Sitting of 30 March 1977

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

    Cambodia
    Mr. Wallasked the Secretary of State for Foreign and Commonwealth Affairs if he will raise in the Security Council, as a threat to the peace of South-East Asia, the current large-scale slaughter in Cambodia.
    The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. Evan Luard): No, Sir. The Government deplore the systematic violations of human rights which have occurred in Cambodia. But the Cambodian actions, abhorrent as they are, do not, in the view of Her Majesty's Government, constitute a threat to international peace.
    Mr. Wall: Why these double standards? When some event takes place in South Africa or Rhodesia the United Nations rises in its wrath. Will not the Government reconsider this matter, practise what they preach and take some positive action about the genocide of these people?
    Mr. Luard: With regard to Southern Africa, South Africa and Namibia, the Government have always contested that such situations represent a threat to peace. We are entirely consistent in our approach to these things. With regard to Cambodia, however much we may deplore the situation there, it is clear that it is primarily a domestic matter and, therefore, not a matter for the United Nations.
    Mr. Alan Lee Williams: Will my hon. Friend consider approaching the Inter-
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    national Red Cross to see whether it can become involved in the depressing situation in Cambodia?
    Mr. Luard: I entirely agree with my hon. Friend that one of the unhappy aspects of the situation in Cambodia is the difficulty that we have in obtaining reliable information about what is happening there. There would be very great value in the International Red Cross taking some action of the kind that my hon. Frend has suggested, but I cannot take responsibility for that.
    Mr. Fell: Is Cambodia a member of the United Nations?
    Mr. Luard: Yes.
    Mr. Fell: Why?
    Mr. Tapsell: Does not the passivity of the international community in the face of an almost Hitlerian scale of slaughter in Cambodia call in question the Declaration of Human Rights and, indeed, the validity of the Nuremberg trials? Ought not the Government now to take an initiative on this matter in the United Nations?
    Mr. Luard: I have already expressed my own and the Government's condemnation of the kind of activities that we have seen or heard about in Cambodia over the last year or so. If it were to be taken up in the United Nations, the main responsibility would be on the neighbouring countries that are mainly affected. So far, the United Nations has not decided to intervene in what is an internal question. If anything, it is a question for the United Nations Commission on Human Rights, and I would be glad to see that body discuss the matter.
    Mr. Lawrence: Is the Minister saying that nothing can be done to raise the question of the slaughter of 1¼ million out of a population of 7 million people in Cambodia? Is there not something that the Government can do to raise the matter positively in one of the council chambers of the world?
    Mr. Luard: I have mentioned one body that could be concerned with a matter of this kind—the United Nations Commission on Human Rights. I would welcome that commission discussing the matter.

    Rhodesia
    Mr. Blakerasked the Secretary of State for Foreign and Commonwealth Affairs whether he will make a statement about recent developments in relation to Rhodesia.
    Mr. Hastingsasked the Secretary of State for Foreign Affairs whether he will make a statement on Rhodesia.
    Mr. Brocklebank-Fowlerasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a further statement on Rhodesia.
    The Secretary of State for Foreign and Commonwealth Affairs (Dr. David Owen): I hope to find a suitable basis for resuming negotiations that will lead to a peaceful transition to majority rule in 1978. It will, of course, be the chief topic of my forthcoming visit to Africa and a major subject to be discussed at the end of the week in London with Secretary Vance.
    Mr. Blaker: Is not the statement of the Rhodesia Government yesterday saying that Mr. Smith is still prepared to have a two-year transition to majority rule in certain conditions? Has not the time now come for the Government to establish an authoritative British presence in Rhodesia, which would help to work out arrangements for the interim period, including arrangements for the election of an African leader for that period?
    Dr. Owen: I hope the hon. Gentleman is right in his interpretation of Mr. Smith's statement, but, as I understand it, the problem about that statement is that he was firmly tying the two-year majority period to the creation of an interim Government. That means a recipe for indefinite delay. The world—and certainly the British Government—expects a two-year period of majority rule to start from the time when Smith himself made these commitments. We ourselves have asked for majority rule to start from March 1976.
    Several hon. Members—
    Mr. Speaker: Order. I shall come to the Government Back Benches after I have called the other two hon. Members
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    whose Questions are being answered in this group.
    Mr. Hastings: Now that the Geneva initiative has indisputably failed, is not the only course to invite Rhodesia to produce its own solution and when something acceptable and reasonable has been put forward to seek to impose some form of plebiscite, perhaps with American help? In this connection, is not Bishop Muzorewa the most hopeful figure on the African side?
    Dr. Owen: It appears that the hon. Gentleman is advocating what is often called an internal solution. He will know that the United States Government have firmly said that they believe that this is not the way forward. That is also the view of the British Government. The problem is that Rhodesian opinion goes much wider than those who are currently in Rhodesia. What is at issue—[Interruption.] Hon. Members are entitled to their views. What we need is a stable solution that will last and not the production of something that does not meet the legitimate aspirations of the black people for black majority rule in a period of time after free elections. That is what is at issue.
    Mr. Brocklebank-Fowler: How does the right hon. Gentleman imagine that he will achieve what he calls a stable solution if he rules out the possibility of any discussions with Mr. Smith in Rhodesia on his forthcoming visit to Southern Africa, if he also rules out—as I understood from his earlier reply that he did—the possibility of permanent British representation in Rhodesia and if he also continues to refuse the possibility of some reference to the Rhodesian people to determine who should lead an interim Government of that country?
    Dr. Owen: The hon. Gentleman has assumed that I have ruled out three things that I have not ruled out. The first question is on a matter on which there is another Question on the Order Paper, and I should prefer to answer it when that Question is reached. The second question—whether it is the right time to establish a British presence in Rhodesia—I have not ruled out, although certainly I do not think it appropriate at present. As to the question of consulting Rhodesian opinion, that is very much one of the issues that one wishes to discuss.

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    This is best done if one recognises that Rhodesian opinion goes outside the immediate confines of Rhodesia. Many Rhodesians are outside Rhodesia. What we need is a settlement that will bring about the cessation of guerrilla action and produce peace and stability around Rhodesia's borders. That is one of the issues.
    Mr. Robert Hughes: Since Mr. Smith made a commitment to majority rule within two years, is it not the case that he has sought every opportunity to slide out of that commitment? Does not the statement yesterday lead to the final repudiation by Mr. Smith of majority rule within two years? In those circumstances, how can there possibly be a peaceful solution?
    Dr. Owen: My hon. Friend's reading of that statement is more accurate than the other interpretation. I hope that that is not the case. I certainly do not wish to rule it out myself. I wish to have discussions with Mr. Smith in Capetown. I hope that he will think very hard before he rules out the possibility of majority rule within two years, that is, majority rule in 1978.
    Mr. Hooley: Will my right hon. Friend's conversations with the front line Presidents include discussion of the possibility of an international peace-keeping force in Rhodesia—either a Commonwealth force or a United Nations force?
    Dr. Owen: I am perfectly prepared to consult and discuss any aspects, but it is a fact of life, whether we like it or not, that at present it would not be possible to put a United Nations peacekeeping force into Rhodesia. We have to accept realities, harsh though they may be. There may come a time, at a particular moment towards a peaceful settlement, when such a force could have a stabilising influence. I certainly do not rule it out of the question, but we shall look at it when the circumstances arise.
    Mr. Maudling: As what should matter to this House are the wishes of the people of Rhodesia, for whom we are responsible, why does the Foreign Secretary rule out an internal solution?
    Dr. Owen: I think that it is dangerous to talk about an internal solution. That is becoming a shorthand term for a solu-
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    tion that does not carry conviction with all those people who are representative of black nationalist opinion. That is the question. At this stage to rule out those black nationalists who are outside Rhodesia would be a recipe for continued violence and continued guerrilla activity around the borders. What is surely to be hoped is that black African opinion can be combined together to fight democratic elections inside Rhodesia under a supervised system that we can all respect. That is what I think all hon. Members on both sides of the House want to see.
    Mr. Thorpe: May we wish the Foreign Secretary success on his maiden voyage to Africa? Does he agree that the first thing that he must establish is whether Mr. Smith is still committed to African majority rule in two years? Is the right hon. Gentleman aware that this is not the first time that there has been ambiguity in the language of Mr. Smith on constitutional matters? Secondly, does the right hon. Gentleman agree that the whole lesson of the Monckton and Pearce Reports is that unless there is African consent any constitutional settlement will be doomed to disaster? Therefore, does he not agree that it is vital to have a referendum not only on choosing a leader for Rhodesia as a whole but on any interim agreement that is put forward?
    Dr. Owen: I agree that it is fundamental that there should be African consent. That was accepted by the Opposition when they were in Government. We have all recognised that this is the necessary ingredient for stability. I, like the right hon. Gentleman, hope that Mr. Smith really does mean majority rule in two years from when he first made that very important statement. I pay great tribute to Dr. Kissinger for having brought that forward. The danger that Mr. Smith now seems to be implying is that it runs only from when an interim government is established of which he has to be a part. That is a recipe for indefinite delay, and that would be unacceptable to world opinion and, I think, opinion on both sides of this House.
    Mr. John Davies: Does the right hon. Gentleman realise that his continual repetitive references to Rhodesians outside Rhodesia seem to put in question

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    the adherence to the fifth principle, which was that nothing of a settlement would be achieved without the consent of the Rhodesian people as a whole? That is surely the essential background upon which we are all based. In those circumstances, does the right hon. Gentleman not think that the suggestion made by my hon. Friends today, that we should now be sensible enough to realise that, whatever Mr. Smith thinks, we should have a presence in Rhodesia able to guide us on how to consult majority opinion, is really an essential? Does he not think that that would be the most welcome outcome of his own visit to Africa?
    Dr. Owen: I respect the way in which the right hon. Gentleman put his question. Concerning the Rhodesian people as a whole, I confirm that that is strongly my view. Whereas I was drawing attention to some people outside Rhodesia, we must never forget that the vast bulk of the population who need to be consulted are still within Rhodesia. They are also both white and black. I believe in a peaceful solution, and I wish to have a situation in which white Rhodesians would be happy to stay in Rhodesia and contribute to peace and stability there.
    Secondly, on the question whether we should have some form of permanent presence there, there are arguments over that. I am quite open-minded, and I have not closed the door to such a presence. There is no doubt that we are not as fully informed as we would wish to be about what has happened in Rhodesia. Some way in which this could be achieved clearly would be of benefit, but clearly it could not involve recognition of a régime that is illegal and is in rebellion against the Crown. However, were we to reach some firm agreement about this, I should be open-minded about it.
    Mr. Speaker: I allowed a much longer time than is normal on that Question, but we shall have to go quicker now.
    Mr. Brothertonasked the Secretary of State for Foreign and Commonwealth Affairs if he will visit Rhodesia.
    Mr. Rifkindasked the Secretary of State for Foreign and Commonwealth
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    Affairs which Heads of Governments he expects to meet during his forthcoming tour of Southern Africa.
    Mr. Dykesasked the Secretary of State for Foreign and Commonwealth Affairs what up-to-date progress he is abe to assess for a successful outcome of the constitutional crisis in Rhodesia in the context of his official visit to Southern Africa.
    Dr. Owen: As I told the House on 1st March 1977,
    "I for my part stand ready at any time to go anywhere and talk to anyone if I judge that it will make a genuine contribution for a peaceful settlement."—[Official Report, 1st March 1977; Vol. 927, c. 205.]
    I have no plans for visiting Rhodesia, but if the situation appeared to warrant it I would of course be prepared to go.
    Mr. Brotherton: The House will be delighted to hear that the right hon. Gentleman is prepared to go to Rhodesia. Would not now be a very suitable time for him to go, and would he not gain a great deal more from meeting Rhodesians, black and white, in Rhodesia than he will gain from meeting President Podgorny's friends, particularly President Machel, the harbourer, shelterer and comforter of the murdering guerrillas?
    Dr. Owen: I do not think that the hon. Gentleman makes a serious contribution to what is a serious issue. He knows that I am seeing people who hold all forms of opinion. He knows that in Cape-town I am seeing Mr. Vorster and that I shall see Mr. Smith. At this moment I do not judge it right to go to Rhodesia, but I do not exclude it. Much will depend on the circumstances, on the reception that I get and on what is said during the time that I am in Africa. All I hope is that Mr. Smith will not keep to the line that he appeared to be pursuing in his statement yesterday.
    Mr. Robert Hughes: When my right hon. Friend is in South Africa will he be seeing Sir David Scott, the British Ambassador, who in a recent speech in Capetown boasted of Britain's good will to South Africa to the extent that he said that the only four times that Britain has used its veto in the UN Security Council have been in favour of South Africa? If

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    that is a true reflection of the Government's position, it should be wholly condemned. If not, will my right hon. Friend bring back the ambassador permanently to this country?
    Dr. Owen: I shall be seeing the ambassador when I am in Capetown. I have read his speech. It has been misreported in a number of directions, not least in the direction to which my hon. Friend has drawn attention. As I understood it, it was a strong plea to opinion in South Africa to recognise strongly-held world opinion about the racial policies that were being pursued in South Africa and the need to make changes and to modify its position, so that its present policies on apartheid would not be as repugnant to world opinion as they currently are.
    Mr. Luce: Does the right hon. Gentleman agree that, whatever we may feel about Mr. Smith's record, he has over the past few weeks introduced measures designed to ease race tensions in Rhodesia in spite of European opposition? When he goes to Southern Africa will he acknowledge the introduction of those measures and give some encouragement to Mr. Smith?
    Dr. Owen: I welcome any step in the right direction. I must tell the House in all honesty that the difficulty that some people in Rhodesia seem to have found over the Land Apportionment Act is a gnat compared with what they will have to accept in majority rule. The resistance to the Act and the difficulty that some of them have found in respect of it does not augur well to a commitment to majority rule within the time scale that we are discussing. However, any movement is to be welcomed.

    Laos
    Dr. Glynasked the Secretary of State for Foreign and Commonwealth Affairs whether Her Majesty's Government intend to recognise the new régime in Laos following the arrest and detention of the King and his immediate family.
    Mr. Luard: The Government recognised the Lao People's Democratic Republic on 5th December, 1975. The reported arrest of the former King of
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    Laos, who abdicated in November 1975, does not alter the legal position.
    We have heard with regret and disquiet the reports of the ex-King's arrest, although no official announcement has been made.
    Dr. Glyn: I am grateful for that reply and for the fact that the Minister regrets that His Majesty has been a prisoner of the Communists. Is the Minister aware that His Majesty was a constitutional monarch who took no active part in politics within his country? In those circumstances, could the Minister use his influence with the provisional Government to secure the King's release and the release of his family, who are known to me personally?
    Mr. Luard: Unfortunately, the position at present is very obscure. We know little more than what we have learned from the reports that the hon. Gentleman seems to have read. We shall certainly see whether we can make inquiries and we shall express our concern about the ex-King's fate.

    Belgrade Review Meeting
    Mr. Sproatasked the Secretary of State for Foreign and Commonwealth Affairs what latest discussions he has had with EEC and NATO allies on the Belgrade review conference.
    Mr. Luard: Intensive discussions on preparations for the Belgrade review meeting of the Conference on Security and Co-operation in Europe are continuing in the political co-operation machinery of the Nine and in NATO. This subject will be considered at ministerial level on 18th and 19th April in the EEC political co-operation context and on 10th and 11th May in NATO.
    Mr. Sproat: Will the hon. Gentleman tell the House when it is expected that the main part of the Belgrade review conference will begin? Will he assure us that Her Majesty's Government, together with our allies in NATO and the EEC, will be pressing that the meeting, contrary to what the Soviet Union wants, is held at top political level and mainly in public, and not merely between officials and mainly in private?
    Mr. Luard: The preparatory meetings of the conference will be held at the end

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    of June and in July. It will then be decided exactly when the main conference will take place and how long it will last. At that stage the procedural matters that the hon. Gentleman has raised will be decided. I think that the House as a whole hopes that at least a part of the conference will be in public, when the strongly-held views of all members of the conference can be expressed, including opinion about all aspects of implementation of the Helsinki Agreement. However, most of us would also accept that more useful progress would probably be made if at least a part of the conference consisted of confidential discussions.
    Mr. Blaker: Does the hon. Gentleman agree that one of the most important objectives for the West at Belgrade is to make it clear to the Soviet Union that an interpretation of détente that enables it to go on subverting our societies and supporting change by violence throughout the world is not acceptable to the West?
    Mr. Luard: One of the main purposes of the meeting will be for all the Western members in particular to express their views about their interpretation of détente and the ground rules, for example, for peaceful coexistence between the two halves in Europe. I am sure that the hon. Gentleman's view will be expressed on that occasion. Most of us accept that detente is a complex process, which involves a number of aspects. The question of human rights is by no means the only aspect of concern, but it is one that many people will feel to be of the greatest concern to many Western countries.
    Mr. John Davies: Will the Minister use his influence, and encourage his right hon. Friend to use his, to ensure that the House is consulted on the preparatory steps for the Belgrade conference? Many Members on both sides feel that the House will necessarily have to be involved in the matter before the initial conference starts again.
    Mr. Luard: I understand the concern that must be widely felt in the House and that has been expressed by the right hon. Gentleman, namely, that the House should be involved in this process. I understand that there are some who feel that there should be a debate in the
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    House. That is primarily a matter for my right hon. Friend the Leader of the House. I shall draw my right hon. Friend's attention to the views that have been expressed.

    International Year of the Child
    Miss Joan Lestorasked the Secretary of State for Foreign and Commonwealth Affairs what positive steps are being taken by Her Majesty's Government to commemorate 1977 as the International Year of the Child as agreed by the United Nations.
    Mr. Luard: The United Nations has agreed to commemorate 1979 as the first Year of the Child.
    No decisions have yet been taken on the nature and extent of Government involvement, but it is our intention to participate fully in the commemoration of 1979 as the International Year of the Child.
    Miss Lestor: I thank my hon. Friend for that reply, but I remind him that there was a great deal of reluctance on the part of the British Government to commit themselves to participate in the International Year of the Child, as correspondence that I had with the Department before my hon. Friend was there will testify. Will he ensure that initiatives are taken by the Government so that human rights for children are recognised here and abroad, and will the Government act also in respect of race relations?
    Mr. Luard: Our reluctance, such as it was, concerned the nature of the commemoration, if any. I think that my hon. Friend will agree that in recent times there have been many "years" for this, that, or something else. Sometimes it has been questionable how much value was obtained for the cause in question. We were concerned that what took place would help children throughout the world. I take note of what my hon Friend says and I shall try to ensure that our contribution is of the sort to which she refers.
    Mr. Eldon Griffiths: Will the hon. Gentleman spare a little pity for the children of Cambodia? You will recall, Mr. Speaker, the admonition
    "Suffer the little children to come unto me."
    In that light, will the hon. Gentleman provide some help to the children who

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    have fled Cambodia into neighbouring countries, who need medicine and food now? Will he try to concert his policies with those of President Carter, whose stand on human rights has struck a chord in many parts of the world? Will he now do something about the problem of the children of Cambodia?
    Mr. Luard: I have already expressed the Government's profound concern at the appalling atrocities that have been reported from Cambodia over the past year or so. I agree that we should try to do everything in our power to ensure that adequate assistance is given to all refugees, including children. As the House knows, we have been contributing generously to the United Nations High Commission for Refugees, which has a programme designed to help refugees from Cambodia. We shall be giving £350,000 this year for that purpose.
    Sir Bernard Braine: Does the hon. Gentleman realise that the issue goes beyond refugee children? Is he aware that in some parts of the world—for example, Ethiopia—children are held in prison without trial? Will the hon. Gentleman grasp the opportunity that the Question offers him to reconsider this matter and to take a more positive stand against the treatment of innocent children in so many countries?
    Mr. Luard: I share the hon. Gentleman's hope that this occasion—the International Year of the Child, which has now been decided on—will be used as an opportunity to express the concern of the international community about children in the situation that the hon. Gentleman describes.

    Namibia
    Mr. Hooleyasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on his recent conversations with the United States Secretary of State so far as they concerned policy on Namibia.
    The Minister of State, Foreign and Commonwealth Office (Mr. Edward Rowlands): My right hon. Friend's discussions with Mr. Vance remain confidential, but there was a substantial measure of agreement on our approach to bringing about early self-determination and independence for Namibia.
    Mr. Hooley: Does my hon. Friend agree that the United States and Western Europe between them command enough economic power to compel South Africa to get out of Namibia, and that if it does not do so not only will the savage racial war escalate in that part of the world but it will bring a greater conflict in East-West relations and a danger to detente?
    Mr. Rowlands: I appreciate what my hon. Friend has said about the serious situations that may develop in Namibia and Southern Africa generally if South Africa does not change its policies. It has remained our position and it has been the position of the United States that we do not think that economic sanctions against South Africa will work.
    Mr. Peter Bottomley: Could the Minister publish at some stage the criteria that the Government produced for recognising an independent Namibia and say then, or now, whether the same criteria would apply to the Transkei?
    Mr. Rowlands: If the hon. Gentleman looks at the terms of Security Council Resolution No. 385, which lays down the views supported by all Western nations in the Security Council, he will see the terms and criteria that we would use. They certainly do not fit the Transkei.

    Lebanon
    Mr. David Watkinsasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on current relations between Her Majesty's Government and the Government of the Lebanon.
    Mr. Temple-Morrisasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on British relations with the Lebanon.
    The Minister of State, Foreign and Commonwealth Office (Mr. Frank Judd): We have close relations with the Government of the Lebanon and have assured them of our willingness to do all we can to help the reconstruction of the country and the return to stability after the tragic war.
    Mr. Watkins: Is my hon. Friend aware that that answer is very much to be welcomed? Is he also aware that it is estimated that there are at least 250,000

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    people in the Lebanon very severely disabled as a result of the civil war whom the Lebanon cannot help from its own limited resources? Will he give serious consideration to the possibility of British medical and rehabilitative help, if he has not already done so?
    Mr. Judd: Last year we provided £500,000-worth of humanitarian assistance. I shall certainly bring the point my hon. Friend has just made to the attention of my right hon. Friend the Minister of State for Overseas Development.
    Mr. Temple-Morris: Is the Minister aware that the Lebanese Government have made it clear that there is a desperate need for technical assistance from us and that they have discounted financial assistance? Is he also aware that Her Majesty's Ambassador, together with engineers, recently visited the docks in Beirut, which were grievously damaged in the civil war? Will he assure us that every effort will be made to give British technical assistance to what is an outstandingly important commercial centre and a centre for free enterprise and the Western world in the Middle East?
    Mr. Judd: I am grateful to the hon. Gentleman for that point. I assure him that in the aid we are providing technical co-operation is a priority. We shall be carefully considering what we can contribute to reconstruction.

    Falkland Islands
    Sir Nigel Fisherasked the Secretary of State for Foreign and Commonwealth Affairs whether discussions with the Government of the Argentine about the future of the Falkland Islands have begun; whether they include the issue of sovereignty; and if he will make a statement.
    Mr. Michael McNair-Wilsonasked the Secretary of State for Foreign and Commonwealth Affairs if he will bring forward proposals for consulting the people of the Falkland Islands about their future relationship with the United Kingdom.
    Mr. Ridleyasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement about
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    Her Majesty's Government's policy towards the Falkland Islands.
    Mr. Rowlands: As I told the House on 1st March, we are considering whether negotiations on the future of the Falkland Islands including sovereignty might take place. No negotiations have yet begun but if they do there will be full consultations with the islanders.
    Sir N. Fisher: Will the Minister go rather further than that and confirm that there will be no change in the sovereignty of the Falkland Islands without the full consent of the islanders, and that no pressure will be put upon them by the Government to accept any such change against their wishes?
    Mr. Rowlands: If the hon. Gentleman reads the Official Report of the debate on 1st March and the full statement that I made in response to questions he will realise that we have given very full assurances. I went so far as to say that the Government would not bring proposals to the House if they were not acceptable to the islanders.
    Mr. McNair-Wilson: Is the hon. Gentleman aware that the Foreign and Commonwealth Secretary said that the question of sovereignty would be decided in this House? Will he now give an assurance that the people of the islands will be given the chance of a referendum before any change of sovereignty is envisaged?
    Mr. Rowlands: We have not even begun to negotiate yet, let alone have proposals which might be brought before the islanders or the House. It is therefore premature to anticipate in what form consultations can take place. We did not discuss this with the islanders when I went there. Clearly, this matter will come up, and how consultations will take place at a later stage will certainly be considered.
    Mr. Jay: Do I understand my hon. Friend's statement today to mean that no change will be made without the express consent of the people in the Islands?
    Mr. Rowlands: As I have told the House over and over again, we certainly shall not bring forward any proposals which are not acceptable to the islanders,

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    and they must obviously receive the consent of this House.
    Mr. Tapsell: Will the hon. Gentleman confirm, so as to allay some anxieties stemming from Press reports, that it is impossible for Argentinian business interests to gain control of the land of the Falkland Islands, because this requires the authority of the Secretary of State, which would certainly be withheld?
    Mr. Rowlands: I would rather clarify the point that the hon. Gentleman is making. First, no land on the Falkland Islands can be alienated without the permission of the Falkland Islands Government, which is hardly likely to be forthcoming. Secondly, the British Government would not support such a move.
    Mr. Whitehead: In view of the widely authenticated reports on the systematic suppression of human rights in Argentina, which my hon. Friend may have seen—the Amnesty report and others—does he think that this is an appropriate moment to enter into any kind of negotiations with that Government about the possible transfer of sovereignty over the Falkland Islands?
    Mr. Rowlands: We all deplore abuses of human rights, wherever they occur. Nevertheless, the welfare interests of the islanders require our discussing these matters with the Argentinian Government.
    Mr. Thorpe: Will the Minister say what aspect of sovereignty is negotiable?
    Mr. Rowlands: This is one of the major difficulties of apparently reconciling the almost irreconcilable. Until we have had some discussions and negotiations, I could not forecast what their outcome might be.
    Mr. Donald Stewart: Will the Government help the islanders in their present economic situation by making a decision to extend the airport runway, and incidentally help them to preserve their status?
    Mr. Rowlands: The extension of the runway, costing more than £5 million on current estimates, is a serious and important project, but it seems to us that on present evidence it would be hard to
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    justify it. It could bear very heavily on the current revenue problems of the Islands. We have not closed the door to the project, but we need more convincing that it is viable.
    Mr. Skinner: Will my hon. Friend on all occasions please refrain from using the phrase "whole-hearted consent"? We do not want to deceive the Falkland Islanders in the manner in which the ex-Leader of the Tory Party tricked this nation and dragged it into the Common Market.
    Mr. Rowlands: I should not dream of using the undesirable terminology of Conservative Members.

    Human Rights
    Mr. Formanasked the Secretary of State for Foreign and Commonwealth Affairs what action Her Majesty's Government intend to take in the light of his public pronouncements on the human rights aspect of foreign policy.
    Dr. Owen: We will systematically take human rights considerations into account and give a high priority to them as part of the many factors that have to be considered when making foreign policy decisions. Our aim will be to protect and enhance human rights everywhere and we shall take whatever action, private or public, we consider will be effective.
    Mr. Forman: In view of the considerable stress the right hon. Gentleman laid in his speech on 3rd March on striking the right balance between morality and reality, will he now publish his Department's league table of human rights in different countries in the world, so that the House may more accurately assess the way in which the Government are responding to, say, Chile and South Africa on the one hand and the Soviet Union and Czechoslovakia on the other?
    Dr. Owen: I do not intend to publish the list. This was one of the considerations that we had to take into account when we decided to look systematically at the question of human rights. We had to consider whether the mere existence of such a list would cause problems in relationships between the British Government and other Governments. The decision was taken to have the list as

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    the only way of being serious about human rights, on the strict understanding that we would not publish it. That was decided after very careful thought, and it remains my decision.
    Mr. Ioan Evans: As my right hon. Friend is to meet Dr. Vorster, will he convey to him privately or publicly our abhorrence of the apartheid system in that area, the occupation of Namibia, and the support that he is giving to the illegal régime in Rhodesia?
    Dr. Owen: Some things are private and some things are public. My abhorrence of apartheid is public, and I shall state it wherever I am.
    Mr. Maudling: In the light of that answer, what action will the right hon. Gentleman take about those British subjects at present imprisoned in Angola for no crime known to international law?
    Dr. Owen: It is important to try to get our relations with Angola on a better footing. That is certainly something that I wish to do. Many representations have been made about this issue, so far unsuccessfully. I think that the overall object is to improve our relations with Angola, and then some consequences may flow from that. I certainly understand the right hon. Gentleman's concern, which I share.
    Sir D. Walker-Smith: Does the right hon. Gentleman's reference to action everywhere include action within the European Economic Community, in regard both to bringing proper pressures to bear outside and to work on the possible formulation of a charter of rights in the socio-economic context within the Community, following the generalised action taken by the common declaration of the three political institutions of the Community?
    Dr. Owen: A lot of work has been done on the common declaration. which I am due to sign formally in Brussels on 5th April. I hope that we look at human rights everywhere, not excluding the EEC. The price of championing human rights is a little inconsistency at times. There will be occasions when there is a strong case for public denunciation but when, for a variety of reasons—economic, political and social—the
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    denunciation may need to be done privately. Therefore, we shall not always be consistent. No doubt Mr. Bernard Levin will have something to say about the alleged inconsistencies.

  EUROPEAN COMMUNITY

    Heads of Government
    Mr. Skinnerasked the Secretary of State for Foreign and Commonwealth Affairs when he next expects to meet the EEC leaders; and if he will make a statement.
    Dr. Owen: At the next meeting of the Foreign Affairs Council, which will be held in Brussels on 5th April.
    Mr. Skinner: Will the Foreign Secretary tell the EEC leaders that the United Kingdom Parliament is having a free vote not only on the method of direct elections but on the principle? Taking account of the fact that half the Labour Back Benchers have declared themselves against the principle of direct elections, will the Foreign Secretary accept that if he wants to get this legislation through he will need more than just a Labour-Liberal alliance; he will need a Tory one as well?
    Dr. Owen: I accept that my hon. Friend is the first to advocate a belief in national independence within the EEC—
    Mr. Skinner: I am advocating that we get out.
    Dr. Owen: I do not believe that my fellow Foreign Ministers are interested in the procedure that we adopt. They are interested in our using our best endeavours to keep to the May-June 1978 target date.
    Mr. Walters: Will the Foreign Secretary bear in mind the enormous political importance of the Middle East to Europe, and does he agree that it is preferable that European policy on this issue should be in advance of that of the United States? After President Carter's statement on a national home for the Palestinians, is there not a danger that we are trailing behind? Will he discuss this when he next meets EEC leaders?
    Dr. Owen: It is important that there should be a peaceful solution to the Arab-Israeli dispute. One does not pursue that objective by talking about being in advance of or trailing behind the United States. We want a rational, positive policy. That objective has been broadly maintained, and it has been helped by the EEC forming a view of Middle East problems and keeping in close liaison and in general agreement with the United States. I do not see us either in advance of or behind the United States; I see us working together with them.
    Mr. MacFarquhar: If we are unable, even using our best endeavours, to hold direct elections in May or June of next year, will it not cause our European partners not only to be unhappy with us, but to set back their own direct elections?
    Dr. Owen: The Council decision made it clear that elections in the nine countries would proceed simultaneously over a four-day period. That decision would have to be changed if we were unable to stick to the target date and there was to be a go-ahead in other countries. Our partners expect us to use our best endeavours, but many other member States are finding difficulty in their legislative processes. Each member country must look after itself in these matters and each tries genuinely to honour any agreement to which it has put its name.
    Mr. Watt: When the Foreign Secretary next meets his EEC colleagues, will he impress upon them the sense of frustration felt among the leaders of the fishing industry? Unless the EEC agrees quickly to a 50-mile conservation zone around Britain, the EEC ports will be blockaded not only by French boats but by Scottish boats as well.
    Dr. Owen: There was a debate in the House on Monday night, and the Minister of Agriculture, Fisheries and Food will make a statement later today about the Council meeting. His actions and the Government's actions over the last year or so, when negotiating these matters, show that we are perfectly prepared to stand up robustly for justified British interests. We have never disguised our dissatisfaction with EEC policies on fishing, agreed in 1970.
    Mr. Marten: In view of the very poor performance of the Common Market
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    compared with the hopes of those who voted for our entry, will the Foreign Secretary welcome the setting up of a Select Committee, evenly balanced between hon. Members who are for and those who are against our membership, to go into the worthwhileness of our membership, or will he not dare to do so?
    Dr. Owen: I am always in favour of Select Committee procedure. I think that it adds to the scrutiny of the Executive by the legislature. However, I think that that issue was put to the British people and they answered it decisively.

    Direct Elections
    Mr. Arnoldasked the Secretary of State for Foreign and Commonwealth Affairs what recent discussions he has had with his EEC colleagues on progress towards direct elections.
    The Under-Secretary of State for Foreign and Commonwealth Affairs (Mr. John Tomlinson): There has been no recent discussion of direct elections in the Council of Ministers.
    Mr. Arnold: Has not grave damage already been caused to Britain's reputation and interests within the EEC by the delay in bringing forward a Bill for consideration by the House? With the possible exception of Belgium, all other countries are well ahead of us in their preparations for direct elections.
    Mr. Tomlinson: I do not accept that at all. More damage has been done by Conservative Members being obsessed with the belief that we are doing ourselves damage. The Government's position is clearly understood. In fact, I think that it is more clearly understood by our Continental partners than by Opposition Members.
    Mr. Spearing: When the Minister mets his colleagues in the Council, will he make clear that so-called hard-line resistance to the EEC does not encompass opposition to genuine international co-operative measures? Does he agree that no official Government White Paper or statement has outlined any obligation to direct elections at all, and that there is every reason for doubt about this matter?
    Mr. Tomlinson: Whereas I agree with the first part of my hon. Friend's observations, I strongly disagree with the second part—
    Mr. Spearing: It is a fact.
    Mr. Tomlinson: My hon. Friend may have a loud voice but his shouting does not change the fact that implicit in a positive vote in the referendum was a commitment to our treaty obligations, which include direct elections.
    Sir A. Meyer: Since the Government's deal with the Liberals irrevocably means a commitment to holding direct elections, will the Minister dispel the unworthy belief that the Government are deliberately postponing a decision on the method of election until it is too late to have any method other than an ignoble kind of gerrymandering to safeguard the Labour Party?
    Mr. Tomlinson: That is not even worthy of the hon. Member. It is the Government's intention to publish a White Paper soon and then put the matter to the House.
    Mr. Roy Hughes: Does my hon. Friend agree that the British people have no desire to go any further into the quagmire that is the Common Market? They remember the days of the referendum with nostalgia. That was when unemployment was a mere 800,000 and butter was 20p a pound. Unemployment has now reached 1,300,000 and butter is 50p-60p a pound.
    Mr. Tomlinson: Much as I admire and respect my hon. Friend, I fear that, even as in the past, his judgment does not accurately reflect that of the people of this country.
    Mr. Farr: Will the Minister confirm that there is some perplexity in Britain on the voting pattern in direct elections? Will he explain how anybody can start a system in which the vote of a Member of Parliament from, say, Britain will be worth only one-fifth or one-quarter of a vote by a Member of Parliament from, say, Belgium or Luxembourg in the new directly-elected Assembly? Is that not wrong, and is there not something that the Foreign Secretary can do forthwith in the Council of Ministers before we go wholeheartedly into this scheme?
    Mr. Tomlinson: Obviously all matters concerning figures were discussed fully before we entered into our agreement. I am sure that the hon. Gentleman, on reflection, will agree that the figure that he gave suggesting that the vote of a United Kingdom Member will be worth only one-fifth of the vote by a Belgian Member was totally wrong and misleading.
    Mr. Jay: Since the subject of direct elections is of major constitutional importance, should there not be a free vote in this House on the principle of direct elections?
    Mr. Tomlinson: I note what my right hon. Friend says, but obviously that is a matter for other people than myself.
    Mr. John Davies: Does the Minister realise that his reply to his right hon. Friend the Member for Battersea, North (Mr. Jay) may cause a great deal of confusion, particularly as it conflicts with the robust assertion of the Government's intentions on the whole issue of direct elections? Does he not also appreciate that the Government's unqualified acceptance of the principle of direct elections, enunciated by the Prime Minister, commits the Government beyond all question and should not be subject to subsequent revision?
    Mr. Tomlinson: I repeat that that is a matter for other people than myself. My right hon. Friend the Prime Minister made the position quite clear in his statement to the House.
    Mr. George Gardinerasked the Secretary of State for Foreign and Commonwealth Affairs what steps he has taken to ascertain the progress that other EEC member States are making in preparing for direct elections to the European Parliament in May/June 1978; and what has been the outcome of these inquiries.
    Mr. Tomlinson: The Government are keeping themselves closely informed of the progress in member States. Some have introduced legislation to adopt the Community agreement on direct elections in accordance with their respective constitutional requirements; but none has yet introduced legislation covering the holding of the elections.
    Mr. Gardiner: May not the Minister find himself further behind the preparations of his European colleagues if, in introducing legislation on direct elections, the Labour Government deny the principle of single member representation so as to make enemies of many pro-Europeans, who hitherto have been pledged to support such legislation?
    Mr. Tomlinson: No, I do not accept that.
    Mrs. Dunwoody: Is not the question of direct elections a matter of monumental unimportance to the European Community? Should we not instead be considering the political implications of the Greek and Portuguese attempts to enter the Community before we bother with any further ridiculous fetishes that will produce a totally unrepresentative Assembly that is incapable of representing the views of the British people?
    Mr. Tomlinson: Having answered a number of questions put by my hon. Friend in the European Assembly at Strasbourg, I know her views, but I disagree with her views on this matter as expressed in Westminster as much as I disagree with them when they are expressed abroad.
    Mr. Dykes: What are the three main advantages of the PR regional list system of European direct elections?
    Mr. Tomlinson: That is a matter for each Member of the House when the proposals emerge.
    Mr. Raphael Tuck: A few moments ago the Minister said that it was implicit in the terms on which we joined the Community that there would be direct elections. He did not say that it was explicit. Will he quote any speech or anything in writing from which it can be understood that there shall be direct elections?
    Mr. Tomlinson: I should hate to quote from my own speeches, but I can refer my hon. Friend to those if he wishes. If he gave me notice of the question I could find other references as well.

    Passports
    Mr. Martenasked the Secretary of State for Foreign and Commonwealth Affairs if he will make a statement on the latest proposals for a Europassport.
    Mr. Judd: I refer the hon. Member to the Written Answers that my right hon. Friend gave to the hon. Member for Richmond, Surrey (Sir A. Royle) and the hon. Member for Bury St. Edmunds (Mr. Griffiths) on 2nd February. Since that time the uniform passport has been discussed in the European Community Working Group on Passport Union but several outstanding issues remain to be resolved.
    Mr. Marten: Will the Minister now give a definite assurance on this matter, unclouded by Foreign Office verbiage? In the exercise of the Royal Prerogative, will he refuse to agree to the imposition of a Europassport until this House has taken a decision on the matter? In giving his reply, will he refrain from using words such as "desirable" or phrases such as "This is a matter for the Leader of the House"? We should like a firm assurance that no action will be taken to finalise the matter until we have debated it and decided it.
    Mr. Judd: I agree in the most categorical terms that the House should have an opportunity to discuss the matter. The timing of the debate must be a matter for my right hon. Friend the Leader of the House.
    Mr. Heffer: Why cannot my hon. Friend say that the House of Commons "will" have such a debate and "will" take a decision? In view of the fact that there is no demand whatever among British people for this course, can we not tell our partners in the Common Market "Forget it"?
    Mr. Judd: I assure my hon. Friend that nobody understands more than I do the strong feeling in this House on this matter. I give him my absolute word that what he and others have said has registered with us. We shall make sure that the House ought to have this opportunity, but the timing of the matter lies with my right hon. Friend the Leader of the House.
    Mr. Eldon Griffiths: Is not the standardisation of travel documents far less important than the harmonisation of policies in Europe? Will the Minister leave the British passport alone and concentrate instead on making Britain a good citizen of the Community rather than the

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    leading backslider that it is now becoming?
    Mr. Judd: We believe that we can do nothing but strengthen the Community if we make sure that agreements reached by the Community, in whatever sphere of policy, genuinely reflect the interests of all the members of the Community and the British people, who are as much a part of the Community as is anybody else.

    North-South Dialogue
    Mr. Spearingasked the Secretary of State for Foreign and Commonwealth Affairs what arrangements have been made by the Council of Foreign Ministers of the EEC to co-ordinate policy in respect of the North-South dialogue.
    Mr. Judd: The Foreign Affairs Council on 8th March reviewed the Community's position in respect of the North-South dialogue. A common opening position for the Common Fund Negotiating Conference was agreed. The Foreign Affairs Council on 5th April will further co-ordinate the Community's position on the major issues arising in the CIEC, in which the Community participates as a single delegation. Meanwhile, the process of co-ordination is continuing at official level both within the Community and with the seven other industrialised countries participating in the CIEC.
    Mr. Spearing: My hon. Friend did not mention the Council of Ministers, on which we had a statement earlier this week. Is he aware that the Prime Minister drew a distinction between plans for "a" common fund and plans for "the" common fund? Will he say where any citizen of the EEC can find a specific authoritative statement dealing with what the Heads of State agreed, and what is the EEC's attitude to a common fund?
    Mr. Judd: I am sure that my hon. Friend, with his usual careful attention to detail, will have scrutinised what the Prime Minister said in his statement after returning from Rome. It is clear that we are committed to working towards international commodity agreements and, as a Community, are prepared seriously to examine the rôle of a common fund in fulfilling that programme.
    Mr. Blaker: The Minister will recall that the Prime Minister has made clear
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    that the Community proposes to call on countries of Eastern Europe to make a more adequate contribution towards development aid. How does the Community propose to undertake that task?
    Mr. Judd: I assure the hon. Gentleman that we are concerned that Eastern European countries have not been pulling their weight in this respect. We must now work out precise techniques to make the point clear.
    Mr. Hooley: What is the EEC's attitude towards expanding the resources of the World Bank?
    Mr. Judd: In our general approach to development matters, I must remind my hon. Friend that we are the second largest contributor to the World Bank. That remains our position within the Community and outside.
    Mr. Tapsell: Is the Minister aware of the extent to which Third World opinion is concerned by the degree to which the EEC, together with North America, is pre-empting the fossil fuel resources of the world while at the same time making it difficult for nuclear power to be made available to the Third World? Will he draw the attention of his EEC colleages to this problem?
    Mr. Judd: I assure the hon. Gentleman that members of the EEC are well aware of this problem and give a great deal of time to considering the matter in depth, and that they will see how a fair and equitable policy can be worked out in the interests of the developing countries as well as of the industrialised world.
    Mr. MacFarquhar: As well as being concerned with the aid effort from Eastern Europe, is not the EEC equally concerned with the aid effort from Japan? Will he take the opportunity, when he next meets Japanese Foreign Ministers, of suggesting that much of the disagreement on trading matters between Europe and Japan could be mitigated if Japan were to assume some of the aid burden within the world?
    Mr. Judd: I recognise the force of what my hon. Friend has said, but that is a matter for the OECD and the Development Assistance Committee within the OECD.

MANOR HOSPITAL, EPSOM (DISPUTE)
Sir P. Rawlinson(by Private Notice) asked the Secretary of State for Social Services if he will make a statement concerning the situation at the Surrey hospitals arising out of the denial to the hospitals of food and fuel necessary for the well-being of the patients.
The Minister of State, Department of Health and Social Security (Mr. Roland Moyle): I am informed that the difficulties stem from work rosters for domestic staff at the Manor Hospital, Epsom. These were agreed and implemented by members of the other unions concerned but proved unacceptable to a few members of the Transport and General Workers' Union. After considerable discussion, 30 members of this union were eventually suspended on full pay at the end of February, but the suspension was lifted on 21st March on the understanding that staff would then return to work. As, however, they were still unwilling to accept new rotas, they received notice of dismissal as being in breach of contract.
The 30 domestic workers were joined by about a dozen catering staff and pickets were established. Action spread to another four hospitals in the mid-Surrey health district. Although this action was unofficial, TGWU officials discussed the problems with local management late last week but felt unable to accept a temporary solution or a formal approach to the Advisory, Conciliation and Arbitration Service unless the area health authority first reinstated the 30 staff and agreed to restore the former rotas. Management was reluctant to accept this latter course, which would in any case have had to be put to the other staff who are content with the new arrangements.
Interruptions to supplies gave rise to fears for the well-being of patients, and preliminary steps were taken by the area health authority to seek an injunction to restrain allegedly illegal picketing. On Monday the Transport and General Workers' Union declared the dispute official.
In view of the apparent risk to the health and welfare of patients, my right
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hon. Friend the Secretary of State decided to intervene in order to cool the situation, to protect patients' interests and to get talks going again. He took three steps. First, at my right hon. Friend's suggestion the chairman of the area health authority called the parties together yesterday. Secondly, again at my right hon. Friend's suggestion, the chairman agreed to defer action on the application for an injunction in relation to picketing. Thirdly, my right hon. Friend asked the Transport and General Workers' Union for its part, to assist in cooling the situation by ensuring that picketing was peaceful and avoided action that would put the health of patients at risk. The union gave an assurance that action along these lines was already being taken.
In this connection, my right hon. Friend and I deplore the savage personal attack that was made yesterday by a certain newspaper on the General Secretary of the Transport and General Workers' Union, Mr. Jack Jones. Mr. Jones has a fine record of campaigning in the cause of the elderly and in relation to this dispute has done nothing to conflict with that record. Officials of the union have taken steps to ensure that picketing is kept within the proper bounds and that essential supplies are allowed through. This is entirely in line with the request made by my right hon. Friend the Secretary of State yesterday.
Following my right hon. Friend's initiative, talks took place yesterday and a joint statement was issued last night by the area health authority and the Transport and General Workers' Union in the following terms:
"An agreement has been reached on immediate appointment of a mediator through ACAS to look into the dispute in the domestic department at the Manor Hospital, Epsom. A further meeting has been arranged for tomorrow, Wednesday at 5.0 p.m. in an effort to reach a final and satisfactory agreement."
It would not be helpful for me to make any further comments while negotiations continue, but I am advised that although about 100 staff are still taking action essential supplies are now reaching the hospitals concerned, and I am assured that there is no immediate risk to patients. I shall continue to keep in close touch with the situation.
Sir P. Rawlinson: Is the Minister aware how abhorrent it is to members

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of the public and to many members of other unions working in these hospitals that a mere duty roster dispute should lead to suffering for some of the most unfortunate people in our society—the very old, the young and the mentally deficient?
Will the hon. Gentleman confirm that there have not been serious breaches of the law, as many people have suspected? What did he mean by saying that somebody will ensure that the picketing will be peaceful? Is not all picketing meant to be peaceful, and why has picketing that was not peaceful been tolerated at any time?
Mr. Moyle: Naturally an industrial dispute in the National Health Service is to be deplored, but the right hon. and learned Gentleman should concentrate on the fact that the parties are meeting to try to resolve the dispute. He should not make the situation worse by raking up what might have happened in an earlier part of the dispute. It is important that picketing is peaceful, and the right hon. and learned Gentleman should concentrate on the fact that that has been achieved.
Mr. Skinner: Does my hon. Friend agree that it takes two to create a dispute and that it will need two to strike a reasonable bargain? Does he agree that the right hon. and learned Gentleman and members of a party that has been clamouring for the massive expenditure cuts that have resulted in the run-down of mental health hospitals and the impossibility of building others should be the last people—together with parts of the media—to raise such a clamour now and to demand further public expenditure cuts at the same time?
Mr. Moyle: It has always been my experience that it takes more than one person to make a dispute, but negotiations and discussions are proceeding and we should leave the parties to get on with it.
Mr. Mather: Is the Minister aware that hospital authorities at Schiff Hospital in my constituency were given 24 hours' notice by unofficial strikers to evacuate patients? Does he realise that the patients include geriatric and serious post-
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operative cases? The strike has subsequently been made official.
Does the Minister condemn such action? Can he say whether the normal procedures for appeal against dismissal exist in area health authorities and whether there is subsequent right of appeal to industrial tribunals? If so, why has the procedure been bypassed?
Mr. Moyle: An appeal on grounds of unlawful dismissal or anything else, outside the Whitley Council machinery or any other machinery in the Health Service for the resolution of disputes, is a last resort. We should make every attempt to ensure that disputes are settled within the organisations in which they occur.
As for the action that has been taken. I do not think that condemnation will help. The important thing is that the parties will now get round the table to discuss the issues, and that is the way that we should encourage things to develop.
Mr. George Gardiner: Does the Minister accept that many of my constituents who have relatives in these hospitals will be grateful to the British Press—notably the Daily Mail—for drawing the attention of Mr. Jack Jones to the crimes against humanity being committed in the name of his union? Should we not be grateful that there is a free Press in this country that is prepared to champion the rights of innocent patients who are being used as pawns in what seems to be a routine industrial dispute?
Mr. Moyle: In respect of one particular newspaper report yesterday, I have no hesitation in saying that it did not help the resolution of the dispute at all. The leadership of Mr. Jack Jones in solving the dispute has been nothing but helpful.
Dr. Vaughan: Does the Minister accept that in the eyes of many people the Secretary of State's intervention has been both too late and inadequate? Is it not quite appalling that a section of the community that is least able to defend itself should be exposed to such behaviour? Will the hon. Gentleman condemn clearly, simply and unequivocally such behaviour affecting the care of the sick? Does he think that the structure of the trade union negotiating

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procedures is adequate for health matters, and will he look into this?
Mr. Moyle: On the question about the machinery for trade union negotiation, trade unions and management are negotiating and that is the essential point. As for the Secretary of State's intervention, it was nicely timed and wholly adequate in that it achieved everything that it set out to do and got the dispute back on to the right lines again.

EUROPEAN COMMUNITY (AGRICULTURE MINISTERS' MEETING)
The Minister of Agriculture, Fisheries and Food (Mr. John Silkin): With permission, Mr. Speaker, I wish to make a statement about the Council of Agriculture Ministers which met in Brussels from 25th to 29th March. My hon. Friend the Parliamentary Secretary represented the United Kingdom.
The Council did not reach agreement on Community agricultural support prices for 1977–78, and discussion will be resumed at the next meeting in Luxembourg on 25th and 26th April. The consequence is that the EEC common support prices and the United Kingdom's guaranteed price for milk and the target price for beef under the beef premium scheme remain unchanged for the present. At the request of France, Ireland and Italy the Council accepted changes in the green currencies of those countries.
Eight member States would have been able to agree on a final package of changes from the Commission's original proposals, including slightly bigger price increases. In a long and hard session, my hon. Friend maintained that we should be prepared to accept the changes in common prices and a small devaluation of the green pound only if there were adequate compensating action of food prices in the United Kingdom. In this connection the United Kingdom put forward proposals for a butter subsidy which would have achieved this and also helped to dispose of part of the Community's expensive butter surplus. Unfortunately the final package did not offer sufficient advantages to the United Kingdom and we were, therefore, not prepared to accept it.
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The Council also considered measures for the establishment of catch quotas for fish and other control measures in certain areas of the waters of member States. As my hon. Friend the Minister of State explained to the House on Monday evening, the United Kingdom could not agree to these measures, which would have adversely affected our rights in United Kingdom waters.
Mr. Peyton: Is the right hon. Gentleman aware that I made clear in the House on Monday that we regard the fish proposals as unacceptable? However, will he tell us what he would be prepared to accept? It is hard for us to see who has gained anything from this rather prolonged and obviously bitter argument. What is the cash amount separating what the right hon. Gentleman has been offered on the butter subsidy by the Council of Ministers and what he has been asking for on behalf of the Government?
Does the Minister realise that his statement will be particularly distressing for the producers of pigmeat, whose problems are still in the air despite the almost calamitous reverses they have suffered in recent months, and for the producers of beef, who will face some serious consequences as a result of the further devaluation of the Irish green pound? Does he realise that, although he may have a difficult task in his negotiations, the producers feel that he has consistently let them down?
Mr. Silkin: It is difficult to say exactly what one would accept in a package when it contains about 40 different regulations. As the right hon. Gentleman and those of his colleagues who have negotiated in Brussels know, the package must be accepted in its entirety. Once one starts disentangling it and saying that one is prepared to accept this or that, no one accepts anything. The package as a whole was unacceptable for the simple reason that what was being offered to the United Kingdom, which alone among the Nine had an interest in preserving prices at the most reasonable level for producers and consumers, was totally out of proportion to the price that would have been paid.
The right hon. Gentleman asked about only one part of the package. The final offer on butter was that there would be

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a subsidy, averaged over the year, of 7p a pound to the United Kingdom for a price that was at least 50 per cent. higher than that. I did not regard that as a very good deal for us.
I understand the difficulties of producers. I have checked the records, and if an agreement had been reached in Brussels it would have been the quickest agreement ever reached by the Council of Ministers. The Commission brought forward its proposals two or three months later than usual, and we had to go to the European Assembly for its view only a day before the five-day marathon in which we were engaged. It was always going to be difficult, but I was not without hope that we might have been able to come to an agreement. However, we could not do so.
We were at least able to end one fairy story that I hope will never be repeated—namely, that all we had to do was offer a devaluation of the green pound and the pigmeat mcas would be recalculated. The Danes made clear that, whatever we did on the green pound, they regarded a recalculation of the pigmeat mcas as intolerable.
Mr. Peyton: On that last point, did not the Minister miss an opportunity last autumn of securing a renegotiation of pigmeat mcas? Will he answer my question about the cash amounts separating what was offered on the butter subsidy and what he was asking for? Am I right in thinking that it amounts to about ¼p? Is that not a rather small amount compared with the effect of some of the Budget proposals on fuel oil and petrol?
Mr. Silkin: One must look at the package as a whole. It contained many other things, including no change in the calculation of pigmeat mcas. While we might be willing to accept some parts of the package, we were not able to accept it all. The cash difference at the end of the day remained very considerable.
On the right hon. Gentleman's point about a green pound devaluation affecting pigmeat mcas last autumn, it is not customary to reveal the details of conversations with other Ministers, but I think that the right hon. Gentleman has got it wrong.
Mr. Jay: Is my right hon. Friend aware that he will both deserve and receive the overwhelming support of the British public if he continues to resist uncompromisingly the crazy proposals of this ridiculous organisation?
Mr. Geraint Howells: May I express my admiration and congratulations to the Minister for his stand on the butter issue? The price of butter has increased by 55 per cent. in the last 12 months, and it cannot go on. Does the right hon. Gentleman agree that six months is too long to finalise prices in the annual renegotiations, and does he think that confidence will ever be restored if we carry on with this practice? What proposals has he to help beef producers who will lose up to £30 if they sell their cattle in April?
Mr. Silkin: I freely admit that it is difficult for the beef producers. I am afraid that there is nothing that I can say about that situation. It is the inevitable result of the price negotiations not having been completed. The precedents show that they are seldom completed in March, but I know that is not much consolation. We shall have to see what we can do.
Regarding the time element, I think that the hon. Gentleman was referring to the transitional steps on butter. These are laid down in the Treaty of Accession which, after all, is the basis on which we entered the Common Market. They are totally and utterly immutable.
Mr. Welsh: Given that the right hon. Gentleman is outnumbered eight to one in Europe, is it not really a case of "We're a' oot o' step but oor Jock Silkin"? What real chance is there of agreement next month or the month after, since our farmers have to deal with last year's prices to meet this year's costs? Will the right hon. Gentleman give a firm assurance that devaluation of the Irish green pound will not continue to have a harmful effect on the Scottish market? What steps can he take to protect Scottish beef farmers?
Mr. Silkin: On the last question, I do not know; we shall have to wait and see. The effect of the devaluation of the Irish green pound, which was quite a large devaluation, will mean that Irish beef will tend to find its way into markets in Europe other than our own. Therefore, that part of the competition will not take place. However, we shall have to wait and

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see. This is the possibility. If the hon. Gentleman cares to wait and see and be a little patient, we shall have more evidence of what happens. I take it that even the hon. Gentleman would not have devalued the United Kingdom green pound to the same extent as the Irish green pound has been devalued. If he would, that would be one of the many reasons for which I should thank God for a Labour Government.
Mr. Buchan: I hope that my right hon. Friend will accept the congratulations of most hon. Members in this House and of people in the country as a whole who regard his conduct and that of the Parliamentary Secretary as in marked contrast to the supine nature of the conduct of negotiations between 1970 and 1972 and, for that matter, the renegotiation in 1974. Does he agree that behind that lies the whole question of tine end price obsession of the common agricultural policy and the consequent creation or surpluses which flow from it, with which the Opposition are also obsessed, rather than the proper expansion of British agriculture?
Mr. Silkin: It is a question of the end prices. That is why we have a butter mountain of 200,000 tonnes and why, unless steps are taken now, it will grow and grow until nobody knows what on earth to do with it and we see the end of this policy.
Mr. Peter Mills: Will the right hon. Gentleman bear in mind that delay in coming to an agreement is a serious matter in terms of confidence in the production of food and of halting the drop in production in British agriculture? Will he also bear in mind that he has sacrificed home production and the British farmer for the consumer? As it would mean a less than 1 per cent. increase in the cost of food in the long term, what he has done is very serious indeed.
Mr. Silkin: I am afraid that the hon. Gentleman's figure on food prices is wrong. The figure is actually 3p in the pound. I am using the Commission's figure on food prices. To those who are paying the bills, particularly those on low incomes, it is a very great figure. I agree that any delay is difficult for British producers. I can only say that they, like
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the rest of the community, would prefer a fair rather than a bad package.
We have been told that we should willy-nilly have accepted the Commission's first package. Had we done so, that would have created an unparalleled rise in prices. Had we done so, we should have been the only country to accept the Commission's proposal. Perhaps the Opposition will tell us here and now whether they would have agreed to accept the Commission's last proposal, which would have been a tremendous increase over its first proposal.
Mr. Torney: I congratulate my right hon. Friend on the stand that he has taken against the oppressiveness of the common agricultural policy and the Prime Minister on having supported him in this matter. Is my right hon. Friend aware that, by their agreement when in Government to enter the Common Market, the Conservative Opposition are responsible for the very problems that they are mentioning today? Does he agree that the real problem is the uselessness of the CAP to Britain? Will he and the Prime Minister take steps radically to change or abolish the common agricultural policy as that is the real cause of what Britain is suffering from today?
Mr. Silkin: I have never disguised from the House my own view of the common agricultural policy. However, at Brussels during the last five days and nights my aim was to stop an oppressive price rise, which the Opposition supported, at the expense of the British housewife.
Mr. Buchanan-Smith: What message has the right hon. Gentleman for pigmeat producers, who are currently producing every pig at a financial loss? What message does he have for beef producers, who will have to face an additional export subsidy from Ireland? I acknowledge that he is standing up for the interests of the British housewife, but what estimate has he made of the consequences of this uncertainty to the security of future food supplies from home sources?
Mr. Silkin: One of the results that must be obtained is the continuance of the variable beef premium. On that remained absolutely firm. I have already

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mentioned beef prices, and I do not particularly want to go into that subject.
It is only a matter of two months ago that I informed the House, in answer to a question from an Opposition Member, that I was introducing a subsidy because of the unwillingness of our partners or of the Commission to move to a recalculation of pigmeat mcas. That subsidy remains. I know that the position is difficult—it is bad—but if we had not been willing and prepared to provide that subsidy at that time, the position would have been desperate.
Mr. Peyton Mr. Peyton rose—
Mr. Speaker: Order. I shall call those hon. Members who have already risen, if they will be brief.
Mr. Peyton: Is the right hon. Gentleman aware that in his brief statement he has given the House no detailed information on the points that separate him and his colleagues in the Council of Ministers? We shall take an early opportunity of returning to this matter in order to give him a chance of repairing his lamentable failure to do so.
Mr. Silkin: I should be grateful if the Hat hon. Gentleman would make that a firm promise. I begin to understand how it was that when in Government and negotiating on the various foolish attempts that they made in the past the Opposition failed to arrive at anything sensible. [HON. MEMBERS: "Answer."] I shall answer the question. There were a number of different items, because this was a package. If the right hon. Member for Yeovil (Mr. Peyton) expects me to answer that in detail, all I can say is that my opinion of him as a negotiator is even lower than it was earlier.
Mrs. Dunwoody: Is my right hon. Friend aware that his degree of realism is the first that we have seen of any sensible negotiations in the Council of Ministers? Should he not point out, not only to the consumer but to the producer in this country, that unless he gets a radical revaluation, particularly of the dairy aspects of the common agricultural policy, we shall be in a worse situation in 12 months than we are at the moment, and that the farming community will have to pay for it?
Mr. Silkin: My hon. Friend is correct. If prices of farm commodities go up, consumption goes down. Time and again it has been proved that it is the farmers who lose.
Mr. Farr: Does the Minister agree that the last time the Irish changed the value of their green pound the British beef producers were hit because Irish exports undercut the market? In view of the failure of the Government to renegotiate the MCA for pigmeat and in view of the increased costs of production and the fall in the value of the market in pigmeat, will the Minister consider increasing the 50p subsidy, which has been a great help so far?
Mr. Silkin: I have already dealt with mcas. In January other circumstances contributed. We shall have to wait and see how pigmeat works out. We must be serious about it. I am being taken to court on this matter. I can hardly increase a subsidy on which I am about to be taken to court.
Mr. Ioan Evans: I congratulate my right hon. Friend on the fight he has put up in Europe. It is peevish of the Opposition not to recognise what my right hon. Friend has done. I am sure that their attitude will be noted in the Stechford by-election. Will my right hon. Friend confirm that 1 lb of butter that cost 24p when we entered the EEC will cost £1.20 by the beginning of next year if the green pound protection is withdrawn? Is that not contrary to the Government's policy of keeping prices down? Does he agree that the common agricultural policy is highly inflationary and that we should abandon it?
Mr. Silkin: That is one of the aspects on which I spent five long days and nights.
Mr. Hastings: What, if any, discussion took place on the production of isoglucose? I understand that there is a proposal to increase the levy to £28. Does not the Minister agree that that is too high and that it will put at risk the technological development of this important commodity? Will he continue to resist it?
Mr. Torney: The Conservatives took us in.
Mr. Speaker: Order. An hon. Member below the Gangway has a loud voice. I hope that he will let us get on with the business.
Mr. Silkin: This was one of the issues on which the United Kingdom delegation made a strong plea indeed. It still remains to be settled, because, after all, the package or its successors remain to be negotiated. I agree that it was a bad offer.
Mr. Roy Hughes: In his statement my right hon. Friend said that the beef premium scheme would continue meanwhile. Will he amplify that and take the opportunity to emphasise that there is no division between producers and consumers, because if we have prices that are too high both will suffer?
Mr. Silkin: My hon. Friend is right on the latter part of his question. The variable beef premium remains part of the matters to be negotiated. We have every prospect now of continuing it. I asked the Commissioner about the Milk Marketing Boards. I received an assurance from him that he viewed them favourably and that he hoped to put the issue to the Commission in the near future.
Mr. Marten: Do not all the goings-on in the past three days illustrate the absurdity of trying to get a common agriculture policy for nine different countries at different stages of economic development and with different climates? Would it not be better to go back to a national agriculture policy and win for ourselves more imports from outside the EEC, as suggested when the Official Opposition agreed to the amendment of the motion the other night when we debated the EEC price review?
Mr. Silkin: It must be clearly understood—incidentally, it was five days and nights, not three—that the basis on which we entered was that there were different systems of agriculture with different requirements and that that at least required some careful handling. We must remember that the end package can never be to the advantage of all. A liberal importation of foodstuffs from outside the Community remains the policy of the Government. In the light of what we have been pressing for for years I am
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delighted to hear that Opposition Members are coming to agree with that policy.
Mr. Spearing: Does my right hon. Friend recall the right hon. Member for Sidcup (Mr. Heath) speaking on a radio programme on 4th July 1971? Does he recall the right hon. Gentleman, when advocating entry to the EEC, saying that the cost of food as a result would be a ½p in the pound for each of the six years that we were changing to the EEC system of food prices? Can my right hon. Friend tell the House what the cost has been and what the cost of the proposed package from the Commission will be for this year? If he cannot do that now, will he undertake to give an answer later?
Mr. Silkin: I missed that radio broadcast, but I received reports of it. It has proved to be inaccurate. If my hon. Friend cares to write to me, I shall give him a detailed account.
Mr. Temple-Morris: Does the Minister fully appreciate that our credibility in Europe is being damaged through the Government and their supporters constantly dragging their feet on European matters? Will the Minister address his mind to the difference between him and his eight European colleagues and tell us exactly what that difference is? Does he agree that the proposals amount to 1 per cent. overall on food prices, or ¼p on the cost-of-living index?
Mr. Silkin: No, the difference is much greater. It is a question of principle and of whether one is in favour of a high-priced food economy. Furthermore, I prefer our present position to total invisibility in Europe.
Mr. Watt: Although I appreciate that the right hon. Gentleman is desperately short of sleep, will he take time to tell the House whether one of the items in the package involves the sheepmeat régime? Is he aware of the present iniquitous position in which the French are increasing the levy on lamb and yet lamb is entering the original six countries free of levy by the back door via Britain and Germany?
Mr. Silkin: I take the hon. Member's point, but that was not discussed.

EUROPEAN COMMUNITY (AGRICULTURE MINISTERS' MEETING)
Mr. Peter Mills: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the failure of the Minister to give adequate reasons to the House for the breakdown of negotiations in Brussels on the farm price review for 1977."
The House is entitled to a better explanation from the Minister. Those who represent consumers are also entitled to a better explanation of the reasons for his failure to agree on this matter—particularly as it would mean only about ¼p in the pound on the cost of living. It is also important to those who represent producers that they should have a better explanation from the Minister.
The matter is urgent. Time is not on our side. I do not believe that the Minister realises the importance to the confidence of the home producer of getting a speedy decision in these matters. Sowing and ploughing do not wait for Government decisions. The farmer wants to know where he is. He wants a definite price and programme in front of him.
The matter is also important because much is at stake. The future of British agriculture is at stake and the track record of this Government is not encouraging. Last year, production fell by 10 per cent. Therefore, these matters are important not only to the producer but in the long term to the consumer. That is the problem: the Government are considering these matters in the short term, not the long term.
The matter is important also not only because of the future of production but because of the importance of a much clearer picture for certain sections of British agriculture, which in the long run will affect the consumer. The pig industry has been frittered away by this Government, for example.
This matter is important also because of the effect of the devaluation of the green pound in Ireland but not in this country. We need a much fuller explanation of this.
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I am sorry for the short notice I gave, Mr. Speaker, but I believe that these things are important. They are certainly specific. I hope that you will consider my application seriously.
Mr. Speaker: The hon. Member for Devon, West (Mr. Mills) is well within his rights in acting as he has done when a matter arises out of a Minister's reply. He had no need to apologise for the shortness of notice.
The hon. Member asks leave to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"the failure of the Minister to give adequate reasons to the House for the breakdown of negotiations in Brussels on the farm price review for 1977."
I listened carefully to the exchanges in the House this afternoon. What I have to decide is whether an emergency debate should take precedence over the ordinary business set down. The House knows that, under Standing Order No. 9, I have to take into account the several factors set out in the Order but to give no reasons for my decision. I have to rule that the hon. Member's submission does not fall within the provisions of the Standing Order. Therefore, I cannot submit his application to the House.

ROYAL ASSENT
Mr. Speaker: I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Acts:

1. Social Security (Miscellaneous Provisions) Act 1977.

2. International Finance, Trade and Aid Act 1977.

3. Nuclear Industry (Finance) Act 1977.

4. Job Release Act 1977.

5. Representation of the People Act 1977.

6. Town and Country Planning (Scotland) Act 1977.

7. General Rate (Public Utilities) Act 1977.

8. Agricultural Holdings (Notice to Quit) Act 1977.

9. British Airways Board Act 1977.

BILL PRESENTED
  CRUELTY TO ANIMALS ACT 1876 (AMENDMENT)
  Mr. Kenneth Lomas presented a Bill to amend the Cruelty to Animals Act 1876: and the same was read the First time; and ordered to be read a Second time upon Friday 20th May and to be printed. [Bill 97.]

DUNFERMLINE COLLEGE OF PHYSICAL EDUCATION FOR WOMEN (CHANGE OF NAME)
4.16 p.m.
Lord James Douglas-Hamilton: I beg to move,
That leave be given to bring in a Bill to require the Secretary of State for Scotland to rename Dunfermline College of Physical Education for Women, situated in the purpose-built specialist facilities in Cramond, West Edinburgh, 'The Scottish College of Movement and Education'; and for connected purposes.
The purpose of this Bill, which has the support of the college, is to recognise the present Dunfermline College of Physical Education for Women for exactly what it is—a centre of excellence for sport and physical education and an outstanding national asset. This is in no sense a party political matter, since the sponsors of the Bill represent every party in Scotland.
I am somewhat hesitant about introducing the Bill, since it seems to be different from almost all recent legislation in three respects. First, it will cost the taxpayers nothing. Second, it will create absolutely no administrative difficulties. Third, the suggested change of name is logical and will cause no anomalies.
First, I will deal with the logic of the change of name. At present, the college is called the Dunfermline College of Physical Education, but it is in Edinburgh, at a considerable distance from Dunfermline. At least one might expect it to be called the Edinburgh College of Physical Education, but that would not do either, since both its catchment area and its influence extend throughout the Scottish nation.
It is also a diminution of its rôle to describe it as a college of physical education. Its rôle is already that of a national college, so calling it such would involve no reorganisation. As a result, there would be no expenditure apart perhaps from changing the letter heading on some notepaper.
Second, the name should provide an accurate description of the nature of an institution. The college is not at Dunfermline and it does not deal with physical education alone. Since the college is a national college and the only one

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for women students in Scotland, training students from and supplying teachers to every region in Scotland, the term "Scottish" is accurate and reflects its national nature.
Third, the college is not concerned only with training physical education specialists to degree standard. It already runs a post-graduate course in recreation and leisure and it has research projects in movement therapy for the disabled. It contributes to the academic study of this area. It also contributes to and collaborates in high level sports coaching for national teams. It is these aspects of its work which would be reflected in its new title.
Fourth, "Dunfermline College of Physical Education" indicates only the training of teachers, whereas "Scottish College of Movement and Education" covers the full spectrum and allows for diversification. Ever since 1965, the college has been pressing for further diversification and a change of name and it has not had a final answer on the matter from the Scottish Office. That is the reason for the Bill. The Long Title mentions the purpose-built special facilities in Edinburgh and it is hard to imagine anyone so insensitive as to think of the college being anywhere else.
I hope that there will be no opposition to the Bill because there is something in it for every political party. It is sensible and represents no burden to the taxpayers, so it should recommend itself to the Conservative Party. It makes clear
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to the world the possession by the Scottish nation of an outstanding educational asset, so it should commend itself to the Scottish National Party. One of the purposes of the college is to improve co-ordination; that should appeal to the Liberal Party. Finally, its new title, including both the words "education" and "movement", should have the support of both the Labour Party and the Scottish Labour Party, each of which is now engaged in educating the Labour movement in Scotland. I commend the Bill to the House.
Question put and agreed to.
Bill ordered to be brought in by Lord James Douglas-Hamilton, Mr. Hector Monro, Mr. George Younger, Mr. Malcolm Rifkind, Mr. Alexander Fletcher, Mr. Robin F. Cook, Mr. Jim Craigen, Mr. Dennis Canavan, Mr. Donald Stewart, Mrs. Margaret Bain, Mr. Russell Johnston and Mr. James Sillars.

DUNFERMLINE COLLEGE OF PHYSICAL EDUCATION FOR WOMEN (CHANGE OF NAME)
  DUNFERMLINE COLLEGE OF PHYSICAL EDUCATION FOR WOMEN (CHANGE OF NAME)
  Lord James Douglas-Hamilton accordingly presented a Bill to require the Secretary of State for Scotland to rename Dunfermline College of Physical Education for Women, situated in the purpose-built specialist facilities in Cramond, West Edinburgh, 'The Scottish College of Movement and Education'; and for connected purposes; and the same was read the First time; and ordered to be read a Second time upon Friday next and to be printed. [Bill 96.]
ORDERS OF THE DAY

  WAYS AND MEANS
  Order read for resuming adjourned debate on Question [29th March].
  AMENDMENT OF THE LAW
  That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but

  (a) this Resolution does not extend to the making of amendments with respect to the surcharge imposed by the National Insurance Surcharge Act 1976 other than amendments for affording relief to charities; and

  (b) without prejudice to any authorisation by virtue of any Resolution relating to value added tax, this Resolution does not extend to the making of amendments with respect to that tax so as to provide—

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

  (ii) for refunding any amount of tax;

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

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

  [Relevant Commission Documents: Nos. R/566/77, R/567/77, R/236/176 and R/2520/76.]
  Question again proposed.

BUDGET RESOLUTIONS AND ECONOMIC SITUATION
4.21 p.m.
Sir Geoffrey Howe: I would join with my right hon. Friend the Leader of the Opposition in congratulating the Chancellor—if he were in the House at the moment—on his speech and particularly on its brevity. It sets a good precedent in many respects, and it is the least we are entitled to expect from him by way of compensation for the frequency with which he has troubled the House on budgetary matters.
It is a useful opportunity today, after we have had so many excursions from the right hon. Gentleman, to look back over the three years of Healey Chancellorship and to try to assess it. In one respect I think that we may say that he has been constant to himself throughout, because
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he has demonstrated from beginning to end his infinite capacity for trying to snatch the appearance of victory out of the jaws of defeat. Had we not known him so well we would have been astonished to hear of the humiliation of the country in the negotiations with the International Monetary Fund last December, which he described yesterday as "striking financial successes".
We remember the first Budget which the right hon. Gentleman introduced three years and four days ago which, with characteristic modesty, he described as
"the turning point in our people's post-war history."—[Official Report, 26th March 1974; Vol. 871, c. 328.]
Perhaps we may be forgiven for wondering whether he was in agreement with the rest of the House as to the way in which we were turning at that time.
I am glad to see that the Chancellor has arrived in time to hear at least part of my speech. I am considering his three years' stewardship of the affairs of the nation. I was about to say how fortunate we are to have on the record, apart from his observations in the House from time to time, the benefit of his own considered judgment on his conduct of our affairs, as recorded by Mr. Kenneth Harris of the Observer last Sunday. The House may remember that the Chancellor was asked what he had achieved and in what he had failed. He began:
"Failure is a rather loaded word.… You could say that so far I have failed to get the economy as I would like it. We've got high unemployment, which has still been rising; the rate of inflation is much higher than it should be; and our industrial performance is not significantly better than it was in 1974; so I haven't yet achieved my major objective."
The last sentence which I want to quote reads:
"But I could argue that even in these fields the situation would have been even worse without me."
The Chancellor of the Exchequer (Mr. Dennis Healey): Would not the right hon. and learned Gentleman agree with me that that was also the view of the domestic and financial market as expressed by the fall of £1,400 million in stock values the moment there was some vague suspicion last week that the right hon. and learned Gentleman might be in charge of our financial affairs?
Sir G. Howe: But would not the Chancellor accept, much more realistically, that the reaction of the markets today is due to the extent to which he was compelled to accept the advice received from this side of the House rather than from his own side? We know that the Chancellor has many attributes—they are all described in these articles—including a vivid imagination. But it is difficult to see just how matters could have been worse without him.
Prices have risen by 70 per cent., real take-home pay has gone down by 9 per cent., industrial production is down by 2 per cent., public expenditure is up by 100 per cent., and income tax is up by 140 per cent. Perhaps most telling of all, the rate of bankruptcies and company liquidations in our society has more than doubled since the Chancellor arrived in the Treasury. In the last quarter of 1976 there were 1,876 company liquidations, the highest figure ever recorded in Britain.
Unemployment has gone up by 750,000. As an inevitable consequence of the arithmetic which the Chancellor gave us yesterday, it is likely to go on rising into the foreseeable future. The Chancellor may dimly recollect that he was elected to his high office on the slogan "Back to work with Labour". That seems to have been translated into "Make Britain a land fit for liquidators to live in".
It is particularly alarming to see the Prime Minister, who has apologised that he cannot be here this afternoon, reported in an interview last week as saying after all this
"I take the view that we are only half way through the job that we started on."
We would as soon be spared the other half if it is to be anything like the first half.
By every measurable standard, the country is much worse off than it was before the Chancellor went to the Treasury. I hope that we shall hear no more, in this or any other debate, from him about the transformation he has wrought in our affairs, the new stability he has brought to our economy. For the British people his three years in the Treasury have been disastrous and entirely wasted.
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The second point I want to make is that it is important for the House, and particularly Labour Members, to understand the scale and the importance of the change that has taken place in the Chancellor in recent months. We on this side of the House welcome the fact that the Chancellor who embarked in 1974 upon a massive increase in public expenditure has for the last year been trying to do exactly the opposite.
We welcome the fact that the Chancellor who put up the standard rate of income tax from 30 per cent. to 35 per cent. now has plans for reducing it to 33 per cent. We welcome the fact that the Chancellor who once boasted of his plans to make the rich howl with anguish has now been compelled, by the howls of anguish from millions of trade unionists and working people, to abandon that destructive and stupid intention.
Of course, the Chancellor changed position in a way that was characteristic of him. Anyone not familiar with the history of the past three or four years, and listening to the Chancellor in yesterday's debate, might have been forgiven for thinking that the lesson that high income tax does great damage had been unearthed and revealed to the country solely because of the intellectual courage and originality of the Chancellor himself, after burrowing through the red Despatch Boxes that he tells the world he finds so exciting. If I may give him some advice, he would have been far better advised to stick to his original ambition, which is characteristically modest and more fruitful, of writing the world's greatest book on the philosophy of art.
I tell the Chancellor that his personal credibility would have been enormously improved if he had admitted that the propositions he now advances run entirely counter to everything he has previously said or done. The House and the Labour Party should be in no doubt about the scale of the reversal which has taken place between 1974 and 1977.
In 1974 this great tax reform was not an accidental exercise. In his Budget speech then he said that he was embarking upon a
"deliberately and carefully considered redistribution of fiscal burdens".—[Official Report, 26th March 1974; Vol. 871, c. 295.]
He is now embarking, apparently equally deliberately, on an attempt to reverse

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that very process. Then the right hon. Gentleman planned an expansion of public spending. Today he plans a reduction of it. Then he gave a delighted welcome to the inflow of hot money into the Treasury. Today he has constructed elaborate machinery to prevent any such thing from coming into the country at all. Then he was engaged in a fierce tightening of price control. Yesterday, with a cloud of double-talk, he talked about the need to prevent any unreasonable profit mark-up but at the same time ensuring that the return on capital is allowed to recover sufficiently to reinforce the upturn in investment. If we see anything in all this, it looks as though the Chancellor will certainly be relaxing the price control which he imposed previously. Certainly in 1974 he launched a massive increase in food subsidies. Now we know that he is abolishing them. He doubled the regional employment premium. Now he has abolished it. He froze the price of gas almost alone among the products of the nationalised industries. Now he is gratuitously increasing it.
We admire the ironic sense of justice of the Prime Minister, that the man he has chosen to carry through this symbolic display of our subservience to the International Monetary Fund is the man who made such a huge fuss about our subjection to the sovereignty to the European Economic Community. I congratulate the right hon. Gentleman on a quite remarkable and unprecedented abandonment of almost every policy on which he and his party arrived in office. Labour's last two election manifestos, certainly the economic parts thereof, have been consigned to the scrap heap.
Some interesting questions arise. How is it that this conversion has come about? Has the Chancellor been under the influence of the Tribune Group? Or has he been under the influence of the Leader of the House? It seems unlikely. Even so, the whole process of the reeducation of the Labour Party that has taken place must have some value for it. It must be useful for the Tribune Group to learn, as it supports this Budget over the weeks ahead—[HON. MEMBERS: "Where are they?"]. They are conducting their own private meeting in a state of anguish, I dare say. It will nevertheless be useful for the Tribune Group to
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learn, as it supports this Budget, that neither this Chancellor nor any other can undo the damage done by taxation which has become too high without conferring, as this Budget will, substantial advantage in tax and post-tax terms on many people.
I hope that the Tribune Group will share our general sense of delight that the Managing Director of British Leyland and the Chairman of the National Enterprise Board will each, as a result of this Budget, be receiving £17·61 per week extra in his pay packet, which is equivalent, as the Chancellor used to say to my noble Friend Lord Barber some years ago, to a gross pay increase for those two distinguished gentlemen of £5,388 a year.
We should all be encouraged by the fact that the Leader of the House—I am sorry that he is not here—has advanced his educational process so far. We know that the Leader of the House is becoming a man of increasing moral flexibility under the pressures of government. There was a time when he used to proclaim that no man was worth more than £10,000 a year—or whatever it was that he himself then happened to be earning. Now we are delighted that he has agreed to support this Budget, which will award him the equivalent of a pre-tax salary increase of £2,560 a year. Certainly hon. Members opposite are learning, but I doubt very much whether the Tribune Group is the source of inspiration for much of this Budget.
How about the Liberal Party—[HON. MEMBERS: "Where are they?"]—which is represented by the hon. Member for Cornwall, North (Mr. Pardoe) and is the fragile foundation for the Government's majority? We know that the Chancellor is a very intellectually agile man, although he presides over a Department that is not renowned for the speediest reaction in Whitehall.
The liaison between the Chancellor and his hon. Friend the Member for Cornwall, North is only seven days old. No doubt the weekly love-in that we are told is to take place between the Chancellor and his hon. Friend will be a deeply therapeutic experience for them both, and Treasury officials who have to sit in on this exhilarating experience will have to take the rough with the rough.
However, I hardly think that the hon. Gentleman's influence on the Chancellor

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has yet been as extensive as to product, much influence in this Budget. We shall see in a few moments. I believe that three, different strands of influence can be detected in this Budget. The first is the Prime Minister, because week after week now the Prime Minister has been boning up, the better to instruct his Cabinet colleagues, by reading "The Right Approach" from cover to cover, morning till night, and the influence is beginning to make itself felt.
Then, of course, the Chancellor has received instruction from the electors of Woolwich, West, of Workington and of Walsall. To reinforce that instruction, the Chancellor has received supervision from Dr. Johannes Witteveen and Mr. Alan Whittome, the Managing Director of the International Monetary Fund and the team leader. It is a remarkable roll of honour—Woolwich, Walsall, Workington, Witteveen and Whittome.
It will be a happy turn of history if, come tomorrow, the electors of the constituency which elected the Chancellor who had to clear up after the Prime Minister had finished with the Treasury take the opportunity of teaching another lesson to the present Chancellor.
So we welcome the process of re-education as far as it has gone. We welcome the exemption of charities from the National Insurance surcharge. We welcome the improved relief on overseas earnings, although it still seems a pretty rum way of going about it to begin by identifying the man out there in Acapulco for his contribution to the export efforts, while the man who is sweating his guts out in Derby, Crewe or Rotherham is treated as if he had nothing at all to do with it. It demonstrates the folly of having marginal tax rates that are too high in the first place.
We welcome the improved investment income surcharge relief. All those paying the investment income relief surcharge are still far worse off than at the time of the Chancellor's first Budget, let alone when the exemption relief was introduced in 1972.
We welcome the modest movement in tax thresholds that the Chancellor has introduced. However, he has hardly begun to repair the damage he has wrought since he went to the Treasury.
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I want to ask the Chief Secretary a question about tax thresholds. The single man's threshold and the widow's threshold have risen by 9½ per cent. as a result of the Budget. It may well be sensible that we do not have a statement of benefits today at this stage in the Budget debate, but we should like to know just how that movement compares with the prospective movement in the level of benefit. We should like the Chief Secretary to tell us when we shall hear about the increase in benefits.
In particular, we should like to know because we want to know the effect of the relative movement of benefits and tax thresholds on the situation complained about yesterday by no less a person than the General Secretary of the National Union of Railwaymen, Mr. Sidney Weighell. The Press report said:
"More than 9,000 British Rail jobs have not been filled because potential recruits earn more on the dole"
than at work.
This is a graphic illustration of something that we have all been complaining about. The complaint yesterday was advanced and reinforced not by any of my hon. Friends but by this great trade union leader. We want to know when the Government will announce their intentions about the relative level of benefits and tax thresholds. What would be the effect of this Budget for the poor? When shall we know that?
We also welcome the recognition by the Chancellor that indirect taxes are a more sensible way in principle in our present circumstances of raising revenue than direct taxes. However, we certainly cannot endorse the wisdom of the choice he has made in deciding that the motorist should carry the burden of heavier indirect taxes. Why, for example, has he not taken the advice we have given him over months and years now to return to the 10 per cent. rate of value added tax, which he should never have abandoned in the first place? It produces the same yield. It does no more harm or good to the retail price index than any other tax. It is much more widely spread and, therefore, does not force the whole attack on to one industry and one activity.
Does not the Chancellor recognise the importance of the car to many working families in all parts of the country?

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Perhaps I may remind the right hon. Gentleman of a speech made in the House two years ago in May 1975:
"In … many … rural areas the car is not a luxury … In large parts of my constituency and probably … other rural areas the car is the only means of getting to work. We must take account of the very severe disincentive effect which higher and higher motoring costs impose in such areas. It is on this argument that I base my plea to the Government."—[Official Report, 15th May 1975; Vol. 892, c. 684–5.]
The House will be delighted to know that that speech was made by the hon. Member for Cornwall, North. That gives the lie to any suggestion that the hon. Member for Cornwall, North has had a dramatic effect on the structure of the Budget. We look forward to hearing in which direction he will advise his party to vote, after he greeted this Budget last night with a degree of enthusiasm bordering on the ecstatic, and whether he will nevertheless support a Budget which will do such a marvellous service to those of his constituents who depend on the motor car to get to work.
The reality is that the room that the Chancellor has for manoeuvre has been and is still gravely limited by the total volume of spending to which the Government remain committed and the consequent size of the borrowing requirement. We remain gravely disturbed by the fact that not just in this fiscal year but in the next the Chancellor still plans to borrow more than £8,000 million. That figure is still much too high.
Nor do we take much comfort from the fact that he looks forward next year as well to a growth of money supply which could be as high as 13 per cent. That suggests that he would be willing to settle for an inflation rate—if he can achieve it—only just inside single figures. If that were the limit of his ambitions that would be inadequate.
That brings me to my last main point—
Mr. Healey: We have not had any main points.
Sir G. Howe: The Chancellor may not have liked them, but there have been plenty of them. My last main point is the relationship between public spending, conditional tax cuts and the projected pay deal. There is a very important lesson to be learned here by the House as well
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as by the Chancellor. if I may take him back, not to the 1974 Budget speech but to the speech made in 1976, he described that Budget—and he may well have been right—as
"the most critical Budget of the present Parliament."
and above all as a Budget that was about jobs and inflation. The Chancellor also stated
"The £6 pay limit guarantees"
—note that word—
"that our rate of inflation will continue to fall in 1976."
The Chancellor continued:
"I believe that we can still achieve our target of under 10 per cent. next winter. The prospect for 1977 depends crucially on achieving the low pay limit."
The Chancellor went on, on a different point:
"I believe it is well worth accepting some increase in the PSBR in order to achieve a lower rate of inflation".—[Official Report, 6th April 1976; Vol. 909, c. 238 and 281–282.]
Many of us pointed out that this showed a degree of economic illiteracy. From that moment onwards the Chancellor of the Exchequer and the economy went down hill all the way. The world saw the huge size of the planned public sector borrowing requirement, £12,000 million, and understandably took fright. The world was hardly to know that the one occasion on which the Chancellor deliberately set out to increase the public sector borrowing requirement was also the only occasion on which he managed to reduce it.
We lived through a long, hot summer when any stray observations from any trade union leader, any passing journalist or any Labour Back Bencher were enough to knock two, five or 10 cents off the value of the pound before breakfast. If we are to get these things right from now on it is important to understand what happened to the economy and who is responsible for what happened. It was not the fault of perverse foreigners around the world and it was not the fault of what the Chancellor called the malign interaction of the exchange rate and other mysterious factors. It was not an act of God, as the Chancellor tried to imply yesterday.
Once again we are indebted to Kenneth Harris of The Observer. I quote from

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what the Chancellor is reported to have said in an interview which appeared in that newspaper last Sunday. He said:
"Last year I made, in good faith, the prediction that if we could get another round of pay policy we could halve inflation again, or nearly halve it, to, say 7 per cent. But that one did not come off … mainly because the value of the pound fell much more than we expected."
He again referred to the impact of the drought and commodity prices. He continued:
"why the exchange rate went down so far was that we didn't reduce our deficit enough".
At last we have the truth. The responsibility for the destruction of the Chancellor's very own counter-inflation policy rests fairly and squarely on the shoulders of the Chancellor himself. I wonder whether I dare go on quoting from this interview. The Chancellor was no doubt accompanied by some hapless Press officer from the Treasury, but I wonder whether next time he ought to be accompanied by his solicitor. What happened has had certain very serious consequences for him and the Government and for our country.
The Chancellor stated:
"When this happens it can be very damaging to one's credibility, and I don't blame trade unionists for feeling that the Government hasn't kept its part of the bargain."
That is the first problem because whatever people may think of his rather unctuous broadcast last night, trade union leaders do not believe what the Chancellor is trying to say. There are very few people—I think that the Chancellor will agree—on either side of the House who believe in their heart of hearts that we can maintain long-term detailed regulation of pay bargaining. Short of the gravest emergency, no acceptable or even effective machinery is likely to exist. I wonder whether it would command a majority in the House. Almost certainly it would end by destroying itself.
We have to go through a period of transition to a world which is free from direct Government interference in pay bargaining. That period of transition must be one of greater flexibility to allow room for the compressed spring of pay differentials to uncoil. The toolmakers at British Leyland have virtually been told as much. We have to recognise the need for restraint. Without restraint in pay bargaining the inescapable alternative will be unemployment.
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This will pose particular difficulties for the Labour Party. It means that we shall have to go through a period when pretax as well as post-tax incomes are becoming more unequal. It will impose great strains.
In those circumstances, it is the duty of government—a duty which the Chancellor has neglected to his cost in the past year—first, to see that the money supply is firmly and steadily controlled; secondly, to see that the Government's own deficit is firmly controlled; thirdly, to see that the cash limits over their own expenditure are firmly controlled; and fourthly, to see that the sum available within those cash limits for public sector pay is equally firmly controlled.
There must be no room for doubt in the public sector as well as in the private sector about the inescapable conflict between higher pay and more jobs. So far there has been little room for disagreement on either side of the House with what I am saying. They are, at the end of the day, the economic facts of life. It is very important for the Government to understand that these are matters that the House agrees without dispute on party lines.
Mr. Healey: The right hon. and learned Gentleman is now making some points on which the whole House will want to seek a consensus. It will be helpful for the rest of the debate if he can tell us explicitly whether he agrees with the views put forward by the right hon. Member for Lowestoft (Mr. Prior) on television two days ago that we must have a phase 3 pay policy, and when he told us, speaking as a member of the Shadow Cabinet a couple of days ago, that he would want to do nothing to make this negotiation more difficult. It would be helpful to have that from the right hon. and learned Gentleman because it might give some guidance to the right hon. Member for Leeds, North-East (Sir K. Joseph) when he opens the debate tomorrow.
Sir G. Howe: I am grateful, of course, to the Chancellor for his courteous solicitude for my right hon. Friend, and I think it is important to deal with this matter seriously—
Mr. Healey: What about answering the question?
Sir G. Howe: I intend to answer it, but it is important to understand that on this

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issue there are, there have been and there always will be within both major parties differences of view and differences of emphasis.
Mr. Healey: Ah!
Sir G. Howe: "Ah!" nothing. The Chancellor knows as well as I do that the Leader of the House and the Minister for Social Security were neither of them conspicuous for their enthusiasm for any kind of incomes policy, statutory or voluntary, before they came into office. The Chancellor himself was not the most robust supporter of such a policy. If he faces the facts he must know that both the major parties have fought elections on both sides of this question. For that reason it is important for us to try to hammer out those areas where we agree and disagree. The Liberals have retained a virginal purity in these matters, never having had the responsibility to do anything about them.
Let me now answer the Chancellor's question. All that I have said is more likely to work and more likely to be accepted without severe social consequences if the inescapable consequences of the policy are clearly understood by the nation as a whole. One consequence—probably the most important—is that the total sum available to finance higher money pay without higher unemployment is, will be and must be strictly limited, probably in our present circumstances to a single figure, less than 10 per cent.
That is part of the reality we have to face. It may or may not be formally endorsed by the trade union movement as a result of the negotiations to take place. The Chancellor has faced that position. I should not like to be sure about it. However, the Chancellor must seek that understanding from the nation as a whole. We shall do nothing to seek to reduce his success in achieving that understanding by consultation with the nation and everyone else to whom he thinks it right to talk about it. That must be the Chancellor's objective.
Whether or not he gets a deal of the familiar semi-private kind of the last year or two—and he must recognise that many trade union members are increasingly resentful of the exclusiveness of that—it must be his duty, and we shall support him in this, to secure an understanding of these inescapable realities
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throughout the nation. The key messages are these. The Government and only the Government can, must and will control inflation. That is the inescapable duty of government. Trade unions—leaders and members alike—have got to relearn their responsibility for limiting the level of unemployment.
Mr. Sydney Bidwell: The right hon. and learned Gentleman is preening himself a great deal today. Unfortunately for the Leader of the Opposition, she has in the person of the right hon. and learned Gentleman one who is well remembered as having brought in the most excessive, repressive anti-trade union law ever known in this country, a law which provoked the mightiest anti-Government trade union demonstration of all time. Whatever the trade union movement might think of my right hon. Friend the Chancellor, it is not likely to entrust its affairs to the right hon. and learned Gentleman.
Sir G. Howe: I had rather hoped that we could rise above the level of that sort of intervention, because sitting immediately opposite me on the Labour Benches is the right hon. Member for Blackburn (Mrs. Castle) who in her turn has been round this course—
Mrs. Barbara Castle Mrs. Barbara Castle (Blackburn) indicated dissent.
Sir G. Howe: With her there was only one difference. Her legislation included criminal sanctions, and ours did not.
Mrs. Castle Mrs. Castle indicated dissent.
Sir G. Howe: If these messages are to be clearly understood, the Chancellor and the Prime Minister will have to be a great deal more candid and explicit about the next stage of the pay policy that they seek than the Chancellor was yesterday.
In the course of fulfilling that task the Chancellor faces perhaps two real hazards, both to do with the Liberal Party. First, if he tries to repeat precisely the formula he followed last year he will have to work hard, it appears, to persuade the Leader of the Liberal Party about the legitimacy of the process he is engaged upon. On 7th April last year the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel)—then a Liberal MP but not the Leader of his

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party—was reported as having described the Chancellor's decision to offer conditional tax relief as "a constitutional outrage". He continued:
"They depend on the decisions of the TUC, in which many millions of affected people, from MPs to the self-employed and including most grassroots trade union members, have absolutely no say."
He went on:
"It is an abdication of government. All Mr. Healey's arguments in favour of his policy are ones he should have properly put to the TUC leaders privately but he should not run away from the responsibility of taking decisions himself. This is the smack of weak government".
He should know, Mr. Deputy Speaker.
Mr John Pardoe: It is less than three minutes since the right hon. and learned Gentleman was explaining how there are differences on his own Front Bench—[HON. MEMBERS: "Oh!"] Let me hasten to assure the right hon. and learned Gentleman that there were differences on this Bench a year ago on that very matter. My right hon. Friend, however, is a quick learner.
Sir G. Howe: I am not quite sure who is learning from whom in this exercise.
There is one other significant worry. It was not easy at the outset to see where the Liberal Party and both wings of the Labour Party could ever come to make common cause. There is one conceivably fatal possibility. They are all by temperament big spenders. As the balance of payments improves, as it must, as domestic credit expansion control becomes a less and less effective discipline, as it will, as unemployment remains stubbornly high, as it will, the temptation presented to these three groups to expand Government spending will become dangerously attractive, and I am worried about that.
The Liberals are fond of saying that they have a clear alternative to Conservatism. They are fond of saying that they have a clear alternative to Socialism. Last week we had the privilege of discovering exactly what that alternative was. It was escapism. The country cannot afford to give the Liberal Party any opportunity to join the Government in trying to escape at any stage down a high-spending road.
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I come back to the Chancellor of the Exchequer. We have only to look at him to realise that he is a recidivist at heart—a big-spending, incontinent recidivist. He is at present under two contraints, one more fragile than the other. He is constrained by the Liberal Party and by the International Monetary Fund. I have a great deal more confidence in the effectiveness of the IMF in its capacity as the parole board for the Chancellor than I have in the hon. Member for Cornwall, North in his capacity as a trainee probation officer. It will be the purpose of the party for which I speak this afternoon, well before the Chancellor is set at dangerous liberty by the IMF, to ensure that he does not have the opportunity to present another Budget to this House.
5.0 p.m.
The Chief Secretary to the Treasury (Mr. Joel Barnett): It is perfectly clear that the House prefers to hear the right hon. and learned Member for Surrey, East (Sir G. Howe) talking about interviews that my right hon. Friend gives to Kenneth Harris than any serious speech which he delivers. Given the lack of any serious content in his speech today, I can only assume that the right hon. and learned Gentleman finds the Budget as good as we on this side of the House find it. The only—[HON. MEMBERS: "Where are the Labour Members?"] They are perfectly happy to leave us to deal with the right hon. Gentleman. But the only serious part of his speech was that part dealing with incomes policy where the right hon. and learned Gentleman told us that there was not exactly agreement on the Opposition Front Bench. I shall come back to that in a moment.
One of his major criticisms was about the heavy oil, petrol and vehicle excise duty increases. One does not expect them to be popular but they are, nevertheless, right on both energy and transport grounds. The right hon. and learned Gentleman said that he would prefer an increase in VAT from 8 per cent. to 10 per cent. Such an increase would raise about the same amount of revenue as the increase in duties on petrol, heavy oil and vehicle excise duty, but would add 50 per cent. more to the retail price index than those duties.

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While these duty increases are unpopular with many people in the country, only the right hon. and learned Gentleman, and no one else, is under the impression that an increase in VAT would be popular with the housewives, given that it is across the board. The right hon. and learned Gentleman's alternative would have meant a much bigger increase in the retail price index.
Both the right hon. and learned Gentleman today and the Leader of the Opposition in her own remarks yesterday, asked about the social security benefits. There is no need for a statement in the Budget about social security uprating. But my right hon. Friend the Secretary of State for Social Services will, in due course, be announcing an uprating in pensions which meets our commitment to uprating no later than November in line with prices and earnings, whichever is the higher. Other benefits will be uprated at the same time, also in line with our commitments.
Mr. Patrick Jenkin: As I understand the statutory requirement, it is to have a review of the level of earnings and prices in each financial year ending 5th April. Will such a review be announced before the end of the present financial year?
Mr. Barnett: I shall have to look into whether there has already been a review in this particular financial year with respect to last year's November uprating. As I am sure the right hon. Gentleman will be aware, and as far as I am aware we do not think it will be necessary to have another one in this financial year. However, I am happy to look into the point that the right hon. Gentleman has made. I am not clear what the right hon. Gentleman is seeking to do. Is he seeking to suggest that we should not uprate the benefits or that he would not? I would make it quite clear that we intend to meet our commitment to uprate the benefits.
Mr. Patrick Jenkin: The point is perfectly simple. There are two obligations. One is to conduct a review and the second is to make an uprating. The position on uprating has been made perfectly clear in the Public Expenditure White Paper. All I am asking is when the Government will conduct a review on which next November's uprating will be
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based. As I understand it, that has to be announced in the current financial year.
Mr. Barnett: We shall carry out the review in good time in order to ensure that the uprating is carried out in line with our commitment. We are determined to meet our commitment and we shall do so.
The right hon. and learned Member for Surrey, East did not have a great deal to say about the levels of income tax. The last time we discussed this, he took as his theme what he called "Truth in taxation". It is not surprising that he did not tell us very much more about that today. Having discussed "Truth in taxation" last time—there was the explicit understanding on the part of many of his hon. Friends that it meant indexation—the best that the right hon. and learned Gentleman would tell us about indexation was that in seeking after truth he would consider it seriously. That was the right hon. and learned Gentleman's view about that particular aspect of direct taxation.
We now know from what he said today that he wants to see the borrowing requirement much lower than it now stands to be in 1977–78. But even if he were to cut public expenditure much further than it has been cut already he would not be able to offset income tax reductions on the scale that he has previously suggested to the House. I can only assume that in sticking rigidly to the principle of truth in taxation that is what he means.
With regard to the level of public expenditure, right at the end of his speech during the public expenditure debate, and only after an intervention from the right hon. Member for Down, South (Mr. Powell), was it squeezed out of him that what he was really suggesting—the right hon. and learned Gentleman was obviously not intending to put it in his speech—was much bigger cuts in public expenditure. He gave two areas where he would make these cuts. One was in housing subsidies and the other was in grants to industry.
Perhaps in the pursuit of truth, the hon. Gentleman who is to reply for the Opposition this evening will tell us a little more than the right hon. and learned Member for Surrey, East told us on that occasion. The right hon. and learned

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Gentleman referred to the NEDO Report and that report in turn referred to about £450 million savings. But that would mean an increase of about 40 per cent. in gross rents. Is the right hon. and learned Gentleman really suggesting that that would be the best way of getting the understanding of the people of this country with regard to an incomes policy especially at this particular time? I notice that he does not think so, or perhaps he will tell us on another occasion.
With regard to the level of grants to industry, and again following an intervention from the right hon. Member for Down, South, the right hon. and learned Gentleman said:
"It was he, also, who was so fierce in his denunciation of the damage done by grants to industry, whether on a regional or a non-regional basis, all of which are on a revenue rather than on a capital basis and are areas in which, I suggest, the Government should be making still further cuts to restore the balance of these patterns of spending programmes."—[Official Report, 17th March 1977; Vol. 928, c. 663.]
That was the right hon. and learned Gentleman's view about what we should do. I was rather surprised to hear him refer to them as cuts in current expenditure. In fact, they are capital and not current expenditure. They are for aids to investment. I am surprised that the right hon. and learned Gentleman is not aware of that because they largely come under the Industry Act 1972, and he was a member of the Government which introduced that particular Bill. I am rather surprised to see that that is his view.
I accept that there is a case for examination with regard to transfer payments. But what industry wants at present above all else is stability, with regard to both taxation and grants. To suggest that one of the best ways to help industry at this time is to remove all these grants suggests to me that the right hon. and learned Gentleman is not in touch with the people from industry who are in touch with us.
Before I turn to the Budget, I should like to draw the attention of the House to the fact that along with the Budget Statement we are debating four EEC documents, on the recommendation of the Scrutiny Committee of the House.
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In some important respects they are out of date or constitute a record of economic events rather than a prescription for future action. The one exception is Document R/566/77 concerning the adjustment of economic policy guidelines for 1977. This is an updating of the draft annual report on the economic situation which contains guidelines for each Member State, in Document R/2520/76. I apologise to the House for all these complicated numbers. Document R/567/77 is a report on economic policies pursued by member States last year, with an assessment of the progress, or lack of it, towards convergence of the economies of the Community. Finally, Document R/2361/76 contains the draft Fourth Economic Policy Programme with medium-term guidelines for the Community as a whole up to 1980. All these documents have been adopted by the Council after a recommendation by the Scrutiny Committee that their adoption need not be held up pending parliamentary debate.
I hope to deal with our general economic policies as referred to in these documents, but if here are any specific questions my right hon. Friend the Financial Secretary or my hon. Friend the Minister of State will be happy to deal with them later in the debate.
This Budget will, I believe, be seen as an important turning point in progress towards achieving our objectives of full employment, steady economic growth and inflation no higher than our competitors'. These objectives are, of course, dependent on an improvement in our industrial performance. That in turn will depend on both sides of industry. All Government can do is create the right conditions. This Budget, and the measures that preceded it, have created the right conditions, and I should like to deal with some of them.
First, we have, both now, and in prospect, a more stable financial background than we have seen for many years. Internally, the public sector borrowing requirement is within the totals quoted in the Letter of Intent, and there should be no difficulty financing it. On the external side, our balance of payments should be improving in the second half of the year and be in surplus thereafter. Domestic credit expansion will also be safely within the previously stated limits.

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The associated growth of the money supply, as my right hon. Friend pointed out, is expected to be within the same range—9 per cent. to 13 per cent.—as we set for this financial year.
All this, plus the better balance achieved by the reduction in public expenditure, will ensure that the necessary financial resources will be available for industry, and, above all, that the resources will be available at much lower rates of interest.
Second, we have helped industry directly, both companies, and their employees, as well as small firms the self-employed. I should like to deal with some of the measures.
First, on company taxation, we have confirmed that the 100 per cent. first-year capital allowance will continue, as will stock relief. Taking both together, most expanding companies will pay virtually no corporation tax at all. That is what is most important for the economy of this country. Concerning small companies, the level for the lower rate of corporation tax has been increased to £40,000, with marginal relief going up to £65,000. This means that over 95 per cent. of all companies are covered by these rates. Equally, small, non-incorporated firms and the self-employed will benefit from the 100 per cent. capital allowance and stock relief.
We have also extended the ceiling for retirement annuity relief from £2,250 to £3,000. That is something that I should have thought would be widely welcomed. It is certainly welcomed outside the House. I would have hoped that it was also welcomed within the House. It will enable the self-employed to provide for their retirement in a better way than they have been able to do previously, by setting off the payments under these annuities at the marginal rate of tax to which they are subject.
We have not been able to do as much as many would have liked in reducing the level of income tax. However, those who condemn us and say that we have done too little in reducing income tax are often precisely the same people who also want to see a massive reduction in the level of the public sector borrowing requirement. However, taken together with the 2p reduction in the basic rate that we hope to be able to introduce, I
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believe that the profiles of the rates are very much better than has perhaps been appreciated.
If we had taken the whole of the £2¼ billion and used it wholly on the threshold, of course that would have been better in one sense, in that one would have taken far more people out of tax altogether. But one would have done nothing about differentials between the unskilled and the skilled. The net result of doing it all on the threshold would be to give exactly the same cash benefit to a man earning, say, £30 a week as to a man earning £120 a week, whereas by reducing the basic rate by 2p one does more for the skilled worker on average earnings and up to twice average earnings.
Mr. Julian Ridsdale: Is it not rather robbing Peter to pay Paul? Has not the cut-back in the rate support grant meant that many householders are having to face an average increase in rates of 15 per cent.?
Mr. Barnett: I do not think that one can look at one aspect of the economy on its own. I think that we were right to reduce the amount of the rate support grant in order to ensure that we had a better control over local authority current expenditure than had previously been available to us. We are now getting a much tigher control, even though it is only indirect control, than we have had in the past by using the 61 per cent. plus cash limits on the grant itself. I think that it has been very effective. We have not reduced the level of local authority current expenditure as much as we would have liked, but certainly by 1977–78 I should hope that local authority current expenditure will be down, in accordance with what we have been seeking in the local authority consultative council.
However, we could have done more as regards income tax only if there had been further large cuts in public expenditure. It is a view taken perfectly reasonably by a number of right hon. and hon. Members, but the right hon. and learned Member for Surrey, East has always suggested that it should be done almost entirely on subsidies. To take the point made by the hon. Member for Harwich (Mr. Ridsdale), that would certainly be robbing Peter to pay Paul, because one would take in one hand

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from one group of people—for instance, council house tenants—and give very much more to people with higher incomes. I am not sure—to say the least—that that would be an ideal way of getting an incomes policy in the coming round or of holding to the existing round.
One other measure that I think industry will find helpful—indeed, the right hon. and learned Gentleman welcomed it, although in a somewhat confused way—is the special help to those who work abroad, particularly export salesmen. It provides for a 25 per cent. deduction for those working abroad for 30 days or more. I think that this again is generally widely welcomed. We have changed the measure from that contained in the consultative document put out in December to ensure that the relief will be more readily available to those who go abroad for short periods.
Perhaps the greatest help that we have provided for industry in this Budget, and by what we have done previously, is to create much greater stability. For example, I would myself prefer the previous kind of corporation tax system. I do not happen to like the imputation system introduced by the previous Conservative Government. I know that I am not alone in that. It is not a political matter but a matter of what one considers to be the more appropriate system.
However, much more important than the system itself, whether or not one likes it, is the maintenance of some stability so that industry understands the system rather better than if it were constantly being changed. We have helped the expanding companies—even with the imputation system—through the 100 per cent. capital allowance and stock relief. Therefore, in that respect the stability that we have created will be of great benefit to industry.
I have described just two areas where I believe we are creating the right conditions so that industry can improve its performance—through a stable financial background, and by improvements in direct taxation.
But the third area is the most important of all. I refer to incomes. There can be little doubt that the greatest help that we could provide for industry at this
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time would be to obtain a satisfactory agreement on a third round of pay policy. There can equally be little doubt that after not just two years but many years of different kinds of incomes policies, the widening of differentials and the other forms of flexibility that we now need will not make the achievement of a third round easy.
However, it is vital that we achieve it. The alternative of seeking to remove all anomalies and widen differentials too rapidly would cause a pay explosion that would destroy all our hopes of cutting the rate of price increases and the level of unemployment. I believe that trade union leaders understand that only too well. As the TUC Economic Review makes clear, trade union leaders are not in favour of a free-for-all.
If we want moderation in pay claims, we must understand the problems facing trade union members. It is in that spirit that we took careful note of the representations made in the TUC Economic Review. We could not meet them in a number of important areas. We could not, for example, take action that would, overall, give too much of a stimulus to the economy, thus breaking our commitments on fiscal and monetary policy. The consequences for the exchange rate and inflation would be as disastrous for trade unionists as for everyone else.
We have made income tax reductions that trade unionists recognise as being essential. We have provided finance for selective employment measures and for some help to the construction industry through assistance to the inner city areas. We appreciate that the TUC and many others would have preferred no offsetting indirect tax increases at a time when the crucial problem is bringing down the rate of inflation, but we felt that we had to have a little leeway to make larger cuts in direct taxation.
The indirect tax increases have a minimal effect on inflation—namely, about 1 per cent. They have been chosen because they have the least possible effect on employment while meeting important social and economic objectives in health, transport and energy.
Taking all that we have done in the Budget, including the reduction in the basic rate of income tax that we hope will be possible, I am confident that trade union leaders and, more important, their

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members, will recognise how essential it is that we should be able to conclude a third stage of pay policy. We should then be able to break out of the series of stop-go cycles that we have been in since the war, which have been created by higher wages chasing higher prices chasing higher wages, to the disadvantage of everyone both inside and outside industry.
We now have a golden opportunity of seeing the end of stagnation, of moving to a new era of moderate but real wage increases, bringing about lower price increases, more jobs and a steady improvement in living standards. No real improvement can be achieved without an improvement in our industrial performance but there is no better way of achieving that than by creating and maintaining the conditions that I have described—namely, a stable financial situation internally and externally, a stable tax structure for industry that provides an incentive for expansionist-minded companies, combined with improved personal incentives for employees, and an incomes policy that provides companies competing at home and abroad with a greater degree of certainty in relation to their industrial costs.
We did not hear too much this afternoon from the right hon. and learned Member for Surrey, East about the alternative that is offered by the Opposition. However, we have had it on previous occasions.
Mr. David Howell: My right hon. and learned Friend made our position very clear.
Mr. Barnett: It has been made somewhat clearer on previous occasions. In my view the alternative that is put forward by the Opposition does not bear contemplation in current circumstances. It is based more on hope than on expectation. Last week the Spectator stated:
"We should be told in the near future not just that a Conservative Government would balance the budget but exactly how it would balance the budget".
That raises interesting questions. We have not had answers to them this afternoon or on previous occasions.
The right hon. and learned Gentleman went into a somewhat convoluted part of his speech when dealing with incomes policy. I hope that those who heard it
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will now be clear about the Opposition's view about incomes policy. As the right hon. Member for Leeds, North-East (Sir K. Joseph) is on the Opposition Front Bench, perhaps he will tell us whether the Shadow Cabinet is in favour of an incomes policy and negotiation with the trade union movement. Is that the view of the Opposition Shadow Cabinet? We heard the right hon. and learned Member for Surrey, East—this was the only serious part of his speech—going on about incomes policy. None of us is any clearer about the view of the Shadow Cabinet.
Mr. Jim Craigen Mr. Jim Craigen (Glasgow, Maryhill) rose—
Mr. Peter Walker Mr. Peter Walker (Worcester) rose—
Mr. Barnett: I should love to give way to someone from the Opposition Front Bench. I give way to the right hon. Member for Worcester (Mr. Walker).
Mr. Walker: I ask the right hon. Gentleman about his incomes policy and the calculations that he has made. He talks of a public sector borrowing requirement of £8,500 million. He must have calculated what was necessary in that policy for public sector wages. At present they are £26 billion. A 10 per cent. increase in public sector wages will add £2·6 billion to public expenditure. What calculation has the right hon. Gentleman made to take account of an increase in public sector wages?
Mr. Barnett: We cannot separate an incomes policy and apply it only to the public sector, as the right hon. Gentleman is only too well aware. I know that he has honestly stated his view and that he is in favour of trying to achieve a voluntary incomes policy with the trade union movement. I am sure that he would not want to separate an incomes policy and to make a calculation that is based purely and simply on the cost for the public sector. However, I appreciate his point. We want an incomes policy that achieves a rate of price inflation in single figures by 1978 and continuing to reduce thereafter. That is the objective, and it is the objective of the TUC.
It is important that the country should know whether the Opposition Front Bench shares that view and whether its occupants want to have a voluntary

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incomes policy. We heard the right hon. and learned Member for Surrey, East talk about inescapable consequences that are to be understood. He said that he wants an understanding with the country at large. Does he want to have a voluntary incomes policy with the TUC? It seems that we are not to have an answer from the Opposition Front Bench. I give way to my hon. Friend the Member for Glasgow, Maryhill (Mr. Craigen).
Mr. Craigen: I listened to the right hon. and learned Member for Surrey, East (Sir G. Howe) and he did not make his policy clear. I had the impression that he was saying that the Chancellor is a big spender of public moneys and that he himself would be a wee spender. He seemed to be saying that when it comes to an incomes policy, he is a suspender.
Mr. Barnett: I share my hon. Friend's failure to comprehend the Opposition's policy. I wish that they would make it clear.
Mr. William Clark Mr. William Clark (Croydon, South) rose—
Mr. Barnett: The hon. Gentleman is not yet on the Opposition Front Bench. If he were, I am sure that he would do a better job than some of its present occupants. However, he cannot speak for the Shadow Cabinet.
Mr. William Clark: The Government have said that the reduction in the standard rate of tax from 35p to 33p is dependent upon a satisfactory incomes policy being arranged. My right hon. and learned Friend said that if it is calculated that the public sector borrowing requirement is £8,500 million, the Government must have taken some cognisance of the amount that was to be paid in the public sector in salaries. I am not mixing up the public sector with the private sector. I accept that if there is a 5 per cent. increase in the public sector, there is a 5 per cent. increase in the rest of industry. If the £8,500 million borrowing requirement is based on a notional 5 per cent. increase in the wage and salary costs of the public sector, a 10 per cent. increase would clearly give us something more. Will the right hon. Gentleman be a little more explicit about the conditions that are attached to the ordinary taxpayer paying a standard rate of 35p or 33p?
Mr. Barnett: Clearly that depends upon the Government remaining in office, which I am sure they will do for a very long time. Equally, I am confident that we shall be able to negotiate a satisfactory pay deal. The hon. Gentleman will find all the assumptions surrounding the cash limits calculations set out in the cash limits White Paper. I am surprised that he has not read it with his customary assiduity. If he does so, he will find incorporated in the figures assumptions about pay increases next year. What will eventually happen to pay increases next year will become clear as a result of the negotiations with the TUC.
Mr. William Clark Mr. William Clark rose—
Mr.Barnett: I would rather have an intervention from the Opposition Front Bench. I know that the hon. Member for Croydon, South (Mr. Clark) is an illustrious figure in Tory Central Office. It may be that one day he will be translated to the Opposition Front Bench so that I may see him at closer quarters. But at present the right hon. Gentleman cannot speak for the Opposition Front Bench, and those on it are remaining remarkably silent about the Opposition's policy on incomes.
Mr. Peter Hordern: As the right hon. Gentleman is so interested in our incomes policy, perhaps he would be good enough to tell us what the Government's incomes policy is and what they are negotiating with the trade unions. We are being asked to consider a Budget that is apparently being settled with the trade unions. Will the right hon. Gentleman tell us what the wages increase will be?
Mr. Barnett: I thought that my right hon. Friend the Chancellor of the Exchequer made it crystal clear yesterday. It was crystal clear to me and my hon. Friends that, subject to our achieving a satisfactory pay deal, there would be a 2p reduction in the basic rate of tax. I am surprised at the hon. Gentleman, who has tried the oldest trick in the game. He is not prepared to tell us what the Opposition want to see. The hon. Member for Guildford (Mr. Howell) should stop whispering in his hon. Friend's ear. His hon. Friend manages without him sometimes—not always, but he tries.

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We have been told by some right hon. Members on the Opposition Front Bench that they hope that our negotiations with the TUC will succeed and that we shall be able to negotiate a voluntary pay deal, but is that the Opposition's official policy? We know the view of the right hon. Member for Leeds, North-East. He writes and speaks on these matters very lucidly, much more lucidly than the Shadow Chancellor, who was a little unclear today. Perhaps the right hon. Gentleman will be able to explain it all tomorrow, or at least to explain his own view, if not that of the Shadow Cabinet.
Normally, the Shadow Chancellor's answer to all our problems is to cut income tax, but he told us today that he also wants to cut the borrowing requirement by substantial sums, and one assumes that, as he is truthful in all things, he would not also want to cut income tax. He would want to cut public expenditure and reduce transfer payments and subsidies to reduce the borrowing requirement, but not to cut income tax. Maybe that is the view. If not, it would not exactly be a way of balancing the Budget.
Mr. David Howell: As the right hon. Gentleman is being so coy about the contents of his cash limits White Paper, will he confirm to my right hon. Friend the Member for Worcester (Mr. Walker) that the figure he has in mind is a 10 per cent. increase in gross earnings for 1977–78, which would mean a pay increase for negotiation with the trade unions of about 5 per cent?
Mr. Barnett: Hon. Members should know better than that about the cash limits. We have had cash limits for a little while now. The cash limits White Paper contains assumptions, not forecasts, of what will happen in a pay deal. In any event, pay deals in the public sector are not settled until the end of the year, so the element for pay settlements that are not known is a very small amount, as the hon. Gentleman knows very well, and the margin of error is very small.
The hon. Gentleman keeps asking me questions, but he has never answered one, nor has anyone else on the Opposition Front Bench. I am paid to answer questions, but also to ask some occasion-
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ally. I never seem to receive any answers to my questions.
It is very interesting to note the Opposition's view on the best way to solve our problems and improve our industrial performance. What they are suggesting would certainly not be to the liking of industry. Here I quote in aid Mr. Hugh Stephenson, in an article in The Times last Monday. I gather that the hon. Member for Blaby (Mr. Lawson) suggests that he is a member of the Labour Party. That does not make the article wrong. Mr. Stephenson wrote:
"No one for a moment should be confused into thinking that the investing public or institutions would support the Labour Party in an election when it came to one … there are also strong residual doubts concerning the bones of the Tory industrial policy, even in the minds of bankers, financiers and industrialists of an essentially Conservative disposition."
I should think that there are doubts about not only the bones but the skin as well, certainly after this afternoon. Then we come to the most interesting part, which is true whoever wrote it:
"In shipbuilding, cane sugar refining, steel making, machine tooling, ferrous founding, telecommunicating and scores of other industries those concerned know that the future depends on a greater or lesser degree of planning and assistance involving the Government in one form or another. Equally, scores of companies with good records and prosperous prospects in as many more industries know that their future has been made more secure with Industry Act help."
We know that the Act was put on the Statute Book by the previous Government. We also know what some Conservative Members would like to do with the Act. [HON. MEMBERS: "Hear, hear. I note the support for that view, but is it the view of the Opposition Front Bench, of the Shadow Cabinet? We do not know, but I fear that all that would be thrown away if ever we were to have the horror of another Conservative Government.
The Conservatives' policies undoubtedly create such despair that they manage to bring together the CBI, the TUC, the City, the banking community and pretty well Old Uncle Torn Cobleigh and all. That is what just the slightest fear of the introduction of their policies did to all kinds of people. It is no wonder there was a collective sigh of relief last Wednesday night when the Conservatives lost the vote. The Opposition

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Front Bench is in trouble on this matter as on everything else.
There can be only one way forward, and that is through the policies set out by my right hon. Friend the Chancellor in his Budget Statement yesterday. The national interest is not helped by the pretence, implicit in the speeches of Conservative Members, that there is a simple, instant solution to our problems. Our problems are too deep-seated and have been with us for too long.
We all hear complaints about high prices, low net take-home pay and falling living standards. If we are honest, we must admit that we do not reduce inflation generally by artificially holding down one price with money that has to be found at the expense of something else—[HON. MEMBERS: "Hear, hear."] I have a note saying that if Conservative Members cheer at that point, I should remind them of the £1,181 million that they provided in subsidies for the nationalised industries under their legislation. It is very strange that they are now cheering a straightforward statement of fact—and the right hon. Member for Leeds, North-East is nodding agreement—when they did something very different when they had the opportunity.
Of course, artificially holding down one price is not the way in which to deal with the problem, although it may occasionally be possible to help a particularly hard-hit group of consumers. Equally, we do not automatically improve living standards by large increases in net take-home pay. We shall improve real living standards only by a real improvement in our industrial performance.
I believe that by the means I have described, together with the increasing flow of North Sea oil, we have provided industry with the sort of background from which it can move forward as never before. North Sea oil is not a panacea, and it will not last for ever, but if it is used wisely, combined with our newfound financial and economic stability, we can see the end of stop-go. But it must now be for industry to grasp the opportunity that has been provided.
Mr. Deputy Speaker (Mr. Oscar Murton): Mr. Pardoe.
5.40 p.m.
Mr. John Pardoe Mr. John Pardoe (Cornwall, North) rose—
Mr. Kenneth Lewis: On a point of order, Mr. Deputy Speaker. While I fully realise that the calling of speakers is at the discretion of the Chair—
Mr. Pardoe: Then why does not the hon. Gentleman sit down?
Mr. Lewis: I want to know whether there is a new rule that says that one Government supporter should follow another.
Mr. Deputy Speaker: That is entirely for the discretion of the Chair. I called Mr. Pardoe.
Mr. Pardoe: It is perfectly true, as the right hon. and learned Member for Surrey, East (Sir G. Howe) said, that my first reaction to the Budget last night was to call it a Budget of hope. I do not think that that was an ecstatic reaction—that might be a misnomer. If anyone was near to ecstatic it was the City editor of the Daily Telegraph this morning and those who deal with the £ sterling. I said last night that it was a Budget of hope, and upon further reflection overnight I still think that. In the present state of the economy hope is about the only commodity for which we can hope.
I want to make it clear to some hon. Members and to the Press that, contrary to Press speculation, which misled the right hon. and learned Member for Surrey East, I did not write the Budget, and it shows. The Sunday Times appears to think that is a great pity that I did not. The Sunday Times leader last Sunday said:
"The Chancellor rises on Tuesday in a changed political world. It is a pity that the arrangement with the Liberals has come too late to allow them any influence on his Budget. We believe that in this area, as in others, Liberal influence would be beneficial."
To that I say "Hear, hear". I see that one Conservative Member put down a Question asking the Chancellor whether I had been told all the Budget secrets. That is a ridiculous Question to table and it makes a mockery of Question Time, because the answer is so obviously "No". Hon. Members really should not try to seek answers they already know.

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I take this opportunity to deny suggestions that have been made about the pay round negotiations. There was an extraordinary suggestion in yesterday's edition of The Times, and I object not to the fact that the author that the right hon. and learned Gentleman quotes—Mr. Hugh Stephenson—is a member of the Labour Party, but to the fact that he wrote for The Times. Yesterday it was suggested that I and my hon. Friend the Member for Rochdale (Mr. Smith) claimed that we should be party to the pay round negotiations with the unions. The Times never bothered to ask me or my hon. Friend about this, and the fact is that the suggestion was never made by either of us. I have views on pay policy and I shall say something about them later, but of course I never thought that we should be involved in these negotiations.
In all humility I offer Ministers some words of advice: I hope that they will beware of journalists who ask them to comment on alleged remarks by Liberals about Liberal influence on policy. Not all journalists actually wish the Liberal Party well, any more than they wish the Labour Party well. There are some who know nothing more than what they find at the bottom of a whisky glass. There are some who spend their time ringing up Ministers and saying that a Liberal spokesman has said this and that. Ministers should ponder a moment before they reply to such tittle tattle. They should consider that a quiet and dignified note of scepticism is more appropriate than a loud, quotable explosion.
Mr. John Biffen: Will the hon. Member dispel any speculation in the Press about how the Liberal Party will vote on Budget Resolution No. 11 on hydrocarbon oils and No. 15 on vehicle excise duty, since he has his own views on these matters which have been well documented in the past? We shall watch with interest the way in which he votes on Monday night.
Mr. Pardoe: The hon. Member must await the rest of my speech, and he may even have to wait until Monday night. But I am not likely to go back to the familiar words that the right hon. and learned Member for Surrey, East read out from the Front Bench this afternoon.
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It is easy for Conservatives to make capital out of the past failures of the Chancellor. There is no easier game on earth than that. But they only do so by relying on the short public memory of Conservative errors. The present leadership does not want to be judged by the mistakes of Lord Barber. I understand that. For all his manifold sins and weaknesses, no one could say that the present Chancellor is worse than Lord Barber.
I shall try not to judge either the Conservative or Labour Party by the past, because I would not want anyone to judge the Liberal Party by what the Liberal leadership did to Ramsay MacDonald when it sided with Montague Norman and the Conservatives against the advice of Lord Keynes. It is futile to look back in that way. But both the Chief Secretary and the right hon. and learned Member for Surrey, East opened their speeches by looking back at the past and I, too, shall give the Liberal view of the past.
I begin with a statement made on television by the Chancellor on 26th March 1974, when he said:
"The way I look at it is this: within a few years' time oil will start flowing in from around our shores, and a lot of our problems will be that much easier. So the job is to get from here to there without either our economy or our society breaking down."
The folly in that statement and strategy, if it was a strategy, was that it grotesquely underestimated the appallingly low state of the British economy. It was the weakest economy in the Western world in terms of equipment for dealing with the 1973 oil crisis.
I prefer the words of Dr. Edmund Stillman, of the Hudson Institute, who said:
"North Sea oil is one of a series of evasions of reality which Britain has developed to avoid confronting harsh economic competition."
The Chancellor's speech yesterday was very different. He said:
"Our aim must be to earn a balance of payments surplus in conditions of full employment.
The growing output of North Sea oil will not be sufficient to achieve this."
He went on:
"In sum, North Sea oil will not itself create a large number of new jobs, nor will it make possible a rapid return to full employment."—[Official Report. 29th March 1977; Vol. 929, c. 262–3.]

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That is the reality and it is a pity that the Chancellor did not recognise it and did not realise the full extent of the British economy's weaknesses when he took office. I do not deny for one moment—and I do not think that anyone can deny—that the Chancellor's inheritance in 1974 was a bad one.
The added value, the wealth created per employee in British manufacturing industry was, is, and has been for a long time appallingly low by international standards. The wealth created per employee in manufacturing industry was £2,615 in 1973 and 66 per cent. of that went in wages and salaries. In a sample of 416 Japanese manufacturing companies for the year ending 30th September 1974 the added value per employee was £8,083, of which 42·3 per cent. went in wages and salaries. One must note that in spite of the extraordinary differences in percentages between us and the Japanese because of the very much higher added value in Japanese manufacturing industry, the actual amount paid out in wages and salaries per employee was £1,726 in this country and £3,420 in Japan.
Mr. Ridsdale: Is it not a fact that the reason for this is that wage increases are negotiated on a company basis in Japan and not a national basis?
Mr. Pardoe: If the hon. Gentleman is referring to incomes policy, I agree that that is partly responsible. They are tell-tale figures. They represent a state of British industry over a long period of time.
The short-term inheritance is pretty bad. Money supply, having increased very rapidly before the Chancellor took over, could only equal inflation in the pipeline. One can argue whether money supply usually rises to meet inflation, or whether it goes up in advance and creates inflation. But in the circumstances of the early 1970s, I do not see how there can be any doubt that a 60 per cent. increase in money supply in two years, which happened in 1972–73, will produce a mass of inflation in the pipeline.
Moreover, Conservative pay policy was catastrophic. We warned at the time that commodity prices would not fall as the Conservatives were then predicting, and that phase 3 of that policy was ruinously
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over-generous and was a recipe, not for controlling inflation but for teaching the British people how to live in a banana republic. At that time the Conservative Government decided to index wages without at the same time indexing the capital side of the economy. If one indexes incomes but not capital, one destroys the whole capital base of that economy.
Mr. David Madel: If phase 3 of the Conservative Government's policy was regarded as too generous, was that why it was Liberal policy to offer the mineworkers less?
Mr. Pardoe: The Conservative Government set up a relativity board to do the job that the National Board for Prices and Incomes would have carried out if the Conservatives in 1970 had not abolished it. We would not have abolished that board and would not have got ourselves in the same situation vis-à-vis the miners as did the Conservatives. It is true that we voted against phase 3, and if the hon. Gentleman looks at the record he will see that we so voted because we thought that phase 3 was over-generous. However, Liberal warnings at the time went unheeded.
The worst part of the inheritance involved increases in oil prices. That necessitated a reduction in real living standards, real disposable income, and there was nothing that anybody could have done about it. That had to happen because of external forces. It is extremely difficult to govern a country and to manage it when people, to use the Macmillan phrase, have never had it so good and when they constantly expect living standards to rise as though that were in the natural order of things—and that in a country where standards have fallen, as has happened in the last three years.
The greatest criticism I have of the right hon. Lady the Leader of the Opposition is that in all her utterances on the economy she makes governing Britain sound a darned sight to easy, and frankly it is not—[HON. MEMBERS: "Oh."] It is a pity that Conservatives who have had experience of office have not learned the responsibilities of office. We at least have learned them in Opposition.
Mr. Timothy Raison Mr. Timothy Raison (Aylesbury) rose—
Mr. Pardoe: No, I cannot give way.
I wish now to turn to the IMF limits, whether the Government were wrong to enter into them, and whether we should have accepted those limits. We have given an undertaking and we should stick to it. There is little argument about the Budget judgment. That is largely irrelevant, and I believe that it is a good thing that Budget judgment this year has been de-mythologised. It is not very much more useful to try to forecast the PSBR. The PSBR is not much more than a crystal ball. People who persist in looking into crystal balls have only themselves to blame if their predictions turn out to be roughly the same shape.
Even in December the Treasury was making a £2 million error, because its officials partly underestimated the effect of cash limits, especially at local authority level. Moreover, interest rates are falling. The National Westminster Bank today announced that its borrowing rates will be 9½ per cent.—a drop of 4½ per cent. in three months. Therefore, the Chancellor is likely to have more to play with than he has been estimating. It may be that he will be able to use a little extra in his negotiations with the unions, because two points off the standard rate do not sound a lot with which to be going into the rough bargaining chamber.
Let me turn to the subject of taxation. I believe that there are two central things wrong with the British taxation system. The first is that income tax is too high and is out of the control of Parliament because of the insidious workings of inflation. Total taxation is not so high. We are not a heavily taxed nation compared with the rest of the world. It just feels that way. [HON. MEMBERS: "Oh."] It is true that we are not. If one draws up a ghastly league table, one sees that of the 10 major industrial nations only Japan has a lower proportion of the national product going in taxes than we do. Other countries, such as Germany and France—whose inhabitants do not complain about taxation half as much as we do—have a higher proportion of national product going in tax.
The main reason is that they impose far less income tax but suffer a far higher proportion in indirect tax. In 1976–77 income tax amounted to 17 per cent. of total tax requirement, including national insurance contributions; in West Germany
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the figure was 33 per cent., and in France 20 per cent.
The main culprit in all this is the lack of revenue we obtain from national insurance contributions. In this respect the figure in the United Kingdom is 17½ per cent. of total tax revenue, 30 per cent. in West Germany, and 40 per cent. in France. Employers will not like me to point that out, but they now pay less than 9 per cent. of their wages bill in national insurance contributions, whereas employers in Western Germany pay 15 per cent. of the wage bill and French employers 31 per cent. in those contributions.
The Sunday Times Business News contained a report on a proposal along these lines. I should like to make it clear that it is not, as stated in that article, Liberal policy. It is a discussion paper put up to a tax panel and it comes from a working group. That paper will have to be considered along with many other working papers of a similar sort, before it becomes part of party policy—if it ever does. I think that cuts in income tax should be massive.
Mr. Hordern: I have the article in The Sunday Times to which the right hon. Gentleman refers. Would he care to deny the report, which says:
"Dramatic new proposals, including a 53 per cent. cut in Britain's income tax burden, and a major change in the basis for future pay policy negotiations, have been prepared by the Liberal Party. They are already under discussion between the Liberal leaders, Labour Cabinet Ministers and top trade unionists."?
Is that report inaccurate?
Mr. Pardoe: The document has been submitted to the Treasury, and it has been discussed with various trade union leaders. I hope that the Conservative Party also takes the chance of consulting a few interested people outside Conservative Central Office on its research documents. That should do a great deal to improve the quality of Conservative Party policy in future.
I believe that there should be a major cut in income tax. I do not think that a cut of 55 per cent.—55 per cent. is the figure—is too much, but it must be phased over a period. There is no doubt that the effect of reducing income tax would be extremely beneficial in two sectors. The first sector on which it will bite is the poverty trap, because it would

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enable us to raise thresholds and overcome difficulties in that area.
Secondly, it would have a tremendous effect on small businesses. The plight of small businesses is one of the biggest problems of British industry. There are in the United Kingdom 27,000 manufacturing firms employing 10 or fewer people. In Germany and France there are well over 150,000 such firms. If we had anything like that number of small manufacturing businesses, we should have about 500,000 more jobs in manufacturing industry at the most progressive and dynamic end of the manufacturing sector.
I am convinced that a reduction in income tax will enable people, by being able to save personally rather than through the tax system, to channel savings through the institutions and it will provide risk capital to a far greater extent to bring about a high birth rate of small businesses. However, the Chancellor has made a start by moving from taxes on income to taxes on expenditure. I repeat that it is no more than a start. It is more a nibble than a decent bite. I hope that the right hon. Gentleman will be far more daring and radical in future.
After the Budget changes, the income tax forecast is 39·49 per cent. of total tax, including national insurance contributions, compared with an outturn last year of 41·25 per cent. We must remember that in 1969–70—the last year of the previous Labour Government—the figure was 28·73 per cent. An enormous increase has taken place in that period.
The Liberal Party has been committed to indexation of taxes for a long time. The Chancellor has not introduced it this year, and he has not raised allowances to the levels of April 1976, let alone April 1973. It must be done and done formally. I hope that there can be a firm agreement among the parties about this and that the Conservatives will commit themselves to indexation of the tax system. I hope that if an amendment on indexation is moved in the Finance Bill Committee, the Conservatives will vote for it.
Taxes should be raised with the open consent of Parliament. Fiscal drag is the tax which Parliament does not have to vote. Income tax could not have
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become such an intolerable burden if it had been indexed. The PAYE system, coupled with high inflation, makes tax gathering too easy and when tax gathering is easy, public spending becomes wasteful and inefficient. I hope that we can use this unique parliamentary situation to do what Parliament is meant to do and ought to do, namely, control taxation.
The Budget increases in indirect taxation are the necessary other side of the coin of a substantial reduction in income tax—although the reduction is not anything like as substantial as we should have liked. There are ways and means of doing these things, and a standardisation of VAT at 10 per cent. would be infinitely preferable to the effects of a rise in petrol tax.
It is all very well to say that the effect of VAT on the retail price index over the whole country would be greater than the effect of a rise in the petrol and car taxes, but the spending patterns of people in rural areas is vastly different from those of people in urban areas. In rural areas there is no public transport as an alternative and a car is a necessity, not a luxury. There must be new thinking on this subject, because it is utterly intolerable that in the rural areas —and, in the absence of even the White Paper on transport in rural areas, for which we have been waiting for months —the price of petrol and car tax should be increased. Also, in rural areas, because of lack of competition, petrol prices are already substantially higher than they are in urban areas.
Mr. Nicholas Ridley: While agreeing with every word that the hon. Member for Cornwall, North (Mr. Pardoe) has said about the inequity of the increased petrol tax, may I ask whether he and his hon. Friends will be in the Lobby with us against that when it comes to the vote?
Mr. Pardoe: I shall do a deal with the hon. Member for Cirencester and Tewkesbury (Mr. Ridley). If he will support me on indexation, I might just possibly be tempted to support him on petrol tax. The best answer that I could give to him would be to quote the words of a great and revered Liberal Party Leader of the past—wait and see.

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The right hon. and learned Member for Surrey. East referred to the virginal purity of the Liberal Party, but I do not want to claim anything like that. I regard stage 3 as absolutely essential because if we do not get it we shall go into the stratosphere of inflation. Wages are coming down as a proportion of total inflation. They represented three-quarters of inflation in 1975, but half in 1976. We must achieve an effective stage 3.
If we try to rely on monetary policy alone, we shall find that when we come—as we inevitably shall—to face a wage explosion, the monetary floodgates will be pressed hard and if they hold—as they must—wages will be able to rise only at a cost of higher unemployment and lower profits and therefore investment. The company sector will be squeezed short of cash, and there will be no job-creating investment, so unemployment will rise. That would be the short-term consequence of trying to take the strain upon the money supply without an incomes policy.
Neither Government nor Opposition have spelled out what they regard as a reasonable incomes policy. Some people start from the fact that the retail price index is forecast to go up by 13 per cent. Some trade unions say that they must compensate their members for that. We must ask a different question. What will happen to the resources available to pay us? The answer is that those resources will hardly rise over the next year. In an ideal world the norm is "nowt". That is really all the extra that the British people can afford to pay themselves in the coming year. However, we live not in an ideal world, but in the real world. The increase should be no more than 5 per cent., not at national level but at plant level bargaining. It must be at plant level because that is where the problems of differentials and productivity bargaining can be worked out. Five per cent. is the absolute limit.
The real danger to the British economy is that, although the balance of payments will come right within the next year or two and look attractive throughout the 1980s, the underlying balance of payments of the manufacturing sector will be as appalling as it has been for a long time. The whole of the improvement in the balance of payments will
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come from North Sea oil. When North Sea oil starts to decline and we again become an importing nation, we shall find that we have the chronic balance of payments problem that has bedevilled us for as long as most of us in the House can remember. We must use this period to make our manufacturing sector competitive and efficient and to raise output and value added per man.
This Budget can in no sense be regarded as an election, or even a by-election, Budget. It is—as most of the serious Press has today recognised—a responsible Budget. It is at least a step back on the road to fiscal sanity.
6.9 p.m.
Mrs. Barbara Castle: I listened for what seemed rather a long time to the three speeches of the party spokesman and I could not help wondering whether it was because they are men that none of them ever referred to one of the most serious flaws in the Chancellor's Budget strategy—his failure to use any of his £2¼ billion to help children or the mothers who bring them up.
We have talked a lot today about the purposes of the Chancellor's strategy. There is pretty general agreement in the House that he has his purposes right. The Chancellor wants to relieve the intolerable pressures on people's circumstances and to restore fair differentials in our society. Above all, the Chancellor wants to underpin the pay policy. However, the House has failed this afternoon to grasp the central rôle that the mothers in our society play in that strategy. Do not let us forget that the mothers of young families are feeling the pinch of inflation most. Over successive years, under successive Governments, they have received the least attention and the least relief.
That is where the anger is accumulating. I agree with the hon. Member for Cornwall, North (Mr. Pardoe) that this is not a by-election Budget. Women voters are in the majority, a fact that we forget at great risk, and they will be deciding whether the Government are helping them to deal with the sort of domestic problems with which they are struggling. It is the women who are angry at inflation and at their wits' end to know how to continue to feed and clothe their families. It is a matter of great regret that in a

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Budget that pushes up the Index of Retail Prices by another 1 per cent. as part of the effort to enable the Chancellor of the Exchequer to give £2½ billion in tax reliefs none of that money is to go to meet the problems faced by these women.
I thought that there was all-party support for child benefits. It is not so long since there was anger in all parts of the House at the Chancellor's decision to ditch the child benefit in his last Budget. However, no one seems to have realised yet that in this Budget we are, in effect, continuing to make the mothers of this country pay the price for a continuation of the pay policy.
I wish to spell out some figures in detail. The child benefit was ditched last year because the Government wanted to link pay restraint with increases in take-home pay through tax reliefs. As a result of the outcry from all parts of the House, they were forced to compromise, and it was agreed that child benefit should be phased in, starting with two self-financing tax changes this year, namely, family allowances being made free of tax, and child tax allowances being cut by an equivalent amount. I pay tribute to the Chancellor for standing by that compromise. The Budget Resolutions will fulfil that commitment, which is an essential first step towards phasing out child tax allowances and phasing in tax-free child benefits.
As a result, the great majority of families who pay the basic rate of income tax and who are entitled to receive the child benefit will find that the father's pay packet will go down by about 70p a week—as it would have done even if the child benefit were not being slowly introduced—but that the mother will receive £1 child benefit for the first child. The family will, therefore, be 30p a week better off.
That was the system accepted, however unhappily, as the only feasible compromise in the budgetary situation that we faced in July, but no one anticipated then that the Chancellor would be able to introduce income tax reliefs of En billion in this Budget. Now that he has that money to give away I have been urging him to face up to the implications of carrying out the compromise solution.
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My right hon. Friend could not use that money to increase child tax allowances. With inflation still running at double figures and further increases in food prices under the common agricultural policy on the way—despite the magnificent efforts, which I salute, of my right hon. Friend the Minister for Agriculture it is clear that in this year, of all years, the Chancellor would normally have given help first to families with children, by increasing the child tax allowances—over and above the extension of the family allowance to the first child, which is a separate and long-standing Government policy. Since child tax allowances are to be phased out, my right hon. Friend could not help families in that way. The only way open to him was to phase in child benefits this year at a substantially higher rate, and that is what I have been asking him to do.
The extension of the family allowance to the first child at the pitiably low figure of £1 a week involves £95 million of help to families in a Budget of tax reliefs totalling £2½ billion. When I think about that I wonder whether we are all mad—but perhaps it is merely that we are governed by men. By refusing to take this proportion seriously, we are once again cheating the children of this country.
For a mere £900 million of that £2½ billion, my right hon. Friend could have raised child benefits to £2·70 per child per week. A man with two children under the age of 11 would have been £2·90 a week better off than he will be under the proposed rate of benefit, and a man with four children under 11 would have been £5·30 better off.
Instead of spending money in that direct and practical way to give urgently needed assistance to mothers trying to bring up families, the Chancellor proposes to spend £901 million on increasing single and married allowances and £960 million on reducing the basic rate of tax by 2p if he gets the pay deal—a total of £1,861 million in a full year.
What will he the effects of the tax reliefs and the changes in child benefits provided in the Budget on family incomes? The tables obligingly provided by the Treasury and the Inland Revenue show the effect dramatically. They do not tally in the form of their presentation

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or cover all the groups in which I am interested, so I have had to do some calculations myself. If they are not accurate, I urge the Chancellor to circulate the correct figures in the Official Report so that we may all judge what we are doing this week.
The tables show that a single man on £50 a week will be about £1·20 a week better off. A married man on the same income and with no children will be £1·43 better off. A married man with two children under the age of 11 will be £1·63 better off and a married man with four children under 11 will be £1·76 better off. A single man on national average earnings of £80 a week will be about £1·80 a week better off. A childless couple will be just over £2 a week better off. A married man with two children under 11 years of age—that is, a family of four to share this benefit—will be about £2·23 a week better off. A married man with four children under 11 years of age—six people to share this tax relief—will be £2·32 a week better off.
The Chancellor made play with the fact that he is proposing a substantially larger increase in the married allowance this year to help the family man. But, because he cannot increase child tax allowances and will not increase the child benefit, he has still produced the result that the heavier a man's family obligations, the less help relatively he receives from the Chancellor.
Let us look at the size of the opportunity that we are throwing away. As I said, a man with two children on £50 a week gains only £1·63 a week from the Budget, even taking into account the extension of child benefit to the first child. If the Chancellor had spent £900 million of his £1,800 million on increasing child benefit, that man would still have gained about half of his tax reliefs, but in addition would have received £2·90 from the increased child benefit. Therefore, the help going into that family would have been not £1·63 but £3·70 a week.
The same man on national average earnings would, under my proposals, gain for himself and his family about £4 a week compared with the £2·23 the Chancellor offers him. Even with a wage of £100 a week, that man would be better off as a result of increasing child benefit
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than by giving all the money in tax reliefs. He would get £4·20 a week from my proposals instead of £2·63 a week from the Chancellor's.
Of course, the larger the family, the more the man would benefit from my alternative. For example, a man on national average earnings with four children to bring up would get £6·60 a week from my proposals and only £2·10 from the Chancellor's. The same man with six children would get £8·85 a week under my proposals and only £2·32 a week under the Chancellor's. That £2·32 is just 52p a week more tax relief for eight people than for the single man or 32p a week more than the childless couple will get under this Budget.
How can we say that we are looking after the nation's children? How can we expect mothers to get through the coming year on that distribution of the money that we have to give away?
The man who is too poor to pay tax at all will get nothing from the Chancellor. My suggestion would give him a bonanza of £2·90 a week more for two children or £5·30 a week more for four children. That has always been one of our major arguments for concentrating more of our resources on child benefit. The idea has been that the benefit should go to that small but not insignificant group of families who are too poor to pay tax.
Another major argument is that the higher level of child benefit is the most effective way yet known for removing the built-in disincentive to work which arises when a man is on a low wage or has a large family. The right hon. and learned Member for Surrey, East (Sir G. Howe) made some play with this point in his opening remarks. I think that it was he who quoted Sidney Weighell of the NUR as saying that thousands of his chaps got more on the dole than they got at work. That is true if a man is on a low wage or has a large family. Those are circumstances in which it pays better to be on the dole than to be at work. The central reason is that when a man is unemployel the State pays him £4 a week per child. However, when he is at work he gets the child benefit of only £1 for the first child and £1·50 for the second and subsequent children.
The more rapidly we move towards equalising what we give to a man for

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his children when he is in work and what we give him to bring them up when he is on the dole, the quicker we shall restore the health and productive vitality of our society. I wish that the Chancellor had used some of the £2½ billion to get us on that way.
My figures may seem surprising. How is it that a man with children could gain so much more under my proposals for the same money as the Chancellor proposes to spend? The answer is that my right hon. Friend is proposing to divert so much of that money to the single, the childless, and the better off. I think that all three of those categories need something, but do they need to corner every bit of that money at the expense of families? Do they need the improvement in personal allowances and then, if all are good boys, a reduction in the standard rate of tax as well? The result of those changes produces what I have tried to spell out to the House.
The Budget continues the trend of recent years of financially discriminating against families. We are always running away from that problem: the moment is never right to put it right. Again, the Chancellor pleads the pay policy.
My right hon. Friend said that he must do something in the Budget to restore better differentials. Differentials for whom? I think that he is talking about differentials between the skilled and the unskilled. If he pleads that as his excuse, it means that we have now reached the ridiculous situation where pay policy has so eroded the differentials in the pay packet that we must offset them in a Budget which deliberately widens differentials in favour of the single and the childless and against families. We are swopping one kind of differential for another. Once again, the children of this country are being made to bear the brunt of pay policy. We are standing our social policies on their heads.
Mr. George Cunningham: Are there not this year some severe practical difficulties which we always recognised? My right hon. Friend does not want the tax allowances, which we have reduced, to be raised in April. I think that she accepts that the child benefit rate, already fixed, could not have been raised with effect from April. Is she suggesting that it
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should be raised later this year? Does she think that it would be practical politics for the Chancellor to say that we shall distribute £2¼ billion, but roughly half will be distributed some months ahead in the autumn?
Mrs. Castle: I was coming to that very point. My hon. Friend and I have discussed these practical difficulties many times. I know that he is as keen as I am on the child benefit scheme.
There is a practical difficulty. I accept that it is administratively impossible to increase the child benefit rate before November. I quoted £900 million, because I happen to think that that is a good share of the swag for the kids. Some is left for immediate improvement, therefore. The second tranche—the 2p off the standard rate—is in any case subject to negotiations, which are still to take place. It is for that second tranche of reliefs that I would have substituted the uprating of child benefit at the earliest practicable date.
When he goes into the pay talks, the Chancellor should say that he has done something in the Budget to ease the pressures by substantially increasing personal allowances and that the unions should, therefore, give the Government a good pay policy. If he did that, when the first round of the pay negotiations starts in November he would be able to say to those in the public service and to the members of NUPE that he had something to give them in exchange for wage restraint. In some cases that would amount to £5·30 a week. It is time the Government opened their eyes to what that could mean.
If the Chancellor were to reject that I should fall back in my desperation from one expedient to a lesser one. If he finds, as I think he will, that despite the relaxations in the Budget we are still suffering from economic overkill and that he has to come back with an autumn Budget—not to tighten things up but to relax them to encourage the upsurge needed in industry —he should then increase child benefit substantially. That would redress the injustice to children, as that is contained in the proposals before us. At the very least, will the Chancellor hold out some future hope for the children?
I have never been a particularly arrant feminist, but I cannot help feeling that this

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Budget is a product, once again of masculine mentality. It is just as much a surrender this year as it was last year to those elements among the wage negotiators who say that their men are interested, not in the family income, but in what they receive in their pay packets. It is a surrender to those who complain that cigarettes are going up and that that has an impact on their pay packet. I am not trying to make an anti-masculine case, but I beg my right hon. Friends, as they examine the proposals, to realise that, in this year of rising inflation, we cannot afford to leave out the children.
6.33 p.m.
Mr. Douglas Crawford: I hope the right hon. Lady will forgive me, a mere male, if I do not follow her speech closely. Perhaps one of her conclusions might have been that we should have the Leader of the Opposition as Prime Minister, but that is not in my interest any more than it is in hers. I am the only representative of a political party in the House that is not taking part in the Stechford by-election, so I shall eschew any comment about that.
We should all be grateful for small mercies. The Chancellor of the Exchequer has not produced such a bad Budget, but he has still not brought us back to where we were in October 1974. From the Scottish point of view for which I speak, this Budget, like its predecessors and its predecessors' predecessors, is nasty and brutish. It fails to allow Scotland to realise her full economic and industrial potential. It fails to offer her a way out of her appalling unemployment and her appalling social and urban deprivation. It fails to encourage real investment in Scottish industry. The Scottish TUC, which was voluble in telling the SNP that its members should not vote against the Government last week, is now busy criticising the Government for what it considers to be a bad Budget.
I shall deal with some small aspects of the Budget proposals, although they are not small to those who are suffering from the Treasury's iron grip and the slavish adherence to a unitary economic State that is centrally managed. The Budget has done nothing to ease the burden on the self-employed that we remember was first proposed by the Con-
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servatives and subsequently made heavier by the Labour Government. The burden of the levy on the self-employed should be abolished in Scotland. I understand that the cost of that would be about £7 million per year. Surely that is a small sum to pay to give back to small business men in Scotland some freedom to exercise their entrepreneurial skills and their ability to create wealth for the benefit of all.
The same approach should have been taken to VAT. The threshold at which a business becomes liable for VAT registration should have been raised from its present £5,000 annual turnover to £15,000. I understand that to do that in Scotland would cost between £7 million and £8 million a year. That is a small amount to pay to relieve small business men from the administrative complexities involved in their acting as unpaid tax collectors for the Government.
If there is anything that epitomises Scotland, it is whisky. Time and again the industry, the Scotch Whisky Association and the SNP have asked the Chancellor of the Exchequer to relieve some of the burden on whisky. In this instance it is not a case of our being relieved that at least the Chancellor has not imposed a further burden on whisky. He has done nothing to reduce that burden even to the levels that prevailed in October 1974.
If employment and investment in this important industry, which employs about 23,000 people, are to be maintained, the duty on whisky must come down. We shall be tabling amendments to the Finance Bill at a later stage. I hope that we get more support from the Conservatives, who in the past have been conspicuous by their abstention on the issue.
We shall also seek to amend the Bill to ensure that the duty on whisky becomes payable not, as now, when it comes out of bond, but at the time of retail sale. At present the industry is acting as unpaid banker to the Exchequer, interest free. I understand that the once-for-all cost of such a change would be about £150 million.
Much has been made of the increase in petrol and vehicle excise duty and many crocodile tears have been shed. The Chancellor does not appear to realise that in many rural areas the railways have

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been closed, bus services discontinued and that the car is the only way in which people can get around. If the situation continues, we shall soon be back to horses. When the vote on the resolutions takes place on Monday, members of the SNP will be watching closely to see whether the Conservatives' protestations are matched by their feet in the Division Lobbies.
We shall also watch to see whether the Lab-Lib alliance will stand firm on the matter, since many Liberal hon. Members represent rural areas. Do they wish their constituents to be hammered by this aspect of the Budget?
When the hon. Member for Oswestry (Mr. Biffen) attacked the hon. Member for Cornwall, North (Mr. Pardoe) on that matter, the hon. Member for Cornwall, North wriggled. We were told that we should wait and see. As economic spokesman for his party, the hon. Member should have committed his colleagues clearly and unequivocally to vote against the increases in petrol and vehicle excise duty. These are small issues, but they are not small to the people or the industries involved.
The SNP takes its greatest issue with the Chancellor on the main strategic points in the Budget. The Chancellor told us at length yesterday about what the IMF would or would not let him do. I have news for him. Last year I wrote to the IMF about what was to be the collateral for the loan gained last autumn. It is interesting to note in that context what the Financial Secretary said earlier this year about the relationship between the IMF loan and Scottish oil. He said:
"The amounts with which we are concerned —the $20 billion in total and the $12·9 billion borrowed since 1st March 1974—need to be set against the very considerable sums which North Sea oil will make available to offset the balance of payments deficit resulting, in part, from the imports of oil which it will replace in considerable measure.
He went on:
"Other countries are presumably satisfied that the facilities granted to us are more than covered by the benefits which will derive to us from North Sea oil."—[Official Report, Standing Committee A; 8th February 1977; c. 32–3]
Last year I wrote to the Managing Director of the IMF. In a reply dated 21st October 1976 the acting Managing Director, Mr. William B. Dale, told me:
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"The Fund does not require security along the lines you mentioned."
Therefore, that can be forgotten. If the IMF says that oil is not required as collateral, it is not.
But irrespective of that, it is neither morally right nor prudent of the Chancellor and the Chief Secretary to hypothecate the oil revenues to a London Treasury when their destination will be decided in a very few years by a sovereign Scottish Government in control of the natural resources of the Continental Shelf of Scotland, as defined by the Continental Shelf Jurisdiction Order of 1968, passed by this Parliament.
The Financial Secretary to the Treasury (Mr. Robert Sheldon): The hon. Gentleman may have read that quotation in its context or not, but clearly the question of collateral does not enter into these arrangements. However, anyone who lends money—Governments or the IMF: we must remember that a number of other loans are also concerned—must have due regard to the success of the policies carried out by the receiving Government and their ability to repay. That is what I was seeking to impose on that Committee.
Mr. Crawford: I am grateful to the Minister, especially for the fact that I think that he accepts that it was not oil per se as collateral but Government policies that the IMF would be looking for.
On the subject of oil, the people of Scotland will not allow their country to be the only one which, although large quantities of oil have been found, is getting poorer for it. Scotland needs a separate and expansionist budget that will use the oil revenues to reduce taxes, direct and indirect, to provide proper incentives for industry, as is done in Norway, to cultivate future industries in Scotland and to increase public expenditure so as to get rid of the awful social deprivation in the West of Scotland.
The Budget does very little to represent Scotland in these matters. That is why a separate budget is vital. I wrote to the Chancellor about this. His reply was courteous, but it was steeped in the philosophy of the United Kingdom as a unitary economic State, centrally managed, and that simply will not do.

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There are many respects in which the economies of Scotland and England differ. This is what the Scottish Council Research Institute said about Scottish trading patterns:
"Any direct estimation of Scottish exports from United Kingdom overseas trade statistics must founder on the fact that Scottish industry is not a microchosm of the United Kingdom's industry and that in several sectors, manufacturers in Scotland export a different mix of products."
It also said:
"Comparatively, the increase in value of Scottish manufactured exports has been greater than that for the United Kingdom as a whole."
Perhaps even more important is this final quote from the SCRI:
"Analyses suggest that the United Kingdom's increased trade with EEC countries, following membership, was not reflected in Scotland. In total, the rest of the world remains more important for Scottish exporters."
But if trading patterns are different in Scotland and England, our balance of payments is even more markedly different, especially now that Scottish oil is on stream to a value of about £1,600 million a year.
Mr. George Cunningham: Is the hon. Gentleman including the Shetlands as part of Scotland? As he knows, the Shetland Islands Council has made it plain in public that if there were to be devolution, it would not want to be part of a devolved Scotland Would the hon. Gentleman, against the wishes of the people of the Shetlands, try to force the Shetlands into an independent Scotland?
Mr. Crawford: The Shetlanders have never said that they do not want to be part of a Scottish Parliament. They have said that they do not want to play a large part in a Scottish Assembly, but that is totally different. If this Parliament is upholding the rights and wishes of the Shetlanders on this issue, it should also respect their rights in the Common Market referendum, in which they voted to come out. We cannot logically have our cake and eat it on this matter.
No one can deny that the possession of oil will give Scotland a healthy balance of payments. The latter-day Lord Godolphins of the "Scotland is British" campaign and its Conservative acolytes suggest that a strong currency would be bad for Scotland. How do they equate
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that with the parliamentary reply that I recently received from the Financial Secretary, to the effect that a 1 per cent. trade-weighted depreciation in sterling would add between ¼per cent. and ⅓ per cent. to retail prices after about a year?
Given that the pound has fallen from a rate of $2·40 to about $1·70 in the last two years or so, it is fairly easy to see where much of the increase in the cost of living has come from. I am reminded of the Tory heckler at a meeting during my last General Election campaign who, when I confirmed that we wanted a sovereign pound Scots, said that that would not do because very soon it would be worth only—I repeat, "only"— $2. I am sure that we in Scotland would settle for that for a start.
It may be of interest to know what Peter Jay, the economics editor of the much-maligned newspaper, The Times, wrote on 3rd February in an article entitled "Scotland without England":
"If there is one thing the Scots are supposed to understand, it is money. This tradition is impressively borne out in the Scottish National Party's plans for the financial aspects of self-government, a dimension of the independence debate that has been paid too little attention … The arrangements proposed are perfectly workable. The people of Scotland will benefit from them, as compared with the present situation … The benefits will include the overwhelming effects of increasing the impact of North Sea oil on Scotland's national income."
He went on:
"The decisive argument for financial independence for Scotland, irrespective of political independence and long before North Sea oil was discovered, has always been the need to break out of the '£1=£1 Scots' trap. But a Scottish government should not assume this just on the strength of a so-called favourable 'conventional' export record achieved in conditions of permanently high unemployment. Once the £Scot is allowed to float freely—it may need to go up or down—and provided that trade unions in Scotland are not determined for ever to set Scottish pay at a level in real terms which condemns a high proportion of their members to unemployment, full employment will follow quickly."
Mr. Raison: I am interested in that quotation, but is the hon. Gentleman accepting the argument that Scottish wage rates should fall?
Mr. Crawford: Certainly not, and I do not think that Mr. Jay implies that. We say that with the greater resources that we have at our disposal, wage rates

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—certainly real wage rates—would have tended to rise. Mr. Jay does not suggest that they will fall.
We need a vast injection of funds from our resources into our industry, our social work, our education, our infrastructure. We are not happy with many of the Budget Resolutions which will be voted on on Monday night. The Chancellor may have prescribed a sugar-coated pill for England, but he has left a bitter taste in Scottish mouths.
6.48 p.m.
Mr. R. B. Cant: If it is true that Budget debates are slowly but surely becoming devalued, that is partly because of the frequency with which we have them. They are no longer annual ritual occasions. The Chancellor has now presented 10 Budgets. However, the main reason is that we are becoming increasingly conscious that so little influence on the future of the economy is exerted by what happens in this place. As many people have said, here and outside, the battles for our economic destiny are much more likely to be won in the workshops of Britain.
Nevertheless, this House still has an overwhelming responsibility to provide a satisfactory and responsible financial framework within which the economic operations of this country can function. One attractive feature of the Budget on this occasion is that the Chancellor and, I think, most hon. Members have come round to the view that we must pay attention to some of the indicators which we have laid on one side from time to time, perhaps rightly, perhaps wrongly.
I have one or two reservations about the Budget. But I must say to my right hon. Friend the Chancellor that, despite the fact that he has made many important concessions in income tax, he made a mistake in trying to claw back some of these concessions by imposing some additional indirect taxes. This is the case because of our present situation when people really believe that inflation is public enemy No. 1. I know that we are alarmed by some other indicators, particularly by the fact that unemployment is proving to be such an intractable problem.
We are also rather appalled by the low estimate of the rate at which the cake
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which we are going to divide amongst ourselves is likely to grow in the next year or two. In the past both of these things would have proved intolerable, yet they have undoubtedly receded into the background as inflation has taken its toll.
Any Chancellor in increasing not real inflation but certainly the RPI is taking a grave risk, perhaps economically, but also politically. As Peter Jenkins in The Guardian said:
"No Chancellor introducing such a Budget such as Mr. Denis Healey's yesterday could be named as an accessary to a plot to hold an early election."
Undoubtedly, this is a reasonable conclusion because the Chancellor has taken a gamble and increased indirect taxes.
I think that he has been seduced to some extent by those gentlemen of the Treasury and other academicians who have put forward arguments about the way in which the percentage derived from indirect taxes has fallen over a certain number of years in the past and who have produced delightful statistics showing that all other countries, especially in the Community, derive a much higher proportion of taxation from indirect taxes. and so forth. I suspect that the average elector in Stechford or anywhere else will not be too seduced by such arguments. He will only say "My God, yet another price increase".
We keep on getting these increases. It seems to people that because Governments make decisions in quite arbitrary fashion to put up gas prices by 9½ per cent., or whatever, to increase the price of petrol, the car tax, and so on, the Government cannot really be taking the problem of inflation too seriously. This will have consequences far beyond the seriousness of the percentage increases.
This change must come, but we all seem to be patching up our tents when it is raining. We are making these sorts of adjustments now which will make the achievements of the Chancellor's policy so much more difficult, at a time when we have had to concede, once more, that our projected estimates of what will happen to the price levels have gone sadly awry. We are still in double figures, and. heavens above, I think that the rate of inflation is running at near 20 per cent. I would say to the Chancellor that in this respect he has made a mistake.

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I also have some misgivings about the continuation of the linkage between the pay settlement and changes in taxation. I say that because I feel that one of the reasons the Chancellor has been cautious to the point of not mentioning any figures in his speech is quite simply that he has no confidence about what he can achieve in terms of the amount by which wages will rise.
The problem this time is more complex, and yet by saying that he will make this additional £1 billion available as part of the wage bargain, he has in effect preempted the wage bargain. He has taken away £1 billion from what would have been available to make contributions to solving this incredibly difficult problem of wage differentials and so on. I do not think that that is a problem that would divide myself and the Chancellor. On the whole, I think that many people would pay tribute to his judgment on the general question of how far he should go.
However, I would say, and I had hoped that some of my hon. Friends would have been present, that those who take a rather anti-Chancellor, anti-cautious view about the future—[Interruption.] I must not be too critical, because I am sure that my hon. Friends are doing something which I should be doing, namely, campaigning in Stechford rather than making speeches here to which no one listens, and which will not have the slightest influence on the course of human history.
The Chancellor's caution stems from his fear about what the settlement will be. I think that he has made the settlement more difficult in one sense because he has made this fiscal concession. There will not be enough money left. I do not know what the figures are, because I have not had a chance yet to look at the cash limits. I do not know what my right hon. Friend has in mind, but I suggest, without fear of contradiction, that the wage increase gross next year will be 14 per cent., which will be about 4½ per cent. from the Budget concessions and about 9½ per cent. to 10 per cent. as a consequence of what the Chancellor will have to concede to get a settlement which will embrace all these different factors, particularly differentials.
Mr. Hordern: Is the hon. Gentleman saying that the increase in earnings which
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he projects means that he has no confidence that the Government's incomes policy can bring about a reduction in the rate of inflation?
Mr. Cant: I do not know whether that would necessarily follow, but I do not have a great deal of confidence in these extrapolations of what is likely to happen to earnings. I hold the view that I do about incomes policy because the end product in all these exercises has been that earnings in some mysterious way, propelled by some type of wage drift which has not been wholly explained, turn out to be much greater than was anticipated.
We said last year that we were going to have a certain percentage. Yet what happened, as figures recently published show, was that the increase was far in excess of that. This is one of the difficulties. I think that the Chancellor has that and a number of other problems relating to what is likely to happen at the back of his mind.
I do not know, following these various analyses of domestic credit expansion—M3 and all the rest of it—whether what the International Monetary Fund was imposing on Britain might have an effect quite the reverse of what was expected. The DCE concept was born in the days of balance of payments deficits of a very high order in the second half of the 1960s. In those circumstances, it is a compensation in relation to M3 that pulls one up fairly sharp.
Thanks to our Scottish friends, at the end of this year—certainly in 1978—our balance of payments will move into considerable surplus. The consequence of that will be that, as DCE recedes, the Chancellor may be faced with serious increases in his money supply aggregates. I do not know what he will do with them.
Everybody is enormously confident about the public sector borrowing requirement. The Chancellor will have no difficulty. He has brought off this brilliant strategy of the £15 down gilt, which he has carefully timed so that he can finance some of his borrowing in the first two or three months of the new fiscal year. These gilts are repayable on such dates as make me feel that we shall have money supply figures on a monthly basis in future.

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There is a confidence about this that I do not altogether share. I am not absolutely certain that the Chancellor will be able to find his 4 billion to £6 billion public sector deficit money as easily as all that. This is partly due to the fact that, although interest rates will fall, it is unlikely that they will fall as rapidly or for so long as many people in the City are suggesting. There is now a firm expectation throughout the money markets in the United States that the rate of interest there will begin to rise.
Another interesting factor on which nobody seems to have got his eye, unless I have not been listening, is what has been happening to the savings ratio. In the past the public sector borrowing requirement did not really matter. From a situation in which we were saving 8½ per cent. of personal disposable income we moved last year to saving about 15 per cent. In those circumstances, directly or indirectly, the Chancellor has no difficulty. In times of inflation, taxpayers are very concerned, not about the falling value of their money, but about the future. They fear for the future and are determined to hoard money, even though the value of the pounds that they hoard is in real terms fast diminishing.
The change is obvious. The savings ratio is down to 11½ per cent. One per cent. of savings ratio is equal to about £1 billion. This is also a factor which may be in the Chancellor's mind. He may have difficulties if the savings ratio collapses much further.
I shall not follow the ignoble example of most of the opening speakers who spoke at considerable length. It is abvious that the Chancellor expects, as a result of very cautionary policies, to have considerable headroom—public sector borrowing requirement, money supply, favourable balance of payments as a consequence of North Sea oil, and by 1978 things will be much brighter for this country, again thanks to our Scottish colleagues, than they have been for some time.
What I say to the House, and to those few of my hon. Friends who are here to listen to me, is that this is an opportunity which Britain must not throw away again as it did under two previous Tory Gov-
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ernment. We have had chances before. We have gone in for dashes for growth, and we have brought Britain to the brink of ruin. I am confident that my right hon. Friend has adopted the right policies of caution to achieve the opportunities that will become available very shortly. If an election occurs in the same year as this bounty becomes available to us, this will be absolutely fortuitous but perfectly acceptable.
7.6 p.m.
Mr. Percy Grieve: There was much in the early part of the speech of the hon. Member for Stoke-on-Trent, Central (Mr. Cant) with which I was in almost complete agreement. I was rather put off at the end of his speech when he attributed some of our economic ills, past or present, to previous Tory Governments.
It is obvious to most of the population who consider these matters that our economic ills—the lack of saving, the lack of thrift, the lack of investment, the lack of the lifeblood of industry—have been procured by the Chancellor himself by his early Budgets in 1974. They recognise that the Chancellor brought this country to a desperate pass and is only now gently—too gently—and slowly—too slowly—trying to put the matter right.
One of the ways in which the Chancellor is trying to put the matter right is, for the first time since this Labour Government came to power, to tackle and reduce the absolutely overwhelming burden of direct taxation.
I felt rather sorry for the Chief Secretary when he endeavoured this afternoon to defend this Budget and to expose its effects and what it sought to do and what the Chancellor, he himself and the Treasury team had designed it and desired it to do. The right hon. Gentleman seemed to be saying—"It is a poor thing. I know that we have not gone very far, but of course half a loaf is better than no bread". Or was it a quarter of a loaf, or an eighth of a loaf, or a sixteenth of a loaf, or even a thirty-second of a loaf?
The Chancellor has set about tackling the problem of the burden of direct taxation. I am the first to agree that it is not possible in one fell swoop to switch that appalling burden—the greatest burden of

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its kind in any free country—in one Finance Bill from direct to indirect taxation. That would be impossible.
I accuse the Chancellor of not having gone nearly far enough in this Budget. My second charge against the Chancellor is that in going part of the way and in seeking to increase indirect taxation he has chosen quite the wrong method. I seek to deal with that second point first.
I have the honour of representing the constituency of Solihull, which produces one of the finest motor cars in Britain, the Rover, and where the Range Rover and Land Rover are manufactured, vehicles that are among the greatest export earners for this country. The result is that for many years, ever since I have had the honour to represent Solihull, I have been in close contact with the motor industry, as is my duty. We all know that the motor industry is passing through a perfectly appalling phase. The motor industry bids fair to fail the country completely by becoming bankrupt and dragging a large part of British industry down with it.
There is more than one reason for this. One is undoubtedly bad labour relations and another, closely linked to it, has been the fact that we have had suicidal strike after suicidal strike in a large part of the industry. However, even given the evils produced by labour troubles and bad labour relations the motor industry throughout the years has been subject to another evil and another ill, namely, intense Government interference. The motor industry has been used by the Government as a sort of economic regulator or economic yo-yo, so that in one Budget it is raised up and in another it is struck down. In one Finance Bill it is helped and in another Finance Bill it is hindered.
I have talked regularly with the leaders of this country's great motor industry during the past 12 years or more. One of their constant causes of complaint is that they are made the plaything of the Government. They are not given a chance to get to their feet before they are subjected to more taxation. In the old days the Industrial Reorganisation Corporation made the industry establish itself in various parts of the country. Taxation on the industry by means of the purchase tax varied from one Finance Bill to another before we had the VAT
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system, and then the rate of VAT on petrol was raised to 25 per cent.
It is not only my constituency that depends on the motor industry for its living. The West Midlands and large parts of the rest of the country—in fact the kingdom itself—depend on the industry for their living in a large measure. The industry is going through one of the most difficult periods in its history. It is seeking to rehabilitate itself after the devastating blow of having suffered from strikes, falls in sales, and other difficulties.
Yet what does the Chancellor do in seeking to transfer part of the tax burden from direct taxation to indirect taxation? He increases the burden on the motor industry again. Many of my right hon. and hon. Friends have referred to the burden that the increase in vehicle excise duty and the increase in duty on hydrocarbon oils will place on the ordinary citizen. It will place a burden on those living in rural areas, on the countryman who has to make his way from the country to market, on the elderly, on pensioners and all those outside our cities who depend on a motor car. They will have a great burden to bear.
I emphasise the burden that this will impose on the motor industry itself. The number of cars sold is bound to be fewer now that the vehicle excise duty is £50, than the number sold when it was £40. The number sold is also bound to be fewer because of the increase in the price of petrol.
Solihull will suffer, the West Midlands will suffer, and the country generally will suffer from this wholly misguided transfer of part of the burden of taxation. I hope that the Chancellor and other Ministers will mark what I have said, because already the news from the West Midlands is that this burden is very much resented by those who are dependent on the motor industry for their living.
I shall now deal with the first limb of my accusations against the Chancellor and his actions in this Budget. I echo what has been said by other hon. Members who have spoken this afternoon. The hon. Member for Cornwall, North (Mr. Pardoe), when he had finished that part of his speech wherein he dealt with crystal balls, went on to speak a good deal of sense about the burden of direct taxation in our society.

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I do not want to go over at too great length ground that I have already developed in other speeches in the House on taxation. However, I must say that we are subject to the greatest level of direct taxation of any country in the Western world. I believe that even Sweden does not take the higher rate of income tax on any income, whether it is income from earnings or investment, above a level of 70 per cent., while our higher rate is 98 per cent.
The House will recall that in the recent debate on taxation I went in some detail into figures which showed the burden being placed upon the ordinary citizen who, however fast he has been running during the past two years, has simply not been able to keep up with the combined effects of inflation and gross, savage over-taxation.
These things move very fast. As long ago as November last year, a man who in 1974 earned £5,000 a year needed to earn £8,057 a year to break even. A man who had been earning £10,000 a year needed to double his earnings to £19,974. If his income was from investments, although it is almost unbelievable, the same man would have needed to increase his income to £53,000 and more. These figures speak for themselves.
In my capacity as a Member of Parliament I am a Member of the Assemblies of the Council of Europe and the Western European Union. Many hon. Members on both sides of the House who go abroad frequently would agree that this appalling tax burden is undoubtedly having the greatest possible disincentive effect on our people. Wherever one goes abroad, people in the same professional capacities and who do the same kind of work are earning more and keeping more than people in this country. This applies all the way from the shop floor upwards.
If we are to give British industry back its life blood, since it depends on the savings of the people, we have to enable the people to save. To enable the people to save, we have to cut down the appalling burden of direct taxation. In that direction the Chancellor has offered us not a loaf, not a half a loaf, but a sixteenth, a thirty-second, or a sixty-fourth part of a loaf. He has made a few concessions which, to echo a word used by the hon. Member for Cornwall, North,
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simply nibble at the problem. He has not tackled the problem.
If that problem is to be tackled, Government expenditure must be cut. The very fact of inflation and taxation at this scale distorts the whole economy, and that leads to difficult, dangerous and sad situations, such as those described by the right hon. Member for Blackburn (Mrs. Castle). There will be subsidies and special grants because society demands them. It demands them, however, because the whole economy is distorted by inflation and over-taxation.
I wish to deal with the over-taxation of capital. I am glad that the Chancellor has at least made a minor concession on small investment incomes on retired people. It was a disgrace that this was not done in 1974 and 1975, and even worse that the Chancellor caused the situation to deteriorate then. We had defeated him in 1974 and managed to get the figure increased to £2,000. As soon as he was able to command a necsary majority in the House of Commons, he cut the figure and thereby reduced many retired people living on their savings to something like penury. Now the right hon. Gentleman is making slight amends at a stage when inflation has vastly reduced the value of £2,000 a year.
We have the highest taxes on capital in the Western world—and, for aught I know, in the Eastern world, too, although I do not have figures for that. I asked the Chancellor on 11th March for the comparable figures of estate duty payable in direct line of descent in all the Common Market countries. He chose to reply by saying that the figure was based on there being only one son. That is a comparative rarity in most of the countries of the EEC. In most of them the prevailing system is that each child gets a slice which is free of duty. With large families of between three and six children, for example, the amount of the estate which escapes all duty is considerable.
We do not do that. Thank heavens we have seen the light, so that the surviving spouse now enjoys exemption for life. But on the death of the survivor the children are very hard hit—harder hit here than in any of the countries to which I have referred. I shall give the figures for only £20,000, the value of the houses

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of very many people. The figures are based on there being one child.
In the United Kingdom the duty payable would be £500. In Belgium it would be £603; in Denmark, £1,372; in France, nothing; in Ireland, nothing; in Italy, £225; in Luxembourg, £837; in the Netherlands, £1,654; and in West Germany, nothing. Further up the scale, however, the increase in the rate in this country is enormous. At £40,000 we have the highest rate of any country in the Community, more than double that prevailing in any other country except Denmark. I shall not go right up the scale, but the figures are to be seen in Hansard.
If we want to encourage saving, and we must encourage saving to provide investment for British industry, we must change our policies not only on taxes on income, but on that final tax on capital which falls on the death of a surviving spouse.
7.26 p.m.
Mr. Jim Craigen: I think that there has been a general recognition that the Chancellor has a somewhat limited scope, and that this will remain so as long as there is a virtual IMF work-in at the Treasury. Most of the debate this afternoon has been concerned with reductions in personal taxation, reductions which have been expected for some time, if not almost foretold. I should have liked to see yesterday more indication that those in lower-paid employment would be assisted by tax reductions, because the cost of living—electricity prices, travel costs and so on—tend to bear more harshly upon the family budgets of such people.
The Chancellor spoke yesterday about the need to reduce the rate of inflation, and he indicated that this was his main aim. I hope that equally he will see the reduction of the rate of unemployment also as a main aim. My hon. Friend the Member for Stoke-on-Trent, Central (Mr. Cant) made a shrewd observation about the forthcoming negotiations between the Chancellor and the TUC. In some ways it seems that the Chancellor has steered himself up a cul-de-sac with these negotiations. I wonder whether the £960 million which he said would be available to reduce the standard rate of tax from 35 to 33 per cent. might not be the sub-
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ject of negotiation with the TUC to enable him to ask the unions to suggest alternative ways of using the money to create extra job opportunities, which is an increasingly vital matter. There is a lot of unemployment in most of the industrialised countries, but that gives us no great comfort here.
It certainly gives no comfort to those who are out of work. The right hon. and learned Member for Surrey, East (Sir G. Howe), in his opening speech, made some interesting observations on his outlook on this whole question of the public sector. He virtually posed the choice between reduced taxation—he made it clear that he would reduce public spending—or paying people in the public sector a bit more. He seemed to be saying that it was almost a question of choosing between jobs and pay in the public sector.
The right hon. and learned Gentleman's comments did, however, raise a point concerning the way in which, for example, the rate support grant has operated for the local authorities. Local authorities are sometimes faced with choices of what sectors of employment they should keep and what sectors they ought to try to save through natural wastage. There is often a tendency to save through natural wastage, if not through creating actual redundancies, with regard to lower-paid jobs. But those jobs are very important to the people who actually have them.
The Chancellor yesterday referred to the future potential of North Sea oil but told us that this would present no guarantees of full employment in the future. He said that it would certainly help our balance of payments and our energy position but that there was no guarantee that it would create more jobs, particularly in the manufacturing sector. One of the problems of investment decisions is that, by and large, the kind of investment that we are asked to make is greedy on our capital resources and often leaves public authorities with the task of finding employment for those who are not able to find employment in the capital intensive private sector such as the chemical, communications and oil industries.
It would be interesting to know from the Financial Secretary just what we can look forward to in the way of EEC

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co-operation in organising investment. I was particularly interested to hear from the Chancellor yesterday that it was hoped we could achieve this organising of investment, especially with regard to providing jobs for young people.
I turn to some of the specific points that the Chancellor announced. I welcome the selective job introduction for manufacturing firms, albeit when they are employing only less than 50 people, but I wonder how long some of those firms will be able to guarantee the life span of those jobs when the six months of the £20 subsidy has ended.
My second point concerns the special assistance to be given to the creation of new jobs for the disabled. I have a blind craft workshop in my constituency. One of the problems in this area of sheltered workshops has been a falling away of public service contracts. The need is surely to assist many of those workshops to sustain the full capacity of their employment potential. That is something to which, perhaps, my right hon. Friend, and his colleagues in the Department of Employment, will pay some attention.
I also welcome the additional boost which is being given to the construction industry, particularly in the inner city areas, not least because of the large number of building workers who are at present unemployed. The extent of the enormous pool of unskilled and semiskilled people, particularly in the west of Scotland, which shows up from an analysis of the trend of the unemployed, is staggering, but I foresee the sheer problem of the physical jerks in respect of central and local government planning. One year we tell the local authorities that they will have to cut back on their expenditure and the next year we say "We want to give you a wee boost so that you can provide some additional employment". Most of the authorities are doing the best they can, but it becomes a frustrating exercise as a result of this weathercock business of chopping and changing. A little more continuity would go a long way to helping some local authorities and public agencies in their planning. One of the problems in the stress areas is that there is so much chopping and changing.
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I turn to the increased petrol prices. These have been argued on the basis of energy conservation. In parenthesis I would say that not all motorists are necessarily well-to-do people. A lot of people have family cars which, apart from weekend pleasure, are used as a means to work. Many people also share their cars with other workmates going to the factory, the shop or the office. If we are really serious about energy conservation should we not be looking at what the United States is doing? It is trying to force the motor manufacturers to find ways of getting more out of oil by increasing the miles per gallon.
Similarly, with regard to power, if we are really serious about energy conservation should not the Chancellor have been announcing measures to encourage more insulation in factories, offices and houses in order that heating bills could be substantially reduced? Apart from anything else, that would provide additional employment opportunities. I am glad that the Chancellor has not increased the tax on paraffin, but the reason why more people are having to use paraffin heaters is that they cannot afford to pay for electricity.
As a non-smoker I want to make a point about the price of cigarettes. I know that every packet carries a health warning. I appreciate that the Chancellor has increased cigarette prices for the benefit of the chests of the people who smoke. I understand that tipped cigarettes are a little safer than untipped cigarettes. Something might have been done in that regard. We should also remember that some hon. Members have constituents who earn their living in the tobacco industry. It is an industry that provides no small measure of support to the Treasury and no small number of people are employed in it. It has recently been facing a falling away of employment and turnover.
I believe that high priority should have been given in this Budget to employment and manpower policy generally. We are well accustomed to fiscal Budgets. We know there is an industrial strategy, but it seems to me that we are seriously in need of an employment strategy. When the Chancellor comes to give us his Budget, whether every year or every half-year, as we have now become accustomed to, I hope that he will spell out the implications of his fiscal measures on the

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manpower situation in the country. To my mind, far too much human resourcefulness is unused at present. We have spent much of the day talking about the importance of tax reductions and the need to introduce more incentives into the place of work. But tax reductions do not matter all that much to a person if he is not in a job. It seems vital that we should be putting the question of employment at the top of our priorities. I regret to say that we do not appear to be doing that in the right way at present.
7.41 p.m.
Mr. Julian Ridsdale: The Chief Secretary said that our problems had been with us for too long. They have been with us too long—but especially since 1964 and more especially since 1974, since when, alas, successive Socialist Governments have tried to create an island of Socialism in a world of free market economies. Socialism just cannot compete with free market economies that are running efficiently. Fortunately, the saviour of this country has been the IMF, first in 1969 when it came to the help of the then Socialist Government and again now when it has come to the help of the present Socialist Government.
The Budget bears all the imprint of a bankers' Budget—not of British bankers but the bankers of the IMF who have dictated the terms to the Chancellor. The Government have now learned the tragic lessons of 1974, when, because of the vast increases of Government spending and the taking off of the lid on wage increases that occured then, the grounds were laid for putting the Government into pawn to the international bankers and for the Government having to borrow the record sum that we have had to borrow in the last few years.
We are at present under the instructions of the IMF and we have little ground for manoeuvres unless we face the reality that if we wish to have more ground for manoeuvre we must redeploy Government spending so that it goes to giving the incentive to create more wealth and to giving incentives to increase productivity, and so that we can get out of the straitjacket of Socialism which has imprisoned our economy for far too long.
Let us compare the performances since 1974 of Japan and this country. In 1974
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Japan had an inflation rate of 19 per cent. Our rate was 10 per cent. Today, because the Japanese have adopted a voluntary prices and incomes policy and have had great restraint on Government spending, the rates of inflation are almost exactly reversed. We have a rate of 16 or 17 per cent. Japan has a single figure rate. That is the price that we are paying for Socialism and a demonstration of the success of the market economy, of watching Government spending and of seeing that a voluntary wage agreement is reached with the unions.
I interrupted the Chief Secretary during his speech to ask him to compare the tax reductions with the increases in tax and the cutting back of the rate support grant. I have a feeling that this is rather a sleight of hand on the part of the Chancellor, a robbing of Peter to pay Paul, or a robbing of the ratepayer to pay the taxpayer. What is the total amount of money that is being collected through the average rate increase of 15 per cent. today? It is that amount of money that we must set against the tax deductions that the Chancellor has announced. When we hear that figure, I think that we shall see that we have had very much a neutral Budget, rather than what seems to be a Budget of tax reductions.
The rate burden falls heavily upon small families and those who can least afford it. That is one of my worries at present. The Government have failed to reform local Government finance. Indeed, the system is archaic. We should never dream of having a bill as large as the defence bill included in the rates, yet we have on the rates an education bill that is twice the size of that for defence, and it falls on families who are least able to bear it.
The right hon. Member for Blackburn (Mrs. Castle) made a plea on behalf of children. Of course, householders are being affected by the rate burden. However, the right hon. Lady should direct her mind to local government finance and the increase in rates and not make special pleas necessarily for one section of the community, deserving as it may be. She makes a plea for help for children, but we could all make our special pleas.
Coming from a constituency that contains 33,000 retired people, let alone other

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people numbering about 60,000 who are making wealth in farming and other activities, I realise that for the single person living alone not nearly enough has been done in this Budget. I realise that a prerequisite for all this help must be that we create more weath as a country and that, therefore, it is right to give incentives for more productivity and the creation of more wealth.
However, at the same time, we must care. For the single person living alone, particularly those aged over 65, who must face an increased telephone bill and doubled electricity and gas bills, and, what is far worse, the increase in bus and rail fares, there are some very human problems that Socialism has created. For all Socialism's wish to try to give more care to the people, it has failed to produce wealth. It is only by producing wealth that we can help the country. That is certainly something that Socialism does not do—but a market economy does it. The lesson is there for people to see in the rest of the world.
Mr. Doug Hoyle: If the market economy is such a good thing, as the hon. Gentleman is making out, why was it that the previous Conservative Government turned away from it?
Mr. Ridsdale: The previous Conservative Government did not turn away from a market economy. They were in power for only three years, and it takes longer than that to correct the faults of Socialism.
I am most disturbed by the effect that the increase in petrol tax will have, particularly in rural areas. I can appreciate the argument of the necessity for saving energy supplies, but I think that the Government do not realise how imprisoned people are becoming because they cannot travel fairly cheaply and easily in rural areas. This tax will increase the burden, particularly on the elderly and those who cannot afford to pay the increased charges that have been forced upon them. In my constituency there are 33,000 retired people who have no concessionary fares, because if such fares were introduced by the local council the cost would be passed on to other ratepayers who are pensioners. The only real way that help can be given in respect of concessionary
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fares is by the introduction of a simple national scheme, which need not be extravagant. If that were done, there would be an immediate saving of Government spending of £30 million a year. Surely that would help a great deal.
Yesterday the Chancellor talked about increasing productivity. When I listened to his remarks about capital gains I thought for a moment that with his new love for the Liberal Party he was about to introduce profit sharing on the lines of the Employment Investment Bill that I introduced on 4th February. If such a scheme were introduced and encouraged, there would be increased productivity in industry, increased participation and real industrial democracy rather than some of the other forms of industrial democracy that are set out in the Bullock Report and other reports.
When we come to discuss the Finance Bill I hope to table a new clause that will have an effect similar to the proposals in my Employment Investment Bill. I hope that Liberal Party Members will support me and will not be kin to the desire to support the Socialism that we have had from the Government, which means equal shares of less and less.
Since 1964 we have tried, alas, to create an island of Socialism in a world of free economies. Japan has enjoyed success because it has adopted a market economy and because Government spending has been kept at half total Government spending in this country. As a result, they have been able to keep taxation at half our rate. Wages in Japan are negotiated on a company basis. Investment has been double ours. Their skill in research and development is considerable. Their education system has produced great technical skill. They are reaping the rewards of adopting a market economy that is competitive and producing goods that the world wants.
We have much to learn from countries such as Japan, Germany and the United States where capitalism flourishes. Those countries are able to create wealth and to give their people a life that is far better than the British Government are able to offer in following the road of Socialism.
Unless we can quickly increase our GNP there will have to be a further redeployment of Government resources unto industry. We believe—this seems to be

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modern non-Liberal belief—that money fructifies in the pockets of the people and not in the coffers of the State. If we are to raise £1,000 million for the National Enterprise Board the money has to come from 1,703,000 people paying tax at £587 a year. How much more wisely they could invest that money than the NEB. This is the principle that we are arguing across the Floor of the House.
My right hon. and hon. Friends know that it is only a market economy system that can produce the wealth and will produce a standard of living in this country that is comparable with that enjoyed in other countries. We want a balanced budget. We want sound finance. We want a strong pound.
We watch what is happening in the wage negotiations now taking place. When I heard the Chief Secretary bandying words across the Floor of the House and asking "What is your policy on prices and incomes?" I felt that we were coming to the crux of the matter—namely whether Parliament rules the country or some outside body.
If the Opposition adopt the irresponsible attitude of Labour Members when they were in Opposition, it will be difficult for any democratic Government to govern. The code of Parliament must be that when the Government of the day have been elected the Opposition in all responsibility must do their best to ensure that the Government can adopt a proper voluntary prices and incomes policy. That is something that Labour Members failed to do when they were in Opposition. I am sure that my right hon. and hon. Friends hope that the Government will be able to reach a proper voluntary prices and incomes policy in the difficult negotiations that they have with the trade unions. If we occupy the Government Benches, I hope that the present Prime Minister and his right hon. and hon. Friends would support us in the same endeavour.
7.57 p.m.
Mr. Fred Evans: I shall be brief. I shall try to make one specific and narrow point. Of course, any Budget debate is a temptation to indulge oneself, as did the hon. Member for Harwich (Mr. Ridsdale), in every tired old cliché of economic treaties of 30 years ago, or else to hold forth with ideas
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of one's own. I hope that I can resist those temptations.
Having heard much of the debate this afternoon, I was struck by what has been called the crystal ball phase in the speech of the hon. Member for Cornwall, North (Mr. Pardoe). However, the deeper emotional reaction and rational reaction was to the speech of my right hon. Friend the Member for Blackburn (Mrs. Castle) with her restrained yet passionate pleading on behalf of the women of this country, who are faced with the real problems of bringing up families in circumstances that more and more remind many of us of the stringencies of the time that we went through when we were young.
It appears to me that whatever the Budget may have to do with Liberalism, it has mighty little to do with Socialism. We should have preferred a very different attitude towards unemployment. In that context I refer to the construction industry. My hon. Friend the Member for Glasgow, Maryhill (Mr. Craigen) referred to the problems of the industry and the massive unemployment that exists in it. My hon. Friend paid tribute to the Chancellor's gesture in pledging himself to a programme of urban renewal in the centres of our great cities. This will absorb a sizeable proportion of the unemployed skills in the construction industry.
But city centres are not the general pattern throughout the country. In my part of the country, for example, we are largely dependent on small to intermediate building firms, which are closely tied to the contracts they secure from local authorities and other public or quasi-public bodies.
The issue to which I shall refer has been the subject of debate in the House and of what appears to be a well-orchestrated campaign of questioning by some Conservative Members to denigrate a whole system. Having watched what has happened in South Wales over improvement grants and exploitation in general, I say at once that I am cheerfully committed to the removal of the cowboy builder. But that does not mean that no problems remain in the construction industry. One concerns the campaign against the tax exemption certificates for contractors and subcontractors.

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Here I wish to quote from the South Wales Echo, from an article printed as recently as last Friday, which shows that the information is up to date. It said:
"Many sub-contracting builders in South Wales could face bankruptcy if they have not received their tax exemption documents in time for a new Inland Revenue law on April 6.
The warning came today from the regional director of the Federation of Master Builders, Mr. Austin Clements, who said the 35 per cent. of earnings they stand to lose under a new tax law could easily lead to large scale redundancies in the industry.
His 'warning' comes because, he said, many sub-contracting firms have not received tax exemption forms they applied for up to one year ago.
The April 6 ruling is an attempt to get rid of 'cowboy builders' who fail to pay their tax. Any builder who fails to produce his certificate at the start of a contract will have 35 per cent. of his earnings confiscated by the Inland Revenue until the end of the year.
'Now any builder who has not received his exemption certificate must get in touch with his local tax office at once to apply for a letter of Intent,' said Mr. Clements."
As I have said, in parts of the country such as mine builders are closely tied to local authorities and certain other public bodies. From 6th April, 35 per cent. will be deducted from any payment due to them, excluding only the direct cost of materials, unless the subcontractor produces a tax exemption certificate. Sub-contractors will incur the same deduction, irrespective of who the main contractor's client is, unless they, too, have exemption certificates.
Some firms applied for exemption certificates a year ago or more and have not received the certificates. I have an example of a reputable firm of builders in that position. Certain people who were extremely worried got the Welsh Office to try to ascertain the number of firms of sub-contractors in South Wales which still had to obtain certificates. According to the Inland Revenue's returns, they total about 18,000, a considerable slice of the construction industry in such a small region. There are all sort of theories about the matter. There are stories that the cause is a bottleneck in the computer centre at Liverpool. I do not know.
Even if the Inland Revenue issues the outstanding certificates by the end of
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this month, many firms will still suffer what is after all a penal deduction—35 per cent.—through no fault of their own. The cause is faults inherent in our pattern of government. It takes a long time for local authorities and similar bodies to make up their minds. They want to execute their administrative work properly and thoroughly in processing payments to a contractor. The whole business can sometimes be very protracted.
There is no hon. Member on either side of the House who has not at some time come up against the problem of people who need an immediate cash flow and who are owed thousands of pounds by a local authority. They will certainly receive the money, but often, it appears, at some dim and distant time in the far future. The industry cannot sustain that kind of delay and the cutting off of cash flow, which in present economic circumstances would seriously threaten the continued existence of many subcontracting units.
In Wales as a whole there is chronic unemployment. It has lasted for a very long time. Successive Governments have tried to tackle the problem, but no one has yet succeeded in dealing with it. Therefore, it is not a question of one job being worth more than another. Any job is vital. If we add up all the redundancies that could occur through something in the nature of an administrative bottleneck, we see that the impact on the whole region can be very serious.
I ask my right hon. Friend the Financial Secretary to give special attention to this matter. I know that he has given a great deal of attention to the whole question already. If the House can try to ensure that as many tax exemption certificates as possible are in the hands of those needing them by 1st April, or certainly before 6th April, we shall be eternally grateful for the prevention of at least some possible redundancies.
I have a great desire to understand the processes of the administrative mind and how all these bottlenecks can occur. We could get a very good picture if the Minister would tell us how many applications for tax exemption certificates have been received by the Inland Revenue; how many certificates have been issued; how many have been refused; and how many received before 30th September and 31st December last

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year have been approved by the inspectors of tax but for which certificates have not yet been issued.
Mr. Michael Roberts: I wonder whether the hon. Member would care to comment on the fact that a very large number of applications for tax exemption certificates have been made in South Wales and have been approved by the Inland Revenue authorities but as far as we know there is a bottleneck in the computer centre in Liverpool which issues the certificates.
Mr. Evans: That is the position as I understand it. In my opening remarks I said that the number of exemption certificates still outstanding in South Wales was fairly considerable. These figures were given to me last Friday by the Regional Director of the Federation of Master Builders. Be that as it may, I accept that the applications have been received. If there is a bottleneck in Liverpool it should be cleared, and if a letter of intent has been produced that should be taken as something very firm.
I urge the Minister to take note of these points in the hope that further crises in this industry in South Wales can be avoided. A consequence of these crises is redundancies. I am sure the Minister will look at this matter and I look forward hopefully to a reference to it in the winding-up speech.
8.14 p.m.
Sir Brandon Rhys Williams: It is nine years since I had the honour to be elected to this House. In the days when I first came here and opened the campaign to draw attention to the need to amalgamate income tax and social security I could empty the House more quickly than anyone. Today as I start there are fewer than a dozen hon. Members in the Chamber. That is the amazing state of affairs on the day after the Budget.
I may not have many hearers, but I believe that the points I wish to make are of interest to a large number of people. The House listened with close attention when the right hon. Member for Blackburn (Mrs. Castle) spoke about child benefits. I had to agree with every word she said, and it would have been heartless to point out to her that if she had
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taken a more favourable view of the Conservative tax credit proposals, we might have been closer to a realistic rate of benefit for children than we are today.
While we must welcome the Chancellor's intentions in reducing direct taxation, we must ask whether the way in which the concessions are proposed is really sensitive to social needs. There are two particular points that I wish to make. One was made by the right hon. Member for Blackburn, and I reinforce what she said about provision for families. She complained that the Budget was the product of a masculine mentality and that it took that form because it came from a Government of men. I think that the Budget took the form it did because it came from a Government dominated by trade unionists. That is the reason why families are being neglected.
I have often tried to point out that, with the ending of cheap food and the simultaneous effects of inflation, the cost of living has gone up much faster in large households than it has in small ones. If figures are needed to substantiate this, I can give them. They were provided to me rather grudgingly by the Secretary of State for Prices and Consumer Protection and they show strikingly the increase in essential expenditure by families with two or three children compared with that in households consisting of one or two people only. This inflation will continue throughout this year, and the relative position of larger families will continue to worsen.
It is an insult that the first child will receive only £1 a week from next month, at a time when the national average wage is more than £60 a week. We must recognise that this is, at any rate, a gesture in the right direction, but we must also recognise that for the unemployed the national insurance scheme has to give £3·05 on top for each child and that for widows and recipients of invalid benefits the scale of additional allowances for children is very much larger.
I have tried to calculate the differentials for families in net spending power after tax that vary in size. For the great majority of earners the Budget means that they will receive £16 a year more if they are married than if they

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are single. They will then receive a further £8 a year for two extra children—that is £4 a year each. That is not very much.
Possibly by an oversight, the Inland Revenue did not publish the figures for one-child families but simply gave them for married couples with two children. Therefore I cannot verify my presumption that one-child families will in fact now be less favourably treated than they were before the introduction of the child benefit scheme. This is a matter on which I need to make further calculations.
For the burden of supporting a wife and two children a bread-winner gets an extra £24 a year—that is 7p a day to feed three extra mouths. Yet the Chancellor is giving the single man on the national average wage a tax concession worth £78 a year. We must recognise that the Budget is strongly tipped in favour of single men and wage-earners and neglects mothers and large families.
I have examined the figures involving the person on £3,500 a year, which is the category in which the greatest number of people fall among those who are in regular work. A single man will now have a tax burden of £889; a married man will have a tax burden of £750—in other words, he will be £139 a year better off. A married man with two children will have a tax burden of £500, taking into account child benefit and family allowances.
Therefore the married man with two children will be £5 per week better off than the married man without children—£2·50 per child per week. But one cannot keep a child on £2·50 per week. Hence the growing contrast between living standards of single people and families.
I believe that attention should be drawn to this important fact. It is an anomaly that the standard of living of the country as a whole has fallen and that there is real hardship among families, resulting in a fall in the nutritional standards of those on low incomes and one-parent families. However, one can still pick up a newspaper in London or in the provinces and see whole-page insertions advertising useless household trash which people are asked to buy—and evidently do. I am referring to such equipment as stereo headphones, quadraphonic decks and
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imported household goods which nobody seriously wants. On the other hand, in Kensington and elsewhere mothers queue up before jumble sales hoping to buy second-hand clothing at bargain prices for their children.
The Chancellor is not helping families by increasing the tax allowances for married couples when both are working. In my opinion married couples without dependants, both in full-time work, are the most favourably treated of all for tax purposes. But the Chancellor has chosen to give an extra £70 increase in respect of earned income relief for married women. Once again the Government have shown bias in favour of the wage earner against the mother who stays at home and who is no longer an active unionist, if she ever was.
My second point relates to household costs. An opportunity is being lost in this year's Budget to help households, in the way the Chancellor is applying the large increase in personal allowances to all types of wage earner whether householders or not. The people with money to burn are often teenagers living at home and not liable for household rent. It would have been a good innovation if we had left their personal allowances alone, or if we had even reduced the amount of those allowances, so that they would have had to pay more tax.
For the most part teenagers can well afford to contribute more to society in the expectation that when they have to raise families of their own, society will give them more generous help. I do not like to see teenagers spending up to £10 on a tie in the same department store where pensioners are unable to afford even warm winter clothing. I wish, therefore, that the Chancellor this year had introduced personal allowances for households.
My suggestion is a topical one because the Department of the Environment has recently issued a consultative document on housing problems. It has been truthfully said that the object of that document is to prepare public opinion for a general increase in the level of rents. I regard the document with mixed feelings.
We must remember the many people who are on low wages, or those who live on small fixed incomes, such as many of my constituents, who are already in

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despair over household bills and who do not know where they will find the money to pay higher rents. Surely it would have been appropriate if they could have been helped in this Budget. There should have been a new tax allowance for householders, as a preparation for a full tax credit scheme in due course, including a householder's credit as a central feature of the proposal.
The figures of personal allowances show that the Inland Revenue appears to be oblivious of the growing problem of rents. The old personal allowance was £735 and the old married allowance was £1,085. The married allowance can easily be seen to be less than twice as large as that for a single person. One could say that these figures could equally well have been expressed as a figure of £350 per head and £385 for the common household element. If one took the single person's allowance as the basis of the calculation, one would have come up with the figure of £735. If dealing with a household consisting of two people, the figure comes out at £1,085. The difference therefore can be seen to be merely a matter of presentation, but it is important to examine the figures in this way when changes are introduced. We can then see the true nature of such a change.
The new personal allowance is to be increased substantially to £805 and the married allowance to £1,225. What has happened is that the personal allowance has been increased by £70 to £420, but the common household element stays at the same figure of only £385 as it existed before the Budget. In spite of the trend towards higher rents, the allowance remains unchanged.
That is further evidence that the Inland Revenue is out of touch with social needs and is trying to obey a political mandate to produce the most favourable possible Budget to assist the climate of opinion for this year's round of wage negotiations. In its anxiety to benefit as many wage earners as possible, the Inland Revenue has forgotten the household, which is the basic economic unit in society.
We have to ask ourselves whether families are irrelevant to the social contract and whether wives of wage earners have a part in determining the attitude taken by their husbands over the size of take-home pay. Does the ability to
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meet the household rents and rates have no bearing on attitudes to wages?
I feel that those questions have to be answered by saying that public opinion as to the proper size of the wage packet depends on the attitude of all the people—all the voters—and the wives at home must not be forgotten, as they all too often are by this Labour Government. Therefore, although I welcome the move towards reductions in taxation which the Chancellor is sponsoring in his Budget, I believe that much of this money will go in ways that will not achieve the best effect from a social point of view. I feel that we now need a Government who care for the interests of the whole nation and not merely for those who take part in wage negotiations.
8.28 p.m.
Mrs. Renée Short: I wish to apologise for the fact that I did not hear the opening speeches from the two Front Benches. It was because I was occupied in proceedings in the Expenditure Committee.
I have mixed feelings about the Budget. It is good in some parts and bad in others. Although my right hon. Friend the Chancellor has some good ideas, he has not followed them up with enough finances to back his proposals, and he has been too cautious in the resources he has made avaialble.
First, I want to take up a point that was touched on by my hon. Friend the Member for Caerphilly (Mr. Evans), namely, the proposal to revitalise the inner cities by injecting the princely sum of £100 million to be spent over the next two years. This is really a derisory sum. It is a tiny bit of pump priming. For that sort of money one could build about 10,000 new houses, or rebuild and modernise about twice that number of old houses, but that is all.
It will do virtually nothing fundamental for the construction and civil engineering industries, which are urgently in need of new resources, new help and new orders from private builders, house-owners and local authorities to prevent them going under. Many firms are hanging on by the skin of their teeth.
Some firms are sending people to the Middle East and other parts of the world to try to win contracts. They are spending a large amount in doing that and, of

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course, they are meeting a great deal of opposition from our Common Market partners—they are always there.
A large number of firms, such as architects, have built up design teams over the years and these teams are now in danger of being broken up, because the work is drying up. Some time ago the Minister of Housing talked about preparing schemes that could be taken off the shelf when the time was right, when the building industry, civil engineering and architects' firms were in dire need, but we have heard little more about the schemes.
The Chancellor's measures are far from adequate to rescue the industry. Inner city areas in many parts of the country are quite appalling. White and black communities live side by side in crumbling houses surrounded by grimy sites that are waiting to be redeveloped. Even today, millions of people live in substandard houses that ought to have been replaced long ago.
In addition to better houses, we need decent work places and factories to provide jobs for young people and adults. Buildings worth £100 million will not go far towards providing all that is needed.
Too many young people are doing makeshift jobs under the job creation scheme and the work experience scheme. On those schemes alone we are spending much more than the Chancellor has decided to inject into the construction industry. I mention, en passant, that the job creation scheme provides few opportunities for girls.
We need more investment in factories and workshops to provide jobs urgently and to produce the goods for the home market and export. For years now we have been urging the Chancellor to introduce import controls. He has refused to do so, and again in this Budget he has not done it. This is needed to stimulate and encourage good business enterprise at home. Without it imports will continue to come into the country and our deficit with the EEC—which is like an albatross round our necks—will continue to hinder our economic recovery. None of this is tackled in the Budget.
Improving our cities does not mean improving just houses and work places. We need to provide leisure activities and
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facilities for our people. We do not live on work alone. In order that we may enjoy our leisure we should be providing work for trained and talented people in the whole area of the Arts. Many such people are now unemployed although they are highly skilled, trained and talented. I refer to actors, singers, musicians, theatre technicians and directors, who are in great difficulties today.
Theatre-in-education schemes are very important to help build up the audiences of tomorrow and to inculcate a love of the Arts in the young. Such schemes are among the casualties of recent public expenditure cuts and it is tragic that, for the want of a comparatively small amount of money, this valuable work is going by default. The Chancellor has not offered a penny to help the Arts. There has been no relief on VAT. Yet what the Chancellor receives in VAT from, for example, the commercial theatre is tiny. It is about £5½ million. He would not miss that sum, yet it would provide great relief and help to the non-subsidised theatre.
We have just had the announcement of the funds to be made available to the Arts Council. The council is to receive an increase of less than 15 per cent. to meet an inflation rate of 21 per cent. Another £1½ million was needed to enable the council just to stand still without any development or expansion. This is the meanest cut of any Government expenditure.
I am disappointed that the Chancellor has done nothing to help the Arts in this Budget. He said that he had helped charities because he had received many representations from them. I remind him that he had a fair number of representations last year and the year before about removing VAT from the Arts. We shall just have to continue to try to persuade him to see the error of his ways.
I greet with only muted applause the Chancellor's decision to increase the duty on cigarettes. It is all right as far as it goes, but it should have been an increase of at least 10p on a packet of cigarettes. Cigarettes are killers and great destroyers. All smoking is dangerous, but cigarette smoking is the most dangerous.
I do not approve of the kindness shown towards pipe smokers. My right hon.

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Friend said that many of them were pensioners, but many cigarette smokers are pensioners, and we know from those among us who are pensioners that they may be well heeled and well able to pay more for their pipe tobacco.
I sometimes wonder whether it is realised how many days' work are lost because of incapacities caused by illnesses brought on by cigarette smoking, or how much these illnesses cost the National Health Service in the treatment of lung cancer, chronic bronchitis and emphysema and chronic heart disease. All this costs the National Health Service a great deal of money, and it is money that could be better spent on preventive medicine rather than on trying to cure incurable diseases. In 1974–75, sickness and invalidity benefits paid as a result of illnesses associated with smoking totalled £41 million and 17 million days were lost from work.
These diseases cause about 50,000 deaths a year and most of them could be prevented if people smoked less. The Chancellor has been far too timid. I hope that he will go much further to try to reduce the amount of cigarette smoking. Some people claim that if cigarette prices are increased, smoking does not necessarily decrease, but a number of surveys have shown that as the price goes up, the amount of smoking goes down. If the price goes up enough, the decline in smoking will be that much greater.
The BMA has suggested that there should be annual increases in tobacco prices until, within 10 or 15 years, most people will, it hopes, have stopped smoking. If that happens, fewer people will die of these dreadful diseases and the resources of the NHS can be used in other ways.
I turn to other parts of the Budget. Transport costs bear heavily on lower-paid families, whether they live in the town or the country. The increases on petrol tax are in the interests of saving scarce fuel and one can hardly complain about them, but the increase car tax is a considerable imposition on poorer families.
The increases in transport costs during the last few years—bus, underground and railway fares—have clobbered many people. We are not giving people any choice in the methods of travel to get to
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work or to go out for pleasure or recreation. That is a grave disservice, especially to working people.
The goal that the Chancellor seeks to reach by the summer may not be possible unless he is prepared to reduce taxation and ensure that the cost of food, for example, is controlled. Travel and food costs weigh heavily on all families, but most heavily on the lower paid, especially those with children. These families will have their voices raised for them by the trade unions when they consider the next phase of the pay policy. Unless the Government can be seen to be helping these families, the Chancellor will not reach his goal later this year and we shall certainly be in dire distress.
I congratulate the Chancellor on doing a little, but not enough. I feel that the Budget is good and bad in parts. More resources should be made available for those urgent areas of the economy that need help.
8.42 p.m.
Mr. Nicholas Fairbairn: I begin by paying a compliment to the hon. Member for Wolverhampton, North-East (Mrs. Short). I share her regret that more has not been done for the Arts, which have an absolutely fixed income and suffer from being a labour-intensive activity. The Arts cannot escape the effects of inflation to the extent that they can be more productive. For example, the Missa Solemnis cannot be played quicker or sung with fewer people. An act cannot be cut from a play. An essential characteristic of the Arts is that they suffer from necessary labour costs.
I regret most of all the lack of capital investment in the Arts. I had not intended to refer to the Arts. However, I endorse the plea made by the hon. Member for Wolverhampton, North-East for the Arts which form an important part of the quality of life and have greatly improved the civilisation of this country in the last decade or so.
I think that there is in the Budget a more hopeful lesson for Opposition Members than for Labour Members. It is that the Chancellor of the Exchequer, assuming him to be the spokesman for the Labour Party, has at last comprehended that there is a motivation in human beings, whether they be wage

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earners or millionaires, to earn money. Reward is the incentive for the effort that they make.
The recent British Leyland strike was about that very thing. The shock troops, so to speak, of the Labour movement were saying that the skilled toolmaker, who puts in a great deal of effort, should not be paid the same as the tea maker who does not.
Yesterday the Chancellor, who has for so long been saying that we must have a redistribution of wealth so that we all get the same, suddenly recognised the concept of the motive of reward. I believe that widespread human motive is one of the fundamental conflicts in the theory of Socialism.
It was wonderful to see Hugh Scanlon on television last night telling us that we needed investment, reward and incentive to create employment and prosperity—all the things that the Labour Party constantly resents and constantly attempts to diminish. Perhaps it has learnt something, if late and not very well.
The Budget should not be allowed to appear to be different from what it is. Essentially, we have received about £1,000 million of tax rebate. That leaves the people less well off than they were when the Budget was presented a year ago. If we examine the Red Book, the Financial Statement and Budget Report, we find that the Chancellor of the Exchequer will receive this year, in taxation alone, about £5,000 million more than he received last year. In other words, the State machine is still clawing away from those who work, those who produce and those who make profits. This year the State will have a further £4,000 million to spend.
There is a fantasy that there is such a thing as public money. If one asks somebody who should pay for a particular service, he will say that the Government should pay. A Government supporter said that if money is transferred from the ratepayer to the taxpayer it is as though it does not have to be paid. There is no such thing as public money. Charities obtain their money by subscription, firms and families by working. Governments obtain their money by legislative confiscation. They have no money. When we talk of public funds and pub-
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lic expenditure, we are talking of the expenditure of the private funds of individuals and families who work and of businesses that are built up by those who work and make the money that the Government can confiscate and spend. We should not overlook that the Budget involves an increase in the expenditure of that which is earned of more than £4,000 million.
A lesson has been learned. It has been learned by people who have come, for the first time, into the area of family taxation. It has been learned by the people who previously would not have been taxed or who would have paid only a little tax. The little that was deducted did not matter to them much. But now, when they see a wage slip which says that they earn £100 a week from which is taken income tax and national insurance contributions, that wage-earning man and wage-earning family realises that the Welfare State, that was supposed to be free, is not free. It is far from free. The wage-earner has to pay for it.
Regardless of party, we should realise that people are becoming more conscious that they must pay for State services which, by a trick of the mind, were sometimes imagined to be free like air, superabundant, all-available and costing nothing.
It is also important to understand another matter. Night after night we hear the same people on television—Mr. Scanlon, Mr. Scargill, Mr. McGahey, Mr. Jenkins, Mr. Murray and Lord Watkinson. We hear again and again from the mouths of the same people views which are supposed to be the views of the millions of families, mute and silent, whom they represent. We should realise that the views of those at the top, whether of unions or of anything else, are not at all the views of those whom they claim to represent, and that if one asked the wage earner whether he wanted cuts in public expenditure and less taxation or more taxation and more public expenditure, one would find very different views. I think that they will be reflected tomorrow.
There is a conflict between the treatment of town and country. I was interested in a debate not so long ago about what was called "urban deprivation". Hon. Members described housing and

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social situations in towns. As closely as anyone, I have seen the worst of urban problems, for instance, in Glasgow. However, there are in my constituency and the constituency of any rural Member, people living in worse houses, with much worse services and greater deprivation, than live in inner cities. They do not complain and they do not expect that everything should be done for them and money spent upon them. It should not be taken for granted that it is only the cities which are deprived. Country people tolerate—much more willingly tolerate and adjust to—the deprivation of transport, entertainment, services, housing and all the other things which are claimed now to be so essential in the inner city.
Of course the Budget will particularly affect those in rural areas. It is not sufficiently understood in this day of universal communication that the communication of transport is something from which rural areas are almost entirely cut out and that without a motor car in some of these vast areas transport is impossible.
The Chancellor stayed last summer in my constituency at Kenmore, at what he might call the "Russian end" of Loch Tay. There he went into the post office and bought some sweets and cigarettes. He had forgotten his money and said that he would have to return to the hotel to get some. The postmistress said, "That may be the way you think you can run this country, but it's no way we do business here." I should like to take the Chancellor into some rural areas where transport is utterly absent and show him the extent to which people depend on it I should like to show him to their incomes and housing. That is where poverty exists and where it is least complained of. I should like him to know the extent to which deprivation will be added to the burden of those who live in the country by his increases in the costs of fuel and motor transport.
Budget after Budget, the Chancellor has told us that unemployment would go down and each time it has gone up. Each time we have been told that productivity would go up and each time it has either remained stagnant or gone down. Each time we have been told that prices would fall and each time they have risen. It was always the next time that we would
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have single figure inflation and it was always the next time that it did not happen.
Admittedly, the word "miracle" has now been dropped, but yesterday we were told that prosperity and the marvels of the future would be one square away. Every time it is one square away and every time we are further from it than we were the last time. Perhaps it is a sort of intended prophecy. If it is always prophesied that we shall have prosperity, people will be distracted from the penury which is being visited upon them. But the longer it continues, the less faith people can have in the word of the Chancellor. The more often the Chancellor does it—and he does it every time—the less faith the people will have in his word or in his remedies.
We have a give-away Budget which makes everyone in the country less well off than he was a year ago. It says that £4,000 million to £5,000 million more in taxation will be absorbed by the State in the coming year than in the last year.
I grieve for a country in which a generous Budget leaves us poorer than we were before it was given away. I grieve for a country whose rate of inflation is so much higher than that of its competitors, and so much higher because the State spends, at £481 a second, money which it has not got. That is what causes inflation.
Until the Labour Party understands that we cannot tolerate, and that people and wage earners will not tolerate, the spending of vast funds raised by taxation or by borrowing which we cannot afford, and that the State machine is not free so to behave, I do not think that there is any hope for us.
As a result of the Budget strategy we are all becoming increasingly poorer. It is a sad comment on the fantasy that Socialism produces prosperity for all.
8.57 p.m.
Mr. Peter Hordern: Yesterday we heard a Budget Statement that was one of the shortest on record, or certainly one of the shortest I have listened to since I have been a Member. Today we had to listen to another from the hon. Member for Cornwall, North (Mr. Pardoe). It will take some getting used to to appreciate that we have two Budget Statements for

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the price of one. But I imagine that that is what we shall have to do. I did not detect much unanimity of purpose between the Chancellor yesterday and the hon. Member for Cornwall, North, today.
The hon. Member yesterday called this a Budget of hope. I was reminded of the saying of Dr. Johnson about a man who married again immediately after losing his wife and who called it a
"triumph of hope over experience."
Already, after just 24 hours—I do not know whether the hon. Gentleman saw the Chancellor—he seemed to be not his real self at all. He was like a lion become lamb. I fear that after whatever consultations took place the hon. Gentleman found that it was a triumph of experience over hope.
I do not want to go into the Liberal Party's programme, if for no other reason—none of them is here. I suggest that the Liberal Party's programme is different from that which we had from the Chancellor yesterday. I saw it suggested in The Sunday Times, for example, that there should be a reduction in income tax of some £9·4 billion and that this should be paid for by new social security taxes under which the worker would get only half the agreed increase in earnings. I cannot say that that policy would appeal very much to the Liberal Party's new allies but, at any rate, it was an interesting proposal for the hon. Member for Cornwall, North. I daresay that we shall see more of these proposals from him.
Obviously, there will be much more consultation. I should have thought that with the Liberal Party and the Labour Party together the House could have expected to see more tangible results than have so far appeared. I am disappointed that there have not been some closer arrangements already. One would have thought, for example, that the property assets of the Labour Party could be merged with the National Liberal Club. That might have produced some interesting results. I suggest it to the hon. Member for Tottenham (Mr. Atkinson).
The National Liberal Club appears to be full of Danes at present who are under the impression that the National Liberal Club is a hotel. I suppose it is an im-
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provement on the position many years ago when F. E. Smith was Lord Chancellor and used the National Liberal Club, I am told, as a convenience. When the hall porter remonstrated with him and asked him whether he was a member, F. E. Smith said "Good God, is this a club?" I suppose things have improved since then.
The Chancellor will have to do rather better for the Liberal Party than he has done so far. The fact is that there is a Duchy of Lancaster of which there is a Chancellor. There is a Duchy of Cornwall, too. Could not the Chancellor make the hon. Member Chancellor of the Duchy of Cornwall, North? At least that might be some satisfaction for the disappointments that the Liberals have so far encountered.
However, the hon. Member for Cornwall, North made a most important point about the case for rural transport and the effect on rural transport of the proposals in the Budget to increase the vehicle excise duty and petrol tax. The hon. Gentleman was specific about this. I understood that he personally feels bound by the remarks he made in previous speeches some two years ago, which were very strong indeed and very convincing.
I understand from the hon. Gentleman that he and his colleagues will be joining the Conservative Party on Monday night in voting against these proposals. We understand that that is the position and we look forward to the hon. Gentleman's support in the Lobby because he, like many hon. Members in the debate during the course of the day, had much to say about the problems of rural transport and the effect on industry as well.
With all due deference to the hon. Member, I could not think that this Budget was directly related to the Liberal Party. I think it bears a close resemblance to the Budget of last year, which was related very much more to the trade unions and the spirit of Jack Jones. That was the source of last year's Budget. It is the same position today.
This is the tenth Budget that this Chancellor has introduced. On each occasion the House has become more and more irrelevant to the Budget. The Budget is not directed to the House. It seems to be scarcely directed to the International Monetary Fund. It is directed

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much more to the Trades Union Congress and to Mr. Jack Jones. We do not know whether Mr. Jack Jones will find these proposals acceptable, but I think it is important to state that there are other people in this country besides Jack Jones and that for us the test of this Budget is what it will do for inflation, for investment, and for unemployment.
On all those matters this Budget seems to me to be either irrelevant or damaging. We have had 10 Socialist Budgets from this Chancellor, and he has shown in the past that he is prepared to put the economy at risk in order to win the election. He will assuredly do so again if he can get away with it.
My first concern—this was mentioned by the hon. Member for Stoke-on-Trent, Central (Mr. Cant)—is that the main element of risk seems to be the size of the public sector borrowing requirement. As is well known, the Letter of Intent had a figure for the PSBR of some £8·7 billion. I believe that the figure of £8·4 billion that the Chancellor is expecting is very near the mark and, if there is a prospect, as the Chancellor makes out in the Financial Statement and Budget Report, of manufacturing investment increasing by some 17½ per cent., I think that that public sector borrowing requirement will be very hard pressed, because it will be in competition with the private sector for funds.
I very much doubt whether manufacturing investment will increase by 17½ per cent. That is most unlikely. It would have been much better to reduce public expenditure to give the leeway required in the size of the PSBR.
The second point on which considerable interest has been expressed is the Chancellor's claim to have reduced income tax. The Red Book shows that the yield of income tax is up by £1 billion. As my right hon. Friend the Leader of the Opposition said yesterday, this is not a give-away Budget at all but a take-away Budget.
The fact cannot be concealed that under this Government the exchange rate has fallen by one-third and for most of the Government's period of office production has been rather less than it was during the three-day week. Public expenditure has almost doubled in money terms and prices have risen by 70 per cent.
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I am sorry that the Chancellor could not attend today. He kindly sent me a message to explain the reasons, which I absolutely accept. I understand that the Chancellor's wife sends the Chancellor off to buy cod every Saturday morning. I think that the Chancellor knows a thing or two about that. He had only to look at c. 322 of Hansard of 3rd March to see that the price of cod in terms of minutes worked had scarcely altered since 1945.
I have some advice for Mrs. Healey. She should send the Chancellor down the road and get him to buy a sack of potatoes and a sack of coal and lug them back home and then send a 15-word telegram to himself explaining why the price of those three commodities has more than trebled. He would then get a pretty good idea of the increase in the cost of living, and the exercise would not do him much harm, either.
Everyone knows the Chancellor's personal record on forecasting. He will for ever be known as "Mr. 8·4 per cent.". The Chancellor has been around long enough for us to be able to form a proper judgment. His 10 Budgets give us the right sort of scope to do so. Every prediction and every forecast that he makes is always too optimistic. They are always accompanied by boasts. It is rather like Mohammed Ali in reverse: be can always predict in which round he will be knocked out.
I shall remind the House of some predictions that the Chancellor made a year ago in the 1976 Budget statement. He said:
"The tide has now turned and output in the United Kingdom is rising."
That is correct. It grew by a little under 1 per cent. last year and is due to rise by 1½ per cent. in the next 18 months. I cannot say that I call that much of a tide.
The Chancellor also said:
"The outlook for unemployment now seems distinctly brighter."
In fact, it got worse. The Chancellor went on:
"We should thus have no difficulty in meeting our external financing needs this year."—[Official Report, 6th April 1976; Vol. 909, c. 234–6.]
We entered the worst financial crisis that we have ever had and were in the arms

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of the International Monetary Fund in December. The Chancellor also said that the pay limit guaranteed that our reduced rate of inflation would continue to fall in 1976. The rate of inflation on an annual basis is now 16·6 per cent., and, on the three-month basis which the Chancellor particularly likes to quote, it is 20 per cent.
It is not always possible to get forecasts right, but it would be nice to get some right occasionally. We feel as though we have been through 10 rounds with the Chancellor and that in every one he has been knocked to the floor. It is time that he packed it in or that his manager threw in the towel for him. It is time that his manager retired, too.
It is no good blaming the Treasury computer for these mistakes. If optimistic assumptions are fed into a computer, one will receive optimistic forecasts. The surprising thing about the Treasury computer is that it has no monetary input and no monetary capacity of any sort. This means that the Chancellor appears to rely specifically on controlling wages to control inflation. He said so in his Letter of Intent on 15th December.
This is a most interesting commentary on the Labour Party's wages and incomes policy. The Letter of Intent said:
"Under the first stage of this policy, the increase in average earnings was reduced to 13·9 per cent. in the year ending July 1976 … Under the second stage, the T.U.C. and Government are applying the present pay agreement strictly; average earnings resulting from this second stage policy in the period July 1976 to July 1977 will rise by something like half of the amount of increase in the preceding 12 months."
That is important because at that time the Government were saying that there would be in this current period an increase in earnings of only 7 per cent. But by January, less than a month after the Letter of Intent had been written, the level of earnings had risen by 5½ per cent.
If we go on at that rate the level of earnings by this July will have reached 11 per cent., and that is 50 per cent. above the level mentioned in the Letter of Intent. That was the first specific pledge which the Government made in the Letter of Intent. Can the Government have been serious about that? Was it important to them that the Letter of Intent should be strictly observed,
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because that is what one would normally imagine to be the position?
The Letter of Intent said on the following page:
"Nevertheless the Government is determined to ensure that the rate of inflation continues to fall. Accordingly, it will begin early next year to consider, in consultation with the TUC and the CBI, how this objective can best be pursued in the period beyond July 1977. I would aim at reaching agreement through these consultations in the early spring of next year, in time for the Budget."
We all know that spring was very late this year, but there has been no agreement before the Budget and, so far as one can see, practically no consultations.
This looks very different from the assurances that were given to the IMF only a matter of three months ago. Yet listening to the Chief Secretary this afternoon it appears that the only way in which the Government are concerned about controlling inflation is to have a strict incomes policy. Already during the course of the last few months it has been broken to the extent of 50 per cent. Surely no one in the House or outside can think that an earnings and incomes policy applied for the next year, from July 1977 to July 1978, will be more restrictive than that of the past year, but that is what the Letter of Intent says—that it will be just as restrictive, if not more so.
It stands to reason that it will not be more restrictive, because of the disgraceful anomalies already existing under the current pay code. One has only to consider the fact that television and film people are allowed to get any increase in wages which is index-linked, whereas the policeman is bound by the £6 pay limit. These sorts of anomalies are unacceptable. The vast majority of the people in this country believe that earnings will increase much faster than hitherto.
If that is the case this policy, which is the first objective in the Letter of Intent, will be irrevocably broken. How, therefore, can the Government pretend that their policy for controlling inflation by an effective incomes policy is either satisfactory or will be acceptable to the International Monetary Fund? I do not believe that they can make any such claim.
The fact is that their inflation policy seems to depend entirely on building a

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house of cards with the TUC which the merest puff of wind from Mr. Scanlon or the toolmakers will blow down. That is how it appears. It is no good the Chief Secretary asking us to talk about our incomes policy and say whether we believe in that as a means of controlling inflation when it is plain that the Government do not believe in it either. The Letter of Intent says at a later page:
"It is also essential to reduce the public sector borrowing requirement in order to create monetary conditions which will encourage investment and support sustained growth and the control of inflation."
That is already written into the Letter of Intent. It is quite plain that this is the point to which the IMF attaches importance. If the country had to depend on an incomes policy secured at a level of earnings written into the Letter of Intent, we should be in a singularly bad position.
Mr. Robert Sheldon: The right hon. and learned Member for Surrey, East (Sir G. Howe) at any rate made it plain where he stood. As I understand it, he was in favour of an incomes policy this year. The right hon. Member for Leeds, North-East (Sir K. Joseph) is not. The right hon. and learned Member for Surrey, East explained this divergence of views on the Conservative Front Bench. Where does the hon. Gentleman stand?
Mr. Hordern: I would say quite clearly that I can see no divergence whatever between what my right hon. and learned Friend the Member for Surrey, East (Sir G. Howe) said earlier today and what I know my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) said. The position is perfectly plain. It is that we agree that an incomes policy is exceedingly helpful in reducing the level of unemployment to below the level that it would otherwise be. But my right hon. and learned Friend the Member for Surrey, East said plainly that in controlling inflation it is much better that a monetary policy should be used. He was talking of an incomes policy in terms of controlling unemployment. That is a clear distinction. It is quite plain that the Government are not resting upon an incomes policy in order to control inflation, because they are depending upon a monetary policy, and they said so in their own Letter of Intent to the IMF.
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If the IMF thought that a rise in earnings was related to inflation, it would be very upset indeed that the Government have already broken their assurances by some 50 per cent. in the course of the last three months. But, of course, the IMF for all practical purposes consists of the United States and West Germany, and neither of those two countries believes in an incomes policy to control inflation. Both countries have the best record of controlling inflation of any of the Western democratic countries. Indeed, President Carter said a week ago that he did not believe in using an incomes policy as a means of controlling inflation. They have no objection to the Government, or the Treasury, making their genuflections towards Lord Keynes. So long as the targets for the public sector borrowing requirement and the money supply are stuck to, they have no objection at all to the Government producing these proposals.
I do not think that the IMF has anything to worry about. The people who have to worry are the people of this country, because they have to put up with the effect of the Government's policy in pursuance of the social contract. It is they who feel the effect of price controls.
I want to turn to what the Chancellor said about that in his Budget yesterday. I find it extraordinary that he could say:
"So we intend to prevent any unreasonable profit mark-up, by keeping the price control on profit margins …"
and just two sentences later state:
"We must make sure that the return on capital is allowed to recover sufficiently to reinforce the upturn in investment and to ensure that the new jobs we need are created."—[Official Report, 29th March 1977; Vol. 929, c. 260.]
What sort of hypocrisy is that? That is the sort of gobbledegook contained in the incomes policy of this Chancellor.
It is not just price controls which are damaging. That applies to taxation, too. The Chief Secretary said today that VAT would be more expensive on the RPI than would the petrol tax. That is not necessarily the case for elderly people. VAT does not apply to food or transport. But the new petrol tax will have its effect on food prices that elderly people will have to pay.
I find it remarkable that the Chancellor can say one thing to his parliamentary

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committee upstairs about VAT not being such a damaging tax and yet come to the House later and say that the Government have no proposals for an increase in VAT. The reason is obvious. The TUC will not allow an increase in VAT. That is the position. Furthermore, the TUC will not allow the Government to cut public expenditure in sensible ways, or indeed at all.
Therefore, what we have today is a policy for total stagnation under the social contract. That is not an economic policy that is acceptable to the people of this country.
There is, however, something a great deal more serious that underlies the Budget and the particular proposals that the Chancellor put forward to us yesterday. I think that very few people can recognise the revolution that has taken place in our tax system in just the last few years. In 1973 there were just 400,000 people who paid tax at rates higher than the basic rate. By 1976–77 the figure had risen to 1·4 million.
Three weeks ago I put a Question to the Chancellor to ask him how long it would take at the rate of inflation in the last two years for the married person without children on average earnings to pay tax at the higher rates. The answer was that he would be paying tax at the higher rates in April 1979. That is a very short time away—only two years. In other words, the average wage earner will be paying tax at the higher rates—admittedly at the old rates—in two years' time.
It is true that the Government, by virtue of this Budget, have taken 800,000 people out of this range. But no one can tell what the rate of inflation will be, and it is at least certain on the Government's figures that 400,000 of them will be back in the higher range again. This is a very serious matter indeed.
It is serious on two counts. I do not think it acceptable to the people of this country, particularly to workers, for them to find themselves paying tax at the higher levels knowing full well that within the next two years after that, if inflation continues at the same level, they will be paying even higher rates of tax, on the higher and successive bands. That is a position that the workers will find totally intolerable. Therefore, in any case, there
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is a clear reason and an absolute necessity to reduce the burden of direct taxation, and of income tax in particular.
There is, however, another reason for doing it which goes far beyond the need to do it because of the total unacceptability of direct taxation. That is because of the inequity of the present tax system and the way in which, as the hon. Member for Cornwall, North said, through fiscal drag the Government get money without passing legislation. This point has been made by many hon. Members during the debate.
The damage that is done by fiscal drag is not sufficiently realised. The Chancellor talks about giving back tax. If he is really serious, I can tell him what the levels of allowances should now be after the passage of the last three years alone. If he were seriously contemplating restoring the allowances to the position at which they stood when he came into power, the single allowance, which is now, after the new uprating, to be £805, should have been £1,140. The first higher band that he has stated with so much pleasure is now to be increased to £6,000 should be £9,850. The higher rate of 83 per cent. which is now to be levied on £21,000 should, just through the course of inflation, be now levied at £38,320. That is simply to bring the rates into line with inflation.
As my hon. Friend the Member for Harwich (Mr. Ridsdale) said, we must also take into account not only the effect of fiscal drag and inflation but the very positive effect of the increase in rates. There have been no reductions in direct taxation by the Chancellor. There have been massive increases instead.
Mr. Pardoe: The hon. Gentleman has said several times that this Budget has been made up in order to please the TUC, but does he recognise that in the new parliamentary situation that has been created this Budget is very much in the hands of the House of Commons, and is probably the first Budget since the war to be so? Therefore, the House of Commons can, in fact, index the taxation system. Is the hon. Gentleman going to do so?
Mr. Hordern: I am interested in what the hon. Gentleman says. I am sorry that he was absent at the beginning of my

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remarks. I noted particularly what he had to say about the effect of increased petrol tax and vehicle excise duty in rural areas. We shall look for the support of the hon. Gentleman and his colleagues in the Opposition Lobby on Monday. We shall look with care at any amendment that he and his party may table. We shall examine it in great detail and in much the same spirit as in 1974 between the two elections. That is our position.
Indexation is important. We have a form of fiscal injustice that is intolerable. Expenditure should be indexed alongside revenue. There should be an adjustment of rates to allow for inflation. The Chancellor should say "That is what the rate should be and that is the real position after inflation. This is what I propose to do". That would be a much more honest approach. It is one that I hope we shall adopt when we become the Government.
I have thought for a long time that it is extraordinary that we should present a Budget on the expenditure side many months before the Government can know what the revenue will be. It does not happen in any other country. I think it is an old Keynesian relic that the two matters are quite separate and do not have to be examined together. Professor Cairncross had something to say about it to the Expenditure Committee in 1975. He is an economist with a great knowledge of the Government service. I am sure that it is a change that should be undertaken.
It is only sensible that expenditure and revenue should be considered in a similar way. I believe that that was the way in which the matter was considered many years ago. We should return to that position, as it would concentrate the mind of Government wonderfully to have to look at their own revenue position alongside expenditure. It is too absurd that they can look at their expenditure without any idea, except through fiscal drag, of how they will raise the required money.
I believe that tomorrow we shall find that the effect of the petrol tax increase and the increases in indirect taxation will do the Government no good at Stechford. Indeed, they will do them no good at Grimsby. That is well deserved. They have been taking revenue from the
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pockets of the people by stealth. It is high time that they paid for it.
Long after the Government and the Liberals have done with their wheels and deals, the people will continue to be faced with the inexorable demands of Socialism. The taxes and the bills will still be coming in. That is why public expenditure has to be cut as well. It must be cut to reduce the borrowing requirement. That is the only way in which interest rates can be reduced. It is the only way in which genuine economic recovery may take place.
If I had to sum up the Budget, I should say that it is a Budget without hope and without truth. What has the Chancellor offered the people? He has offered a further retreat in living standards. He has a regime of high interest rates, higher unemployment still, and virtually no growth.
The Government should not mistake the genuine frustration of the British people for silence and apathy. They are no longer prepared to pay the price of Socialism. They do not know whether there is a solution to their problems, but they are fed up with constant appeals to patriotism, to the Dunkirk spirit, and with being told by the Chancellor from his plushy room in the Treasury that it is all up to them.
There have been too many false dawns in the Chancellor's horizons. It is time that we made it clear that there has never been any need to travel down this road. Our troubles are Government-inflicted and not self-inflicted. There is no necessity for us to have the highest direct taxation system in the world, nor to penalise success. Unless we can control public expenditure and cut it we shall never be able to free the resources to provide the incentives for the country to grow and prosper.
I see nothing in the Budget but a planned deterioration in the living standards of the British people. That is a prospect that we totally reject.
9.30 p.m.
The Financial Secretary to the Treasury (Mr. Robert Sheldon): The hon. Member for Horsham and Crawley (Mr. Hordern) talked about the changes in taxation over the past few years. He spoke of a number of changes in income tax. That ties in with comments from both sides of the House about the changing relationship

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between direct and indirect taxation, a matter to which the Member for Cornwall, North (Mr. Pardoe) referred.
It must be remembered that increases in income tax are not quite the same as increases in direct taxation. Although it is true that the revenue from income tax has increased over the past few years, we must also bear in mind that corporation tax has gone down and that the revenue from capital taxation has been reduced. Therefore, the figures for direct and indirect taxation tend to under-estimate the changing rôle of income tax in direct taxation and the decline in indirect taxation and the excise duties in the case excise duties.
Although the revenue from excise duties has diminished—I am talking in real terms in all cases—revenue from rates has increased, and the employer's national insurance contribution has also gone up. This complicates the figures. Therefore, I should like to talk essentially about the main areas which people have in mind—income tax in the case of direct taxation and the excise duties in the case of indirect taxation. Let us restrict the argument to these narrower but most important areas.
It is true that as inflation increases income tax raises more revenue and, excise duties raise less. Given the increases that come automatically from income tax, we have to look on the other side of the books at the problems arising from the failure to revalorise the excise duties. This has been a common problem and perhaps the most important problem in indirect taxation.
The problem can be seen most clearly if we look at what excise duties reached at their highest levels in about 1969. For example, the tax on beer per pint amounted to 12·9 pence. It has now been reduced in real terms to 9·8 The duty on a bottle of spirits—this meets the point made by the hon. Member for Perth and East Perthshire (Mr. Crawford)—amounted to £6·30 in 1968, in comparable terms. It is now £3·70. That is a measure of the failure to revalorise the excise duties, most of which have declined in real terms for the very reason that Chancellors do not like to have to put them all up by substantial amounts every year, as would be required if they
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were to keep pace with inflation. I could go through all the excise duties in turn, but that would be rather tedious. For every year that one fails to revalorise there is the problem in the second year of putting them up by large amounts or continuing the gradual slide in the real revenue obtained.
Those who ask for a change from direct to indirect taxation must understand the problems which result both for the Chancellor, in having to make regular adjustments, and for the House. We know that each one of these indirect tax changes has been criticised, particularly those on petrol and vehicle excise duty. But this was simply an attempt—an inadequate attempt some people might say—to revalorise these particular excise duties.
One can say that these duties should not exist or that they are fixed too high, but as long as one assumes that there is a need for them and that there is a requirement at some stage in the future to move from direct to indirect taxation, one simply cannot comment adversely on increases in indirect taxation in the general sense. This was the problem facing the late Sir Gerald Nabarro. He did not like taxation on particular goods and he wanted indirect taxation more broadly spread. But even he did not condemn the excise duties to a diminishing rôle year after year as long as it was felt that the duties served a useful purpose in the collection of large amounts of revenue for the Exchequer.
The attempt to revalorise these duties year after year must be faced. What we are doing with petrol is no more than a revalorisation to the extent of last year. Actually, over a long period of time there has been a considerable reduction. If we take 1969, in real terms the amount of excise duty on hydrocarbon oils was 59·6p. Just before the Budget it was down to 38·9p. Even in this case there has been, over a period of years in real terms, a massive reduction in the amount of revenue obtained from excise duties on petrol.
I do not believe that it was necessarily a conscious decision that there should be a switch from indirect to direct taxation of this kind. A lot of this occurred under a Conservative Government, and that is hardly in accord with their philosophies. Rather, it has been a necessary

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consequence of the very high levels of inflation.
Mr. Pardoe: I accept entirely what the Financial Secretary has said. But why do we not change to a method of taxation which taxes the value of the goods on which we have excise duty as a percentage? We would not need to revalorise a percentage.
Mr. Sheldon: At some stage every Chancellor must have had that sort of dream in mind when he came to the Treasury. There would be nothing easier than effortlessly to retain the level of revenue he required from this without the annual discussions, debates and arguments that he has to face in the House of Commons. The difficulty is that these duties raise so much money as a proportion of their value before the duty is charged. So high is the duty that any minor adjustments in the price of raw materials for these goods means enormous fluctuations in retail prices and in duty. In certain areas, such as alcohol and tobacco, there is the question of control. It would be very difficult to establish control of rapidly fluctuating prices. But these are technical matters and we can pursue them in the future.
As long as we think that there is a case for the kind of excise duties that we have, and for retaining the values of the revenue that we obtain from them, there is a case at times of high levels of inflation for maintaining the high revenue wherever we can.
If we examine levels of excise duty on petrol, we see that the result in price terms gives us about the cheapest petrol in Europe. Our premium grade petrol in the United Kingdom will cost 87p per gallon after the Budget increases, compared with £1·22 in France, £1·16 in the Netherlands, £1·04 in Germany, and £1·49 in Italy. For these reasons I feel sure that the need for energy conservation as well as the need for revenue point in the same direction.
Let me say a few words about vehicle excise duty. Most of the arguments I have used point to the fact that we have failed to increase excise duties to take account of inflation and so on. Therefore, we decided to increase the amount of the vehicle excise duty by £10. A revalorisation exercise to 1975 levels would have required an extra sum of £15.
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Therefore, in real terms a declining amount of revenue has resulted from that source of duty.
I understand the points made by a number of hon. Members concerning rural motorists. An assessment and examination was undertaken to see whether it was possible to undertake some kind of discrimination in favour of people with special requirements for motor cars. However, despite an exhaustive examination, that was not found possible. Evasion was felt to be too easy a matter in a country as small as ours, and no practical scheme was discovered.
I feel that we shall have to examine the whole question of direct and indirect taxation in the light of the way in which inflation changes their relationship in the manner I have described.
Mr. Pardoe: Hear, hear—that is a good point.
Mr. Sheldon: I turn to the changes in the levels of income tax. The right hon. and learned Member for Surrey, East (Sir G. Howe) did not refer to those changes. Surely that is a most important aspect of the duties of the Chancellor and a most important matter at any time when there is the prospect of a reduction of basic rate to a figure of 33 per cent. We all welcome that reduction, and it is a reduction we have not seen for some time.
There are three ways in an income tax system in which one can change the rates of taxation and the tax burden. A Chancellor can vary the thresholds. This helps the less-well-off and all those up to the higher rate of tax and beyond. The Chancellor can also change the higher rate bands, which obviously helps the best-off. Furthermore, he can change the basic rate up to the level of the highest rate, and even beyond. Whether he does one or the other helps the situation right up to the limit.
In this Budget my right hon. Friend used all three methods that were available to him. This provides various forms of assistance to each of the sections of the tax-paying public to which I have referred. It is right that he should have taken that course, and particularly in regard to the higher rate bands where there has been a marked erosion.
Let me give one or two figures. Between 1974–75 and 1976–77 the drop in real

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net income for a married man earning £7,000 a year was 15 per cent. and on a figure of £10,000 a year the fall was between 17½ and 20 per cent. That is the kind of erosion which has been referred to on many occasions. In various debates I have sought to point out the way in which the compression has occurred between the man on average income and the man at the top. The top man might be said to be earning in the region of £25,000 a year.
One can look at the example of two married men, each having two children. For the man on average male earnings of £80 a week, that is, £4,160 a year, after taking account of child benefits and national insurance contributions, his net pay would be £3,203. The married man with two children earning £25,000 a year would end up with a net pay of £11,287. The ratio between the earnings of the two men is 3·5 to 1.
Of course, all these figures are subject to a number of qualifications. One could argue that the man on £25,000 a year would have mortgage relief, but perhaps not a large amount because typically he would be getting on in years and would be on the capital repayment part of his mortgage. Such a person would also be likely to have a fairly large amount of life insurance. Taking all that into account and making allowances for both sides, it is not possible that the ratio could be more than 4 to 1.
I do not know whether one should have a philosophical discussion during a Budget debate as to what the ideal ratio should be. When I was young I used to think in terms of figures not far removed from those, and I am not ashamed that we have brought the ratio down from the high level that existed in the past. At any rate, this is one of the lowest ratios in the Western world, and of almost any country in the world. It is clear when the ratio is so fine that we must be careful that any distortions that arise, particularly from sudden changes, are not unmanageable.
References have been made to the benefits of North Sea oil. I was pleased to hear realistic understanding of the benefits of North Sea oil. Certainly some of the extreme statements that we have heard in the past are now ceasing. North Sea oil must be regarded as a
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valuable but limited contribution with certain advantages in particular areas, especially the balance of payments, but if it is not wisely used it will be of little benefit in the long term.
The problem is that we shall be dependent on North Sea oil as a proportion of over 3 per cent. of our gross national product by 1980 and over 5 per cent. by 1985. It is expected that we shall achieve self-sufficiency during the 1980s. Thereafter North Sea oil will diminish only moderately, but it will eventually peter out. It is here in the quantities that we envisage for a limited duration. The use to which we put the oil is crucial.
The United Kingdom is fundamentally a manufacturing country, dependent on industrial and commercial skills and not on fortuitous finds of mineral wealth. The danger of which we are particularly aware is that some Government in the 1980s might not be prepared to use the wealth for industrial investment. The greatest danger is that the wealth might be used for a consumer-led boom that could lead to the higher plateau of consumption, not earned by production. That would be the greatest disaster of all that could befall us.
We have been through the problem of getting over our difficulties and encumbrances through our dependence on the Empire. It provided us with wealth that we did not wholly earn. The ability that we had to rig control over other countries' economies and to plan the use of their raw materials for our benefit—for which we sent our manufactured goods in return—was essentially a one-sided advantage. It gave us the standard of living that we enjoyed and a protected market, but we had to face a sudden withdrawal from that privileged position. We are slowly coming to terms with that change in our rôle. It is lasting longer than many of us had hoped, but it is essentially a changing rôle.
Some of us fear that this oil may provide a bridge from one kind of protected rôle to another without the country facing the essential tasks that it needs to confront. The oil will provide us with the means to invest in our manufacturing processes and industries on which we must depend, but it is far from certain that it will be used in that way.

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The horror story that must always be there as a warning to any Government in the 1980s is that they may be hooked on high consumption that is not justified by production and is sustainable only by the oil. The plateau of oil wealth will be steady, but it will not continue. The advantage of industry is that it can increase annually the wealth and production that we obtain from it.
We cannot compare the plateau of oil wealth with the giant engine of industrial production and expansion which, through its large and regular increases, limited only by our ingenuity and application, can create a firm basis for our prosperity. Those who say that the rôle of the Government in these matters is to keep out and to allow those in industry to run their affairs may find, as a result of that, that we shall have failed to take advantage of the enormous opportunities provided for us by this asset.
A change is to take place in the remission of taxes in cases of official error. The Inland Revenue now has some new rules. Where a taxpayer is faced with an unexpected demand for tax because of failure by the Inland Revenue to make proper and timely use of information which the taxpayer has supplied, the tax is remitted, wholly or partly, if the taxpayer's gross income falls within certain limits.
The limits which were fixed in 1971 were revised in 1974 with the result that in cases falling under the terms of the White Paper, no attempt is made at present to recover the arrears of tax where the taxpayer's gross income is less than £2,000 a year. Where his gross income is above £2,000 but less than £4,000, only one-half of the arrear is collected, unless there is investment income of £325 or more, since that indicates the availability of a significant amount of capital. In that event, as where the taxpayer's gross income is above £4,000 a year, the whole of the arrear is normally collected, although there is some elasticity to meet exceptional cases of which I could give examples.
The intention is to raise the limits to £3,000, £6,000 and £500, respectively. The effect would normally be that where a taxpayer's gross income is less than £3,000 a year, the whole tax will be
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remitted in cases of official error. Where his gross income is between £3,000 and £6,000 a year, one half of the tax will be remitted unless there are significant capital resources measured by an income from investments of £500 or more per annum. If his gross income is £6,000 or more there will be no remission. The new limits will apply to any case of official error where the Inland Revenue's view as to the application of the White Paper is conveyed to the taxpayer or his agent on or after today's date.
I understand that the main argument for indexation was prompted by the attempt to fix the Government to ensure that taxation was independently based and outside the Government's control. I am always sceptical about those who seek to enforce actions upon the Government by obligatory means of that kind. It will be difficult to start indexing income tax thresholds, for example, without at the same time indexing indirect taxes, because the two go together. The hon. Member for Cornwall, North obviously agrees with me.
Having done that, what about house loans—mortgages? I am very much aware that there is inequity there. Again, I think that I carry the hon. Member for Cornwall, North with me.
Then there is the question of pay and areas which are not indexed. Once we start leaving areas unindexed, the Government's freedom of action becomes concentrated on a narrower unindexed area. We have to consider lenders to the Government, fixed stocks and securities and such problems. I mention these to show the bewildering array with which we should be confronted if we started to act in that area.
If we were to have high and persistent levels of inflation, which can be foreseen without end, the Government might find themselves on that road. But we are a long way from that situation. We still have a number of opportunities before us. When we think not only of the problems which I have described, but of the problems of legislation, which my right hon. Friend the Lord President of the Council might not welcome, we see the difficulties.
Mr. Nick Budgen Mr. Nick Budgen (Wolverhampton, South-West) rose—
Mr. Sheldon: I have only a few minutes left. I hope that the hon. Gentleman will forgive me if I do not give way to him. I am sure that he will find other opportunities of taking the matter further.
What I found most interesting was the view put forward by the right hon. and learned Member for Surrey, East on the pay deal. The hon. Member for Horsham and Crawley tried to assert an agreeement which his right hon. and learned Friend had not attempted to claim. I took down his words. The right hon. and learned Gentleman pointed out clearly, freely and frankly that there was some divergence but that there was a welcome for it. The right hon. and learned Gentleman said that he wanted to see a transition to a world free from direct Government interference in pay bargaining. I am sure that we all want to see that particular transition. The way to get it is by achieving levels of responsibility by all who are concerned in looking at the economy as a whole.
The use of the money supply adduced by the hon. Member for Horsham and Crawley and others may control pay in the long run, but what about this autumn? What about the levels of unemployment and of wild inflation which would result immediately? If he were right and we had to go through the fire of high unemployment at the end of it in order to achieve the result that he predicts with a much greater degree of certainty than is given to anyone, we would still have to pay a price this autumn, and possibly next year, too, of a kind which worries not only the House but the country.
We saw what happened to the Financial Times index. It dropped immediately it could be seen there was a possibility that a vote of no confidence in the Government might be carried. Then it rose again when it could see that the Government were safe. That, to me, was the greatest indication of all that the Tory Party does not have the City of London or the Stock Exchange behind it. For the Tory Party to be denied by those whom it seeks to represent is, I should have thought, the greatest danger of all. The support that we have seen, both in areas where we do not expect it as wall as in areas where we do, is an indication of the way in which the Budget is being received by the people of this country.
It being Ten o'clock, the debate stood adjourned.
Debate to be resumed tomorrow.

BUSINESS OF THE HOUSE
Ordered
That the Motion relating to the Ruling of the Chairman of Ways and Means may be proceeded with at this day's sitting, though opposed, until any hour—[Mr. Ashton.]

CHAIRMAN OF WAYS AND MEANS (RULING)
Mr. Speaker: Before the debate begins on the motion in the name of the right hon. Member for Farnham (Mr. Macmillan)—
That, in the opinion of this House, the ruling given by the Chairman of Ways and Means on Thursday, 10th February 1977, in selecting for debate in Committee of the whole House on the Scotland and Wales Bill the Procedure Motion, new Clause 40 and Amendment 679, all in the name of the Leader of the House, ought not to be cited or drawn into precedent on any future occasion.
—I have a short statement to make to the House which I hope will be of some assistance. I am making this statement after consultation with the Chairman of Ways and Means and Mr. Deputy Speaker and with his full agreement.
If I had still been Chairman of Ways and Means, I should have taken exactly the same decision as was taken by the present Chairman of Ways and Means. In the circumstances surrounding the Committee stage of the Scotland and Wales Bill, I believe that the Chairman of Ways and Means was entirely correct in what he did. Nevertheless, I am of the firm opinion that the ruling made on that occasion does not of necessity apply to all future Bills. Every Bill has to be looked at on its merits.
I am, therefore, ruling that the decision referred to in the motion is not one that is regarded as a binding precedent for future legislation. The House should bear in mind the discretion of the Chair in the selection of amendments. I am deeply conscious that the Speaker of the House is, in a special sense, the guardian of our unwritten constitution. It is because of the responsibility that I feel in this regard that I have made this statement.
Mr. Maurice Macmillan: On a point of order, Mr. Speaker. I seek your advice. The motion is critical of the

539
Chair only in a technical sense. It does not question the correctness of the Chairman's ruling, which you have now confirmed. My anxiety was that it might have been possible at some time in the future for the ruling to have been distorted, or unfair advantage to be taken of it, in greatly differing circumstances. Your expansion of the original ruling by the Chairman of Ways and Means has removed all anxiety on that score and has removed all danger of a false precedent being set where none was intended. In those circumstances I shall not seek to move the motion.
Mr. Speaker: I hope that that is in accordance with the will of the House.
Hon. Members: Hear, hear.

MR. EARLSTON SPENCER (WORK PERMIT)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Ashton.]
10.3 p.m.
Mr. J. Enoch Powell: At the end of last year I received an extract from the Jamaica Daily News. My attention was specially drawn in that extract to an item inside a box, which I shall read to the House as it is brief. It ran:
"Social worker Earl Spencer, who was detained at Up Park Camp June 20 under the Emergency Regulations, is to be released today"—
that was from the Jamaica Daily News of 26th November 1976—
"so that he can travel to the United Kingdom to prevent his UK work permit from expiring. Mr. Spencer's release is conditional on his remaining in the United Kingdom. If he returns to Jamaica while the State of Emergency is in force he will be subjected to further detention. His release from Up Park Camp was approved by National Security Minister Keeble Munn."
When my eye fell on that news item, I felt it right to inquire into the facts which lay behind it, it being extremely remarkable on the face of it that a detainee in Jamaica should be released so that he could return to the United Kingdom to prevent his work permit expiring and that that should be conditional on a matter that is in no way under the control of the Jamaican authorities, namely, his remaining in the United
540
Kingdom. That is an extraordinary assertion.
It took some little time, owing to various mishaps with which I need not detain the House, to obtain from the Home Office any facts about the background to this extraordinary news item. When they came, they were contained in a Written Answer on 17th January this year. Here again, I think that it will be convenient if I put the terms of that Answer on the record. It said:
"Mr. Earlston Spencer"—
that appears to be his correct name—
"a citizen of Jamaica, came to this country on 13th April 1975 and applied successfully for a work permit as a social worker from the Department of Employment."
I take it that that means a work permit from the Department of Employment to work as a social worker.
The Answer continued:
"He embarked on 22nd April 1976"—
that is to say, just over a year after his arrival—
"and returned on 25th November 1976 while his work permit was still current, for the stated purpose of resuming his former employment and applying for a renewal of this work permit which expired on 30th November 1976."
So it was a very near squeak. He had only five clays of his existing work permit, of which he had not been availing himself for some six to eight months, in existence when he got out of detention in Jamaica and arrived in the United Kingdom.
I resume quotation from the Written Answer:
"He was given leave to enter the United Kingdom for two months"—
that is, two months from 25th November—
"and that leave is still current."
The Answer concluded with the words:
"His stay thereafter would depend upon his making a successful application under the Immigration Rules for an extension of his leave."—[Official Report, 17th January 1977; Vol. 923, c. 37.]
It seemed to me, as no doubt it will have seemed to anyone reading that Written Answer, that a number of questions were still left unanswered—indeed, that it concealed, as the novelists used to say, more than it revealed. I put some of these difficulties immediately to the Home Secretary. I said:
"I do not know by whom he was employed as a social worker; but one cannot help

541
wondering about the efficiency of an employing authority which can dispense with his services from April to November and then re-employ him for a couple of months without any certainty that he can stay at the end of them."
I must say that I hoped—my hope so far has been in vain, although I trust that it will be fulfilled tonight—that I might receive some information as to the peculiar circumstances and the nature of the social work and the nature of the employer with whom Mr. Spencer had been working.
But I had other difficulties. I suggested that the Home Secretary would wish to be satisfied under what pretext Mr. Spencer had entered the United Kingdom initially, in order while he was here to apply for and obtain a work permit. I drew the attention of the Home Secretary to the alleged blackmail on the part of the authorities in Jamaica who allowed him out of detention on condition that he came to the United Kingdom and stayed here.
In response to that inquiry, I received from the Home Secretary, dated 25th February—a month after the expiry of the two months' leave which Mr. Spencer received on landing on 25th November—a reply which I can only describe as devious and unsatisfactory. Still, it did shed some additional light, though what additional light it shed was not reassuring. It said:
"Had there been reason to believe that Mr. Spencer's purpose in coming to this country last April"
that was a mistake; it should have been April 1975—
"was to take employment without permission he would have been refused admission. There was no such reason, and he was admitted as a visitor."
I pause there to consider the remarkable statement, if it is accurate, that is imported by these two sentences. It says that if the authorities had supposed his intention was to take employment without permission, they would not have let him in. But had he said, when he presented himself, "My intention is to get in first and then apply for a work permit", presumably they would have admitted him. If this is so, I cannot see any purpose in having the system of work permits.
If, on the other hand, it means that, had there been reason to believe that Mr.
542
Spencer's purpose was to take employment, he would have been refused admission, and that it was only because it was not known that that was his intention when he was admitted as a visitor, one is bound to inquire what can be the value of a system that admits a person as a visitor and is then perfectly ready thereafter, although he had at the moment of admission indicated that his intention was to obtain work, to supply him with a work permit.
Whether the words "without permission" ought to be in that sentence or not, the conditions which that statement describes are, on the face of it, objectionable. The Home Secretary's letter of 25th February continues:
"there is, as you know, no prohibition on someone, whether lawfully here as a visitor or living overseas, from applying for permission to work here".
If that is so in the widest sense, it is very difficult to see what sort of control can be exercised upon entry if anyone can come in as a visitor and there is no prohibition upon him when lawfully here as a visitor applying for permission to work here.
There is an avenue wide open if applications are considered automatically on their merits from persons who have got in here simply because they were visitors and who would not have been allowed here if it had appeared upon their first presenting themselves that their real intention was not a visit but the taking up of employment. One can imagine circumstances in which a person genuinely arrives as a visitor and then special conditions arise in which it would be reasonable, quite exceptionally, for that person to obtain work.
I hope that one of the facts that will be given tonight is the date upon which Mr. Spencer first applied for his work permit and the date on which it was given to him. It looks as though—it is not clear and I hope that we shall have the facts—it was shortly after arriving that he made his application for the work permit.
The letter continues:
"In Mr. Spencer's case the Department of Employment, applying the usual criteria, agreed to issue a work permit, and, as is normal practice, the Home Office then granted Mr. Spencer an appropriate extension to his permitted stay in this country."

543
What was that appropriate extension? What was in the first place his permitted stay as a visitor? What was considered to be the appropriate extension? Whatever was the total of those two, it took him through from April 1975, when he arrived, to 30th November 1976, a period during the last eight months of which he did not find it necessary to be at work in this country. All those matters need to be cleared up before we can understand this case or appreciate the light which it may throw upon the administration of the immigration controls.
Then I think that curiosity is legitimate as to the nature of the social work concerned. I say that it is legitimate because we are told that this is a person who was admitted as a visitor and who would not have been admitted if it had been realised at the time that he intended to get work here. What was the nature of this social work for which Mr. Spencer was found so specially suitable that, although he had arrived as a visitor, the opportunity was pounced upon to secure his services; and what was the authority which was employing him?
I should also like to know what the authority had to say when Mr. Spencer went off to Jamaica for six or eight months after being employed by one authority, if it was with one authority, for a year? Did it grant him leave of absence? Did it say "You have worked very hard for a year. Now you are entitled to six months' holiday"? Or did Mr. Spencer just sling his hook, as they say? When he came back and was admitted—I again quote from the first Written Answer—
"for the … purpose of resuming his former employment and applying for a renewal of this work permit"—[Official Report, 17th January 1977; Vol. 924, c. 37.]—
was he going back to the same employer; and, if it was the same employer, what did the employer say when he walked in? What explanation did Mr. Spencer give of his eight months' absence—perhaps a description of the conditions of detention under the security rules in Jamaica? Did he tell the authority "Look, I have been allowed only two months. So you must understand that you are re-employing me, subject of course to the Department of Employment and the Home Office, only temporarily"?
544
As it stands at the moment, this is a highly unsatisfactory narrative. One's dissatisfaction is increased by the difficulties which have attended upon the extraction from the Home Office even of the inadequate facts and explanations set out in the Written Answer and the letter which I have placed before the House.
I have therefore sought this short debate to enable the Home Department, on a matter which is in itself of some public interest, to come clean with the full facts, but also because I believe that a case of this kind shows that far greater surveillance is necessary over the exercise of the power to grant a work permit, which can of course be extended and can eventually terminate in permanent residence, to persons who initially come to this country, either genuinely or otherwise, for the purpose of paying a visit and making themselves acquainted with our historical monuments and our beautiful scenery.
I should like, finally, to give this assurance to the Under-Secretary of State, who is to reply. I shall not lose my interest in this case until all the facts have been disclosed which I believe one is entitled to know and which would either remove the anxieties which prima facie this case arouses or would point to the remedial action which needs to be taken in the administration by the Home Office of the immigration law.
10.20 p.m.
The Under-Secretary of State for the Home Department (Dr. Shirley Summerskill): I am grateful to the right hon. Member for Down, South (Mr. Powell) for providing an opportunity for us to discuss briefly this case of a man originally admitted as a visitor who was subsequently given permission to take employment here. The right hon. Gentleman has expressed concern about the granting of permissions to take employment in such circumstances.
I shall first set out the facts and explain the application of the relevant immigration rules. This man, who is a citizen of Jamaica, first came to this country as a visitor on 13th April 1975. Under the immigration rules someone seeking entry as a visitor is admitted if he satisfies the immigration officer that he is

545
genuinely seeking entry for the stated period of the visit and that he can, without working, support himself for this period and meet the cost of the return or onward journey.
Visitors coming to stay with relatives or friends are also admitted if the immigration officer is satisfied that no more than a visit is intended and that the support available is adequate. But in all cases leave to enter should be refused if the immigration officer is not so satisfied and, in particular, leave to enter should be refused where there is reason to believe that the passenger's real purpose is, for example, to take employment.
It is open to a Commonwealth citizen who wishes to ascertain in advance whether he is eligible for admission to the United Kingdom to apply for an entry certificate to the appropriate British representative in the country in which he is living. Generally speaking a passenger holding an entry certificate is not to be refused leave to enter unless the immigration officer is satisfied that false representations were employed or material facts were concealed for the purposes of obtaining the certificate or a change of circumstances since it was first issued has removed the basis of the holder's claim to admission.
Before coming here this man had, on 26th March 1975, obtained an entry certificate for the purpose of coming here as a visitor from the British High Commission in Kingston, Jamaica. On arrival he presented his passport, containing this valid entry certificate, to the immigration officer and satisfied him that he was coming here for a visit only. The immigration officer accordingly admitted him in the normal way as a visitor; that is to say, he admitted him for six months only.
If the immigration officer had had any reason to believe that Mr. Spencer's purpose in coming here had been to take employment without permission and had been satisfied that he had obtained his entry certificate by making false representations or concealing material facts, he would have refused him entry.
Mr. Powell: Supposing the officer's view had been that his intention in coming here was to take employment, would he
546
not, in accordance with the regulations that the hon. Lady has just read out, be required to refuse him entry?
Dr. Summerskill: As I have said, that would be a reason for requiring him to refuse entry. But the immigration officer was satisfied that he was coming here for a visit only.
On 15th September 1975 an application was made for permission to take employment to enable this man to become a warden-youth worker with a housing association which runs a hostel for homeless West Indians. Mr Spencer was to help them to find training or employment. As a visitor he had worked voluntarily for the association in a field in which he had had several years' experience before coming to this country.
There is nothing in the Immigration Act 1971 that prevents such an application being made. It is in fact by no means unusual. In 1974, 5,000 Commonwealth citizens and about 3,000 foreign nationals already in this country as visitors or students were successful in obtaining permission to take approved employment. In 1975 about 4,000 Commonwealth citizens and 2,400 foreign nationals were successful. In 1976 there is every indication that the number is even lower.
The immigration rules make clear that in relation to variation of leave to enter with a view to employment, the general position is that where a person wishes to come to work in the United Kingdom the employer must have obtained a work permit before the person sets out. People admitted as visitors or students or for other temporary purposes have no claim or entitlement to stay here in employment. If the Department of Employment is prepared in a particular case to approve the proposed employment, an appropriate extension of stay may be granted; if not, an extension is refused.
A work permit is issued for a named overseas workers in respect of a specific job with a specific employer. Permission can also be given for work to be taken by a person from abroad already in this country, subject to the same criteria as for a person abroad. Before a permit can be issued certain basic conditions must be satisfied. Among these are that, with some exceptions, the work is such as to require a person with a professional qualification, skill or experience. Secondly, a

547
condition is that the employment of an overseas worker is necessary, and, thirdly, that there is no suitable resident labour available to fill the post offered and the employer has made adequate efforts to find such a worker.
The basic condition relating to the non-availability of suitable labour here means that the operation of the work permit scheme is closely linked to the state of the labour market. In a situation of persistent unemployment widely affecting the labour market, even at the levels of skill, qualification and experience demanded by the scheme, it becomes increasingly difficult for that basic condition to be satisfied. This is the present situation and it has obtained for some time. In those occupations where the skills criteria do not obtain an annual quota operates and the stringency of the labour market requirement has been intensified by reductions in the quotas. Policy on this and related matters is kept under constant review.
The employer's application satisfied the normal criteria of the work permit scheme. Mr. Spencer had several years' experience before coming to this country. The job had also been advertised and notified to the Employment Services Agency without success. The Department of Employment agreed to authorise the employment, and, in accordance with normal practice, the Home Office granted him an extension of stay up to 30th November 1976—the date of expiry of the permission.
He embarked from here on 22nd April 1976 and returned on 25th November 1976 for the stated purpose of resuming his employment and applying for a renewal of his permission to work. As his permission was still current and since
548
he satisfied the immigration officer that he was coming to resume the employment for which it had been issued, he was given leave to enter for two months. However, our records show that he left this country again on 1st December 1976.
I trust that the explanation I have given about Mr. Spencer's case has met the right hon. Gentleman's dissatisfaction.
Mr. Powell: It would be interesting to know how they managed to get on after April 1976 without the services of someone who was so irreplaceable. It may possibly have occurred to the hon. Lady that arrangements of this sort are capable of being used not bona fide in order to provide a means of entry to this country, and of continued permits which would lead to eventual permanent residence. I am sure that the hon. Lady will ensure that that possibility is taken into account even more carefully in future as a result of the investigation of this case.
Dr. Summerskill: I am certain that there was no abuse of the work permit system in this case and that the work permit was justifiably given. If there had been any indication of any abuse, I should certainly share the right hon. Gentleman's concern. However, I have looked at this case extremely carefully, and I cannot see that there is any abuse. Admittedly the man in question left in April, but he was detained in Jamaica for some time before returning subsequently in November.
Question put and agreed to.
Adjourned accordingly at half-past Ten o'clock.

ENVIRONMENT
  Kielder Dam
  Kielder Dam
  Newham
  Newham
  Improvement Grants
  Improvement Grants
  Planning Control (Policy Note)
  Planning Control (Policy Note)
  Ordnance Maps
  Ordnance Maps
  Suffolk (Structure Plan)
  Suffolk (Structure Plan)
  Fire Precautions (Factory Farms)
  Fire Precautions (Factory Farms)
  Dolphins and Porpoises
  Dolphins and Porpoises
  Big Ben
  Big Ben
  Rate Support Grant
  Rate Support Grant
  Rents (Assessment Costs)
  Rents (Assessment Costs)
  Calcium Chloride
  Calcium Chloride
  Council Houses (Heating)
  Council Houses (Heating)
  Land Acquisition (Intervention Board)
  Land Acquisition (Intervention Board)
  PROTECTION OF BIRDS
  PROTECTION OF BIRDS
HOUSE OF COMMONS
  European Community Documents
  European Community Documents
  Gipsies
  Gipsies
  Community Development Projects
  Community Development Projects
  Deportation
  Deportation
  Fire Precautions (Hotels)
  Fire Precautions (Hotels)
TRANSPORT
  Policy White Paper
  Policy White Paper
OVERSEAS DEVELOPMENT
  Indonesia (Inter-Governmental Group)
  Indonesia (Inter-Governmental Group)
EMPLOYMENT
  Trade Unionists
  Trade Unionists
  Dyfed
  Dyfed
DEFENCE
  Sudan
  Sudan
  Bullets
  Bullets
WALES
  Factories
  Factories
  Dairy Farming
  Dairy Farming
  Potatoes
  Potatoes
NORTHERN IRELAND
  Belfast Opera House
  Belfast Opera House
  Schools (Reorganisation)
  Schools (Reorganisation)
AGRICULTURE, FISHERIES AND FOOD
  Farmlands
  Farmlands
  Pigs (Slaughtered)
  Pigs (Slaughtered)
  Pig Farms
  Pig Farms
  Butter (Intervention Stock)
  Butter (Intervention Stock)
  Beef (Intervention Stock)
  Beef (Intervention Stock)
  Council of Ministers (Meeting)
  Council of Ministers (Meeting)
INDUSTRY
  British Aerospace
  British Aerospace
PRICES AND CONSUMER PROTECTION
  Maximum Price Orders
  Maximum Price Orders
  Price Commission
  Price Commission
  Beer
  Beer
  Funerals
  Funerals
  Ticket Touts
  Ticket Touts
  Tea
  Tea
  Veterinary Surgeons (Advertising)
  Veterinary Surgeons (Advertising)
NATIONAL FINANCE
  Forestry
  Forestry
  Drink, Tobacco and Petrol
  Drink, Tobacco and Petrol
  Rhodesia
  Rhodesia
  Tax Allowances
  Tax Allowances
TRADE
  Small Businesses
  Small Businesses
FOREIGN AND COMMONWEALTH AFFAIRS
  Cambodia
  Cambodia
  Japan
  Japan
  Middle East
  Middle East
  Rhodesia
  Rhodesia
  Uganda
  Uganda
  Romania
  Romania
  Southern Africa
  Southern Africa
  Hong Kong
  Hong Kong
  Zaire
  Zaire
  Falkland Islands
  Falkland Islands
  Angola (British Subjects)
  Angola (British Subjects)
  United States of America
  United States of America
EUROPEAN COMMUNITY
  Direct Elections
  Direct Elections
  Lomé Convention Conference
  Lomé Convention Conference
  Nuclear Capability
  Nuclear Capability
  Hospital Waiting Times
  Hospital Waiting Times
SOCIAL SERVICES
  Geriatric Beds
  Geriatric Beds
  National Marriage Guidance Council
  National Marriage Guidance Council
  Family Practitioner Committees
  Family Practitioner Committees
  Health Education Council
  Health Education Council
  Cigarettes
  Cigarettes
  Hospital Treatment (Claims for Negligence)
  Hospital Treatment (Claims for Negligence)
  Maternity Grant
  Maternity Grant
  Death Grant
  Death Grant
  Medical Laboratories (Technicians and Scientists)
  Medical Laboratories (Technicians and Scientists)
  National Health Service (Charges)
  National Health Service (Charges)
  Hospital Treatment and Security Benefits
  Hospital Treatment and Security Benefits
  Whooping-cough Vaccination
  Whooping-cough Vaccination
SCOTLAND
  Fishing Industry (Faroes Negotiations)
  Fishing Industry (Faroes Negotiations)
  Paroles
  Paroles
  Juvenile Offenders
  Juvenile Offenders
  Prisons
  Prisons
  Illiteracy
  Illiteracy
  Prisoners
  Prisoners
  Calcium Chloride
  Calcium Chloride
  European Community (Grants and Loans)
  European Community (Grants and Loans)
  Intergrid Construction
  Intergrid Construction
  Juvenile Offenders
  Juvenile Offenders

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

LORD THOMSON OF MONIFIETH
The Right Honourable George Morgan Thomson, having been created Baron Thomson of Monifieth, of Monifieth in the district of the City of Dundee, for life—Was, in his robes, introduced between the Lord Shackleton and the Lord Hughes, and made the solemn Affirmation.

CRUDE OIL: MINIMUM SAFEGUARD PRICE
2.47 p.m.
The Earl of LAUDERDALE: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are still pressing Britain's EEC partners to agree to a minimum safeguard price for crude oil.
Lord STRABOLGI: My Lords, the Commission's proposal of January 1976 that approval in principle should be given by the Community to such a system is still before the Council. On the insistence of Her Majesty's Government, the subject of MSP was included in the agenda for yesterday's Energy Council, which was presided over by my right honourable friend the Secretary of State for Energy. As a result of the discussion, the Commission has been charged with further examining the various possible ways of supporting investment in the development of Community energy resources, including MSP. This does not imply a commitment to the principle of MSP by all Member Governments. The result of the Commission's further study, including texts of draft operative instruments, will be referred back to the next Energy Council on 14th June.
The Earl of LAUDERDALE: My Lords, in thanking the noble Lord for that very full, informative and helpful reply, I should like to ask whether it is the policy of Her Majesty's Government still to link our view on this matter with the problem of Euratom loans—I think £300 million worth—for research in alternative sources of energy?
Lord STRABOLGI: My Lords, I think that that is a different question.
The Earl of LAUDERDALE: My Lords, I am much obliged and I would not wish to press the noble Lord unduly, but may I ask a further question? Is it the case that we are still thinking in terms of a minimum support price of the order of six dollars a barrel? I ask this in view of the fact that prices have risen very much higher than that, and even if the OPEC organisation collapsed altogether it would be very unlikely to go down as low as six dollars.
Lord STRABOLGI: My Lords, the majority of the major oil-consuming countries of the world do not, as is demonstrated by their commitment to MSP through the IEA, share that view. The purpose of an MSP in the EEC is to make investments in Community energy resources worth while. If it is never to be used, so much the better.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, may we have a dictionary—RSVP?
Lord STRABOLGI: My Lords, I will arrange for one to be put in the Library for the benefit of the noble and learned Lord.
Lord SUDELEY: My Lords, may I ask the Minister whether he could confirm that it is France which is opposed to the principle of MSP? Secondly, may I ask the Minister whether he could mention the various ways, apart from MSP, by which investment might be encouraged in the development of the Community's energy resources?
Lord STRABOLGI: My Lords, in reply to the noble Lord, Lord Sudeley, I may say that seven of our EEC partners who have already agreed in the International Energy Agency (I spell it out for

889
the benefit of the noble and learned Lord) to the minimum safeguard price concept also accept it within the Community. We believe that the eighth, France, will come to accept the idea, too. With regard to the noble Lord's second supplementary question, about possible ways other than MSP, there are of course a variety of ways by which some form of assistance could be given to protect certain of the energy investments, of which our own are very great. These are at the moment under discussion.
Lord O'HAGAN: My Lords, I understand that new proposals are to come from the Commission on this matter. Can the noble Lord say whether the Scrutiny Committee in either House and/or the European Parliament will have a chance to examine these before a decision is taken in the Council?
Lord STRABOLGI: My Lords, I think the Committee, of which the noble Lord is a member, has had an opportunity already to scrutinise some of the proposals. I will inquire whether there will be other opportunities. I hope and am sure there will be.
Lord BALERNO: My Lords, may I ask the Minister whether in continuing to press for the minimum safeguard price we are not in grave danger of both losing political good will and also of forgoing the chances of securing more important aims?
Lord STRABOLGI: I must remind the noble Lord that the proposal for the adoption by the Community of a system of MSP emanated from the Commission in response to the agreement reached by the Heads of State in December 1975. Our EEC partners are aware that we are contributing 27 per cent. of all Community investment in energy, and I believe that they accept, therefore, the importance to the United Kingdom of protecting this investment.
The Earl of LAUDERDALE: My Lords, could the noble Lord add just one other piece of information to the considerable and helpful information that he has already given; namely, when do we expect the Commission's new proposals to come forward, so that they can be available for scrutiny?
Lord STRABOLGI: My Lords, as I said at the end of my original Answer, the results of the Commission's further study, including the text of draft operative instruments, will be referred back to the next Energy Council on the 14th June.

SCOTTISH DAILY NEWS CO-OPERATIVE
2.54 p.m.
The Earl of LAUDERDALE: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how they propose to recover the loan of £1,200,000 made to the Scottish Daily News Co-operative.
The MINISTER of STATE, SCOTTISH OFFICE (Lord Kirkhill): My Lords, Scottish News Enterprises Limited, which published the Scottish Daily News, is in liquidation. The Government, as secured creditors, have lodged a claim with the liquidator, and the exact amount recovered will depend on the final outcome of the liquidation. The liquidator has, however, informed the secured creditors that payment of around 50p in the pound can be expected.
The Earl of LAUDERDALE: My Lords, in thanking the noble Lord for his confirmation of what has been, of course, widely published in the Press, may I ask him this question: Does he not consider, with the benefit of hindsight, that this was not a very prudent step for the Government to take, in that they made this investment against advice from their own Department and that that investment had the effect of encouraging others—namely, prospective workers in the co-operative—to invest their own savings, up to, in some cases, as much as £5,000, all of which has been lost?
Lord KIRKHILL: My Lords, the Government recognised from the outset that this was a high-risk venture, but the Government took the view (and at the time, I think, properly took the view) that jobs had to be saved in an area of continuing and escalating high unemployment, as is evidenced in the West Central belt of Scotland.
The Earl of LAUDERDALE: My Lords, in accepting the Government's point that of course investment should be made to protect and advance employment, may I ask the noble Lord whether he would not agree that the use of taxpayers' money for high-risk investment is a new and very high-risk departure from the old policies of the Board of Trade and of what used to be called the Board of Trade Advisory Committee, and so on?
Lord KIRKHILL: My Lords, this is, of course, one of the great divides that would separate the noble Earl from myself in terms of political credo and philosophy.
Lord BALERNO: My Lords, can the noble Lord inform the House as to how much has been lost by members of the Scottish National Party, or the National Party itself, who were shareholders in this venture?
Lord KIRKHILL: My Lords, I should really like to be able to reply to that question, but I cannot.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, can the noble Lord say how many jobs have been saved now?
Lord KIRKHILL: Of course, my Lords, as I think your Lordships' House will know, the enterprise has foundered. It enabled a number of jobs to be saved; and, of course, there has been a measure of transfer into the Outram Group.
Viscount HANWORTH: My Lords, did the Government consider the cost-effectiveness of this matter in keeping jobs? Surely, if they were going to invest that amount of money, there were many other courses which would have provided far more jobs?
Lord KIRKHILL: My Lords, the Government do not take up an intransigent position, and I think perhaps, with hindsight, there is a measure of relevance in the noble Viscount's comment.
The Earl of LAUDERDALE: My Lords, can the noble Lord assure us that in future the Department of Trade or the Department of Industry, whichever is concerned, will heed its own advisers?
Lord KIRKHILL: My Lords, the Department is, of course, always subject to Ministerial control and decision.
Viscount St. DAVIDS: My Lords, while wishing to declare an interest, in that I am a member of a co-operative in Yugoslavia, can the noble Lord say whether the Government have studied the much better methods of financing co-operatives in Yugoslavia, which result in the Government not losing nearly so much of their money—in fact they frequently make a lot—and which also protect the worker from uselessly expending large quantities of his capital and his work, and from losing a great deal of enthusiasm?
Lord KIRKHILL: My Lords, descending from Scottish Northern fastness, I am really somewhat insular in the Government's knowledge or awareness of the Yugoslav position. Nevertheless, I shall see that the noble Viscount's remarks are conveyed to the appropriate quarter.
Lord BALLANTRAE: My Lords, recalling the great astonishment which swept across the whole of Scotland when we heard that this support was going to be afforded, could the Minister assure us that no similar sudden, impulsive investment will happen again?
Lord KIRKHILL: My Lords, I do not think I can accept that it was an impulsive investment. Nor do I think I can give the kind of unequivocal assurance to your Lordships which the noble Lord would wish.
Lord ORR-EWING: My Lords, would the noble Lord follow up a point made earlier? Perhaps he could categorise how many jobs were secured, for how long, at a cost of approximately £600,000.
Lord KIRKHILL: My Lords, I cannot give that answer to your Lordships' House this afternoon; but I shall certainly attempt to get those figures, and I shall write to the noble Lord.

EEC: MILK MARKETING REGULATIONS
2.59 p.m.
Lord MOTTISTONE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is their policy towards the European Commission's revised proposal for a regulation laying down general rules for the marketing of milk products and in particular for the exclusive use of milk fats and protein.
The LORD PRIVY SEAL (Lord Peart): My Lords, we have made it clear that, while we fully support accurate and informative labelling, we cannot accept any proposals which would adversely affect the interests of both the food industry and the consumer.
Lord MOTTISTONE: My Lords, I thank the noble Lord for his reply. Am I to understand that the Government agree in this particular case that what the Commission is trying to achieve—that is, to force people to use milk products in various food products—will not be achieved by this, and that much greater costs will be involved in the future disuse of certain titles and descriptions?
Lord PEART: My Lords, I agree with the noble Lord. That is why the Government have opposed these proposals.

ELECTRICITY: NIGHT RATE REDUCTION
3 p.m.
Lord HAWKE: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will do their utmost to ensure that the substantial cut by CEGB in their charge to the Area Boards for off-peak electricity, operative from 1st April, is passed on in full by the Area Boards to the consumer.
Lord STABOLGI: My Lords, I understand that Boards' off-peak tariffs from 1st April, which include reductions in basic night rates, will take full account of the reduction in the night rate in CEGB's bulk supply tariff. This rate applies only to a defined level of consumption; other night units are charged at a higher rate.
Lord HAWKE: My Lords, while thanking the noble Lord for that moderately satisfactory reply, may I ask whether he is aware that, if the Central Electricity Generating Board want to get a more balanced load, they will have to decrease their night tariff still further, because people are finding it very expensive to keep night storage heaters running?
Lord STRABOLGI: My Lords, the basic night rates on white meter tariffs and most night-only tariffs will be reduced on average by 4½ per cent. for the 8 to 10 hours rate and by 9 per cent. for the 6 and 7 hours rate. This reduction which affects consumers' bills from July may be obscured by the increase in the fuel cost adjustment.
Lord HAWKE: My Lords, arising from that answer, may I ask whether I am right in thinking that the CEGB prices are going down by 15 per cent.? If so, why is there so small a reduction reflected in the Area Board's prices?
Lord STRABOLGI: My Lords, this rate is related to system costs at a time when the demand on the generating system is at the minimum. It applies during other periods of the night only up to the level of the Board's consumption at the minimum. Demand above that attracts the standard rate.
Lord HARMAR-NICHOLLS: My Lords, is the noble Lord aware that, despite the detailed figures which have just been given, people who invested in night storage heaters when they were offered the concessions feel that some of those decisions have not been honoured as completely as they might? If good will is to be returned, perhaps the noble Lord's right honourable friend will have to look to see whether or not he can honour what was an undertaking at the beginning of this night storage scheme.
Lord STRABOLGI: My Lords, I will pass on what the noble Lord has said to my right honourable friend. Tariffs are, by Statute passed by Parliament, a responsibility of the electricity boards. With regard to night tariff rates, they have been considerably reduced. But, with regard to the possible increases in coal, the rates may have to go back to the price at present. The day rate, I am afraid, will have to go up.
Lord SHINWELL: My Lords, is not the noble Lord's answer somewhat ambiguous? The consumer will have no reduction at all. Does the noble Lord recall that a few weeks ago the noble Lord, Lord Ferrier—and I do not think he is present now—initiated a debate on this question and received a definitive assurance from the Minister replying for the Government that the CEGB would be compelled to have regard to the needs of the consumers who had been promised a reduction if the general charge of the electricity supply suffered a reduction?
Lord STRABOLGI: My Lords, the basic rates in these tariffs—and these are off-peak tariffs which include a daytime period—which are affected by increases in other rates in bulk supply tariff as well as by a reduction in the night rate, will be unchanged; but as I have said, the first bills at the new rates, from July, will be affected by an increase in the fuel cost adjustment expected at that time.

GOVERNMENT STATEMENTS
Baroness YOUNG: My Lords, I beg leave to ask Her Majesty's Government the Question of which I have given Private Notice, namely:
To ask Her Majesty's Government what is the situation at the Surrey hospitals following denial to the hospitals of food and fuel necessary for the wellbeing of patients and whether they will make a Statement.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, with the leave of the House, at a convenient moment after 3.30 p.m. my noble friend Lord Wells-Pestell will answer this Question in the form of a Statement. This will be followed by my noble friend Lord Strabolgi repeating a Statement on the EEC Agricultural Ministers' meeting.

SALE OF MANORS BILL [H.L.]
The Earl of KINNOULL: My Lords, I beg to introduce a Bill to regulate the transfer of Lordships of certain Manors. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read 1a.—(The Earl of Kinnoull.)
On Question, Bill read 1a, and to be printed.

EMU WINE HOLDINGS AND SUBSIDIARY COMPANIES BILL [H.L.]
Read 3a, and passed, and sent to the Commons.
HERITABLE SECURITIES AND MORTGAGE INVESTMENT ASSOCIATION, LIMITED BILL [H.L.]
Read 3a, and passed, and sent to the Commons.

ROYAL ASSENT
The LORD CHANCELLOR (Lord Elwyn-Jones): My Lords, I have to notify the House in accordance with the Royal Assent Act 1967 that the Queen has signified her Royal Assent to the following Acts:

Social Security (Miscellaneous Provisions) Act 1977,

International Finance, Trade and Aid Act 1977,

Nuclear Industry (Finance) Act 1977,

Job Release Act 1977,

Representation of the People Act 1977,

Town and Country Planning (Scotland) Act 1977,

General Rate (Public Utilities) Act 1977,

Agricultural Holdings (Notices to Quit) Act 1977,

British Airways Board Act 1977.

INNER CITY PROBLEMS
3.8 p.m.
Lord SANDFORD Lord SANDFORD rose to call attention to the problems at the hearts of our cities; and to move for Papers. The noble Lord said: My Lords, I should first like to welcome most sincerely the appointment of Mr. Shore to the chairmanship of a Cabinet committee dealing

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with this matter, and also to welcome his current interest in the inner city, the topic of our debate. Perhaps I should then say a word about the origin of these studies. The Secretary of State and the Ministers, of which I was one, in the Department of the Environment in 1972 initiated the so-called six town studies. There were three studies based upon Oldham, Rotherham and Sunderland published in 1973 under the title Making Towns Better. They complemented the Bains Report which was on the topic of corporate management of towns and cities. They were available to the new districts that came into being on the reorganisation of local government and they amounted to two manuals on how to make the best use of available resources—as it turned out, timely advice.
There were three longer-term reports called for, and those are the ones which relate to our debate today and which have been summarised in this report. Three inner areas were chosen for study: Stockwell in the London Borough of Lambeth, Small Heath in the City of Birmingham, and an area which one can describe as Edgehill in the City of Liverpool. These reports are now complete but not yet published. I am afraid that the Secretary of State has brought some criticism on himself for the haste with which he is now trying to bring this matter to a conclusion. For instance, from Liverpool we read:
"We question the validity and even the serious intent of a consultation process which

(a) allows only two months from publication for reactions,

(b) is based upon a report costing £1·50 and which proves to be in very short supply, and

(c) which cannot wait until the publication of the full report of more than three years' work which is to be published this summer."

Baroness BIRK: My Lords, may I ask the noble Lord to forgive me for interrupting so early? Is the noble Lord saying that it is not better to have the summary of the report so that people can see the way they are going than to wait for the full report? I cannot believe that he means that. The Secretary of State is a very assiduous and conscientious Minister and must want matters to continue and as much information as possible to be given to the public.
Lord SANDFORD: My Lords, personally I have managed satisfactorily because I have been reading the reports as they came out. The noble Baroness has been kind enough to send them to me. I am not quoting my own views but those of a city and the voluntary bodies in the city which complain that they have had to respond in too much of a rush on this important and complicated matter. But it is not a matter of great moment. In preparing for this debate I had to decide what kind of debate we should have and what role this House might play in the general debate which the Secretary of State has called for.
Of course there is no end of fuel in the inner city on which to feed the fires of Party political controversy, but I am satisfied that the general view of your Lordships is that we would do best to leave that to our colleagues in another place and to those who are about to fight in the local elections. So I shall resist the temptation to say that if by now Socialism really worked its fruits should be showing in the inner cities where for so long they have been dominated by Socialist councillors and by Socialist policy. I shall take up no time in trying to impute blame on Her Majesty's Government for the present state of unemployment which is one of the things that bears particularly heavily on the inner city, and I shall not pursue any suggestion that the Government's latest housing policies have made thousands of units of private accommodation inaccessible to would-be tenants in the inner cities. These are all matters which I suggest could but should not be debated. At least I shall not raise them.
I have the feeling that we should try to eschew Party controversy, resist these temptations, and instead bring to bear on this complex of issues our relative detachment from the hustings. Our wide experience, reflected in today's list of speakers, make the most of the fact that a lot of us are well past having to grind particular professional axes and make the best of our broad collective spread of interests. Many of us have served in central Government, local government, shire counties and metropolitan counties; some have business insight, others have knowledge of voluntary sectors, and so on. I should have thought that this range of interests could do something to help the

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councillors actually grappling with the daunting problems of the inner wards to find improved ways of managing, and perhaps also help central Government to find the right way of providing due support to these valiant, expensive but so far unsuccessful efforts in the inner cities.
I turn first to the malaise of the inner city and attempt a diagnosis of it. I think the symptoms of the malaise are well known. They are partly endorsed by these studies. What is felt—and it is very important—is a lack of confidence in the area, an unwillingness to invest in it, to live in it and to set up business in it. There is a sense of decline and decay, a feeling that the community has disintegrated, and now no longer cares for its own members or its own buildings. There is a feeling that the area has a poor image, a sense of shame in having an address in it, a sense of powerlessness and futility in the face of the changes that occur and are apprehended. These changes may be caused by outsiders in some London office deciding to close down a local factory, or by one's own council, only a few miles away but seemingly just as uncaring, deciding to close a cherished little school, bulldoze away a terrace of houses or put a new highway across the view.
The studies show convincingly that these and other things like them are symptoms of the malaise as the inner area patient feels them. There are other equally well known measurable symptoms all set out in these studies. Let us take the one from Small Heath in Birmingham for example: a large loss of population down from 50,000 in 1951 to 32,000 now; an increasing concentration of lower skilled families; the better off and more skilled have moved out and more unskilled have moved in; a declining economic and industrial base; a rate of decline in manufacturing jobs double that in the city as a whole; very little public or private investment in the area in the recent past whether in homes, shops, schools, amenities or workplaces. Incidentally, how much we all welcome the presence of my noble friend Lord Ashdown in this debate to give us his views on how the interests of the private developer can be brought in again.
So much for the symptoms of the malaise, but what of the causes that underlie
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it? After three substantial seminars held in the Department of the Environment five or six years ago, Ministers were given no clear consensus as to what the causes of this malaise were. We decided to set up these inner area studies. As one reads these reports, it is surprising how much original survey work still needs to be done in each area before the causes begin to emerge. One has to say now that that ignorance has not been helped by the fact that there has been no Census since 1971. Certainly, these studies only go to confirm that the causes are not simple; they are not the same everywhere, but there are some general underlying causes that emerge. I will mention a few: slum clearance policies and new town development policies. Both are designed specifically to help the inner areas by relieving congestion there, both are indispensable and both probably, in some cases, are still required; but by now each in various ways and in various places has had serious unnoticed and injurious side effects in the inner areas by causing the disintegration and the impoverishment of existing communities that were there.
These policies may still be needed. My noble friend Lord Nugent, I hope, will be saying in a moment something about the state of the policy of dispersal as between the South-East and the Greater London area. All these policies now need to be modified and applied in a much more selective form. But of course slum clearance and new towns are by no means the only policies which in practice have injured the inner areas. The irony is that in their case they were the ones actually designed to help the inner areas by reducing the congestion in them. It seems that the inner areas are those which, over and over again, make the sacrifice called for in seeing through other major programmes, whether mounted by a department of the council or a Department of central Government or whether they are caused by some large-scale rationalisation of large-scale industry.
Huge capital programmes for central area development, for example, or for council housing, mostly in peripheral areas, have had the effect of pre-empting expenditure years in advance on rehabilitating and improving older housing. Take, for example, the view of the consultants,

901
again from Birmingham, on this matter. They say:
"Housing policy is not effective in directing resources to either houses or people in the greatest need. This applies to most aspects of public expenditure on housing."
Then later, in paragraph 27, they say:
"There is a case in Birmingham for reducing expenditure on new construction of municipal dwellings.
"The funds released should then be redirected to increased investment in rehabilitation and parallel industrial investment…
They go on, criticising Birmingham's housing policy in 1975/76:
"It is very expensive—people cannot afford the houses"—
provided by council housing policy—
"without a large subsidy … The form of housing deprivation that it does most to reduce (sharing of dwellings) is among the less serious forms of housing deprivation."
Take Liverpool. That study area has many problems; and not the least of them is an almost irreversible blight caused by the M62—not where the motorway has gone, but where for many years it might have gone. I doubt whether any highway engineers, planners or car drivers involved have lost much sleep on Edgehill's plight, which has been caused largely by motorway blight. Public health inspectors have set themselves targets of slum clearance in good faith; planners have set about removing non-conforming industry from residential areas, with the best of intentions; educationalists have closed popular and efficient secondary modern schools in pursuit of comprehensives; and businesses have rationalised their affairs after mergers and done all sorts of unforseen damage in the inner cities. All that has been done for sound reasons which seem excellent in the minds of the Department, the profession or the business concerned, but each has constituted another successive blow struck at the heart of the city. Those blows and many others, taken together, may well yet prove fatal.
The fact is that the ambition of most of our public civic professionals and private businessmen lies elsewhere, and there are few of them who feel they can leave their mark in their professional archives by having made the most of an inner city area. Civic pride fixes on
902
things like a new housing estate, a completed ring road or a profitable central area redevelopment or, best of all, the excitement of creating a brand new town. The inner city malaise has many other facets, many other symptoms and many other causes. I hope that this debate, like the studies, will bring them out. I have stressed what I believe to be the main underlying cause, and I turn now to prescriptions for a treatment or a cure for this inner city malaise. I offer three prescriptions, one of them to be applied to the affected part in the inner city itself.
First, I would say that I am against amputation. The inner city cannot be "eliminated". Despite the run-down appearance of houses, the empty factories, the vandalism, the aimless feel of the communities, there are physical capital assets and human talents in the inner areas which are far too valuable to neglect any longer. They must be regenerated. But a combination of policies—mainly concerning housing, I think—has virtually eliminated the interest of the private investor in these areas, and we shall be interested to know what noble Lords feel can be done to bring him back. The fact is that it is now the local authority which has to try to make the most of them, and it seems to me that probably the best that can be done is by adopting a more total approach, by various forms of area management in varying degrees.
Corporate management was advocated in the Bains Report and in the first three of our six Town Studies. It is now increasingly practised at the higher levels of local government—not without stress or strain, as the long tradition of strong and almost autonomous central departments in local government still persists. Listen to what the Liverpool Inner Area Study has to say about that:
"It was clear from the start that there was no strong political backing for the area management experiment in Liverpool. Senior politicians were prepared to tolerate it, particularly as central government was paying three-quarters of the cost. But there was no way in which the caucus of the major parties could be thought to have regarded area management as a significant experiment in the development of local government in Liverpool with the possibility of becoming an important element in the fight against urban deprivation.
"The politicians involved in the district committee were hesitant and, despite its status as a full committee of council, were not prepared to support overtly an area interest against

903
departmental policy lines. To attempt to interfere in the policies of other committees except through the party caucus or Policy and Finance Committee was unprecedented. Consequently, projects tended to be outside the current mainstream of council activity and therefore not permitting any influence on existing policies."
Then there is a passage about how the experiment went, and it continues:
"Also it showed how strong was the departmental entrenchment that many people had previously felt but were not able to demonstrate clearly. And it showed how ineffective central decision-making could be over issues of purely local importance. In many cases the refusal of senior officers to countenance changes was not because they were stubborn but because they were unaware that anything was wrong with the way in which policies were transferred into action on the ground. Many appeared genuinely to believe that everything was working out perfectly."
That was said by the consultants in Liverpool.
All those studies find a case not only for adopting the corporate approach to city management but also for taking it out to the area level. As long ago as 1974, the Department of the Environment set up trials of area management approach—Newcastle, Kirklees, Dudley and Haringey. Liverpool had already adopted it as part of its inner area study, and Stockport has since adopted it throughout its borough—as far as I am aware, the only borough to do so. Such value as is discerned for area management would best he safeguarded, to start with, if it were adopted on an ad hoc, trial-and-error, basis. No particular pattern has been claimed as best and no one is certain that the pattern should be adopted wholesale, although, as I say, Stockport has tried it out in its own borough.
The studies show, and common sense endorses, a number of merits in the system for regenerating our inner cities. Surely it must be right to adopt an overall rather than a departmental approach to these complex run-down areas, which have already suffered so much from distortions of excessive departmentalism. Secondly, it must be a help, if possible, to devise a plan and scheme for comprehensive management that is tailor-made for the needs of particular areas. All three studies see this advantage. The Metropolitan Borough of Rochdale has adopted such a comprehensive and tailor-made scheme for the rehabilitation of one of their run-down industrial areas in Crawford Street. That may well prove
904
another useful model for others to study and emulate.
Is this not, also, a timely moment to welcome the increased scope that "area management" can offer for the contribution that projects engaging voluntary and temporary labour can make? The noble Lord, Lord Allen, now chairman of the NCSS, my noble friend Lord Colville and, no doubt, other noble Lords will be able to develop that point better than I can. But it surely is better to have young, inner city school leavers trained, employed and caring for their neighbourhood, rather than unemployed and vandalising it. Until the economy is again managed in a way which provides an assurance of a job for school-leavers in the inner city, I think that there is much to be said for including in the patterns for managing these areas schemes such as the job creation programme, to ensure that young citizens, who do not get normal, permanent jobs, can get jobs designed to improve their own environment.
Another merit of this change of approach in tackling the multiple problems of an inner area by way of a more corporate approach, is that it will make much heavier demands on the councillor in his personal and representative role. I shall be interested to hear whether other noble Lords agree with me that more involvement with the wellbeing of his own ward, and less involvement in the running of a professional service department, is a trend to be welcomed, demanding as it will nevertheless be on the councillors concerned.
I turn to offer some prescriptions to be taken in Whitehall. Those last remarks amount to a prescription for the inner city itself, but there is no point in advocating a more corporate approach to certain parts of the inner city, tackling jobs, homes, welfare, voluntary effort, public participation altogether, unless support for it from central Government is forthcoming in forms that match the local, total, tailor-made approach. As the Liverpool consultants put it, the basis for action by central Government would be through its evaluation of programmes devised locally for individual inner areas, and just how this can be done is one of the most important things that Mr. Shore has to decide when he issues his White Paper.

905
Professor Eddison, Director of the School for Urban Advanced Studies at Bristol, has drawn my attention to the way in which the Scottish Office are proposing to set about approving the Scottish authorities' so-called "financial plans", which I understand reflect the corporate approach. This may be one way which the Department is considering, and I shall be interested to hear from the noble Baroness whether she can comment on that. Other models are the National Park plans, with which I have some familiarity. These are part of the outcome of the new unified total, local approach to those areas, and enable a supplementary block grant covering all the different expenditure, formerly paid under a string of specific grants for National Park purposes, to be approved and sanctioned under one central Government decision. But there remains for Mr. Shore and his Committee the thorny question of priorities between areas and cities.
There is, of course, the perennial temptation, which the Government surely have to face, of favouring their marginal wards and constituencies, and timing their announcements, as they are already doing, for electoral purposes. No one would complain about that, or be taken in by it. Many of your Lordships will already have heard the anxieties of the shire districts and cities, lest all the inner city resources are channelled to the metropolis. My own view is that the first lot of inner areas needing help, that should benefit from any new strategy, should be those which seem likely to show us soonest the results by which we can test the lessons of these studies and the new approaches to be made. In present circumstances, it really is not practicable to make rapid progress on a broad front. So my choice would be for those areas where extra effort, further resources and a new approach are most likely to show results and teach useful lessons.
In conclusion—and I apologise for going on for so long, but it is a massive subject—I should like to offer a prescription for your Lordships to consider. In view of the intractable nature of the inner city problems, you might care to consider—and, maybe, noble Lords would care to comment on this during the debate—whether thought might be given
906
to selecting a Committee of this House to monitor the progress made following these studies, and, following any initiative which the Secretary of State may shortly be announcing, to report from time to time on how things seem to be turning out in the inner areas.
The fact is that, over many years, the various departmental initiatives of central Government, the various departmental initiatives of local government, the oscillating approaches of the political Parties, the vast expenditure of resources, the valiant efforts of councillors and all the skills of their professional advisers have been rewarded by little or no advance in the inner areas, and little or no thanks or satisfaction among those who live there. It seems to me that, in these circumstances, it perhaps behoves us to see what we can do and address ourselves to the problem on a continuing basis. We can devote the work of no less than eight Committees to the problems of Europe. Perhaps we should put just one Committee to work on the problem of our native cities, and especially their inner areas. Meanwhile, I look forward very much to hearing the rest of the debate. My Lords, I beg to move for Papers.

SURREY HOSPITALS DISPUTE
3.37 p.m.
Lord WELLS-PESTELL: My Lords, with your Lordships' permission, this may be a convenient time for me to reply to the Private Notice Question which stands in the name of the noble Baroness, Lady Young.
"I am informed that the difficulties stem from new work rosters for domestic staff at the Manor Hospital, Epsom. These were agreed and implemented by members of the other unions concerned but proved unacceptable to a few members of the Transport and General Workers' Union. After considerable discussion 30 members of this union were eventually suspended on full pay at the end of February; but the suspension was lifted on 21st March on the understanding that staff would then return to work. As, however, they were still unwilling to accept the new rotas they received notice of dismissal as being in breach of contract.

907
"The 30 domestic workers were joined by about a dozen catering staff and pickets were established. Action spread to another four hospitals in the mid-Surrey Health District. Although this action was unofficial Transport and General Workers' Union officials discussed the problems with local management late last week but felt unable to accept a temporary solution or a formal approach to the Advisory, Conciliation and Arbitration Service unless the Area Health Authority first reinstated the 30 staff and agreed to restore the former rotas. Management were reluctant to accept this latter course which would in any case have had to be put to the other staff who are content with the new arrangements. Interruptions to supplies gave rise to fears for the wellbeing of patients and preliminary steps were taken by the Area Health Authority to seek an injunction to restrain allegedly illegal picketing. On Monday the Transport and General Workers' Union declared the dispute official.
"In view of the apparent risk to the health and welfare of patients, my right honourable friend the Secretary of State decided to intervene in order to cool the situation, protect patients' interests and get talks going again. He took three steps:
At my right honourable friend's suggestion, the chairman of the Area Health Authority called the parties together yesterday.
Again at my right honourable friend's suggestion, the chairman agreed to defer action on the application for an injunction in relation to picketing.
My right honourable friend asked the Transport and General Workers' Union for their part to assist in cooling the situation by ensuring that picketing is peaceful and avoids action which would put the health of patients at risk.
The union gave art assurance that action along these lines was already being taken.
"In this connection, my right honourable friend and I deplore the savage personal attack yesterday by a certain newspaper on the General Secretary of the Transport and General Workers' Union, Mr. Jack Jones.
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Mr. Jones has a fine record of campaigning in the cause of the elderly and in relation to this dispute has done nothing to conflict with that record. Officials of the union have taken steps to ensure that picketing is kept within the proper bounds and that essential supplies are allowed through. This is entirely in line with the request made by my right honourable friend the Secretary of State yesterday.
"Following my right honourable friend's initiative, talks took place yesterday and a Joint Statement was issued last night by the Area Health Authority and the Transport and General Workers' Union in the following terms:
'An agreement has been reached on immediate appointment of a mediator through the Arbitration, Conciliation and Advisory Service to look into the dispute in the domestic department at the Manor Hospital, Epsom. A further meeting has been arranged for tomorrow, Wednesday, at 5 p.m., in an effort to reach a final and satisfactory agreement.'
"It would not be helpful for me to make any further comments while negotiations continue, but I am advised that although about 100 staff are still taking action essential supplies are now reaching the hospitals concerned and I am assured that there is no immediate risk to patients. I will continue to keep in close touch with the situation."
Baroness YOUNG: My Lords, I can hardly thank the noble Lord for that Statement. I have considerable sympathy for him personally because he is a kindly man, but I should have thought that his first action would be to ask his right honourable friend the Secretary of State to condemn without question the action of a trade union in stopping essential supplies of food and fuel from reaching elderly, sick and, in many cases, mentally handicapped patients. For them to have taken this action on two of the coldest days that we have had this year must make all of us in this country feel deeply ashamed. I hope further that the sentence in the last paragraph of the Statement:
"It would not be helpful for me to make any further comments while negotiations continue"—
does not mean that the noble Lord is now completely satisfied that the patients are not suffering.

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According to the Press report in today's Times, agreement has been reachedwhereby supplies of food and laundry and other essentials will be allowed through the picket lines each day. Surely in the case of elderly and sick patients there ought to be no question, in any circumstances, of any interruption of supplies. Does not the noble Lord agree that in many ways it is the outdated structures of trade unions which led to the strike action instead of to the proper use of the negotiating machinery? At the beginning of the Statement it is said that:
"… the Transport and General Workers' union officials discussed the problems with local management…but felt unable to accept a temporary solution or formal approach to the Advisory, Conciliation and Arbitration Service".
To many people like myself, it is inexplicable why, when machinery is laid down, it is not used at once and why a great many people have to suffer. Whatever the rights and wrongs of the issue, surely sick people ought not to be put at risk.
Baroness ROBSON of KIDDINGTON: My Lords, on behalf of these Benches and also on behalf of myself as Chairman of the South-West Thames Regional Health Authority, may I welcome the Secretary of State's Statement and his intervention to the limited extent that he intervened in this dispute. I think that all of us welcome the fact that the dispute has been contained. I personally disagree with the noble Baroness, Lady Young, regarding the statement that she made about the trade unions. All of the other unions have behaved admirably in this dispute. There has been no intervention by the other unions to exacerbate the problem, and I should like to pay tribute to them for that. In the present situation, when the talks have resulted in a bettering of the situation, when ACAS have been called in and when both sides have agreed to abide by arbitration, it is not appropriate to make statements which might help to fan the flames of further discontent.
Lord WELLS-PESTELL: My Lords, I am grateful for the comments which have been made by both noble Baronesses. I do not want to join issue with the noble Baroness, Lady Young. In a situation of this kind it is so easy to condemn; it is so easy to make statements which, instead of helping the situation, are going
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to make matters infinitely worse. No one more strongly desires than my right honourable friend and myself that this matter be resolved successfully. We recognise the inconvenience that is suffered in situations of this kind by the people on the receiving end. However, we want to create the kind of climate that will resolve these difficulties because, in the last analysis, it is their resolution that is going to put the matter back to where it was. In this kind of situation, it does not help to make outspoken, public condemnations which will exacerbate the situation rather than help it. In that respect I am grateful to the noble Baroness, Lady Robson of Kiddington, who takes this point of view, who is on the spot and who knows the situation. I am glad that she feels that in the circumstances my right honourable friend has done the right thing.
Baroness GAITSKELL: My Lords, may I ask the Minister to clarify one point. As I understood it, the conflict was about certain schedules for a husband and wife who wanted to be off duty together so as to look after their children. Therefore my sympathies were with the strikers, not with the management who stopped them being off duty together. It seems to me to be very reasonable that a husband and wife who are working in a hospital should occasionally have their leave together in order to look after their children.
Lord WELLS-PESTELL: My Lords, it is perfectly true that there has been a dispute over the rotas. There are four different kinds of rotas to meet four very different situations within the hospitals concerned. These rotas have been accepted by the majority of the people working them. There were disagreements on the part of a number of people and they were the cause of the present situation. As I say, however, I do not really want to go into cause. We want to find out whether or not these difficulties can be overcome. As meetings are taking place and will continue tomorrow, I think it is perhaps as well for me to say no more than that I hope that the talks are successful.
Lord DERWENT: My Lords, what does the noble Lord mean when he says that he hopes that the situation will be put back as it was?
Lord WELLS-PESTELL: My Lords, the noble Baroness, Lady Young, complained that certain patients were suffering as a result of this dispute.
Lord DERWENT: My Lords, they were suffering.
Lord WELLS-PESTELL: My Lords, I have not denied it; perhaps the noble Lord will allow me to finish. I am saying that that was the complaint of the noble Baroness, Lady Young, and that she obviously wants the situation to be resolved so that what happened before will continue in the future. And this is precisely what I meant.
Lord SEGAL: My Lords, would my noble friend not agree that there is something rather repugnant about the whole idea of the picketing of a hospital?
Baroness YOUNG: My Lords, would the noble Lord not agree that the lesson for us all from this is how important it is that the proper negotiating machinery should be used and that strike action should always be a last resort, particularly where the wellbeing of patients is concerned, and that this is really the tragedy of the situation?
Lord WELLS-PESTELL: My Lords, the noble Baroness encourages me to say things that I really do not want to say. I hope noble Lords opposite will cast their minds back some months when perhaps negotiating machinery in respect of other parts of the National Health Service could have been used.

EEC AGRICULTURAL MINISTERS' MEETING
3.52 p.m.
Lord STRABOLGI: My Lords, with the leave of the House, I should like to repeat a Statement being made in another place by my right honourable friend the Minister of Agriculture, Fisheries and Food. The Statement is as follows:
"The Council of Agriculture Ministers met in Brussels from 25th to 29th March. My honourable friend the Parliamentary Secretary represented the United Kingdom.
"The Council did not reach agreement on Community agricultural support prices for 1977/78 and discussion
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will be resumed at the next meeting in Luxembourg on 25th/26th April. The consequence is that the EEC common support prices and the United Kingdom's guaranteed price for milk and the target price for beef under the beef premium scheme remain unchanged for the present. At the request of France, Ireland and Italy the Council accepted changes in the green currencies of those countries.
"Eight Member States would have been able to agree on a final package of changes from the Commission's original proposal, including slightly bigger price increases. In a long and hard session my honourable friend maintained that we would only be prepared to accept the changes in common prices and a small devaluation of the green pound if there were adequate compensating action of food prices in the United Kingdom. In this connection the United Kingdom put forward proposals for a butter subsidy which would have achieved this, and also helped to dispose of part of the Community's expensive butter surplus.
"Unfortunately the final package did not offer sufficient advantages to the United Kingdom and we were therefore not prepared to accept it.
"The Council also considered measures for the establishment of catch quotas for fish and other control measures in certain areas of the waters of Member States. As my honourable friend the Minister of State explained to the House on Monday evening, the United Kingdom could not agree to these measures which would have adversely affected our rights in United Kingdom waters."
My Lords, that concludes the Statement.
3.56 p.m.
Lord SANDYS: My Lords, I expect many noble Lords in most parts of the House will agree that we share a degree of mystification at the Government's stance on the situation at the moment, and my first question is to ask the Government what is the result of the present negotiations; what is the result of this present exercise? My second question concerns the difficulty we experience in discerning the difference in price between the butter subsidy which was sought and

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that which was finally offered by the Commission. Would the Minister be able to tell us a little about the consequences for both pig producers and beef producers?
With regard to the MCAs for pigs, concern has been expressed, and so far as beef prices are concerned a special anxiety has been expressed in regard to the devaluation of the Irish green pound and its effect on Irish beef in this country. We have a particular concern as to the stance adopted by Her Majesty's Government, because this appears to have been a negotiation which may well prejudice negotiations in future years.
Lord BANKS: My Lords, I should like to thank the noble Lord, Lord Strabolgi, for repeating the Statement made in another place. We on these Benches are well aware that protracted all-night negotiations are part of the routine way in which these matters are settled. Nevertheless we regret the acrimonious note which appears to have crept into the meeting of the Council on Monday night. Of course we sympathise with the efforts of the Government to keep down food prices in this country. However, inevitably, as the Statement implies, we have to accept some devaluation of the green pound. This is a problem for which the Community was not responsible in the first place. The Government are right, in the face of surpluses, to want to keep price rises down as far as possible, but there will have to be a compromise and there must be limits to the extent to which we as a nation can expect to be protected against the effects of the devaluation of the green pound and the effects of such price rises as may be agreed. However, I very much hope that a satisfactory compromise solution will be arrived at in a month's time.
3.58 p.m.
Lord STRABOLGI: My Lords, I am grateful to both noble Lords, and particularly to the noble Lord, Lord Banks, for what he has said, and I shall do my best to answer the various questions that have been raised.
The noble Lord, Lord Sandys, asked what was the result of the present negotiations. There have of course been various decisions: the Italian green lira
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has been devalued by 6·5 per cent., giving an MCA change of 8 points; the French green franc has been devalued by 2·55 per cent., giving an MCA change of 3 points, and the Irish green pound has been devalued by 6·26 per cent., giving an MCA cut of 7 points. All these changes will take effect from 1st April for milk, pigmeat and beef, and the beginning of the marketing year for all other commodities. The marketing years for beef and milk will each be extended until 30th April with, of course, no change in prices in the meantime.
The noble Lord, Lord Sandys, asked about the effect of the changes in the Irish green pound. This will increase the gap between Irish and United Kingdom prices. My right honourable friend the Secretary of State for Northern Ireland has announced an increase in the payments under the meat industry employment scheme. We do not expect the differential to have any major impact on Great Britain prices. The Irish/United Kingdom green rate differential is naturally a factor in considering the need for a change in the United Kingdom green pound, but obviously it is not the only factor.
With regard to the butter subsidy, the Commission's compromise proposal was for a subsidy of 30 units of account per 100 kg. (about 8p per lb.) for the rest of this year, falling to 25 units of account per 100 kg. (about 6½ip per lb.) for the first quarter of 1978. The proposed increase in Community prices, plus the proposed green pound changes and first transitional steps, would have added about lop per lb. to the price. The next transitional step would add another 6½p per lb. We cannot say what minimum butter subsidy would be acceptable, but I am sure the noble Lord would agree that the final package must be considered as a whole.
With regard to beef, the compromise proposal is for 3·5 per cent. increases in target and intervention prices. The present system both of intervention and of variable premia will continue for the whole of the coming marketing year. This, of course, was not agreed. The proposal to continue premia for a full year is an important advance on the Commission's original proposals. Pending further Council discussion, current intervention price and United Kingdom target price

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will be unchanged, giving a United Kingdom target price for April of 52·12p per kilo.
With regard to pigmeat, the basic price will increase by 5 per cent. from 1st November. No Commission proposal has been made on pigmeat MCAs, but we will continue to press for change in the method of calculation. The negotiations have shown, I think, that simply changing the green pound would not in itself secure this change. The subsidy, I am glad to say, will continue for the time being. We recognise that the increase in basic price will increase pigmeat MCAs unless the method of calculation is changed.
My Lords, I may say in conclusion that of course the other Member States could have agreed on a compromise package. We recognise the difficulties of those Member States resulting from failure to agree; but we consider that the effect on food prices and counter-inflation policies is a vital issue for the Community as a whole. The European consumers also have an interest in the stand taken by the British Government. Other Member States underestimated the value to the Community, through offsetting savings in the cost of the surplus disposal, particularly of the butter subsidy, as the noble Lord, Lord Sandys, said. We should not only look, I suggest, at the short-term budgetary cost, but at the need to give some priority to consumers and to avoid heavy cost of sales to third countries which would otherwise appear inevitable.
Lord GLADWYN: My Lords, when the forthcoming by-election at Stechford is over, will the Government give serious consideration to the constructive, if qualified, criticism of the Agriculture Ministers' recent policy as advanced in a leading article in today's Financial Times?
Lord STRABOLGI: My Lords, I am afraid I had forgotten there was a by-election at Stetchford. I have been too busy today answering questions in your Lordships' House.

INNER CITY PROBLEMS
4.3 p.m.
Debate resumed.
Baroness ROBSON of KIDDINGTON: My Lords, first of all may I thank the noble Lord, Lord Sandford, for raising the subject of the problems of the inner cities in your Lordships' House today. There are a great number of distinguished Members of your Lordships' House making contributions to this debate today, and I have therefore decided to limit myself to the question of the social problems that have been created in the inner cities because of the relationship between the planners and those for whom they plan. If I can use the terminology, I want to make a distinction between people who are city dwellers and people who are city users, and I want to concentrate basically on the social problems.
In order to do that, I hope your Lordships will forgive me for spending one or two seconds on the historical build-up in the way I see it. It is true that until recently cities developed naturally—that is, in accordance with the demands of industry and commerce—and that the people who invested in the cities were the people who really governed the planning of those cities. There was no planning in the way that we understand it today. The only exception perhaps, in the 18th and 19th centuries, was the enforcement of public building standards and health requirements. Otherwise, it was a naturally evolving society. In those days, until the second half of the 19th century, the planners—in other words, the people who were investing money in the inner cities—were city dwellers as well as city users, so that to a certain extent there was an interest by at least a percentage of the people living in the cities in the development of the city itself. Nevertheless, the majority of the people, the working class, even in those days had very little say, if any, in the development of the cities in which they lived.
The second half of the 19th century saw the flight to the suburbs, and this was caused largely by the rapid growth of the working classes taking over the centre of the cities, the desire to get out of the conurbation; and the people who could afford to do so, did so. This exodus of the middle classes from the inner cities sharpened the distinction between the city dwellers and the city users.
When Government planning started at the beginning of this century there was a

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certain community of interest between the city planners and the private enterprise planners in the fact that they were both city users rather than city dwellers. It was very rare for the official city planners to be actually city dwellers. They planned, largely, in a paternalistic way, and the private enterprise planners took decisions based on profit, which is natural. This is still the position today.
What mistakes can we pinpoint which resulted from this planning coming from the outside rather than involving the city dwellers themselves? First of all, as has already been mentioned by the noble Lord, Lord Sandford, official planners accelerated the flight of private capital from the inner city areas. Grants were available to industries to set up in development areas, and local government positively encouraged firms to move out. The result has been, and is, widespread unemployment, and this leads to micro-economic collapse of all the small businesses that existed in the inner city. The small shops have disappeared, and those that survive are often surviving because they are paying low wages, cutting corners on safety, and not really conforming to the kind of conditions that we should like to have. The main housing strategy for inner cities, as mentioned by the noble Lord, Lord Sandford, was clearance and redevelopment.
I accept that some of that has now begun to change. It was legitimate in some ways: there was a desire to reduce the overcrowding of the inner cities, and so the overspill into expanding towns was encouraged. But it resulted in the withdrawal of a large percentage of the younger generation in the cities, and particularly the skilled manual workers. So we were left in the inner cities until recently with an excessive number of unskilled labour.
I was interested to read the report of a conference held in the City Hall, Cardiff, in 1976. Dr. Graham Lomax, who is General Secretary of the London Council of Social Service, claimed that between 1963 and 1973 one finds that fewer of the unemployed in the inner cities consist of unskilled manual workers, compared with the proportion in assisted areas, so that that balance has slightly changed. This is something I think we
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should keep very carefully in our minds, because although we have an enormous unemployment problem in this country it is still tremendously difficult for industry to find skilled labour. If Dr. Graham Lomax is correct and we have a fund of skilled labour hidden in our inner cities, this is something we should look at very seriously.
My Lords, I was saying that there is a difference between city dwellers and city users, and as the planners and the architects very rarely live in the cities—in the areas to which they are applying their development plans—it is very difficult to see how they can ascertain the desires of the people who are actually going to live in those communities. As we have seen, the results have been calamitous. I do not know how anyone could ever have conceived the concept of the vertical street—to think that a liftshaft would create the same community spirit as would be created by a row of terraced houses or a square where people can get together!
Huge estates have been developed without any of the services—the small shops, post offices, telephone kiosks and other facilities—that help to create a community. The only way in which to solve the problems of the inner cities more economically than by pouring enormous sums of money on specially large schemes in inner city areas, is to give priority to the preservation of the community. This can be done, but many facets have to be integrated if we are to recreate the communities in the inner cities. One very important one is transport policy in a city. I do not think that it should be called "transport policy"; it should be called "mobility policy", because it is very often forgotten that most journeys by city dwellers, rather than city users, are made on foot or by local transport over very short distances.
The planning policy which has intersected the big cities with radial roads to help the city user has also helped to kill life for the city dwellers. Unimaginative transport planning has helped to create the problem and to divide communities and families, and has made it difficult for them to get together. Once we have created those conditions, we have created enormous problems because we have broken up the community. We create loneliness. Such conditions are an incentive to

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crime; we get inadequate schooling, low employment and material poverty. To a certain extent people become trapped in the decaying inner cities of this country.
What have the planners suggested, and what have they done to ameliorate the conditions? An enormous amount of money has been poured into deprived areas, particularly into social services, schools and law enforcement. However, I believe that those facilities are an endless drain—they will always be there demanding money. In doing that we are treating the symptoms and not removing them from our society. We must look at how we can use that money in a more constructive manner. I do not suggest that the social services that exist in these areas are unnecessary. I suggest that they would not be necessary to such an extent as they are at present if we changed the conditions, instead of continuing forever paying large sums of money to treat the symptoms.
What can we do in order to change the social climate within our innercities?— because I believe that that is the basis for a solution in the long-run. As long as the planning is carried out by city users, the problems will continue. We urgently need participation in planning and execution by city dwellers. That requires a massive sustained community effort. Today what is called "community action" I would not call "action". It is basically community "reaction". It is only when something comes to light which is so outstandingly bad that the community gets together and objects, that we have what is called "community action". It is a tool for stopping the madder schemes but it is not a positive way of reacting and nor is it a positive contribution by the community. I believe that that tool has to be developed very carefully.
In certain parts of the country neighbourhood councils can do an enormous amount of good. In suburban areas they are the right answer. But I wonder whether they are the right vehicle for the inner city dweller. Community development on a much smaller scale, starting from a much smaller root, will be the answer in the inner cities; a development where people get together and evolve their own authentic institutions through which they can exercise greater control over their own lives. As examples I
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should like to cite tenants' co-operatives, where the tenants themselves are responsible for purchase, conversion and management of the houses in which they live; and tenants' associations, where tenants associate to protect their common interests.
There is a marvellous example of a tenants' association in Islington where there was an enormous problem of vandalism. The tenants' association was farsighted enough to enrol all the youngsters into a junior tenants' association and it charged them with the responsibility for keeping watch on the surroundings of their developments. That has worked enormously well. I greatly believe in the principle of giving responsibility to people at all strata of society in order to solve some of the problems which face us.
The other problem is obviously employment. Small industrial co-operatives are beginning to appear in inner cities. Many of them have taken advantage of the job creation programme. A very good one in Liverpool is the Merseyside Training Co-operative No.1 A group of people have got together and through the job creation programme they are able to train youngsters in carpentry and bricklaying, and have taken on the construction of fibre-glass boats. They are doing very well.
However, what will happen to them when the job creation programme comes to an end, as is planned, at the end of this year? They have no capital and they cannot get any. This is one way in which we can help the inner cities to help themselves. Why not revitalise the development commissions started by Lloyd George, and give them a little more money for the purpose of giving capital to small co-operative enterprises which can then begin? Thus we can create a coherent whole within the inner cities.
Those are important suggestions because if they are carried out by the community itself there is more likely to be a healthier development than if something is superimposed on it. What can the Government do? They obviously have a hand in all these things. They must encourage self-help. I said that the social services have to spend an enormous amount of money on treating the symptoms of the malaise in the inner cities. Why should not some of the money allocated to the

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social services be given to community groups so that they can organise themselves and therefore establish a firmer footing and better foundation on which to build? We should make more money available to local organisations for employing local community workers within society. Above all, we must be prepared to take risks when making grants to locally-organised enterprise, and to be less bureaucratic. We have to take a gamble on these things, because I believe in the long term it is only self-help that creates a lasting solution.
Then we heard, for instance, in the Budget yesterday about the Government giving another £100 million for the urban aid programme. The problem is, as always, to what extent Whitehall and the various departments, all involved in a problem like an urban aid programme, will get together and function together. My own experience is that from department to department—and even within departments sometimes—it is difficult to get concerted action. I would therefore hope that the Government are going to allow this money to be administered wholly by the regions of this country, because I believe that that is the only way again that the dwellers within that region will get a real say in the kind of development they want.
Apart from the lack of capital for creating jobs and cuts in housing expenditure, I do not believe that inner cities, except for help of this kind, suffer from lack of money more than any other part of the country. It is just that it has been superimposed and not spent in the right way. I believe, and perhaps noble Lords will agree with me, that if one allows the city dweller to have a greater say in the development of his city, and if we encourage community development—which, after all, is the basis of democracy—then we have some hope in the long run of solving the problems of the inner cities and also of getting the greatest mileage out of public money spent in this way.
4.22 p.m.
Baroness PHILLIPS: My Lords, I intervene in this debate very briefly, and I am grateful to the noble Lord, Lord Sandford, for giving us this opportunity. I should also like to thank my own Front Bench for promoting me so high on the
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list, and I must apologise to them if I do not follow entirely the environmental theme. I speak this afternoon as an inner city dweller of what I still consider to be the greatest city in the world, London. The problems of the inner city, as the noble Baroness has just outlined, are not only environmental but social.
I offer three quotations to your Lordships to make my point:
"In the lightest thoroughfare [in London] there was at every turn some obscure and dangerous spot whither a thief might fly for shelter and few would care to follow…
It is no wonder that with these favouring circumstances in full and constant operation, street robberies often accompanied by cruel wounds and not infrequently loss of life should have been of nightly occurrence in the very heart of London.
It was not unusual for those who wandered home alone at night to keep to the middle of the road, the better to guard against surprise from lurking footpads: [who may surprise them] few would venture to repair at a late hour to Kentish Town or Hampstead or even to Kensington or Chelsea unarmed or unattended."
The second one:
"A warning to elderly folk of the Borough not to let people into your homes unless you know who they are—in recent months police have dealt with cases involving confidence tricksters: one old lady was so nervous that she had to be persuaded to open the door to the police who went to interviv.v her about the crime."
The third quotation:
"Borough police are on the lookout for a gang of youths who have robbed and assaulted elderly and infirm persons. Although the amounts stolen have been small,…"
The first quotation is taken from Charles Dickens' Barnahy Rudge, date 1870; the second from the Wandsworth Boro News, date March 1977; the third from the Fulham Chronicle, March 1977.
A ride on a No. 11 bus, which I frequently undertake from your Lordships' House when I "venture to repair at a late hour unattended" can be a very traumatic experience. Drunks come up and ask for some cash—albeit one did say to me, "Excuse me, but could you lend me a shilling?" Fights break out, gangs of boys and girls race up and down the stairs shouting abuse, with the unfortunate conductor being quite unable to deal with them. Almost invariably the other passengers are too indifferent or too afraid to offer any support.
Last week one of my granddaughters, a student at Kent University, was travelling on the Underground en route to the

923
Houses of Parliament to take tea with her mother and myself in the other place. Alone in the compartment she was attacked by a young man. Bearing in mind that we may not mention ethnic differences, I would say he was an overseas visitor. Being a tall and strong girl, as well as a good looking girl, she was able to fend him off. My Lords, this was at 3·45 on a weekday afternoon!
This is not a pretty picture I paint, and I do not like what is happening to this great city where I was born, and of which I have always been proud to say—"I am a Londoner". In the other place recently, Mr. William Whitelaw, introducing a Motion on crime prevention, referred to the danger that many of us may take for granted acts of lawlessness which were once almost unthinkable. The Home Secretary, in his reply, made reference to the state of affairs in earlier times, just as I have this afternoon. But in Dickens' time there obviously was great poverty and degradation. There were great differences between the very rich and the indescribably poor. This does not obtain today. While there may be certain pockets of unemployment, I am bound to say that I am genuinely confused about unemployment in the great city of London, since the very newspapers from which I took these two cuttings contain not one page but five pages of all kinds of employment.
No one would deny that juvenile crime is an increasing and a rising problem. May I mention just one area in which I am now professionally concerned as a director of the Association for the Prevention of Theft in Shops. A representative sample of 1,400 boys in London aged between 12 and 17 were interviewed recently in a study of theft. All the boys admitted to at least some stealing at some stage from a wide variety of sources. Eighty-eight per cent. had stolen from their school; 70 per cent. had stolen from a shop; 33 per cent. from stalls in markets; 25 per cent. from motor vehicles, and 5 per cent. had actually taken away the vehicles. Eighteen per cent. committed theft by the age of seven, and 42 per cent. by the age of ten.
One of the more curious changes in attitudes of our times is that stealing does not seem to be regarded as serious, particularly if it is from a large store.
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We all seem, even intelligent people, to subscribe to the "them" and "us" or "they can afford it" theory. I believe that as parents, teachers, youth leaders, or whoever is concerned for the young, our approach must be that a criminal offence is just what it is; an anti-social act against the community.
The figures of £550 million of known thefts from shops will show that I am not talking about a small problem. The prevention of crime in inner cities cannot be merely left to the authorities. The honest citizens, who happily still make up the majority of folk living in the inner cities and elsewhere, have to play their part. The moment has come for those who do not like the violence, the dishonesty, the intimidation of this minority to act and speak out. Incidentally, it is interesting to note that the expenditure in Press and television advertising in public service campaigns shows that safety-belts, pedestrian safety, road safety, fire prevention, anti-inflation and antismoking were all given far more money than crime prevention.
If we are to make our inner cities good places in which to live and bring up our children, more attention must be given to the philosophy that small is beautiful. The tower block, the vast school and the enormous shopping area depersonalise the human being and create many of the difficulties we meet today. We must remind ourselves that cities are for people and not for units of population, and a society which ignores this will certainly reap the whirlwind.
4.30 p.m.
Lord ASHDOWN: My Lords, I ask noble Lords to extend their usual kindness and indulgence to me as a maiden speaker. Knowing how many experts there are in this august Chamber, I have delayed speaking until I found a subject in which I had acquired a particular knowledge; I declare an interest at the outset, in that I have been engaged as a developer for the whole of my working life. As such, I wish to submit for the judgment of noble Lords some ideas I have, and I will do so in a brief and non-controversial way. First, however, I wish to thank my noble friend Lord Sandford for giving me the opportunity of speaking on this extremely urgent and important matter.

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As I see it, the problem of the regeneration of the inner urban areas of our cities is basically that of introducing into these areas means of employment by the building of factories, warehouses, commercial premises and the like. Tempting industry to many of these areas will be a very costly matter in the short-term, but I submit that in the longterm perspective the costs of taking action are bound to be infinitely less than failure to act at all.
The problems of the inner urban areas were the subject of an address by the Secretary of State for the Environment, delivered to the Save Our Cities conference held on 9th February last in Bristol. It was a pity that the Minister did not have more to say about the role of the private sector and perhaps a little less about the possible use exclusively of local government agencies. However, I agree wholeheartedly to the need, to which he referred, for planning policy to be made more sensitive to industrial and employment requirements. This need must be recognised and implemented by local authorities.
The Secretary of State went on to say that the institutions which hold the key to effective action were those of central and local government. Maybe, but unfortunately central government and particularly local government are desperately short of one ingredient, money. Today who is not short of this most valuable and rare commodity? In the circumstances, in the present economic plight, therefore, any local authority real improvement will have to rely on private capital. It is essential, then, that central Government and local authorities should stop looking askance at the private developer and instead actively encourage his participation. Apart from his finance from private sources, he has skills and experiences which he can bring to the many problems of regeneration and he possesses the further attribute that, given the right circumstances and modest rewards, he is willing to take risks in backing his judgment.
If, however, the private developer is to be asked to help, there must be a willingness to recognise his problems. For too long he has had to negotiate an obstacle course of planning process, public inquiry, office development permits and industrial
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development certificates, the existence of at least some of which render urgent action not merely difficult of achievement but initially impossible. There must of course be give and take; the planning authority must be ready to adopt a sensitive and flexible attitude within the framework of its development plan and the developer must be ready to acknowledge his social responsibility. Together there is much that they can accomplish. By putting private capital to work to effect the earliest process of regeneration will have a two-fold effect; that of giving an immediate fillip to employment in the depressed building industry in the short-term and the benefit of large job creation in the long-term when commercial premises would have been built.
I submit that the right dynamism for the regeneration of our inner urban areas is to set up a development corporation with full executive powers along the lines of the new town development corporation but in reverse; that is to say, not seeking to tempt out to new towns industry and commerce but to induce industry and commerce to come back into the inner urban areas. This suggestion was actively mooted in the policy statement of the Town and Country Planning Association of 16th March 1977. The remit of the development corporation, I suggest, would extend over the whole of the city region designated and would thus do away with the fragmentation of control that at present exists. It should incorporate the good parts of central and local government while attracting substantial inputs of private enterprise at the right time. It would of course be accountable to the proper authorities concerned.
However, I submit that no success can attend on any effort to regenerate our inner cities unless steps are taken within the areas affected to abolish industrial development certificates and office development permits. These two systems entail onerous restrictions on development and are completely out of step with the present need to encourage development. I quarrel with the policy statement of the Town and Country Planning Association where it views with scepticism the advantages flowing from the abolition of these two systems. The Association claims, erroneously I submit, that these should be maintained since development up to, but not exceeding, 12,500 or 15,000 feet

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require no permits. That is a totally false premise which merely seeks to put back the clock in a futile attempt to reinstate the inner urban areas as a mushroom of very small enterprises from which originally they sprang. It cannot he the answer of a lasting and durable nature.
What I envisage as an early solution is large-scale industrial warehouse and commercial enterprise being introduced into these areas ab initio, thus reducing the time needed to rehabilitate and revitalise the afflicted areas. To this end I quote the action of the GLC as recently as last week when it adopted a recommendation from its planning committee to suspend the IDC system and to abolish the ODP system in the GLC area and to set up an industrial development agency to deal with inner city planning. The new town corporations are able cheaply to buy agricultural land for their new towns; but it is axiomatic that the cost of the land in the inner urban areas can and will be very expensive. It is apparent, therefore, that there must be either Exchequerborne or rate-borne grants to buy land and to clear it and to bear planning loss. This is where the £100 million that the Chancellor announced yesterday would come in tremendously useful. One thing is quite clear: some review of the compensation code is imperative. The detail is unimportant at this stage compared with the acceptance of the principle.
Under the present legislation for special development areas, the industrialist who builds his own factory and the entrepreneur who is prepared to build factories to rent, enjoy tax incentives and inducements by way of grant for regional development, new machinery, building, removal expenses and training of the workforce. These grants should, I suggest, be made available under the development corporation. But the private developer would still face the formidable hurdle of high interest rates, spiralling cost of materials and a large wage bill in a labour-intensive situation and those would normally deter him from industrial development at this particular moment. He should, therefore, be encouraged to the extent of being permitted to take up ground leases at discounted ground rents that would enable him to have a fair, reasonable and modest profit in return for
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introducing his risk capital. It could well be that the incentive of the grants that I have mentioned would not be enough to encourage him to enter these areas. If that were found to be so, I suggest that one could even go to the limit of offering some tax rebate on his ultimate profit to ensure a properly, modestly added equity to enable him to have an equation of fair return for risk capital.
For the eight and a half square miles of Dockland in London, I suggest for consideration that the land could very well be used for the Olympic Games such as were held in Munich and Montreal.
4.43 p.m.
The Lord Bishop of BIRMINGHAM: My Lords, I am glad of the opportunity to follow so expert a maiden speaker as the noble Lord, Lord Ashdown, and should wish to congratulate him on the quality of his speech. I regret that I could not find myself in agreement with all of it. In my innocence, I was unable to follow the rather larger financial flights of fancy to which I listened with interest, but I hope that, having left it for three years before making his maiden speech, the noble Lord will speak again much sooner.
My own reason for contributing to this debate is largely because my service in the Church over the past 30 years has been in South London, then in Liverpool and is now in Birmingham. I therefore have quite a personal interest in the Department of the Environment's summary report, Inner Area Studies, to which reference has been made this afternoon. Indeed, I warmly commend the substance of that report and, in general, the conclusions that are drawn from it.
Of course, London, Liverpool and Birmingham are three very different cities and I think it unwise to draw conclusions from one city and apply them rigidly to others. The problems are quite certainly similar but by no means necessarily identical. Others have spoken or will speak of London and Liverpool in particular; but I content myself with referring specifically to Birmingham, because this is the area with which I am at present most in touch and about which I hope that I am best informed.
Sometimes when I am driving through Birmingham both by day and by night

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I am reminded of that hymn which begins,
"City of God how broad and fair…"
and goes on to say,
"How gleam thy watchtowers through the night
With never fading ray,
How rise thy towers serene and bright
To greet the dawning day".
Birmingham is sometimes called the city of a thousand trains, and at night it sometimes gives the semblance of a city of a million fairylights, although I hesitate to say that the overhead lights on the urban motorways can exactly be called fairylights. Then there are the hundred or so tower blocks of high rise flats to which critical reference has been made this afternoon—rightly, as I think. These are those great towers within which tens of thousands of human souls are boxed up. Again, we have heard of the artery-like urban throughways. They do indeed divide the city but, more than that, they provide a rapid means of transit by which many well intentioned and comparitively affluent people by-pass and escape from the intervening twilight zones which surround the business and administrative heart of Birmingham. What a contrast there is between the status buildings and the glittering city centre shops (which are themselves such a magnet for those who cannot afford to buy what they display), the generally green and pleasant suburbs on the perimeter of the city and the intervening deposit of obsolescent housing, industrial decay and social deprivation. I use the term "deposit" quite intentionally, as meaning what is left behind and, very often, left far behind. We are familiar, and have been for a long time, with the distinction between the "haves" and "have-nots" but I believe that to those two categories we have to add a third one—the "never will haves" or those who, often with justice, think themselves to be so.
The basic problems of our inner cities seem to me to begin with poverty. Despite what has already been said and may again be said in this debate about the way in which social security has, in large degree, met a great many of the problems of the poor, poverty is still at the root of all our troubles. It is poverty which is often accentuated by the particular
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burdens of old age and ill health, by the high proportion of problem families and single parent families who gradually emerge in or drift to the problem areas, by widespread unemployment—we have already heard a good deal about that—and, nowadays, by the influx of citizens of immigrant stock, West Indian or Asian. To this, we must add the factor of human inadequacy and misfortune. The less able are left behind by those who are more able and more enterprising and consequently suffer deprivation in the various terms already referred to—housing, environment, job opportunity, amenities, educational opportunity—and that, I believe, is a very real deprivation for many children locked into areas such as those we are talking about.
Let us remember that deprivation often means actual privation. Of that, I have not the slightest doubt from my own first' hand knowledge of the situation in my own city. Sometimes it is needless privation arising from the fact that those who might be better advantaged from what is provided through social security just do not know how to go about getting it or are too frightened to take the necessary action themselves. There are quite a lot of people in that category.
Then there is a consequent dampening, damning effect of the apathy which arises from long experience of nothing happening to improve the situation. It might sound as if nothing had been done. There are some inner areas of Birmingham which I take pride in and show to people when they come to the city. I did not know what was there before though I hear people who regret the loss of what had to go in order that the new might emerge; but what has been created is splendid, if a bit too opulent and expensive for some of those who would desire to live there. There has been a great deal of rehousing both within the city and on the edge of it, but there has undoubtedly been a great loss in the sense of community and of neighbourliness. There has been the migration to greener pastures of the more able and independent residents to which I have already referred. With all this has come the not-to-be-underrated impact of the break up of the three-generation family to which I attribute so much juvenile crime and irresponsibility today. But then I speak as a grandfather and, let me add, without reference to my own grandchildren.

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We have heard already about the relocation of industry, and with it the disappearance of many small businesses and job opportunities, lost to those who cannot travel right across the city to their work nowadays because sometimes they can hardly afford to do so. This is particularly hard upon working mothers who want a part-time job, but cannot take a job which is very far afield, and especially if, in the area where they live, there are insufficient proper baby-minding or nursery school facilities.
The zoning of industry has, in my judgment, gone much too far. Clean air legislation and pollution control have done a good deal to counter the old arguments in favour of separating where people live from where they work, and there are a great many people in the rundown areas of our city who would rejoice to see a return of the smaller industries, whether on a co-operative basis or otherwise, to within walking distance of where they live. It is very much a pattern of the old Birmingham, the old Black Country, and I believe it is one that we have lost to our very great disadvantage.
I believe that urban renewal has proved to have been conceived on too ambitious a scale, and evidence of that is the extent to which it has fallen behind its objectives to a point where a great many area plans have had to be entirely reconsidered because of the sheer cost that is now involved. There has been too little consciousness of the human factor. Too much has been imposed on a theoretical basis without sufficient awareness of what these changes will mean for those who have to endure them. We have been overtaken by a large-scale influx of residents from the new Commonwealth, not least in Birmingham, though not exclusively there of course. They had nowhere else to go but to the twilight areas. They were dependent, and are still, on employment for their prosperity, and they were forced by comparative poverty when they arrived to accept low standard housing and so to reinforce a problem which they did not create.
So there has come about this heightened separation of social classes. There has been produced a very great strain upon educational resources. There are teachers, for example, in areas like Small Heath in Birmingham where 30 per cent. of the
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children in their classes are the products of one-parent families with all the attendant complications that that imposes on those who try to help those children grow up. There is inevitably a high level of English language deficiency which has to be coped with, and of course very few of those teachers live, or are able to live, or perhaps could be expected to live, in the areas where they teach. I am glad to think that the clergy still do and in this way make a real contribution to the total scene; and it is not all loss.
Let me quote from an article which one of my clergy, who lives in a run-down part of Aston, recently wrote about his own situation as a married man with young children in such an environment:
"…problems are all relative—your loss is our gain! 'What about the Children?' people say. Well, Martin is 4½ and starts school this January. We're pleased with the school; he'll learn to read and write and we've every hope that he'll be happy. Of course there are children in his class who can't speak English, but there are also specialist teachers ably tackling the problem. And no suburban isolation here, no deserted streets or children ferried everywhere insulated in their parents' cars! 'What about crime?' Well it exists, just as it exists all over the city. We feel every bit as safe as when we lived in suburban Birmingham.
On the other hand, it's right to call our area 'deprived'. Poverty, unemployment, social rejection and racialism determine people's lives more than in other areas (which doesn't mean everyone is poor or that all the houses are slums.)".
I am glad to have a man like that among my clergy.
What can be done to meet the situation as we know it to be? We certainly cannot leave it as it is, and much has been suggested in the various reports to which reference has been made by others as well as by myself. But I hope that we shall go on from there and face up to the realities of the situation in every possible way and by setting ourselves alongside whose who live in these circumstances. The £100 million, to which reference has also been made, is a start. Much can be done if the money is there. But much can be done by cherishing what we already have: the enterprise of the people who are there and who are longing for an opportunity, as I believe, to demonstrate it; the skills, some of which have not yet been alienated from the areas of greatest social need; the capacity for industry which is undoubtedly there to be generated; the housing which I think could often be regenerated.

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But we need to admit and to reverse our mistakes—and not least this separation of where people live and where they work. We need to reverse the pattern by which these have become one-type areas, and perhaps to reverse it by giving a lead ourselves, if we are able to do so. We need to attract more people engaged in commerce and administration and in the professions back to these areas where they lived not so very long ago—half a century or so ago, and that, after all, is not very long in terms of history. We need a greater mix in the housing provision, or in the housing rescue operation, if such people are to come back willingly, as I believe more would do. We need, too, more public investment in job creation, subsidised rents and other advantages for small businesses. We need more nursery school accommodation, localisation of social services and of other community facilities, so that they are not seen as a distant faceless lot inhabiting a vast block in the city centre, but as those who want to befriend those whom they are paid to serve, and who I think often in themselves believe they are calledto serve. We also need provision of capital resources centrally and its administration locally, and I think that in Birmingham, at least there is a case for local area committees, although I do not speak in any sense as a politician. But I do think of areas which are large enough to need that kind of treatment.
Even greater support is needed for the teachers who I believe are doing a most vital and constructive job in areas where most other people either do not go, or feel themselves unable to go. We need, too, greater support for the police, not simply as those who hunt the criminal, but as the guardians of the peace, as a great many of them are still in these areas; not feared, but respected, and in need and deserving all the support which this House can give them. By all means let us work for local participation, recognising the problems of encouraging those who have lost hope to begin to hope again. Let us encourage hope by identifying specific needs, first, if we can, through the eyes and the aspirations of those who are living in the areas where need seems to be a fairly useless word to use.
Let us recognise and plan positively for a multicultural society, recognising that a good many of the people of immigrant
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origin will want to go on living in areas like this because they have embedded themselves in the area quite properly—the Asians, not least—by buying property, by improving it, and by developing a sense of cultural identity through being closer together. Racialism, though not a word which any of us would wish to speak lightly, is still a factor that has to be recognised and I think lived through, and lived down.
I quote again from my young clergyman in Aston:
"Racialism especially is infinitely more subtle and piercing than most white people have begun to realise. In the current political climate it's the politically weak and the minorities who are fair game for attack… And all this is compounded by racialism. Anyone whose ministry is among the blamed is going to have to share the blame."
He continues, speaking of his own experiences:
"'still large barriers of language and culture between us and the Asian majority—large, but not insurmountable. We've found that not a lot happens simply through chance contacts and being friendly on the streets. Here is a kind of loving that really has to be worked at… What does it amount to? Certainly an affirmation of some traditional values: worship and the Christian community at the heart of ministry, a priest living with his people, a neighbourhood ministry, a spiritual and social fellowship for the congregation. And then some quite normal activities occur in a new form, like the ecumenical scene or relationships with schools and the professionals'. But behind it all there is the more radical perception that the Church needs to become much more a place of multi-racial communion and fellowship at all levels"—
and here are the words I want to emphasise—
"if it is to be a sign to the British people of their new vocation to be a community of many races and cultures".
I repeat, my Lords,
"…a sign to the British people of their new vocation to be a community of many races and cultures".
So I say to your Lordships that we should make quality of life a real aim, and not just a talking point; that we should encourage and make much fuller use of the voluntary and social agencies that are there; and—and here I speak to myself rather than to your Lordships—that we should try to revive or generate a spirit of civic pride which will permit none of us to turn a blind eye on the black spots which deface our cities, or to dispute where the available resources should first be applied.
5.2 p.m.
Baroness GAITSKELL: My Lords, first of all I should like to thank the noble Lord, Lord Sandford, for initiating this important debate. I must say that I feel very happy to follow the right reverend Prelate the Bishop of Birmingham; not only happy, but privileged because of all the things he said in his speech with which I agree—and I agree with all of it. The Birmingham study was, to me, the best one of the three. It seemed to me to go straight to the heart of the matter by being called "The Unequal City"; and, as this happens to be on the same wave-length as the things I am going to say, I cannot help appreciating it particularly. The Liverpool one was the next best; but the Lambeth one I found much too theoretical and much too obvious in the things it advocated. I do not mean this in a harsh way, but I think it really has not helped us a great deal. I must also congratulate the noble Lord, Lord Ashdown, on his excellent maiden speech. Except for the fact that I could not work out how much the incentives which he underlined were going to cost unless we received them as, say, pennies from heaven, or something like that, I agreed with a great deal of what he had to say.
My Lords, this debate poses more questions than it provides answers, and is more articulate in its diagnosis than cure about our national economic ailments, and that somehow our political differences will not be breached during this debate. The phrase "the hearts of our cities" makes me slightly uncomfortable when it is people we are talking about. The trail of deprivation which we must follow—and here I agree with the right reverend Prelate—reaches beyond the boundaries of this trendy reference to "inner cities". In trying to uncover the economic blight that has fallen on some of our cities, we have to go to the roots of the problems—the inequalities that lie at the hearts of these cities. There seemed so much hope at the end of the war, when we tried to build a fairer and better country: yet here we are, thirty years later, demoralised by the existence of slums, homelessness and unemployment, and even disenchanted with so much that the planners have built. I always wondered what kind of people the planners had in mind when the architects built all those high rise flats, because it seemed to me that
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they were not meant for families with children at all.
In 1959 I accompanied my husband on a visit to Moscow. Mrs. Healey and I were allowed to visit the fiat of a woman house-painter, which she shared with a young married couple and their baby; the flat of one engineer; and the flat of one of the intelligentsia. They were all a little different from one another. I did not see the flat of a ballet dancer, which I was told would probably be the best of all. Discussing the housing problems with one of our Russian hosts, I distinctly remember his saying that their Government had found it uneconomic—that is, much too expensive—to build flats of more than eight storeys.
My Lords, the fact that we have not dealt with the inequalities of the housing system after all these years is a severe indictment of our free democratic society. The violence in Belfast, which has been referred to today by my noble friend Lady Phillips, sometimes makes me wonder whether the housing situation there is tolerable; and I have little doubt that unemployment is still a factor in the troubles that we have in Ireland, in Belfast. I am sure that the bad housing and unemployment which exist in a rich city like New York are a large contributing factor to the violence that exists. So when we propose to give special aid to metropolitan inner city areas, it is not surprising that there is a backlash from the country areas calling for co-ordinated programmes to deal with industrial decline. Urban deprivation, they point out, is not the monopoly of the big cities.
The policies that both Labour and Conservative Governments have followed since the war have failed to change the social conditions of many of our citizens. Bland statements such as, "Every citizen should have a decent home", or about a property-owning democracy, only go to show how necessary it is to have precise policies in housing. There is still conflict between the ideas of renting and owning one's house. It has been pointed out by experts in this field that one of the tasks for the Labour Party is to make tenants equal to owner-occupiers, so that council tenants should not he left without security of tenure. I believe the Labour Party had a better understanding of the policies

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based on modern sociological and economic understanding of the human needs in urban societies, and the quality of life within these societies. I am only making a few general points and I am not expert whatever in this field.
The main needs, I believe, lie in new building and to deal with the obsolescence in the private rented sector. Emphasis should be placed on giving access to housing for low income earners. To obtain the resources, urgent reform is needed to cut taxation relief which is now given to those who need it least; that is the universal option mortgage scheme and to reduce assistance to owner occupiers. To meet the need for rented housing, a high level of council housing is necessary. These policies amount to a positive discrimination towards deprivation areas which are the real problems in the cities; and it is a major political problem of housing for the workers. The lesson still to be learned by us has been stated in several Fabian pamphlets: that there is no substitute for comprehensive and direct action by the State in meeting housing problems, and in channelling resources to those most in need. This is at the heart of the problems in our cities.
5.11 p.m.
Lord REDCLIFFE-MAUD: My Lords, I should like first to congratulate the noble Lord, Lord Ashdown, on his contribution which was quite unlike any of the others that we have had; and, not surprisingly, because he has special experience which I myself lack, I was all the more interested in his suggestions. I hope that we shall all hear him very often again—and in less than two years' time. I should like also to thank the noble Lord, Lord Sandford, warmly for giving the House a chance to discuss this question this afternoon. In particular, I was interested in the suggestion he threw out that we might consider in this House having a Select Committee which would in some ways monitor what is happening to the urban environment throughout Britain and, in particular, in the inner areas of cities which we are discussing this afternoon. I had the privilege of being a member of the Select Committee on Sport and Leisure, under the late Lord Cobham. Not only did I learn how much experience there was of both sport and
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leisure among my fellow members of that Select Committee, but it provoked a debate which was the historical occasion of the first speech by the Prince of Wales. I cannot help thinking that this problem of inner cities is a matter where your Lordships' House can be of value in watching and using the varied experience of our membership in an area which is going to be with us for a very long time and about which none of us this afternoon will say we know the answer.
I want to suggest something which is quite compatible with that idea hut which goes much wider. I want to suggest that the time has come when we should follow the experience which we have had since 1970, when the Royal Commission on Environmental Pollution was established, and continued by the next Administration, first of all under the chairmanship of the noble Lord, Lord Ashby, then under the chairmanship of Sir Brian Flowers and now, more recently, under Professor Kornberg's chairmanship. This has done specially valuable work in monitoring pollution authoritatively and on a continuingbasis. Unlike these pathetic Royal Commissions which come into being and pass away, of which I have had something to do on one occasion, what I call the "Ashby-Flowers Commission", not only gathers together some eight persons including the noble Lord, Lord Zuckerman, and other friends of ours, with a very small secretariat and marginal expense to public funds, but draws attention to the whole position of environmental pollution as it was in 1970 and follows that up with racy pieces about toxic waste which did not particularly please the Departments concerned or the Government, and, more recently, one on nuclear waste.
I ask the Government seriously to consider whether it would not be valuable to establish a continuing Royal Commission on cities—not on inner cities, but on cities. Anything we can do for inner cities must be part of a wider policy for the city region, and for the country as a whole, as well as for those inner parts of it to which we are considering giving priority, as I personally think we should, in our debate this afternoon. The Royal Commission that I have in mind would start by reviewing what are our present assumptions about the future form of cities in the light of our past experience. I believe that we have been very slow in the last 30 years, as the noble

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Baroness, Lady Gaitskell, was saying earlier. We have not been quick enough to see the mistakes which either a particular city council or the Government (either the present or a previous Government) have made. Those great devastated areas, bulldozed without thought for the uprooting of human communities in the process, which have been a feature of the last 30 years of our efforts to plan and redevelop our cities; and those high rise monstrosities which at the time were done in good faith by people who really believed that that was the only way you could make use of this highly priced land in the centre of our cities (whatever the Russians did) were mistakes.
These were mistakes which we now, I believe, generally recognise. That is why the whole emphasis now is on redevelopment and rehabilitation and the preservation of communities as far as possible instead of uprooting them and putting them at a distance. Those were the sort of mistakes that we shall go on making, and that Governments will go on making and will be unwilling to admit that they have made. And when I say "Governments",I mean not only national Governments but local governments. It is difficult for a political Party that has been responsible for a city to admit that it has made a grave mistake and to go back on it. I believe a Royal Commission would help us to learn these lessons quicker and would give us earlier warning of necessary changes than we had in the last 30 years. It would also be authoritative in the sense in which a non-political body can be and a political body cannot. Furthermore, it would treat (as we all of us would probably agree we should treat) the problem of the cities and inner cities as something which is not for "Stop-Go!" and not for one political Party to change the policy each time it succeeds to Office.
We need a policy which is an all-Party Policy (with great differences of opinion about how to execute it; for that is right and inevitable) with a broad picture of what the cities of the future should be. We want to encourage those movements of people who want to have a small house and a garden to live in, who want to get out of the urban context; and to encourage also those who are prepared to come into the urban context and who would like a redeveloped house such as one may find
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in various parts of London not far from this Chamber in places where people of professional and other classes choose to live for various reasons. This inward and outward movement you cannot stop and should not try to stop; planning should simply help people to make their choices individually in a way that helps the rest of the community to make their individual choices.
These movements involve a rethinking of the assumptions on which our city government and planning have been based and I believe that a Royal Commission that developed a momentum from having a continuing life would get over the political and the departmental difficulties. What we are discussing today—and every speaker has referred to it—covers so many central Government Departments and also many parts of our local government structure. God forbid! that we should now re-organise local government, but there is no doubt that those of us who are unrepentant about the original proposals of the Royal Commission on Local Government in England—with city regions or something like it, and two tiers of local government in the metropolitan areas but a single tier in the rest of the country—still think that that would have made our chance of solving the inner area problems a little better than it is to-day. Fortunately in the metropolitan areas (and I have no quarrel with the decision that there should be London and six instead of the three that the Royal Commission suggested) the district—the old city councils of Liverpool, Birmingham, Manchester—still has responsibility for most of the services relevant to the problem of the inner areas; that is, social services, education and housing. Unfortunately outside the metropolitan areas we have to get collaboration between two tiers: the districts—particularly the old county boroughs which are now districts—and the new county councils; for districts are responsible for housing in the inner city areas of Bristol, Stoke-on-Trent or Nottingham, but the new counties are responsible for social services and education.
May I now leave this perhaps foolish suggestion—though I feel it to be a good one—that the Government should consider setting up a continuing Royal Commission on cities which might go very well with a Select Committee of your

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Lordships on inner cities. Meanwhile, what are we to do straightaway? Decide to give priority to certain inner areas. But there should be no nonsense in our minds. Giving priority to someone means that you give less to someone else, and unless we have the political will, both nationally and in the cities, to give priority to these inner areas at the expense of some areas or some services, particularly at the present time when resources cannot be substantially extended, nothing will he achieved.
We are grateful for the £100 million which the Chancellor tossed to the inner cities yesterday afternoon, but that is chicken-feed when we are thinking of the problems at stake. We cannot expect big additional sums to be added to what is already the public expenditure total. If, as I greatly hope, we mean immediate business for the priority areas, we shall have to do less in those which are not priority areas. Here let me agree with those who have already said that the inner areas which we are talking about this afternoon are all over the country. They are not only in the metropolitan counties, not only in the big towns, they are in small places, too. If we are going to give priority to inner areas where there is this collective disadvantage and deprivation, if finance or other resources are to be made available, it requires great and difficult decisions by national Government to pick among all those who will of course think that their own problems deserve any priority support that is going.
Concentration and focussing are the next requirements. There are already educational priority areas where there is deprivation from an educational point of view. There are housing action areas and various areas which the urban aid programme has been concerned with. If I might refer back for a moment to the Select Committee on Sport and Leisure, of which the noble Lord, Lord Cobham, was chairman, that Committee reported in 1973 and in the enthusiasm following the appearance and speech of the Prince of Wales the Government promised a White Paper. It took them two years, but in 1975 they produced it. They there declared their agreement with a particular recommendation of the Select Committee that there should be recreational priority areas, parallel to and similar to the
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educational priority and housing action areas.
Perhaps the Government can tell us that something has been done about that. They were going to discuss this most urgently with the Sports Council. That may have been done and the Sports Council may not have enough resources to do it. There is a good example of what I said earlier about priority: if you want to give recreational priority to certain areas but cannot increase the total sum for distribution, other very worthy demands on the Sports Council will not be met. Whatever else comes out of this debate, I hope we could agree that there should be a single focussing and concentration of priority on these inner areas.
On the local government side, the last thing I would do would be to suggest a single pattern of how the local authorities should proceed. In these reports on the inner areas, it is interesting to note that local government has not found it easy to adapt the corporate management concept of better co-ordination of various departments and committees of the local authority, and reconcile that with aid to priority areas. I believe that no progress will be made on the inner area problem unless local authorities have within their committee structure an inner area committee of the council. I believe that every district council which means business by their inner areas should have a committee which ranks with the other main committees of the council, whose chief officer is one of the team that assembles weekly around the board of the chief executive officer. The council must contrive that what tends to be under Gains-type administration, a centralised decision-taking process for the city as a whole, is complemented by decision-taking about special action that should be taken in priority parts of the city.
There is one point which I think is relevant both to central and local government: that is, that we should not allow the private professional firm of architects and planners and developers to go out of business or even to go into exclusive business in Saudi Arabia, the Sudan and other places. These are excellent uses of their talents and skill and for obvious reasons we are all for it, but it would be a pity if we gained the whole world of the balance-of-payments resulting from

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work in the Sudan of Saudi Arabia and lost the contribution of these persons to saving our own urban soul.
In the last analysis, whatever the policies of the Government may be, it is going to be local government that does or does not effectively carry these out and if national Government is giving special subsidies to priority areas for this or that reason it is right that they should monitor them and be as sure as they can that the money given for special purposes goes to the special places for the special purposes. But there is no real alternative to trust. Local governments are far more likely to make good use of whatever money is given to them if the attitude of Ministers at the centre is to trust them, even though they know that some of them will make mistakes.
5.30 p.m.
Baroness HORNSBY-SMITH: My Lords, I should like to join in the congratulations to my noble friend Lord Ashdown on a most able maiden speech, in which he was able most wisely and strategically to talk about his own specialty of development. He referred to the responsibility of the developer for the environment. Your Lordships will, I think, appreciate that he practises what he preaches when you realise that the imaginative development in Victoria Street, which has opened up the Roman Catholic Cathedral and given a new dimension of history and environment to that street, is the result of development brought about by my noble friend and his colleagues. I should also like to congratulate the noble Lord, Lord Sandford, for giving us an opportunity to debate this subject, although I doubt whether he could have imagined how widely differing in their topics and specialties would be the speeches this afternoon. I am almost in sympathy with the noble Baroness, Lady Birk, who will have so wide a range of topics to deal with.
My Lords, in the rush to new towns and new environments after the war—largely to expedite the improvement of areas of bomb damage and of slum clearance—we denuded parts of the great cities of some of their most skilled workers,
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and we left tragic areas of dereliction and poverty, which got consistently worse as trade and industry found such areas unattractive because labour was difficult to find. At the same time, the retailer in those areas saw the number of his customers being whittled away as they migrated to other territories, and thereby he saw the purchasing power of his market descending. At the same time, we witnessed an immense growth in the multiples, in the then still very viable High Streets, and such growth was often to the detriment of the small individual shopkeeper.
The trend has changed again, and today we find that the great retail chains are unable to obtain in city centres the considerable acreage they now require for their new hypermarkets and car parks; and so they are moving way, way out to the perimeters of cities. Therefore, the only way we are going to tackle these areas—which are often quite small—within the cities and the only way we can revitalise these centres, is by positive action to rehabilitate the dwellings that can be restored and maintained and to bring in new commercial enterprises. Such enterprises will come, in the main, from the thousands of small manufacturers and from the smaller shopkeepers, because more and more the large firms—whether they be industrial, professional or retail—may desire, or indeed are often compelled by the local authority, to move out into areas away from towns, often by the fact that they are commanded to provide four times the area for car parking than they actually want for their factory. Therefore, it will be the small man, who is so often overlooked and so often regarded as somebody who need not be consulted, to whom we must look to bring in service industries and to bring back the retail shops alongside the housing of which many speakers have spoken, in order to restore the life to these communities.
In all the reports that I have read, the local authorities have unanimously insisted that they alone are experienced enough and capable enough to carry out such a project. To an extent, it is their rigid and inflexible attitude which has so often driven industrialists and retailers to seek pastures new. It is they who have concentrated so much on new and virgin areas with scope for prestigious new schemes which could

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be started from scratch—areas where there are no headaches to begin with. Nobody can blame the planning officers and architects for seizing opportunities in respect of new land which is fairly readily available, where they are able to build, for example, their own access roads. So they say: "Let's get this done to the glory of City X, rather than tackling those terribly difficult inner areas."
We must now change the direction. I believe that, in the same way, as when they went to the new towns they consulted with and made concessions to the prestigious employers, whether in manufacturing or retailing, to get them into the new towns and to make them viable, so in their drive to improve these derelict areas they should equally deal with the smaller groups who are even more closely aligned with their areas. How often do they consult the small manufacturing associations, or the local chambers of trade, who are based locally on the community—sometimes in an area of only four square miles? Nevertheless, they know those areas like the backs of their hands and they know what their members want. How often are those bodies consulted in advance, rather than being told suddenly, "We have got a blueprint: this is what we are going to do—the shops are going to be 2,000 square feet each—like it or lump it".
I believe that we could gain a great deal by close consultation between those associations which are strong in the areas where development is needed and which, because of their modest size but certainly not lack of knowledge of their areas, could make a very real contribution, not only in developing the areas but in encouraging people to take up the projects. The emphasis has to be on the smaller firms and there has to he great variety. It is here that the needs of the locality can be satisfied, because there is available, through these people, the local knowledge which can be so valuable.
Many of the derelict areas are comparatively small parcels of land. Much could be done to help. Even if it required a reduced rental for a period of three to five years, it would be cheap at the price from the point of view of providing employment and rebuilding the heart of the community. When the new towns were set up, they did not hesitate to give the major retailers concessionary rents, or even a moratorium for several years,
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because they knew that if the four giants were there, then all the other retailers would follow and their shopping centre in the new town would get off the ground. Let us do the same now to attract the small manufacturer and retailer and service industry hack into the areas which need them to provide employment and to revitalise the cities.
If anyone doubts that there is a place for the small shopkeeper, let him study the queues and explain the success of the very considerable number of Pakistani shops which have opened in London during the past few years. They are making an excellent success of their shops, which they could not do unless the need was there. Last night, I read in an evening paper of an imaginative scheme concerning a very well-appointed warehouse in Chiswick, with space for up to 30, where young people with their own craft, knowledge and desire to expand are able to rent the space they require at a reasonable cost, with heating, lighting and other services there, in order that they can start up new enterprises and new industries themselves. I believe that the scheme is very imaginative, has been very successful and is well conducted, and I consider that we could well start something similar in other areas.
Would that we could have such a centre for dealing with problems, because one of the biggest and eternal questions of people today is: Where do you get anything repaired? The electrical shop says "Send it back to the manufacturers". You pay almost as much as the piece of equipment is worth in order to post it one way, and then you are charged for having it posted back. If you ask the Electricity Board to come and repair a frayed flex on a fire or an iron for an old lady, it costs £6.50 just for the man to cross the mat, without the charge for the repair.
Why can we not have one of these warehouse centres where an electrician can do these jobs and where one will have to wait only till the next day, at most, to collect the article? Why can we not have someone who can really repair, and will repair, a pair of shoes—a centre where you can get new corners put on a suitcase, new linings in a pocket, a rib on your umbrella or your scissors ground? I am quite sure that there is still a demand

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for these things, and a craft repair centre could go a long way to bring in people, and make a name and a new life for a centre.
It would be useless to deny that we have seen a tragic decrease in the community spirit. But it is only patchy in London, because in many areas there is still a village and community spirit. People tend to forget that London is an agglomeration of villages. Kentish Town and Chalk Farm were villages in the sixteenth century. Lambeth was not linked up in the Tudor period. Many of those former villages still have a community spirit, and the right reverend Prelate will endorse the fact that such a spirit very much exists in Lambeth. There is also a community spirit in Dulwich, in Camden and in Soho; but, alas! it has been lost in those areas which have been allowed to run down.
It is very sad that we have lost a good deal of the good neighbourliness and the urge to give immediate help. The feeling of instant compassion has, in many ways, lessened as the welfare services of the State have grown. Where friends and neighbours would rally round in the old days, in sickness or unemployment, they are now more inclined to say, "Well, they will be all right on their benefits and national assistance. They will manage."
But mere cash is not the sole answer to people who have fallen on hard times. They want the moral boost of personal contact and encouragement. They want the feeling that somebody cares and is sympathetic to their problem, even if it is only someone to whom they can pour out their woes, or someone who will help them to keep their chin up and encourage them to try for another job, or to look forward to the days when they will be well. They want the kind of friend who, in the old days, would pop in and say "I was making some cakes anyway, dear, so I thought I would bring around half a dozen for your kids", or "Here are a few vegetables from George's allotment"; or, for the sick person, someone who would pop in and change the bed and do the shopping.
The warmth and loyalty in times of stress in the inner city communities was something about which we all rightly
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boasted. But the chats over the garden fence have been replaced, alas! by the cold-blooded isolation of multi-storey flats, where a frail old lady finds herself jammed between a hi-fi addict upstairs and unruly children downstairs; neither family anti-social in themselves, but making life hell for the old lady. She does not have a proper opportunity to do something about the noise, and possibly the people upstairs and down hardly know she is there, because they do not meet and talk over the garden fence.
I believe that if we are to bring back that spirit of warmth, that spirit of living and working in and enjoying the local community, we must take a hard look at the restrictive legislation and the high cost of land, which discourages industry from venturing into these areas of blight. I believe that the planning chiefs must be told that, before they launch grandiose schemes in virgin areas, they must look at these inner city areas. We have to take a cool look at the Community Land Act, because that is an open encouragement to local authorities to take new sites, easier sites and sterilise capital and land, which prevents them from doing the work which they might do in these inner areas.
We have to look again at the inflationary cost of existing user rights. Let us look at some of the local authority by-laws, which say "This cannot be used for that purpose". Some of them have been in existence for 20 years, and they are not at all applicable today. Again, we have to look at the application of the minimum size rules under the Industry Act, which, in practice, have prevented inner area firms from benefiting from grants payable outside, although I know that the Chancellor has made some concessions in his Budget which will be helpful in this sphere.
I believe, too, that councils must review the plots that they own and hold on to for future development. They must do something to speed up their machinery in relation to industrial applications, and be seen to woo industry and be ready to work with it in the widest sense, not only those who will live in the area—and, indeed, the small shopkeeper generally does—but the manufacturers and the retailers, in order to make it attractive and viable for people

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who set up in business and provide employment, which is vital if any housing refurbishment is to be worth while.
As a measure of their intent, I think that they could begin by rehabilitating all those existing buildings which, with modernisation, could provide good accommodation for the next 20 years. At the same time, priority should be given to reviewing the many buildings which are in the possession of councils and are idle. I am thinking of what had been a great residential school, which has been taken over by the local authority and will probably be sterile for years, but with a little plumbing and partitioning it could become a hostel for young people searching for digs.
It would probably be a lot cheaper to give such buildings to known and experienced charities, who are used to managing such properties for the young employed. The Government and the local authorities do not have the resources to do this alone, and I believe that it must be a co-operative effort with all the advantages which accrue to the industrial employment areas applied to these inner areas. If we fail and do not get massive action on these centres, we shall turn London, and possibly other great cities, into something like a bankrupt New York which we hear so much about today. We shall repeat in our other cities the fate of many formerly great American cities where, as all who have visited them know, the perimeters thrive and the ancient hearts of the cities are dead. It is a massive task; but, with vigour and imagination and, above all, co-operation—co-operation from those who will occupy and make viable those sites —I believe that we can succeed.
5.50 p.m.
Lord LLEWELYN-DAVIES: My Lords, I must begin by declaring an interest in today's subject. My firm carried out the Birmingham inner area study to which the noble Lord, Lord Sandford, referred in opening the debate this afternoon. As a professional planner, I have been engaged in many parts of the world with new towns and have planned two—Milton Keynes and Washington—in this country. I shall have something to say later on about their impact on the inner areas of cities.
Other noble Lords have already described the present acute and deteriorating
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situation and discussed the various immediate steps which can be taken to bring about improvement. I agree that early action must be uppermost in our minds this afternoon, and I expect that this debate will contribute significantly to our understanding of what needs to be done at once. However, I hope noble Lords will understand if I speak on a different aspect; that is, the longer-term aspects of decay and the possible long-term policies which might halt or even reverse it.
In Britain, the state of our inner cities is the result of major changes in the social and economic structure of our society. The actions of planners and the policies of successive Governments, which we can now see to have been sometimes mistaken, are only secondary and not principal causes of today's difficulties. The principal cause is that the fabric of British cities is still very much what it was at the end of the 19th century: the age of the railway and the horse. The railway system, around whose radiating routes our cities grew into spider-like shapes, with development spreading out along the tracks, was always a rail-horse system. It was as dependent on the horsebus—the hansom cab and the dray—as it was on the passenger and goods trains. "Waterloo, cabbie", shouts Sherlock Holmes, pulling Watson into the hansom beside him, "and a guinea if you can make it in 10 minutes". Railway stations were always built just that distance apart as could be efficiently served by horse-drawn traffic, and they generated the highly centralised 19th century city.
Employment in the 19th century was mainly in manufacturing industry, much of it in heavy industry, using coal for fuel and often linked to steel production. So cities grew in the mining areas, and at seaports, where coal and ore could be brought together. Workers were housed at high density as near to the factories and mills as possible. These industry-based cities were not loved; they generated little sense of civic community and were often denounced by reformers of the time as inhuman. The Garden-City idea developed as a reaction, and led in turn to the idea of New Towns.
Today we have a different transport system and a different pattern of employment and they do not fit our old city

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fabric. Road transport enables people and goods to move in any direction, wherever there is a road, and to go from door to door without changing. Employment has moved progressively away from primary industry into secondary industry; that is, into the production of manufactured goods which are today produced more and more by automated or mass production machinery. Employment is again moving, now into activities connected with the interchange and creation of knowledge. Ideas have taken the place of goods as the main generators of employment. Books, newspapers, television, radio, research, education, entertainment, the arts and medicine are increasingly the basis for employment. As an example from America, in the great steel-producing centre of Buffalo the University of Buffalo is now the largest employer of labour, far exceeding the steel industry and employing a far wider range of skills.
Much of industry is now footloose. Gas, oil and electricity are available almost everywhere from national networks as sources of power. Workers can come from any direction by road transport, and products can be distributed equally easily in every direction. So new factories develop in suburban locations where land is cheaper and more plentiful than in the old city centres. People, and later their shops, follow. Meanwhile, much of the old small-scale industry, which used to give employment in the inner areas, is dying out. We regret this and we are working to revive it, but, except for a few specialist trades, we cannot hope for very much success. Those people who can do so, especially young families, are moving away from city centres into the suburbs where they find cheaper new homes, often with gardens, increasingly better education and more choice of employment if they are mobile. Therefore the inner areas gradually become derelict, as we have heard this afternoon, and house the poorest sections of the community, especially those immigrant populations who are forced to start at the bottom of the economic ladder.
What I have just said is the standard diagnosis of urban ills today and is probably completely familiar to noble Lords; but I do not believe that it is the whole story. The decay of inner areas affects many British cities, some catastro-
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phically, and is increasingly common; but it is not universal. Those cities which were capitals—Edinburgh, Dublin and London, despite all its problems—have maintained a degree of vitality at their centres. So have university cities—Oxford, Cambridge and Boston in the United States. Possibly, therefore, urban decay is not, after all, an inevitable consequence of present-day patterns of economic activity and transport. But if so, the question is: what has made the difference?
The answer, I think, lies in something that I touched on earlier: the shift in the weight of human activities from things to ideas. Perhaps the new role of the city is going to be as a centre for the exchange and development of ideas rather than products. If this is so, it would explain the unexpected survival of so many German cities. Historically, nearly all of the principal cities in Germany were the once capitals of tiny, independent States. Each had a royal or ducal palace, a cathedral, an opera house, a theatre, a park, often a zoo, and generally a university at the centre. Their inhabitants felt that sense of urban identity which has been referred to this afternoon; they felt that they belonged to their city. This gave some of these German cities a better chance to adjust themselves to the new role of central areas in the 20th century; that is, as a social and cultural exchange point.
If I am right in this reasoning, then in the long run I believe that city centres have to change their role: to accept that manufacture and commerce cannot be forced back in significant quantities and endeavour to expand and to attract medical centres, universities, libraries, museums and theatres—every kind of cultural and intellectual activity which benefits and depends upon that superior accessibility which is the central area's sole but absolutely vital asset.
Before I close, I should like to say something about new towns. It has been argued that new towns have contributed to the problems of inner areas. I think this is not so. Two arguments are brought forward. One is that the financial resources devoted to new towns could have been better applied to supporting inner city renewal. The other is that new towns attract employment and people away from central areas, and thus accelerate their decline. But the facts do not support either of these arguments.

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The outward movement from the old centres is a reaction to real social and economic forces. The outward movement in a metropolitan region will be just as great, whether or not some of this movement is collected into planned new towns. The new town organises the movement of people into a concentrated, compact and economical form, otherwise it would simply be the familiar suburban sprawl. The cost of providing roads, sewers, water, schools and other necessary services is certainly less for a given population in a new town than it would be for the same number of people spread out in a suburban pattern. It may come from different Votes in each case but that is not the issue. The issue is the total cost to the nation. Over 90 per cent. of the people and jobs leaving London in the 1960s went to suburban locations; less than 10 per cent. into new towns. So even if the new town population were in some way additional to the general outward movement—which I do not believe it is—even then, the effect on London as a whole is absolutely negligible.
It is my belief that part of the movement out of our city centres is inevitable, and indeed beneficial, and offers a better life to certain groups of the population. I think there is a possibility of maintaining a vital role for city centres in most of our historic cities if they can accept and vigorously welcome the new role focussed on ideas rather than products and the exchange of goods. New towns are better than suburbs; they will save money, save agricultural land and protect green belts for recreation, but they can never compete with the range and culture offered by a true metropolitan centre.
Many aspects of public policy will need to be brought to bear if this long-term approach to urban problems is to be achieved. The debate has brought forward some and will no doubt bring forward more. I believe the single most important issue is land policy. National land policy must be capable of helping cities to write down the high land prices prevailing in central areas, even where decay is already present. Land values linger on at levels which are prohibitive for redevelopment long after the economic reality has made them "hope values" rather than real ones, and the revived city
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centre in its new role will not come about until this issue is resolved. We should all be very grateful to the noble Lord, Lord Sandford, for raising these vital questions for our debate today.
6.2 p.m.
Lord HYLTON: My Lords, I entirely endorse the remarks made by the last speaker about our gratitude to my noble friend Lord Sandford. I should also like to say how very much I agree with nearly everything said by the noble Baroness, Lady Robson of Kiddington. I hope to give an example of the sort of things she wanted to see happen being put into practice in one particular inner city area, but before I do that I should like to quote from a book by a major American author, Mrs. Jane Jacobs, which is simply entitled The Economy of Cities. She said this:
"Solutions to most of the practical problems of cities begin humbly. When humble people, doing lowly work are not also solving problems, nobody is apt to solve humble problems."
I believe this throws a lot of light on this debate, and I should like to produce evidence from the Isle of Dogs in the London Borough of Tower Hamlets which will show lowly people beginning to solve problems. This part of London was very severely affected by bombing during the War. After the War, it was rebuilt in perhaps a slightly unfeeling way which gave little scope for a genuinely mixed community, with the result that managers and professionals still tend to live off the island. On this point I should like to question whether "area management" by local authorities will be really effective if the managers themselves are non-resident.
That aside, dock closures and reduced port employment have very badly affected the Isle of Dogs, which in addition has poor access and not very adequate public transport; and the position was that by 1976, with a population of just under 15,000, the unemployment rate for men had reached 14 per cent. and for women it was no less than 25 per cent., while there were some 240 acres of disused or vacant land. That was not a very promising start, but a year ago last March there took place in the Isle of Dogs a consultation which lasted a week and involved just over 100 people, an adequate

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proportion of them being local people, which I think was just what the noble Baroness meant when she spoke about involving the city dwellers. In addition, four European countries and seven other countries from the rest of the world were represented and, as a result, there came into being something called The Isle of Dogs Human Development Project. It began life with a document of some 100 pages, but since the publication of that document there has been real progress and actual results. I will mention some of those results, and I do so in a random order intentionally, because I believe these varied results show that one needs a complete mix if one is going to awaken the whole of a particular district.
A social club has come into being on the island, which has done things such as organising football matches, children's parties, film shows and considerable fund raising for a pre-school project; it has produced an island song book, and it has even painted up "welcome" signs at the entrance to the island. An historical brochure is in preparation, and plans are well advanced for a clubhouse, providing leisure activities for whole families in one place. The quite well-known Bridge House near the entrance to the island has been restored, and a start has been made on rehabilitating other derelict historical buildings.
On the industrial side a small start has been made with, surprisingly enough, a cottage industry producing leather moccasin shoes. This industry employs a full-time organiser, two other men working full-time and six women working part-time in their own homes. Other small businesses are being planned, and here I should like to say how very much I agree with my noble friend Lady Hornsby-Smith in all she said about the importance of repair businesses, craft businesses and the use that can be made of large old warehouses if they are properly sub-divided and reorganised.
Returning to the Isle of Dogs, a nursery pre-school is functioning from nine in the morning till four in the afternoon, with some 25 children and 14 parents involved, while other parents are going through play group leadership training courses so that additional whole day pre-schools will follow from this pilot scheme. There is a youth action corps in existence which
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gives training to young people in vehicle maintenance, and a former Port of London Authority building is being repaired by teenagers for future use as a youth centre. The young people in this corps are helping with all aspects of the Human Development Project. At least one town meeting for the whole town has been held and local residents' interest groups are emerging from that later consultation, and they have carried out practical work, which is very much needed, on cleaning up the incredible weight of litter to be found on some of the residential estates.
On the question of transport, informal co-operation between vehicle owners was started, and London Transport has arranged a 20 per cent. increase in the number of buses serving the area. An Industrial Development Advisory Board has been formed, bringing together industrialists, trade unionists and local residents. Together they have surveyed existing industries and vacant land and buildings. They are preparing a brochure to encourage investment in the island. They are also consulting with the Intermediate Technology Development Group on appropriate new industries. At the same time 43 shopkeepers are being consulted about trade development and what they can do to help not only themselves but also the total local economy.
That is a great deal to have been achieved in the course of one year, and I believe we can draw quite a number of conclusions from all this work. The first I would point to is that when you take a particular delimited area out of a whole inner city you must look at all the problems simultaneously. Having done that, you must try to get social and economic development at the same time, and here I think I can quote in my support the mayor of Tower Hamlets. You must, if you can, get contributions not only from the public sector but also from the private sector. Obviously, you need local interest, local activity; but you should also strive, if you can, to get some outside participation as well. Finally, to get this whole process moving, I believe it will be found very helpful to have an organised community resident on the spot to act as catalysts. This idea is nothing new at all, because it was exactly the principle on which the old familiar settlement houses in London, and no doubt elsewhere, operated for a very long time.

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My Lords, I believe this experiment I have been describing is significant, if only because it is taking place within the constituency of the Secretary of State. I hope that he, and the noble Baroness who will reply to the debate, will monitor it very carefully. I ask for this because it seems to me that such things as educational priority areas, housing action areas, urban aid and sports priority areas, all these things that have been tried in recent years, have been far too much a matter of remote government, of civil servants and local authority officials spending sums of money without sufficient involvement, and comprehensive involvement, of the local people. I believe it is necessary to motivate whole groups of people and to raise the morale of all the residents in a given inner city area. It is necessary to do this because, somehow or other, we must reverse the collapse of individual responsibility, which is, I believe, very much at the root of the inner city malaise.
6.13 p.m.
Lord ALLEN of ABBEYDALE: My Lords, I should like to echo previous speakers in thanking the noble Lord, Lord Sandford, for initiating this extremely important debate. I am sure that he will not be very surprised that the course of discussion has strayed fairly wide beyond the reports of the three consultants on which mainly he based his speech.
I rise to take part in the debate with some diffidence, but I have three perhaps rather disparate claims for speaking today. First, for the five years that I was at the Ministry of Housing and Local Government I had a close responsibility for town and country planning, with some concern with the new towns; and, later on, it was in my time at the Home Office that we started up what were then the pioneering projects of the urban programme and the community development projects which, whatever might be thought about them, did at least make up the first specific assault by central Government on the problems of urban deprivation. Secondly, as the chairman of the National Council of Social Service I have a particular interest in the contribution which the voluntary organisations might make in all this. Thirdly, I am a native son of Sheffield, a forgotten city when there is any talk of special help.
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I fear that much of what I want to say serves to underline the difficulties. I should like to begin by saying that there is one difficulty which is really of our own creation, and that is the problem which those involved find in writing intelligible English. I am not referring particularly to the reports of the consultants, but rather to the great mass of articles and comments and reports which come pouring out in such profusion. The noble Lord, Lord Ashdown, in his very interesting and thoughtful maiden speech, referred to the speech which the Secretary of State for the Environment gave at the Bristol Conference in February. I noticed at the time that The Times correspondent, in referring to this speech and the associated press conference, said that Mr. Shore was being opaque. I happen to think that this was a little unfair; hut I confess, anyway, to a very lively sympathy with Mr. Shore who, before he spoke, must have waded through a great deal of the literature written on this topic, and can readily be forgiven if at the end of it he felt slightly bemused. Much of this literature is written in the jargon which is so favoured by social scientists on both sides of the Atlantic. There abound strange words like "dysfunction"—spelt, my Lords, with a "y". One has to pause over the misprints which occur to make sure that they are indeed misprints and not some horrible new words invented for the occasion.
I will resist the temptation at this stage of the debate to comment on the machinery of government aspects, issues which always seem very much easier to those outside than to those who actually have to work them out. But I should like to repeat the point which has been made before: that it is important to remember all the time that there are limits to what central Government can do. Obviously, the central framework of planning and of industrial policies, and the distribution of resources, are of the very first importance. But nothing very much is going to happen unless there is real local involvement.
In saying this, I have two things in particular in mind. First, it means the full concern of the local authorities—and I mean the local authorities. My heart sinks a little when, through the fog, one finds looming up suggestions that yet more pieces of local machinery should be created, perhaps yet another tier of

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elected representatives. There may be a need for doing something more; and I certainly would not quarrel with the thought advanced by the noble Lord, Lord Redcliffe-Maud, that there may well be a case for a new inner city committee in certain areas, but I hope within the existing framework of local government. I certainly hope that those concerned will think very carefully before creating yet more pieces of organisation outside the existing local government structure. I should like to say, too, that my experience suggests that local hierarchies involving the day-to-day direct commitment of Ministers are troublesome to organise and to keep effectively in being for more than a short time.
Secondly, local involvement means looking to the voluntary organisations which already exist and which are ready and willing to play their part. This is a good way in which to get value for money, but it is simply not a way of getting things done on the cheap. These voluntary bodies cannot help without receiving more money for training and basic administration, and without some guarantee of continuity. What they can do, with any luck, is to help to counter the disturbing picture we get of local people with little sense of belonging, who feel remote from authority and probably antagonistic towards authority. These voluntary bodies have a real role to play in giving disinterested advice, in helping to instil greater self-reliance, and in encouraging neighbourly care.
It seems clear from the broad hints that Ministers have been dropping that the Government are thinking about concentrating special help on just a handful of arbitrarily selected areas, although this has not emerged very sharply from the debate so far. We have all seen in the Press the names of the five cities which are thought to be the favourite runners. The modest £100 million promised by the Chancellor yesterday, primarily, from the way he put it, to help the building industry, is destined for a few areas, as yet unspecified. I can clearly understand the reasons for selecting some areas when nothing worthwhile would be achieved if the limited resources available were spread too thinly. However, quite apart from the point made in the leader in The Times of today—with which I have
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much sympathy—that it is dubious whether it would be right to add to the available resources by cutting down on the new towns, I begin to hesitate over the assumption which seems to underlie the proposals—and which is certainly often made by the commentators—that the worst problems are necessarily to be found in the hearts of our big conurbations. I do not believe that that is so, for the reasons that the noble Lord, Lord Radcliffe-Maud, touched on a short time ago.
Whatever may be the demerits of the community development projects, they showed with painful clarity that acute problems arise in areas which are often assumed to be rural. I have in mind the projects at Cleator Moor in Cumbria and the Upper Afan Valley in West Glamorgan. Then there were the reports on Batley, which is not an area within a large city, but all the same shows up problems I suspect just as serious as those to be found in, say, Newcastle-upon-Tyne, which we read is likely to be one of the favoured areas.
We are bound to ask ourselves just what this inner city policy, in the form in which it seems to be emerging, is trying to achieve, and what the implications are of giving priority to just five or six projects for areas inside the biggest cities. Projects on this scale will not make much of a dent on urban deprivation across the nation. As I have said, I quite understand that there are not enough resources to go round. I also assume that it is hoped to learn lessons in these areas which can be put to more general use, although experience suggests that it takes a very long time for lessons to emerge, that considerations vary very much from area to area and that by the time the lessons have emerged, political beliefs about priorities have quite likely changed. But to divert special resources to particular areas in Liverpool or Birmingham will not be of much comfort to the Batleys, Cleator Moors and the Brightsides of this world, which have problems that are just as serious.
This is a real dilemma and, so far as far as I know, no very clear policy has been propounded. I hope that, in reply, the noble Baroness may be able to tell us a little more about the benefits which are expected to accrue to a wider community by putting resources into just a

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handful of selected schemes, although I should not be surprised if she went on to say that we shall have to wait for the White Paper for the answer. I, personally, find all this quite puzzling and should greatly welcome—now or later—some further illumination.
I should like to make one other point before I sit down. It concerns the urban programme to which I have referred but about which we have heard very little so far. This programme is designed to help local authorities to alleviate special social need in urban areas by relieving the plight of the most disadvantaged in those areas. The programme stems from the Local Government Grants (Social Need) Act 1969 under which a 75 per cent. grant may be paid towards approved local expenditure. It is a modest programme. As I understand it, the £23 million available this year hardly allows for anything but the continuance of a number of projects. I appreciate that it has become rather fashionable to scoff at the programme as providing trivial palliatives which deal with the symptoms rather than the causes of deprivation. However, as no one knows with certainty what these causes are—as our debate has shown—and even if the diagnosis skilfully set out by the noble Lord, Lord Sandford, in his opening speech was accepted as comprehensive, it is difficult to think that acceptable policies could be divised within our total resources to remove these causes altogether, I think that there is much to be said for palliatives. Even a small amount of money can make a great difference locally, and without this programme there would certainly be fewer day-nurseries, language training schools for immigrants, adventure playgrounds, hostels for battered wives, legal advice centres, holiday schemes for deprived children, and so on. The programme has the merit that it firmly involves the local authority which has to find a quarter of the cost and fit these projects into its wider policy for tackling deprivation in its area. Voluntary bodies can also be brought in, although admittedly only if the local authority wants this and is prepared to pay its share. I believe that about a third of all local authorities have benefited under this programme.
I speak with prejudice. But I should not have liked this opportunity to pass
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without saying that I believe that the programme has done more good than is sometimes appreciated, and that I should be sorry to see it go or to see it even more starved of funds, so that instead money can be spent on just a tiny number of chosen areas. There are serious issues here affecting the lives and wellbeing of many of our fellow citizens; nor are they problems which will go away with increasing national prosperity, as the experience of the United States so starkly demonstrates.
I am sure that we all look forward this evening to the speech from the Government Front Bench, and to the forthcoming White Paper, in the hope that we shall get clear and persuasive answers to what are admittedly the extremely difficult questions we are posing here today. I am not competent to express a view on the idea which the noble Lord, Lord Sandford, threw out about some form of committee of this House to keep a continuing monitoring look on the situation, but I certainly think that the issues here are of such gravity that in one way or another this House ought to return to these problems on future occasions.
6.31 p.m.
Lord RITCHIE-CALDER: My Lords, I join everyone else in thanking the noble Lord, Lord Sandford, for giving us the opportunity for this debate. I join everyone else in congratulating the noble Lord, Lord Ashdown, on his impressive and informative maiden speech. The only thing I want to say is that if we are going to have the Olympic Games in dockland, London, we had better start recruiting our security squads now!
I do not share with my noble friend Lady Gaitskell any embarrassment about this being called the heart of a city. It at least reminds us that we are looking in this case for a pacemaker of some sort, but it also reminds us that this is part of an organic problem and not purely the kind of mechanical, physical, structural problem which we have been thinking of so consistently in our planning, I am afraid to say, in recent years.
We must not romanticise the inner city. All the world over the inner city is the Casbah, the ghetto, the Bowery, the Dickensian slums of London. As a crime reporter I knew the inner cities of

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Dundee, Glasgow, and London. I knew the slums of the Overgate, the Gorbals, and London's East End slums—in some cases worse than in Dickens' time because they were 100 years older. I sometimes thought on those sorties with the crime squad that the real criminals were not the ones we were hunting but those who exploited and tolerated the conditions that we were seeing; and those responsible included the neglectful city fathers.
Like the Royal Mile in Edinburgh, which once housed, before we started to convert it some of the worst slums in Scotland, an inner city may be picturesque and properly converted, can become gracious and inspirational instead of a social mockery and a community reproach. Like the noble Baroness, Lady Robson of Kiddington, I am all for preservation and restoration of the worth while. One of my most moving experiences was in Warsaw immediately after the last war when, in the total and systematic devastation, I saw the Poles in their thousands among the ruins of the Old City of Warsaw sitting chipping the mortar off the bricks of the debris so that they could be put back brick by brick as they were before. And so they have been. The buildings have been replaced architecturally, externally, as they were, and internally with modern amenities.
So too in the city of Kiev; a city in a garden in the Ukraine. It was deliberately devasted by the Nazis by fire and explosives. The trees of the boulevards were burned by flame throwers. Where the facades of the dignified old buildings remained they were restored and the blackened scars painted over—as remember the White House in Washington was painted over after we burned it. The shells behind have become habitable, useful, modern buildings. Then you have a city of two and a half million, planned and zoned so that the parks and gardens and the open spaces are four times the extent of the built up areas. There the inner city has been retained as a kind of tabernacle to the past.
When we talk about planning and Communism, and so on, all I have to remind you is that if you go to Russia today you will see taken very seriously, I assure you, the kind of problems we are discussing today. For example, in the Leningrad Soviet they have a continuing
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20 years' plan, and every day in every way that plan is looked at and reassessed and revalued. It is not a fixed plan; it is there to meet the kind of necessities or changes of attitudes which experience will throw up.
I hate to use this word, but I think both my noble friend Lord Llewelyn-Davies and I can be described as interested in the science of ekistics. I apologise to the noble Lord, Lord Allen, but that, if, my Lords, you forgive the word, is the science of human settlement. And it is a science; and if you consider what has been done and thought all over the world—and not just in this country or in the Western countries—about the nature of human settlement, and not just in the demonstrations of the Habitat Conference and so forth, you will realise that there is a great body of knowledge and experience which has somehow been overlooked or neglected.
Knowing this, I wonder why we, the British, of all people, are today reproaching ourselves, and rightly reproaching ourselves, for our handling of the inner city. We were pretty enlightened. We were an example to the world in town and country planning. When I was a young reporter in Dundee sensitised by the slums, one of my inspirations was Professor Patrick Geddes, the pioneer of town and country planning, the mentor of Lewis Mumford and of his "culture of cities" —Geddes, who believed that bricks and mortar need not be an affront to nature, and that human settlement could be consistent with improvement and enhancement of the quality of life in a real sense.
During the 1930s I felt that we were getting somewhere. We had the Garden Cities movement, we had Letchworth as planned development, we had Fred Osborne campaigning for proper suburban development, and we had enlightened and forward-looking architects preaching not just about buildings—flats and so forth— to house people, but thinking about the social emphases and their meaning. We had an appalling problem then, as we have now, of sub-standard housing; intolerable, then as now, even on sanitary grounds. The problem which faced everyone then, in London demonstrably, was the problem of what was called "decanting". It was decanting in those days, which was the problem—where to put the people when

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the slum sites were being cleared for redevelopment.
The boroughs did not have elbow room; they did their best. I remember Riverside Mansions in Stepney; a block of working class flats as high as the building regulations then allowed. They had lifts and laundry facilities and a general community within the building. I welcomed that, without the premonitions of high rises and Ronan Point, and so on, which we had later on. There was Bermondsey, where casual dock labour had to be on the spot to suit the tides, and which had an appalling slum called Vauban Street, which the right reverend Prelate may have known in the old days. In those days it was below the level of the river so that regularly with high tides the water of the river sluiced through the Victorian terraced houses, bringing water rats and river slime. Bermondsey, within the restraints of that situation and its limitations of elbow room, converted a disused dock into a site for a block of flats to house the people of that street when they were being decanted.
The LCC began its overspill programme and built Becontree and Dagenham. People from the slums of the East End were moved into trim, semi-detached houses— the sort of thing Fred Osborne was preaching—and lessons were learned (some of them we have forgotten) the hard way. But the rehoused people started trekking back into the slums because although the rents of the houses were reasonable—I assure noble Lords that they were—family budgets were stretched. The children wore out their shoes walking to school, they developed healthy appetites because they were better placed and better housed and those sort of things caused a real strain. In addition, the women were lonely because they could not push their prams down the Mile End Road doing window shopping, admiring the things they could not afford to buy. There were no pubs, no locals, no community centres and no churches; they were just living areas. I remember on one occasion how Churchill reproached—very much as the noble Lord, Lord Allen of Abbeydale, is reproaching the official jargon of the housing programme after the war and chanted:
"'mid pleasures and palaces I may roam;
Be it ever so humble, there's no place like a living unit."
It is to be hoped that we learnt a great deal from what occurred at that time, and
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certainly we put more imagination into the next generation of housing development.
Another point which we are discussing today I find particularly significant because it is demonstrably true: we have forgotten the city villages. During the war—many noble Lords here today will remember, and were probably involved in, what happened in London during the war—when we started to evacuate people from places called Stepney, Poplar and Bethnal Green we made an extraordinary discovery, though I do not know why it should have been considered extraordinary because it should have been self-evident. It was that when people were moved they did not know from which boroughs they were moving because they paid their rates hut did not identify with their boroughs. They belonged to a neighbourhood or a village, an area around a church or pub or whatever else it was. They were moving from a community and away from people with whom they had a real identity and were friends. There were city villages and until we learn the sense of that, a great deal of what we are trying to do will be sterile.
Then came the new town policy and agree with my noble friend Lord Llewelyn-Davies that there is no justification for the suggestion that the development of the new towns was responsible for the decay of the inner cities. It was in the first instance an attempt not only to produce new development in the industrial and community sense but of necessity to release the concentration of the cities and the suburban sprawl. It was a meaningless suburban sprawl with all the complications in terms of transport that that meant and has demonstrably resulted in confusion since.
The lesson to be learnt is that the people who move in those circumstances—they are not moved compulsorily; they are not put into a removal van like their furniture—leave because they have the enterprise, or see the necessity to move. But one of the problems which that throws up is the fact that they are, by and large, the younger people and the more enterprising. That means that, as they move, they are not only physically taking themselves as people away from the area but are taking the leadership and meaningfulness from the neighbourhood, and as a result the neighbourhood becomes bereft.

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Many studies have been made into this in the United States, where this is a manifest tragedy and where mobility is even greater. In other words, as people move from one part of the country to another they leave behind a ghost community, a community bereft of leadership.
That is the problem we are considering today. It is not just a physical and material problem. We are trying to find out how we can have neighbourhoods which are meaningful; we are trying to restore to these communities their lost leaders. The right reverend Prelate the Bishop of Birmingham, whose speech I greatly appreciated, pointed out that, in such circumstances, practically the only person left nowadays as an inner city dweller in any professional sense is the local clergyman. Teachers and doctors do not live in such a community. The only people who remain are the deprived, and I refer to the deprived not only financially but those who are deprived of inspirational leadership and indeed of human comfort. It is, therefore, not a question of structural or physical planning, for one of the tragedies is that when the bulldozers move in, they demolish an area not only in terms of the buildings but in terms of human and living relationships as well.
I invite Lord Llewelyn-Davies to come to Edinburgh now to see our devastation. It is not just a question of inner city deprivation, but of the fact that developers and others have conic in with bulldozers and have destroyed buildings before we have been able to do anything about it. We have great scars in our lovely city of Edinburgh. Even in Glasgow there has occurred what in my view is an atrocity. Certainly there was plenty to reproach in the city. It ma} have been rather soot-covered, but there was a Victorian dignity about it. Now we have spaghetti junctions, throughways and fly-overs, and I am told that people are coming from all over the place to look at Glasgow as a solution to the transport problem, this at a time when they are destroying and disfiguring the city, fixing technologically upon us the stranglehold of this sort of development. In San Francisco they are pulling down the fly-overs we are now putting up in Glasgow.
I support strongly the proposal of the noble Lord, Lord Redcliffe-Maud, for
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a continuing Royal Commission. I would prefer, once we have reformed the House of Lords, that this House should be that continuing Royal Commission, making us the House of the future, responsible for the future and designed to protect the future against the kind of ravages which lack of imagination has created, generation after generation. What we are looking for is imagination, initiative and money. I was going to say "a lot of money", but "a lot" of money nowadays is entirely relative. What £100 million would do to repair the scars which have been created by the developers in their attempt to develop, one cannot say. Even that sum would do only cosmetic surgery. What I and, I hope, all of us want to see is that the lessons are learnt. Our native genius and the kind of resuscitation of the creative industries and the renewal of our city centres are matters which ought to be the concern of everybody, but they ought also to call for very careful monitoring.
I want to say how much I support the idea of the noble Lord, Lord LlewelynDavies, that we should look again at our cities to see what we can do to restore the beating heart of those cities—or, rather, than the heart, the brain. How can we bring back into the cities the sense of the fact that we have in these cities something which, culturally, we value? I believe that we ought to be pushing our universities hack into the heart of the cities. We have taken them out and left that form of inner city blight. We ought to be putting them back, and we ought to use much more imagination in creating in the inner city the living amenities for the people who ought to be there—the dwellers in the city—and we should, as the noble Baroness, Lady Robson, has pointed out, pay much less attention to the city users in the sense that they are the "corners and goers" and that they take their rates with them, robbing the local authority of what should be used in the heart of the city. These are the kind of things that now require deep thinking, social consciousness and a public will to see that the inner city will not only be a heart with a pacemaker, but will again be a part of a living organism.
6.53 p.m.
Lord SANDYS: My Lords, I should like to add my thanks to my noble friend

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Lord Sandford for giving us this opportunity and, further, my appreciation of the maiden speech of my noble friend Lord Ashdown. I should like to say to the noble Lord, Lord Ritchie-Calder, that I hope he will agree that the developer has a very particular role in the regeneration of our cities. I understand his criticism because I speak as chairman of a preservation society and also as chairman of a housing association. However, I believe that to understand the developer, we must understand what he is trying to do within the context of planning. That will really be the substance of my few remarks this evening.
Last year, barely 12 months ago, Dr. Alice Coleman gave a particularly important address to the Royal Geographical Society. It was entitled, Is Planning Necessary? As she was director of the second Land Utilisation Survey, which was begun in 1960, she was able to point out some very alarming statistics in regard to land use. I am sorry that the noble Lord, Lord Llewelyn-Davies, has left the Chamber temporarily, because I was going to attach some of my remarks to the final statement of his speech, in which he said that the single most important issue was land policy. In that, I very much agree with him because Dr. Alice Coleman, in her address, said the following:
"No planner creates waste land deliberately. Is it fair to hold planners responsible for the near doubling of waste land in the Thames area between 1962 and 1972? I think it is fair because the proliferation of waste land was one of the chief abuses of which Stamp complained and one of the leading arguments for introducing planning in the first place."
The question is, how much waste land is there in the hearts of our cities? This seems to be a very important issue and one to which the Civic Trust has devoted its particular energies and attentions. The Trust is about to produce a survey of towns, cities and villages in this country. This will be produced in May, so, unfortunately, I can only quote from some very early reports that have come in to date. However, it appears from the initial study of 250 of these surveys that the corner site, the gap site in a row of shops and the street scheduled for development, demolished but never acted upon, are subjects in regard to which the planners should really look to their laurels.
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Wherever one goes in the country one sees such sites and the Trust's study related to those areas. I believe that it would be beneficial to go to another city —Bristol—and to quote the experience there because there has been a very unhappy experience in that regard in Bristol. The Health Authority was asked in the 1950s and 1960s to centralise its hospital provision. It took over an area of 15 acres and knocked down a large number of Georgian houses, some distinguished, some not. In so doing, the Authority discovered what a particularly difficult site it was going to be to develop. In addition, its experience was that it did not need all the site, and those houses that remained standing on the site were left to decay further.
I believe that there is a tremendous object lesson to be learned from Bristol and what happened there, because a whole area was blighted in the way which we know all too well. I believe that the lessons to be learnt can be drawn from what the Civic Trust said: It said:
"Looking back, one wonders whether the change in official attitudes might have been achieved much earlier if more people had made a fuss years ago: without pressure from local groups, it seems highly probable that the site would have festered indefinitely. It is hoped that more land will be released and that perhaps two multi-storey car parks could take all the cars now parked on the surface".
The lesson remains most strongly and I believe that the action of local groups in rehabilitating those houses not required is a growth point in the housing industry and I particularly commend to the Government's attention the very effective publication issued two years ago by the Royal Institute of Chartered Surveyors and called The Economics of Conservation.
Perhaps I may dwell for a moment on economics. Despite the fact that the cost of building is rising so sharply, I believe that we may say that, today, the cost of a 900 square foot living and working area house at a rate of approximately £17 per square foot takes one into the bracket of over £15,000. That is a house built as new from ground level. I think that it is true to say—and certainly, as chairman of a preservation society, this has been my experience—that an equivalent area could be rehabilitated for approximately two-thirds of that cost.
Prices change every day. The cost of paint rose only recently or is about to rise

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by a factor of no less than twenty per cent., so I shall not stick out my neck too far. Nevertheless, there are very appreciable savings to be made from rehabilitating old property and, despite the effort, both mental and physical, which is needed to do so, the return in terms of the environment is incalculable.
I should like to refer to a publication which my noble friend Lord Sandford will remember, as will the noble Baroness. It is called, Tommorrow's London and was published at the time of the Labour Government in 1969. I should like to refer to a particular sentence in Chapter 8, which deals with participation. It said:
"We will preserve our heritage, our good buildings and our trees, but we will not allow the city to choke in a welter of antiquated rubbish."
I am on the side of the "antiquated rubbish", which I assume graphically describes those houses which the planners feel to be of insufficient architectural merit for preservation. I believe that there are very real causes for anxiety, which I think the Government are now appreciating, that the decaying property is well worth while rehabilitating.
I was particularly glad to read in the Birmingham study, referred to by the right reverend prelate the Bishop of Birmingham, that the study suggested that there was too great an emphasis on new housing; a disproportionate amount —I think the Budget was £34 million as opposed to a rehabilitation budget of approximately £6 million. It may well be that there are good reasons for that disproportionate amount. I do not know how this budget has been scheduled or whether there is a special problem here. Often it happens that the structure of old houses in an industrial area has been affected over a very long period by in-industrial pollution. If one takes a single brick and taps it, its whole structure will decompose, will fall apart, and one realises that one cannot preserve every building one would like to preserve. Nevertheless, there is a strong case for a re-examination here.
I should further like to draw the Government's attention to a problem which I believe is a real one in the preservation field, and I have said so over many years. I refer to the building regulations of 1966. Of course I am aware that they have been changed and varied from time
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to time, but I should like to draw the Government's attention to one particular factor above all others in the building regulations which demands a ceiling height of seven feet six inches in living rooms. There is of course a relaxation procedure, of which I am well aware, but I believe that a great many buildings are unnecessarily demolished because of the requirement to have living room ceiling heights of seven feet six inches. If it were possible either to provide a more easily obtained relaxation procedure, or further to relax the standards by even a matter of inches it would be of great importance. As I have previously said, I strongly support the building regulations so far as they enable old houses to be made safe, or safer, from fire risk. I believe that the building regulations fulfil an important function. Nevertheless, their application by both the fire authority and the local authority needs the sensitivity to which, I think, in other areas, the noble Lord, Lord Ritchic-Calder, referred. It is sensitivity which is required in this field.
I should like to refer to the situation of the small shop in the city centre, which has already been referred to by the noble Baroness, Lady Robson of Kiddington, and my noble friend Lady Hornsby-Smith. Small traders in blighted areas have a special grievance. I have in mind the tobacconists, the newsagents, the shoe repairers and the street corner greengrocers. On reading an article in The Times on 21st March I felt that Mr. Ken Peters, the secretary of the National Federation of Retail Newsagents, put the matter very well. I quote his words:
"Whole areas of towns are being wrenched down leaving in their wake a trail of small shops, deprived of suitable premises and without means to compete against the multiple and trendy boutiques for the new plush sites in the High Street."
This is a real need, and we will see ourselves progressively deprived of those very valuable small traders unless we are particularly aware in the planning stages.
I refer finally to a publication which I hope is in almost universal distribution in the Department of the Environment, though I regret that it has not to my knowledge been quoted from sufficiently frequently. It is a book called Goodbye London, written by Mr. Christopher Booker and Miss Candida Lycett Green.

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There in graphic form are the planning lessons which we should have learned. If we have not learnt them by now, it is about time we did.
7.5 p.m.
Lord SOPER: My Lords, I should like to add my congratulations to those already offered to the noble Lord, Lord Ashdown, on the occasion of his vigorous and informative maiden speech. I should like to thank the noble Lord, Lord Sandford, who ecclesiastically is my noble friend, for the opportunity he has offered to us of discussing this imperative matter and not least for the suggestion he made in his own speech that probably the way in which we could second that debate in the other place would be to inquire fairly deeply, if we could make such an effort, into the causes and the nature of the kind of problems that belong to the hearts of the great cities. I believe that that is probably the best course that could have been taken, and I am glad to have found that in the course of the debate that indeed it has been taken.
I want to suggest that there are two areas in which these problems lie. One belongs to the nature of the city itself, not alone its heart, but its lungs and every other part of it, whereas the other belongs more existentially, so to say, to what has been happening in the past years to some of the conurbations in some of the inner cities of this country and of other countries. I offer as a contribution initially the kind of examination that the Churches have made into the condition of the inner cities, particularly such inner cities as are listed in the favoured programme of the five. Ted Wickham, the Bishop of Middleton, has written I think the authoritative treatise on the fact that the most mortal enemy of organised religion is the modern city, and he adduces the various reasons for which he comes to that conclusion. I would in parenthesis remind myself that there must be a modification of this general assertion, particularly in the light of what the noble Lord, Lord Llewelyn-Davies, has already said, and the fact that there is no uniformity that can be attached to the great cities even of this country.
Nevertheless, I think that it is informative and relevant to remind ourselves in examination of why it is that organised religion
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has so far declined, and the facts are, I suppose, something like this. Within many an inner city area the proportion of those who go regularly or frequently to church is about 1 per cent., whereas in the general area the proportion of those who still have attachment to organised religion must be about 10 per cent. Why is this? In the first place, there is an artificiality about the modern city, particularly that which has been fertilised out of the Industrial Revolution and still retains the nature of that kind of city, which is very different from the traditional general cities to which the noble Lord, Lord Llewelyn-Davies, referred particularly when making a reference to Germany. The artificiality means that the natural rhythms are destroyed by the coming into being of electricity, by the nature of the conurbation, by the destruction of night and day, by the eradication of the seasons, and the various natural processes; and this must have a deleterious effect. Although it can be argued that the countryside may breed superstition, it at least cherishes wonder, and it is the element of wonder which is very largely lost in the great conurbations, and, being lost, one of the great props or one of the great safeguards of a religious background goes with it.
Therefore one of the elements with which any attempt to deal with the problem with the inner city is concerned must be a preparedness to look at some method whereby a renovation of the naturalness of life can be reintroduced in what has now become so fundamentally artificial. In that artificiality another of the elements is the lack of community. I know very well that there is a kind of community that belongs to the Gorbals, and still belongs to the Gorbals, and it is a community of deprivation. I have no disagreement at all with the sense of neighbourhood that children have, particularly because they play in the streets, but I suggest to the noble Lord, Lord Ritchie-Calder, that probably that sense of belonging to a neighbourhood tends to be dissipated as the child grows, and I should have thought that it is very much less likely that the adolescent and those who have grown up into that environment possess still that sense of involvement in the neighbourhood, least of all, of course, in the urban district.
Finally in this regard, those who have looked at the question of why the Churches

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have failed, or why people have failed to support organised Christianity, have been impressed by the fact that it is general and not particular. Once upon a time, we Methodists used to say, "We are doing badly but, thank God!, the Baptists are doing worse"; but now the problem is across the board or, shall we say, across the aisles, and is no longer confined to any one particular creedal statement or one particular Church. The delinquency which was so eloquently referred to by the noble Baroness, Lady Phillips, is a matter upon which those who work in the inner city, as I do, or try to do, are well aware. I had occasion to mention when I last spoke in your Lordships' House that in our hostel for boys the life expectancy of a television set was about six weeks. It had just disappeared; and I have to tell your Lordships now that the coin-box of the telephone system in the house was "whipped" last night, and I am giving the widest publicity to this in case anybody should know anything about it. These are facts which underline the inevitable consequence of the artificiality and lack of community in the city as such. There are variations and modifications of this general theme, but if there is to be any renovation or reclamation of the inner city, that inner city must recover both a sense of living in a real world and a sense of belonging to a real community.
My Lords, added to these fundamental questions, which are subject, as I admit, to certain modification, there are of course the matters to which reference has been made over and over again in this debate: the decay, the miserable and dreadful decay, sometimes due to sheer neglect, sometimes due to inefficiency, sometimes due (as I rightly suspect, I am sure) to a wrong sense of priorities—the driving of great arterial roads through the heart of a city—and, in fact, the failure to recognise that there are three areas in a city, and that decay has belonged to all three of them. There is the central area, there is the inner city and there is the suburb.
My Lords, I work in what is called Camden. I would suggest that Camden has now come to be a tripartite local community. You could think of Holborn, which was one of the original parts of Camden, as being part of the centre of the city; you could think of St. Pancras, which is the second constituent, as being part
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of the inner city; and I suppose you could think of Hampstead, the third constituent, as being part of, shall we say, the urban or suburban area rather than the inner city itself. Now if there is to be any attempt to deal with the problem of the inner city, it must cut across the unnatural boundaries which hitherto have activated the local administration and, indeed, the local authorities in general.
However, I want to refer for a little longer to some of the other evils. It is a fact that poverty is attracted to the inner city. It is a fact about which there can be no doubt, though there may be various reasons which can be attributed as being responsible for that fact. It is a fact, and it is a fact of increasing importance and of increasing severity. It is also a fact—and here again I have some evidence of it, and would pass it on to your Lordships if I may—that within the area of many inner cities there is no concordant programme and no sense of what, after all, should be done with them.
What has not been asked this afternoon is whether or not what we know of the inner city in a particular set of circumstances ought to be preserved at all. I can quite sec the value of preserving the cultural city, which has a history and which is capable of attracting, not only attention, but love and fellowship. I can believe in the residential needs of certain areas which are now more or less derelict because of the depredations of those who have knocked a great deal down and built very little to put in its place.
I can see the value of a particular area which is now very largely bowdlerised by the wrong sort of industrialism and could be recovered for a healthy suburban or inner city area. What I cannot believe in is that it is necessarily possible to take some of the areas that I know of in London and other places and redeem them; and though to demolish them and start afresh from scratch is an impossible dream at the moment, yet I believe that a great many of the expedients to which we ought to attract the attention of local authorities must he fairly short-term. But I am not at all satisfied that when some kind of better civilisation dawns upon us we shall necessarily want to preserve what we now call the inner city.

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Finally, my Lords, may I make one or two suggestions? I heartily agree with what has already been said by a number of noble Lords that the end of the process is to put the responsibility much more upon those who live there and those who are in the natural neighbourhood, which would mean, in my case, in Holborn. I am on the edge of Holborn, and a great deal of the responsibility that I have belongs to Westminster. But there must be some kind of inter-relationship as between the various local authorities, because the boundaries are not natural and do not necessarily belong to the inner city at all.
Secondly, I am quite sure that there is need in some cases for neighbourhood committees, and already in this debate this afternoon evidence has been put before your Lordships of the way in which neighbourhood committees have indeed made great progress and have astonished those who felt that such enterprises would be shortlived end based mainly on emotion rather than on common sense. I refer, if I may, to one in which I am interested, the day centre at Kingsway, in which we have found how possible it is to create and maintain a sense of community by people living in a great deal of the poverty of that part of London.
Finally, I am always attracted by that magnificent last line that Carlyle wrote in his English translation of Martin Luther's hymn, "Ein fest' Burg". Your Lordships will remember that it goes like this,
"The City of God remaineth".
Your Lordships may prefer to put that in a less ecclesiastical frame, but I am satisfied that the only kind of city which is likely to remain is that which conforms to the pattern which is found in the created universe as we know it—and the countryman knows it far better than we do. But in fact it is only possible to maintain any prospect of a city which is likely to persist if we can persuade those who are invited to live in any part of it, whether in the lungs or in the heart of it, that by so doing they are embarking upon a progress to a full life, and not merely maintaining a particular kind of economic or industrial civilisation.
This, I think, is the ultimate problem: it is the ultimate solution. One thing
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which is beyond any question is that you cannot wait for the millenium when you are concerned with human beings; and I heartily endorse the enthusiasm and the effort which has already been put in the speeches which we have heard this afternoon as to the need immediately to do something to recover from the poverty, the artificiality, the lack of community and the sense (to use that "in" word) of alienation which is a mark, I think, of so many an inner city and could be removed by an application, not only of money and resources but, still more, of a common spirit of enterprise.
7.19 p.m.
The Lord Bishop of SOUTHWARK: My Lords, I must first apologise to the House for not being here at the start of the debate, but an inescapable engagement made that impossible. I particularly regret that I was unable to hear the speech of the noble Lord, Lord Ashdown. In fact, I would not have thought it right to intervene today were it not for the fact that I feel very strongly on this subject. I began my ministry just over 40 years ago in one room in a foul slum, a condemned house, where I lived for a good many years; and now, for 18 years, I have been the Bishop of what is virtually South London. So, really, for 40 years, apart from four wholesome years at Cambridge, perhaps the most beautiful city in the British Isles, I have lived in the whole of the inner city, and not in just part of it.
I am not going to generalise. I want to confine myself to the sort of problems I have experienced in South London. When I say "South London" I mean just over Westminster Bridge and along the riverside. We could start on it in five minutes and be in the heart of it in about twelve minutes. I want to put what I have to say under three headings: housing, poverty and the environment—not just negatively; but to state the problem and then put before you what I believe is a way towards a partial solution.
First, with regard to housing. Look across the river. There are too few houses. It is difficult to estimate exactly; but we need to think not in terms of hundreds or of thousands, but in tens of thousands. That is the first thing about housing. The second thing is that there

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are too many bad houses and sub-standard houses. The other day, I got the figures of people on the waiting lists in the boroughs on the other side of the river. In Wandsworth, 35 per cent. of the applicants on these lists have no living rooms; in Lambeth, 46 per cent. share a bathroom; also in Lambeth, 50 per cent. share an inside lavatory; whereas in the borough of Southwark, 40 per cent. have no inside lavatory at all. The third thing about housing is that much of the new housing not only leaves a great deal to be desired but encourages anti-social behaviour at an enormous cost. Come and visit some of our new housing estates, with their bleak corridors, their vandalised lifts and their appalling sense of isolation. Much of it is so badly planned, much of it so badly maintained and much of it, alas!, so badly managed.
There are three items on the agenda showing why the housing position is desperate. That, in all conscience, is enough; but I have to add a fourth: the lack of rented accommodation which makes life difficult for single young people or one-parent families or immigrants. Yet the latest figures show that there are 50,000 properties empty—30,297 being in Southwark borough alone. Some of these have been empty since 1973. What an appalling state of affairs! Is there any way towards a solution? I can only suggest steps towards a partial solution.
First, we must take seriously what is called a social mix. There is a crying need for middle income groups to come and live in the inner boroughs in their own houses. They should be encouraged to come as owner occupiers. Some of these houses could be built by the council or by private builders on council land. That is where I think we need to have another look at the political myths about the private ownership of houses. I deplore whole areas being taken over by a particular council or a particular group of people. There must be a mixture. What is so wrong about people owning their own houses? I know that this does not apply in many of the countries which are communist. I have been to Romania recently. There, the Government authorities boast of the fact that since there has been a communist régime, far more people own their houses than owned
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them before. There is nothing of which to be ashamed about that.
I have served on a housing committee in Bristol and in Cambridge. If people have council houses and then they get possession of them they might be encouraged, we are told, to sell them to other people for a large profit. There is a very simple solution to that; and we had it in Bristol. If you want to sell it, then you sell it back to the council. There is no question of there being exploitation. That is what I greatly hope is a way forward: a social mixture of people of all economic backgrounds and classes being encouraged to live together in the same area.
Secondly, if we look to the future, new houses should be more traditional. Most people want a terraced house with a small back garden; they do not want a flat in a high rise concrete block. I remember the horror of this coming home to me when I was visiting some sick people in Plumstead at the time of the electricity strike. It was not safe to go up in the lift; in any case, it was not working. I had to climb 15 or 17 storeys. I asked myself what this must mean for mothers and babies, to say nothing of old people who have to go up and down these stairs; and even when the lift is working, you must often wait for a very long time. No, they want more traditional houses where there is less vandalism, less litter and a greater respect for property.
Why is there less litter, less vandalism and a greater respect for property? It is because you can care for a small area which is yours and which you can see from your window and which you can, perhaps, defend. But there is no sense of responsibility, public or private, for vast anonymous areas with lifts, corridors and massive stairways. I realise that we cannot do away with what we have got; unfortunately we are not so wealthy as California. But housing units should be smaller and managed with the help of a tenants' co-operative. That, I believe, will bring about a tremendous change. People now feel, as was pointed out by one speaker this afternoon so helpless when they find that something goes wrong. To whom do you go?—To something called "management"; there is no one person on the spot to whom you can go with your immediate difficulty.

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Problem number two is unemployment and poverty. In the inner ring, half the tenants of the Greater London Council have such small incomes that they are eligible for rent rebates. This may be because they receive low wages, because they have large families or because they are living on pension. Whatever it is, it is a disturbing fact. Another disturbing fact is the great decline in employment in the inner city because firms have moved away. That is one of the things I have noticed most since I have been a Bishop. Shortly before I came to Southwark there were 69,000 manufacturing jobs in the borough. In 1975, the number dropped from 69,000 to 30,000. In some areas, the rate of unemployment is 20 per cent. Youngsters with ambition have little or no opportunity; so they just clear off.
Is there a solution? Can we point to one?—I think so, if we can do three things. First, encouragement must be given by the Government to people to stay in the inner city or to return to the inner city. Planning has resulted in thousands of small businesses and shops being moved out or closed down. The small shopkeepers in redeveloped areas just cannot afford the rent. They might stay, they might return, if they are given subsidies for their new shops and factory premises. There must be more opportunities for training school-leavers in skilled jobs. Secondly, and this is very important and sometimes overlooked: when we train people for these jobs, we must think of the sort of jobs we want to create in the inner city. They are not primarily office jobs or services. They are in manufacturing industry. That is where help should be given.
Thirdly, the environment, which brings before us the whole problem of deprivation. My diocese extends to Gatwick Airport. My Lords, if you were to come with me from Gatwick Airport you would come first to Reigate—what we call the gin and Jaguar belt—and the lovely Surrey Hills; you then move into Mitcham and Streatham and things begin to get a hit grim. As you get down to Brixton you notice a very great change; you come to Kennington, to Elephant and Castle, then Walworth and Rotherhithe. The inner cities are coming in upon you— over-crowded street, noisy traffic, the dirt.
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I love my cathedral at London Bridge but I must say that as I move towards it my heart fails because of the squalor. I do not know how many noble Lords know Southwark. The sheer squalor and the hideous dirty buildings are a disgrace to any city which calls itself civilised.
As to health, twice as many babies die before the age of one in the inner London boroughs as compared with the outer London boroughs. Regarding education few children leave inner city schools with any qualifications, and very few go on to further education. I remember going to one school some seven or eight years ago and the headmistress told me that they had over a hundred changes of staff within a year. Another headmaster said, "Do not believe the figures put out about schools. I can tell you in this school it is between 25 per cent. and 30 per cent." Community decline: the younger skilled workers have left the inner city, leaving the elderly and the unskilled. Worse still, the planners have destroyed and are still destroying settled communities and family groupings, so in the end you get psychological deprivation and more people leave. Those who remain feel they are failures; they feel hopeless, lacking opportunities for themselves and their children. Unable to exercise responsibility or control over their environment they become apathetic, the problem becomes greater, and then even worse when racialism rears its ugly head.
Do not let us close on that depressing note, my Lords, because I think there is a way forward. Financial priority needs to be given to the inner city. I realise that money is short but matters can be improved without extra money. How, my Lords? It is by allowing a much greater flexibility when it comes to the uses to which money is put. If more were spent on decent housing and the provision of skilled jobs, far less would be needed for the social services which deal with the casualties of the decaying city.
With the decline of the population there are many half empty schools, halls and premises. These should be retained and imaginatively adapted for social purposes. More money should be spent through voluntary rather than statutory bodies. I know that may be unpopular with some members of your Lordships' House, but that is the result of long experience.

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Voluntary bodies are less bureaucratic, less distant, less wasteful and they involve local people. In other words, let us have more money for play groups and less for nursery schools; more for housing associations and less for the GLC housing department. That is difficult at the moment when we do not have all the money that we want. Local Government—and I speak as one who for years has served on two boroughs—is wasteful of money and time. In many areas in the inner cities it has virtually totalitarian power, controlling almost all the land and housing, and it makes nearly all the decisions affecting the environment. These powers should be curtailed; whatever happens they must not be increased.
Then my final observation my Lords: inner city problems cannot be solved by advice and financial help from up above, from the powers-that-be alone. In the last resort people must solve their own problems. People in the inner city must feel responsible for their own lives and must share in the decisions made for their future. In the past so much has been done with the best of motives by planners, architects and politicians. They failed because the people were not properly consulted. The help was often misplaced through ignorance of the local situation and the result has been greater apathy and lack of responsibility on the part of the people.
If I may give one illustration of this: in South London there is to be a second Hyde Park. This was decided many years ago but I believe it will he quite a long time before it is finished. How splendid to have a Hyde Park in South London! But if the mothers had been consulted it would have been found that they do not want their children to go off over dangerous roads to a distant park where they cannot keep an eye on them and do not know what may happen to them in some vast green area. They want small parks near at hand where they can look out of the window and see where little Polly or Betty is and shout down to them when it is time for them to come in. But the mothers were never consulted. I am quite sure that the people who were consulted had never lived in an inner city and have no notion of what it means to live in a high rise fiat. I believe that we must consult the people. If we take them into our confidence then the
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architects, planners and politicians can work with them for a nobler city where people can live in dignity and with hope.
7.38 p.m.
Lord O'HAGAN: My Lords, I want to thank my noble friend Lord Sandford for initiating today's debate. I should also like to thank my noble friend Lord Ashdown for his notable maiden speech, but I expect your Lordships will thank me if at this stage of the debate I telescope my remarks instead of attempting to cover all the different points on this subject that spring to mind. I will concentrate on just one or two that have not been mentioned or not in the way that I want to mention them. I want to look at the problem from the other end of the telescope, at the function of central Government in considering and working out what should be done in the inner areas of our cities.
The noble Lord, Lord Allen of Abbey-dale, in a fascinating speech, reminded us that there were limits to what central Government could do. I accept that, but central Government is the source of the money, or most of it, even if it is only through the rate support grant. It is essential for central Government to know what it is that they are trying to do, and to be aware of the problems that those in the inner cities have to deal with. Of all the chilling facts and insights contained in this interesting document, Inner Area Studies, one of the most frightening, to me, was paragraph 38 of the study on Liverpool, which reads like this:
"Until very recently departments"—
that is, departments of central Government—
"have pursued apparently independent policies. Some have operated in the inner areas through special projects (Department of Education and Science, Home Office); through social policies (Department of Health and Social Security); or through concern with housing and local government finance (Department of the Environment). But for two key departments (Industry and Employment) the inner area perspective has been missing."
The first question I should like to ask the noble Baroness, Lady Birk, is this: do the Government feel that the mechanics of central Government enable them to know enough about the problem they are now considering? Far be it from me, my Lords, to call for a reform of central or local government—we have had quite

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enough of that—but do the Government really know about the problems? Are they satisfied that this dislocated machinery enables them to have a thorough look at what they are preparing a White Paper to solve?
I should like to suggest that one of the matters which could be done is to ask the Central Policy Review Staff to study and examine this problem of co-ordination of policy towards the inner city in the same way as they were asked to look at social policy. Perhaps the noble Baroness could tell us whether they have been asked to do so. If not, does she not think that it would be more useful to do that kind of thing rather than playing "tip and run" with the Foreign and Commonwealth Office?
There is one other point I particularly welcomed in the speech made by the noble Lord, Lord Allen; that was his comment on jargon. I always thought, loyal supporter of the European Economic Community though I am, that "Eurojargon" was the worst jargon, but that was before I discovered "piano-babble" when preparing over the last few months for today's debate. The communication gap that exists even among those who are trying to learn about these things is something that needs to be looked at.
Of all the different solutions to the many enormous problems which are contained in the subject matter falling within today's debate, T should like to spend a minute or two on employment which, to me, is the key—not just short-term palliatives such as the job creation scheme, which are of course important and worth while, but the longer-term prospects for employment. Employment brings fulfilment to people and decreases dependence on social secutity. It brings money into the area, which sustains the shops and all the other services and facilities that go to make up a genuine local community.
Most of what I had intended to say has been said already, much better than T could have said it, by my noble friend Lady Hornsby-Smith; but I feel that the need to examine exactly what can be done now to increase employment in the inner areas of our cities is one of the most urgent needs. We must have precise analyses and clear definitions. There is some disagreement, of course. Some
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commentators think that the most important factor in the decline of employment in the inner cities and the rapid loss of manufacturing jobs has been the death or the movement of large firms. That is referred to in the Birmingham study—one of the three studies in the report which was initiated by my right honourable friend Mr. Peter Walker. Others believe that the key is in the smaller businesses. Obviously, both have a role, but we should be quite clear as to which we should go for.
The Government have already taken a tentative initiative in dealing with industrial development certificates. I notice that the Department of Industry has changed the IDC policy in so far as it affects the replacement of obsolete buildings in urban areas. That has already been announced in another place, and I wonder whether the noble Baroness can tell us whether this "chipping away" at the issue of industrial development certificates is a prelude to a more wide-ranging and fuller examination. May we be told what types of employment the Government are now prepared to encourage or sustain within the inner cities? For example, I learn that Greenwich has its own employment development officer. Is that the kind of thing that the Government would like to see continued and expanded?
It seems that the planners are the new music hall butts and are about to take over from the tax inspector and the mother-in-law—everybody seems to have a rude comment to make about the planners. I do not wish to follow that policy in relation to those who do not seem to be too popular or who are not here—with the exception of the noble Lord, Lord Llewelyn-Davies—to defend themselves. But whether or not it was economic growth which led to the beginnings of planning control and whether or not it was population growth that was one of the prerequisites in the thinking of planners, we must now admit that to some extent the planners have planned the life out of our inner cities. We must admit, whether or not their original assumptions were right at the time of the 1947 Act, that the whole structure of our planning system has become to complicated for a declining nation—or at least for a nation whose wealth is not increasing—and that this hits our inner areas very hard indeed.

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I should like to ask the noble Baroness this: if the Government are beginning to admit that planning controls have an effect on our inner cities—and their action on IDCs with obsolete factories seems to indicate that they are—how are their considerations of the inner areas of our cities linked with housing finance? I am not asking for the secrets of either White Paper to be revealed today—of course not. But it is impossible to consider seriously that either can be examined exclusive of the other.
I should like to conclude by following up what was said by the noble Lord, Lord Redcliffe-Maud, about the need for continuous examination of this problem. Looking at the various seminars that have been held on this subject and at the articles that have been written, one becomes aware that this subject is something which suddenly becomes fashionable every few years or so, and explodes on us. I think it would help the public debate, and indeed the political debate, if there was a more continuous input of well-digested statistics and analyses of the kind provided by the studies which were the inspiration for this debate today.
It may be that the Standing Royal Commission, suggested by the noble Lord, Lord Redcliffe-Maud, would be the answer. Certainly, if your Lordships' House and another place are going to evolve, as I believe we should, a range of specialist Parliamentary Committees looking at particular areas of governmental activity continuously, that would be another way of doing it. But whichever way we do it, I hope that Parliament will have a role in examining what government, local government and central Government, is planning for our inner areas.
The phrase "the uncaring bureaucracy", which is not new, appears in these reports. But most bureaucrats are not uncaring people. It is their machinery and methods of work which make them so. If we are to sustain confidence in bureaucracies, be they national or local, we must make sure that their work is scrutinised and explained in public. I believe that, either through the standing Royal Commission or a specialist Committee of, preferably, both Houses of Parliament, this is something that we must try to do, if the problems of our cities, and particularly of the inner areas of our cities, are to be
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dealt with in a way that encourages local democracy, encourages local feeling, rather than takes away from it.
7.52 p.m.
Baroness WHITE: My Lords, I intervene briefly in this debate because I feel that it would be incomplete without a voice from Wales. I do so partly out of gratitude to my right honourable friend the Chancellor of the Exchequer, who yesterday, when he announced the £100 million of Government money which is to be spent upon inner city problems, included a reference to the Principality. This was particularly comforting, because from official sources, even as lately as two weeks back, we were hearing very discouraging noises. Therefore, it was especially gratifying to find that Wales, as well as the metropolitan areas of England and the City of Glasgow, more particularly I suppose, in Scotland, is to have some share.
I have an interest to declare, and I shall have to do my best to steer clear of the Addison Rules. But I have never found that the noble Lord, Lord Nugent of Guildford, whose voice I hope we shall be hearing, has been unduly inhibited in talking good sense about water simply because he happens to be chairman of the National Water Council. Therefore, the fact that I am chairman of the Land Authority for Wales will not, I hope, preclude me entirely from saying something about the land problem as it affects inner city redevelopment and rehabilitation.
In fact, the reason why I am not able to present to your Lordships tonight an elegantly turned discourse, as well phrased as some of those to which we have had the pleasure of listening today, is that I have been far too busy in this last week of our financial year in completing purchases of inner city land in Cardiff, our capital city of Wales. I should like to say just a word about our capital city of Wales, because although it is far smaller in scale than the metropolitan areas which are the subject of the reports, which have been the main content of our discussion today, it exemplifies just as clearly the problems of an inner city, where we have a dockland—very much smaller, of course, than the dockland of East London, but a dockland—which has declined steadily since coal ceased to be a great export trade.

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We have a civic centre which is second to none, of which we are extremely proud. But not many yards from it we have an area, which I see from all the windows of the tower block in which I have my office, which is a picture, very largely, of blight, of squalor and of dereliction, and which has been in that state for a number of years and, of course, needs to be tackled. The City of Cardiff is doing its best but it cannot possibly undertake all that is required, and that is why the Land Authority for Wales is also taking a hand.
The noble Lord, Lord Sandford, to whom we are greatly indebted for having initiated this debate, said, very properly, that he wished to eschew Party controversy, but yesterday, he will recall, he made some rather derogatory remarks about the Community Land Act. I would draw his attention to the current issue of Planning, the journal of the Town and Country Planning Association, which has a column beginning with the words:
"The Community Land Act is alive and well and living in Wales."
I draw his attention to this, because I think we have proved, or are in the process of proving, that we have a much more satisfactory organisation for the administration of this legislation in Wales than there is in England, or, so far as I know, in Scotland. We have one organization which is concerned with this matter of development land for the entire Principality. We work, of course, in the closest possible partnership with local authorities, but we can take a much broader view than any one authority, and we have a concentration of resources which is denied under the English system. I think we also have greater freedom of action.
Our purpose is, of course, to encourage private development, and here I very much sympathise with some of the remarks of the noble Lord, Lord Ashdown, to whose speech I listened with the closest attention. I thought he may have protested a little too much about the need for assistance to the private developer, and perhaps there could be some occasion when we might discuss this subject. Nevertheless, it is extremely important that we should recognise the need for partnership between the private developer and the public authority, and I repeat that in the Principality, on our relatively small scale, we exemplify
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a pattern which might be studied with advantage elsewhere.
We have, of course, in Wales, as they have in Scotland, a Development Agency and, more recently, the Development Board for Rural Wales, which is hardly concerned with the problem on which we are engaged tonight. But I repeat that our Land Authority is working very closely with local authorities. I think that this is a good pattern, because I entirely agree with all noble Lords who have stressed the need for participation by the community concerned in the planning of its future. I am quite certain that the democratic processes of planning must be carried out by elected bodies; that there must be the structure plans, the local plans and so on, and that development must take place within a framework which has been determined by processes of consultation, and, ultimately, by the decisions of elected bodies answerable to the community.
But the implementation of those plans is quite a different matter, and I feel very strongly that the type of local authority which we have, which can carry out public services in many directions but is a cumbersome committee system, is quite unsuited to questions of land development. I am not, of course, speaking of land which is being built upon for the purposes of the local authority itself. That is quite another matter. But my brief experience has shown me that one needs to have an entrepreneurial spirit, and I was very glad to hear one or two tributes to the new town organisations, because I believe that they exemplify a combination of, and a balance between, entrepreneurial spirit and public responsibility. I am happy to say that a number of my own team have had experience in both the public and the private sector and in the new towns. You need a mixture if you are to succeed in the development of these inner city areas.
I hope very much that the Government will look very carefully at the way in which we should proceed and that they will also look, as the noble Lord, Lord Llewelyn-Davies, so rightly said, at our land policy. The noble Lord made it plain—it is fairly obvious to all of us, but he speaks with great experience—that land is basic and that the way you deal with it is the only basis upon which you can redevelop your inner areas.

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The noble Lord also said, I thought so rightly, that you cannot have adequate and satisfactory inner city redevelopment unless you look at land values. This is what frustrates even those who, like myself, are extremely anxious that we should do all that is possible to use the land which is there already—much of it with services provided, even though the surface is blighted and derelict—instead of eating up our green fields on the periphery. We in the Land Authority have the most sensitive conscience about this matter, but we have to face the economic facts of current land valuation practice where, as the noble Lord, Lord LlewelynDavies, rightly emphasised, there is still by tradition a very large element of hope value which is nowadays, in many circumstances, quite unjustified.
I must admit that in the short time since I received it I have not been able to analyse the extremely interesting report, to which the noble Lord. Lord Ashdown, referred, of the Town and Country Planning Association which was published very recently and which is entitled Inner Cities of Tomorrow. However, may I direct the attention of noble Lords who are interested in the matter, and also that of my noble friend Lady Birk who is to reply, to the section on land policy which is contained in the report. I do not agree with it in every detail. For example, I do not hold their view, that you should hypothecate increasing land values for the benefit necessarily of the particular neighbourhood from which they were derived.
However, I think that the report has drawn attention very clearly to some of the problems which must be solved if we are to succeed in this programme of rehabilitation. May I quote a few sentences from the section on land on page 15 of the Report:
"The way in which land is held, valued and managed is crucial to any solution of inner area problems. In all areas, the present basis of valuation militates against the redesign of the inner cities on the lines desired… In all cases, land appears to have an unrealistically high book value, thus inhibiting its release for any purposes which will not realise that value".
This is precisely what one suffers from. If one takes a district valuer's valuation, for example, one has the impression that every square metre of inner city land must be devoted either to luxury offices or to a superstore. The report continues:
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"One will have to enable book values to be written down to the real market value of the land, which may be much less than their theoretical development value based on historic land use zonings".
However, the report points out that if you use these inner areas for some of the purposes which most of us agree would be desirable, you reach the point where you ought to be valuing certain land in certain circumstances at current use value, not at market value.
Unless the Government are prepared to tackle the problem and find ways of dealing with it, we shall face considerable frustration, despite offers of help from the centre. The report goes on to point out that under the community land legislation the point could be reached, under the so-called second stage, where one would then be able to buy land at current use value instead of, as at present, at market value, less development land tax. In an inner city area, development land tax is not necessarily so helpful as one might suppose. It depends very largely upon the history of the site concerned. If the base value is too high, then the social value of buying it, less development land tax, is very much diminished.
I do not wish to go too far into these technicalities, because the hour is late. All I am trying to do is to impress upon my noble friend—and, I hope, through her upon her colleagues in Government—that unless they look with close attention at land policy their plans for the inner cities are likely to be very much longer drawn out than they need to be, and possibly very seriously frustrated. I repeat that I speak from experience of facing this problem in the inner city area of Cardiff. Very shortly we shall he telling the world about what we have been able to achieve in our first year of operation, and our land policy statements and rolling programmes will be published. The Town and Country Planning Association's report suggests that these are secret, but they are not secret: I trust that they will be published in the next few weeks. I am happy to say that we are working with housing associations on the sites to which I am referring, and that we are hoping either to keep people living in the centre or to bring them back to live in the centre. We are doing this because we are trying to hold a balance between other sites, from which we can make perhaps greater

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profits, and what we feel are the social needs of the inner city.
Finally, may I warmly support the noble Lord, Lord Redcliffe-Maud, and others who have suggested that we are uncertain, groping and still tentative about what the pattern of our future cities is really to be. Therefore, before we spend too much of the £100 million, and whatever further funds may be coming our way, it is urgent that greater attention should be given to this problem. The whole problem has arisen very suddenly and sharply. It has been before our eyes for all these years, of course; but, for bringing the problem right into the heart of domestic politics, we owe a debt not only to noble Lords who have spoken and to various organisations but also to my right honourable friend the Secretary of State for the Environment. My right honourable friend has seen the obvious, but it is the obvious about which nobody has spoken before in a purposeful way; so it behoves all of us in our various capacities to apply ourselves to solving the problem. I repeat, however, that we should seriously examine it with the utmost urgency.
8.9 p.m.
Lord NUGENT of GUILDFORD: My Lords, I should like to say a brief word of thanks, first to my noble friend on the Woolsack for making it possible for me to speak, and then to my noble friend Lord Sandford for promoting the debate. I have to declare an interest. For many years I have been chairman of the Standing Conference of all the planning authorities in the South-East region. Therefore I rub shoulders with the planners who today have been referred to with some doubt, I think. However, I can certainly assure noble Lords that they strive, and strive gallantly and most skilfully, in my opinion, to translate into action what they believe to be the wishes of their masters. Nevertheless, the fact is that all of us have rather confused minds, both at Government and at local government level, about just what we do want in this very complex field. May I put on record my tribute—I am speaking in particular of London—to the Greater London Council and the London boroughs for the immense efforts that they have made to grapple with this enormously difficult problem.
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I should like to congratulate my noble friend Lord Ashdown on his maiden speech, which was entirely in line with the remarks I want to make. If we are to achieve a recovery in these decaying inner city areas it is absolutely essential to get a mixture of local government effort and private enterprise. These areas must be made attractive to bring private investment back there, because only in that way shall we create the new jobs that are needed.
I was enormously interested, as always, in the remarks made by the noble Lord, Lord Soper. I agree with him, of course, about the artificiality of urban life—I am a countryman myself and a churchman—but it is in the very long term that this situation will be put right. In the short term I am quite certain that Government and local government must do something to help the residue population who have been referred to today: the very old, who are still there; the young unskilled and, in the present circumstances, unemployable. We must help them. They will need every help they can be given for the next 10, 20, 50—probably 100 years. So here is an immediate situation about which we must do something.
In looking at this picture, which is a sombre one, I think—and I believe most planners think—of the immense success that we have had in the past 30 years in the development of the new towns round London and in other parts of the country. Here we have been able to create really successful new developments: pleasant residential areas for new homes—some rented, some owned, but mostly rented; pleasant industrial estates which are prosperous, pleasant playgrounds. The whole delightful atmosphere is one where people are obviously happy and prosperous and employment is high. What is the lesson to be learned? It has been made attractive, and obviously the new town corporation is a very suitable instrument, and I shall return to that.
So, without going into the analysis which I should have liked to go into, I will shorten my speech and turn to some of the solutions and the action which I think the Government really should now take in order to make these inner city decaying areas attractive enough to get new investment coming in,

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new businesses starting and existing businesses beginning to expand, and to bring back skilled workers who will want to live there, buy their houses there and send their children to school there. Until we get that we shall never get the rest employed.
The first thing that sticks out a mile for London is that the Government really must abolish IDCs, ODPs and the LOB. These bodies have done a splendid job in the past but they are now completely superfluous. These are things which I am sure the Government could do immediately, with no loss to anybody. What we are trying to do is to reverse the flow, not to keep it going out. The second point on the planning level has been referred to by many speakers today; namely, that we need a more flexible approach.
There is a feature called the nonconforming user with which the noble Baroness, Lady Birk, will be familiar, which in all planning strategy we all wish to eliminate; that is, industry or business in the middle of residential areas. For very good reasons it has always been the purpose of planners to get rid of these, but in the inner city areas this has been done to a large extent and of course the result now is clearly disastrous. We want them to stay there; we want to bring them back. There may be a certain amount of inconvenience; they may be a bit noisy; they may even make some smells but, God bless my soul! they do provide the jobs. I am glad to see the noble Baroness, Lady Birk, nodding her head and I hope she will feel that in these special areas that particular strategy of planning, which is absolutely right generally, is wrong there. It should be relaxed; a much more flexible attitude should be taken to the non-comforming user, and indeed to the man or woman who is enterprising enough to start up a little business in the back yard. These things should be looked at flexibly, and the planning authority should be there to help rather than to restrict and to regulate. I was interested to see that the consultants recommend this, and I am sure it is right in this area—I would not say for everywhere.
On the question of land use and development, I very much agree with the remarks made by the noble Baroness, Lady White. There is no doubt that there are large,
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decaying, derelict areas where there is nothing happening at all, no development —and there is not going to be any because they are not worth anything to anybody. They are in the book, so to speak, at very high nominal values, which I feel absolutely certain are quite unrealistic and need somehow to be written down to existing use value. They are practically worthless.
I come here to a point which has already been made. I think the Government really must consider a new instrument for the administration of these areas. The new town corporation concept has been talked about today. It appeals to me very strongly because it has had a great success. It has somehow the right philosophy to get public authority and private enterprise working together, which is what we must get in these areas; and I should have thought it not impossible that some way could be found to transfer these areas into the possession of, perhaps, inner city corporations, which will take them over and make them available to developers who would develop them for industry. Part of them have to be developed for private housing in order to attract back the young skilled workers which we must get back if we are to get any employment going there. With that kind of machinery I should have thought we might be able to get the kind of development that we want.
The right reverend Prelate the Bishop of Southwark has now returned to the Chamber, and I should like to say that I agreed with almost every word he said. I do not always agree with him, but I do on this occasion. It interested me very much that he, from his point of view, saw this problem so much as I do, but from a completely different point of view. I am sure those are the lines we have to go on. Turning to his next point, education, it is obviously urgently necessary to get training facilities for school leavers, to give them a skill. There are plenty of vacancies for skilled workers but there are no vacancies for the unskilled workers. The schools must be improved. We shall never get skilled workers to come back from wherever they are, and to take houses in these areas, unless the schools are attractive enough for them to send their children to them. So here again a special effort must be made to make these areas more attractive.

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I entirely agreed with the noble Baroness, Lady White, on one point: here are these areas, doing nothing, fully serviced with roads, electricity, gas, water, sewerage—everything that can be wanted. Obviously, in terms of land conservation, it is so much wiser for us to use those areas for development rather than to take green fields from agriculture, which we cannot afford to do and which are immensely more expensive. I join with the noble Baroness, Lady White, in hoping that the noble Baroness, Lady Birk, will be able to sympathise and perhaps be receptive to the notion we are putting before her.
The only other point I should like to make concerns the question of creating new businesses. It really is the responsibility of Government to create conditions which will stimulate the creation of new businesses. With high taxation, high inflation and restricted prices, we have seen so many businesses going out of existence in the last three years; and yet this is the lifeblood of the country. New businesses and expanding businesses create wealth; they create jobs, and we all live on them at the end of the day. So I ask the Government, with all their preoccupations and with the many things they have to think about, to take on board that the creation of new businesses in these areas is essential. This is the fever spot of the nation; this is where new businesses must be created to give jobs and to restore an economic life to the community. This will make life better there immediately, and then perhaps all the other things that need to be done there can happen gradually afterwards.
8.20 p.m.
Lord SEEBOHM: My Lords, we must all be grateful to the noble Lord, Lord Sandford, for bringing this debate before the House. I think most of the things I wanted to say have been dealt with, so I will be short. The problem is now well recognised, and I hope that today's discussion will perhaps persuade the Government to give very careful thought indeed as to how this £100 million is going to be spent.
I want to talk first of all—because I do not think the question has been dealt with very thoroughly—about people. In recent years there has been a continuous
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movement of people both in and out of these inner areas. I am quite certain that many skilled workers have gone and unskilled workers have moved in, and this includes, of course, a great number of immigrants. There is also, I am afraid, still the attraction of the inner city to the flotsam and jetsam, the people who prefer the anonymity of inner cities and prefer the shady side of the street. These will always be a problem in large conurbations, and I do not know how we deal with that.
For some time now I have been involved in an organisation called, "Full Employ". This was started some years ago by a group of people from the City because of the need to find jobs for immigrants. We were not successful. It was an employment agency oriented towards immigrants, but I am afraid our results were most disappointing. So a year ago we stood the whole thing on its head. We decided that we ought to train people in the inner city areas and then see whether the jobs would come of themselves. So we started something called "Project Employ". We have run two 12-week courses, purely for under-educated and alienated young people, in order to try to show them what it is like to live in an office environment. The accommodation and the bulk of the training staff was provided by a bank, and generous help was given by the TSA. So far 50 students have come out of the first two courses. The third course is still going on. Forty per cent. immediately found jobs.
Not only were they adept at learning new skills, as we had suspected; the important thing was the change of attitude. Halfway through the first course we realised what we were doing. We were not just teaching them some skill; we were teaching them to work with a team, to work in an office with other people, and even to welcome the mild discipline. This was something which changed their attitudes completely. I believe that not only have we helped the students who have jobs, but those who do not yet have jobs have learned a great deal about attitudes, about the community, about what the world outside is, and so on.
The majority of the students were West Indians. All or almost all were unqualified, seldom possessing—and entirely irrelevant to us—qualifications of any

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kind, apart from a few low grade GCEs. All were poor, all had a history of unemployment and failure at school, many had domestic and social difficulties, and some actually had criminal records. The project has shown that concentration of care and attention on those who have had little or no chance at home or at school can produce the most astonishing results. More than the career prospects has been the complete turn round in attitudes, both to work and to the community in which they live.
The instructors in this particular case were career people in the bank, not trained to teach, but people who had been used all their lives to bringing up people to learn in training, in service, and most of them in point of fact had been working overseas with coloured people, which made their job rather easier. This is not the time and place to examine this organisation in any detail, or to describe the cost, which is fairly heavy. The cost in this particular case, as most of the accommodation and everything else was donated, was very light. But supposing it was about £2,000 per head for a 12-week course, spread over 40 years of a life of fulfilment and decent living and so on, this sum is absolute "peanuts". If they had not had this opportunity, they were already drop-outs and they would have lived with all the misery that goes with that condition. So this is an experiment which I hope the TSA will continue to help. It is being evaluated in due course, and there will be a report which I hope people will be able to see. In the inner city areas, I think this kind of experiment is worth all the tea in China.
On the other side of the coin, of course, is the question of jobs. I should like to congratulate the noble Lord, Lord Ashdown, on what he said, in which I was very interested. I in my business have financed two developers. One works inside London and on the outskirts; he does nothing but take secondhand commercial properties and rehabilitate them, or take larger ones and divide them up into about 1,500 square foot size. He has absolutely no problem at all in letting them. People are coming back into them. He gets a viable proposition with a commercial return, sufficient to pay me my requirements as well. This has also been done by some boroughs. The classic
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example is at Woolwich, where a large factory moved out. The local authority, Mr. George Prince and his colleagues got it going again. There were 6,000 people unemployed, and already 5,000 are back working in that area. There have been other cases of local authorities converting and restoring small areas, and entrepreneurs appear from nowhere and little businesses start up. This is something that I think must be pressed ahead very hard.
Other speakers have talked about the planning authorities, and I think they must come down from the clouds. They must accept some businesses previously classified as undesirable or unpleasant; they must accept the fact that industry and living quarters are in the same area. One East Londoner I spoke to the other day said that everybody ought to be allowed to walk to work, and I think he had a point there. A fortnight ago I chaired a seminar on this subject in Southwark. It was greeted with considerable enthusiasm, and at the end it became perfectly clear to everybody there that what is needed now is for business, particularly large business, and the local authorities, to form a partnership in order to carry out major experiments; they should include the chambers of commerce, the Small Business Advisory Service and, of course, the voluntary organisations, such things as the Action Resource Centre and such things as Jumbo-Jobs. They must all be brought together.
Each local authority has entirely different problems. Some have no big business in them at all. Some have an entirely different ethnic problem. They should form their local advisory committees bringing in the voluntary bodies, bringing in the local businesses, and working out plans as quickly as they can. I have been invited to take a team of businessmen from that conference to meet the Borough of Southwark, which I am doing. I have had another invitation from Islington. I believe the thing is on the boil, and I think now is the time to strike. I know that it is perhaps a short-term outlook. I believe that the kind of plans put forward by the noble Lord, Lord Ashdown, may be absolutely first-class, but they will take time, and we have not got time. The problem is very urgent indeed, and I hope very much that if there is to be

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£100 million to spend it will be in supporting local initiatives. As the noble Baroness, Lady Robson, said, we should help people to help themselves, and they are ready to do it, given very little support. In my business, we say that a very little help makes a nearly commercial proposition commercial. I believe that this is a chance to do it.
8.28 p.m.
Viscount COLVILLE of CULROSS: My Lords, I hope the noble Baroness, Lady Birk, will have thought this debate as worth while as we sitting on these Benches have. She has not really a very difficult task in winding up this debate, because although the noble Baroness, Lady White, remarked that this matter was now at the forefront of domestic politics, it would certainly not appear to be a matter of Party politics. From all sides of the House there have been contributions made, some of them indeed slightly surprising contributions we might think, but nevertheless all telling the same tale, and coming from the inevitable wealth of expertise and expert knowledge of all types which your Lordships always produce on an occasion such as this. We have had two organisational suggestions from my noble friend Lord Sandford and from the noble Lord, Lord RedcliffeMaud, which may also assist in pursuit of a solution to this problem.
My Lords, it so happens that what I wanted to say, in so far as it is possible now to say anything fresh in this debate, approaches the matter from the side of private enterprise and the private citizen, as indeed did my noble friend Lord Ashdown in his maiden speech, on which I join with other noble Lords in congratulating him. However, I have also seen this kind of problem through the eyes of a local authority or a number of local authorities in different parts of the country. I recognise and welcome the "mixed economy" approach which has been explored in this debate. Indeed, the inner area studies recognise the need for a great mass of different agencies and types of people to take part in the solution of these problems. We shall look forward to the Government's White Paper on this matter, which is due to be published shortly. I daresay that the noble Baroness will be hampered a little in her speech
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tonight, in that she will be unable to tell us in advance what that White Paper will contain.
I want to examine two aspects: first, the way in which planning has had an impact upon inner city areas and, secondly, briefly, the role of the volunteers, which the noble Lord, Lord Allen of Abbeydale, has already mentioned in a fascinating speech. When I first met the world of town planning, about 15 or 17 years ago, there were in existence highly detailed development plans. A number of inner city areas contained things which are now long out of date; they were called comprehensive development areas. Then there were—and there still are—primary zones where residential, commercial or industrial development was to be encouraged and where, as my noble friend Lord Nugent of Guildford said, nonconforming users were to be most heartily discouraged.
In those days the planners and the local authorities, who were their masters and whom they were trying to serve, saw the opportunity to redesign and redraw the map of a town, and to recast its structure. Those grandiose approaches were not at that time prohibitively expensive; nor were the disadvantages and the dangers inherent in them nearly so clear as the glorious gains that appeared to be attendant upon them. Some areas have gone in for wholesale clearance of centres, and certainly these matters were widely planned. With them, of course, there went the actual or the threatened disappearance of the small shop-keepers and the small businesses, for the simple reason that, although there was a theoretical protection for them and the opportunity for them to be relocated—they were there because they were round the corner from the prime shopping area so their rents were low or, indeed, sometimes they had freeholds—there was no question of their being able to afford the high rents in the only relocation areas that the local authority could offer them.
The other aspect—the clamp-down on non-conforming users—had exactly the same effect. In particular, it had the result that when any non-conforming industry or commercial activity outgrew its building, it was never allowed to grow because that merely consolidated, in planning terms, the non-conforming use

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and made it, in theory, even more expensive in the end for the local authority to buy it out when it came round to it. Therefore, those businesses were stifled.
Time has greatly changed the situation. Comprehensive development areas disappeared towards the end of the last decade and, nowadays, as my noble friend Lord Sandys was anxious to point out, we are far more keen to see whether we cannot use to good effect most, or at any rate some, of the existing buildings that we already possess. We may have to find new uses for them, but we are much less anxious to pull them down and build afresh in some completely new organisation. That, indeed, is what the noble Lord, Lord Seebohm, has just told us. If we do that we would find that, after all, a perfectly good use can be devised for those old buildings.
It may be that the economic crisis and the lack of money in this field has come in the nick of time and has saved us from making many further mistakes which we would otherwise have made. I remember what was proposed for Covent Garden; indeed. I promoted the scheme for the Greater London Council. That was the first time that the voice of the disorganised action group has been heard at a planning inquiry, at any rate on a large scale. That group asked about the activities and the possibilities for which the existing buildings could be used. If one goes round Covent Garden today one sees many premises on offer; some are being converted and sonic have been sold.
The other feature that has been mentioned by my noble friends Lady Hornsby-Smith and Lord Hylton is the warehouse type of scheme. There are a number of these schemes, in addition to the ones which my noble friend saw in the paper. There are some in the diocese of the right reverend Prelate the Bishop of Southwark, which are being instigated by the local authority there. They are providing a very fine new use for old buildings, some of which are of historic and architectural value, and a place where craftsmen and other small enterprises may take root and start again. Therefore, there has been a fundamental change in our approach and one which certainly makes sense in the current financial climate and also from
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the point of view of social policy. I shall return to this matter in a moment.
I now deal with the question of volunteers. All of us who have spoken in this debate and thought about this problem must want to enliven and reinvigorate the dead and dying inner city areas. Plainly, local authorities have a prime role to play here. I was interested to hear my noble friend speak about their organisational problems. It is very true that the departmental and committee structure does not readily adapt itself to the coordinated approach that is needed. They tend to operate in watertight departments. Various local authority departments are involved—for instance, housing management. architects, planners, social workers, parks and, indeed, the refuse-collecting department, to name but a few. They should he working together and there is a need for some method of devising this.
It may be that the experiment in Liverpool has not been particularly successful, but other local authorities are experimenting with joint sub-committees reporting back to the main committees. Perhaps that is a more suitable method to fit in with the way in which local authorities operate, both politically and from the management point of view. However flexible and adroit they may become, no degree of support for voluntary service is likely to be unrewarding. In saying that. I do not mean that every project must he blindly backed, but volunteers can try things which officialdom cannot or dare not try, and they can drop projects very much more easily than local authorities if those projects fail, because they do not have to answer awkward questions in the council chamber or in the local Press.
Baroness LLEWELYN-DAVIES of HASTOE: Or in your Lordships' House.
Viscount COLVILLE of CULROSS: Or indeed, as the noble Baroness says, in your Lordships' House. I have seen at first hand what volunteers can do to prove in the most forlorn and dead-beat neighbourhoods that people are filled with far more ability and initiative than anyone would have dared to hope. I suggest that a partnership between the volunteers' enthusiasm and some modest, perhaps even temporary, sanction by the local authority—for instance, for its property to be used—could achieve a great deal for the spirit

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in a run-down and apathetic community. It is extremely hard for central or local bureaucracy by itself, or even councillors, to instil a spirit to survive into that kind of place; a will to rebuild a community and an area where once more it is worth living, and in which people will positively make a choice to go and find a house, or start some small job-creating enterprise. That is one of the ways in which the right reverend Prelate the Bishop of Southwark will get the start of a new social mix coming back into the areas about which he spoke.
A hundred factors and influences can be detected in this matter, but I want to draw out from those two matters, the planning and the volunteers, a single and perhaps over-simplified lesson. As society becomes more complicated, run by increasingly large and remote organisations, I believe people will perish if they are not allowed to retain some personal control over their lives, their way of life and their destiny. It was the noble Baroness, Lady Phillips, who reminded us of the physical size of the buildings and the environment in which some people have to live, and the daunting effect that has upon them.
I was thinking in terms of the nonconforming user, the small businessman compulsorily to be expropriated because his business happens to be in an area zoned for residential purposes and redeveloped under a local authority housing scheme. He is worried not only about the high rent that he will have to pay—of course he had a freehold previously—in the council owned flatted factory that, if he is lucky, he will be offered; he wants his freehold hack. He does not much like being in an industrial estate anyway. It is almost certain to be tucked away in what used to be the railway sidings. There is no pub to go to at lunchtime, and it is certainly not within walking distance for two-thirds of his workforce, as his old place used to be.
Some of them will go, but most of them, or at any rate a number of them, will feel that what is being offered is not satisfactory, is not part of the community at all, and that will be the end of that enterprise. It may be that it will be a specialist enterprise. I can remember one concern in a specialist trade, and people from the arts and museums all over the country came or wrote to the public
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inquiry to say that if this concern closed down it would be a national loss, yet the firm was going for precisely this nonconforming user reason in a compulsory purchase order. I regret to say that I do not know what happened, but it was a classic example of the sort of danger that can occur.
Then there is the problem created under the Housing Acts. There is now a choice in a local authority between redevelopment and rehabilitation if they make a clearance order to redevelop, or at any rate contemplate redeveloping a site which is subject to unfitness, or some of the houses are subject to unfitness. Of course, if all the houses are pulled down it is a statutory duty that all the owners and the tenants who currently live in them and all their families should be rehoused. But in practice that is not what the people who live there want. They really would like to stay in their existing houses, and moreover they cannot believe that the building upon which they have cherished their attention, which they have decorated, and to which they have done such repairs and maintenance as they are able, can be said to be unfit for human habitation. They have been living in it.
The truth of the matter is that although, technically speaking, a number of those houses after a few days of the builders' work will be put back into perfectly good order and will be just as good as many of the houses in which your Lordships and I have probably lived in our time, it is only a small technical failure to comply with the requirements of the Housing Acts which has enabled them to be classified by the medical officer of health.
Those are opportunities for a local authority to make a choice whereby it can make the best—and it is probably not going to be very much more expensive, if at all—of the existing fabric not only of the buildings, but also of the human society, of the people who live there; and increasingly this is being done. I would say, in parenthesis, that one of the troubles about this process is that the decision takes such an infernally long time that by the time it has been made half the houses are empty, or have squatters in, or have had to be wrecked in order to prevent the squatters going in. Therefore, if a little more speed could be instilled into the process it would be no bad thing.

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I am not saying that there should never be any relocation of industries which are in the wrong place, or any redevelopment of unfit housing areas, but I would say that we should not perhaps be too tidy. Too tidy a house is, at any rate in my humble opinion, not such a pleasure to live in; and perhaps the haphazard and rather more human type of a city may be more comfortable and reassuring for those humble citizens who have to live in it.
What I have to say about the individual's approach does not apply solely to the rights of property—and this is where I come to the lessons to be drawn from the volunteers; it also relates to people's ability to take some positive part in furthering their own wellbeing and so raising their morale, the very point that my noble friend Lord Hylton made. Here it is that volunteers can show how it can be done, and how to lead. On this, I am so glad to have heard the speech of the noble Lord, Lord Allen, because in the time that he has been at the National Council for Social Service it is quite clear to me that he has absorbed the true wisdom of the situation and is really giving your Lordships the best possible advice about how we should all proceed.
I remember going to Liverpool and seeing a few oft he things that the volunteers were doing there. It was a little while ago and I will not give too many examples. There was one area of quite ill-repute where the boys were not allowed to play between the tenement blocks because the footballs broke the windows. They said that they could not go to play in the park because the local authority would not allow people from that district to book the football pitches, and they had nothing to do. The local authority gave the volunteer organisation a pub which they had compulsorily acquired and would eventually pull down. This the boys had turned into their own club. They were decorating it and doing what they wished with it, and they had at last got something to do, and the opportunity for the first time in their adolescent lives to keep out of the trouble in which they had incessantly been before that. They were very proud of it. and one volunteer leader was doing it all.
There was the adventure playground where use had been made of a local authority cleared site, and also of the
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rafters and other building materials from the houses that had been pulled down round about. The parents in the street had turned this, with one volunteer leader, into an adventure playground where all the children could play in such safety as one can have in an adventure playground. At one stage the nearby tenement block had been planted by the parks department with shrubs and trees. They had lasted a very short time because the vandals had had at them. Then somebody thought of the idea that the tenants' organisation which had been created in the tenement block, should be allowed to choose their own shrubs and trees and to plant them, which they did. After that, so far as I know, the vandals left them alone because they were their trees and not any more the local authority's trees and shrubs.
There were a number of other examples of that sort which required a little assistance from the local authority—the building, the materials, the flat for the volunteer leader in the tenement block; but by comparison with the results, and by comparison with the uplift that it gave in those areas, remarkably small expenditure was required. That is the sort of participation that I believe we should be encouraging. It is not negative. I do not think that the noble Baroness, Lady Robson, suggested that it was. It is a positive force to be harnessed.
Although I entirely agree with those who have said that there should be public participation in the planning process when you decide what to do with an area—although it is often rather bewildered when it looks at the plethora of schemes between which the people are asked to choose in their somewhat untutored way—I believe that the public participation that we are really seeking is in harnessing the energies and activities of the people, which are latent even within these very depressed areas, to help them to help themselves to find their way out.
Lastly, I should like to say this. The noble Baroness and her colleagues in the Government are about to produce the White Paper on what the Government are going to do, not only with the extra £100 million, but presumably, with all the other money from the other different schemes which are already available to them. I imagine that she is collecting ideas in the course of this debate, and it

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may well be that, as has been forecast, the extra money will go to five individual places.
Would the noble Baroness consider, maybe running in parallel, one other possibility? It is that one or two places should be found on which all the available resources of Government from all the different Departments should be concentrated—from the Home Office, the Department of Education and Science, the Department of Health and Social Services, the Department of Employment, and there may be others as well—to see whether, if one concentrated all the different facets of aid in one or two places, it would really make a difference. In other words, would the concentration of all those things which we have thought to be so fine and forward-looking produce scintillating results? It might be that, even if that is rather eclectic and tends to starve the palliatives about which the noble Lord, Lord Allen of Abbeydale, talked in another context, perhaps we should then be able to see the value of these working together rather than as at present (and in the past, I regret to say) working individually between the efforts of different Departments.
I leave that for the noble Baroness to think about. It may be that policy is too far advanced to do anything about it. Of one point I am certain: today's debate has shown the Government that something must be done and, from the point of view of your Lordships' House, it is clear that if the Government come forward with sensible schemes they will have the wholehearted support of all noble Lords.
8.52 p.m.
The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Baroness Birk): My Lords, this has been not only a long debate but an extremely interesting one. However, it is not aseasy to reply to as the noble Viscount, Lord Colville of Culross, suggested because it has spread across such a wide area. I say with sincerity to the noble Lord, Lord Sandford, that I am grateful to him for initiating it, because although it seems that our debates result in my having to say, "I am not in a position to anticipate what my right honourable friend is going to say —and the noble
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Lord, Lord Allen of Abbeydale, was right about that; he is too old a hand not to know that I was about to say that—I can tell the House that my right honourable friend will be making a Statement on inner cities as soon as possible, he hopes before Easter.
It is important for me to say that, when I was speaking to my right honourable friend about this issue, he showed himself to be extremely interested and anxious to see what came out of our debate today. I do not always find all my right honourable friends wanting to read every word in our Hansard,but that has been my right honourable friend's reaction to this debate. Although on this occasion it would have been nice for me to be able to announce something positive and definite, because it has been such a useful debate and has covered such a wide field, it will be of tremendous use to the Government.
A great deal of argument has gone on throughout the debate—indeed, this argu ment has run through all the meetings that have taken place—about whether there should be a concentration of resources on a small number of towns or whether, so to speak, the financial butter should be spread rather more thinly over a larger area. I was interested to note the differences of opinion which were expressed in today's debate; for example, with the noble Lord, Lord Redcliffe-Maud, and the noble Lord, Lord Allen of Abbeydale, taking one view and other noble Lords expressing different attitudes. It is clear, therefore, that what my right honourable friend will announce will certainly not please everybody, and clearly this is a very difficult subject. The noble Viscount, who usually has something original and interesting up his sleeve, produced what I might call his Colville Plan, his pilot scheme, which was very interesting, although I will not go into that.
We are all aware that the inner city problems overlap and reinforce themselves and, while I may go over some of the ground, let me separate the basic components. We have heard a great deal—I do not want to go over all aspects of it—about the physical environment, and what came out clearly was not only the functional side of the matter but the fact that this is the visual image which the expression "inner city" creates; and when this

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is dismal and depressing, the effects go devastatingly deep and inevitably it conditions the outlook and expectations of those who are living in it. For many, it must be the mainspring of their will to leave the inner city as soon as possible. It is also a major deterrent to the advent both of people and economic investment which the inner areas need so badly.
It is on the economic decline of inner city areas that I wish to comment. This was raised by many noble Lords, including the noble Lord, Lord Ashdown, who made an extraordinarily good maiden speech in which he concentrated to a great extent on this side of the matter. In his September speech in Manchester, my right honourable friend the Secretary of State for the Environment, who at that time had just been given special responsibility for urban affairs, gave the economic aspect as the main priority. That gave the whole problem important political clout and, as my noble friend Lady White said, it brought the issue right into the heart of domestic politics.
The people living in these areas and who suffer from the results of the economic, physical and social decline are extraordinarily vulnerable and are made into very frail human beings in the whole aspect of their lives. I thought that the right reverend Prelate the Bishop of Birmingham, when he referred to the "never 'Will haves ", was identifying a very sad and, at the moment, hopeless group. The right reverend Prelate the Bishop of Southwark also rightly pointed to the devastating effects of poverty in these areas. Those with additional problems, like single parent families, find themselves in poor quality but accessible housing in the inner city and there we also find the casualties of our society; those with drink or drug problems, the homeless on the doss-house circuit and the squatters.
Of course, not everybody in the inner city fits into these dismal categories. But even for the majority, living in reasonably adequate housing and with jobs, there is a penalty in living in the inner city; it is what the Birmingham inner area study described so aptly as collective deprivation "which everyone suffers. Poor environment, lack of confidence in the area, a sense of decay and the decline in community spirit; it was
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that to which my noble friend Lady Gaitskell was referring when she highly praised the Birmingham study. On top of that is the stigma which attaches itself to particular localities and which reduces the chance of getting a job from an inner city school or a mortgage from an inner city address.
Then, many inner city inhabitants face an additional handicap: the colour of their skin. I am not suggesting that the problems of race and of the inner city are identical, but there is often a substantial overlap. Where ethnic minorities are concentrated, we know that they suffer these additional handicaps in terms of jobs and housing. Those are, briefly and broadly. the main components of inner city problems, but they are not present in similar proportions in all cities or even in all the inner parts of one city. However, I believe they are at their worst in the biggest cities, which beget the biggest problems. The housing problems of big cities, the scale of their employment problems which extend over wide areas, and the concentration of their social problems, all pose difficulties on a macro-scale. When the Government announce their plans on this matter, the great problem will be to decide where the need is greatest because what we know and what I can anticipate is that it will be pointed out that resources are limited at the present time.
So there is no point in us thinking that everything that any of us would like done will be able to be done. In the physical environment, the reason why these problems come about is, I believe, the age of the housing stock. My noble friend Lord Llewelyn-Davies was of course absolutely right—he is such an expert on these problems—when he highlighted the 19th century aspect of the fabric of our cities today which we see especially in the cheap buildings which were put up in the late 19th century booms and which are corning to the end of their natural life.
The way that redevelopment has been carried out is certainly not very pretty. It has split up communities and effaced familiar landmarks which gave neighbourhoods their identity. Massive road schemes, to which the noble Baroness, Lady Robson, referred, have created blighted swathes right through many inner areas.

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The roots of the economic problems go very deep. In the bigger cities, the movement of people out of inner areas and the decline of jobs have been going on for a long time, but it has not been a balanced movement. A high proportion of the people leaving the inner city have been skilled, while the unskilled have stayed behind. The noble Baroness pointed this out, as did other noble Lords. Now, many of the unskilled jobs have disappeared as firms have moved out to better sites, or have frequently closed down altogether. The noble Baroness, Lady Hornsby-Smith, particularly emphasised this point. Other firms have been swept away by large-scale redevelopment, which was another example of insentitive public policy. The result of all this has been a growing imbalance between the labour demands of industry and the skills of the residents. This, coupled with a chronic lack of new investment is, I believe, at tire heart of these inner city employment problems.
I should like for a moment to turn to the new towns, because there is a link here. Again, my right honourable friend is hoping to make a Statement as soon as possible, though this, too, I cannot anticipate. Here, we have to keep a proper perspective in talking about the relationship between the development of the new towns since the war and the problems of the inner cities. I was very glad that my noble friend Lord LlewelynDavies stressed this point and took this view, as did my noble friend Lord Ritchie-Calder. Most of the migration out of the inner cities has been voluntary and the new towns have taken only some 10 per cent. of that migration. At the same time, there is scope for them to take a broader cross-section of people—more of the elderly, the unemployed, the disadvantaged and the unskilled. That is what we are absolutely agreed on: the new towns may have been, if you like, creaming off the population rather than taking a cross-section. For the future, it is necessary to look at the balance of investment between the new towns and the cities which they were intended to relieve because circumstances change nationally and in each region. An example is the projection of the population. That is why my right honourable friend has been undertaking the review.
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Now, we can begin to use the lessons from the inner area studies and to get a comprehensive grip on the problem rather than following one study by another which, after a while, can become a contagious endemic Governmental disease. It is for that reason that we moved quickly on the consultation based on the summary report, and the response has been really worth while. Already, over 150 local authorities and other bodies have given their views. Of course, there is a great deal of variation, but on many points there is a striking consensus. For example, there is consensus on the need for local government to equip itself for the job rather than set up new outside agencies. Discussion has arisen here as to whether there should or should not be outside agencies. I believe that the work can be done in a way that would link with the local authorities.
A second point of consensus was the need to enlist the energy of voluntary bodies, the Churches and other groups and, above all, of the people living in the inner areas. All these points were made by the noble Lord, Lord Hylton, by my noble friend Lord Soper and by the noble Viscount, Lord Colville. However, the question still remains: How can we get to grips with the inner city problems? It is clear from what has been said—and my noble friend Lady Gaitskell stressed this—that it will be neither quick nor easy to improve the state of the inner cities. It is a long job reversing powerful and long-established destructive trends. It is true that inner areas need to change, but change must be on a human scale and must respect the need for both continuity and identity. If one snatches away what is there, even if it is something that some of the planners do not think quite right, one may not be doing anything good in human terms for the people who are living there.
The time has come to make a positive start on getting policies, both central and local, working in the right directions. This calls for a lasting commitment to tackle the gross inequalities between the inner city and outer areas, which is the only way in which we can create a sense of confidence in the people living there and in those who are willing to invest. It is this mutual confidence which is vital to the regeneration of the inner cities. What is needed now is effective action.

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That means harnessing the main policies and programmes of local government to the special needs of the inner city areas. Here, housing, planning, education, employment, transport and all the other services are involved. It also means employing these programmes in a different way from that in which they have been employed before, not only as providers of individual services but as contributors to an all-round improvement of the areas so that what is done in one programme fits and reinforces what is done in another.
In housing, this means placing greater emphasis on mobility so that people can move easily into or out of the inner city in order to take up a job. It also means a mix of private ownership and public sector housing. My right honourable friend has stressed this is his speeches, and it is really not true that it is not part of Government policy that there should be this mix or that there should not be an acceptance of private ownership. One has to have a mix.
It also means—and about this I feel passionately—the rehabilitation of housing wherever possible so that this housing can be added to the stock at a lower cost, hopefully, and also more quickly. I must admit that I am often very distressed to see the numbers of houses that are taken over sooner than they can be dealt with and which have to be boarded up and remain empty for long periods. Whether it be Conservative or Labour councils that are responsible, this is really bad housing management.
We come now to planning, on which the noble Lord, Lord Nugent of Guildford, and the noble Lord, Lord Sandford, and many others commented. Here it means finding temporary use for vacant sites to improve the environment. It means allocating good sites for industry where there is a chance of generating employment, and allocating sites for moderately priced private housing to attract skilled workers back to the inner city. So one wants a range for manufacturing industry, for small businesses, and for a mixed amount of housing. I thought that the noble Lord, Lord Seebohm, was extraordinarily interesting on the question of employment when he described his project "Full Employment". I think that he is absolutely right when he differentiates between what can be done fairly quickly
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in the short term and what has to be part of a much longer term process. Several noble Lords have stressed the importance of small businesses in the inner city and the need for collaboration between local authorities and industry. I absolutely agree with this, though it is a matter of preserving the big firms as well, as other noble Lords have pointed out, and without any doubt there will be a role for the private sector investment in the inner city. In fact my right honourable friend has mentioned this in his two major speeches on the subject.
I should like to turn for a moment to the importance of community facilities—which have also been frequently mentioned—in regenerating community life in the inner areas. The noble Lord, Lord Redcliffe-Maud, particularly emphasised this point, and I think that he will be glad to hear that the Government have already discussed with the Sports Council how they can help in the inner cities, and a specific sum of money is now set aside for grant-aid for sports facilities in deprived urban areas.
Of course, what all these programmes require is money. We all know that at present we cannot afford to increase the public expenditure total. The noble Lord, Lord Allen of Abbeydale, appreciated this, as does everybody else, and I should add that any extra expenditure for inner cities must be found elsewhere. I know that everybody was pleased that in the Chancellor's Budget Statement yesterday, £100 million was allocated for construction activities in the inner areas. The noble Lord, Lord Seebohm, is right and I can assure him that it will need very careful consideration as to how the money is spent so that the best result is obtained. Both my noble friends Lord Llewelyn-Davies and Lady White referred to land prices as an obstacle to fresh investment. This is a highly complex question and I do not think that now is the time to go into it, but it is certainly being considered as part of the inner city review.
Having made the point about money and resources, we should not regard this as only a money problem. It requires recognising the needs of the inner city. It requires often reallocation of resources and redirecting of priorities. This is why I have talked about the main programmes. But it also requires a funda-

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mental attitude change by local authority councillors and officers, and it involves them in finding new and more flexible working methods between central and local government.
The noble Lord, Lord Redcliffe-Maud, made the interesting suggestion that there should be a Royal Commission on cities. I should certainly like to think further about that and pass the idea on to my right honourable friend. I think that it must be the proliferation of committees and commissions which we have had over the past few years that makes me slightly allergic to the idea of them, so if I have time to think about them that might pass off. The noble Lord, Lord Sandford, supported by the noble Lord, Lord Redcliffe-Maud, raised the point about a Select Committee of this House. What rather worries me about this is that I have an awful feeling that we have a demolition order over our heads. However, this is a matter which should be considered. I believe that we should find some way of getting a monitoring system, but there again I share some of the reservations of the noble Lord, Lord Allen of Abbeydale, over the Royal Commission—
Baroness WHITE: My Lords, would my noble friend not agree that we might be rehabilitated?
Baroness BIRK: We might very well be restored or rehabilitated, my Lords. So far as central Government co-ordination is concerned—about which the noble Lord, Lord O'Hagan, questioned me—the distribution of Government responsibility is a matter for the Prime Minister, as I am sure the noble Lord knows. But I should emphasise that the Committee, under the chairmanship of the Secretary of State for the Environment, has brought together all the relevant Departments that are concerned in this whole question. This is the first essential step towards a corporate approach within Government, and it is the first time that it has been done. I think the noble Lord will appreciate that beyond that I cannot go. One of the examples of where there has been close co-operation and link-up is in the docklands area in East London, where the noble Lord, Lord Ashdown, suggested we might have the Olympic Games.
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This is an example of redevelopment which the Government have endorsed. The Government have endorsed their commitment to the redevelopment of the area; and the cohesion and sense of purpose shown by the local authorities working together in the joint committee, with close links with industry and my own Department, is very encouraging. One example is the local plan for Wapping, which is a good example of a local authority recognising and sustaining the identity of a particular locality. This has been approved by the Joint Docklands Committee, and we support it; but it is, of course, a matter for the local authority rather than Government.
The question of a new town type of corporation set-up for inner cities has been raised in its different aspects by different noble Lords. I think the point here is that if local authorities want to set up this type of organisation, or something similar to it, there is simply no reason why they should not set up any agency of this sort that they want which is working for them on specific tasks. But that, I think, is up to the local authorities. It must be up to them, and it could, indeed, be useful. But local authorities themselves will need to find new ways of working, especially to get closer to the local community so that they can tailor their service to the different needs of different neighbourhoods.
I believe that if local government can get closer to the communities, this will bear rich fruit. It will make it easier to tap the energy and enthusiasm which exists in the communities themselves, and the valuable variety of voluntary organisations and individual men and women—and their help is urgently needed. The inner area studies have shown how ready voluntary bodies are to take a share of the burden, whether it is finding work, patching up old houses for unemployed youngsters, as in Birmingham, or finding a bed for the single homeless, as in Liverpool. But I think we have to take as a warning that this has to be harnessed together with the professional work. I think it would not only cause an imbalance but we would not get the right results if this went too much on the volunteer side. I think volunteers must he harnessed into this section, but not running it; and I felt that the noble Viscount, Lord

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Colville, had tipped the balance perhaps a little too much.
But closeness makes it easier to take account of the priorities of local people themselves, and this is something on which everybody is in absolute agreement: that some way must be found whereby things are not done for people over their heads but in which they participate because they want to and they do not feel alien, they do not feel helpless and they do not feel so desperate about it. There has been a reaction against end-state planning in recent years, and a move to see planning as a continuous process; and there has also been this reaction against imposing objectives on local communities who may have different, and even surprising, priorities—but if they are their priorities then they should be able to work them out.
Surveys carried out for the inner area studies have in fact shown the concern of people about vandalism and crime in, for example, Lambeth, and the appearance of the area in Small Heath, Birmingham. These are their expressed priorities of which we must take account. The neighbourhood management schemes, sponsored by my Department, should help local authorities to get closer to the local communities' needs. Particularly do I hope that they will be a means of showing the local councillor how he can have a more effective role; and the elected neighbourhood council movement also has a valuable part to play by acting as a focus for local opinion and in enhancing the sense of community. This is what I would call the corporate approach at local level.
May I take my last example from a field of personal concern to me, which also serves to demonstrate, I think, the range of policies and programmes which have an interest here. This is the conservation dimension of inner cities. In several areas already the authorities have combined a Section 10 conservation grant with housing improvement grants to tackle run-down areas. The Canning Street area of Liverpool is an example. Sometimes a building no longer required for a previous purpose can be converted to another use, and I know that the noble Lord, Lord Sandys, is also very interested in this aspect of it. Here I think the Dutch have done some good work. I
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have seen some very successful conversions of this kind in Amsterdam. Sometimes conversion to community use is more appropriate and the building comes alive again and makes its contribution to the vitality of the area. I have seen warehouses in Southwark which have been converted to craftsmen's workshops, some by the local authority but others by a group, almost as a type of co-operative. Another example is the Bristol dock area, which I have been to and which is now used as an arts centre. That has built up its own vitality and attracts a great many young people, both to visit it and in order to work in it.
My Lords, we have had a very interesting debate. I am quite aware that I have not been able to reply directly to all the points, for which I hope noble Lords will forgive me. I shall certainly pass them all on to my right honourable friend, and they really will be, I think, of great interest, both now and in the future, because we are starting on both short-term and long-term aspects. On the longer-term aspects I was fascinated by the speech of my noble friend Lord Llewelyn-Davies, particularly in his reference to the new role for the production of ideas, rather than the other things we think of when we talk in terms of production. My Lords, I have tried to make it clear that we should not think of the inner city just as a collection of problems—and I think we have all agreed on that—but as living communities with severe problems, but also presenting opportunities to Government and to themselves to play a new role in urban society. That. I believe, is the challenge before us.
9.20 p.m.
Lord SANDFORD: My Lords, I am sure that all noble Lords would like me to thank the noble Baroness for making that very comprehensive response to our debate. She began by apologising that there was not anything that she could say, but she went on to say a great deal that was of great interest to us. I should like to thank all noble Lords who have taken part in the debate and to add my own congratulations to my noble friend Lord Ashdown.
My Lords, in framing my Motion I used the word "heart", the seat of our emotions and affections. This was to

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suggest that our debate should not be merely a technical and environmental one, but one which recognised the organic and personal character of cities; how they were, as one noble Lord said, once a cluster of villages; how we should cherish their untidy fabrics; and how we should revive the informal and local community care and initiative. I am very glad that so many speakers have responded in that way. But there has been a tragic theme running through the debate, sounding a note of disappointment, of disenchantment, not to say dismay, at the state of our cities. But speakers have also offered a wide range of remedies which the noble Baroness was gracious enough to acknowledge and which I hope her right honourable friend will find useful. There has been also a very positive wish to see the Secretary of State using these studies of the inner areas to good effect and devising new strategy for the regeneration of these areas and also, I think, a fervent hope that he will produce measures which all of us can support, as we earnestly wish to do. I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

AGRICULTURAL HOLDINGS (NOTICES TO QUIT) BILL [H.L.]
Returned from the Commons agreed to.
BRITISH AIRWAYS BOARD BILL [H.L.]
Returned from the Commons agreed to.
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