Council had not been able to obtain the land for housing development. We welcomed the proposal with open arms. The committee suggested that there should be a linking railhead for Covent Garden market which would bring
  1312
  produce from all parts of the South. Even in those days containerisation was discussed and it was believed that Nine Elms would be the fulcrum for the distribution of agricultural produce.
  I have visited Covent Garden Market on a number of occasions. I pass it daily and I have been interested in it from the beginning from the point of view of the retailers who buy their produce there. I have regular contact with retailers in my constituency. Two of the country's best known retailers live there—Jack May and George May—who shift 1,000 tons of potatoes a week in Battersea. I am struck by the size of the place and by the little use made of the space. A case could be made for the extension of Covent Garden Market to include other markets in London. Covent Garden Market is underused. I agree with the hon. Member for Maidstone (Mr. Wells) when he talks about the atmosphere of Nine Elms and the way in which it is organised. But I am worried about whether the same amount of trade is retained.
  Mr. Wells: There has been a substantial year-by-year increase in trade.
  Mr. Perry: I am pleased about that. It seemed to me that not as much business was taking place as before.
  A case could be made out for an extension of Covent Garden Market to take in other products such as fish and meat. It could become a paying proposition for those who operate at Covent Garden, the taxpayer and the housewife.
  We welcome the Covent Garden scheme in Battersea. My right hon. Friend the Member for Battersea, North (Mr. Jay) has also been interested in the problem and I recall that he was concerned about the dozens of disused railway lines, and we both welcomed the scheme, which will fill up the space.
  The hon. Member for Westmorland (Mr. Jopling) made an attack on the borough of Wandsworth when he said that it should get on with town planning. The hon. Member for Maidstone mentioned the railway arches. Although they are on Covent Garden ground, I believe that they are still the responsibility of British Rail. British Rail is responsible for the lack of use of those arches. A case could be made against British Rail for not letting the space under the arches.
  Mr. Wells: I understand that the arches are let en bloc to the market authority. I understand that the market authority would like to get on with subleases as fast as it can but there are problems, not only with the arches.
  Mr. Perry: I am very glad to have the hon. Gentleman's confirmation and assistance.
  However, it seems that the London borough of Wandsworth has been taking some stick tonight for not developing this area. As an ex-member of the council of the London borough of Wandsworth and, prior to that, of Battersea for 37 years, I must point out that the London borough of Wandsworth is at present trying to develop the whole area surrounding Covent Garden Market. Various schemes have been put forward. There was to be a large comprehensive school there and other developments. However, with the present shortage of money and protracted negotiations with different people, Wandsworth has not been able to proceed with the schemes that it would like.
  It is a little unfair to attack Wandsworth because of the desolate condition of this part of Battersea. It is desolate because it is disused railway land and because a lot of industry has gone elsewhere. For example, alongside the area there was the biggest depot in south London of the Gas, Light and Coke Company—now the Gas Corporation. With the advent of natural gas, provision of gas from that area was stopped.
  The whole of that part of Battersea, now in Wandsworth, is lying desolate. It is not being used. I have no doubt that this is one of the problems with which the hon. Member for Hampstead (Mr. Finsberg) will deal on Friday when talking about urban areas. The desolate areas left behind by industry that has moved are one of the problems of inner London, and Covent Garden Market is right in the middle of them.
  I go along with the hon. Member for Maidstone in what he said about the lack of facilities for the staff at Covent Garden Market and how the immediate shopping area is to some extent desolate and not very inviting to visit. I take his point that the market, in conjunction with the London borough of Wandsworth, should expedite town planning permis-
  1314
  sion for some sort of shopping development, and even on entertainment lines. There is plenty of room all around the market in Nine Elms for the building of a large sports arena, which would put some life into this part of south London.
  The only thing that I am worried about is that after all the grandiose schemes about which I was told in the early 1960s I have to be present today to support a Bill to provide taxpayers' money to get Covent Garden Market out of the red. I would much rather that matters had come to fruition as I was told in 1961 that they would. I was told that it would be a wonderful affair that would pay for itself and that no public money would be required. Today, about 15 years later, I am asked to vote to provide another £25 million for something that was to be a money spinner.
  To my right hon. Friend the Member for Battersea, North and myself Covent Garden Market has been a pet for many years. This day is not happy for us. We have seen something that we thought would pay for itself coming to us for £25 million of public money to wipe out debts, or to have money pumped into it.
  We like Covent Garden Market where it is, but we want to see it extended. I am sure that arrangements can be made. Valuable city property can be realised and millions of pounds can be obtained from the City of London, which is one of the most efficient authorities in Britain. I hope that some agreement will be reached for extension of the market so that it can be more efficient and in a better area, and that development can occur all around it.
  6.24 p.m.
  Mr. Nigel Spearing: At the end of the motion for the Second Reading of the Bill there is a motion standing in my name and the names of some of my hon. Friends urging that, should the Bill get a Second Reading, it be referred to a Select Committee. One of the names on the list is that of the hon. Member for Eastleigh (Mr. Price). That is incorrect. The name should be that of my hon. Friend the Member for Lewisham, West (Mr. Price).
  Despite the speeches so far, there is a degree of unanimity among virtually all hon. Members in the Chamber that because

  1315
  of the move, which was generally agreed to be necessary, there must be some financial recompense to the Authority. I think that even my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) would agree with that. The point is how much more London should get than other markets in comparable positions and whether public money has been wisely expended. Indeed, will a Bill of this sort do the trick anyway? I do not think that my hon. Friend the Minister of State addressed himself properly to those questions.
  The main factor that we must realise is that markets—and, perhaps, abattoirs —are in competition with each other. One cannot recoup the costs involved merely by raising prices, because in that case the enterprise goes out of business altogether. That is a major point in the debate.
  The hon. Member for Maidstone (Mr. Wells) mentioned the Western International Market. That is a new market, too, operated by the London borough of Hounslow. It is not far from London Airport. It may well be that if that market had not been developed, some of the trade would have gone to Covent Garden. As I understand it, considerable quantities of horticultural produce, mostly of relatively high price, come by air freight these days—perhaps more than we realise—so Covent Garden is competing with a near neighbour that is certainly in an expanding trade, as well as with other markets, Spitalfields and so on, which are closer at hand.
  It was always realised that there would be an element of risk in moving Covent Garden Market because, as we all realised, one cannot just take up a very complex, centuries old organism—which was not under a single authority or ownership because many of the market traders had their own premises in Covent Garden—in one part of London and dump it down on the other side of the river expecting it to be perfect from scratch. There was always an element of doubt whether it would "take", almost in the sense of transplanting a plant. I understand that the traders had to be persuaded.
  The Greater London Council has been castigated. I shall not say that the GLC
  1316
  is a perfect authority, but the principles were agreed by both parties. The differences arose about what was to happen to the property that was left. As an unrepentant conservationist, I am very glad that we have not had wholesale redevelopment of the area, which would have been largely in the hands of property developers and largely not to the benefit of London as a whole. There may be differences of view about that. However, it is right that the House has agreed that, because that did not happen, we have to be asked to vote more money than otherwise, and we can rest on that.
  However, when the traders were persuaded to go to this site they were told that it would be much better. They were told not only that there would be a lack of congestion—there is no congestion now—but that they would have river access for bulk traffic from the Port of London, and perhaps short sea trades from the Continent, and a railhead as well. They were told all that, and that was mentioned in an article in the Economist in 1974. Neither has happened. One question that must be answered—I do not think that it will be answered in this debate, because my hon. Friend the Minister probably does not have the information—is why both of those facilities have not been provided. Certainly the Covent Garden Market Authority wanted the railhead. That has been mentioned in the debate.
  Let me deal with the river point. The hon. Member for Maidstone said that it was not "on". I have yet to learn why it is alleged to be not on. A considerable quantity of fruit and vegetables will come from the Port of London, being brought up through London on craft and unloaded on that wharfside which was reserved for the purpose, and it may be possible for lorries to come through and pick up the bulk quantities after sampling in the market itself. It has never been explained why that has not happened. Craft might even come direct from the Continent, as they used to do, and go up stream with fairly heavy consignments.
  My main point about the facilities relates to the railhead. Had more traffic gone through Covent Garden—even larger tonnages than hon. Members have mentioned—the amount that the House will be asked to vote would be somewhat

  1317
  reduced and the permanence and therefore success of the market would have been greater. That has not been possible. I have been interested in this because I was a member of the GLC planning committee. When the project was approved, we thought that there would be a railhead at Nine Elms, but British Rail withdrew, although the rails and platforms were on the site. The Nine Elms yard, where the railhead should be, was part of the old goods yard. The rails were there, and the signal boxes and the connection with the main line, yet British Rail would not go ahead.
  I have had consistent correspondence with British Rail on this matter. It now says that to reinstate a single line and put one shed there would cost either £500,000 for a simple scheme of £2¼ million for a sophisticated one. I believe that the Authority wishes to apply under Section 18 of the Railways Act 1974 for some if not all of this money. This is astonishing. One public authority is dealing with another which had the tracks and the platforms. There was talk about the Channel Tunnel making it non-viable but I simply do not believe that this proposal was not on.
  We are helped with evidence from the unlikely source of the Sunday Times. At the moment, a good deal of traffic goes by British Rail to Hither Green, whence it is transported to Covent Garden.
  According to the Sunday Times Business Section of 3rd October 1976, an enterprising gentleman hired from British Rail a siding at Stewarts Lane, Battersea, which is much nearer Nine Elms, unloaded railway wagons there and took their contents to the market. He was reported to be doing very well.
  I asked British Rail whether it had any comment about that. I had a reply today from the freight manager. He said that only two or three wagons a week go into that siding, which the Sunday Times had said was so old that it almost had to be unearthed from the debris. If British Rail can put two or three wagons into that siding, why can it not do the same in the siding on the site itself? We need much more explanation about this; British Rail has not explained it to my satisfaction.
  A good deal of traffic comes from Portugal and Spain, but instead of
  1318
  arranging for that to come into London, to the Covent Garden terminal, British Rail, with a firm called Transfesa, has built a distribution depot at Paddock Wood. Therefore, having emerged from the ferry boats at Dover, these rail wagons terminate at Paddock Wood, where the goods are transferred to road. Once again, British Rail seems to have lost out.
  But it is not only transport and access which are of public concern; there is also public expenditure itself. Articles in The Economist on 29th August and 30th November 1974 warned the public that the market would make a loss.
  More important, the Public Accounts Committee in its third report of 1971–72 took evidence from the then permanent secretary to the Ministry of Agriculture and from Sir Henry Hardman as to the losses then being incurred. They said that in due course economic rents would be charged. The hope was that the costs would be recouped from the throughput of the market. But it is clear from this debate, if not from the Minister's speech, that that is not possible. If the rents or the tolls are put up beyond the level which is economic or which the stallholders say is economic, the market disappears. I presume that there is no obligation on anyone who has taken space there to remain there.
  So the Government and the House are on the horns of a dilemma. This certainly applies to London Members, because they have not been entirely satisfied by some of the features of the process of transfer from Covent Garden to Nine Elms or with the position over the railhead and the river wharves. The House is being asked to vote a large sum for this one project, about which I can understand Birmingham and Manchester Members having doubts, without being able to go into the matter thoroughly. The Minister's speech made it plain that he did not want to give too much away.
  I therefore suggest that the procedure of an ordinary Standing Committee will not take the debate much further. The only way in which we can prise information from Ministers in that event is through probing amendments. They will pass pieces of paper to officials, who will no doubt pass pieces of paper to the officials of the Market Authority. That is how interrogation will take place and hon. Members will satisfy themselves that

  1319
  the money being voted will be spent to the best advantage.
  I cannot see that such a procedure would be in the best interests of this House, of safeguarding public expenditure or—just as important—of the Authority, the stallholders and the London public who depend on them.
  Mr. Wells: Is not the weakness of an ordinary Standing Committee simply the fact that hon. Members would not be able to ascertain anything they really wanted to know and that all we could do would be to go through the four clauses and the amendments? Because of the rules of order, a Standing Committee would be a perfectly useless exercise.
  Mr. Spearing: I am grateful to the hon. Member for showing how difficult this procedure would be. I believe and hope that a Select Committee would not take long on this matter. Hon. Members often protest at what they regard as the charade of a Standing Committee. I do not think that those procedures are always as worthless as they appear—there are many side-effects—but if we are to have a Select Committee on a Public Bill, it is on this sort of Bill that we should have it.
  I cannot support a Bill which votes this large sum without these questions at least being asked. I am not saying that the money should not be spent: in a very difficult situation, perhaps it should be. But every hon. Member has an obligation to make sure and to find out.
  I am not asking for a change in our procedure. This procedure already exists under Standing Order No. 40. I understand that some time ago it was normal for Bills to go to Select Committees anyway. There is a great deal of talk about the need to question the Executive about its proposals. This is an ideal opportunity.
  Mr. Costain: I remind the hon. Gentleman that the Bill which first embodied these proposals was designated a Hybrid Bill and that we had a special procedure to deal with it? I sat on the Committee which examined the Bill.
  Mr. Spearing: I am grateful for that information about a time when I was not in the House, but I think that the hon. Gentleman will agree that hybridity
  1320
  arose because of the effect on private property in the market itself.
  The proper questions could be asked under the procedure that I suggest, but not in a Standing Committee. The hon. Gentleman adds further point to my argument.
  Mr. Leslie Spriggs (St. Helens): My hon. Friend has mentioned the response that he received from British Rail about the proposed railhead, which apparently is not forthcoming. Has the new Chairman of British Rail seen the request for information about a railhead in the market area?
  Mr. Spearing: The last chairman was confronted with this matter personally. I believe that the present chairman knows of my correspondence. I spent a morning with the freight manager of British Rail on the site, and he gave me his reasons why it was not possible. In fairness to him, there are arguments about demurrage, storage, new wagons and many other factors. But they do not convince me.
  The Select Committee is the most appropriate method. This is not a party issue and not a manifesto issue, but a matter of concern both nationally and locally. It is a matter of good government and of looking after public moneys in the proper way.
  The Public Accounts Committee has already looked at the matter and said that it was not satisfied. But the Public Accounts Committee can only look at funds that have already been spent, things that have already happened and about which nothing can be done. It is only at a time such as now that we have the opportunity for a Select Committee to go into the public expenditure involved before a matter is agreed. I hope, particularly in view of the information that has not been made available in the debate, that the Minister will agree to the motion, or at least take it seriously.
  I hope that the Opposition will fulfil the traditional and proper rôle of any Opposition looking at any Executive and that they will not make a party issue of this matter. Both parties have been in office and in the majority at County Hall at times when the issue has been debated. Both parties have agreed in principle. This is a matter of good government and the proper expenditure of public money.
  6.41 p.m.
  Mr. Geoffrey Finsberg: This debate is unfamiliar ground for me to plough. I am in rural company with so many agriculturists. I always thought that even in a constituency like Hampstead there must be glass houses somewhere. Certainly all my constituents are consumers of agricultural products and therefore I welcome the opportunity of participating in this debate.
  The debate has been interesting more because of what has not been said than for the content of some speeches, to which I shall refer later.
  My hon. Friend the Member for Westmorland (Mr. Jopling) asked a number of questions. I am sure that the Parliamentary Secretary will do his best to answer them, because, unlike the Minister of State, he will have plenty of time available to get through all the points. There is no need to add the customary phrase and ask the hon. Gentleman to write if he does not have time to reply. The House will give him time if he will give the answers.
  Among the questions that need replies are those on the Authority's staffing and the allegations that it is overstaffed. The Authority has said that it might be able to make savings amounting to £50,000. From my own observations of the work of the Authority, I can see no obvious signs of overstaffing, but a Civil Service staff review body has visited the Authority and I hope that the Minister, who has received its views, will give us some glimpses of the suggestions that have been made. Without that, it would be difficult for us to judge adequately whether there has been any overstaffing.
  My hon. Friend the Member for Westmorland also pointed out that we are working from the 1974–75 report of the Authority and that there is a need for the House to see the figures up to the end of September 1976. I hope that the Parliamentary Secretary will amplify what the Minister of State said in an intervention —that the Government will do their best to make up-to-date financial information available. I am not sure how this can be done, but the House expects such information to be available to the Committee that will look into the Bill, whether it is an ordinary Standing Committee or a Select Committee. It would be intoler-
  1322
  able if any Committee had to operate on out-of-date financial information.
  The House also wants to know much more about the proposed letting of the rest of the market towers. It would be helpful if the Minister could say, in reply to my hon. Friend the Member for Westmorland, which Government Department will take the premises and when the rent roll will rise to the total figure that he mentioned.
  The Minister made a strange statement. He said that the Market Authority's proposal to raise £500,000 from traders might, in the absence of agreement, be subject to Government direction. Will the Government introduce statutory powers in order to collect a sales tax? What did the Minister of State mean by that cryptic intervention? We need that information before deciding how the £500,000 ought to be raised.
  The hon. Member for Birmingham, Perry Barr (Mr. Rooker) made an interesting speech. He attacked the Minister of State because he felt that Birmingham was being unfairly treated. He mentioned the EEC referendum. He claimed it had been said that Birmingham would suffer if Britain did not get into the Common Market. But most of the major United Kingdom markets have received a grant of up to one-third of the cost of eligible facilities under the Agriculture and Horticulture Act 1964. In addition, Birminghame received an EEC grant that was not available to Covent Garden Market because that project was too far advanced when the United Kingdom entered the EEC. It was unfair of the hon. Member for Perry Barr not to mention that money had been paid to Birmingham.
  Mr. Rooker: I did not intend to mislead the House. I thought that the message would get across that, because there was a "Yes" vote in the referendum, Birmingham received £1½ million of EEC money. But because of the increased cost of the Birmingham market over original estimates—due to increases in building costs, the rate of inflation and interest rates caused largely because Birmingham rebuilt on the site of the existing market—ratepayers had to find £6½ million. The grant from the Government and the Common Market was £4½ million, but the market has now cost £11 million. We cannot charge economic rents to traders because they would not

  1323
  go into the market if we did, and there was a sort of lock-out in reverse when the market opened. The market has had to be subsidised from the rates. We came to the Government for extra help because the Agriculture and Horticulture Act provides an extra £5 million that has never been used. We asked for part or all of that money.
  Mr. Finsberg: It was helpful to get on record that Birmingham has received £1½ million more than Covent Garden market.
  I took careful note of what the hon. Member for Perry Barr said when he went on to attack Sir Alex Samuels, whom he described as one of the foremost property speculators. I have obtained a copy of his entry in "Who's Who" and I find it interesting. He was a member of the Covent Garden Market Authority. I suppose that might qualify him as one of the foremost property speculators. He is a Knight, a CBE, a JP, a Fellow of the Royal Society of Arts, a member of the Institute of Mechanical Engineers and a part-time member of the British Waterways Board.
  But then I begin to wonder. He was educated at elementary school and was a member of Shoreditch Borough Council from 1945 to 1961. As I recollect, Shore-ditch Borough Council did not have many Conservative members. Sir Alex was chairman of the London and Home Counties Traffic Advisory Committee from 1946 to 1961. He was appointed by a Labour Minister and there is nothing in that job to suggest that he is one of the foremost property speculators. He was a member of the Special Inquiry into London Traffic Congestion, the Working Party for Car Parking and the Special Survey Committee on the use of parking meters. Most property speculators do not like parking meters outside their properties.
  Sir Alex was also a member of the London Travel Committee, the Operations Group of the Transport Co-ordinating Council for London, deputy chairman of the National Road Safety Advisory Council, vice-president of the London Accident Prevention Council, a member of the Departmental Committee on Road Safety and adviser to the Minister of Transport on London traffic management and on road traffic.
  1324
  Sir Alex was highly qualified to do all these jobs because he was once a taxi driver, but I see nothing in them to suggest that he is one of the foremost property speculators. Perhaps the hon. Member for Perry Barr was referring to Sir Harold Samuel. If not, I am fascinated to know what qualifications Sir Alex has for being regarded as one of the foremost property speculators.
  Mr. Rooker: I have also looked at the entry in "Who's Who" and it is not all accurate. One would not expect it to be, because of Sir Alex's age. For instance, Sir Alex is not now a member of the British Waterways Board or the Covent Garden Market Authority. There is no information about his job or any directorships of property companies. Companies House has all the records. The entries in "Who's Who" are written by the people concerned. They put in what they want to put in and leave out what they want to leave out. The records at Companies House are full of the goings on of various property companies who have made some nice rip-offs along the Thames.
  Mr. Finsberg: I note what the hon. Gentleman said about things being left out and I remember the £1½ million which Birmingham has received from the Common Market.
  My hon. Friend the Member for Maidstone (Mr. Wells) speaks with great authority and sincerity on this matter and he said in 1965 about the Covent Garden Market Bill:
  "We on this side of the House view this as a great scheme for the benefit of horticulture and the consumer and as of inestimable benefit to central London."—[Official Report, 24th March 1965; Vol. 709, c. 675.]
  I am sure that time has not made him change his mind although problems have certainly arisen since that time. My hon. Friend put his sentiments wisely and I take this opportunity to wish him, as the next master of his company, the traditional toast that he and it shall flourish root and branch.
  The hon. Member for Manchester, Moss Side (Mr. Hatton) said that there was one law for London and another for the rest of the country. It might be happier for London if that were true in all respects, but the present situation on the rate support grant and the proposed

  1325
  filching of £3¾ million from the Thames Water Authority show that this is not so. London does badly.
  The hon. Member for Moss Side went into great detail about abattoirs as did two other hon. Members. I make only a passing reference to them, although I could go into detail as my late father worked in Smithfield Market for more than 20 years so I know a bit about the blunt red end of meat. However, the abattoirs of Manchester do not seem all that relevant to this debate.
  I understand the case made by my hon. Friend the Member for Manchester, Withington (Mr. Silvester) and it is no part of my speech to deny it. The Minister must take that responsibility. However, the House should recall that there were important differences of circumstances at Covent Garden and those in Birmingham, Manchester and other places where markets have been rebuilt.
  In general, the sites of old markets belonging to local authorities had long since been written off; that was not the case in Covent Garden. The total value of these sites, which were usually in city centres and therefore of high value, could be offset against the cost of a new market. As a result, quite a few new sites were acquired at a net nil cost, but this did not happen in Covent Garden for the variety of reasons already mentioned. It is not necessarily correct to say that there is an all-fours comparison between the municipal markets at Birmingham, Manchester and elsewhere and the Covent Garden market.
  I do not think that the hon. Member for Battersea, South (Mr. Perry) was serious when he suggested the creation of a vast food empire with Billingsgate and Smithfield markets being moved to Nine Elms. It is an interesting flight of fancy, but I do not believe that he would wish it to happen.
  The hon. Member did not convince me when he spoke about Wandsworth Borough Council and the planning delays. I am sure that they would not have happened with the old metropolitan borough of Battersea under his wise leadership or that of the late Sir Norman Pritchard. The leadership of Wandsworth Borough Council is rather different. I welcome the hon. Gentleman's testimony to the efficiency of the City of
  1326
  London Corporation and we shall look for his support if any attempt is made to incorpate the efficient City into the profligate GLC.
  The hon. Member for Newham, South (Mr. Spearing) referred to the delays and muddle by British Rail over the railheads and the hon. Member for St. Helens (Mr. Spriggs) asked whether this matter had been brought to the attention of the new Chairman of British Rail. There are a number of responsibilities of British Rail and its rail freight which ought to be considered by the new chairman very quickly.
  Last week, the majority of hon. Members probably received two glossy documents about rail freight. They were sent in expensive white envelopes to our home addresses at the first-class postage rate of 181½p, compared with the second-class rate of 14p. Two postage stamps had been laboriously stuck on every envelope instead of passing them through a franking machine.
  I should find it easier to believe that there was efficiency in rail freight if its mail room was brought up-to-date and if the chairman did not let his signature go out over a document which was distributed in such a slipshod and clumsy manner. I hope that we shall see some action as a result of what the hon. Member for St. Helens has said about the efficiency of rail freight.
  The hon. Member for Newham, South also spoke about his suggestion of a Select Committee to consider the Bill. We have no objection in principle; a Select Committee was set up recently to look at the Army Bill and some helpful recommendations were produced as a result. We can see no objection to the establishment of a Select Committee, but it is for the House to decide whether to adopt such a procedures.
  The debate has shown that there has been great benefit to the country in general as a result of the development of the market on its new site, particularly when one recalls the jungle which existed there before.
  My involvement with Covent Garden extends back for more than 10 years when I had responsibility as leader of Camden Council, which covered a fair part of the area of Covent Garden. At that time I saw the problems on the

  1327
  ground and, like my hon. Friend the Member for Westmorland, I bitterly resented the delay in the commencement of the scheme brought about by the public expenditure cuts which, as my hon. Friend the Member for Maidstone rightly said, did not differentiate between various kinds of expenditure.
  Certain matters need clarification. One overriding point needs to be put to the Minister. Does he think that in five, 10 or 15 years' time we shall have a Covent Garden (Financial Provisions) (No. 2) Bill, or does he think that the measure we are being asked to pass tonight will put matters reasonably right?
  I join in the tribute paid to the Authority, which has done a first-class job. I include in that tribute in addition to the three chairmen of the Authority, the chief executive and the staff, who have served the Authority extremely well. The Authority has been well managed in the interests of its traders, its consumers and its taxpayers.
  I have noted some of the advantages of the new market. There have been substantial savings in the waiting time of delivery vehicles, which have benefited the senders. There have been substantial savings in the waiting time of collection vehicles, which have benefited the buyers. There has been a reduction of wastage and pilferage due to better handling, storage conditions and security, which have benefited all sections of the trade.
  There has been a net reduction in traders' operating costs, mainly because of reduced labour costs, but also allowing for investment in mechanical handling and storage equipment, which benefits traders. It is estimated that the total benefit represented by those savings may amount to between £2½ million and £3 million a year. Because of that, it is right to pay tribute to what the Authority has done.
  The Authority could have had more assistance from the Government in planning matters, to which passing reference has been made. Worries were expressed in the 1965 and 1968 debates in the House about planning controls on this site. The Authority felt frustrated on three areas—the riverside site of about two acres, part of the entrance area,
  1328
  another two acres, and the eastern triangle, which is four acres.
  On the riverside strip of two acres, there was much discussion with Wandsworth Borough Council before an application was put in to that council in September 1974 for permission for a development. As a result, the Authority felt great disappointment when it received a refusal from Wandsworth for that scheme in February 1975. The Authority—here I do not acquit the Covent Garden Market Authority of some delay—did not appeal to the Secretary of State until September 1975, but it asked for an early inquiry. The inquiry was finally fixed for September 1976, after delaying tactics by the Wandsworth Borough Council. There was an eight-day hearing and thereafter the hearing was deferred for more noise-level measurements.
  I understand that it is expected that the inquiry will resume in March this year, and I hope that a decision will be taken fairly swiftly. I hope also that the Minister will impress upon his colleague in the Department of the Environment that a swift decision is needed and that it would be wrong to expect another 12 months to go by before that decision is given.
  I said that in the earlier debates reference had been made to planning problems. In 1968 the right hon. Member for Battersea, North (Mr. Jay) referred to this. He is no longer here but, as I propose to make a complimentary remark, I am sure he will acquit me of not telling him that I intended to refer to him. He said:
  "I regret to some extent that it has not been possible to find a little more land for new housing in the fringe of the area".—[Official Report, 9th May 1968; Vol. 764, c. 703.]
  In one of the schemes I am discussing the Authority included extra housing. It is apparent, therefore, that the Authority took careful note of what the right hon. Gentleman put to the House on that occasion.
  It was thought that the second site by the entrance might be useful for a retail outlet. My hon. Friend the Member for Maidstone, in his graphic description of Colditz, pointed the way to this. There are few shopping facilities for those who work in the market and those workers welcomed the idea floated by the Market Authority of a retail outlet which would

  1329
  be profitable to the Authority and help to reduce its burden. Interest was expressed by two national firms in putting up supermarkets. Wandsworth again indicated strong objection.
  The hon. Member for Battersea, South knows the area very well. One reason advanced by Wandsworth for its objection was that that proposal would harm established shops at Clapham Junction. I only wish that Hansard could report the look on the face of the hon. Member for Battersea, South. He agrees with me that a more nonsensical reason could not have been given. But that reason was given and it is as invalid now as it was then.
  Rather than get itself involved in vet another hassle with Wandsworth, the Authority decided to have another think about it instead of going to appeal. I am not sure that I acquit the Authority on that. I think that it should have gone to appeal straight away.
  In October 1976 a commercial organisation thought that it might be able to carry out a cash-and-carry warehouse development with a small amount of extra industry. The officials of Wandsworth Council seemed to be interested in the idea, but no formal view has yet been expressed back from the council to the Authority.
  I hope that the hon. Member for Battersea, South will acquit my hon. Friend the Member for Westmorland and me from being too hard on Wandsworth. I know the hon. Gentleman fairly well, and I imagine that his language might have been even more salty than mine to some of the officers of Wandsworth Council and their political masters. The hon. Gentleman will be glad to learn that the third site, the eastern triangle, is in not Wandsworth but Lambeth. I am told that there is soon to be an application for its development.
  These three sites could have produced for the Authority extra capital from a sale and lease-back operation, or extra revenue if they had been let as sites for supermarkets. The Authority would have had the rent and perhaps a percentage of the profits as extra income. Because of the frustrations imposed on the Authority by the local authorities, this has not yet happened. I hope that the Secretary of State will use his not incon-
  1330
  siderable influence to get swift decisions. If necessary, I hope that he will call in any further planning appeals and give a quick answer—not let matters drift on and on as they have in the past.
  Many issues have been raised. My hon. and right hon. Friends and I see no reason to refuse a Second Reading to the Bill, but the questions put by hon. Members on both sides of the House must be answered. It must be left to the House to judge whether the Bill, having received a Second Reading, should go to a Select Committee or to a normal Committee of the House.
  7.9 p.m.
  The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mr. Gavin Strang): I start by assuring the House that the Government regard this Bill as an important measure. It is certainly important for the whole of the horticultural industry. We are talking about vast sums of money.
  I assure hon. Members that there is no question of the Government regarding this as a relatively trivial case. The interest that has been shown so far in the debate fully reflects the importance of the Bill. No Minister of any political complexion could be happy about having to bring forward a Bill of this nature, asking Parliament to agree to the writing-off of a substantial amount of money and to the suspension of a further maximum figure.
  A series of decisions and events going back 16 years, if not longer, has led to the present state of affairs. When I looked at the history of this proposal it seemed that the most convenient starting point was the December 1960 debate to which the hon. Member for Maidstone (Mr. Wells) referred. I regret that I have to admit that I have not read the whole of that debate. I read the opening speech by Mr. Soames, as he then was, and the Opposition Front Bench speech. I undertake, before the Bill goes into Committee, to read the speech of the hon. Member for Maidstone.
  In 1960 the Government had before them the Runciman Report. The Labour Opposition opposed the Government's proposals, perhaps for reasons rather different from those advanced by the hon. Member for Maidstone. They believed that the Government should have adopted

  1331
  a more radical solution and set up a Greater London market authority, taking over all the markets rather than only Covent Garden. I do not want to rehearse these arguments. I have been encouraged by the fact that today the Opposition Front Bench speakers have not sought to make trivial party capital out of this matter. In so far as Governments have made mistakes, the blame is to be laid at the door of Governments of both parties over the years.
  The 1960 Bill became the 1961 Act, setting up the Covent Garden Market Authority. Subsequently it became clear that the right decision—I think there is broad agreement on this—was to rebuild the market not on the original site, as envisaged, but elsewhere. It is fair to say that every hon. Member who has referred to this has agreed that there has been a considerable benefit to London as a result of the decision to move from the old site. This benefit is not reflected in the accounts of the Authority. It is also fair to say that there has been a great deal of discussion about the financial implications of the move, particularly about the decision by the Conservative Government to list the buildings.
  I acknowledge that the Labour Government in July 1966 postponed the building. I was a little amused by the reference the hon. Member for Maidstone made to the then Labour Government having the impertinence to link this project with a cut-back on swimming pools. I remember the July 1966 measures very well, not because I was a Member of this House. I can remember the resentment I felt and the speeches I made in my general management committee. At that time these measures were naturally seen by Labour supporters as a regrettable set-back. I can assure the hon. Member that there were other things than the cut-back on swimming pools that concerned the Labour Party. There was the cut in the housing programme and the re-introduction of prescription charges.
  Mr. Wells: The point that offended the horticultural industry was that the right hon. Member for Huyton (Sir H. Wilson) literally coupled the Covent Garden Market Authority with the swimming pool cut-back. They were juxtapositioned. The right hon. Gentleman dealt with housing
  1332
  and the other great issues and then pulled down this great horticultural project to the level of municipal frivolities.
  Mr. Strang: I am grateful to the hon. Member for that clarification. I was not doing him justice.
  It is true that the listing of the buildings reduced the site value. While I cannot accept many of the comments of my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker)—certainly not the implied criticism of the Market Authority—what he said about the listing of the buildings and the implications of that for site value was reasonable. There cannot be any argument about that.
  Whatever the history, the Government of the day have to face up to current financial realities. This is the nub of the whole argument. This is what the Bill is about. It is not simply a question of the importance of this market to the horticultural industry, although that is undoubtedly of central importance, as all hon. Members have recognised. Looked at in crude financial terms and in terms of public interest—not in relation to horticulture but in relation to public finances—hon. Members must be persuaded that the action being taken by the Government is fully justified.
  Mr. Jim Craigen: My hon. Friend has referred to the public interest and points have been made to him about the position in Birmingham and Manchester. I realise that he does not have responsibility for Scottish affairs —he has enough to do—but he is no doubt aware of the difficulties being experienced by the district council market department in Glasgow. In the public interest what consultation has there been between the Scottish Office and his Department about the implications of the Bill? I am anxious about the Bill's effects on the present situation in Glasgow. A wider view must be taken.
  Mr. Strang: I am grateful to my hon. Friend. Other hon. Friends and at least one Opposition Member have raised similar arguments in relation to Manchester and Birmingham. Perhaps I can touch on his reference to Glasgow, although it is not within my responsibility, when I come to those points.
  The alternative to Government intervention would be the bankruptcy of the

  1333
  Authority, which would not be in the public interest, let alone the interest of the horticultural industry. Bankruptcy would mean that the only income obtained by the National Loans Fund from these loans would be the income realised from the disposal of assets.
  The total value of the assets is probably equivalent to the value of market towers. In other words, the market is only suitable for a market. There is no other use to which it could be put. It would involve enormous demolition costs. The site is not a plum site for development for other purposes.
  Mr. Ernest G. Perry: Is my hon. Friend really saying that the site at Nine Elms is not suitable for any purpose other than a market? Surely he does not mean that.
  Mr. Strang: There is no question of my meaning that. The point I was making was that there are sites in other parts of London which, if they were completely cleared, would be worth a lot more than this site. It is important to be frank about this. If the Government did not intervene in this way, the public purse would be worse off. Under the Bill the Government will get repayments from the Authority. The alternative would be the complete demise of the market as a result of the intolerable financial debts that it has accumulated.
  I turn now to the points made by my hon. Friends about other cities, and this follows well from what I have said about the financial position. It may not be popular to say so, but the fact is that the Covent Garden Market Authority is the Government's responsibility in a way in which the other markets are not—that is irrefutable. But that does not mean that the Government are unsympathetic about the problems of the other cities.
  The Government have complete responsibility for the building of the new Covent Garden Market—it was done on the initiative and the authority of the Government. The Government are, as it were, the only paymasters. We are therefore talking of a situation which is fundamentally and in principle different from the position of those markets built on the initiative—in many cases, the commendable initiative—of municipal authorities.
  We are actively considering the position with regard to Manchester. My hon.
  1334
  Friend the Member for Manchester, Moss Side (Mr. Hatton) and the hon. Member for Manchester, Withington (Mr. Silvester) were in an impressive deputation from the local authority, and they are due for a reply. But they know that this is a very difficult issue. It is always difficult to get money out of a Government—even more so at the moment. I hope that they will be willing to give us time. We shall give a reply as soon as we can. But we recognise their deep concern and the burden which this situation places upon the people of Manchester.
  There is a similar situation with the Birmingham market. I shall not reiterate the arguments which my hon. Friend the Member for Birmingham, Perry Barr heard in the Adjournment debate a year ago. He knows that the Government have supported the Birmingham market in a number of ways. But it must be admitted that as taxpayers the citizens of Manchester, Birmingham and Glasgow are having to accept responsibility for the Covent Garden market in addition to accepting as ratepayers financial responsibility for their own markets. I accept that, and there is no point in denying the validity of the statement. But I assure hon. Members that the question of the Glasgow market is also of great concern and that Ministers in the Scottish Office are deeply conscious of it. All these problems, difficult as they are, are being considered sympathetically by the Government.
  Mr. Tom Litterick: This is a matter of great importance to hon. Members from Birmingham. My hon. Friend has said that the Government will consider sympathetically the situation in Birmingham and other cities which are shouldering a difficult burden because of this kind of development. Could not he be more emphatic and promising? There is a woeful inconsistency in what is being done by the Government in the Bill. That inconsistency will be recognised by constituents in Birmingham and elsewhere. Cannot my hon. Friend be more promising and hopeful?
  Mr. Strang: I have tried to explain that I do not see any inconsistency in the fundamental sense that the Covent Garden Market Authority is the responsibility solely of the central Government.
  Mr. Litterick: Our constituents do.
  Mr. Strang: Of course I acknowledge the enormity of this issue for the ratepayers of Birmingham, but I cannot go further than what I have said.
  Hon. Members have suggested the possibility of a deputation. Deputations have invariably been received by the Government. I am not trying to undermine the importance of this matter when I assure my hon. Friend that we recognise the strength of feeling that he and others share about it. I think that it is quite consistent to tackle the problems of the Covent Garden Market, but we recognise that it focuses attention again on problems which are shared by the Covent Garden Market Authority and the municipalities of Birmingham, Manchester and Glasgow.
  I take the point about the need for more financial information. We are anxious to give hon. Members as much financial information as possible. It is no secret that the Covent Garden Market Authority is running into more and more debt and that the latest accounts, which we are trying to get out as quickly as possible, will not change the situation.
  As far as the suspended loan is concerned, I tried to explain earlier that the Bill provides for a particular way of arithmetically presenting the accounts. This is truly an accounting technicality. I give the assurance that there is no question of trying to conceal the suspended loan. The reason for suspending the loan rather than writing off the total sum is that we envisage, if it is at all possible, the Authority paying back the suspended loan, and that part or all of it will be returned. I assure the House that reference to the suspended loan will be prominent in the annual report of the Authority. The Bill gives Ministers power to instruct the Authority, if it were otherwise minded, to write prominently into the accounts that it has a suspended loan hanging over it.
  Hon. Members spoke of the planning aspects, but I do not think that they would expect me to comment on decisions which are within the jurisdiction of the local planning authority. No one likes to see land which should be developed standing derelict or awaiting development. But my hon. Friend the Member for Battersea, South (Mr. Perry) was fair.
  1336
  I am sure that we all in our constituencies, particularly in urban areas, recognise the difficult problems and decisions which have to be taken by the planning authorities, but we all hope that this land can be developed in the community's interest and in the financial interest of the authorities as soon as possible.
  The question of a railhead for the Covent Garden market was also raised. The Authority and British Rail are still considering it. It is still a possibility, but the project has to be practical and viable. My hon. Friend the Member for Newham, South (Mr. Spearing) was fair in acknowledging that there are two sides to the argument as to whether the project is as practicable and viable as might have seemed earlier.
  The question of the raising of the £500,000 also arose. The hon. Member for Maidstone has great experience and knowledge of these matters. This is not the first time I have had the privilege of listening to his detailed knowledge and views. My hon. Friend the Member for Battersea, South is also knowledgeable about the working of the Covent Garden market, and he put forward some interesting proposals—radical, but none the less important nor any the worse for that—for the improved utilisation of the Authority's assets. But, as both hon. Members will recognise, these are matters for the Authority.
  The Government's job is to see that we have a competent Authority which knows its job. When it comes to the running of the market, the development of the land, the maximum use of the assets, and the overall efficiency of the operation, it is important that the Government should not get too involved in the nitty-gritty of management decisions.
  An important point that hon. Gentlemen have been concerned about is the means whereby we shall raise the additional £500,000. This again is a decision best taken by those on the spot. The Government have said that they want the additional £500,000 from the Authority. That is fair and reasonable in the circumstances, and no one has opposed it. We have to recognise that asking for this additional money means that by and large it will have to come out of the pockets of the users and the traders.

  1337
  There are a number of ways in which this money could be raised but surely it is right that the decisions should be taken by the people on the spot in consultation with the Government. That is surely in the interests of the trade unions and the various representative bodies as well as the people with an interest in the Authority.
  Mr. Finsberg: Would the hon. Gentleman amplify the comment of the Minister of State that, failing an agreement, the Government would have to give a directive? What exactly was meant by that phrase?
  Mr. Strang: The phrase is fairly self-explanatory. Obviously, the Government will not anticipate failure on the part of the Authority, or failure on the part of the whole enterprise, including the users, to raise this additional money. But, naturally, if we are left in a situation where we are not getting the income we need, it may be that as a last resort the Government will have to use their powers to compel the Authority to take steps to raise the additional money. That is obviously something which is implicit in the legislation.
  Mr. Wells: Does the Minister mean that the Government would force the traders in the market, one way or another, to cough up the £500,000? I can tell him categorically that if this were done by force the traders would undoubtedly move their business elsewhere and the whole enterprise would fail. Therefore, coercion will not work.
  Mr. Strang: I am not saying that the Government will coerce the traders. But when the Government say that they want another £500,000 a year they mean that. If the Authority comes back and says "I am sorry, we cannot raise the money" that creates a completely new situation and the Government are not bound by any undertakings envisaged in this legislation. That is perfectly reasonable.
  I have been talking about matters that I believe are best left to the competence of the Authority. I am glad that hon. Gentlemen, including hon. Gentlemen on the Conservative Front Bench, paid tribute to the record of the Authority in recent years. I have had the pleasure and privilege of meeting members of the Authority and I believe that the com-
  1338
  ments which have been made about the current chairman, the previous chairman, and the record of the Authority are fully justified.
  I would refer to the points made by my hon. Friend the Member for Newham, South in relation to his motion calling for the Bill's referral to a Select Committee rather than a Standing Committee. I can understand the consideration that leads my hon. Friend and other hon. Members to take the view that in this particular situation there is a case for a Select Committee investigation as opposed to a Standing Committee.
  We all appreciate the differences between a Standing Committee and a Select Committee and the powers that a Select Committee has to enable it to look more fully into an issue and take evidence and discuss a matter. As someone who believes strongly in the importance of Parliament and in its role in scrutinising the Executive and controlling and monitoring the use of public money, I think it right and proper that the Government should give serious consideration to any suggestion from any hon. Member aimed at improving the efficacy of Parliament in scrutinising the actions of the Executive.
  I am glad to be able to tell my hon. Friend that the Government are considering the proposition that he has advanced today. My hon. Friend would not expect me to be able to accept his motion. After all, this is a matter that has only arisen within the last few days. It is not my hon. Friend's fault. But it is a fact that the Government have not had an opportunity to consider his request for a Select Committee.
  When I say that the Government are undertaking to consider this matter, naturally that is on the assumption that my hon. Friend will be prepared to withdraw his motion. What I mean is that the Government will consider two possibilities: first, the possibility that my hon. Friend wishes—that a Select Committee should take the place of the Standing Committee; I might say that if the Government were to agree to that, it would only be on the basis that it would not delay the passage of the Bill. There are important financial reasons why the Bill should get on to the statute book as soon as possible.
  There is also an alternative possibility which would be for the Standing

  1339
  Committee to go ahead but for the Government to agree to the setting up of a Select Committee perhaps to cover a wider question than simply the Covent Garden Authority. It could perhaps cover the issue of market authorities in the London area and throughout the country generally. On the basis of that assurance I hope that my hon. Friend will be prepared to withdraw his motion to enable the Government to consider sympathetically the arguments that he has put forward. In so doing we shall consult my hon. Friend as well as the Opposition.
  Mr. Spearing: I am grateful for what my hon. Friend has said. I appreciate that because the House was reassembling it was not possible to put my Motion on the Order Paper earlier, although under Standing Order No. 40 it could be moved without notice at all. It would be better to deal with the Bill by means of a Select Committee because if things went wrong and the £500,000 could not be raised and things got far worse, a Government other than the present Government might have to come back to the House yet again. Those hon. Members who considered the matter would then be under criticism not only in Standing Committee but subsequently. I hope that the Minister will take this into consideration and think carefully about the consequences of not going ahead with a Select Committee.
  Mr. Strang: Certainly the Government will give consideration to the points that my hon. Friend has made. I cannot give any commitment whatever this evening, but I can assure him that we shall consider the matter promptly and expeditiously, and will do our best to find a way of meeting his wishes.
  Mr. Deputy Speaker (Sir Myer Galpern): I ought to remind the Minister that if no motion is passed, such as that which appears on the Order Paper, the Bill automatically goes to a Standing Committee.
  Mr. Strang: That is correct, Mr. Deputy Speaker. But nothing I have said in any way contradicted that.
  Mr. Deputy Speaker: I thought that the Minister was saying that he would consider the proposal by the hon. Member
  1340
  for Newham, South (Mr. Spearing). I apologise if I have made a mistake.
  Mr. Strang: The point I am making is that although the passage of the Second Reading motion means that the Bill automatically goes to a Standing Committee, that does not preclude the subsequent setting up of a Select Committee should the House so wish.
  Mr. Finsberg: This is an important issue and the House should try to get it clear. As I understand the situation, the Minister has said, without commitment, that the Government will consider the point made by the hon. Member for Newham, South (Mr. Spearing). It is clear from Standing Orders that if the Second Reading is agreed to, the process of setting up a Standing Committee comes into being and nothing that the Minister does can prevent that. If the hon. Member for Newham, South does not move his motion, the House will have no opportunity of getting a Select Committee on the Bill unless the Minister can give us his undertaking that the Government will not move to set up a Standing Committee until they have come to their decision. If they then decide to set up a Select Committee, they will require a business motion that the Standing Committee does not have to meet. Without that assurance, all that the Minister has said is valueless.
  Mr. Strang: I had assumed that every hon. Member with any interest in the subsequent motion on the Order Paper was aware of Standing Orders. But plainly that is not the case. It is a fact of life that if we give a Bill a Second Reading a Standing Committee normally is appointed. Subsequently, however, this House can pass any motion that it wishes changing that decision and setting up a Select Committee. In this event, that can be done along one or other of the lines that I have suggested.
  Mr. Spearing: I apologise for intervening yet again, but this is an important procedural matter. In wanting to get this Bill through, I am sure that my hon. Friend does not wish there to be both a Standing Committee and subsequently a Select Committee. If he will now say that the Government's proposal would be to substitute by a business motion a Select Committee instead of the normal Standing Committee to which this Bill would

  1341
  be committed, I shall not move my motion. Unless he can give that undertaking, however, I am bound to move it at the conclusion of this debate, assuming that the Bill receives a Second Reading.
  Mr. Strang: I shall explain what the Government are undertaking to do. Naturally we want the Bill to be given a Second Reading. It is equally clear that we cannot accept my hon. Friend's motion, because we have not had adequate time to consider its implications. But I give the undertaking that, if the House gives the Bill a Second Reading and if my hon. Friend agrees to withdraw his motion, we shall consider the appointment of a Select Committee. The Select Committee may be as my hon. Friend wishes—I understand that he wishes the Select Committee to be on the Bill. But, if the Government cannot agree to that, there is an alternative, which would be for a Select Committee in addition to the Standing Committee.I appreciate fully that what my hon. Friend wants is for the Bill to be referred to a Select Committee——
  Mr. Deputy Speaker: It may help the House if I explain that it does not depend on the hon. Member for Newham, South moving his motion. It is open to any hon. Member to move that the Bill go to a Select Committee. If the Second Reading were carried and the Bill went automatically to a Standing Committee, it would be open to the Government to move that the Standing Committee be discharged and to set up something in its place.
  Mr. Strang: I am grateful to you, Mr. Deputy Speaker, for making that absolutely clear to all hon. Members.
  Perhaps I may conclude by stressing that the Government are anxious to meet the legitimate arguments advanced by hon. Members, and I have no wish to reiterate them. However, the hon. Member for Hampstead made a very fair point when he asked whether this was the end of the matter and pointed out that there had been several pieces of legislation in relation to the Covent Garden Market Authority. He expressed the fear that we might be back again next year or in two years with another piece of legislation.
  1342
  In putting forward this measure the Government believe firmly that if it is enacted it will provide a basis for the success of the market. The market has been operating only for a little under three years. We believe that we have given every consideration to this. There is no argument about the importance of the market. There is no argument that the Government must intervene. If we do not, the market will collapse for financial reasons. The Bill provides a framework within which the authority can make a success of this very important market.
  Question put and agreed to.
  Bill accordingly read a Second time.
  Bill committed to a Standing Committee, pursuant to Standing Order No. 40 (Committal of Bills).

  COVENT GARDEN MARKET (FINANCIAL PROVISIONS) [MONEY]
  Queen's Recommendation having been signified—
  Mr. Deputy Speaker (Sir Myer Galpern): Money Resolution. Mr. Sheldon.
  Motion made, and Question proposed,
  That, for the purposes of any Act of the present Session to make fresh provision in relation to the finances and the financial duties of the Covent Garden Market Authority, it is expedient to authorise—

  (1) the release of the Authority from its liability to the Minister of Agriculture, Fisheries and Food to repay and pay interest on so much of the sums advanced by him under section 40 of the Covent Garden Market Act 1961 as amounts to £13 million;

  (2) the release of the Authority from its liability to repay to the Minister when due so much of the sums so advanced, not exceeding £25 million, as is constituted a suspended debt by virtue of any provision of the said Act of the present Session and to pay interest on the sums for the time being comprised in that debt;

  (3) any increase in the sums paid into the Consolidated Fund which is attributable to any amendment of the said Act of 1961 by the said Act of the present Session.—[Mr.Coleman.]

  Mr. Michael Jopling: I understood that a Minister from the Treasury was to have been here to move the Money Resolution, and I am surprised

  1343
  that no Minister has risen to explain it to the House. It is very unusual not to have a Treasury Minister present to tell the House about the Money Resolution.
  Mr. Deputy Speaker: When I called "Mr. Sheldon", it was quite in order for the Whip to say "Now, Sir"; and then I proposed the Question. It is as simple as that.
  Question accordingly agreed to
  Mr. Jopling: I am glad to see that the Financial Secretary, whom I congratulate on his elevation to the Privy Council, is now in his place. If he would say a few words about the Money Resolution now that he has arrived, we should all be very grateful.
  Question put:—
  The House divided: Ayes 150, Noes 23.

  Division No. 27.]

  AYES

  [7.45 p.m.

  Allaun, Frank

  George, Bruce

  Ogden, Eric

  Archer, Peter

  Gilbert, Dr John

  Orme, Rt Hon Stanley

  Ashton, Joe

  Golding, John

  Ovenden, John

  Atkins, Ronald (Preston N)

  Gourlay, Harry

  Padley, Walter

  Atkinson, Norman

  Graham, Ted

  Park, George

  Bagier, Gordon A. T.

  Grant, George (Morpeth)

  Parker, John

  Barnett, Rt Hon Joel (Heywood)

  Grant, John (Islington C)

  Pendry, Tom

  Bates, Alf

  Hamilton, James (Bothwell)

  Penhaligon, David

  Bean, R. E.

  Harper, Joseph

  Perry, Ernest

  Beith, A. J.

  Harrison, Walter (Wakefield)

  Price, William (Rugby)

  Bishop, E. S.

  Hattersley, Rt Hon Roy

  Rees, Rt Hon Merlyn (Leeds S)

  Blenkinsop, Arthur

  Horam, John

  Richardson, Miss Jo

  Boardman, H.

  Howell, Rt Hon Denis (B'ham, Sm H)

  Roberts, Albert (Normanton)

  Booth, Rt Hon Albert

  Howells, Geraint (Cardigan)

  Robinson, Geoffrey

  Bottomley, Rt Hon Arthur

  Huckfield, Les

  Roderick, Caerwyn

  Boyden, James (Bish Auck)

  Hughes, Rt Hon C. (Anglesey)

  Rodgers, George (Chorley)

  Bray, Dr Jeremy

  Hughes, Robert (Aberdeen N)

  Rodgers, Rt Hon William (Stockton)

  Brown, Hugh D. (Provan)

  Hughes, Roy (Newport)

  Rose, Paul B.

  Brown, Ronald (Hackney S)

  Hunter, Adam

  Ross, Stephen (Isle of Wight)

  Buchan, Norman

  Jay, Rt Hon Douglas

  Ross, Rt Hon W. (Kilmarnock)

  Buchanan, Richard

  Jeger, Mrs Lena

  Rowlands, Ted

  Callaghan, Jim (Middleton & P)

  John, Brynmor

  Ryman, John

  Carter-Jones, Lewis

  Johnson, Walter (Derby S)

  Silkin, Rt Hon John (Deptford)

  Clemitson, Ivor

  Jones, Alec (Rhondda)

  Silkin, Rt Hon S. C. (Dulwich)

  Cocks, Rt Hon Michael

  Jones, Barry (East Flint)

  Small, William

  Coleman, Donald

  Jones, Dan (Burnley)

  Smith, Cyril (Rochdale)

  Colquhoun, Ms Maureen

  Judd, Frank

  Smith, John (N Lanarkshire)

  Concannon, J. D.

  Kaufman, Gerald

  Spriggs, Leslie

  Conlan, Bernard

  Kelley, Richard

  Stallard, A. W.

  Corbett, Robin

  Kerr, Russell

  Steel, Rt Hon David

  Cowans, Harry

  Kilroy-Silk, Robert

  Stewart, Rt Hon M. (Fulham)

  Crawshaw, Richard

  Lamborn, Harry

  Stoddart, David

  Cunningham, G. (Islington S)

  Lamond, James

  Stott, Roger

  Cunningham, Dr J. (Whiteh)

  Lestor, Miss Joan (Eton & Slough)

  Strang, Gavin

  Davidson, Arthur

  Lewis, Ron (Carlisle)

  Thomas, Mike (Newcastle E)

  Davies, Bryan (Enfield N)

  Lipton, Marcus

  Varley, Rt Hon Eric G.

  Davies, Denzil (Llanelli)

  Lomas, Kenneth

  Walker, Harold (Doncaster)

  Davis, Clinton (Hackney C)

  Lyons, Edward (Bradford W)

  Walker, Terry (Kingswood)

  Deakins, Eric

  McElhone, Frank

  Weitzman, David

  Dempsey, James

  McGuire, Michael (Ince)

  Wellbeloved, James

  Doig, Peter

  Mackintosh, John P.

  White, Frank R. (Bury)

  Dormand, J. D.

  Maclennan, Robert

  Whitlock, William

  Duffy, A. E. P.

  McMillan, Tom (Glasgow C)

  Williams, Rt Hon Alan (Swansea W)

  Dunnett, Jack

  Mallalieu, J. P. W.

  Wilson, Alexander (Hamilton)

  Eadie, Alex

  Marks, Kenneth

  Wilson, William (Coventry SE)

  Ennals, David

  Millan, Rt Hon Bruce

  Woodall, Alec

  Ewing, Harry (Stirling)

  Miller, Dr M. S. (E Kilbride)

  Young, David (Bolton E)

  Fernyhough, Rt Hon E.

  Morris, Rt Hon J. (Aberavon)

  Flannery, Martin

  Moyle, Roland

  TELLERS FOR THE AYES:

  Foot, Rt Hon Michael

  Murray, Rt Hon Ronald King

  Mr. Thomas Cox and

  Forrester, John

  Oakes, Gordon

  Mr. Peter Snape.

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

  NOES

  Bennett, Andrew (Stockport N)

  Hatton, Frank

  Silverman, Julius

  Body, Richard

  Lambie, David

  Silvester, Fred

  Budgen, Nick

  Loyden, Eddie

  Skinner, Dennis

  Carmichael, Neil

  McDonald, Dr Oonagh

  Thorne, Stan (Preston South)

  Cook, Robin F. (Edin C)

  Maynard, Miss Joan

  Wise, Mrs Audrey

  Craigen, Jim (Maryhill)

  Meyer, Sir Anthony

  English, Michael

  Mikardo, Ian

  TELLERS FOR THE NOES:

  Gow, Ian (Eastbourne)

  Miller, Hal (Bromsgrove)

  Mr. J. W. Rooker and

  Gower, Sir Raymond (Barry)

  Morris, Michael (Northampton S)

  Mr. Tom Litterick.

  Resolved,
  That, for the purposes of any Act of the present Session to make fresh provision in relation to the finances and the financial duties of the Covent Garden Market Authority, it is expedient to authorise—

  (1) the release of the Authority from its liability to the Minister of Agriculture, Fisheries and Food to repay and pay interest on so much of the sums advanced by him under section 40 of the Covent Garden Market Act 1961 as amounts to £13 million;

  (2) the release of the Authority from its liability to repay to the Minister when due so much of the sums so advanced, not exceeding £25 million, as is constituted a suspended debt by virtue of any provision of the said Act of the present Session and to pay interest on the sums for the time being comprised in that debt;

  (3) any increase in the sums paid into the Consolidated Fund which is attributable to any amendment of the said Act of 1961 by the said Act of the present Session.

  SOCIAL SECURITY (CONTRIBUTIONS)
  7.57 p.m.
  The Secretary of State for Social Services (Mr. David Ennals): I beg to move.
  That the Social Security (Contributions, Rerating) Order 1976, a draft of which was laid before this House on 7th December, be approved.
  Under the Social Security Act 1975, the Secretary of State for Social Services is required to review each year the general level of earnings in Great Britain and to consider what changes in national insurance contributions need to be made in the light of movements in earnings and other relevant factors.
  The draft order provides for increases from next April in certain of the rates and levels of contributions. I will explain, first, the details of the changes, and then go on to deal with the major issues of the size of the surplus, and whether we are maintaining the right balance between income and outgo of the scheme.
  Under the order, the lower earnings limit for Class 1 contributions—that is, those paid by employed earners and employers—is to be raised from £13 to £15 a week and the upper earnings limit is to be raised from £95 to £105 a week. The percentage of employed earners' contributions will remain 5·75 per cent. and the effect will be that, as a result of the order, those earning £95 or more will pay increased contributions—at the new higher earnings level, no more than 58p. Employers' contributions will remain 8·75 per cent., and they, too, will pay increased contributions under the order in respect of employees who earn £95 or more a week.
  As regards the selfemployed, the increase in their contributions is to be shared between the flat-rate Class 2 contribution and the earnings-related Class 4 contribution.
  On the last two occasions on which contributions generally have been increased—in April 1975 and 1976—the Class 2 contribution has been held steady even though this is the contribution to which the self-employed person's rights to benefit are linked. Since the present Class 2 contribution rate of £2·41 a week

  1347
  was established in August 1974, the pension rate has increased by over 50 per cent. I hope therefore that it will be seen as reasonable that the contribution rate should rise on this occasion by 25p a week to £2·66 a week.
  No change is proposed in the rate of Class 4 contributions, which remains at 8 per cent. But the range of profits or gains on which the contribution is levied is being changed. Under the draft order the range will be from £1,750 to £5,500 a year in place of the present limits of £1,600 and £4,900 a year. The maximum increase in the Class 4 contribution will therefore be £36 a year and it will be payable where profits or gains amount to £5,500 a year or more.
  The draft order also raises the level of earnings below which a self-employed person can be excepted from liability for Class 2 contributions from the present limit of £775 a year to £875 a year. The remaining change made by the order is an increase from £1·90 to £2·10 in the rate of the Class 3 contribution which is paid weekly by some employed contributors on a voluntary basis and paid also by other contributors who wish to make good deficiencies in their contribution records.
  I should mention also that the lower rate of Class 2 contributions for women, which is being brought in stages up to the rate for men, is being increased from £2·20 to £2·55 a week under the separate order which was also laid on 7th December. This is part of the preparation for the new pension scheme which will come into operation in 1978.
  Mr. Patrick Jenkin: My hon. Friend the Member for Wallasey (Mrs. Chalker) is listening closely to the Secretary of State and she wondered whether he had the figures right for the Class 3 contribution. The order provides for an increase from £2·10 a week to £2·45. I think the right hon. Gentleman said that the increase was from £1·90 to £2·10.
  Mr. Ennals:The figures as I have them show an increase from £1·90 to £2·10. The Class 2 contributions for women are quite different. If there is any misunderstanding I shall ask my right hon. Friend who is to wind up the debate to clarify the matter. If it is discovered while I am speaking that the figures I
  1348
  have given are in any way wrong I shall correct them. The last thing I want to do is to mislead the House.
  Mr. Patrick Jenkin: It will be a long time to wait for the wind up speeches. Let me quote from Article 4 of the order which reads
  "In section 8(1) of the Act (Class 3 contributions) for "£2·10" there shall be substituted "£2·45"."
  Mr. Ennals: I must congratulate the right hon. Gentleman and the hon. Member for Wallasey (Mrs. Chalker). The figures they gave were right and mine were wrong. I am grateful to the hon. Lady for being perspicacious. As was said earlier today, she is keen on figures and she got them right this time.
  Let me move on to some of the wider implications of the Bill, particularly concerning the Government Actuary's report, which was published at the same time as the order. It was in an attempt to dispel some of the concern which many hon. Members clearly felt on reading the report and the order that my right hon. Friend, the Minister for Social Security, and I had an explanatory note prepared and made available to all hon. Members. We hoped that it would be helpful.
  The main argument is centred around the level of the balance in the National Insurance Fund. The Government Actuary's report shows that on certain illustrative assumptions as to the levels of earnings and unemployment, the income of the National Insurance Fund will exceed the outgo by £932 million in the current year and about £875 million in 1977–78. When allowance is made for the actual cost of the November 1976 uprating, the corresponding forecast made at the time of last year's re-rating order implied that the income and outgo of the Fund in 1976–77 would be just about in balance.
  By the time of the further report which accompanied the Benefits Up-Rating Order last May the Government Actuary was forecasting a surplus of income over outgo of £389 million. The currently estimated surplus is based upon a much greater contribution yield this year than was previously anticipated. The House is entitled to know why this was occurred. Hon. Members will appreciate that the new earnings-related system of contributions was introduced only in April 1975

  1349
  and almost no information about its effects was available in the late summer of 1975 when the esctimate for the report on last year's re-rating order had to be prepared. The other main factor is the cost of unemployment benefit. Unfortunately, the Actuary had to make estimates for a level of unemployment higher than we have been used to. In the event, the proportion of the unemployed entitled to benefit from the National Insurance Fund has turned out to be much lower than had been expected, because a surprisingly high proportion of those registered as unemployed failed to meet the contribution conditions.
  Another factor contributing to the big increase in the surplus is that higher than expected contributions automatically lead to higher Treasury supplements on the 18 per cents. basis. In addition, a higher balance in the National Insurance Fund leads to bigger interest income, thus further increasing the surplus. It could be said that the Government Actuary got his figures wrong last year and has now adjusted his sights. However, that would be unfair, given what I have already said about the special factors which applied last year and which created difficulties for this assumption. Also, it would be misleading to foster an expectation that, in subsequent years variations between forecasts and out-turn would not occur. Clearly they have occurred in the course of the past year and with the best will in the world I cannot prophesy that they will not occur in the future.
  Certainly I hope that, in the absence of these special factors, the variations will not be so wide and that we shall have more experience on which to base an assumption since the earnings-related system will have been with us for longer. I hope that the variations will not be as wide in the future, but the current figures show that in the present economic situation, forecasting the effect on the scheme of changes in factors such as unemployment is an extremely hazardous business.
  Many factors influence the actual levels of contribution, income and benefit expenditure. The Government Actuary pointed out in his report that 100,000 people more or less unemployed costs or saves the National Insurance Fund about £130 million, so that an estimate that is 100,000 out one way or the other introduces that degree of variation.
  1350
  There is the additional factor that we have a statutory commitment to uprate benefits by November this year. Although account is taken of that event in the Actuary's report on the basis of certain assumptions, these assumptions may not be borne out. We are talking here not about cash in hand but about estimates based on certain assumptions. We cannot be certain that those assumptions will turn out as we may estimate.
  I turn now to consider the size of the sums involved, because they are very large. We must remember that we are concerned with a scheme in which income and expenditure are about £10,000 million a year. Even a small percentage shift in one or other direction can make a very big difference to any surplus or deficit which arises.
  As I said in answer to a supplementary question in the House this afternoon, the Fund now represents about three months' benefit expenditure. For many years after 1948 it amounted to about two years' expenditure, though the total amount involved was much less than it is at present. In other words, whilst the balance of the Fund seems an enormous total, it has to be considered against the rate of expenditure on benefits.
  The size of the surplus at which to aim in any year is very much a matter of judgment in the light of the prevailing circumstances. Certainly it would not, in my view, be wise to try to fix some statutory relationship between estimated income and expenditure of the Fund. It must be left to the judgment of the Government of the day. I am not denying that the figure now is larger than was anticipated.
  Given that on this occasion there is no need to increase the contribution percentage, the question arises whether we are right to propose an increase in the earnings ceiling. In my view, it would be absolutely wrong not to do so. Any earnings related system must adjust its earnings limits from time to time if the nature of the system is not to be changed as the general level of earnings increases. The increase in the earnings ceiling means that those earning more than £95 a week will have modest contribution increases. But it would be unfair to those lower down the earnings scale if those with earnings of more than £95 a week were

  1351
  specially shielded from increases. It would be socially wrong that the burden should be borne by those earning less than £95 a week when the value of earnings had changed.
  Mr. George Cunningham: Surely the alternative is not to leave the lower and upper levels at the present rates or to raise them by lesser amounts but to allow the percentage to be dropped. My right hon. Friend said that there was no need to raise the 5·75 per cent. figure above 5·75 per cent. I suggest that he seems not to be considering the possibility of dropping the 5·75 per cent. figure below 5·75 per cent. That is what I think the Government ought to be doing, given that there is enough money in the Fund to afford to do so. Why is that option not being pursued?
  Mr. Ennals: There are a number of reasons for not doing so, and I should like to deal with them in greater detail later. One is that we are moving towards a new pension scheme. We are anxious not to be faced in 1978 with a big jump in the contributions which have to be paid. That would be unsatisfactory for both employers and employees. We are moving steadily in a variety of different ways towards a new pension scheme. I should like to deal with that matter in greater detail later.
  The increase in earnings in the year to April 1976 would have justified raising the earnings level by 17·8 per cent. The House knows that we are not proposing to do that. Instead, we propose to raise the ceiling on Class 1 earnings by only 10·5 per cent. In answer to my hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham), I should point out that this is the amount required to maintain a ratio of seven to one between the ceiling and the basic pension rate. That was the target set in the Social Security Pensions Act 1975, It is our intention, in moving towards that target, to have that kind of percentage.
  I understand that the Opposition, at the time of the 1975 legislation, accepted that seven to one ratio. It would be hypocritical if we were now to decide to vote against adopting that ratio as a basis for moving forward into the new pension scheme. Certainly if we fail to move
  1352
  towards it now, there will need to be a bigger jump in April 1978 when the scheme comes in.
  Mr. Patrick Jenkin: That assumes that the assumptions in the Government Actuary's Report, which accompanied the 1975 Bill, are still valid. Do the Government still accept the assumptions upon the basis on which those figures were written into that Bill? Or is it the case that, with the experience that we now have of a much greater buoyancy of the revenue, coupled with the difference that we have found with the higher level of unemployment, those assumptions are now no longer valid and, therefore, whatever may have been said by either side at that time has been belied by events?
  Mr. Ennals: I am sure that my right hon. Friend will be prepared to give some of the assumptions on which the Government Actuary based his conclusions, but I do not think that it would be wise for me to do so at the moment.
  Mr. Patrick Jenkin: But the right hon. Gentleman accused me of being hypocritical.
  Mr. Ennals: I think that second thoughts may be right. Perhaps the right hon. Gentleman will develop that point in his speech and my right hon. Friend will deal with it in winding up the debate.
  Mr. Patrick Jenkin: Now the right hon. Gentleman is being hypocritical.
  Mr. Ennals: There is nothing hypocritical in that. We want to deal honestly and fairly and more effectively with the point that the right hon. Gentleman wants to make. If he spells it out in his speech, my right hon. Friend will deal with it in winding up the debate.
  The Government have always hoped to set the initial contribution rates for the new pension scheme below the illustrative rates of 10 per cent. for employers and 6·5 per cent. for employees which were given in the Social Security Pensions Act 1975. We have taken many opportunties of making it clear that we hoped that it would be possible to start with initial contributions below those figures. One reason for this order is that that is what we wish to do.
  However, it will depend on the future liabilities which the Fund has to meet.

  1353
  For example, if we were to spend both this year's and next year's estimated surpluses on new or increased benefits, as some of my hon. Friends have suggested, it would mean an additional and continuing burden on the Fund, which would almost inevitably prevent reductions in the contribution rates originally predicted for the new pension scheme. Indeed, we might have to increase substantially those rates much sooner than would otherwise be necessary to meet the additional benefits which the scheme will provide.
  Mr. Tom Litterick: There seems to be an inconsistency between what my right hon. Friend has just said and what he said seven or eight minutes ago by way of explaining the emergence of the large surplus. Earlier, the Secretary of State suggested that the surplus emerged initially by accident. I do not wish to rehearse his explanation of that accident. However, he is now saying, with hindsight, that the surplus is a manifestation of wisdom. I do not think that he can claim it both days.
  Mr. Ennals: I did not go quite that far. I might have said that this was good housekeeping. We did not want to have this surplus but, having got it, we are wise to use it as we propose because it means that we shall be able to move steadily into the new pension scheme without a higher level of contributions and without establishing commitments which would result in higher contributions earlier. We do not say that we planned for the surplus, but, having got it, we must deal with it wisely and efficiently for the benefit both of the National Insurance Fund and of the new pension scheme, which is probably one of the most important advances which this Government have proposed.
  I hope that the Opposition will make clear where they stand on the order. I understand that they will vote against it, but I cannot imagine that they will urge that we should spend more on benefits because before Christmas they worked themselves into a great lather about public expenditure. Perhaps the Opposition Front Bench did not do that, but most hon. Members on the Opposition side did. The Oppositon certainly urged swingeing cuts in expenditure. As we
  1354
  saw in Standing Committee this morning, the Opposition are prepared to will the end without willing the means. That is the height of irresponsibility.
  The operation of the National Insurance Fund cannot be considered in isolation from the requirements of the economy as a whole. Given that the Fund is in surplus, we must look at the impact of National Insurance Fund receipts on the public sector borrowing requirement. The balance resulting from any current surplus in the National Insurance Fund is invested in public sector stock. This reduces the amount which the Government need to borrow from other sources to finance their overall borrowing requirement.
  With the public sector borrowing requirement at its present high level a surplus accruing to the National Insurance Fund is of great economic assistance. That is what it is all about. I presume that if the right hon. Member for Wanstead and Woodford is to vote against the order, he is suggesting that we should have a lower balance which would result in significantly adding to the public sector borrowing requirement.
  We must look at the other side of the coin. A surplus in the National Insurance Fund is borrowed by the Government. Were the surplus to be spent, the Government would, overall, have to spend less elsewhere—and I am sure that the right hon. Member for Wanstead and Woodford agrees—or else they would have to raise other taxes or borrow more. That would run completely contrary to the Government's objectives and to those of the Opposition, although their objectives appear to be to embarrass the Government and not to serve the economic interests of the nation.
  I hope that we shall hear where the Opposition stand on that issue. If they were to vote against the order and if it were defeated, the National Insurance Fund would lose £150 million in 1977–78. Because of the reduced level of Treasury supplement and the lesser burden of contributions on the public sector, the overall effect on Government finance would be to increase the 1977–78 public sector borrowing requirement by about £115 million. But the Opposition complained throughout last year that the public sector borrowing requirement was too high. I look forward with interest to hearing

  1355
  how the right hon. Member for Wanstead and Woodford justifies recommending to his hon. Friends that they should vote against the order.
  I do not want to take up any more time of the House nor do I wish to end on a note of controversy. I have tried to be frank with the House both tonight and earlier in a note to hon. Members. We are bound to establish soundly the structure of contributions and benefits of the 1978 pension scheme. We are bound to ensure that the social security system is soundly financed. We cannot ignore the financial conditions of the day. I ask the House to acknowledge these considerations, although I realise that it may be too much to ask it of the right hon. Gentleman. I urge the House to show some sense of responsibility at the end of the debate.
  8.25 p.m.
  Mr. Patrick Jenkin: The Secretary of State adopts the oldest advocacy trick in the book—when one has a bad case, one abuses the other fellow's attorney. The Secretary of State is more than a little unhappy with the case that he has to defend and he has been in difficulties finding reasons that will convince the House of the justification for the increase in contributions under the order.
  He made a statement on 7th December when he announced the increases. Subsequently he has given us a note of explanation, which I welcome, and which set out his argument and the basis of his case. In addition, he and his colleagues have answered a battery of Written Questions from both sides of the House.
  But one clear message comes across from all this—these increased contributions have less to do with funding social benefits than with financing the Budget deficit. That is what it is all about. If that is right—and I shall seek to show that it is—it is simply increasing taxation to finance the borrowing requirement. It has nothing to do with pensions or social benefits and we are bound to oppose it.
  Given the high levels of direct taxation, we do not believe that it can be right to increase these levels still further to meet the borrowing requirement. On the contrary, as the Chancellor of the Exchequer himself, in his almost daily
  1356
  recantations of his earlier sins and wickednesses has said, direct taxation is already too high and must be reduced across the board for the low, middle and high income earners.
  The order increases the burden of direct taxation by about £150 million for no other purpose than to meet the public sector borrowing requirement, and we shall vote against it.
  Mr. Ennals: That is hypocritical.
  Mr. Jenkin: I cannot see that it is hypocritical. The borrowing requirement is too high, not because direct taxation is too low but because expenditure is too high.
  Mr. Ennals: The right hon. Gentleman is arguing that those on the upper level of earnings—between £95 and £100 a week—should be excluded. Is that not the real reason that he opposes the order?
  Mr. Jenkin: I shall come to that shortly. The right hon. Gentleman is fairly new to his office, as indeed I am fairly new to shadowing him, although I have had my present position for exactly a year tonight.
  The point is that the burden that has fallen upon those people through increased national insurance contributions has been out of all proportion over the last two or three years to any other form of direct taxation. We of course agree that next year's public sector borrowing requirement must be financed, but it would be better by far to reduce public expenditure by a further £150 million.
  My right hon. Friends have given the Government plenty of scope for doing that on items that the Government are too frightened to touch because of their hon. Friends below the Gangway—such as stopping the spending of hundreds of millions of pounds on unnecessary public investment in the North Sea. The Government could do that and get all the revenue they want by taxation and control by legislation. They do not need to invest.
  This order, because it is a straight increase in direct taxation to finance the PSBR via the National Insurance Fund, is the least acceptable way of dealing with the problem. There are much bigger majorities in the House for cutting public expenditure than for raising taxes.

  1357
  The rest of my speech will be in two parts. I want first to prove my point that financing the borrowing requirement is the reason we have the order. Secondly, I want to look at the effect of the order, coupled with its predecessors, on different categories of contributor.
  A number of basic facts are not in dispute. The right hon. Gentleman rehearsed some of them, but perhaps it would be helpful if I set them out quickly. Not only is the National Insurance Fund in substantial surplus, but the surplus is now very much bigger than it was previously estimated to be—£932 million in the current year as against a previous estimate of £389 million. That is the surplus for one year.
  Secondly, the total balance of the Fund —the right hon. Gentleman did not mention this figure by this coming April, on the assumptions spelled out in the Government Actuary's report, will be about £3,000 million. That is a figure that was given to me in a Written Answer published in Hansard on 23rd December.
  Thirdly, there will be a further surplus next year, on the assumptions in the Government Actuary's report, estimated at between £867 million and £888 million. Therefore, by April 1978 the total balance of the National Insurance Fund will be approaching £4,000 million.
  The fourth point is that the main variable on outgoings, namely, the level of unemployment, on the figures that the right hon. Gentleman quoted is relatively minor by comparison with those sums. Even a variation of 100,000 in the number of people eligible to draw unemployment benefit—and we know that that is only half of the number unemployed—on the figures that we were given a few moments ago would mean only £130 million. That is just under 14 per cent. of the annual surplus in 1977–78, or, putting it another way, 3¼ per cent. of the total balance at the end of that year.
  Even if the number of unemployed eligible for benefit increases to twice that figure, 200,000 more, which implies an extra 400,000 unemployed because only half are eligible for benefit, that means that there would be an additional outgoing of precisely 7 per cent. of the accumulated Fund.
  The Minister for Social Security (Mr. Stanley Orme): What about sickness benefit?
  Mr. Jenkin: One could have short-term fluctuations in the sickness benefit. I agree that one could have an epidemic. However, that would be a comparatively short-term matter for relatively few weeks. But compared with the increase that I have quoted for unemployment it would be small. For the Government to pretend that somehow here there are potential massive fluctuations in the Fund is nonsense.
  On the other hand—the fifth point—the main reasons for the massive increase in this year's surplus were that the cost of unemployment was £220 million lower than estimated in the Government Actuary's report—not the level but the cost of the benefit—and, secondly, that the yield of contributions, as the right hon. Gentleman has said, was £237 million higher than the estimate.
  The right hon. Gentleman said that that was as a result of a lack of experience. But that applied only to the estimate made in the autumn of 1975. It is a little strange that the estimate made in May 1976 should have still failed by such a wide margin to estimate the level of contributions. However, there it is, and that is what happened.
  There is no dispute about any of those facts. They are beyond argument. They are all in the Government Actuary's December report or in figures that we have had in parliamentary answers. It is against that background, the huge total Fund, that we must examine the Government's reasons for yet further increases in contributions. In his original statement——
  Mr. Ennals: In an answer that I gave to my hon. Friend the Member for Birmingham, Selly Oak (Mr. Litterick) I pointed out that on 31st March 1974, just a few weeks after the right hon. Gentleman himself was a Treasury Minister, the National Insurance Reserve Fund together with the Industrial Injuries Fund totalled £1,861 million. The change is not very great. Was he as worried then as he is now?
  Mr. Jenkin: I shall quote the figures. I intend to quote figures for a different series of dates from the Government Actuary's report, because I want to make

  1359
  it clear what has happened to the ratio of the total Fund to the annual outgo. That is part of the Government's case for an increase.
  In his statement of 7th December the Secretary of State was remarkably vague about the reasons for maintaining such a large surplus and for adding to it by increasing the contribution. In the only really relevant sentence of that statement he said:
  "… this favourable balance will be of advantage in view of the economic uncertainties".—[Official Report, 7th December 1976; Vol. 922, c. 157.]
  For sheer vagueness, that is difficult to beat. It must by now be clear to the right hon. Gentleman that it convinced no one, not the Press, not the Opposition and not his hon. Friends.
  We therefore had his curious apologia, this explanatory note which purported to set out the reasons more fully. Like the right hon. Gentleman, I shall follow it closely. The relevant questions are divided into two—why do we need a surplus for 1977–78 and why do we have a re-rating order at all?
  To the first question the right hon. Gentleman has given broadly three reasons. Two of them I shall prove are insubstantial and the third—the borrowing requirement—will be seen as the real reason. The first insubstantial reason was that the Fund needed to be built up so that its size matched the scale of the expenditure. The right hon. Gentleman has just made that point again. On the face of it that reason sounds plausible until one looks at the figures. They show clearly that on 31st March 1974, according to the social security statistics, the reserves were £1,461 million. On 31st March 1977, I was told, they will be £3,000 million and the estimate for 31st March 1978 is between £3,867 million and £3,888 million.
  According to the statistics and the Government Actuary's report—I shall not quote the detailed figures—if one looks at the ratio of the annual outgo, the expenditure, of the Fund to the balance, one sees that, for the year to 31st March 1974 the reserves represented 36 per cent. of the expenditure; by 31st March 1978 the percentage will have risen to 41. Therefore, the right hon. Gentleman's argument that he needs an extra £150
  1360
  million of revenue to preserve the balance is sheer bunkum.
  That balance is already moving sharply in the direction of the increased size of the Fund relative to the expenditure. It is on that basis that the right hon. Gentleman says that he needs to ensure that the size of the Fund matches the scale of the expenditure. The size of the Fund is rising sharply relative to the scale of the expenditure, and the order will increase that trend further. So that reason for the surplus is absurd: it does not hold water.
  The absurdity is underlined by the comparison that the right hon. Gentleman made with the position in 1948. He must surely know that when the scheme started in 1948, large numbers of people of pensionable age were not entitled to pensions, yet the entire working population was pouring contributions into the Fund from the start. Therefore, of course, in those years the ratio of outgo to surplus was very different. But that bears no comparison to the position today. What the right hon. Gentleman has said merely seems calculated to mislead his hon. Friends into thinking that he is doing something reasonable.
  Second, the right hon. Gentleman said that we need to take account of sharper fluctuations in benefit expenditure. I have already shown that the biggest such fluctuation, the level of unemployment, is marginal in relation to the size of the Fund. The Minister has made reference to the next uprating, which is coming in November of this year. But the point must be recognised—and the Minister skated over this—that with earnings-related contributions there ought to be no increase in the level of contributions over that achieved by the application of the percentage of contributions to rising earnings. The contributions rise automatically to meet the rising cost of benefits. This has been shown to happen and it has happened. As the hon. Member for Islington, South and Finsbury (Mr. Cunningham) said, the increase in the contribution percentage to 5¾ shows that that may not all have been necessary.
  Mr. Ennals: Is the right hon. Member for Wanstead and Woodford (Mr. Jenkin) saying that as earnings levels increase ceilings should remain the same? He is saying that ceilings must remain

  1361
  the same and that the burden must fall on those below a ceiling that has been kept unnaturally low.
  Mr. Jenkin: That does not answer the point that I have just made, but seeks to make another point that I shall come to in a moment. I do not believe that the surplus will evaporate through payment of benefits and I suspect that that is also the view of the Department. The Minister has answered more than 20 parliamentary Questions on this subject during the last two or three weeks, but there has not been so much as a hint in his answers that the surplus could evaporate as a result of expenditure during the course of the year.
  Mr. George Cunningham: I understood that the right hon. Member for Wanstead and Woodford (Mr. Jenkin) said that the new system of earnings-related contributions would mean increasing revenue to the Fund. It would not do that if one did not raise the upper limit, because 5¾ per cent. or any other percentage of a fixed band would produce the same amount of money in cash terms, subject only to the very tiny qualifications that as more people earned a maximum above that band there would be some product from that. The intention of not only the 1975 Act, which was a consolidation measure, but the 1973 Act, passed by the Tory Government, was always that upper and lower limits ought to rise. The system will not work unless they do that.
  Mr. Jenkin: Of course, over the long term upper and lower limits will rise, but, having seen the result of the current percentages and limits, is it right simply to go on as if nothing had happened- As to the point raised by the hon. Member for Islington, South and Finsbury, if everybody were at the upper limit of £95 already, there would be no increase. But the vast majority of earners are moving through the bracket and as their incomes rise, so do their percentage contributions. There are relatively few contributors whose incomes are above the upper limit and for them there would be no increase in contributions. To suggest that because there is a fixed band between £15 and £95 there is no increase in contribution revenues as incomes rise is absurd. The majority of incomes move up through the band and as they move
  1362
  up the same percentage produces a higher figure.
  The surpluses are not likely to evaporate. Nor will they be used to pay increased benefits. There should be no mistake about that. I am sorry that the hon. Member for Selly Oak has left the Chamber. He and his hon. Friends wanted more benefits, and they received dusty answers.
  The hon. Member for Bristol, North-West (Mr. Thomas) wanted to increase unemployment pay and, together with the hon. Member for Chorley (Mr. Rodgers) to pay the £10 Christmas bonus to pensioners. Other hon. Members opposite wanted other goodies, but they all got dusty answers from the Secretary of State. One example was:
  "No. The use of the surplus to provide for the payment of a Christmas bonus or a special increase in social security benefits would mean an increase in public expenditure, which cannot be contemplated in present circumstances."—[Official Report, 13th December 1976; Vol. 922, c. 601.]
  The right hon. Gentleman was quite right, but it must be puzzling to a lifelong Socialist such as the hon. Member for Selly Oak to be told that although the money is there, it cannot be spent.
  So I discount the first two reasons for the surplus as shallow and insubstantial. I come to the third, and what I believe to be the real, reason—the impact of the National Insurance Fund receipts on the public sector borrowing requirement. The Minister's note says:
  "The balance resulting from any current surplus on the National Insurance Fund is invested in accordance with Section 133 of the Social Security Act 1975 in public sector stock. The interest on this stock accrues to the Fund for the benefit of contributors. The surplus has the effect of reducing the amount which the Government needs to borrow from other sources to bridge the gap between its expenditure and its revenue."
  That is the real reason for the surplus and the reason for contributions being increased.
  For once, I agreed with what the hon. Member for Selly Oak wrote in Tribune just before Christmas when he said:
  "the Government is using the fund simply as another means of taking purchasing power out of the hands of the people, hoping, no doubt that it would go unnoticed. £932 million is a hefty contribution to the Treasury hunt for cuts and all the better if it does not need to be debated and voted on in the House of Commons."—

  1363
  I hope that the hon. Gentleman realises that it is being debated and will be voted upon. He added:
  "This is simply disguised taxation."—
  I agree—
  "it is deflationary taxation which bears hardest on the poorest."
  The hon. Gentleman is right again.
  The basic marginal rate of tax for an employed man is not 35 per cent.—the basic rate of income tax—but 40.75 per cent. This is because of the 5·75 per cent. national insurance contribution. That is the rate of tax on every extra pound of income of all single men earning more than £15 per week and for a childless married couple with more than £21 per week. Above these ridiculously low levels of income, the marginal rate of taxation is 40·75 per cent. The burden of taxation has become a cruel imposition on the lower paid.
  The real reason for the surplus is to help to finance the Budget deficit. The Fund is in a massive surplus, so should contributions be increased? The Minister's note says that this is mainly to raise ceilings. It says:
  "If the ceiling is not raised periodically, in line with the general movement of earnings, the better off, i.e. those presently earning over the current ceiling of £95 a week, would be the only ones paying no more by way of contributions than they are at present. They would not therefore be paying their fair share towards the cost of benefits."
  That sounds plausible—again until one looks at what has happened to these people's contributions. Let us take a man on the upper earnings limit of £105 and assume that he has had no increase in his income over the past three years. My case is even stronger if he has had a pay increase.
  In 1975–76, when the upper limit was £65, such a man paid contributions of £197·34. In 1976–77, when the upper limit was raised to £95, his contributions increased by 44 per cent. in one year to £284·05. For 1977–78 when the upper limit will be £105, his contribution will be £313·95. This represents an increase of 60 per cent. in his contributions in two years. I do not understand how any hon. or right hon. Gentleman can conceivably say that it is so reasonable that it follows automatically and inexorably that the ceiling has to be raised. That 60 per cent.
  1364
  increased contribution has to be paid out of net income.
  The assumption I made is not altered if the man's income has gone up, because if his income goes up he pays an even bigger contribution. On the assumption I made, that his income had not gone up. that is a whacking great tax rise by any standards. When it is set against the size of the National Insurance Fund surplus and the fact that the only reason for increasing it still further is to help to finance the Budget deficit, we say that this is not only taxation; it is very unfair taxation.
  The Secretary of State made some play with the fact that we are moving to a new pension scheme. He referred to the agreement that the upper limit should be seven times the basic pension level. But that assumption was made on the original assumptions of the Government Actuary. If the application of that rule now produces both a huge surplus of the Fund and such massive increases of taxation for those on modest middle incomes, surely the right hon. Gentleman should look again at the rule to see whether it is fair.
  The Secretary of State said that buildup was needed to meet the cost of the new second pension scheme in 1978. Why should the contributions be raised for the coming year to meet the costs of a scheme which is not due to start until 1978? The 1975 Government Actuary's report—Cmnd. 5928—did not envisage the contributions going up in advance.
  The right hon. Gentleman made great play with the fact that we did not know the results of the earnings-related contributions, but now that we have the experience and have shown that the Fund is being built up massively ahead of the time assumed by the Government Actuary, would it not be wiser and fairer to defer an increase in the contributions for the new scheme until next year? I cannot see what is hypocritical about demanding that of the Government. There is nothing hypocritical. We are simply standing by our oft reasserted principle that direct taxation is much too high and should not be further increased.
  The Chancellor of the Exchequer has repeatedly acknowledged that. In October he said in a broadcast:
  "I think the rates of income tax are too high at every level of earnings from the poorest paid to the highest paid."

  1365
  It must be within the memory of every hon. Member that just before Christmas the Chancellor of the Exchequer said:
  "it has become essential to reduce the burden of direct taxation."—[Official Report, 21st December 1976; Vol. 923, c. 502.]
  Yet here we have an order—the latest in a series—which has effectively increased the burden of national insurance contributions by 60 per cent. in two years for the category of taxpayer affected by it. I say flatly to the Government that it is unacceptable, and we do not propose to accept it tonight.
  In particular, it is unacceptable to the self-employed. Last year the right hon. Member for Blackburn (Mrs. Castle) boasted that she was setting out to right the wrong she had done to the self-employed a year earlier. According to the notice issued by the DHSS:
  "Special steps to help the less well-off and self-employed are included in the review of national insurance contributions announced today by Mrs. Barbara Castle. Said Mrs. Castle: 'If we can find a solution to this problem, which I am urgently examining, this would right one of their biggest grievances'."
  Yet in The Times of 10th August 1976 appeared these words:
  "The interdepartmental working group set up to study how the self-employed could be brought fully into the earnings-related State pension scheme has been disbanded, and the Government says that it has no intention of bringing the self-employed into the full scheme in the predictable future. Nevertheless, they have to pay earnings-related contributions if they have clear profits of £1,600 a year."
  That lower limit is raised by this order. Yet tonight we see the result—a further increase in flat-rate contributions and a substantial raising of the upper level. But still the self-employed will get no unemployment benefit, no industrial injury benefit and no entitlement to earnings-related sickness benefit.
  These arrangements are highly unsatisfactory. I repeat the pledge that we have given to do all we can within available resources to meet the legitimate grievances of self-employed people in all sections of the community. Their contribution to the community is invaluable and their independence is essential to a balanced society.
  Perhaps the most important single duty of this House is to prevent Governments oppressing the people by harsh and unfair taxation. At least most taxation is
  1366
  levied openly through the Finance Bill. When we have this sort of sneaky, backdoor tax masquerading as the financing of social benefits when it is really the funding of the Government's Budget deficit, our duty is clear. We must throw it out.
  8.56 p.m.
  Mr. George Cunningham: The speech of the right hon. Member for Wanstead and Woodford (Mr. Jenkin), besides being wrong headed in many respects, was breathtaking in the gall which it manifested, especially in those last remarks. Such agreement as I had with the right hon. Gentleman this morning on another matter he has entirely dissipated in his remarks tonight. He said that there should not have been, over the past two or three years, a 60 per cent. increase in social security contributions. But there has been an increase of that order in National Insurance Fund outgoings. Therefore there ought to be a commensurate increase in contributions.
  The hon. Gentleman does a great deal of harm by referring to national insurance contributions as a tax. We all know the sense in which a national insurance contribution is not like a contribution to a funded pension scheme. It is important that the public should realise the enormous cost of providing national insurance benefits. The only way in which that can be constantly brought home to people is for there to be a separate, specific contribution for those national insurance benefits. These are contributions for benefits received, not a tax in any case whatever.
  Mr. Patrick Jenkin: The hon. Gentleman entirely misses the point. If the object were to finance benefits I would accept what he said. But when the only object is to finance a Budget deficit, it ceases to be a contribution and becomes a tax.
  Mr. Cunningham: The right hon. Gentleman knows quite well that when he was a Treasury Minister it was then the practice—and it has always been the practice—to treat the National Insurance Fund for the purposes of public sector management as part of public sector finance. He did that when he was in the Treasury a few years ago. If he were

  1367
  saying only that we should not allow a surplus of the present dimensions to build up, I would have more sympathy with him. Of course, if there is a surplus, justifiable on other grounds, the Government must not ignore that and secure a borrowing requirement as large as they would have done if that surplus did not exist. The right hon. Gentleman knows, or should know, that this is the situation. If there were a Conservative Government at present they would be doing the same.
  Mr. Ennals: My hon. Friend will also agree, since we are concerned that the public should understand, that the National Insurance Fund can be used for no other purpose than the payment of benefits. What the right hon. Member for Wanstead and Woodford (Mr. Jenkin) was saying was very misleading.
  Mr. Cunningham: And insofar as there is a surplus, it is carried forward to later years. If there were a deficit it would be carried forward, so that, taking the years together, any money which is collected is and must be disbursed. There is no way of siphoning it off for other purposes.
  I would prefer that the aim should be to have no significant surplus in the National Insurance Fund. Obviously, one's aim is never perfectly correct, and if one aims at a zero figure—why not, because this is a pay-as-you-go scheme?—sometimes one will have a surplus and sometimes a deficit. There is nothing wrong with that, and one should carry one or other of them forward to the following year and adjust one's percentage contribution figures in order to take account of that.
  I can see only one reason for aiming for a modest surplus rather than for a zero figure. If, by going for a zero figure, one ends with a deficit, one has much more difficulty in increasing tax rates on a temporary basis than one would have in increasing national insurance contributions. So maybe there is a justification for aiming for a modest surplus. But a surplus which amounts to one-quarter excess over the yearly consumption is not modest in a pay-as-you-go system.
  My right hon Friend has advanced tempting and attractive reasons, relating to the introduction of the new scheme in
  1368
  1975, in an attempt at justification. I think that that is the only reason that justifies it. Nothing else would do so.
  The right hon. Member for Wanstead and Woodford as usual surely lost sight not only of the reality of managing these things but of the intentions of his own social security Ministers when they put through the Social Security Act 1973, upon which all this is based, when he argued that the lower and upper limits should not be automatically raised. I do not believe that one should take the size of the fund into account when one raises the lower and upper limits. I think that he has lost an opportunity tonight for arguing that that ought to be a perfectly automatic rising but that what one alters is the percentage figure.
  Now, if there is an excess of 25 per cent. in the Fund—if we are to be fairly extreme—it would be possible to reduce contributions by about 10 to 20 per cent. Let us be much more modest than that. It should be possible to secure a balance in the Fund in 1977–1978 even if one were to drop the contributions—I shall instance only the employees' contribution, but the same would apply pro rata to the others—reducing the 5·75 per cent. to about 5 per cent. The indication, as I see it, is that one could do that and still have a surplus in the Fund. Why were not the Opposition arguing for that, rather than for the illogical move of freezing the limits because one does not need so much extra money in the coming year?
  I think that if any of us were in the Secretary of State's position we would be greatly attracted, this surplus having accidentally came about, by the thought of keeping it and using it to soften the increase in percentages which will inevitably be needed in April 1978. Let us remember that, when the child benefit argument was going on last summer, one of the difficulties which were foreseen in making a swift shift from child tax allowance to child benefit was that that would have affected wage packets not only this coming April but the April after, and that a shift of that sort in April 1978 would be particularly unattractive at a time when an increased national insurance contribution was going to be needed because of the introduction of the new scheme.

  1369
  If, as a result of pushing forward the surplus, snowplough fashion, into 1978, there need not be such an increase in the contributions in April 1978, one thing follows—that it will be possible to have a bigger shift from child tax allowance in April 1978 to child benefit. This is a very appropriate time for that fact to be pushed around, because we shall shortly be thinking about what further change in the shift from child tax allowance to child benefit it would be appropriate to make in April 1978. That to me is a very attractive argument indeed.
  In principle, leaving other things aside, there should not be a surplus of any significant size in the National Insurance Fund. But if we can ease the shift to child benefits, and ease the introduction of the new and very important pension scheme in 1978 by pushing it forward instead of liquidating it, I think that is an attraction. Otherwise, the right course would have been to let the percentage fall back to around 5 per cent. and for the Government to make up the difference, so far as general economic management is concerned, by an increase in tax.
  Since the Chancellor intends to reduce taxes this coming April it would have been possible to make this change. He would be reducing the national insurance contribution—and the tax rates as well—but he could reduce our tax by a little less than he otherwise intended to do because he had made a larger reduction in the national insurance contribution. That is the argument that the Opposition should have been making. But because of these considerations relevant to 1978, and the difficulties that will be presented, I think that on balance it makes sense to use this windfall to ease the difficulties that we shall have in 15 months' time.
  Mr. R. A. McCrindle: I start by posing the question: why raise contributions at all? I realise that I am echoing my right hon. Friend on the Front Bench, the Member for Wanstead and Woodford (Mr. Jenkin).
  Here we have a sector, perhaps the only sector, of the economy that appears to be constantly in surplus and where there is a buoyancy that would be the envy of many another sector of our economy. If in these circumstances we
  1370
  are still faced with the possibility of a substantial increase in contributions, one is entitled to ask where it is all going to end.
  When we have a surplus of the order of that revealed this evening, when we have reserves that appear to be more than adequate and when we have just gone through a year in which perhaps the greatest test in terms of fluctuations in the requirement for benefits has been passed—by that I mean the sizeable increase in unemployment benefits that may have been thought to have been required—one is entitled to ask where it is all going to end if we still face these increases in contributions. When can we ever envisage a situation in which the burden of contributions is likely to be reduced?
  I now turn to the position of the earnings-related aspect of contributions. I would concede the point made by the Secretary of State earlier, that if we are to have an earnings-related system, as inflation and other factors affect earnings, there has to be a constant increasing of the ceiling to which those earnings related contributions are attached.
  Having said that, I hope that the House will forgive me if in passing I say that the effect on the upper earners—those now earning £105—is really nothing more than a further clobbering of a section of society which has been at least as subjected to a reduction in the standard of living by a combination of taxes and inflation as any other section of the community.
  My right hon. Friend pointed to the fact that the contribution made by the top earners has gone up by no less than 60 per cent. over a period of two years. By any standards that is a very sizeable increase. When people in this category look at the abuse, as they would contend, which exists within the distribution of our social benefits, one can understand their disillusionment, and one will also be able to understand their inability to appreciate why, with a surplus of the size that we are discussing, nevertheless their contributions have to be increased once again. I mention that not as a special plea for such people but so that the House can consider the attitude which will prevail among many of them.

  1371
  It has been asked why, if there is this vast surplus, it cannot be used to introduce new benefits, and of course it is a very tempting thought to pursue. It was particularly tempting to consider the possibility of a Christmas bonus. Most hon. Members will have had numerous requests in their postbags in the period leading up to Christmas. Yet I am sure that the Government, in a period when total expenditure has to be reduced, are right to resist the temptation to use this surplus for the increasing of benefits or for the introduction of new benefits.
  But there can be no doubt that my right hon. Friend the Member for Wanstead and Woodford was correct when he described this order as nothing short of increased taxation made necessary by the need to finance the borrowing requirement, and one cannot but say in passing that, whatever else may be the effect of these increased contributions, they are a further turn of the screw against offering an incentive to those people who have had incentives reduced substantially over the past few years.
  Attention must be drawn also to the fact that the order is not only increased taxation, whatever the hon. Member for Islington, South and Finsbury (Mr. Cunningham) may say. It is increased taxation which can be authorised by this House without the necessity to introduce a Finance Bill. That is a matter which the House should consider very carefully and, I hope, not provide as a precedent.
  Mention has been made of the self-employed. I find it distasteful to discover that on this uprating once again the self-employed have a slightly larger additional burden placed upon them than that placed upon the ordinary employee. It is incumbent upon Opposition Members who have spoken out consistently over the past few years against the increasing burden placed upon the self-employed, not only in national insurance contributions but in so many other ways, to draw attention once again to the feeling which prevails amongst such people that they continue to carry a disproportionate share of the burden of national insurance contributions and taxation and to point out that, when that is allied to the difficulties which as small shopkeepers they frequently experience in the application of multiple rates of VAT and in
  1372
  many other ways, they expect us to protest that the Government have not taken this opportunity to reduce their burden.
  We are asked to take account of the fact that these increased contributions are necessary because of the possibility of a shaper fluctuation in the years that lie ahead in benefit expenditure. I respectfully ask the Minister of State to say from where he expects such an increased fluctuation to develop. Over the past years we have had an increase in unemployment of an order that one would have expected to demand a considerable additional requirement from the Fund. We have had, it would seem, that additional unemployment, but nevertheless we have weathered the storm and in the process produced a substantial surplus. What could it be that the Government envisage happening which might possibly require this substantial surplus? Mention has been made of an epidemic, but it would have to be an epidemic of the most major proportions before there was such a fluctuation in the requirements to justify an increase of the order proposed in relation to the surplus which has been announced.
  I have reached the conclusion that without question this is simply another method of increasing taxation. The Government should be criticised for increasing taxation through the back door, because that is what is being done this evening. The Opposition are correct to draw attention to these facts and to vote against the Order. I shall have the greatest pleasure in following my right hon. Friend in to the Lobby on that vote tonight.
  9.17 p.m.
  Mr. Robert Boscawen: I think that my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) did a most effective demolition job on the thinnest case I have heard from the Government Front Bench in a long time. The case put up by the Secretary of State for increasing the contributions in the higher band was one of the least plausible we have heard for a long time in this House. The Secretary of State said it was wrong not to raise the upper band in any case because more people's earnings had increased into that upper band, and because an increase in contributions was necessary to preserve the structure of the scheme.

  1373
  In a year when there is this record surplus on the National Insurance Fund, in a year when everyone who has to contribute towards the Fund is in personal economic difficulties, and when many businesses are also in some difficulty, there is no excuse whatever for increasing the contributions in the upper band. I make no apology for emphasising what my right hon. Friend and my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) have already said.
  There is a trend, under the present Government, towards national insurance contributions becoming just another way of raising progressive income tax from the taxpayers. Despite what the hon. Member for Islington, South and Finsbury (Mr. Cunningham) said, this is what has happened. As if it is not enough for this Government to have just placed a national insurance surcharge of 2 per cent. on the contributions of employers. This latest increase makes the whole contribution system look like progressive taxation.
  It is highly desirable in our society that people should understand that their right to get something out of the kitty in the long run depends on putting in regular contributions throughout their working lives, which they can identify as being tailored towards these particular benefits they hope to receive. If the people are not going to get anything more in the way of benefits, yet their contributions rise year after year, as they have under this Government, they will regard this form of contribution as just one more part of the general taxation system. It is an undesirable trend and the more that it continues the less favourable will be the reaction of people to the National Insurance Fund.
  One excuse that I saw for the increase in the contribution, which I am glad to say the Government have not used, is that it is to pay for raising the lower earnings limit. I agree that the limit ought to be raised. It is far too low. I saw from a parliamentary answer that raising the limit by £2 as suggested would cost the scheme only £4 million a year, and that money could be paid out of the £3,000 million surplus without any difficulty. The sum of £4 million could be covered by a mere statistical error in calculations and it certainly would not
  1374
  require an increase in the upper earnings limit.
  As my hon. Friend the Member for Brentwood and Ongar said, those in the upper earnings limit band including the self-employed—those who are receiving £5,500 a year or just above—have already been treated in a cavalier fashion in the last couple of years. They come into the higher levels of additional tax. They are the people who are probably the most affected by the massive increases in rates on their homes and by the increase in the mortgage interest rate. These are the people, particularly the self-employed among them, who are today opting out of much of the activity in which they should be playing a part.
  In my area the product of a penny rate has fallen by 2 per cent. or 3 per cent. this year because of the closure of small businesses and shops. This has taken place because for the people who run them it is not worth while continuing when they are clobbered so badly. Such people will be having to pay a considerable increase—about £1 a week more—but are not receiving an extra penny of benefit.
  We are told that this large surplus is necessary, since it accounts for only about three months' outgoings from the fund. The surplus is now to be increased by £150 million or so. That increase will add only one week to the three months' surplus. Such an increase is totally unnecessary to preserve the surplus and the essential structure of the scheme.
  I concede that there is one good side to the increase, but it happens for all the wrong reasons. It will tend to help occupational pension schemes when the new two-tier system is introduced in 1978. A greater number of people in the upper earnings limits band will undoubtedly decide that their advantage will lie in finding an occupational scheme which will enable them to opt out of the basic State scheme and the new earnings-related scheme. Many of them will consider joining one of the very good occupational pension schemes that exist, although some cannot do so because they are self-employed and have great difficulty in finding a suitable scheme.
  By clobbering the upper earnings limit band, the Government will give a boost to many occupational schemes. It is essential to the whole basis of the new

  1375
  State earnings-related scheme that as great a number as possible take part in occupational pension schemes. In the long run that will reduce the amount the National Insurance Fund will have to contribute to the earnings related State benefit.
  Even so, this benefit to the National Insurance Fund is for all the wrong reasons. This is another mean measure, trivial in its overall effect, as it will raise only £150 million, but considerable in the blow it will deal to a vital sector on whom we so greatly depend for our economic recovery. For that reason, I shall certainly support my right hon. Friend in opposing this increase.
  9.22 p.m.
  Mr. Dan Jones: I am surprised at the Opposition. It is true that there is a sizeable surplus in the Fund, but those of us who have a genuine respect for health know that our National Health Service is still the best in the world. Tory Members should be glad that we have such a service and should argue that it should be used to promote better health.
  I wonder whether Ministers and officials in the Department have read the report published by those responsible for the medical care of rheumatics and arthritics. Are they aware of the great loss of industrial output arising from rheumatism and arthritis? Tory Members cry out when there are industrial stoppages, but they do not always stop to consider the cause. They argue that industrial stoppages have a detrimental effect on our economy.
  Is the Minister prepared to take into account the appreciable surplus? Perhaps some of it should be devoted to the provision of better facilities. Many people who badly need hospitalisation cannot secure it because there are no facilities available. That is an aggravating situation, particularly when those awaiting treatment are at work.
  In this country many thousands of people are prematurely crippled by arthritis and rheumatism. I should applaud the Opposition with glee if they said "Here is the money. Use it in the way suggested by responsible people in society." I cannot understand why the Opposition, who are constantly talking about a constructive approach to the nation's problems, should quibble about
  1376
  a couple of quid and say "Do not do it", referring to the self-employed who apparently will suffer as a result. I do not accept that approach. Apparently some hon. Gentlemen believe that the self-employed will opt out. I wonder whether they will opt in when they, their wives, or families are sick.
  Members must be careful about what they say in this House. With health, everything is possible. Without health, everything becomes intensely difficult. The Government should be pressed from both sides of the House to look at those features of British society detrimental to our standing in the world.
  I should like my right hon. Friends to consider the problems of those who are crippled with arthritis and rheumatism. Those responsible for treating them are confident that with greater facilities they could considerably reduce suffering and return to industry those who, at this time more than any other in the post-war years, can make a vital contribution to the economic well-being of the nation.
  I beg my right hon. Friends before deciding to add to the credit balance to consider whether they can advantageously spend the money in the way that I have meekly and humbly recommended for the sake of those suffering intensely from arthritis and rheumatism.
  9.33 p.m.
  Mr. Tony Newton: I shall not attempt to follow the eloquent plea made by the hon. Member for Burnley (Mr. Jones). I have no doubt that in different financial circumstances many hon. Members on both sides of the House would have a great deal of sympathy with what the hon. Gentleman said and could think of a number of causes of their own that they would like to advocate. Indeed, I should find no difficulty in doing that. However, I fear that the hon. Gentleman was banging his head against a brick wall in making his plea to his right hon. Friends.
  I do not know whether the hon. Member for Burnley heard the Secretary of State's opening speech. I should like to quote from the end of the note which the right hon. Gentleman circulated. The punch line at the end of his message is that any spending of the surpluses
  "would be contrary to the whole objective of the Chancellor's statement on December 15th."

  1377
  What we are debating tonight is not how and whether we can spend the money —we have been told that we cannot—but whether it is right to raise the money in this way.
  Mr. Dan Jones: The Chancellor, after all, does not have the last word. The hon. Gentleman will be aware that the Opposition have pressed my right hon. Friend in many ways and for different reasons. Why not press him on this matter? Any money spend in the way that I have indicated would be an investment, not expenditure.
  Mr. Newton: I fear that, as an Opposition Member, albeit on the Back Benches rather than the Front Bench, in the nearly three years since I came into Parliament the major problem for me has been preventing rather than encouraging the Chancellor to spend excessive sums of money. Now that we have at last got him to accept the need for some sense of reality, even though it imposes some harsh decisions, I do not intend to go overboard in encouraging the Chancellor to reverse engines almost before he has started to move in the right direction.
  I wish that the two senior DHSS Ministers were in the Chamber because it is difficult not to feel sympathy with them in their plight. In reality they are not spokesmen for their Department, but are acting in this debate, as they have in others, as proxy spokesmen for the Treasury. In the debate on the earnings rule the Chief Secretary to the Treasury was in the Chamber, nearly all the time, which is not usual on such an occasion. A charitable man might have thought that he was there to help, but I believe that he was there to ensure that there was no backsliding by Ministers.
  Tonight Ministers have been spared his presence. They have been spared him breathing down their necks, but a large part of the speech by the Secretary of State was written in effect by the Chief Secretary. It was being read out in justification for a proposal which cannot be attractive to the Ministers in the Department, but they were forced to put it forward. It is easy enough to score points on this issue and I accept that Ministers are in an awkward position. But they should be more honest with the House and with the country.
  1378
  Ministers, particularly those from the Department of Health and Social Security, are fond of saying that their Department has in some way been sheltered from the impact of public expenditure cuts. But that is true only to a limited extent. They may not have been forced to cut benefits—and we may have saved them from cutting a benefit this morning. But when one examines the balance between what they are collecting and paying out in benefits, one sees that the Department has become an arm of the tax-collecting branch of Government. The Department has been asked to collect money which is not required to pay the benefits for which it is responsible.
  Mr. George Cunningham: There is no doubt about that.
  Mr. Newton: There is certainly no doubt about the construction to be placed on the circulated note and on what the Secretary of State said when opening the debate. I have not got his exact words, but in effect the Secretary of State said that if we did not have this surplus in the National Insurance Fund, we should either have to borrow money or raise other taxes. There is no other deduction than that this is either forced saving or a form of general taxation.
  Mr. Orme: I am sure that the hon. Member does not want to mislead the House on the argument of taxation. He is aware that this money cannot be used for any purpose other than national insurance purposes. It is not a form of taxation and the money is not transferred to general taxation. It is not a tax.
  Mr. Newton: That is a fine semantic point. I said that there could be no interpretation but that it was either forced saving or additional taxation. What the Ministers has just said puts it rather more into forced saving than into extra taxation.
  If the Minister does not want me to use the phrase "extra taxation" I shall not use it. However, the blunt fact is that money is being raised from the public in the form of national insurance contributions which is not required to meet the current needs of the National Insurance Fund. That is misleading to people paying contributions, who are

  1379
  encouraged to believe—and rightly encouraged—that these contributions are required to pay for benefits that they will receive. It is money which is not currently required at all.
  Whether the Minister chooses to call it taxation, as I should be inclined to call it, or whether he accepts that this is forced saving, as it certainly must be, it is not easy to justify, and for the very reasons touched on by the hon. Member for Islington, South and Finsbury (Mr. Cunningham). It is very important that the public should be confident that these contributions are required to pay for the benefits that they receive. That is exactly what we are currently undermining, in both this proposal and, even more so, in the National Insurance Surcharge Bill, even though that Bill primarily affects employers.
  The whole national insurance scheme is at present being perverted to a purpose quite alien to what it was set up to do and quite alien to what the public think it is doing. That is a senseless thing to do in terms of public relations, even if it could be justified in other terms. The Minister clearly disagrees with the use of the word "taxation". We can agree to differ, though there is little in the Minister's argument.
  My other main point concerns the other arm of the argument that has principally been used by Ministers—that this surplus is needed in order to cushion the blow when we move over to the new pension system next year. I wish that more Labour Members were present tonight. I invite Labour Members to think of what would be said if that analogy were followed by other people increasing their charges.
  Let us suppose that the Secretary of State for Prices and Consumer Protection were faced with Rank-Hovis-McDougall and the other bread manufacturers saying "We know that bread prices will have to rise rather a lot next autumn because of something that we expect to happen in the price of wheat, so please let us raise them a little more now, or let us make huge profits now, in order to cushion the blow then." There would be an outcry.
  One of the whole purposes of the price control machinery is to prevent people doing that. It is to accept that there will
  1380
  be frequent price increases, rather than to allow bigger increases, which will cushion the blow over a period and prevent the massive increases. The argument that is now being used would not be acceptable if adopted by any other Department in relation to the social contract.
  It is not merely in this bit of the public sector that this has happened. Let us look at what has happened with the Post Office. It would be out of order to stray into that matter for more than a moment. However, a huge surplus of profit has built up in the Post Office and we are being asked to accept it as justification that the Post Office will be able to hold prices for about 18 months.
  Mr. Dan Jones: Thank God for that.
  Mr. Newton: Yes, indeed. However, if any private concern had been allowed to increase prices in the past to build up such profits, it would have been treated on the Labour Benches as a public scandal. Labour Members would have demanded that the prices be reduced. They would have said that the profits were obscene and that capitalists had been allowed to run riot. The Post Office has been allowed to run riot, and now DHSS Ministers have been allowed to run riot with these contributions and they ask us to accept that they are being responsible in terms of the development of their policy over a long period ahead.
  I want to give reasonable time for the Opposition Front Bench spokesman to wind up the debate, but I want to make one final point. My objection to these increases is not simply the fraud that is being perpetrated in the presentation of the Government's argument. It is the fact that it is part of a policy that has left the people of this country with a disastrously high level of deductions from earnings. None of us can get away from that immediately, but we do not always recognise what has happened in the last few years.
  I was told in a Written Answer on 14th December that the percentage of average earnings taken by income tax and social security contributions from an average family man with a wife and two children under 11 was 9·2 in 1964–65 and 19·1 in 1970–71. In 1973–74, after three years of Conservative Government, there was a

  1381
  more modest increase, to only 19·3 per cent. In 1976–77, before these increases, it has gone up to 24·1 per cent. In 12 years, the deductions from the average family man have risen from less than 10 per cent. to nearly a quarter of his earnings.
  Then we wonder why people say that it is hardly worth bothering to work, or people think of going abroad, or the self-employed say that they cannot manage. The reason is not only national insurance contributions, but that is part of it. Against that background of problems it is little short of criminal for Ministers deliberately to raise one important part of those deductions above the level which is necessary. I am glad that we shall be voting against the order.
  9.46 p.m.
  Mrs. Lynda Chalker: We have had an interesting if perhaps short debate on something which to the majority of people outside the House looks relatively innocuous; something which those of us accustomed to social security debates have seen arise with monotonous regularity—an uprating order, normally of benefits but this time of contributions.
  The Secretary of State seemed to believe that we did not understand that there were pitfalls in forecasting. Above all else, I, as a statistician, know that there are plenty of pitfalls in forecasting and that really reliable statistics are often difficult to get. But that is why statistical theory has developed a system of calculating terms of error and bands of confidence with known probabilities. I am sure that the 37 statisticians working away at the Elephant and Castle know all about that. I expect that in our future debates Ministers will bring before us not just one figure but the 95 per cent. confidence limits as well. That will really be blinding the House with further science.
  My right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) spelled out most clearly just where the Fund surpluses are and how large they are. This is not just a matter of what we in this House think about a surplus for 1976–77 of £932 million or the Government Actuary's estimate for the coming year of a surplus of between £867 million and £888 million, depending on the per-
  1382
  centage increase in earnings. It is very much a matter of the way in which the position is understood by the British public when, as we constantly say, we have a major economic crisis.
  That is why the House, and the Opposition in particular, have a responsibility to spell out clearly, as we have done tonight, what is going on. My hon. Friend the Member for Braintree (Mr. Newton) spelled out the figures that he received on 14th December. Those are the figures that the British public understand, money they see being taken from their direct income.
  It is incredible how many people have thought that the National Insurance Fund was notional. Perhaps it was not until the series of parliamentary Questions on 13th and 14th December that even some hon. Members realised that the Fund was no more notional than the fact of my standing here; that it was substantial that it needed to be, and was, invested in accordance with Section 133 of the Social Security Act 1973.
  This investment—and we know that the benefit of the investment can be used only for social security purposes—is reaching a higher percentage as the balance of reserves builds up. The Minister would be doing a service to the House if he revealed what proportion of the £3,000 million surplus is invested in Government and local authority stock, and the sort of yield it produces. We are a little wary, and the more we probe, the more information comes out. If the Government continue to defend such a surplus, more information should be given about what they are doing with the money.
  We have seen the balance of the fund change substantially. Since March 1975 there has been an increase of 50 per cent. to £1,000 million—according to the estimate for April 1977 produced by the Government Actuary in Command Paper 6688. The biggest problem is that the Government are being seen to make a profit. Whether or not the Government argue about it, that is how it is seen outside the House, and it colours people's attitude to the increases in taxation. I am convinced that whatever the notes with which hon. Members have been provided say about investment, and whatever Ministers say about the way in which money is being used and about

  1383
  what would happen if there were a major crisis, those facts will not be known and understood outside. What will be publicly known is that an extra amount of money is being taken out of the pockets of working men.
  I accept that those on a higher income will be more heavily penalised, and in recent months the House has turned its attention to such people for good reasons. As my hon. Friend the Member for Brentwood and Ongar (Mr. McCrindle) said, these people feel that this is just a further clobbering of their income. When the hon. Member for Islington, South and Finsbury (Mr. Cunningham) challenged my right hon. Friend the Member for Wanstead and Woodford about the Fund, the hon. Member would not accept the point that is understood by many other people—that if there is to be an increase in the Fund, such an increase must be seen by the British public to be used for benefits. As we know from Government replies to parliamentary Questions, that is certainly not what the Government intend to do with the growing surplus of the National Insurance Fund.
  The way in which the Secretary of State dealt with the explanation tonight was understandable. I make no bones about that. We know why there is a re-rating order: because the money that is being invested is helping the Treasury in difficult circumstances. That has been clearly spelt out, and I do not need to repeat it. The money taken from working people in the different classes of contributions set out in the uprating order will not increase benefits for anybody.
  I was interested in and sympathetic to the plea made by the hon. Member for Burnley (Mr. Jones) who was extremely sincere in what he said about the surplus on the Fund. There are many cases deserving extra expenditure but, we now have to steel our hearts more than we would wish in order to get the economy back on the right road. Then it will be possible to have the benefits which the hon. Member for Burnley would like, and which the Opposition are determined to get from a strong economy in the future. But now people are feeling overcome by the taxation burden which has been imposed on them in the past two or three years.
  1384
  The Secretary of State said that it was necessary to raise contributions in 1977–78 in order to pay for the better pensions under the Social Security Pensions Act 1975 which comes into operation in April next year. He said that it was being done now in order to avoid a big jump next year. If only 50 per cent. of the unemployed people in this country are drawing unemployment benefit while the others are taking some other benefit, we know that there must be a substantial alteration to the Government's Actuary's figures and the surplus in the Fund.
  Some of these matters are unclear even to hon. Members who study this subject. We hope that the Government are looking into the reasons why only 730,000 of the 1,350,000 unemployed people are receiving unemployment benefit. As these figures change, so does the effect on the Fund and so will the ability, with or without increased contributions, to pay the pensions under the scheme which starts next year.
  When we were discussing the Social Security Pensions Bill in 1975, we had before us a Government Actuary's report which did not envisage an increase in contributions before 1978. We suspect that the April 1977 rates will probably be only a stop-gap.
  It would be much more sensible to wait until we are clearer about what is going on in this field before changing the contributions. The men who will have to pay the increases in April this year see the Government taking extra money from them to invest, albeit for the benefit of the social security system, on the chance that they may need it in April 1978 or thereafter. Those men would rather keep their money than pay an extra percentage of direct taxation which the Government may invest as they wish without those men having any security of a return of benefit on that investment when the Government decide that they have finished with the money. We have heard from my right hon. Friend the Member for Wanstead and Woodford that the contributions of a man earning £5,500 a year have increased by 60 per cent. since 1975–76.
  We have heard from the Secretary of State that he must deal with the unexpected surplus wisely and efficiently. When he used those words I felt that we had the answer to why the Government

  1385
  were taking yet more money. It is to pay for the vast deficits we are seeking to repay, which have resulted from the Government's mismanagement of the economy by buoying up the public sector borrowing requirement. We have seen unfrocked the real intention behind this order.
  Several hon. Members have referred to the relationship between contributions and benefits. Those Government Front Bench Spokesmen who are used to hearing my comments on these subjects know that I would dearly love to bring home to the people the real cost of the services and benefits we provide. The people are totally divorced from the reality of cost. The Government, led by the Chancellor of the Exchequer, have a duty to put that right, and we shall do our best to help them, so that people really understand about the costs of the system.
  The real problem is that—as the man in the street knows only too well—this progressive taxation is not being related back to him in benefits. It is being used to buoy up an already excessive Fund. We should be increasing the cost consciousness of the nation by telling the people how the benefits from the National Insurance Fund are being used. We might then find it not quite so difficult to explain why things sometimes go wrong and why, with the best will in the world, the Government Actuary and all the statisticians from time to time get matters out of true.
  If we continue to divorce national insurance contributions from the cost of specific benefits, real anger will be felt about the increases. So often the increased contributions are seen as a little bit of extra taxation that the Government are taking. There is no need to increase the surplus. As was pointed out, the £150 million which the Government will gather in from the order will provide only for one more week of benefit in addition to the existing Fund surplus.
  We know that the Government are making these increased contributions because, regrettably, the Front Bench, speaking on behalf of the Department of Health and Social Security, are no longer allowed to be independent thinkers in the interests of health and social security but are merely a tool of the Treasury. That is why we shall oppose the way in which they are seeking, unreasonably,
  1386
  to take money from working men when they do not need it at present for benefits. We shall vote against the order.
  10.4 p.m.
  The Minister for Social Security (Mr. Stanley Orme): I felt the lash of the words spoken by the hon. Member for Wallasey (Mrs. Chalker) when she implied that the Department was being dictated to by the Treasury. I do not know whether, when the right hon. Member for Wanstead and Woodford (Mr. Jenkin) was Chief Secretary to the Treasury, he behaved in the manner in which his hon. Friend thinks that the Treasury behaves now, but I assure the hon. Lady that that is not the case.
  One or two red herrings have been drawn across the debate. The right hon. Member for Wanstead and Woodford referred to the red herring of taxation, which his hon. Friends have followed up.
  Mr. Patrick Jenkin: Are we really to believe that it was entirely out of the goodness of their hearts that the right hon. Gentleman and his right hon. and hon. Friends decided that they needed this enormous surplus to help finance the public sector borrowing requirement? If that is what the right hon. Gentleman is saying, I do not believe him.
  Mr. Orme: The right hon. Gentleman may not believe me, but I am telling him the truth. When we saw what the surplus would be, we examined the issue with a view to altering the rate and perhaps meeting the point made by my hon. Friend the Member for Islington, South and Finsbury (Mr. Cunningham). We thought long and hard about this. In a period of inflation and economic difficulty it would have been attractive to make a reduction in this type of contribution. We had to consider not only a surplus that would last for only 12 weeks if it were paid as benefit, but the new earnings-related pension scheme which is due to start in April 1978. That will mean considerable increases in national insurance contributions for most people.
  Faced with this and taking into account that the surplus is not as large as it seems on the surface, and bearing in mind the calls that could be made on the Fund as a result of sickness or unemployment, we concluded that the Fund

  1387
  ought to remain at its present level and that the uprating should take place only at the top level for the benefit of those at the bottom end of the scale. If that is not social justice, I do not know what is.
  Mr. McCrindle: Much play is being made by the Minister and his right hon. and hon. Friends of the fact that part of the reason for the large surplus is to cushion the effect of the increased contributions required in 1978. To some extent I accept that argument. Is the right hon. Gentleman telling us that that means that in 1979 and subsequent years, were the Government still to be in office, they would not contemplate a surplus of this order?
  Mr. Orme: When we face the position after 1978 the Government will obviously want to take account of the surplus. The hon. Gentleman is right in saying that we shall have to examine the position. We cannot make hypothetical assumptions now.
  I understand that I caused some amusement at Question Time today when I said that the hon. Member for Wallasey was very good at figures. The hon. Member has asked about figures and about the investment of the surplus. She said that more ought to be known about it. The answers to her questions are to be found in the published accounts, the latest of which relate to 1974–75. I shall willingly send her a copy. The accounts show in detail the type of stock held. I know that she would not want me to go into detail now. The 1975–76 accounts will be published in a couple of months' time. The full figures, both of the previous and of the current investment, are and will be known.
  The right hon. Member for Wanstead and Woodford mentioned the seven to one ratio. He asked whether it stood by the Social Security Pensions Act 1975 for the relationship between the earnings ceiling for contributions and the basic pension rate and rested on assumptions by the Government Actuary that have now been invalidated. The answer is that the level of the earnings ceiling depends not on calculations by the Government Actuary but on a judgment as to the proper definition of an earnings-related pensions scheme operated by the State on
  1388
  a compulsory basis. The Government adhere to the view, taken at the time of the 1975 Act, that the right ceiling for the State scheme would be about seven times the basic pension rate and that the maintenance of the ceiling at that level would provide a stable basis for the State scheme.
  This can be used as a firm structure for pensions planning, both in relation to those who will participate fully in the new earnings-related State scheme, which starts in 1978, and in relation to those who will be contracted out as members of occupational pension schemes. I hope that this explanation satisfies the right hon. Member for Wanstead and Woodford.
  The right hon. Gentleman discussed the effects of changes in the level of unemployment, given in the Government Actuary's report. He spoke of a change of 100,000 in the number registered as unemployed. The right hon. Gentleman was wrong, incidentally, in his initial assumption. It is a matter of the number registered as unemployed and not the number eligible for benefit. It follows that a variation of 400,000, to which he referred, in the number of unemployed would affect the annual outcome to the extent of over £500 million and not the £260 million that he quoted.
  A number of hon. Members asked questions about the position of the self-employed. The Government would like to be able to offer the self-employed earnings-related benefits for earnings-related contributions, and there are ways in which this could be done. But, as my right hon. Friend made clear last August, there is no way of doing it at a cost in manpower which would be acceptable in the present circumstances.
  I have discussed this with a number of self-employed people, and I have found that there is not a great deal of enthusiasm amongst many of them for earnings-related benefits as such. Despite what they will be paying under the new scheme and the fact that they are not eligible, therefore, for certain benefits, the main benefit—the pension—which accounts for about 75 per cent. of the expenditure, will not be affected. The self-employed, therefore, will find themselves with a mixed flat-rate and earnings-related contribution system.

  1389
  In deciding what share of the contribution burden the self-employed should bear the Government have done their best to ensure that substantial fairness will be achieved as between the self-employed as a group and employed earners as a group, and as between different groups in the ranks of the self-employed themselves. The Class 4 rate has not been increased and the lower profit limit has been raised, the latter a beneficial measure. The Class 4 upper limit has moved in line with the Class 1 upper limit. We believe that that is fair. The flat-rate Class 2 contribution is being increased by only 10 per cent. after having been steady for the last two years, during which time there has been a more than 50 per cent. increase in pension rates.
  A great deal of comment has been made about the increase that many people have had to pay since 1974. The hon. Member for Braintree (Mr. Newton) said it was about 60 per cent. for certain people in the top figures. Benefits have also increased. The main benefit—pensions—has increased by over 50 per cent. in that period.
  It is a fact that we cannot use the money for any other purpose. The Government can only spend the money on benefits. That is the purpose of the scheme. The money will not be used for any diversionary methods such as going into other forms of taxation or being used by the Treasury. It will only be used by the National Insurance Fund.
  Mr. Dan Jones: That is as it should be.
  Mr. Orme: I thank my hon. Friend for that intervention. The overall contribution required from the self-employed has been held at about 8 per cent. of total profits or gains. On those figures it can hardly be said that the self-employed have been singled out for exceptionally harsh treatment. We would not accept that argument in any circumstances.
  My hon. Friend the Member for Islington, South and Finsbury raised an interesting point about child benefit and told the House what he thought the Government ought to be thinking about in 1978 in particular and possibly in 1979. My hon. Friend will appreciate that I cannot comment on the points that he made at this stage. However, I
  1390
  would say that his points were extremely interesting and obviously the Government will have to take them into account.
  My hon. Friend the Member for Burnley (Mr. Jones) made a special plea for arthritics and other National Health Service patients and hoped that there could be some benefit from expenditure of this Fund. He should appreciate that the Health Service is largely supported by direct taxation as opposed to contributions to the National Insurance Fund. I shall certainly take account of what my hon. Friend has said. I note the report issued yesterday on arthritic people and the effect that rheumatism and arthritis have on industry. My right hon. Friend will be looking at this report with keen interest and he will take my hon. Friend's observations into account.
  Mr. Dan Jones: I would simply ask that a team at the Ministry examines the present uneven state of treatment of patients. The most industrialised part of the country, the North-West, is the worst treated.
  Mr. Orme: As a Member for the North-West, I would not contradict my hon. Friend. I am sure the hon. Member for Wallasey will not do so, either. My right hon. Friend the Secretary of State was present when the report was published. Naturally he will have a keen interest in it.
  Some of my hon. Friends rightly raised important points about the surplus in the Fund and asked whether the Fund could be used for other benefits. This is not possible within the confines of this order or within the confines of the principles governing it.
  It is not because we are unsympathetic with what many of my hon. Friends are suggesting. It is because of the manner in which the money is invested. Using it as suggested would have an effect on the public sector borrowing requirement and there would be difficulties that could affect the Chancellor's strategy. I am sure that my hon. Friends will take that into account.
  If the House declined to approve this re-rating order, the direct financial consequence would be that in the year 1977–78 the National Insurance Fund would not receive the £150 million which the order is estimated to produce. But it

  1391
  is not only the total financial effect which is important. As my right hon. Friend explained, the purpose of the order is to raise the lower and upper earnings limits for Class 1 contributions so as to bring the limits more into line with the current earnings level and to make associated changes in the contributions of the self-employed.
  If the order is not made, the effect will be that the scheme will operate until April 1978 with its present earnings limits and its present self-employed contributions, and, from April 1977, the employer's contributions will be affected by the addition of the 2 per cent. national insurance surcharge. But in the absence of the present re-rating order, employees with earnings above the present £95 earnings ceiling would have no increase in their contributions, so the contributions of employees at the lower earnings level would be increased to the extent that their earnings rose.
  I am sure that many of my hon. Friends would not accept that as a basis for proceeding at present. Moreover, the movement of the earnings ceiling in April 1978 when the new pension scheme starts would need to be so much the greater if no interim increase were made in April
  1977 of the sort for which the present order provides.
  There is an additional point dealing with women's Class 2 contributions. Here I refer briefly to the Women's Class 2 Contributions Order, since that order has been made so as to provide a woman's Class 2 rate consistent with the man's rate provided in the order now before the House. If that order were not made, the order setting the women's Class 2 contribution rate would need to be revoked, with the effect that the rate of Class 2 contributions payable by women from April 1977 would be the same as that already payable by men, namely, £2·41 a week.
  I hope that I have said sufficient to show that the present order is necessary to adapt the dimensions of the national insurance contributions system to the changes in the earnings level and that without it we should be failing to keep the scheme's contributions provisions up to date, thus distorting its structure and leading to the need for much bigger changes in 1978. It is on that basis that I commend the order to the House.
  Question put:—
  The House divided: Ayes 143, Noes 136.

  Division No. 28.]

  AYES

  [10.23 p.m.

  Allaun, Frank

  Dempsey, James

  Kaufman, Gerald

  Archer, Peter

  Doig, Peter

  Lambie, David

  Ashton, Joe

  Dormand, J. D.

  Lamborn, Harry

  Atkins, Ronald (Preston N)

  Duffy, A. E. P.

  Lamond, James

  Atkinson, Norman

  Dunnett, Jack

  Lestor, Miss Joan (Eton & Slough)

  Bagier, Gordon A. T.

  Eadie, Alex

  Lewis, Ron (Carlisle)

  Barnett, Rt Hon Joel (Heywood)

  Ennals, David

  Litterick, Tom

  Bates, Alf

  Ewing, Harry (Stirling)

  Lomas, Kenneth

  Bean, R. E.

  Fernyhough, Rt Hon E.

  Loyden, Eddie

  Bennett, Andrew (Stockport N)

  Flannery, Martin

  Lyons, Edward (Bradford W)

  Bishop, E. S.

  Foot, Rt Hon Michael

  McDonald, Dr Oonagh

  Boardman, H.

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

  McElhone, Frank

  Booth, Rt Hon Albert

  Freeson, Reginald

  McGuire, Michael (Ince)

  Boyden, James (Bish Auck)

  George, Bruce

  Mackintosh, John P.

  Bray, Dr Jeremy

  Gilbert, Dr John

  Maclennan, Robert

  Brown, Hugh D. (Provan)

  Golding, John

  McMillan, Tom (Glasgow C)

  Brown, Robert C. (Newcastle W)

  Gourlay, Harry

  Mahon, Simon

  Buchan, Norman

  Graham, Ted

  Mallalieu, J. P. W.

  Buchanan, Richard

  Grant, George (Morpeth)

  Marks, Kenneth

  Callaghan, Jim (Middleton & P)

  Grant, John (Islington C)

  Maynard, Miss Joan

  Campbell, Ian

  Harrison, Walter (Wakefield)

  Mikardo, Ian

  Carmichael, Neil

  Hattersley, Rt Hon Roy

  Millan, Rt Hon Bruce

  Cocks, Rt Hon Michael

  Horam, John

  Morris, Rt Hon J. (Aberavon)

  Coleman, Donald

  Howell, Rt Hon Denis (B'ham, Sm H)

  Murray, Rt Hon Ronald King

  Concannon, J. D.

  Hoyle, Doug (Nelson)

  Oakes, Gordon

  Conlan, Bernard

  Huckfield, Les

  Ogden, Eric

  Cook, Robin F. (Edin C)

  Hughes, Rt Hon C. (Anglesey)

  Orme, Rt Hon Stanley

  Cowans, Harry

  Hughes, Robert (Aberdeen N)

  Ovenden, John

  Cox, Thomas (Tooting)

  Hughes, Roy (Newport)

  Padley, Walter

  Craigen, Jim (Maryhill)

  Hunter, Adam

  Parker, John

  Crawshaw, Richard

  Jeger, Mrs Lena

  Pendry, Tom

  Cunningham, G. (Islington S)

  John, Brynmor

  Price, William (Rugby)

  Davidson, Arthur

  Jones, Alec (Rhondda)

  Rees, Rt Hon Merlyn (Leeds S)

  Davies, Bryan (Enfield N)

  Jones, Barry (East Flint)

  Richardson, Miss Jo

  Davis, Clinton (Hackney C)

  Jones, Dan (Burnley)

  Roberts, Albert (Normanton)

  Deakins, Eric

  Judd, Frank

  Roderick, Caerwyn

  Rodgers, George (Chorley)

  Stallard, A. W.

  White, James (Pollok)

  Rooker, J. W.

  Stewart, Rt Hon M. (Fulham)

  Whitlock, William

  Rose, Paul B.

  Stoddart, David

  Williams, Rt Hon Alan (Swansea W)

  Ross, Rt Hon W. (Kilmarnock)

  Stott, Roger

  Williams, Rt Hon Shirley (Hertford)

  Rowlands, Ted

  Strang, Gavin

  Wilson, Alexander (Hamilton)

  Silkin, Rt Hon John (Deptford)

  Thomas, Mike (Newcastle E)

  Wilson, William (Coventry SE)

  Silkin, Rt Hon S. C. (Dulwich)

  Thomas, Ron (Bristol NW)

  Wise, Mrs Audrey

  Skinner, Dennis

  Thorne, Stan (Preston South)

  Woodall, Alec

  Small, William

  Varley, Rt Hon Eric G.

  Young, David (Bolton E)

  Smith, John (N Lanarkshire)

  Walker, Harold (Doncaster)

  Snape, Peter

  Walker, Terry (Kingswood)

  TELLERS FOR THE AYES:

  Spearing, Nigel

  Wellbeloved, James

  Mr. Joseph Harper and

  Spriggs, Leslie

  White, Frank R. (Bury)

  Mr. James Hamilton.

  NOES

  Adley, Robert

  Grist, Ian

  Page, Richard (Workington)

  Arnold, Tom

  Grylls, Michael

  Penhaligon, David

  Atkins, Rt Hon H. (Spelthorne)

  Hall, Sir John

  Percival, Ian

  Baker, Kenneth

  Hall-Davis, A. G. F.

  Pink, R. Bonner

  Banks, Robert

  Harvie Anderson, Rt Hon Miss

  Prior, Rt Hon James

  Beith, A. J.

  Hastings, Stephen

  Pym, Rt Hon Francis

  Benyon, W.

  Hayhoe, Barney

  Rathbone, Tim

  Berry, Hon Anthony

  Holland, Philip

  Rhodes James, R.

  Body, Richard

  Hooson, Emlyn

  Ridley, Hon Nicholas

  Boscawen, Hon Robert

  Hordern, Peter

  Rifkind, Malcolm

  Bottomley, Peter

  Howells, Geraint (Cardigan)

  Roberts, Michael (Cardiff NW)

  Braine, Sir Bernard

  Hunt, John (Bromley)

  Ross, Stephen (Isle of Wight)

  Brocklebank-Fowler, C.

  Hurd, Douglas

  Rost, Peter (SE Derbyshire)

  Buchanan-Smith, Alick

  James, David

  Scott, Nicholas

  Buck, Antony

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

  Shepherd, Colin

  Budgen, Nick

  Jopling, Michael

  Shersby, Michael

  Bulmer, Esmond

  King, Evelyn (South Dorset)

  Sims, Roger

  Burden, F. A.

  King, Tom (Bridgwater)

  Sinclair, Sir George

  Butler, Adam (Bosworth)

  Kitson, Sir Timothy

  Skeet, T. H. H.

  Carlisle, Mark

  Knight, Mrs Jill

  Smith, Cyril (Rochdale)

  Chalker, Mrs Lynda

  Lamont, Norman

  Smith, Dudley (Warwick)

  Clark, Alan (Plymouth, Sutton)

  Lawrence, Ivan

  Speed, Keith

  Clark, William (Croydon S)

  Lawson, Nigel

  Spicer, Michael (S Worcester)

  Clegg, Walter

  Le Marchant, Spencer

  Sproat, Iain

  Cooke, Robert (Bristol W)

  Lester, Jim (Beeston)

  Stainton, Keith

  Cope, John

  Loveridge, John

  Steel, Rt Hon David

  Corrie, John

  Luce, Richard

  Stewart, Ian (Hitchin)

  Crowder, F. P.

  McCrindle, Robert

  Stradling Thomas, J.

  Davies, Rt Hon J. (Knutsford)

  Macfarlane, Nell

  Taylor, Teddy (Cathcart)

  Dean, Paul (N Somerset)

  McNair-Wilson, M. (Newbury)

  Tebbit, Norman

  Douglas-Hamilton, Lord James

  Maude, Angus

  Thatcher, Rt Hon Margaret

  Drayson, Burnaby

  Mawby, Ray

  Thomas, Rt Hon P. (Hendon S)

  Edwards, Nicholas (Pembroke)

  Maxwell-Hyslop, Robin

  Trotter, Neville

  Eyre, Reginald

  Meyer, Sir Anthony

  van Straubenzee, W. R.

  Fairbairn, Nicholas

  Miller, Hal (Bromsgrove)

  Vaughan, Dr Gerard

  Fairgrieve, Russell

  Mills, Peter

  Viggers, Peter

  Fisher, Sir Nigel

  Mitchell, David (Basingstoke)

  Walker, Rt Hon P. (Worcester)

  Fookes, Miss Janet

  Moate, Roger

  Walters, Dennis

  Fowler, Norman (Sutton C'f'd)

  Monro, Hector

  Warren, Kenneth

  Fox, Marcus

  Morrison, Charles (Devizes)

  Weatherill, Bernard

  Glyn, Dr Alan

  Morrison, Hon Peter (Chester)

  Wells, John

  Goodhew, Victor

  Mudd, David

  Winterton, Nicholas

  Gow, Ian (Eastbourne)

  Nelson, Anthony

  Gower, Sir Raymond (Barry)

  Neubert, Michael

  TELLERS FOR THE NOES:

  Gray, Hamish

  Newton, Tony

  Mr. Carol Mather and

  Grieve, Percy

  Onslow, Cranley

  Sir George Young.

  Griffiths, Eldon

  Page, Rt Hon R. Graham (Crosby)

  Question accordingly agreed to.

  Resolved,

  That the Social Security (Contributions, Re-rating) Order 1976, a draft of which was laid before this House on 7th December, be approved.

  NEW TOWNS (SCOTLAND) BILL
  Order for Second Reading read.
  Ordered,
  That the Bill be referred to the Scottish Grand Committee.—[Mr. Snape.]

  WOMEN CLEANERS (PAY)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Shape.]
  10.35 p.m.
  Mr. Bruce George: Since being elected to the House in February 1974 I have been concerned about the plight of the low paid. Regrettably, a considerable army of men and women fall into this category. In a previous Adjournment debate I had the opportunity of raising the problems of low pay in the hotel and catering industry. I am pleased to say that, after three months of submitting my name every week to Mr. Speaker, I have been fortunate enough to secure this Adjournment debate and am able to raise the subject of low pay in the contract cleaning industry.
  I am pleased that it is my hon. Friend the Under-Secretary of State for Employment who is responding for the Government tonight, because I am well aware of his long-standing and deep sympathy with the lower-paid worker.
  My involvement with the problems of the contract cleaning industry stems directly from a letter passed to me last summer by the Secretary of the Walsall and District Trades Council, a Mr. Bill Fisher. The letter was written by Mr. Cooke, Secretary of the Walsall No. 4 (Gas) Branch of the General and Municipal Workers' Union.
  I can do no better than read the letter. Mr. Cooke stated:
  "Recently I have enrolled six female cleaners at Walsall Gas depot in Prince Street, Pleck. They do not work directly for West Midlands Gas but are employed by MCC Office Cleaning, Cleveland Street, Wolverhampton … who sub-contract to West Midlands Gas.
  Inquiries have revealed that they are paid £5·85 per week for 12½ hours, giving an hourly rate of 46·8p. This compares very unfavourably with what West Midlands Gas would pay for office cleaners, which is 81·525p
  1396
  per hour and would give these ladies £10·19 per week. As a trade unionist I am not willing to stand by and see cut price labour used within our industry and I have already reported this matter to my own union. Added to this they have only recently received their first pay rise in two years, which was £0·80 per week.
  I would be very much obliged if you would pass this information to Mr. Bruce George, MP."
  Ultimately I received partial satisfaction from West Midlands Gas, but I began further researches. I have tabled a number of Parliamentary Questions, written dozens of letters, held a public meeting for cleaners in the West Midlands area—the meeting was attended by over 150 cleaners employed by contract cleaning companies—and I have liaised with those whose concern predates mine, namely, trade unionists and the Low Paid Unit.
  I have been particularly fortunate in securing the co-operation of the Low Paid Unit, to whose work I am happy to pay tribute. The Minister will be pleased to know that the Low Paid Unit will shortly be producing another report on the contract cleaning industry. That report, when published in a few weeks' time, will add greatly to the literature on the subject of the contract cleaning industry. Up to the present we have the report published in 1971 of the National Board for Prices and Incomes "Pay and Conditions in the Contract Cleaning Trade", and the incomes data study entitled "Cleaners' Pay", published in 1974. There is little else. I believe that the new report will shed a great deal of light on the plight of the estimated 100,000 cleaners—mostly female, and mostly part-time—who work in the contract cleaning industry.
  The contract cleaning industry is large and has expanded considerably in the last decade. Its turnover is in excess of £155 million a year. There are some giant companies, but the majority of companies employ fewer than 50 women, many of whom work part-time and do short stints of about three hours per day either early in the morning or late in the evening.
  Many establishments, which formerly employed cleaning staff directly, now hire contract cleaning companies—presumably to save costs. Indubitably, the pay and working conditions of those employed in the contract cleaning industry are inferior to those enjoyed by workers

  1397
  who are directly employed by companies employing their own cleaners. That is borne out by the research which has been done so far.
  It is dangerous to generalise. There are many good contract cleaning companies which pay reasonable wages. But my researches reveal that many companies do not pay reasonable wages, and this I deplore.
  The incomes data study and the NBPI were unhappy about conditions of employment in the industry. They were not satisfied with holidays and holiday pay. In many cases none was given. They were not satisfied with the sick pay provision. In many cases there was little provision for sick pay.
  We must remember that women in this industry work in uncongenial surroundings, often in cold premises in which the central heating has been turned off. Night workers might be locked in the premises. These women work unsocial hours. In many cases their family life suffers. One wonders why these women are prepared to work for the pittance that they receive. In times of high unemployment there is an incentive for these women to remain in work, even though the wage rates are low. These women are working not for pin money but because they may be single parents or desperately need to supplement their husbands' low incomes. Therefore, in most cases these women have to work even though conditions of work are poor and wages are low. So far, protection against unfair dismissal has not applied to them because most of them do not work the minimum number of hours required under the legislation. Thankfully, that will change.
  There are some disagreements about pay. Exact figures for pay are difficult to come by, because companies naturally, in a fiercely competitive industry, are not forthcoming in revealing how much they pay their workers.
  The NPBI report noted:
  "There are pockets of low pay, mainly associated with certain regions, and night workers in particular are poorly paid … But it cannot be said this is a low paid trade as a whole".
  I disagree. This concept of pockets of low pay was reinforced this morning on the radio by the secretary of the Contract Cleaning and Maintenance Association,
  1398
  who said that the rate of pay in the provinces was between 70p and 80p per hour. That will cause howls of derision and anguish from the 150 women who attended my public meeting, because most of them are earning between 45p and 60p per hour. The majority earn less than 56p per hour and 20 per cent. of them earn 50p per hour or less.
  I shall quote a few examples from evidence I have been given of companies which are paying less than 60p per hour. These emanate from the West Midlands. They are ISC Cleaners, King Pin Contract Cleaners, Cleaners Contractors Ltd., Midland Contract Cleaners, Cleanswift, MIC, Ofliclean, Commercial Cleaning Services, and many more. These are examples of companies which to my mind are paying poverty wages.
  It may be that the Contract Cleaning and Maintenance Association believes that the rates are higher, but I have incontrovertible evidence from the women who attended my meeting and from others throughout the country who have written over 100 letters to me that this complacent attitude of there being pockets of low pay in the contract cleaning industry is open to criticism.
  I have here a letter from several ladies—written on official notepaper which had probably allen to the floor—saying:
  "I am writing to you on behalf of the cleaners of"
  —a well-known bank in my constituency—
  "concerning your recent letter in the Press. We work for"
  a certain company
  "We do 15 hours a week and receive £6·50 a week. That works out at 43p per hour. Out of this we pay 80p per week bus fare. Hoping you will look into this matter for us".
  If that major bank, whose profits are in tens of millions of pounds a year, is aware that women clean its offices for 43p an hour, it should be ashamed.
  Another bank in my constituency is also involved in the issue. I quote from a letter:
  "I and three other cleaners work at this bank and we are seeking your advice on how to get a rise. Our bank wage is £7·50 per week, which is 50p per hour. We have asked for a rise about three months ago but we are no further about it".
  The letter then names the bank and states that cleaners have to pay £1·40 a week in fares.

  1399
  Another constituent writes:
  "I am writing this letter on behalf of my wife, who is afraid of dismissal if she writes it."
  The letter names the company and continues:
  "There are eight other cleaners and one supervisor … the wife and the other cleaners get £7 a week or 56p an hour."
  I could continue at length. Another letter states that cleaners' current income is £8·50 per week, paid fortnightly. The letter states:
  "The working week is 15 hours so at fractionally over 56p per hour it is well below the standard you say is desired. A request for a rise on this paltry amount usually brings first vague promises of near future rises and then abuse on the lines that more money will be paid when the standard of work is improved. The promises therefore never become an accomplished fact. The ladies simply back down under the threat of mass sackings. The glaring inconsistency in the attitude of the contractor is that the management do not complain about the efficiency of the work done. On the contrary they seem quite pleased with the cleaners."
  I have, of course, omitted names of companies, but I shall supply them to the Minister.
  There are many examples of low pay, not only in the Black Country but in the whole of the West Midlands. If proper research were conducted it would reveal more than pockets of low pay and many instances throughout the country. If public corporations, banks, newspapers and other respected organisations were aware that they indirectly employed slave labour—I use that phrase advisedly—I hope that they would be prepared to renegotiate these contracts or no longer to employ cleaning companies which pay such low wages.
  Low pay is not illegal. These companies are doing nothing illegal, but they are acting in a morally reprehensible manner and give a bad name to those paying reasonable wages.
  Any contract cleaning company that is prepared to pay low wages will, because of the unemployment situation, hopelessly undercut a reputable company when tendering.
  What can be done? The Government have attempted to put their own house in order where they employ cleaners directly. Where they employ indirectly, they have inserted a fair wages clause in contracts. The Minister for the Civil Service seems to be satisfied with the situation, accord-
  1400
  ing to a Written Answer to me. He said:
  "I have, however, no reason to believe that contractors employed to clean Government offices are not observing the minimum rate of pay clause now included in the contract."—[Official Report, 26th October, 1976; Vol. 918, c. 185.]
  Despite that assurance I am attracted to the idea, put forward by Jim Skinner in a Fabian research pamphlet, of a survey within the Civil Service Department to monitor pay levels and vet contracts to ensure that they comply with legal requirements.
  I am not satisfied with the response that I received from certain public corporations. I have evidence of indirectly-employed cleaners receiving less than 55p an hour in public corporation offices—of course indirectly employed—and getting a wage rate much less than their sisters who are directly employed by that public corporation.
  The public corporations may have a fair wages clause in contracts that they negotiate, but I have lots of evidence to show that this fair wage clause, in very many cases, merely adorns the contract. It is not enforced. There may be a fair wages clause but there is a lot of evidence to show that it is simply not observed. There is no follow-up.
  I was told by one senior officer of a public corporation in the West Midlands:
  "Whilst there is legislation or directives to this effect for Government premises, there is no similar provision for non-Government premises."
  He went on to say,
  "Even though a fair wage clause is included in contracts, the corporation is not bound to do this."
  I hope that the Minister will invite the chairmen of public corporations and other public bodies to employ the same standards that the Government employ in relation to cleaners either directly employed or, more importantly in this respect, indirectly employed. This would give a very good lead to the private sector.
  Indeed, I have heard complacency expressed about the contract cleaning companies employed by local authorities. I have evidence of contract cleaning companies being employed by a local authority at a rate just over half that paid to cleaners directly employed by that local authority. Thus the cleaners who clean the civic centre of the town in question

  1401
  receive a wage rate of just under £1 an hour but those who happen to clean a block of fiats owned by the local authority are getting infinitely less.
  Looking at the private sector, I hope that a number of developments will combine to remedy the situation that I have been describing. I hope that the trade unions—the National Union of General and Municipal Workers, the Transport and General Workers' Union, the National Union of Public Employees and the Civil Service union—will be able to make a much bigger impact in this industry than hitherto they have been able to do.
  The problems of unionisation are immense. The vast majority of the workers are women, who are not as susceptible as males to trade union blandishments and desires to join. The work force is scattered, with perhaps two or three people per site. One must not forget that there are some employers who still exhibit hostility to trade union membership. As I have said, these women are subject to instant dismissal and they have no recourse, up to the present, to the industrial relations tribunals for unfair dismissal.
  I hope that the unions will be able to make a bigger impact. Research has shown that women who are members of a trade union are better paid than those who are not. I am pleased that the follow-up to my public meeting in December by the National Union of General and Municipal Workers has had a lot of success.
  Secondly, I hope that the Contract Cleaning and Maintenance Association will get its members to agree to a minimum rate for the job. However, one must remember, in fairness to them, the difficulties of companies that are not members of the association.
  Thirdly, I hope that Schedule 11 to the Employment Protection Act will be used to the advantage of the low paid. I shall be interested to hear what the Minister has to say about that schedule.
  I should like to hear the Minister's analysis of the impact of the Equal Pay Act and the sex discrimination legislation. I hope that the Minister knows, as I know, of the cases in which women cleaners have received less from recent pay legislation than they should have received.
  1402
  However, surely the solution does not rest entirely with legislation alone or in direct action by cleaners or the action of trade unions. Surely it rests in a great deal of persuasion and co-operation. I am proud of what the Government have done in relation to the low paid. I hope that these low-paid women, who definitely exist in my interpretation and in the analysis of the Low Pay Unit, working within the contract cleaning industry will hear something this evening or in the near future that will give them some hope. These are the low paid and the neglected sector of the work force. I hope that their plight will be recognised by the Government and that there will be some action. When I meet my constituents and those who have written to me, I hope that I shall be able to offer them considerable hope for the future.
  10.55 p.m.
  The Under-Secretary of State for Employment (Mr. John Grant): The House will need no reminding from me of the continued interest which my hon. Friend the Member for Walsall, South (Mr. George) has shown in the question of low pay and the situation of those who work in what are traditionally regarded as low-paying industries. I have listened with great interest to the points which he has made.
  The findings of the National Board for Prices and Incomes and its recommendations are important because they have had a decisive influence on the shape of subsequent developments. I hope, therefore, that my hon. Friend will bear with me while I refer to some of the more salient of those conclusions and recommendations.
  The report found that the hourly earnings of the vast majority of contract cleaners were comparable with the earnings of manual workers generally, taking men and women separately. Though there were problems of low pay, and holiday provisions and fringe benefits were on the whole poor, the report concluded that contract cleaning could not be said to be a low-paid trade as a whole. An important point was that if weekly earnings were low it was because working hours were short rather than because hourly earnings were low by standards found elsewhere.

  1403
  I understand that in a radio interview this morning my hon. Friend said that far too many workers in the contract cleaning industry are receiving poverty wages, by which I understand he means less than 55p an hour. I should like to set this in perspective if I may. The New Earnings Survey for April 1975 gives information about the earnings of part-time cleaners and shows that women working slightly less than 20 hours a week were receiving £14·80 a week on average. This is equivalent to an hourly rate of nearly 75p. This compares with average hourly earnings for all part-time women manual workers of about 77p an hour. Ninety per cent. of all part-time cleaners were receiving more than 52p an hour.
  I would add that these figures cover both directly-employed and contract cleaners; separate earnings information for contract ceaners alone is not available from the NES. Nevertheless, these figures tend to suggest that one of the main conclusions of the NBPI study in 1971 still stands, namely, that contract cleaning is not a low-paid trade, taken as a whole. It is clear, however, from the impressive evidence which my hon. Friend gave that there is a problem here which is glossed over, and even some conflict of evidence. No one would deny that pockets of low pay exist in this country, that less than a decent living wage is sometimes paid and that this situation should be swiftly eliminated wherever it exists. My hon. Friends seems to have uncovered a sizeable pocket in his area, to put it mildly.
  There are means available for resolving some of these difficulties—in particular the means of seeking redress under Schedule 11 to the Employment Protection Act, available from the beginning of this year. Nevertheless, the most important factor in improving the overall situation lies in the achievement of more effective and more widespread collective bargaining arrangements for the industry as a whole. Despite the difficulties, I hope that progress can be made in this direction.
  The NBPI concluded that the contract cleaning industry taken as a whole was not low paid but that there was a case for developing a closer relationship between both sides of industry to settle pay and conditions.
  1404
  Officials of my Department initiated talks between both sides of the industry as recommended, but it was concluded that there was little scope for real progress until the unions had improved their membership within the industry. Nevertheless, discussions continued and departmental officials chaired meetings between some of the larger employers in the trade and the unions concerned. I am sure that the talking is not over yet, but one of the major themes which emerged in the talks was the rôle of the Government as a major user of contract cleaning services. In this connection the Government introduced in April 1975 special clauses in contracts for the cleaning of Government offices which require successful contractors to pay wages and to grant holidays with pay to their employees at rates no less favourable than those agreed for local authority staff engaged on similar work.
  The rate of pay of local authority manual workers which employers of contract cleaners working in Government offices have agreed to observe is £36 for a 40-hour week, equivalent to an hourly rate of 90p. It has now gone up to £38·50 a week, equivalent to an hourly rate of 96p. I am sure my hon. Friend will agree that that is an important step in the right direction.
  As my hon. Friend has pointed out, workers in the contract cleaning industry enjoy some measure of protection from the Fair Wages Resolution. The resolution in its present form was passed by the House of Commons in 1946 and is incorporated in all contracts for the supply of goods and services to Government Departments. The Government have also encouraged local authorities and nationalised industries to include a fair wages clause in their contracts.
  The Fair Wages Resolution provides that contractors should pay rates of wages and observe hours and conditions of labour not less favourable than those established for the industry—that is to say, the employer should observe any terms and conditions of employment laid down in a national or district collective agreement for his industry. If there are no such established rates, the contractor must observe terms and conditions of employment not less favourable than the general level observed by other employers

  1405
  whose general circumstances in the trade or industry are similar. All this applies to contractors for Government Departments.
  While most other public authorities also incorporate a fair wages clause in their contracts, the provisions are not always identical, and need not be identical, to those laid down in the resolution passed by this House. In particular, some authorities have their own machinery for resolving complaints and do not make provision for the Secretary of State to refer cases to the Central Arbitration Committee.
  I would now like to turn to two of the points raised by my hon. Friend. He is quite right to criticise public authorities which, in spite of advice from the Government, have not put a fair wages clause in their contracts with cleaning companies. If it were not for the existence of a new legislative provision, this is a matter which I would want to investigate thoroughly. However, in Schedule 11 to the Employment Protection Act the Government have now given to everyone the rights that were previously enjoyed only by those working on contracts containing a fair wages clause. Schedule 11, which was brought into force on 1st January this year, will give to all workers protection very similar to that contained in the Fair Wages Resolution, with similar mechanism for dealing with complaints. Workers in the contract cleaning industry need no longer depend for this protection on the existence of a fair wages clause in their company's contract, and, of course, the provisions of the schedule are available to those whose companies work for the private sector as well as for companies holding contracts with public authorities. I have already mentioned the rates which must be paid to those carrying out contract cleaning in Government offices, and I think that the use of Schedule 11 will represent a considerable step forward for workers in the industry. Indeed, it was for the benefit of groups of generally low-paid workers that Schedule 11 was brought into force, in spite of the opposition of the official Opposition.
  1406
  Having spoken about the operation of the Fair Wages Resolution and Schedule 11, I ought to add a footnote about their purpose. These provisions cannot provide those in the contract cleaning industry with a mechanism which will allow them to obtain a general uplift of pay for the industry. Their purpose is to catch the employer who is paying less than the general level in the industry—to deal with pockets of low pay within an industry. The purpose is therefore limited. Nevertheless, I am sure that there is scope for workers in the industry, and their trade unions, to make considerable use of Schedule 11 and the Fair Wages Resolution to deal with the worst cases of exploitation which undoubtedly occur.
  I would not wish to give the impression that the Government are complacent about the low paid. Indeed, nothing could be further from the truth. Only today I expressed my alarm at the findings of the low pay blitz that we have carried out in certain wages councils. One of our major preoccupations has been to adopt measures which will help not only those who are low paid but all those on low incomes.
  My hon. Friend the Member for Walsall, South has made a number of detailed suggestions, and in the few moments now left to me I cannot deal with them in detail. I can, however, promise to give careful consideration to the specific points he has raised about the inclusion and monitoring of fair wages clauses in contracts entered into by nationalised industries, local authorities and other public bodies. I shall be interested to receive any further informamation that my hon. Friend may want to pass on to me.
  This debates has provided a valuable opportunity to explore some of the problems of low pay in a particular industry, and I am grateful to my hon. Friend for initiating and pursuing the matter in his usual courteous and helpful way.
  Question put and agreed to.
  Adjourned accordingly at five minutes past Eleven o'clock.

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