Sitting of 25 July 1978

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  LONDON TRANSPORT BILL
  Lords amendments agreed to.

  BRITISH RAILWAYS (SELBY) BILL
  Order for Third Reading read.
  To be read the Third time upon Wednesday 2nd August.

ORAL ANSWERS TO QUESTIONS
  DEFENCE

    Hydrographer to the Royal Navy
    Mr. Hooleyasked the Secretary of State for Defence what additional tasks are likely to fall upon the Hydrographer to the Royal Navy in the light of the discovery of oil west of the Shetlands.
    The Under-Secretary of State for Defence for the Royal Navy (Mr. A. E. P. Duffy): Reports about the discovery are still speculative; it is much too early to say whether any new requirements for hydrographic surveys would arise.
    Mr. Hooley: Does my hon. Friend agree that the work of the Hydrographer and his staff is of very high quality but that he lacks the full resources to carry out all the duties that are being thrust upon him? What were the findings of the hydrographic review body, will these findings be published, and when will that body meet again to look at all the needs in this field over the next 12 months or so?
    Mr. Duffy: I am much obliged to my hon. Friend for the compliment he pays the Hydrographer and his staff, which is fully merited. Some 30 per cent. of
    1340
    the waters around our coasts have been surveyed to full modern standards. In so far as there is a problem, it relates to civil requirements, and the problem of how to meet this additional requirement is currently being discussed by the other Departments involved. I cannot anticipate the outcome of that current study, but I should like to emphasise to the House that the problem under consideration is how to meet a civil requirement.
    Mr. Marten: What are the constitutional limits which we claim around Rockall?
    Mr. Duffy: That is another question.
    Mr. Dalyell: In the absence of representatives from the Scottish National Party for this important Question about Shetland, would the Ministry of Defence write me a letter spelling out what a separate Scottish hydrographer would involve in terms of cost and the skilled resources that are at present invested at Taunton?
    Mr. Duffy: Certainly.

    RAF Married Quarters (Heating)
    Mr. Beanasked the Secretary of State for Defence what action is being taken to provide alternative forms of domestic heating in Royal Air Force married quarters.
    The Under-Secretary of State for Defence for the Royal Air Force (Mr. James Wellbeloved): I am well aware that the cost of using certain types of central heating installed in Royal Air Force married quarters has given rise to some concern. For that reason, trials have been carried out at two RAF stations to assess the cost effectiveness of unblocking the chimneys of married quarters fitted with electric night storage central heating to see whether, by this means, the occupants can be provided with an alternative method of heating.
    The trials have now been completed and the resulting information is now being studied in conjunction with a report by the Property Services Agency. We shall complete our studies as quickly as possible and we shall, of course, take account of the new and welcome factor in the equation introduced by the announcement last week that off-peak electricity charges are to be reduced from October 1978.
    Mr. Bean: I thank my hon. Friend for that answer, but does he not agree that is is deplorable that Service men do not have a choice of heating in their married quarters? Will he take steps to see that in new construction various alternative forms of heating are available?
    Mr. Wellbeloved: I agree with my hon. Friend that, with hindsight, perhaps it was not the wisest of policies to have only one form of heating available in married quarters, and I shall certainly draw to the attention of the appropriate Minister and the Department my hon. Friend's suggestion in respect of new married quarters, which I think is an excellent idea.
    Sir T. Kitson: Will the Minister have a word with his right hon. Friend and point out to him that one of the greatest problems for many Service men living in married quarters is the cost of heating and that at Catterick, which is a pretty cold part of the United Kingdom, the problem of electricity heating is one that is creating great financial difficulties far many Service men?
    Mr. Wellbeloved: We are well aware of the situation. Apart from the trials to which I have already referred, we are carrying out an extensive programme of insulating properties to try to improve their thermal capacity and thereby contribute to stabilising, if not reducing, the cost of heating.
    Mr. Churchill: Is the Under-Secretary aware that last winter many Service families had to devote up to £10 per week to the cost of the electric heating installations that are provided for them? Will he now undertake that insulation will be provided by this winter for homes which are dependent on that mode of heating? That does not need any trial.
    Mr. Wellbeloved: We are proceeding at a great pace to complete our insulation programme. As I indicated earlier, with hindsight it was obviously not the right policy to make married quarters for Service men dependent on only one form of heating. I am sure the hon. Gentleman will agree that both Governments share responsibility for that lack of foresight.

    Expenditure
    Mr. Hugh Jenkinsasked the Secretary of State for Defence what savings
    1342
    would be achieved if his current defence expenditure was at the average level of European North Atlantic Treaty Organisation countries.
    The Secretary of State for Defence (Mr. Frederick Mulley): In 1977, the last full year for which information is available, the savings, had our expenditure been at the average level of the European NATO countries, would have been of the order of £1,800 million.
    Mr. Jenkins: Does my right hon. Friend appreciate that that is a huge saving which could be made? Will he suggest to his right hon. Friends in the Cabinet that that saving ought to be made—it is, in fact, Labour Party policy that it should be made—and that the money could be spent on social services and on improving generally the conditions of our people?
    Mr. Mulley: My hon. Friend is aware that at present, unhappily, the progress that we expected to make in arms control negotiations has not been achieved. While it is the Government's policy to reduce our share nearer to that of our European allies—we reduced it from 5·1 per cent. to 4·9 per cent. of GDP in 1977, and the estimate for this year is 4·75 per cent.—at the same time many of our European allies are increasing their expenditure, so the gap is being narrowed This exercise cannot be fulfilled in a short period.
    Sir Ian Gilmour: How much would it cost if we took our defence expenditure up to the proportion of gross national product spent by the Russians?
    Mr. Mulley: The proportion that we estimate is spent by the Soviet Union is based on a much lower gross national product per capita than in Western Europe. We estimate that that of the Soviet Union is between 11 per cent. and 12 per cent., whereas the NATO average is between 4 per cent. and 5 per cent.
    Mr. Flannery: Is my right hon. Friend aware that while the Tory Party was constantly putting pressure on the Government—who finally capitulated—to increase defence expenditure, hundreds of millions of pounds that were already available for spending in other areas remained unspent? Is it not a fact that there was an orgy of spending on things that could

    1343
    not be regarded as defence items merely in order to spend that money, while the Tory Party was demanding more and more for defence?
    Mr. Mulley: I think that my hon. Friend has, uncharacteristically, been prone to take too much notice of some newspaper reports. There was no orgy of spending. The simple fact is that a number of estimated expenditures were not realisable. Through no fault of my Department, equipment was not available in time and, as we have to work on both capital and revenue on a one-year basis, we brought forward some expenditure for this year to make room for the expenditure that we had not been able to make last year. I have in mind what I think perhaps caught my hon. Friend's eye, namely, the modest expenditure on vacuum cleaners and carpets. I make absolutely no excuse or apology for that expenditure, because we took the decision to put carpeting in other ranks' married quarters on the same scale as that in officers' quarters. That is why we bought the carpet and the vacuum cleaners. I am sure I carry my hon. Friend with me on that decision.
    Several Hon. Members rose—
    Mr. Speaker: Order. May I ask for briefer supplementary questions and answers?

    Royal Navy Pay and Records Unit
    Mr. Viggersasked the Secretary of State for Defence if he is satisfied with the operation of the pay and records unit of the Royal Navy.
    The Minister of State, Ministry of Defence (Dr. John Gilbert): Yes, Sir.
    Mr. Viggers: Is the Minister aware that the possible move of the Pay and Records Office to Glasgow, at vast expense, has caused some cynical observers to believe that the Government may be more interested in buying Scottish votes than in the efficiency of the Services? Will he refute this gross slur on his Department by explaining his intentions?
    Dr. Gilbert: I am glad that the hon. Gentleman is not one of the cynics. He is quite right. The reasons for the Government's dispersal programme relate to such considerations as the fact that the level of unemployment in the area that he
    1344
    represents, regrettably high as it is, is nowhere near as high as it is in Glasgow.
    Mr. Watkinson: Relating to the matter raised by the hon. Member for Gosport (Mr. Viggers), would my right hon. Friend accept that there is a base in my constituency—RAF innsworth—where there is great opposition to such a move? Can he undertake that there will be no announcement relating to the dispersal programme during the parliamentary recess?
    Dr. Gilbert: I know my hon. Friend's great interest in this matter and the vigorous way in which he protects the interests of his constituents. He had, I believe, an Adjournment debate which was answered by my hon. Friend the Under-Secretary of State for Defence for the Royal Air Force only a few days ago. I am very happy to give him the assurance for which he asks.

    Recruitment
    Mr. Kenneth Lewisasked the Secretary of State for Defence whether he will give the figures for recruitment to the Armed Forces in each of the first lour months for 1978 and the comparable figures for resignation or retirement.
    Mr. James Wellbeloved: Figures for Armed Forces recruitment in each of the first four months of this year were 4,530, 2,622, 2,239 and 2,367 respectively. Corresponding figures for total outflow from the Services were 4,098, 3,740, 4,329 and 4,528.
    These figures include officers and both Service men and Service women.
    Mr. Lewis: Is the Minister aware that, while the House and the country must be appreciative of the award made to Service men recently, it falls short of the award given to the police? Is he aware—I am sure he is—that the high degree of skills required in the Services makes it necessary that we retain people? The Minister's figures show that more are leaving than are actually being recruited. It is absolutely essential to retain high skills. Therefore, we have to pay for those skills. We must pay a pilot more than we pay a London busman, but we do not.
    Mr. Wellbeloved: It is not of any benefit, either to the police or to the Armed Forces, to compare the two wage

    1345
    awards. They are different, they are based on different calculations, they have different dates for implementation, and a whole host of other different factors applies. On the general question, the figures I have given for outflow include those leaving the forces for every conceivable reason, ranging from sickness to dismissal, from voluntary retirement to normal retirement.
    Mr. Madden: Does not the Minister admit that there is widespread concern about the disgracefully low pay of industrial civil servants, many of whom perform a vital role within the Armed Forces, especially as the basic rate for many is just £32·50 per week? Can he say what is being done to resolve the present dispute and when industrial civil servants will be given a square deal?
    Mr. Wellbeloved: The current dispute is being handled by the CSD, which is negotiating and dealing with the situation. With respect to the general point raised by my hon. Friend, provided that the Government continue to achieve their great success in bringing inflation under control and getting the country back on to a sound economic base, all those at present on low pay can look forward to a more prosperous future.
    Mr. Goodliew: Will the hon. Gentleman tell the House the percentage of officers who have passed the examination for entry and been accepted for places at the staff college but who have decided to opt out and are being replaced by reserves?
    Mr. Wellbeloved: If the hon. Gentleman will table a Question on the detailed aspect that he is raising, I shall be happy to give him an answer.
    Mr. Frank Allaun: Will the Minister heed the widespread resentment by parents and teachers at recruiting in certain schools by forces officers who present war in a glamorous light? Will he end this shameful practice, particularly as school leavers today are faced with the most effective recruiting agent of all—namely, unemployment?
    Mr. Wellbeloved: The first responsibility of any Government is to maintain peace, and to do that we need effective Armed Forces. I can tell my hon. Friend and the House that service in the British
    1346
    Armed Forces is an honourable and exciting career. In no way do I wish to prevent recruiting departments of the three forces from carrying out reasonable and legitimate information exercises in our schools, provided that they are kept within reasonable bounds and are approved by the Department.

    Recruiting Costs
    Mr. Gwilym Robertsasked the Secretary of State for Defence what are the latest figures available for the cost of recruiting soldiers, sailors and airmen.
    Mr. Wellbeloved: Recruitment to the Armed Services in the financial year 1977–78 accounted for approximately £26·16 million. During this period 38,237 men and women joined the Services, and on this basis the average cost per recruit was £684.
    Mr. Roberts: Does my hon. Friend accept that that figure is far too high? Does he agree that it is necessary to bring recruitment into line with industrial practice through the jobcentres? Does he also accept that it is vitally necessary to remove the intolerable class distinctions in every facility which operate in the forces and which act as a disincentive to recruitment?
    Mr. Wellbeloved: As regards average cost per recruit, I agree with my hon. Friend that this figure is too high. We are attempting to take measures to bring it down to a more reasonable level. In regard to jobcentres, we are considering this matter to see whether they can play a greater part. With regard to the last part of my hon. Friend's question and his claim that the Armed Forces are class-ridden, that may have been the case many years ago but I can assure my hon. Friend that more and more sons and daughters of working men and women are now joining the forces and obtaining commissions. I do not believe that we on the Government Benches do ourselves any good by trying to imply that the Armed Forces officer corps is exclusively the prerogative and privilege of the nonworking classes. Working-class lads are being awarded commissions.
    Mrs. Winifred Ewing: Does the Minister accept that the cost of recruiting might be reduced if those recruited were more fairly treated in their domestic

    1347
    arrangements? Will he state whether he is in regular contact with the forces wives' associations which have sprung up like mushrooms, based on discontent of a very real nature? Will he consider setting up a liaison committee? Does he accept that, although the main platform of discontent is pay, there are many practical matters that these associations can bring to the Ministry on an informative basis and, which he could do something about? Will he set up a liaison committee with the forces wives' association?
    Mr. Wellbeloved: I have received a number of representations from members of the forces wives' association, and later this week, in conjunction with some of my right hon. and hon. Friends, I hope to meet a number of the association's members.

    South Africa (Defence Minister)
    Mr. Brothertonasked the Secretary of State for Defence if he has any plans to meet the South African Defence Minister.
    Mr. Mulley: No, Sir.
    Mr. Brotherton: Bearing in mind that the Soviet Union is the principal enemy of this country and that this nation is very active both in Southern Africa and the Indian Ocean, does not the Secretary of State agree that it would be a good idea to have discussions with the South African Minister of Defence about the defence of the Cape route, thereby showing that he is at least aware that there is a problem in Southern Africa regarding the safety of this nation?
    Mr. Mulley: I do not think that that would be very helpful in the circumstances. It is a matter for the nations that use the Cape route to take appropriate steps to protect their shipping.
    Mr. Grocott: Will my right hon. Friend make some inquiries about the 40 deaths in detention of dissidents in South Africa in the past two years? Will he join me in condemning the hypocrisy of the press and the Opposition in this country who profess concern about dissidents who are being imprisoned in the Soviet Union but who make no protest whatsoever about dissidents who are murdered in South Africa?
    Mr. Mulley: I agree with my hon. Friend that there are disparities in the emphasis on the treatment of human rights as between one country and another. But making inquiries in foreign countries is a matter for my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs and not a matter for me.
    Rear-Admiral Morgan-Giles: Can the Secretary of State explain how the supply of maritime equipment and ships can have any possible bearing on the internal policies of the South African Government?
    Mr. Mulley: I do not think anyone would suggest that there was necessarily any connection. But there is a mandatory resolution of the United Nations on the provision of armaments and other matters to South Africa, and we honour that mandatory resolution.
    Mr. Lee: Will my right hon. Friend reconsider that answer and meet the South African Defence Minister in a reminiscent mood and ask him how much assistance he and his friends gave Hitler during the Second World War? Will he consider asking them to remove their guards from Robben Island so that we can get Nelson Mandela out of it?
    Mr. Mulley: I am not quite sure what my hon. Friend means when he makes a request for reminiscence about helping Hitler. I personally was responsible for a cerain amount of sabotage—I do not know how many building projects I helped not to come to fruition—and I spent five years in Germany. However, I do not believe that reminiscences are the best way to pursue diplomatic exchanges.

    Exercise Purple Oyster
    Mr. Woodallasked the Secretary of State for Defence if he is satisfied with the results of the recent Purple Oyster exercise; and if he will make a statement.
    Mr. Duffy: Exercise Purple Oyster 78 was held on an installation in the Claymore field at the end of last month. It was the latest in a series aof exercises designed to test arrangements for the protection of offshore oil and gas installations. Many procedures for dealing with a terrorist incident were practised, and I am satisfied with the progress made in

    1349
    training personnel who would be involved in a real incident.
    Mr. Woodall: I thank my hon. Friend for that interesting reply. In view of the massive build-up of submarines by certain nations, I wonder whether the exercise is designed to repel possible invaders coming from under the sea, as well as possible invaders coming by surface or by airborne methods? Can my hon. Friend say whether any of our civilian forces took part in the exercise—and, if so, which ones?
    Mr. Duffy: My hon. Friend will understand why I cannot disclose details, but I hope he will rest assured that current planning takes account of every possible threat. In this exercise, for example, it was assumed that terrorists had captured installations. Surveillance flights were made and reaction forces were deployed. I reply to the second part of my hon. Friend's question, the civilian who was deployed, notably, was the chief constable of the Grampian police force. Others included the flag officer for the area concerned, as well as various units of the Armed Services, including Her Majesty's ships, helicopters and aircraft of the Royal Air Force and units of the Royal Marines.
    Mr. Buck: Why was the exercise called Purple Oyster? As I represent the constituency of Colchester, I find that name rather intriguing. More seriously, can the Minister tell us about the role of the Royal Naval Reserve in the defence of oil installations? Many hon. Members on this side of the House think that the Royal Naval Reserve has a substantial part to play in the protection of oil rigs. Perhaps the Under-Secretary would say something on that matter.
    Mr. Duffy: Several exercises are held each year to rehearse the military arrangements for dealing with a terrorist incident on our offshore installations. These exercises bear a series of designations, of which Purple Oyster is only one. Others include Pink Mussel, Prawn Salad and Smoked Salmon. As to the second part of the hon. and learned Gentleman's question, the Royal Naval Reserve, here as elsewhere, plays an invaluable and an increasing part.
    Mr. Dalyell: What was the contribution of the chief constable of the Grampian police force to all that?
    Mr. Duffy: As my hon. Friend knows full well, our Armed Forces could not possibly deploy—nor would they wish to deploy—in an exercise such as this except in liaison with the civil power.

    Royal Air Force (Ground Attack Capability)
    Mr. Rhodes Jamesasked the Secretary of State for Defence whether he is satisfied with the ground attack—air-to-surface—capability of the Royal Air Force in support of ground forces, particularly in Europe; and if he intends to propose further developments in that capability.
    Dr. Gilbert: The RAF's capability for ground attack is judged adequate to cope with the current threat. As indicated in the statement on the Defence Estimates, a number of improvements are under consideration, including the introduction of Tornado GR1, increasing the capabilities of the Harriers and Jaguars and their weapons systems, and the eventual replacement of these latter aircraft with a new tactical combat aircraft.
    Mr. Rhodes James: I thank the Minister for that reply. Does he not agree that this capability is absolutely crucial, particularly in the European sector, and should have high priority?
    Dr. Gilbert: I entirely accept what the hon. Gentleman says.
    Mr. Kinnock: Is my right hon. Friend aware that we shall not have any oysters, purple or otherwise, or any air capability if we do not pay the people who support the Forces' efforts and properly maintain both aircraft and naval ships? They simply will not be there to provide that service. The capability will go to hell.
    Dr. Gilbert: I think that I accept my hon. Friend's proposition. I am not quite sure what relevance it has to the Royal Air Force which, unlike the Navy, tends not to rely on civil servants for most of its support.
    Mr. Pattie: Is the Minister aware that there is widespread concern in the country about the lack of depth of our air

    1351
    defences? Can he confirm that the Government are considering an off-the-shelf purchase from the United States, the reciprocity for which would be the provision of Rapier units to defend United States forces in Europe?
    Dr. Gilbert: There are certainly several proposals in an advanced stage of consideration for improving air defence arrangements for this country. I do not know of one that could be described in precisely the terms that the hon. Gentleman has put to me, but I shall be happy to write to him if he would like more details.
    Mr. Churchill: Since we have fewer than 90 aircraft, including all reserves, for the air defence of the United Kingdom, and as there are no air defence aircraft in the pipeline until Tornado ADV comes on stream in the latter part of the 1980s, what plans does the Minister have for enhancing our air defence capability in terms of fighter aircraft?
    Dr. Gilbert: If the hon. Gentleman had been listening to the answer, he would have heard me say that there would be a replacement of the Harriers and Jaguars with a new tactical combat aircraft. I think that the hon. Gentleman is confusing in his supplementary question, which relates to air defence, the Question on the Order Paper, which relates to air-to-surface capability in support of the ground forces.
    Mr. Heffer: On a point of order, Mr. Speaker. Is it usual for Opposition Members, or anybody else, to give the actual numbers and figures of aircraft, and so on? Is that not stepping over the lines of official secrets?
    Mr. Speaker: Order. Perhaps the hon. Gentleman will raise that matter after Questions.

    Instrument Landing Systems
    Mr. Tebbitasked the Secretary of State for Defence if he has yet authorised expenditure upon further instrument landing systems for Royal Air Force airfields.
    Dr. Gilbert: No decision has been taken yet on the procurement of further instrument landing systems for the Royal Air Force, but expenditure has been authorised on site surveys for such systems.
    Mr. Tebbit: In view of the size of the probable order and the experience of the Royal Air Force with the existing equipment, does not the Minister agree that before a contract is placed a proper specification should be drawn up on the basis of which companies should then submit their proposals? Does he agree that any new procurement on this scale should be on the basis of an open contest and not a single tender operation?
    Dr. Gilbert: I am obliged to the hon. Gentleman for that question. I am well aware of his interest in the matter, which he has always been good enough to disclose.
    Mr. Tebbit: On a point of order, Mr. Speaker. I have no financial interest in this matter, and I hope that I have never disclosed one.
    Dr. Gilbert: I did not say that. If the hon. Gentleman thought that I was imputing that, of course I withdraw my remark.
    The hon. Gentleman is right. There is a further requirement for many more sets than are at present in operation. As I understand it, the Royal Air Force is very happy with the sets that it has already. One must always consider—I refer now to the second part of the hon. Gentleman's question—whether there should be an open competition, should one be so satisfied with the equipment in service that one thinks that it would be wasting people's time to invite them to tender. However, I have no difficulty whatever in accepting the first part of the hon. Gentleman's question.

    Warship Construction
    Mr. Banksasked the Secretary of State for Defence if he will publish the number of warships currently under construction for the Royal Navy.
    Dr. Gilbert: There are currently 18 major warships of MCMV size and above under construction for the Royal Navy. In addition, two Island class ships and a number of smaller vessels are being built.
    Mr. Banks: Why is it that every time a Socialist Government leave office we have fewer warships than when they came in?
    Dr. Gilbert: The hon. Gentleman might ask himself why it is that every time a Socialist Government are in office

    1353
    the fire-power and general capability of the Royal Navy are higher than when they entered office.
    Mr. R. C. Mitchell: Will the Minister confirm that it is still the policy of the Ministry of Defence to have naval warships built primarily in the three specialist naval shipyards, which are Yarrow, Vickers and, in particular, Vosper Thornycroft?
    Dr. Gilbert: It is the policy of the Ministry to rely on those yards for "first of class" builds of warships. But, of course, as my hon. Friend will know, we place subsequent orders very widely at other shipbuilding yards throughout the country.
    Mr. Evelyn King: Does the Minister agree that the number of warships under construction is insufficient?
    Dr. Gilbert: All Services and all Defence Ministers want as much material as possible to be placed at their disposal. However, I am satisfied that the shipbuilding programme of this country gives the Royal Navy the capability it needs to meet our assigned share of the threat.

    Royal Military School of Music
    Mr. Jesselasked the Secretary of State for Defence if he will visit the Royal Military School of Music, Kneller Hall.
    The Under-Secretary of State for Defence for the Army (Mr. Robert C. Brown): I have no plans to visit Kneller Hall in the foreseeable future.
    Mr. Jessel: Is the hon. Gentleman aware that British military bands, trained at Kneller Hall, Twickenham, have a high standard of excellence and are the envy of the world? Is he aware that, incidentally, they help our national balance of payments by attracting visitors to the United Kingdom? Will he fight any small-minded element in the Left wing of his party which seeks to undermine the morale-boosting value of this fine British tradition?
    Mr. Brown: I am glad that the hon. Gentleman has the same high regard for British military bands as I have.

    Armed Forces (Overseas Allowance)
    Mr. Goodhartasked the Secretary of State for Defence what discussions he
    1354
    has had about the rate of local overseas allowance to be paid to the Armed Forces in Germany; and what changes in the rates will be made in the next year.
    Mr. Mulley: None. I refer the hon. Member to the answer I gave the hon. Member for Gosport (Mr. Viggers) on 30th June, in which I announced that there will be no change in existing rates of local overseas allowance before 1st April 1979 except where adjustments are made necessary by movements in exchange rates. Whether the allowance is changed thereafter will depend on decisions to be taken in the light of a review to be held in the early part of next year.
    Mr. Goodhart: Does the Secretary of State recall that exactly two months ago he told me that he hoped that a new system for assessing the levels of local overseas allowance would emerge? How far has he got with those discussions with the Treasury?
    Mr. Mulley: It is because there are difficulties in reaching a satisfactory alternative that we need more time. I think that the present system of extending the moratorium, at least until April of next year, and possibly beyond, until we are satisfied that we have a better arrangement is the best way of proceeding, because there is uncertainty in the Rhine Army and in the RAF in Germany. If possible, I want to allay that by making this statement now.
    Mr. Viggers: Will the Secretary of State explain why the foreign service allowance for civil servants, some of whom get London weighting for working in Gibraltar, has gone up by so much over the past two years while the local overseas allowance has remained the same?
    Mr. Mulley: The foreign service allowance is not, of course, my responsibility, but I understand that in Germany the local overseas allowance is in excess of the FSA.

    Royal Air Force Facilities (Use by the Media)
    Mr. R. C. Mitchellasked the Secretary of State for Defence what action is taken to recover the cost to public funds when the Royal Air Force provides transport and other facilities at the request of the press or other media.
    Mr. Wellbeloved: All requests from the press and other media for Royal Air Force transport and facilities are carefully considered. If the balance of advantage of the resulting publicity is assessed to be of benefit to the Service, no charge is made.
    Mr. Mitchell: Does that reply mean that on certain occasions we are subsidising the press in matters of transport? Can my hon. Friend tell us what other organisations can have a similar subsidy to that of the press?
    Mr. Wellbeloved: It means that where either we initiate or the press requests facilities or transport and where we believe that this will be of benefit in projecting the legitimate and worthwhile image of the Royal Air Force, we grant those facilities without charge. However, in view of my hon. Friend's comments I shall consider the point that he has made about subsidy, because it would be inequitable if one section of the community—namely, the press—were to receive a hidden subsidy of this nature. I shall institute a review of the situation.
    Mr. Hooson: Can the Minister tell us how many charges have been levied in the past two or three years?
    Mr. Wellbeloved: Very few have been levied. There have been 313 requests for facilities or transport. Most of them have been judged as being of value to the Royal Air Force.

    Territorial Army Volunteer Reserve
    Mr. Dudley Smithasked the Secretary of State for Defence whether he accepts the recommendation in the report of the Advisory Committee on the Territorial Army Volunteer Reserve that the Service should revert to the old name of Territorial Army; and if he will make a statement.
    Mr. Robert C. Brown: A number of recommendations affecting the TAVR are under consideration following receipt of the Shapland report on TAVR manpower wastage. As I informed the hon. Member for Weston-super-Mare (Mr. Wiggin) on 5th July—[Vol. 953, c. 218]—I shall announce the Government's decisions in due course.
    Mr. Smith: Does the Minister agree that it is imperative that we have a
    1356
    credible reserve force, and does he not think that there is great merit now in calling that reserve force the Territorial Army, thus trying to recapture some of the Service's fine old glory and efficiency?
    Mr. Brown: I agree most heartily with the introduction to the hon. Member's supplementary question. The old TA did a superb job, and I believe that the TAVR is doing a superb job now. The question of the name change, of course, is simply one of a number of recommendations. I think that the hon. Gentleman would agree with me that on a report of this nature—it is a highly complex report with a number of recommendations needing intense study—it would be wrong to single out one recommendation without giving the whole report the consideration it deserves.

    Iran (Arms Sales)
    Mr. Litterickasked the Secretary of State for Defence if he will now put an end to the sale of armaments by the British Government and British arms manufacturers to the Government of Iran.
    Dr. Gilbert: No, Sir.
    Mr. Litterick: Is the Minister aware that British-built tanks were used in Qum and Tabriz by the Iranian authorities to kill more than 600 peaceful demonstrators? Therefore, does he not agree that in the light of this knowledge we can assume that the end uses to which British armaments are being put in Iran do not satisfy his Department's criteria for the supply of armaments to countries overseas?
    Dr. Gilbert: As to the factual basis of my hon. Friend's question, I think that he is probably correct. The incident took place when the scale of violence became too great for normal civilian control. But, as my hon. Friend will appreciate—my right hon. Friend the Prime Minister spoke on this subject in the House on 16th May—it is a difficult process for a ruler such as the Shah, who has immense power, gradually to release that power and encourage more liberalisation without at the same time leaving himself open to a considerable degree of disorder.
    Mr. Viggers: I endorse the Minister's political comment, but may I ask him whether he would like to speculate on the

    1357
    amount of unemployment that would be caused in this country if we were now to cut off arms sales to Iran?
    Dr. Gilbert: I think it would be fair to say that ROF Leeds would have to close.
    Mr. Sever: Does my right hon. Friend accept that there is a considerable degree of feeling on the Government Benches that what appears to be a special relationship between this Government and the Government of Iran is not generally regarded as acceptable?
    Dr. Gilbert: I recognise the very strong feeling that my hon. Friend and many others of my hon. Friends have on this matter. It is a subject that has been discussed by my right hon. Friend the Foreign Secretary—for whom it is a departmental responsibility rather than for Defence Ministers—with the Iranians at very high levels. The Iranian Government are aware of our views on these humanitarian issues.

    Royal Fleet Auxiliary Vessels
    Mr. Loydenasked the Secretary of State for Defence how much money will be spent in each of the regions of the United Kingdom on repairs and refits to Royal Fleet Auxiliary vessels.
    Mr. Duffy: We expect to spend £12·5 million in the financial year 1978–79 on repairs and refits of Royal Fleet auxiliaries. Contracts will be placed following competitive tenders, and it is therefore not possible to forecast expenditure by region.
    Mr. Loyden: Is my hon. Friend aware that the closure of the Western Ship-repairers yard on Merseyside, adding to the already high level of unemployment in that area, could in our opinion well have been avoided had work been fairly distributed among the yards of the United Kingdom? May I ask my hon. Friend whether, even at this late stage, anything can be done to get work to that yard?
    Mr. Duffy: My hon. Friend will recall that I received a deputation led by him about this matter. Moreover, I paid two visits to Merseyside for the specific purpose of discussing this problem with him and his colleagues there. I pointed out then the need for defence funds to be employed in the most economic way and
    1358
    I mentioned the Ministry of Defence's financial accountability to Parliament. But I will do as my hon. Friend asks, and I shall be in touch with him.

    PRESIDENT BREZHNEV
    Q.1 Mr Whiteheadasked the Prime Minister what recent communications he has had with President Brezhnev.
    The Prime Minister (Mr. James Callaghan): I conveyed to President Brezhnev in late May through a distinguished Soviet visitor my views on detente, the need to maintain stable relations between East and West, and the factors in Soviet policies which make this more difficult.
    Mr. Whitehead: In continuing that correspondence, when my right hon. Friend next writes to President Brezhnev will he tell him that, although the vast majority of the British want detente and would like to work for it, we are not prepared to buy it by silence about the trials of human rights activists and trade union leaders, and that in consequence the Soviet Union can expect further ostracism along the lines of the ties, sporting and cultural, that have been broken within the past week or so if it does not change its ways?
    The Prime Minister: The Soviet Union understands very well from statements made by me, by the Foreign Secretary during discussions with Mr. Gromyko and by others the damage that is done to British-Soviet relations by its inhumane treatment of human rights campaigners. This is clear to the Soviet Union. At the same time, we wish the policy of detente, as expressed through a comprehensive test ban treaty and a strategic arms limitation treaty, to be continued and those agreements to be made as soon as possible, because they are in the interests of both sides.
    Mr. Stokes: When he next meets President Brezhnev, will the Prime Minister ask him to use his influence to have all the Cuban troops removed from the different countries of Africa?
    The Prime Minister: I shall certainly make that request, but I do not think that it will necessarily have all the influence that the hon. Gentleman thinks it

    1359
    will have. I have a feeling that the Soviet Union will take decisions on a different basis from that.
    Mr. Greville Janner: Is my right hon. Friend aware that there is a growing body of opinion in the country and in the House that if the present repressive measures continue in the Soviet Union it will be inappropriate for the Olympic Games to be held there in 1980?
    Hon. Members: Hear, hear.
    The Prime Minister: I understand that, and from the cheers in the Chamber it is clear that many hon. Members share that view. I do not think that it is for the Government to express a view on that; they are not directly concerned at this stage. It may be necessary later.
    Mr. Adley: What about the Springboks?
    The Prime Minister: I know that the cold war warriors are waiting to jump into action straight away, but it is not necessary for us to go into those details for the Olympic Games, which are three years away.

    PRIME MINISTER (ENGAGEMENTS)
    Mr. Welshasked the Prime Minister if he will list his official engagements for Tuesday 25th July.
    The Prime Minister: In addition to my duties in this House, I shall be holding meetings with ministerial colleagues and others.
    Mr. Welsh: Will the Prime Minister consider today the United Kingdom's record of economic failure in Scotland, given our continual massive unemployment and emigration rates? Is it any wonder that there has been this continuing woeful neglect of Scottish economic interests, given that the Prime Minister does not consider the Secretary of State for Scotland worthy or fit to hold a place on his senior Cabinet committee on economic policy?
    The Prime Minister: I do not know what the hon. Gentleman is referring to there. The Secretary of State for Scotland is involved in all decisions affecting the Scottish economy. The record on this is
    1360
    a good one, and, as the hon. Gentleman knows, when the Scottish National Party proposes that it should separate from the United Kingdom it is constantly and immediately rebuffed.
    Mr. Spriggs: Does not my right hon. Friend agree that many of those who have declared psychological warfare on the Soviet Union should give more attention to the millions of unemployed in this country?
    The Prime Minister: I do not know that the two things are necessarily related, but I hope that we shall pay attention to both.
    Mr. Jessel: As the Post Office has just announced profits of £1 million a day over the past year, achieved by monopoly price fixing, may I ask whether the Prime Minister is aware of the countrywide dissatisfaction with postal services, such as the second-class post, which is supposed to take two days but normally takes the best part of a week? What will the Government do about it?
    The Prime Minister: I was very happy to see that the Post Office had joined the gas industry, the nationalised electricity industry and British Airways in making a big profit. I know that it deprives the Opposition of a bone to chew on, but the plain truth is that we have introduced commercial considerations into the thinking on the boards of the nationalised industries in a way that the Opposition lamentably failed to do. These industries are now able to finance much of their own expansion instead of relying on the taxpayer. I am sorry that the Opposition are deprived of the argument, but we have put right what the Opposition failed to put right.
    Mr. Watkinson: Returning to the question of unemployment, does not my right hon. Friend agree that the prospects for economic growth next year are not particularly bright in the Western world? In those circumstances, is it not necessary to turn to structural measures? Will he consider putting a new impetus behind the scheme to encourage earlier retirement so that the youth can gel to work? [Interruption.]
    The Prime Minister: Opposition Members seem to forget that there is a scheme under which we can continue until we

    1361
    reach the age of 70 and, outside, get a larger pension. So they had better watch out. Apart from the frivolity, I agree with my hon. Friend that structural changes are taking place not only within the British economy but in the economies of the Western world.
    On the subject of early retirement, I hope that we, in conjunction with our partners in the European Community and on a wider basis, can move on this matter. It is important that we should try to move together, because we cannot allow our competitive costs to deteriorate by comparison with others.

    TUC
    Mr. Corbettasked the Prime Minister when he last met the TUC.
    The Prime Minister: I met members of the TUC general council on 18th July. Further meetings will be arranged as necessary.
    Mr. Corbett: Can the Prime Minister confirm that the Trades Union Congress still attaches vital importance to the social wage, which is an important supplement to people's take-home pay? Does he also agree that pretences of axing tax would mean gigantic cuts in public spending and growing public squalor in such important services as housing, health and education?
    The Prime Minister: The social wage, as it became known in 1974, is an important part of the total emoluments and rewards of every wage earner, and, indeed, of others in this country. For example, in the case of a married man with two children who is earning £75 a week, I find that the child benefit payment which will be increased in November, is equivalent to an increase of 6 per cent. on his real wages. This is very important. The TUC naturally attaches importance to this. I hope that at some time we shall hear—perhaps this afternoon—whether the Opposition intend to cut public expenditure, how they hope to avoid making charges for such matters as attendance by doctors, and for hospital and school services.
    Mr. Adley: Can the Prime Minister now confirm the demise of the Jack Jones route to a thriving economy—namely, the
    1362
    downgrading of skill, enterprise and effort? Will he take this opportunity to confirm that the Government accept that this is not the way to make the economy thrive and that this proposal, which was the "bible" of the TUC, is now as dead as the dock labour scheme?
    The Prime Minister: I can assure the hon. Gentleman that Mr. Jack Jones is quite capable of looking after himself against the hon. Gentleman. The views he ascribes to Mr. Jones are not for me to defend, and, as far as I know, they have never been held by him and are not likely to be.
    Mr. Pavitt: Will my right hon. Friend, when he next sees the TUC, rub home the question of the social wage and the disaster that could occur in terms of primary care if by any chance a barrier were to be put between the patient and the doctor's treatment? At the same time, will my right hon. Friend look at the problem that arises from the Oppositions demand that taxation be decreased, bearing in mind that in West Germany health charges are charged direct to companies as a separate form of taxation?
    The Prime Minister: It is my understanding that the TUC is fully aware of the difficulties in which the Opposition find themselves at present when they say that they will cut public expenditure but, at the same time, give no clue as to how they propose to meet the continuing expenditure, especially in relation to the increase in the number of pensions and to the increase in the cost of the Health Service, education and other services.
    Mr. Hannamasked the Prime Minister if he will list his official engagements for Tuesday 25th July.
    The Prime Minister: I refer the hon. Member to the reply which I gave earlier today to the hon. Member for South Angus (Mr. Welsh).
    Mr. Hannam: Will the Prime Minister take time today to answer one straightforward question? Does he believe that a Government who in four years have nearly trebled the level of unemployment, halved the standard of living of skilled workers and doubled the cost of living and in the past year have produced nearly 10 million days lost in industrial strikes

    1363
    should be given another chance of running this country?
    The Prime Minister: The answer to the last part of the supplementary question is so obviously "Yes" that it is hardly worth saying. As to the first part of the hon. Gentleman's supplementary question, he has a number of propositions wrong and he entirely neglects the fact that the oil price increases of 1973–74, which were fivefold, hit the Western economies, including our own, extremely badly. In this country we have been able to maintain the standard of life of the people over the whole period and, at the same time, protect the weak and those most in need.
    Mr. Kinnock: Will my right hon. Friend be able to see his noble Friend the Lord Privy Seal in order to instruct him to be more flexible and generous than he has been hitherto in his negotiations over wages and terms and conditions of employment of industrial civil servants, many of whom are earning absolute pittances and on whose services we cannot expect to depend much longer if we continue paying them as we do now?
    The Prime Minister: I note my hon. Friend's views, but I do not think that in the matter of wage negotiations it is right for me to enter into a discussion when the negotiations must take place between the trade unions and the Government. That is what we hope to do, and we are ready to receive the trade union leaders at any time.
    Sir Bernard Braine: Although the Prime Minister may not have found time in his busy day yet to have read the Health and Safety Commission's report on the terrifying and unacceptable level of hazards to which 33,000 of my constituents are exposed, will he be kind enough to read the report tomorrow and, when he has grasped the gravity of the position, instruct the Secretary of State for the Environment, who has, I understand, responsibility for co-ordinating action in this area, to make a statement in the House on the subject before the House rises?
    The Prime Minister: I am aware of the hon. Gentleman's anxiety and I have looked at, but not read, every page of, the report. The Secretary of State for the
    1364
    Environment is studying it urgently, and I shall convey to him the hon. Gentleman's request.
    Mr. Loyden: May I ask my right hon. Friend to reflect on the decision taken last night when the dock labour scheme was voted down by all the Tory parties on the Benches opposite? Will he give an assurance that, in the event of a Labour Government being returned, the scheme will be put on the statute book and that the nationalisation of the docks will follow?
    The Prime Minister: The Secretary of State for Employment for the time being will, of course, carry on the dock labour scheme under the 1967 regulations, which arose out of the 1946 Act. He will have discussions with both sides of industry to see how the damage that was done by the Opposition last night can be repaired, and in due course, when we have a majority in this House, we shall certainly make sure that a full decasualisation scheme goes through.

POLARIS SUBMARINES (INDUSTRIAL DISPUTE)
Mr. Banks Mr. Banks (by Private Notice) asked the Secretary of State for Defence if he will make a statement on the worsening situation arising from the blacklisting of three Polaris submarines.
The Secretary of State for Defence (Mr. Frederick Mulley): Yes, Sir.
Attempts to persuade the work force at the Royal Naval Armament Depot, Coulport, to resume normal working have not yet succeeded, although I naturally hope that an early settlement can be achieved. To ensure that our contribution to the alliance strategic deterrent is maintained, the Government must ensure that preparations for HMS "Revenge" to sail are completed very soon. We are therefore today informing the work force that naval and management personnel will complete the loading of HMS "Revenge", starting tomorrow, and that in the interests of safety the depot will be closed temporarily to all except certain specially authorised personnel from 26th July until the loading has been completed. As regards "Repulse" and "Renown", there is as yet no operational problem, although I

1365
shall of course keep the situation under review.
Mr. Banks: Whilst thanking the Secretary of State for that reply, may I ask him to recognise that this dispute has been going on for too long? Will he further recognise the significance of the fact that a small number of men have effectively prevented the deployment of our nuclear deterrent, on which the whole of our defence strategy and our national security rests? Will he further understand that we respect his position in bringing the Navy in to release these ships, and will he give an assurance that this situation will be prevented in future and that he will take every step necessary to ensure that the national security of this country is continued?
Mr. Mulley: As the hon. Member and the House know, this is part of a much wider industrial dispute affecting the pay of all industrial employees of the Civil Service. I hope very much, as my right hon. Friend the Prime Minister said a few moments ago, that through the proper trade union machinery we can find a solution to this problem. As regards the particular impact of the problem on essential defence operations, I give the House the assurance that we shall take all steps necessary to ensure that our operational efficiency is not in any way impeded. I give the further assurance that up until the moment, and up until the time when we expect this operation to be concluded, there will have been no operational penalty whatever. This is the way in which we shall proceed until, as I hope, the dispute is concluded.
Mr. Campbell: While recognising the problems of the defence commitments involved in the particular position announced this afternoon, may I ask my right hon. Friend whether the Government are looking closely at the problems involved in the overall wage claim of the industrial civil servants concerned, not just in my constituency but in other constituencies throughout the country?
Mr. Mulley: I assure my hon. Friend, in whose constituency this unfortunate dispute has arisen, that the Government are well aware of the very strong feelings of the men involved. As I said, it is a
1366
wider dispute than merely the Ministry of Defence. The lead, therefore, is with my right hon. Friend the Lord Privy Seal and the Civil Service Department. But I can assure my hon. Friend that the Government will do all that we can with the trade unions to see whether we can find a way of bringing the dispute to an early conclusion.
Mr. Hooson: Whilst we commend the action that the Secretary of State has authorised today, will he not agree that this dispute illustrates the great danger to this country of our defence effort being rendered nugatory by industrial action? Is there not a need for a national effort in this matter and possible negotiations with the TUC to see that this kind of thing does not happen—otherwise, in the Kremlin they would be laughing?
Mr. Mulley: I thank the hon. and learned Member for his concern, but I think that—unusually—his choice of language was inept. It has not been rendered nugatory. It has not happened. The Government have the means of taking the necessary steps, and we shall take all steps, to see that our military efficiency and our contribution to the alliance are not impaired.
Mr. Robin F. Cook: Since we have survived the last few weeks quite satisfactorily without three of the four nuclear submarines, does my hon. Friend believe that the history of those weeks would have been remarkably different if none of the four had been at sea? Does not this episode underline the futility of his country attempting to have a second generation of nuclear weapons, with all the other economic challenges that we have to face?
Mr. Mulley: I understand my hon. Friend's views about the deployment of the present Polaris force and whether we should have a successor to it. I am sure, however, that he would agree with me that this is not a decision to be taken as a by-product of an industrial dispute.
Several Hon. Members rose—
Mr. Speaker: Apart from the Front Bench, I shall call one more hon. Member on either side. It is a Private Notice Question.
Mr. Viggers: Why has such a large gap developed betwen the non-industrial civil servants and the industrial civil servants who work within the Department for which the Minister is responsible? Does the Minister think that an offer of £46 a week basic rate for a skilled man is sufficient?
Mr. Mulley: I cannot speak for all the industrials concerned, but the average earnings for a 40-hour week are greatly in excess of £46 a week. Nevertheless, I accept that there are problems because of the commitments and understandings given to the non-industrials which the industrials wish also to have considered. But such gross exaggeration as the hon. Gentleman has just indulged in does not help the matter.
Mr. Madden: Will my right hon. Friend acknowledge that until today the Tory Opposition have shown remarkably little interest in the low pay of industrial civil servants? Will he not also acknowledge that those workers themselves have shown remarkable patience over their low pay for many years? Can he tell the House what active steps are being taken to resolve this dispute and to give the lowest-paid section of public employees a square deal?
Mr. Mulley: It is not my immediate responsibility. Naturally, however, since we employ the greatest number of industrial civil servants, my Department is extremely concerned. Every effort is being made to bring about the kind of negotiations which may lead to a settlement. whether the Opposition show interest in the matter is of no great concern to me. I want to do the right thing for my employees and for the country. This is not the first time that the Opposition have sought to exploit every possible difficulty, if they think that there is any advantage in it.
Sir Ian Gilmour: We on this side of the House warmly welcome the decision which the right hon. Gentleman has announced this afternoon. We were also welcoming the general attitude he was displaying until his answer to the last question.
Will the right hon. Gentleman agree that in view of the enormous importance of these three submarines, whatever the merits of the pay claim may be, what the trade unions are seeking to do in relation to these submarines is a shameful abuse of industrial power? Will he bring home to the trade unions concerned that whatever the merits of the claim, what they are doing is utterly wrong?
Mr. Mulley: I would not, myself, use such provocative language. It is necessary for everyone to understand that the Government are determined to carry out our commitments to the alliance and that we shall not be sidetracked by industrial action, although we shall take every possible step to try to find a solution to the current industrial disputes.

POLARIS SUBMARINES (INDUSTRIAL DISPUTE)
  BILLS PRESENTED
    HOUSE OF LORDS (ABOLITION)
    Mr. Dennis Canavan presented a Bill to provide for the abolition of the House of Lords: And the same was read the First time; and ordered to be read a Second time tomorrow end to be printed [Bill 186].
    BUCCLEUCH ESTATES AND PIRELLI (NATIONALISATION)
    Mr. Dennis Canavan presented a Bill to take into public ownership Buccleuch Estates Ltd. and Pirelli General Cable Works Ltd.: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 185].

EMPLOYMENT PROTECTION (AMENDMENT) (NO. 2)
3.38 p.m.
Mr. Richard Page: I beg to move,
That leave be given to bring in a Bill to further amend the Employment Protection Act 1975.
The amendment would be to allow the extension of the initial 26-week period from starting employment to 52 weeks before the implementation of this Act. The reason behind the amendment is, bluntly, to remove any inhibition in this area which an employer may have over offering initial employment. I believe that everybody has sympathy with the aims and objects of the Employment Protection Act but surely this Act only has relevance if it aids and does not hinder the opportunity of employment. In certain narrow areas—I concede that they are narrow areas—questions are being raised that point to the conclusion that sections of the present Act are inhibiting employment.
The part of the economy that I have in mind which is most affected by such a section of the Act is that occupied by the small and medium business. In a recent survey of over 800 small firms in this sector, 85 per cent. of them felt that the short time scale of 26 weeks was a deterrent factor in the offering of employment.
With the number of unemployed at present at a staggering 1½ million, with several hundred thousand in artificial job creation schemes—I am not knocking the fact that there are artificial job creation schemes, but there is no substitute for the real thing—with the demanning that is taking place in nationalised industries and large companies, and with the forecast of more unemployment in the pipeline, although officially denied, all this shows that this Government have planted a terrible crop for us to harvest when we are in office after the next General Election.
The debate last night on unemployment exposed the failings and failures of the present Government. It is sad to reflect that since the Second World War some 33 years ago every time the Socialists have come to power they have succeeded in practically doubling unem-
1370
ployment. They are indeed true friends of the working men and women of this country! Surely it must now be realised that we have reached the end of the road in trying to solve our problems by heavy redistributive taxation.
At the end of a 13-year period we find that our productivity has gone up by only 25 per cent. yet our public expenditure has gone up by 33⅓ per cent. Surely we must now turn back to the idea of a free enterprise society which can produce far more wealth for the deprived members of our society, which in turn will give us better health, better education and better social services. To do so in this country we must promote and encourage the medium and small businesses, the self-employed, the entrepreneur and the professional man and woman—that is the only way in which we shall be able to give a better deal to the deprived members of our society.
Within the EEC, countries with populations comparable with our own, such as Germany and France, have small and medium businesses which contribute far more to their national incomes than ours at present. If we take Germany as an example for comparison—I accept the difficulties of comparing the small business sectors—it can be shown that Germany has approximately 1·6 million small businesses each employing between one and nine persons, giving employment to a total of 4·5 million people. Using comparable definitions and even allowing for the larger population of Germany, it can be shown that there are over 40 per cent. more small businesses in Germany than in Britain.
When we have encouraged this sector up to the levels achieved by the EEC we shall have won two major victories. The first will be an increase in prosperity to help the deprived sections of our society; the second will be the victory of decreasing unemployment. It needs the small business of this country to employ only one more person per firm and our unemployment would start to shrink dramatically. I think of the benefit of this to my own constituency which at present has 2,500 people out of work, 1,000 more than in the same period of 1973.
The productive hands of this sector are tied by a rope of many strands such as high personal taxation and vast increases

1371
in Government legislation, each and all of them calculated to restrain and discourage. This amendment to the Employment Protection Act will slacken one of those strands and help towards this country's future prosperity.
3.45 p.m.
Mr. George Rodgers Mr. George Rodgers (Chorley) rose—
Mr. Speaker: Does the hon. Member for Chorley (Mr. Rodgers) wish to oppose the Bill?
Mr. Rodgers: Yes, Mr. Speaker. The Bill that we have heard presented by the hon. Member for Workington (Mr. Page) seeks to encourage the absurd myth that the Employment Protection Act is obstructing the recruitment of labour to small and medium-size firms. This misconception is easily disproved.
However, the suggested amendment to the Act has a wider purpose. It is designed to give credence to the policy that the Tory Party has some special concern and even affection for small enterprises. In truth, when a choice has to be made between the claims of big business and small business, it is inevitable that the Tory Party will give its favours to the large organisations—the multinational and the supranational companies.
We have already witnessed the activities of the asset stripper whose function is to close down small competitors and to destroy jobs in the process, in order to eliminate competition and to maximise profits. As every hon. Member must be aware, the heaviest despair of the small business man is the imposition of value added tax—a device introduced by the previous Tory Administration in order to ease our passage into the Common Market.
Small retailers complain, too, that the giant wholesalers supply goods to chain stores, supermarkets and hypermarkets on more favourable terms than those that are available to the small shopkeeper, yet there is no evidence whatsoever that a Conservative Government would, in those circumstances, intervene on behalf of small businesses to protect their interest. Indeed, the Conservative Party has not advanced any coherent policy whatsoever on behalf of small enterprises. Any suggestion that Tory Members have an ex-
1372
clusive relationship—some special understanding—with small business men is, in my view, not only misleading but totally fraudulent.
I turn to the section of the Employment Protection Act which is the cause of so much artificial outrage from the Benches opposite. This legislation reflects the view held on this side of the Chamber that working people are not just economic resources to be shifted around at will but individuals who build up rights in their jobs and have a claim to minimum standards of treatment by their employers. It may be that the author of the Bill is not aware that in a number of European countries provision is already made in respect of employment protection that is far superior to that which has been brought into being through the Employment Protection Act.
Of course, we have the usual confusion within the Tory Party ranks about the merits of the Act. Certainly the right hon. Member for Lowestoft (Mr. Prior), who is the Tory spokesman on employment, has made it clear that he is not committed to any hasty changes in the employment protection legislation. Of course, he may never be in a position to influence a course of events. Obviously, many of his Back Benchers have different views, and it is almost a pity that we are unlikely to see at any stage which section of the Tory Party has been enabled to impose its will on the other.
The Employment Protection Act has created a rift right through the Conservative Party, because I see that that august body, the Conservative trade union organisation, is aghast at the notion that George Ward—of Grunwick fame—is now being seriously considered as a Tory Party parliamentary candidate. This is the man who refuses to allow his employees to join a trade union, and the Tory trade unionist body is not normally entitled to do anything but show its face on a television screen or appear at a Tory Party conference to establish the relationship between the Tory Party hierarchy and the working man. Even this body has declared that it will not tolerate having this person, who has breached the Employment Protection Act—[HON. MEMBERS: "Too long."]—imposed upon the Tory Party.

1373
A recent study by the Conservative Centre for Policy Studies, an entirely independent body, has shown that there is little evidence that employment legislation in general and the Employment Protection Act in particular are inhibiting industrial recovery or contributing to high levels of unemployment.—[HON. MEMBERS: "Speed it up."] Paradoxically, the aspect of current legislation that has made the most widespread impact on employers' practices was that concerning the unfair dismissal provisions—which date originally not from the Employment Protection Act but from the Industrial Relations Act, introduced by the Conservative Government in 1971.
It has been suggested that the unfair dismissal qualifying period should be extended from 26 to 52 weeks, but six months surely is sufficient for any employer to assess a new employee's contribution and potential. Surely this is especially true in a small firm. Furthermore, the possibility of a small firm facing a claim for unfair dismissal in any one
year is only one in a hundred and the possibility of that same firm having to pay compensation in any one year is less than one in a thousand.
As I indicated, the nonsense that has been spoken about the effect of employment opportunities can easily be dispelled. What I find unforgiveable is that Opposition Members are continually encouraging the myth—and in so doing are maliciously suggesting to small business men—that by engaging additional labour they will place their firms at risk. This myth has become self-perpetuating, and I trust that responsible Conservative Members will take steps to denounce this ill-conceived and damaging campaign against full employment.
Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and Nomination of Select Committees at Commencement of Public Business):—
The House divided: Ayes 184. Noes 203.

Division No. 309]

AYES

[3.52 p.m.

Aitken, Jonathan

Emery, Peter

Jessel, Toby

Amery,Rt Hon Julian

Eyre, Reginald

Johnson Smith, G (E Grinstead)

Atkins, Rt Hon H. (Spelthorne)

Farr, John

Jones, Arthur (Daventry)

Baker, Kenneth

Fell, Anthony

Jopling, Michael

Banks, Robert

Finsberg, Geoffrey

Joseph, Rt Hon Sir Keith

Beith, A. J.

Fisher, Sir Nigel

Kaberry, Sir Donald

Bell, Ronald

Fookes, Miss Janet

Kershaw, Anthony

Bennett, Sir Frederic (Torbay)

Forman, Nigel

Kimball, Marcus

Benyon, W.

Fowler, Norman (Sutton C'f'd)

King, Evelyn(South Dorset)

Berry, Hon Anthony

Fry, Peter

King, Tom (Bridgwater)

Biffen, John

Gardiner, George(Reigate)

Kitson, Sir Timothy

Biggs-Davison, John

Gardner, Edward(S Fylde)

Knight, Mrs. Jill

Blaker, Peter

Gilmour, Rt Hon Sir Ian (Chesham)

Lament, Norman

Boscawen, Hon Robert

Gilmour, Sir John(East Fife)

Langford-Holt, Sir John

Bottomley, Peter

Glyn, Dr Alan

Lawrence, Ivan

Bowden, A.(Brighton, Kemptown)

Goodhart, Philip

Lawson, Nigel

Braine, Sir Bernard

Goodhew, Victor

Le Marchant, Spencer

Brocklebank-Fowler, C.

Goodlad, Alastair

Lester, Jim (Beeston)

Brotherton, Michael

Gow, Ian (Eastbourne)

Lloyd, Ian

Bryan, Sir Paul

Gower, Sir Raymond (Barry)

Luce, Richard

Buck, Antony

Gray, Hamish

Macfarlane, Neil

Budgen, Nick

Grimond, Rt Hon J.

MacGregor, John

Bulmer, Esmond

Grist, Ian

MacKay, Andrew (Stechford)

Butler, Adam(Bosworth)

Grylls, Michael

Macmillan, Rt Hon M. (Farnham)

Carlisle, Mark

Hamilton, Archibald (Epsom & Ewell)

McNair-Wilson, P. (New Forest)

Chalker, Mrs Lynda

Hamilton, Michael(Salisbury)

Marten, Neil

Clarke, Kenneth(Rushcliffe)

Hannam, John

Mates, Michael

Clegg, Walter

Hastings, Stephen

Maude, Angus

Cockcroft, John

Hawkins, Paul

Maudling, Rt Hon Reginald

Cooke, Robert(Bristol W)

Keseltine, Michael

Mayhew, Patrick

Cope, John

Higgins, Terence L.

Meyer, Sir Anthony

Cormack, Patrick

Holland, Philip

Miller, Hal (Bromsgrove)

Costain, A.P.

Hooson, Emlyn

Mitchell, David (Basingstoke)

Critchley, Julian

Hordern, Peter

Molyneaux, James

Crouch, David

Howe, Rt Hon Sir Geoffrey

Monro, Hector

Davies, Rt Hon J.(Knutsford)

Howell, David(Guildford)

Morgan-Giles, Rear-Admiral

Dean, Paul(N Somerset)

Howell, Ralph (North Norfolk)

Morrison, Charles (Devizes)

Dodsworth, Geoffrey

Hunt, David (Wirral)

Neave, Airey

Douglas-Hamilton, Lord James

Hunt, John(Ravensbourne)

Nelson, Anthony

Drayson, Burnaby

Hurd, Douglas

Neubert, Michael

Durant, Tony

Hutchison, Michael Clark

Newton, Tony

Dykes, Hugh

James, David

Normanton, Tom

Eden, Rt Hon Sir John

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

Nott, John

Oppenheim, Mrs Sally

Rodgers, Sir John (Sevenoaks)

Stradling Thomas, J.

Page, John (Harrow West)

Ross, Stephen (Isle of Wight)

Tapsell, Peter

Page, Rt Hon R. Graham (Crosby)

Ross, William (Londonderry)

Taylor, R. (Croydon NW)

Page, Richard (Wokington)

Rost, Peter (SE Derbyshire)

Tebbit, Norman

Pardoe, John

Royle, Sir Anthony

Temple-Morris, Peter

Pattie, Geoffrey

St. John-Stevas, Norman

Thatcher, Rt Hon Margaret

Penhaligon, David

Scott-Hopkins, James

Thomas, Rt Hon P. (Hendon S)

Percival, Ian

Shaw, Giles (Pudsey)

Thorpe, Rt Hon Jeremy (N Devon)

Peyton, Rt Hon John

Shaw, Michael (Scarborough)

Townsend, Cyril D.

Price, David (Eastleigh)

Shelton, William (Streatham)

Viggers, Peter

Prior, Rt Hon James

Shersby, Michael

Walker, Rt Hon P. (Worcester)

Pym, Rt Hon Francis

St, T. H. H.

Walters, Dennis

Renton, Tim (Mid-Sussex)

Smith, Dudley (Warwick)

Warren, Kenneth

Rhodes James, R.

Speed, Keith

Whitelaw, Rt Hon William

Rhys Williams, Sir Brandon

Spence, John

Winterton, Nicholas

Ridley, Hon Nicholas

Spicer, Jim (W Dorset)

Young, Sir G. (Ealing, Acton)

Ridsdale, Julian

Sproat, Iain

Rifkind, Malcolm

Stanley, John

TELLERS FOR THE AYES:

Rippon, Rt Hon Geoffrey

Steel, Rt Hon David

Mr. Tim Smith and

Roberts, Michael (Cardiff NW)

Stokes, John

Mr. David Atkinson.

NOES

Allaun, Frank

Forrester, John

Millan, Rt Hon Bruce

Anderson, Donald

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

Miller, Dr M. S. (E Kilbride)

Archer, Rt Hon Peter

Garrett, W. E.(Wallsend)

Mitchell, Ausitn (Grimsby)

Ashley, Jack

George, Bruce

Mitchell, R. C. (Soton, Itchen)

Ashton, Joe

Gilbert, Rt Hon Dr John

Morris, Rt Hon Charles R.

Bagier, Gordon A. T.

Golding, John

Morton, George

Baln, Mrs Margaret

Gould, Bryan

Moyle, Rt Hon Roland

Earnett, Rt Hon Joel (Heywood)

Graham, Ted

Mulley, Rt Hon Frederick

Bates, Alf

Grant, John (Islington C)

Newens, Stanley

Bean, R. E.

Hamilton, W. W.(Central Fife)

Noble, Mike

Benn, Rt Hon Anthony Wedgwood

Hardy, Peter

Oakes, Gordon

Bennett, Andrew (Stockport N)

Hattersley,Rt Hon Roy

Ogden, Eric

Bidwell, Sydney

Havman, Mrs Helene

O'Halloran, Michael

Blenkinsop, Arthur

Healey, Rt Hon Denis

Orme, Rt Hon Stanley

Booth, Rt Hon Albert

Heffer, Eric S.

Ovenden, John

Bottomley, Rt Hon Arthur

Henderson, Douglas

Park, George

Bradley, Tom

Hooley, Frank

Parry, Robert

Bray,Dr Jeremy

Horam, John

Pavitt, Laurie

Brown, Robert C. (Newcastle W)

Hoyle, Doug(Nelson)

Pendry, Tom

Brown, Ronald(Hackney S)

Huckfield, Les

Prescott, John

Buchan, Norman

Hughes, Rt Hon C.(Anglesey)

Price, C. (Lewisham W)

Buchanan, Richard

Hughes, Roy(Newport)

Price, William (Rugby)

Campbell, Ian

Hunter, Adam

Radice, Giles

Canavan, Dennis

Jackson, Miss Margaret (Lincoln)

Rees, Rt Hon Merlyn (Leeds S)

Cant, R. B.

Janner, Greville

Richardson, Miss Jo

Carmichael, Neil

Jay, Rt Hon Douglas

Roberts, Albert (Normanton)

Cartwright, John

Jeger, Mrs Lena

Roberts, Gwilym (Cannock)

Castle, Rt Hon Barbara

Jenkins, Hugh (Putney)

Robertson, George (Hamilton)

Clemitson, Ivor

Johnson, James (Hull West)

Robinson, Geoffrey

Cocks, Rt Hon Michael (Bristol S)

Johnson, Walter (Derby S)

Rodgers, George (Chorley)

Concannon, Rt Hon John

Jones, Alec (Rhondda)

Rooker, J. W

Conlan, Bernard

Jones, Barry (East Flint)

Roper, John

Cook, Robin F. (Edin C)

Jones, Dan(Burnley)

Rowlands, Ted

Corbett, Robin

Kaufman, Rt Hon Gerald

Sandelson, Neville

Cowans, Harry

Kelley, Richard

Sedgemore, Brian

Craigen, Jim (Maryhill)

Kerr, Russell

Sever, John

Crowther, Stan(Rotherham)

Kilrov-Silk, Robert

Sheldon, Rt Hon Robert

Dalyell, Tam

Kinnock, Neil

Shore, Rt Hon Peter

Davidson, Arthur

Lambie, David

Silkin, Rt Hon S. C. (Dulwich)

Davies, Bryan (Enfield N)

Lamborn, Harry

Silverman, Julius

Davies, Ifor (Gower)

Lamond, James

Skinner, Dennis

Davis, Clinton(Hackney C)

Latham, Arthur (Paddington)

Smith, Cyril (Rochdale)

Dean, Joseph(Leeds West)

Lee, John

Smith, Rt Hon (N Lanarkshire)

de Freitas, Rt Hon Sir Geoffrey

Lestor, Miss Joan (Eton & Slough)

Spriggs, Leslie

Dempsey, James

Lewis, Arthur (Newham N)

Stallard, A. W.

Dewar, Donald

Lewis, Ron (Carlisle)

Stoddart, David

Doig, Peter

Litterick, Tom

Stott, Roger

Dormand, J. D.

Loyden, Eddie

Summerskill, Hon Dr Shirley

Douglas-Mann, Bruce

Luard, Evan

Taylor, Mrs Ann (Bolton W)

Duffy, A.E. P.

Mabon, Rt Hon Dr J. Dickson

Thomas, Ron (Bristol NW)

Dunwoody, Mrs Gwyneth

McCartney, Hugh

Thorne, Stan (Preston South)

Eadie, Alex

McDonald, Dr Oonagh

Tierney, Sydney

Edge, Geoff

McElhone, Frank

Tilley, John

Edwards, Robert(Wolv SE)

McKay, Allen (Penistone)

Tinn, James

English, Michael

MacKenzie, Rt Hon Gregor

Torney, Tom

Evans, John (Newton)

Maclennan, Robert

Tuck, Raphael

Ewing, Harry (Stirling)

McMillan, Tom (Glasgow C)

Varley, Rt Hon Eric G.

Ewing, Mrs Winifred(Moray)

Madden, Max

Wainwright, Edwin (Dearne V)

Faulds, Andrew

Mallalieu, J. P. W.

Walker, Terry (Kingswood)

Fitch, Alan(Wigan)

Marks, Kenneth

Watkins, David

Flannery, Martin

Marshall, Jim (Leicester S)

Watkinson, John

Fletcher, Ted(Darlington)

Mason, Rt Hon Roy

Watt, Hamish

Foot, Rt Hon Michael

Mikardo, Ian

Welsh, Andrew

1376

1377

White, Frank R. (Bury)

Williams, Rt Hon Alan (Swansea w)

Woof, Robert

White, James (Pollok)

Williams, Alan Lee (Hornch'ch)

Young, David (Bolton E)

Whitehead, Phillip

Williams, Sir Thomas (Warrington)

Whitlock, William

Willson, William (Coventry SE)

TELLERS FOR THE NOES:

Wigley, Dafydd

Wise, Mrs Audrey

Mr. John Ellis and

Willey, Rt Hon Frederick

Woodall, Alec

Mr. Bruce Grocott.

Question accordingly negatived.

DIVIDENDS BILL
Mr. Hordern: On a point of order, Mr. Deputy Speaker. The House is in some difficulty with regard to the Dividends Bill, which is the last motion on the Order Paper for today.
Yesterday, when the motion appeared, it was objected to—no doubt for very good reasons—by one of my hon. Friends. As I understand it, what should have happened was that the right hon. Gentleman the Leader of the House should have tabled the motion again today and made it exempted business in order that the House could reach a decision whether amendments could be tabled to the Bill.
We are now in the position of being unable to table any amendments or new clauses to the Bill. I know that many of my hon. Friends have a host of amendments which they would like to table. This means that after Second Reading, if the Government stick to their proposal to have a Committee stage immediately afterwards, the Government will be unable to consider in detail the amendments which my colleagues wish to place on the Order Paper.
In view of that fact, would you Mr. Deputy Speaker, consider making representations to the Leader of the House so that the House should be properly treated and so that there is a proper and substantial interval between the Second Reading and the Committee stage of this Bill?
Mr. Deputy Speaker (Mr. Oscar Murton): I am grateful to the hon. Gentleman for giving me notice of the point of order which he wished to raise.
The subject of Government proceedings and procedure is nothing to do with the Chair. On the other hand, should this motion be passed, the Chairman of Ways and Means will be prepared to consider any manuscript amendments which are tabled, but it would be helpful if the Chairman of Ways and Means could be given some prior notice so that there
1378
is an opportunity to consider them before they are tabled.
Mr. Ridley: Further to that point of order, Mr. Deputy Speaker. Can you tell us the means by which we are to give the Chairman of Ways and Means notice of such amendments? Are we to hand them to him? Can you tell us by which means other hon. Members will be circularised so that they, too—and, of course, the Government—will know what those amendments are? It would somewhat restrict the scope of debate if neither the Government nor the rest of the House knew what the amendments were. There must be some means whereby the amendments could be circulated for all to see.
Mr. Deputy Speaker: I must amplify what I said. The question arises if the motion is not passed. That, I think, is understood by the House. Manuscript amendments would be handled in the normal way.

REFLECTIONS ON THE ROYAL FAMILY
Mr. Litterick: On a point of order, Mr. Speaker. In a ruling yesterday you apparently laid down a definition for the benefit of the House relating to who is and who is not a member of the Royal Family. However, with respect, it would appear that that ruling was made by you without knowledge of a decision made by a previous monarch in 1917 defining quite precisely who is and who is not a member of the Royal Family.
For that reason I ask you, Mr. Speaker, to reconsider your ruling of yesterday, to have a look at the decision made by the late King George V, and perhaps also to reconsider my suggestion that a definitive list ought to be published by yourself for the purposes of the House.
Mr. Speaker: There is no need for me to reconsider the matter. I had already considered it during the interval between the hon. Gentleman's statement last week and his statement yesterday. My ruling stands.

THE ECONOMY
4.7 p.m.
The Prime Minister (Mr. James Callaghan): I beg to move.
That this House welcomes the substantial progress already made in combating inflation as described in the White Paper (Winning the Battle Against Inflation) and recognises that a further sustained national effort is required to keep inflation under control as a basis for a healthy and productive, expanding economy capable of providing full employment and rising living standards for the British people.
The motion is in three parts. The first part welcomes the substantial progress that has been made in reducing inflation. The second part recognises that a further effort will be required if inflation is to be contained during the coming 12 months. The third part says that the purpose of this effort is to provide a basis on which to build a productive economy—I emphasise the words "a productive economy"—to return to full employment and provide rising living standards.
Those are our objectives—a return to full employment and sustained economic growth. These objectives require continued and continuing improvement on our past performance in price and non-price competitiveness, in industrial performance and in investment.
We attack inflation because it creates unemployment, lowers the family living standards and reduces the sustainable rate of growth. Everyone at home and abroad recognises and acknowledges the healthy improvement that has been brought about by Britain's success in the battle against inflation.
It is a battle which has been fought by the British people, with their consent and help, and it has succeeded. Inflation is increasing, as the House knows, at half the rate it was when the Opposition left office and bequeathed to us an unsavoury inheritance. This was made worse by the fivefold increase in oil prices from which the western world—and the developing world, in particular—has not yet recovered.
Now our money is holding its value better at home and abroad than at any time in recent years. Since we held this debate a year ago, other factors have improved. The economy is beginning to grow. Gross domestic product increased by almost 1 per cent. in the first quarter
1380
of 1978. Industrial production in the three months to May was 1·3 per cent. higher than in the previous three months. Manufacturing production increased by the same amount. Consumer expenditure is rising. The volume of exports of goods increased by 8 per cent. in 1977 and imports increased by 1½ per cent. Private manufacturing investment increased by 13 per cent. in 1977 and, in spite of a dip earlier this year, all the surveys show —or suggest, certainly—that in 1978 investment will again show a substantial increase.
As the rate of inflation has fallen steadily month by month, living standards have recovered rapidly. People are better off now than they were a year ago. This has been brought about by a combination of wage increases, lower taxes and higher child benefits. We have given incentives and we shall continue to do so.
Let us take as an example a man who was earning £75 a week this time last year. With a 10 per cent. increase in wages and lower income taxes, his real take-home pay—not his notional pay—will have increased by £2·35 per week at last summer's prices—that is 4·6 per cent.—if the man is single, and by 5 per cent. if he is married with no children. If the man is married with two children under the age of 11, his net family income will also have benefited from the tax-free higher child benefits and he will have had a real increase of £3·19 a week—that is 5·4 per cent. in real living standards.
We have brought the supply of money under control with the growth of sterling M3 on track for the 8 per cent. to 12 per cent. target range set by the Chancellor in his Budget.
Sales of Government stock are going well and the Government's funding programme is well in hand. Our foreign exchange reserves stand at $16½ billion after repaying $2½ billion in foreign debt in the first half of this year.
As yesterday's debate showed, even unemployment is on a falling trend, although there is general acceptance that much more needs to be done.
In total, 1977·78 is witnessing the best recovery the country has made since the oil price increases set hack the western world's economies so dramatically.
In a world in which Britain is so heavily dependent on foreign trade, to

1381
some degree our own level of output and employment are a reflection of the world's levels of activity and trade. A total of 30 per cent. of Britain's gross national product is taken up by foreign trade.
However, I am bound to say to the House that the prospects are not altogether bright. We in Britain, having had some success in overcoming inflation, expect to grow faster than last year at 3 per cent. The Government therefore see it as our paramount duty to build on our success so far, to give a lead to contain the present rate of inflation, to temper it with help for the least-well-off and the needy, and to sustain our rate of growth. The success that we achieved in these matters last year gives me encouragement to believe that we can hope for continued co-operation in our efforts.
It is worth casting one's mind and, indeed, one's eye over what was said in the debate held a year ago this week. The Government were told that the improvements that I have just outlined would not take place. I was told that we were on the brink of a pay explosion, that we would not get inflation down into single figures, that if we did, we would not hold it there, that the policy had completely failed, and various pundits were solemnly prophesying the ignominious collapse, as they called it, of phase 3 with wage increases of 25 per cent. and 28 per cent. They were wrong. It did not happen because the people of this country willed that it should not happen.
Now the fainthearts are at it again. They are reinforced by those with a vested interest in failure. I therefore give way to the hon. Member for Cirencester and Tewkesbury (Mr. Ridley).
Mr. Nicholas Ridley: A year ago the Prime Minister also said that the people of this country wanted to return to free collective bargaining. He said "It cannot be gainsaid, so be it." Why did he gainsay it and why did it not be?
The Prime Minister: The definition of free collective bargaining is one that has occupied a great many theologians for a very long time. I shall come to this question in a moment. I am only relieved
1382
that the hon. Gentleman's thrust was no more deadly than that.
It is now being said that inflation is going back into double figures next year. The White Paper, "Winning the Battle Against Inflation", is the answer to those who say that. It points out that many elements enter into inflationary price increases. Some of them are outside our control, such as world commodity prices, international currency fluctuations and crop prices, but these elements may affect all our competitors in the same way. Where we can exercise some influence over our own destiny is over some of the costs of production of our goods and services. Pay is one such cost, and it is to this element that the White Paper is directed.
Before the White Paper was published, the Government held many discussions with members of the general council of the TUC and some with the CBI. These discussions have been valuable in helping us to formulate our views. I should like to express my formal thanks to the TUC, in particular, for the wisdom shown by the affiliated trade unions and their members who, although they did not accept the guidelines last year, nevertheless recognised that moderation in wage settlements would bring benefit while a runaway inflation would do undoubted harm.
To my knowledge, and from my conversations, trade union leaders have been reinforced in their view by the way events have progressed since last July. They are making it clear—they have made it clear to me and to my right hon. Friends—that they have no intention of returning to the inflationary spiral of 1973 to 1975.
The Government are grateful to both the TUC and the CBI for coming to meet us in order to hear the Government's views about the likely developments in the economy over the next 12 months. I think that it was important to make a beginning in this way. I should like to see it carried further. I believe that there should be an annual discussion. As long as we have such things as annual wage rounds, it is important that there should be a discussion between the Government and leaders of industry on both sides, whoever they may be, as to how the Government see the

1383
economy developing during the following 12 months.
Mr. Peter Hordern: I hope that the Prime Minister will also include the House of Commons in such discussions. As the right hon. Gentleman has said that he forecast an increase in growth of 3 per cent. for next year, will he tell the House what is his forecast for unemployment for this time next year?
The Prime Minister: Of course the House of Commons should be included in these discussions. As far as I know, there are a number of economic debates in which the House frequently expresses its view. As regard forecasts of unemployment, my answer is "No". I rely on what the late Iain Macleod said. He said that he did not believe in making such forecasts. I am happy to follow his example.
The TUC, in its conversations with us, said that it would prefer the Government not to put a figure on the general level of increase in earnings. It wanted us to publish our general views without putting a figure on earnings. We considered this very carefully of course, but the Government believe that they have a responsibility to indicate guidelines in the light of the view we take of the prospects for inflation. Our conclusion is that the guideline figure in the year from 1st August should not exceed 5 per cent. if we are to be reasonably certain of keeping the inflation rate within single figures.
The rate of inflation is the test. Keeping it down is the objective. I am concerned that because expectations have been so varied over recent years, when increases have been as much as 28 per cent. or 30 per cent., people sometimes get into the way of believing that an increase in wages of 10 per cent. is a wage freeze. I have even heard that expressed in this House by one of my hon. Friends who was attacking me for a wage freeze last year because wages were going up by 10 per cent.
We have to get back the sense of what the country can do in these matters. The test is not how many pounds one has in one's pocket, but how much they will buy. That is the test. When I looked at the survey published in the London evening newspapers earlier this week,
1384
showing how much a suit or a holiday would cost in some Continental countries, I was reinforced in my belief. It is true that the wages are higher. So are the prices. They are very much higher. I thought that there was general agreement between us on that.
We have measured our prospects against those of our major overseas competitors. We have measured the possible development in costs, possible commodity price developments and so on, and we believe that 5 per cent. is the figure that is most likely to maintain living standards and help employment at a time when we need all the orders from abroad that we can get and at a time when the level of world trade is flagging badly. There is no argument between the TUC and the Government about these objectives. The difference is on methods.
The Government recognise the special position of the lowest earners. Those with families have already been helped through the introduction of tax-free child benefits payable to the mother, which were raised last April to £2·30 per child per week, will be increased to £3 per child per week in November and will be increased to £4 per child per week next April. This helps all families but it is of particular benefit to the lower-paid families because they benefited much less from the tax allowances than the higher tax payers.
To help the lowest earners further, the Government are ready to see an exemption made to the 5 per cent. guidelines, where this can be negotiated, and up to certain levels. But we must ask all those concerned in negotiation to accept that any consequential improvement in the position of the lower paid cannot be made the basis for leap-frogging claims otherwise, ultimately no one will be better off.
The White Paper also makes provision for the continuation of self-financing productivity deals. Rather over 10 per cent. —that is an interesting figure—of workers in major groups negotiated such a deal during the current pay round. These deals by their nature do not increase unit costs and should reduce them as far as possible. They are closely monitored and the evidence is that, in general, they are genuinely self-financing.
I want to say a word about flexibility and differentials. The last 10 per cent. guidelines proved less flexible in practice

1385
than the policy we set out in the White Paper. The argument against using a figure—this is the TUC's argument, and I think that there is a lot in it, but it is not to be disposed of by sloganising—is that it is taken as a standard and, therefore, in many cases the 10 per cent, became an across-the-board entitlement, at the expense of flexibility and the restoration of differentials. Even so, there were a number of important group settlements—gas workers, ambulance men, insurance and banking staff to quote just a few—where flexibility has been used. The House will be interested to know that an analysis of settlements covering over 4 million workers shows that about one in five includes some adjustment of differentials and over half have included some element of pay restructuring. This year negotiators will have the chance to carry this further and adapt existing pay structures to changing needs.
I have heard it argued that the figure of 5 per cent. does not give room for flexibility. I doubt whether this is so when the percentage figure is translated into pounds sterling and calculated against weekly or monthly earnings. When that is done, in my view there is room—and I say this quite openly—for more flexibility than if it is referred to purely as a percentage matter.
I refer now to the use of the Government's discretionary powers to support pay policy and dividend control. We listened carefully to the representations of the CBI on the pay clauses in Government contracts. We came to the decision that they and the other discretionary powers must be continued, because the Government cannot give encouragement to blatant breaches of the guidelines by firms in receipt of Government industrial aids or Government contracts.
Pay clauses and discretionary powers have broadly been accepted by contractors, and Government contracting has been unaffected. The vast majority of firms observe the guidelines. In fact, the number of cases in which the Government took discretionary action in the past year has been infinitesimal compared with the large total of settlements which have been made within the guidelines. Nor have we any evidence that contract
1386
clauses have caused the difficulties that were foreseen. They operate as a deterrent and in no case yet have they had to be enforced.
The debate on Thursday will provide the opportunity for detailed discussion of the Dividends Bill. But the House should know that the Government have decided to introduce this Bill because in our view, it would be quite wrong when we are asking working people to exercise moderation on pay in the year ahead, to fail to do everything in our power to see that moderation is exercised with dividend payments.
I do not believe that the argument is conclusive that insurance policy holders or pension fund beneficiaries will be adversely affected by this measure. What affects them even more than dividend control is the erosion of the value of their savings by inflation, and they have as much to gain as any group by the success of the anti-inflation policies. After all, it was the Opposition who first introduced these statutory powers when they were in Government in 1973. Even the hon. Member for Cirencester and Tewkesbury overcame his reluctance and voted for them. If they genuinely want to see moderation in pay settlements in 1978 they should vote for the Dividends Bill when it comes before the House on Thursday. To do otherwise, against the background of their own history, will destroy any claim they have to be taken seriously on this subject.
Other important matters to which my right hon. Friend the Chancellor has referred in the White Paper, and which I wish to emphasise, are the need to respect existing annual settlement dates and the importance of the Price Commission's activities in maintaining an active programme of investigation into price rises.
I turn to the matter of hours of work. There is growing discussion in some trades unions, but not all, about negotiating a reduction in the working week. The White Paper makes it clear that such negotiations are acceptable—it is a general move that is taking place not only here but on the Continent—subject, of course, to the condition that the settlement as a whole does not lead to any increase in unit costs above what would have resulted from a straight guideline settlement on pay.

1387
On the question of unemployment, there seems at first sight to be a paradox that although there has been a serious increase in unemployment, the number of people in jobs has not fallen. Part of the explanation is that the total of people in work and seeking work has risen by 750,000 in the last four years.
There is a continuing trend for married women to seek work outside the home, and a recent survey showed that of all women betwen the ages of 35 and 59, two out of every three are at work. The number of people at work has remained fairly constant, but the number of people coming into the labour market, and therefore seeking work, has increased. There are now more young people coming into the labour force than there are older people leaving it. This is helping to add 170,000 a year extra to the labour force during the next few years. Nevertheless, it is our view—from factors that we can see, although we cannot put statistics to them—that unemployment is on a falling trend.
We intend to take all possible measures, as my right hon. Friend the Secretary of State for Employment said yesterday, to stimulate employment, especially for young people. By next April, every young person who has left school this Easter or summer should have a job, be in further education or training, or have the opportunity of work experience under the youth opportunities programme.
The third part of the motion recognises that keeping inflation under control is a basis for a productive and expanding economy.
Mr. Ralph Howell: Does the Prime Minister agree that we have a special unemployment problem because a large number of people are caught in the unemployment trap since they cannot afford to work due to our crazy taxation and welfare system? May I draw his attention to one of my constituents who has just been sacked by British Rail, who had £28 spending power when in work, who now has £33 spending power and who says that he cannot afford to take a job unless lie is offered £70 a week? What is the Prime Minister's answer to that?
The Prime Minister: I do not agree with the hon. Gentleman except in very few cases of very large families. Of
1388
course there are cases where, because of the level of child benefit, or through other circumstances—
Mr. Howell: My constituent has two children.
The Prime Minister: That may well be so, but I am thinking here of the exceptional case. As regards taxation and levels of remuneration, the hon. Gentleman had better ask his leader, who has said that nationalised industries such as the railways must live within a fixed budget. So the hon. Gentleman's constituent will get no help out of any negotiations there.
The way to help all low-incomes cases is through child benefit, through the family income supplement and by other such measures. What one cannot do—and hon. Members will be wrong-headed if they encourage it—is to believe that if one lifts those at the bottom one can lift up the whole panoply. One would then be away on a wage explosion again. We have to find other ways of dealing with the matter.
Now I come to the third part of the motion which relates to keeping inflation under control—let us see if we have any agreement on this—as a basis for a productive and expanding economy. We are working to achieve this through additional efficiency at home and by means of international co-operation with the other major western industrialised countries. I have already reported to the House on the work done at Bonn.
As regards Britain, the Government's main instrument here is the industrial strategy. This has encouraged the major sectors of industry to re-examine their own needs and prospects. Industrialists and trade unions together, in various parts of industry, have set targets for themselves for their market share in some 30 or more of the major sectors of British industry. Having set their targets for their market share objectives, they have examined the consequences of these for manpower capacity, training, energy, construction, transport, distribution, finance and technology.
This exercise has been done throughout all the major parts of British industry by the voluntary co-operation of employers and trade unionists. I get a little riled when I hear the Opposition

1389
sneer at the work that has been done. The findings and recommendations have now been sent to and are being studied by individual companies and workers. It is in the interests of all of us that they should be encouraged to make the necessary changes.
As a result of the sector working parties' recommendations, some of which have gone to member companies, others of which have come to the Government, the Government have taken measures over a whole range of proposals to improve the position of individual companies and of industries. The services of the Export Credits Guarantee Department have been improved precisely as a result of the recommendations.
In accordance with giving priority to the modernisation of our industrial base, some £270 million has been allocated to individual sectors of industry, such as machine tools, drop forgings, ferrous foundries and electronic components, for modernisation and re-equipment of industries that are at the very heart of our national economy. I recommend every hon. Member to read the very interesting article in The Guardian this morning on the re-equipment of the woollen industry and ask himself whether he does not think that this strategy has been justified. I hope that hon. Members have been made aware by company managements and trade unions of the value of the industrial strategy in these matters.
We intend to continue full support and to build up the National Enterprise Board. Its subsidiaries now provide jobs—[HON. MEMBERS: "Oh."] Hon. Members show how out of touch they are with real industrial efficiency. The NEB's subsidiaries now provide jobs for over 280,000 people. In 1977 it invested £200 million in 22 companies. Some of these investments are already showing results. Ferranti was a real success story both for the NEB and for Ferranti's management. This British company is now among the leaders in its challenging field. Rolls-Royce made a profit of £20 million in 1977 and is maintaining its position as one of the three best manufacturers of aero-engines in the world. Does anyone wish to challenge or to sneer at that?
In about 25 companies the National Enterprise Board has minority sharehold-
1390
ings which are helping to finance the expansion of these companies. A number of further investments are in progress and others are in prospect in the northern region and in the north-west region following the establishment of regional boards of the NEB. The investment strategy of the National Enterprise Board is fully compatible with the Government's industrial strategy. Whatever the Opposition's prejudices, the Board's work is increasingly valued by British industry.
This, then, is the basis for a productive and expanding economy. We must overcome both domestic and world inflation, work to get world trade increasing, improve the technical efficiency and productivity of our own industries and give incentives to those who work in industry. The Government have taken action in all these areas and will continue to do so, having relieved them of some £6½ billion of taxation since the April 1977 Budget.
We have a clear policy. As a consequence the rate of inflation is going down. Unemployment is moving down. Output is improving and living standards are going up. Taxes are going down and the weakest in society are being cared for. That is the policy that we ask the House to support.
I had hoped to have a serious discussion on these issues today, but this mornings edition of The Times stated that
"the Leader of the Opposition for the first time in her career speaking immediately after Mr. Callaghan"—
and that is not right anyway; it appears that
"The word in Conservative quarters last night was that she intends to seize this crucial opportunity to destroy both the Prime Minister's arguments and his credibility with the electorate. But Labour back benchers can be counted on to give her a rough time."
I hope that last part is not true. If we hear the right hon. Lady in silence we shall miss none of the full flow of eloquence. But if this is to be the test—I wonder which of the "Gang of Four" put that in—if this is the word from Conservative quarters last night, let us look at the alternatives and see what we are faced with.
We are told that the right hon. Lady has a distaste for making policy in the Shadow Cabinet. Looking at her colleagues, I can understand that and sympathise with her. But we are also told that

1391
this distaste for policy making leads her to make ill-prepared and sometimes indefensible remarks. I might also add that they are frequently contradictory.
For example, on 29th November 1976, she told us:
"I believe in a voluntary incomes policy".
Thirteen months later she changed her mind. She was then saying that the Government should not interfere with wage bargaining. Then that trusty old sheepdog was put up on 29th December to say that the pay—and I am sure he wants to hear his words—of public service workers should have a fixed relation to national industrial earnings, and that the Government should guarantee that. But six months later the right hon. Lady contradicted him. She told us that while there, should be free collective bargaining in the private sector, the nationalised industries in the public sector must live within fixed budgets.
How does one reconcile that? How can one, in a highly structured society such as ours, say that electricians employed in private industry shall have one rate and shall be able to obtain it by free collective bargaining, but that those employed in nationalised industries must be subject to fixed budgets and cash limits? The right hon. Lady is riding for a fall on that one.
The right hon. Member for Leeds, North-East (Sir K. Joseph) does not always contradict himself. He only contradicts in Opposition what he did in Government, but his view is consistent. He says that incomes policies are actively damaging. But that is not the right hon. Lady's view. It is not the view of the right hon. Member for Penrith and The Border (Mr. Whitelaw) who is sitting next to the right hon. Gentleman—no wonder the right hon. Member for Lowestoft (Mr. Prior) has absented himself this afternoon. The right hon. Member for Lowestoft walks about wringing his hands and prophesying, as he did a year ago, that there will be a wage explosion. He was wrong then and he is wrong now.
The truth is that the Opposition, led by the right hon. Lady with her distaste for policy making, is all over the shop on this issue of pay. There is no Opposition policy worthy of the name.
"Stiff in opinions, always in the wrong;
Was everything by starts, and nothing long;
But, in the course of one revolving moon,
1392
Was chemist, fiddler, statesman and buffoon."
Right hon. Members may pick their own roles in this particular pantomime. They may choose them as they please.
There is only one occasion when they speak in unison. That is when there is a pay grievance from which they hope to extract some party advantage.—[HON. MEMBERS: "Oh."] That is why the right hon. Lady, with the right hon. Members for Penrith and The Border and Leeds, North-East sitting beside her, put the trusty old sheepdog in to double the proposed pay settlement for the police. How he must have squirmed when he had to do it. But he did it. And he will go on doing it. But at least they are consistent. Find a grievance and exploit it, as the right hon. Member for Chesham and Amersham (Sir I. Gilmour) did with the Armed Forces pay, without regard at all to any consequences for pay policy.
One other major facet which distinguishes the three years of the right hon. Lady's leadership can be summed up thus, "Find a rolling bandwagon and jump on it as soon as you can". If there are trade disputes, let us have a referendum. If it is hanging, she is in favour. If it is a closed shop, she is against it, of course, but she will take no action by legislation. If it is immigration, we ate in danger of being swamped. On this last she has done great harm, because she has knowingly aroused the fears of thousands of coloured people living in this country and it will take them a long time to recover their composure. If it is devolution and the bandwagon is rolling one way, she is in favour of an Assembly—
Mr. David Crouch Mr. David Crouch (Canterbury) rose—
The Prime Minister: No, I am dealing with the right hon. Lady. The former leader of the Conservative Party, the right hon. Member for Sidcup (Mr. Heath), has at least been consistent on this. But when the bandwagon seems to be halting, the right hon. Lady is the first to jump off. She is not in favour of an Assembly now. And if we do not like either solution, we can choose what the right hon. Member for Cambridgeshire (Mr. Pym) puts forward and have a federal Britain.
What a way to run a party! The National Enterprise Board will be abolished. No, on second thoughts, perhaps

1393
they will not abolish it. They will merely cripple it. Public expenditure they propose to reduce except, of course, on all the items that they intend to increase. Where is the money to come from? We have had the answer—one clear, straight answer from the right hon. Lady on television. What she said was, "Let us abolish the Community Land Act"—and we shall save all of £39 million! The right hon. Lady is insulting the intelligence of the British people with her one-sentence solutions to deep-seated problems.
That is no way to conduct an Opposition, especially when they aspire to be a Government. If the right hon. Lady ever had responsibility she would find out that it is not so easy to get the Cubans out of Africa by refusing to sell a few ships to Poland. It is not so easy to change the attitude of the Soviet Union on human relations by refusing to sell them footwear from Norwich. These one-sentence solutions are an insult to the people of this country. Prejudice and dislike are no substitute for a foreign policy.
The simple truth is this: the right hon. Lady has led the Conservative Party for three years and under her leadership people still do not know what the Conservatives stand for. They still have no clear idea what their policies are on pay, on production, on immigration or on anything else. They do not know because she does not know. She has a distaste for policy-making.
The right hon. Lady's every speech is a rallying cry to prejudice. The Tory Party once aspired to lead one nation and to speak for one nation. Now the Tory Party, many of its members reluctant and sullen, has to listen to the language of division the whole time. That call to division will fall on deaf ears. The British people have come to know that they achieve most when they work together when they work in unison, in social justice and in fair play.
4.44 p.m.
Mrs. Margaret Thatcher: I beg to move, to leave out from "House" to the end of the Question, and to add instead thereof:
'condemns the economic policies of Her Majesty's Government which during the last four years have resulted in record unemploy-
1394
ment and stagnant living standards for the British people; deplores the continued use of blacklisting to enforce pay limits; and calls for the implementation of policies for economic recovery based upon realistic and responsible collective bargaining, cuts in personal taxation, and real rewards for hard work, skill and enterprise'.
I was rather surprised that the Prime Minister sat down when he did. I was waiting for him to develop an intellectual argument. Perhaps that was a little optimistic. He is long on words; what a pity it is that he has been so short on achievement.
He usually starts almost any speech with a reference to the "unsavoury inheritance". That was not what we were hearing at the last General Election. We heard nothing about an unsavoury inheritance then. Whatever the Government had inherited at that time, they had completely sorted out all the problems—or so they said. The Chancellor of the Exchequer—whatever he had inherited—said that the inflation rate was then 8·4 per cent. It can scarcely have been due to us that, after that, it went up to 27 per cent. His right hon. Friend said that there were no increases in the pipeline. Nevertheless, the rate of inflation rose to 27 per cent.—a record in the whole of our history. The former Prime Minister, the right hon. Member for Huyton (Sir H. Wilson), said that unemployment was beginning to fall and that the balance of payments showed a substantial improvement. We were in great difficulty a couple of years after that.
The Government claimed to have sorted out one policy after another at the last General Election. Anything that happened thereafter was due to their own policies. For the first time, food prices have doubled within a Government's period of office. That has happened during this Government's period of office. Unemployment has more than doubled. The standard of living is falling. As I listened to the Prime Minister, I felt that he did not care what happened so long as at the last General Election inflation was 8·4 per cent. and he could claim just about the same at the next.
The Government, after four and a half years of their own trials and other people's tribulations, have just about got us back to where they started in terms of output from our factories and the living standards of some who work in them.

1395
That is the very best that this Government can claim by way of progress after four years—and that takes little account of the tribulations which the people have suffered during these four years, the lowered living standards and the increased unemployment. Yes, perhaps there are more women out at work than there were. That is because they have had to go out to keep up a reasonable standard of living.
I turn to the White Paper. I noticed that the Prime Minister went very wide on subjects which, it seemed to me, did not touch on economic policy. That was his choice. I shall at least try to be relevant. I want to make it quite clear to the Prime Minister that any discussion or statement, in a White Paper, a debate or a forum, which leads to a greater understanding of the workings of the economy and of the continuing need for responsible and realistic collective bargaining in the light of all the circumstances is welcome.
Recently I had occasion to go through all the statements which have been made, since the employment White Paper of 1944, about the need for greater understanding of the matters which affect costs in industry, inflation and full employment. There is an astonishing similarity between the words which have been used at top level ever since the time of Lord Woolton's full employment White Paper which was followed by those of Sir Stafford Cripps, Mr. Harold Macmillan and the then Mr. George Brown and our own incomes policy statement.
There is no doubt—we all know it—of the need to try to contain the increase in wages within the increase in production. The more discussion that we can have, and the more that that is understood, the better. But I and my right hon. and hon. Friends cannot accept that the objective is best achieved by having an absolutely rigid limit of X per cent. applying regardless of the several and many different circumstances of industry and commerce, regardless of the conditions on the shop floor, regardless of the profitability of various concerns. I do not think that we shall get the increase in production and prosperity which is what we all want by that method.
I have four points to make about the White Paper. First, as far as I can understand it, it has two paradoxical features.
1396
The 5 per cent. figure seems more rigid by far than the 10 per cent. figure last year. It is quite true that in the debate last year we were told that the 10 per cent. figure was a national increase and that there would be very considerable variations—it was an average. This year the 5 per cent. figure seems to be absolutely rigid and to be the total increase for any group compared with the previous year. I believe that this will make this phase of the incomes policy even more rigid than last year and that it will be even more difficult to bargain for the many variations that occur within our industry.
As events happened last year, the l0 per cent. did not turn out to be 10 per cent. at all. Even though the Prime Minister tried to make it more rigid, it turned out to be 15 per cent., or nearly seven times the increase in output by the summer of this year. That is my first comment. There is much greater rigidity this year in the 5 per cent. than ever before, rigidly applying to each group of people who bargain. But the paradox is that in the rest of the White Paper we seem to have similar provisions, accommodating productivity deals as before—and perhaps "accommodating" is the word.
I remember that last year Frank Chapple, in referring to the power workers' productivity deal, ridiculed the idea that the productivity deal just concluded in the industry was within the Government's pay guidelines. The deal was based on sales of electricity and appliances, and the latter at least were falling. "I cannot see how you can get a productivity scheme out of that", said Mr. Chapple. Nevertheless, the Department of Trade managed to do so.
The point is that it is very difficult indeed to tell what kind of productivity scheme will be accepted. It depends very much on who does the negotiating and with whom in the Department it is done. And yet—and this takes me on to the second point on the White Paper—as a result of varied productivity deals, some of them very accommodating, sanctions are nevertheless to be applied and companies are to be subject to black lists, arbitrary action and pay clauses in Government contracts.
We cannot apply this kind of black list pay clause or sanctions unless we can

1397
be absolutely certain of their being consistent in their application. To do anything else is to introduce arbitrary law into our system, and that is the total negation of the liberty of the individual and everything for which we stand.
The right hon. Gentleman will know of the first company that a black list was applied to last year, although for a long time he denied that there was a black list. As late as New Year's Day of this year he said that it was a figment of the imagination. But it was no figment of the imagination for the companies which had the black list applied to them. It was first tried on an excellent company which exported 95 per cent. of its products overseas. The company, in Belfast, which employed 3,500 people, in fact paid its people lower wages than Short Brothers or Harland and Wolff to the tune of some £6 below what workers employed by the latter two firms were getting each week.
Therefore, the company decided—I should have thought that this would have been welcomed by those on the Labour Benches—to put up their pay. I understood that those on the Labour Benches were in favour of increasing the pay of lower paid workers. What did the company get for its trouble? It was put on a black list and finance to help it with its exports was stopped. Fortunately, the firm got the finance elsewhere. Whatever sort of policy was it that attempted to apply black listing provisions to a firm like that?
The truth is that we now have two kinds of law. First, there is legislation properly passed through Parliament and impartially administered. Then we have White Paper law or diktat which is arbitrary, secret and Socialist. It is passed by those who wish to control other people's lives but who have envisaged themselves only as controllers, not as the controlled.
It is interesting to consider what would have happened if, instead of an incomes White Paper phase 4, we had had "Competition in Aviation—Fourth Phase"? Would Freddie Laker ever have been able to win his battle for Skytrain or the consumer have benefited from his determination? Of course not. He was able to win that battle because that ruling was against law upheld properly in a court.
1398
One could determine what the conditions were and gain justice in one's favour from a court.
In this White Paper, which goes in for arbitrary black lists and arbitrary sanctions, it is not possible to tell against whom those sanctions will be applied, except at the whim of the Government when they decide whether they can take on a company, or whether they can apply sanctions against a big company or only against some of the smaller ones, which suffer from so much damage.
I have a third point on the White Paper. I have been through it word for word and I cannot find the word "differentials" occurring even once. Nevertheless, there is a continuing and serious problem resulting from telescoping differentials under successive pay policies. That now presents us with one of the real problems about increasing production. Everyone knows that even in the midst of unemployment there is a shortage of skilled labour and that shortage is stopping the creation of more genuine jobs which will create prosperity as well as work.
Indeed, we have asked several times in this House about the ICI case at Teesside where there is difficulty in finding suitably skilled artificers. Because ICI cannot find these men—because it cannot pay enough to attract them—it is not now proceeding with a £20 million investment in new plant. Yet the White Paper makes no reference to the very serious problem of differentials. It refers to flexibility. Nevertheless, all the flexibility that it permits seems to be within the 5 per cent. limit. That is precious little or no flexibility at all.
The White Paper refers also to anomalous cases in the public sector. But in most of those anomalous cases—the police, the firemen, university teachers and doctors—the pay is determined by outside bodies. What sort of provision is made in the private sector where special groups have done particularly badly? Many of those are among middle management. The White Paper says that any special arrangement must be cleared through the Department of Employment. But, once again, the approach is totally arbitrary. That is a feature of the new White Paper law under this Government; it is totally arbitrary and no one knows where he is with it.

1399
The fourth feature to which the Prime Minister referred—but briefly—was that of dividend controls, which will be debated on Thursday. I think that the future of the many people who are in insurance and pension schemes must he considered. For many, the main source of income comes from dividends from investments.
The Prime Minister knows that the Royal Commission on the distribution of income and wealth which reported in 1975 showed that the largest single group of beneficiaries from shares were the 14 million people saving through life assurance. The next group consisted of 11½ million members of occupational pension schemes. Furthermore, half of all recipients of dividends and interest had total incomes of less than £2,000 a year.
One would have thought that that kind of level of income would normally have been regarded by this Government as low and needing to be increased. If it was from earnings, it would be. For many of the people, that income is from hard-earned savings which have already borne the brunt of inflation. Does the Prime Minister really think it necessary to impose yet another round of dividend control?
I noticed that when the Chancellor of the Exchequer put it across he tended to imply that only wealthy people benefited from dividends. If wealthy people benefit much from dividends, they give most of what they get back to the Chancellor of the Exchequer pretty quickly at up to 98 per cent. rate of tax.
So much for the White Paper. The Prime Minister has set out certain objectives which the White Paper is designed to achieve. Time after time, he and previous Labour Governments have set out objectives on jobs, prices and growth. We could not disagree with the objectives because, of course, everyone wants increased prosperity, an increased standard of living, increased growth and falling inflation. We would agree with many of these objectives; but the truth is that the policies to put them into effect are just not forthcoming, and they never have been.
I agree that we must set this White Paper into the wider perspectives of our ambitions and objectives for the economy of the United Kingdom. I want
1400
to discuss briefly, therefore, three points on the economy.
First, if our objective is to have a prosperous, expanding economy, we must recognise that high public spending, as a proportion of gross national product, very quickly kills growth. We have noticed this during the period since the last war. If we examine public expenditure in that period as a proportion of the national income, we find that Conservative Governments tend to lower public expenditure as a proportion of national income. We have to remember that Governments have no money at all. Every penny they take is taken from the productive sector of the economy in order to transfer it to the unproductive part of it. That is one of the great causes of our problems, because this Government have increased the unproductive sector, and diminished the productive sector, so that during the lifetime of this Government we have had virtually no growth at all.
During the period known as the 13 years of Conservative Government, we kept down public expenditure. [HON. MEMBERS: "Wasted years."] Hon. Members call them wasted years. Let us see what was the average performance in those 13 years. Let us see how it compares with the performance under this Government. Growth was at an average of 3 per cent., because we kept down public expenditure. Inflation was at an average of 4 per cent. Unemployment was at an average of 2 per cent. How many people would like to have those figures back again? They would put this present Government to shame. The average regular increase in growth was 3 per cent.
This Government have never achieved anything like that. They have only had a reduction in growth, if I may put it in that way, a fall in manufacturing output, a fall in national income and a fall in standard of living, together with a rapid increase in unemployment. Even the Prime Minister would welcome it if he were ever able to get down inflation to 4 per cent. Yet during that time we were constantly being criticised for not having got growth up to a higher level.
It is interesting to look at the Labour Party manifesto for 1964. Labour's manifesto complained that companies were vying with each other for scarce labour. We were in a period when wealth was

1401
being created and when jobs were creating prosperity. There was a steadily rising standard of living. In fact, they were the 13 best years that we have ever known.
One of the great defects of high Government spending is that it leads to high borrowing, as the Chancellor knows, which leads to high interest rates, and that in turn leads to higher public spending. One of our great strictures on this Government concerns the amount of income that now has to go out each year purely on servicing the debt, purely on servicing the amount of money they have had to borrow for their policies over the past four years.
The total amount of debt held outside the public sector when we left office—the Prime Minister was talking about an inheritance—was some £3,000 million. One would have thought that that was sufficient. This year the estimate is some £8,000 million interest on borrowings alone. It is a rather serious thought that this year we are having to spend more on interest to finance borrowings than we are spending on education, on health or on defence.
If some Labour Members had taken some of our advice earlier—before they had to take it because the IMF was called in—and had spent rather less freely than they had of other people's money, the position would have been very different. They have a test of virtue which depends on how much they can spend of other people's money rather than their own. If they had taken our advice, we should have been spending very much less today and had to finance very much less money borrowed. We should have been able to have a very much lower rate of tax.
The second general proposition is that taxation kills incentive. People judge their standard of living by what they have got left in their own pockets and not by how much they have put into the Chancellor of the Exchequer's pocket. That seems to be accepted by almost everyone except Labour Governments. Wherever one goes, one finds it said that all levels of tax are too high. Now and then, even the Chancellor of the Duchy of Lancaster says it. If he does not say it in this House, he says it on television:
1402
"I must be frank and say that many of these taxes owe more to a judgment of an egalitarian kind than to an economic kind."
He went on:
"My own view is that a correction is now overdue, and I think that we will soon see one."
Of course, we did not. But unless one gets the rate of personal taxation down, there will be no incentive to get the extra production or productivity which it is the Prime Minister's objective to secure.
The third proposition is that too much regulation kills jobs. One can take an example from the bread industry, directly from pay policy. The industry wished to go against the 12-months rule on the ground that it would have got a very much smaller settlement. It was not allowed. The industry said that that would mean having a bigger settlement. It said that it would have to have redundancies. Eighteen months later it did.
The Prime Minister's objectives may be the same as ours, but he and his party are unwilling to bring in the requisite policies in order to carry them out. That is why we do not have very much growth in this country. That is why, under Socialism, we have a lower standard of living. That is why, under Socialism, we have had such a very rapid increase in unemployment, which the Prime Minister is unable to do anything about.
Let us compare our economy with the economies of some countries which have been infinitely more successful than we have. Let us look at the United States. An article in the Wall Street Journal of 10th July 1978 states:
"Since the current recovery began in March 1975, the US economy has created more than 10 million new jobs."
What were we getting here in 1975? We were not talking about any recovery at all. In 1976, one of the worst years in our post-war economic history, the Chancellor in fact forecast a public sector borrowing requirement of some £12 billion, and had to go touting round the world for loans to see him through. He eventually had to apply to the IMF, and had to subject us, fortunately, to disciplines which he was unwilling himself to impose.
That is the kind of increase in jobs that we could have had here had we had a Government prepared to have less public spending, more in the private sector,

1403
more incentives and less regulation. But we shall never get that from this Government.
Let us look at the result in countries which are prepared to operate such a system. Let us look at the performance of all those countries which were represented recently at Bonn. Let us look at their increase in national income or gross domestic product and compare it with ours. We find that ours, in four years of Socialism, has gone up by only 0·1 per cent. So much for the Prime Minister saying that he wants growth. He is not short on objectives but he has been totally lacking in achievements. Other countries have achieved very much higher rates of growth in the same period and in the same world conditions, without the benefit of North Sea oil. Some of them, such as the United States, had a deteriorating oil problem, or were having to import all their fuels, as in the case of Japan.
In terms of manufacturing output, the Prime Minister has absolutely nothing to boast about. In the four years during which Socialism has been in charge, manufacturing output in the United Kingdom has fallen by 6·1 per cent.—the worst record of all the Bonn countries.
We accept that the Prime Minister is just as anxious to create jobs as we are. In fact, there have been four periods each of which has produced a million additional jobs. Most of them have come from the private sector. Many of them have come from small businesses—from the very sector which this Government have clobbered and have imposed additional taxes upon, even though they have now set out to try to undo a little of the damage which they did previously.
Those periods are a tribute to what private enterprise can do in creating additional jobs. With one exception, all of them were during periods of Conservative Government—from June 1952 to June 1956, from June 1959 to June 1962, from December 1962 to March 1966, and from September 1971 to September 1974. Each of them produced a million additional jobs, operating largely through the private sector, although in periods 3 and 4 some of them were through increases in central and local government, but not a high proportion. The figures are given in "Britain Means Business",
1404
and they are there for all to see. They are not a high proportion. The jobs which create prosperity as well as creating work will tend to come from the private sector and will come from small businesses.
These are the principles upon which we operated when we were in power. They are the principles which produced the additional growth and which produced the increased standard of living that the Prime Minister, despite all his talk, is quite incapable of producing. He takes us to task for trying to cash in on a particular wage claim. May I remind him that we have not done that? It was he who did that during the February 1974 election campaign in his famous speech in Aberdare, when, against the background of a statutory incomes policy — and I reject a statutory incomes policy for the future—he said that he backed the miners all the way and that it was utter drivel for us to say that by fighting that claim we were fighting inflation. Those were his words then. Perhaps they can be placed before him once again.
In spite of the Prime Minister's words, if one compares the Labour and the Conservative records in the post-war period, one sees that time and again on almost every indicator and on almost every value the Conservatives' performance comes out streets ahead of Labour's for the benefit of the average person.
Let us consider, for example, the real take-home pay of the average industrial worker. I take the Prime Minister's definition: in terms of what it will buy. When the right hon. Gentleman says something about cash limits, let me point out to him that housewives have had to budget on cash limits all their lives. We know what it is about. The real take-home pay of the average industrial worker rose 60 per cent. in periods of Conservative Government and only 6 per cent. under Labour. The average industrial worker and his family have done 10 times better under us than they have ever done under Labour Governments.
For all that the Prime Minister boasts about what he has now done about inflation, I might point out that on the three-month basis it is currently above where it was at the time of the last General Election when the Chancellor of the Exchequer boasted that it was 8·4 per

1405
cent. Inflation has risen twice as fast under Labour as it has under the Conservatives. Unemployment has risen 12 times faster under Labour than under the Conservatives. Output has grown nearly twice as fast under the Conservatives as it has under Labour. Industrial and manufacturing output again has grown nearly twice as fast under Conservatives as under Labour.
These are the facts which the Prime Minister cannot get round. Despite all his euphoric speeches, he cannot argue with this performance. It has come about as a result of applying Conservative policies—the policies of a free market economy and a social market economy.
We contrast Labour's record of economic failure. It is its own condemnation. It is a record born of envy and hostility to wealth creation. The unemployment queues spell the despair of Socialism. The record of inflation tells its own story of Labour incompetence. The present level of interest rates condemns the fiscal and monetary judgments of the Chancellor of the Exchequer.
The realities prevent the Prime Minister believing in socialism.
Mr. John Parker: Tell us what you mean by Socialism.
Mrs. Thatcher: If the hon. Member for Dagenham (Mr. Parker) has not heard the comparisons that I have made and recognised that under Labour Government after Labour Government all in total can put up the standard of living of the average industrial worker by only 6 per cent., compared with our 60 per cent., and if he does not regard that as failure, I do not know what he does regard as failure.
Mr. Parker Mr. Parker rose—
Mrs. Thatcher: No. I have given way to the hon. Member once. I shall not do so again.
Illusions or different political beliefs prevent Government supporters sitting below the Gangway from believing in a vigorous social market mixed economy. Perhaps one writer was correct in his assessment when, about the battle over Clause Four, he wrote:
"Productivity was never of any interest to the extremists. They would rather control
1406
men's lives in uniform misery according to their definition of the public good than allow them to flourish freely."
Try as he may, the Prime Minister cannot shift the choice which the nation faces away from the central theme of liberty versus collectivism. Roy Jenkins, perhaps the best Chancellor of the Exchequer that the Labour Party has ever had, reminded us that where the State allocates three-fifths of the nation's resources, freedom of choice and the values of a plural society are in danger. That is what the State is allocating now.
For four years the nation's economic fortunes have been in unsure hands and in the shifting pattern of alliances which have provided the Treasury Bench with its support. The long drab period is, we hope, being brought to an end. A new beginning with a new Government and new opportunities cannot come too soon
5.20 p.m.
Mr. Douglas Jay: The right hon. Lady the Leader of the Opposition has given us her idea of an intellectual speech. She told us many things that she would not do if she were Prime Minister; but she omitted to tell us what she would do. What the right hon. Lady is offering us amounts to monetary disinflation plus unrestrained pay bargaining in the private sector and an incomes policy in the public sector. To use her own language, that is what I should call an arbitrary policy. In practice, it would mean increasing unemployment, stagnant production and bitter conflict over pay between the public and private sectors. That, briefly, is what we should have if the right hon. Lady were to carry out her non-existent policy.
As the right hon. Lady has called for an intellectual speech, I shall do my second-rate best. My starting point is that it is high time we returned to full employment and growth. I hope that I carry some support even from the Opposition Benches. As that is my starting point, I am a wholehearted supporter of the Government's proposed incomes policy and the White Paper, including dividend control. The only way to return to full employment in present circumstances—I recognise that for some this may be an unpopular truth—and in the probable future is through an incomes policy.

1407
I particularly welcome the statement in the White Paper that neither my right hon. Friend the Prime Minister nor the right hon. Lady has quoted, as follows:
"the country should aim at a long-term approach in which collective bargaining is based each year on a broad agreement between Government, unions and employers about the maximum level of earnings which is compatible with keeping inflation under control in the following 12 months".
That is a harsh truth that some have still not grasped.
What has really happened to economic policy, and especially employment policy, in the past 10 years? The truth had better be stated starkly. The basic fact is that unrestrained collective bargaining has discovered that it has the power to force up pay rates faster than production. That, as a first result, has forced up prices—notably three years and four years ago—and as a second result has compelled Governments either to continue the inflation or to check it at the cost of unemployment. Baldly summarised, that is the story of the past few years.
This has happened in almost all the industrial countries in the 1970s and not only in Britain. In the United States both the rate of unemployment and the rate of price rises are not so far different from our own. The same is true of France. The process also started before the huge rise in oil prices, even though that rise and, in our case, the common agricultural policy, have exaggerated it.
In effect, completely uncontrolled collective bargaining has disrupted full employment; and we must restore some sort of control if we are to return to the high levels of employment that we all want to see. The right hon. Lady mentioned the employment policy White Paper of 1944. It is worth recalling that that White Paper—incidentally, it was approved by Lord Keynes—stated that demand management could not work without price and pay restraint. That was a prophetic statement that many seem to forget. As I should put it, we cannot manage demand unless we manage costs at the same time. That might not be true if the public would tolerate the ever-increasing price inflation that we have seen in some South American countries, which is a perfectly workable policy if one does not mind ever-increasing
1408
inflation. However, experience, convinces me that the British people would not very long tolerate that solution.
If they will not tolerate it, the Government are forced to limit monetary expansion. But, given that the Government thus firmly limit such expansion, it unhappily follows that the faster pay rates rise, the greater will be unemployment. That is why we now see building workers unemployed and building work that needs to be done. It is why teachers are unemployed while schools are in need of teachers. It is why we have to adopt the necessary but somewhat absurd job creation schemes, because sufficient productive jobs are not available.
Indeed, I suspect that if by magic everybody's money income in Britain were suddenly reduced by some substantial proportion tomorrow morning, unemployment would fall rapidly in the subsequent 12 months. I believe that that illustrates vividly the situation in which we find ourselves.
It is, however, more constructive to say that the reason why unemployment has been falling gradually in the past 10 months is that we have had some effective pay restraint. Contrary to what many honestly think, I do not believe that the unemployment that we are now experiencing has very much to do with technology or technological development. Some of us remember that those opinions were repeatedly expressed in the 1930s. At that time it was thought that we should never have full employment again. However, 10 years later those arguments appeared extremely foolish. The fact is that the world's demand for goods and services is unlimited if we follow sensible economic policies.
In the long term, it is surely not even sensible to put the emphasis on shortening hours of work or even lowering the age of retiring. Incidentally, in the Unite States they are moving in the other direction and abolishing compulsory retiring ages. To shorten hours of work ail round is equivalent to raising pay rates and labour costs. That is just as likely to increase unemployment as to reduce it. On the other hand, if we stick to a firm, long-term incomes policy, which must include dividends as well as pay, there is no reason why we should not return to full employment fairly quickly.

1409
Some might argue that in terms of production and productivity even the 5 per cent. policy that the Government propose is too high. However, it is clearly the best that we can get. I therefore warmly congratulate the Government on having the courage to go for that policy, in spite of the great deal of opposition that it will no doubt generate. The Opposition's alternative policy, if we can call it that, of monetary—
Mr. Ian Mikardo: What is it? Tell us what it is.
Mr. Jay: The right hon. Lady has not told us. I am guessing from the Babel of voices that we have from the Opposition Benches and outside that we should have a mixture of monetary restriction, on the one hand, and an income free-for-all, on the other. This would mean chronic unemployment, low production, low investment and, in the end, the further weakening of this country. That seems to be the certain effect of that policy, if it is the policy that the Opposition propose to adopt. If it is not their policy, no doubt the next Opposition Front Bench speaker will tell me where I am wrong, in that estimate. That will be illuminating for us all.
In spite of there being much more "flexibility"—if that is the blessed word —in the White Paper than the right hon. Lady seems to have noticed, for the forthcoming year, it is true that we have still not solved, or even seriously tackled, the crucial problems of relativities and differentials. Those problems must be overcome if we are to have a successful incomes policy. I cannot see that there is any long-term solution to this problem, except to restore a last-resort pay tribunal of some kind, which would cover all salaries and wages, not just selected bits of the economy. I believe that until we restore that in some form we shall have a steady succession of special cases—the Armed Forces, the police, the firemen and many others. We shall have separate so-called review bodies which tend to become pressure groups for their own particular clients, very naturally. Indeed, we could easily end up with leap-frogging by the review bodies.
Nevertheless, for the moment let us at least do what we can. For that reason, I strongly support the Government's White
1410
Paper in the belief that it is at least a major step towards a long-term incomes policy, backed eventually by a competent authority. I welcome it because I believe that is the only way of getting back to full employment.
5.31 p.m.
Mr. Maurice Macmillan: I do not want to go in great detail into the argument that we have heard since I have promised to be extremely brief, but among the many platitudes trotted out by the Prime Minister was the one that the control of inflation was essential to growth. That is true, but he said it in a way that implied that once inflation was under control there would be little difficulty in achieving a rapidly expanding economy with higher wages for all, even perhaps higher dividends, more social spending, and all the rest. I do not think that it is quite as easy as that.
To go back a little in time; I remind the House that, in the 50 years up to the beginning of the First World War, prices were absolutely static. Average earnings went up between two and three times and growth averaged about 1 per cent. a year. The difference was that in those days we were earning a very large amount from overseas in interest, profits and dividends. All through that period—and, indeed, between the two wars—it was seldom that our sales of goods and services overseas covered our necessary imports. Despite successive problems and balance of payments difficulties since the Second World War, we covered a far higher proportion of our imports with the export of goods than we did in the inter-war years, despite the fact that we were then selling to a great extent to a captive market: a colonial empire, whose economies we controlled so that we were able to buy cheap and to sell dear.
That situation has gone, and we do not yet seem to have recognised it. We do not seem to have recognised that we now have to sell a larger proportion of goods overseas than ever before just to stay where we are. Therefore, we need a far greater increase in productivity. I am glad that that was admitted by the Prime Minister.
We have to make a much greater effort than that which I see foreshadowed in the Prime Minister's speech and, indeed, in the White Paper, to decrease unit labour

1411
costs. I do not believe this requires longer working hours and, through stopping over manning, greater unemployment. Nor do I think, as the right hon. Member for Battersea, North (Mr. Jay) said, that technological advance necessarily produces unemployment. I think that it may require a change in the pattern of people's work, but I do not believe that it increases unemployment; if anything, and over a period, the reverse is the case.
The main point that I want to make is that, in order to develop our trade at home and overseas—the Prime Minister reminded us that 30 per cent. of our gross domestic product depends on overseas trade—we must consider our position in the world. Until a relatively short while ago, we had a system in which the Empire developed into the Commonwealth and in economic, monetary and exchange terms the Commonwealth developed into the sterling area. We had a group of independent countries where, broadly speaking, we did not need to settle across the exchanges the debts between the countries which were members of the group.
It seems to me that, in the initiative that has been taken by the German Chancellor and the French President at Bremen, they are seeking, despite the great difficulties of doing so, to create a similar type of union within the European Economic Community. They are seeking to achieve for all the member States of Europe the advantages which the sterling area gave to the United Kingdom and to the other member States of the sterling area for so long.
Now that these old advantages have disappeared, it would seem foolish indeed if we in this House and in the country allowed any Government in the course of negotiating the necessary details to give the impression that they were turning in principle against the initiative to bring new advantages by moving towards economic and monetary union, starting with exchange rates. I am slightly prejudiced in favour of this initiative. About 20 years ago I wrote a paper on similar lines for the Western European Union.
We have missed many opportunities in Europe. I think that it was Lady Bracknell in "The Importance of Being Earnest who said:
"We have already missed five if not six trains. To miss any more might expose us to comment on the platform."
1412
Any political party which misses any more chances in Europe will be exposed to very adverse comment on its political platform. We have missed the earlier trains—the Defence Community, the Coal and Steel Community, Euratom and the Economic Community itself. We now have this opportunity both to replace the advantages of the sterling area and to get back into a position in which the European Community can begin to operate as a political and economic entity. Of course there are difficulties and problems, but the prize of success is very great. Since the Bremen initiative will go ahead with or without the United Kingdom, the penalty for failure could be equally great.
5.38 p.m.
Mr. Allen McKay: The occasion of an economic debate seems an appropriate occasion on which to refer to my predecessor, John Mendelson, for whom I had a great deal of respect.
John was a small man, but of great political stature, a good constituency MP and a splendid parliamentarian who served his constituency faithfully for 19 years. His work for the well-being of the area and for the people who live in it was well known and recognised. His fight to retain employment in the area and his forthright honesty in solving problems, large or small, endeared him to all his constituents. His high intellectual ability, along with the sense of purpose with which he pursued problems, projected the greatness that was in him. His reputation was not only high here but was respected in many other countries. He spoke out against oppression wherever it was and against whomever it was who caused it, irrespective of critics or pressures.
But he was not all things to all men. I know that hon. Members on both sides of the House have disagreed with John, as indeed I did both as his agent and friend. But his arguments were always based upon his clear understanding of a problem after much careful thinking. Once he had decided that he was right, his logic was pursued to the end with a determination that he always had. Our backgrounds were different but John gave me a goal at which to aim. I am proud to be in the House, but I wish that I could have come here in some other way than through John's death. He will be

1413
much missed by the House and his constituents.
The Penistone area ranges from concentrated urban areas to vast rural areas where it seems that there are more grouse than people. The constituency covers 144 square miles. During the campaign I learnt what that meant. The 71,000 electors work in the coal, steel, engineering and agriculture industries. I am glad that we have a Government committed to creating a modern, viable and efficient steel industry. Their investment in steel at Stocksbridge will make the area part of the overall plan. Without that investment the entire area will stagnate and die.
We have a fine British steel industry which would not be there but for State aid and intervention at a time when they were needed. We have the finest steel workers in the world. They have enough faith in the Labour Government not to let them down.
In my area we also have the best miners and mining engineers. Investment in the Barnsley area by the National Coal Board has ensured the employment of 16,000 miners until the year 2000. It is necessary to continue with that expansion so that the known reserves are fully exploited to the benefit of the nation. To do that we need an integrated fuel policy which will ensure that the best use is made of our energy resources.
There is another side to this industry which shows the care and compassion of the Labour Government. Help has been given to pneumoconiosis sufferers, grants have been paid to help those affected by closures and redundancies, and contributions have been made to workers' pensions schemes. Retirement at the age of 60 has been introduced. I believe that that should be extended to all industries to make way for the young unemployed.
I am conscious that the Government have spent £4·3 million in the area to employ 3,380 people. Without that help the area would be poorer. Unemployment is a world-wide problem. That is why I applaud the Prime Minister for his efforts to get the world economy moving.
During the election campaign the farming fraternity expressed their grumbles. But I am led to believe that Labour's derating of land, basing income
1414
tax on two years to even out the good and bad years and the increase of about 16 per cent. in income for 1977, was right for the farmers. The Government should continue to help farming to grow and prosper. At the same time, they should keep a careful watch on food prices. There is still some concern about the cost of farm machinery. The Price Commission could investigate that matter.
When I questioned people in shops about prices, I was told openly that at long last the increase in prices was becoming steadier. I was told that people could now go out on a Friday to shop knowing that the amount of money that they spent the previous Friday would buy the same.
The engineering industry causes anxiety in the area. David Brown has declared 300 people redundant. Had that company asked for Government aid earlier those 300 men would not now be redundant. It took the initiative of a Labour-controlled council to try to set up a workers' co-operative to create employment for those men.
I turn to one of the most disturbing features of the area. This involves a management fault. I do not condemn management for its own sake but I scream out when I think that there is injustice. I am speaking of the Hepworth ironworks. The shop stewards at that company asked the management if they could have a meeting during working hours. They asked for that meeting because the factory operates a seven-day week on a three-shift basis. The shop stewards had no alternative. The management refused their request. After another meeting the shop stewards went back to the management and suggested alternatives, but they, too, were refused.
In view of the problem which the shop stewards were experiencing they believed that they must call the meeting. The management told the convenor that all workers who attended the meeting would be dismissed. The men did not know of that warning when they went to work the next day. They attended the meeting and as a result 239 workers were dismissed.
The trade union has asked for ACAS to be called in but the management has refused. The union has asked for the

1415
services of any independent body to be called in, but the management has refused.
The dispute has now lasted for five weeks. The shop stewards have said that they will give up their credentials so that the dispute can be resolved. The management has said that it would want to take away their credentials for five years. No trade union could accept that. The country will not prosper unless there are more suitable arrangements in industry. If either side in a dispute suggests that ACAS should be used, that should be accepted.
Many other matters affect my constituents. I should have referred to them if I had had the time. One of them concerns the economic disadvantages of local government reorganisation. I accept that the present Government are not responsible for that major expensive change, but it is relevant to the national economic situation. There is a need to give areas neighbourhood or successor parish councils with statutory powers.
I feel strongly about the question of television licences, particularly for pensioners. I hope that I shall have the opportunity to press that matter before long.
I have enjoyed the attention of the House for long enough. The Penistone constituency has made a substantial contribution to the creation of our wealth. I hope that national policies and my services will enable my constituency to create more for the well-being of the area and for the country's good. I fought the by-election on the Government's handling of the economy. I am now here. I hope that I and the Labour Government will remain here for many more years.
5.47 p.m.
Mr. John Pardoe: It is a privilege to follow the hon. Member for Penistone (Mr. McKay) after his maiden speech. We welcome him to the House. I welcomed his comments on his predecessor, John Mendelson. When I first came to the House 12 years ago, John Mendelson had a reputation for being a wild, Left-wing Socialist, but I soon discovered that he was more of a radical Keynesian. I cannot pay a man a higher compliment than that. John Mendelson had friends of long standing in the House across party lines. I wholeheartedly endorse the remarks that the hon. Mem-
1416
ber for Penistone made about his predecessor.
I have to admit to the hon. Member that I worked against him in his by-election campaign. He might have noticed that I did that with considerable effect. I am not sure whether the maintenance of the Liberal vote is a better comment on the last 15 months of Government than the fall in his vote is on the last four and a half years of Labour Government. Whatever our feelings were in the by-election, I welcome the hon. Member to the House. Clearly, he has a close and keen interest in the people and problems of Penistone. We look forward to hearing from him about these matters in the future.
Listening to the opening speeches in the debate, I was minded to ask the question "Is this a private General Election, or can anyone join in?" Clearly, there will be a General Election pretty soon. Clearly, it will be an election fought on the swapping of statistics more than most, if that is possible. But the debate that we are having this afternoon is in the aftermath of the publication of the White Paper on incomes policy. It would, however, be ridiculous to suppose that pay is the only important ingredient in our own economy, and even more ridiculous to suppose that what we do in our own little island can alone change the fortunes of the world economy, with which our success or failure is so inextricably tied up.
I wholeheartedly endorse the remarks of the right hon. Member for Farnham (Mr. Macmillan) about our place in Europe. It seems to me absolutely essential that we should work within the international community to get the economy right.
The trends in the world economy are not at all encouraging. Inflation is almost certainly moving upwards again in most of the major industrial countries. If we take together six of those major countries, excluding Britain—the United States of America, Canada, Japan, West Germany, France and Italy—we see that prices in May of this year were 6·6 per cent. above those of a year ago. But, of course, that is a 12-months figure, and 12 months is a long time when we are dealing with inflation.
If we take the three-monthly figures for those countries at annual rates, we

1417
can see that the inflation rate for them has moved up from 4·6 per cent. at the beginning of this year to 8·4 per cent. in May. This 8·4 per cent. average rate of inflation—the latest average rate of inflation for these major industrial countries —is much nearer to the average 12-months rate for the period 1973–77, the period following the oil crisis, when it was 9·1 per cent.
The prospect for jobs in the western economies is certainly no better than that for inflation. Even if we take the most optimistic assessment of the follow-up to the summit conference, it cannot have much effect until 1979, and even then it is pretty dismal. The gross national product of all OECD countries together in 1978 will probably rise by no more than 3·6 per cent. That is less than the 4 per cent. achieved in 1977. I do not think anyone can expect that 1979 will be better on present policies than 1978.
World trade in 1978 may grow by a little less than 5 per cent. and may accelerate slightly in 1979, but that will be not much more than half the rate of growth that we knew in the decade leading up to the 1973 oil crisis. These are the international realities that we have to face in dealing with our own domestic economy.
All this makes it doubly incomprehensible to those of us who deem ourselves to be European that the British reaction to the European economic initiatives which we have seen, particularly at the Bremen conference, should have been so half-hearted—half-hearted on the part of the Government and, indeed, on the part of the official Opposition. We had absolutely nothing this afternoon, in a speech on the economy, from the right hon. Lady the Leader of the Opposition which led one to believe that she was in any way interested in these important international initiatives.
The British Establishment's reaction to international and especially European proposals to change the world economic order is, I think, little better than that of a beetle staking out its territorial claim on its own dung-heap. I fear that that des-scription is probably apt for the British economy in 1979. It is probably not a bad description of the European economy in that year, too.
1418
This may seem incomprehensible to foreigners, but it is, perhaps, understandable in the atmosphere of British domestic politics, because there is to be an election. The opinion polls have already shown that public opinion has turned quite substantially against the whole European idea. Therefore, I fear that both major parties will clearly be conducting an election campaign in which they will certainly, if not pander to, do the best to cultivate the lowest prejudices of Britain. These prejudices are the very same prejudices as made us late for every important European initiative that we have had in the last 30 years, and we are about to be left at the European starting-gate all over again.
This afternoon, the Leader of the Opposition paid a compliment to the President of the European Commission, Mr. Roy Jenkins, as the best Labour Chancellor, by which I think she meant that he had actually left the Conservative Government of 1970 with a surplus of income over expenditure—which they rapidly turned into a very substantial deficit. It is utter and complete nonsense for the right hon. Lady to talk about public spending being lower as a proportion of GNP under a Conservative Government. Under the Conservative Government of which she was a member it rose more rapidly than at any time in the last 50 years, and the borrowing requirement rose to a higher proportion of the GNP than it is now.
Nevertheless, I turn to what the best Labour Chancellor—to borrow a phrase from the Leader of the Opposition—said as President of the European Commission in an important speech last October in Florence. He said that the restoration of full employment required action on a historic scale comparable with Europe's postwar reconstruction, the Marshall Plan and the Keynesian Bretton Woods international monetary system.
Last April, at Copenhagen, Europe's leaders agreed to seek common solutions to these problems which the President had then outlined. The Bremen conference was held this month to take that process a stage further. The European leaders have, of course, agreed to work to establish a European monetary system, backed by the colossal sum of $50,000 million of our pooled currency reserves. These are even bigger than

1419
the funds available to the IMF. If successful, this initiative can achieve the monetary stability which Keynes and Bretton Woods gave the world for 25 years and which was the foundation of the rapid growth in the post-war period.
Unless this initiative is followed through, there is no hope at all that Britain or anyone else will solve its economic problems. The European monetary fund, for which I seem to remember the Liberal Party called as long as 15 years ago, will enable the industrial countries to put the huge surplus funds, the OPEC funds and other surpluses which are floating around the world mainly in an orgy of currency speculation back to productive use.
Therefore, international action, particularly international action within Europe, is absolutely essential if we are to solve our problems effectively. But international action does not absolve us from taking action ourselves to put our own house in order.
No one can deny that the British economy is in many respects greatly improved over the past year or so. However, the Prime Minister, like the Leader of the Opposition, should be a little less selective in his choice of periods for comparison, because at the beginning of 1977 the British economy was a disaster area after three years of Labour Government.
Inflation then was over 20 per cent., which was a little higher than it was when. Labour came to power in 1974. Three years of Labour Government, on its own, had done nothing to bring this rate down. If one is quoting selective statistics—frankly, this kind of selectivity is somewhat meaningless—on the improvement in inflation and the performance of various Governments on inflation, no one can possibly deny that the quite astonishing collapse of the inflation rate from over 20 per cent. to under 8 per cent. has taken place during the last 15 months, the very period in which the Liberal Party and the Labour Government have been working together.
I do not fool myself by these statistics, and I do not fool myself about the British economy. There are two laws of politics that we all ought to observe. One is not to believe the other fellow's propaganda, but the other more important law is never to believe one's own. Nothing
1420
fundamental has changed in the British economy. This is the problem. Inflation has fallen, but it is still twice what it was before the 1973 oil crisis, it is higher than that of most of our major competitors, and it is probably rising again as theirs is also.
The balance of payments is certainly on the credit side, but I believe that that is only short-lived and it is mainly because of oil. In 1977 non-oil export volume rose by 7·8 per cent. and imports rose by 6·7 per cent., so it is hardly surprising that the balance is on the credit side. But the trend in 1978 is, unfortunately, very different. The volume of non-oil exports will rise by perhaps 3½ per cent., if we are lucky, while non-oil imports may rise by as much as 6½ per cent. Even on price, our exports have become uncompetitive. On the more important non-price factors, nothing has happened to change our chronic and perpetual uncompetitiveness.
Of course, there is a real limit to what the Government can do on non-price factors of exports, because that is very much up to management. But pay is crucially important in relation to the price factor. As one who supported phase 3 and who still believes that it was very much better than nothing at all, and very much better than anything which the official Opposition had on offer at the time, I have to say that it was only partially successful and not good enough.
Mr. Ron Thomas: I was interested in what the hon. Gentleman said about the price factor with regard to exports. Surely he is aware that multinational companies decide the prices which they will charge in order to get the highest profit. Even at a time when sterling was being devalued and they could have lowered their prices, they refused to do so because it was more profitable to sell less than to sell more.
Mr. Pardoe: That sounds like an argument for a tax on exports, but I shall not follow the hon. Gentleman down that particular road.
I continue with the argument about pay policy and quote from last year's White Paper, since we are discussing this year's, which said:
"the general level of pay settlements should be moderate enough to secure that the national earnings increase is no more than 10 per cent."

1421
I am sure that the Chancellor has those words engraved on his memory, just as I have. The trouble is that this White Paper has had to admit that that 10 per cent. has not been adhered to. It does not actually admit it in very bald terms, but it says that the outcome is "somewhat higher than this". Actually, it is 50 per cent. higher on the old index and 35 per cent. higher on the new index, and I do not know which index the Chancellor works on.
The most important paragraph in the White Paper is that which deals with the long-term determination of pay and locks forward to some system which can outlast the ad hockery of recent years. But what does keeping inflation under control mean for the Government? What rate would they equate with keeping inflation under control, and what sort of long-term arrangements do they have in mind? Unfortunately, the White Paper makes no mention of that at all other than simply looking forward to some long-term arrangement. In no sense is it a basis for the great national debate which needs to take place.
Does the Chancellor think that it perhaps might have been better had we had more of a discussion document on the long-term future in addition to a White Paper in respect of the next 12 months? I am convinced that there is a need for an incomes policy, and a long-term policy at that, which prevents wage inflation but permits flexibility in individual earnings. A national norm has every possible disadvantage, as we have seen. It tends to become a minimum for wage negotiation and it is very inflexible as between one industry and another. We need a formula which is tailor-made to the situation of each industry and each enterprise. I think that the best formula would be one which relates labour costs to added value in each enterprise and which is enforced by imposing a tax on those enterprises which exceed this ratio.
I am in no sense wholeheartedly in support of the Government's sanctions policy. I think that the sanctions are better than none, because none implies that we have a pay policy in the public sector and no pay policy at all in the private sector. But it is particularly the continuing repetition of the phrase "gov-
1422
ernmental discretion"—discretionary powers—in the White Paper to which I object. Who exercises the discretion about which private enterprise concerns shall obey the guidelines and which can disregard them? If one is unlucky enough to have work in the public domain, where one has contracts with Government, one is not always clobbered, although one has a fair chance of being clobbered by these sanctions, but if one has no Government contracts there is no control at all. I believe that the Government should have introduced a form of sanction or penalty which applies equally to everyone who infringes the guidelines and which is not subject to this kind of arbitrary discretion by civil servants and Government Ministers.
One is often asked whether the policy has to be statutory. I would ask the Chancellor whether the dividend control has to be statutory. If it is sufficient simply to urge trade union leaders and those who negotiate pay on the capital side of industry to be moderate and to stick within the 5 per cent. guidelines, why is it not also sufficient to ask industry to exercise voluntary control over dividends? There is absolutely nothing in this White Paper which convinces me or my right hon. and hon. Friends that we should vote for the reimposition of dividend control without similar control on pay and prices as part of the prices and incomes policy.
A pay policy has to be enforceable on those who do not wish to abide by it and who have the power not to do so. That has always been the argument for the rule of law, and I see no reason for not introducing the rule of law into this area.
I come to the point raised by the right hon. Member for Battersea, North (Mr. Jay) about the need for some kind of umpire or arbiter. However flexible or bespoke the norm may be to each and every enterprise, as I would wish, at the end of the day someone will have to make a decision about whether one industry shall be able to breach it. What a tragedy it is that the political foolishness of the two-party system in this House abolished the National Board for Prices and Incomes, which was the best investigative machinery that the House has set up since the war in the area of prices and incomes. It was a tragedy that that was

1423
abolished by the stupidity of the two-party political system, a system which decrees "What I am for you are against, what you are for I am against, and whatever you did, I come into power to undo."
It was also a tragedy that this Government abolished the Relativities Board, which to a limited extent replaced some of the functions of the National Board for Prices and Incomes. How much better that would be instead of the Edmund-Davies committee, the Houghton committee on teachers' pay, and a whole series of other ad hoc committees set up to make their own decisions devoid of any basic economic argument about the public interest at all and ignorant of the consequences of their action on other pay settlements. It is very nice for all of us to welcome the police settlement, but that settlement will have horrific consequences for pay policy even though it may settle a political problem at the moment. It will involve leap-froggings among the police, teachers, firemen and who next?
Therefore, it is a tragedy that the two-party political system has abolished those two bodies which would have enabled arbitration to take place in a sensible manner which took account of the national interest. We shall have to come back to a long-term pay policy. We shall have to replace the National Board for Prices and Incomes, and the sooner the better.
6.9 p.m.
Mr. Ian Mikardo: The part of the speech of the hon. Member for Cornwall, North (Mr. Pardoe) which I enjoyed most was the part in which he made fun—and quite justifiably—of the Prime Minister and the Leader of the Opposition for their rather silly game of trading selective statistics. But, having taken the mickey out of them for doing it, he then proceeded to join in the game himself. I do not propose to follow him in that.
However, I shall follow him in congratulating my hon. Friend the Member for Penistone (Mr. McKay) on his most impressive maiden speech. We were all deeply moved by his tribute to his predecessor. Those of us who mourn John Mendelson as a parliamentarian and a friend—as I do—at least have the consolation of knowing that the constituency of Penistone continues to be represented in this House at the very highest level.
1424
I find it very difficult to make up my mind about how I should vote at the end of this debate. On the one hand, I have no time at all for the White Paper. Its economic analysis is defective and the proposals it makes will not achieve the objectives it seeks. Also, any attempt to implement the proposals in their present form will result in abject failure. Nothing in the White Paper will make a worthwhile contribution to remedying the two basic defects of the British economy—high unemployment and low investment and productivity.
On the other hand, we shall be voting tonight on the Government motion. Its phraseology is bland and innocuous. It says nothing at all. It is very difficult to oppose it or even not to support it. In effect, the terms of the motion are that this House is opposed to sin and in favour of virtue. That is all there is to it. In that case, if there is nothing wrong with the motion, why should I not vote for it?
However, another consideration must be taken into account. The wording of the motion has been chosen deliberately—not to express but to disguise the views of the Government. The motion represents not the face of Government economic policy, but the mask upon the face of Government economic policy.
I have no doubt that, if the motion is passed this evening, the Chancellor of the Exchequer will not say next week, and the Prime Minister will not say when he addresses the TUC's annual congress, that the House of Commons passed this motion. What they will say is that the House of Commons supported the White Paper—5 per cent. and all. They have put down a "catch-all" motion—
Mr. Dennis Skinner: I hope that the Chancellor is listening to this.
Mr. Mikardo: The Government have put down a "catch-all" motion in order to attract support, or at least some evidence of support, for something that is not in the motion at all. That is what puts me in a quandary about the way in which I should vote tonight.
I wish to concentrate my remarks on a single sentence in the speech of the Leader of the Opposition. It was a sentence which she used several times. She said that the problems of this country

1425
were due to Socialism. She spoke twice of the past four years of Socialism. Even in her absence and by proxy I want to tell her something about Socialism. I believe that I have greater authority to speak on that subject than she has.
I have listened to the right hon. Lady saying this in every weekend speech that she has made recently. She has been followed sheepishly by many of her hon. Friends and the newspapers which support the Conservatives. They say that all our ills are due to the fact that this Government have turned Britain into a Socialist society. I have been all round Britain with a fine-toothed tooth-comb, a magnifying glass and a laser beam, and I have difficulty in perceiving any evidence of Socialism in our society that is discernible—even to the greatly reinforced naked eye.
We have no economic plan. Whoever heard of a Socialist society without an economic plan? Except for a few marginal things, we have a virtually unrestricted laissez-faire system. There may be justification for that in some people's eyes, but it is still not Socialism. We do not even have planning agreements with the major companies. That would be a tiny, tangential piece of planning, not even Socialist planning. The French go in for planning agreements in a big way and the French entrepreneurs are at least as individualistic as any in the world. Yet they take it as a matter of course that any big company shall enter into a planning agreement. We have only one—with Chrysler. Whatever that is, it is not Socialism.
We have no effective controls over import penetration. How do we run a planned Socialist economy without controls which enable us to decide which parts of the things we use we make ourselves and which parts we get from outside the country? As a result of having no import controls whatever, one British industry after another is going to the wall. That is not Socialism.
We have totally inadequate and ineffective controls over outward investment. Whoever conceived of Socialism without there being controls over money flowing out of the country? Everyone in the House must know what has been happening as a result of the inadequacy, incom-
1426
pleteness and ineffectiveness of our overseas investment control.
We live in a country which desperately needs more investment in British industry in order to raise the standards of technology and to provide jobs for British workers. Yet British business has multiplied its investment overseas fivefold in the past decade, at a time when British industry has been starved of investment.
It is sometimes said that we have inward investment as well as outward investment and, indeed, a great deal of this is very welcome. But this is a relatively poor country in investment terms. As the outward investment figure continues to be twice as great as the inward investment figure, all that we are doing with much of this investment is creating in other countries the jobs that we should be creating in the United Kingdom.
On the calculation of Government Departments themselves, 35 per cent. of all British overseas investment occurs at the expense of jobs in Britain. Forty-five per cent. of our investment in the other eight EEC countries is at the expense of British jobs. Some may try to justify that, but they cannot say, as the Leader of the Opposition says, that it is Socialism.
We have not had four years of Socialism, as the Leader of the Opposition rather foolishly suggests, but we have had a manifest waste of our economic resources by the failure to use even some of the most simple instruments of economic intervention. This is partly because we are locked into the European charter for big business and partly because Government economic thinking is dominated not by Socialists, but by pragmatists, monetarists, mercantilists and by the last remaining survivor of the Manchester free trade school of more than a century ago. I hope that no one will intervene to ask me the name of the last person on that list.
If I were a private entrepreneur, should say a prayer before I went to bed every night for the people who are running the economy of our country today because it is largely for the benefit of private entrepreneurs that it is being run.
Let us look elsewhere for evidence of the four years of Socialism that the Leader of the Opposition was babbling

1427
about. We see that major decisions affecting the lives of millions of people are made outside this elected Parliament by a self-perpetuating oligarchy of a few hundred directors of big companies. The manifesto on which my right hon. Friends and I were elected—perhaps the difference between us was that I meant it and they, apparently, did not—included as its central theme
"a significant and irreversible transfer of power and wealth to working people and their families".
We have made no transfer at all. The same little oligarchies still determine the way this country is run.
There has been no extension of participation in decision-making and no transfer of power. The nationalised Bank of England takes its prime function to be not the guardian of the national interest but the protector and spokesman of private City interests. Whatever justification there may be for that, it is certainly not Socialism.
We see that earned incomes are held down while unearned incomes are virtually unrestricted. Whatever that is, it is not Socialism. We see that workers at all levels pay their full taxes, but we know that rich people and, as The Sunday Times told us, large companies avoid paying large parts of their tax. Whatever that is, it is not Socialism.
It is still true in this country that more than one-third of all personal disposable income is held by 1 per cent. of the people. I cannot equate that with Socialism either. We have luxury living side by side with millions on the poverty line. There has been no transfer of wealth to working people and their families. That is why we see highly expensive private hospitals proliferating while National Health Service hospitals are being shut down left, right and centre in working-class areas. Whatever that is, it is not Socialism.
I hope that I have said enough to stop the Leader of the Opposition from carrying on with the babbling brook of nonsense which she inflicted upon us earlier.
Except in a few small communities such as the kibbutzim in Israel, Socialism has not been instituted and does not exist anywhere in the world. That is why there is no factual basis for the Leader of the Opposition or anyone else saying
1428
that Socialism "has failed". There is no experience to go on, no experience on which she can base that claim. What someone once said of Christianity is equally true of Socialism: it has not been tried and found wanting; it has been found difficult and not tried.
I end on a personal note. When I joined the Labour Party nearly half a century ago, I did so in the belief that our party would be the instrument for transforming this country into the first genuinely Socialist society in the world. I was a young man then and I hoped to see the transformation come about in my lifetime. Having reached my three score and 10 years, I know that that hope will not be fulfilled, but I am convinced with every fibre of my being and from everything I have learned in that half century that this country and many others will turn to democratic Socialism—if not in the lifetime of my children, at the latest within the lifetime of my grandchildren.
The tide of history is sweeping hard that way and no Political Canute can turn it hack. Any politician who can project his thoughts beyond the next General Election but one can see it coming inexorably and inevitably. One does not need to go far to find the reason.
The young people of today, who are better educated and more mature, understanding and sophisticated than young people were when I was their age, can look around and see for themselves to what a pathetic mess the world has been brought by the competitive, capitalist system which dominates it. They can judge for themselves how capitalism has failed to improve and refine its mechanisms for distribution and exchange in order to keep pace with the great improvements in its mechanisms for production, with the result that the people of the world cannot consume all they produce.
These young people see millions of unemployed workers and millions of others who pine for the goods that those unemployed workers could make. They see millions of idle builders and millions more without a roof over their heads. They see millions of hungry people and millions of tillers of the soil with no soil to till. They see exuberant luxury and exuberant waste, side by side with abject poverty—casinos in the West End and

1429
people sleeping rough in the East End, mountains of unused milk powder in the northern hemisphere and starving babies in the southern.
These young people see that over the past decade the money spent in the world on the instruments of life has remained virtually static while the money spent on the instruments of death has doubled. They see science geared to making a nuclear weapon that is so clever that it can select its own target, and they see, at the same time, people dying for lack of a few kidney machines. As these young people look around our society, they can see that, to this day, a man is judged not by his worth, but by his birth and esteemed not for what he is, but for what he owns. That is why we shall have a move away from the system that has caused all these ills. Our young people see all that I have described, and in the long run they will not stand for it. They will reject the system that brought the world to this pass.
I hope that our young people will not be attracted by any totalitarianism that exacts too high a spiritual price for whatever material benefits it may confer. They will ruthlessly reject any political leader of any party, including my own, who is too myopic to see their vision. That is why the future lies with democratic Socialism.
If there is any hon. Member who thinks that what I have been saying is not directly relevant to the motion he is wrong. The fact is simple. After this motion is passed or defeated, when the General Election has come and gone, whenever that may be, all the problems we have been discussing today will still remain unresolved. They will continue to remain unresolved until we break away from the fetters of conventional thought that have shackled all our Governments, Conservative and Labour alike. Until then we shall go on having economic debates against the same sad and sombre background that afflicts us today.
6.32 p.m.
Mr. Esmond Bulmer: I join the hon. Member for Cornwall, North (Mr. Pardoe) in congratulating the hon. Member for Penistone (Mr. McKay) on his maiden speech. We listened with pleasure to the tribute he paid to his
1430
predecessor, who was always the most straightforward opponent, and a debater of very great skill. We look forward to hearing from the hon. Member again.
What a sad speech we had from the hon. Member for Bethnal Green and Bow (Mr. Mikardo). I can agree with him only in his view that the White Paper does not contribute any lasting solution to our problems, particularly to unemployment.
The figure that sticks in my mind, as our unemployment rises and our share of world markets falls, is that if we could stop the process and recover even 1 per cent. of our original share of world trade that would be worth 400,000 jobs or so. The central charge we make against the Government is that they have not provided the environment in which British business can compete effectively in the world.
Industry looks to Government to provide three things—to control the rate of inflation, to create conditions in which British companies can invest on competitive terms with foreign rivals, and to provide a political, social and economic background sufficiently stable to allow long-term decision making. The Government cannot claim to have provided any of these.
During their first months of office, and in order to win the October 1974 General Election, the Government fuelled wage rises that drove the rate of inflation up to 20 per cent. That made any sensible long-term decision making impossible. How many people who are out of work today would now have a job if the Government had set then the pay guidelines that they are now recommending to the House? Their public expenditure excesses have so driven up interest rates that at no time since 1973 has it been possible for industry to borrow money long term at an acceptable fixed rate.
The Government's legislation affecting business has been of a breadth and complexity never before suffered by industry. Perhaps the high water mark of interference contemplated by the Government was the Bullock report. Certainly the proposition that a shop steward, after three or four weeks in a trade union college, could discharge the world-wide responsibilities of a main board director of ICI showed how far the Government

1431
were prepared to go to sacrifice industrial efficiency on the altar of dogma.
Management has lost two particular freedoms, and that loss is partly responsible for our poor industrial performance. The first is the freedom to price. It has been prejudiced by taxation and the operation of the Price Commission. There is a limit to how far Government can raise industry's taxes without having an adverse effect on jobs. Increases in the payroll tax have cost 60,000 jobs according to the Chancellor of the Exchequer, 110,000 jobs according to the Secretary of State for Employment, or more than 150,000 jobs according to the Treasury estimate to the Expenditure Committee.
No one knows how many jobs were lost as a result of the 25 per cent. level of VAT. Short-lived though it was, it had an immediate and disastrous effect on unemployment. My company had to face a 30 per cent. increase in its wholesale prices at the stroke of the Chancellor's pen, and, after we had kept our price increases below the rate of inflation, our growth was checked overnight and a high-volume, low-price strategy was torpedoed.
When we brought this fact to the attention of the Treasury we were told that there were all sorts of factors apart from prices which might have contributed to the subsequent drop in demand. When we applied to the Price Commission for a price increase of the order of that inflicted upon us by the Treasury in order to restore margins, the arguments we had used to the Treasury and which the Treasury had refuted were used by the Price Commission against us. The result of the conduct of the Treasury and the Price Commission has been that we are employing several hundred fewer than we otherwise would, and capital investment which would have taken place outside of the company and would have brought jobs to Labour constituencies has had to be cut back.
The Government seem incapable of grasping one simple truth. It is that when margins are cut back, employment is cut back. If a company does not have the cash to continue—many companies have gone through terrible cash crises in the past two or three years—they have to cut back on jobs in order to stay afloat, because otherwise a whole lot more jobs would be lost.
1432
The Price Commission is causing a loss of jobs in manufacturing industry and is one of a number of bodies which are creating a growing resentment among management about the level and destructiveness of Government interference. If Government can, without even token consultation, wreck a company's business strategy and then demand that the company submits its entire strategy to detailed cross-examination by people who do not understand the way in which the company works, can anyone wonder that exception is taken?
When a Treasury Minister, no doubt advised by a civil servant, tells a business man that a 30 per cent. increase in his wholesale price may not have led to the drop in his business, one is given some insight into how Galileo must have felt when the Vatican continued to insist that the earth was flat.
Two specific criticisms can be made of the Price Commission. The first is that the real reason why an application is turned down may never be known. There is no provision for the company to talk directly to the people who say "Yes" or "No", and a suspicion is growing that rejections are largely political, and that applies particularly to those designed to postpone increases beyond October.
The second criticism is that the legislation is drafted so widely that management can never feel totally confident in facing an inquiry; nor, therefore, can it plan ahead sensibly. The knowledge of the certain loss of revenue which will result from the delay in implementing a price increase and the prospect of a scourge of accountants causing enormous dislocation to the day-to-day running of a business normally ensures that companies settle for a lower figure.
When one remembers that the return on capital in the larger manufacturing companies has dropped from about 16 per cent. in 1960 to 2 per cent. today net of inflation, one realises that only a Government with such blinkered vision as this could argue the continued need for the Price Commission in its present form. British industry has too little cash, not too much.
However, the additional danger of bodies such as the Price Commission and the level of Government interference is

1433
that the "English disease"—which, rightly or wrongly, is often described as the inability of manager and managed to get on—will assume a different shape. Increasingly, it will become the inability of those in industry and the Civil Service to get on.
Many civil servants are able and intelligent people who want to be helpful, but seldom have they been trained in industrial management. Not in the Treasury, the Department of Industry or the Department of Trade are there senior civil servants with practical experience of running medium or large companies, yet these people constantly take decisions which cut the ground from under the feet of those running British industry.
In many areas, the Government have set the Civil Service on a collision course with management. That is disastrous for the country and for employment.
Mr. George Robertson: The hon. Member has implied that shop stewards cannot help to run industry. He now says that civil servants cannot run industry either. Is the poor performance of British industry really solely the responsibility of the British Government? Does no blame attach to British management at all?
Mr. Bulmer: What I have been trying to describe is the way in which management has not been allowed to operate in what it would regard as the best interests of its company and how often Government interference has torpedoed the strategy on which management has set the company and the disastrous effect that that has had.
How many people say to Labour Members "Why should I go on producing? Why should I not join the Civil Service? There I shall not be accountable in the same way. I shall probably be better paid, if I am successful I shall have a 'K' or perhaps something less at the end, and I shall have an inflation-proofed pension."? There is an imbalance between the rewards given to management and the Civil Service.
Mr. Arthur Lewis: And they can go to private industry afterwards, or become the chairman of a bank, as Lord Barber did.
Mr. Deputy Speaker: Order. I would strongly deprecate an hon. Member trying to address himself to sedentary interruptions.
Mr. Bulmer: The loss of freedom to price is serious enough, but the loss of freedom to reward may be more harmful. Some Labour Members will understand the feelings of the work force when exceptional effort cannot be rewarded. In the past four years, many efficient firms in the private sector have seen their productivity gains taken from them and handed to those industries which are supported by the Government through taxation and which are bywords for inefficiency, low productivity and over-manning.
If management cannot reward a hardworking work force as it deserves, it is deprived of one of its most important tools, and performance is bound to suffer. The contrast between remuneration of British managers and skilled workers and the pay in those countries which compete most effectively with us is nothing more than a formula for international suicide. If the country's best managers or skilled workers can earn two or three times as much abroad, it is hardly surprising that a growing number are doing so. I cannot understand how the Government or the unions can believe that it is in their best interests that the nationalised industries or the private sectors should be prevented from competing in an international market for the best skills and the best managers available.
Another distasteful feature of the White Paper is the continued clobbering of all those who have invested in industry. This has been going on now for five years. Seventeen families out of every 20 in this country have a direct stake in British industry and it is wrong that they should continue to be penalised in this way. It is a sign of the times when pension funds of trade unions are not investing everything they have in British industry but are buying works of art and other hedges against inflation.
If one considers industrial shares against a house or agricultural land, taking 1946 as the basis, one sees that the RPI has risen from 100 to 650. For a house, it has risen from 100 to 900 but for industrial shares it has risen from 100 to only 350. That seems to be cutting

1435
off one's nose to spite one's face. We should do all we can to make investment in industry attractive.
My right hon. Friends have continued to point out how successful businesses have been handicapped by taxes, particularly on capital. The capital transfer tax means that a successful business cannot be passed on from the first to the second generation. Many of today's great cornpanies—Wedgwood, Pilkington, Marks and Spencer and the rest—could never have emerged under this regime.
The Government have also promised to introduce a wealth tax. The Financial Secretary may have read the words of Mr. Colley in the Dail when withdrawing the Irish Government's wealth tax:
"… one certain result emerged: existing jobs were lost and jobs in prospect never came to fruition."
I hope that the Minister will ponder the Irish experience.
The poor performance of this country in recent years has come about because we have not created an environment in which the skilled worker, the manager, the entrepreneur and the owner can make their full contribution to our success. I look to the return of a Conservative Government to see that they can do so.
6.47 p.m.
Mr. Arthur Lewis: I apologise to you, Mr. Deputy Speaker, for making a sedentary interjection during the speech of the hon. Member for Kidderminster (Mr. Bulmer). I now repeat it. I agreed with most of what he said about the Civil Service and wanted to point out that, although years ago civil servants had well-paid jobs and pensions which became inflation-proofed, it was then the custom that they simply retired when they left their jobs. Now, of course, they can take another lucrative job in industry, and invariably in the industry for which they have been responsible in the Civil Service.
I do not blame the civil servants. As I said in my interjection, Lord Barber, the prolific Tory Chancellor who led this country into an economic mess and who was advised by the same Treasury advisers as this Government have, became the chairman of a bank at a salary of £20,000 a year. He was all in favour of an incomes freeze.
1436
I am not just getting at Lord Barber. It is true of all of them. Roy Jenkins dragged us into the Common Market and then went off to a £60,000 tax-free job, paid for in part by the British taxpayers whom he had conned into supporting his incomes policy.
Mr. Alan Clark: Hear, hear.
Mr. Lewis: Let us not forget Christopher Soames, Tugendhat and the rest. They all feathered their own nests.
I agree with everything said by my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo) about Socialism. I wish that he had also quoted the remark of that great and true Socialist Nye l3evan, whom we were both so proud to know, that he had never known international bankers to be the friends of Socialists or to help introduce Socialism. I cannot see the IMF, which is supposed to be the friend of the Chancellor and the Government, helping us to produce Socialism. The Government are not interested in Socialism. They have not done anything to produce moves towards more Socialism. I do not blame them. They are carrying out the instructions of those at the Treasury.
Let me instance the case of Lord Armstrong. When he was Mr. Armstrong, in charge of the Civil Service, he introduced the first wage freeze. The right hon. Member for Sidcup (Mr. Heath) was Prime Minister. Before Mr Armstrong's wage freeze was introduced he suggested that all top civil servants should have their salaries increased by 25 per cent. His salary was the first to be affected. Then he discovered that civil servants should have inflation-proofed pensions. As he was due to retire to become chairman of a bank—following the example of Lord Barber—he suggested that he should wait and not draw his pension for 12 months so that he could then claw it back at the inflation-proofed rate. All the poor taxpayers whom he had been taxing had to pay for that.
What about the present Chancellor of the Exchequer? I should like him to tell us how, on his known limited income, he can, in the course of four or five years, afford two or three houses costing £200,000 or £300,000. I do not know how he does it. The ordinary taxpayer

1437
certainly cannot do it. We have these advisers telling us that an incomes policy is good and should be introduced. They say that it should be statutory.
Incidentally, it is worth pointing out that the Liberal Bench is now empty. What about stockbrokers? Do they have a limited income? What about the leaders of both Front Benches when they are playing their musical chairs? At the moment it is the Tories who write the centre page spread in The Sunday Express. They share it themselves. The right hon. Member for Chipping Barnet (Mr. Maudling) is one of those who share it. They write lovely articles saying that the worker should limit his income—and they get £300 or so for writing the article. These are the people who are telling us that we should have a prices and incomes policy.
I was surprised that my hon. Friend the Member for Bethnal Green and Bow ended his speech by saying that he did not know which way to vote. His speech convinced me. I have made up my mind. I shall vote against the Tory amendment and abstain on the main Question. I know that if the Tories gain power they will be no different from a Labour Government and that if Labour holds power things will stay as they are. I fought the last General Election on the ground that there would not be a statutory incomes policy. Technically speaking, we do not have such a policy. We have everything except that.
We have had Opposition Members telling us that there will be free collective bargaining. If they are in power, they will be advised by the same civil servants and before long they will break their promise. The people have become fed up with these Treasury statements. Practically every six months a statement is made saying "X is right." Six months later, we are told "It is not X. It is Y. We made a mistake. Our forecasts were wrong. We did not understand this, we never appreciated that." Almost every six months these people are proved by their own statements to be wrong. Who pays for this? Who suffers? It is the ordinary person, the poorest working man, the chap on the lowest income.
There is the suggestion that people can negotiate up to £44 a week. Why do not the Government bring in a national mini-
1438
mum wage below which no one shall fall? Why not ask Lord Boyle and his committee to work out a reasonable percentage of the increase which has been given to the chairman of Cable and Wireless Limited? He has got a 100 per cent. increase for a three-and-a-half-day week. If he attends the Lords, he gets another £16·50 tax free, which is worth to him, on his known public income, £100 per day. That noble Lord—Lord Glenamara—was in favour of incomes policies. When he was Government Chief Whip, he used to try to whip me in. I have never supported any incomes policy because I know that it cannot work.
An incomes policy will work for some—the poorest. It does not work or the lawyers. How many lawyers have we here? We have about 16. They all voted for an incomes policy. Incidentally, they are the only ones who, as Members of Parliament, are allowed to hold an office of profit under the Crown. They can act as recorders at £5,000 and £6,000 a year. Every Member of the House of Lords can hold any office of profit he wants. Reference has been made to the committee chaired by Lord Diamond. I know Lord Diamond. I knew him when he was in this House. He was an accountant, just like the Chief Secretary to the Treasury. Lord Diamond is on the quango train. Everyone in the Lords who wants it has either a well-paid sinecure, a part-time job for which he is paid thousands of pounds a year, or is getting expenses worth thousands of pounds a year. They all get up and make lovely speeches in another place saying that it is time that we had an incomes policy.
Later tonight we shall no doubt have a member of the legal profession speaking on the Opposition Front Bench. It may well be the right hon. and learned Member for Surrey, East (Sir G. Howe). I do not know whether he will be for or against an incomes policy. I do not know whether the Opposition have changed their minds yet. All that I ask is, what about the lawyers? Almost every day we read in the papers of a case in the High Court which may have lasted two or three days, or even a week, and we are told that the legal costs will be £50,000, £70,000, £100,000 or £500,000. Who pays? It is not the Government. The taxpayer pays. The Government have no money. They do not have a halfpenny.

1439
The money is produced by the workers, by hand or brain. It is they who pay.
It is a crying shame that a Labour Government should try to grind into the ground those who are already the lowest paid. The richer and more exclusive brethren will get away with it—those who write articles, those who broadcast. I have heard all of these debates in the past 30 years. I heard someone on radio saying how much he supported the Government's income policy. My wife was listening and she said "He put up a good case". I said "Yes, and he'll get more for those three or four minutes than my average worker will get for a week's work". That broadcaster was all in favour of an incomes policy, and well he might be.
Let us remember again the words of that great Socialist Nye Bevan. My hon. Friend the Member for Bethnal Green and Bow was here at the time, and he will remember when the great Roy Jenkins and Hugh Gaitskell put a temporary charge on medical certificates. That charge was then extended to teeth and spectacles. I think that that was in 1947. It was a temporary charge, but it is still on.
When Nye Bevan was resigning, I went to him and said "Look, Nye, for God's sake do not vote against the Government. Do not resign, because if you do you will bring the Government down, and we cannot have a Tory Government." He said "Look, son"—he was much younger than I was—"do not tell me that to be kicked in the tookers"—my hon. Friend knows that expression—"by a Labour Government is better than being kicked in the tookers by a Tory Government, because to me it does not matter. I am still being kicked in the backside. I do not want to be kicked in the backside at all." That is my attitude.
I do not want to support a so-called Labour Government carrying through their so-called incomes policy when it is not an incomes policy at all but is a further attack on those on the lowest standards of living. Therefore I shall, as I said, vote against the Tories because I do not trust them, and I shall abstain from voting on the motion.
7.1 p.m.
Mr. Douglas Henderson: The debate started in a sad
1440
way, with two of the worst speeches that we have ever heard from the Front Benches in this House on any subject, but I am glad to say that the debate has improved considerably within the past hour of so. We all enjoyed the contribution of the hon. Member for Newham, North-West (Mr. Lewis), and I think it is fair to say that all those who were here at the time were impressed by the maiden speech of the hon. Member for Penistone (Mr. McKay).
When the hon. Member for Cornwall, North (Mr. Pardoe) paid the usual tribute to the hon. Gentleman, he said that he had campaigned against the hon. Gentleman during the by-election. I shall pay my tribute, but my hands are clean because my party had no candidates at Penistone and, therefore, the tribute that I shall pay is sincere. I thought that the hon. Gentleman showed a great deal of compassion and understanding for his constituency, and I am sure that we all look forward to further contributions from him.
The other speech that I should mention was that of the hon. Member for Bethnal Green and Bow (Mr. Mikardo) which I am sure friend and foe alike would admire as a brave, honourable and sincere speech. Speeches of that kind, I am sorry to say, are not heard often enough in this House.
If the opening speeches from the two Front Benches today were a foretaste of what we are to have during the General Election, I can only say that we are in for one of the dreariest and most negative General Election campaigns that we have ever experienced. Both speeches were atrocious, and I think that when we are discussing a matter as profound and important as this we are entitled to expect the Prime Minister to be more Prime Ministerial, and we are entitled to expect from the Leader of the Opposition a speech which at least has some sparkle and originality. You might throw me out for saying this. Mr. Deputy Speaker, but I counted at least 12 hon. Members who were fast asleep when the right hon Lady was speaking. I shall not embarrass anyone by naming names.
Mr. Deputy Speaker: It is no use the hon. Member appealing to me. I certainly shall not throw him out. I am waiting to hear his masterpiece.
Mr. Henderson: Thank you very much, Mr. Deputy Speaker. I shall try to make sure that what I have to say is sufficiently interesting so that you will be fully awake during the whole of it.
The point which comes through in the Government's propaganda, the White Paper, is that the control of wages is the sole means of controlling inflation, and that if ordinary working people, be they managers, or be they on the shop floor, will restrict themselves to this 5 per cent. figure during the coming year, all will he well.
The final sentence in paragraph 31 of the White Paper says of the Government's policy:
"It will encourage the regeneration of industry, guarantee living standards"—
that is a pretty formidable undertaking—
"and make possible a continuing fall in unemployment, bringing lasting benefits to all sections of the community."
That is a very rash and unprincipled statement for the Government to make, because it is clear that one reason why inflation has fallen over the past year is that commodity prices are very much more stable than they were a year ago. An interesting article by Dr. Graham Hallett, the senior lecturer in economics at University College, Cardiff, traces this extremely well. He has done a graph showing the position over the past few years. It shows that after the rise in 1973–74, and the fall in 1975, there was a very much more balanced and stable situation in the spring of 1977. His conclusion is that the fall in the British inflation rate owed a great deal to the singularly fortunate combination of stable commodity prices and a rising pound.
Dr. Hallett went on to say:
"The outlook now is less promising."
That is the first point that the Government have to answer. What is their forecast of the direction and the pace at which commodity prices are likely to move over the next year, because the United Kingdom is vulnerable, particularly in agricultural commodities, because this country can virtually feed itself for about three days a week? We always say in my party that we are rather sorry for the people of England in this respect. They can feed themselves for only three days a week. We feed them for one day
1442
a week by the exports which they get from us, Ireland feeds them for one day a week, and the rest of the world feeds them for the other two days of the week.
The hon. Member for Bethnal Green and Bow talked about planning, but I have to say that this is perhaps the only area in which the Government have made any attempt at planning in the past few years with the publication of the White Paper "Food from Our Own Resources" which was designed to say for the United Kingdom "Let us raise the level of self-sufficiency in foodstuffs by investment in agriculture" and anyone looking at the targets and figures postulated in that White Paper can see what a futile exercise in planning that has been, because the targets have not been achieved, and in fact they have slipped back over and over again.
There must be concern about what the exchange rate will do in the next year, and again we should like an informed judgment from the Treasury on this matter, because the strong balance of payments surplus that was confidently being forecast even a few months ago has not materialised and the monetary growth has recently been about 15 per cent. rather than the 11 per cent. that was being suggested. When we are talking of inflation, let us not think that we are talking only of wage costs. Let us not play a cruel hoax on the working people and tell them that if they will keep down to 5 per cent. the rate of inflation can be controlled.
There is a perfunctory reference to these factors in the first paragraph of the White Paper about the contribution which a higher exchange rate and stable commodity prices have made, but it is only perfunctory, and that argument and rationale are not developed in the White Paper, and nowhere are there any figures of Government projections on these two crucial factors—perhaps the two most crucial factors in the past year—in the change in the rate of inflation.
I see the Financial Secretary sitting there with a frown on his face. No doubt he or whoever else winds up the debate will give us that information, because I do not think that we can look solely at wage costs, and look at this policy, without taking into account how effective the Government will be in dealing with these other factors.

1443
In terms of rising prices and rising costs, the Government having published their pronouncement that wages must be kept to 5 per cent., I must inform the House that I have just received today from the Scottish Special Housing Association a note of the increased rents which it intends to charge this year for houses in my constituency. The increases are not 5 per cent. I cannot see one increase for any type of house which is 5 per cent. The smallest increase that I can see is 9 per cent, and that is for a five-apartment semi-detached house. If, however, one happens to live in a block of four flats, the rate of increase will be 12 per cent. If one happens to be in the giddy heights of living in a terraced end house with no side access; the rate of increase will be 15 per cent.
Here is the point. At the very time when the Government are telling people that wage increases must be restricted to 5 per cent., the Scottish Special Housing Association, with thousands of houses throughout Scotland, is telling its tenants that they are to be charged a minimum of 9 per cent. more, and in some cases 14 per cent. and 15 per cent. more. I expect to have an answer from the Government on that question as well. I do not know what is likely to happen on the local authority side. No doubt we shall hear about increases there as well.
I want to make a very special point about the position in Scotland, because many of us feel that we are entitled to some special consideration and some special treatment in this situation. I will give the reasons for this. The first is that the productivity of Scottish industry has been higher than the productivity of industry in the United Kingdom over the past few years. Making the comparison between the United Kingdom and Scotland for all industries, and using 1970 as the base line at 100, I find that in 1974 the figure for Scotland was 108, as against 106·9 for the United Kingdom. In 1975, the figure for Scotland was 106, as against 101·6 for the United Kingdom. In 1976, it was 108·9 for Scotland, as against 102·2 for the United Kingdom. In 1977, it was 107·1 for Scotland, as against 102·6 for the United Kingdom. In other words, there was greater productivity in Scottish industry over these years, with a differen-
1444
tial of some 5 per cent. when compared with that of the United Kingdom.
Mr. John Evans: Where is the evidence?
Mr. Henderson: These are Government figures, published by the Scottish Office. I realise that they are uncomfortable figures, which make some people a little edgy.
Mr. Arthur Lewis: Will the hon. Gentleman give the code or reference number? We should like it to be in Hansard for reference purposes.
Mr. Henderson: I will send the hon. Gentleman the reference. The information is published by the Scottish Office every six months. Wage levels in Scotland, then, are to be held down, although productivity has been higher. This means that the level of demand of the Scottish economy is to be held down correspondingly.
I turn to the level of incomes in cot-land, where again the figures are contentious. The information comes from the regional survey. This material is in the Library. It shows that for the last year for which figures are available, 1975–76, the average household income per week in Scotland was £74·68, as compared with £78·59 for England. I do not begrudge people in England getting an income of £78·59, but ordinary people in Scotland are entitled to ask "Given the circumstances in which we live, why is not our income £78·59 as well?"
The next factor to which I refer is the cost of living in Scotland. Again, the figure comes from the regional survey. For the year 1977, the annual budget for food for the United Kingdom was £918, but the corresponding figure for Scotland was £940.
I recently met a young couple from Chelmsford who have just moved into my constituency, where, of course, they will have a very much better Member of Parliament than they had in the area from which they came. The first comment that the wife made to me was that on coming to Scotland she had been appalled to notice how much higher was the cost of food. She could not understand why she had been able to buy things in supermarkets in Chelmsford for

1445
very much less than she was able to buy them in the shops in Aberdeen, in Ellen or in Peterhead. In terms of cost of living, there is about a 4 per cent. differential between Scotland and the rest of the United Kingdom.
The Government have already recognised that in London there are some distortions of labour costs. When I refer to the London weighting, I am not making an attack on the right of people in London to have proper recognition taken of the circumstances in which they live. Indeed, those of us who come to London and see the conditions in which they live have some sympathy with them. But I think that my constituents and constituents of hon. Members in other parts of Scotland are entitled to say to the Government "If you can do this for London, why cannot you do it for Scotland?" The Government ought to carry out a proper survey, on the same basis as they did for London. If that were done, the people of Scotland would abide by the results. If the results were to show that the positions were comparable, there ought to be a Scottish weighting allowance, just as there is a London weighting allowance.
Incomes data survey study no. 157, which I saw in the Library, shows that the BBC pays its staff £9 a week extra in London as compared with what it pays in Glasgow or Edinburgh. The IBA, which is slightly more affluent, perhaps, pays almost £9·50 a week extra to its staff in London. In inner London the Post Office pays almost £12 a week more to its staff than it pays to its staff in any part of Scotland. In subscribing to the Automobile Association, as many of us do, we probably have not realised that we have been subscribing towards a London differential of £9 to £10 a week for the staff there. The clearing banks are paying about £13 a week extra to the staff working within 3 miles of Charing Cross. Is it suggested that bank staff in Aberdeen or Edinburgh have lower living costs than bank staff in London?
This is a matter to which the Government must address themselves with increasing attention as the General Election comes nearer. If a special survey can be made for London, it can also be made for Scotland. It is high time that this matter was looked at in terms of the distortion of the labour market in Scot-
1446
land through lower family incomes and higher costs. I am sure that such a survey would show the true position and help to even up the differentials between Scotland and the rest of the United Kingdom. I hope that we shall have a reply on this aspect from whoever winds up the debate tonight.
The hon. Member for Bethnal Green and Bow said how difficult it was to decide between Tweedlcdum and Tweedledee. Not because we think that there is any great intellectual merit, any great compassion or any great understanding of the problem on the part of the Conservative Party, but simply because this matter is the Government's responsibility, we shall be in the Opposition Lobby tonight. We have no great confidence that the Opposition could do one whit better for the people of Scotland than the present lot are doing.
7.18 p.m.
Mr. Sydney Tierney: This has been an interesting debate, Mr. Deputy Speaker, I do not wish to comment, as the hon. Member for Aberdeenshire, East (Mr. Henderson) has done, on the quality of the speeches, but I think that we have had something of a full dress rehearsal at the beginning of the debate, and no doubt the same will apply at the end of it.
We had a debate yesterday on unemployment, and although the debate today will cause more interest and more excitement, because of the political and electoral implications, it is the problem of unemployment which overshadows everything else that we discuss in real and human terms in this House. Consequently, the greatest and most immediate problem for us all is how to return to a situation of full employment.
Whether it affects school leavers or those who are 40, 50 or 60 years of age, unemployment is no less intolerable. We are faced with this formidable problem of unemployment again and again, and we have to seek solutions to it. We have to consider measures such as those in the White Paper—sometimes unpalatable measures—to resolve the problem. Although we may not agree with all that is contained in the White Paper "Winning the Battle Against Inflation", it is something that we have to discuss and determine, and we must give our deep consideration to it.

1447
The arguments about a lower rate of inflation being essential if we are to create more jobs, reduce unemployment and keep British goods competitive both at home and abroad are well understood. Employers and trade unions know that they have a very heavy responsibility in the conflict between the Government's overall strategy to contain wage levels, inflation and unemployment and the flexibility which they need to deal with such matters as differentials, low pay and special cases. It is a very delicate balance and I think that everyone agrees that the Government have an extremely difficult task.
In "Winning the Battle Against Inflation", my right hon. Friend the Chancellor of the Exchequer is right to stress the debt which the nation owes the trade unions for the moderation and responsibility which they have exercised over the past three years.
Mr. Skinner: And the naivety.
Mr. Tierney: My right hon. Friend is also right to emphasise that we must secure our gains and build upon our successes. Therefore, he must not be surprised if the trade union movement, having studied the Government's measures proposed in the White Paper, expresses its disappointment at the lack of elbow room to build upon those successes. For three years we have had ad hoc policies on a year-to-year basis, set and firm in their concept and rigid in their application. Although the general strategy has been successful, the inflexibility of such measures has brought consultation problems, differential and special case problems and, perhaps most of all, low pay problems.
I want to spend a few minutes on the problem of low pay. A number of hon. Members on both sides wish to speak, and I shall confine my remarks to this problem.
In Great Britain, 2½ million employees work in trades covered by wages councils. Wages councils fix minimum legally enforceable rates of pay in relation to a specified working week. In agriculture, 44 per cent. of male employees earn less than £50 a week. In hotels and catering, 58 per cent. of males earn less than £50 a week. In retail distribution, 33 per cent. of males earn less than £50 a week.
1448
I refer my right hon. Friend the Financial Secretary to the Retail Drapery, Outfitting and Footwear Trades Wages Council, which covers people working in retail drapery shops, outfitting, shoes and so on. The report of that wages council shows changes which take effect from 3rd July of this year—two or three weeks ago. It covers clerks, sales assistants and cashiers in those trades.
Reference has been made already to London weighting. The London rate for clerks, sales assistants and cashiers in the proposal—and the next negotiating date is July 1979—is £40. Away from London, in provincial cities and towns, the rate of pay as from 3rd July 1978 running on to 3rd July 1979 is £38·50 for the same categories of workers.
In the meantime, obviously, in the months ahead other wages councils will determine similar rates for similar categories of workers, especially those engaged in retail distribution. Taking the figure of £38·50 for workers in those trades and remembering that the anniversary date is July 1979, they will need an increase of £6 or approximately l5½ per cent. to reach the figure of £44·50 mentioned in the White Paper.
I know that there has been some talk by my hon. Friend the Member for Newham, North-West (Mr. Lewis) about a minimum wage. But I want to ask the Financial Secretary whether the Government, who have some good influence in the negotiating operations of wages councils, are prepared to see wages councils' rates move towards this figure of £44·50 in the next 12 months. In other words, if wages councils meeting in September, October and November this year do not gain this £44·50, are the Government prepared to see them meeting again within the 12-months period so that they may reach this £44·50 or, better still, will they ensure that that rate is put into effect as quickly as possible?
Mr. Arthur Lewis: Is my hon. Friend aware that the Minister can refuse to sign an agreement and can refer it back? As he does that if there are wages above the level, would not it be a good idea if he considered doing it when they were below the level?
Mr. Tierney: I am grateful to my hon. Friend, and I am sure that he has made the point.

1449
Apart from wages councils, there is little doubt that some trade unions will in some instances have to negotiate voluntary agreements for £44·50. That may surprise some hon. Members. Paragraph 19 of the White Paper refers to respect for existing settlement dates. I hope that we shall be told whether the Government will allow wages councils or trade unions and employers voluntarily to engage in a second set of negotiations within the 12 months, the first set having failed to achieve the rate of £44·50—miserable rate though that is.
Low-paid workers suffer not only from the problems of low wages but from all the other anomalies thrown up by pay policies. For instance, they experience the most devastating differential problem of all, which is the difference between average low-pay earnings and the average earnings in British industry generally. In 1976, at the TUC conference, 113 unions representing more than 11 million workers carried unanimously a resolution moved by my own union, the Union of Shop, Distributive and Allied Workers, stating that they sought improvements of basic rates to assist workers on low pay and the implementation of a TUC minimum wages policy.
There is an Early-Day Motion in circulation headed
"A Policy for Low Paid Workers".
It makes the point that there exists an unacceptable low estimate of the social and economic worth of the jobs performed in the public services, in agriculture, in hotels and catering and in retail distribution. It goes on to point out that wages are subsidised because of the excessive dependence on means-tested benefits such as family income supplement.
The TUC has given priority to the low pay problem and, as I have said already, a resolution on the subject was passed in 1976. The TUC has fixed the low pay rate at two-thirds of the national average earnings figure, which means that we should be aiming at a figure of £55 as a basic minimum rather than the £44·50 mentioned in the White Paper.
I recognise that a start is being made. At least there is some consideration in the White Paper, modest though it is, for low-paid industries. It may be that the Government are coming round to the
1450
belief that low pay and the problems that it brings also make up a special case, a case for special consideration, and a special case which requires immediate and urgent inquiry.
The ever-continuing problem of low-paid workers and their struggle to escape the poverty trap can be resolved permanently only by substantial increases in real wages. In most of the trades which I have mentioned—the public services, retail distribution and so on—productivity schemes, self-financing or otherwise, which are the escape route for many industries are almost impossible to achieve and apply.
The workers in these industries, which are efficient and prosperous, resent their low pay label and the employers who get away with miserable levels of pay qualifying for social security Dm fit but not providing a standard living rate of pay. If the low paid were treated as a special case, as they should be, we should be able to release many wage earners from the poverty trap and restore their respect. We should thereby eliminate the need for social service benefits, which is often a duplicating and time-wasting process. We should eliminate the need for rent and fate rebates and all the other services and effort that are required to ensure that a family receives an income of subsistence standard to enable it to survive.
We need a far wider discussion on pay than the Government have so far undertaken. That is necessary if we are even to begin to understand the problem of low pay. We must move away from dealing with the problem on an annual basis. At present we put ourselves in the clear for 12 months at a time and hope for the best. In 1975, under phase 1, the £6 basic rate increase was the highest ever received by retail distributive workers. It was higher than the 10 per cent. in 1977–78. In 1976–77 the Government reverted, unfortunately, to a percentage increase that left the low paid even further behind. That is because no special consideration was given to their plight.
In the White Paper we are faced with another percentage increase and the hope that some of the low paid might be able to acquire a basic minimum rate of £34·50 a week. That is £10 or more

1451
behind the acceptable figure. That indicates the extent of the problem that has to be overcome and the need for a year-on-year consideration.
I understand the view that Britain should aim at a long-term approach in which collective bargaining is based each year on a broad agreement among the Government, unions and employers about the maximum level of earnings that is compatible with keeping inflation under control. However, I hope that my right hon. Friend the Prime Minister will understand, as I am sure he does, that over many years the free play of market forces—the free-for-all—has failed to secure equity between various bargaining groups.
In 1975 we set off with a pay policy to arrest and contain the glowing rate of inflation. Those measures were successful in that respect. It was essential that they should be. Since the war—not since 1975 or 1974—we have allowed wage growth to evolve in a way that has left us with deep-rooted problems. None is more deep rooted than the problem of low pay.
I have confined my remarks to the special case of the low paid precisely because it is a special case. I make no apology for making that claim. The low paid are a special case because their wages are far too low. They are a special case because they suffer the most devastating differential problem. That is the problem brought about by the difference between their average rates of pay and the national average rate of earnings throughout industry. They suffer all the anomalies that rigid pay norms bring and they are unable to turn to productivity bargaining, whether or not it is self-financing, for support.
The problem of the low paid has been with us for a long time. They are the poor, and over many years our economic achievements have been all the poorer because of our acceptance of low pay standards throughout industry. It will take a considerable time to put matters right, but we must make a start.
In the discussions that my right hon. Friends have with all sides of industry, I hope that they will make the elimination of the low pay problem an urgent priority. The TUC, through the trade union movement, must be allowed to pur-
1452
sue and overcome the problems of low pay. Action is needed to end the scandal of Britain's poverty wages. Such action is long overdue.
Mr. Deputy Speaker: I remind the House that about 11 hon. Members have been waiting patiently throughout the debate and are anxious to speak. There remain 90 minutes before the wind-up speeches begin. Unless there is a drastic curtailment of the length of speeches so that they continue for about eight minutes apiece, many hon. Members who wish to make contributions will not have the opportunity of doing so. I hope that this evening we shall win the battle against not only inflation but lengthy speeches.
7.35 p.m.
Mr. Ralph Howell: Ever since 1961, and under successive Governments, we have had debates on the economy, on various White Papers and on the introduction of more and more controls of wages, prices and dividends. All of them have been unsuccessful and have resulted in the dismal position in which we now find ourselves. I do not believe that there is any hon. Member who believes that the White Paper will do anything to improve Britain's productivity or to get us out of the terrible morass into which we have fallen.
I congratulate the hon. Member for Birmingham, Yardley (Mr. Tierney) on his excellent and well-reasoned speech and on the service that he is doing for the low paid. I can associate myself almost entirely with everything that he said and with part of the speech of the hon. Member for Newham, North-West (Mr. Lewis). I associate myself with both hon. Members' call for a minimum wage. It is time that we recognised that it is a disgraceful state of affairs that we tax those who are earning less than half the national average wage. We have the most absurd system whereby we top up wages with the family income supplement, for example, only to take money away in tax. I hope that we may join forces to some extent to try to push forward the idea of a minimum wage. I cannot understand how it is that after four years of a Socialist Government Labour Members have to preach to the Government about the need to help the poor and the need to lift low wages by introducing a national minimum wage.

1453
I shall direct my remarks to the White Paper and the dismal idea of holding down wages to 5 per cent. We are the nation with the lowest wages in the EEC. In 1961, when we first started the foolish business of restricting wages, we had the highest level of wages in any of the countries now within the EEC. I shall illustrate the price that we are paying by referring to a few figures. The average hourly earnings of male workers in Britain are £1·62. Even in Ireland they are now £1·71. Our wages are less than half those being paid in Denmark, which are £3·84. They are little more than half those being paid in Germany, which are £2·97.
It is time that we tried actively to get on a par with our competitors and to provide incentives for people to work. Even with our present low wages, we cannot compete with foreign car manufacturers. How is it that our car manufacturers allow their home market to be taken over by the Germans, the Japanese, the French and almost everybody else, despite the fact that we are running such a low wage economy?
The crucial factor that we have to consider is that there is insufficient incentive to get people to work properly and efficiently in Britain.
Mr. Skinner: Rubbish.
Mr. Howell: It seems that the hon. Member for Bolsover (Mr. Skinner) wants to keep it that way. He is not interested in seeing the wages of the lower paid lifted.
Mr. Skinner: The week before last I attended a meeting, which the hon. Gentleman did not attend, in a Committee Room upstairs when Mr. Alan Fisher addressed Members of Parliament on the question of low pay. I support the £60 minimum. I doubt whether the hon. Gentleman does.
Mr. Howell: I support a minimum wage. I think that a £60 minimum is a little excessive at the moment.
Mr. Skinner: I thought the hon. Gentleman would say that.
Mr. Howell: I hope that we can work towards it very quickly. I should like to see the hon. Gentleman do something more active in supporting—
Mr. Skinner: I used to work with my hands, brother.
Mr. Howell: I did, too. I should like to see the hon. Gentleman do something more active in supporting his hon. Friends with the idea of introducing a minimum wage. Let us not make it too high for a start, or it will be impractical. Let us get a minimum wage and get away from wages councils awards.
We have created a treadmill society in which people at all levels, due to our appalling tax system, find it almost impossible to better themselves. We have a high-taxation, low-wage, high-frustration society. It is high time that we broke away from this state of affairs.
I turn now to the hypocrisy in the Government's motion of aiming towards full employment. They have done nothing towards getting anywhere near full employment. In fact, they have taken us so much further away. It is appalling hypocrisy to dangle the thought of such a situation when they know that it is impracticable with our present system.
Tremendous numbers of people are caught in the unemployment trap. In an intervention to the Prime Minister, I mentioned this matter. I believe that tens of thousands—hundreds of thousands—of people simply cannot afford to work due to our very low tax thresholds and high tax rates. In fact, it is now more profitable not to work than to work.
I want to draw the attention of the House in more detail than I did earlier to two people, one of whom worked and the other of whom is still working for British Rail. I have my constituent's permission to mention his name. It is all too easy for cases to be brought up which are generalised. My constituent, Mr. Tatchell, was a crossing gate keeper. He still lives in a British Rail tied house. His wage, before he was sacked, was £46 a week. His spending power after tax, national insurance and rent was £28.
Mr. Tatchell thought that his job was underpaid and the hours too long-90 hours a week on duty. He is now unemployed. He receives £44·90, out of which he has to pay £11·50 rates. Therefore, he is more than £5 a week better off unemployed than at work. He does not want to be unemployed, but he cannot accept a job at much under £70 a week.

1455
He has two children. This applies not only to the large families about whom the Prime Minister was talking but to the average size families. Mr. Tatchell has calculated that he needs £70 a week before it is worth his while going back to work.
Mr. Tatchell's friend, a little further down the track, is still at work. His rent has been pushed up to £16 a week. I have his pay slip here. It shows that he earned £58 in a certain week. After deductions for rent, tax and national insurance, he received a cheque for £28. It is disgraceful that we should tax people earning such low wages. It is not worth their while to work.
We must apply our minds to this problem. It is not worth while pulverising a dying Government on this issue. However, the next Government must attend to this problem. All Governments since 1961 have held down wages and indexed benefits to such an extent that we have reached the absurd situation where nearly half the working population are either better off unemployed or only marginally better off if at work when account is taken of what they have to pay to get to work.
The system is destroying the British people. I believe that nearly everybody in this country would like to work, work intelligently and see the country prosper once again. I believe that we do remarkably well, despite the handicaps that we place upon ourselves. We are almost keeping up with other countries. We are like an Olympic swimmer who could streak past his competitors if only we removed the heavy weight that we insist on having round our neck. The weight of taxation is destroying incentive at all levels.
I should like to draw attention to another pay slip that I saw earlier. A person earning £20,000 a year had half his monthly salary deducted in tax. We must overhaul and reframe our taxation, welfare and employment system. The Conservative Government between 1970 and 1974 tried to patch it up in various ways. We tried to help with family income supplement and measures of that kind. But there is no way of repairing or improving the present totally unco-ordinated taxation and welfare
1456
employment system. I hope that our incoming Government will recognise that we must overhaul the system in order to allow the British people to get themselves out of this appalling mess.
7.47 p.m.
Mr. Giles Radice: congratulate the hon. Member for Norfolk, North (Mr. Howell) on his speech, particularly on his concentration on low pay and poverty trap issues. The hon. Gentleman made a valuable contribution to the debate.
I also congratulate my hon. Friend the Member for Penistone (Mr. McKay) on an excellent maiden speech. I should like to take this opportunity of paying tribute to John Mendelson, whom I always found encouraging and kind to all younger Members like myself.
I want to concentrate on the White Paper. I had hoped to hear from the Opposition Front Bench today some elucidation of the Conservative Party's viewpoint on inflation and incomes policy, because its policy has been in a highly confused state.
The right hon. Member for Leeds, North-East (Sir K. Joseph) said that incomes policy was actively damaging. He puts his faith in controlling the money supply. Before the debate the Leader of the Opposition made noises about possibly having some kind of incomes policy in the public sector, but letting the private sector go hang. We also had the right hon. Member for Lowestoft (Mr. Prior) being rather more enthusiastic about the idea of an incomes policy.
I hoped that the right hon. Lady would let us all into the secret of the Conservative Party's policy, but she did not. She criticised my right hon. Friend the Prime Minister for the lack of intellectual content in his speech and then made a speech almost totally lacking in intellectual content. It was one of the worst speeches I have heard from the Opposition Front Bench in the five years that I have been a Member of this House.
I confess to being an unrepentant supporter of incomes policy. My experience as research officer of the General and Municipal Workers' Union and, indeed, as a Member of Parliament for an industrial constituency has strengthened my conviction that we must have an incomes policy.

1457
I agree that, because there are a number of different causes of inflation, incomes policy is only one of a number of measures or weapons that a Government can use. We know from experience that it is wrong to rely on incomes policy alone. We have had the experience of the three years in the 1960s when incomes policy was almost the sole instrument in controlling inflation. That was in the years before devaluation. It was not a great success.
In 1972–74 the Conservative Government had an incomes policy but did not control the money supply. That was ineffective. Any Government who want to control inflation must have policies on the exchange rate, money supply, public expenditure, competition, productivity and prices, as well as incomes. But I cannot see how it is possible to run a modern economy—whether it is capitalist, mixed or a total command economy—without an incomes policy. So I welcome the White Paper.
I turn to the question of the 5 per cent. norm. After the 10 per cent. limit—which has turned out to be rather higher than that—5 per cent. seems low. But because of the current rate of inflation, which is between 7 and 8 per cent., and the need to reduce it further, we must reduce the norm. I recognise that our rate of inflation is about average for OECD countries, but it is higher than the rates in main competitor countries such as Japan and West Germany. I believe that the Government have got the figure about right.
There are exceptions. The Leader of the Opposition did not recognise the exceptions. I have seen at least three exceptions in the White Paper. Groups of workers who are in positions similar to those of the firemen and police might be regarded as special cases. The low paid are in certain circumstances to be regarded as an exception. As in the previous pay policy, those with self-financing productivity deals are to be regarded as an exception. So it is not a rigid norm. Provided that the norm is held, the rate of inflation will come down and, for the second year running, there will be real increases in living standards. I welcome the White Paper and the norm.
I also welcome paragraph 9 of the White Paper in which the Government commit themselves, for the first time in
1458
this Parliament, to a long-term incomes policy. Nobody pretends that running an incomes policy is easy. It is not. Inevitably there are anomalies and distortions. Anomalies and distortions that arise in one phase have to be corrected in the next. In my experience, the difficulties caused by distortions and anomalies are made far worse by our national habit of abandoning incomes policies after three or four years and going back to a free-for-all which, in its turn, creates more distortions and anomalies. We then have to have a rigid incomes policy which creates further anomalies and distortions.
Many people have come to the conclusion that we need a permanent but flexible policy which can be adjusted to changing circumstances while maintaining an overall control of incomes. We should be aiming at that.
A number of things follow from that. One must have criteria for issues such as low pay, productivity and differentials. The new incomes policy appears to accept that. There must also be an adjudicating body which is voluntary and preferably on a tripartite basis with trade union participation. There must be a body which can make consistent judgments about the difficult cases such as those involving the firemen, policemen and university teachers. The sooner we accept the need for such a body, the sooner we can get rid of all the ad hoc review bodies with which we are now littered and which, because of their different adjudications, are making a nonsense of incomes policy.
We need a long-term incomes policy. But that will have long-term implications for the role of the trade unions. One must admit that. It is wrong to say that the bargaining functions of the trade unions will be removed. They will be able to bargain about low pay, differentials, productivity, hours of work and overtime, but one would be less than honest not to admit that there is bound to w some modification of the trade union role.
Over the past few years the trade unions have played an important economic and social role nationally. It is right that they should do so. It is right that one of the two major interest groups should be consulted and should play a part in the determination and shaping of national affairs. All Governments, of whatever hue and whatever they say

1459
before they take office, are bound to attempt to agree a social contract—what ever they call it—with the trade union movement. Such a contract must include economic and social issues as well as pay.
At the level of the company, the drive towards industrial democracy has its own logic and force. Its time has come. The adoption of a long-term incomes policy will hasten that process because trade unions will demand more control over management decision making. They will demand more control over the strategic decisions which shape company affairs. Trade unions will want to be certain that the resources of the firm to which their members contribute so greatly are used properly.
Whatever the long-term changes, the Government are to be congratulated on their courage in stating their own view in such a clear fashion. I wish that the Opposition had done the same. I believe that the Government's view is right. I also believe that in October, or whenever the election is, that view and policy will be supported by the British people.
7.57 p.m.
Mr, Julian Amery: Whatever else the debate has not done, it has to some extent restored my faith in democracy. We are on the eve of a General Election, and yet in this great debate on economic issues the argument is not between the parties. It cuts across the Floor of the House. That is true of incomes policy, of how to achieve the highest productivity and the nettle that I propose to grasp. The hon. Member for Chester-le-Street (Mr. Radice) has shown great courage in committing himself to an incomes policy. It is not popular with some of those hon. Members who adorn the Benches around him.
I propose to speak about the international context in which we operate. It is no use controlling inflation or securing productivity unless we can sell what we produce. We have to sell much of what we produce outside this island.
When I examine the results of the latest Bonn summit, I conclude that although it was not a disaster it holds out little hope. This morning's figures for the price of gold and the position of the yen and the dollar suggest that we are a long way from recovering from the world
1460
recession. Unless some order can be brought into the monetary markets, we face a grim outlook for 1979.
What are we going to do about it? There is the Cambridge school view of those who more or less follow Professor Wynne Godley's ideas. These would lead to reflation at home with inflationary results which would to some extent be controlled by rigid import controls and successive devaluations. With a population of between 55 million and 60 million, I do not believe that this could conceivably work. At the end of the day we should find ourselves forced out by this policy from the European Community to look for some new association—perhaps the COMECON, which would allow Lord Kaldor and Lord Balogh to reintegrate themselves into the countries of their origin.
So what are we to do? The present situation is untenable. An insular position is untenable. The European Community has so far seemed the best hope But, when we look at the European Community, I think we must accept that the United States, through the "benign neglect" of the dollar, is getting more than its fair share of European trade. The Japanese, through superior efficiency, are getting a very large share. The Soviet bloc, through dumping—which has pretty well been accepted by the Community—has been getting, until it has recently been stopped, a considerable share.
Therefore, while I never thought that there was a case for island protection, British protectionism, there is a case that one could argue for European Community protectionism. I do not propose to argue it today. I think that we may come to that. There is, however, a logical case for it unless the imbalance between the European Community and the United States, Japan and the Soviet Union can be overcome.
I want to suggest, however, that there is a better way. It is the way towards which the French and German Governments have been trying to lead us. We have overcome many obstacles to our trade with Europe. A lot of the trade barriers have been eliminated through our joining the Community. But the differences between the exchange rates, between the pound, the franc, the mark and the lira, particularly when they are

1461
floating, act as a discouragement to trade and investment.
If we could have some harmonisation of European currencies on the lines suggested by Chancellor Schmidt and President Giscard d'Estaing, there would open a new perspective enabling intra-European trade to be greatly increased. We have had some experience of this. Mr. Fukuda, the Japanese Prime Minister, is always going back to 1931, so I shall allow myself to do the same. When we went off gold in 1931 and created the sterling area, we founded a system of harmonised currencies, but floating against the rest of the world. The effect was to bring about an enormous increase in intra-sterling trade. I believe that the creation of that monetary union had as much to do as the introduction of imperial preference with the dramatic expansion of intra-Commonwealth trade that took place in the 1930s.
It is interesting to note that it was all done quite voluntarily. There was no supranational institution. What happened was that these countries, at very different levels of development, all agreed to bank their reserves with the Bank of England and, within limits, to follow the advice of the Bank of England. This system worked from 1931, through the depression, through World War II and through the aftermath of World War II until the 1960s.
I think that the break-up was inevitable because the industrial strength was not there to back the system. But the breakup did not bring the relief that many people thought it would bring. On the contrary, ever since the sterling area broke up, what we have really been looking for is another payments area into which we could fit.
The Bremen proposals seem to me to represent something which, if we join in and help to shape them, could give very great relief and open new perspectives to us.
I beg the House not to turn its back on those proposals. I beg the House, and not the Government, because we are near to a General Election, and although it is not this House that will decide these things it is the House that will return after the election. We turned our back on the coal and steel proposals in 1950.
1462
That was a great mistake. We turned our back on the European Defence Community, which was ill-conceived but could well have been reshaped. We turned our back on Messina, on the Treaty of Rome. We had to crawl in without having much influence on the terms, and we are still suffering from it.
I pray that we shall not make the mistake, what Dante called the supreme sin, of the great refusal of those who have an opportunity and do not take it. I hope that we shall not turn our back, not only for economic reasons but for political reasons too. I see that the Gaullists in France and the Communists in France are attacking President Giscard d'Estaing on his proposal because they think that it could lead to a German domination of the European economy. There will be no German domination if Britain, France, Germany and the other economies of the Community are involved. But if we stay out, that is a different story. I understand the anxieties of our French friends when they see the strength of Germany and the reluctance of Britain.
I think that politically this would be useful, too, because it would not be an anti-American or an anti-Japanese move. I was in Japan recently and I found the Japanese extremely sympathetic to the idea. Although I see that the Americans have reservations—the present American Administration seem to have reservations about quite a lot of good things and positive views about many rather doubtful things—I think that it would help the dollar if there were an alternative reserve currency with which the Americans had to keep in tune.
Of course it involves imposing certain disciplines upon ourselves. But there is no escape from discipline anyway. What have we been doing over the last two years since we accepted the International Monetary Fund support? The disciplines that we would have to impose upon ourselves would be less, I should have thought, and we should have a greater say in drawing up the rules. Of course we should be more independent and freer if we kept completely aloof from every organisation. But we all know the answer. What is the use of freedom which means freedom to sleep in the open air under the bridge in winter? That is not much of a freedom.

1463
The one thing that we have to fear is our lack of self-confidence. We still have in this country very great expertise in banking, insurance and all the arts of the square mile of the City. Ten years ago the authority of the Bank of England and the Treasury would have enabled us practically to dictate the terms of the European monetary union. We have lost a lot of ground since then. But let us not be afraid of our own weakness. This is the one fear that we have still to overcome.
8.8 p.m.
Mr. Dennis Skinner: The right hon. Member for Brighton, Pavilion (Mr. Amery) referred to the meetings at Bremen and Bonn and he placed some emphasis on the new Franco-German pact, which he thinks will do us a hell of a lot of good. Like the Common Market, it will further penetrate our industrial economy. It will mean that our current balance of payments deficit inside the Common Market, mainly with West Germany, will get worse. It will mean that the common agricultural policy will never be changed. There will be several other spin-offs, but those are the two most important matters.
The right hon. Gentleman has gone on record many times in regard to his delirious excitement and the frenzy into which he gets about the Common Market. He is like many other hon. Members. However, at least one can give him one sole credit. That is that he still tries to sing the Common Market's praises. There are some on the Opposition Front Bench, including the right hon. Gentleman's leader, who, although from time to time they talk about the European party, are now beginning to bewail the fact that we are inside the Common Market.
I know that an election is coming—at least some say that it is coming. But at least it is to the right hon. Gentleman's credit that he still tries to prop up this ramshackle organisation.
We are not here to discuss that matter, although I accept that wages and matters of that nature are all inter-related when multinational companies are spreading their wings all around the world.
I want to quarrel with one point made by my hon. Friend the Winber for Bethnal Green and Bow (Mr. Mikardo). He said that we have not seen any
1464
Socialism during the course of the past four years. He is absolutely right. But he went on to say that we had a laissez-faire economy. I do not think that that is right. This economy, currently—so called "private enterprise"—is propped up by lots and lots of taxpayers' money.
There are lots of Conservative Members, and a few Labour Members, who are directors of companies which are milking the taxpayers in order to survive. That is the real truth of the matter. About the only private enterprise area which one can find currently is the manufacture of skateboards, which is not in the assisted areas, and Ladbroke betting shops.
Mr. Neville Sandelson: The Bar.
Mr. Skinner: Not the bar in here. That is heavily subsidised. The bars in here are indeed heavily subsidised.
Mr. Sandelson: I meant the barristers Bar.
Mr. Skinner: My hon. Friend is on about the Bar. That Bar also is heavily subsidised—his Bar, and the £30,000 a year which he picks up as well as being a Member of Parliament. Those are his words, not mine.
Mr. Sandelson: I wish you were right.
Mr. Skinner: This White Paper is really a Bill. We have been dragged here under false pretences. I was told last week that we were to have a debate on the White Paper which forecasts a permanent incomes policy—the one which says that 5 per cent. will be good for workers in the forthcoming year. What do the Government do? They manufacture some sort of emotion. The motion
"welcomes the substantial progress already made in combating inflation".
There has been an element of that, but not all that much. It then goes on to talk about:
"a further sustained national effort".
National effort? Who will be held down? Will estate agents be held down?
Mr. Sandelson: Barristers?
Mr. Skinner: Barristers? Lawyers of all kinds and descriptions? Will they be restricted to 5 per cent., especially those dealing with property conveyancing? Of course not. What about all those who

1465
are on contracts? What about all those footballers who are currently signing new contracts? Will they be subject to 5 per cent., whether they come from Argentina or anywhere else? There are literally millions of people who never have to be subject to an incomes policy. Those Labour Members who get carried away with the idea that this is good, fair and equitable ought to study the facts. All these people escape the net. Incomes Policies are devised to put a fence around those who can be easily identified.
There are about 200,000 miners. The Government want to put a fence around them and slap 5 per cent. on them, if they can get away with it. But there is no chance. Perhaps they will find the railway men and slap an incomes policy on them, or find the teachers and do likewise. Of course all those who are organised inside trade unions will be subject to an incomes policy. That is why, throughout the period that I have been in this House, and whether it has been a Tory or a Labour Government, I have refused to support such a policy.
I must ask the monitor on the Government Front Bench, the Minister of State, Treasury, to tell the Chancellor that some of us are not supporting his policy. He will not be able to tell the nation's press that he has Dennis Skinner roped in on a 5 per cent. permanent incomes policy. I am not worried about the consequences, because the consequence of my voting for something that I abhor is more important than carrying on with a Government under whom unemployment now stands at 11 million. It is things such as that which I must take into account.
This White Paper has been produced without any consultation with Labour Members. Of course, the Liberals were consulted. But where are they? They are missing again. They are perennial absentees who come in here under their job creation scheme, set up 15 months ago with the Government in order to save their own jobs, and consult the Government on every important piece of legislation. But we Labour Members are herded into the Chamber, or herded into some Committee Room upstairs, and told "This is what we have got for you today, lads. Take it or leave it."
1466
I used to serve on a local authority, where we all had one vote apiece. The chairman of the council, the chairman of committees, and even the newest councillor, all had a vote. But in this place the Liberals are consulted as, I suppose, is the Conservative Front Bench on most of these things. It certainly looks to me as if they have been consulted about this motion and the amendment.
Mr. John Page Mr. John Page (Harrow, West) rose—
Mr. Skinner: I shall not give way. I have not seen the hon. Gentleman in the Chamber all day. I know that he is a lawyer, and that he has been busy, but he will not interrupt me. I shall give way only to an hon. Member who has been present throughout the debate
Mr. Page: On a point of order, Mr. Speaker. I have been present frequently enough to listen to the sotto voce and sedentary remarks from the hon. Gentleman, but what I really wish to do is to remove the insult that I am a lawyer. I am just extraordinarily clever.
Mr. Skinner: I reckon that the hon. Gentleman would just about make one. Labour Members who sit below the Gangway went into the 1974 General Election fighting for Socialism. I remember Conservative Members saying that the only time we could have an incomes policy was in time of war. That view was held by our ex-Prime Minister, who now sits in this House occasionally. Even Roy Jenkins said on television that we could not have an incomes policy except in times of war. Yet here we are moving into phase 4. The Government are hoping that by surreptitiously placing this motion on the Order Paper they can drag Labour Members into the Division Lobbies to support it.
The result of reducing consumer purchasing power and the £6 pay policy and its successors is that there are 1½ million people on the dole. That is not something temporary. It is not an aberration. It has been there for God knows how many months. Of course, there has been a marginal change during the past few months. With their hands on the economic levers, any Government worth their salt ought to be able to bring down unemployment on a seasonal variation, or whatever they

1467
call it, by about 3 or 4 percentage points. We expect them to do that. But as a result of the policies that they have pursued, this Government have engaged in throwing people on the scrapheap. That is the truth of the matter.
Mr. Martin Flannery: There would be twice as many if the Conservatives were in power.
Mr. Skinner: Yes, I accept my hon. Friend's remark. There is no question about that. They would get rid of all the so-called attempts that have been made to prop up jobs. But we Labour Members are in business to plan the economy. We have had opportunities and we should have used them to plan away unemployment. We have not done so, because during the past two and a half years, the Treasury Bench has been obsessed with cutting back public expenditure, unless it has been defence, and throwing people out of work by that deliberate action. We are now faced with the consequence of going into a General Election—so we are told by my hon. Friend the Member for Chester-le-Street (Mr. Radice)—with courage. I do not believe that one wins elections on the basis of so-called masochistic courage.
In my view, this country is rich. It is rich in talent. Currently it is even rich in money. It has the possibility of a trade surplus over the next decade, something which we have never had before when moving into a General Election. Yet this same Government now want to clobber the workers with another 5 per cent. They even have the audacity to put this motion on the Order Paper before the Dividends Bill is debated. We all know what will happen to that. That outfit across the way—the Liberals, Scottish nationalists and all the rest—will throw it out. Therefore, a kind of tasty morsel is dangled in front of the Left wing, and we shall then be herded through the Lobbies to support a permanent incomes policy on the flimsy basis that we might get some sort of dividend control, which has been evaded anyway during the past few years.
One only has to read the established newspapers such as The Sunday Times to discover that top companies are not paying income tax. Tribune happened to mention that fact about 12 months ago. This is the scenario today. I know that
1468
it is not devised that way. It is devised in such a way that in this pre-election period we all go marching into the Lobbies united on the basis of a permanent incomes policy. In order to kid some people, this motion was devised to give the impression that we are not really voting for it.
I want to hear the Chancellor of the Exchequer say quite bluntly tonight that it is the Government's incomes policy and that it has nothing to do with the Parliamentary Labour Party, a large section of which will not support the 5 per cent. guidelines.
I believe that far from thinking about an election—which we are supposed to be having in October—we should be doing something much different. We, or the Government, should recognise that in the last year of this Parliament we have arrived at the stage at which we must tell the workers, who have been subject to incomes policy after incomes policy, that we will not continue with yet another one. We must tell them that we shall return to free collective bargaining, as outlined in our manifesto during both elections in 1974. The Government should tell the people that we will come back next time and, to all the howls and cries of derision from hon. Members opposite, we will introduce a Budget that will not give away more money to the wealthy, but will introduce new elements in the social wage.
Mr. R. B. Cant: I am not an enthusiast for incomes policies, but I wonder whether my hon. Friend would seriously suggest that this country can afford to give to the miners, MPs, teachers, barristers, estate agents and everybody else a 20 per cent. increase in income next year.
Mr. Skinner: I reckon that if those in top positions—the chairman of the National Coal Board, the chairman of the British Steel Corporation, the judges who have been wrecking section 2 of the Employment Protection Act, and the top civil servants who wander off into jobs in industry, complete with a pension—can all get up to 70 per cent., apparently somebody says that there is enough money in the country to pay them.
We cannot devise an incomes policy that is fair to all. That is Impossible when 70 per cent. of the economy is

1469
supposedly in the private enterprise sector. That is the real crunch for me. Whenever there is an incomes policy there are all these people who escape through the net.
The Minister of State, Treasury, who is on the Front Bench, must tell the Chancellor and the Prime Minister that what they should be concerned about is winning back support from working-class voters. The last two by-elections did not indicate that we are on a wave that will carry us through to victory in October. What we need is to come back next time and present a Budget that will introduce new elements of the social wage—abolish the television licence, get rid of school meal charges for all children, let Lids go to school without having to pay bus fares, and give old people the right of free travel throughout the length and breadth of this country. Even if we were defeated by that lot opposite on these measures—which I doubt—we should be able to say to the workers of this country "This is what the election is about, and this is what we must defend."
My guess is that a 5 per cent. incomes policy plus an incomes policy that will be there for ever will not be enough. I emphasise that I am not here to wreck this Government or to inflict grievous wounds on the Labour Party. I am trying to say to those who occupy the big seats in the House of Commons and the Government that they are on the wrong track. If they want to win the election they should follow my advice. Then they might just make it.
8.24 p.m.
Mr. Ian Lloyd: The hon. Member for Bolsover (Mr. Skinner) places me in some difficulty. So often I find myself unable to accept either his premises or his conclusions. At least tonight I have found his premises interesting and some of his conclusions agreeable. For other reasons I find the whole concept of an incomes policy rather strange.
This has been a strenuous debate and we have had a great deal of declaratory, dogmatic and other kinds of Socialism put forward. Beginning with the hon. Member for Bethnal Green and Bow (Mr. Mikardo), we had a very good example of what one might describe as
1470
"observational egalitarianism". We can always have our emotions wrung, as long as there is one surviving element of poverty in the land, by comparison with anything which can be described as the opposite. It seems to me that the purpose of the observational egalitarians is to eliminate the mode, the median and the average. They should really settle down and ask themselves whether that can he done in a human society. I think they will find that the answer is "No"
Then we had the very interesting experience of the hon. Member for Newham, North-West (Mr. Lewis), whom one might describe as a typical example of the Neanderthal Socialist. He uses egalitarianism as a club to take economic weight off other people.
Lastly we come to the Prime Minister, whom one could describe as being an exponent of cosmetic Socialism. He does it when the Tribune group cannot be gainsaid, and he does not do it when the IMF says that the country is broke. He puts rouge on when he is addressing the Labour Party executive and highbrow pencil when he is addressing the IMF.
This is an accepted part of the peculiar games which we play in this Chamber. Each side tries to discover, expose and ridicule what it believes to be the inconsistencies of its opponents. We spend much of our time and much of what is misdescribed as our intellectual energy in combing the pages of Hansard for ammunition. The result is that the House is for ever looking backwards, and when a choice example is found right hon. and hon. Gentlemen present the discovery with all the enthusiasm which prompted the Greeks in Homer to shout "Thelassa!" What they would have shouted had they seen the Government Front Bench even Homer would have found unprintable.
This situation justifies two observations. The first is that this activity and the obvious joy which it engenders are utterly inconsistent with the argument, so often put forward by the same right hon. Members, that conviction should be subservient to fact and argument, that Governments should freely admit their errors and that political doctrine should reflect reality and not seek to distort it.
But if every Government joined the learning curve of experience at a pretty

1471
low level, every chart, graph and economic statistic would proclaim loudly and clearly not only that Labour Governments enter office at the bottom of the "U" curve but that they stay there so long that it is flattened by the sheer weight of ineptitude into a straight line. Thereafter the economy lurches from crisis to crisis as policy is constrained by the more absurd examples of economic illiteracy which pass for serious criteria when Labour Governments are in power.
No undertaking is quite as difficult as an attempt to climb the north face of the Labour Party's economic prejudices. It is a cold, inhospitable and dangerous precipice of human doctrine, and the valleys beneath are littered with the corpses of those who have stayed too long or have been blown off by some economic blizzard. Some, of course, reach the top and fall exhausted into the resuscitating arms of the IMF.
One could hardly blame responsible people who follow our national and parliamentary affairs seriously for concluding that this charade demonstrates that no Government of either major party have really been in full, confident and effective control of the situation for the last 20 years. The record entitles the nation to ask whether the country has had government by a Cabinet and Parliament intent on discovering, observing and enforcing the national interest over all sectional interests—which is what they are put here to do—or whether the country would have done just as well had the Cabinet been selected from the "Muppet Show".
The British public, represented perhaps by those two elderly characters in the "Muppet Show" theatre box, have recently had to reconcile Prime Minister Kermit advocating public participation, which in this theatre is known by such terms as the social contract, Chancellor Fozzie Bear trotting out feeble jokes about how different it would all be if only the audience would laugh in the right places—I interpret this as meaning that industry should invest in high-risk technology for what is effectively a nil rate Of return in real terms—and the Monster, that great shaggy beast, who presides over the most important Department in Britain—the Department of Energy—tearing up and down backstage, destroying the scenery of each show as it is just about
1472
to come on. Nor, evidently, is he averse to pulling the rug out from under Kermit whenever he is slightly off balance. One might describe that as a neurosis in charge of an apotheosis.
This is the dishevelled, disoriented and irrelevant bunch of comedians who dare to stand at the Dispatch Box and ask us to endorse their policies and commend them to the nation.
If the IMF parts of the Government s policy bear some relation to the needs of the hour, the Government are as incapable of enforcing such a policy as they are of discovering it. It is, therefore, pertinent to inquire what a truly comprehensive policy would be and whether it can be enforced by any Government enjoying the conventional authority that derives from their own conviction, their sense of purpose and the advice they receive from civil servants. The realities of our national situation have been buried for years under a vast pile of misleading semantic camouflage.
We should take a new look at the meaning of words. I take as my text a phrase that illustrates the central fallacy of our times more effectively than most. It comes speech made by the Chief Secretary to Treasury to the Industrial Society last year. The right hon. Gentleman said:
"The tax reliefs in the last two Budgets of 1976–77 have, of course, done a great deal to help living standards in the meantime."
The Prime Minister has often said exactly the same sort of thing. If ever there were a misuse of the words "of course", this is it. Of course, Budgets have done nothing of the kind. They do lots of things, but they cannot alter the living standards of the nation as a whole in the short run. In the long run, their influence is overwhelmed by much more powerful influences.
What Budgets do in the short run is confined essentially to two things. They alter the distribution of money incomes in a society in exactly the same way as a wage claim that is unrelated to productivity. They also alter the distribution of real resources between the public and the private sectors. In the longer run, the distribution of tax burdens has a significant influence on the wealth-creating capacity of the nation. We know a great deal about that after the past four years.

1473
In the short run, living standards are determined by one thing and one thing only—the efficiency with which a given output of goods and services is produced and the number of people entitled to exercise a claim over it. If there is one thing that has been conspicuously absent from the debate so far, it is the word "output". Time and again we hear about living standards, money claims, minimum wages and so on. When shall we hear about productivity and output, because they determine the whole thing?
We are extraordinarily adept in the House at spending hours, weeks, even months debating the distribution of incomes. If we spent only a fraction of that time debating the efficiency of the nation and why in the past 20 to 25 years we have fallen from the top to the bottom of the productivity league table, we might make a very much greater contribution.
Whether this country pays itself an increase in money wages of 3 per cent., 30 per cent. or 300 per cent., its standard of living in real terms will not and cannot vary by more than plus or minus 3 per cent. in any year. That is the historical record of our national productive system. It is confirmed in the latest Government publication which gives the figure as an average of 2¾ per cent. over the past 30 years. I suggest that that figure of 3 per cent.—not 5 per cent., 10 per cent., 15 per cent. or 30 per cent.—should be engraved on every £1 note, every cheque, every Government document and every machine tool and above the portals of every factory gate, public office and Government Department. Indeed, until national common sense reasserts itself, this should be said both before and after grace at meal times. It should also be printed perhaps on every packet of cigarettes and on every manifesto in the next General Election. It should certainly be printed on the stationery of every trade union in the country, and particularly on the forms used to make wage claims. The White Paper pays belated recognition to these fundamentals, but even it still talks about 5 per cent.
What an improvident Government can do, of course, is to maintain current living standards at a higher level than is justified by real incomes. They can do this by forcing the consumption of
1474
capital or by borrowing the difference between money incomes and output. A Government can also create an environment that is generally hostile to the production and investment of wealth. This Government have done that. Governments frequently do it while paying lip service to the "incentives" that they know to be necessary but which they have no intention of operating in practice.
A beast called Cerberus gets in the way of that, and Cerberus in the United Kingdom has just about polished off the whole private enterprise system for breakfast. It no longer pays in this country to take real risks, and those real risks, especially in high technology, are precisely what this country needs to take.
All this has a fundamental relevance to pay policy, for I am arguing that, if we are serious about living standards and if we really wish to see them rise, two clear consequences must be accepted. The first is that the whole thrust of public debate must be shifted from the income to the output side of the equation, and the second is that if the full energies of the entrepreneurial, the industrious, the ingenious and the gifted members of society are to be engaged in this enterprise, they must be allowed to share more than equally in the results. They must also know that this will not be reversed and their wealth or earnings dissipated by a turn of the egalitarian screw after a sudden change in national political fortunes.
This is the area in which this country does itself such continuous and lasting damage. Has the National Enterprise Board, for example, recognised this in setting up its new organisation to make micro-processors? If it has, may we now conclude that the Government have recognised the importance of rewards for risk-taking and intend to encourage substantial differentials? If they have not, and if there is a bluff somewhere along the line, we can be certain that, however many millions of pounds are put into the venture and however gifted are those who are recruited to it, it will fail, and so will many others.
I turn now to the output side of the equation, which suffers from fundamental constraints which Ministers who preach about Government guarantees and living standards would be unwise, if not dishonest, to ignore. It can be, and has

1475
been, established beyond serious statistical challenge that gross national product is related closely and directly to the supply of energy. The growth of gross national product and gross national product per head in the developed world has been made possible historically by the growth of energy supplies. Each major burst of growth can generally be associated with the availability of a new form of comparatively cheap fuel. The progression from wood to coal to oil and finally to uranium sees our civilisation on the threshold of the solar age, devising processes which will enable us to harness and store energy in that remote nuclear furnace, ultimately without depending on fossil fuels and paying the immense price necessary to get fossil fuels out of the ground.
If the fuel is indigenous, a Government may claim to be able to influence both supply and price. The record of both coal and North Sea oil bears this out. But a Government who cannot influence the availability or price of their major sources of energy cannot even pretend to influence national output. The efficiency of energy use is an important factor, and I pay tribute to what the Government have done in this respect recently. But again, historically, improvements in the efficiency with which energy is used overall are seldom dramatic, and we should probably be over-optimistic to set a limit of 3 per cent. per annum.
Efficiency and conservation, both usually requiring considerable capital investment, might just enable us to achieve an increase in energy supplies of about 1 per cent. per annum and the growth of GNP associated with such a figure. It is, therefore—I say this advisedly—utterly irresponsible for any Government to forecast a growth in GNP. That includes even Socialist Governments who can claim a monopoly of public welfare, as they do. To do so, they must offer something real to back up the wages lottery unless they can produce figures to show an increased availability of energy either from total supplies, which have a major effect, or from conservation, which has a minor effect.
The figures given on the useful statistical cards produced by the Department or Energy show a virtually constant energy input of primary fuels from 1973 to 1976. I ask the House to draw its
1476
conclusion. With the decline in coal being offset by other fuels, especially gas, there was in this period a massive artificial shift in the terms of trade between energy and other manufactured goods, a shift to which our coal miners contributed almost as much as the much maligned Arab sheikhs in OPEC. The only difference is that the difference is not felt across the exchanges.
It may be argued that the increasing availability of North Sea oil and gas within the United Kingdom provides precisely the increased availability of energy on which the Government base their optimistic forecasts. The Prime Minister has said as much on numerous occasions, but this amounts in effect only to the prospect of being able to maintain our existing primary energy input at about its present level with the guarantee that we shall be able to supply oil to ourselves at a cost no higher than the marginal cost per barrel of the last barrel we choose to extract from the North Sea. This could well be lower than future OPEC prices, but North Sea costs will never be lower, certainly not in real terms, in the foreseeable future than OPEC costs, even when its supplies approach exhaustion.
Therefore, the prospect is for the continued availability of the present quantum of primary energy at what will probably be slowly increasing costs in real terms. By that I mean that the terms of trade between energy and manufactured goods will continue to move inexorably against manufactures.
The only offsetting factors are twofold. The first is utilisation efficiency, which Governments can and should encourage by stimulating capital investment in this area. The second is the predictable bonus from new energy technology, such as the fast breeder reactor and fusion, but these cannot be quantified—certainly not yet—and Governments have no right to base GNP forecasts, optimistic or otherwise, which they cannot fulfil on technologies which have not yet left the laboratory.
Where does this leave us on the much-vaunted question of prices, incomes and pay policies? There is only one answer. They are a lasting monument to the complete and total inability, vividly demonstrated year after year in this House, of the political process to force democratic

1477
electorates to come to terms with the realities that they have to face.
If primary fuel supplies do not grow, there can be no economic growth other than that fuelled by the efficiency of structural change. If economic growth is artificially limited because legislation and political prejudice combine to impose massive restraints on improvements to the economic process, as we have seen, there can be no growth in real incomes—and if there is no growth in real incomes the whole massive annual or semi-annual ritual of pay claim, wage bargaining and incomes policy becomes nothing more or less than a time-consuming, misleading and dangerous political farce.
In these circumstances, the duty of any Government is to emphasise two important and predictable effects of the annual wage demand ritual. The first is that income allocation, by a combination of market forces and taxation, is replaced by the inherently uncontrollable and damaging process of income allocation by inflation. The second is that, as the revolution of rising expectations runs violently into the sands of reality, those who abuse the political process to pretend to powers which they do not and cannot possess will suffer the fate common to all witch doctors who fail to produce the cure: they will be butchered by the electorate, and the discredited political or resource allocation process over which they have presided will probably suffer the same fate as the witch doctor's bones. The political "Muppet Show" will not enjoy as long a run as "The Mousetrap".
My conclusion, therefore, is that responsible democratic Governments in the developed world now face a clear duty, which few if any of them are discharging because its discharge obliges them to notify disenchanted electorates that the oil bonus of our civilisation is just about spent. The party is over in a much more fundamental sense than is realised.
Continuous annual increases in money incomes simply cannot produce continuous and corresponding increases in real incomes in the developed world as a whole or in the undeveloped world. To the extent, therefore, that the mythology of so-called annual wage bargaining is indulged in, this Parliament will merely
1478
lose all effective control over the internal distribution of incomes and will thus eventually become spectator to a game of economic musical chairs in which some section of society will always be the loser.
If trade unions insist on continuing the pantomime, any claim which they make to represent the interests of their members must be set against the damage which their activities will cause to the whole of the economic process and to the social cohesion which that process requires. If they turn their attention to energy availability and utilisation, to industrial efficiency and productivity, their claim to participate in the affairs of the nation will regain a validity which at present it simply does not possess, whatever the degree of lip service we politicians of either party choose to pay to it.
The confrontation which this country cannot avoid is the confrontation with the harsh realities of its own economic situation, its social absurdities and its technological conservatism. That is the confrontation which matters. It is to the outcome of that confrontation that we should pay much more attention than we now do.
8.45 p.m.
Mr. Arthur Latham: I will not follow the hon. Member for Havant and Waterloo (Mr. Lloyd) except to express the hope that he will have his copious notes recycled.
I am not at all clear whether there are likely to be two Divisions at the end of the debate. One Right-wing member of the Parliamentary Labour Party, and I suppose that there are many to choose from, has already remarked to me, having heard the speech of the Leader of the Opposition, that even Socialism would be better than that. It has been put to me that, because of the way in which the debate developed, or failed to develop, the Opposition may not be pressing the main Question to a Division. I make it clear, in line with the comments of my hon. Friend the Member for Bolsover (Mr. Skinner), that, if there should be a second Division and a vote on the Government motion, it is possible that the Government could lose that Division because some of us, rightly or wrongly, are taking the simple view that

1479
we shall oppose the Opposition amendment because we disagree with it, and shall fail to support the Government motion because we disagree with that, too.
I understand that some of my hon. Friends—and they have every right to do this and I hope that it will be respected and understood outside—intend, in the event of there being a second vote, to support the Government but to issue a statement explaining why they are against the economic policies that the Government are pursuing. It may or may not be right to do that, but I want to remind those of my hon. Friends who intend to take this course that the public expenditure cuts, the level of unemployment and the argument about economic strategy are all part of the debate tonight. If we look carefully at the ingenious Government motion, we find that the House is being asked, in effect to approve that which has gone before and to endorse that which is to come if the Government pursue the policy in their White Paper.
The motion makes it clear that we are being asked to applaud the progress as described in the White Paper and that we should then continue further along those lines. There is some merit in the approach of those who support the Government's strategy and who, therefore, approve the public expenditure cuts, as indeed do the Opposition. That is a reasonable position for such hon. Members to take. I am unhappy about those who oppose cuts but at the same time support the Government's strategy. There is just as much inconsistency and hypocrisy in that as there is in the approach of those who support cuts affecting other people but protest when they are affected.
I go on record as being opposed to a strategy which has led to cuts in education, housing, social services, health and local government generally. I repeat the opposition of some of us, including a number who may vote for the Government if there is a second Division, both to the economic theory and the political attitudes behind those public expenditure cuts and all that followed from them. We reject the view that all private manufacturing is necessary and desirable and that all public service is an optional luxury. It was at one time claimed to be one of the main strategies of Government somehow to achieve a transfer from
1480
public services to private manufacturing. Some of us questioned not only the ethics and desirability of that but whether there was any mechanism by which such a switch could be achieved.
It means making an absolute assertion that a firm producing plastic ducks is of greater merit and deserves the support of the State whereas meals on wheels for the elderly or handicapped are far down the list of priorities. I as a Soda-list deny that that choice has to be made in the way the Government have held with their economic theory. We ought to see all of this happening against the background of the maldistribution of wealth and a society in which the minority still owns whilst the majority works, where we have non-owning producers and non-producing owners. There has been no change in that basic structure of our society.
It also needs to be reasserted that the effect of lower taxation in general benefits the better off, and that we ought not to have disregarded, as the Chancellor appears to have done, the redistributive effect of taxing the wealthy. My hon. Friend the Member for Bolsover has again referred to the social wage, which seems to have been largely forgotten in much of the Government's policy making.
I put this question to the Government. At the height of our controversy about public expenditure cuts which followed from the strategy, there was a supposition that there would be a £9 billion public sector borrowing requirement. Subsequently it was suggested that that would run to £12 billion. In the event, we arrived at a figure of £6 billion, and this year we have a Budget that is professedly based on an assumption of a £5½ billion PSBR.
I remember asking my right hon. Friend the Chief Secretary to the Treasury at the time what was considered by the Treasury to be the proper level of PSBR and what were the criteria taken into account It seems to me to have been absolute nonsense that the House, the Labour Government and the Labour Party should have gone through all the trauma that they did recently over £500 million when the acknowledged margin of error is apparently £3 billion either way.
The suggestion that somehow or other that £500 million was of great consequence had no other meaning except in

1481
terms of the rather neurotic and hysterical behaviour of some of those in charge of international financial institutions. If we are to continue to offer carrots to investors, if we are to continue the practice of free trade within the EEC, however high the tariff wall externally, if we are to continue to pander to foreign lenders, if that is what it is all about in terms of incomes policy and all that flows from it, I put it to the Government that if we are to rely on the economics of the market we shall be stuck with the morality of the market.
In London we face the serious social consequences of further dock closures. If anything is to be done in human terms, the commercial forces have to be resisted and the Government have to disregard the laws of the market. If we are to tackle unemployment in a positive way and overcome the moral dilemma of unused resources and unmet needs, we must challenge market values.
In the White Paper the question of employment is linked to incomes policy Paragraph 4 says:
"A lower rate of inflation is also essential it we are to create more jobs and keep British goods competitive."
That is a philosophy that I believe that Socialists in this House and outside will reject because the idea of simply producing jobs as a result of greater competition means putting other people elsewhere out of work, which is what is behind the suggestions about transfers from region to region, greater mobility, and so on.
I do not think that the policy in the White Paper really indicates anything other than following the conventional past pattern of relying entirely on market forces and simply having competition about the share of western unemployment which we are going to experience.
Mr. Ron Thomas: Does my hon. Friend agreed that the other countries of western Europe—indeed, the other capitalist States—which have a lower level of inflation than ours have still failed miserably to deal with their levels of unemployment?
Mr. Latham: That is precisely the point, that the White Paper suggests no means of tackling the fundamental problem, any more than do the Conservatives,
1482
but is concerned simply with the share of the unemployment to which my hon. Friend has referred.
The position as I see it is that the Labour Government continue to believe that there should be a market for everything except wages. Whether or not the Dividends Bill is passed on Thursday, the idea that that kind of dividend control is the quid pro quo for holding back wages is false, because when people's dividends are postponed the accumulated and accrued wealth is still there subsequently for them, whereas the worker who has a wage increase put back loses that additional income for all time. I never have been able to accept that it is part of a Labour Government's policy to suppress workers' wages.
My hon. Friend the Member for Bolsover talked about when a Bill is not a Bill. Although we are supposed not to have a statutory incomes policy, we have a policy which appears to have statutory effect without there being legislation. Although there may not be provisions for imprisoning offenders, there are substantial sanctions which can be used in many cases.
It seems to me that as a result of this motion the Government hope to be able to proceed with the policy outlined in the White Paper and to claim for it the authority of Parliament without having obtained parliamentary approval. That will be the effect if there is no second Division. That is why I am unable to go along with those who feel that they should vote for this policy while at the same time explaining that they are against it, and in fact reject it.
Whatever the outcome of that, along with them there will be a number of us who will campaign for different policies. We know that one alternative to a Labour Government, some of whose policies we disagree with, is what is described outside the House as a Thatcherite Government. That, many of us feel, is like cutting one's throat to cure pneumonia. What we want to campaign for is a correct alternative, a Labour Government following different policies.
I want in the two minutes to which, I gather, I am now restricted to summarise once again the fairly modest and moderate set of proposals which a number of us have been urging for a long

1483
time. First, there must be controlled reflation. Secondly, we should plan imports so that the effect of the controlled reflation is not simply to stimulate other economies. Thirdly, there should be an expansion of the National Enterprise Board, the development of planning agreements and the development of public services. There should be that kind of positive job creation, and we should make good the cuts in public expenditure that we have experienced. There should be reduced spending on weapons, and the introduction of a wealth tax.
Like my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo), I know that the achievement of those policies is not something immediately to be attained, but I hope that we shall go on campaigning for them and that we shall move towards those radical changes. I appeal to my hon. Friends who share that view not to compromise themselves by voting for a motion tonight which, however cleverly worded, none the less endorses the policies pursued up to now and approves the strategy outlined in the White Paper, which I for one believe to be a non-Socialist strategy.
8.59 p.m.
Sir Geoffrey Howe: May I begin, Mr. Deputy Speaker, by saying how glad I was to have the opportunity of hearing the lucid speech of my right hon. Friend the Member for Farnham (Mr. Macmillan) about the opportunities opened up by the Bremen initiative. I also want to say how much I regret having missed the speech on the same theme by my right hon. Friend the Member for Brighton, Pavilion (Mr. Amery), who rightly spelled out the case against protectionism, and who likewise called for a positive response to the Bremen initiative. Clearly, what my right hon. Friends had to say deserves very serious consideration.
I am also glad to have the opportunity of paying tribute to the hon. Member for Penistone (Mr. McKay), having had the pleasure of hearing him make his maiden speech in the House. I am sure that the whole House will have enjoyed and appreciated the gracious way in which he paid tribute to his predecessor. All hon. Members will realise the truth of what I say when I suggest that no debate of this kind can really be regarded as complete
1484
without the former hon. Member for Penistone.
I can extend my common ground of welcome to the hon. Member for Penistone a little further by saying that in his performance in his by-election contest he managed to bring comfort to almost every party in the House save the nationalists. He succeeded in holding the seat for his own party. He succeeded in allowing the Liberal Party to hold its vote. He also succeeded in enabling my party to achieve a swing in its favour sufficient to deliver the next Conservative Government with a towering majority. We are all well pleased with his brilliant performance.
I must say that the Labour Party does not have much hope of avoiding that kind of an outcome to the forthcoming General Election if its campaign is to rest upon the foundation of complacency laid by the Prime Minister's speech this afternoon. If we look at the various claims that he made in the course of the early part of that speech, we find him saying with some pleasure, perhaps not surprisingly, that the Government's funding programme was going well. In language that most of us, would understand, it means that the Government are somehow succeeding in borrowing the huge sums that they want, and borrowing on a scale comparable with what they achieved last year. In the circumstances which have actually happened, that is not something of which the Prime Minister ought very readily to boast.
During the four and a half years in which the right hon. Gentleman's Government have been in office, the interest on public sector debt held outside the public sector has risen from £3¼ billion a year to almost £.8½ billion a year. That is a huge increase of more than £5,000 million in the annual interest payments paid on sums of money borrowed by the Government. It is astonishing that the-Prime Minister should see fit to boast about the success with which he is adding to that huge burden of debt for future generations.
Even this year, as a result of the so-called successful Government funding programme, because it is so large, the interest rate—the minimum lending rate, or bank rate as we used to call it—has risen from 7 per cent. to 10 per cent. That very rise—a necessary price to pay.

1485
for funding this huge borowing—is itself adding hundreds of millions of pounds to public spending and public debt this year.
It should be a matter for regret rather than pride that the size of borrowing per household in this country under this Government has risen from £2,600 in 1973–74 to £5,000 in the present year. We are borrowing per head more than twice as much as our nearest international rival. That should be a matter for great regret rather than for pride in a Prime Ministerial speech.
The second matter about which the Prime Minister took some pride was the record in relation to inflation. It really is time that we got the Government's position on that quite clear. Not for the first time a Government spokesman was saying that they had reduced the rate of inflation to half the rate which they had inherited. The Government, as is well known, fought the last election on the Chancellor of the Exchequer's claim that inflation then was running at 8·4 per cent. That is either part of the political record of this country or it is not. If the Chancellor was prepared to take credit for that figure in the course of that election campaign, he should have the courage to accept responsibility for it now as the foundation for this Government's record.
On the same basis as that claim, inflation, on the last month's figures is now going up at 11·7 per cent. a year, and at a rate which is accelerating. Why should we not be allowed to draw attention to this movement of the inflation rate? The Prime Minister says that it is in some way unpatriotic for us to do so, when the National Institute of Economic and Social Research, which the Government fund so amply, makes the same forecast that it is going up beyond 10 per cent. next year? Why should we not tell the people the truth? When the London Business School, whose officials give the Government valuable advice, make the same forecast, why should not we also tell the people the truth about that?
The reality is that the Government dare not face the truth about the future of inflation, just as they dare not spell out their record in the past. Between February 1974 and April of this year, prices went up by 91 per cent.—four times as
1486
fast as they did in Germany in the same period, three times as fast as they did in the United States and about twice as fast as they did in France. On this Government's record, we are equal bottom of the inflation league with Italy, and it is a disgrace on the Government's record of which the people should be made aware.
As for the value of our currency, during the same period of four years, while the value of the Japanese currency increased by 39·5 per cent. and that of West Germany by 20·1 per cent., while France's currency had fallen by less than 1 per cent. and those of the United States and Canada by 10 per cent. or 11 per cent., Britain's currency had fallen in value during that four-year period by 27·4 per cent., and once again we were competing with Italy for bottom place in the international currency decline league.
Mr. Norman Tebbit: Here comes the head waiter.
Sir G. Howe: Before the Prime Minister came into the Chamber, I had been dealing with what he said today about the so-called improvement in the rates of output and growth. He was taking credit, be it noted, for what was happening this year. I do not know whether the House noticed it, but the figure which the right hon. Gentleman quoted was the figure for the improvement in industrial production between the first and second quarters of this year and not over an annual period. There was an increase of 1·3 per cent. between one quarter and the next. The right hon. Gentleman did not go quite as far as the Chancellor of the Exchequer in his statement on Friday when introducing the White Paper. The Chancellor of the Exchequer, true to his 8·4 per cent. three-monthly figure averaged over 12 months style, went the distance and said that we were now growing at an annual rate of 4 per cent.
But it is in no sense an insight into the reality. A change between one three-month period and the next is no insight into what is actually happening.
Looking at the record of manufacturing output since this Government came to office, in the years between 1973 and 1977 manufacturing output fell by 6 per cent. We are the only country which during that period has not achieved some growth in our manufacturing output. So once again, on output and growth, we

1487
are bottom of the international league and there is nothing for the Prime Minister to boast about.
But what, finally, did the Prime Minister say about living standards? Hon. Members will remember the careful way in which he chose his words. He said that the people would be grateful for the fact that they were better off today than they were a year ago, and he produced figures which spelt out that a married man with two children who earned £75 a week would now be enjoying £3·19 more in real terms than he was 12 months ago—an increase of 5·4 per cent. But why did the Prime Minister compare today's living standards with those of only a year ago? Why did he not compare them with the living standards of four or five years ago?
I want to press the Prime Minister in some detail about that. Hon. Members will have seen the interview which the right hon. Gentleman gave last week on television in which he was asked by Mr. Fred Emery of The Times:
"You say we're prosperous, but people do seem to have a sense that they have lost ground economically, they are less prosperous than they were four years ago.
PRIME MINISTER: Oh, that certainly isn't true.
MR. FRED EMERY: Do you think that's an illusion on their part?
PRIME MINISTER: Well, it's a statistical illusion anyway. None of the figures would bear out what you're saying."
It is worth looking at those figures with some care, because my hon. Friends have been asking Questions of Treasury Ministers about the change in living standards over the past four or five years. I have three recent versions before me. The first is the answer given yesterday to a Question by my hon. Friend the hon. Member for Blaby (Mr. Lawson) asking what was the real weekly net income at June 1978 prices of a married man on average earnings with two children under the age of 11, on the basis of the latest price index. In 1973–74 the average real weekly net income at June 1978 prices was £73·30. In 1977–78—that is the last figure given in the column in the answer—the same man with two children had a real weekly net income of £67·60.
Mr. Nigel Lawson: Is that an illusion?
Sir G. Howe: Even if we add the £3·19 for which the Prime Minister took credit
1488
this afternoon, we arrive at £70·79. Therefore, at June 1978 prices the average man with two children is still about £3 worse off than in 1973–74.
There is another set of figures that makes the position even clearer. The Government were kind enough to estimate the real value of earnings for next year. The estimate was given in answer to a question tabled by my hon. Friend the Member for Blaby and appeared in column 781 of Hansard of 13th July. The real weekly net income of a married man with two children in 1973–74 was £68·70. The Treasury gives the real weekly net income for 1978–79 after taking account of the tax cuts that were made by the Opposition when we debated the Finance Bill in Committee and entitlement to 10 per cent. pay increases in the current year. On that basis, the real weekly net take-home income for a married man with two children will drop from £68·70 to £67.
Mr. Lawson: Is that an illusion?
Sir G. Howe: Is that a "statistical illusion"?
Mr. Jay Mr. Jay rose—
Sir G. Howe: By what standard and in what sense does the Prime Minister assert to millions of viewers the reply
"it's a statistical illusion anyway. None of the figures would bear out what you're saying"?
It is fair that the right hon. Gentleman should be given the opportunity to reply. Is he able to point to one figure that will bear out what he said to the viewers? I am willing to let the right hon. Gentleman correct his reply. If he is unwilling or unable to challenge my figures, surely it follows that the figures that he quoted and the statement he made on television last week, far from being accurate, were themselves a "statistical illusion" of fundamental and deceitful importance.
Mr. Jay Mr. Jay rose—
Sir G. Howe: The Prime Minister—
Mr. Eric S. Heffer: Give way.
Mr. Speaker: Order. It does not seem that the right hon. and learned Member for Surrey, East (Sir G. Howe) is giving way.
Sir G. Howe: At this stage I am anxious that the Prime Minister should have the opportunity of defending himself. If he will not do that, perhaps he will withdraw the observations that he made on television and apologise to Mr. Fred Emery and through Mr. Emery to the country. I give way to the right hon. Member for Battersea, North (Mr. Jay).
Mr. Jay: As the right hon. and learned Gentleman says that he has studied the figures with such care, will he say how much of the drop in real incomes was due to the common agricultural policy?
Sir G. Howe: I dare say that the right hon. Gentleman will be able to ask about that for himself and will be able to ascertain how far, if at all, the answer would have been different were it not for the renegotiation for which the Prime Minister was in part responsible.
The British people now have the truth firmly on the record that they are worse off and that living standards have been cut over the past four years. However, the situation is worse than that. The figures that I have quoted relate to the average industrial earnings of those who have the good fortune to be in work. What about those who are out of work after four and a half years of Labour Government? The unemployment figure increased last month despite the Prime Minister's bland observations about trends. It increased to 1.586 million. If that is taken into account, average living standards have fallen even more sharply than the Prime Minister is willing to admit.
We find that in international comparisons as well. This country's record, after four and a half years of Labour Government, is worse on unemployment just as it is worse on productivity, just as it is worse on living standards, just as it is worse on inflation and just as it is worse on the decline in the value of the currency. We are the only country in the western world of our kind and size in which private enterprise has been hauling ashore to add to our riches tons and tons and millions of pounds worth of North Sea oil, yet prices have risen faster, unemployment has risen higher and faster, debt has grown larger and more massive and living standards have fallen more sharply than in any comparable country in the western world.
1490
This Government, of which we had the Prime Minister speaking this afternoon, are the only Government in the history of this country who have succeeded on this scale in halting growth, doubling prices, more than doubling taxes, more than doubling debt, almost trebling unemployment and slashing living standards. Their programme in 1974 was on the platform
"Back to Work with Labour."
When the British people come to pass judgment on them, they will know that the reality was "Back to square one with Labour." We have had enough of them.
Clearly, against that background the policies set out in the White Paper, even if they are right, would not be enough by themselves to restore the economic fortunes, of this country. But the White Paper addresses itself to real and central issues about the future management of our economy. It is the result of a lot of learning by the Government, partly by our advice and partly from the hard school of experience.
It is important for the House to understand that the White Paper establishes a fair degree of common ground that the parties ought to recognise when discussing these matters. It is worth identifying them. I say that it is worth identifying them for this reason. It is important to stake out the ground on which the future Government, after the forthcoming General Election, have to stand as they shape the economic policies of this country. We shall be looking, so far as we can, for support from the then Opposition on the strength of our joint experience to date. We know that the Labour Party, on its record and form, has the capacity to be even more damaging in Opposition than in Government. It is important to remind it of the lessons of its own experience, which will be part of our common equipment as we go ahead.
It is important to know how we are to create the conditions to restore industrial prosperity, and I want them to be established between the parties as far as possible. First, it is now common ground that the essential foundation of the battle against inflation is proper and effective control of the money supply, with the target rate for the growth of the money supply reducing from year to year. In so far

1491
as the present Government have helped to establish that point it is important, and a number of hon. Members are entitled to take credit for it. It is an important point. In 1973 the Labour Party's behaviour towards the Conservative Government was of such quality as not to entitle it to criticise us now. Let us take credit for what has been learned.
Secondly, I welcome the extent to which the Government in the White Paper, as they did last year, spell out the necessity for strict control of public spending through cash limits. That is an important new discipline, essential to the establishment of effective control over this country's economy.
Thirdly—on this the Government have wavered but have showed signs of learning—it is important, if we are to achieve that kind of control, to secure year by year steady reductions in the size of the public sector deficit or the public sector borrowing requirement. This year, unhappily, they have reversed that trend and are increasing it again.
It is worth reminding the House of what the Chief Secretary said on St. David's day 1976:
"But we shall reduce that deficit as we move out of recession, because we are only too well aware that the regrettably high level of debt interest—made higher of course in real terms as the attack on inflation succeeds—would itself be a heavy burden in the years ahead."
We must give credit to the Chief Secretary for that, regret his failure to carry it through this year and mark that up as another part of the common ground.
The most important thing is that, as we apply the policies which are now agreed between us, this Government and the future Government must secure wider understanding and a wider sense of reality and responsibility in the collective bargaining process. It is right that the Government should play their part in spelling out the necessity for that understanding. To that extent we are also on common ground.
The right hon. Member for Battersea, North and the hon. Member for Chester-le-Street (Mr. Radice) said that we must recognise the need to establish a longterm, permanent incomes policy. I do not regard that as the right way to approach the matter. Both sides of the House have for too long discussed in extremes incomes
1492
policy on the one hand and free collective bargaining on the other.
Last year the Chancellor of the Exchequer was moving on to the right ground when he said that he was hoping, as a result of the changes that he made last year, to be paving the way to a return to normal collective bargaining. It is that for which we must strive—the restoration of realistic, responsible collective bargaining, without Government interference, in the context of the type of policies which I have described.
The Chancellor of the Exchequer (Mr. Denis Healey): The right hon. and learned Member referred to the progress that I made last year, but when he discussed my policy last year he described the pay policy as
"an onslaught on the British people's standard of living and freedom generated and forced down their throats by ageing, doctrinaire, prejudiced, Socialist trade union leaders."
Is that still the right hon. and learned Gentleman's view?
Sir G. Howe: By no means. The Chancellor will recollect the correspondence that we exchanged about this which, if he has the grace and wisdom to recognise it, establishes common ground. [HON. MEMBERS: "Answer."]
Mr. Speaker: Order. Constant interruptions from a sedentary position are unfair.
Sir G. Howe: In reply to a letter from my right hon. Friend the Member for Lowestoft (Mr. Prior), the Chancellor—he was quoting me at that point—said:
"there needed to be an understanding about the total increase in pay that the economy could afford, but that it would be 'unthinkable' to translate that into an individual flat-rate figure… The task in the next twelve months is to complete the transition to responsible collective bargaining from two years of rigid pay restraint, without in the process touching off a pay explosion."
We were on important common ground in that respect. The tragedy is that during the last year the Government have allowed their indication of what the economy could stand to develop increasingly into a rigid, strict and tight norm and to restrain the process of a return to collective bargaining. That is the mistake that we fear this year. That mistake led to the decision to introduce blacklisting and secret sanctions—which are an

1493
affront to the rule of law and which do great damage economically. They should have no place in the return to collective bargaining.
Even if we get that right, we must do something else to restore our economy to health. We must begin once again to encourage and restore rewards for initiative. It is that for which the Government have not begun to understand the need.
The Chancellor of the Duchy of Lancaster, who is not with us this evening, has had the candour to admit what is necessary. In a television interview on 23rd April, he said:
"That rate of tax on salaried talent is very high in this country…. The putting of this right is a massive problem that will take a little time and I believe this to be a number one priority…an urgent priority…. There has to be a move to make our tax rates, especially on earnings, comparable with what our rivals…on the continent have".
The Government have resolutely refused to learn that lesson. They will never learn it. For that reason, they will not have the capacity to restore the scope for creating wealth and prosperity to our country.
When we made changes in the Budget—knocked 1p off the standard rate of tax and raised the threshold by £1,000—what was the response of Government Members? They did not thank us for doing what the Chancellor of the Duchy of Lancaster has been urging upon us. Putting on their Opposition hats, they too readily said that we were the pressure group for the rich. As long as that kind of attitude dominates tax policy, there is no prospect of a return to sanity.
The Prime Minister took some pride in the success of Rolls-Royce. I join him in paying tribute to that company. But does the Prime Minister know that one of the most significant refugees from this country in recent weeks, and who has left specifically because of the penally high level of taxation, is the finance director of Rolls-Royce who was instrumental in securing its most recent large order? That is characteristic of what will go on if we continue with the present Government.
We are clear in our purposes as to what needs to be done. We are clear in our policies as to what needs to be done. We are ready and impatient to put them into practice.
1494
It would be interesting to know just exactly what is the condition of the Labour Party. We read of many meetings and many to-ings and fro-ings and of the right hon. Member for Bristol, South-East (Mr. Benn) mobilising his group in one corner and the Prime Minister mobilising a counter-group for action in the other. We must certainly have some clue as to the nature of what is going on in the Labour Party.
I think that I may have found it in an extract from the last volume of Mr. Crossman's diaries, describing a discussion in the spring of 1970. I shall quote it because it is quite important and interesting. It is as follows:
"Jim"—
that must be the Prime Minister—
"said that we were half-way through our tremendous change and this should be our theme, solvency, which appealed to the middle classes…. We should point up the choice between us and the Tories. Then he emphasised that we need time, time, and we need the trade union secretaries to work up the anti-Tory campaign."
Bob came next, and he said:
"We must do something for the trade unions, they must feel the need for a Labour Government and we must work up their feelings of fear of the Tories."
Wedgie said—[HON. MEMBERS: "Ah."]—
"The electorate must fear them and like us…and, for a lift to our own side, the great thing we want is healthy reflation. Not a flash but a sense that the economy is growing, and without upsetting the international bankers."
So much for Wedgie.
Then we come to the Chancellor of the Exchequer:
"Denis only feared that we would stumble this year, which was why he wanted the election as soon as possible."
[Laughter.] Thirteen Budgets later, he must be in even greater fear.
Finally we come to Shore:
"Shore's main point was to stress achievements…. But what next? We must do some hard thinking about that. We have not really got a 'what next?'."
If they have, they are not telling us about it.
We have heard something about the "what next?" from the members of the Tribune group below the Gangway. The hon. Members for Bolsover (Mr. Skinner) and for Paddington (Mr. Latham) may

1495
recognise this rather interesting text about "what next":
"Now Denis Healey has made it clear that the 'great revival' was just a myth after all.
It was, of course, an illusory revival anyway…underneath this butter, the bread has still been crumbling away. The real story about what Denis Healey likes to call the 'real economy'…is told by the imports crisis…while the Government has no real strategy it will again be panicked into squeeze, as it has been so clearly this time. This is another chapter in the log of a Government paddling along not knowing where it is going."
That is a very excellent editorial from Tribune of about one month ago describing exactly the condition of the Government whom the Tribune group is so reluctant to support.
So what is there on offer? We have had a few glimpses of insight from some statements made by some right hon. Members on the Labour Benches. On that celebrated occasion in Burnley when the Chancellor of the Exchequer thought that the press was not present, he offered one of his rare insights into his political vision. He said:
"I will offer you proper Socialism when we get a decent majority in the House of Commons to enable us to do it."
Mr. Healey: Hear, hear.
Sir G. Howe: The Chancellor says "Hear, hear." What on earth does he mean by "proper Socialism"? Is it what he talks about to the managing director of the IMF or to international bankers? Does he mean to promise a prospect of no more Sussex homes and farmsteads for Labour Ministers, no more chauffer-driven cars for Government Ministers from the Government car service, no more tax-free representative homes and no more outdoor relief for former Labour Party supporters as members of quangos? I doubt whether the Chancellor means that. But, however much the economy declines, however poor the British people become under the Chancellor of the Exchequer, they themselves will see that they are all right. Their Socialism is highly selective. They certainly do not believe in taking their own medicine.
We had one other little incident about which the House might like to ponder for a moment, and we are glad to see him present. I refer to the Lord President of the Council, who in the by-election at Moss Side the other day made the utter-
1496
ance that four years in office had made him more, not less, of a Socialist. He added:
"The more I've seen, the more I'm convinced that we have to carry through a major democratic transformation in our society. We've only just started. We offer you"—
God help us—
"10 to 15 years of exciting politics in Britain if you have the nerve and courage to stay with us"
I do not know what kind of excitement the right hon. Gentleman has in mind, whether he has in mind the prospect of attacks on the judiciary once a week instead of once a year or whether he has in mind the prospect of picket duty for the Secretary of State for Education and Science, the Secretary of State for Defence and the Minister with responsibility for sport once a month instead of once a year. God knows what kind of excitement the Lord President has in mind.
As for the Prime Minister, his own aspiration is to have as little policy as possible. The less he has to say about it, the better. The more he has to concede to the national executive committee, the worse he knows that it will be. Will he have to nationalise all the banks, or only some of them? Will he have to nationalise all the docks, or only some of them? Will he have to nationalise all the building industry, or only some of it? Just how far will the Prime Minister have to go?
The British people are determined to reject this wretched Government on their record and on their promises as well. The British people are yearning for a Government who will once again set the nation free to create wealth and who will bring into effect financial policies which will once again begin to restore the prosperity of our country. The British people are yearning for a change of Government, and it cannot come a moment too soon.
9.32 p.m.
The Chancellor of the Exchequer (Mr. Denis Healey): I should like to start, as did the right hon. and learned Member for Surrey, East (Sir G. Howe), by congratulating my hon. Friend the Member for Penistone (Mr. McKay) on a most moving and sincere maiden speech in which he demonstrated his love of his constituency. I had the privilege of speaking with him during the recent by-election campaign which brought so much comfort, as the right hon. and learned

1497
Gentleman said, to so many people. I must say that I was deeply impressed by the direct common sense and the wide industrial experience and experience of local government which my hon. Friend showed, as well as by his deep humanity. These qualities make him a worthy successor to Jack Mendelson, and I know that he will continue to contribute matters of great value to our debates.
It is nice to hear the right hon. and learned Gentleman again. I must say that he has broadened his literary tastes a little since we last met. I was a little surprised at their catholicity, if that is the right word. I was interested to see that his hon. Friend the Member for Blaby (Mr. Lawson) has at least introduced him to numbers, which is about time in view of the responsibilities which he claims he wants to follow.
In the main, the right hon. and learned Gentleman made a very entertaining speech—[HON. MEMBERS: "A very good speech."]—yes, it was a very good speech. I was unfair to him last time. He is not dead, but sleepeth. The right hon. and learned Gentleman wanted to explore common ground, for reasons which I shall come to later. He did, indeed, declare a wide area of common ground, somewhat to my surprise and, I think, that of the Tribune group. With however little hope of success, I shall try to start by carrying both sides of the House with me in describing as objectively as I can the background against which I think any fair-minded person will wish to judge the Government's economic record.
For nearly five years the western world has been living in a crisis of economic uncertainty. When the fourfold increase in oil prices was imposed overnight by the OPEC countries, the industrial economies sustained a blow from which they have still not recovered. The stability that we had come to enjoy in the post-war years was undermined, and the steady expansion of material wealth was brought almost to a standstill. Massive unemployment spread over western Europe and North America and soaring inflation swept across most countries as a result of the sudden immense leap in the price of the raw material on which most of the industrial life of the west depended. We are still suffering from the consequences of the pertks it reached during this period.
1498
Those words, as I know hon. Members opposite will recognise, come from the matrimonial address of the right how Member for Sidcup (Mr. Heath) in Penistone a few weeks ago. He knows what he was talking about because he was Prime Minister when the February 1974 General Election was fought. He plighted his troth to the Leader of the Opposition in the words that I have just quoted, and she leapt to embrace him with a statement issued within a minute of the news coming over the tapes. She said:
"I welcome the warm terms in which Ted Heath has pledged his support. They will give added strength to the Conservative cause in the battles ahead."
I confess that I thought that she was a little ungrateful to her wooer when she spoke this afternoon, because she tried delicately to ignore the whole record of the Government of whom he was the Leader and she was a member. She concentrated on the record of what we on this side of the House call the 13 wasted years before the 1964 General Election. I thought that her slogan in the next election might be "Bring back Harold Macmillan".
Of course the right hon. Member for Sidcup learned a great deal from his experience in office at the head of a Government in which so many of those on the Opposition Front Bench had the privilege—if one can call it that—to serve. Three years ago, almost to the day, he spoke to us in this House with all the authority of a man who had only just left the Prime Minister's office and he told us that the oil crisis faced us with a cut in living standards of 5 per cent. to 10 per cent. He said that the reason was that there was a massive transfer of resources from each country of the western world to the oil-producing countries.
The right hon. Gentleman said:
"For too long—perhaps over 30 years "—
that includes the 13 wasted years under Mr. Macmillan and four years under himself—
"we have seen that the payments that we make to ourselves are greater than our production of resources to meet them."
He said that the reason
"why we have never been able to run our economy at a reasonable rate in the last 30 years without crises"
was that fundamentally we had had
"an unbalanced economy."—[Official Report, 22nd July 1975; Vol. 896, c. 344–8.]

1499
That was the economy that we inherited four and a half years ago, as described by the leader of the Government from whom we inherited it. His new alliance —if that is the right word for it—with the Leader of the Opposition will sweep the Tory Party to oblivion.
The fact is that we inherited an economy which was gravely out of balance. It was running a balance of payments deficit of £3·5 billion. Inflation was over 13 per cent. and rising fast, with 11 triggers of the threshold agreement by October 1974. The minimum lending rate was at 12½ per cent. I do not know how the Opposition have the audacity to complain about the minimum lending rate of 10 per cent. against their record. Added to all this, growth collapsed completely in two months of three-day working. This was all before the oil crisis had really hit us. The right hon. Member for Sidcup pointed out in 1975 that, given the impact of the oil crisis and the world recession that accompanied it, unemployment was bound to rise. Indeed, he thought that it would rise faster than it did.
Let us look at the situation today. The balance of payments is in surplus, not because of oil alone, but because we had a 7 per cent. increase in the volume of our manufactured exports last year. For the first year since the war, we increased our share of world trade in manufactures. Inflation is down to 7½4 per cent. and has been cut by more than half in the past 12 months to the lowest level for more than six years—long before the last Conservative Government left power.
The minimum lending rate is down to 10 per cent. and output is rising, in the last three months for which we have figures at over 4 per cent. and the retail sales figures suggest that it will continue rising at the same rate for many months to come. Unemployment is falling slowly, but steadily.
Mr. Lawson: What happened last month?
Mr. Healey: The hon. Member for Blaby instructed his right hon. and learned Friend the Member for Surrey, East to refuse to accept three-monthly figures. Now the hon. Gentleman asks me what happened last month. We had a small increase last month, but that was largely because the number of unem-
1500
ployed school leavers is very much smaller and there is no question in my mind, and we shall find out in detail next month, but that many of last month's school leavers took jobs that, a year ago, would have gone to adults and therefore swelled the seasonally corrected unemployment figures.
I do not deny that we still have a long way to go, but we can claim that, perhaps for the first time since the war, we have an economy in balance. As the right hon. Member for Sidcup pointed out, we had not had the economy in balance for 30 years. We have seen a massive shift of resources into exports. We have built solid foundations on which we can continue to build in the years to come. The policies througa which we did this have proved themselves in action and I have quoted the figures that demonstrate that fact.
In his timid and rather late exploration of common ground, the right hon. and learned Member for Surrey, East referred to our policy on public expenditure. We have it under firm control for the first time in a decade and we can safely plan for steadv and sustained expansion in our public expenditure. We have firm control of the monteary aggregates. During the last two years that the Conservatives were in power, money supply was growing at twice the rate of money GDP. In our first four years in power, we had to keep it down to half the rate of growth of money GDP and now we are able to allow it to grow roughly in line with money GDP, as do our competitors abroad.
Mr. Lawson: It is growing ahead of money GDP.
Mr. Healey: With great respect to the hon. Member for Blaby, it is not growing ahead.
Our funding programme is well ahead of schedule. The right hon. and learned Member for Surrey, East had the temerity to suggest that we learnt all this from the Tories. He reminded me of what Nye Bevan said about Selwyn Lloyd at the time of Suez it is like one bacillus saying to another that they were responsible for the advance of medical science.
We have an industrial strategy which has solid support from both sides of industry, though it never encounters anything but sneers from the Conservatives

1501
increases for those with whom they are In the British National Oil Corporation, we have an instrument for maximising the nation's gains from the North Sea which has already won the respect of all the international oil majors. We have a National Enterprise Board which is moving into areas of high technology that have been avoided by the private sector. All these elements and instruments of policy depend for their success on our getting inflation under control, getting it down and keeping it down.
In order to succeed in its objective, which the Opposition Front Bench temporarily says it shares with us, we need the co-operation of the trade unions and employers. We have had it for three years—longer than any Government in our history. We shall continue to secure it for another 12 months at least, even though the unions and the employers have serious disagreements with us on some aspects of our pay policy.
Mr. Crouch: The Chancellor mentioned two bodies which have emerged during the life of this Administration—the National Enterprise Board and the British National Oil Corporation. May we have an assurance that, apart from consulting the TUC about the worth and the progress of these two bodies, he will involve Parliament, too, in their accountability, given the enormous responsibilities they now carry without the supervision of Parliament?
Mr. Healey: We have regularly debated these matters in Parliament and on each occasion Parliament has supported the Government's view on them.
We depend on the success of our pay policy for the success of our other policies, and we have sought steadily to introduce more flexibility into our pay policy as the years have passed—from £6, to 2½ per cent. and £4, up to the straight 10 per cent. in the current round and 5 per cent. for the next 12 months. In this coming round there will be two elements of flexibility. First, there will be provision for negotiation on hours, subject to certain conditions, as we have laid down conditions for productivity agreements. Secondly, there will be provision for protecting the lowest paid.
My hon. Friend the Member for Birmingham, Yardley (Mr. Tierney) asked me about wages councils. They will be
1502
free, if they so decide, to recommend wage concerned up to a maximum total wage of £44½50 a week. But they will not be able to break the 12-months rule or undertake a second negotiation in a single 12-month period.
The most important thing is that these difficult years of pay policy have not involved a sacrifice for the men and women who get the pay. I hope we have not forgotten that some years ago when wage increases reached 30 per cent., 40 per cent. and, in one case, 50 per cent., the real value of those increases was wiped out within a few months by price increases. In the past 12 months what appeared at the time to be a very tough guideline of 10 per cent. has meant, because inflation has fallen and because we have been enabled to make tax cuts and increase benefits, that real earnings over the year have increased by at least 5 per cent. overall.
A sacrifice is involved, and I and my friends in the leadership of the TUC are deeply conscious of it. That is the sacrifice by those who negotiate on pay on both sides of industry—employers as well as shop stewards and convenors—who find themselves limited in their fredom to negotiate by the needs of pay policy. It did not surprise me or my colleagues that this year as last the TUC found it impossible again to endorse the Government guidelines. What emerged most clearly in our discussion, however, was that the TUC shares our objective. It is as keen as we are to keep inflation in single figures and to stop it rising for the coming year. I think that it recognises that the Government have responsibilities to the nation as a whole which they cannot avoid.
We have the responsibility for making clear to those who negotiate what limit on earnings is required to keep inflation under control. That is a responsibility which we have accepted, which we cannot dodge, and which we will not dodge.
The hon. Member for Cornwall, North (Mr. Pardoe) raised an issue of great importance when he asked how we proposed to move from the current type of system to a permanent system. He will not be surprised that I cannot agree with his proposals. I do not think that it would make sense or be possible for the Government to develop a detailed juridical machinery to enforce a complicated

1503
blueprint for settling relative wages according to labour costs divided by value added, or some such formula.
We must try, if we are to get the flexibility we need in a dynamic economy, to move towards a system such as already exists and has existed for many years in Western Germany, Austria and Scandinavia in which a consensus about the level of pay which is consistent with keeping inflation under control leads to settlements which are consistent with that level without the need for detailed Government intervention, because there is a shared perception of what is reasonable and what can be expected of inflation in the coming year. We have not yet reached that stage. I hope that we shall in the near future.
I know that the present system is far from perfect, but until we get the sort of consensus to which I have referred, it will remain difficult to reconcile flexibility with the type of moderation overall which is required if we are to keep inflation under control.
This year, we expect to get an earnings out-turn of 13 per cent. to 14 per cent. on the new index, of which 1 per cent. to 2 per cent. will arise from self-financing productivity deals so that the inflationary drift over the 10 per cent. will be only 2 per cent. or 3 per cent.
We made a mistake last year, which I admitted to the House in a recent debate. We set the 10 per cent. initially, not as a guideline for settlements but, as the right hon. and learned Member for Surrey, East fairly said, as a limit to the increase in the nation's earnings. However, I think that we have learned from experience that any figure which is published, what ever its intended purpose, is liable to be taken as a floor for settlements by those who negotiate. That is why this year we set a guideline of 5 per cent. for settlements, knowing that that is likely to result in an earnings out-turn about half that in the current year —[HON. MEMBERS: "Half?"]—about half the increase in earnings in the current year—in other words, about 7 per cent. It would have been impossible to achieve it this year or achieve it next year without the use of discretionary powers in support.
But the real problem is the one which was demonstrated with classical simplicity in the speech of the Leader of the
1504
Opposition. She really provided us with a textbook case. She started by saying that she thought that probably 5 per cent. was right for the increase in earnings nation-wide, but, she said, some should get less and some should get more. She said that people should be enabled to expand differentials, so that skilled workers could get a bigger percentage increase than unskilled workers and managers could get a bigger percentage than skilled workers.
Then, in the next breath, the right hon. Lady said that we should also have given more to Mackies, because the workers there are low paid. Then again, the other clay she said that we must have draconic severity in imposing a guideline on the whole of the public sector through cash limits. Then she puts the sheepdog up to ask for 40 per cent. increases for part of the public sector this year. At the same time, the hon. Member for Stratford (Mr. Churchill) has been asking for even larger increases for the Armed Forces.
The right hon. Lady wants a 5 per cent. limit on earnings, but she wants more for the low paid and for the high paid. She wants more for the public sector if they happen to appeal to her politically, and more for the private sector. How, then. does she keep earnings within the sort of limit she purports to aim at? It really cannot be done.
What the right hon. Lady did not tell us was who these groups are who are supposed to get less than the 5 per cent. The nearest approach we can ge to an answer to that question is from the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) who, we are told, has made a list of trade unions in those industries whose bargaining power is so weak that the Government of the day can do anything they like with them—the railway men, the local authority manual workers, and so on. That is what really lies behind the right hon. Lady's policy, if anything lies behind it at all—but of course she will not tell us that until after an election.
What we get from the right hon. Lady, and from her right hon. and learned Friend, is rhetoric provided by Saatchi and Saatchi, perorations produced by Tom Utley, Patrick Cosgrave, Paul Johnson, Uncle Tom Cobleigh and all. But for policy all we get is that she will offer

1505
anyone anything to buy votes. Something for nothing—that is the programme on which she will fight the next election. She preaches moderation and responsibility. yet she will not accept the responsibility herself for doing or suggesting anything which will be unpopular with anyone.
That, of course, is why we have had this deathbed conversion to incomes policy in the past three days. It is because the right hon. Lady thinks—she has seen the opinion polls—that it might be popular. She has dropped the position she has been holding for the past four years and switched it round for the duration of the General Election. Befote the General Election was as close as she now thinks it is— she could be wrong about that; is not that so, Prime Minister?— she dedicated herself to a rigid, theological monetarism which rejected compassion and co-operation.
The attitude which the right hon. and learned Member for Surrey, East expressed in this House a year ago when we debated the last pay policy—which he now says was such a wonderful idea—was typical. I ask him again, does he still believe that pay policy is:
"an onslaught on the British people's standard of living and freedom generated and forced down their throats by ageing, doctrinaire, prejudiced Socialist trade union leaders"?
When I ask the right hon. and learned Gentleman this question he suddenly finds himself engaged in a passionate conversation with whomever happens to be sitting on his right—and occasionally on his left.
The fact is that behind the desperate opportunism which determines all the actions of the Tory Party at the moment there is a deep psychological obsession with conflict and confrontation which has driven the right hon. Lady, in one area of policy after another, to an extremism
which is profoundly hostile to the moderation and responsibility which, for the next few months, she hopes to be able to preach. We were able to see that the other day on television. Abroad she plans to confront Russia, Cuba and the United States. She will take them all on. At home she wants to confront the immigrant population, the Scots, the Welsh and the Irish. In industry she wants to take on the CBI and the TUC at the same time.
The fact is that, however much the right hon. Lady may attempt to fudge her attitudes during the period before the next General Election, her basic position is a recipe for anarchy in this country and the people of the country will reject it.
We have been present at a historical occasion today. We have heard this afternoon the last speech which will be made in this House by the right hon. Lady—if she is right about the date of the General Election—as Leader of the Conservative Party. The axes and the knives are already being sharpened. The sheepdog is playing for the policemen's votes, the right hon. Member for Chesham and —Amersham (Sir I. Gilmour) is playing for the Armed Forces' votes and the anti-American vote, while the right hon. Member for Cambridgeshire (Mr. Pym) is fighting for the federalist vote. They are all shooting off in their own different directions—the sign of a party in the last stages of decay. It is the sign of a party which is riding to certain defeat when it next has the chance to meet the British people.
I ask the House to reject the amendment and to pass the Government motion.
Question put, That the amendment be made:
The House divided: Ayes 287, Noes 304.

Division No. 310]

AYES

[10.00 p.m.

Adley, Robert

Berry, Hon Anthony

Buchanan-Smith, Alick

Aitken, Jonathan

Biffen, John

Buck, Antony

Alison, Michael

Biggs-Davison, John

Budgen, Nick

Amery, Rt Hon Julian

Blaker, Peter

Bulmer, Esmond

Arnold, Tom

Body, Richard

Butler, Adam (Bosworth)

Atkins, Rt Hon H. (Spelthorne)

Boscawen, Hon Robert

Carlisle, Mark

Atkinson, David (B'mouth, East)

Bottomley, Peter

Chalker, Mrs Lynda

Awdry, Daniel

Bowden, A. (Brighton, Kemptown)

Channon, Paul

Bain, Mrs Margaret

Boyson, Dr Rhodes (Brent)

Churchill, W. S.

Baker, Kenneth

Braine, Sir Bernard

Clark, Alan (Plymouth, Sutton)

Banks, Robert

Brittan, Leon

Clark, William (Croydon S)

Bell, Ronald

Brocklebank-Fowler, C.

Clarke, Kenneth (Rushclifte)

Bendall, Vivian

Brooke, Hon Peter

Clegg, Walter

Bennett, Sir Frederic (Torbay)

Brotherton, Michael

Cockcroft, John

Bennett, Dr Reginald (Fareham)

Brown, Sir Edward (Bath)

Cooke, Robert (Bristol W)

Bonyon, W.

Bryan, Sir Paul

Cope, John

Cormack, Patrick

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

Rathbone, Tim

Costain, A. P.

Johnson Smith, G (E Grinstead)

Rees, Peter (Dover & Deal)

Craig, Rt Hon W. (Belfast E)

Jones, Arthur (Daventry)

Rees-Davies, W. R.

Crawford, Douglas

Jopling, Michael

Reid, George

Critchley, Julian

Joseph, Rt Hon Sir Keith

Renton, Rt Hon Sir D. (Hunts)

Crouch, David

Kaberry, Sir Donald

Renton, Tim (Mid-Sussex)

Crowder, F. P

Kellett-Bowman, Mrs Elaine

Rhodes James, R.

Davies, Rt Hon J. (Knutstord)

Kershaw, Anthony

Rhys Williams, Sir Brandon

Dean, Paul (N Somerset)

Kilfedder, James

Ridley, Hon Nicholas

Dodsworth, Geoffrey

Kimball, Marcus

Ridsdale, Julian

Douglas-Hamilton, Lord James

King, Evelyn (South Dorset)

Rifkind, Malcolm

Drayson, Burnaby

King Tom (Bridgwater)

Rippon, Rt Hon Geoffrey

du Cann, Rt Hon Edward

Kitson. Sir Timothy

Roberts, Wyn (Conway)

Durant, Tony

Knight, Mrs. Jill

Rodgers, Sir John (Sevenoaks)

Dykes, Hugh

Knox, David

Ross, William (Lordonderry)

Eden, Rt Hon Sir John

Lamont, Norman

Rossi, Hugh (Hornsey)

Edwards, Nicholas (Pembroke)

Langford-Holt, Sir John

Rost, Peter (SE Derbyshire)

Elliott, Sir William

Latham, Michael (Melton)

Royle, Sir Anthony

Emery, Peter

Lawrence, Ivan

Sainsbury, im

Ewing, Mrs Winifred (Moray)

Lawson, Nigel

St. John-Sieves, Norman

Eyre, Reginald

Lester, Jim (Beeston)

Scott, Nicholas

Fairbairn, Nicholas

Lewis, Kenneth (Rutland)

Scott-Hopkins, James

Fairgrieve, Russell

Lloyd, Ian

Shaw, Giles (Pudsey)

Farr, John

Loveridge, John

Shaw, Michael (Scarborough)

Felt, Anthony

Luce, Richard

Shelton, William (Streatham)

Finsberg, Geoffrey

McCrindle, Robert

Shepherd, Colin

Fisher, Sir Nigel

McCusker, H.

Shersby, Michael

Fletcher, Alex (Edinburgh N)

Macfarlane, Neil

Silvester, Fred

Fletcher-Cooke, Charles

MacGregor, John

Sims, Roger

Fookes, Miss Janet

MacKay, Andrew (Stechford)

Sinclair, Sir George

Forman, Nigel

Macmillan, Rt Hon M. (Farnham)

Skeet, T. H. H.

Fowler, Norman (Sutton C'f'd)

McNair-Wilson, M. (Newbury)

Smith, Dudley (Warwick)

Fox, Marcus

McNair-Wilson, P. (New Forest)

Smith, Timothy John (Ashfield)

Fraser, Rt Hon H. (Stafford & St)

Model, David

Speed, Keith

Fry, Peter

Marshall, Michael (Arundel)

Spence, John

Galbraith, Hon T. G. D.

Marten, Neil

Spicer, Jim (W Dorset)

Gardiner, George (Reigate)

Mates, Michael

Spicer, Michael (S Worcester)

Gardner, Edward (S Fylde)

Mather, Carol

Sproat, Iain

Gilmour, Rt Hon Sir Ian (Chesham)

Maude, Angus

Stainton, Keith

Gilmour, Sir John (East Fife)

Maudling, Rt Hon Reginald

Stanbrook, Ivor

Glyn, Dr Alan

Mawby, Ray

Stanley, John

Godber, Rt Hon Joseph

Maxwell-Hyslop, Robin

Steen, Anthony (Wavertree)

Goodhart, Philip

Mayhew, Patrick

Stewart, Ian (Hitchin)

Goodhew, Victor

Meyer, Sir Anthony

Stokes, John

Goodlad Alastair

Miller, Hal (Bromsgrove)

Stradling Thomas, J.

Gorst, John

Mills, Peter

Tapsell, Peter

Gow, Ian (Eastbourne)

Miscampbell, Norman

Taylor, R. (Croydon NW)

Gower, Sir Raymond (Barry)

Mitchell, David (Basingstoke)

Taylor, Teddy (Carthcart)

Grant, Anthony (Harrow C)

Moats, Roger

Tebbit, Norman Temple-Morris, Peter

Gray, Hamish

Molyneaux, James

Thatcher, Rt Hon Margaret

Grieve, Percy

Monro, Hector

Thomas, Rt Hon P. (Hendon S)

Griffiths, Eldon

Montgomery, Fergus

Thompson, George

Grist, Ian

Moore, John (Croydon C)

Townsend, Cyril D.

Grylls, Michael

More, Jasper (Ludlow)

Trotter, Neville

Hall-Davis, A. G. F.

Morgan, Geraint

van Straubenzee, W. R.

Hamilton, Archibald (Epsom & Ewell)

Morgan-Giles, Rear-Admiral

Vaughan, Dr Gerard

Hamilton, Michael (Salisbury)

Morris, Michael (Northampton S)

Viggers, Peter

Hampson, Dr Keith

Morrison, Charles (Devizes)

Wakeham, John

Hannam, John

Netive, Airey

Welder, David (Clitheroe)

Harvie Anderson, Rt Hon Miss

Nelson, Anthony

Walker, Rt Hon P. (Worcester)

Haselhurst, Alan

Neubert, Michael

Walker-Smith, Rt Hon Sir Derek

Hastings, Stephen

Newton, Tony

Walters, Dennis

Havers, Rt Hon Sir Michael

Normanton, Tom

Warren, Kenneth

Hawkins, Paul

Noll, John

Watt, Hamish

Hayhoe, Barney

Onslow, Cranley

Weatherill, Bernard

Heath, RI Hon Edward

Oppenheim, Mrs Sally

Wells, John

Henderson, Douglas

Osborn, John

Welsh, Andrew

Heseltine, Michael

Page, John (Harrow West)

Whitelaw, Rt Hon William

Hicks, Robert

Page, Rt Hon R. Graham (Crosby)

Whitney, Raymond

Higgins, Terence L.

Page, Richard (Wokington)

Wiggins, Jerry

Hodgson, Robin

Parkinson, Cecil

Wilson, Gordon (Dundee E)

Holland, Philip

Pattie, Geoffrey

Winterton, Nicholas

Hordern, Peter

Percival, Ian

Wood, Rt Hon Richard

Howe, Rt Hon Sir Geoffrey

Peyton, Rt Hon John

Howell, David (Guildford)

Pink, R. Bonner

Young, Sir G. (Ealing, Acton)

Howell, Ralph (North Norfolk)

Powell, Rt Hon J. Enoch

Hunt, David (Wirral)

Prentice, Rt Hon Reg

Younger, Hon George

Hunt, John (Ravensbourne)

Price, William (Rugby)

Hurd, Douglas

Prior, Rt Hon James

TELLERS FOR THE AYES:

Hutchison, Michael Clark

Pym, Rt Hon Francis

Mr. Spencer Le Merchant and

Irving, Charles (Cheltenham)

Raison, Timothy

Mr. Michael Roberts.

James, David

1508

1509

NOES

Abse, Leo

Faulds, Andrew

McGuire, Michael (Ince)

Allaun, Frank

Fernyhough, Rt Hon E.

MacKenzie, Rt Hon Gregor

Anderson, Donald

Fitch, Alan (Wigan)

Maclennan, Robert

Archer, Rt Hon Peter

Fitt, Gerard (Belfast W)

McMillan, Tom (Glasgow C)

Armstrong, Ernest

Flannery, Martin

Madden, Max

Ashley, Jack

Fletcher, Ted (Darlington)

Magee, Bryan

Ashton, Joe

Foot, Rt Hon Michael

Maguire, Frank (Fermanagh)

Atkins, Ronald (Preston N)

Ford, Ben

Mallalieu, J. P. W.

Atkinson, Norman (H'gey, Tott'ham)

Forrester, John

Marks, Kenneth

Bagier, Gordon A. T.

Fowler, Gerald (The Wrekin)

Marshall, Dr Edmund (Goole)

Barnett, Guy (Greenwich)

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

Marshall, Jim (Leicester S)

Barnett, Rt Hon Joel (Heywood)

Freeson, Rt Hon Reginald

Mason, Rt Hon Roy

Bean, R. E.

Freud, Clement

Maynard, Miss Joan

Beith, A. J.

Garrett, John (Norwich S)

Meacher, Michael

Benn, Rt Hon Anthony Wedgwood

Garrett, W. E. (Wallsend)

Mellish, Rt Hon Robert

Bennett, Andrew (Stockport N)

George, Bruce

Mikardo, Ian

Bidwell, Sydney

Gilbert, Rt Hon Dr John

Milian, Rt Hon Bruce

Bishop, Rt Hon Edward

Ginsburg, David

Miller, Dr M. S. (E Kilbride)

Blenkinsop, Arthur

Golding, John

Mitchell, Ausitn (Grimsby)

Boardman, H.

Gould, Bryan

Mitchell, R. C. (Solon, Itchen)

Booth, Rt Hon Albert

Gourlay, Harry

Molloy, William

Boothroyd, Miss Betty

Graham, Ted

Moonman, Eric

Bottomley, Rt Hon Arthur

Grant, John (Islington C)

Morris, Alfred (Wythenshawe)

Boyden, James (Bish Auck)

Grimund, Rt Hon J.

Morris, Rt Hon Charles R.

Bradley, Tom

Grocott, Bruce

Morris, Rt Hon J. (Aberavon)

Bray, Dr Jeremy

Hamilton, W. W. (Central Fife)

Morton, George

Brown, Robert C.(Newcastle W)

Hardy, Peter

Moyle, Rt Hon Roland

Brown, Ronald (Hackney S)

Harrison, Rt Hon Walter

Mulley, Rt Hon Frederick

Buchan, Norman

Hart, RI Hon Judith

Murray, Rt Hon Ronald King

Buchanan, Richard

Hattersley, Rt Hon Roy

Newens, Stanley

Butler, Mrs Joyce (Wood Green)

Hayman, Mrs Helene

Noble, Mike

Callaghan, Rt Hon J. (Cardiff SE)

Healey, Pt Hon Denis

Oakes, Gordon

Callaghan, Jim (Middleton & P)

Heffer, Eric S.

Ogden, Eric

Campbell, Ian

Hooley, Frank

O'Halloran, Michael

Canavan, Dennis Cant, R. B.

Hooson, Emlyn

Orbach, Maurice

Carmichael, Nell

Horam, John

Orme, Rt Hon Stanley

Carter, Ray

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

Ovenden, John

Carter-Jones, Lewis

Hoyle, Doug (Nelson)

Owen, Rt Hon Dr David

Cartwright, John

Huckfield, Les

Padley, Walter

Castle, Rt Hon Barbara

Hughes, Rt Hon C. (Anglesey)

Palmer, Arthur

Clemitson, Ivor

Hughes, Robert (Aberdeen N)

Pardoe, John

Cocks, Rt Hon Michael (Bristol S)

Hughes, Roy (Newport)

Park, George

Cohen, Stanley

Hunter, Adam

Parker, John

Coleman, Donald

Irvine, Rt Hon Sir A. (Edge Hill)

Parry, Robert

Concannon, Rt Hon John

Irving, Rt Hon S. (Dartford)

Pavitt, Laurie

Conlon, Bernard

Jackson, Colin (Brighouse)

Pendry, Tom

Cook, Robin F. (Edin C)

Jackson, Miss Margaret (Lincoln)

Penhaligon, David

Corbett, Robin

Danner, Greville

Perry, Ernest

Cowans, Harry

Jay, Rt Hon Douglas

Phipps, Dr Colin

Craigen, Jim (Maryhill)

Jeger, Mrs Lena

Prescott, John

Crawshaw, Richard

Jenkins, Hugh (Putney)

Price, C. (Lewisham W)

Cronin, John

Johnson, James (Hull West)

Price, William (Rugby)

Crowther, Stan (Rotherham)

Johnson, Walter (Derby S)

Radice, Giles

Cryer, Bob

Johnston, Russell (Inverness)

Rees, Rt Hon Merlyn (Leeds S)

Cunningham, G. (Islington S)

Jones, Alec (Rhondda)

Richardson, Miss Jo

Cunningham, Dr J. (Whiten)

Jones, Barry (East Flint)

Roberts, Albert (Normanton)

Dalyell, Tam

Jones, Dan (Burnley)

Robors, Gwilym (Cannock)

Davidson, Arthur

Judd, Frank

Robertson, George (Hamilton)

Davies, Bryan (Enfield N)

Kaufman, Rt Hon Gerald

Robinson, Geoffrey

Davies, Rt Hon Denzil

Kelley, Richard

Roderick, Caerwyn

Davies, Ifor (Gower)

Kerr, Russell

Rodgers, George (Chorley)

Davis, Clinton (Hackney C)

Kilroy-Silk, Robert

Rodgers, Rt Hon William (Stockton)

Deakins, Eric

Kinnoch, Neil

Rooker, J. W.

Dean, Joseph (Leeds West)

Lambie, David

Roper, John

de Freitas, Rt Hon Sir Geoffrey

Lamborn, Harry

Ross, Stephen (Isle of Wight)

Dell, Rt Hon Edmund

Lamond, James

Ross, Rt Hon. W. (Kilmarnock)

Dempsey, James

Latham, Arthur (Paddington)

Rowlands, Ted

Dewar, Donald

Leadbitter, Ted

Ryman, John

Doig, Peter

Lee, John

Sandelson, Neville

Dormand, J. D.

Lestor, Misr Joan (Eton & Slough)

Sedgemore, Brian

Douglas-Mann, Bruce

Lever, Rt Hon Harold

Selby Harry

Duffy, A. E. P.

Lewis, Arthur (Newham N)

Sever, John

Dunnett, Jack

Lewis, Ron (Carlisle)

Shaw, Arnold (Ilford South)

Dunwoody, Mrs Gwyneth

Litterick, Tom

Sheldon, Rt Hon Robert

Eadie, Alex

Loyden, Eddie

Shore, Rt Hon Peter

Edge, Geoff

Luard, Evan

Short, Mrs Renee (Wolv NE)

Edwards, Robert (Wolv SE)

Lyon, Alexander (York)

Silkin, Rt Hon John (Deptford)

Ellis, John (Brigg & Scun)

Lyons, Edward (Bradford W)

Silkin, Rt Hon S. C. (Dulwich)

Ellis, Tom (Wrexham)

Mabon, Rt Hon Dr J. Dickson

Silverman, Julius

English, Michael

McCartney, Hugh

Skinner, Dennis

Evans, Fred (Caerphilly)

McDonald, Dr Oonagh

Smith, Cyril (Rochdale)

Evans, Ioan (Aberdare)

McElhone, Frank

Smith, Rt Hon (N Lanarkshire)

Evans, John (Newton)

McKay, Allen (Penistone)

Snape Peter

Ewing, Horry (Stirling)

MacFarquhar, Roderick

Spearing, Nigel

1510

1511

Spriggs, Leslie

Tomlinson, John

Whitehead, Phillip

Stallard, A. W.

Tomney, Frank

Whitlock, William

Steel, Rt Hon David

Torney, Tom

Willey, Rt Hon Frederick

Stewart, Rt Hon M. (Fulham)

Tuck, Raphael

Williams, Rt Hon Alan (Swansea W)

Stoddart, David

Unwin, T. W.

Williams, Alan Lee (Hornch'ch)

Stott, Roger

Varley, Rt Hon Eric G.

Williams, Rt Hon Shirley (Hertford)

Strang, Gavin

Wainwright, Edwin (Dearne V)

Williams, Sir Thomas (Warrington)

Strauss, Rt Hon R. G.

Wainwright, Richard (Colne V)

Wilson, Rt Hon Sir Harold (Huyton)

Summerskill, Hon Dr Shirley

Walker, Harold (Doncaster)

Willson, William (Coventry SE)

Swain, Thomas

Walker, Terry (Kingswood)

Wise, Mrs Audrey

Taylor, Mrs Ann (Bolton W)

Ward, Michael

Woodall, Alec

Thomas, Jeffrey (Abertillery)

Watkins, David

Woof, Robert

Thomas, Mike (Newcastle E)

Watkinson, John

Wrigglesworth, Ian

Thomas, Ron (Bristol NW)

Weetch, Ken

Young, David (Eolton E)

Thorne, Stan (Preston South)

Weitzman, David

Thorpe, Rt Hon Jeremy (N Devon)

Wellbeloved, James

TELLERS FOR THE NOES:

Tierney, Sydney

White, Frank R. (Bury)

Mr. James Hamilton and Mr. Alf Bates.

Tilley, John

White, James (Pollok)

Question accordingly negatived.
Main Question put:—
The House divided: Ayes 296, Noes 281.

Division No. 311]

AYES

[10.15 p.m.

Abse, Leo

Cryer, Bob

Grocott, Bruce

Allaun, Frank

Cunningham, G. (Islington S)

Hamilton, James (Bothwell)

Anderson, Donald

Cunningham, Dr J. (Whiteh)

Hamilton, W. W. (Central Fife)

Archer, Rt Hon Peter

Dalyeli, Tam

Hardy, Peter

Armstrong, Ernest

Davidson, Arthur

Harrison, Rt Hon Walter

Ashley, Jack

Davies, Bryan (Enfield N)

Hart, Rt Hon Judith

Ashton, Joe

Davies, Rt Hon Denzil

Hattersley, Rt Hon Rop

Atkins, Ronald (Preston N)

Davies, nor (Gower)

Hayman, Mrs Helene

Atkinson, Norman (H'gey, Tott'ham)

Davis, Clinton (Hackney C)

Healey, Rt Hon Denis

Bagier, Gorden A. T.

Deakins, Eric

Helfer, Eric S.

Barnett, Guy (Greenwich)

de Freitas, Rt Hon Sir Geoffrey

Hooley, Frank

Barnett, Rt Hon Joel (Heywood)

Dell, Rt Hon Edmund

Hooson, Emlyn

Bates, Alf

Dempsey, James

Horam, John

Bean, R. E.

Dewar, Donald

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

Beith, A. J.

Doig, Peter

Hoyle, Doug (Nelson)

Benn, Rt Hon Anthony Wedgwood

Dormand, J. D.

Huckfield, Les

Bennett, Andrew (Stockport N)

Douglas-Mann, Bruce

Hughes, Rt Hon C. (Anglesey)

Bishop, Rt Hon Edward

Duffy, A. E. P

Hughes, Robert (Aberdeen N)

Blenkinsop, Arthur

Dunnett, Jack

Hughes, Roy (Newport)

Boardman, H.

Dunwoody, Mrs Gwyneth

Hunter, Adam

Booth, Rt Hon Albert

Eadie, Alex

Irvine, Rt Hon Sir A. (Edge HIII)

Boothroyd, Miss Betty

Edge, Geoff

Irving, Rt Hon S. (Dartford)

Bottomley, Rt Hon Arthur

Edwards, Robert (Wolv SE)

Jackson, Colin (Brighouse)

Boyden, James (Bish Auck)

Ellis, John (Brigg & Scun)

Jackson, Miss Margaret (Lincoln)

Bradley, Tom

Ellis, Tom (Wrexham)

Janner, Greville

Bray, Dr Jeremy

English, Michael

Jay, Rt Hon Douglas

Brown, Robert C. (Newcastle W)

Evans, Fred (Caerphilly)

Jeger, Mrs Lena

Brown, Ronald (Hackney S)

Evans, Ioan (Aberdare)

Jenkins, Hugh (Putney)

Buchan, Norman

Evans, John (Newton)

Johnson, James (Hull West)

Buchanan, Richard

Ewing, Harry (Stirling)

Johnson, Walter (Derby S)

Butler, Mrs Joyce (Wood Green)

Faulds, Andrew

Johnston, Russell (Inverness)

Callaghan, Rt Hon J. (Cardiff SE)

Fernyhough, Rt Hon E.

Jones, Alec (Rhondda)

Callaghan, Jim (Middleton & P)

Fitch, Alan (Wigan)

Jones, Barry (East Flint)

Campbell, Ian

Fitt, Gerard (Belfast W)

Jones, Dan (Burnley)

Canavan, Dennis

Flannely, Martin

Judd, Frank

Cant, R. B.

Fletcher, Ted (Darlington)

Kaufman, Rt Hon Gerald

Carmichael, Neil

Foot, Rt Hon Michael

Kelliey, Richard

Carter, Ray

Ford, Ben

Kerr, Russell

Carter-Jones, Lewis

Forrester, John

Kilroy-Silk, Robert

Cartwright, John

Fowler, Gerald (The Wrekin)

Kinnock, Nell

Castle, Rt Hon Barbara

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

Lemble, David

Clemitson, Ivor

Freesen, Rt Hon Reginald

Lamborn, Harry

Cocks, Rh Hon Michael (Bristol S) Cohen, Stanley

Freud, Clement

Lamend, James

Concannon, Rt Hon John

Garrett, John (Norwich S)

Leadbitter, Ted

Conlan, Bernard

Garrett, W. E. (Walisend)

Lee, John

Cook, Robin F. (Edin C)

George, Bruce

Lestor, Miss Joan (Eton & Slough)

Corbett, Robin

Gilbert, Rt Hon Dr John

Lever, Rt Hon Harold

Cowans, Harry

Golding, John

Lewis, Ron (Carlisle)

Craigen, Jim (Maryhill)

Gould, Bryan

Litterlek, Tom

Crawshaw, Richard

Gourley, Harry

Luard, Evan

Cronin, John

Graham, Ted

Lyon, Alexander (York)

Grant, John (Islington C)

Lyons, Edward (Bradford W)

Crowther, Stan (Rotherham)

Grimond, Rt Hon J.

Mabon, Rt Hon Dr J. Dickson

1512

1513

McCartney, Hugh

Parker, John

Strang, Gavin

McDonald, Dr Oonagh

Parry, Robert

Strauss, Rt Hon R. G.

McElhone, Frank

Pavitt, Laurie

Summerskill, Hon Dr Shirley

McKay, Allen (Penistone)

Pendry, Tom

Swain, Thomas

MacFarquhar, Roderick

Penhaligon, David

Taylor, Mrs Ann (Bolton W)

McGuire, Michael (Ince)

Perry, Ernest

Thomas, Jeffrey (Abertillery)

MacKenzie, Rt Hon Gregor

Phipps, Dr Colin

Thomas, Mike (Newcastle E)

Maclennan, Robert

Prescott, John

Thorpe, Rt Hon Jeremy (N Devon)

McMillan, Tom (Glasgow C)

Price, C. (Lewisham W)

Tierney, Sydney

Madden, Max

Price, William (Rugby)

Tilley, John

Magee, Bryan

Radice, Giles

Tinn, James

Maguire, Frank (Fermanagh)

Rees, Rt Hon Merlyn (Leeds S)

Tomlinson, John

Mallalieu, J. P. W.

Richardson, Miss Jo

Tomney, Frank

Marks, Kenneth

Roberts, Albert (Normanton) Roberts, Gwilym (Cannock)

Torney, Tom

Marshall, Dr Edmund (Goole)

Robertson, George (Hamilton)

Tuck, Raphael

Marshall, Jim (Leicester S)

Robinson, Geoffrey

Unwin, T. W.

Mason, Rt Hon Roy

Roderick, Caerwyn

Varley, Rt Hon Eric G.

Meacher, Michael

Rodgers, George (Chorley)

Wainwright, Edwin (Dearne V)

Mellish, Rt Hon Robert

Rodgers, Rt Hon William (Stockton)

Wainwright, Richard (Calne V)

Mikardo, Ian

Rooker, J. W.

Walker, Harold (Doncaster)

Milian, Rt Hon Bruce

Roper, John

Walker, Terry (Kingswood)

Miller, Dr M. S. (E Kilbride)

Ross, Stephen (Isle of Wight)

Ward, Michael

Mitchell, Ausitn (Grimsby)

Ross, RI Hon W. (Kilmarnock)

Watkins, David

Mitchell, R. C. (Soton, Itchen)

Rowlands, Ted

Watkinson, John

Molloy, William

Ryman, John

Weetch, Ken

Moonman, Eric

Sandelson, Neville

Weitzman, David

Morris, Alfred (Wythenshawe)

Sedgemore, Brian

Wellbeloved, James

Morris, Rt Hon Charles R.

Selby, Harry

White, Frank R. (Bury)

Morris, Rt Hon J. (Aberavon)

Sever, John

White, James (Pollok)

Morton, George

Shaw, Arnold (Ilford South)

Whitehead, Phillip

Moyle, Rt Hon Roland

Sheldon, Rt Hon Robert

Whitlock, William

Mulley, Rt Hon Frederick

Shore, Rt Hon Peter

Willey, Rt Hon Frederick

Murray, Rt Hon Ronald King

Short, Mrs Renée (Wolv NE)

Williams, Rt Hon Alan (Swansea W)

Newens, Stanley

Silkin, Rt Hon John (Deptford)

Williams, Alan Lee (Hornch'ch)

Noble, Mike

Silkin, Rt Hon S. C. (Dulwich)

Williams, Rt Hon Shirley (Hertford)

Oakes, Gordon

Silverman, Julius

Williams, Sir Thomas (Warrington)

Ogden, Eric

Smith, Cyril (Rochdale)

Wilson, Rt Hon Sir Harold (Huyton)

O'Halloran, Michael

Smith, Rt Hon (N Lanarkshire)

Willson, William (Coventry SE)

Orbach, Maurice

Snape, Peter

Wise, Mrs Audrey

Orme, Rt Hon Stanley

Spearing, Nigel

Woodall, Alec

Ovenden, John

Spriggs, Leslie

Woof, Robert

Owen, Rt Hon Dr David

Stallard, A. W.

Wrigglesworth, Ian

Padley, Walter

Steel, Rt Hon David

Young, David (Bolton E)

Palmer, Arthur

Stewart, Rt Hon M. (Fulham)

TELLERS FOR THE AYES:

Pardoe, John

Stoddart, David

Mr. Donald Coleman and

Park, George

Stott, Roger

Mr. Joseph Dean.

NOES

Adley, Robert

Butler, Adam (Bosworth)

Fell, Anthony

Aitken, Jonathan

Carlisle, Mark

Finsberg, Geoffrey

Alison, Michael

Chalker, Mrs Lynda

Fisher, Sir Nigel

Amery, Rt Hon Julian

Channon, Paul

Fletcher, Alex (Edinburgh N)

Arnold, Tom

Churchill, W. S.

Fletcher-Cooke, Charles

Atkins, Rt Hon H. (Spelthorne)

Clark, Alan (Plymouth, Sutton)

Fookes, Miss Janet

Atkinson, David (B'mouth, East)

Clark, William (Croydon S)

Ferman, Nigel

Awdry, Daniel

Clarke, Kenneth (Rushcliffe)

Fowler, Norman (Sutton C'f'd)

Bain, Mrs Margaret

Clegg, Walter

Fox, Marcus

Baker, Kenneth

Cockcroft, John

Fraser, Rt Hon H. (Stafford & St)

Banks, Robert

Cooke, Robert (Bristol W)

Fry, Peter

Bell, Ronald

Cope, John

Galbraith, Hon T. G. D.

Bendall, Vivian

Cormack, Patrick

Gardiner, George (Reigate)

Bennett, Sir Frederic (Torbay)

Costain, A. P.

Gardner, Edward (S Fylde)

Bennett, Dr Reginald (Fareham)

Crawford, Douglas

Gilmour, Rt Hon Sir Ian (Chesham)

Benyon, W.

Critchley, Julian

Gilmour, Sir John (East Fife)

Berry, Hon Anthony

Crouch, David

Glyn, Dr Alan

Biffen, John

Crowder, F. P.

Godber, Rt Hon Joseph

Biggs-Davison, John

Davies, Rt Hon J. (Knutsford)

Goodhart, Philip

Blaker, Peter

Dean, Paul (N Somerset)

Goodhew, Victor

Body, Richard

Dodsworih, Geoffrey

Goodlad, Alastair

Boscawen, Hon Robert

Douglas-Hamilton, Lord James

Gorst, John

Bottomley, Peter

Drayson, Burnaby

Gow, Ian (Eastbourne)

Bowden, A. (Brighton, Kemptown)

du Cann, Rt Hon Edward

Gower, Sir Raymond (Barry)

Boyson, Dr Rhodes (Brent)

Durant, Tony

Grant, Anthony (Harrow C)

Braine, Sir Bernard

Dykes, Hugh

Gray, Hamish

Britian, Leon

Eden, Fit Hon Sir John

Grieve, Percy

Brocklebank-Fowler, C.

Edwards, Nicholas (Pembroke)

Griffiths, Eldon

Brooke, Hon Peter

Elliott, Sir William

Grist, Ian

Brotherton, Michael

Emery, Peter

Grylis, Michael

Brown, Sir Edward (Bath)

Ewing, Mrs Winifred (Moray)

Hall-Davis, A. G. F.

Buchanan-Smith, Alick

Eyre, Reginald

Hamilton, Archibald (Epsom & Ewell)

Buck, Antony

Fairbairn, Nicholas

Hamilton, Michael (Salisbury)

Budgen, Nick

Fairgrieve, Russell

Hampson, Dr Keith

Buller, Esmond

Farr, John

Hannam, John

1514

1515

Harvie Anderson, Rt Hon Miss

Maude, Angus

Scott, Nicholas

Haselhurst, Alan

Maudling, Rt Hon Reginald

Scott-Hopkins, James

Hastings, Stephen

Mawby, Ray

Shaw, Giles (Pudsey)

Havers, Rt Hon Sir Michael

Maxwell-Hyslop, Robin

Shaw, Michael (Scarborough)

Hawkins, Paul

Mayhew, Patrick

Shelton, William (Streatham)

Hayhoe, Barney

Meyer, Sir Anthony

Shepherd, Colin

Heath, Rt Hon Edward

Miller, Hal (Bromsgrove)

Shersby, Michael

Henderson, Douglas

Mills, Peter

Silvester, Fred

Heseltine, Michael

Miscampbell, Norman

Sims, Roger

Hicks, Robert

Mitchell, David (Basingstoke)

Sinclair, Sir George

Higgins, Terence L.

Moate, Roger

Skeet, T. H. H.

Hodgson, Robin

Monro, Hector

Smith, Dudley (Warwick)

Holland, Philip

Montgomery, Fergus

Smith, Timothy John (Ashfield)

Hordern, Peter

Moore, John (Croydon C)

Speed, Keith

Howe, Rt Hon Sir Geoffrey

More, Jasper (Ludlow)

Spence, John

Howell, David (Guildford)

Morgan, Geraint

Spicer, Jim (W Dorset)

Howell, Ralph (North Norfolk)

Morgan-Giles, Rear-Admiral

Spicer, Michael (S Worcester)

Hunt, David (Wirral)

Morris, Michael (Northampton S)

Sproat, Iain

Hunt, John (Ravensbourne)

Morrison, Charles (Devizes)

Stainton, Keith

Hurd, Douglas

Neave, Airey

Stanbrook, Ivor

Hutchison, Michael Clark

Nelson, Anthony

Stanley, John

Irving, Charles (Cheltenham)

Neubert, Michael

Steen, Anthony (Wavertree)

James, David

Newton, Tony

Stewart, Ian (Hitchin)

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

Normanton, Tom

Stokes, John

Johnson Smith, G (E Grinstead)

Nott, John

Stradling Thomas, J.

Jones, Arthur (Daventry)

Onslow, Cranley

Tapsell, Peter

Jopling, Michael

Oppenheim, Mrs Sally

Taylor, R. (Croydon NW)

Joseph, Rt Hon Sir Keith

Osborn, John

Taylor, Teddy (Carthcart)

Kaberry, Sir Donald

Page, John (Harrow West)

Tebbit, Norman

Kellett-Bowman, Mrs Elaine

Page, Rt Hon R. Graham (Crosby)

Temple-Morris, Peter

Kershaw, Anthony

Page, Richard (Wokington)

Thatcher, Rt Hon Margaret

Kilfedder, James

Parkinson, Cecil

Thomas, Rt Hon P. (Hendon S)

Kimball, Marcus

Pattie, Geoffrey

Thompson, George

King, Evelyn (South Dorset)

Percival, Ian

Townsend, Cyril D.

King Tom (Bridgwater)

Peyton, Rt Hon John

Trotter, Neville

Kitson, Sir Timothy

Pink, R. Bonner

van Straubenzee, W. R.

Knight, Mrs. Jill

Prentice, Rt Hon Reg

Vaughan, Dr Gerard

Knox, David

Price, David (Eastleigh)

Viggers, Peter

Lamont, Norman

Prior, Rt Hon James

Wakeham, John

Langford-Holt, Sir John

Pym, Rt Hon Francis

Walder, David (Clitheroe)

Latham, Michael (Melton)

Raison, Timothy

Walker, Rt Hon P. (Worcester)

Lawrence, Ivan

Rathbone, Tim

Walker-Smith, Rt Hon Sir Derek

Lawson, Nigel

Rees, Peter (Dover & Deal)

Walters, Dennis

Lester, Jim (Beeston)

Rees-Davies, W. R.

Warren, Kenneth

Lewis, Kenneth (Rutland)

Reid, George

Watt, Hamish

Lloyd, Ian

Renton, Rt Hon Sir D. (Hunts)

Weatherill, Bernard

Loveridge, John

Renton, Tim (Mid-Sussex)

Wells, John

Luce, Richard

Rhodes James, R.

Welsh, Andrew

McCrindle, Robert

Rhys Williams, Sir Brandon

Whitelaw, Rt Hon William

Macfarlane, Neil

Ridley, Hon Nicholas

Whitney, Raymond

MacGregor, John

Ridsdale, Julian

Wiggins, Jerry

MacKay, Andrew (Stechford)

Rifkind, Malcolm

Wilson, Gordon (Dundee E)

Macmillan, Rt Hon M. (Farnnam)

Rippon, Rt Hon Geoffrey

Winterton, Nicholas

McNair-Wilson, M. (Newbury)

Roberts, Wyn (Conway)

Wood, Rt Hon Richard

McNair-Wilson, P. (New Forest)

Rodgers, Sir John (Sevenoaks)

Young, Sir G. (Ealing, Acton)

Madel, David

Rossi, Hugh (Hornsey)

Younger, Hon George

Marshall, Michael (Arundel)

Rost, Peter (SE Derbyshire)

Marten, Neil

Royle Sir Anthony

TELLERS FOR THE NOES:

Mates, Michael

Sainsbury, Tim

Mr. Spencer Le Marchant and

Mather, Carol

St. John-Stevas, Norman

Mr. Michael Roberts.

Question accordingly agreed to.
Resolved,
That this House welcomes the substantial progress already made in combating inflation as described in the White Paper (Winning the Battle Against Inflation) and recognises that a further sustained national effort is required to keep inflation under control as a basis for a healthy and productive, expanding economy capable of providing full employment and rising living standards for the British people.

THE ECONOMY

  DIVIDENDS BILL
  Ordered,
  That in respect of the Dividends Bill, notices of Amendments, new Clauses, and new Schedules to be moved in Committee may be accepted by the Clerks at the Table before the Bill has been read a Second time.—[Mr. Thin.]

MARINE OIL POLLUTION
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Tinn.]
10.30 p.m.
Mr. Peter Emery: The problem of oil pollution at sea is so considerable and is of such concern to hon. Members that this is the second Adjournment debate on the matter in two weeks. I am particularly sorry to see the Under-Secretary of State for Trade on the Government Front Bench. I mean that not as a criticism of him, but he may know that I asked for a Minister from the Department of the Environment to answer the debate. That is a matter for the Government, and they decided that the Under-Secretary of State for Trade should reply.
I apologise to the Under-Secretary but I have no alternative but to attack him, because for overall co-ordination on oil pollution the Department of Trade is the wrong Ministry. It does the wrong job and is most likely to make the wrong decisions. I remind the Minister that I have taken an interest in oil pollution for many years.
Three years before the Under-Secretary entered the House, during the "Torrey Canyon" debate I said:
"Let us make certain that the file is not closed now, as has so often been the case when we have had debates in the House. Let us make sure that we have learned from the disaster so that, if it occurs again, we shall be able to act slightly more efficiently than happened on this occasion."—[Official Report, 10th April 1967; Vol. 744, c. 890.]
I take no pride in the fact that those were the closing sentences of my speech. I repeat them because the action taken and the speed of decision seems slower in the case of the "Eleni V" than it was at the time of the muddle of ministerial action on the "Torrey Canyon" disaster.
1518
At that time ministerial to-ing and froing led to the first Private Notice Question being answered by the Secretary of State for Defence. A statement was made by the then Prime Minister, the right hon. Member for Huyton (Sir H. Wilson), who promised a White Paper. The White Paper was produced by the then Home Secretary, Mr. Roy Jenkins, who opened the subsequent debate, which was wound up by Mr. Anthony Greenwood, who was then the Minister for Housing and Local Government.
Mr. Greenwood carried most of the responsibility during the latter part of the disaster. I worked closely with him. I flew over the wreck in a helicopter, which led to the publication of an Osbert Lancaster cartoon on the front page of the Daily Express. It showed two pilots looking down from a helicopter at the oil spill. Underneath were words to the effect "It's No. 10, and he says if it's going anywhere near Honiton to leave it alone."
I was led to believe that the single co-ordinating Ministry would be that dealing with local government. This belief was reinforced by the then Prime Minister on 4th April 1967. Mr. Murray, now Lord Murray, asked him
"whether the committee that is co-ordinating the efforts to clear the oil will continue in being for some time just in case there are any further disasters of this sort?".
The Prime Minister replied:
"Yes, Sir. The committee—both the headquarters committee and the local organization—are being kept in being. As my hon. Friend knows, the Parliamentary Secretary and the Minister of Housing and Local Government have been assigned particular areas. As soon as danger appears in any of the areas they will immediately take charge of operations".—[Official Report, 4th April 1967; Vol. 744, c. 49.]
I should like to know why, in 1969, I believe, the co-ordination was taken away from local government and given to the Department of Trade? Why, when we have the Ministry of Defence, the Prime Minister, the Home Office, the Departments of Environment and of Transport, and certainly the Ministry of Agriculture, Fisheries and Food—and now, indeed, the Department of Energy—do we find the Department of Trade in this co-ordi-nating position?
The Department of Trade is the Department responsible for shipping and the

1519
furtherance of the shipping industry. It is the Department responsible for insurance and the furtherance of the insurance business. These are possibly the only two vested interests in any major oil or shipping disaster at sea.
My contention—it is the major aspect of my speech—is that above all, above every other concern or vested interest, if there is a major disaster at sea which brings oil pollution, the one overriding principle must be to protect the environment. It must be that above all else. The value of the ship, the value of the remaining oil and the claims of the salvage experts are nothing compared with, and must be entirely secondary to, the need to ensure as little environmental damage as possible.
I contend that this is a decision somewhat foreign to the Department of Trade. After all, I think that I can talk with some authority, having been a Minister working with the admirable civil servants of that Department, although in my day none of them claimed to be a great environmental expert.
My second question is this: if the Department of Trade co-ordination is so good, why were the same errors made in the "Eleni V" case as with the "Torrey Canyon" 12 years later? Why was no one able to make quick executive decisions, without further consultation, on the spot? When both ships had to be destroyed—one by bombing and the other by demolition charges—why was it said, in April 1967, that the decision was 11 days or at least nine days too late, and in May 1978—the same criticism—that the "Eleni V" was destroyed 21 days or at least 17 days too late?
Can we never learn? What is the chain of command? Who decides what and where? Why do decisions take so long? Is there not evident proof that the present emergency machinery does not respond adequately or, indeed, even effectively?
I have a major constituency interest in the need for the most effective, the most modern and the most efficient contingency planning and co-ordination for dealing with oil pollution. In Lyme Bay, off Seaton or Beer, Sidmouth or Budleigh Salterton, or off Exmouth or the mouth of the Exe, some of the world's largest supertankers, which are too big to enter most
1520
ports in Britain, in official jargon, "lighten their load". This means that they discharge all or part of their cargo of crude oil by ship-to-ship pipeline to a smaller vessel, which then proceeds to unload in any of a number of British ports.
With the massive south-westerly gales that arise on this part of the coast, with the volume of shipping that can be blown off course from the immensely busy shipping lanes in the Channel, or by human error, or because an anchor drags, it is only a matter of time before a major accident occurs.
If a 250,000-ton tanker, fully laden with oil, slices into a much smaller vessel, the pollution will be catastrophic. At that moment the tourist industry in the southwest will face bankruptcy. At that moment the local government agencies will require every possible aid. At that time they will have to look to the Government, and any dilatory decision-making by the Government will only enhance the disaster.
Let me say clearly that I do not consider that the IMCO negotiations should be, or could be, taken away from the Department of Trade, nor, indeed, the control of spillage when out at sea, but I do contend that the overall co-ordination does not rest with the Department of Trade. Does the Department of Trade normally, or ever, deal with other British emergencies? No. That is basically the responsibility of the Department of the Environment. In drought, flood or blizzard, Environment Ministers deal with the mobilisation of local government resources, the co-ordination of military and local government effort, the aid to local authorities, financial or material, training for local government staff and pools of equipment for local government use. None of these is in any way the responsibility of the Department of Trade.
Turning to another aspect, I ask three simple questions. I should, if possible, like an answer tonight. Has the Archer-Berry report, ordered by the Prime Minister, been delivered to No. 10? I believe that it was meant to be there on 1st July. Secondly, when will a statement be made on that report? Thirdly, may we have an assurance that, as with the "Torrey Canyon" inquiry, the Archer-Berry report will be published by the Government as a White Paper? As

1521
the inquiry has been carried out by Department of Trade civil servants, if it is not produced as a White Paper it will certainly be branded as a whitewash, which has already been suggested in some quarters.
Again, why have we not advanced in our technique of dispersal of oil at sea? Detergents are still not working really well. The Minister knows that only too well from the criticism of local authorities on the Norfolk coast. The vacuuming of oil spillage is still not operative. Why? The use of transponders is hardly even considered and is certainly nowhere in use. How much money is being spent on research in these areas connected with the problems of oil pollution? What annual sum is being spent? If co-ordination by the Department of Trade is effective, why has there been no updating for the benefit of local district councils? Why was the equipment in use on the east coast so antique? Why, indeed, is there such criticism emerging from local government sources?
With all this, does it really lead to the conclusion that all is going well, or that the Department of Trade should continue to be the co-ordinating Ministry? I contend that this cannot be the case, and that co-ordination must return to local government or to the Department of the Environment.
I end with a quote from The Times of 31st May 1978:
"A number of conflicting interests have been apparent in the handling of 'Eleni V' as it floundered for 25 days off the coast of East Anglia. The Department of Energy, for example, was worried that the early plan to two the wreck around the north of Scotland ready for sinking in the Atlantic might jeopardise oil rigs in bad weather or, if it sank prematurely, interfere with pipelines beneath the sea. The Department of the Environment was concerned lest a running spillage should pollute long stretches of coastline during the journey which was eventually cancelled.
When the plan was altered to a beaching operation on a sandbank another set of conservationist fears arose"
The quote continues:
"One school of thought holds that statements by the Department of Trade engendered a spirit of false optimism in the early phase although that is vigorously denied by the department, which points out that it 'moved into the unknown virtually every day'."
1522
If that is true, why? If it is a fact, how shocking. If this was what was said by the Department of Trade, the sooner oil pollution matters are co-ordinated by the Department of the Environment the better for everybody.
10.47 p.m.
The Under-Secretary of State for Trade (Mr. Clinton Davis): it is a pity that the hon. Member for Honiton (Mr. Emery) did not do more profound research into this matter. His approach was perfunctory, inexact and inaccurate in a number of material particulars, as I shall establish. The hon. Gentleman claimed to have learned much from his term in office, but he has not portrayed that situation tonight.
It might be helpful if I begin by outlining the present ministerial and departmental responsibilities for dealing with oil spills. The basic structure is simple. My Department is the lead Department in the Government on the clearance of oil spills and has executive responsibility for dealing with oil spills at sea. The coastal local authorities—not the Department of the Environment—are responsible for dealing with any oil that comes close inshore or actually comes ashore.
My Department has decentralised responsibility to the principal officers of the nine marine survey districts that cover the United Kingdom coastline. Within a framework of general guidelines each principal officer has drawn up his own contingency plan, which provides for close consultation with the local authorities, local officials of the appropriate fisheries department and local officials of the Nature Conservancy Council and other wild life interests. This local co-ordination is a cardinal feature of the contingency arrangements, and these matters were all brought into play during the "Elani V" incident.
Others, of course, have a part to play. The Department of the Environment, together with the Scottish and Welsh Offices, is responsible at Government level for policy on the protection of beaches and inshore waters. It stands ready to give local authorities assistance and advice when called upon.
The fisheries departments advise on the use of approved low toxicity dispersants and their impact on fisheries. The Nature Conservancy Council is the principal source of advice on wild life interests.

1523
Subject to service commitments, the Ministry of Defence provides assistance on request, in the form of aircraft for aerial surveillance and command ships and spraying vessels for anti-pollution operations.
Policy co-ordination among departments, environmental interests and industry is centred on the standing committee on pollution clearance at sea. This committee reports to the Secretary of State for Trade. In addition, departments of the Nature Conservancy Council can be brought together in the clearance advisory panel to advise on the clean-up response to be adopted in certain instances.
The Select Committee on Science and Technology is currently carrying out an inquiry into the handling of the "Eleni V" problem by the Government and other public bodies. On this occasion, therefore, it would not be appropriate for me to dwell on that operation, although I rebut some of the hon. Gentleman's rather more absurd allegations.
The Department of Trade's antipollution organisation responded quickly. On the evidence, there is no doubt about that. The principal officer set up his operational headquarters on the spot at Gorleston coastguard station with great promptness and a fleet of dispersant spraying vessels was mobilised very swiftly. The basic problem was that existing dispersants proved relatively ineffective in dealing with the sort of heavy fuel oil that was carried by the "Eleni V".
It is not true that no one was able to make quick executive decisions on the spot. The hon. Gentleman will have to assess the evidence as a whole. He is seeking to come to a premature judgment before the Select Committee has finalised its deliberations. That is not the way in which anyone approaching evidence should come to a judgment, but the hon. Gentleman has chosen to do so and he is entitled to do that.
The principal officer made executive decisions as emergencies arose. He did not have to refer back to London—nor did he—in order to deal with those emergencies on the spot. That is brought out in the evidence. Decisions were taken promptly, with the object of minimising
1524
the risk of further pollution. The execution took time because of the inherent difficulty of dealing with a part of the ship that was upside-down and largely submerged. That was not comparable with the situation 11 years ago in the "Torrey Canyon" episode, or with that in the "Amoco Cadiz" incident.
The machinery of government is based on the organisation of Departments by functions, such as energy, agriculture and trade. Our arrangements in the maritime area are consistent with this general aproach. Accordingly, they rest on the basis that individual Ministers are responsible for the functions of their Department as they apply to the maritime area. It is obvious that many functions of Departments have a maritime dimension, but the Government's view is that, on the whole, it is more important to retain functional links, particularly those of a policy nature. For example, the exploitation of offshore oil and gas has more in common with the development of onshore energy, and fisheries have more in common with agriculture, than each has with the other.
The allocation of ministerial responsibilities is a matter for the Prime Minister, and present arrangements were reviewed in 1975–76. The report of that time confirmed that the basic structure ought to be retained and it recommended a number of detailed changes and improvements. That report was published in September 1976 as pollution paper no. 8, entitled "Accidental Oil Pollution of the Sea", to provide an opportunity for debate and comment. The report was subsequently endorsed by the Government in July 1977. This allocation of responsibilities has important advantages. Oil spillages and pollution can occur at any point around the coast of the United Kingdom and my Department responds through its decentralised marine survey organisation.
By their nature, local authorities are decentralised. Oil spillages and pollution occur infrequently on any particular stretch of coast, so responsibility is placed on organisations that already exist for other purposes, the manpower and resources of which can be diverted when the need arises. The division of responsibility between "at sea" and "on shore" broadly reflects a distinction in

1525
the techniques utilised. Apart from naval architects, our marine survey organisation is staffed largely by Merchant Navy deck officers with command experience and engineer officers who are well suited to organising and directing operations essentially based on the use of ships. My Department is also able to utilise the coastguards' communication network.
Added to that, my Department has a wide range of related maritime responsibilities. We survey merchant ships for safety. We deal with traffic separation schemes, navigational aids, the safety of navigation generally, and the coastguard and its responsibilities for co-ordinating maritime search and rescue are all part of my Department's responsibilities. We are also responsible for measures to reduce operational pollution.
The local authorities have substantial resources of men, vehicles and mechanical equipment for their other functions, which can also be used for beach clearance. The assertion by the hon. Gentleman that all this is antiquated is not borne out by the evidence. The authorities have also acquired necessary items of beach-cleaning equipment, and a number of systems for containing and recovering oil mechanically from the sea surface, while generally ineffective in the open sea, can be useful in sheltered or inshore waters. Booms may also be useful in protecting particularly sensitive areas in entrances to harhours and small rivers.
The present allocation of responsibilities has clear advantages. In itself the reallocation of responsibilities does nothing to reduce the incidence of oil pollution or to improve the techniques available to deal with oil pollution. Quite apart from the inquiry by the Select Committee, the Department is engaged in a thorough stocktaking of our contingency arrangements, to which the hon. Gentleman alluded.
We have by no means closed our mind to the possibility of change. The structure of Departments and the responsibilities of Ministers are by no means immutable, but they need to be adapted to changing circumstances. My right hon. Friend the Prime Minister keeps this question under review and would not hesitate to make hanges if they seemed necessary.
1526
The hon. Gentleman said that with a major disaster at sea, bringing oil pollution, the main concern must be to protect the environment. I believe that the paramount concern must be the safety of life. To that all else is secondary. That does not mean that pollution is of minor importance.
The hon. Gentleman asked a number of questions, with which I shall try to deal in the short time available. The exercise in which we are engaged is one of Government stocktaking, involving a number of Departments, with important experts. It is chaired by the permanent secretary at the Department of Trade. The report has been delivered to my right hon. Friend the Prime Minister and I have already given an undertaking that a statement will be made about it. However, since this is a matter for the Prime Minister to determine, I cannot say in what shape that report will be published.
The hon. Member asked how much had been spent on research. I shall let him have the information in due course. A considerable amount has been devoted to this matter, but the weight of the research done by Warren Springs has not been into the type of oil in question, which is not carried in a great proportion of the ships operating around our coasts. The establishment is, however, stepping up its research into this problem.
It is incorrect to say that there has been no updating of contingency plans. The hon. Gentleman claimed that the same errors were made with the "Eleni V" incident as were made with that of the "Torrey Canyon". I have demonstrated—and I think that the evidence before the Select Committee is clear on this point—that the two incidents were different. With the "Torrey Canyon" a large tanker became a wreck. With the "Eleni V" we had to cope with the hulk of what remained of a small tanker. I simply do not believe that it is right to equate the two incidents, although certainly both gave rise to problems.
We do not have the complete answer to this matter. There are no panaceas, but the right way to proceed to save human lives and to try to mitigate these disasters is to take international action. In that respect, the Government have acted and taken initiatives at IMCO. I

1527
believe that history will show that we were right. This is an international problem, which can be tackled satisfactorily only on an international basis.
Question put and agree to.
Adjourned accordingly at Eleven o'clock.

DEFENCE
  Royal Air Force (Avenues of Promotion)
  Royal Air Force (Avenues of Promotion)
  Aircraft Accidents
  Aircraft Accidents
  Royal Air Force (Channels of Communication)
  Royal Air Force (Channels of Communication)
  NATO Defence Ministers
  NATO Defence Ministers
  Defence Codification Agency
  Defence Codification Agency
  Sperm Whale Oil Products
  Sperm Whale Oil Products
  China (Defence Minister)
  China (Defence Minister)
  Royal Air Force (Senior Officers' Functions)
  Royal Air Force (Senior Officers' Functions)
  Air Defence System
  Air Defence System
  Westland Helicopters Contract
  Westland Helicopters Contract
  Manpower
  Manpower
  Royal Ordnance Factories
  Royal Ordnance Factories
  Hydrofoils
  Hydrofoils
  Indonesia (Aircraft Supply)
  Indonesia (Aircraft Supply)
  Women's Royal Air Force (Duties)
  Women's Royal Air Force (Duties)
  Civilian Employment
  Civilian Employment
  38 Group, Royal Air Force
  38 Group, Royal Air Force
  RAF Personnel (Travel-to-Work Costs)
  RAF Personnel (Travel-to-Work Costs)
  Nimrod Aircraft
  Nimrod Aircraft
  Illegal Fishing (Interceptions)
  Illegal Fishing (Interceptions)
  Dockyards (Industrial Unrest)
  Dockyards (Industrial Unrest)
  Expenditure
  Expenditure
  Cruise Missiles
  Cruise Missiles
  Minelayers
  Minelayers
  Africa (British Subjects)
  Africa (British Subjects)
HOME DEPARTMENT
  Bail Hostel (Kew)
  Bail Hostel (Kew)
  Race Relations Act
  Race Relations Act
  Parliamentary Constituencies (Staffordshire)
  Parliamentary Constituencies (Staffordshire)
  Younger Voters
  Younger Voters
  Princess Hannan
  Princess Hannan
  Racial Discrimination
  Racial Discrimination
  Capital Punishment
  Capital Punishment
  Parliamentary Elections (Candidates' Deposits)
  Parliamentary Elections (Candidates' Deposits)
  "Green Goddesses"
  "Green Goddesses"
  Sexual Offences (Anonymity Rule)
  Sexual Offences (Anonymity Rule)
  Fire Extinguishers and Pressure Vessels
  Fire Extinguishers and Pressure Vessels
  Maintenance Payments
  Maintenance Payments
CIVIL SERVICE
  Government Appointments (Peers)
  Government Appointments (Peers)
  Civil Servants (Maladministration Allegations)
  Civil Servants (Maladministration Allegations)
  Former Prime Ministers (Cars)
  Former Prime Ministers (Cars)
  Permanent Under-Secretary of State (Pension)
  Permanent Under-Secretary of State (Pension)
  "The Government's Record"
  "The Government's Record"
  SCOTTISH AND UNIVERSAL INVESTMENT TRUST
  SCOTTISH AND UNIVERSAL INVESTMENT TRUST
HOUSE OF COMMONS
  Members' Salaries
  Members' Salaries
  EUROPEAN COMMUNITY
  EUROPEAN COMMUNITY
AGRICULTURE, FISHERIES AND FOOD
  Farmland
  Farmland
  Soya Beans
  Soya Beans
  LEGAL AID
  LEGAL AID
PRICES AND CONSUMER PROTECTION
  Imperial Group and J. B. Eastwood
  Imperial Group and J. B. Eastwood
  Petrol
  Petrol
  Electricity Consumers' Council
  Electricity Consumers' Council
  European Community Trademark Office
  European Community Trademark Office
  Concorde
  Concorde
TRADE
  Research (Expenditure)
  Research (Expenditure)
  Electrical Goods (Imports)
  Electrical Goods (Imports)
  Ocean-going Tugs (Shetland and Orkney)
  Ocean-going Tugs (Shetland and Orkney)
  TUC AND CBI
  TUC AND CBI
  EUROPEAN COUNCIL
  EUROPEAN COUNCIL
  PRIME MINISTER (ENGAGEMENTS)
  PRIME MINISTER (ENGAGEMENTS)
  NATIONAL ECONOMIC DEVELOPMENT COUNCIL
  NATIONAL ECONOMIC DEVELOPMENT COUNCIL
  HELSINKI
  HELSINKI
  SECRETARY OF STATE FOR INDUSTRY
  SECRETARY OF STATE FOR INDUSTRY
  BROMLEY
  BROMLEY
  STRATEGIC STOCKPILES
  STRATEGIC STOCKPILES
  NATIONALISED INDUSTRIES (CHAIRMEN)
  NATIONALISED INDUSTRIES (CHAIRMEN)
  PRIME MINISTER'S QUESTIONS
  PRIME MINISTER'S QUESTIONS
  EX-SERVICE MEN (COUNCIL HOUSING)
  EX-SERVICE MEN (COUNCIL HOUSING)
  LORD CHANCELLOR (DUTIES)
  LORD CHANCELLOR (DUTIES)
  SHIPBUILDING (SWEDEN)
  SHIPBUILDING (SWEDEN)
EMPLOYMENT
  Grunwick Processing Laboratories
  Grunwick Processing Laboratories
  Unemployed Persons
  Unemployed Persons
  State Appointments (TUC General Council Members)
  State Appointments (TUC General Council Members)
  Training Opportunities Programme
  Training Opportunities Programme
  Job Release
  Job Release
  Unemployed Young Persons
  Unemployed Young Persons
  Manpower Services Commission
  Manpower Services Commission
  Weekly Wages
  Weekly Wages
  Industrial Accidents
  Industrial Accidents
  Garners Steak Houses
  Garners Steak Houses
  Industrial Disputes
  Industrial Disputes
  Pneumoconiosis
  Pneumoconiosis
  Questions to Ministers
  Questions to Ministers
  Runcorn
  Runcorn
  Toxicologists
  Toxicologists
FOREIGN AND COMMONWEALTH AFFAIRS
  Rhodesia
  Rhodesia
  Arabian Peninsula
  Arabian Peninsula
  Heads of Government (Bremen Meeting)
  Heads of Government (Bremen Meeting)
  British Protected Persons (Status)
  British Protected Persons (Status)
INDUSTRY
  Private Companies (Government Grants)
  Private Companies (Government Grants)
  Microelectronics Industry
  Microelectronics Industry
  Planning Agreements
  Planning Agreements
  Chrysler UK Limited
  Chrysler UK Limited
  Industrial Development Certificates
  Industrial Development Certificates
  Microcircuit Computers
  Microcircuit Computers
  Car Production (International Comparisons)
  Car Production (International Comparisons)
  Steel Production (International Comparisons)
  Steel Production (International Comparisons)
  Co-operative Development Agency
  Co-operative Development Agency
  Effluent Treatment Charges
  Effluent Treatment Charges
  Shipbuilding
  Shipbuilding
ENVIRONMENT
  Blood (Lead Content)
  Blood (Lead Content)
  Rivers and Reservoirs (Nitrates)
  Rivers and Reservoirs (Nitrates)
  River Churnet (Pollution)
  River Churnet (Pollution)
  Lambeth Partnership Committee
  Lambeth Partnership Committee
  Public Lavatories (Hygiene)
  Public Lavatories (Hygiene)
  Liverpool Street and Broad Street Stations
  Liverpool Street and Broad Street Stations
  Direct Labour
  Direct Labour
  Local Authority and New Town Tenants
  Local Authority and New Town Tenants
  Local Government Reorganisation
  Local Government Reorganisation
  Ex-Ministers (Government Cars)
  Ex-Ministers (Government Cars)
EDUCATION AND SCIENCE
  School Files
  School Files
  School Meals
  School Meals
  Vitro and Embryo Transplants
  Vitro and Embryo Transplants
  Institute of Hearing Research
  Institute of Hearing Research
  Deafness (Research)
  Deafness (Research)
  Academic Chairs (Medical Disciplines)
  Academic Chairs (Medical Disciplines)
  Comprehensive Education (York Conference)
  Comprehensive Education (York Conference)
TRANSPORT
  Thetford Bypass
  Thetford Bypass
  Road Vehicles (Dangerous Loads)
  Road Vehicles (Dangerous Loads)
  Lead Traps
  Lead Traps
  Tanker Design
  Tanker Design
  Mixed Loads
  Mixed Loads
  Hazardous Materials
  Hazardous Materials
  Railway Tied Cottages
  Railway Tied Cottages
SCOTLAND
  School Building (Moray and Nairn)
  School Building (Moray and Nairn)
  Special Branch Officers
  Special Branch Officers
  Crime (Detection Rate)
  Crime (Detection Rate)
  Scottish Development Agency
  Scottish Development Agency
  Council House Rents
  Council House Rents
  Census 1981
  Census 1981
DEFENCE
  Woolwich Arsenal
  Woolwich Arsenal
  Rhodesia
  Rhodesia
  Brunel (Exercises)
  Brunel (Exercises)
  Gurkhas
  Gurkhas
  Degaussing
  Degaussing
NATIONAL FINANCE
  Benefits
  Benefits
  Income Tax
  Income Tax
  Unemployment Trends
  Unemployment Trends
  Tax Revenue
  Tax Revenue
  Expenditure
  Expenditure
  PAYE
  PAYE
  Nationalised Industries
  Nationalised Industries
  Tobacco Duty
  Tobacco Duty
  714 Certificates
  714 Certificates
  Tax Yield
  Tax Yield
  Parliamentary Questions
  Parliamentary Questions
  Double Taxation
  Double Taxation
  Balance of Payments
  Balance of Payments
  Loans (Employees and Relatives)
  Loans (Employees and Relatives)
  Gross Domestic Product
  Gross Domestic Product
  General Practitioners (Loans)
  General Practitioners (Loans)
  Personal Incomes
  Personal Incomes
  Footballers' Transfer Fees (Exchange Control Regulations)
  Footballers' Transfer Fees (Exchange Control Regulations)
  Taxation
  Taxation
  Income Tax Reliefs
  Income Tax Reliefs
  Income Tax (Yield)
  Income Tax (Yield)
  Currency Regulations (Convictions for Evasion)
  Currency Regulations (Convictions for Evasion)
NORTHERN IRELAND
  Public Bodies (Trade Union Membership)
  Public Bodies (Trade Union Membership)
  Trade Union Leaders
  Trade Union Leaders
  Rates
  Rates
  Rents
  Rents
WALES
  North Wales Expressway (Compulsory Purchase Appeals)
  North Wales Expressway (Compulsory Purchase Appeals)
  Sport and Leisure Facilities
  Sport and Leisure Facilities
  County Councils (Expenditure)
  County Councils (Expenditure)
ENERGY
  Fireclay
  Fireclay
SOCIAL SERVICES
  Hospital at Home Experiment
  Hospital at Home Experiment
  Occupational Deafness
  Occupational Deafness
  Benefits and Special Needs (Eligibility)
  Benefits and Special Needs (Eligibility)
  Census (Ethnic Groups)
  Census (Ethnic Groups)
  Hearing Aid Council (Amendment) Bill
  Hearing Aid Council (Amendment) Bill
  Elderly Persons (Telephones)
  Elderly Persons (Telephones)
  Welfare Services
  Welfare Services
  Medical Care (Per Capita Cost)
  Medical Care (Per Capita Cost)
  Spectacle Frames
  Spectacle Frames
  Local Authority Children's Homes
  Local Authority Children's Homes
  Foster Homes
  Foster Homes
  Health Education Council
  Health Education Council
  Invalid Care Allowance
  Invalid Care Allowance
  Attendance Allowance (Blind Persons)
  Attendance Allowance (Blind Persons)
  Hospital Waiting Lists
  Hospital Waiting Lists
  Disabled Persons (Vehicle Costs)
  Disabled Persons (Vehicle Costs)
  Institute of Hearing Research
  Institute of Hearing Research
  Hospital Beds
  Hospital Beds
  Deafness (Research)
  Deafness (Research)
  Censuses
  Censuses
  Homoeopathy (North Staffordshire)
  Homoeopathy (North Staffordshire)
  Surveys (Planning Information)
  Surveys (Planning Information)
  X-ray Film
  X-ray Film
  Pneumoconiosis
  Pneumoconiosis
  Blind Persons
  Blind Persons
  Hearing Aids
  Hearing Aids
  Sick Pay Claims (Car Workers)
  Sick Pay Claims (Car Workers)
  Disabled Persons (Equipment)
  Disabled Persons (Equipment)
  Attendance Allowance (Payment Procedure)
  Attendance Allowance (Payment Procedure)
  Wheelchairs (Dutch Design)
  Wheelchairs (Dutch Design)
  Austistic Adolescents
  Austistic Adolescents

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

LORD BLEASE
William John Blease, Esquire, having been created Baron Blease, of Cromac in the City of Belfast, for life—Was, in his robes, introduced between the Lord Melchett and the Baroness Stedman.

STEEL PRODUCTIVITY
2.49 p.m.
Lord ORR-EWING: 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 plans they have for improving productivity in the steel industry.
Lord WINTERBOTTOM: My Lords, the Government believe the main responsibility for improving productivity in both the public and private sectors of the United Kingdom steel industry rests with the managements and the workforces and their representatives concerned. Improvement of productivity is one of the objectives of the Industrial Strategy, and is being studied by the Iron and Steel Sector Working Party, on which both the public and private sectors of the industry and the trade unions are represented. The Government's recent White Paper British Steel Corporation: The Road to Viability recognised the need for very substantial improvements in management and manpower practices in the Corporation over the next few years to achieve viability through international competitiveness.
Lord ORR-EWING: My Lords, is it not a fact that in January 1976 a joint committee of the BSC management and the TUC Steel Committee agreed to reduce the very serious overmanning in the
774
industry, so that it was internationally competitive? Did not this agreement result in the setting up of 100 productivity schemes? May we be told what has happened in the past two and a half years to reduce the overmanning and so make BSC internationally competitive? How many people have been made redundant and paid compensation?
Lord WINTERBOTTOM: My Lords, the noble Lord is quite right. A joint BSC-TUC Steel Committee statement recorded agreement on reductions in manpower where necessary to achieve international standards if the industry wants to be competitive in the 1980s and it set out the conditions under which they were to take place. Progress was held up under Phases I and II of the pay policy, when meantime payments could not be introduced. Since 1st August 1977 more than 100 self-financing productivity schemes involving a de-manning element have been proposed. Provided the current pay policy year's guidelines are observed, the introduction of these schemes is a matter for the British Steel Corporation and the unions.
Lord WYNNE-JONES: My Lords, can my noble friend say how many steel industries in the world are internationally competitive at the moment?
Lord WINTERBOTTOM: My Lords, I could give details of a table to the House, but it is fairly depressing. So far as I can find out, none is competitive.
Viscount TRENCHARD: My Lords, can the noble Lord tell us a little about the Government's and the Steel Corporation's diagnosis of the reasons for the increasingly poor productivity record of the Steel Corporation over the past 10 years in relation to our competitors abroad? Do they know what the main reasons are?
Lord WINTERBOTTOM: My Lords, 10 years is a long time. The Iron and Steel Sector Working Party plans to undertake a detailed comparative study of the efficiency of certain British Steel Corporation works, as well as similar works in Germany and the Netherlands. The terms of reference are:
"to examine relevant variables in specific processes in matched pairs of steelworks in the

775
United Kingdom and Europe; to assess the reasons for differences in performance; and to report back to the Sector Working Party with proposals for action."
This study will be carried out by a small team comprising trade unionists and British Steel Corporation management. I believe that that is a much more valid system of assessment than is jobbing back over 10 years, a period during which much has happened in the world outside.
Lord LEE of NEWTON: My Lords, is my noble friend aware that since nationalisation a huge amount of modernisation has taken place in the British Steel Industry? Taking that into account, can he say what level of production we should have had to endure had we not had nationalisation?
Lord WINTERBOTTOM: My Lords, this is one of those awful questions where one has to give what the alternatives would have been had we not taken certain action. What is interesting here is to compare two sets of figures of output per man and loss per tonne of liquid steel, which show that the losses seem to be equivalent to those of any major steel producing unit.
The Earl of LAUDERDALE: My Lords, can the noble Lord tell us how many redundancies have been effected in the steel industry in, say, the past year with a view to de-manning—to use his phrase—the industry?
Lord WINTERBOTTOM: No, my Lords; but if the noble Earl will table a Question I will answer it.
The Earl of SELKIRK: My Lords, can the noble Lord say whether he thinks that he will be able to sell the steel which is being made at present?
Lord WINTERBOTTOM: My Lords, part of the problem is that it is a very peculiar situation. Yes, most certainly we can sell the steel that we are making.
Lord ORR-EWING: My Lords, does not the noble Lord agree that the Government cannot entirely opt out and leave this responsibility to the BSC and the trade unions? The BSC is at present losing over £450 million of taxpayers'
776
money every year. It is not right for a Government to leave the taxpayers in this parlous position. Something should be done to increase productivity, so that it does not take two Britons to produce the same amount of steel that one German can produce.
Lord WINTERBOTTOM: My Lords, the noble Lord is overstating the problem. The BSC is not losing over £450 million every year. This is a jeu d'esprit, if I may use a French expression. BSC expect to make a loss of about £175 million in the first half of the current year, without allowing for contingencies.
Lord GLENKINGLAS: My Lords, does the noble Lord not remember that, as I recollect, every time a chairman of the steel industry has forecast a loss it has been doubled by the end of the year?
Lord WINTERBOTTOM: No, my Lords, I have a greater confidence than the noble Lord. I should like to make a point arising from what my noble friend mentioned earlier. If we take the actual loss per tonne on the international scale, we find that the French private sector lost £42 per tonne; the German public sector lost £26 per tonne; and the United Kingdom public sector lost £25 per tonne. We are not doing too badly in the international league of losses in what is a very difficult world situation.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, what about the Japanese private sector?
Lord WINTERBOTTOM: My Lords, that was a fast one.
Lord HANKEY: My Lords, if the Government were to lay on a supply of the escort vessels which the Navy need so desperately, would that not greatly help the steel industry? Would not some of the cost be off-set by the reduction in unemployment, by insurance, and other factors? Would not our status in NATO be greatly improved?
Lord WINTERBOTTOM: That is another question, my Lords.
The Earl of ONSLOW: My Lords, will the noble Lord please tell us how much how many Japs are being paid per week

777
to produce one tonne of steel, and will he compare that with how many British workers are being paid how much per week to produce one tonne of steel here?
Lord WINTERBOTTOM: My Lords, the noble Earl said either "chaps" or "Japs"—
The Earl of ONSLOW: Japs.
Lord WINTERBOTTOM: The figures regarding Japs are not available, my Lords.
Lord DAVIES of LEEK: My Lords, is my noble friend aware that some of us consider that the questions which have been asked today are certainly inept? Is he further aware that unless we start studying the implications of the micro-circuitry of the electronic ship—which will put thousands and thousands out of work, unless we get a plan for the future—we shall be living and arming like Sparta?
The Earl of LAUDERDALE: My Lords, does the noble Lord agree that whatever else is inept, redundancy payment of £15,000 to £17,000 per head may very well be inept in view of the impact that that has on the economy elsewhere, particularly on the private sector?

DISABLED PERSONS: UN DECLARATION
2.58 p.m.
Baroness VICKERS: My Lords, I beg leave to ask the first Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what action has been taken in regard to United Nations Resolution 3447 (XXX) adopted 9th December 1975, on the Declaration of the rights of disabled persons.
Lord WELLS-PESTELL: My Lords, in many cases, the aims of the Declaration had already been achieved in this country, and in others we were actively seeking to achieve them before the Declaration was approved. Ministers generally, and
778
my honourable friend the Minister for the Disabled in particular, have been consistently seeking to improve the quality of life for disabled people since this Government took office. A progress report on the Declaration was recently submitted to the United Nations, and we shall be making arrangements for it to be published. When it is published, I shall see that a copy is placed in the Library of your Lordships' House.
Baroness VICKERS: My Lords, in thanking the noble Lord for that reply I should like to ask him whether the Declaration has yet been ratified and signed by the United Kingdom?
Lord WELLS-PESTELL: My Lords, I do not know whether it has been ratified and signed. All I can say is that it has been sent to the United Nations.

H.M. DOCKYARDS: UNION ACTION
2.59 p.m.
Baroness VICKERS: My Lords, I beg leave to ask the second Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what arrangements have been made with the eight unions at H.M. Dockyard Rosyth in order that two of the Polaris submarines may be moved and that H.M.S. "Renown" may be refitted.
Lord WINTERBOTTOM: My Lords, with the leave of the House, I will answer this Question in the form of a Statement to be made at a convenient moment after 3.30 this afternoon.
Baroness VICKERS: My Lords, I thank the noble Lord for saying that he is to make a Statement. However, in view of the fact that my Question has been on the Order Paper since 12th July, why have we waited so long for the Statement?
Lord WINTERBOTTOM: My Lords, this is a moving situation—or perhaps I should say a situation in movement. That is why there has been a certain postponement.
Baroness VICKERS: My Lords, while thanking the noble Lord for that reply—and it has not moved very far, I suggest—may I ask him whether, after the Statement, we shall be able to ask as many questions as we would have been allowed to ask on a Starred Question?
The LORD PRIVY SEAL (Lord Peart): My Lords, I think the noble Baroness understands that of course she will be at liberty to ask specific questions on the Statement.

FAST NUCLEAR REACTORS: SAFETY INQUIRY
3 p.m.
The Earl of HALSBURY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what action they will take to set up an inquiry into the safety of fast nuclear reactors.
Lord STRABOLGI: My Lords, the Government have undertaken that any proposal to build a commercial demonstration fast reactor will be subject to a public inquiry. The inquiry would not be limited to local planning matters; but would allow wider relevant issues to be examined. The Government are considering what might be the most appropriate arrangements for such an inquiry in the event of a proposal being made.
The Earl of HALSBURY: My Lords, while thanking the Minister for that Answer to another Question, may I ask him whether he would answer the Question I asked, which is when and what action they will take?
Lord STRABOLGI: My Lords, the Government expect the nuclear organisations to put forward in due course considered proposals for the construction of a commercial-scale demonstration fast reactor. When these have been received we will be in a better position to decide on the timing of any inquiry.
Lord WYNNE-JONES: My Lords, do Her Majesty's Government intend to
780
wait until there is some declaration made by the European Economic Community before making any Statement with regard to the nuclear reactor? There have been, as I have no doubt my noble friend has observed, statements in the papers to the effect that the European Community is looking into the matter. Does that mean that we wait for their decision?
Lord STRABOLGI: My Lords, I am sure that is a factor which will be taken into account by the nuclear organisations.
Lord SKELMERSDALE: My Lords, could the noble Lord elucidate on his phrase "commercial demonstration nuclear reactor"? To me, those are two completely different things. Does the noble Lord mean a commercial, and therefore usable, reactor, or does he mean a demonstration, in other words a trial, reactor of a commercial size?
Lord STRABOLGI: My Lords, I would recommend the noble Lord, Lord Skelmersdale, to look up the glossary behind the energy Green Paper, which is dated last February and is in your Lordships' Library, where he will see an explanation of the term.
Lord HAILSHAM of SAINT MARYLEBONE: But, my Lords, if the noble Lord has it so readily in his mind, could he not tell the House what it is? Because there may be a queue in the Library as a result of his answer to that supplementary question.
Lord STRABOLGI: My Lords, I took the opportunity to arm myself with a photostat of the glossary, and I will read this out to the House:
"A fast reactor is a type of fission reactor in which neutrons resulting from fission are not deliberately slowed down. The main types of fast reactor at present under development are designed to use plutonium as a fuel, at the same time breeding plutonium from depleted uranium at a faster rate than it is consumed."
I may say that this is a very serious and important subject; and, of course, the Green Paper concluded:
"We need to ensure that fast reactor technology will be available to us when we need it in a proven and acceptable form, and it will be necessary for Ministers to consider how best this will be achieved."
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, while I am sure the House is very interested in what the noble Lord has just told us, it was not an answer to the question put by my noble friend, who wanted to know the exact meaning of a commercial demonstration reactor. Whatever else was the definition given by the noble Lord, it was not a definition of that.
Lord STRABOLGI: My Lords, if the noble and learned Lord would be good enough to look up the glossary under "thermal reactor", he will then see a description of a thermal reactor—
Several noble Lords: No!
Lord STRABOLGI:—and then a reference indicating that he should look up "fast reactor", where he will be given an explanation.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, is the noble Lord aware that I know perfectly well what a thermal reactor is, and perfectly well what a fast reactor is? The question is: What is a commercial demonstration reactor, to which he referred in his original Answer? We cannot be put off by definitions of different things, because we can actually hear; and if the noble Lord thinks that I do not know the elements of nuclear physics, he is wrong.
Lord STRABOLGI: My Lords, a commercial reactor of this kind is one that, if it is developed—and there is an experimental one at Dounreay at the moment—will be able to put nuclear energy to commercial uses. It is as simple as that.
Viscount THURSO: My Lords, is the noble Lord aware that the prototype fast reactor now operating at Dounreay is putting quantities of electricity into the grid, and that in fact it lights my house every day—or, perhaps, every night; and every day in the winter-time? Is he further aware that the system which is employed was described in your Lordships' House not very long ago in a debate on nuclear energy by the noble Lord, Lord Hinton of Bankside, as being inherently safe; and that in that debate we were pressing Her Majesty's Government to produce the commercial
782
size demonstration reactor, which will work by the same means as the prototype but on a commercial scale?
Lord STRABOLGI: My Lords, these are all factors which will be taken into account, but we have not yet had the proposals from the nuclear organisations. When we have those, we shall then consider what inquiry to set up. These are all matters for an inquiry.
Lord BYERS: My Lords, would not the noble Lord agree that my noble friend gave a far better answer than he did?
The Earl of HALSBURY: My Lords, to bring this matter to a conclusion, would the noble Lord give an undertaking that he will ensure that the other side of the business, in whose court the ball apparently now rests, is aware that the next move is up to them?
Lord STRABOLGI: Yes, my Lords,

BUSINESS OF THE HOUSE
Lord PEART: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That the Lord Peart be given leave to advance the Motion relating to the Ministerial and Other Salaries Order 1978 from Tuesday the 1st August to Thursday the 27th of July.—(Lord Peart.)
On Question, Motion agreed to.

HOMES INSULATION BILL
3.7 p.m.
The PARLIAMENTARY UNDER-SECRETARY of STATE, DEPARTMENT of the ENVIRONMENT(Baroness Birk): My Lords, I beg to move that this Report be now received.
Moved, That the Report be now received.—(Baroness Birk.)
Lord HARMAR-NICHOLLS: My Lords, I wonder whether on this Motion I may ask the noble Baroness a question which I have put on at least two previous occasions to other ministerial spokesmen,

783
when I have been told that the Department in question was not theirs and they could not answer at that stage. Everyone accepts that the insulation of offices is a very desirable thing that ought to be encouraged. The Government wish to do that, and everyone would support the Government in their endeavours. Is the noble Baroness in a position to say that, if householders go to the expense of insulating their houses, it will not have the effect of putting up the rateable value of the house, which will mean that they will have to pay more rates? When, with the same aim of conserving oil revenue, we encouraged central heating in houses, it was found that the rateable values of properties were increased as a consequence of the extra amenity, which meant that, far from encouraging installation, it acted as a discouragement. As regards insulation, my question is very clear. Is the noble Baroness in a position to say that it will not interfere with the rateable value, therefore causing an increase in rates? Alternatively, if she cannot answer that specifically, can she say that she would recommend to her right honourable friend that instructions be given that insulation will not put up the rateable value, so that we do not have, on the one hand, encouragement, and, at the same time, discouragement caused by the extra expense to which householders would be put?
Baroness BIRK: My Lords, that was an unexpected one at Report stage. As the noble Lord is well aware, rateable values are set by references to the hypothetical open market annual rental value of the property. It is true that, theoretically, it is obviously possible that, by increasing the value of the amenity to the house, the rateable value could be increased, but I am advised that the insulation measures eligible under the Bill are, when taken in isolation, unlikely to have more than even a marginal effect on the assessed rental value. In any event, in England and Wales, improvements which increase the gross annual rental value of a domestic property by less than £30 are normally ignored until the next general revaluation. That is provided for under Section 21 of the Local Government Act 1974. I would add that I think it is extremely unlikely—in fact, practically impossible—that, when the Government are taking this initiative and paying people
784
to heat their houses, they would then put up the rateable value in that way. It does not make sense, even in the Alice in Wonderland situations which sometimes go on in government.
Lord PLANT: My Lords, would my noble friend not agree that the valuation office have never increased the rateable value of a house because of the insulation of a loft?
Baroness BIRK: That is absolutely true, my Lords. That is why I particularly pointed out to the noble Lord opposite that although this was theoretically possible in fact it had not happened in this case and it was very unlikely that it would happen.
On Question, Report received.
Then, Standing Order No. 43 having been suspended (pursuant to Resolution), Bill read 3a.
Baroness BIRK: My Lords, I beg to move that the Bill do now pass.
Moved, That the Bill do now pass.—(Baroness Birk.)
3.12 p.m.
Lord SANDYS: My Lords, I feel that this is an appropriate opportunity to mention to the noble Baroness the pace with which we have been invited to discuss this important Bill; because it is against a background of four years in which the whole question of energy saving has been discussed that this very small Bill, a Bill which has only the remit to carry out approximately 10 per cent. of the housing programme insulation every year for 10 years, is included. The Second Reading took place on 12th July, the Committee stage on 18th July, and today we have just had the Report stage and Third Reading.
We are being invited at considerable speed to examine this Bill and, although it is not for me to suggest how the Government arrange their business, it appears that it is Bills of this type which might well be examined in this House at a very much earlier stage in the Parliamentary programme and be much more satisfactorily discussed. We hope that the insulation programme is a great success;

785
but how can this be so, particularly for the forthcoming autumn and winter, if, in fact, Royal Assent is likely to take place early next month followed by all the usual provisions? In the first place, local authorities will be advised by circular; they, in turn, will be expected to advertise the scheme; and the programme will, we hope, get off to a start in the autumn. Had this Bill been considered by this House at an earlier stage in the Session, it might have been possible to have the whole thing not only on the stocks but moving by now—to the great benefit of large numbers of people in this country.
I should like to express gratitude on behalf of my noble friend Lord Strathcona and Mount Royal for assistance over a number of questions in connection with this Bill. As I understand that the particular issue of approved materials has been a matter of discussion between the Department and the industry, it is, I hope, a matter on which the noble Baroness will be able to inform the House in a few minutes. It is a further issue whether materials will be approved materials under British Standards specification. This in itself is another reason why the Bill ought to have been completed at an earlier stage, so that this vital aspect of approved materials for the programme could have passed through its usual stages. I am grateful for what the noble Baroness said on 18th July (in cols. 188 and 189 of the Official Report) in regard to the budgetary considerations, because what she said in her remarks at that time, the assurances she gave, went a considerable way to removing anxieties which were expressed by my noble friend Lord Strathcona at Second Reading. It was not clear from the Explanatory and Financial Memorandum how this programme was to be paid for. Now we understand from the noble Baroness that it is a 10-year rolling programme, although the Explanatory and Financial Memorandum did not say so.
Lord LEATHERLAND: My Lords, will my noble friend bear in mind that, whenever this beneficent Government do anything to bring comfort to ordinary families in the country, it is greeted with moans from the Party opposite? It may be that this beneficent measure could have been introduced earlier.
Lord SANDYS: Yes!
Lord LEATHERLAND: My Lords, the noble Lord says, "Yes". I would remind him that his Government were in power for three or four years and they did nothing whatever about it. There is no use in the noble Lord pretending that this method of insulation was not available at that time. Even in the days of the Tory Government, I had my own roof insulated by the method suggested in the Bill. In introducing this Bill, we have done a good thing
which will benefit many thousands of families throughout the country. I think it is very mean for the Party opposite to pour cold water on it.
3.17 p.m.
Lord FERRIER: My Lords, I deeply resent what has been said just now by the noble Lord who has just sat down. It seems to me that we have done everything in our power to fall in with the desire of the Government that this Bill should be pushed on to the Statute Book as soon as possible. I was reading the proceedings in another place and there they said it was five years ago that it could have been gone on with. I think it was very unfair to suggest that this has been met with moans or groans or whatever it was the noble Lord said. It is nothing of the sort.
I preface my speech with the words: As I said on Second Reading, I and many others on this side of the House do support this Bill and wish to give it a fair wind. Nevertheless, I may say, it could have been a much better Bill—and this was the point made by my noble friend—if the Government had given us more time in which to consider it. In this respect, I feel I owe the House an apology because I put my name to two Amendments but I could not come to the Committee stage because of the fact that this Bill had the sign on it in the Minutes which meant it was "set down before the expiry of the recommended minimum interval between stages". This is what has gone on because it was not introduced earlier, as my noble friend Lord Sandys said it might. Nevertheless, I owe thanks to my noble friends on this side of the House and to the noble Baroness for making understood some of the points that I made in the Committee stage and,

787
with my noble friend Lord Sandys, I look forward to the noble Baroness replying to this problem of materials which is one that I raised on Second Reading.
I think that we all agree that this matter is of such importance and means such a lot to poor people with the cold winter coming along that it is better to have this Bill, imperfect as it is, than not to have a Bill at all. But I and many noble Lords on this side feel that that is poor consolation to those who think the measure should have been tackled a long time ago, perhaps years ago. Home insulation being a function of domestic space heating, I must confess that I used the Second Reading as a vehicle for my relentless pursuit of lower off-peak electricity tariffs for domestic heating.
The reductions which have taken place in the past few days do not go far enough. They do not cover Scotland, for instance; but that is another matter. I was glad that my noble friend Lord Harmar-Nicholls mentioned the question of rates. The reply of the noble Baroness went some way to meeting the problem. That is something we did not discuss at the Committee stage, any more than the question of VAT has been mentioned. Perhaps the noble Baroness will speak on that when she winds up the debate.
There arises one point about insulation which I think is apposite and is a matter of interest to me and my family who have lived in the tropics for many years. My wife pointed out to me yesterday that if one insulates a house and keeps it cool inside one could find that the insulation keeps the cold in. This has a bearing on the angle which I took of the importance of adequate space heating which will result from proper low tariffs. I hope that the noble Baroness is going to be able to say something about dangerous materials. It has been suggested to me in various consultations that the time may come when more regulations may be required in regard to furnishing materials generally. I refer to the hazards which fire fighters have to face today with fumes and smoke which arise from some of the modern materials. That again is another matter. I support the Motion that the Bill, with all its blemishes, be given a Third Reading now.
3.22 p.m.
Lord AIREDALE: My Lords, I should like to support both Conservative speakers in what they said about the haste with which this Bill was hurried along. It was intimated to us in Committee that, if a single Amendment were to be agreed to, the whole Bill might be lost. All I can say about that is I simply do not believe that it is the will of the electors that there shall be single-chamber Government in the month of July.
Lord ROBERTHALL: My Lords, following the tenor of the remarks of the noble Lord, Lord Sandys, may I ask whether the noble Baroness is able to give us some idea of when the local authorities will be ready to receive applications?
3.24 p.m.
Baroness BIRK: My Lords, in dealing with the points which have been raised, may I first say something about the timetable and what has been described as the Bill being introduced at a late time in the Session. The timetable was agreed through the usual channels in the usual way. It was agreed between both sides of the House. I find it rather odd at this stage of the day—but I think it is a bit "end of termish" at the moment—that the noble Lord, Lord Sandys, should have raised that question in that way. If I may focus on his remarks, may I thank him for the kind messages which he passed on from the noble Lord, Lord Strathcona and Mount Royal, which I enjoyed rather more than Lord Sandys's own remarks, although I am sure they were very good-humoured.
This is a short and simple Bill. We all discussed it and I explained carefully on Second Reading and also at Committee stage that due to the small amount of resources that can be put into the first scheme and because the Bill itself outlines not only the possibilities but the framework for future schemes, there is a tremendous simplicity about it. With great consideration and thought about it, I cannot believe that spending very much longer on it would have got us any further. I have no recollection of cutting down or trying to stop anybody on Committee stage. There is no guillotine in this House; every Amendment was discussed extremely fully. Other noble

789
Lords from both sides of the House who did not share this considerable interest intimated to me afterwards that they thought I had gone on rather too long about it. One really cannot please everybody.
Lord FERRIER: My Lords, may I interrupt the noble Baroness? I personally would have put down an Amendment or suggested a Schedule regarding building materials had it not been for her appeals, which I feel were justified, that we should get on with it.
Baroness BIRK: I appreciate that, my Lords. The noble Lord will agree that we have had correspondence, we have spoken about it and I intend in a moment to reply for the record to the point that he raised on the use of materials. As the noble Lord said, he was unable to be here at Committee stage; otherwise no doubt he would have raised the matter on the Question, Whether the clause shall stand part of the Bill? even if he had not had the opportunity to put down an Amendment. But I do not think that one can argue on that.
With the other Bills which have been through the House in this Session—the Scotland Bill and the Wales Bill to name but two—which have taken a considerable amount of your Lordships' time, I think that it is a triumph for both sides of the House that we are going to get this Bill on the Statute Book. My noble friend Lord Leatherland had a point when he said—and it is part of the political scene—that when one brings in anything it is always considered that it is either late or does not go far enough. It is traditional for such matters to be greeted by moans. That does not make it a less important measure.
The answer to the question that the noble Lord, Lord Roberthall, asked about when the local authorities will be able to take action is this: We are hoping that this will be some time in early September. Directly the Bill gets the Royal Assent, local authorities, who know all about it in any case—it is not really a highly complicated measure and they will have already been discussing it and getting their plans underway—will have been circularised and will get it underway.
790
On that point, I must say to the noble Lord, Lord Sandys, that one has to take human nature into account. When the weather is rather warmer and there is the odd nice day like today, people do not start, as perhaps they should, thinking about insulating their homes. When we get to the fresher days of September and October the demand will come and, then, I can assure noble Lords, local authorities will be able to deal with it. On the whole, noble Lords will agree that there has been a wide measure of agreement and a repeated emphasis on this throughout the discussion on this Bill. There has been a recognition of the overriding need to bring the first scheme under the Bill into operation before another winter is upon us. The noble Lord, Lord Ferrier, has kindly advised me of his questions in advance and he and the noble Lords, Lord Sandys and Lord Strathcona and Mount Royal, have raised the question at some length of ensuring that the products in respect of which grant aid is given are both effective as insulants and safe in use. This is an extremely important point.
If noble Lords will bear with me for a moment, this is something that I think should go on the record in our discussions on this Bill. I think that I should make it clear immediately that most insulation products generally available in this country at present have been tried, have been tested and have been proved in use over many years. The insulating industry itself has taken action to ensure the safety and effectiveness of its products. A number have already submitted voluntarily to the Agrement Board for assessment and other manufacturers are working with the British Standards Institute towards the urgent establishment of a British standard.
Officials of my Department have been closely involved with a number of manufacturers and only yesterday were having further discussions with them and, I believe, the Agrement Board on this. However, it is true that the introduction of this Bill will no doubt lead to the appearance of a number of new products on the market. Despite the steps already taken by industry therefore the Government remain concerned to see that adequate measures are taken to protect the householder and ensure an effective use of public resources. We are therefore continuing

791
urgent discussions with the various interested parties to establish an effective method of excluding from grant-aid projects which fail to meet acceptable standards, and I am confident that will be achieved very soon. I can, however, assure the House that these discussions and the introduction of appropriate control procedures will not delay the commencement of the first scheme, which will come into effect, as I said, as early as possible this autumn.
The noble Lord also referred to VAT. At present there is no special VAT relief for insulation work, although in some circumstances the work can be exempted under the general zero-rating for building and reconstruction work. The distinction for VAT purposes is between works of constructional or alteration services which are zero-rated, on the one hand, and works of repair and maintenance, which are standard-rated, on the other. Insulation work on new buildings and first-time installation of insulation in existing buildings would both be within the first category, and thus qualify for zero-rating for VAT purposes. As there is no question at the moment, as I explained at earlier stages, of any "topping up" being possible, these would all be new insulation schemes and therefore should be zero-rated.
In answer to the noble Lord, Lord Ferrier's interesting point—or rather his wife's point—about insulation keeping the cold in, this is, of course, working on a sort of vacuum process. If we have a very hot summer it is rather like having a thatched-roofed cottage: it seems to keep one warm in winter and to keep one cold, combined with stone, in summer. So in a way one could say that people are getting two services for one, and even North of the Border it has recently been quite hot. In other words, you can keep hot when you want to, warm when you want to and cool when you want to. That gives an added dimension to the advantages that people are going to get.
Lord FERRIER: My Lords, I really only meant to link it with the cost of heating a house. The point is that it is no use insulating the house unless you can heat it inside in cold weather. That is why I want low rates for heating.
Baroness BIRK: My Lords, I can see that point. I think we would all like
792
low rates for heating; but I think the noble Lord will agree that if you want to keep the heat in you have to heat up the house to start with. I think we are all agreed on that.
Finally, I will reiterate that this Bill, although a modest one, is of great importance in regard to our general efforts to conserve energy in this country. The debates have served to highlight some of the problems which face us as we try to instill a greater awareness of the importance of energy conservation in the country at large. Certainly we shall be looking closely at this problem and at how fast we can move towards the further measures which are contained within the Bill, ready to be taken in hand directly resources are available. In the meantime, I would ask the House to pass this Bill.
On Question, Bill passed.

ROYAL NAVAL ARMAMENT DEPOT, COULPORT
3.34 p.m.
Lord WINTERBOTTOM: My Lords, with the permission of the House, I wish to repeat an Answer to a Private Notice Question being given by my right honourable friend the Secretary of State for Defence in another place. The Answer is as follows:
"Attempts to persuade the workforce at the Royal Naval Armament Depot, Coulport, to resume normal working have not yet succeeded, although I naturally hope that an early settlement can be achieved. To ensure that our contribution to the Alliance strategic deterrent is maintained the Government must ensure that preparations for HMS 'Revenge' to sail are completed very soon. We are therefore today informing the workforce that naval and management personnel will complete the loading of HMS 'Revenge', starting tomorrow, and that in the interests of safety the Depot will be closed temporarily to all except certain specially authorised personnel from 26th July until the loading has been completed. As regards 'Repulse' and 'Renown' there is as yet no operational problem, although I shall of course keep the situation under review."
My Lords, that is the end of the Answer.
Lord CARRINGTON: My Lords, I think the Government are quite right. It must be the prime duty of the defence policy of a Government to keep the nuclear deterrent in action. Would the noble Lord not agree that it is really totally intolerable that union leaders should set themselves up as the arbiters of whether or not it is necessary that there should be a British nuclear deterrent at sea? Would the noble Lord be good enough also to tell the House whether the industrial unrest in the other dockyards is likely to lead to further trouble for other ships in the Royal Navy and, if so, what the Government intend to do about it?
On a domestic matter, may I ask the noble Lord the Leader of the House this: my noble friend Lady Vickers has had a Question down on this subject for some time. A Member of another place put down a Private Notice Question at the last moment, which was accepted in another place. Because a Member of another place put down that Private Notice Question, my noble friend was not allowed to hear the Answer to her Question, or to have the right to ask the first supplementary in this House. I do not believe that is the right procedure. All it would have meant would have been that another place would have heard the same Statement 50 minutes later. I hope very much that the noble Lord the Leader of the House will look into this because, if I may say so, I do not think it is fair on my noble friend.
Lord PEART: My Lords, may I just say that the Statement was agreed with the usual channels. That is the procedure. I had hoped that the noble Baroness would be able to put questions directly to my noble friend, and I am sure she will.
Lord MACKIE of BENSHIE: My Lords, I should like,—
Lord WINTERBOTTOM: My Lords, may I first reply to the first two points made by the noble Lord the Leader of the Opposition—
Lord MACKIE of BENSHIE: My Lords, if I may continue, along with the noble Lord, Lord Carrington, I welcome the Government's determination to tackle this extremely serious problem, because it
794
is a matter which has shocked the whole country. We really are in the land of make-believe if this sort of thing can continue. The laughter in the Kremlin must be considerable. This is so serious that I think the Government should have all-Party consultations in order to get the backing of all the forces in this country who really want to see some semblance of order and sanity in our defence preparations.
Lord WINTERBOTTOM: My Lords, I apologise to the noble Lord, Lord Mackie. The noble Lord, Lord Carrington, asked me whether the situation was not intolerable. The answer is: Yes it is, and we are not tolerating it. As regards the other dockyards, that is a wider question. I understand that the Joint Co-ordinating Committee for Government Industrial Establishments is willing to discuss with the trade union side any alternative proposals made for settlement in this area of Polaris missiles and, of course, in other areas in the dockyards.
I think the noble Lord, Lord Mackie of Benshie, expresses the feeling of the House as a whole and indeed the feeling outside this House, that the situation is of such significance that a common view should be expressed on the problem we are facing at the moment.
Lord GEORGE-BROWN: My Lords, if I may, I should like to join in the welcome that has been given to the Government's taking of this action, and I do so both as a Member of this House and as an official of the union concerned for a long, long time. May I ask the Minister whether he would agree that these things are never done, even when they have to be done, without a great deal of delicacy and risk being involved? May I therefore put it to him: Is it not better that anything that we might all have wanted to say had he not made that Statement today should not now be said, in order that we do not stir up more trouble following the decision, since the Government have courageously made the right decision?
May I further put it to him, having heard Mr. Mick Martin on television last night, who said that if there were ever an emergency of course the Glasgow shop stewards would have met—could

795
we just remind him, as I once put before the Lower House, that the nuclear warning in those days was four minutes and nobody ever heard of a Glasgow shop stewards' meeting coming to any decision—they would soon be up there!
Lord WINTERBOTTOM: My Lords, I am most grateful to my noble friend for his very wise comments.
Baroness VICKERS: My Lords, may I thank the noble Lord for replying to my Question on the Statement. Can he tell us what is the basis of the dispute? Is it solely about pay, or is it also about length of hours? As my noble friend Lord Carrington said, there is unrest not only in this dockyard but in other dockyards, so we should welcome Government discussion with officials and others, in order to see that we do not have trouble elsewhere.
Lord WINTERBOTTOM: My Lords, this is a dispute based on pay. There is nothing more sinister than that.

INNER URBAN AREAS BILL
3.41 p.m.
Baroness BIRK:My Lords, I beg to move that the Commons Reason for disagreeing to one of the Lords Amendments be now considered.
Moved, That the Commons Reason for disagreeing to one of the Lords Amendments be now considered.—(Baroness Birk.)
Baroness YOUNG: My Lords, may I say that it is very gratifying to us on this side of the House that all the Amendments to the Inner Urban Areas Bill, with the exception of one, have been agreed in another place. I think that this reflects the view of the whole House about the importance of this Bill. But before we accept the Reason, given on the Order Paper, for not accepting the Amendment about giving grants to voluntary organisations, I wonder whether the noble Baroness can give us any further explanation. It has been ruled a Money Resolution by the Speaker in another place, and that I must accept. Nevertheless, it seems, on
796
looking again at the Financial Memorandum to the Bill, that this is a very difficult ruling to accept. The Amendment did not impose a duty at all. It opened the possibility of giving grants to voluntary organisations in the inner cities. It seems, on reading the Explanatory and Financial Memorandum that goes with the Bill, that most of the clauses in the Bill—
"are discretionary and the precise expenditure that will arise cannot therefore be calculated."
No one was asking for extra expenditure, but what we were asking for was value for money; and most people who have had experience of voluntary organisations believe that giving money to them is often better value than giving it to a statutory authority, whether it be central or local government, to manage. I therefore think that it raises quite an important matter of principle, and for those of us who are concerned with voluntary organisations it is very disappointing that the Government have not seen fit, if they are unable to accept the Amendment as drafted, to bring forward an Amendment which would have achieved the same objectives, but would not have been subject to the same difficulty.
I say this in the knowledge that when this matter was discussed in the House at Report stage the noble Baroness, Lady Birk, said at col. 616, in reference to the Amendment by my noble friend Lord Sandford:
"I hope that the noble Lord does not intend to press it, but if he does, I do not intend to put myself or my noble friends into a position in which we appear to be opposing the interests of the voluntary sector. Therefore if he wishes to divide the House, I shall abstain, and ask my noble friends, if they feel that way, to do the same thing."—[Official Report, 30/6/78.]
In fact, the Government did not vote against the Amendment, but abstained for reasons which I am sure are perfectly understandable to us on this side of the House. I should therefore be grateful to the noble Baroness, if she could give us an explanation of the Government's attitude in another place.
On Question, Motion agreed to.

COMMONS REASON FOR DISAGREEING TO ONE OF THE LORDS AMENDMENTS
[References are to Bill (141) as first printed for the Lords. The Commons Reason is printed in italics.]

LORDS AMENDMENT
1 After Clause 14, page 9, line 41, at end insert new Clause B:
Grants to national voluntary bodies.
"B. The Secretary of State may, with the consent of the Treasury make grants for assisting persons engaged in promoting or assisting schemes and research relating to, and dissemination of information in respect of, the enhancement of the physical environment and the promotion of employment in designated districts."
The Commons disagreed to the above Amendment for the following Reason:
2 Because it would involve a charge on public funds, and the Commons do not offer any further Reason, trusting that the above Reason may be deemed sufficient.
Baroness BIRK: My Lords, I beg to move that this House doth not insist on their Amendment No. 1 to which the Commons have disagreed for the Reason numbered 2. As the noble Baroness, Lady Young, has just pointed out, this Amendment is the new clause which the noble Lord, Lord Sandford, moved on Report to attempt to provide for grants to national and voluntary bodies. At the time, I said that the clause went beyond the Money Resolution on the Bill and that it would not be acceptable in another place. The noble Lord was not content on that occasion to accept my advice, but as it turned out, and as the noble Baroness, Lady Young, has just said, what I said about another place proved correct. A number of comments were made about this clause and the Government's attitude to it, and I think that I should briefly make clear our views, particularly because the noble Baroness, Lady Young, has herself raised the matter again.
The Money Resolution refers to other Acts of Parliament and not to this Bill. Therefore, the Amendment could not have been accepted. If the noble Baroness will look at the Explanatory and Financial Memorandum, she will see that all the financial provisions come under the powers of other Acts, and there is no special financial provision for this Bill. We believe that there are ample powers to aid voluntary bodies within the Bill as it is at present, and under the powers of previous Acts of Parliament. I should now like to explain what I mean by that, and I hope that it will be the last time that we clarify our views on this matter.
798
First, the clause is unnecessary because we can, and do, already pay grants to the kind of bodies that the noble Lord said he intended to provide for. I say "intended", since the clause, despite this idea, does not provide specifically for grants to bodies that are either national or voluntary. Secondly, our opposition to this clause does not imply any opposition to the involvement of voluntary bodies, at either national or local level, in the problems of inner areas. It was in order to underline that, and make it quite clear, that I made the comment, which the noble Baroness has just read out, at the end of the debate when the noble Lord, Lord Sandford, said that he would press his Amendment.
I have stressed before, and I stress again, that we are concerned to have the widest possible involvement of the voluntary sector, and my right honourable friend the Secretary of State for the Environment emphasised this when he spoke to the National Council of Social Service conference two weeks ago. If the Government felt that further powers were necessary to make grants to assist in this involvement of voluntary bodies, we should most certainly have included such powers in the Bill and should also have provided an appropriate Money Resolution. The noble Baroness is correct, and, if it had been decided that they were necessary, then they could have been provided, but not within the Money Resolution as it stands; they would have needed a new Money Resolution. But as I have already said, we do not believe that such additional powers are necessary to enable us to do what the noble Lord and the noble Baroness are suggesting, nor would the Amendment make further funds available.
We have discussed the role of voluntary bodies at some length at previous stages of this Bill, and there was considerable discussion in another place. I feel that my right honourable friend has moved some distance towards assuring, and reassuring, voluntary bodies in the discussion that he had with a deputation from the NCSS and also when he spoke at their conference. I am now sure that the House will be content not to insist on this Amendment.
Moved, That this House doth not insist on their Amendment No. 1 to which the

799
Commons have disagreed for the Reason numbered 2.—(Baroness Birk.)
3.50 p.m.
Lord EVANS of CLAUGHTON: My Lords, may I say from these Benches that we very much welcome the acceptance by the Government of the overwhelming majority of the Amendments, as the noble Baroness, Lady Young, has said. Like her, we are disappointed, but I think we have to accept willy-nilly the explanation which the noble Baroness, Lady Birk, has given for the unwillingness of the other place to accept this Amendment. I only hope that the optimism of the noble Baroness—that her right honourable friend has satisfied voluntary organisations—is realised. There is still great concern—I am sure noble Lords appreciate that I am involved with voluntary organisations—about the absence of the involvement of voluntary organisations in inner urban partnerships. There is a great concern among councils of voluntary service that they are not being sufficiently involved.
I hope that the discussions both in this House and in another place and the representations made by the Minister may convince local authorities that it is vitally important—for financial, charitable and efficiency reasons—that voluntary organisations should be thoroughly involved. If that assurance can be given, I should like to thank the noble Baroness very much, as it were as an apprentice in this House, for the courtesy, patience and, indeed, resignation with which she has been prepared to listen to all that I have had to say about the Bill during its various stages. We all feel that the Bill has been very considerably improved by the Amendments which the Government have been willing to accept.
On Question, Motion agreed to.

PARLIAMENTARY PENSIONS BILL
Report received.
Then, Standing Order No. 43 having been suspended (pursuant to Resolution), Bill read 3a, with the Amendments, and passed, and returned to the Commons.

COMMUNITY SERVICE BY OFFENDERS (SCOTLAND) BILL
3.53 p.m.
The MINISTER of STATE, SCOTTISH OFFICE (Lord Kirkhill): My Lords, I beg to move that the Commons Reasons for disagreeing to certain Lords Amendments be now considered.
Moved, That the Commons Reasons for disagreeing to certain Lords Amendments be now considered.—(Lord Kirkhill.)
On Question, Motion agreed to.

COMMONS REASONS FOR DISAGREEING TO CERTAIN LORDS AMENDMENTS
[References are to Bill (193) as first printed for the Lords. The Commons Reasons are printed in italics.]

LORDS AMENDMENT
1 Clause 2, page 2, line 45, at end insert ("and, where appropriate, the particular days or times of day when the work is to be performed")
The Commons disagreed to the above Amendment for the following Reason:
2 Because it is unacceptable in principle and would have undesirable consequences in practice for the effective operation of community service by offenders in Scotland.
Lord KIRKHILL: My Lords, I beg to move that this House doth not insist on their Amendment No.1, to which the Commons have disagreed for the Reason numbered 2. The Government consider this Amendment undesirable in principle and believe that it would have most undesirable consequences in practice for the effective operation of community service by offenders in Scotland, the principle of which has been widely supported in your Lordships' House, in the other place, and among those with an interest in penal policy in Scotland.
The principal reasons for objecting to the Amendment are practical ones. I was particularly appreciative of the intervention at Report stage by the noble Baroness, Lady David, who spoke with great conviction from her own personal experience as a magistrate who has imposed community service orders under the legislation in force in England and Wales. She described the Amendment as "totally impracticable."
What the court would never be in a position to know, or find out, with any

801
certainty at all is whether work would continue to be available on the set day or at the set time right through to the point, up to a year later, when the offender is working off the last hour of his sentence. If for any reason work ceases to be available at the right times or, for that matter, if the offender through no fault of his own is no longer able to work at those times, it would be necessary, under the Amendment, for the case to come back to the court at the request of the offender or the supervising officer under Clause 5(1).
The court has a number of options open to it under this clause, but it cannot simply vary the times specified in the order as the Bill had no such provision in it. It would be necessary, therefore, for the court to use its powers under Section 5(1)(d) to revoke the order and to sentence the offender again for the original offence. This is a highly cumbersome and most unsatisfactory procedure. It would add even further to the work of the courts and the community service organisers and could have a most damaging effect on the morale of the offender who would find himself in a most uncertain position through no fault of his own.
I have stated before in your Lordships' House, and I say it again now, that the court does have the power to express a view as to how a sentence should be carried out. As I have also indicated before to your Lordships, I am quite convinced that the community service organisers will do all that they can to fall in with such an expression of the court's wishes. There are many ways in which courts can influence the social workers, and vice versa, informally and formally. Such mutual influence is most likely to be beneficial when it is based on genuine mutual trust, and that will not, I submit, be achieved under this Amendment.
I can assure your Lordships that the Government will continue to stress the need for the fullest co-operation between courts and community service organisers in order to ensure that the wishes of the courts are met to the fullest extent possible. I am sure that Scotland needs this Bill which is throughly workable. I trust, therefore, that your Lordships will not press the Amendment.
Moved, That this House doth not insist on the said Amendment, to which the Commons have disagreed for the Reason numbered 2.—(Lord Kirkhill.)
Lord CAMPBELL of CROY: My Lords, we are grateful to the noble Lord, Lord Kirkhill, for having explained why the Government, when the Amendment went to another place, still decided not to change their minds. Very briefly, I should like to comment on this Amendment, and it would be convenient if I referred also to the other Amendment because both are in the same terms.
First, I should like to say that I am speaking in place of my noble friend Lord Mansfield who has hitherto been dealing with this Bill, although I have been associated with him. My noble friend regrets that he cannot be here this afternoon. May I remind your Lordships that he is singularly well qualified to deal with this subject, practising as he does as a barrister at the English Bar—incidentally, following in the footsteps of the first Earl of Mansfield—and also being familiar with Scots law and procedure, since from time to time he sits on the bench of his local district court. There are very few people, if any, in your Lordships' House who are so familiar with law and procedure on both sides of the Border.
I think that all concerned have given a welcome in principle to this Bill. We are also glad that the Government have accepted certain Amendments, both in another place and also in your Lordships' House. As the noble Lord knows, on two or three occasions at Question Time I have suggested that a Bill of this kind should be introduced for Scotland. This was when we were discussing football hooliganism, because a system for dealing with it has been in operation in England for about five years and we believe that it has been successful. Circumstances are different in Scotland, but we feel sure that we can benefit North of the Border from a Bill of this kind.
We regret that the Government did not see fit to accept both this and the following Amendment. The purpose was to ensure that the alternative of community service was not treated as if it were not a punishment. I think that it can bring another benefit to Scotland, because the prisons in Scotland are overfull. There is a higher proportion of persons in prison

803
in Scotland than in England and Wales, and it will be beneficial if that prison population can be reduced. At the same time, we do not want persons who are before a court to feel that they are simply getting off if they are given a community service order.
The object of the Amendment which was moved and pressed by my noble friend at an earlier stage was to ensure that the court would have some say in how the community service was to be carried out. If I may give a very simple example, if it was a football hooligan who was before the court it would be very satisfactory, appropriate and salutary if the community service were to be carried out on Saturday afternoons so that he was not able to attend football matches. That would have been the kind of thing which the court would have been able to arrange under my noble friend's Amendments. The Government have raised objections to this and have not accepted it, but I do hope that the Government will none the less keep under special observation the way in which this Bill is carried out when it is enacted. There may well be cases where this Bill, if it is not carried out in the way in which I think we in this House all hope it will be, may fall into disrepute, and hooligans or vandals may simply think that they are getting away with it.
At an earlier stage, the noble Lord indicated that there were advisory committees which had been set up in different parts of Scotland. He did not indicate that the sheriffs sat on those committees, but he did indicate that they sometimes attended. I hope the Government will do all they can to ensure that the judiciary in Scotland are able to keep in contact with the social work departments of the local authorities who will have the task of carrying out the community service obligations under this Bill; I hope that the sheriffs will keep in touch with those committees. I know that this may be patchy; there may be some parts of Scotland where there is close liaison between the judiciary and the social work departments and others concerned. I hope the Government will keep this under close observation.
Lord KIRKHILL: My Lords, I should say, for the record, that so far as the pilot schemes themselves are concerned, at
804
this stage some sheriffs have joined the advisory committees; others are meeting informally on a monthly basis with those who are involved.
Lord CAMPBELL of CROY: My Lords I am grateful to the noble Lord for adding that clarification to what he said at the earlier stage. I am sure my noble friend Lord Mansfield will be glad to have that additional information. In accepting that another place has rejected these two Amendments, I would only say on behalf of my noble friend and myself that we hope that the action which is taken when this Bill is enacted will be kept under special observation, and, should it be necessary for improvements to be made, that the Government of the day will come forward with any further necessary legislation.
On Question, Motion agreed to.

LORDS AMENDMENT
3 Clause 2, page 3, line 10, at end insert—
("(2A) Upon making a community service order the court shall have regard to the desirability of relating the work to the nature of the offence.")
The Commons disagreed to the above Amendment for the following Reason:
4 Because it is unacceptable in principle, unecessary and drafted in a manner which could lead to confusion.
Lord KIRKHILL: My Lords, I beg to move that this House doth not insist on their Amendment No. 3, to which the Commons have disagreed for the Reason numbered 4. I do not propose to add anything to the debate in your Lordships' House at this stage. The Government's position has been put very clearly before your Lordships' House. So far as this particular Amendment is concerned, the Government consider it to be defective. But the noble Lord, Lord Campbell of Croy, has spoken on both Amendments, and I would not wish to add anything.
Moved, That this House doth not insist on their Amendment No. 3, to which the Commons have disagreed for the Reason numbered 4.—(Lord Kirkhill.)
On Question, Motion agreed to.

CIVIL LIABILITY (CONTRIBUTION) BILL
Lord SCARMAN: My Lords, I understand that no Amendments have been set

805
down to this Bill and that no noble Lord has indicated a wish to move a manuscript Amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the Order of Commitment be discharged.
Moved, That the Order of Commitment be discharged.—(Lord Scarman.)
On Question, Motion agreed to.
Then, Standing Order No. 43 having been suspended (pursuant to Resolution), Bill read 3a, and passed.

ROAD TRAFFIC (SEAT BELTS) (NORTHERN IRELAND) ORDER 1978
4.6 p.m.
The MINISTER of STATE, NORTHERN IRELAND OFFICE (Lord Melchett)The MINISTER of STATE, NORTHERN IRELAND OFFICE (Lord Melchett) rose to move, That the draft Road Traffic (Seat Belts) (Northern Ireland) Order 1978, laid before the House on 19th June, be approved. The noble Lord said: My Lords, this order will permit the Department of the Environment for Northern Ireland to make regulations, subject to the approval of Parliament, requiring the compulsory wearing of seat belts in Northern Ireland, and prescribing exemptions from such requirements. The order would require seat belts to be worn only in the front seats of vehicles that have, by law, to be fitted with belts. This would include all cars first registered after 1st January 1965, light vans registered after 1st May 1967 and some three-wheeled vehicles registered after 1st May 1967 and others registered after 1st September 1970.
The draft order recognises the need for a number of exemptions which will be provided for in the regulations. The order mentions two in particular: drivers who are reversing their vehicles, and drivers and front seat passengers who have a medical certificate from a doctor certifying that there are medical reasons why they should not wear a seat belt. This will be a matter solely for the doctor's own judgment and no specific diagnosis need be spelled out on the certificate. The Government are, of course, ready to consider any reasonable approaches for other exemptions, and the order provides enabling powers for this. Infringement
806
of the regulations would be a summary offence liable to a maximum fine of £50, and it would come within the general range of fixed penalty offences.
As noble Lords will know, the provisions in this order were originally included in the Roads and Road Traffic (Northern Ireland) Order 1978, which was approved by your Lordships last week. During the consultative period for that draft order, it was clear that the most controversial provisions would be the introduction of the compulsory wearing of seat belts, and many people suggested that this provision should not be included in an Order in Council dealing with a wide range of uncontroversial road safety and traffic matters. The Government did not share that view, but we were anxious to be as helpful as possible, and that is why the mandatory wearing of seat belts is being introduced in this separate Order in Council.
I should like, if I may, to set out fully the arguments in favour of these provisions, and then to do my best to answer the reservations that some people have about them. First, I should like to explain to the House why the Government are proposing to introduce the compulsory wearing of seat belts in Northern Ireland. The Government were naturally concerned about the appalling road accidents problems of Northern Ireland, and in 1976 we set up a local road accident study group to advise us on how to reduce the terrifyingly high toll of death and injury.
Statistics show that the number of deaths on the roads in Northern Ireland per 10,000 vehicles registered is double the number in Great Britain. In every 1,000 road accidents in Northern Ireland there are 60 deaths compared with 25 in Great Britain. The number of deaths and injuries caused by road accidents throughout the United Kingdom is bad enough. But the grim statistics in Northern Ireland show clearly that we have problems there on a different scale altogether from the rest of the UK; in particular, the very high fatal accident rate is a cause for great concern. By establishing a study group in Norhern Ireland, the Government accepted that the particularly high rate of road deaths and injuries there might well only be reduced by introducing special measures in Northern Ireland.
The study group was an entirely local body, made up of members of a wide range of relevant interests, including motoring organisations, the road safety movement and the Royal Ulster Constabulary. The study group was not, of course, asked to consider whether Northern Ireland should be used as a test bed for other parts of the United Kingdom. Nor did it recommend any such thing. It was asked to consider carefully, and on their merits, what new measures could be taken to reduce the road deaths and injuries in Northern Ireland. And that is what this locally based and locally composed study group did.
One of its main recommendations was that the wearing of seat belts should be made compulsory. It was convinced that, in a community where so many fatal accidents were occurring, we could not neglect the experience accumulated in the very many other countries which had introduced the compulsory wearing of seat belts. This is not a new or untested idea. It is commonplace in Western Europe.
Noble Lords will be pleased to hear that the study group's proposal has had a wide welcome in Northern Ireland. Those most knowledgeable and experienced in road safety matters wholeheartedly support it. And, above all, the proposal has had the solid and virtually unanimous support of responsible medical opinion. I have no doubt that this support, and the moderate and positive way in which it has been expressed, will impress noble Lords. Society as a whole owes a great debt to the surgeons in Northern Ireland's hospitals. They have had to cope with the appalling consequences of many years of violence. Anything which will reduce the burden on them should, I believe, have our full support.
Day by day and week by week, these surgeons have had to cope with the tragic consequences of violent death and injury. Their views on this order are clear. On 9th March no fewer than 70 of Northern Ireland's leading surgeons sent a letter to me, as Minister with responsibility for Health and Social Services. They estimated that in 1976 road accidents had cost Northern Ireland something like £30 million. They said that a significant proportion of this cost fell on the Health Services, and that the risk of being killed
808
in a road accident was about four times greater for the "unbelted" and that their injuries were likely to be more serious. Referring to the many countries where compulsory wearing of seat belts has been introduced in the last few years, the surgeons said—and I quote from their letter to me:
"They all show impressive reductions in death and injuries on their roads. If we could achieve similar reductions the burden on our surgical wards would be eased considerably. In a time of financial stringency it is difficult to see any other way in which one could make extra beds available without additional cost. The result would be equivalent to building and staffing half a hospital."
I entirely agree with what Northern Ireland's leading surgeons have said to me. This measure is not simply a vital road safety measure, but also one of the most significant initiatives open to us in the field of prevention of illness and death.
I would now like to mention some of the reservations which have been expressed. First, some people have said that we should not use the Order in Council procedure to make a reform of this kind.
But Orders in Council are the normal means of legislation for Northern Ireland in transferred matters. The Government do not believe that they are an ideal way of legislating, but until there is a devolved Legislature in Northern Ireland again they will be the only practicable method. Parliament recognised this when it passed the Northern Ireland Act 1974.
Orders in Council have already been used to place a wide range of measures on the Northern Ireland Statute Book. While some of these enacted provisions for Northern Ireland which were already in force in the rest of the United Kingdom, many made provisions for Northern Ireland which have no equivalents in the rest of the United Kingdom. The Seat Belts Order is, therefore, in no way unique in this respect. I am sure that your Lordships would not want to confuse the issue of Northern Ireland's constitutional arrangements, which we debated very recently in this House, with a measure designed to save lives.
Objections to this order have, of course, been advanced on libertarian grounds. I find these arguments extremely difficult to understand, let alone accept. In the

809
last two years I have made innumerable flights from London to Belfast by plane, and I have never yet come across anyone who refused to fasten their seat belts on any grounds. I have certainly never met anyone who claimed that the switching on of the "Fasten Seat Belts" sign, and the cabin staff's checking to make sure all passengers, without exception, comply with this, was an infringement of their personal liberty. Of course, everyone knows that on take-off and landing an unbelted passenger could be thrown with force against the back of a seat, and voluntary persuasion and personal checking by cabin staff has been effective, in ensuring 100 per cent. wearing of seat belts in aeroplane.
With cars, where there are unfortunately no cabin staff to check on drivers and their passengers, persuasion and advertising have failed. But—as current Government publicity on seat belt wearing points out—a head-on crash at even 30 miles per hour has much the same effect on an unbelted driver as taking a high dive on to a solid surface.
People do, of course, argue that individuals have the right to do, or not to do, something which places only themselves at risk. But society no longer takes that view—for example, as far as the wearing of crash helmets by motor-cyclists is concerned. In any event, I believe that the general argument is a difficult one to sustain. Noble Lords will be aware that the Government car service is suffering from industrial relations problems today. I had to wear a crash helmet when travelling to work on my moped, but I did not feel in any way that my personal liberty was infringed by that particular legislative requirement. Unnecessary deaths and injuries involve social as well as personal costs; make unjustifiable demands upon scarce hospital beds and the time of doctors and surgeons, and often leave families dependent upon the support of the community at large.
Some people, I know, argue that in particular types of accidents, people may be in a worse position as a result of wearing a seat belt. I certainly would not claim that that is inconceivable, in some very rare cases. But the balance of advantage is overwhelming. The risks when wearing a seat belt are a great deal
810
lower than the risks when not. Governments and Parliament do not base their policy or law upon extremely exceptional cases.
Finally, people have asked whether it will be possible to enforce this measure in Northern Ireland, given the many other demands on the RUC. Clearly the requirement will not be self-enforcing.
But the information available, as a result of the experiences in other countries where seat belt wearing is compulsory, indicates that the vast majority of people will comply with this new law. Indeed, wearing rates of up to 80 per cent. have been reported in other countries, without the need for exceptional enforcement effort. Moreover, the Royal Ulster Constabulary was, of course, represented at a very senior level on the working party which recommended this proposal to the Government in the first place.
My Lords, I hope this House will support an advance in the road safety law in Northern Ireland which has been proved to be effective elsewhere; which has been pressed on the Government by responsible and expert local opinion in Northern Ireland; which is not merely supported but demanded by the local medical profession. Your Lordships' House regularly and rightly expresses horror at the appalling tragedy of the deaths and injuries that result from terrorist and paramilitary activity in Northern Ireland. Yet, in terms of the number of people needlessly killed and injured, road casualties are by far the worse tragedy. Since 1969, when the troubles began in Northern Ireland, a total of 1,852 people have died in Northern Ireland from terrorist or paramilitary activity. Of those, 1,373 were civilians. Over the same period, road accidents have claimed the lives of 2,981 people. I beg to move.
Moved, That the draft Road Traffic (Seat Belts) (Northern Ireland) Order 1978, laid before the House on 19th June, be approved.—(Lord Melchett.)
4.20 p.m.
Lord CARRINGTON Lord CARRINGTON rose to move, That further debate on the Motion for approval of the order be now adjourned.
The noble Lord said: My Lords, I should first explain to your Lordships the reason

811
for this rather unusual Motion. It seems to me that the circumstances surrounding the presentation of this order warrant it, and it has nothing whatever to do with the merits or otherwise of the order itself. It is usually the case that we in this House do not oppose Government orders. It is true that on very rare occasions we have done so, sometimes with rather unexpected results. Generally speaking, orders pass through your Lordships' House with nothing other than discussion. The reason for this is that orders do not come under the provisions of the Parliament Act. Therefore, the rejection of an order by this House is the end of the matter; there can be no second thoughts, though, of course, it is possible for the Government to re-lay the order at a later date in slightly different terms. Your Lordships will remember that there has been some debate in the past, particularly from those who sit on the Government Benches, as to whether or not this state of affairs should continue.
Some little time ago, there was a Bill making the wearing of seat belts compulsory in the United Kingdom. As this matter could hardly be said to be a Party affair, there was a free vote and the House rejected the proposal. Indeed, this House on two separate occasions rejected a proposal for the compulsory wearing of seat belts—whether rightly or wrongly it is not for me to argue at this moment. It now seems to be the Government's proposal to use the people of Northern Ireland in an experiment to see whether or not the compulsory wearing of seat belts is both effective and acceptable, and for the other reasons which the noble Lord, Lord Melchett, has explained.
Speaking for myself, I do not feel very strongly on the subject of seat belts or the proposal that there should be an experiment in Northern Ireland. Indeed, if anything, I tend to think that it might be rather a good idea. However, I am well aware that this issue raises considerable controversy and it may well be that on a free vote your Lordships will once again reject this order; after all, your Lordships have rejected such a proposal twice already. If that is so, that would be the end of the matter.
But, on this occasion, the proposal has not been discussed in another place
812
and, should the order be rejected, there would be no opportunity for the House of Commons to make its views known about this matter and—perhaps rather more importantly in this particular case—there would be no opportunity for the only elected representatives from Northern Ireland in the Westminster Parliament to make plain their position with regard to their own Province. I do not think that it would be right that this House should deprive the other House, in particular those most concerned, of the right to have a discussion.
There is another point which the noble Lord, Lord Melchett, touched on. This is, in effect, a Northern Ireland Bill, and it is only because of the abolition of Stormont and the Emergency in Northern Ireland that the Government at Westminster can use such a procedure to differentiate between one part of the United Kingdom and the other. Once again, it would surely be wrong for the House of Commons not to have at least a chance of commenting upon that most important constitutional departure.
As I understand it, the order is down to be discussed in another place later this week. There would be no objection whatever to your Lordships taking the order next week, after the House of Commons has debated it; after all, the House is sitting and will not be particularly busy. If we postponed the discussion of this order until next week, we should in no sense be reflecting upon the merits or otherwise of the order. Indeed, if the order was rejected in another place, that would be that and we should have no further say in the matter. But, if it was passed in another place, then noble Lords could make up their own minds, having regard to what happened and knowing the debate and the views of those in another place.
I must say that I think that seems to be a much more suitable way of arranging things. I am surprised that the Government—to whom I have put this proposal and who presumably want to get their order through Parliament—have not been prepared to accept it. We have so often heard from noble Lords opposite that the elected House must always have the last word and that we, in this House, must be careful not to usurp the functions of the elected Chamber. It seems to me very

813
curious that the Government should seek to do precisely the opposite, and that it is those of us on this side of the House who seek to safeguard the position of the House of Commons. I hope that, on reflection, the noble Lord the Leader of the House will be prepared to accept my Motion, but I must tell him that, if he does not, I shall ask your Lordships to to into the Lobbies. I beg to move.
Moved, That further debate on the Motion for approval of the order be now adjourned.—(Lord Carrington.)
Lord BYERS: My Lords, without repeating from these Benches the arguments put forward by the noble Lord, Lord Carrington, perhaps I could, very shortly, support what he has just proposed. I think that it is wrong to introduce controversial measures of this nature into this House at a late stage in the Session. This is not a precedent which would commend itself to the House if we really thought it out. I agree with the noble Lord, Lord Carrington, that this is a matter which is very controversial. I am a passionate believer in seat belts; I have always voted for seat belts; but I do not think that it is right for this House to pronounce on a controversial matter—on which I certainly could not carry the whole of my Party—late in the Session and before the House of Commons has had an opportunity, with the Ulster Unionists and others there, to give its views.
I say to the noble Lord, Lord Melchett, and to the noble Lord the Leader of the House that it is rather odd that, on the day when we read in the next Labour Party Manifesto that we shall be abolished in favour of a unicameral Parliament, we, in this House, should be seeking to protect those in the other place. Therefore, for those reasons and for the reason of common sense, I hope that we shall support the noble Lord, Lord Carrington.
Lord PARRY: My Lords, each of the speakers who has so far spoken is attractive in argument and persuasive in some of the things that he has said. But I wish to oppose the motion for the adjournment on this issue although, over lunch, I was invited in a jocular way to support the noble Lord who has spoken from the Opposition Front Bench. I
814
oppose the Motion because I share what I know to be his deep concern about this problem.
I believe that the noble Lord, Lord Byers, is totally sincere when he says that he is deeply worried—as we all are—by the appalling consequences of bad driving on the roads. Although it may perturb noble Lords on the Front Bench, I am now speaking to the issue on the adjournment and I intend to make a speech in support of that which I think will be within the order of this House. I am so advised and I rise carefully to make this speech. I hope that the House will be tolerant in allowing me to make it. This is a tolerant Chamber and we are concerned about the appalling tragedies that occur.
If I needed a further argument to put before noble Lords, it is that which is contained in a letter which I have seen written from a Mr. William Rutherford of the Royal Victoria Hospital to the Prime Minister of this country. I have asked the House to be tolerant. I know that there are some noble Lords who are more tolerant than others.
Several noble Lords: Order, order.
Lord PARRY: My Lords, I have been assured that I am allowed to do this. I shall accept a ruling of the House if otherwise.
Lord HAILSHAM of SAINT MARYLEBONE: My Lords, I do not want to interrupt the noble Lord, but the issue is whether or not the debate be adjourned. As far as I know, there is nothing to prevent the noble Lord, Lord Parry, saying anything relevant to that or, supposing that the debate is adjourned for a week—which is really what the Motion amounts to—making a speech on the merits. But, with great respect, I suggest to him that a speech on the merits is not in order in the rather narrow terms of the Motion which my noble friend has put forward.
Lord PEART: My Lords, I think, that the noble and learned Lord would agree that my noble friend can give the reasons why he thinks we should not adjourn.
Lord HAILSHAM of SAINT MARYLEBONE: Certainly, my Lords.
Lord PARRY: My Lords, thank you very much. I realise that this is a very difficult and contentious issue and that it is tempting to use the procedure of the House in order to set the matter at rest. However, I also believe that this is such a vital matter and time is so vital that, on reflection, noble Lords will believe that they are right to allow me to speak and, in fact, to allow matters to proceed to a debate of the House at this point.
I was about to give this quotation:
"By allowing the recent Bill in the House of Commons to lapse for want of a quorum in the House, the death, disfigurement and crippling of many road victims has been assured".
That is one man's opinion, but that man is an eminent consultant surgeon at the Royal Victoria Hospital. When the noble Lord was moving his Motion, he said it had nothing whatever to do with the merits or otherwise of the measure. My respectful submission is that it has everything to do with it; that, when the adjournment of the House is moved—in fact this has been said openly—it is almost a form of sinister attempt to introduce this discussion.
Several noble Lords: Rubbish!
Lord PARRY: My Lords, I say that looking at the words before me. It seems rather odd that the Government should attempt to bring this discussion before the House in this way. However, if noble Lords opposite think I put too strong a point on it by using the word "sinister", I would use the word "odd", with whatever implications that might have. If that is the insinuation, it is my belief that the Government do not intend to bring this debate before your Lordships' House to circumvent any of the processes of democracy, with which we are as much concerned as any other noble Lords. This is germane to the question of whether or not we adjourn. My first point is that we cannot afford to waste any time in dealing with this problem and therefore it is vastly important that we discuss it. We must not waste any time.
A noble Lord: One week?
Lord PARRY: Yes, my Lords. We must not waste even a week. In one week, 30 more people could be killed in road smashes by not wearing belts and,
816
if we can save 30 lives by bringing the whole process forward one week, then we shall have achieved something to the credit and not to the discredit of this House.
Lord MONSON: My Lords, does the noble Lord really believe that the passing of this Motion would save 30 lives just like that? Surely he knows that, while this sort of provision might help, if people believe that way, it cannot completely turn the statistics upside down.
Lord PARRY: I welcome that question, my Lords. When I last spoke on this subject, noble Lords thought I had introduced some emotion into the debate because I referred to my experiences. Briefly, I can repeat those experiences by saying that I have been in two accidents, once unbelted and once belted. I experienced those accidents myself, and my father, not wearing a belt, was killed in an accident. I believe the introduction of seat belts would substantially reduce the loss of life and that if we introduced this measure at once we could save a measureable number of lives. In my view, 30 is a conservative, not a radical, estimate of the saving.
Several noble Lords: Order!
Lord PARRY: My Lords, it is all very well for noble Lords opposite to shout "Order", but I will go anywhere and speak before any audience if I can advance the case I am seeking to put. I have already established that nobody will convince me that we should delay discussing this matter. I shall accept the will of the House. I see that noble Lords opposite would prefer that I were not speaking in these terms. Very well. If the issue before the House is that we should now adjourn on some point of principle, I simply wish to make it clear that I for one, and there are many like me, shall resent very much indeed the fact that we were not given the opportunity to speak on a subject which we consider to be vital.
Lord MONSON: Next week.
Lord PARRY: Not next week; now, my Lords. This is a subject on which we have been invited to speak by groups of people in Northern Ireland. The

817
Government are not seeking to use Northern Ireland as a test-bed, nor the people of that tortured nation in an experiment that will help to come to conclusions to be used elsewhere. They are simply using evidence that has been brought forward at the invitation and on the instigation of people in Northern Ireland who are qualified to judge.
A recent international conference in Australia evaluated the experience available, and, as my noble friend said, on 5th March the British Medical Journal summarised the findings of that conference. There was overwhelming evidence to show that we should as soon as possible introduce in Northern Ireland legislation to make the wearing of seat belts compulsory. The two debates we have had in this House have not been concerned with the introduction of seat belts in Northern Ireland; we have debated only the introduction of seat belts in this country. I had hoped to persuade the noble Lord the Leader of the Opposition, for whom I have a deep regard, not to seek the adjournment of the House but to allow us to have our debate and come to a conclusion properly.
4.36 p.m.
Lord SHEPHERD: My Lords, I share with the noble Lord, Lord Byers, regret that this order should have come so late in the Session, but there may be reasons for that. My main concern is the question of business, a matter with which I have been involved for a number of years, and I believe I can claim to have an understanding of what is involved. First of all, it is for the Government to decide as and when to introduce their legislation. In practice, of course, there is consultation between the two sides, but at the end of the day, whether a Conservative or Labour Government are in office, it is for the Government of the day to decide, as and when within their timetable, to introduce legislation.
The noble Lords, Lord Carrington and Lord Byers, seemed to rest their case on the fact that if your Lordships' House were to consider this order today and were to exercise their undoubted right to reject it, we should have precluded the House of Commons from considering this matter. Lord Carrington himself recognised that that was not the case. He
818
said there had been occasions when this House had rejected an order; an order has then been reintroduced—with different phrases but in substance the same—and your Lordships' House has then acquiesced in the passing of that order. Thus, if this House were to reject the order, it would then be open to the Government to re-lay, first in the House of Commons, a new order, differently phrased, and for the other place then to have its debate and reach a decision on it.
Regarding the problem of orders, I have for long felt that your Lordships' House should always have the right to tell another place, "Think again", but as Lord Carrington said, with orders we very reluctantly do not do that; we do it only on the rarest possible occasions. If we were to reject this order, another place could take into account what we had said—our thoughts on it and reasons why we rejected it—and we could then have a second chance of looking at the matter in the light of what had been said both here and in another place.
There is much advantage in the proposals the Government have put forward and for doing this today. As I say, I regret it is late in the Session because it is a matter of controversy in your Lordships' House. However, I must tell Lord Carrington that if he insists on his Motion he will not have placed the House of Commons in any different position than if the order were rejected. If that were not the case, the other place would not be placed in a different situation because it would have to consider the matter and vote on it. Therefore I do not believe there is a great deal in what Lord Carrington said.
I fear there could be a danger of it becoming a precedent in that never should an order be taken in your Lordships' House before being taken in another place. I do not believe the noble Lord, Lord Denham, if he has the misfortune to be the Government Chief Whip, would wish to have that sort of precedent round his neck. My final comment is that it seemed to me from the way Lord Carrington was speaking about the order, about your Lordships' House and about the other place, that this House should he purely a rubber stamp for another place.
Lord CARRINGTON: No.
Lord SHEPHERD: My Lords, that is not a view I have ever held.
Lord MONSON: My Lords, before the noble Lord, Lord Shepherd, sits down, would he not agree that virtually no notice whatsoever was given of this order, with the result that a great many noble Lords who feel extremely strongly about this issue which affects the freedom of so many people have not been able to come along this afternoon to discuss or vote upon it?
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, may I for a moment intervene to say that that is not the case. The House has known for at least a week.
4.41 p.m.
Lord MELCHETT: My Lords, if I may, I should like to respond to some of the points which the noble Lord, Lord Carrington, put in moving his Motion—if that is not going to upset noble Lords on the Opposition Front Benches too greatly. I am grateful to the noble Lord, Lord Carrington, for signifying that he approves of that suggestion.
The noble Lord first of all suggested that legislation on seat belts in Northern Ireland, which
is the substantive issue before the House in the order today, had been rejected by your Lordships' House on previous occasions. But may I say to the noble Lord, with great respect, that that is not the case. So far as I am aware this is the first time that your Lordships' House would have had the opportunity of discussing an order which related explicitly to Northern Ireland. It is simply not true to say that your Lordships' House has rejected an order—of the type which the Government are asking your Lordships to discuss today—on two previous occasions. On many other occasions your Lordships' House has passed orders which introduced legislation for Northern Ireland, which is unique to Northern Ireland, and has not concerned itself with whether they have been previously debated or not debated in another place or in your Lordships' House. There are a great many examples of orders which have been passed with the approval of noble Lords opposite which have introduced unique legislation for Northern Ireland.
The noble Lord, Lord Carrington, also suggested that the Government were
820
attempting to use the people of Northern Ireland for an experiment. But, as my noble friend Lord Parry said, that is not true. A very large number of bodies in Northern Ireland supported this measure, including the Transport and General Workers' Union, the Methodist Conference, the Road Safety Council for Northern Ireland, the Association of District Councils—which represents all those elected representatives in Northern Ireland—the Royal Society for the Prevention of Accidents, the RUC, the AA, the Approved Driving Instructors' Association, a number of political Parties and the Presbyterian Church in Ireland. All those bodies have had the courage of their convictions and have felt able to stand up and say what their views on this measure were. I suggest that it would be a matter of great regret if your Lordships' House approved this Motion and did not place itself alongside that large number of responsible bodies in Northern Ireland in supporting this measure. That will be the effect of approving the Motion which the noble Lord, Lord Carrington, has put before the House.
Several noble Lords: No, no!
Lord MELCHETT: It certainly will, my Lords. The Government are asking the House to approve the order put before the House today and the noble Lord is suggesting that we should no longer discuss it.
Several noble Lords: Until next week.
Baroness LLEWELYN-DAVIES of HASTOE: Next Friday?
Lord MELCHETT: I hear my noble friend behind me saying "next Friday" with some horror in my heart, as I confess that Northern Ireland Ministers do not get very much opportunity for holidays. I should like to answer one other point made by the noble Lord, Lord Carrington —and my noble friend Lord Shepherd dealt with this at some length—and that was that if your Lordships' House were to reject this order today we would be denying the House of Commons the opportunity to discuss this matter. That is what the noble Lord, Lord Carrington, said.
Several noble Lords: No!
Lord MELCHETT: The noble Lord, Lord Carrington, is agreeing with me although all his colleagues on his Front Bench do not seem to be agreeing with him. If he wants to retire for a moment to sort this matter out between himself and his noble and learned friend I should be quite happy to allow him to do that. But if I could follow the noble Lord, Lord Carrington's own view of what he said, that is only true if your Lordships defeat this order. The noble Lord, Lord Carrington, may be privy to some information to which I am not, but unless the House has an opportunity to hear the arguments and to have a debate as the Government have suggested we should, we will not know whether the danger which the noble Lord, Lord Carrington, is suggesting the House will face will actually arise.
Several noble Lords: Too late.
Lord MELCHETT: If it is too late because the House rejects it, as my noble friend Lord Shepherd has already said, and as we have previously done with Northern Ireland orders in another place, the order can be re-laid in a slightly different form.
Though I do not entirely share the view of the noble Lord, Lord Carrington, about your Lordships' House, I was interested by the novel constitutional proposition that controversial measures should not be debated in, or considered by the House of Lords if they have not already been considered in another place. That would have interesting effects, for example, if it were applied to the Scotland and Wales Bills. As I understand it, on those Bills, noble Lords opposite were suggesting the exact opposite; namely, that your Lordships' House should make a special effort to debate and discuss controversial issues which had not been considered by another place. I find it a little hard that one law applies to Government business on devolution and another law apparently applies so far as noble Lords opposite are concerned about a vital measure to save lives in Northern Ireland.
I would also have thought that the noble Lord, Lord Carrington, might have suggested to your Lordships that there was some value in an expression of opinion by your Lordships' House, regardless of
822
whether or not another place had considered this matter. I would not necessarily go so far as the noble Lord, Lord Carrington, in putting that forward, but I am surprised that he did not suggest that there was some value not only for the people of this country but for the people in Northern Ireland hearing your Lordships discuss this order and knowing what your Lordships' opinions on it were. That will be, at least for today, denied to us if the noble Lord's Motion is carried. The noble Lord, Lord Byers, said that while he was a personal supporter of this Order—
Lord CARRINGTON: No, I did not.
Lord MELCHETT: I am afraid that the noble Lord, Lord Carrington, is again in dispute with his colleagues. I apologise for sowing such dissension among noble Lords opposite. The noble Lord, Lord Byers, suggested that he might not be able to carry the whole of his Party with him if it came to a division on this matter. I do not know whether the same thing applies to the noble Lord, Lord Carrington, but in my view the noble Lord, by moving his Motion, is not making any attempt to preserve the rights of the elected Chamber in this matter. He is simply trying to ensure that your Lordships do not get a chance to say whether or not your Lordships approve of the order and in that way protecting if anything, the image of your Lordships' House and not of another place.
Lord CARRINGTON: My Lords, I must admit I am rather surprised that the Leader of the House has not answered.
Lord PEART: My Lords, I shall be delighted to respond. I think that my noble friend has put a powerful case and it
was reinforced by the noble Lord, Lord Parry. We should like to discuss this matter, but if noble Lords feel that they wish to force it to a Division immediately then let them do so. That is all I have to say. It is clear.
Lord CARRRINGTON: I must say, my Lords, I am slightly surprised at the bad temper shown opposite. It seems to me—
Lord PEART: I hope that I never showed bad temper in my intervention.

823
I thought there was a bit of bad temper among those on the Opposition Front Bench.
Lord CARRINGTON: My Lords, I was slightly surprised at the bad temper shown, with the exception of the noble Lord the Leader of the House. I am sorry that the noble Lord, Lord Parry, misunderstood me—and he did misunderstand me. What I was seeking to do is something quite simple. It seems to me that since this House has on two occasions rejected the principle of wearing seat belts, there was, to say the least of it, a likelihood that it might do it again. If it did it again that would raise certain difficulties. The difficulties it would raise would be that the House of Commons
would not have discussed this order. The noble Lord, Lord Shepherd, is quite right that at a later stage, right at the end of the Session, they could put down another order saying much the same thing, which after two debates would lead to two more debates. All we need to do in order to avoid having four debates is to postpone this debate for four days and have it in four days' time. If I may say so, I have never heard so much song and dance about so little.
4.50 p.m.
On Question, Whether further debate on the Motion be now adjourned?
Their Lordships divided: Contents, 114; Not-Contents, 74.

CONTENTS

Airedale, L.

Forester, L.

Nugent of Guildford, L.

Alexander of Tunis, E.

Fortescue, E.

Nunburnholme, L.

Allerton, L.

Fraser of Kilmorack, L.

O'Brien of Lothbury, L.

Alport, L.

Gainford, L.

O'Hagan, L.

Amherst, E.

Glendevon, L.

O'Neill of the Maine, L.

Amulree, L.

Glenkinglas, L.

Onslow, E.

Atholl, D.

Gridley, L.

Rankeillour, L.

Balerno, L.

Hailsham of Saint Marylebone, L.

Rawlinson of Ewell, L.

Barnby, L.

Hale, L.

Ridley, V.

Belstead, L.

Hanworth, V.

Rochdale, V.

Bledisloe, V.

Henley, L.

St. Aldwyn, E.

Bolton, L.

Hereford, V.

St. Davids, V.

Byers, L.

Home of the Hirsel, L.

Salisbury, M.

Caithness, E.

Hood, V.

Sandys, L.

Campbell of Croy, L.

Hylton-Foster, B.

Seear, B.

Carr of Hadley, L.

Jeffreys, L.

Selkirk, E.

Carrington, L.

Kemsley, V.

Sharpies, B.

Cathcart, E.

Keyes, L.

Skelmersdale, L.

Clifford of Chudleigh, L.

Kinloss, Ly.

Spens, L.

Clitheroe, L.

Kinnaird, L.

Stamp, L.

Clwyd, L.

Lauderdale, E.

Strathclyde, L.

Craigavon, V.

Long, V.

Strathcona and Mount Royal, L.

Crathorne, L.

Loudoun, C.

Tenby, V.

Cullen of Ashbourne, L.

Lucas of Chilworth, L.

Teviot, L.

Daventry, V.

Luke, L.

Teynham, L.

de Clifford, L.

Lyell, L.

Thomas, L.

Denham, L. [Teller.]

Mackie of Benshie, L.

Trefgarne, L.

Ebbisham, L.

McNair, L.

Trenchard, V.

Eccles, V.

Mancroft, L.

Trevelyan, L.

Elles, B.

Marley, L.

Tweeddale, M.

Elliot of Harwood, B.

Massereene and Ferrard, V.

Vernon, L.

Elton, L.

Mernvale, L.

Vickers, B.

Emmet of Amberley, B.

Monson, L.

Vivian, L.

Energlyn, L.

Mottistone, L.

Wakefield of Kendal, L.

Evans of Claughton, L.

Mowbray and Stourton, L. [Teller.]

Ward of North Tyneside, B.

Exeter, M.

Westbury, L.

Faithfull, B.

Newall, L.

Wigoder, L.

Ferrier, L.

Northchurch, B.

Winstanley, L.

Foot, L.

NOT-CONTENTS

Ashby, L.

Boston of Faversham, L.

Burton of Coventry, B.

Aylestone, L.

Brimelow, L.

Castle, L.

Baker, L.

Brockway, L.

Darling of Hillsborough, L.

Blyton, L.

Bruce of Donington, L.

Davies of Leek, L.

Davies of Penrhys, L.

Listowel, E.

Rhodes, L.

Douglas of Barloch, L.

Llewelyn-Davies of Hastoe, B. [Teller.]

Roll of Ipsden, L.

Dowding, L.

Sainsbury, L.

Fisher of Camden, L.

Lloyd of Hampstead, L.

Samuel, V.

Gaitskell, B.

McCarthy, L.

Segal, L.

Garner, L.

McCluskey, L.

Shepherd, L.

Gordon-Walker, L.

Maelor, L.

Shinwell, L.

Hall, V.

Melchett, L.

Sligo, M.

Halsbury, E.

Milner of Leeds, L.

Snow, L.

Hamnett, L.

Mishcon, L.

Stedman, B.

Hatch of Lusby, L.

Morris of Grasmere, L.

Stewart of Alvechurch, B.

Henderson, L.

Murray of Gravesend, L.

Stone, L.

Houghton of Sowerby, L.

Noel-Baker, L.

Strabolgi, L.

Howie of Troon, L.

Oram, L.

Taylor of Mansfield, L.

Ilchester, E.

Paget of Northampton, L.

Walston, L.

Janner, L.

Pannell, L.

Wells-Pestell, L.

Kennet, L.

Pargiter, L.

Whaddon, L.

Kirkhill, L.

Parry, L.

Wigg, L.

Leatherland, L.

Peart, L. (L. Privy Seal.)

Wilson of Radcliffe, L.

Lee of Asheridge, B.

Pitt of Hampstead, L.

Winterbottom, L. [Teller.]

Lee of Newton, L.

Raglan, L.

Wynne-Jones, L.

Resolved in the affirmative, and further debate on the Motion adjourned accordingly.

LIVE FARM ANIMALS: EXPORT FOR SLAUGHTER
4.59 p.m.
Lord HOUGHTON of SOWERBY Lord HOUGHTON of SOWERBY rose to ask Her Majesty's Government what conclusions they have now reached on the export of live farm animals for slaughter. The noble Lord said: My Lords, this matter has been dragging on for a very long time. I raised it on the eve of the Easter Recess, four months ago, when the report of the interdepartmental committee became available, and obviously a little further time was needed for consideration and consultation. But all the summer has gone by and no further Statement has been made on behalf of the Government.
When I tabled my Question some days ago the prospect of getting a debate on the subject in another place, or indeed a ministerial announcement in another place, seemed unhopeful. No undertaking could be given by the Leader of the House that time would be available for a debate in another place before the House rose for the Recess. I therefore thought that this was not an inappropriate time and place to ask a Question which might enable the Government to shed further light upon their position.
In the meantime, however, in the other place there were exchanges between the Minister and Members on both sides of the
826
House of Commons on 20th July. To some extent, therefore, the matter was advanced further by what the Minister said. Nevertheless, on that occasion there were ambiguities, there were statements made of less than adequate clarity or firmness, which I think make my Question very relevant today. There were two things about the Minister's statement in reply to questions in another place on 20th July which caused me some concern. One was that it appeared that the Minister was now waiting for developments in the EEC on the transportation of live animals between one EEC country and another before carrying his own consideration of the matter further. Another suggestion he made was that, while the EEC were considering the matter, perhaps some interim measure might he taken by Her Majesty's Government to deal with the growing concern and anxiety about this traffic in the public mind here. Altogether, I think the Minister's replies left quite a number of questions unanswered.
One thing I think I might draw to your Lordships' attention is the Minister's statement in column 762 of the Official Report, when he said:
"… when I come to make my decision it will, I hope, be the right decision and it will be made without fear and without favour".
That does not sound very much like a Minister with any fire in his belly, and I thought my right honourable friend had convictions on this matter. He supported them by vote in another place on a crucial occasion in 1973. My Lords, "without fear and without
favour". Fear of who? Favour towards whom? This is a matter

827
relating to the welfare of living animals; this is not merchandise—inanimate, unfeeling. This is a growing traffic in live animals, being bundled across the Channel into Europe for slaughter or so-called further fattening. The traffic has been increasing because the profits in it have been rising. Let there be no mistake about it: what we are talking about are the profits of the agricultural industry related to the exploitation of living animals.
It may be that Her Majesty's Government have no policy in the matter; that all they have is a desire to reach a decision "without fear and without favour". All the more reason, then, perhaps, why I should mention to my noble friend that tomorrow morning, if indications arc fulfilled, the National Executive of the Labour Party will be meeting and will be considering a report from their Home Policy Committee on a comprehensive set of proposals dealing with animal welfare and protection. One of the features of this report, which has received wide publicity, relates to the abolition of cruel sports; hut this report is very much more wide-ranging than that, and contains important proposals to go into the policy of the Labour Party, with the hope, indeed, of putting something along these lines in the Manifesto. It says:
"Animals should be slaughtered as near as possible to the point of production".
"Export of live food animals should be replaced by a carcass trade".
"Consideration should be given to compensating dairy farmers for any rapid drop in calf prices".
Those are the three summary heads of recommendations made in this particular matter. There are other proposals made regarding the transportation of live animals within this country, quite distinct from the export of live food animals.
If anything like this is approved by the Labour Party, if anything of this appears in the Manifesto of the Labour Party at the next General Election, this will be the most significant political document on animal welfare protection ever published in this country. At last a political Party looks like taking up animal protection and welfare as a national issue, as an issue which must engage the attention of Government and of Parliament and be backed by the consent and approval of
828
large sections of supporters of a political Party. In other words, what it does is to bring animals into politics, which in my opinion is where they should be, and not left to the hazards of the Private Member's Bill procedure, to Private Members' Motions and to the other frustrating experiences one can have of Parliamentary procedure on these matters. So I offer to my noble friend that guidance as to what the policy of Her Majesty's Government should be.
I have drawn the attention of the Minister to an article which appeared in a magazine called Veterinary Practice as recently as 19th June 1978, where there is the most scathing professional condemnation of this traffic that I have ever read. It calls it "An unjustifiable trade", and it concludes:
"Nothing can justify this despicable trade. It causes distress to the animals, anguish to those concerned members of society forced to witness its enactment, and degradation to those who ply it. Above all else, the trade is an affront to commonsense".
The truth is that this trade is the gravy train of the agricultural industry in Britain which goes where the money is—and where the money is, the animals go. We have had many confusing opinions about the economics of this matter—whether it is beneficial to the balance of payments, whether it is adding to our export trade figures, or what. But one thing is pretty clear, and that is that if the young animals which are being shipped to Europe for slaughter or further fattening remained in this country to come to full killing weight, the amount of meat we should have available would be out of all proportion to that which is exported to other countries. This traffic is not feeding any people better, it is not providing any more meat for anybody; it is merely pushing it across the boundaries of countries according to the marginal advantage of so doing.
When France puts a levy on the import of sheep to France because prices there are so much higher than in Britain and are attracting a good deal of trade from this country, undermining the economics of the French agriculture industry; when that levy is imposed, the animals are shunted via Holland or another EEC country where the French cannot, under the rules of the EEC, impose a levy on the import of these live animals. I think we should follow one firm rule that

829
animals should be slaughtered as near as possible to the point of sale. The idea that these animals are shipped around in order to get marginal profit without regard to the effect on the economics of the industry in this country, without regard to the effect on the level of prices of meat in this country, seems to me to be quite abhorrent.
I am not blaming any farmers who want to maximise their profits. That is what they are in business for. The National Farmers' Union is a trade union. It is looking after the interests of its members which it is their proper duty to do. But they must not pose as the custodians of the social conscience or, indeed, of the wider aspects of agricultural policy. It is for society, it is for Parliament, to safeguard the minimum standards of behaviour towards animals which is consistent with a compassionate and civilised society.
Therefore, my Lords, I hope that we are going to get something more positive from my noble friend this afternoon than we have had so far. Do the Government really intend to do anything or are they shillyshallying? Are they just holding all this off until the Recess—because if the Government do nothing, nothing is done. They could make orders tomorrow which will suspend this traffic, wholly or in part and, indeed, on a previous occasion without coming to the House of Commons at all, the Government suspended all orders enabling live sheep to be shipped across the Channel. When the vote was eventually taken in the House of Commons, it disposed of this traffic at least for a time. But inaction, I think, is the cruellest form of dealing with any problem of emotional content and anxiety of this kind. Will the Government respond to their own supporters?
Will the Government respond to those who have Motions down in another place asking for an opportunity to debate? Sir Harold Wilson said that the Labour Party is nothing if it is not a crusade. Let us have a crusade about something! Heaven knows, we need it! —not only in the Labour Party but in the country generally. Let us have some conviction about something. Let us feel there are principles we should apply and not submit all the time, to the squalid considerations
830
of the profit and loss account, especially when dealing with living things!
The danger in this country is that we shall reduce animal welfare, animal protection, to a matter of economics, a matter of industrial and financial advantage. It is our duty in both Houses of Parliament, to raise this matter above that level. Therefore, I invite my noble friend to be as full and frank as he can. Let us know where we stand. Let us know whether the Government have any intention of saying anything; and, if so, when. How are we to march towards a General Election in this state of indecision, this state of inaction, when a very large section of the Labour Party will be demanding between now and the General Election a positive assurance of action in this field?
5.15 p.m.
Lord SANDYS: My Lords, the House will be grateful to the noble Lord, Lord Houghton of Sowerby, for having put down this Unstarred Question and for coming to the House, as I understand, on the first day after his recent indisposition. We hope that his good health will continue and increase as the days go by. This subject is one of great concern to many of us; and those who are taking part this afternoon in the debate on the Unstarred Question have demonstrated over a period of years their interest in this field. In opening one's remarks, I think one must inevitably refer back to the last time this matter was discussed. As the noble Lord, Lord Houghton, reminded the House, that was the Adjournment debate on 23rd March. The Working Party report, the yellow document we have before us, was first published on that very morning. Since that day, we have had ample opportunity to look at it in greater detail and also to take into consideration what has been said in another place.
The noble Lord, Lord Houghton, referred to the
Minister's statement in another place in reply to a Question. I think it would be valuable both for the purposes of the record and for some noble Lords who have not had an opportunity of reading what he said on that occasion if I referred to the Minister's Answer. He said:
"I am considering representations on the report by officials of the Agriculture Departments

831
and, pending a decision, my hon. Friend the Parliamentary Secretary has told the Council of EEC Ministers of our concern and asked if it proposes to take any action. The Commission confirmed that new proposals concerning intra-Community trade in live food animals will be put forward shortly."—[Official Report (Commons) col. 762; 20/7/78]
The issue, of course, is the whole question of animal welfare. Today, the 25th July, is within a week of the European Convention for the Protection of Animals during International Transport becoming effective. This document, which was initiated by the Council of Europe as long ago as December 1968 and open for signature ten years ago, is about to take effect. Many of the signatories to this Convention have been observing for many years past particular articles set out in the Convention; but there have been disquieting reports which give rise to public concern.
I think it proper that we should put to the Government the Unstarred Question posed by the noble Lord, Lord Houghton. This problem has been of long standing. Your Lordships have discussed the Balfour Committee report, and I should like to refer to that report because the Balfour Committee was discussing this very issue some ten or more years ago. I refer to paragraph 13 of the Balfour Committee report, where they said:
"The Committee have obtained first-hand evidence that cattle exported to France from Great Britain have been travelling for long journeys through France to places as far away as Marseilles and Bordeaux. Some of these journeys may take more than 48 hours from the point of disembarkation and there are no Government regulations requiring animals to be fed and watered."
The Balfour Committee was speaking at a time when the French Government had neither signed the European Convention not had they drafted their own regulations. Of course since those days M. Michel Debre has signed the Convention and I understand that the French have taken appropriate action.
The situation, however, is not as easy as that because animal welfare bodies, including the RSPCA, have been very anxious about this field. I will quote from a report which came to me as recently as this morning from that body:
"It might have been thought that the widespread public concern over the export of live food animals would have led to a reduction in
832
the distances travelled by United Kingdom livestock to their destinations abroad. However, as recently as July 1978 substantial consignments of British calves have been carried to the veal rearing units in France and close to the Spanish border and sheep have been observed in the Spring of 1978 travelling to lairages in West Germany for periods over 24 hours—and for onward transit to more distant parts, and in both cases the stock were not fed, watered or rested within the journey times. Clearly exporters are not concerned that these journeys are considered to be excessive."
That is an important charge to raise only a week before the European Convention becomes effective. If we turn to this document, which is a very important one, Article 6, paragraph 4, on page 7 says:
"During transport animals shall be offered water and appropriate food at suitable intervals. Animals shall not be left more than 24 hours without being fed and watered. This period may, however, be extended but only if the journey to the destination where the animals are to be unloaded can be completed within a reasonable period."
It must be very apparent to all those who read the Convention what a very elastic part to Article 6 this is. It emphasises this point:
"This period may, however, be extended but only if the journey to the destination where the animals are to be unloaded can be completed within a reasonable period."
What is reasonable in this context, my Lords? Clearly, the reasonableness is interpreted in a quite different way from one area to another. It may be applied with greater vigour in our country and with less vigour in another.
But what is the value of the Convention on this particular point? I believe that it is an attempt: a sincere attempt, a prudent attempt and a timely attempt. If this Convention can be made to work, it can he made to work by all those official bodies working together in a constructive manner. It is a welcome fact that the British Veterinary Association, the National Farmers' Union and the RSPCA have formed themselves into a working party to look at this subject over quite a considerable period in recent years.
I also believe that our colleagues on the Continent, both the official and the voluntary bodies, have been looking at this with great care. When the Convention is only just about to start in operation, is it really for us to say that it will not work in advance of the experiment?

833
I believe the official and unofficial bodies will bring a great influence to bear upon the use and value of the Convention. I believe that it is the beginning of a European experience in animal welfare. I hope that we carry the noble Lord, Lord Houghton of Sowerby, with us in this event.
I return to the main problem. We are looking at the whole remit of animal welfare. I have concentrated on one particular aspect. I should like to pursue this because the noble Lord, Lord Houghton, referred to calves. He referred to this trade in some detail. I should also like to refer to what he said on 23rd March because it was specially relevant and was also particularly enlightening. The Minister has referred in his Statement to the increase in the carcase trade, and this has been a very welcome increase. We understand that by weight—not by value—the beef and veal trade in carcases has risen 16 times since 1970.
For the current situation so far as calves are concerned, I would refer to the Meat and Livestock Commission figures referred to most helpfully by the noble Lord, Lord Houghton, at column 1947 of Hansard in the debate of 23rd March. This is what he said:
" The numbers have risen significantly, the export of calves going up from 249,000 in 1976 to 394,000 in 1977."
Further down he quotes the Meat and Livestock Commission:
"… the numbers of live sheep went up from 32,000 to 356,000 whereas Appendix B gives 200,000, so there is a big difference there."
We must consider the question to which the noble Lord, Lord Houghton, referred. He asked his noble friend Lord Strabolgi to comment in his reply on whether the export of calves was a real need and of benefit in our agricultural export field. I have given notice to the noble Lord, Lord Strabolgi, of a question in very much the same terms because it will be of value to those concerned with this trade as to whether we could have a comparison of the benefit to exports by retaining those calves and exporting them as fattened cattle at a later date.
From the agricultural point of view, there are a number of factors which must
834
be stressed. First, there is the undeniable influence that monetary compensatory amounts have upon the trade as a whole. Secondly—and most important—there is the cost of farm feed. I do not think that this has been shown more clearly than in the year of the great drought, 1976. In that year the cost of a ton of hay rose from approximately £40 a ton—of course there are regional variations—at the beginning of the year, to well over £80 a ton—and again, there are regional variations, and some were very much higher—at the end of the year after the drought had taken full effect. This affected the whole range of farm feeds.
Naturally, the farmer must consider very seriously whether it is going to be possible to retain the animals on his farm; whether it is possible that he will be able to continue fattening those beasts over an extended period; and whether the whole of his plans for doing so are not going to he thrown out totally. Of course, in the background—and this applies over a much longer period—is the very beneficial situation with which we are faced in this country so far as grassland is concerned.
I should like to stress this because in the longer term the whole question of Food From Our Own Resources, the Government White Paper which, alas!, has not been fulfilled as rapidly as the Government or ourselves would have wished, has brought out the real benefits which we can attain by emphasising and developing our grassland potential. I believe that in this field we are placed by nature very favourably ahead of many of our European competitors. This may well have its own influence on our trade.
I have spoken for quite a long time on this issue. Other noble Lords will be bringing out other aspects of the matter; but before the noble Lord, Lord Somers, rises to speak I should like to say that I did support him on the Diseases of Animals (Amendment) Bill as long ago as January 1972. Since then 6½ years have passed and a great deal of water has passed under the bridge. I believe that the intentions of the noble Lord, Lord Somers, may well have been brought into effect, partially, but only partially, through this European Convention. I believe that the anxieties expressed by all of us who took part in the debates on that Bill may to

835
some extent have been allayed, but I look forward to hearing what the rest of your Lordships have to say in this connection.
5.31 p.m.
Lord MACKIE of BENSHIE: My Lords, I must first of all declare an interest: I am a farmer and I actually buy calves to rear. It would be very much in my interest if the trade to the Continent were stopped, because the price would fall substantially in this country. I do declare my interest, but that is not how I regard the whole problem.
First, I should like to say I am very glad that the noble Lord, Lord Houghton of Sowerby, has raised this matter again—he has a tremendous interest in it—but I must really defend my fellow farmers from his attacks. They appear to me to be attacks; perhaps he may correct that later, but they sound very like it. I remember that I was stupid enough to rise during a debate on dogs and say that I thought there were too many dogs who are not looked after by their owners and that there were too many useless dogs about the country; whereupon I was told by the noble Lord, Lord Houghton, that I was "talking as a farmer". My Lords, I still shiver when I recollect the contempt he put into his voice when he said that I was talking as a farmer.
I am concerned mainly with the calf trade and I should like to speak about that, but I should like also to speak about the calf trade inside this country, because it is very relevant to the problem. For many years, farmers in Aberdeenshire and further north have bought calves out of England for rearing. They have taken them from Devon up to Aberdeenshire, which is a distance of 600 miles or more. I have seen those calves arrive in Aberdeenshire in bad condition, but I have also seen them arrive in very good condition. I have seen such calves reared and put on weight and grow to slaughter weight very quickly, very efficiently and very happily. That can happen only with very contented and well-looked-after animals. The farmers who rear them know perfectly well that the end of the trade is slaughter and beef for the population, but they care for these animals a great deal more than many of the people who make a tremendous noise about it and then tuck into their
836
escalope of veal with an enjoyment wholly unrelated to anything concerning the animal.
The farmers do care for their animals and they do not like to see them badly used, from both a humane and an economic point of view. I agree with the noble Lord that there have been many dealers who have shot animals around this country, let alone the Continent, in a manner which is wholly reprehensible and should be stopped. The NFU agree with this and they want to see the welfare code implemented and, above all perhaps, with more inspection. But it is a fact that if you are exporting animals for slaughter they must be well looked after on the way there, otherwise you will suffer economic loss. Certainly it is in the interests of both the welfare of the animal and the susceptibilities of those who are rightly concerned about cruelty to see that that is done.
I think it can be done if we have a proper set-up of inspection over these animals. It is not all in farming—and here I quote from the noble Lord—
" Profit in the agricultural industry being related to the exploitation of living animals and squalid considerations of profit and loss".
The concern that is felt over the animals themselves is very, very strong in very large sections of the agricultural industry. One thing I should like to see is exactly the same as in human affairs connected with crime: that is, more police. We need more inspections of the vehicles, the lairage and the general conditions in which animals, and particularly young animals, travel to their destinations.
I should like also to say a little about the economics of the matter as regards this country and the EEC. The fact is that the calculation of the export levy on live animals is quite ludicrous, in terms of the calf. A calf is always reckoned at 50 kilograms and in fact it pays about £8 of export levy. These calves are going abroad for veal and for further fattening—indeed, to full beef-weight slaughter in some cases—but they only pay an export levy of £8, and in fact the price of beef and veal generally on the Continent is something like 30 per cent. or 40 per cent. higher than it is here. A levy of £8 for a calf is nothing at all; it is not a realistic levy for that calf going abroad. The levy should be at least

837
£18 to £20 before it will do anything like bring the economics into line as between the EEC and this country.
That is an enormous factor in the very large increase in the export trade. I have not got the exact figures—I was glad to hear the noble Lord, Lord Sandys, ask for them—but I do know that, whereas in former days a large number of dealers went down to England to buy calves to be sent up for rearing in Scotland, we now have large numbers of dealers in the Scottish markets buying up calves to be exported to the Continent. It is a very much longer distance from Scotland over to the Continent than it is from the markets of the South. So, my Lords, I think this is a case of economic nonsense and of course it has everything to do with not properly applying the Common Agricultural Policy.
I have never felt that the CAP was wrong: it is the lack of application of proper principles of the CAP that is wrong. The fact is that the price on the Continent should come down quite substantially and here—and of course I again declare an interest—the price should go up quite a lot in order to make the CAP work. It is not the actual policy which is wrong, but the application of it; and the payment of an £80 levy, in or out, in the case of a 10 cwt. Full-grown beast and of £8 for a calf that goes out from here is a perfect illustration of the sort of nonsense we are making of the Common Agricultural Policy under the present system. Therefore I think we have to look to that.
I should like to end by saying that I hope the Minister can assure us that he is going to see that the welfare code is applied properly throughout the EEC. I should like to stress again that the farmers are as concerned—in fact, with more knowledge, more concerned—about the welfare of the animals they handle as those who are rightly concerned from outside the industry. I hope that we shall get a satisfactory answer from the Minister.
5.40 p.m.
Lord SOMERS: My Lords, this is not the first time that the noble Lord, Lord Houghton of Sowerby, has raised this subject in the House, and I agree with him that it is much too long to have to wait
838
to see any definite steps taken on this subject. The possibilities of doing so are all there. The slaughter houses are available, they are not working up to full capacity and there is nothing, in a practical way, to forbid the adoption of a carcase trade—and that only—at once. The evidence for what we are complaining of in the treatment that our animals get on the Continent is available for anybody who wants to look at it. It is available from my own society, the Council of Justice to Animals, it is available from ISPA, the International Society for the Protection of Animals, and it is available from the RSPCA. It is all, to my mind, unquestionable, because in matters of that description we make a point of seeing to it that we do not provide evidence that is doubtful. So that we are waiting anxiously to see some steps taken.
Of course, there is always an objection from the farming community, but let me say at once to the noble Lord, Lord Mackie, that I shall not attack farmers, because I have the greatest respect for them. Many have been in my own family and I know what a hard life it is. But surely their problem could be
solved in some way by the Government. Could not the Government provide a subsidy for any loss that farmers might suffer by this step? They provide subsidies for many other things that are, to some of us, far less essential.
The EEC regulations have been mentioned a good deal tonight. They are, of course, very satisfactory, but the trouble is that they are simply not observed. The French society, the OABA, the oeuvre d'assistance aux bëtes d'abattoir, has done splendid work not only in observing but in bringing to legal action many cases of blatant disregard of these principles. One of the problems is that they are extremely difficult to enforce. You cannot have somebody watching or trailing every shipment of animals that is taken from the coast, but more could be done. One must also remember that certain races—in particular, the Latin races—arc not given to looking upon the treatment of animals as of any great importance. A little education in that direction might be a good thing. Whether or not they will accept it is another question.
I agree entirely with the noble Lord, Lord Sandys, that these provisions are too

839
elastic. The proviso which he quoted should certainly be eliminated. Incidentally, may I say how grateful I am to him for saying what he did about the Bill which I tried to introduce some years ago. It is very nice to know that what one has said in your Lordships' Chamber is remembered. This is an important subject and I sincerely hope that the Government will realise that feeling is running very high about it, and that something really ought to be done and done soon.
To go back to the subject of farmers, let me say at once that many farmers arc very much in sympathy with those of us who wish to revert to a carcase trade only. I hope that the Government will not merely take the opinion of the National Farmers' Union. They represent a good many of their members, but they do not represent them all and there is a very sizeable number of farmers who feel very strongly in the opposite direction. I hope that our debate tonight will have some effect.
5.46 p.m.
Lord DE CLIFFORD: My Lords, I shall be very brief in addressing your Lordships, whom I have addressed on a number of occasions on this matter. I thank the noble Lord, Lord Houghton, for raising this subject. The question on the Order Paper is quite clear: what will the Government do about this matter? A number of us in this country feel very strongly about the complete loss of control, once an animal crosses the Channel. This is the basis of everything that we want to know.
The noble Lord, Lord Somers, said that in a number of Latin countries, and other places, they are surprised at our attitude towards animals, which is different from their own. We are just as surprised about them, and if we accept the fact that their views on the treatment of animals are not the same as those of the vast majority in this country, then my submission to your Lordships and the Government is that we should stop the provision of animals which can be treated in this way.
I get rather alarmed when I hear that the EEC, which has issued Directives on the subject of humane slaughtering, has started to take proceedings against Member
840
countries, because they have not carried them out. If that is so, why should we continue to export our animals, when the EEC cannot ensure that humane slaughtering is universally carried out within the Community?
I am further extremely surprised—and I hope that the noble Lord, Lord Strabolgi, can give me some enlightenment—to hear that we not only export animals to the EEC but re-import them as meat. That is a report which was recently made in another place. If that takes place, what quantities are involved? It appears to me that, if we are re-importing meat from stock which has been exported, it is far better to keep the stock and slaughter it here. In view of everything that noble Lords have said this afternoon, I ask the Government to see whether they can take firm steps to stop this trade in live animals to the Continent.
5.49 p.m.
Viscount MASSEREENE and FERRARD: My Lords, may I intervene for just a moment? I had not realised that this debate was on, but this is a subject in which I am very interested and I am also a farmer. I should, first, like to congratulate the noble Lord, Lord Houghton of Sowerby, on what he said. He was quite right. It is obviously more humane to kill an animal where he has been bred or in his home environment at the nearest slaughterhouse. I also have a great deal of agreement with what the noble Lord, Lord Mackie of Benshie, said, regarding farmers and the trade. But may I answer my noble friend behind me? He said that it is extraordinary that we export this meat on the hoof and then re-import it as beef.
With due respect to my noble friend, he is not quite correct. We do not re-import the beef that we export on the hoof. We import a great deal of cheaper beef that has come from the Argentine, or even from Russia through Europe. It is cheaper than our beef. We export beef on the hoof, which is very expensive beef, certainly as regards fat stock. That is the answer to my noble friend who sits behind me.
I sometimes take livestock from North to South. I also take livestock across country. When one does so, one makes absolutely certain that the stock is taken

841
either in one's own lorries or by transporters who have a high reputation. With regard to our own country, if cruelty takes place during transportation—and I am afraid that in certain instances it does—the answer is to employ far more inspectors and police. We have far too few police, but if we had more of them to carry out checks on livestock lorries and to ask the drivers when the livestock was watered or fed last and to check whether they were telling the truth, it would, I think, solve the problem. That is the answer in our own country. So far as what happens abroad is concerned, it is quite true that there are the EEC regulations, the Balfour regulations and all the other regulations, but they are not adhered to. We can make very strong representations about this in the EEC, but at the moment it is almost impossible for this country to ensure that those regulations are adhered to. As one noble Lord said, the Latins in particular—although not so much the Germans—have very little feeling for animals, and I do not think that we shall ever alter that state of affairs. It is impossible; it is human nature.
What interests me is that if one is exporting valuable pedigree stock, there is never any complaint of ill-treatment when it reaches and travels on the Continent. The only conclusion that I can reach is that if the stock is valuable enough the Frenchman, the Italian, or whoever he may be treats the animals well, simply because they are valuable. But there again that is human nature.
Our only hope is to keep on pressing for improvements in the EEC and to make all the representations that eve can to ensure that when we export animals on the hoof these regulations are adhered to. If, however, it transpires that year after year, or month after month, the regulations are not adhered to and if we keep on getting evidence of ill-treatment, then the only honourable thing to do, as the noble Lord, Lord Houghton of Sowerby, has said, is to stop the trade.
5.53 p.m.
The Earl of SELKIRK: My Lords, before the noble Lord replies, may I say a word? I agree that there is a great deal of concern about this subject. It is proper to say that this concern has imposed a degree of improvement which I
842
think shows that a considerable reaction is taking place. In fairness, however, I have to say that there was a great deal of room for improvement. I do not doubt, as the noble Lord has said, that that improvement is continuing, but I find it a little shaking that calves on the bottle can, apparently, still be exported. Whatever the regulations are, that seems to me to be going rather far. I have no doubt, as the noble Lord, Lord Sandys, has said, that we have done much to initiate improvement in the way in which things are done on the Continent, but there is a very considerable margin for improvement to take place. I do not doubt that it is quite likely that the convention would not now be taking place if it had not been very strongly supported —I shall not say initiated entirely—by this country. If my information is correct, I believe that the convention comes into operation next week, but it will be years before it has a very profound effect upon what happens.
The crux of the issue is economics. I read with great interest the Yellow Book. This is a most complicated economic formula which they have produced, and I am very far from believing that it is anything like convincing. I think that the noble Lord, Lord Mackie of Benshie, made a very interesting point when he said—and I dare say this is perfectly true —that the CAP plays a very substantial part in the way that this works out and that there is a substantial element of subsidy in various places. These are matters which are well within the Government's control. With great respect, I think that it is extraordinary that we import a great deal more meat than we export. I know that the quality is different, but one wonders whether this kind of export is really as valuable as it is made out to be. I thought that the argument of the noble Lord, Lord Houghton of Sowerby, was unanswerable. He asked whether it is really necessary to export live animals for slaughter and whether one can really make out an economic case for it. In the case of almost all raw materials, it is better to produce the finished product near to the raw material than it is to transport it before finishing it. This is a very simple, straightforward economic proposition. I find it very hard to believe, in terms of true economics, that when one takes

843
away subsidy and goodness knows what else it is justifiable to do the slaughtering after a long and what must be quite expensive journey of several hundred miles.
I hope that the Government will look very hard at this matter. Let us be quite clear that nobody is accusing farmers in this country of not looking after their animals properly. There are a few exceptions, of course, but farmers have a very real regard for their property. That is not, however, the point. There is always a strain involved during a long journey, whatever form it takes, and extra care is needed, particularly if part of the journey takes place out of our own country. This postulates an enormous amount of supervision, with all the expense that that involves. It is a difficult traffic to run, and somebody has got to pay for the inspection which takes place. I think that we must measure carefully how far this trade is really worthwhile.
5.58 p.m.
Lord CLIFFORD of CHUDLEIGH: My Lords, if I may make two points, first I have to declare an interest. I rear livestock, both sheep and cattle. No matter how they twist it up with fine words about individual farmers, I still think that a huge attack on farmers is taking place. I do not believe that people realise what happens in the case of most farmers. I sell my sheep and cattle either in the market or to the FMC. The farmers are not responsible for what happens when their cattle are taken abroad or when they are taken from Devon to Scotland. It is the dealers who are responsible. Therefore, the implied attack on farmers in most of these cases is absolutely unwarranted.
Secondly, when one is trying to obtain a price for one's sheep, lambs, calves or whatever it may be, time and time again these dealers say, if you deal with them direct and not through the market, "If I don't deliver these animals in good condition, they they will not come back to me and I shall not get any more orders from them". So I do not see why this attack on farmers is taking place.
The only other point that I wish to make is that in my part of the world there has been an increased trade in live animals across the sea ever since the opening of
844
the Plymouth to Roscoff ferry. I was speaking to a carrier only the other day who frequently makes that journey. I know very well that he takes the utmost care over the feeding and watering of his livestock. He says, "If I don't do so, and if I deliver the livestock at the other end in bad condition, whether for slaughter, or for fattening, or for whatever it may be, I shall not get orders to come back and buy livestock off you again". I do not see, therefore, why there should be this unnecessary attack on the farmers, for in 99 cases out of 100 it has got nothing to do with them. The fault lies with the people who transport the livestock. That is where the problem lies and that is what has got to be dealt with.
6 p.m.
Lord STRABOLGI: My Lords, I should like first to join with the noble Lord, Lord Sandys, in saying how glad I am to see my noble friend Lord Houghton of Sowerby back in the House after his illness and to find him so full of vigour. I have listened with great interest to what my noble friend has said on the subject of the export of live food animals and to all the speeches made by your Lordships in this short debate.
Of course, animal welfare in its various aspects is not an unfamiliar topic in your Lordships' House, and it is right that this should he so. I consider it entirely appropriate that we should devote time to discussing these matters which are of interest and concern to so many people in this country. Over the years, whenever the subject of live animal exports has been discussed, there have been those who have argued with conviction that the trade should be stopped, and that, of course, has been argued today; and there have been others who, with equal conviction, have felt that it would be wrong to impose such a sanction.
The welfare interests, among whom my noble friend Lord Houghton has long been prominent, would like to see the trade brought to an end. They have argued that animals should not be sent on long journeys without food and water, only to be slaughtered when they reach their final destination, and they believe that demand on the Continent could be met by further development of the trade in carcase meat, as has been said today.

845
Against this view are those who point out that many of the journeys to the Continent are no longer than journeys regularly undertaken by livestock in this country. They argue from the economic standpoint that the demand for slaughter stock on the Continent is separate from the demand for carcase meat, and that it would draw in more live animals from other possibly more distant sources such as Eastern Europe if the supply from Britain were stopped. Similar arguments have been advanced for and against the termination of the export trade in animals for further fattening, especially the calf trade, which has been referred to by your Lordships.
My Lords, I believe it is widely recognised that the dairy industry in this country produces many more calves than are required to maintain the size of the dairy herd and that the sale of surplus calves for beef production is an important factor in the dairy farming economy. It is also recognised that the considerable increase in calf exports in recent years—and the figures are given in the Yellow report—has brought a significant rise in market prices for calves.
Those who wish to see the export trade stopped are convinced that the great majority of the calves could and would be reared for beef in this country and exported as carcasses, and they argue, as my noble friend Lord Houghton has argued, that this would be to the ultimate benefit not only of farmers but also of the ancillary slaughtering and hides and skins trades. But the farming and exporting interests disagree with this analysis. They believe that stopping the export trade would result in a serious loss of income to dairy farmers, that beef rearers would not rear all the young calves which would then become available and that there would be a substantial increase in the slaughtering of young calves.
The noble Lord, Lord Mackie of Benshie, said—and I am sure all noble Lords will agree with him—that farmers have the welfare of their animals at heart, and indeed, as the noble Lord said, it is in their interests that this should be so. The noble Lord, Lord Sandys, referred to our great grassland potential, and the noble Lord asks why it is not equally
846
attractive for producers to rear and fatten calves now exported so that they can be exported in carcass form. The ability to export beef and veal depends more on Continental demand for these products than on our ability to supply them, and that demand favours beef and veal killed in the importing countries. The availability of calves on the British market has limited relevance to these facts.
I may remind the House that when the export trade was resumed in January 1975, following the report of the committee chaired by the noble Lord, Lord O'Brien of Lothbury, which was followed by a debate in another place, the Government stressed the importance of applying international rules that would curtail excessively long journeys and would generally improve the conditions under which livestock are carried. Here, I fully agree with what the noble Earl, Lord Selkirk, said in this respect. The House will be aware that, last year, as the noble Lord, Lord Sandys, said, the EEC Council of Ministers adopted a Directive which gives the force of Community law to the provisions of the Council of Europe's Convention on the Protection of Animals during International Transport.
The Directive takes effect next week, from 1st August, as I think the noble Lord, Lord Sandys, said. Among its provisions are the requirements that animals shall be given a veterinary examination for fitness to travel before the international journey begins, and that they shall be fed and watered at appropriate intervals, as, of course, has always been the case in the United Kingdom. The Directive also provides a framework within which more detailed implementing rules can he introduced.
There are those who have criticised this Directive as being too generalised—and it has been criticised this afternoon—and have doubted whether it will be properly observed in some Member States of the Community. I would draw the attention of the House to the fact that, at a recent meeting of the Council of Ministers, the Commissioner responsible for animal welfare, Mr. Gundelach, announced that the Commission would shortly be issuing proposals for a further implementing Directive. My right

847
honourable friend the Minister of Agriculture has made it clear that the Government will critically examine such proposals to ensure that they advance the cause of animal welfare in a positive way and that they will be properly applied throughout the Community. I think that at this stage we must await the outcome, although I agree very much with what the noble Lord, Lord Mackie of Benshie, and the noble Viscount, Lord Massereene and Ferrard, said, that we need more supervision and continuing supervision.
The noble Lord, Lord Mackie of Benshie, who has great knowledge of this subject, referred to the export levy on calves. I do not want to go into this in much detail, but this was answered very fully in paragraphs 102/3 of the Yellow Report. I think they concluded that the French import payment MCA would at present almost entirely offset the United Kingdom export levy MCA, whatever calculations methods were adopted. This is a very interesting and detailed analysis, which I commend to the noble Lord. The noble Lord, Lord Sandys, referred to Lord Houghton's query in March about the discrepancy between statistics in Annex B of the report and those quoted by the Meat and Livestock Commission. The export figures quoted in Annex B exclude trade with the Irish Republic and the Meat and Livestock Commission statistics include such animals.
My noble friend Lord Houghton of Sowerby, as he was perfectly entitled to do, asked whether the Government are doing anything. The export trade in live food animals continues to pose many difficult questions, as the noble Earl, Lord Selkirk, conceded. I have not been able today to indicate what conclusions the Government may reach about any part of the trade, but I can assure noble Lords that we are looking very hard at this. I hope that what I have said today is enough to assure the House that the subject is receiving the closest attention and that the welfare of these animals will continue to be a matter of prime concern to the Government.

LONDON TRANSPORT BILL
Returned from the Commons with the Amendments agreed to.
SHEFFIELD GENERAL CEMETERY BILL
Reported from the Select Committee with Amendments.
  SUPPLEMENTARY BENEFIT STATISTICS
  SUPPLEMENTARY BENEFIT STATISTICS
  POST OFFICE RECRUITMENT AND IMMIGRANTS
  POST OFFICE RECRUITMENT AND IMMIGRANTS