Sitting of 2 November 1978

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

  BUSINESS OF THE HOUSE
  Mrs. Thatcher: May I ask the Leader of the House to state the business for next week, please?
  The Lord President of the Council and Leader of the House of Commons (Mr. Michael Foot): As the House is aware, the debate on the Address in reply to the Gracious Speech will be brought to a conclusion on Thursday 9th November.
  FRIDAY 10TH NOVEMBER—Second Reading of the Public Lending Right Bill.
  MONDAY 13TH NOVEMBER—Second Reading of the Nurses, Midwives and Health Visitors Bill.
  Mrs. Thatcher: As the Public Lending Right Bill was included in the first Gracious Speech of this Parliament, and that was the last we heard of it, may I express the hope that this time it will get through, as the Lord President, after the end of this Session, may have need of the benefits that it will confer?
  Mr. Foot: I thank the right hon. Lady for her support on all those various counts, and I think it is a fine example of the persistence of this Government that if at first we did not succeed, we are trying and trying again. I know that the right hon. Lady is very sensitive about any Scottish reference, but I hope that she will not mind that one.
  Mr. David Steel: May I ask the Leader of the House the question I raised yesterday about the form of the debate on Rhodesia? He will be aware that the official Opposition have indicated that they are tabling an amendment on the current situation in Rhodesia, which is a quite different matter from the Bingham report. Surely it is right not only that we should be able to express views on the Bingham report during a general
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  debate on Rhodesia but that the House should be given the chance, if we wish to do so after we have listened to the debate, to press for a further inquiry. Will the right hon. Gentleman make sure that an amendment of that kind will be possible, possibly by the suspension of the 10 o'clock rule?
  Mr. Foot: The question of the calling of amendments and what amendments are in order or out of order is not one that the Government decide; it is decided by Mr. Speaker. I am fully aware of the points raised by the right hon. Gentleman and others in the House yesterday, but I believe that the provision of time during the debate on the Gracious Speech, when these matters can be debated, is the first opportunity when the House can give a general view on the matter. We should approach the matter in that way.
  It does not mean that the House may not return to the matter again later, but I think that we should now proceed on the basis proposed here. We are suggesting that on Tuesday the rule should be suspended, so that there will be plenty of time for Members in all parts of the House to engage in the debate if they wish and to be able to raise all the matters that are in order during the debate on the Gracious Speech.
  Mr. William Hamilton: Will my right hon. Friend give an assurance that there will be an early opportunity to debate, preferably in a two-day debate, the report issued during the Summer Recess by the Select Committee on Procedure?
  Mr. Foot: It is obviously a very important report. I cannot give my hon. Friend an indication of exactly when we shall have a debate upon it, but of course we must give consideration to it.
  Mr. Cormack: Is the right hon. Gentleman aware that there are reports in the press that the Government intend to turn down the recommendations of the Select Committee on the Land Fund? May we please have a statement to clarify this matter?
  Mr. Foot: The hon. Gentleman will do well to follow the procedure of not believing anything he reads in the press until it is verified from the reputable quarter of this Dispatch Box.
  Mr. Faulds: I congratulate my right hon. Friend on his persistence with public lending right. May we hope that this time round the Leader of the Opposition will manage to corral her filibustering independents into a responsible Lobby?
  Mr. Foot: The right hon. Lady has already offered her support on the Bill, and I think we should accept that offer in the spirit in which she has given it.
  Mr. Goodhew: Can the right hon. Gentleman tell the House why a gift of arms to Zambia was made before the House of Commons had an opportunity to debate it?
  Mr. Foot: The House of Commons is to have an opportunity to debate it at a very early stage. What the Government did was to stand by their duties and obligations in the matter.
  Mr. Jay: If we should not believe all that we read in the press on the subject of the European monetary system, do the Government intend to publish a paper—white, green or whatever—so that we shall know before we debate the matter what it is that we are talking about?
  Mr. Foot: I am sure that it will be highly desirable that the House should know what it is debating before it debates it. Undertakings have been given that there will be a debate in the House, and, of course, by that time I am sure that my right hon. Friend and others will have seen the information which the Government have put at the disposal of the House, and I believe that they will be satisfied that the Government have met that obligation too.
  Mr. Pardoe: Will the Lord President accept that what he said just now in reply to my right hon. Friend the Member for Roxburgh, Selkirk and Peebles (Mr. Steel) is a classic example of how this House, far from controlling the Executive, is now totally controlled by the Executive? When my right hon. Friend raised the question with you, Mr. Speaker, you quite rightly and obviously stated that you were not able to choose, and were in no way responsible for choosing the subjects for debate. So we then went to the fount of all wisdom. My right hon. Friend asked the Lord President whether he would do something about it, but he said "It has nothing to do with me." This
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  matter can go on being tossed backwards and forwards for ever. No one will ever accept responsibility.
  I remind the right hon. Gentleman of what the allegation is. The allegation is that there is a conspiracy between the two Front Benches of this House to ensure that the House of Commons never gets to the bottom of having been grossly misled by successive Governments. That is the allegation. When will the right hon. Gentleman let us debate it?
  Mr. Foot: The allegation, in my judgment, is absolutely baseless. Certainly there has been no understanding between the Government and the Opposition Front Bench as to how we should express a view on this matter. What the hon. Gentleman is doing, if anyone were to believe him, is spreading rumours about these matters which are completely false.
  Mr. Pardoe: Pull the other one.
  Mr. Foot: That is a more articulate interruption than we usually have from the hon. Gentleman. I advise him that in my judgment it is quite wrong to spread the tale that the Executive are in control of Parliament in these matters. That is not the case. What the Government have decided and what will happen during the coming days is that, at the earliest possible opportunity after the return of this Parliament, there will be discussions on the matter during which Members in different parts of the House will be able to express their views as freely and lengthily as the time provides. Indeed, a considerable amount of time is provided for this purpose.
  When those views have been expressed, the Government will certainly take them into account, and, of course, we shall have to make our own judgment and bring that back to the House as well. Therefore, the idea that the Executive is controlling Parliament in this matter and not the other way round is, as I said, completely misleading.
  Mr. Skinner: Will my right hon. Friend accept that, in this situation as in all others, if the Opposition Front Bench pushed for a separate debate on Bingham with all their might there would be a separate debate? Whether or not there is a conspiracy between the two Front Benches, it seems to me that there certainly is a conspiracy in the Tory Party

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  not to have this matter dealt with separately and for a full public inquiry to follow. Is it not time, however, that my right hon. Friend took appropriate steps to ensure that this took place?
  Mr. Foot: That is a different matter and one that will be a subject for debate both within the Labour Party and within the House of Commons as to what should be determined in the future. But during the debates upon the Gracious Speech the Opposition have a perfect right to put their views as to what should be debated in the form in which they wish to see it debated. That is something that has happened in the House of Commons for generations, and I believe that it is perfectly proper. But it is quite misleading to suggest that the House of Commons will not have a full opportunity to debate this matter and to give its views, and the Government will, of course, take account of those views.
  Several Hon. Members rose—
  Mr. Speaker: Order. I propose to call the three hon. Members who have been standing before we move on to the statements.
  Mr. Hugh Jenkins: Will my right hon. Friend accept my congratulations on reintroducing the Public Lending Right Bill? Will he confirm that on this occasion it will be taken at prime Government time? When will the Second Reading take place?
  Mr. Foot: I have already announced that Second Reading will be taking place on Friday next week, so we are proceeding quickly. This is a Government measure and we hope that it will have the full backing of all parts of the House, as it has had before. I have every hope that we can get it on to the statute book at an early date.
  Mr. Madel: There are two ministerial statements today about important events that occurred during the recess. Can the Lord President arrange for the Secretary of State for Industry to make a full statement about another important event—the Peugeot-Citroen takeover of Chrysler—because the press statements from that Department during the recess were rather unforthcoming?
  Mr. Foot: I cannot accept the criticisms made by the hon. Gentleman of the statements made by my right hon. Friend on the subject. I will certainly see whether there should be a special statement, but I am doubtful whether that should be the case, and, of course, we have to take into account—in order to suit the convenience of the House and not merely of individuals concerned—that if one has too many statements it eats up too much of the rest of parliamentary time.
  Mr. Pavitt: Will my right hon. Friend be making an early statement on the action he proposes to take on the Select Committee's report which deals with the medical and health coverage for hon. Members of this House?
  Mr. Foot: Yes. We have not had a further meeting of the Services Committee and those concerned, but I hope that we shall be able to make an early statement.

  PRISON SERVICE
  The Secretary of Stale for the Home Department (Mr. Merlyn Rees): With permission, Mr. Speaker, I should like to make a statement.
  The Government have decided to set up an inquiry to consider the causes of the present situation that exists in the prison system. The inquiry will examine the organisation and management of the prison system in the United Kingdom, including its use of resources and working arrangements, conditions in prison service establishments and the structure, pay and conditions of service.
  The Secretaries of State for Scotland and Northern Ireland and I are consulting the appropriate staff associations, and I will inform the House of the composition and the terms of reference of the inquiry. We shall ask for a report with the utmost urgency.
  In recent months, unofficial action has been taken in some penal establishments which has had the effect of disrupting the criminal justice system as well as the running of the prisons themselves. The Government make clear that such action cannot be allowed, and with the establishment of this inquiry they expect all staff to work normally and to present their case to the inquiry in due course.
  Mr. Whitelaw: Is the right hon. Gentleman aware that the Opposition support strongly the broad inquiry which he proposes, and we agree with him entirely that there should be normal working in our prisons? This inquiry will provide the opportunity to consider the whole question of conditions of service and the overcrowding in our prisons, together with the administration and management of them.
  Will the right hon. Gentleman confirm that the terms of reference will be wide enough to allow the inquiry to consider whether it is best for the prison service to be administered from within the Home Office or by its own professional head outside the Home Office but responsible to the Home Secretary, as has been suggested several times by the Opposition and, indeed, by many other people?
  Mr. Rees: I am grateful to the right hon. Gentleman. It will be a wide-ranging inquiry, but it will be carried out as a matter of urgency. On the second question, there is no reason why the possibility suggested by the right hon. Gentleman should not be looked at. It has been looked at, rejected, and discussed already, but it is right that it should be looked at again.
  Mr. Kilroy-Silk: Given that my right hon. Friend has been warned for a considerable time now about the situation, can he explain why it has taken him so long to act? Why is it always that the Government must be seen to be acting only under pressure? Will he accept that the present crisis is not just or even mainly a consequence of the prison officers' action, but has more serious and deep-rooted causes in the overcrowding, the inadequate facilities and the lack of adequate staff in our prisons and the lack of public expenditure on them?
  Will my right hon. Friend give an assurance that he will take action, urgently and immediately, to ensure that the crisis does not disrupt the prison service, and that we do not have further riots, such as those which have already occurred, and which are likely to recur, unless sensible, sensitive and imaginative action is taken by my right hon. Friend?
  Mr. Rees: I am interested in what my hon. Friend says, and I know that he has a knowledge of this matter. I accept that
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  over the last quarter of a century not enough resources have been put into the prison service. It is my view that what has been happening in the last year or two is part of a wider malaise in society in that prison officers have taken no notice of the Prison Officers' Association, to which I give praise. I have a list here of some of the things that have happened recently which, in my view, should not happen in our society, such as people being refused admittance to prison. On the Isle of Wight at the moment, the prison officers are deciding who shall go in and go out, and it is indefensible that that should happen. Of course it has a bearing on what my hon. Friend says, but the matter is much deeper than that. It has to do with present day attitudes, and I give notice on behalf of the Government—
  Mr. Adley: February 1974.
  Mr. Rees: No, it is not due to February 1974. The hon. Member for Christchurch and Lymington (Mr. Adley), who comments on everything every Sunday morning, would do much better if he visited a prison instead of shouting in that way.
  Mr. Stephen Ross: May I, from the Liberal Bench, also welcome the Home Secretary's decision to set up the inquiry, which will be particularly welcomed in my constituency?
  May I also take up his remarks about Parkhurst? Does the Secretary of State agree that Parkhurst prison, above all, has had a long tradition of good prison service? The fact that this dispute has lasted more than 11 months reveals the extent to which morale has dropped in the prison service generally and in relations between prison officers and the Home Office. I hope that that factor will figure largely in the inquiry.
  Can the Secretary of State give an undertaking, as he did for the police, that the Government will accept the recommendations of the inquiry? If the prison officers are to resume working, which I hope they will, they will want an undertaking of that sort.
  Mr. Rees: The prison officers at Parkhurst can put their case now to an independent inquiry. It will be a wide-ranging report and rather different from other reports that we have had. I think it better

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  that we should let the matter lie at present. If there is a case, let it be put. My office and I will also put a case. The matter must be looked at from all sides.
  Mr. Edward Lyons: While congratulating my right hon. Friend on his announcement of this inquiry, which we all hope will do a great deal of good, may I ask whether he agrees that in the end no great improvement can be expected without new prisons and an end to overcrowding? Have the Government any proposals for increasing prison building and thus reducing overcrowding? That is the basic cause of all these problems.
  Mr. Rees: It does not answer the question precisely. As I said earlier, it is a big problem. We are spending £23 million on new construction and £8 million on maintenance and repair of existing premises. The present plans over the next four years will produce 4,500 additional places. In the current situation, even if new prisons were available tomorrow morning, there would still be a problem. That is what we want to look at.
  Mr. Edward Gardner: Can the Home Secretary explain why he has allowed the present discontent, and the dangers to the prison service which attend that discontent, to mount to its present peak without previously taking action? Would he not agree that he has had well over a year of warnings that this kind of situation would arise? Will he also make clear that in this wide-ranging investigation the specific subject of overcrowding will be dealt with?
  Mr. Rees: The subject of overcrowding will arise automatically, and it must be looked at. The hon. and learned Gentleman spoke of a peak, as though this was a problem in every prison. He spoke of steps being taken to deal with it. I believe that this is the right time to deal with it, and if the hon. and learned Gentleman has suggestions to make—as I know he has—he should give his evidence to the inquiry. I think it will be found that there is far more to this matter than just the normal aspect, which is perfectly relevant, of resources, equipment and buildings.
  Mr. Ryman: Although I welcome the announcement of this inquiry, will my right hon. Friend please consider this matter as one of urgency? An inquiry
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  of this kind will take a considerable time before recommendations are made to him. In the meantime, many members of the Prison Officers' Association have alleged that cash is owing to them immediately. That money has accrued over a period of two years. Is he prepared to consider making an interim payment to those prison officers, pending the full report of the inquiry? The prison officers allege that substantial sums of money are owed to them.
  Mr. Rees: I know about the arguments in special cases. In one prison the prison officers are insisting that they be negotiated with directly and that negotiation should not be done by the Prison Officers' Association. I am not prepared to accept that. It must be done through the normal channels.
  I wish to make one other point clear. We are not talking only about pay. We are talking of something far wider. In accepting the results of the inquiry, everyone would be accepting all that comes out of it. My hon. Friend said that he assumed it would take a long time. I do not accept that assumption.
  Mr. Speaker: Order. May I appeal to the House? There is another statement to follow. Will hon. Members not argue a case but simply ask a question?
  Mr. Mayhew: Were not all the factors contributing to the present crisis identified in our debate on prisons on 18th March last year? Is it right that the Home Secretary should now say that the inquiry should report with the utmost urgency when he has sat on these problems for the intervening 18 months? Surely we want to get it right.
  Mr. Rees: No, I have not sat on them. What was raised in the House did not cover all the problems. If the hon. and learned Gentleman has a view on this, I hope that he will give evidence to the inquiry.
  Mrs. Renée Short: Is my right hon. Friend aware that as long ago as 1967—11 years ago, not last year—a Select Committee made proposals for relieving the appalling conditions in many of our old, overcrowded prisons? Does he not think that it is high time that the situation for both prisoners and prison officers in the old prisons was drastically reorganised so that prison officers could give

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  time to education and rehabilitation work which they cannot do now? They spend most of their day locking and unlocking doors. Does he not also agree that sentencing policy should be looked at, because a large number of people are committed to prisons who should not be?
  Mr. Rees: I do not want to give a list of what has been done on sentencing policy and community service orders. My hon. Friend is right to raise the general issue. In many cases there is no educational work being done, although all the resources are there to be used right now. Certain prison officers are saying that they are not prepared to allow prisoners to participate in this.
  Mr. Molyneaux: Will the Home Secretary give an assurance that in the meantime there will be no change in attitudes towards so-called political status or special category status in any of Her Majesty's prisons?
  Mr. Rees: When I was Secretary of State for Northern Ireland, I ended political status which had been created under a previous Administration.
  Mr. Grocott: Although the inquiry can certainly do no harm, does my right hon. Friend agree that the main cause of the problems has been well known for a long time, namely, the appalling overcrowding and the disgusting conditions in many of our prisons due to a generation of Home Office neglect? Will he tell the House what steps he intends to take to reduce the prison population by ensuring that people who are plainly not intended for prison are not committed to prison, such as alcoholics, vagrants and the mentally subnormal?
  Mr. Rees: I hope we can do something about the matter of subnormality and alcoholism. Of course, the situation has something to do with a generation of neglect, but there is something more deep-seated at the moment which I want to get to the root of.
  Mr. Peter Mills: Will the Home Secretary bear in mind that, as the Member of Parliament who has Dartmoor in his constituency, I am very concerned about the future of that prison? Will he also bear in mind that, while I have been trying to help, the replies that have been
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  received from the Home Office have taken so long that that has added to the problems and irritation of the prison officers? Will he see what can be done to speed up the replies?
  Mr. Rees: I hope that the hon. Gentleman will support me in the action that I shall be taking about Dartmoor.
  Mr. Ashton: Will my right hon. Friend ensure that the inquiry also covers those members of the Prison Officers' Association who work in the special hospitals at Rampton, Moss Side and Broadmoor? Is he aware that they, too, have taken unofficial action because of their working conditions? Will he make sure that that section of their union is included in the inquiry?
  Mr. Rees: I shall certainly look at that in the terms of reference.
  Rear-Admiral Morgan-Giles: Hon. Members with prisons in their constituencies will know the great urgency of this matter. Will the Home Secretary consider putting a time limit for at least an interim report by the inquiry so that it does not appear to be merely a means of keeping everything under the carpet and there will be an opportunity for positive action?
  Mr. Rees: It will report as a matter of urgency, but the terms of reference, when I bring them to the House, will all fit together. One part of it will not be dealt with separately. It will be dealt with as a matter of urgency.
  Mrs. Bain: First, may I say on behalf of the Scottish National Party that this inquiry is extremely welcome? But will the Home Secretary give an assurance that the special unit at Barlinnie will be given special attention within the inquiry in view of the fact that it has done much to change the attitude of opinion in Scotland from punitive to rehabilitation measures?
  Secondly, will the Home Secretary look specifically at housing as it is allocated to prison officers? It would appear that in the past the remuneration of those prison officers who wished to purchase their own house rather than take up a local authority allocation has suffered.
  Mr. Rees: All these matters will be considered.
  Several Hon. Members rose—
  Mr. Speaker: I propose to call the four hon. Members who have been standing.
  Mr. Carmichael: I agree with the hon. Member for Dunbartonshire, East (Mrs. Bain) on the great value that the special unit at Barlinnie has contributed towards the study of prison reform, but will there be a Scottish element in the inquiry? I recognise that there is a distinct difference between the Scottish and the English prison services, but they work closely together in many ways and what happens in England today as regards prison officers is usually followed very quickly in Scotland. Therefore, will there be a Scottish element in the investigation and the inquiry?
  Mr. Rees: Scotland is covered in the inquiry and the special interests of Scotland will be taken into account.
  Mr. Sims: Will the right hon. Gentleman be more specific about his reply to the hon. Member for Lichfield and Tam-worth (Mr. Grocott)? Is he satisfied that the terms of reference of the inquiry are such that it will be able to take into consideration the fact that prison officers are required to supervise not only criminals but alcoholics and the mentally disturbed, who should not be in prison and are there because the Secretary of State for Social Services has not provided adequate accommodation for them?
  Mr. Rees: There is no reason why that matter should not be covered.
  Mr. Cope: When the Home Secretary speaks of a wider malaise, does he recognise that such has been the deterioration in the standards of law and order in this country that, whereas before the war there were about 10,000 or 11,000 people in prison on average, now there are more than four times that number and that this is the fundamental problem in the prisons?
  Mr. Rees: There is not a breakdown in law and order; there is a problem of law and order. I have figures here which can relate it to the advent of the Conservative Government. One can prove anything with figures. The hon. Gentleman must make up his mind. One sign of success in the fight for law and
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  order is that more people are in prison, so numbers cannot be taken in isolation.
  Mr. Peter Bottomley: Can the Home Secretary give a clear answer to the question which is not part of the terms of the inquiry, namely, why he has waited until now to announce the inquiry?
  Mr. Rees: The matters which have concerned me in the way that people have been taking the running of the prisons into their own hands have happened in the last year. In taking the decision to do something about it, one has to choose the right moment. In the last few weeks deliberate action has been taken which I am not prepared to accept on the part of the Government. For that reason. I have set the inquiry up now. As I said in my statement, if people have views on this matter, they can give them to the inquiry. They should not be taking the action they are, which is unofficial and is leading to a breakdown of law and order, and could lead to an even worse breakdown.

  ZAMBIA
  The Secretary of State for Foreign and Commonwealth Affairs (Dr. David Owen): With permission, Mr. Speaker, I wish to make a statement on Zambia.
  When the Prime Minister and I met President Kaunda at Kano on 22nd and 23rd September, the President asked for our help in dealing with Zambia's economic problems and for military assistance, making it clear that he was turning to us in the first instance as a fellow member of the Commonwealth with which his country has had economic and defence relations since independence in 1964. We discussed in detail the urgent problems they faced of obtaining maize seed, fertiliser and pesticide which were needed to ensure next year's harvest. We also discussed the problems of the Benguela railway.
  Zambia also faces severe economic difficulties arising from the low world price of copper and difficulties with her road and rail links to the sea. The Rhodesian raids deep inside Zambia on 19th October have reinforced the Zambian Government's concern about their national security. I have just heard today of a further raid.

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  We have agreed to provide military aid to improve Zambia's defensive capability. Some ground equipment and spares have already been supplied, strictly for the use of the Zambian armed forces and police. More will follow after detailed consultations with the Zambians. We shall also step up military training for Zambians in Britain. No British Service personnel or aircraft will be stationed in Zambia.
  The Zambian Government have given us firm assurances that the equipment will be used for no other purpose than the defence of Zambia and will not be passed to any third party, and the air defence equipment will safeguard the integrity of the capital. When we have established with the Zambians their exact needs, I will immediately tell the House the cost to the Exchequer of the military assistance that we are providing. Parliamentary approval for this expenditure—which I expect to be of the order of £10 million—will be borne on the Foreign and Commonwealth Office Votes and will be sought in a Supplementary Estimate in due course.
  The Government have agreed to help meet Zambia's urgent need for foreign exchange by making now an advance payment of £20 million in respect of purchases of copper for British industry. We expect this copper to be shipped to Britain during 1980. The quantities, up to £20 million in value, will depend on contract prices at the time of delivery. The copper will be resold to British buyers in such a way as not to disrupt the normal workings of the market. We have also offered technical assistance to Zambia to help in the development of Zambian cobalt production.
  The Benguela railway is due to be reopened on 4th November and should ease the problem of transporting Zambia's exports, including copper, and also imports. We have offered financial assistance for improving the Zaire section of the Benguela railway and are offering technical assistance for the Angolan section.
  I hope that this assistance for Zambia at a time of great difficulty will strengthen her links with this country and the Commonwealth.
  Mr. Pym: This is a very important statement, but not a particularly precise one. We on the Conservative Benches naturally recognise fully the vital importance of the Commonwealth and our relations with all its African members, but is not the right hon. Gentleman aware of the grave anxieties that exist, not only about the terms but about the implications of this arrangement within the context of the Rhodesian crisis and the central aim of Her Majesty's Government to bring peace as soon as possible to that land?
  Can the right hon. Gentleman tell the House what guarantees he has about the use and destination of these weapons, especially in view of the presence in Zambia of substantial guerrilla forces? There is a phrase in the statement about?
  "firm assurances that the equipment will be used for no other purpose than the defence of Zambia".
  Does that mean the defence of Zambian troops and aircraft, or does it mean the defence of terrorist bases inside Zambia? If it is the latter, how can the Government defend this position when the terrorists operating from these bases are killing innocent black and white Rhodesian civilians?
  Secondly, how can the right hon. Gentleman be sure that these British weapons will be totally restricted to the defence of Zambian installations, as distinct from air space? The phrasing of the statement is vague. Certainly it is too general. References to the "national security" of Zambia and to the provision of military aid to
  "improve Zambia's defensive capability".
  are very vague phrases, which could be open to wider interpretation. We would certainly like the Foreign Secretary to be more precise.
  Thirdly, can the right hon. Gentleman say what undertaking the Government have secured from President Kaunda to the effect that he will use every endeavour to bring Mr. Nkomo to the conference table so that progress towards a peaceful settlement in Rhodesia can be achieved? That seems to us to be a vital need at present. What we are questioning is whether the right hon. Gentleman has viewed his action in the whole context of the immensely serious situation in Southern Africa as a whole.
  Dr. Owen: I welcome the right hon. Gentleman's statement about his support for the Commonwealth, which I know to be genuine, and particularly for African countries in the Commonwealth. I also welcome his statement about the central aim of the Government being to achieve a peace in Rhodesia. It is. I can assure the right hon. Gentleman and the House that there has been no more difficult decision that I have had to take as Foreign Secretary than this issue. As the right hon. Gentleman said, I believe that we had to take it in the whole context of an extremely grave and serious situation.
  As to being precise, I would with respect go back to the statement that I read to the House, which I believe answers the right hon. Gentleman's point about guarantees. It says:
  "The Zambian Government"
  —that is, the Government and the President of that country—
  "have given us firm assurances that the equipment will be used for no other purpose than the defence of Zambia and will not be passed to any third party"
  —there are other liberation movements than the ZAPU forces in Zambia at the moment, and that is why I have used the expression "third party"—
  "and the air defence equipment will safeguard the integrity of the capital"
  —the capital of that Commonwealth country. I believe that that is quite clear.
  Of course, any hon. Gentleman may ask how I can be absolutely certain. I have, and this House has in this situation—as we have with many other questions of arms equipment—to make our best judgment of the integrity and the word of honour of the Government of that country. I for one am prepared to rest on the integrity of President Kaunda and of the Zambian Government.
  Mr. David Steel: Will the Foreign Secretary confirm, first of all, that Zambia, more than any other individual nation State, has had to bear the burden of the British and United Nations' sanctions policy over the last decade? Secondly, will he accept that it is right that any British Government should always be prepared to consider giving assistance to any fellow member of the Commonwealth which finds its territory violated? Does he not find it both illogical and hypocritical that the very people who have been criticising this aid to Zambia
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  would have been the first to criticise the growing influence of other Powers in the world if Zambia had had to turn elsewhere?
  Dr. Owen: I am grateful to the right hon. Gentleman for understanding the complexities of this issue and for his support over a difficult decision, but, I believe, a right decision, to stand by the Zambian Government. As to his last point, I urge the House to look at this matter in its widest context. It is no use our trying to resist the spread of influence of others if we, when asked, are not prepared to stand up and be counted.
  Mr. Hooley: Does my right hon. Friend agree that the indiscriminate bombing by Smith's air force is strongly reminiscent of the behaviour of Mussolini's air force in Abyssinia in the 1930s". Does he also agree that the other side of this equation is the flow of oil and arms from South Africa to Smith's regime, which is the basic reason why he is able to commit aggression against Zambia, Mozambique, Botswana and other surrounding countries? Is it not high time that the Security Council was seized of this problem and brought the whole pressure of the Western world to bear to destroy this rebellion?
  Dr. Owen: My hon. Friend raises a wider question about sanctions and other issues which we shall be discussing next week. On the subject of attacks, I think tha it is a matter for great regret on the part of every hon. Member of this House that in this dispute, unfortunately, many hundreds of civilians on both sides and in many different countries are losing their lives—some as the result of bombing and other military atacks, and some as the result of indiscriminate killing. There can be no one on either side of this House who does not want to achieve a peaceful and negotiated settlement. That will be extremely difficult, but, in the context of this issue, let it not be forgotten that few people in Southern Africa have played a more significant role in trying to achieve a negotiated settlement than President Kaunda. Time after time, at very considerable risk—he has been frequently attacked—he has stood for a negotiated settlement. The whole history of various initiatives which he has taken is the most eloquent testimony that this man is prepared to take political risks to achieve a negotiated settlement for Rhodesia.
  Mr. Maudling: Before agreeing to supply these arms for the defence of Zambia, did the Foreign Secretary seek an assurance from President Kaunda that he would do all in his power to restrain the activities of the guerrillas who are using the relative safety of Zambia, now to be enhanced by British arms, to conduct a campaign of murder and terrorism in Rhodesia against black and white alike? If he did not ask for that assurance, why not?
  Dr. Owen: The right hon. Gentleman knows President Kaunda, as do many others in this House. President Kaunda has made clear on a number of occasions his dislike—and in stronger words than that, too—of the civilian casualties that have taken place on both sides. He has asked and urged the Western press to make certain that its censure of that type of killing of innocent civilians is applied equally to both sides.
  Equally, I make clear that President Kaunda, like other African Presidents, has stressed at all times his commitment to the liberation struggle. They have supported the continuation of that struggle. In the case of President Kaunda, however, it has not been at the expense of giving up the route which he would far prefer—a negotiated settlement.
  Mr. Faulds: Is it not a fact that these heroic attacks by the courageous young whites of the Smith regime have not been against the armed camps of trained men, where they would have been met with ground-to-air missiles, but against such places as refugee camps and a camp where women civil servants were being trained? [Interruption.] Hon. Members should learn the facts. Will my right hon. Friend undertake to ensure that, whatever Zambia's defence needs may be, the Government will meet them readily and effectively?
  Dr. Owen: I have already expressed to my hon. Friend our intention to meet those requests which are made for the defence of Zambia. It is a tragedy that these raids resulted in loss of life; a large number of women were, in fact, killed in the last series of raids. I do not yet have enough information about the raid that took place this afternoon, but I hope that that will not reveal further loss of civilian lives.
  Mr. Amery: Is the right hon. Gentleman aware that in giving arms to Zambia he is providing a shield to the host country for the Nkomo guerrillas? I believe that Mr. Nkomo has just been to Moscow. Is the right hon. Gentleman further aware that the Soviet Union is providing the sword—the weapons—with which the Nkomo guerrillas strike at Rhodesia? Is this not tantamount to military collusion between Britain and the Soviet Union?
  Is the right hon. Gentleman further aware that giving financial aid to Mozambique, Zambia and now, apparently, Angola, and military aid to Zambia, and at the same time asking for the renewal of sanctions against Rhodesia, explodes to smithereens his claim that he is even-handed in his attitude to the transitional multi-racial government and the Patriotic Front?
  Dr. Owen: I claim at all times the need to try to achieve a negotiated settlement in relation to the parties in dispute. But let there be no illusion that we are not even-handed when comparing the actions of Mr. Smith and of President Kaunda. We do not supply arms to the liberation forces. That is a decision that this House has maintained ever since the armed struggle started. But times certainly change; the right hon. Gentleman might do well to look at Hansard and at what he said as short a time ago as February 1976. He argued then that
  "we should give maximum support to the black African countries which are, broadly speaking, aligned with us, and I exclude Tanzania and Mozambique. They are Zambia, Zaire, Malawi and Botswana. The first two are desperately short of foreign currency, and I hope that the Government, with European and American support, will make generous aid available to them, secured against the copper stockpile which they have at their pit heads and which they cannot move at present. Let us make armaments available to them if they want them, and advisers and instructors if they want them, too."—[Official Report, 24th Febrauary 1976; Vol. 906, c. 228]
  Mr. Ioan Evans: Does my right hon. Friend realise that there will be full support on the Government Benches for the action that he has taken? We welcome the fact that he and the Prime Minister went to Nigeria to meet Kenneth Kaunda and wish to express our support for him in the difficulties that he has faced. Does he also realise that if we have a responsibility for Rhodesia we must

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  have some responsibility for the continuation of the illegal regime? If we have that responsibility, we must also have responsibility for the consequences of that continued illegality.
  Will my right hon. Friend, therefore, not only do what he has said that he will but also consult other Commonwealth members to ensure that there is wide support for Zambia in its present situation and to bring an end to that illegality in Rhodesia? Does my right hon. Friend further realise that there is almost no one in the world—outside South Africa—who supports the illegal regime, except for some members of the Conservative Party?
  Dr. Owen: I have always believed that the Commonwealth could play a very important part in bringing about a negotiated settlement in Rhodesia. I spoke to the Commonwealth Secretary-General only this morning—he was flying to Lusaka later today—and I believe that the Commonwealth link can still bridge problems in Southern Africa and elsewhere in the world. However, that means that we respond when a member country asks us, irrespective of whether it is black or white, whether it is rich or whether it is strong. In the Commonwealth we try to bind together those things which are common to us.
  I believe that at Kano there was such a time when two countries—in the background of events—could have embarked on a collision course, in the aftermath of the publication of the Bingham report. Instead, they came together to discuss the future. At that Kano meeting a major part of the discussion concerned the question how we could bring about an all-party conference, which was the point raised by the right hon. Member for Cambridgeshire (Mr. Pym), to which I did not refer earlier. I believe that President Kaunda still feels that that offers a route to a negotiated settlement.
  Several Hon. Members rose—
  Mr. Speaker: Order. I propose to call three speakers from each side, in addition to those from the Front Benches who may wish to ask a final question.
  Mr. Maurice Macmillan: Does the Foreign Secretary recall that the Organisation of African Unity achieved the somewhat precarious unity of a black
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  leadership in Rhodesia under Bishop Muzorewa? Does he also recall that President Kaunda backed that leadership unreservedly and said that he would never support anyone who broke away from it, and yet Mr. Kaunda is giving full support to Mr. Nkomo and his terrorists? In view of that, did the Foreign Secretary make any attempt to warn Bishop Muzorewa, Mr. Sithole or Chief Chirau about this action, which they, at any rate, regard as very hostile?
  Dr. Owen: I am always ready to enter discussions with any of the parties to the dispute, and I do not believe that anyone can claim that I am not. I have recently spoken to Mr. Sithole and I am always ready to see Bishop Muzorewa and Chief Chirau, as I am to see anyone who can contribute to a settlement.
  It is an interpretation of the event to which the right hon. Gentlemen referred which lies at the root of a great many of the personal problems between Bishop Muzorewa and President Kaunda. I know that it is the wish of President Kaunda that that personal problem between them should be resolved, and that he would like to have a better relationship with Bishop Muzorewa than he currently has.
  Mr. Newens: Does not the statement made from the Opposition Front Bench, as well as those made from the Back Benches, suggest that the Opposition do not recognise the right of Zambia to defend its territory against the incursions from the illegal Rhodesian regime? Will not this lead only to black Africa regarding their stand as totally hypocritical and incline it even more to turn elsewhere in the world for aid?
  Dr. Owen: I hope not. Of course this is a difficult decision, and of course the Opposition are bound to probe the matter. They are right to question it here in the House of Commons. I have no objection to that. I hope that when they reflect on this issue they will feel that we have decided rightly. When they faced a similar problem in 1973—when they felt that Kenya, another country in the Commonwealth, needed military assistance—they were prepared to give military assistance and to charge it to the Foreign Office Vote, as we have done.
  The whole history and the strength of the Commonwealth is that it has been

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  supported on both sides of the House, and I hope that that will remain the case.
  Sir J. Eden: Did President Kaunda tell the right hon. Gentleman from where he expected the military threat to Zambia's integrity to come? Did he tell the right hon. Gentleman to which other supplier of arms he was considering turning? Finally, why did not the right hon. Gentleman take the opportunity to bring pressure to bear upon President Kaunda to ensure that the guerrilla forces of Nkomo were dispersed out of Zambia?
  Dr. Owen: We certainly took the opportunity of the Kano meeting—if that is what the right hon. Gentleman refers to—to pursue the ways in which we could achieve a negotiated settlement. President Kaunda has made his position on the liberation struggle perfectly clear. He is the sovereign Head of State of an independent sovereign country. That country will make its decisions. We have to make our decisions. We have to live together in the world, and we have to face the fact that Zambia has decided to support the liberation forces. We will not support the liberation forces. [HON. MEMBERS: "You are now."] I believe, when hon. Gentlemen look at the very difficult distinction that has to be made, they will see that we are not supporting the liberation forces. We are supporting the defence of Zambia.
  Mr. Grocott: Will my right hon. Friend convey to President Kaunda the admiration and sympathy of the House at the tremendous sufferings of the people of his country resulting from the continued treason of Smith and the failure of successive Governments to put it down? Will he confirm that the troubles in that part of Africa are made immeasurably worse by the feeling of some elements in Rhodesia, rightly or wrongly, that Smith's treason is in many ways sympathised with by certain Members of the House?
  Dr. Owen: On the last point, it is undoubtedly true that in their attempts to achieve a negotiated settlement successive Governments have been bedevilled by an increasingly strong element in this House that is thought to be not only helpful to, but prepared to sustain, the regime. I believe that it is also true, and needs to be said in this House, that the
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  front-line countries—Botswana, Zambia and Mozambique—have paid a heavy economic price for the events of 1965. When we debate the issue on Tuesday and Wednesday, we shall have the opportunity to look back and to learn lessons of what has gone wrong.
  None of us, however, should be ashamed to admit that the heaviest burden has fallen on countries such as Zambia, whose economy has been gravely damaged.
  Mr. Eldon Griffiths: One does not doubt President Kaunda's intentions, but is not the real question his ability to keep these weapons out of guerrilla hands? What grounds has the Foreign Secretary for believing that if we send weapons to Kaunda Moscow will stop sending them to the guerrillas in his territory?
  Finally, since some British personnel—most likely civilians—will be on the ground maintaining the weapons, if they get involved in Rhodesian counter-strikes how will the Foreign Secretary defend them? Will he send in British troops?
  Dr. Owen: I have made it clear to the House that no British Service personnel will be stationed in Zambia. If it is decided that there should be civilian personnel, that is for them to decide. There is a large British population in Zambia—people who have lived there peacefully for many years. There are British passport holders who have become Zambian citizens. Let us not forget that there are many thousands of British people there. The hon. Gentleman knows that. One has to trust people, as the right hon. Member for Brighton, Pavilion (Mr. Amery) said in the debate on 24th February, when I suggested that we should also offer Zambia British military advisers if it wished to receive them. President Kaunda is the same President now, in 1978, as he was in 1976. He was then under some of the same pressures, though they were not as acute as they are now. I believe that he can be certain that when he gives his word to us it will not have the consequences that the hon. Gentleman fears.
  Mr. Bryan Davies: Is it not a reasonable interpretation of the present status of the internal regime that it is one of white racialism, only partially blackwashed by the limited participation of black Ministers? Is it sufficiently realised in this

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  House and in the country at large that black Ministers have no say over whether the Rhodesian security forces invade Mozambique or Zambia, that those Ministers' participation is limited to the internal situation, and that those actions are the actions of the power which has been illegally in control of Rhodesia for the past 13 years?
  Dr. Owen: My hon. Friend has just returned from a visit to Rhodesia. I am glad that he went, as did some other hon. Members. There is no doubt that it will be unacceptable in this House and also in many other countries all over the world for the military to have the power of decision-making that it currently has inside Rhodesia. I believe that it is a serious issue in judging the degree to which the decisions are shared in the Executive Council. The fact is that a further raid took place on the territory of Zambia today. All that this does is to underline the vital importance of a negotiated settlement involving all of those people who are currently fighting each other.
  Mr. Pym: I do not think that the right hon. Gentleman dealt with one of the questions that I put to him. What undertaking has he received from President Kaunda in return for the present deal that he will use every practical effort to get Mr. Nkomo to participate in the affairs of Rhodesia? Will he please answer now the questions put by my right hon. Friends the Members for Chipping Barnet (Mr. Maudling) and Bournemouth, West (Sir J. Eden)? What assurance has he received from President Kaunda? What effort will President Kaunda now make to disband the guerrilla bases in Zambia, which are at the core of the trouble?
  Dr. Owen: I made very clear what President Kaunda's stand is on the liberation struggle. I make no secret of it to the House. It is announced in frequent press conferences. There is nothing new about this. As for President Kaunda's endeavour to bring about a negotiated settlement, I have no doubt about it—it was discussed in considerable detail in Kano—and about his wish for a successful all-party conference, after he has done the necessary preliminary work to try to make it possible to get a basic frame
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  work for understanding. I have no doubts about those matters. They were discussed in considerable detail. Some of the negotiations since that Kano meeting have been fully in the spirit of what we discussed then.

  ZAMBIA
    BILLS PRESENTED
      PENSIONERS PAYMENTS
      Mr. Secretary Ennals, supported by Mr. Chancellor of the Exchequer, Mr. Secretary Mason, Mr. Secretary Millan, Mr. Secretary Morris, Mr. Stanley Orme, Mr. Alfred Morris, and Mr. Eric Deakins, presented a Bill to make provision for lump sum payments to pensioners, and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed [Bill 1].
      COMPANIES
      Mr. Secretary Dell, supported by Mr. Chancellor of the Exchequer, Mr. Secretary Millan, Mr. Secretary Morris, Mr. Harold Lever, and Mr. S. Clinton Davis, presented a Bill to amend the law relating to companies and to amend the law relating to the fees chargeable in respect of the registration of business names: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed [Bill 2].
      NURSES, MIDWIVES AND HEALTH VISITORS
      Mr. Secretary Ennals, supported by Mr. Secretary Mason, Mr. Secretary Millan, Mr. Secretary Morris, Mr. Roland Moyle, and Mr. Eric Deakins, presented a Bill to establish a Central Council for Nursing, Midwifery and Health Visiting and National Boards for the four parts of the United Kingdom; to make new provision with respect to the education, training, regulation and discipline of nurses, midwives and health visitors and the maintenance of a single professional register; to amend an Act relating to the Central Council for Education and Training in Social Work; and for purposes connected with those matters: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed [Bill 3].

    BUSINESS OF THE HOUSE
    Ordered.
    That
    (1) Standing Order No. 6 (Precedence of Government business) shall have effect for this Session with the following modifications, namely:—
    In paragraph (2) the word 'twelve' shall be substituted for the word 'ten' in line 5; and in paragraph (5) the word 'eight' shall be substituted for the word 'ten' in line 30;
    (2) Private Members' Bills shall have precedence over Government business on 19th and 26th January, 2nd, 9th, 16th and 23rd February, 6th and 27th April, 4th, 11th and 18th May and 13th July;
    (3) Private Members' Notices of Motions shall have precedence over Government business on 24th November, 1st and 8th December, 2nd, 9th, 16th, 23rd and 30th March and ballots for these Notices shall be held after Questions on Wednesday 8th November, Wednesday 15th November, Wednesday 22nd November, Wednesday 14th February, Wednesday 21st February, Wednesday 28th February, Wednesday 7th March and Wednesday 14th March;
    (4) On Monday 11th December, Monday 26th February, Monday 14th May and Monday 9th July, Private Members' Notices of Motions shall have precedence until Seven o'clock and ballots for these Notices shall be held after Questions on Thursday 23rd November, Thursday 8th February, Thursday 26th April and Thursday 21st June;
    (5) No Notice of Motion shall be handed in for any of the days on which Private Members' Notices have precedence under this Order in anticipation of the Ballot for that day.—[Mr. Bates.]

ORDERS OF THE DAY

  DEBATE ON THE ADDRESS
  [SECOND DAY]
  Order read for resuming adjourned debate on Question [1st November].
  That an humble Address be presented to Her Majesty, as follows:
  Most Gracious Sovereign.
  We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.—[Mr Cledwyn Hughes.]
  Question again proposed.

  NATIONAL HEALTH SERVICE
  3.36 p.m.
  The Secretary of State for Social Services (Mr. David Ennals): I welcome the opportunity of today's debate on the Gracious Speech to review the state of the National Health Service and to discuss its problems. No public service is held in higher regard than the National Health Service. It has within it men and women of high skill and dedication. None is held in higher esteem than the nurses—and I speak from experience, having had five weeks as a patient in an NHS hospital this summer.
  I believe that much of this respect is due to the basic principles on which the National Health Service is based—namely, a service for everyone, paid for by everyone, free at the point of delivery.
  Today's debate provides an opportunity for the Government to set out their policies and aims. There is today concern about the state of the NHS. I hope that the Opposition, having chosen this subject, will give the House and the country some straight answers to some straight questions.
  There are three main areas of concern that worry patients, staff and the public generally. First, there is the problem of resources and the priorities for using them. Secondly, there is the bureaucracy in the NHS and the reorganisation carried out by the Conservatives. Thirdly, there are the difficulties over industrial relations

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  and pay, and the alarming effects that industrial action can have in our Health Service.
  I propose to deal with these three areas in turn, starting with resources and priorities. The needs for more cash and more staff in the NHS are plain for all to see. There are increasing demands on the service from growing numbers of elderly people.
  There are new methods of treatment for conditions that would have gone untreated only a few years ago. We have long waiting lists—now sadly longer still. There is a backlog of old, inadequate hospitals and the inheritance of an unfair share-out of health funds and facilities across the country. There are not enough staff, cash or facilities for our geriatric wards or our mental illness hospitals or our hospitals for the mentally handicapped. There is the need to cut still further the number of babies who die at or shortly after birth, and to reduce to a minimum those born handicapped. There is also the need for a further improvement in community care, and better primary care, particularly in inner cities. The list could go on. I said at the Labour Party Conference that I had the longest shopping list in the business. I have recognised—I think that we all do—the pressures on the Service, the strain on staff of all kinds, and the suffering of patients who have to wait too long for treatment or face unsatisfactory conditions—let us face it—in some of our hospitals.
  That is why we are planning to spend this year £120 million more in real terms on the NHS than we did last year. The £50 million Budget boost is only now beginning to show results. We have seen the opening of modern new hospitals in, for example, Newcastle, Northampton, Oxford and elsewhere. There has been the recruitment of more staff—especially nurses—and the provision of more resources for the Cinderella services. There is more home dialysis for kidney patients. This is beginning to happen.
  In addition, we have made provision in the Gracious Speech for a scheme of payments for those seriously damaged by vaccination—a problem which has caused great concern in this House over many years. I am proud that it was this Government who responded to that
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  concern. Legislation to cover the scheme of payments will shortly be introduced and will, I hope, have the support of the whole House.
  We are now spending about £8 billion a year on our health and personal social services, an increase from 4·7 per cent. of GNP in 1973 to 5·7 per cent. on the latest available figures. What is more, we are spending this money in accordance with a clear set of priorities, worked out after careful discussion. We are pressing ahead with a steady programme to achieve a fairer share of health funds across the country. That means that while programmes are held back in some regions, particularly in the Thames regions, areas of greatest need in the North, North-West and the East Midlands are seeing very rapid growth. I am sure that that principle is right and should be supported by the House.
  We are giving the Cinderella services for the elderly, the mentally handicapped and the mentally ill a higher priority. The House will know that during the recess there have been two important developments in these areas. First, the Government published a White Paper on our review of the Mental Health Act in which we propose new safeguards in the treatment and detention of mental patients and other reforms. Secondly, the National Development Group reported to me on "Helping Mentally Handicapped People in Hospital", and I have made a statement setting out the Government's proposals for further improving the quality of care for the mentally handicapped.
  The Cinerella services and geographical redistribution of funds are two of our key priorities. A third is a shift towards prevention. My hon. Friend will have more to say on this subject, especially in relation to perinatal mortality. I hope soon to announce some further initiatives, building on the much improved figures for perinatal mortality of the past few years.
  The Gracious Speech stated:
  "Fresh support will be given to enable the National Health Service to fulfil and extend its services to the public."
  The Government have a firm commitment to strengthen and develop our National Health Service. We have made it plain that, as the economy improves, it will be possible to devote more resources

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  to the services. We have given practical effect to that commitment twice in the past year, in the November and April measures.
  The House will, of course, have to await announcements at the appropriate time on the Government's plans for public spending in the period ahead, but there will be an increase in resources available for 1979–80, compared with figures in the last White Paper. It will give us some more room for manoeuvre and will, I am sure, be warmly welcomed in the country, especially by those working in the Service.
  We shall stick to our agreed priorities, and I hope to announce additional resources to help meet the needs of the elderly, to assist mentally-handicapped children, to assist disadvantaged groups, particularly in areas of high mortality, and to make some contribution to the assault on the long waiting lists.
  I have set out the Government's priorities on resources and the way in which they will spend them. The House and the country will also wish to know where the Conservative Opposition stand. Let us start with the issue of spending on the Health Service. A few months ago, the right hon. Member for Wanstead and Woodford (Mr. Jenkin) was quite clear. He said that a Conservative Government would adopt the projections in last February's White Paper on public expenditure. His actual words were
  "We have to live within that, and there is no possibility of extra money."
  What could be plainer than that? And that was after the Budget injection of £50 million. He was saying that under a Tory Government there would not have been that £50 million boost and there would not be any further increases beyond the figures in the White Paper.
  I hope that the right hon. Gentleman will confirm that that is the dismal prospect facing the NHS if the Tories, by misadventure, were to be returned to power. [Interruption.] If the hon. Member for Reading, South (Dr. Vaughan) doubts that, his right hon. Friend will have an opportunity of dissociating himself from his own quoted statement.
  The subject of resources raises, I believe, two further issues—charges and the Tory plan to shift to an insurance
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  basis of finance. When we last debated the National Health Service in this House, I put a number of questions to the right hon. Member for Wanstead and Woodford. He refused absolutely to answer them. So, having got no way at all with the monkey, I went to the organ-grinder. In order not to confuse the public and the House about who really is the Leader of the Opposition, I should explain that when I use the term "organ-grinder", I do not mean the organist. I am referring to the right hon. Member for Finchley (Mrs. Thatcher) and not to the right hon. Member for Sidcup (Mr. Heath). In any event, I got no reply. So I shall put the questions again, and give the right hon. Member for Wanstead and Woodford the chance to answer them.
  How much would a Tory Government put on the prescription charge? Will the Tories introduce a new charge for seeing a GP? If so, how much? Will they bring in so-called hotel charges for staying in hospital? If so, how much? Will they bring in a new insurance-based system of finance? If so, will there be different levels of service for different levels of premium, and will there be separate premiums for each member of the family, with extra to pay for the children? When will the Tories publish the Vaughan report on charges? We have had a lot of open government. It is about time we had a little open opposition.
  These are fair questions. I warn the right hon. Member for Wanstead and Woodford that he cannot get away—as he did once before—with saying "We are waiting for the views of the Royal Commission." He is quite happy to tell us in detail what he wants to do about the organisational structure of the NHS without waiting for the Royal Commission—and that is purely technical matter. This is a matter of deep principle. He does not need the Royal Commission to tell him where his principles lie—or I hope he does not. Let us see what he has to say.
  While he is about it, I hope the right hon. Gentleman will spell out where the Conservative Party stands on the issue of queue-jumping. Where does it stand on common waiting lists for private and NHS patients in NHS hospitals? The Government's position is plain. While pay beds are being phased out, we believe

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  that those who pay should not be able to jump the queue for treatment. That is why I made proposals in the summer for the implementation of common waiting lists. The hon. Member for Reading, South leapt up and sharply criticised this policy. The issue is all the more important since, as we understand, the Tories want to bring back more pay beds. So I ask the question today: do the Tories support common waiting lists, or are they now openly in favour of queue-jumping? I hope we shall hear an answer to that question from the right hon. Member for Wanstead and Woodford.
  I also hope that, instead of carping criticism, we shall get from the Opposition some recognition of what has been achieved by this Government and those who work in the Health Service. The fact is that, in spite of all the difficulties and the financial restraints, we have more and more staff treating more and more patients. The facts speak for themselves. I am comparing the position in 1977 with that in 1973, the last full year of the Tory Administration. The number of inpatients treated is up by 213,000 to 5,345,000—an all-time record. The number of day-patients is up by 123,000 to 532,000—again a record. The number of medical staff is up by 14 per cent. The number of nurses and midwives is up by 12 per cent.
  In spite of these achievements, waiting lists remain very long, with all the pain and the suffering that means for patients. This is one of the many problems we face in the National Health Service. We have a great deal still to do. But let us take a balanced view and recognise not only the tasks ahead but the real achievements of the many dedicated people who work in the Service.
  I have dealt with the first area of public concern: resources and priorities. I turn now more briefly to the second: the organisation and structure of the National Health Service.
  There is no disguising the very widespread concern over the reorganisation that the Conservatives foisted on the Service four years ago. The public believe—no one doubts it—that there is too much bureaucracy, that the machine is insensitive to the needs of patients and staff and, perhaps especially, that decisions are sometimes taken too far away from the patients themselves.
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  I know that the right hon. Gentleman likes to wax eloquent on this last point—he makes speech after speech—but it is a little difficult to take seriously what he and the right hon. Member for Leeds, North-East (Sir K. Joseph) have to say on this matter. Somehow or other they talk as if they had no responsibility for it at all, as if somehow the situation that they are graphically describing is the responsibilty of the Labour Government. But they are responsible for it—they and they alone. It was their pet scheme and it was vigorously opposed by Labour when we were in opposition. We knew that they had it wrong. But now they are coming forward with yet another Tory blueprint. The right hon. Gentleman's party is coming forward with a new blueprint for the reorganisation of the NHS. I ask whether you, Mr. Speaker, would buy a second-hand reorganisation from the men who planted the first one upon us.
  My right hon. Friend the Prime Minister, in his speech to the Labour Party conference, made clear that this Government intend to make decision-making more democratic in a number of spheres of life. In the light of the views of the Royal Commission on the NHS, we are determined to make the Health Service more responsive both to those who use it and to those who work in it. As the Prime Minister made clear, we shall not take major steps on this before we have had a chance to consider the views of the Royal Commission that will be reporting to us early next year.
  This is in stark contrast to right hon. Members on the Opposition side. They are so embarrassed by what they have done that they are falling over themselves to suggest new remedies. I believe that in their haste they seem to be seeking to impose yet another rigid, ill-thought-out pattern upon the Service. Frankenstein may be dissatisfied with his first monster so he is helpfully making another. Let the public be warned.
  Mr. Stanley Newens: Is it not a fact that one result of the dreadful structure which has been imposed by the present Opposition on the Health Service is not only bureaucracy and administrative waste but the diversion of too many resources from patient care to administration? Ought we not to be seeking some reorganisation which will put more of

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  the money which goes into the Health Service into patient care?
  Mr. Ennals: That is absolutely right. Until we can carry out the changes that we need—because the burden of bureaucracy must be reduced—we have to see what we can do right now. I advise right hon. Gentlemen that we are first cutting down on management costs which, as my hon. Friend said, result directly from the reorganisation for which they were responsible. In the past two and a half years we have cut out nearly 3,000 administrative posts and at the same time we have seen the number of doctors and nurses increasing. As a result, this year we have been able to release about £13 million for patient care. In a sense, this is a form of organic change. As for districts, we are also looking at the structure at local level to see how we can meet local needs. I have already given approval for four area reorganisations and there are several others in the pipeline. We are making savings on fuel, supplies, drug costs and the rest. My hon. Friend is absolutely right. These are the issues on which we are concentrating.
  That brings me to the third and final area of concern for the Health Service—the problems of industrial relations, pay disputes and industrial action. That is perhaps the most immediate area of concern for the public generally. In fact, the last time this House debated the National Health Service—it was at a time when I was in hospital and could not be here—it was about industrial relations in the Service.
  As patients see only too clearly, the real damage that can be caused by industrial action is the lengthening waiting lists, postponed operations, real problems for staff morale and all the rest. It is in times of internal conflict that the NHS sometimes gives the appearance of having too many warring factions rather than being a united team. The right hon. Member for Wanstead and Woodford will understand what I mean by that. The difficulties are enormous.
  There are no easy answers to problems of pay. Many other disputes can blow up, and they blow up locally. We have all been greatly alarmed by the recent works supervisors' dispute and by
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  troubles in particular hospitals. There may be more difficulties ahead as we enter the pay bargaining season.
  What judgment can we pass on the use of industrial action in the National Health Service? In 1973 it was the ancillaries who used it, in 1975 it was the doctors, and in 1978 the works supervisors. Some people have attacked industrial action within the NHS as part of a general attack upon the trade unions. That is absolutely unfair.
  I pay tribute to the commitment of the leaders of the Health Service unions to the Service and the interests of patients. Can we—as some people suggest—impose a requirement that because they work in the Health Service they should forswear the normal rights of trade unionists? I believe that that would be unrealistic. Most organisations—and I suspect that they include the British Medical Association—would not agree to have their hands tied. Of the three areas of concern being discussed today, I think that this is the one in which Tory hypocrisy is at its worst.
  Mr. Eldon Griffiths: Before the right hon. Gentleman continues his attacks, may I say that the vast majority of people who work in the Health Service at all levels hate the idea of strikes against patients? They do not like it any more than we do.
  Would the right hon. Gentleman consider at least what was done in the recent police pay settlement, when the police agreed to continue to give up the right to strike but were compensated by an inflation-indexed pay increase and machinery to maintain it? Large numbers of doctors and nurses and other members of the National Health Service have written to me saying that they would like such a deal to be tried out in the Service.
  Mr. Ennals: I suppose that many people would say that they were prepared to make some sacrifices if they were given 25 per cent. extra pay. I can see that prospect winning a battle across the country.
  I want to come on to the inflationary consequences, because we cannot totally exclude the National Health Service from this Government's battle against inflation, as the hon. Gentleman seems to think we can. I believe that those who

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  choose to work in the NHS have a very special responsibility to those they serve and to sick people. A hospital is not like a factory complex. Human health and lives are at stake. It cannot be right to put human lives at risk and to cause suffering as an indication of industrial muscle. We must find a better way. We must get our procedures right. We owe it to the Health Service workers and to the patients. Let us look at what we can do in a serious way.
  I believe that there are two distinct problems. First, there is the question of pay and conditions of service, matters dealt with in the Whitley Council machinery. Secondly, there are the disputes that blow up locally—rows about the duty roster, the level of staffing on a ward, where someone parks his bicycle, or a clash of personalities. If they are not tackled, these problems fester and eventually erupt into industrial action, with all that it involves for patients, and all the publicity and effect upon morale.
  That is why earlier this year I brought together round my table the general secretaries of the main Health Service unions, the chairman and secretary of the British Medical Association council, the chairman of the Conference of Medical Royal Colleges and the secretaries of the Royal Colleges of Nursing and of Midwives, together with a representative of the Trades Union Congress and a representative of management. It was the first time that such a meeting had ever taken place in the lifetime of the National Health Service. As a result, I was able to put forward concrete proposals only last week for a new disputes procedure in the National Health Service. This up-to-date procedure is designed to settle disputes quickly at the local level where they arise. The general Whitley Council is now considering these proposals, and I hope that it will embody the essential features in an agreement that can be put into effect as soon as possible throughout the NHS.
  This is a practical down-to-earth initiative that I hope will cut to a minimum the number of avoidable local disputes. I was impressed by the extent to which the leaders of the professions and the unions came together and hammered out something that they could all support.
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  The Opposition are always quick to criticise whenever they see the chance, but let us remember that when they had responsibility for these matters, they did absolutely nothing. Now they draw on their great reservoir of imagination and come up with fanciful ideas of a patients' charter. I hope that the right hon. Member for Wanstead and Woodford will tell us about it. It sounds good. What does it mean? How will it work? I hope that it is more sensible than the right hon. Gentleman's best known proposal that we should brush our teeth in the dark. At least I can understand that, and perhaps he will enable me to understand his ideas for improving industrial relations in the National Health Service.
  We are talking about industrial disputes. The Opposition's attitude to disputes about pay is equally unconstructive. They did nothing to be proud of when they were in office, but they are quick to make capital out of any difficulties that we have.
  Mr. David Crouch rose—
  Mr. Ennals: I would have preferred to give way later to the hon. Gentleman. However, as I know he takes a great interest in this matter, I shall give way now.
  Mr. Crouch: I wish to intervene only on the matter of pay policy. The Secretary of State told us that he had a meeting recently when he called together the representatives of the responsible trade unions operating in the Health Service. Do they appreciate that not only do they operate under the Cabinet's pay policy so strongly advocated by the Prime Minister, but they also operate under the cash limits that fall on his Department? If they take more than the pay policy limits allow, it will be a matter of robbing Peter to pay Paul. Did he make that clear to them?
  Mr. Ennals: The conference that produced this initiative on local disputes was dealing specifically with non-Whitley-Council-type disputes. I believe that there may be merit in inviting the same group of people to meet to see whether we can improve methods of dealing with the types of disputes that affect Whitley Council

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  issues. I shall cone to the main issue—the question of the supervisors—in a moment.
  In the case that we have been discussing, the machinery is not the real issue. The real issue is what sort of pay rises various groups of NHS staff are seeeking and what they can be given. Here, not only the question of cash limits but the question of pay policy is crucial.
  I must comment briefly on two recent matters of concern—the supervisors' dispute and the worries expressed about the pay and morale of nurses. I deal first with the dispute.
  I have no doubt that the House will have shared my great anxiety about the effect of the recent dispute on waiting lists and the very real risk to patients. Happily, a settlement has been reached with the help of the good offices of the general secretary of the TUC—and the House will, I know, be grateful to Mr. Len Murray for his most helpful initiative.
  I have no wish to rake over the coals. But there have been suggestions that this dispute could have been settled weeks earlier if Ministers had wished, suggestions that the issue had nothing to do with pay policy, and suggestions that the Government finally accepted a deal that I had said earlier was not on. All these suggestions are false.
  Ministers intervened on a number of occasions in efforts to settle the dispute. It was at my request that ACAS made an attempt to conciliate after talks had broken down. What was really being suggested by some critics of the Government was that we should simply have given the staff concerned all that they were demanding—regardless of pay policy and regardless of cash limits and the consequences for other groups of staff. It was a sure recipe for further disputes and further industrial action in the NHS. Pay up and hang the consequences seemed at one stage to have been the attitude of the hon. Member for Reading, South in a statement that he made. No doubt he or his right hon. Friend the Member for Wanstead and Woodford will tell us the purpose of his intervention at that time, if that was not it. I suppose that is what he wanted.
  Mr. Doug Hoyle: Does not my right hon. Friend agree that this dispute was not connected with pay policy but was a hangover from the reorganisation that should have been settled much earlier?
  Mr. Ennals: No. Let me spell it out. It is most important that the House should understand. Of course it was not a straight issue of whether the pay claim was above 5 per cent. This dispute was not about annual pay settlements. It was about a genuine regrading of staff.
  There were two very important issues of pay policy. First, the Government had to be satisfied that the new salaries offered for the new posts were commensurate with the job descriptions. On this basis, we approved the salary scales that had been offered by the management side several weeks before. The rejection of that management offer was the start of the supervisors' action. Happily, six weeks later, after the disruption in the Service, they accepted precisely the same salary scales that they had rejected.
  Secondly, we had to be satisfied that any improvements to the supervisors' productivity allowances were genuinely self-financing. That condition is met in the agreement reached last wek. Bonus payments are clearly subject to the financial viability of the scheme.
  During the negotiations, the staff side was demanding a minimum—I repeat minimum, because it was from 15 per cent. up to 30 per cent.—of 15 per cent. allowances for all supervisors regardless of whether they were involved in productivity schemes and regardless of whether the schemes were saving enough money to cover the costs. I said that that was not on. Productivity deals must be genuinely self-financing. I have stuck to that position. The agreement reached last week is entirely consistent with it. The 15 per cent. allowances provided for will not be an unconditional minimum available to all, regardless of membership of schemes and their viability. All supervisors will now have the opportunity to participate in schemes, but the allowances paid, which we hope may reach 15 per cent. six months after schemes are initiated locally, will depend upon the financial viability of the schemes. That is the crucial point. I am glad that the unions were able to

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  accept it. Until they did, no settlement was possible.
  The other subject that I have to mention is the morale and pay of nurses. I recognise the great pressure that nursing staffs are under, particularly during industrial action by other groups when, in a sense, nurses have to pick up the tabs and carry on seeing that patients are cared for. I think that the House will join me today in expressing the country's deep feeling of thanks to the nurses and to other staff who did so much to maintain the services during that very difficult and, I believe, tragic period.
  Nurses are under stress for many other reasons. There has been a steady increase in the number of nurses working in the National Health Service. It has doubled in 30 years. There has been an increase in the proportion of trained nurses. But they are under very great pressure. I know that from my own experience in hospital. The number of patients increases, the period that an in-patient stays declines, and inevitably the amount of attention that each patient needs increases. As more patients are elderly, they make heavier demands upon the nurses. The nurses need to master new skills.
  I am very glad that we have managed to include in the legislative programme a Bill to establish a new, unified structure for the regulation, discipline, education and training of nurses, midwives and health visitors. This structure will comprise a United Kingdom central council and four national boards, one for each country of the United Kingdom, with supporting specialist committees which will replace the existing statutory and non-statutory bodies. For heaven's sake, the nurses have been waiting for a long time for this.
  Mr. Laurie Pavitt: Since 1972.
  Mr. Ennals: We can go back to 1974 at least, when my right hon. Friend the Member for Blackburn (Mrs. Castle) announced the Government's acceptance of the main recommendations of the Briggs report.
  I am pleased to say that we can now start moving forward. I know that many nurses will welcome this, but that they
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  will also say that their pay has fallen behind. They have asked me to look at their position in the light of the "special case" provisions in the White Paper. The question of nurses' pay is one that will have to be looked at by the Government in the light of our declared policy on pay as set out in the White Paper.
  I hope that Conservative Members will not seek to make capital out of this matter. With their record on nurses' pay, they have nothing to be proud of. What did they ever do about it when they had the chance? It was a Labour Government who raised nurses' pay by 20 per cent. in 1970—I know because I was a Minister in the Department at that time—and it was a Labour Government who gave nurses a further boost of 30 per cent. in 1974 following the Halsbury report. And what happened between 1970 and 1974? Nothing—because we had a Tory Government.
  In the months ahead we face many difficult problems over pay in the National Health Service. I hope that they can be resolved without industrial action. As I have said. I deplore any industrial action in the NHS that puts patients at risk. I hope to explore, with leaders of the profession and the unions, what scope there is for avoiding such action in relation to pay disputes. But to those who say that industrial action in the Health Service must be avoided simply by giving in to whatever demands are made, I give this reply. Of course we must see, within the scope of what is economically possible, that justice is done to the staff. But merely to give in to all demands is the road to anarchy, in the Health Service itself and in the wider pay context.
  I repeat what my right hon. Friend the Prime Minister said yesterday. This Government are not prepared to take that road. Here we see one of the great divides that is opening up in British politics today. The Conservative Party is taking up a series of extreme positions, on the NHS and on the economy. After 30 years of bipartisan approach to the principles behind the NHS, the Tories seem to be showing their true colours. They seem ready to tax the sick with new and heavier charges.
  Dr. Gerard Vaughan: Rubbish.
  Mr. Ennals: I am glad. In that case the hon. Gentleman will be able to assure us that it is rubbish and that that part of the Tory programme has been set aside. That will be a great relief for the whole country. I shall see whether we can get some more cries of "Rubbish." The Tories are committed to a two-tier Health Service. No "Rubbish"? We shall see. The right hon. Member for Leeds, North-East seems to know what it is, because he has been putting forward the idea himself, as have the right hon. Member for Wanstead and Woodford and the hon. Member for Reading, South. They do not know what it means. Perhaps they cannot spell it out; perhaps they do not understand their own proposals. But the moment will come in a minute for the right hon. Gentleman to explain.
  The Tories are committed to massive cuts in public spending which cannot fail to hit the health and personal social services. No doubt the right hon. Gentleman will speak of that. They are also in favour of a free-for-all approach to wages, which would send inflation through the roof. If they restrain pay at all, it will be in the public sector only, so that nurses and other Health Service workers will again have to bear the brunt of rising prices. That is the Tory prescription, not only for the economy of the country but for the National Health Service. The contrast between the positive achievements and the positive programme, of this Government and what the right hon. Gentleman and his hon. Friends have to offer is patently obvious.
  Mr. David Price: Before the right hon. Gentleman sits down—
  Mr. Speaker: Order. Has the Minister sat down?
  Mr. Ennals: I have sat down.
  4.14 p.m.
  Mr. Patrick Jenkin: May I begin with a word of welcome to the right hon. Gentleman? This. I think, is the first occasion on which he has addressed the House since he was struck down and whipped off to hospital in July. We very much welcome his return to health and hope that this time it will be lasting.
  I can agree with the right hon. Gentleman on two of the matters to which he
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  referred. First, he said at the outset of his speech that there is real concern in the country about the state of our Health Service. That is correct, and it is why we have chosen to devote the second day of the debate on the Queen's Speech to the subject of health.
  Secondly, I agree with the right hon. Gentleman's expression of the thanks of the House, and indeed of the whole country, to those who work in the Health Service. He singled out the nurses. That was certainly justified, and one can add all the other professional, para-medical and non-professional people who work and strive to give of their best, often in extremely difficult circumstances.
  The Prime Minister has intimated to me that he must depart very soon, so, if I may, I shall break the natural order of my speech and make one point now in his presence—and may I say how grateful I am to him that he has chosen to wait.
  One of the things that we expected to hear about in the Queen's Speech was a Bill to reorganise the Health Service. The right hon. Gentleman made a powerful statement at Blackpool—in fact, I think that he startled his right hon. Friend. He certainly startled the Health Service when he said that it was to be further reorganised.
  Naturally enough, the press, caught a little unawares by this, tried to find out what was happening. There was an interesting article in The Times. After referring to the Prime Minister's words, Mr. George Clark, whom we all know well and greatly respect, wrote:
  "According to the ministers closely involved, the area health boards will disappear in the reorganisation and there will be greater democratic control of the hospital service."
  Mr. George Clark contacted me and asked me what were the implications of that statement—he was obviously making his inquiries. He is not a man who writes the words
  "According to the ministers closely involved"
  unless he has had some contact with Ministers closely involved. So there it was. Presumably, this was what the Prime Minister was referring to, and it is interesting because it is exactly what we have been advocating. We believe that there needs to be a slimming down of the

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  structure, the merging of a tier, and, in most of the country—although there must be flexibility about this—it is the area tier which must be merged into the others.
  But, alas, it was all wrong. That was not what the Prime Minister meant—or certainly not what the Secretary of State meant—because apparently a letter was written on behalf of the Secretary of State to administrators of regional and area health authorities of which, Mr. Speaker, for greater accuracy, I have obtained a copy. This was a little difficult because, despite the great importance of the Prime Minister's remarks as interpreted by Ministers, and the very wide interest they had aroused, no publicity at all was given to the letter. There was no press release, no press guidance, no private briefings, not even one of the Secretary of State's many speeches.
  But the letter is clear beyond peradventure. It is short, blunt and to the point. It reads:
  "Dear Administrator,
  In view of some of the misleading press comments on what the Prime Minister said at the Labour Party Conference on 3 October you may like to know that the Secretary of State has given an assurance that there is no commitment on the part of the Government to introduce legislation on the organisation of the National Health Service in advance of receiving and considering the Report of the Royal Commission."
  The Prime Minister (Mr. James Callaghan): Hear, hear.
  Mr. Jenkin: The Prime Minister said "Hear, hear." What, then, are we to make of Mr. George Clark's statement beginning: "According to the Ministers closely involved"?
  Mr. Ennals: The right hon. Gentleman should not allow himself to be fooled by everything that he reads in the press. I can assure him that no such statement was made by any Minister in the Department. Perhaps the right hon. Gentleman should have taken the trouble to read what the Prime Minister actually said, which was:
  "Subject to the recommendations of the Royal Commission on the Health Service, we intend to undo much of the damage caused by the Tory reorganisation and make the management of the Health Service more responsive to the patients and to the dedicated people at all levels who work in the Service."
  I hope that the right hon. Gentleman will warmly congratulate my right hon. Friend on setting that lead.
  Mr. Jenkin: Yes, if I knew what the Government's intentions were. What we have in this episide is that on Tuesday 3rd October the Prime Minister goes to Blackpool and cheers up the Labour troops by telling them that it is all going to be changed. On Friday 6th October, quietly and surreptitiously and without any publicity at all, the Secretary of State reassures the managers principally concerned that, of course, it is all nonsense and that nothing whatever will happen. All I can say is that it is one hell of a way to run a health service.
  I am grateful to the Prime Minister for staying in the Chamber, but he must realise that he caused great dismay by his talk of a major reorganisation at this stage. This most emphatically is not our policy.
  The Prime Minister: I am not sure that it was worth staying. I have the very highest opinion of Mr. George Clark, as of every other journalist, as we all have; we all know how splendid they all are. But I think that the misapprehension could have been avoided if the initial words of my statement had been quoted, but, alas, they were left out of a number of the press documents. They were
  "subject to the recommendations of the Royal Commission",
  which, I understand, we shall not have until several months from now. Anybody who really studied these matters would therefore know very well indeed that we could not possibly legislate in the current Session, so there was no need for the apprehensions.
  I would just say this in conclusion. Every morning I say to myself "Shall I really correct this error that is in the newspapers?", and then I decide "No. If I spend my day correcting all the things that are wrong which are written about me I shall never do anything else".
  Mr. Jenkin: Perhaps we can leave it at that. I accept the Prime Minister's bona fides on this. Apparently, he did not mean what was attributed. But it seems to me that with a matter of this importance—and the Secretary of State had a very strong letter from John Bettinson, the chairman of the National Association of Health Authorities—a little more publicity might have been given to the denial, as a good deal of publicity had

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  been given to the original misapprehensions.
  I said that we selected the subject of health for debate today because of the real concern of the people over the state of the National Health Service—not just because of the appalling damage done by the recent dispute, or even on account of the evidence that we have recently had from the Royal College of Nursing about falling standards and collapsing morale, but because as I go round and talk to people in the hospitals and in the constituencies I detect a growing fear that the NHS is rapidly sliding out of control while the Secretary of State stands, as it were, feebly expostulating on the sidelines and quite powerless to halt the slide.
  We read in the Queen's Speech about "fresh support". I come straight away to the points that the Secretary of State has made about the financial support. I thought that today he might be announcing additional spending for the Health Service. Certainly that is what I read into his remarks in his reply to the nurses' deputation. He has said that this will come. May I put this to him? We would welcome this. It would be a step to get back to the rates of growth which the Health Service enjoyed under the last Conservative Government. Let me repeat the figures to get it clear. On capital expenditure alone, in real terms, for every £2 that is being spent now on Health Service capital spending, £3 was being spent when we left office—I am talking about real terms, taking account of inflation. After a prolonged period of more than 3 per cent. growth per year, the growth rate has been cut back to 2 per cent. over the last four years, and the figures in the public expenditure White Paper, even taking account of the £50 million, made it 1·8 per cent. over the next four years. There was a suggestion in one of the medical magazines that the Government were aiming to get back to the long run rate of growth of spending. That would involve very substantial sums indeed. We shall wait and see what comes.
  A more general point is that in the Health Service local health authorities are large and complex organisations. If they are asked to change speed and direction at short notice and suddenly, as, for
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  instance, with the extra £50 million in the Budget coming only three months after the public expenditure White Paper, this makes rational planning of health services for the future almost impossible. It is bound to lead to a waste of resources. Of course people welcome the extra money. But one does not get the best value for money if one is constantly chopping and changing; sensible planning is made almost impossible.
  Mr. William Molloy: The right hon. Gentleman should have told the right hon. Member for Leeds, North-East (Sir K. Joseph) that.
  Mr. Jenkin: On the contrary. When we were publishing White Papers on public expenditure and health expenditures over a prolonged period, we tended to stick to the projections. If more money is to be spent on the Health Service, the sooner that people know when it will be available so that they can incorporate it into their plans the better value we shall get for the money.
  Mr. Ennals: I gave an assurance without giving the figures. However, the right hon. Gentleman is clearly dedicated to George Clark and what he writes in the columns of The Times. I read on 16th May:
  "Mr. Jenkin explained the scheme when he was asked whether the Conservatives, if returned to office, would provide extra resources for the National Health Service. He said the Conservatives would adopt the projections for spending contained in the present White Paper on public expenditure.
  'We have to live within that, and there is no possibility of extra money'."
  Did George Clark get that wrong, too?
  Mr. Jenkin: I was asked on that occasion whether we were proposing to cut the money for the Health Service. I gave an absolute commitment then, and have repeated it since on a number of occasions. We have no plans for cutting the Health Service below what we shall inherit. That is the phrase I am using. I made that statement soon after the publication of the White Paper on public expenditure. The phrase I have used, which I stand by and repeat today, is that we shall not cut spending on the Health Service below the figures that we shall inherit. How far and how fast we shall be able to increase spending will depend, as is common ground between the two parties,

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  on how successful we are at managing the economy and restarting economic growth. It will be our aim, when we can, to get back to the rate of growth and spending on health that we had under the last Conservative Government.
  Dr. M. S. Miller: It is not the same thing for the Conservative Party to say that, if elected, it will not cut expenditure. Other allegations have been made about increasing the money going into the Health Service by charges which are to be levied.
  Mr. Jenkin: I have nothing to add to what I said in the earlier debate. The Secretary of State played the same old tune and perhaps I may be allowed to: we must wait for the advice of the Royal Commission. Listening to the Secretary of State fiddling his old tune, one might have thought that everything had stood still in the meantime. The fact is that we are expecting the report of the Royal Commission in a few months and it would be foolish now to make pledges in advance of that.
  I turn briefly to the subject of the nurses, because they have made a long and detailed critique of the Health Service. They talk of the falling standards in the Health Service, of the collapse in morale, and use very serious language about "continuing deterioration" and
  "the serious threat to the maintenance of standards of care."
  In describing clinical areas, they talk of the resulting
  "positively dangerous standards of care."
  We need to take those criticisms very seriously indeed. I do not know whether the nurses' complaints are to be included in the right hon. Gentleman's description of "carping criticism" which he made in his speech, but I take the memorandum, which I have carefully studied, extremely seriously.
  I take no part more seriously than the figures given of the rapidly declining number of learner nurses in the Health Service. Initial entrants from March 1977 to March 1978 are down 17 per cent. and learners down 13 per cent. That is very bad news for the country and for the Health Service. We did not hear anything from the Secretary of State on what is to be done about that.
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  In many parts of the country—and this is true in my own area—it is not possible to fill those posts for which funds exist and they are below the regional norms. What the future position will be like fills one with great despondency. We are in the grip of a vicious circle, with falling numbers that result in overwork, leading to lower standards and increasing job dissatisfaction for the nurses. Consequently, many leave early, many do not complete their period of training, and the situation deteriorates further.
  Job satisfaction for nurses is the absolute key. They want to feel that their work is up to the highest standards that they were taught in their nursing schools. There is nothing more demoralising for people in that kind of work to know that they are giving only second or third-rate service.
  Mr. Molloy: I agree with much of what the right hon. Gentleman is saying. Indeed, I think that the whole House agrees with it. However, we should like to know whether he will also agree that there must be a massive resurgence of resources to put right the matters about which the nurses have been complaining.
  Mr. Jenkin: I made the point that we could afford a substantial increase in money spent on health only when the economy is once again producing the resources to enable that to be done. That is common ground between the parties. I do not think that there is any point in calling for a huge influx of funds at this stage, because we know that that cannot be done.
  I turn to the Briggs report, which was referred to in the Gracious Speech. We shall debate that, I believe, on Monday week, so I need say little now about it. It has been a long time coming, and we welcome it. I know of the lengthy consultations that have taken place, because of the understandable desire on the part of professional groups who wish to preserve their separate identities within the profession, bearing in mind their long and honourable records of service to the community. At the same time, we must avoid—and this is a question of balance—creating an over-rigid, over-cumbersome structure. We support the general aims of the Bill, but we shall

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  certainly wish to study the details very carefully.
  The Gracious Speech referred to vaccine compensation. We also welcome that. May we ask the Under-Secretary to state whether that will be taken into account in the calculation of supplementary benefits for affected families? When the Government were last asked that question, they reserved their position, but we now need to know. I do not know whether the Under-Secretary intends to say something on the future of the Pearson report and where the Government stand on that. These subjects are clearly interrelated.
  I turn next to the Bill to pay attendance allowance to kidney patients. The conduct of Ministers here has been a good deal less admirable. The sad thing is that those payments could now be being made if the Government had had the sense to adopt the Private Member's Bill presented by my hon. Friend the Member for Ealing, Acton (Sir G. Young) in the last Session. I have been singularly unimpressed by the excuses why that did not happen. The Government said that the Bill was not properly worded and did not cover the subject adequately. My hon. Friend—indeed, the whole House—would have been ready to accept any amendments that could have been made to the Bill, either here or in another place, to enable those payments to be made to kidney dialysis patients as rapidly as possible.
  I have a horrid suspicion that the reason we have not had that Bill is that the right hon. Gentleman has an almost obsessive compulsion to take the credit for everything that happens. Why cannot he have a little grace and give credit where credit is due? Why could he not have allowed my hon. Friend's Bill to reach the statute book? The right hon. Gentleman has not enhanced his reputation in this affair.
  Important though all this is, it is overshadowed by recent events in the Health Service—the maintenance supervisors' strike. I should like to examine in some detail the arguments which the right hon. Gentleman has put to the House and those which were advanced during the strike. By common consent, this has been the most damaging strike—although it should not be described as a strike but a
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  dispute; the supervisors were being paid all the time—in the history of the NHS. That point has been raised by my hon. Friend the Member for Aylesbury (Mr. Raison) on a number of occasions. We cannot know whether deaths actually resulted from it, but we certainly may assume that deaths may have been hastened and that some who could have been cured will not now be cured. A total of 9,000 beds were closed, 300 hospitals were on emergencies only and waiting lists are now up by 60,000—a 10 per cent. increase—with untold misery and despair for patients. The dispute certainly dealt a further blow to morale in the NHS.
  The Secretary of State's explanation has left a whole raft of questions unanswered. It needs to be made clear why the dispute was left outstanding for so long. That point was made by the hon. Member for Nelson and Colne (Mr. Hoyle). The dispute dates back to 1974. For all the criticisms of this party, the Government have been in office for four and a half years; they have been in charge of matters. They really cannot put the responsibility back on the last Conservative Government.
  The pay structure was settled for senior work staff in grades 1, 2 and 3 but not for grades 4 and 5. Yet it was only two months ago that management got round to putting forward pay scales for grades 4 and 5. Why was the grievance allowed to fester for over four years?
  By his inaction on this matter alone, the Secretary of State deserves severe censure. However, a much more serious question that he must answer—he has not yet done so to my satisfaction—is why this dispute was not settled within the first few days. His case, as he presented it to the public throughout and as he presented it again today, was that the Government were standing firm in defence of their pay policy. In his letter of 9th October to Allan Black, the chief staff side negotiator, he wrote
  "The Government would not be prepared to authorise any offers which would involve further increase in cost … we must ensure that any agreement is consistent with pay policy."
  He has maintained that attitude throughout, including his phrase, repeated this afternoon, that what the staff side was demanding was "just not on".

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  The Daily Mirror quoted him as saying on 26th October, that
  "…we mustn't create a situation which makes such a hole in the pay policy that there is nothing left."
  Yet there has now been substantial evidence, from authoritative sources, that pay policy had nothing whatever to do with it. The Sunday Times quoted one of the staff side negotiators, Mr. Ray Harris—[Interruption.] I am quoting what the paper reported him as saying, and I believe it to be true that he said it. He said:
  "he … first realised that pay policy was an issue when they met Ennals two days after their action began. We were amazed at his attitude.… until then, and from our meeting with the Secretary's junior colleagues at the ministry,"—
  that will be the Under-Secretaries—
  "we had been led to believe that pay policy had nothing whatsoever to do with our dispute."
  Mr. Len Murray, whom the Secretary of State praised—and to whom we pay tribute for his part in settling the dispute—said:
  "'Whatever the merits of the pay policy this dispute was concerned with the relationship between supervisors and related grades on the one hand, and electricians on the other. In no sense did the works staff concerned, or their unions, regard this as an attempt to break the pay policy.'".
  This is a powerful case, which the right hon. Gentleman must answer. Yet he later went on the radio simply repeating that it was a matter of pay policy. As I understand it—and I have made my own inquiries—the issue, at the end, was relatively simple. It was whether all supervisors should share in the productivity bonuses, or only where a productivity scheme was in operation. The unions were insisting "all". The management side was insisting "No. A productivity scheme must be financially viable". That is common form when anyone introduces a productivity scheme. It must pay its way. There were also arguments about the lead-in time.
  But does not this mean that all we had here was not a dispute that put at stake the whole Government pay policy but a haggle over the small print of a productivity deal? That was the view of The Times, which said:
  "… the immediate issues are small beer to both sides."
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  The Guardian, in one of the strongest worded leaders that I have seen on the issue, said that it was
  "a snivelling pay anomaly of the most petty nature … It was foolish to try to construe the present dispute as a challenge to pay policy. We may be in Stage Four, but the supervisors' grievance, hoary with age, predates even this Government's long-running incomes policy."
  The House needs to know which was right. Was it the view of management? The management told me that at no stage in the negotiations was pay policy even mentioned. Was that right? Were the unions right—Mr. Harris and Mr. Murray? Were the junior Ministers right, when they gave their indications earlier that pay policy was not involved? Or are we now to believe the Secretary of State that it was all a matter of pay policy?
  I am bound to tell the right hon. Gentleman that he has not emerged from this episode with any credit at all. Throughout he has given the impression of thrashing about in frenzied futility, blaming everyone and everything except his own dilatoriness in settling the matter years ago, and one of the reasons for his ineffectiveness has been his total confusion about whether pay policy was or was not at the back of it.
  Mr. Ennals: Of course I can well understand the right hon. Gentleman, who represents a party which does not believe in pay policy—well, part of it dots and part of it does not; the Front Bench does not. I can well understand that The Times or The Sunday Times, or all sorts of other spokesmen, would wish to say that it was not a pay policy issue. The people who have to decide whether it is a pay policy issue are those who have responsibility for pay policy. That is Her Majesty's Government. I say straight away that my hon. Friends did not give that impression. That was incorrect. When I spoke, I spoke not just for myself. I spoke for my Government—our Government—who have responsibility for pay policy. I have spelt out in detail the two clear roles in which this was a breach of pay policy. I can understand that people would say "No, we are not trying to break the pay policy". The Government have to decide whether the pay policy is being challenged.
  Mr. Jenkin: I wish that I had not given way to the right hon. Gentleman because

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  I am coming to these points. I think there was throughout a confusion as to whether it was pay policy or not. But I should like to take the argument a little wider and look at it in the context of the discussion that took place here yesterday between the Prime Minister and my right hon. Friend.
  Let us suppose, in the first instance, that the negotiators were right and the Secretary of State was wrong—that the junior Ministers were right and that pay policy was not the issue. Where does the case stand then? Surely, it is that this episode demonstrated, as starkly as could be imagined, that if one has a rigid pay limit it can foul up negotiations even where it is not relevant at all.
  Alternatively, let us take the other way. Let us assume that the Secretary State was right—and there may be some grounds for saying that at the later stage, when the 25 per cent. claim across the board for productivity bonus was made—and pay policy did by then become an issue. Does not this, too, demonstrate the folly of brandishing about a fixed limit at this stage in a pay cycle in that one sets up an Aunt Sally for the trade unions? We know that there are unions which are prepared to have it as their objective to smash the limit, irrespective of the merits of the particular case. None of the unions which are used to negotiating in this Whitley Council can have believed for one moment that a 25 per cent. across the board productivity payment irrespective of financial viability was a starter at all; but it was as good a way as any of trying to smash the Government's pay limit.
  Mr. Ennals: That is right.
  Mr. Jenkin: Yes, but let us see where it takes the right hon. Gentleman. This was the view of a person who perhaps should know, the chairman of the area works officers' association, West Midlands region, who has written an extremely interesting letter in this week's Health and Social Service Journal. I quote: "It is only within the past week that both the media and our colleagues within the Service have considered that this is a direct confrontation with the Government pay policy. There appears to be evidence that this dispute is being used as an attack on the Government pay policy by unions and preventing a reasonable settlement."
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  I have no doubt that the Under-Secretary was right when he saw the staff side some time ago and said that to settle this dispute need not involve pay policy at all.
  Mr. Ennals: Absolute nonsense.
  Mr. Jenkin: What has happened by having the Prime Minister's 5 per cent. pay policy is that it provoked the unions into putting forward a totally unreasonable claim which the Secretary of State then had to say was in breach of pay policy.
  Mr. Ennals rose—
  Mr. Jenkin: Let me just finish my case. Whichever way one looks at it, whether pay policy was involved or whether it was not, the fact of the matter is that this dispute has taken us right to the heart of the argument which we had yesterday. At this stage of a pay policy, does it help to have a rigid 5 per cent. figure, which either gets fouled up with negotiations which are not relevant or else is used as a target by the unions to try to smash?
  Mr. Ennals: I did not wish to intervene again, but the right hon. Gentleman has made an accusation against my hon. Friends which I have already denied. I made it absolutely clear that my hon. Friends in their discussions said no such thing. The right hon. Gentleman really cannot do this in the House. It is quite wrong. I have given him an assurance that no such statement was made by Ministers, and if he wishes to turn this into an economic debate, let him do so.
  Mr. Jenkin: I accept what the right hon. Gentleman says. If he gives me an assurance, of course I accept it. The fact of the matter is that we are in the heart of an economic debate, and as a result of the way in which the situation has been handled we have had now the worst dispute in the history of the National Health Service. It is well known that the 5 per cent. figure was plucked from the air by the Prime Minister in the course of a television interview, much to the dismay of many of his colleagues. They knew what the consequences would be. In 1974, a rigid limit plunged the country into the three-day week and brought down the Government. Now, in 1978, another rigid figure has hit the National Health

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  Service with the worst dispute in its history and may well have led to loss of life.
  In his speech yesterday the Prime Minister asked:
  "Are we to have a winter of strikes?"
  It means, he continued:
  "that life could seize up in a closely-knit industrial society such as our own."[Official Report, 1st November 1978; Vol. 957, c. 53.]
  In the National Health Service it is not just that life seizes up, it is that lives are snuffed out. That is the price that we are now paying for an over-rigid pay policy.
  Of course, this would not be so if it were not for the activities of those in the National Health Service who use patients as weapons in their disputes, by taking industrial action. We debated this subject last July, but it has now become one of even more intense public concern.
  People have been horrified by what they have seen and read in recent weeks. In a straightforward battle for more money, the unions involved have not hesitated to use the torment of patients as a weapon in their struggle—and "torment" is the right word. There was the lady sent home with a fractured knee joint, in agony and untreated; the 85-year-old man with a broken shoulder joint, sent home in agony and untreated; cancer patients, where surgeons reported that cases which were operable were now becoming inoperable. The list is very long.
  My hon. Friend the Member for Aylesbury received a letter last week from an elderly lady of 77 with polio in one leg who needs an operation on an arthritic knee in the other. She has already been waiting over 10 months. She wrote:
  "Mr. Taylor the consultant has told me that owing to the industrial dispute the waiting list will now be much longer and as I live alone and am not able to get out life is becoming very depressing. When working before retirement I worked 10 years in the hospital service including the Royal Bucks."
  What does she think of what has been going on during the past few weeks? All over the country there were similar stories, and 60,000 cases were added to the waiting list.
  I have to ask this—have we all gone mad? How can one justify using the sick and injured in this callous and inhuman
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  way? Have we reached such a level of moral bankruptcy that we accept with a resigned shrug that one man's pay claim may be another man's coffin? [Interruption.] I have said many times that I condemn all those who strike in the Health Service. We were very firm about that when we were faced with strikes in the medical profession.
  Look at the defences we have heard. First, there was the flat denial that anything at all was going wrong. COHSE's spokesman, Nick Grant, said:
  "It is extremely doubtful whether there's a cause-and-effect relationship between the patients being turned away and the supervisors' action."
  Further on he said:
  "The difficulty we always have in disputes is that certain consultants tend to exaggerate and make some sort of capital out of them."
  We can treat that statement with the contempt it deserves.
  Then there was the counter-attack. The right hon. Gentleman felt its blast when he finally, from Norwich, made his appeal to the men to go back and pointed out what the consultants there had told him. Of what was he accused? He was accused of "blackmailing the union" which, when one considers what was going on really makes one puke.
  Perhaps almost more offensive than the other defences was the mealy-mouthed excuse "Yes, we know. We are very sorry, but it is not our fault." I have said that I thought the men had a case that should have been dealt with years ago, but it seems to me absolutely outrageous that the sums of money involved should have given rise to the hardship which we have been facing.
  Geoffrey Drain, in his letter to The Times, which aroused a pretty fierce riposte from a number of people, said:
  "NALGO joins … in feeling sympathy for patients caught up in the effects of the industrial action currently being undertaken by hospital engineers and building supervisors. Mr. Rodger "—
  who had written earlier—
  "however, is misinformed. These NALGO members are not on strike. They are refusing to undertake tasks for which they are not being paid; additionally they are not carrying out certain maintenance work."
  In law a man is presumed to intend the natural and probable consequences of his act. If a union orders men not to service

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  essential equipment and as a result patients have to be sent home in pain and untreated, it does not lie in the mouths of the union leaders to claim that that consequence is unintended. However we look at it, the object, the purpose, is to put the screws on management, but the result is to punish the patient.
  None of the men concerned would, individually, set out to cause suffering to a sick or injured person to secure a private gain. I must again ask the question that I asked on 3rd July, to which I have never had an answer: why does it apparently become quite acceptable to do so collectively in order to secure a collective gain? What is it about trade union morality which seems to blunt individual consciences?
  When I asked that question in July Albert Spanswick, the general secretary of COHSE, in reply to the debate, wrote a very intemperate article in the COHSE journal, accusing me of "an extraordinary display of Tory prejudice." On some matters I admit to prejudice. I am prejudiced against depriving patients of urgent medical care as a weapon in a dispute over more money. That is one of the matters on which I shall maintain my prejudice, because I believe that that is totally wrong.
  Therefore, I ask—and I was half encouraged by what the Secretary of State said—that we now work towards what I have called a patients' charter. Of course, that must mean improved negotiating procedures. The Secretary of State said that the Whitley machinery existed to avoid such disruption when difficulties arose. It is clearly not working. Four and a half years have passed without this grievance being dealt with.
  The action announced last week was a small step in the right direction, but, as the Secretary of State conceded, it does not deal with major issues. It may deal with the kind of case that occurred in the constituency of my hon. Friend the Member for Kingston upon Thames (Mr. Lamont), where, because of a keen and efficient security manager, thefts totalling £100,000 a year were traced and stopped, but the unions have walked out on strike because they think they are being victimised. I hope that the right hon.
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  Gentleman's new procedure will stop that sort of scandal. It makes me very angry. That security manager has now been suspended because of union pressure pending the inquiry. It is absolutely outrageous.
  Mr. David Price: Will my right hon. Friend answer the question that I wished to put to the Secretary of State? Surely, at the non-pay level we must have a more effective consultative industrial relations machine in the Health Service. I do not wish to be pompous, but I have had much experience in industry. Although one may have national agreements, a great deal of detail is filled in at work level. That is what participation is about. I do not wish to mention particular cases from my part of the country—I am speaking as one who was once a governor of a London teaching hospital—but surely we must have better machinery whereby more matters can be settled in the hospitals and not have to go higher.
  Mr. Jenkin: I agree. We want more than just the short-term brush-fire operation which the Secretary of State announced last week. My hon. Friend is saying that there must be a greater capacity to deal with industrial relations problems at the working level. I am sure of that. The right hon. Gentleman has had the McCarthy report; practically nothing has happened—
  Mr. Ennals: Oh.
  Mr. Jenkin: No doubt, the Under-Secretary will tell us what has happened. Consideration of the McCarthy report, which dealt with the structure of the staff side, seems to be grinding exceedingly slowly. Meanwhile, the nation is having to suffer as we suffered over the past few weeks. It is already clear that we are to suffer again in the future. Other unions are threatening to follow the supervisors down the same road. The National Union of Public Employees has tabled a 40 per cent. pay claim for hospital ancillary workers, as reported in the Financial Times, warning that it has
  "completed detailed contingency plans for industrial action against the Government's 5 per cent. pay policy."
  The Financial Times gave an account of what is envisaged:
  "The plans are aimed at identifying areas of maximum disruption to the Health Service

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  and the effects could be similar to—and possibly worse than—the crippling action taken by hospital works supervisors over the last five weeks."
  That is a grim outlook, which is already casting dark shadows over the next few months in the life of our hospitals. Yet against that background all that we have had is the bland and reassuring words of the Queen's Speech that more resources will be made available. Against that kind of background it is empty rhetoric.
  The Government have presided over the Health Service for four and a half years and the result is now rock-bottom morale, falling standards and growing public disillusion with the whole concept of the NHS. It is time for a fresh start—the kind of start that only a General Election can bring.
  4.54 p.m.
  Mr. Laurie Pavitt: You must have heard hundreds of speeches, Mr. Speaker, in which an hon. Member has apologised to his predecessor, saying "I shall not be following you". I want to reassure the right hon. Member for Wanstead and Woodford (Mr. Jenkin) that I shall be following him very closely because, somehow or other, without straying very far from my own notes, I seem to be moving step by step in the same framework.
  I wish to pick up three points which arose earlier. First, may I dispose of the intervention about Mr. George Clark? Mr. George Clark came to see me on the Friday after the Labour Party conference, and we had a chat. I assure the right hon. Gentleman that, although my right hon. Friend the Secretary of State has affection and respect for me, I have never been close enough to be able to influence what he says or what the Department does. So I am afraid that, as the right hon. Gentleman knows, the idea that someone could have direct access to the DHSS by talking to a Back-Bench Member is not feasible.
  The second point that I should like to take from the right hon. Gentleman's comments is the challenge put to him by the Government Front Bench. He made the categorical statement that a Conservative Government will not in any way allow less expenditure than that which they inherit on the NHS budget. Secondly, he believes that public expenditure must
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  be contained. Thirdly, I accept that he sincerely believes that resources for the Health Service must be improved. If we take those three propositions together, we reach the inescapable conclusion that the only way in which he can get fresh resources without increasing public expenditure—while maintaining the expenditure which he inherits—is by some form of charging. I hope that whoever winds up the debate from the Opposition Front Bench will tell us whether there will be increased prescription charges, board and lodgings charges, increased charges for spectacles or teeth, a fee for an interview with a general practitioner, or any of the other kites that have been flown.
  The right hon. Gentleman concluded by expressing anger and concern. For every case that he has put to the House—and I know of these cases, too, in the past few weeks—I know from personal experience of cases where, in spite of difficulties, devoted Health Service workers—including some in the grades that we have been discussing—have managed to clear the lines, do a job of work and save people from going on the waiting list. I speak from personal knowledge.
  Why do we always hear this jeremiad about all that is wrong and how the trade unions do not do the job, yet never hear the compensating points? I hear both sides. It would be helpful if the House sometimes heard both sides as well.
  The right hon. Gentleman said nothing about the attitude of the Tory Party when industrial action by doctors raised the waiting list from 500,000 to 600,000. That was the time when he should have spoken out about industrial action being harmful to patients.
  Mr. Patrick Jenkin: I have not checked back through Hansard, but the conduct of my hon. Friend the Member for Sutton Coldfield (Mr. Fowler), who was then our spokesman, was in marked contrast to the attitude of Labour Ministers when we were facing strikes not only in the Health Service but elsewhere. My hon. Friend made it abundantly clear that in no way could we support industrial action aimed at disrupting the Health Service or indeed at breaking the Government's pay policy. That has been our consistent and responsible view throughout. I held my

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  peace entirely during this last dispute because I did not think that an Opposition spokesman not privy to the negotiations could make a comment upon it.
  Mr. Ennals: What about the hon. Member for Reading, South (Dr. Vaughan)?
  Mr. Jenkin: The natural revulsion of my hon. Friend the Member for Reading, South (Dr. Vaughan) stems from the fact that he is a doctor and perhaps feels more passionately than most of us what doctors feel when they are unable to treat patients whom they are asked to see.
  Mr. Pavitt: I have been in the House on many occasions when statements have been made from the Front Bench. Health is a subject in which I take an especial interest. I can assure the House that at no time have I sensed any of this anger, indignation or passion and fire about doctors, whatever the comments of the hon. Member for Sutton Coldfield (Mr. Fowler) at that time.
  One word on the Resource Allocation Working Party. My right hon. Friend has dealt with it, and I do not want to spend long on it because it is not really part of our brief today. The principle is absolutely right. There must be a fair distribution of resources. But the administrators are using an axe when they ought to use a scalpel. The blanket regional figures—or even area figures—give no account to the morbidity rates or of the inner city problems which exist within those same regions. The sooner we get Mark II or Mark III of the Resource Allocation Working Party, the greater will be the possibility of dealing with the resources problem in a more just way than the present RAWP formula.
  In the Queen's Speech, my right hon. Friend has put forward non-controversial legislation. There is a general welcome for it, but I am afraid that this year he is not the only Secretary of State putting forward non-controversial legislation. In fact, I am having a job to find any controversial legislation in the Queen's Speech. I do not envisage any all-night sittings dealing with the Briggs report, or any protracted Committee stage.
  Mr. Deputy Speaker (Sir Myer Galpern): I hope that the hon. Gentleman's forecast will prove to be correct.
  Mr. Pavitt: I apologise to you, Mr. Deputy Speaker. As ever, you are always right and such sittings are onerous on the Chair.
  Therefore, as usual, we can commend the things that we like in the Gracious Speech and comment on the omissions. I should like to make two quick comments.
  Thank goodness that the anomalies in the attendance allowances—the right hon. Member for Wanstead and Woodford dealt with this point—for those on renal dialysis are at last being dealt with. For too long there have been unfairness and administrative muddle when subjective judgments have been made and have led to different awards in similar cases. The fact of home dialysis qualifying is now quite clear, and the fact that one has to have other justifications when being dialysed in hospital will clear up a good deal of the muddle. I am grateful for that.
  Secondly, in welcoming the compensation for vaccine damage, which was announced in the Gracious Speech, one cannot say emphatically enough or often enough that immunisation and vaccination remain one of the greatest means of prevention rather than cure. The vast majority of parents should not be put off by the minority of cases in which damage has occurred. We still need the public to have confidence in these procedures.
  I make this special plea now, and the House will know why. I make a special plea because deafness can be dramatically reduced if German measles can beaverted. I know the present difficulties. I have followed the case very carefully. I know what the BMA is saying. However, I plead with my right hon. Friend that the rubella vaccination programme shall proceed as comprehensively and speedily as possible and that he inaugurates immediately combined operations between the DHSS, the BMA and all concerned. This should take place and the House should be given some statement on the matter before Christmas.
  I turn to the legislation on the education of nurses—the Briggs report. I have been pressing this matter, as have other hon.

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  Members, for some time, because it was a bit of nonsense to implement the Salmon report on structure and then to wait for so long to decide what one did about the education of nurses within the structure.
  I sometimes wonder whether the first initial of the DHSS means "delay" or "defer", because certainly those delays and deferrals aggravate not only some of the points that the right hon. Member for Wanstead and Woodford was making but many other problems that the NHS faces.
  The Salmon report was published as long ago as 1966, we had Briggs in 1972, and we had a Government statement in 1974. Now we may see some benefit by 1980.
  I do not ever regard the Royal College of Nursing as being the most revolutionary of bodies or as being composed of the most militant people in these matters. However, I confess that I had no surprise when, after the nurses met my right hon. Friend at Harrogate, they immediately sent him a telegram urging less complacency and categorically declaring that a crisis existed in manpower—and that means nurse power, of course—money and morale.
  When the Briggs legislation is discussed in detail, the key question will be whether students should be employees of the NHS—another pair of hands and pair of feet, carriers of bed pans and bedmakers—or whether they should have full-time student status. This is a vexed question, because in the present circumstances these two differing things must be incorporated into their work situation. For myself, I accept the COHSE statement that nurses must retain employee status but that their placement and where they work must be determined by educational needs and not by the requirements of a shortage of staff in some hospital or other. The School of Nursing, in the ultimate, must be responsible for their supervision throughout the training period, even though they are employees in ordinary terms within the hospital service.
  The Second Reading and the further discussions on this legislation will enable us to go into a number of these points and the whole question of the way in which the nursing profession at present is feeling within the NHS. It is a much loved profession. In this place no Member
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  of Parliament ever makes a speech against nurses. We are always for them. But although kind hearts may be more than coronets, nurses can do with a bit more practical help in respect of their pay and conditions and a little less of the sentimentality of the Florence Nightingale image. We are only too pleased to pay tribute to them. It is about time we gave them the money.
  The problem of nursing today can be illustrated best by the way in which we overload and exploit those nurses who are the most devoted and who have the heaviest responsibility—those who are in charge of nursing staff. They are devoted because that is what their training has led them to. Patient care is so much a part of their philosophy and the way in which they have worked for years that, come staff shortages, come sisters on courses and then come crises in the wards, these are the people who do overtime, work at weekends—the lot. It is the best nurses who are being clobbered the most.
  When he replies to the debate, my hon. Friend the Under-Secretary might better inform us about the compensation for overtime and entitlements for compensating time off. I am not sure whether, when someone has worked over a weekend, she gets another three days or only two days off. If two, that is totally inadequate. We need to solve the problem, not to compensate for it. I commend to all hon. Members the document that the right hon. Member for Wanstead and Woodford and I have both read, which is called "An Assessment of the State of Nursing in the NHS 1978", which was published this week by the Royal College of Nursing, because there is enough meat in that to enable our debates to be informed and for us to be able to talk with knowledge about what the nurses themselves feel about the circumstances in which they work today.
  I regret that the Gracious Speech contained nothing at all about the reform of the Whitley Councils. Some years ago, in The Lancet, a council member said:
  "There is no subject, however complex, which if studied with patience and intelligence, will not become more complex."
  He went on to say that the author must have been a member of a Whitley Council.

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  I welcome the new initiatives that the Secretary of State has announced today. I welcome the getting together of an upper echelon which might, perhaps, be able to cut through some of the problems which develop at lower levels and remain unsolved through the ordinary Whitley machinery. But can one wonder at the recent disputes when there are as many as 56 different scales in the Administrative and Clerical Whitley Council alone, apart from the other Whitleys, when there are 41 organisations each with the right to negotiate in the administrative and clerical grades, and when out of the 56 scales quite a number have been obsolete for years and have just never been deleted? Why not? Is it not about time that all this was put in order?
  I welcome the Secretary of State's consultative document on the settlement of disputes at local level but, as I have said, consultative documents can be a way of buying time. In my view, in health matters time is not on the side of right decisions. One needs consultation, but one also needs to be able to reach the right decisions as speedily as possible.
  The right hon. Member for Wanstead and Woodford started his speech by talking about the omission of the dog that did not bark. That was the reorganisation of the NHS. As I said in my opening remarks, the only person who seemed not to be surprised was me, but I was quite certain that there could be no possible legislation this Session on that subject. Indeed, I informed Mr. George Clark of the same. I am sorry that he did not print all of the rest of what I said rather than the bits that he did print.
  Change is inevitable, whichever party wins the next General Election. My right hon. Friend was a little chiding of the fresh group on the Opposition Benches having another look at NHS organisation, but I remind him that that is all to the good. The last group that the Opposition had studying this subject cost £300,000 of taxpayers' money. Then, after they had done the job and made a mess of it, they said "We are sorry. We made a mistake." At least the working party will not cost the taxpayers anything; therefore, the more homework it does the greater will be the advantage to the House.
  Mr. Nicholas Winterton: The hon Gentleman has expressed the view that a further reorganisation is necessary. Will he specify to the House not necessarily his party's official view but his own view as to how that reorganisation should take place, and what should be done?
  Mr Pavitt: That lecture usually takes me an hour and a half, and I do not wish to delay the House for that length of time.
  There is a good deal of misapprehension and delusion on costs, and in spite of the very good news today of a shift of £13 million from administration to patient services, the idea of shedding a tier by getting rid of the area health authority or the regional health authority, and thus releasing massive resources, is a complete fantasy. I have the figures of the total cost of management. The cost of the regional health authorities is £35 million, of the area health authorities £90 million, and of the districts £74 million. That is about £200 million altogether.
  I estimate that the most that we could save—and I hope we shall save it—would be about £20 million. In terms of the £8,000 million that we are spending at the moment on the Health Service, that is neither here nor there. What is more important about the reorganisation is not the financial aspect but the waste of time by having decisions made in a much too cumbersome way, and having too many clinically trained and other qualified people sitting round tables rather than sitting round ward beds. I shall welcome reorganisation when it comes, because there is no doubt that one of the greatest losses of morale has arisen from the disappointment of hospital staff, general practitioners and community physicians in finding that reorganisation has not produced greater efficiency but has led to greater inefficiency.
  In my view, when we talk about resources, nothing less than 7 per cent. of the gross national product will start to meet our problem, and that is a massive increase. I accept all the economic factors that were stated from the Front Bench yesterday and this afternoon, but I still think that my Government should accept the figure of 7 per cent. as the target to be phased in. I hope that they will plan towards achieving that target, because

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  anything less will make it almost impossible to deliver the services to which people now feel they are entitled.
  We shall be discussing public expenditure in relation to other parts of the Gracious Address. It is my right hon. Friend's responsibility to see that it is used to the best advantage. For example, massive savings could be made in the drugs bill. There could be savings made in the way in which supplies are brought in. There are other ways in which one would hope that savings could be made.
  There is one small matter that I wish to bring to the attention of my right hon. Friend. I think that he should take steps to arrest any action on the part of the private enterprise sector which yields profits to entrepreneurs and leads to heavy losses to the taxpayer. I understand that there is a proposal to import, from the United States of America, coin-operated blood pressure measuring machines. This could mean that every time a person went to the chemist he or she could become a do-it-yourself heart specialist, taking his or her blood pressure by putting a coin in the slot.
  I think that the introduction of a machine of that sort would be a disaster. I can think of no better way of producing a nation of hypochondriacs than to have people checking their blood pressure—especially after making speeches in the House of Commons, or anywhere else for that matter. I can think of no surer method of producing an astronomical rise in the cost of medical treatment by general practitioners, nurses and pharmacists. I can think of no quicker way of putting jet propulsion into the cost of medicines, which is at present £540 million—half as much again as we pay general practitioners—and sending that cost up into the stratosphere. I realise that this is a small matter but I ask my right hon. Friend to make sure that we are not involved with any machines of that sort.
  The Gracious Address always finishes with a prayer. I also feel like praying for a healing process within our National Health Service. I believe that it will get back on course only when the morale improves and when the 1 million people who work within it can identify themselves with a purpose greater than the self-interest of the small group, and
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  greater than their own personal self-interest. Only then, I believe, will they begin to feel proud of their own contribution and proud and respectful of the efforts of every other participant in the National Health Service, however important or lowly their task involved may be.
  I have spent a good deal of my parliamentary life in addressing myself to that task, Mr. Deputy Speaker. Indeed, it is 20 Sessions ago that I was the first new Member to make a maiden speech on precisely this subject. Although, 20 years later, my head is a little bit bloody, it is still unbowed. I pray that we shall do our part in this House towards the fulfilment of this task.
  5.15 p.m.
  Mr. David Crouch: if thought that it would affect the blood pressure of the hon. Member for Brent, South (Mr. Pavitt) I would not say what I am about to say, Mr. Deputy Speaker, but I think the hon. Gentleman knows that I am about to make a declaration. I am obliged, by the conventions of the House, to state that I have an interest in providing pharmaceuticals for the National Health Service. As the right hon. Gentleman the Secretary of State knows, I am also one of his employees. He holds my job in the palm of his hand and can consider sacking me at the beginning of a speech, and certainly at the end of it, because I work on one of the regional health authorities.
  The other day I read one of those typically waspish and gossipy comments about my right hon. Friend the Member for Leeds, North-East (Sir K. Joseph) having put his head in his hands at the Elephant and Castle and said "What have I done?" If I worked in the Elephant building, I would put my head in my hands every morning, but that is a purely architectural thought. When thinking about that waspish comment I could not help remembering that it was my right hon. Friend who projected me into this interest in the Health Service eight years ago. Whatever may be wrong with it, I am still there, thanks to the good will of the right hon. Gentleman the Secretary of State and his predecessor.
  The hon. Member for Brent, South always addresses the House on these health questions with great sincerity and always shows that he has given considerable study to the problems involved. He

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  knows a great deal about health matters and makes a very genuine contribution. Like him, I too feel very much concerned when I express my views on the Health Service. I do not think that he or I can be accused of being guilty of rushing in to find ready scapegoats for what is wrong in the Health Service today.
  When I use the term "scapegoats", I do not mean persons. One of the most obvious scapegoats—picked on by the press, by the public, by doctors, by consultants, by nurses, by many who work in the Health Service, and also by patients and by Members of Parliament—is the reorganisation of the National Health Service. It is said to be the cause of all our problems, but it is not. There are many causes of the problems in the Health Service today, and I suggest that it is wrong always to asusme that reorganisation four years ago was the cause of the problems that we face in the Health Service, and, indeed, the crisis that we face today.
  The Secretary of State took the opportunity to tell us something about the state of the NHS today. I noted one of his comments in particular. He picked out as a good point that in the last few years, under his own leadership of that Service, the number of in-patients treated in our hospitals had increased by a very large amount.
  We were supposed to be pleased at this increase in the provision of health care by the National Health Service. I would only say to him "I wonder whether this really is something to be proud of". I have felt for a long time, and I have said it in this House on many occasions, that we should be looking more to preventive medicine to prevent people having to go into hospitals as in-patients or outpatients—much more so than priding ourselves on the fact that our hospitals are able, and are having, to provide more service today for in-patients and out-patients.
  This is one of the areas in the reorganisation which has been neglected. We used to have regional hospital boards; now we have regional and area health authorities. The change from the title "hospital boards" to "health authorities" meant that these bodies operating under the Minister were to be responsible for the
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  whole panapoly of health provision—for the GP service, preventive medicine, the ambulance service, and so on. But we neglect to this day to recognise the massive and major change that has occurred. We are still paying much too much attention to the hospital problem, which, enormous as it is, should not dominate our thinking and our decisions to the neglect of those other areas so vital in the Health Service.
  Mr. Ennals: Quite right.
  Mr. Crouch: The Secretary of State says "Quite right ". I am delighted to have his support but I am sure that he will not make such a nice comment about what I next have to say.
  As the right hon. Gentleman stood at the Dispatch Box, with the Prime Minister listening to him, I was surprised that he, as the responsible Minister on this second day of the Queen's Speech debate, devoted so much of his speech to criticising the Opposition and saying "Come on, tell me what are you going to do". That was an extraordinary turnaround for a Secretary of State. We heard the Queen's Speech delivered in the other place. We heard the debate started yesterday by the leader of the Opposition and responded to by the Prime Minister. Today we have the first Cabinet Minister coming to this House to tell us about the state of the Health Service, and he is doing so only because my Front Bench decided that we would force this issue on an unwilling Government. We asked for the debate. It could not have come from the Gracious Speech, because only the minutiae of health happens to be mentioned there—the Briggs report. That was a little piece of necessary action, but not a major action, to put right something that is going gravely wrong in our country. It is one of our major social provisions for which I bow to no one in saying that I praise the Labour Govenment of 1948 who brought in the Bill which produced the National Health Service. I am the first to praise that, but now we have a crisis in the Health Service and we find an almost passing concern on the part of the Government—
  Mr. Eric Moonman rose—
  Mr. Crouch: I shall give way in a moment. I know that the Secretary of

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  State takes his responsibilities very seriously. We have heard his expressions of concern, almost emotion, on television. We cannot blame him for that, because some people's lives are at stake. I do not think that he neglects his responsibilities at all. But the right hon. Gentleman did not write the Queen's Speech. I believe that when the Prime Minister and his inner Cabinet came to consider what would be done in this last Session of this Parliament they ought to have given much more serious care to giving and deciding on much bigger action to help the National Health Service out of its difficulties. That is what I am complaining about.
  The Secretary of State chose as his principal topic my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) and tried to deflect everything across the Floor of the House by asking my Front Bench "What are you going to do when you become the Government?", as though he is almost expecting that to happen within the next few months.
  Mr. Moonman: I am grateful to the hon. Gentleman for giving way. I believe that the point on which he is teasing at the moment is an unfair one. If my right hon. Friend wishes to obtain the views of the Opposition Front Bench, that is perfectly legitimate in a debate on such an occasion as this. After all, in previous debates both sides have indicated that many of the difficulties that we are facing, including the industrial relations one, go back four years. I am referring to the reorganisation of the Health Service. It is totally unfair for any hon. Member to select or reject those items which have come up in debate when much of the problem arises directly from actions taken by the previous Administration.
  Mr. Crouch: That is no doubt a good debating point. The hon. Gentleman is a good debater, but he will not trip me up like that. I came here wanting to hear what the Secretary of State would say. He might even have said "We cannot do it now, but we shall do it when we next have a Labour Government". The right hon. Gentleman might have looked ahead to that, but he did not.
  Mr. Ennals: I think that when the hon. Gentleman comes to read my speech
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  he will see that about four-fifths of it dealt with the three major aspects of the Health Service and the position of the Government. It is perfectly true that I put a number of questions to the Opposition to which I hoped they would give answers. I was deeply disappointed to find that I did not get answers to any of them. But most of my speech was devoted quite positively to the Government's policy. I hope that the hon. Gentleman will read it.
  Mr. Crouch: Of course I shall read it very carefully. I am glad that my right hon. Friend did not start intervening in the Secretary of State's speech, because that might have delayed this debate and we want to get on. I have no doubt that my hon. Friend the Member for Reading. South (Dr. Vaughan) will be making some comments on those points at the end. But enough of that.
  The Secretary of State took three subjects as his text—resources and priorities, organisation and, finally, industrial relations. We are grateful to him for having singled out the three major areas where problems exist in the NHS. There are other areas, but those are the three major ones. In the main, I should like to comment on two of them. I shall leave out industrial relations, because what I would say would not really help the situation at this stage.
  It is revealing to learn that we are today spending £8,000 million a year on resources and priorities—more than we spend on defence. Such is the priority of health care in this country. In my view it is not a penny too much. But spending is not unlimited, as I said to the Secretary of State in an intervention. I was glad that the Prime Minister could hear that intervention, because spending is not unlimited. In April 1976, cash limits came into operation. I not only sit on a regional health authority, but I am also a member of the Public Accounts Committee. It is very revealing to sit on that Committee and see behind the scenes and discover exactly what happens.
  Outside this House, I am a business man. Only this week I said to some industrialists "I have never seen in private business of the biggest kind the operation of such stringent control of expenditure as now exists in the operation of the cash limits". It is so stringent that I do not

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  think it is realised by those down the line who have a delegated responsibility for spending that money. The Secretary of State knows what I am thinking about. I am thinking of people in some areas in the country who are reluctant to accept the figures given to them for their budgets for the year and who even turn to him and say "We shall not accept the figures". The Secretary of State is thus put in a very difficult spot. But he has no freedom, because it is the Treasury which has set those cash limits. If those cash limits are exceeded the matter will be reported to the Public Accounts Committee. Such is the way that we work our democracy today, and it is right that we should.
  Even with £8,000 million a year not being a penny too much—it is strictly controlled to that amount—in my view it is still not enough. We lack resources for the provision of care for 54 million people in this country. Why? Perhaps because we use the most expensive part of the Service too readily. We use the hospitals too readily. They are the most expensive part, and, let us face it, people are living a lot longer than used to be the case. Although there are not all that many people between the ages of 75 and 85, that is where there is a major expense in the Health Service today, because such people need the expensive health care which only a hospital can provide.
  The crisis in the Health Service—at £8,000 million a year—means that the Service is dragging its feet in the development of new techniques in medicine. Some of these techniques have been invented in this country. Some of our major teaching hospitals do not even have a brain scanner, which was invented by EMI. One can go to hospitals in America and find five scanners in one hospital. These have been exported from Britain, earning us foreign currency, but we cannot afford the privilege of having them in this country. We have had to close down neurological and neurosurgical units in this country because we can only afford to have them in certain places. It is expensive to have the modern techniques that can save lives and save suffering.
  That is why the Service is in such a crisis. But it is not just a matter of
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  money. Of the £8,000 million, about 70 per cent. goes in wages and salaries. That means that pay demands and pay awards will have an enormous effect on the provision of resources for the whole of the National Health Service. In short, the operation of a pay policy, however it is determined and structured, is crucial in the effect that it has on the resources available for health care.
  I turn to the question of priorities. It is not for me to say where we should get the extra money. I can only say, as a Back Bencher, that I do not think we can spend any less.
  Mr. Ennals: Have a guess where it should come from.
  Mr. Crouch: Yes, I shall have a guess. The Secretary of State will draw something rather Tory out of me. I believe that the money need not all come from taxation. I acknowledge that we must provide some money, and that there has to be a contribution towards the cost. That would have been anathema 30 years ago, but we live in different times now. I believe in a high-wage economy, and from high wages I believe that there should be greater responsibility for people to provide something more towards this enormous cost.
  If we are to get new equipment—particularly new radiography equipment—to produce the sort of luxury service that can be found within the Health Service we must have more money, and some of that money must not have to come from general taxation. It must come from a voluntary provision as well. I am not saying that it should replace it. The last thing that I want to see growing up alongside the Health Service is a second health service. I am saying that within the National Health Service there must be an additional contribution, made by decision.
  I am glad that the Secretary of State is here. Let us acknowledge that he is listening to our debate. He could leave because his Under-Secretary is on the Front Bench, but he has not done so. Wait till he hears what I have to say about reallocation! Who knows, perhaps he will agree with me. I want to talk about priorities. I have had a lot to do with the Resource Allocation Working Party—RAWP—and I am not happy

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  about reallocation. It is having a traumatic effect in its operation.
  I come from Kent, and the population of Kent and East Sussex is growing. There is considerable emigration to these areas from London. Therefore, there is under-provision for health services in these outer areas. They need more money. The amount spent per head there is very much less than is spent per head of the population in London. All this has been revealed in answers and publicised statements. Nevertheless, no matter how much reallocation is justified, it is very rough in its operation.
  Of course there is over-provision in the London areas because of the declining population of the capital. The 12 London teaching hospitals are expensive hospitals that were built either a long time ago or since the war. They are expensive, their standards are high, and that is right. They are centres of excellence, and we must keep them that way. They are also universities. We must not forget that they are also engaged in research and development of new techniques and studies for higher standards of care which permeate to the rest of the Health Service and to the district hospitals later.
  We all know that in teaching hospitals one can find different techniques, higher standards of care, and even a higher performance on some occasions. That is why people elect to go there. There is a great deal of moving across the boundaries into the London teaching areas. Anyone would think that I was a London Member when I talk in this manner. I am not, but I talk like this because I have an affection and great regard for the London teaching hospitals. But with our limited resources, reallocation is necessary. It has been ordered by the Government, and I support it. But in areas outside London we must allocate more, particularly to the north-west, Trent, and so on.
  Mr. F. A. Burden: And Medway.
  Mr. Crouch: Yes, I agree. But I confess that I am not happy about the prospect for the London teaching hospitals. They are centres of excellence, and they provide a very special contribution to our Health Service. Whatever we do, we must not cripple them. I know that they must relate to the community as a whole, and
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  that they must be related within the NHS as a national service. They cannot be seen as something distinctly different. But I believe that they have certain differences which make them distinct. We must recognise those differences.
  Perhaps without waiting for a Royal Commission we should consider seriously whether the London teaching hospitals should be separately managed. I know that the Secretary of State has such a consideration, in a small degree, in the back of his mind. They are so important that we cannot allow them to suffer from blanket decisions which must be made because of national provisions, because if that were done we could lose something very valuable in the process.
  I want to make a comment that criticises not so much the Secretary of State as the Prime Minister. Let us go right to the top.
  Mr. Hoyle: He is not here.
  Mr. Crouch: No doubt it will be reported to him. He reads my speeches, and I read his. It is amazing how the hon. Member for Nelson and Coln (Mr. Hoyle) cannot resist taking part in my speeches. That is always the way.
  The Prime Minister, in his calm, bland, cool and almost unflappable manner said that no major steps would be taken in the Health Service until after the Royal Commission had reported, and with that he packed his bags and left. But why should we have to wait? It is wrong to have to wait. There is a crisis in the Health Service and something needs to be done. We expect something to be done. There are many people in the Health Service who will note very carefully what has been said this afternoon.
  I believe that it is not so much a question of suffering from the sins of my hon. Friends who established the reorganisation. We are suffering today from lack of leadership in the Health Service. We are suffering not from over-management but from mismanagement. We are suffering from a failure to operate line management in the Health Service. I see it all the time. With £8,000 million a year, and 1 million employees, the NHS is an enormous responsibility. Delegation and devolution of responsibility are essential. Control must be exercised from and by the Government at the centre. The Secretary

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  of State must give leadership because he is the boss. One thing that the Prime Minister could have done was to relieve the Secretary of State of his other responsibilities and require him to give all his time to the health of the nation. It would be worth it. At £8,000 million a year, it is one of the largest appointments on its own, without the right hon. Gentleman having to be responsible for other aspects of social provision.
  There is a crisis in the Health Service, and there is restiveness. The situation is so serious that we should not have to wait for the Royal Commission to tell us what to do. At a time when we are facing this grave problem it is extraordinary to say that we can do nothing, that the Government cannot act, and that Parliament is not even allowed to think about the matter. We should not have to wait, but we continue to suffer. The Government have decided to soldier on and to turn their backs on this crisis in the Health Service. This is not good enough. The Government's failure, and indeed refusal, to act is a monstrous example of indifference to one of the major social problems of our time. They have missed their opportunity, and they do not deserve our confidence.
  5.42 p.m.
  Dr. M. S. Miller: I am sorry that the hon. Member for Canterbury (Mr. Crouch) has taken 25 minutes to tell the House that there is a crisis in the National Health Service, and has told us nothing else.
  I wish to add my welcome to the Government's commitment to fresh support for the NHS. I was sorry that the right hon. Member for Wanstead and Woodford (Mr. Jenkin) devoted the major part of his speech to a post mortem examination of the recent industrial action which upset the Health Service. I am not saying that we should not discuss the problems in the NHS, but I wish that the right hon. Gentleman had stuck to the theme of today's debate, namely, what is to be done in this Session of Parliament about the Health Service.
  Having listened to the right hon. Gentleman, and having heard press and television reports, one would imagine that the problems in the NHS were new, and that there was once a golden era in
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  medicine before the establishment of the NHS. Nothing could be further from the truth, as those of us who remember the days before 1948 can testify.
  The fact of the matter—and I say this with a good deal of regret—is that at present another battle is being fought in the long war against the NHS, a war which unfortunately has been going on for 30 years. It is all very well for the Opposition to pledge their support now for the Health Service. Their predecessors did not take that view in 1947 and 1948. There has been stubborn opposition to the development and continuation of the Health Service which has followed on from the stubborn opposition which occurred when the idea of the Health Service was first mooted in 1946 and 1947 during the long debates that then took place. That opposition has not disappeared.
  Yet if we face the situation honestly—and this was a matter on which the hon. Member for Canterbury was totally wrong—we must take the view that a Health Service is needed even more today than it was 30 years ago. It is all very well for the hon. Gentleman to say that people should make a contribution. Costs in the Health Service are growing in geometric progression. Not only do we have to pay much more for old-established, well-tried services, but in addition advances in science and in technology have yielded diagnostic and therapeutic procedures unheard of, indeed undreamed of, 25 or 30 years ago.
  All branches of medicine and surgery have made enormous strides enabling those with kidney failure, heart conditions and blood disorders, to mention only a few examples, which used to have rapidly fatal consequences, to lead useful and even completely normal lives. Orthopaedic procedures for hips and knees have literally transformed a generation of sufferers, who a short time ago would have been confined to wheel-chairs, into fully ambulant members of the community.
  Even in conditions which as yet are not amenable to cure, the Health Service is the great saviour. I have a constituent who suffers from a relatively rare disease of the nervous system known as Hunting-ton's chorea. Recently I had a long discussion with the secretary of an organisation which is striving valiantly to combat

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  this genetic disease. Although the disease is incurable, the Health Service provides a great deal of support for the victims—support which has bankrupted families in the United States, for example, where there is no National Health Service. There the very rich can afford the enormous amount of money necessary to sustain the sufferer over many years, and the poor can obtain institutional care. But the vast majority of the population who are in the middle have to pay and pay and pay. This is also true of many other long-term illnesses.
  The point I am making is that this enormous expense must be met on a national and not on an individual basis. The Health Service must be free at the time of use. But I do not think that shortage of money alone lies at the root of present unrest in the Health Service. Part of the problem is of our own creation. I am referring to the greater and greater expectations which the nation now has in respect of the part which the Health Service can play in our lives. This applies to all the workers in the Health Service. It applies to doctors, nurses, medical laboratory scientists and all the staff, as well as to the patients.
  This is a good thing, but it imposes an enormous strain on our resources of skill. This is an important aspect of the matter. There is a limit to the total amount of skill upon which we can call. This is one of the great problems that face us in the Health Service. There is no panacea, no overall speedy cure for all the problems, no shibboleths to be mouthed as passwords to perfection.
  There is no lack of suggestions. Indeed, the suggestions are so numerous that it is obvious that we need a rethink of how to dispose of NHS income. But—and this is important—there can be no question of going back or of nibbling away at the Health Service until it is completely eroded. Perhaps the Royal Commission will come up with some answers.
  Is there, for example, a surfeit of organisation? If so, we know where the responsibility for that lies. It is interesting to note that Scotland has a different structure from that in England and Wales and, in addition, Scotland has a much higher proportion of consultants who are full time in the National Health Service. This is a mode of action which my right
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  hon. Friend the Secretary of State for Social Services would do well to examine carefully, and perhaps copy.
  Should we, for example, encourage even greater authority to the doctors in the Health Service? Would this help? One eminent medical journalist put the matter this way only a few days ago:
  "Doctors are the sine qua non of this or any other health service. We know that we are indispensable, or at any rate most of us believe it, and so do most of our patients."
  He continues in the following vein:
  "The solution to the problems of the NHS, I suggest, is to restore doctors openly to the position of authority which they once held. There is no point in pretending that medicine is a democratic profession, for it is not. It is a profession where vital decisions often have to be made quickly and clearly and democracy is not a very good way of doing that, whatever advantages it may have in other fields."
  He then concludes:
  "Doctors are despots, but they are on the whole benevolent and enlightened despots. Furthermore, they are elected despots, for the patient has—or at any rate should have—the right to tell his doctor to go to hell, and to seek another one."
  I mention this at some length because there is no use denying that it is a widely held view in the medical profession, but I hasten to add that it is not my view. However, we must examine whether over-organisation has not given doctors the feeling that professional freedom has been seriously eroded. But doctors must realise that accountability must accompany the very real freedom which they enjoy.
  I make only one suggestion which, in my opinion, would go a long way towards accomplishing what the Government describe as:
  "Fresh support … to enable the National Health Service to fulfil and extend its services to the public."
  I advocate a considerable switch of funds to the family doctor sector. It is not good enough that this sector should command only 8 per cent. of the total budget. General practitioner services are the vital element and the GP is the first, and for most people the only, contact with the NHS. An increase in resources in this area would pay handsomely in fewer referrals to hospital and consequently more time being available to surgeons to carry out operations and reduce waiting lists. It would also reduce the enormous drug bill and have other benefits on

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  which time does not permit me to elaborate. To accept the family doctor as the linchpin of the whole Service and to allocate funds accordingly would have a snowballing effect on the whole Service.
  I am not being complacent, because I know that there are problems, but I should like to move on to a serious omission from the Gracious Speech, namely, that we should have had a complete revision of the conditions that have to be satisfied before a pension is paid for industrial deafness. Unfortunately, deafness is regarded as something to poke fun at or, at least, as something not to be taken as seriously as blindness, and this is not so. The Secretary of State can be assured that those of us involved in this area will continue to press for legislation.
  Today's debate concentrates on the NHS and, according to my calculations, should occupy about 5 per cent. of the total time allotted for the debate on the Gracious Speech. However, I know that you, Mr. Deputy Speaker, do not have a rigid 5 per cent. fixation and I should therefore like to mention briefly one other matter that is related to health, if not directly. I refer to housing. Proposed legislation for a new charter of rights for public sector tenants is included in the Queen's Speech. Nothing could be more welcome, but I conclude with one question directed to my right hon. Friend the Secretary of State for Scotland and of which I have given him notice. Will the provisions envisaged in the Queen's Speech apply to the development corporations of new towns in Scotland?
  5.52 p.m.
  Mr. George Thompson: When one debates the National Health Service, one has an impression of déjà vu, but those of us who regularly attend such debates at least look like tributes to the NHS in the standard of our health and our voices. In any case, there cannot be much déjà entendu on these occasions, because the NHS has so many facets that we can regularly turn to it and always find new elements that one or other of us would wish to emphasise.
  I wish to deal with the short section of the Gracious Speech that relates speci
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  fically to the NHS. It falls neatly into three segments. First we are told that
  "Fresh support will be given to enable the National Health Service to fulfil and extend its services to the public."
  The Secretary of State has spelt out a little of this fresh support, because he specifically promised more money for geriatrics. We in the SNP welcome this extra help, and this is the area on which I should like to concentrate, because it is the area on which the Scottish Home and Health Department concentrated in its report for 1977.
  In the section dealing with mental hospitals, the Department said:
  "Greater emphasis might be placed, however, on the development of day areas and on the recognition of the need for day and bed areas to be on one level in view of the increased numbers of elderly patients with restricted mobility."
  Will some of the extra funds which are envisaged be used to help this development?
  The main sections of the report on which I wish to comment are those dealing with the geriatric services, and they are sections 9.12 to 9.14. In section 9.12 we are told that
  "There is still, however, a shortage of paramedical support in many hospitals resulting in an inadequate input from occupational therapists, speech therapists and physiotherapists"
  and that
  "there are still considerable waiting periods for admission. This is in part due to a lack of resources in the community for the reception of discharged patients."
  It would be interesting to know what action the Government intend to take on that matter in this Session.
  In section 9.13, we are told that there is a need for further expansion in in-service nurse training with
  "possible increases in the availability of courses in geriatric nursing care".
  What does the Gracious Speech hold out in this area? In section 9.14 we are told that
  "The development of day care has been slow".
  I emphasise that I am quoting from the Department's report, and if I am thought to be sniping at the Department I am doing so with the ammunition that it has provided. Can we now expect some

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  speedier provision in the development of day care? The report says that
  "there is interest and willingness, but problems of accommodation and transport have delayed the much needed expansion in this field".
  I accept that there are problems of transport, particularly in rural areas, but we must still recognise that for some, possibly many, patients, the only solution may be hospitalisation, and there is a problem in cities such as Glasgow, with declining populations and therefore, to some extent, ageing populations. It would be useful to know what the Government propose to do about such cities.
  The Under-Secretary will remember that in paragraph 227 of the White Paper "Prevention and Health", published in December 1977, we were promised a White Paper on the elderly in 1979. Is that White Paper on schedule?
  My party is not alone in believing that geriatric patients should, wherever possible, be maintained in the community. We would give priority to the building up of an effective community geriatric service, even if we had to accept a reduction in hospital-based facilities—provided that the resources thus saved were devoted to the community geriatric service. We would aim at a planned and co-ordinated medical service for the elderly, both in hospital and in the community.
  I was much impressed by a sheltered housing development that I saw in Dunbar during a recent by-election campaign. I had not previously seen sheltered housing, although I had spoken about it in the House and outside. I was very impressed with the standard of this development and the care shown for the residents by the staff.
  Although I was not terribly successful in winkling out votes for the SNP candidate during my canvassing, I was pleased that all the residents declared their belief that they were receiving an excellent service from the staff and that they were very satisfied with this provision. I am glad to see that in Stranraer, in my constituency, sheltered housing is being provided partly by the district council and partly by the Church of Scotland.
  When we consider the elderly in the community, we ought to pay tribute to the many voluntary groups that work with them as friendship groups, and so on. I recently attended a concert organized
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  by one such friendship group and I felt obliged to tell the people there that they looked considerably more cheerful than do hon. Members, yet they were being subjected to precisely the same treatment—a short speech from me.
  I turn now briefly to the second point to which I wish to refer in the Queen's Speech—the proposal to implement the Briggs report. I am well aware that we shall have the opportunity to debate the Bill soon. It has been published today. My party will oppose that part of the measure which seeks to centralise and standardise, because we are not convinced that after devolution those two processes will necessarily be a good thing. The Government's consultation with the nursing profession in Scotland caused considerable anxiety and agitation among certain members of the profession last year. It will be interesting to see what approaches are made to us when the Bill has been studied by the various bodies involved.
  The Queen's Speech refers to the proposal to compensate vaccine-damaged people. I welcome and support that on behalf of my party. We believe that it will encourage parents to seek vaccination and immunisation for their children, a course which I regard as highly commendable. I am old enough to remember the problems that diphtheria used to cause, problems which now rarely arise in society.
  I agree with one point made by the hon. Member for Canterbury (Mr. Crouch). The Scottish National Party believes that there is a need in Scotland for greater concentration on health education. Too many of Scotland's health problems are self-inflicted by abuses of alcohol, tobacco and, occasionally, of wrong diet. Our people therefore need to be encouraged to pursue a higher degree of personal and family responsibility for self-help and support during illness.
  6.3 p.m.
  Mr. Doug Hoyle: I am always amazed that the Tories take exception at being asked to give their plans for the Health Service. That is a fair point, and one upon which they should come clean. I am certain of one thing. They would destroy the Health Service as we know it and would base it once more on wealth and privilege.

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  I am sorry that my right hon. Friend the Secretary of State has had to leave. I must take issue with one or two of his comments. The important point about the Health Service is that 75 per cent. of the budget goes towards providing pay and conditions for the staff. It is obvious that we shall not obtain the Health Service we deserve unless we can satisfy the demands of the staff. We hear a lot about the way in which the staff are alleged to strike, at the expense of the patients. There are no more dedicated bodies of workers in this country than the Health Service staff, and it is because of their dedication that there have been so few disputes. We should not, however, stretch that loyalty too far.
  The dispute of works superintendents and engineers recently was a case in point. These people waited for four years for resolution of a simple grading question. Which other industry would have tolerated that state of affairs? We should be addressing our remarks not to the fact that a dispute occurred but to the fact that it took so long for the matter to be resolved. This body of people did not take a sudden decision. They were most reluctant to take action, but they were pressed into doing so.
  The right hon. Member for Wanstead and Woodford (Mr. Jenkin) asked why a pay scale for grades 4 and 5 was put forward only two months ago. The dispute had nothing to do with the Government's 5 per cent. limit. The whole affair could have been settled without a dispute. I see my hon. Friend the Under-Secretary of State shaking his head. He had dealings with this matter and at that time things were going quite smoothly. Perhaps he should have continued to deal with the issue. We might then have avoided a crippling dispute. The dispute was not the fault of the trade unionists in the Health Service.
  Let me make one or two points about the Whitley process. It is nonsense to go through the charade of trade unions meeting the so-called representatives of the employers, many of them coming from the councils and the RHAs. These people are well-meaning and well-versed, and they have the interests of the service at heart. They are short, however, of knowledge of industrial relations and of
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  the bargaining procedure. I used to serve on an RHA and I was the first trade unionist that these people had met. Yet it is they who are supposed to represent the employers. The negotiations should involve the people who take the decisions—namely, the officials. It was the officials and the TUC who finally settled the dispute to which I have referred.
  Certain grades negotiate directly with officials, but in other cases there is a game of musical chairs. We have seen the result of that. The patients are affected, and the staff of the Health Service do not want that to happen.
  Let me declare an interest as the president of ASTMS, and let me raise the question of the appointment of health and safety representatives. One would have thought that the Health Service would be taking a lead in this area, but the necessary funds to enable it to do so have not been made available. I hope that my hon. Friend the Under-Secretary will tell us why. Safety should be a prime concern in the Health Service in the interests both of the staff and the patients. So often, however, the Service falls down in this area. Some of the happenings in laboratories are disgraceful.
  Matters should be handled a great deal better than they are, especially where they affect the staff. It is a shame that the situation has reached its present pitch. We should cut out a lot of the waffle and appoint people who are more experienced in labour relations and man management. We should get rid of the top-heavy bodies in the Health Service.
  I want the Health Service to be what it should have been in 1948—the jewel in the Socialist crown. We can make it that only by providing decent conditions, pay and salaries in order to keep staff in it. If we do that we shall be well on the way to getting the Health Service that we all want and deserve, and we shall at the same time be giving the workers the conditions that they deserve.
  6.10 p.m.
  Mr. David Penhaligon: Something more serious has happened in the National Health Service over the past few years than has been referred to in the debate so far. I have in mind industrial action. We all know that there is tremendous loyalty among hospital staffs and that dedication is shown to those whom

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  they treat. However, there has been a breakthrough in industrial action. At various times three or four sections of those working in the Health Service have had reasons that to them have been important enough to cause them to go through the barrier. When the barrier has been broken once, such action becomes an acceptable part of wage negotiation within the Service.
  Since I have been a Member of Parliament the barrier has been broken on three or four occasions. That action has been taken by nurses, doctors and superintendents. The dentists had a sort of half strike. We are now near the stage when the breaking of the barrier is considered to be an acceptable part of wage negotiation within the Service. Once that stage has been reached, there is, tragically, no going back.
  There is little about the way that attitudes are developing in our society that makes me believe that there will be any step taken back once it is considered that strikes are acceptable. It would be interesting if those who campaigned so long and hard and ultimately set up the National Health Service in 1948 could reflect on the present situation.
  It may be that the overall percentage of strikes is not especially high, but we must recognise that striking is a growing trend. One has only to talk to those in the Health Service to realise that the breakthrough has been made. How many more groups are now prepared to talk about strike action, or at least go-slows or threats of industrial disruption, in pursuing their claims?
  I do not know whether the negotiation system for NHS pay settlements is wrong. I do not know how justified the superintendents were in the action that they took. We cannot possibly make a judgment unless we have an intimate internal knowledge of exactly what individuals do at various levels throughout something as complex as the NHS. Looking in from the outside as a layman—I am by training an engineer—as opposed to someone who describes himself as even a quarter medically competent, I believe that the situation is not satisfactory. A great deal more attention should be given to putting it right than the attendance in the Chamber indicates.
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  It is not satisfactory to have a system that means that the Health Service is free and available when someone is not on strike. That is not the concept of the NHS, and we should be far firmer in saying precisely that.
  I have no wish to talk all the time about the national health part of the Minister's portfolio. According to a recent newspaper article, the Minister's total budget is now £20,400 million. That is a remarkable budget. It must represent 30 per cent. or 40 per cent. of total public expenditure. It is truly an enormous sum. However, one of the most expensive areas of the Department's expenditure is pensions. I cannot be satisfied when there is a never-ending stream of constituents attending my surgery to discuss their social security problems. Many of them have recently retired after working throughout their active life.
  We have developed a system that means that those who retire on supplementary benefit will die on supplementary benefit. The new pensions Act has increased that likelihood. We are not even talking about introducing a scheme that will remove from supplementary benefit those who have retired on it.
  We are clearly committed, and rightly so, to increasing supplementary benefit levels in line with wages or costs. It seems that the present system will jog along and that those who retire on supplementary benefit will die on it.
  The new pensions Act means that those who are now 45 may find that some of the present problems have been solved when they reach retirement age. However, it is not satisfactory to tell a retired man of 66, for example, that his weekly income will be examined by the State bureaucracy every week from now until he dies. That is not satisfactory, and every hon. Member will know of the complexities of the State bureaucratic system from their surgery experience. The present system is not a satisfactory way of dealing with those who retire after working for their country for so long.
  We should consider a scheme that would pay a supplement to those who have retired. We could start with those who have retired and who are now over 75. I do not know exactly what we can afford. Expenditure in these areas is colossal because of the numbers involved.

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  A supplement automatically given to pensioners who have never had the opportunity presented by earnings-related schemes, which have now existed for some years, would remove some of them from the terrible cycle of supplementary benefit examinations. The present system is unsatisfactory in a sophisticated society.
  I recently attended a social occasion in my constituency. I was approached by a young man who looked incredibly fit. He ploughed straight into a conversation about kidneys. I was rather surprised. We both had exactly the same drink. I had chosen it because I am teetotal. Apparently, he was drinking it because he is on a dialysis machine.
  As the conversation continued he asked me to put some questions to the Government. Will the Government tell me how many kidneys have become available for transplant in the past 12 months? What was the figure five years ago? What is the percentage of useful kidneys presented by premature deaths? What is the recovery rate of good and useful kidneys?
  I admit that while talking to the young man I was horrified to realise that he had already been on a dialysis machine for four years. He had had one unsatisfactory transplant. He was not in despair—he was remarkably cheerful—but he asked "When do you think that I will get another try?" There will be no freedom for that man until he has another kidney transplant.
  The machine is good and the attendance allowance, if he receives it, obviously helps with financial problems, but those are not the solutions. The young man I met needs an active kidney in his body so that he can lead the sort of life that is led by the rest of us. His children are much the same age as mine.
  I turn to a parochial matter. After some encouragement from me, the Minister promised this summer to carry out an investigation within Cornwall to ascertain the effect of visitors on hospital demand. There has been some substantial correspondence with the Government. I have been asking about the allocation for what is called in parliamentary circles the migratory population. In Cornwall that is better known as tourists.
  Has the survey been completed? When can we expect to have a report? I would
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  be even more interested if the Minister could give some indication of the effects in the short term. I know that there is a pilot scheme running in Truro. That could well have application in a number of other areas besides Cornwall although the county, for better or worse, seems to have more visitors than almost any other area.
  Mr. Molloy: What about London?
  Mr. Penhaligon: Cornwall had 3½ million visitors last year. That means that there were nine visitors for every member of the local population. The hon. Gentleman may complain when London has 72 million visitors.
  It is frustrating that the Royal Commission has become a sort of Aunt Sally. A Royal Commission is an excuse for doing nothing. I agree with the Government when they criticise the Conservative Party for its NHS reorganisation. There is no doubt that it was a mess. The more honest Conservative Members will now admit that they made a mistake. All parties have made mistakes. There is not much point in going on about the mistake of reorganisation in this place, although no doubt that point will be useful during a General Election campaign. There is not much point in the Government, after four and a half years in office, continuing to criticise the actions of the Tories. There is not much point in pointing out the various errors that were made. Why have they not done something to remedy those errors during the past four and a half years?
  The only answer is the abolition of one of the tiers of the NHS. I suspect that different tiers should be abolished in different areas. In my area the tier that seems to serve no useful purpose is the regional health authority. I do not apply that judgment throughout the country, but it appears that in various areas one tier needs to be scrapped. Whether that will save the £20 million that has been prophesied, or the higher figures that have been put forward, is of no matter. Clearly, this will save money.
  With all the problems in the National Health Service such as providing dialysis machines, treating people who need plastic hips or operations to improve their eyesight, wasting £20 million a year is indefensible. After four and a half

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  years that sum amounts to about £100 million. The Government have wasted that amount of money by not putting right the mistakes made by the previous Government. When shall we get around to rectifying those mistakes? The Royal Commission is little more than an excuse for doing nothing. It is time for action.
  6.20 p.m.
  Miss Jo Richardson: The hon. Member for Truro (Mr. Penhaligon) talked about the change in the attitude of workers in the National Health Service. He said that they now seem more inclined to take industrial action. Labour Members are proud of the National Health Service, but I am sure that those who designed the service 30 years ago did not visualise that workers would experience the present stresses and strains.
  The pattern of industrial strife began with the junior doctors and consultants. The hon. Member for Truro gives a false impression—which I am sure he does not intend—by pinning the blame upon those involved in the more recent industrial disputes.
  Mr. Penhaligon: The pattern was started because of the scandalous treatment by the last Government of the nurses' pay claim. I am saying that the situation is becoming worse and that that is terrifying.
  Miss Richardson: I add my welcome to the promise by the Government to give fresh support which will enable the National Health Service to extend its services to the public.
  I wish to make several brief points about the National Health Service. I am not alone in my opinion of these matters. A mention of them in the Queen's Speech or in the Secretary of State's speech would have gladdened the heart of many people. There is no mention of taking control of the drug industry, or of even attempting to do that.
  I and the Department receive much correspondence about this matter. Many people believe that it is wrong that such high profits should be made by the drug industry at the expense of patients and the National Health Service. Private companies can virtually decide what drugs they produce, whether or not they are in the interests of the NHS or the patients.
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  To the layman that appears to be the situation. The companies do not appear to produce drugs on the basis of what is required.
  I am also perturbed that the industry should be run by salesmen. That is the situation in private industry generally. I do not knock general practitioners, but they can be conned into the use of drugs which are not necessarily in the best interests of the patients.
  I can give an example. I have arthritis, a disease from which many people suffer. I do not complain of that. I cannot speak highly enough of the treatment that I receive from the National Health Service. But since it is a disease that afflicts so many it is not unnatural that I should have friends who also suffer from it. They often say "Why do you not try what I have tried? I have found it helpful?"
  A few months ago a friend came to me in excitement. She had suffered from arthritis for some time. She told me that she had found a marvellous product which was produced by a foreign company, the name of which I shall not mention. She said that she was sure that the drug would suit me. It was a drug that had to be administered by a doctor.
  I took the drug to my doctor at the hospital. I would not take anything without consulting him. He said "My dear girl, if you take this you will go blind." He said that the drug had been tested many years ago in its original form and that its use had been rejected because of the possible side effects. He said to me "Please go back to your friend and tell her to stop using the drug."
  That might be an isolated example, but the drug industry must be responsible for it. I doubt whether in the few months left to this Government we could take the drug industry into public ownership. However, we gave £46 million to Hoffman 1a Roche in Scotland to provide jobs there. That company is rich and profitable. Since we are providing that money, why do we not say that we want to have some control over the way in which the British side of it is run?
  I regret that the Queen's Speech does not mention the concern that is felt about the growth of private hospitals. This must affect the future strengthening of the National Health Service. We often hear

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  of applications to local authorities for the building of small private hospitals containing under 100 beds. Sometimes they are in the neighbourhood of National Health Service hospitals. This means that doctors, nurses and ancillary workers are attracted from the National Health Service to private hospitals which are newer and have better conditions.
  I regret that the pay beds Bill which was introduced two years ago did not go the whole hog, cut out private beds altogether and bring the whole system within the NHS.
  Again I plead with the Minister not to go ahead with the closure of the smaller and in some cases specialist hospitals with which we have been threatened in the last couple of years. The names of such hospitals are numerous. We have experienced sit-ins and demonstrations at Hounslow Hospital and at the Elizabeth Garrett Anderson Hospital, which is dear to my heart.
  A working party has been set up to consider the Elizabeth Garrett Anderson Hospital. But we want to know that the hospital is to remain and that the necessary funding will be made available to repair its poor old lift so that the dedicated band of people who have continued to work there during this difficult time can use the hospital in the way in which it was intended to be used.
  I make no apology for mentioning a subject which is related in two ways. First, it concerns disabled people, whose health concerns us all. Second, it concerns benefits, for which the DHSS is also responsible. I see that the Gracious Speech makes a welcome reference to disabled people.
  "A measure will be introduced to extend benefits for the disabled".
  I take that to mean that there will probably be an extension of the mobility allowance, but I have no means of knowing whether that is so. I wish that I could believe that whatever extension of benefit is intended for the disabled could undo the damage done in the past few weeks by the Government's action in restiffening the law relating to the housewife's non-contributory invalidity benefit.
  Many thousands of disabled women felt that a long struggle had ended in
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  November last year when the Government extended that benefit to cover disabled married women. Some of us at that time and since felt that the introduction of a household duties test was discriminatory. Married men, single men and single women had to show only that they were unable to take paid employment. It is discriminatory to provide that married women should go back to their old class image of the housewife and have to go through that sort of test. But that argument is for another time.
  In spite of this provision, thousands of women have been able to claim HNCIP and have been grateful for it—
  The Under-Secretary of State for Health and Social Security (Mr. Eric Deakins) indicated assent.
  Miss Richardson: I must remind my hon. Friend that many married women have been unable to qualify and have become bitterly disappointed over many months. Most of those who have not qualified have been disabled women who have to struggle the hardest to help themselves. If they have managed to invent something to help them to peel the potatoes or reach into corners, that very inventiveness has often precluded them from getting the benefit. Because of this, they have failed to qualify. It seems to be a case of saying "The more you struggle to help yourself, the more chance you have of disqualifying yourself from benefit." That is how many disabled married women have come to see this matter.
  There have been wide variations over the months in decisions in individual cases. Married women in almost identical circumstances have received different treatment in different parts of the country.
  A large proportion of claims have been won at local level and the DHSS, or the insurance officers, have appealed against them. That has caused endless problems for those married women. They are disabled to start with, and the trauma of an appeal is daunting enough for an able-bodied person.
  Because of all the difficulties of the past few weeks, as the Minister must be aware, the National Insurance Commissioners decided recently on a test case to try to reach some decision about the interpretation of the law. They chose the case

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  of a lady in Worthing who had had a favourable decision by a local tribunal. This was appealed against by the insurance officer, represented by a DHSS solicitor. It was a rare step for the commissioners to set up a special tribunal. They do not normally sit with three commissioners as they did on this occasion, on 8th September.
  The commissioners made a far-reaching and welcome decision for disabled married women—that a woman would be entitled to the new benefit if she proved either that she was effectively prevented from running her household in a manner to be expected of a housewife in her circumstances and to maintain it to the standard appropriate in such circumstances, or that she was so disabled as to be incapacitated so far as household duties were concerned "to a substantial extent". "Substantial" was taken to mean "weighty, ample or considerable".
  That does not seem an unfair or unduly generous set of criteria, but many people were horrified at the speed with which the Department—within four or five days, which is very speedy, however much it may have anticipated the decision—rushed through when the House was not sitting a regulation restiffening the law to what it had thought it was in the first place.
  Since I have been a Member of Parliament, whenever I have written to the Minister on behalf of a constituent disadvantaged by tribunal decisions, I have received letters saying "We set up this independent machinery and the Government cannot interfere with it. We must stick by the decision of the tribunals." On balance, I cannot really complain about that, even though a constituent may have been disadvantaged.
  I was therefore doubly horrified to find that this principle applied when a claimant did not get his or her money but that when the Government were going to have to pay out more money they moved to change the law and break the concept of independent machinery. I do not know whether this is the first time that it has happened, but it is the first that has come to my notice.
  The Government have already issued a long list called "Guidance for Insurance Officers". I do not know quite how I came by this, but I do not think that
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  we want to inquire into that. It is marked "For Official Use Only" and says that insurance officers should make sure that appeals put in before 12th September—the date that the regulation was made—should be considered separately from those made after 13th September.
  I wonder why the Government chose this precipitate action, which has caused grave disquiet not only among several hon. Members but in outside organisations and among those disabled married women who are suffering in this way. Why did not the Government go to appeal, for example, on a point of law to the Queen's Bench Divisional Court? Why did they not refer their own suggestions to the National Insurance Advisory Committee? They had already told the committee that it was for the National Insurance Commissioners to define "incapacity". Then, when they changed the law when it did not suit them, this matter should have gone back to the committee once more.
  I guess that the reason why the Government did not do it was a financial one, that they found that their "guesstimate" of the number of disabled married women who might qualify was wildly out, and so they felt that they had to draw a line. If that is so, and the money was not available in the Department to meet prospective new claims, I hope that the Department argued as forcefully as possible with the Treasury. If it is a fact that there was not enough money, the whole House should argue with the Treasury to ensure that funds are available so that the National Insurance Commissioners' decision can be implemented.
  We were told in June in answer to a Written Question that the estimated un claimed supplementary allowance amounted to £170 million and the estimated unclaimed supplementary pensions amounted to £80 million. Those are considerable amounts. If there was not the money available to pay the benefits to the disabled married women who might have claimed after the National Insurance Commissioners' new decision, why could not some of the unclaimed money that has been building up be used? If suddenly a large number of those who had not claimed the allowances and pensions now put in a claim, will the Government say "We had not allowed for your claiming it. We had it there in the first place

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  but now we shall change the law and see that you do not get it"?
  We need to sort out in the best possible way the whole matter of unclaimed supplementary pensions and allowances, and have a proper judgment as to who should qualify for what.
  I am sorry to have widened the debate beyond the matter of health, but I felt that this was perhaps the only opportunity we might have to air the matter. It has left a nasty taste in the mouths of thousands of people, not only those who are disqualified from benefit but others who are concerned about disabled people. I believe that it is not too late for the Government to change their minds and to allow people such as those I have described to have the benefits.
  6.42 p.m.
  Mr. Geoffrey Pattie: The House will be grateful to the hon. Member for Barking (Miss Richardson) for "widening the debate", as she says. I think that she quite legitimately widened it in asking the Government to give us an explanation of the matter that she raised. Although the Minister will probably be speaking to a less than full House when he winds up the debate, those of us who are here then will be waiting with interest to hear the Government's explanation of the curious manoeuvre which was carried out in September.
  Many hon. Members who have spoken in the debate have concentrated on the various defects in the National Health Service and on the several regrettable disputes. I wish only to mention the dispute at Prestwich, of which the hon. Member for Basildon (Mr. Moonman) and I, in our respective capacities as chairman and vice-chairman of the all-party committee on mental health, are particularly aware. We are grateful to the Department of Health and Social Security for allowing us to visit Prestwich on 30th November. I do not want to comment now, not having been there, but the dispute has been giving grave cause for concern to many people, including the Government. That is the reason for our visit.
  However bad matters are in the NHS—and sadly, they are bad—it is generally agreed that they are even worse in that
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  part of the NHS that is generally recognised to be the Cinderella. I refer to provision for the mentally ill and the mentally handicapped. Under successive Governments over a long time, provision for those people has come at the end of the line. If the NHS is not in good shape, they are in even less good shape.
  For a few minutes I wish to concentrate on the publication on 12th September this year of the White Paper, "Review of the Mental Health Act 1959", because I still believe—I hope that I am not totally naive in this—that one test of a civilised society is the extent of its provision for those in its ranks who most need its support. The review was badly needed. It has taken far too long to produce. I shall not chronicle the dreary saga of proposed dates of publication. Season followed season—spring, summer and autumn—still with no White Paper. We feared that it would come during the recess, and our fears were confirmed.
  The position was not helped by a strike at the Stationery Office at the time. Although the White Paper was "published", it was published almost in the legal and technical sense of the word only. It took me some time to obtain a copy, and in the end I did so only through the Secretary of State's private office.
  Clearly, such a review must try to reconcile the various, sometimes conflicting, interests of the public, the staff and the patients, always bearing in mind that the public can at various times be both staff and patients.
  It would be wrong of me not to mention briefly at this point a constituency matter. In my constituency there is the hospital known as Botley's Park, where for some time there has been a dispute. It takes the form of allowing no further admissions until the shortfall of staff, which is about 75 or 80, has been made good. I very much sympathise with the staff and understand their problem. The unions are anxious about the degree of care that their members can give in the hospital. They are worried that unless further recruitment can be allowed—I am aware that that requires more resources—they will have to return, retrogressively, to the days of almost custodial treatment. Their members cannot give the kind of treatment that they believe they have joined the service to provide.

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  I am aware that as a result of the staff's position there is considerable, not to say acute, domestic pressure, because patients should be admitted. My hon. Friend the Member for Woking (Mr. Onslow) has raised the matter with the Secretary of State. The Surrey Herald and other local newspapers have written of examples of serious domestic situations that are likely to occur, with talk of suicide and so on, unless admission takes place.
  I have digressed slightly simply to highlight the fact that any review of the working of the Mental Health Act 1959 must reconcile all the interests, which at times are conflicting. We have in my constituency a dispute which adds further weight to the fact that conflicts are occurring between members of the public, would-be patients and staff. That must be a matter of regret.
  I understand that four Government Departments were involved in the working parties behind the White Paper. The power struggle has clearly been as prolonged as it has been bitter. The sad thing from the patients' point of view is that the victor in the power struggle has been the Home Office, with its emphasis on the custodial aspect of mental care. After 20 years, the review should have seized the opportunity to plan for the new look that is needed if we are to move the services for the mentally ill and the mentally handicapped in the direction that is widely agreed to be necessary.
  We need the establishment of a modern community-based mental health service, and I say at once that this can be achieved only by a substantial shift of resources from the National Health Service to the local authorities. The whole emphasis in the future must be on community involvement wherever possible. It must be outside the hospital and medical environment. The emphasis must be on crisis intervention to avoid hospitalisation in cases of mental illness, and it is particularly important to grasp the challenge of developing the potential which is possessed by the mentally handicapped and not just to assume that if people are mentally handicapped they have zero potential and cannot be in hostels in the community. They need to have whatever potential is there developed to the maximum extent possible.
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  I regret that the provision for the mentally handicapped has not been separated from the provision for the mentally ill. I know that this is an old chestnut of an argument. It must have been debated up hill and down dale in the various working parties. But, sadly, a great opportunity has been missed. When we are talking about the mentally ill, we are talking about a treatable condition, whereas when we are talking about congenital disabilities, such as those possessed by mentally handicapped people or psychopaths, we are talking about the recognised non-treatable conditions. It is unfortunate that, if we talk about something as basic as a White Paper which looks ahead 20, 30 or 40 years, the Government have not grasped the nettle and recognised that various problems will flow from it—resource problems, monitoring problems and so on—and that the challenge should be met head on by separating the resources.
  In his excellent opening speech, my right hon. Friend the Member for Wan-stead and Woodford (Mr. Jenkin) referred to the resistance by the Secretary of State to the Private Member's Bill put forward by my hon. Friend the Member for Ealing, Acton (Sir G. Young) on the subject of kidney machines. The Minister will be aware that about a year ago he and I discussed a proposal of mine to introduce a rather humble measure which some months later eventually emerged as a Ten-Minute Bill entitled the Mental Health Tribunals Bill. In my naivety I had assumed that because the proposal that I was discussing with the Minister had been in the Government's consultative document and that I also had evidence that it was widely welcomed and supported by all sections of what I might describe as the industry, at least we could get something moving in the direction of mental health tribunal review procedures. Sadly, the Government fell back on the rather classic response that we were about to have a White Paper and that it would be unfortunate to advance one small area of it.
  I am glad to see that something on substantially these lines is contained in the White Paper. The Government have said six months. I was hoping for a three-month period. However, the sad feature is that we are talking about a

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  matter which is in the White Paper. Goodness knows when this House will be able to debate the White Paper. What is more, we do not know when the consultative process following the publication of the White Paper will be completed, let alone when there will be any legislation.
  The problems are so enormous that if we are not to do something fundamentally at variance with future policy, it is quite in order to say "Here is a minor amendment which is widely agreed and which can be made, so why not make it?" Let us not wait to get the whole thing lined up so that in 1987 we move forward. I do not wish to give the impression that I have nursed some appalling grievance all these months. But it is sad that the Minister felt he could not move forward what was about 3mm. but that the Government now put the same proposal in their White Paper when it could have been on the statute book already if only the Minister had given me his agreement.
  I hope very much that we shall debate this White Paper rather than attempt now, in what is inevitably an unbriefed House, to go through all these various details. However, perhaps I might put forward a few points in passing. In the White Paper, mentally abnormal offenders are referred to, but no attempt has been made to improve their lot. I am thinking here of bodies such as MIND which, as the Minister knows, services the all-party group of which I am vice-chairman. Obviously I see a great deal of MIND and have a great deal of regard for what it does. A lot of the Department's difficulties arise from individual cases which come up—for example those where MIND represented four patients at the European Commission. This is a state of affairs which I hope the Government will look at a little more closely. If we stand back for a second and look at our policy on custodial "care" of mentally abnormal offenders, we see that it does not differ enormously from those in a lot of foreign regimes that we care to criticise. We are certain in this country that we know what we are doing, that these people are a bit difficult, and so on. However, these people have rights. I appreciate that it is difficult if they have been engaging in unusual behaviour. But it behoves any civilised society to ensure that they are given full
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  opportunity to exercise their rights, and I think that the White Paper has missed out on this one.
  I referred earlier to crisis intervention services. Mention of them is made in the White Paper, and I hope that it is more than a passing genuflection.
  The title of "mental welfare officer", which is now well established and familiar to people in the community, is to be changed to that of "approved social worker". That causes a slight chill down my spine. I wonder what the word "approved" means—approved by whom, and to what standards?
  There is also a great deal of apprehension, to put it no stronger, about consent to treatment and what is to constitute "hazardous" treatment. The Minister will be aware that there are a number of courses of treatment which may not be hazardous on the first occasion but which are hazardous cumulatively. Therefore, it is important for the patient to have certain safeguards built into his or her position so that he or she is quite clear that "hazardous" is not open to too wide a definition.
  I conclude my remarks by quoting from the leader in The Times of 13th September. On the subject of the White Paper, it said:
  "The White Paper's proposals are generally humane and moderate, and in some cases (as with the proposed panel to review treatments where there is dispute over consent) imaginative. But inevitably when the need to have such things cut and dried is felt, the result tends to be more administration, consultation and delay. It is plain that there is not yet wide enough agreement on the proposals to make early legislation desirable. In the consultations to come, all parties should bear in mind the consequences, familiar in the NHS above all institutions, of elaborate discussions ending in elaborate arrangements which, in setting out to please everybody, are too cumbersome to please anybody."
  Anyone who has studied the National Health Service will know that that is a great problem and a great danger.
  I hope that the House will take this White Paper seriously and will have an early opportunity to debate it. Mental patients, be they mentally ill or mentally handicapped, make up a sizeable group in our society. One person in nine will be mentally ill at some time in his or her adult life. These are a group of people in society to whom this House should pay

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  greater regard than it has done in the past.
  7.59 p.m.
  Mr. Eric Moonman: I want to take up the references made by the hon. Member for Chertsey and Walton (Mr. Pattie) to the mental health service. However, before doing that, I take head on the point made by the right hon. Member for Wanstead and Woodford (Mr. Jenkin) about resources—a point also made by my right hon. Friend the Secretary of State when he opened the debate.
  Many people believe that most of the problems of the National Health Service would be solved if we increased the amount of revenue allocated to it. I take the view that it would solve some but not all of them.
  One of the great dilemmas of the political hassle which has to go on in debates such as this is that we overlook some of the real problems encountered by individual patients in psychiatric hospitals or in general hospitals or because of the treatment which they get from their GPs. We also overlook the fact that it is too easy for the political parties, including my own, to become involved in a sort of auction about which is the greatest sum of money that a party will be able to put forward either in the course of a political discussion or at the time of a General Election. If it comes to a General Election it is even more confusing and frustrating for the population. Any attempt to deal with the problem by an expansion of NHS resources must recognise that this aspect is only part of the current crisis. Unless we can identify the weaknesses in the Service, X resources will not alone resolve the difficulties.
  If we continue to talk about an increased allocation we shall divert attention from some central issues. Ultimately, we shall increase the frustrations of the staff because we shall not be able to meet some of their claims. We shall certainly frustrate and divert patients because it will not be possible to provide all the facilities that they would like. We shall also confuse the public in that we shall confirm the impression that the political parties are not prepared to produce even a semblance of agreement on a deep and critical issue.
  One of the major issues in this dilemma concerns industrial relations.
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  My right hon. Friend and the right hon. Member for Wanstead and Woodford dealt with this point today. What disturbed me was that they omitted an important part of any analysis of industrial relations in the NHS. This is a fragile element in a service involving long hours and night working. The reorganisation of the Service has aggravated industrial relations and created new and bitter tensions. Not only is this demeaning to the staffs concerned but the public suffers as a result of the growing number of days lost through disputes. In the industrial disputes table this has become a high risk industry. Where does all of this start? The frustrations felt by the manager who has to keep the NHS running are real. He has to do his job, since reorganisation, without adequate authority on direct line relationship. We have heard about the responsibility, or, as some people say, the irresponsibility of the unions. We have heard of some of the committee problems of reorganisation. What I say is that management within the Service has a right to manage. This many of them are finding it impossible to do.
  It has been argued that we may have a management system which is all wrong. This is an over-simplification. What has happened since reorganisation is that we have encouraged the belief that there is such a thing as consensus management, which is not the same as participative management. Nor is it the same as some of the items dealt with in the Gracious Speech. I have argued to justify the whole concept of worker participation. However, I am a little frightened to think where this is taking some of my colleagues. I am not sure that they have thought this through adequately.
  We can have more participation in schools and hospitals. Apparently, one member of the Cabinet has said that we ought to have it in terms of our security services, too. But there comes a point when we have to say, if we have any management experience at all, that someone still has to manage. There may be the greatest degree of participation, which will satisfy some, but it will not satisfy all. It is hypocritical and unfair and it diverts attention from the main problems of the Service if we, choosing the mood of the Gracious Speech, say that participation is to be an element in today's debate. My guess is that we shall

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  hear that participation will be an element in tomorrow's debate and throughout the debates next week. Fine. If a Socialist Government want to see this, they are entitled to say that participation is an element in what needs to be done.
  What I object to is that we have upgraded the whole concept of worker participation and consensus management as if, in itself, such a thing—if achieved—would solve the problems. It would not. To believe that is to confuse the position and to divert attention from the central issues which are not, therefore, being tackled. This concept arises from the new structure, which attempted to bring in modern management theory which was not properly understood, let alone implemented. Many people in the Service talk about consensus management. They are deeply concerned about the problem. It is not simply a question of pay or conditions. The problem concerns the way people are unable to do their jobs.
  While consensus management has rationalised grievance procedures—a new industrial relations machinery has been introduced—the enthusiasm for this process has produced a management structure in which no level has any direct authority for the layer beneath. The formula was that the region would be responsible for long-term planning and liaison with the Department of Health, while the area had responsibility for employing area and district staff.
  However, the officer team does not include a personnel officer. If there is any meaning in having an industrial relations expert within the management team it is lost because he is not in this structure. We can look at the way that industry operates. We may not accept a strict parallel and we may feel that the Service has certain unique characteristics, but if there is a case for a personnel officer with industrial relations training and competence, surely he should be at the level where he is likely to have the greatest degree of influence.
  There is for me no discernible management style in this structure of industrial relations. There is no management pattern. I do not believe that in the main this is due to the people who are the participants in this extraordinary battle. It is due to the way in which the reorganisa
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  tion was carried out, the lack of direction from the top and the way in which the structure has led to there being so many levels and layers with the result that no level is able to influence the other.
  There is sufficient information and reaction on this aspect from those engaged in personnel. Let me give an example. Often, to get decisions made, personnel officers have to go to two tiers of authority, even at their own level. The team of officers at district or area level consists of one or two doctors, a nurse, an administrator, a finance officer and a works officer. But the personnel officer, the man with the industrial relations competence, who should be able to help on matters of collective bargaining, the key man—the man who is not referred to by either Front Bench because he does not exist in terms of their strategy—is responsible to the administrator. To introduce change a personnel specialist has to convince his boss, the administrator, of his value.
  I have had a great deal of experience in management, in many situations and many industries. If I were to create a structure in an industry in which the person who had a particular degree of competence, whether in cost accountancy, management control or industrial relations, had to work through another grade, another function, I would not be surprised if ultimately I was spending more and more of my concern and anxiety on industrial disputes, grievance procedures and a general drop of morale. These things do not just happen because people are greedy or because they want to go on strike. These issues require fundamental care.
  In this case we do not have to be too shrewd or do any research to see what has gone wrong. I offer this quotation from Derek Warner, who was an area personnel officer for Kent area health authority. He says:
  "This system of consultation and committees is very, very frustrating. It is remarkable that we have been able to make any progress at all. The success of personnel depends largely on the ability of an administrator and his relationship with his colleagues. Whether people get backing depends on personality."
  In no management system should it be the case that decisions, or the resolving of conflicts, should depend on personalities. One man may have an agreeable personality, but he may leave the organisation. It is the way in which we organize

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  the structure which should produce some of the results.
  As chairman of the all-party committee on mental health, I feel duty bound to make a reference to another matter. My concern about the mental health service at present is that there is little emerging from the Department of Health to suggest that we have been able to overcome the problem of neglect. The role of this service is ill-defined and it is underfinanced. There are some shocking stories to be told about the mental health service. It has been referred to already and I do not wish to prolong the references to statistics.
  If we were to operate on the simple argument of increased resources we should have to compliment my right hon. and hon. Friends on the way in which they have managed to resolve some of the allocations. There are ambiguities here. At some point, whether in this debate or in subsequent correspondence, I would like to hear some rationale setting out why the mental health service within hospitals is the Cinderella service. It is astonishing to me that it functions at all.
  I can give some brief examples. First, I think that it is horrifying that 45 per cent. of NHS beds are occupied by the mentally ill or mentally handicapped whereas only 11 per cent. of consultants work with them. Again, 100 mentally ill people in hospital are cared for by 45 nurses compared with 122 nurses per 100 in general hospitals. While it may be argued that the physically ill require a higher degree of nursing care, my inquiries at two or three hospitals recently reveal that in some psychiatric hospitals at least staffing levels are at danger point.
  These are things which concern people. We have accepted, not in the last century but in this century, as we move towards the 1980s, service and treatment in psychiatric hospitals of a level that we would not tolerate in general hospitals. It is not just a question of actual care, of doctor-patient relations, and so on. It is a question of how we look after people in such hospitals. There are serious discrepancies in expenditure between the two types of hospital, and that cannot be accounted for purely in terms of staffing.
  For example, there are psychiatric hospitals which still have long-stay wards with more than 50 beds, and many of
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  them have wards which are unacceptably overcrowded. Again, 65 per cent. of our mental hospitals were built in the last century and many are more than 100 years old. More money is spent on food for general hospitals than for psychiatric hospitals. The cost of feeding a patient in a hospital for the mentally ill or mentally handicapped is £3·58 a week compared with £8·80 in a general hospital.
  There is much more that one could say to show these extraordinary discrepancies. I do not know the rationale for them. No Minister could feel satisfied with the situation. My right hon. Friend should be very troubled by these figures and should demand from the civil servants in his Department not only how they can justify the situation but that a change be brought about. It is far too easy to talk about an increase in resources—that is one way. It is easy and dangerous to talk about industrial relations in terms of strikes and greedy people and difficult management. What we need, however, is a shift of resources so as to achieve a reasonable balance between the types of hospital. We must ensure a fairer expenditure on the hospitals for the mentally ill and mentally handicapped so that there shall not be such an alarming gap.
  I know that the Minister takes these things seriously. It is important to look at the question of setting up a system of establishing minimum standards for psychiatric services within the NHS which could be regularly reviewed and updated and provide more than a basis for minimum acceptable levels of service. This would not solve some of the fundamental issues to which I have referred, but it would at least begin to provide a credibility on the part of those who work in the Service. If we could get that credibility perhaps we could achieve some of the other things which may be more deep-rooted.
  7.15 p.m.
  Mr. Nicholas Winterton: I congratulate the hon. Member for Basildon (Mr. Moonman) on his constructive contribution, and I extend my congratulations to my hon. Friend the Member for Chertsey and Walton (Mr. Pattie). Both Members have done a great deal for the mental health services. I am sure that their positive contributions to the debate will help the National Health

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  Service. I am sure, too, that the Minister will heed what has been said and take whatever action he can within the Government's guidelines. But, having said that, and having welcomed also the positive contribution by my right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin), I am sure that the Government will not expect me to welcome the contents of the Gracious Speech.
  In short, I would describe the Gracious Speech as a non-event. It is a Speech to tide us over to the General Election, designed to appear superficially popular with the electorate, but, in the end, it contains very little.
  However, it would be wrong of me not to welcome the compensation that is to be made available to those who have suffered from vaccine damage. I have made many representations to successive Governments on this matter on behalf of people in my constituency, and I know that the proposed measure will be warmly welcomed on both sides of the House.
  I want to talk about the National Health Service but in doing so I do not want to cover ground already adequately dealt with in the debate. I take up a point, however, raised by the hon. Member for Basildon—that the shortage of resources is only part of the problem of the NHS. We have also been told, rightly, that the problems of the Service will not be solved by removing one of the tiers of authority. I know that many hon. Members on the Opposition Benches feel unhappy about what was done by the last Conservative Government in reorganising the NHS, but there is no point in stirring over that matter again. The reorganisation took place, and we have to make the best of the NHS, making further touches on the tiller to make this mammoth Service more effective and more sensitive to those who have to use it.
  Primarily I want to talk about people. For example, I want to talk about a Mrs. Wilson, a constituent of mine who, before her sad death, lived in Prestbury. Then there is that splendid and indomitable lady, Pat Seed, in the north-west, who is leading a fantastic campaign to raise money voluntarily for a cancer screening machine. Mrs. Wilson died of cancer. She took up this campaign in my constituency. I met her and was
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  unaware that she was suffering from a terminal illness. Indeed, she died but a few weeks after I last met her in my efforts to help her in an event to raise money for a cancer screening machine which enables doctors to diagnose cancer at a much earlier stage than they can do so now, so that people, instead of dying in great pain can live and overcome this terrible disease for which medicine has not yet found a cure.
  I am pleased that the hon. Member for Ealing, North (Mr. Molloy) is here because, when my right hon. Friend was speaking, he interjected "What about the private sector? Do you want everyone to pay?" That indicated, of course, that the State could provide all the services that the people require. But here I have indicated, in the area of cancer, that it is the voluntary contribution of many wonderful people which perhaps will ultimately give the Health Service the machinery and facilities in order to help with the cure for cancer.
  Mr. Molloy: I do not dispute that with the hon. Gentleman. Indeed, looking at the history of medicine, one realises that many of the great advances that have been made in overcoming serious diseases and illnesses have been made by people who have almost had to work somewhere else in order to follow up their ideas on helping mankind. What I was concerned about was whether people such as Semelweiss and Pasteur would have been happy to think that their great endeavours would be placed at the disposal only of those who were wealthy enough to buy them.
  Mr. Winterton: It would be wrong for me to launch into a major debate on this issue of principle, and also a philosophical debate is asked for when the hon. Gentleman poses that question. No, I want all the expertise of the medical profession to be available to all people. It is significant that the private sector of health in Britain has made available to people who cannot afford to pay facilities which at present are not available to them in the NHS. I refer to the heart patients who have been treated by private medicine.
  I pay tribute to the part that the private sector of the Health Service plays in treating both people who can pay and, on occasions, those who cannot pay.

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  Perhaps there should be more cooperation between the two sectors. I know that the consultants and doctors want this. But sadly, too often medicine, like education, has become a political pawn, and the private sector is prevented from playing its part in the Health Service.
  I have referred to Mrs. Wilson, a very brave lady in my constituency, who raised many hundreds of pounds before she died as a result of cancer. She helped that magnificent woman, Pat Seed, who is still with us, in raising hundreds of thousands of pounds to provide equipment for people who may well be suffering from cancer so that they could be screened early and perhaps cured.
  I mention another person, a little girl called Lisa dos Reios. Again, she is no longer with us. She died, at an early age, of leukaemia. But the people of my town, Congleton in Cheshire, rallied round. The parents, too, although they had lost one of their children, wanted some good to come out of this tragedy. A fund was started in order to purchase a blood cell separator machine, which again might, if it had been available, have given this little girl some extra life and given the doctors who were treating her an extra opportunity of trying to cure her.
  Sadly, that machinery was not available. But the public reacted. The public of this country are very generous and very constructive people. They rallied round and raised thousands of pounds, together with another family based in the Greater Manchester area, in order to purchase this machine for a local hospital. No doubt, at this very moment it is being used in order to help sufferers from leukaemia.
  It is, perhaps, a matter of people being prepared to react and to dig into their pockets in order to ensure that there exists a Health Service which can cope with all emergencies, all crises and all eventualities.
  Very briefly, I move on to a subject about which many hon. Members hold different views. Although this matter is not within the portfolio of the Minister responsible for the disabled, who alone sits on the Treasury Bench at this moment, I welcome his presence. I refer to the ques
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  tion of mixed wards. I know that mixed wards in intensive care units have existed for many years, and rightly so, too, because the equipment required for these wards is very expensive. When people are in intensive care they do not know or care whether their neighbour is a man or woman. However, the extension of mixed wards to the recovery wards and the normal wards is causing a great deal of concern in my area. I speak now for my area.
  I hope that the bureaucrats—I use that word purposely—who dictate to and apparently also control our Health Service will listen to what people are concerned about. The matter of mixed wards is of considerable public concern. If there are to be adjustments and modifications to a public service, people's sensitivities at a time of illness should be taken into account.
  I am delighted that the Secretary of State is now on the Government Front Bench. I know that it is stated by the hospital authorities that people do not have to go into a mixed ward. However, if they do not go into a mixed ward, very often the treatment or the operation that they need is put off for very much longer. Therefore, people occasionally have to do something which they do not like doing and which makes them very unhappy and causes them deep concern—and go into a mixed ward.
  Certain cases concerning the problems that can arise in a mixed ward have been drawn to the Secretary of State's attention. I hope that hospitals will always ensure that men can go into men's wards and that women can go into female only wards if that is their choice. This is a service for the people. Let us listen to what the people want.
  I now turn to a matter that I have already raised with the Under-Secretary and the Minister of State. I refer to representations which have been made to the Secretary of State personally by the Macclesfield community health council. These representations were originally made way back in April of this year and concern two particular subjects. They concern, first, the new nucleus hospital, which is to be built, I hope, in the not-too-distant future, at Macclesfield, and secondly, the growing waiting lists for operations in the Macclesfield hospitals.

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  I regret to say that the representations that were made by the Macclesfield CHC have, sadly, gone unanswered. Perhaps I may say that they have been ignored by the Secretary of State. Just to show that I am not misleading the House, let me say that in connection with the new nucleus hospital, the CHC wrote its original letter on 3rd April this year, sending a copy to the Mersey regional health authority. The CHC had heard nothing by 18th May, six weeks later, so it wrote asking for a reply. On 25th May a telephone call was received from a Mr. Brittain, of the DHSS, saying that he had not received the original letter. A copy was sent by the CHC on that day. On 12th July the CHC wrote again for a reply. No reply was received. On 1st September the CHC wrote again asking for a reply. On 28th September the CHC telephoned Mr. Brittain, who, sadly and unfortunately, was not available, but the CHC left a message asking him to ring back. He did not ring back. On 29th September the CHC telephoned Mr. Brittain again. He apologised profusely for the fact that the CHC had not received a reply. He said that he would deal with the matter immediately and that the CHC should hear from the Department within 10 days. On 10th October no reply had been received.
  I hope that the Secretary of State will take note of this small case and take it up with this Department. I bear in mind the heavy responsibilities on his shoulders. Although the letter was sent to him, I know that he would not necessarily have dealt with it, because of the mass of correspondence flowing into his Department. However, it seems quite outrageous that an important letter such as this should have been, appparently, ignored by his Department.
  Mr. Ennals: Having heard the recital of the attempts to get a reply, I assure the hon. Gentleman that I shall look into the matter personally.
  Mr. Winterton: I am most grateful to the right hon. Gentleman for that. Perhaps when he is looking into that case he will also look into another. I may be piling additional burdens upon his shoulders.
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  The community health council is also concerned about the growing waiting list for operations in the Macclesfield health district. It sent a letter on 3rd April, with a copy to the Mersey regional health authority. In this case the letter was acknowledged on 11th April, a week later, which was very satisfactory. On 18th May a reminder was sent. On 19th May a letter was received in reply, stating that a Mr. Probett was making inquiries of the Cheshire area health authority. On 12th July another reminder was sent from the Macclesfield community health council, and on 18th August a letter was received in reply, stating that Mr. Probett's inquiries were taking him longer to complete than had been expected, and that he hoped to be able to reply fully in the near future. That was in August, and on 10th October still no reply had been received. At a meeting of the community health council on 9th October, the feelings of all the members ran very high indeed at what they considered to be the lack of concern and urgency shown by the Secretary of State and his Department on these two very important issues.
  In relation to the new nucleus hospital in Macclesfield, I point out to the Secretary of State that when the community health council wrote, it expressed grave concern about a number of matters. One was about patient comfort, which would appear to be almost totally overlooked in the nucleus hospital concept. The council is very concerned about the recovery beds in operating theatres. It believes that such beds should be available. but they are not provided in the nucleus hospital that is proposed for Macclesfield. The council also believes that the nucleus hospital concept—and I ask the Under-Secretary to tell me in reply whether this is a general view—is too inflexible to cater for all the changing local demands which are made upon a hospital to serve a particular area. It is the view of the council that in the plans for the nucleus hospital to cover Macclesfield, the arrangements for the wards do not include a high dependency nursing area for patients who have had major surgery, for their use prior to their return to the general ward. As a result, the recovery ward must fill this role and must be provided with a greater number of beds than the six beds at present proposed for the ward.

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  I now refer to the waiting lists as they pertain to the Macclesfield health district. I am well aware that there have been many problems within the Health Service, not least industrial problems, which have exacerbated the situation, but the main problem as it relates to Macclesfield arose before this latest industrial dispute within the Health Service. The total waiting lists—details have been sent to the Secretary of State—have increased in the Macclesfield area by 62 per cent. over the last three years.
  This indicates that the Health Service is in a very sad and unfortunate condition. The number of patients waiting over two years for treatment and an operation has increased by 28 per cent. The number of patients waiting over two years for treatment and an operation has now risen by 203 per cent. It is noted that the total number of operations in the hospitals covered by the Macclesfield health district has decreased since 1974. As a result, it is quite clear that the situation is intolerable.
  It was first apparent in 1975 that this was happening. That was approximately the period of the consultants' work-to-rule and the implementation of the Halsbury award for the nurses. This would convey that there are two particular factors which are causing the increased waiting lists. First, the consultants have been declining—quite rightly, I believe—to return to the pressures they experienced before their work-to-rule, as these were detrimental, in some cases, perhaps, to patient care. The other factor is that beds are not being used, due to the lack of funds to employ nurses at the rates set out in the Halsbury award. This matter has already been raised indirectly by hon. Members in the debate. There is no point in having an establishment figure if, as a result of the rates of pay which have been awarded, quite rightly, to the nursing profession, it is not possible to employ enough nurses to man the wards. This is a matter of very serious concern to the people in the area which I serve.
  I have spent some time on raising local matters, but the sorts of matters that I have raised in detail could probably be taken up by many hon. Members on each side of the House. The point is that the situation in the Health Service is very serious indeed, and it is a pity that in the
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  Gracious Speech we heard very little indeed about what the Government are to do to improve it. It appears to me that very often it will be up to the people themselves to provide equipment which will enable the consultants and the doctors to save lives and, in doing so, save the Health Service considerable sums of money.
  I hope that I may be permitted, Mr. Deputy Speaker, to raise one other matter which is not strictly in accordance with the topic laid down for today's debate. I shall not, therefore, expect the Under-Secretary of State to deal with this matter. We discussed at great length yesterday, and at somewht shorter length today, the problems created by the Government's pay policy. I shall not talk about the problems of pay policy relating to the hospitals in my area, although there are grave problems. I want to refer to a small manufacturing company in my constituency which is suffering grave difficulties at the moment in trying to do what it can do very well. It cannot get labour because it is not permitted to pay the rates which would give it the opportunity of employing that labour.
  The company to which I refer is Arclex, which produces glass bonded mica for the electrical insulation trade. The process was developed in Macclesfield about 18 years ago, in conjunction with the founder company of Arclex. called Mauritex Limited, which produces textiles for the electrical insulation trade. As both processes were continuous and Mauritex Limited was already working two 12-hour shifts, both companies adopted, quite rightly, the same working procedure. As the House knows, the rate of pay for textile workers in those days was lower than in most other industries in this country, and to an extent still is today.
  There are not many strikes in the textile industry, however, as the people know the problems under which their industry is operating. On its inception, Arclex wages were in line with those paid by Mauritex Limited, as both companies occupied the same manufacturing building. Arclex NEI Reyrolle Limited developed over the ensuing years, and has now become a recognised supplier of the material which I have mentioned to the electrical industry both at home and. more important, overseas.

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  When it became possible for the company to reduce the basic working week for its employees—I am sure this would be welcomed by Labour Members—this was done, in the first year, from 60 hours to 56 hours. The company's policy was to try to reduce the basic working week each year, so that it could come into line with the average week for the country, but due to pay restraint, brought in by the Government, it has been unable to do this over the last few years. It has obeyed the law and kept in line with Government strictures and legislation.
  The company has, however, during the last two or three years, suffered severely in production, and it is losing certain of its work force because of wage rates. It is finding it very difficult to attract new labour, and its existing labour is going to other industries in the area which pay higher hourly rates. This is now becoming so serious that the company has raised the matter with me. The company is not only increasing its sales within the United Kingdom; during the last year it has increased its export market from an average of just £9,000 worth of business to something in excess of £50,000 today. One of the main requirements of its foreign customers is that it gives quick and prompt delivery. This is now becoming impossible due to the shortage of labour.
  Perhaps those people who are in favour of the 5 per cent. inflexible pay policy will appreciate that here is a profitable company which can increase its labour force, but because it wants to keep in accordance with the Government strictures, guidelines and advice in order to help curb inflation it is unable to get the staff and the workers in order to ensure that the business not only survives but actually grows.
  If the Minister is going to transmit some of this information to the appropriate Government Department, I hope that he will appreciate that the inflexible policy which appears to be the present Government's main plank leading up to an election can cause and is causing grave damage to some companies which perhaps one day could play a major part in the economic recovery that this country so desperately needs. Such companies can also play a part in employing people.
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  With nearly 1½ million people out of work, it is no good the Government pouring £469 million into persuading employers to put people on short time rather than making them redundant. What we require is real jobs so that this country can go from strength to strength and provide the standard of living which people rightly expect.
  I am disappointed that there are so few positive proposals in the Queen's Speech. It can be summed up by saying that it is a survival package, a series of sops to woo the nationalists. It is, I feel, significant that no members of the minority parties are with us to talk about what is a very important subject or to participate in what is a very important debate. The Speech is also a sop to the politically naive. I think it is wrong that measures are being introduced by the Government to mask the real problems of unemployment caused by the present Government's incompetence.
  This country, to which I am proud to belong, is desperately seeking a positive lead, a real hope for the future and a glimpse of a different and better tomorrow. It will look in vain if it seeks to find these ingredients in the Government's programme announced in the Gracious Speech. Above all, it is sad, especially when we are talking about health, to find so few positive proposals. My goodness, the Government could take a great deal from the comments made by the hon. Member for Basildon, who sadly is no longer in his place. If they took that attitude in relation to the Health Service I am convinced that many of the problems could well be overcome. We could then get that regeneration of the Service which would make it one of which those who serve it so loyally and well could be proud. The people of this country could know that they would be able to rely upon that Service when they fell on hard times, when they had a crisis, or when they were ill.
  I wish the Health Service all the best. I hope that the present Government and the future Conservative Government will do all they can to aid this vital Service.
  7.44 p.m.
  Mr. William Molloy: There are very few occasions on which I would agree with some of the views of the hon. Member for Macclesfield

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  (Mr. Winterton), but I am pleased that I can agree with him on such a great humanitarian issue as the National Health Service which so many Tories have praised tonight. Of course, they forget that they voted dead against it at every stage of its inception. It has taken a long time to convert them, but slowly we are winning.
  I was impressed by the hon. Gentleman's speech, especially when he referred to some of his constituents who are suffering. What he said about cancer and other things confirms that there is still much more that the NHS can do. But that does not mean that it has not done anything.
  As a child in the valleys of Wales, which used to produce four anthracite coals which supported British industry and the Royal Navy, I can remember when the average life of a Welsh coal miner was 38 years. If he worked in the pits for 20 years and had what we called "the dust", which is now poshly called pneumoconiosis, he rotted and died and there was no one to investigate why. This point was made by the hon. Member for Macclesfield about cancer and other things.
  Many of the things from which people died in my young days, and which brought suffering and death before they were 40 or 50 years of age, have been eliminated from our society. They have been eliminated because of the National Health Service. Let us put that properly in perspective, especially when we hear of people—there are very few—in the medical profession who look at suffering, illness and disease as a means of making a lot of money. That has to be said loud and clear because they exist, tiny minority though they are, and they are a dangerous element in the building up of our National Health Service.
  The hon. Gentleman spoke about pay beds. During the last debate on this subject I was appalled when a Conservative Member, who is not in the House today, said—and it was not contradicted by his Front Bench—that it would be a good idea if we had many more pay beds and imposed bigger and bigger charges when the rich were sick to enable us to make so much money from the rich being sick that we would be able to let the poor have all that could be provided by the Health Service for
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  nothing. If that is the attitude of Great Britain in 1978, we do not deserve to get on.
  Let us not assume that all those who occupy pay beds get cured and get out of hospital pay their bills. Many do not. I have previously asked my right hon. Friend to investigate this matter. There is a well-known hospital within five miles of this House which has an enormous debt because a number of fancy-named people went into pay beds and then reneged and did not pay. That is another thing which must be looked at.
  Earlier in the debate the gladiators at the two Dispatch Boxes—my right hon. Friend the Secretary of State and the right hon. Member for Wanstead and Woodford (Mr. Jenkin)—had an altercation which revolved round the fact that my right hon. Friend wanted to know what the right hon. Gentleman would do about reorganisation of the Health Service. That was not an unreasonable request. It is a common practice in the House of Commons, and rightly so. When the Conservatives were in Government they wanted to know what the Labour Party would do if ever it became the Government. That was right. Indeed, part of our responsibility is to query, dig and try to find out. Therefore my right hon. Friend was right, because we all have a few worries, not only on this side of the House, about what the Tories would do.
  I have been reading an article by the hon. Member for Aylesbury (Mr. Raison) which appeared in The Times on Friday 19th May. It is entitled
  "Before the Tories begin to consider reorganising the Health Service".
  I do not have time to read it all, but the hon. Gentleman mentions the right hon. Gentleman who speaks for the Conservative Opposition. It would appear that there has been a lot of thinking about the sort of reorganisation that will come about. It is natural that we should want to know the form of that reorganisation. Last time, the Conservatives' reorganisation turned out to be a disaster. Even now the right hon. Member for Leeds, North-East (Sir K. Joseph) puts his head in his hands when he remembers what he did. Therefore it is not unreasonable for us to ask about it. We do not want to find that there are nice propositions for

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  the Health Service but in the end it turns out that Tory promises are nothing more than flamboyant labels on empty luggage.
  All the recent talk about the National Health Service disintegrating has been greatly exaggerated. I agree that there are real dangers and that if they are not dealt with the Service could disintegrate. But let us not say that it is already falling to pieces. Many people have been making loud noises about the disintegration and collapse of the Service, but there has been at least one sane, cool voice. That was the voice of Mrs. Betty Patterson, the chairman of the North Thames regional health authority. She made a valuable and sensible judgment outlining some of the dangers but at the same time outlining what must be done. There was much more balance from her—a woman with experience in this field—than in the frenetic outbursts of some politicians and the newspapers.
  The hon. Member for Macclesfield complained that there is not much in the Queen's Speech about the Health Service. It might interest him to know that there are about the same number of words in this speech as there were in an earlier King's Speech which said simply that it was the Government's intention
  "to establish a National Health Service".—[Official Report, 15th August 1945; Vol. 413, c. 56.]
  With those words Nye Bevan built the National Health Service.
  In those days there was a great deal of consternation over whether the Health Service would ever see the light of day. Even doctors were labouring under misapprehensions which only they themselves could have created. They were terrified of becoming civil servants—I do not know what is wrong with that—and that the patient would have to accept the doctor ordered by the State. In the original Bill, the right was firmly established for a patient to change his doctor whenever he liked. Also, there was no intention whatever of making doctors civil servants. In the end, a combination of the good old British compromise—at which we are such geniuses—and a lot of good will on the part of all people in the profession when they really understood what was involved, enabled the Health Service to be born and to thrive.
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  I believe that we must recapture that sort of feeling. The Health Service started off almost as a catastrophe, but within a matter of 10 months the profession and the ministerial team working together towards an ideal ultimately established the Service. That is the kind of spirit that we must try to recapture. It does not matter what form of administration one has; unless the people who work in the Service are proud of it one can never make it a success. It is a question not just of administration, but of people being proud to work in the Service at all levels.
  I was very pleased when I read at the bottom of page 5 of the Gracious Speech the simple statement:
  "Fresh support will be given to enable the National Health Service to fulfil and extend in services to the public".
  I want to hear how my Front Bench will make a reality of that phrase. In my judgment the National Health Service is one of the things of which this nation can be proud.
  I understand that it is the Government's intention to introduce a number of Bills, some of which will be based on the recommendations of the Briggs Committee. Far too often in the past we in the House of Commons have assumed that a little consultation here and there, and a few letters from interested bodies, are enough to build an Act of Parliament that will affect millions of people. That is wrong. I urge my right hon. Friend to make sure that the great organisations within the Health Service, such as the Confederation of Health Service Employees with which I am associated, are brought in right at the beginning, because of their vast experience throughout the Service. When I attend meetings of the executive of COHSE, I often find that wages and salaries are not discussed at all. The great issues that are debated are how to increase efficiency and reducing bureaucracy within the Service. We should acknowledge that from time to time.
  Right hon. and hon. Members on both sides of the House have said that what happened recently in the Health Service was to no one's credit. It does not matter where the fault lay. We must all share the blame that such a distasteful and nasty thing should have happened at all. It is regrettable that those in charge

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  do not understand the machinery that exists for joint consultation. The wrong people are in charge. At least they should be trained to understand what is meant in this complicated field when a large organisation such as COHSE, representing nurses, ambulance men and others, has to negotiate agreements.
  No one can say today that any small or large employer will see every individual employee and ask him how much money he wants, how many holidays he wants or how many hours he wishes to work. That is ludicrous. But there are some who take that absurd view. I hope my right hon. Friend will understand that the responsibility of organisations such as COHSE is enormous, and that with that responsibility they have garnered a great deal of wisdom and understanding about the Health Service. I beg him to see that in any future Bills not only COHSE but representatives of the consultants and other elements of the Health Service and those who are still the very base of the Service—the GPs—are consulted about any proposed changes.
  I understand that one of the Bills to be brought forward will be based on the Briggs Committee report and that a great deal of its purpose will be to give nurses a new deal. They deserve it. I find it repugnant that we still live in a society where a young lady who carries a couple of double gins and a few whiskies in some nice night club a quarter of an hour from this place earns more money in an hour than a nurse does for a whole week emptying bed pans. We must consider that and acknowledge that there is something wrong and sick with our society if a young woman can take her clothes off to be photographed and earn more in a couple of minutes than a nurse or a doctor earns in a whole year.
  We should all join in and say that loud and clear, and let some of our newspaper owners and managers understand that, too. There is a growing feeling among people about this. The British are a funny people. They buy newspapers to make themselves angry. They buy The Sun, turn to page 3, and see the nude and say "What a lot this is." I still think that we have a responsibility to point out that we do not want the young people of our nation to end up doing that sort of thing. We should make it clear that a nurse is one of the finest ex
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  amples of the way in which a young woman can give service to the nation and to humanity.
  I wish to draw the Minister's attention to another serious problem. My hon. Friend the Member for Basildon (Mr. Moonman) and others have made interesting an informed speeches on the subject of mental health. I wish to add one more dimension to this matter. The Confederation of Health Service Employees is almost by itself responsible for the representation of nursing staff in our medium secure units and mental hospitals. Some of the problems which it faces are enormous. The hon. Member for Macclesfield gave figures of the large number of mental illness cases which are being dealt with in the Health Service, and he stressed how small was the amount allocated to deal with these problems.
  There is another angle to the matter which is growing more difficult. It concerns the legal position of a male nurse in a mental hospital who finds it necessary to restrain a patient who is trying to butcher another patient or strangle or destroy somebody. If that male nurse overdoes it, he can be brought before the courts.
  Let me give an example of what happened on one such occasion. At one mental institution, patients were enabled to go home for a while and later return to the hospital. Because of the shortage of ambulances, male nurses were entitled to use their own cars to take the patient home and later to return him to hospital. In the instance to which I refer, the patient who was being transported suddenly tried to strangle the male nurse who was driving the car back to the hospital. As a result there was an accident. Nothing happened to the patient, because he was not regarded as responsible, but the male nurse was summoned because of the damage that he had caused to another car. When he returned to the hospital he found himself in a difficult situation because he, as an experienced male nurse, had allowed that situation to arise. If after the attempt to restrain him the patient had said, "I did not intend to do anything", it would have been the patient's word against that of the male nurse. Often, male nurses land up in court or find themselves threatened with legal action.

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  I must point out in passing that I would not like to undertake this kind of work. I would not do it for £200 a week. Male nurses have to deal with people who are often highly dangerous and mentally unstable. Because of their mental state, they are sometimes incredibly powerful, vicious and cunning. This has to be said so that we may understand the situation. It is wrong that those who look after these patients should be put at great risk because of the inadequate protection which is given to them within the Health Service, and indeed by the law in general. I hope that this unsatisfactory and demoralising situation will be examined by the Minister.
  I strongly believe that we should remove some of the petty irritations that beset the nursing service. For example, a nurse has to return to duty at 10 o'clock in the evening and work until midnight, similar to the dog watch in the mercantile marine. All these procedures are unnecessary.
  Many old-fashioned Victorian attitudes still exist in the Health Service, and they should be abolished. If that happens, it will make for a better feeling in the Service.
  I wish to mention the important subject of preventive medicine. This relates to the pursuit of health by collective action, and hence the prevention of suffering. I believe that there must be a closer partnership in the great amount of research that takes place between private enterprise and the Government so that the results of that research can be made freely available.
  Most of those who work in the Health Service are dedicated people, and this applies to all the professions and callings, whether they be nurses, general practitioners, therapists, surgeons, consultants or ambulance crews. We have all seen the keenness and devotion of ambulance men and staff when there is an accident in the street, or when a person is carried from his house to an ambulance. Everybody knows that there will be somebody at the hospital in the emergency ward to deal with the patient immediately and later to enable him to receive the full treatment. We must all agree that in any civilised society this kind of attention should be given top priority.
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  The hon. Member for Macclesfield referred to the devoted work of those who seek to relieve suffering and to prevent pain. This is not a new story. We all know of the excellent work carried out by the ambulance men, the nurses and the doctors when the patient reaches hospital, and at a later stage by the surgeon and the specialist. This is part and parcel of the service provided by the fine people who work in medicine. Their work is in the tradition of Pasteur, Lister, Semelweiss and Fleming. All those who work in the Health Service are following in the footsteps of those great names. Mankind is proud of those great men, and we can also be proud of all those who work in the Health Service.
  The Health Service can survive only if we are able to pay for it. It is no good taking the view that we are proud of that Service if we grumble and groan when we get the bills in the form of taxation. We must get rid of that kind of hypocrisy. I believe that the principle behind the Health Service is part of a fine social code, and it has as its aim the wellbeing of all our people. I believe that the Service is the best of our social achievements. We have pioneered many splendid movements in this country, and the Health Service is the finest.
  It will not be long before the Government are able to make a reality of the words on this subject in the Queen's Speech. I believe that the overwhelming majority of people want to see a massive resurgence of effort so that we can build up the Health Service and enable it to benefit from a massive increase in resources. The Soviet Union has not such a fine service. The Russians can put Soyuz in the sky, but we know that many millions of Russians cannot afford an aspirin. We have provided such a service, and we should be proud of it. In a recent television programme it was said by Senator Edward Kennedy that the United States was hoping to set up a service on the lines of our Health Service. Of course we should be proud of our Health Service. It is British, and it can be one of our finest exports. However, let us seek to find ways of perfecting it. Let us see that it has the money and the resources which are necessary to make it the pride of this country. Let the House of Commons see to it that those resources

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  and funds are made available as swiftly as possible.
  8.8 p.m.
  Mr. Tony Newton: Having taken part in most recent debates in the House on the Health Service, I believe that this debate has followed earlier patterns. In one respect this debate has been most encouraging. I refer to the thoughtful contributions made by many hon. Members about the problems in their constituencies or matters thrown up by their experience in all-party groups.
  All this is to be taken against the background of a speech by the Secretary of State for Social Services—I wish he were present to hear me say this—which sought to play politics, because it asked questions about other people's policies rather than told us what the Government thought and planned to do, and conveyed a sense of inertia on his part in the face of problems. The right hon. Gentleman's speech also displayed an unwillingness to discuss many of the matters which we all know need to be discussed.
  I do not want to press this point at great length, but, as we all know and as is gradually dawning on more and more of the public, there is no way of solving the problems of the health services, in terms of the demands that could be made upon them, within the resources that are likely to be made available. There is an infinite possibility of demand and we need to look seriously at how we get the resources and how we are to finance the best possible Service, instead of engaging in catcalls between the two sides of the House about particular aspects of policy.
  One clear example of this fact is that the policy of the Labour Party is to abolish NHS charges, but we all know that that will not happen. Indeed, existing charges have been put up—against the long-term policy of the Labour Party. That is a reflection of reality and we should face up to the reality that we need to look for potential new sources of finance. Some of the ideas that have been floated are not very good, but others merit genuine examination. What we cannot do is to look at our Health Service and assume that if we get another ½ per cent. growth in the economy or whatever we shall be able to solve all the problems. The world is not like that. We need serious thought about how we are to pro
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  vide for the maintenance of the Service in the years ahead.
  That is not the main point of my speech, but it is a matter about which I feel very strongly because we are failing the public with the political "yah boo" atmosphere in which this part of the NHS debate has tended to take place on successive occasions in the House. No one could get away with that in front of an audience of constituents and we do ourselves and the public less than justice when we let our debates proceed on that basis.
  In recent debates on the NHS and during the Consolidated Fund Bill proceedings shortly before the Summer Recess, I have spoken at length about the specific problems of my constituency. I do not propose to do so again now, but I wish to thank the Under-Secretary for the long and courteous letter that he sent to me after our last debate and for his assurance, which I accept and of which there is now evidence on the ground in my area, that the proposed new district general hospital at Broomfield really will go ahead. I have to say that my constituents, having been given such assurances so often before, still say that they will believe it when they see it, but I have reason to believe from local inquiries that I have made that work is proceeding in a way from which one can take real assurance that we shall at last get this new hospital which is so badly needed in my part of Essex.
  The new hospital will not, of course, solve all the problems. It will not, for instance, solve the problem of minor casualty facilities in the two main towns in my constituency, Braintree and Witham. It will not solve what I sense to be the growing pressure on general practitioner services in areas, such as mine, with growing populations. I assure the Minister that I shall continue to press him on these matters when necessary—and I am pretty certain that it will continue to be necessary.
  In his letter to me, the Minister referred to the responsibility of doctors to provide 24-hour emergency services in the context of the argument about minor casualty facilities. My impression is that there is very great confusion among the public about precisely what to do when an emergency arises. People do not seem to be clear about whether they should

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  rush their child or relative to the nearest casualty department or whether they should ring their GP and, if so, whose responsibility it is to provide the necessary transport.
  It seems that there is a need for the public to be informed again about the line of communication when a medical emergency arises. I have come across a number of cases in which people have been uncertain whether to approach their GP or go to the local hospital. A good deal of delay and confusion has arisen as a result.
  The Secretary of State referred to the redistribution of resources and the problem within the Thames regions and also took credit for the improvement in facilities in some other regions. I recognise that the right hon. Gentleman was speaking in some haste and, no doubt, in a form of shorthand, but to at least one hon. Member from Essex and, I imagine, to all my colleagues in Essex, to have the discussion continuing in only regional terms when it is repeatedly acknowledged that Essex is an under-funded area within what is said to be an over-funded region is extremely irritating.
  I am fed up with being told that the north-east Thames region, which covers the constituency of myself and the Under-Secretary, has more money than it should have by some calculations when everyone who looks at our problems knows that Essex is at least as underfunded as any of the regions in the northern part of the country to which the Secretary of State referred. If only for reasons of public relations, I hope that Ministers will recognise that fact when talking about the redistribution exercise. I know that it is recognised when the point is pressed, but it is aggravating to my constituents to have this constant implication that they are in an over-provided area and should not be worrying quite so much about their health services.
  Mr. Nicholas Winterton: My hon. Friend is well versed in NHS matters and I am wondering whether he can indicate how it could arise that a district is instructed to appoint a new consultant but cannot afford to employ the consultant because it does not have sufficient nurses or facilities to give him an oppor
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  tunity of undertaking his work. Does this not show complete chaos between the area and the region or between the region and the Government over the redistribution of resources?
  Mr. Newton: I cannot answer my hon. Friend's specific question, but I agree with his conclusion that there is a good deal of confusion in this matter.
  In my part of the country, there is also some doubt whether the policy that is supposed to benefit Essex by the redistribution of resources within the region is proceeding as effectively and fairly as it should. The chairman of the regional health authority has said in a letter:
  "Our case is that the element of over-provision in London is still being over-stated and that equity still requires that this Region (and indeed all London Regions) should receive a somewhat larger annual allocation than we currently do. And further that the delay in effecting closures makes it impossible, even within our existing resources, to make the sort of internal transfers"
  —that is, transfers to Essex—
  "we believe should be made at the planned speed."
  That worried me because the only possible implication is that the Minister is delaying decisions on recommendations of the regional health authority which are designed to move resources from London to Essex. Let me be clear about this matter. I do not particularly want to see our problems solved at the expense of others, but this redistribution is the Government's policy for dealing with the problems of Essex and it would be wholly wrong if, for reasons of political pressure in London, decisions that are needed to improve the situation in Essex are delayed or held up when the policy of the Government is that those transfers should take place.
  I shall conclude with two specific points, the first of which picks up a common strand in much of the debate, namely, the mentally handicapped. I wish to refer to problems which specifically affect the parents and relatives of young, severely handicapped people.
  There is serious continuing anxiety about whether the Central Council for Education and Training in Social Work is right in its apparent determiniation to phase out the diploma for the training of mentally handicapped adults in favour of a more generalised course in

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  social work. This has undoubtedly caused a great deal of anxiety. My impression is that it continues to cause anxiety and that there are those who are not satisfied that this is the right step to take in the interests of mentally handicapped adults and young people who are moving into adult training centres.
  These problems affect only a relatively small number of people, but they cause immense anxiety and problems for the families of those who suffer from them. There is great anxiety among a group in my constituency who are affected by the provision for the most severely mentally handicapped young people when they leave the special schools. There is a special school in my constituency which I visited recently. I understand that it contains about nine young people who within the next few years will be leaving that school where they are being very well looked after and helped, on attaining the age of 16.
  In the view of the parents, the headmaster, and probably the authorities, there is nowhere in the area where they could be properly catered for after leaving the school. This is an aspect of the current debate about mentally handicapped people and provision for them in which the Department needs to give a further lead. It is acknowledged in the Warnock report and elsewhere that at present there is a grave deficiency of provision for young mentally handicapped adults. There appears generally to be good will and a desire to help among all the authorities who might be capable of helping. There is not, however, simply a problem of resources but also of insufficiently clear guidance or decisions from the Department about precisely who is responsible for providing the after-school care.
  This could be dealt with in a variety of ways. The parents and others in my constituency prefer a special care unit attached to the adult training centre. There are two such centres in Essex which are to some extent jointly financed and run with the help of the local mentally handicapped societies. There seem to be problems, however, in making further progress. In my part of the county, for example, there is uncertainty, and this stems in part from the Department, about precisely where responsibility lies.
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  The Warnock report makes the point that education authorities have a duty to provide for 16 to 19-year-olds, regardless of other circumstances, any further education they may need. Many people feel that a special school which would also be attended by many younger people would not be the right place for 16 to 19-year-olds, and that this would not necessarily provide an ideal solution.
  I have a letter from the area health authority which makes the point that the responsibility for the placement of young persons beyond statutory school attendance age has been with the social services department. I also have a letter from one of the county councillors concerned with the problem at Essex county council who makes the point that although the DHSS has recommended that a service of this kind should be a social services responsibility, the DHSS has never officially transferred that responsibility from health to local authorities or, of course, provided any funding for it.
  The result is that the county social services department has many demands for its money for purposes for which it has a statutory responsibility, and here is another responsibility the importance of which is acknowledged but for which it has never been given direct statutory responsibility.
  On the face of it, therefore, there seems to be some confusion, and I hope that the Minister, even if he cannot comment on the matter tonight, will make some comment to me subsequently. If there is a gap here it is a serious one. It is causing chronic anxiety for parents with children of this kind, and it greatly adds to the strain they already suffer from looking after their severely mentally handcapped children.
  I wish now to deal with the implications of this issue for the argument about reorganisation. I hope that both Front Benches will take note of my comments. I hope that very great emphasis will be put on the need for flexibility in further Health Service reorganisation. It may be that in some cases to change the area tier of responsibility within the Service will be right. But, given the degree to which social services and health authorities will already have to co-operate on matters such as the one I have been discussing and a whole range of others, there are

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  real risks with further change in Health Service organisation, at least in some parts of the country—and I speak from experience of Essex—which would make it more difficult for direct and easy co-operation to take place on the same geographical basis. There is, for example, that which exists between the Essex area health authority as the authority responsible for health services and Essex county council which is responsible for social services.
  This point has been made forcibly to me in Essex, and I hope that it will be borne in mind by Ministers and by my own Front Bench when they consider reorganisation.
  I shall conclude my speech in order to enable my hon. Friends to speak. I am grateful for the opportunity of addressing the House.
  8.26 p.m.
  Mr. Peter Bottomley: I look forward to the Under-Secretary's speech with perhaps more pleasure than I can associate with the memory of the speech by the Secretary of State, who seemed to be somewhat out of tune with the general theme of the debate, which has been one of concern for the Health Service.
  I pay tribute to all parts of the Health Service and the Department, but I mention first an unsung and probably little known branch of the DHSS which is concerned with advice on residential institutions. I do not want to go into great detail, but I am aware of the way in which advice is given to local authorities about certain institutions and inspections are carried out. The discretion, the diplomacy and, yet, the rigour with which the DHSS officials do their job should occasionally be commented upon, and I pay tribute to them now.
  My second point concerns the Halsbury report and the way in which experienced school health visitors and TB visitors were by oversight discriminated against. In the main these are ladies who lost up to £1,000 a year because they failed to have a certificate that in any event was not available when they took up their work. With calm dignity and great determination they carried on with their work.
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  As a result of the pressure brought about in part by myself and by my colleagues, the DHSS recognised the validity of their claim. However, because of the operation of the pay policy it was unable for a time to meet it. When the opportunity came the Department acted. Those concerned in the profession are grateful. It is worth again paying tribute to the Department. It did not act as fast as I should have liked, but the fact that it acted should be put on record.
  There is a pension problem for those in that position who retired when their pay was at a lower level than it would have been had the pay policy not operated. It is a problem that I ask the Minister to consider. I do not ask him to reply tonight. If the Halsbury report should have kept those with great experience—which must be worth more than a new certificate—from suffering in their final years of service, that should not be reflected in a reduction of pension or a failure to increase the pension to what it should have been had the pay scales applied. Some consideration should be given to an increase in pensions or the making of an arrangement that would avoid a total penalty for those concerned.
  I shall refer again to the Health Service, but before doing so I look back to some of yesterday's debate. The Queens' Speech as a whole has been important. One of my great desires as someone who has not normally been regarded as on the extreme Right wing of the Conservative Party is to ensure that when the next General Election comes the bulk of each of the main political parties will take roughly the same approach to pay policy. Others have addressed themselves to the question whether we concentrate too much on the pay aspect of earnings and not enough on productivity or output. I should welcome a General Election when neither political party offered the British people the prospect of an average increase in pay, in real terms, greater than the average increase in output or production.
  That is an important feature that needs to be put across to the British people. However it is dressed up, and whether incomes policy or monetarism is the most important part of getting that message through, I should like to see a General Election in which all political leaders

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  and trade union leaders of significance, as well as all major employers, were united in saying that we cannot have real increases in pay that are greater than underlying output, whether in goods, services or exports. Obviously, the fluctuation of the exchange rate has some effect, as does North Sea oil.
  The underlying truth needs to be put across. There were glimmers of that in yesterday's debate. I pay tribute to my right hon. Friend the Leader of the Opposition, the Prime Minister and other leading politicians of both parties who have been willing to put the message across, or work towards it. Those who merely rehearse the theoretical arguments about monetary policy versus incomes policy miss the point that has been put forward by my right hon. Friend the Member for Sidcup (Mr. Heath), a neighbour of mine, and a few Labour Members who have had the courage to do so.
  It is rather sad that about 30 years after the establishment of the National Health Service, 100 years after the establishment of the Eltham and Mottingham hospital, in my constituency, and at a time when we are trying to retain reasonable Health Service facilities, the Eltham and Mottingham hospital should be under threat of closure.
  When the Secretary of State talks about greater democracy in the Health Service he should think about explaining to the House. and certainly to my constituents, why that is so when in the democratic exercise of asking local people in Eltham and surrounding areas whether they thought the Eltham and Mottingham hospital should continue the overwhelming verdict was "Yes". I asked the Secretary of State whether anyone in that area had agreed to the closure of the hospital and he replied that no one had put forward that view.
  With the large new general hospitals at Greenwich and Sidcup, the establishment of the Queen Elizabeth Military Hospital, which is offering beds to the NHS, and with the apparent desire to retain the Brook and St. Nicholas hospitals, perhaps there is an over-supply of what I call acute beds. However, surely it is about time that the Government, and especially the NHS, recognised the mistakes that were made in building enormous council estates and secondary schools. These mistakes should not be repeated. We
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  should not reach a stage when we have lost every small hospital in every community in London, let alone in the country as a whole.
  I have asked repeatedly for a full justification for the closure of the Eltham and Mottingham hospital. All that I have heard is the answer that there is an oversupply of acute beds in the Greenwich and Bexley area. We do not hear any comparison between the £500,000 a week that the Department pays out in supplementary benefits to the families of Ford strikers—I shall not become involved in the argument whether there should be supplementary benefit paid to strikers' families, which should take place in a different debate—that can lead to jacking up the expectation of pay increases for the rest of us and in turn will probably make it necessary to close more small hospitals, and what £500,000 would do to assist the running of the Eltham and Mottingham hospital.
  Consideration should be given to the trials and tribulations of those who use the services of the Eltham and Mottingham hospital, bearing in mind what they will go through when they take children or an aged relation to the Brook, the Greenwich district hospital or St. Mary's. When that comparison is made, we begin to realise that we have our priorities wrong.
  Every possible argument has been made in favour of maintaining the services at the Eltham and Mottingham hospital. The argument involves the maintenance not of operations but of every other service, including outpatients and physiotherapy. It is a hospital which is at the centre of a real community. I wonder whether the Secretary of State has thought sufficiently about the possibility of democracy in the National Health Service.
  I turn to the greatest failure which the country has experienced in the last four years. We have not experienced the economic growth that many of our industrial friends and competitors in Europe have experienced. If we had had anything like the growth that the Government spoke of when they launched their industrial strategy in 1976, or anything like the growth which the public expenditure increases in 1974 anticipated, it would not have been necessary—even with the Resource Allocation Working

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  Party report—to close Eltham and Mottingham hospital.
  One of the failures of this country, which I associate with the present Government, is that institutions raised by voluntary funds which even since the nationalisation of the hospital service 30 years ago have had great support from the community, have to be closed. That is a consequence of a failure to achieve economic growth. However, I hope that it is still possible to save that hospital.
  I turn to the question of pay in the public sector, which covers the National Health Service. I shall speak of the hospital supervisors. If the National Health Service and, by extension, the Government, are negotiating by grade—which is what occurs because of our diverse union structure and our split negotiating procedure—and the Government after four years are not able to anticipate that people who supervise others expect to earn as much, if not more, than the people they supervise, the Government have no justification for saying that the Conservative Party does not understand industrial relations.
  One of the problems that arose out of the electricians' settlement was that the supervisors were to be paid no more than the people whom they supervised. The Government failed to discharge their responsibility of anticipating future problems as a result of that situation.
  One of the responsibilities of an employer is to recognise what the knock-on effects of a settlement will be on the other groups and, if necessary, to bring the different negotiating bodies together in order to understand how they interact.
  It is worth remembering that the Government introduced the £6-a-week pay policy a week or two after my election success in 1975. I demonstrated then, perhaps to the present Prime Minister's surprise, that one could win an election by arguing in favour of wage restraint and by doing that openly and publicly even at the time of a crucial by-election.
  During the last three years the Government have done nothing to bring home to the trade union movement—and one must remember that the Labour Government have as father, and perhaps as mother, the Labour movement—the danger of having paper increases in earn
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  ings such as the 25 per cent. increases that were common in 1974 and 1975. The Government and unions have failed to recognise this. It was not understood at the TUC and Labour Party conferences.
  The public sector has become more and more aware that the possible wage drift in the private sector makes it increasingly difficult for those in the public sector to accept the fairness of the way in which incomes policy appears to have worked in the last three or four years. Many unions with members in both public and private sectors are unwilling to accept the consequences, in terms of inflation, public expenditure and unemployment, of leap-frogging claims or at least successive claims which are not compatible. One must say, in that light, that the Labour movement and this Government have failed.
  I do not want to make a partisan point, but in three years, from social contract through phases 1, 2 and 3, and now on the verge of phase 4, we have not seen sufficient concentrated work of the type that was done during the last two years of the previous Conservative Government. The cost to the country in lack of economic growth and increases in unemployment and inflation, as well as the reduced value of the pound, in the interregnum between 1973–74 and the present Prime Minister's dedication to keeping down pay increases to what we can really afford, has been horrendous for the country—and just as much for NHS patients as for anyone else.
  It is pleasant to be able to end as I began, with a tribute. The hospital service has been threatened by disputes not only by NHS employees. Nearly a year ago, during the firemen's dispute, many hospitals were left without the fire cover that they were expected to have. They could not expect to get the red fire engines turning up at perhaps three minutes' notice.
  I pay tribute to those—hospital and area administrators, for example—who, in my area of Eltham and in many others, helped to lay on voluntary fire watchers who slept overnight in hospitals. Many of us took part in that exercise. I am glad to have worked with people in management and the work force in providing that cover. When I stayed in the hospital overnight there were, fortunately, no fires, although there was one in my chimney at home on another occasion.

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  The way people worked then to deal with the possible consequences of a dispute outside the NHS is the kind of attitude that we need in the Service as a whole. I hope that one consequence of this debate is that that will come sooner rather than later.
  8.42 p.m.
  Mr. Robert Boscawen: I agree with my hon. Friend the Member for Woolwich, West (Mr. Bottomley) that the sooner we can get a proper procedure for settling these damaging disputes in the NHS the better. We have just passed through a period of which all of us who care deeply about health care should be ashamed. Once again, an industrial dispute has affected not just the organisation of the NHS but patients, and not just for the short period of the dispute but for a long time ahead. The damage done by a dispute of this kind shows up in the waiting lists for a long time ahead.
  We are still suffering in some ways from the damage of the doctors' strike. That happened two or three years ago, and some of the waiting lists which built up have never been cleared. Some of us who took an interest then deplore the fact that doctors found industrial action necessary—just as we deplore the same action among those employed by the NHS today. It is a major defeat for those who run the NHS from the Secretary of State downwards. The Department must take considerable responsibility for the fact that this latest dispute was not overcome a long time ago. It should never have reached that point.
  I hope that the Government are learning the lesson that dispute procedures should be reviewed and reformed as soon as possible, not only locally but at the Whitley Council level, which was perhaps as much responsible for the dispute as the local levels were. These two levels must be improved if we are not to go on having the type of damaging industrial action in the National Health Service that we have seen in the past few years.
  Such action is not only damaging to the smooth running of the Service but is deeply damaging to the morale of all those hard working, dedicated people who run the Service, whether medical staff, nurses, or administrative or maintenance staff in our hospitals.
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  We have been through a very black period. I hope that the lessons are well learned. If they are not, those responsible in the Government, the Civil Service and the area health authorities will receive the condemnation of ordinary people, patients and workers in the NHS for a long time to come.
  There are many deep problems that have nothing to do with industrial disputes facing the Service. The waiting list problem in the hospitals is perhaps the worst of all. In the area where my constituency lies we have a deplorable example of the failure of long-term planning within the NHS to provide sufficient human and financial resources to meet what is undoubtedly a growing demand for orthopaedic surgery.
  Surely it should have been obvious to those who plan the NHS at local and national level that there would be an explosion of demand for orthopaedic surgery as a result of new techniques. Surely it has been obvious for some years that this would happen, so why is it that at a major unit such as the Royal United hospital in Bath, when there is already a waiting list of 1,300 or 1,400 patients for orthopaedic surgery. The orthopaedic wing of that hospital was closed this summer for nearly four months, from the end of June to nearly the end of October, because of a lack of nurses. I have been in touch with the Department, the area health authority and the hospitals involved about this lack. The reasons are complicated. The shortage of nurses has a good deal to do with the difficulty of attracting young people for basic training in orthopaedic nursing. It seems to me that the education service in the area may have something to answer for as well. The number of children with suitable O-levels who want to go into nursing does not seem to be sufficient.
  Nevertheless, I wonder whether long-term planning inside the National Health Service at area level is good enough. Those of us who have been thinking about the National Health Service and party policy believe that more responsibility for planning the future should be pushed down to hospital level. But even if we give the districts more authority, I wonder whether the level of technical ability in planning for the needs of the hospitals in a given district is of a sufficiently high standard to get the answers right.

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  It occurs to me that we may need a general staff in the National Health Service which can advise or even guide area health authorities and district health authorities in planning for the provision of nurses and nursing skills for future demand in the different disciplines. At the moment, it all seems very hit-and-miss. The areas do not know what is going on in neighbouring areas. This does not apply only to district hospitals; we have this problem at present in planning for the future of long-stay mental hospital beds.
  The area health authority in my own area does not seem to be able to obtain future wishes or needs of adjacent areas, and to some extent they are all seen to be planning in the dark. A good deal more thought in the National Health Service should be given to planning hospital care not so much regionally but across area borders where they involve different regions. I question whether we have the quality of people at present capable of coming up with the right answers.
  I come now to the other big failing in the National Health Service. In former days, the consultants used to be kings in our hospitals. Their word went. They were listened to. They gave the lead. They were the local centres of leadership. All that has disappeared. To some extent, it can be said that the reorganisation threw up the local administrators as the persons to give the local lead about what was needed, what could be done and what the future of local hospitals was to be. But they have not replaced the doctors. At local level there is often a lack of leadership. The National Health Service needs people locally who can take responsibility, but at present there is no one locally able to take decisions.
  The Secretary of State has just experienced an incarceration in hospital in his own area. He may well have become aware of the lack of leadership in hospitals. It comes out so often, and it needs looking into. The administrator cannot give that leadership, although he is very often the only person in a position to give it. In many cases senior consultants appear to have been brushed aside. Today their opinions are often hardly sought at all. Where will the leadership come from? I believe that
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  it should come from multi-disciplinary groups within the hospitals at the lowest levels.
  Mr. Ennals: I did not find this at all. Perhaps I was fortunate in that the area chairman concerned is an extremely able man and my consultant is a member of the district management team. It was an energetic and hard working team which gave a great deal of leadership. It had to face difficulties over shortages of funds but it dealt with matters in a realistic and skilful way.
  Mr. Boscawen: I am glad to hear it. I hope that that good example will spread throughout the Service. Not all local leadership is organised well enough. Individuals cannot always go to someone and get a decision. They have to go to and fro, up to the area and down to the district, from doctor to administrator.
  There are too many warring factions in the Service. Why cannot we get rid of the politics in the Health Service and get back to a greater sense of idealism? Those who work in the Service at any level are there to serve the sick. If we could do this we should be serving our constituents and those who are in need to much greater effect.
  8.56 p.m.
  Dr. Gerard Vaughan: We have had a long and useful debate. I hope to leave ample time for the Minister to deal with the many points that have been raised. I begin by adding my welcome to the Secretary of State and expressing my pleasure at his return to good health. I hope that he has now fully recovered. It is good to have him with us this evening. My recent comments about him may have been unpopular but they were not meant personally.
  Listening to the right hon. Gentleman today I found myself gripped more and more by a sense of unreality. This was obviously shared by my hon. Friends the Members for Braintree (Mr. Newton) and for Woolwich, West (Mr. Bottomley). After listening to the right hon. Gentleman giving us a list of the improvements which the Government have made, I have to ask how it is that capital spending, has been reduced in the way that it has over the past four years.

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  How is it that the Service now has the longest waiting list in Western Europe? I heard the right hon. Member's robust statements and then wondered how it was that the hon. Member for Basildon (Mr. Moonman), in an excellent speech, was able to say that there was a lack of any sense of direction in the Service. That is what we hear on every side as we go round the country. It is said that there is no direction at the top.
  It was good to hear the Secretary of State say, I think for the first time, that he is concerned about the state of the Service. It seems to have taken the most drastic, appalling and terrible dispute from which the Service has ever suffered to produce this change of mind. I have spent the whole of my life, until recently, outside politics working within the Service, and for me this recent dispute has been the most ghastly tragedy. I have seen at first hand, apart from all the comments in the press, the effect that it has had on waiting lists and on individuals who find their condition changing from treatable to untreatable. I am sorry to come back to that unpalatable fact, but that is what has happened in recent weeks. Many of us believe that the tragedy was totally avoidable had action been taken at the beginning.
  I agree also with my hon. Friend the Member for Canterbury (Mr. Crouch), who said that he was surprised by how much time the Secretary of State spent in asking the Opposition what their plans are and so little time, relatively, telling us what the Government's plans are. But that is typical of what goes on. It sounded from this side of the Chamber as if the Secretary of State was trying to defend himself by constantly coming back to the question of what our views and plans are. But at the moment it is his responsibility and the responsibility of the Government as a whole to deal with the situation. I saw no reason for the hon. Member for Basildon to chide my hon. Friend for saying what he did.
  I can understand the Secretary of State's emphasis on resources. I agree that there is a shortage of resources. But he made no comment at all on a factor which most people working in the Service complain about—misuse of the resources that we have. One of the economies that we see is a proper redirection of the way
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  resources are being used. Our information is that millions of pounds could be saved if money were properly spent instead of being spent in the complicated and extravagant way it is at present.
  It is difficult to feel a sense of reality when the Secretary of State talks about the shortage of resources while, for example, the Government continue to close down private beds, thereby cutting down the resources that those beds have brought to the NHS. We were promised that they would be used by the NHS, but in the majority of cases they are simply being shut down altogether and the space used for storage or offices. That is a disgraceful situation.
  Against the background of lack of resources, how is it that the Government continue to pursue their aim of having a common waiting list? It is desirable probably in the long run, but it would, as the professions have told the Secretary of State, create disruption during its introduction. Is it right to introduce another disrupting factor at a time when so much is going wrong and when the waiting lists have gone up by 60,000 cases–10 per cent.? The introduction of a common waiting list will increase for a time the general numbers of people on the waiting list. That is the view taken by many people. So it is difficult to accept as reality what the Secretary of State was saying.
  My right hon. Friend the Member for Wanstead and Woodford (Mr. Jenkin) set out clearly our views on the Gracious Speech. Our concern about the Gracious Speech is not what is in it but what is not in it. Its contents will do nothing to deal with the real ills that face us in our health care—unless, that is, we accept, as I do not, at their face value, the words: "Fresh "—an interesting word—
  "support will be given to enable the National Health Service to fulfil and extend its services to the public."
  I regard that as mere window dressing, and I fear that nothing will come of it. Nothing that the Secretary of State said today has changed my view. I hope that the hon. Member for Barking (Miss Richardson) will turn out to have been justified in congratulating the right hon. Gentleman on this, but I doubt it.
  We welcome the undertaking to provide compensation for vaccine-damaged

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  children and the proposal to legislate on Briggs. As the House knows, we have consistently supported the compensation proposal. I agree with the point about deafness and german measles made by the hon. Member for Brent, South (Mr. Pavitt). We shall want to question whether the amount of compensation is right, because there is no doubt that the sums suggested are well below what the children would expect to obtain through an ordinary court of law. We shall want to consider this aspect.
  As many hon. Members know, I chair the medical panel advising on the thalidomide children. All I would say from that experience is that I hope that the Government will put this matter into the hands of a very small group of people so that compensation procedures can go through quickly and humanely and we do not experience the terrible delays and suffering for families that we have all seen with the thalidomide compensation process.
  I turn for a moment to Briggs itself. I was rather surprised that the Secretary of State did not refer to it in more detail. He merely referred to it in passing, rather late in his speech. There is no doubt that from the nursing profession's point of view, this is something that they want very much indeed.
  Mr. Ennals: There will be a whole day's debate in about 10 days' time.
  Dr. Vaughan: Of course, and on that occasion we shall be discussing with the Government the concern that the professions within the profession—the midwives, health visitors, district nurses and psychiatric nurses—all feel about their future identity. It has already been put to us that the health visitors, for example, are considering whether they will have to move out of nursing altogether and into the social services field. This would be a disastrous outcome. We must persuade them not to go ahead with that.
  When it comes to the Bill and the Committee stage, we shall want to have a very good look at the cost and at whether there is a danger of setting up yet another large central bureaucratic structure that will crush all initiative underneath it.
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  We welcome these proposals. We were very glad to see them. But where in the Gracious Speech is the awareness of and comment on the appalling situation in the NHS today, and where are the steps to deal with it? We were certainly not given them tonight. Are we to drift on, waiting for the Royal Commisison in June, which may be delayed? Then, once it has made its recommendations, presumably there will have to be time to discuss them and to work out what sort of action should be taken.
  My hon. Friend-the Member for Canterbury and the hon. Member for Basildon think that there should be action now. So do we. That is because we do not accept that a caring Government, about whose caring we hear so much, should let the situation drift. We regard that as irresponsible and very damaging. Therefore, we ask the Government to rise to the matter of dealing with the needs.
  This is not a personal matter. We are now discussing the condition of a great Department of State and the Government's credibility as regards their control over it. Many people think that the Government have no control at all over what is going on.
  The Secretary of State seems to regard himself as some kind of Houdini. No situation is too difficult for him to know the way out of it, waving a press release of some kind and claiming credit when there is total disaster all around him. This theme of his that all is well is not the picture that one gets as one goes around the country. The right hon. Gentleman shakes his head, but in January, on television, in "Panorama", when he was told that urgent cases were having to wait for investigation, he said that he had never heard about it. He wanted people to let him know. He did not think that it existed. He said what he has said so often, and so damagingly to himself—that we have the finest Health Service in the world. He brushes these other things on one side.
  Mr. Ennals indicated dissent.
  Dr. Vaughan: This is a very important point. I suggest to the Secretary of State that he has done himself and the Health Service great damage by pretending, on many occasions publicly, that these problems do not really exist. He has acquired

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  a reputation for fumbling government in health matters.
  It is true. We have it in the newspapers at present. There are constant accusations that had the right hon. Gentleman stepped in earlier on the recent dispute, it would not have developed to the extent that it did. He has a reputation for too little too late, and it is up to him to live it down.
  Dr. M. S. Miller: Will the hon. Gentleman give me an example of one Labour Social Services Secretary about whom that accusation has not been made?
  Dr. Vaughan: The Government and Ministers are accused of a lack of direction, of mismanagement and a lack of awareness of the situation which really exists. We have had it today in the debate from the Secretary of State's own side.
  Let us examine for a moment, as the hon. Member for East Kilbride (Dr. Miller) has raised it, how this has come about. In January 1977—a long time ago—the Royal College of Nursing produced a report setting out very clearly some of the anxieties about the standard of care of patients. The report set out very clearly that the flow of nurses would drop by about 10,000. The report was ridiculed. The college was told that it did not know the position and that this was not a reliable assessment, yet everything set out in the report has proved to be true, and the assessments have been shown to be completely reliable.
  Not long ago we had the abortion figures, and the Secretary of State said that the number of abortions was going down. Within a few weeks he had to tell us that the number of abortions was going up.
  There were the problems of disability and the appalling mishandling of the issue of the trike, which led to thousands of people becoming housebound. It is no use the Secretary of State shaking his head. This is what happened.
  There was the situation concerning the agency nurses. The Government made very strong attempts to close down the nursing agencies. What has happened? The Government are now making greater use of agency nurses than they ever have before.
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  There is the problem of the waiting lists. It was denied that the waiting lists were a major problem. We were told that the figures were going down. The Secretary of State told us this not very long ago, but in fact they have gone up.
  Mr. Ennals rose—
  Dr. Vaughan: I should like to finish this point, if I may. Early this year Miss Catherine Hall, a most moderate and responsible woman, made a statement, on behalf of the Royal College of Nursing, that the nurses were so concerned about the standards of care for patients that they thought we had a very serious and disastrous situation on our hands. I raised the matter in the House in a Question to the Secretary of State. He ridiculed me and said that nurses were always asking for more of this and more of that. It is all on record in Hansard. Then the Secretary of State went to Harrogate and discovered the truth when he had to listen to the people who actually do the job.
  How does that sort of behaviour and history raise credibility for the Government? It does not. That is why, as one goes round the country, one finds so many people saying that they have no faith in the direction from the top.
  Mr. Hoyle: What would the hon. Gentleman do?
  Dr. Vaughan: The British Medical Association has warned us that standards are falling. It has gone further than that. This is a very serious thing for a medical group to do. It has warned its members of the legal danger of using equipment which is not in good repair and is not serviceable. This is the kind of thing that is going on, and at the same time we have this increasing move to anarchy and disruption which is spreading right through the Service. Only the Royal College of Nursing has come out clearly and said that so far as it is concerned there will be no strike action within the health field. Only today we were accused—my right hon. Friend quite rightly denied it—that we had in some way supported strike action, or did not speak out against it. I was here in this Chamber when the doctors were operating the work to rule, and we said that that kind of behaviour

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  did not justify itself, in our opinion, in any circumstances in the health field.
  I could go on through a great list of statements which have turned out to be untrue or situations which have been misjudged within a very short period. In the past few days The Daily Telegraph has commented that the recent dispute was one which need never have occurred.
  Earlier this year—again I believe this was window dressing—the Secretary of State tried to produce a code of practice. Today he spoke with pride about the number of different people he had brought together to consult. Frankly, why does one have to have consultations for a code of practice to which every humane and feeling person would agree? Why does one have to have consultations to say that the care of patients must come first? It is absolute nonsense. Of course it must come first. Why does one have to have consultations to say that there is no place for strike action in the care of the sick? Why does one have to have consultations to say that intimidating and frightening people is totally barbarian and outside ordinary civilised behaviour? In time of war we have the Red Cross and the Geneva Convention to ensure that injured and sick people are, where-ever possible, not caught up in acts of warfare. Yet in peace, in our own Health Service, we think nothing at the moment of jeopardising the lives and treatment of patients. I feel very strongly about this indeed.
  Mr. Hoyle: Why does the hon. Gentleman denigrate the staff of the NHS who, after all, have been so loyal to the patient? Does he not agree that the worst thing that could happen, if we do not get the pay and conditions right, and early settlement of grievances, is that there will be a drift away from the Health Service? Then patients will suffer. It is largely due to the bureaucracy which the Conservative Opposition set up when in Government.
  Dr. Vaughan: I am glad the hon. Gentleman intervened in that manner, because he clearly has not understood what we are saying. I am not denigrating the staff. I pay great credit to the staff. We heard from my hon. Friend the Member for Woolwich, West what appalling mismanagement there is with regard to
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  negotiation if staff have their pay increased above the level of people who supervise them. I am not denigrating the staff at all. What I am saying is that there is a lack of leadership and confusion at the top.
  Mr. Hoyle: You lot set it up.
  Dr. Vaughan: Now we have a special proposal that a team should be set up in each region—another Quango—in order to come in from outside and sort out industrial problems. Why? Why not give authority to act to those who are actually concerned? What is what my hon. Friend the Member for Wells (Mr. Boscawen) was asking for. Why not give support and authority to those who are already there? One does not need to bring in people from outside to see that once again there is someone actually in charge of running a hospital. It is this complete inability to take any positive action over the past four years which has done so much damage to the Health Service, because there has been drift and confusion.
  We believe that it is not the place of the Government to keep stepping in and telling the staff how to behave in their day-to-day activities. It is their job to deal with the day-to-day activities, but it is the Government's job to show leadership from the top on general policy. I hope that the Secretary of State will take this seriously.
  I went to the hospital at Alton the other day. The ancillary staff are not in communication with the nurses and the doctors. Until very recently the nurses and doctors were not in communication with the area staff. A decision was taken to close that hospital without any consultation with the local people. Is that the way to run a Health Service? Of course not. Now the hospital has been told that its future is likely to cease, that it will be closed as a specialist hospital, at a time when an almost identical hospital is being planned at Cambridge in another part of the country. It does not make sense to them or to me. I hope that the Secretary of State will stop this wild activity of closing down smaller hospitals without examining the damage being done to the local community.
  I hope that the Secretary of State will take seriously the call from many hon. Members on his side of the House for

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  action now. One of his hon. Friends described the Royal Commission as an "Aunt Sally for doing nothing".
  I hope that when the Secretary of State comes to face the nurses he will not try to brush off their problems as he has brushed off so many other problems in the past. It is scandalous that nurses today should earn £26 a week on average less than a primary school teacher. That applies to a registered or enrolled nurse or midwife. It is also scandalous that a nurse should earn less than a secretary. How can one expect to encourage people to come into this great profession if they are to be constantly concerned about the lack of finance in their salaries?
  Mr. Ennals: The hon. Gentleman must be aware that at the time of the change of Government the nurses were in a state of uproar because of the failure of the Opposition, who were then in Government, to deal with nurses' pay. It took my right hon. Friend and the Halsbury report to produce a 30 per cent. increase in nurses' salaries. How dare the hon. Member come to the House and lecture us on nurses' pay?
  Dr. Vaughan: What the Secretary of State has omitted to say is that the main reason for the shortage of nurses is the cut back on training schools and courses for nurses. In many areas these have been cut back by one-third. If he looks at the nurses' assessment of the situation he will see that the Government are urged to recognise this and not to continue increasing the facilities without increasing the number of nurses. There are great problems and I hope that he will take them seriously.
  A lot of play has been made by the Secretary of State about our policies. They are very simple. It was put to us that we should have policies to put right every single thing that is going wrong at present. That would be ridiculous. To have a major change of that kind would only create more damage than good. Therefore, we have looked at the main problems and we have found that these lie in lack of resources and in poor morale.
  When one examines why morale is so bad—and it is terrible—one finds that it is caused by lack of resources, and by the fact that people cannot make decisions. Therefore, we have come down
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  clearly on returning the Health Service to a local base—to locally based small units, where decisions can be made quickly and effectively. Local units will have their own budgets, will know what they are doing and will be able to plan properly again. This will improve morale. We also have plans for introducing incentives locally and increasing the voluntary contribution locally.
  Mr. Pavitt: Will the hon. Member tell the House that this is precisely what happened before the reorganisation? This happened under group hospital management committees which had their own budgets. All this happened previously.
  Dr. Vaughan: Let us at least recognise what the Health Service needs now. It needs to be able to make quick, effective local decisions. We see great contributions coming from collaboration with the private sector. We would give proper priority to reducing the waiting lists and we believe that the private sector would join in reducing them.
  Mr. Pavitt: Will the lion. Gentleman give the figure for BUPA and Private Patients Plan? Even if one doubles that figure, it surely will not touch the problem.
  Dr. Vaughan: I am telling the hon. Gentleman what our policies are. He asked, and I am happy to tell him. We have plans for local freedom of action in the Health Service. This will mean—not in every part of the country, but in many areas—the phasing out of area health authorities.
  We heard earlier in the debate that this proposal would not save a great deal of money. It would save some money directly, but it would save much more money indirectly by making the Service efficient and streamlined again. The regional health authority could then revert to its proper role of being a planning and co-ordinating body, instead of trying to do the day-to-day running of the Service.
  Those are our proposals. We would put right in the front of them priority for the care of patients and for doing away with or severely reducing waiting lists. We believe that that can be done with proper leadership and incentives locally. We have no plans—and let us hear no more of this—for cutting the existing

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  resources in the Health Service. Such a suggestion is a malicious, smearing lie. We have no plans to impose new charges.
  Mr. Hoyle: Not yet.
  Dr. Vaughan: I repeat that we have no plans at all in that respect. Therefore, it is no good accusing us of having such plans.
  In our view, the criticism of the Government's handling of the National Health Service is totally justified. That is why I wrote to the Prime Minister as I did last week. There is now a widespread lack of confidence. One has only to travel the country to discover this. That lack of confidence is to be found among patients and staff. The Royal College of Nursing says that there is a crisis of manpower, money and morale; and we in the Opposition say that there is also a crisis of mismanagement.
  9.28 p.m.
  The Under-Secretary of State for Health and Social Security (Mr. Eric Deakins): I wish first to apologise for the absence of my right hon. Friend the Minister of State, who is on an official visit overseas.
  Because of its size and importance in the national economy and because of its role in the lives of every citizen, the National Health Service is properly the subject of public concern and rightly it is also a matter of great political concern. Although all parties agree on the need for a National Health Service, there is a great deal of political disagreement between them on a number of contentious issues, some of which have figured in this debate.
  Ministers can have no complaints where the Opposition challenge them on straightforward political grounds. We would be unrealistic to think that our political opponents—and even our friends—will always see eye to eye with us on everything that happens in this great organisation of which we in the Labour movement are so proud.
  I hope that the right hon. Member for Wanstead and Woodford (Mr. Jenkin) will forgive me if I do not immediately reply to the points that he made in his speech, because my right hon. Friend wishes me to deal with a subject which
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  has not figured in this debate but which I know is in the minds of all hon. Members with an interest in health matters. I refer to perinatal mortality rates. I wish to say a few words on that subject before I come to the substance of the debate.
  In this country we have long been maintaining a steady reduction in the perinatal mortality rate. There are wide variations in that rate between different areas. For example, in 1977 it varied from between 10·2 per 1,000 live births in Kingston and Richmond to 26·6 per 1,000 in Rochdale. Although there may be room for improvement everywhere, the major problems are obviously linked with areas of multiple deprivation. Any action that we might take in regard to health services needs to be accompanied by broader measures of environmental and social improvement. We are working, and intend to continue working, to develop and sustain a broad attack on these problems through our partnership schemes for inner cities and the urban programme in seeking to help areas of special need.
  I wish to pay tribute to my hon. Friend the Member for Eccles (Mr. Carter-Jones), who is unable to be here today but who has led almost a one-man campaign—although he has been assisted by other hon. Members—in the past year or so attacking the Government, and perhaps rightly, for what he feels has been the neglect of this problem. My hon. Friend has certainly had a great deal of influence publicly and behind the scenes. We are especially concerned about the problems of areas with infant and perinatal mortality rates consistently above the national average where they show no sign of significant reductions.
  In our debate earlier this year on preventive medicine, my right hon. Friend the Minister of State undertook to approach the areas concerned. A short while ago, we wrote to the chairmen, sending them figures for infant and perinatal mortality for the four years up to 1977 and asking them to obtain special reports from the chairmen of areas where there was cause for continuing concern on the specific policies they would be adopting to improve the situation. That is an example of substantial action and direction from above. We

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  have been criticised quite a lot in the debate for a lack of those qualities.
  I should also make clear—I believe that the House will support me here—that individuals have a right to look after their own health and a responsibility to do so. For example, expectant mothers have a responsibility for their own health and for that of their unborn babies. One of the ways in which they can exercise this responsibility is by making full use of the services provided. Late booking for antenatal services is a major problem in many areas, and it is unfortunate that those at risk are often those who are most likely to book late. In an effort to find better ways of reaching them, we and the Child Poverty Action Group jointly organised a conference earlier this year on reaching the consumer in antenatal and child health services which had as one of its principal objectives the aim of identifying some of the problems involved. A number of useful ideas emerged and the report of the conference has been widely circulated.
  In addition, the Government have expressed their commitment to the introduction of a prenatal screening service for spina bifida and other neural tube defects as soon as its safety and effectiveness can be assured. In the meantime, we have set up a working group under the chairmanship of Sir Douglas Black, chairman of the Royal College of Physicians, to review the problems and advise on how they may be met. We hope that this shows that, at least in this area, the Government are taking positive action to remedy something that is of great public concern.
  Mr. Pavitt: Will the Government consider using the same incentive methods used so successfully by the French in order to get the services of our antenatal clinics up to the same standards as those in France?
  Mr. Deakins: We look carefully at what is going on overseas, but we have to bear in mind that conditions differ from one country to another and I hope that the lines we are working on in making the services better known and ensuring that people are got to the clinics in time will have an effect. If the policies on which we are working do not have an effect, we shall obviously have to look elsewhere, but I am confident that, given
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  good will and adequate resources, we shall see them succeed in bringing down still further the perinatal mortality rates.
  The right hon. Member for Wanstead and Woodford spoke about finance and I shall have something to say about that later, although my right hon. Friend the Secretary of State also dealt with this subject. The right hon. Member said that nursing recruitment, particularly of nurse learners, was appalling and asked what we would do about it. The subject of nursing manpower has received a great deal of attention, not merely in the past few days. I think that it would help if I clarified some of the main questions that would pose themselves to any Minister in our position.
  First, neither we nor DHSS officials have imposed any cuts in nursing manpower or recruitment to nurse training. Decisions on manpower levels in relation to services are taken by each health authority in the light of resources available and its perception of the requirements of its area. Similarly, admissions to nurse training are determined locally. There certainly are problems, but the difficulties vary widely from one area to another. We have heard from Conservative Members and the Secretary of State heard from the Royal College of Nursing on Monday about the increased work load putting a great deal of pressure on our nurses, and the reasons for that.
  We are under no illusions about the difficulties, and we shall have to redress shortfalls in provisions in some of the priority services which are not always in the limelight when these matters are debated in the press. However, we have to recognise that the number of nurses working in the NHS has continued to grow, although in the past two years there have been only very small increases—not sufficient. It is the fall in the number of young people entering nurse training in the past two years that has caused serious concern.
  Here again the pattern is somewhat mixed, and on has to look at all the figures. The figures for the first quarter of the current year show an increase over the same quarter in the previous year. If the present trend is continued the numbers entering for training for the SRN qualification should return to the levels of earlier years. There has been some improvement in the number of entrants who

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  remain to complete their training, which is another important factor. But the numbers entering training as pupils for the SEN qualification have continued to fall. That is a matter of major concern. While there are some encouraging signs, we are in no doubt that the Service faces real problems on the question of nurse manpower. We fully appreciate the feelings of nurses who are working under increasing pressure in many areas.
  It is essential, therefore, that positive nurse manpower planning should be developed in all areas of the Service to cope with our future needs. Here I agree with the hon. Member for Wells (Mr. Boscawen) that we need much more manpower planning, and not merely with nurses. To stimulate this process my right hon. Friend intends to issue to NHS authorities early next year a document dealing with a wide range of issues affecting nurse manpower planning.
  The right hon. Member for Wanstead and Woodford also asked me about vaccine-damage payments in relation to supplementary benefits. I am not sure whether this was covered in a parliamentary answer in July, but I am informed—this is, of course, a matter for the Supplementary Benefits Commission—that the effects of payment under the scheme with regard to eligibility for supplementary benefit have been carefully considered by the Commission. It has decided that where the vaccine-damaged person is a child it would be right in assessing the parents' entitlement to supplementary benefit to disregard the payment to the extent that it is held in trust for the benefit of the child or is earmarked for particular major items of expenditure such as adaptations to the home.
  Where the vaccine-damaged person is an adult the payment will normally remove the need for payment of supplementary benefit, but the Commission will give sympathetic consideration to such cases where there are any special circumstances.
  I shall now deal with a point that was raised by the right hon. Gentleman but which was taken up by hon. Members on both sides of the House. I refer to the works staff dispute. My right hon. Friend the Secretary of State dealt with this aspect
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  in some detail, but in view of the subsequent remarks that were made in spite of his speech I ought to spend a little time on the matter. The background to the dispute goes back to 1974. The dispute was primarily about a new grading structure and the salaries attached to it. A joint working party of the Whitley Council was set up late in 1974 to make proposals to the council. The proceedings of the working party were protracted because of the complexity of the task and the need to agree a structure which was acceptable to both staff and management interests.
  Eventually—we must remember that stages 1 and 2 of pay policy intervened—the proposed structure was put to the Whitley Council early this year. The management side offered to discuss salaries for the new grades in this structure within the context of the 1978 pay round. That was unacceptable to the staff side and the 1978 settlement was confined to existing grades, who received an overall increase of just within 10 per cent. Subsequently, the staff side made representations to Ministers and approval was later given to the Whitley Council to negotiate salaries for the new scales. The staff side had given notice of industrial action if salaries were not negotiated. Of course, in approving the opening of negotiations Ministers explicitly reserved their position in terms of acceptance of the outcome.
  I must reinforce what my right hon. Friend said about pay policy. He and I and my right hon. Friend the Minister of State have been closely involved in the past two months with this issue, often on a day-to-day basis. Obviously, both the level of the new rates and the timing of the introduction of the structure were important issues. We had to satisfy ourselves that these matters were in conformity with pay policy, particularly since we shall start to introduce them less than 12 months after the last pay increase.
  The second point at issue is, I believe, a more significant one, and one on which most of the negotiations have been conducted in past months. It concerns bonus payments. Clearly, a bonus not linked with genuine productivity agreements would be outside pay policy, and that is why pay policy came into the matter. The unions have made it a sticking point that there should be payments of at least 15

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  per cent. rising to 30 per cent. to all supervisors whether or not they were involved with productivity agreements, and regardless of whether such schemes were self-financing. That, as the management side told them, was not on, and we said so publicly, too. Happily, the unions moved away from that unacceptable position and enabled an agreement to be reached with NHS management.
  I hope that no one in future—because we may have other disputes to deal with—will feel that when Ministers say something about pay policy implications they are in any way being misleading. They are not. There were genuine pay policy implications. Pay policy was concerned not merely with the appropriate percentage in each year but with a whole range of other issues.
  Mr. Hoyle: I thought that my hon. Friend would have been most indignant about the fact that a group of workers had to wait four years for the settlement of a grading dispute. That is the issue to which he should be addressing his attention. As I said to my right hon. Friend the Secretary of State, pay policy should not have entered into the dispute. We should be addressing our attention to considering means of solving these disputes far more quickly and efficiently. If there is a point of explosion, that must be understood if a group of workers has to wait four years for a simple grading issue to be settled.
  Mr. Deakins: I have already explained—I am sure that my hon. Friend did not fully appreciate all my remarks—that an offer was made and could have been accepted early this year. Admittedly, there would still have been a long delay, but the dispute would not have built up into such grievance. The basis of the grievance was not the grading and salary structure but the bonus scheme.
  I shall not take up the remarks of the right hon. Member for Wanstead and Woodford on pay policy generally. I should be unfair to those who had taken part in the debate if I were to take up his argument about not having a fixed limit for pay. If we do not have a fixed limit, I do not understand how negotiators in pay settlements throughout the country in the public and private sectors will have any idea of what is in the
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  national interest. The Government must give a lead.
  My hon. Friend the Member for East Kilbride (Dr. Miller) observed that many nostrums are being circulated. Fortunately, there have not been too many offered in the debate. I think that we are becoming more realistic when we debate the National Health Service and other areas of the public sector. However, magic solutions are often put forward in the press. As my hon. Friend said, and as most who have taken part in the debate will agree, there are no magic solutions.
  My hon. Friend was concerned about the importance of the general practitioner and the primary health care team. That is an area with which we are much concerned. We should like to see more resources directed to that area. Although joint financing moneys will help, we have to take other steps as well. We have set up a joint working group—the Standing Nursing and Midwifery Committee and the Standing Medical Advisory Committee—with the following terms of reference:
  "to examine the problems associated with the establishment and operation of primary health care teams and to recommend solutions.'
  The first meeting of that group is tomorrow.
  We are also preparing a departmental circular entitled "Primary health care, health centres and other premises". The report will give guidance. It is hoped that it will help health authorities to press ahead with suitable accommodation for primary health care teams. In some areas the lack of suitable accommodation is holding up progress.
  Dr. M. S. Miller: Should this matter be left in the hands of the British Medical Association? Should my hon. Friend not give general medical practitioners who are involved the opportunity to give him their opinions?
  Mr. Deakins: We are always open to receive opinions from any organisation or individual. I hope that my hon. Friend, who is an ardent trade unionist as I am, will recognise that the BMA is a trade union. We have a right to receive its representations.
  My hon. Friend the Member for Brent, South (Mr. Pavitt) said that the problem of RAWP and the inner cities has occupied him a great deal. Indeed, it occupies

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  Ministers' attention. An advisory committee is considering the problem. I am grateful to my hon. Friend for welcoming the Bills that we shall be introducing.
  My hon. Friend referred to rubella. I do not have time to develop his reference in any great detail. We are considering a national campaign during next year, the International Year of the Child. There are some medical difficulties. The difficulties are not technical or administrative. We are considering the financial manpower and administrative implications of the proposal. Obviously, any campaign has to be well planned with public health laboratories and other interested parties, including health authorities. Until a decision is made on proposals that are to be put forward by our Joint Children's Committee, I cannot say precisely what the action will be. However, I can assure the House of our deep concern and our determination to do something as quickly as possible to increase the uptake of rubella vaccinations.
  Mr. Patrick Jenkin: That is an extremely important issue and I am glad that the hon. Member for Brent, South (Mr. Pavitt) referred to it. The key is the acceptance by the Government that we have to have eradication. That means immunising both boys and girls and not merely having the limited campaign of trying to immunise girls before they reach the age of childbearing. Does the examining committee have that proposal on its table, or has that been ruled out?
  Mr. Deakins: I do not know the answer to that question. I shall ensure that the right hon. Member's question is conveyed to the committee. It is a technical and medical question. I am not a medical expert. I shall see that the matter is passed on.
  My hon. Friend the Member for Brent, South also referred to nurses and their terms and conditions of service. These are matters for the Whitley Council. I shall write to him about them. He mentioned reform of the Whitley Council. We have made a response to the McCarthy report. Where we have not been able to reach definite conclusions it is because staff and management have not been able to reach agreement. In some cases the staff associations have
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  not been able to reach agreement. We have made clear that there must be a consensus between staff and management before implementing the McCarthy proposals.
  I turn to the speech made by my hon. Friend the Member for Nelson and Colne (Mr. Hoyle). He thought that the Whitley system was a charade. I do not agree. It is under great strain but it has worked well. I am confident that it will continue to work well, providing that its members are determined to make it work.
  My hon. Friend the Member for Nelson and Colne spoke about direct negotiations with the DHSS, not necessarily with the management. It should be made clear that although he might be speaking for the union of which he has the honour to be president, he is definitely not speaking for all the Health Service unions in the TUC. My hon. Friend also mentioned funds for health and safety. There is disagreement between us. But we have promised to examine the extra costs involved in the running of the Act that might be incurred by health authorities in the next year and to review the situation in a year's time.
  My hon. Friend the Member for Barking (Miss Richardson) made clear her disappointment about the absence of a number of measures from the Queen's Speech. I appreciate her concern, but it is a full programme for my Department. Half a dozen Bills affect my Department. We must consider not only Ministerial resources but those that are available to the Department.
  I should like to reassure my hon. Friend about drugs. The Secretary of State has made clear on a number of occasions that the restrictions on drug promotion to GPs are working adequately and that they are reducing the total expenditure in that sphere.
  My hon. Friend the Member for Barking mentioned the licensing of new medicines. There is strict control. My hon. Friend mentioned a drug that she had been offered. She said that she was told that it was likely to make her blind. I hope that she will give me details of that drug and of the people involved. I shall ensure that it is investigated.
  My hon. Friend the Member for Barking also mentioned the housewives'

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  non-contributory invalidity pension. While on the Front Bench I have had the advantage of consulting the Minister who is responsible for disabled people. There will be an opportunity to debate this matter. My hon. Friend the Member for Barking has indicated that she will pray against the regulations. All that she has said will be noted carefully. There will be a full reply in the House when the matter is debated.
  My hon. Friend also mentioned the Elizabeth Garrett Anderson Hospital. My right hon. Friend has announced previously that the closure of this hospital has been postponed to allow time for discussions on alternative accommodation. Representatives of the hospital staff, the area health authority and other interested parties have come together under the chairmanship of a senior official in the Department and they are giving careful consideration to the practicalities involved in providing an EGA facility within the district general hospital. I hope that a satisfactory solution can be found so that the service provided by the EGA can be preserved in an identifiable form.
  I turn to the speech made by the hon. Member for Canterbury (Mr. Crouch). Much of his speech was favourable to the National Health Service, of which he has great experience. The only part of his speech with which I disagreed was when he said that we should find a different system for financing direct contributions. That is a political difference between us. He accepted the necessity for RAWP. He made a good point when he said that hospitals were often used too readily. That ties in with what my hon. Friend the Member for Brent, South said about the need to extend primary health care facilities which will do much to relieve pressure on the health services.
  The hon. Member also said that we need to devote more resources and attention to preventive medicine. The House will be aware from an earlier debate this year of our views on things like smoking and alcohol and of the measures being taken by the Health Education Council, with extra money from the Department, to bring these matters home to individuals. But each of us has a responsibility for ensuring that we lead healthy lives.
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  The hon. Member for Chertsey and Walton (Mr. Pattie) was mainly concerned about our White Paper on the mentally disordered. I noted with interest his expert comments and those of my hon. Friend the Member for Basildon (Mr. Moonman). We shall study them with interest. The hon. Gentleman had a strong point about separating the mentally ill from the mentally handicapped. Having gone around some rather antiquated institutions run partly by social services and partly by health authorities, I accept that that is desirable. The hon. Member made a number of detailed points on the White Paper. I can write to him about them, but this depends on whether we have an early debate, which is a matter not for me but for the Lord President.
  My hon. Friend the Member for Basildon echoed a number of the hon. Gentleman's comments. He said a lot about statistics on the mentally ill. We need no convincing—nor does any party—that we need to devote more resources to this area, which is one of the priority areas set out in our priorities document in 1976 and in "The Way Ahead" in 1977. I am sure that that would be a priority of any Government, because it is a Cinderella service.
  I also agreed with what my hon. Friend said about NHS management. We can make no fundamental alterations before the Royal Commission reports, but as someone who, like my hon. Friend, has spent a third of his working life in management in industry and commerce, I see the idea of consensus management as a nonsense. I agree that there is no substitute for line management. No doubt the Royal Commission will make some recommendations in this area, but we shall have to wait and see.
  The hon. Member for Truro (Mr. Penhaligon) raised some detailed questions about kidney transplants. Because of lack of time, I will write to him about these matters. He also mentioned tourism in Cornwall. I have seen some correspondence on this. I do not know the latest situation, but I will find out. The Minister of State has been dealing with it. We are over the tourist season now, but if the numbers are going up each year, we may be able to get something extra done for next year.

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  My hon. Friend the Member for Ealing, North (Mr. Molloy) referred to the NHS ideal and the spirit which needs to be recovered. We will all agree with that. He mentioned the concern of COHSE with the future of the Service and its efficient operation. We shall continue to maintain close contact and co-operation with the Health Service unions on these issues of major concern.
  My hon. Friend made an interesting point, which was echoed by the hon. Member for Reading, South (Dr. Vaughan), contrasting nurses' earnings, which are fairly low, with those of other groups—my hon. Friend with strippers and the hon. Member with secretaries. Perhaps, for the first and I hope the last time, I might quote myself in a book I wrote as a young man and which was published over a decade and a half ago. In that book, I asked why a nurse should earn less than a stockbroker. It is a political example, but a pretty good one.
  If it is a question of training, a nurse has far more training than any stockbroker. If it is a question of dedication, no one would argue that nurses are less dedicated than anyone in the City. Finally, I said that one could imagine a society without stockbrokers but one could not imagine a civilised society without nurses. I therefore accept the point made by both hon. Gentlemen.
  My hon. Friend also mentioned nurses' handling of mentally disordered people. I will look at this and write to my hon. Friend. We have had previous correspondence about the matter.
  The hon. Member for Macclesfield (Mr. Winterton) made a very interesting speech. I am sorry that I was not here for the whole of it. I had to nip out to get a bite to eat during the debate. The hon. Gentleman spoke about the importance of the private sector. For us, it is the public side of the NHS that is most important. The hon. Gentleman referred to increasing concern about mixed wards. I shall study his remarks and write to him about the matter.
  The hon. Member for Braintree (Mr. Newton) made a point that I think a number of hon. Members who took part in the debate accept, that resources are limited. He also asked one or two specific questions. He spoke about con
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  fusion about what should be done in an emergency. I shall examine the matter, because if there is a need to clarify lines of communication it is clearly a task that Ministers should undertake.
  The hon. Gentleman also mentioned under-funding in certain areas of the Thames region. There can be no doubt about this. We both come from the same region.
  The hon. Gentleman raised two major points about mentally handicapped children and teaching. In view of the limited time, I think that I can best write to the hon. Gentleman about both questions.
  School nurses were mentioned by the hon. Member for Woolwich, West (Mr. Bottomley), He spoke in particular about the pensions of those who retired before the grievance was remedied. I am not optimistic about a satisfactory solution—at least, a solution satisfactory to the hon. Gentleman and the nurses—but I shall look into the matter and write to him.
  Finally, I come to the hon. Member for Reading, South, who spoke of misuse of resources and the need to redirect resources that are used at present. He was clear later on about what Conservative policy would be, and I am not pressing him on this. If he has any evidence of existing NHS resources being misused, I ask him "Please let us know." I assure him that we shall look into it very seriously.
  Mr. Patrick Jenkin: The Minister knows that in his own constituency the area health authority closed down the Connaught hospital two and a half years ago. How can he explain and justify the fact that it has still not sold the site, and that I was told by the district management team that it cannot sell it this year because it could not use the money this year; it must wait until next year. If that is not a waste of resources, what is?
  Mr. Deakins: I do not want to become involved in a constituency argument with the right hon. Gentleman, but I can assure the House that at a meeting in my presence he supported the closure of the hospital in my constituency. I leave it at that. I have to get on.
  The hon. Member for Reading, South made comments about pay beds. We

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  believe that it is wrong that scarce NHS facilities should be used for the treatment of private patients. As pay beds and other private facilities are phased out, the resources previously devoted to the care of fee-paying patients will become available to meet the needs of the vast majority of people who rely exclusively on the NHS to meet their needs.
  The hon. Gentleman also spoke about common waiting lists. One of the Health Services Board's statutory tasks was to consider the question of common waiting lists for NHS and private patients and to submit a report to my right hon. Friend the Secretary of State for Social Services. This the board has done, and its report has been the subject of widespread consultations. We have considered the board's recommendations and comments and we reaffirm our commitment to common waiting lists to ensure equal access to NHS facilities. We have now written to the joint consultants committee setting out the Government's proposals for implementing these common waiting lists at an early date. We have agreed to hold a discussion with the JCC if it wishes before we publish our proposals. We are awaiting its response. We are anxious to make early progress.
  This has been a fairly good, even-tempered debate, with very little of the ya-booing to which the hon. Member for Braintree referred. That is a good sign of growing realism on both sides of the House.
  It is legitimate in drawing the debate to a close to emphasise some of the difficulties that face any set of Ministers in the NHS. First, there is the question of resources. Demand for health care is a function not merely of need but of medical technology. Experience shows that the public's expectations increase faster than do the resources available to satisfy those expectations.
  Staff in the NHS feel themselves to be entitled to better pay and conditions of service. NHS management feels that it could do an even better job if resources could be increased faster, a point that the hon. Member for Reading, South made, though he did not say where the extra resources would come from. There is a need to stress that resources are limited, not merely during a time of economic constraint but always. There
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  will never be enough money to do all that we wish in terms of improving health care for our citizens. Therefore, we must choose priorities.
  We have made clear our own priorities, but they are regularly reviewed in the light of experience. What it is wrong for any of the Government's critics to do is to imply that more resources will answer the problems of the NHS. We have difficult choices to make from time to time.
  Secondly, there is the question of the powers available to Ministers. They have final responsibility for the NHS, but its management is a task for health authorities. Parliament decided that in 1973, and until such time as Parliament decides otherwise we must all accept that the NHS is not and cannot be run from Whitehall. Hon. Members may find that frustrating. It is probable that Ministers do from time to time. Certainly I do. But we all have to accept the position.
  A number of problems have emerged since the Tory reorganisation, some of them connected with the form of that reorganisation. We are well aware of these problems and, where appropriate, changes can be made after consultation with all concerned—
  It being Ten o'clock, the debate stood adjourned.
  Debate to be resumed tomorrow.

  M25 MOTORWAY
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Bates.]
  10.0 p.m.
  Mr. Toby Jessel: I am grateful for the selection of my subject—the urgent need to complete the M25 London circular motorway, which is of great concern to many of the 12 million people in South-East England who comprise a quarter of the population of our country.
  In 1934, Mr. Hore-Belisha, the Transport Minister who invented Belisha beacons, set up a committee which recommended strongly the building of an outer orbital road round London. Forty-four years have gone by, and now only 20 of the 116 miles of the M25 circular motorway are open.

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  I hope that the Minister will be able not only to reassure us that the Secretary of State for Transport meant what he said in his roads White Paper this April that currently the M25 had top priority—but also that the M25 will at the current rate be completed in time for the golden jubilee of Hore-Belisha's committee. We expect the Government to get on with it and to get on with it fast.
  The objectors to motorways get so much coverage from the media, both broadcasting and the press, that the case for motorways often seems to go by default.
  The first advantage of motorways is safety. On average, a motorway is three times safer to drive along than an ordinary main road.
  The second advantage is the ease of movement. We all know how exhausting and exasperating it is to try to get from one side of London to the other or to cross London at an oblique angle. If one tries to go from Twickenham to Essex, it is a slow, exhausting journey. The same is true if one drives from South London, for example, from Reigate, across to Enfield or from Sevenoaks to Watford. The journey is all but impossible. Anyone going to another part of the country and trying to do a similar 20 or 30-mile journey between two towns—Manchester to Liverpool, Derby to Nottingham, or Glasgow to Edinburgh—expects to find a fast road between them. There is no reason why the inhabitants of South-East England should be deprived of a fast road for a journey of similar length if they wish to make it.
  Thirdly, there is the benefit to towns and villages now enduring heavy through traffic which will be relieved by the motorway bypassing them.
  Fourthly, there is the economic benefit. Motorways cut costs in the distribution of goods, help to hold down the cost of living and inflation and improve our export prospects. This is especially true of the M25 which will link with the Channel ports.
  However, the construction of the M25 is being delayed, not only by the slipping of the Government programme but by the organised obstruction of local public inquiries relating to different stretches of it. Of course, routes have to be scrutinised closely and Parliament has insisted
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  that under the law people who might be affected have the right to have their say. That is as it should be in a free country. But some people are now abusing that right. They are deliberately obstructing public inquiries from getting on with their work. That is not only turning democracy on its head; it is also utterly selfish, and it is acting with total disregard for the safety and well being of other people.
  I said that on average motorways were safer than other roads. If a motorway is stopped, the effect is to kill and injure people. Let us take as an example the 12-mile section of the M25 from Reigate via Leatherhead to Wisley and the A3. The opening of that part is being held back by protestors against the Leather-head interchange. A delay of one year is likely to cost 600 personal injuries and three deaths among people who would otherwise have used that motorway.
  There are also the people who have to endure the exhausting nuisance of heavy traffic thundering past their houses which would be bypassed by the M25. Their needs are being wholly ignored by the motorway protestors. For example, a massive quantity of traffic is pouring through Uxbridge Road, Hampton Hill and the village of Hampton in my constituency. Part of this traffic would be taken away by the M25, although the amount is uncertain. On 4th February 1977 the Under-Secretary told me that the M25 would cut traffic over Hampton Court bridge by a quarter. Last month the Greater London Council estimated that the reduction of traffic in Hampton would be only 10 per cent. to 15 per cent. That is a lesser amount but it would be a significant cut. I would like to know the right figure and what the percentage would be for the cut in the proportion of heavy lorries, which are particularly annoying.
  I would also like to ask why my constituents who will benefit from the construction of the M25 were not notified by the Department of Transport of the public inquiry into the section which would benefit them. I would like to ask whether the Hampton Residents' Association and the Hampton Hill Association can be invited to give evidence to the public inquiry.
  It is essential to speed up the completion of the M25. I hope to hear that

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  the Government intend to redouble their efforts to bring that about.
  10.7 p.m.
  Mr. Geoffrey Dodsworth: I am grateful to my hon. Friend the Member for Twickenham (Mr. Jessel) for raising this matter at an early opportunity, and to you, Mr. Deputy Speaker, and the Minister for allowing some of us to participate in the debate. The Minister will recollect that on 4th July he received a deputation from my constituency in connection with the Maple Cross-Egham section of the M25. This underlines the point made by my hon. Friend.
  At the time a petition was presented bearing over 1,200 signatures, representing 80 per cent. of the population of the villages of West Hyde and Maple Cross. These people expressed an earnest desire to see all urgency and expedition attached to the construction and opening of the proposed M25 from Maple Cross to the M40 along the most recently published preferred route. Of those people, 50 have carried out their own survey on the section of the A412 which affects their village. A section of the M25 has already been built and has had the effect of sucking in new traffic.
  We find that on this previously limited section of road, as a result of that part of the M25 already constructed—and before a further extension is provided—we have 37,913 vehicles passing through in a 24-hour period. That is a 37 per cent. increase compared with 1977. Over 25 per cent. of those are heavy commercial vehicles. It can be recognised that in those circumstances my constituents are deeply concerned that the M25 should proceed with all possible expedition. I am grateful to my hon. Friend for giving me the opportunity of drawing attention to that fact.
  10.9 p.m.
  Mr. R. A. McCrindle: The two sections of the M25 with which I am particularly concerned are, first, that part from the A13 to the A12 at Brentwood, on which, the Minister will know, work is due to start in 1979, and that part from the A12 at Brentwood to the M11. There can be no doubt that the build-up of traffic over the years, particularly since the development of the Dartford tunnel, has placed a burden on
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  the A128 trunk road which it was never built to sustain. The result, to put it at its lowest, is that many of my constituents living along he A128 trunk road are being terrorised by the incidence of heavy commercial vehicles.
  At the other end of my constituency, in High Street, Ongar, there is a main road which was never built to sustain the heavy traffic which is using it.
  My principal point is to echo many of the points made by my hon. Friend the Member for Twickenham (Mr. Jessel). I am very much in favour of the democratic hearing of complaints by objectors to the development of motorways. It is instructive that today the inquiry going on at Hornchurch into the building of the section of the M25 between the A13 and the A12 has extended its hearing into this evening so as to give the maximum opportunity for objectors to make their case.
  That is fine, and I welcome this development, but I should be failing in my duty to the majority of my constituents, who favour the earliest possible development of this section of the M25, if I did not say that, the objectors having been given this opportunity, democracy must be seen as a two-sided affair, and that we would take the strongest possible objection if these professional objectors were to continue to receive the disproportionate hearing that some of us feel that they have had.
  We believe that it is right for them to be heard but that it is not right for them to be heard to the exclusion of the majority who wish the M25 to develop. I hope that the Under-Secretary of State will be able to say that by all means these objections will be taken firmly into account, but that that having been done and a decision having been reached, the pursuit of these stages of the M25 will go ahead at maximum speed.
  10.11 p.m.
  Mr. Cyril D. Townsend: I pay tribute to my hon. Friend the Member for Twickenham (Mr. Jessel) for his most effective speech and I fully support what my hon. Friends have said. The message from the Conservative Benches is that the checks and balances inherent in our democratic way of life must not be allowed to paralyse decisions at central and local level. I am told that

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  all the elected authorities in the areas concerned are in favour of this road.
  The Government claim that this orbital road is a top priority for investment. Why, then, has there been so little action and so much delay? I am told by the GLC that the A2, which goes through my constituency, will be relieved of between 5 per cent. and 10 per cent. of its traffic. That will be very significant for us because it is a major source of anxiety. The North Cray area of Bexley-heath will also have tremendous benefits. We must get today's juggernauts out of residential streets and shopping centres and away from our infants schools and old people's homes. We must get them on to purpose-built roads. The social, technical and economic arguments for doing so are clearly overwhelming.
  The M25 will be good for Bexleyheath, good for Greater London's 7 million people, good for the commercial life of the nation as a whole. France has done so much better in the Paris area in laying down a basic structure of motorways which has been greatly to the benefit of that capital. London and the South-East must not delay any further.
  10.13 p.m.
  The Under-Secretary of State for Transport (Mr. John Horam): I must confess that junior Ministers do not always welcome Adjournment debates, particularly junior Ministers at the Department of Transport. We have had only two days of this Session so far but this is already my second Adjournment debate. But I am grateful to the hon. Member for Twickenham (Mr. Jesse!) for raising this issue tonight, and I think that we all agree that he has done the House a service in doing so. Perhaps that explains the unusually high attendance for an Adjournment debate.
  The Government have said continuously that we welcome more parliamentary discussion of the national road programme. This is cleary not a matter suitable for debate at local inquiries. I am therefore glad that the hon. Gentleman has provided an opportunity for the House to discuss the M25 in particular, and I welcome the chance to make the Government position clear.
  The question of priority has been to the forefront of the minds of those hon.
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  Members who have spoken. We said in our White Paper on roads, published in April, that we attach the highest priority to the completion of the M25. We mean what we say. We intend to give the work on the M25 all the available resources in terms of manpower and attention that it requires. Whenever the question of the M25 comes up, it gets first priority for available manpower and resources. That must be plain to all hon. Members, and it is the position that I want to establish.
  In reply to the hon. Member for Bexleyheath (Mr. Townsend), let me say that there has been no avoidable delay at all in sections of the M25. Of course, public inquiries take time. All the statutory procedures must be gone through, quite rightly, but there has been no delay due to any failure on the part of the Department to give this the highest priority. I assure the hon. Member of that.
  I hope, therefore, that I have established beyond doubt this evening, once again, the Government's complete commitment to building the M25 as fast as we possibly can.
  Mr. Townsend: Is it not possible, though, to bring forward the completion date?
  Mr. Horam: The answer is "No". Of course, we shall bring the completion date forward if it is possible to do so. But the major factor in determining completion dates is the progress of the statutory procedures and public inquiries. Everything else is done as quickly as possible, because it is given top priority, frankly, in the office and so forth. Therefore, I think that it is simply not physically possible to bring it forward. If there is any way in which we can save time, of course, we shall. But in the nature of things, there is a great deal of public interest in this matter, and there are bound to be long public inquiries. They cannot be avoided, and rightly so. Therefore, I think that we are probably stuck with the sort of timetable that we have now, which is probably fairly realistic in the circumstances. I think that we must avoid delay on that, but obviously I cannot promise that we shall bring anything further forward than we have already said.
  Let us look at the advantages of the M25. The Greater London area, 35

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  miles across, is a great obstacle to through traffic, including traffic to and from the east coast and Channel ports and Tilbury docks, and the first advantage of the M25 will be to provide a way round this huge area. It will also provide a convenient link between Heathrow and Gatwick and from these airports to the M4 and the M1. This traffic has no business in London and there is a clear need to provide a bypass for it.
  In addition to that, the road will also act as a general distributor. It will link the radial routes which carry traffic in and out of London. Drivers will be able to reach places in London or find the most convenient exit road without crossing the centre or using existing inadequate orbital routes. This function has become more important since it was decided not to go ahead with Ringway 3.
  Thirdly, the M25 will provide some local relief for congested roads on the outskirts of London. This was of particular relevance to the hon. Member for Twickenham and to the other hon. Members who have spoken in the debate. Obviously, a road designed to serve an orbital function cannot produce relief for all local roads along all its route. We do not claim that the M25 will produce a marked reduction of traffic in central London. But many suburban areas will see a marked improvement to their environment when the road is finished. It will divert heavy through traffic from some roads in inner London. In some places the provision of an alternative route for through traffic will make it easier to introduce desirable traffic management schemes and to prevent rat-running through residential areas. As the hon. Member for Twickenham pointed out with great conviction and strength, it will be much safer than existing roads.
  I now turn to questions of present progress on particular parts of the road, with which the hon. Member and his colleagues are concerned. On the overall picture, the motorway is approximately 120 miles in length. Of that, 23 miles—not 20, as I think the hon. Member said—are now open. Fourteen miles are under construction, and for a further 50 miles the line has been fixed. As has been said many times, we hope for the completion of the entire thing by the middle 1980s. I do not quite know how that ties in with the
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  Golden Jubilee to which the hon. Member refers, but the mid-1980s is the target.
  Mr. Jessel: It depends on what the hon. Gentleman means by " he mid-1980s".
  Mr. Horam: "The mid-1980s" is a fairly flexible phrase, but, none the less, it cannot be stretched too far.
  On the details within the area, which will concern the hon. Member, which I define roughly as the area between the M4 and Reigate and Surrey—that broad south-west part of the M25—the short section between Egham and Thorpe, as the hon. Member knows, was opened to traffic in December 1976. Work is under way on the section between Thorpe and Chertsey—and we hope that that road will be opened to traffic in 1980—and on the bridge over the Thames at Runnymede. We hope that the bridge over the Thames will be completed next year. The section north of the bridge to Yeoveney will begin soon. The remaining sections still have formal procedures to complete, but I hope that the link between Chertsey and Reigate will be completed in 1983, and to the M4 and to the north by 1984.
  The hon. Member for Twickenham asked me for details of the consequential effect of the M25, when completed, on his constituency and the area generally around Twickenham, Hampton and Kingston. He quoted the figure of 25 per cent. for relief of traffic crossing over Hampton Court bridge, and wanted me to explain the difference between that figure and the GLC figures for relief, for example, on the A312. It was given, quite rightly, as 10 per cent. to 15 per cent. The difference is that Hampton Court bridge is more part of an orbital route, whereas the A312 is more a radial route.
  Mr. Jessel: That is not correct. The A312 runs from north-west to south-east and at right angles to any radial route into London. It is a purely orbital route. I am afraid that the hon. Gentleman has been misinformed by his advisers on this.
  Mr. Horam: I always regret being misinformed by my advisers, and obviously the hon. Gentleman's knowledge of the local geography is infinitely superior to mine. But the basic point, however we define orbital and radial roads, is that radials will clearly benefit less than orbitals from the building of another orbital

  351
  route. We believe that, basically, relief on radial routes will be about 10 per cent., whereas that on orbital routes will be rather higher. That is the destinction, and it explains the difference between the two sets of figures.
  Concerning heavy goods traffic, the hon. Gentleman asked what would be the relief there. If we are talking about Hampton Court bridge, where we estimate that the traffic will be a quarter less as a result of building the M25, the figure for the reduction of heavy lorries will be roughly 8 per cent. That is the only figure I can make available at the moment. If I have further information on that point I shall make it available to the hon. Gentleman.
  The hon. Gentleman asked me a detailed point about the Hampton Residents' Association. Obviously a residents' association of that kind, with the interests it must have, must be given every facility to make its views known at any public inquiry. I do not know the exact circumstances of the particular case, but I shall have them looked into with that general objective in mind. I shall write to the hon. Gentleman after I have conducted my investigations. If he will bear with me on that, I shall certainly try to try to seek to facilitate the residents' opportunity to present their views.
  The hon. Member for Hertfordshire, South-West (Mr. Dodsworth) and I have talked on many occasions about this road. Indeed, he has brought deputations to see me about the M40 to Maple Cross section in particular. We talked about this last July when he came with some of his constituents and other people interested in this part of the M25. I know of his desire that there should be no avoidable delay in that section. That is a matter which is fairly early in the pipeline. We do not expect it to be completed until the early 1980s, probably by about 1984. I know that he is anxious that the various sections should be completed more or less simultaneously. We shall do our best to meet that, although there are problems in completing a massive project of this kind and getting the timing exactly right in all the sections. We have the problems very much in mind.
  The hon. Member for Brentwood and Ongar (Mr. McCrindle) reminded me of his concern, which he has pursued assi
  352
  duously in the House, and with me personally, for the A128 and the conditions on that. I fully recognise that this is unsuitable for the traffic that it is having to bear at the moment. It will be a major beneficiary from the building of the M25. Things have not gone entirely smoothly in that eastward section of the M25. We have had some problems over court orders and one mistake that we ourselves made set back the progress by some months. As the hon. Gentleman rightly said, there is now a public inquiry going on at this moment in Hornchurch. Perhaps by now it has been completed. Again this is something on which progress is being made. All things being said, there has been reasonably satisfactory progress.
  Mr. McCrindle: Since the hon. Gentleman has confessed that an error at his Department, which I do not hold against him, did indeed hold up progress on the section of the M25 from the A13 to the A12, and remembering that there was to be a gap in time between that section being completed and the section between the A12 and M11, is it a practicable proposition now to try to bring the commencement of each of those sections sufficiently close so that effectively they are developed simultaneously?
  Mr. Horam: That is a very interesting point and I shall have it looked into. The hon. Member for Bexleyheath was very much in favour of continued progress on this road and made a number of valuable points about the progress of public inquiries. I shall study carefully what he said.
  I come back to the more general point about which the hon. Gentleman was taiking in his contribution. Obviously, hon. Members wish that there was even faster progress than we are able to talk about tonight. I certainly wish that were so. But it would be wrong to underestimate the formidable amount of work in designing a motorway 120 miles long round the fringe of a built-up area such as London. Much of its passes through the Metropolitan green belt, including areas of outstanding landscape value such as Epping Forest and the Kent Downs. From the beginning we have tried to design the road so that it would do the minimum damage to the environment. The greatest care is also needed to avoid unnecessary disruption to homes and communities

  353
  strung along the route. The new road will affect traffic movements on all the existing roads which lie near its route. All these effects have to be assessed, and the junctions designed so that it brings the maximum relief to existing roads and yet does not create too many new traffic problems on roads which act as feeders.
  We have to consult the public living in the areas through which the road passes to get their views on the preferred route. Then we have to go through the formal procedures laid down in the Highways Acts. In the White Paper on the review of inquiry procedures we described the changes we have made in order to meet the concern expressed by the public about the existing system. I hope that the changes will help the objectors in presenting their case as well as preventing the difficulties which have been experienced at some inquiries and which have made it difficult to hold a fair and reasoned examination of the road proposals. The inquiries which have started this autumn are under the new rules, and I believe this has made things easier for all the parties concerned. In answer to the hon. Member for Bexleyheath, I do regret that some people have still sought to make their protests by noisy, undemocratic means. I am grateful that the inspectors have been able to ensure that this small minority have not been able to stop proceedings, and that examination of the proposals is going ahead.
  We recognise that in the past the scope of inquiries has not been wide enough to examine the justification for a road as well as its alignment and other more detailed effects. We accept that the case for each section of M25 should be examined at the line inquiry in the same way as any other road. But I must make it clear that it is the Government's policy to build an orbital route round London and the individual sections must be considered against that background.
  The hon. Member has referred to the advantages which the road will bring. I think his views are shared by the over
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  whelming majority of other hon. Members. But there are some organisations which question that. They fear that when the M25 is completed it will act as a magnet for commerce and industry, drawing firms out of inner London and creating pressures for undesirable development in the green belt.
  Our view of the importance of the M25 is of course fully shared by all the local planning authorities concerned. The South Eastern Economic Planning Council has said that it will have a significant beneficial effect on the economy of the region. Once the M25 is built, journeys will become possible which would not be undertaken at present and new patterns of industrial, commercial and social activity may be formed. These cannot now be forecast except in the most general terms. But there is no reason why these new patterns of movement should create irresistible pressure for growth to the detriment of the green belt or of inner London. The planning authorities have a full range of powers to resist or contain pressures for undesirable development in green belt areas, amply backed by the reserve planning powers of my right lion. Friend the Secretary of State for the Environment.
  At this stage it would be both impracticable and not in the public interest to hold a public inquiry into the entire remaining length of the M25. Decisions have already been taken on the assumption that it will be completed. For example, the recommendations of the Layfield panel on the Greater London development plan and the Government's subsequent decisions on them might well have been different if there had been no plans—
  The Question having been proposed at Ten o'clock and the debate having continued for half an hour, Mr. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at half-past Ten o'clock.

AGRICULTURE, FISHERIES AND FOOD
  Council of Ministers
  Council of Ministers
  Common Fisheries Policy
  Common Fisheries Policy
EMPLOYMENT
  Manpower Services Commission
  Manpower Services Commission
TRANSPORT
  Seat Belts
  Seat Belts
TRADE
  Heathrow and Gatwick Airports
  Heathrow and Gatwick Airports
DEFENCE
  RAF Fairford
  RAF Fairford
OVERSEAS DEVELOPMENT
  Cyprus
  Cyprus
ENERGY
  British National Oil Corporation
  British National Oil Corporation
CIVIL SERVICE
  Central Office of Information
  Central Office of Information
FOREIGN AND COMMONWEALTH AFFAIRS
  Council of Foreign Ministers
  Council of Foreign Ministers
  Banaba
  Banaba

Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Norwich.):
The LORD CHANCELLOR on the Woolsack.
The Marquess of Winchester—Took the Oath.

HMSO: INDUSTRIAL DISPUTE
The LORD PRIVY SEAL (Lord Peart): My Lords, with the leave of the House, I should like to say that I very much regret any inconvenience which may be caused to Members of the House by the industrial dispute at the HMSO warehouse. The management of the Stationery Office is doing all it can to resolve the dispute.
GOVERNMENT STATEMENTS
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, with the leave of the House, may I say that my noble friend Lord Harris of Greenwich will, at a convenient moment after 3.30, repeat a Statement being made in another place on the Prison Service and that that will be followed by my noble friend Lord Goronwy-Roberts, who will repeat a Statement on Zambia.

ELECTRICITY (SCOTLAND) BILL [H.L.]
The LORD CHANCELLOR (Lord Elwyn-Jones): My Lords, I beg to introduce a Bill to consolidate certain enactments relating to the North of Scotland Hydro-Electric Board and the South of Scotland Electricity Board and to functions of the Secretary of State in relation to the generation and distribution of electricity in Scotland with amendments to give effect to recommendations of the Scottish Law Commission. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read 1a.—(The Lord Chancellor.)
On Question, Bill read 1a, and to be printed.

FORESTRY BILL [H.L.]
Lord STRABOLGI: My Lords, I beg to introduce a Bill to re-state the power of the Forestry Commissioners to make grants and loans; and to provide for the metrication of enactments relating to forestry and forest lands. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read 1a.—(Lord Strabolgi.)
On Question, Bill read 1a, and to be printed.

PRACTICE AND PROCEDURE: SELECT COMMITTEE
Lord PEART: My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That a Select Committee be appointed to consider the practice and procedure of the House and to make recommendations for the more effective performance of its functions.—(Lord Peart.)
On Question, Motion agreed to.

COMMITTEE OF SELECTION
The CHAIRMAN of COMMITTEES (Lord Aberdare): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That in accordance with Standing Order No. 60 a Committee of Selection be appointed to select and propose to the House the names of the Lords to form each Select Committee of the House (except the Committee of Selection itself and any Committee otherwise provided for by Statute or by order of the House) and that the Lords following together with the Chairman of Committees be named of the Committee:—

The Lord Privy Seal (L. Peart)

L. Banks,

L. Byers,

L. Carrington,

L. Collison,

L. Denham,

L. Garner,

B. Hylton-Foster,

B. Llewelyn-Davies of Hastoe,

E. St. Aldwyn,

L. Wigoder.

That the Committee have leave to report from time to time.—(Lord Aberdare].
On Question, Motion agreed to.

ADDRESS IN REPLY TO HER MAJESTY'S MOST GRACIOUS SPEECH
3.4 p.m.
Debate resumed on the Motion moved on Wednesday last by Baroness Bacon—namely, That a humble Address be presented to Her Majesty as follows:
"Most Gracious Sovereign—We, Your Majesty's most dutiful and loyal subjects, the Lords Spiritual and Temporal in Parliament assembled, beg leave to thank Your Majesty for the most gracious Speech which Your Majesty has addressed to both Houses of Parliament."
Lord THORNEYCROFT: My Lords, I rise to continue the adjourned debate, and it has been suggested to me that it might be convenient if I made a few remarks upon the economic and industrial questions. I was brought up in a tradition where one declared one's interests to the House, and I have some. I am chairman of Trust Houses Forte Limited, Pye of Cambridge and the Pirelli Companies in the United Kingdom, but my remarks will not necessarily imply that I express the views of those companies. As it happens, I am also chairman of the Conservative Party which has some views on these matters.
I am bound to say that I am not very tempted to enter into the detail of the gracious Speech. Somehow it does not seem to grip me in that way. However, I thought that it might help if I said something about those references to the part which Her Majesty's Government hope to play in Europe and the battle—and Heaven knows it is a battle—that has to be fought against inflation and unemployment. Your Lordships' House is perhaps not a bad place in which to debate matters of that kind, because we count among our Members representatives of the trade unions, men with experience in the Confederation of British Industry, chairmen of companies, bankers, economists, diplomats—people who have played a leading role in both the public and the private sectors. May I say—because it is always good to start on the non-controversial side—that in my view we are not all of us as black as we are sometimes painted.
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Trade union leaders are not concerned with the break-up of the capitalist system; they are concerned with how to work within it and the mixed economy that goes with it. The Confederation of British Industry is at present busily engaged in trying to improve the methods of collective bargaining. Companies, even great multinational companies with which I am associated, and which are sometimes cast in satanic roles in the public Press, make an enormous contribution to the creation of wealth and the provision of jobs and employment in this country. The public and private sectors are not engaged in war with one another. They are both customers and consumers of one another's goods and, thank Heaven, very often partners in great overseas projects and matters of that kind.
Therefore, there is nothing very much wrong with the actors; nor is there much wrong with the setting. The stage upon which we act is a country rich in resources with great reserves of skills, with supplies of coal, natural gas and oil. It is fertile and is all set in an island so beautiful that men and women come from everywhere to see it and the historic sights, arts and treasures which we possess. There is nothing wrong with the actors, the setting or the stage. However, I am a little worried about the play that is being enacted at present.
Why is it that we manage to be, with all that going for us, among the least productive, the lowest paid and the highest taxed countries in Western Europe? Why is it that the Treasury is estimating that, without natural gas and North Sea oil, there would be a deficit in this coming year of £3·5 billion?—which means that we are really using all those great assets simply to keep going without really sparing anything for the investment, the repayment of debt and the rest.
It is necessary to take a cold, hard look at what is going on in British factories. In factory after factory we are 15 to 50 per cent. below the productive capacity of our main competitors and rivals in Japan, the United States, France, Germany or Holland. We survive—we even sometimes earn a profit. We sell abroad, but we sell against the background of the protection provided by a declining currency, for that is what it is. We sell by

31
holding wages—and we shall all talk about wages in this debate—lower than the wages of practically every other industrial country in Europe.
Even with record tax rates we find it hard to raise the revenues to pay for education, the Health Service and all our other social service. We have borrowed to the hilt. We have halved the value of the pound. It seems to me that between us we have managed to create rather an odd world. Unemployment is up and yet "moonlighting" is now a kind of regular occupation in the country. Tax evasion has become the most prized reward that one can offer anyone to do a job. If young men arc asked on television what they propose to do, one after another they choose the social services rather than productive enterprise. The whole system of rewards and penalties, with which most of us were brought up, has somehow or another been turned upside down. I am not here to make an attack about all that. I dare say that some things could have been better done and perhaps it would have been better some had not been done at all.
Some of the matters I have mentioned ought to receive more attention than they do. We spend a tremendous amount of time talking about wages and very little time talking about production. Yet, whatever happens in the rest of the world, unless we can get the production right it will be others who take the growing markets, not us. Therefore, I think that incentives, rewards and productive efficiency ought to be the main themes of industrial and political circles.
First, I want to ask where the Government would really like to take this country. It is no longer a great empire; it is a part of the Continent of Europe. But the leadership of Europe has been passing from us—if it was ever there—to Germany and France. I am bound to say that I am a little unhappy to contemplate this country as the most reluctant recruit of all, grumbling a bit and renowned mostly for a rather untidy barrack room. I believe that we have a better role to play. Although it is not directly referred to in the Speech, perhaps the most important decision that Her Majesty's Government will have to take in the months or even weeks ahead is the attitude they will take
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towards the European monetary system, which is important in terms of both foreign policy and finance. I do not pretend that that decision will be an easy one. My Party was not a party to the negotiations and it would be foolish of me to commit that Party to some line in matters on which one cannot be fully informed unless one has participated in detail with all the advice that can be given.
But, basically, it is not a technical decision that has to be taken. It is not a decision about baskets and snakes; it is about our attitude to life; it is what we are determined this country should do or should be capable of doing. It is a question whether we intend to play a major role in Europe or whether we are content to be on the fringe. I am a little worried about the prospect of Great Britain staying on the fringe of Europe and living a kind of Rake's Progress of its own. Therefore, I would rather like the Government to say as much as they can sensibly and safely say on what attitude they could take. Basically, the question that has to be answered is this: Do Her Majesty's Government contemplate the possibility of aligning our economic policies with those of Europe, or not? That is a critical decision, far more important than practically any of the other matters that are referred to in the gracious Speech, because it will affect us not for 12 months but for a generation.
Do we, or do we not, wish to accept or consider accepting the financial disciplines which plainly the Germans have accepted and which others are willing to accept, and without which we would be unfit to play our part—indeed, it would be dangerous to attempt to do so? Are we willing to accept, now or in the near future, the strong disciplines which are required in matters of that kind? Maybe the time is not now. I have forgotten which saint it was who said:
"Dear Lord, make me chaste but not just yet".
A decision one way or another must be taken some time on whether we are willing to accept disciplines of that kind. The Opposition cannot take that decision for the Government. This field falls into an area which is more appropriate to a national than a Party approach. If we are to do it at all, it were better that we all do it together and that we all do it

33
with determination. I would simply say that I do not see the role of an Opposition as exploiting every difficulty along the way or deriding every hope that might emerge. If the Government can see their way to go forward, I think that one would be disposed not to make the path more difficult than it already is.
I realise that our capacity for manoeuvre overseas is dictated in no small measure by our strength at home. Just as my first question concerned our attitude to what we do overseas, I now want to ask about our attitude at home. I hope that noble Lords will observe that I am not making attacks upon anybody; I am asking about attitudes. In debates of this kind one can sometimes obtain more if one tries to discover where we are trying to go. Then if we differ, we can say so. At least let us discover in which direction we are going.
A great deal has been said on the subject of wages. Certainly it is a very critical one. The question I want to ask the noble Baroness, Lady Birk, is: Do the Government envisage a fixed percentage wage norm as a permanent feature of our society? I will say that again at dictation speed because it is critical. Until one knows the answer to that question it is very difficult to know what one ought to say about it. I repeat, do the Government and the noble Baroness regard a fixed percentage wage norm as a permanent feature of society? While she is thinking over the answer to that one—or she may have it quite ready—may I make a few reflections. Twenty years ago I was Chancellor of the Exchequer and I was practising incomes policies, cash limits, and indeed monetary techniques before Milton Friedman ever started to write about them, or indeed before anybody raised them to these religious mystisicms that now surround these problems. I discovered something about them.
May I say I was very well brought up. I had the advice of men like the noble Lord, Lord Robbins, and the noble Lord, Lord Roberthall—whom I am delighted to see here, and who is going to participate in the debate—and very wise economists like Frank Paish and others who were friends of many of us there, and much I valued them. I may have been an inept pupil, and nothing I say now reflects
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upon the education which I had, but I discovered something. You can call it, if you like, the "Thorneycroft principle". It is that none of these systems works. It is a very great discovery once you have made it. I commend it to the Government because once you have made it you can sit back and get on with governing the country. That, in itself, is a very great advance.
The best you can do is to pursue a judicious mixture of policies concerning income, preferably, may I advise, as one who has failed as often as anybody on this, without fixed percentage incomes put into it—a policy of that kind coupled with a judicious mixture of monetary techniques, and the rest. It is a policy brilliantly described in another place by Mrs. Thatcher; a policy contained in a booklet called The Right Approach to the Economy. That, I know, is the bedside reading of the noble Baroness who is to reply, so I hesitate to quote anything to her about it. However, for those who are less assiduous in their studies I have made a number of copies available in the Library so that others can study it. I recommend page 16 which indeed describes in simple and admirably clear terms what is required, and what I would call the central ground of responsibility and flexibility which represents the views of my Leader and of the Shadow Cabinet.
I would add something else. I hope very much that we stop pretending that any economic system is a substitute for common sense or a cure for the follies of the world. If people misbehave enough, if they are too greedy, if they demand too much or give too little, nothing that we politicians will ever do will really relieve them of the penalty of the follies they commit. Do not let us go round pretending that there are slick and easy answers to the mistakes and evils of the world.
I should like to give some "don'ts" to the Government, and I give them with modesty. They are based on experience; on errors which, over the years, at enormous public expense, I have committed myself, so they are valuable to listen to. Do not attempt to hold wage costs down by freezing prices. It is absolute folly. I know it is advocated by some of the trade unions. It is folly. For one, it encourages people to demand more wages because they think they are perfectly all

35
right; some godlike figure can hold prices down. For another, it is economic nonsense because all you do is attract more imports in, and the balance of payments gets into an even worse mess than it was before. So do not commit that folly. It is terrible, when one has had experience, to offer it. One always has to learn these things by making the mistakes oneself. But do not do it, is the answer. Do not tip the scales in favour of the unions and then punish the employers when they give way. You cannot hold it that way. You may feel inclined to help your friends; you may want to encourage them; but if you strengthen the unions year after year it is no good then looking at the employer and saying, "He is the chap who ought to stand up to them". Do not go on doing it. Do not buy a temporary deal on wages by committing a permanent political folly. That was what the social wage was all about. It is a mistake to do things you know are wrong in order to persuade somebody for some period to say they will stick to some percentage, which is inevitably broken.
Do not strengthen the activists at the expense of trade union leaders. What is wrong with trade union leaders today is not their strength, it is their weakness; that is what is wrong with them. The trade union leaders today have nothing like the strength over their unions of the trade union leaders that I knew when I was a young man—and some of them are in the House, too. Those great men did not stand much nonsense. Over the years, all the time, we have strengthened the activists, and weakened the leaders upon whom we ought to be depending.
Do not diminish the rewards for skill while increasing the subsidies for idleness. That is not an attack on helping the weak and the rest of it, but you must reward a man for making an extra effort or learning an extra skill. There must be some penalties and rewards left in this world. Do not allow people to get away with the idea that we are going to sell more by working less. I know that there are things in the Speech about helping people on short time, and God help them because it is very difficult at the moment, and I have never believed in moving away from positions too quickly. I think you can move much too quickly in these things.
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But in a way it is not the answer. It is first aid stuff. It is not right to think that you can cure all the problems of the world by working half time—not unless we persuade the Japanese to do the same, and I do not see much prospect of persuading the Japanese to do the same.
Do not do these things, and do not imagine that prolonged debate on wages is a substitute for putting up production. The biggest problem facing British industry today—and I know the problem of wages is very great—is our failure to produce efficiently. That is the biggest problem we have. It is not one we are going to solve in a year, or even in two years. You cannot halve the number of men, or double the capital employed in a factory just like that. You have to move carefully, slowly, and, above all, you have to carry the men with you. This takes all the effort that all of us can give in order to bring it about, but the price of failure for this country is terrifying.
Where then do we go? I do not try and say what ought to happen because that requires wisdom far beyond my capacity. I try and say what will happen, which merely requires experience and which is a much simpler thing to deal with. The 5 per cent. will go. I do not say that cheerfully, nor do I abuse the Government about it. I failed on wages before—I think it was 4½ per cent. then—but it is no good pretending something is happening which is not happening at all. Consider the Health Service—poor Mr. Ennals being put up to say 5 per cent. was absolutely vital to the whole success of the policy. That was not Mr. Ennals speaking, and he has been a very falsely accused man. I have lived in Governments and I know what advice he was giving the Prime Minister and the Treasury. I know what the negotiators in the Health Service were saying. They were saying, "It's nonsense. You cannot go on paying the supervisors less than the men they supervise. You can't hold this position". That is what they said, and they were then forced off it. I have seen it happen before. Poor Mr. Ennals was told to read out a ridiculous statement and say it was absolutely critical that the position be held. It is not Mr. Ennals but the Government, and I suggest that the Government must think very carefully about this policy and how it is to be held. I

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feel they must move into a rather more flexible position; at least, I must say that I have always had to move into a more flexible position.
The Prime Minister is getting into a rather ludicrous position. He is standing like some great supremo between the armies. He has given all the ammunition to the attacking forces and is standing on the ramparts, which he has lowered with his strange device of 5 per cent., and is telling the attacking forces, "If you win, do you know what I'm going to do? I'm going to shoot all the defenders for letting you in". That is an incredible position to adopt in conducting the economic policy of a Government.
That battle, I think, is lost, so what do we do? Whatever we do, we must not panic, because these sort of battles have been lost before. We shall still require restraint as well as flexibility, and I should say that we are going to require incentives, rewards and encouragements as well, and that we shall have to try to get back to some of the differentials; we shall have to find some way of paying people who work harder rather more and see that people who have skills are rewarded rather better.
People have an awful habit of quoting what they said before and I have always resisted it, but I intend to fail now and quote something I said 20 years ago when I was facing a situation not too dissimilar from that which faces Her Majesty's Government today. I was certainly under as much attack, and perhaps I should add that in those days there was a Labour Opposition. I do not know whether noble Lords opposite would agree with me, but the Conservative Party is not only better in Government but is better in Opposition, too.
Lord PEART: They are certainly better in Opposition.
Lord THORNEYCROFT: My Lords, this is what I said on that occasion:
"I am not in this speech appealing to anyone. The role of the Government and their policy can be quite clearly stated. First, the Government should state with absolute clarity their view of the economic situation and where they consider the national interest to lie. Secondly, they should, by their monetary, fiscal and spending policies, create conditions and an economic climate consistent with this view".
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If only we would take those simple words and stick to them; if perhaps, above all, we all tried to do our own job; if the Government would stick to governing; if trade unionists would concentrate on negotiating for their members; if managers were once again allowed to manage—they are not debaters but managers of business; if everyone was allowed to do his own job, I think we should have a shorter, simpler and on the whole, rather better gracious Speech to debate.

THE PRISON SERVICE
3.34 p.m.
The MINISTER of STATE, HOME OFFICE (Lord Harris of Greenwich): My Lords, with the leave of the House, I will now repeat a Statement being made in another place by my right honourable friend the Home Secretary.
"The Government have decided to set up an Inquiry to consider the causes of the present situation that exists in the prison system. The Inquiry will examine the organisation and management of the prison system in the United Kingdom, including its use of resources and working arrangements, conditions in prison service establishments and the structure, pay and conditions of service.
"The Secretaries of State for Scotland and Northern Ireland and I am consulting the appropriate staff associations and I will inform the House of the composition and terms of reference of the Inquiry. We shall ask for a report with the utmost urgency. In recent months, unofficial action has been taken in some penal establishments which has had the effect of disrupting the criminal justice system as well as the running of the prisons themselves.
"The Government make clear that such action cannot be allowed and with the establishment of this Inquiry they expect all staff to work normally and to present their case to the Inquiry in due course."
Baroness ELLES: My Lords, we on this side of the House welcome the Statement made by the noble Lord, Lord Harris of Greenwich, and the setting up of this Inquiry. Perhaps the noble Lord would answer three questions of which I

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have given him notice. First, can he give any indication as to whether the setting up of this Inquiry will in any way obviate the action threatened by the prison staff for next Sunday? Secondly, will some kind of time limit be imposed on the body making the Inquiry so that the report is available both to Parliament and the persons concerned as soon as possible? Thirdly, with reference to the criminal justice system, does the noble Lord envisage that this Inquiry will also take into account alternative penalties under the criminal law, cases where people need not be sent to prison, people who fail to pay fines and the like? Will that be included in this Inquiry? I should be grateful if the noble Lord would reply to those questions.
Lord WIGODER: My Lords, we on these Benches also welcome the setting up of this Inquiry, but we are a little perturbed that it may turn inevitably into a somewhat protracted one. It will have to deal not only with mundane questions of pay, meal allowances and matters of that kind, but with sensitive areas—the relationships of the members of the Prison Staff Association with their own leaders, the relationships of the prison staffs with the Home Office and the whole fundamental question as to whether it is possible to have a contented Prison Service feeling they are doing a worthwhile job in prisons where the conditions are as squalid as they are at present in some of the older institutions. All this must inevitably take some time and we are a little perturbed that the prison staff may not feel disposed to wait that length of time and may in fact take action with the inevitable catastrophic consequences that would follow. I would therefore suggest to the noble Lord that the Government might consider inviting the Inquiry as a matter of urgency to issue an interim report dealing solely and simply with pay and conditions of service, and then proceed in a somewhat more leisurely way to examine the more fundamental problems involved.
Lord HARRIS of GREENWICH: My Lords, I am obliged for what the noble Baroness, Lady Elles, and the noble Lord, Lord Wigoder, said—all the more so the noble Baroness who has stepped in at the last moment to deal with this particular
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issue. She asked whether the Statement I made would prevent unofficial action. Of course, I do not know whether it will or will not, and that really deals with the last question put to me by Lord Wigoder. I very much hope it will. If there were widespread industrial action at a number of Prison Department establishments, there is no doubt that it would put an enormous strain on our system of criminal justice, and that would be an extremely serious matter. I do not wish in any way to minimise, so far as this House is concerned, the potential seriousness of the situation.
I must, however, emphasise to the noble Lord, Lord Wigoder, that it is only a number of branches of the Prison Officers' Association who are involved. The Prison Officers' Association naturally have made it absolutely clear that they are opposed entirely to the action which is being taken, has been taken in the past, I fear, in a number of establishments and is likely to take place, or so we are told, from Sunday onwards.
The noble Baroness asked me about a time limit and the noble Lord, Lord Wigoder, raised a similar point. There is no disposition on our part to delay. I spoke to the Secretary of the Prison Officers' Association at lunch time today and suggested that we have a meeting at the Home Office on Monday of next week so that we can start discussing the terms of reference. We want to get on with this matter as quickly as possible, but I do not think that at the moment, as advised, it would be sensible to take out one particular element of the problem and ask for an interim report on that. The problem that we are facing is far more substantial than simply a question of pay.
The last point put to me by the noble Baroness was whether the Committee of Inquiry will have the opportunity to go into wider questions, such as alternatives to imprisonment and so on. No, we have not suggested that because, frankly, if we were to suggest that, I think that the Inquiry would in reality be open-ended. It would have so many issues thrust before it that it would be very difficult to get a report with any reasonable degree of dispatch. For that reason, we have drawn the terms of reference in the way we have to exclude consideration of issues of that kind.
The Lord Bishop of ROCHESTER: My Lords, may I ask the noble Lord whether the terms of reference will include consideration of the constitutional question and the relationship of the Prison Commission to the Home Office?
Lord HARRIS of GREENWICH: My Lords, I was interested to see some discussion of this matter in the Press recently to the effect of whether the Prison Commission, or some similar body, should not be re-established. The Prison Commission was brought to an end in, I think, about 1964 by the noble Lord, Lord Brooke of Cumnor. It is often argued that it would be a good idea to reestablish the Prison Commission. I am never totally persuaded that it is necessarily sensible to re-create a body 14 years after it was abolished for reasons which, to Parliament at that stage, seemed to be fairly self-evident. Nevertheless, having said that, the Committee will have the opportunity to go into this particular matter, so that if it wishes to make recommendations about the way in which the Prison Service is administered from the Home Office, it will have every opportunity to do so.

ZAMBIA
3.42 p.m.
The MINISTER of STATE, FOREIGN and COMMONWEALTH OFFICE (Lord Goronwy-Roberts): My Lords, with permission, I shall now repeat a Statement being made in another place by my right honourable friend the Secretary of State for Foreign and Commonwealth Affairs. The Statement is as follows:
"With permission, Mr. Speaker, I wish to make a Statement on Zambia.
"When the Prime Minister and I met President Kaunda at Kano on 22nd and 23rd September, the President asked for our help in dealing with Zambia's economic problems and for military assistance, making it clear that he was turning to us in the first instance as a fellow member of the Commonwealth with which his country has had economic and defence relations since independence in 1964. We discussed in detail the urgent problems they faced of obtaining maize seed, fertilizer, and pesticide
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which were needed to ensure next year's harvest. We also discussed the problems of the Benguela Railway.
"Zambia also faces severe economic difficulties arising from the low world price of copper and difficulties with her road and rail links to the sea. The Rhodesian raids deep inside Zambia on 19th October have reinforced the Zambian Government's concern about their national security. I have just heard of a further raid today.
"We have agreed to provide military aid to improve Zambia's defensive capability. Some ground equipment and spares have already been supplied strictly for the use of the Zambian armed forces and police. More will follow after detailed consultations with the Zambians. We will also step up military training for Zambians in Britain. No British service personnel or aircraft will be stationed in Zambia.
"The Zambian Government have given us firm assurances that the equipment will be used for no other purpose than the defence of Zambia and will not be passed to any third party, and the air defence equipment will safeguard the integrity of the capital. When we have established with the Zambians their exact needs, I will immediately tell the House the cost to the Exchequer of the military assistance we are providing. Parliamentary approval for this expenditure, which I expect to be of the order of £10 million, will be borne on Foreign and Commonwealth Office votes, and will be sought in a supplementary estimate in due course.
"The Government have agreed to help meet Zambia's urgent need for foreign exchange by making an advance payment now of £20 million in respect of purchases of copper for British industry. We expect this copper to be shipped to Britain during 1980. The quantities, up to £20 million in value, will depend on contract prices at the time of delivery. The copper will be resold to British buyers in such a way as not to disrupt the normal workings of the market. We have also offered technical assistance to Zambia to help in development of Zambian cobalt production.
"The Benguela Railway is due to be re-opened on 4th November, and should

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ease the problem of transporting Zambia's exports, including copper, and imports. We have offered financial assistance for improving the Zaire section of the Benguela Railway and are offering technical assistance for the Angolan section.
"I hope this assistance for Zambia at a time of great difficulty will strengthen her links with this country and the Commonwealth."
My Lords, that concludes the Statement.
3.47 p.m.
Lord CARRINGTON: My Lords, the House will be grateful to the noble Lord for repeating the Statement. I do not think that there will be anybody in any quarter of the House who does not sympathise with the economic position in which Zambia finds itself, due largely to the economic recession in the world, and of course, as the noble Lord said, to the falling price of copper; and in that I think that the House will approve wholly of what the Government have done. I should like to ask the noble Lord whether it is the Government's intention to encourage President Kaunda to diversify his economy, and in particular to rehabilitate his agricultural industry, for his dependence upon copper is the cause, very largely, of this difficulty.
However, I do not think that the Government can have been surprised at the concern shown by a great many people in this country about the shipment of British arms to Zambia, because it coincided with an escalation of the war, and without any explanation it appeared to be almost an intervention in it. If what had been decided had been announced after Kano, the reaction might have been a little different. After all, it is very much better that arms purely for the defence of Zambia should come from Britain than from Cuba or from Russia, with all the military and political interference that that might bring. But there was no explanation after Kano; and indeed it was a strange, secretive meeting from which journalists were excluded.
The fact remains that the timing has made us very suspicious. Like it or not, there are guerrilla camps in Zambia, some—at any rate, one—not very far from Lusaka. From these camps on
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Zambian soil guerrillas enter Rhodesia and kill Rhodesians, black and white. Like it or not, it is surely not very surprising that the Rhodesian forces attack these camps. Now the Government have sought to remain neutral in all this, but if British arms are to be used to defend these camps, that is taking sides, and I must ask the noble Lord whether he will give an assurance to the House that British arms will not be used for the defence of these guerrilla camps. Secondly, I must ask him whether he will assure the House that there were no more secret undertakings reached at Kano of which we know nothing.
3.50 p.m.
Lord GLADWYN: My Lords, I, too, should like to thank the Minister for repeating this important Statement. It seems to me that, as I think the noble Lord, Lord Carrington, said, nobody can object to our granting economic assistance on a considerable scale to Zambia in her present unfortunate position. I also think that if this friendly Commonwealth Government appeals for some military aid, then in principle it should not be refused. I do not see that we should make any sort of objection about that. The only question, of course, is what sort of aid it will be and for what purpose it will be employed. As I understand it—I do not know whether this is the case, but perhaps the Government can tell us—it is confined to a certain amount of assistance to the ground forces of President Kaunda (that is not a very great consideration) but principally to the air defence of Lusaka, the capital. If that is so, again I do not see how we can really object. The fact is that President Kaunda is in a very weak position. He has hardly any effective force at his disposal, and he therefore cannot prevent the establishment of guerrilla bases in his country even if he wanted to do so. Anyhow, they are there. I suppose the intention is for the Government to provide for the military air defence of the capital, Lusaka, but not in any way to give military assistance to the rebels in the defence of their guerrilla bases. It is obvious that the guerrillas will obtain air support and assistance in the anti-aircraft defence of these bases from countries other than ours in the fairly near future. Missiles against low-flying aircraft and helicopters are very

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easy to install and cannot easily be detected, and there is every reason to suppose that the guerrillas will go in that direction. However, if they do we cannot do anything about it. So I would ask the Government to say that it is not their intention to do anything to help the guerrillas protect their bases, which they will defend anyhow, but that our support will be limited to the defence of the capital, Lusaka, which I believe the Queen is to visit in the near future.
3.52 p.m.
Lord GORONWY-ROBERTS: My Lords, I am grateful to both noble Lords for their comments on the Statement that I have just read and, in both cases, for putting (if I may say so without presumption) the right questions. On the first point made by the noble Lord, Lord Carrington, Her Majesty's Government certainly see the need to encourage the Zambian Government in every possible way to diversify their economy and to place renewed emphasis on agriculture. The noble Lord is quite right in saying that dependence, possibly over-dependence, on a commodity which, however important and rewarding, is nevertheless subject to very marked fluctuations of price over the years, can make for special vulnerability at times like these. But copper and, one hopes, other minerals like the one or two I have mentioned, will continue to be very important indeed in the economy of Zambia. However, the point is well made and, I hope, freely taken.
As for the assurance which both noble Lords sought about the destination and the use of the ground equipment and spares, the arms that we seek to make available to our Commonwealth partner, Zambia, I can give that assurance by repeating what my right honourable friend said in the Statement which I have just read. I myself am very confident, totally confident, that the President and the Government of Zambia will do everything in their power, and effectively so, to ensure that this assistance is used by the Government for Government purposes; namely, those purposes very tidily described by the noble Lord, Lord Gladwyn, as the defence of Zambia at a time of considerable difficulty for that country and in the defence of its capital.
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The noble Lord, Lord Gladwyn, also asked what the nature of the aid would be. I would refer him to the last two paragraphs of the Statement I have read, which describe how we seek to assist in the question of foreign exchange availability to Zambia, very badly needed by them, by a forward purchase of up to £20 million worth of copper, the payment to be made immediately or as soon as possible but the delivery to be in 1980. There was a suggestion by ourselves, a natural one, that delivery might be in 1979, but we want to have value for this money; that is, the right kind of copper, which will in effect be available in 1980 rather than 1979. In any case, the extra time available to the Zambian Goverment and economy will be a form of assistance to them within that category.
I have also outlined, like my right honourable friend, the ways in which we are striving to assist the Zambian export economy to reach the sea; that is, by offering assistance, financial and technical, to the three sectors of the Benguela Railway—a very long railway which starts on the Atlantic coast and goes on through Central Africa and then southwards, and which, in varying degrees in varying parts of the area it serves, is in very poor condition. That is assistance well worth making available, not only to Zambia but to at least two of its neighbours. My Lords, may I say that I appreciate the tone and content of the contributions so far made, and I am sure that the Prime Minister and my right honourable friend will equally appreciate them.
Lord CARRINGTON: My Lords, I wonder whether the noble Lord would be good enough to assure the House that there were no other agreements reached at Kano about which we know nothing?
Lord GORONWY-ROBERTS: My Lords, I doubt whether the noble Lord is quite right in saying that we knew absolutely nothing as to the outcome of the Kano meeting. It was held in conditions of urgency, and as a result the Press and other arrangements were momentarily not comparable to those which normally obtain on these occasions. There is no secret about what transpired. A good deal has been said in the Press since then, and indeed my right honourable

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friends in the other place have been most forthcoming about their own statements. As to whether there will be further Kano-type meetings, I very much hope so; but I join the noble Lord in hoping that next time it may be somewhat less urgent and that, therefore, the Press will have no grounds for complaint, and neither will the noble Lord.
Lord CARRINGTON: My Lords, I apologise for intervening again but the noble Lord really has not quite taken my point. We did not know until recently that the Prime Minister had agreed to send arms to Zambia. What I want to know is: At Kano, were there any other agreements reached with President Kaunda of which we now know nothing?
Lord GORONWY-ROBERTS: My Lords, if there had been I am quite certain that they would have been included in the official Statement made in the other place and repeated by me today. I am sorry if I did not quite catch the point of the noble Lord's question.
Baroness GAITSKELL: My Lords, would it not be true to say that if we did not come to the help of the Zambian economy, which is in a bad way, the Soviets are waiting in the wings ready to come to the help of Zambia with arms, as they usually do in the case of any country in Africa which needs help?
Lord GORONWY-ROBERTS: My Lords, I am sure there is a good deal in what my noble friend says. My right honourable friend the Prime Minister touched on this yesterday, when in another place he spoke to the Motion of thanks for the gracious Speech. It is perfectly clear that President Kaunda chose to come to us in the first instance, and I am sure that Members of the House will put themselves in the position of our Prime Minister and Foreign Secretary when they heard of this double request for assistance, and will consider not only what our duty and desire would be as a fellow-member of the Commonwealth but also what might be the consequences of not acceding to this request.
Lord AVEBURY: My Lords, when the question of South Africa was discussed
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in another place on the 24th February 1976, Mr. Julian Amery recommended not only supplying armaments to Zambia but that trainers and instructors should be offered to them as well, if they wanted them. Would the noble Lord say whether any request was made by Zambia that we should supply instructors to help them with the use of the equipment that is now being supplied? Is it a question of putting the Rapier missiles back into order, and can they do this without the presence of British personnel in Zambia? Would he also take the opportunity, having made the Statement, of condemning the fresh attack on Zambian territory which the Secretary of State said had been made today involving probably the loss of Zambian lives—and of women and children—as well as, perhaps, of the guerrillas?
Lord GORONWY-ROBERTS: My Lords, I join the noble Lord in the latter part of his supplementary question. Of course, we condemn these things, from whatever source they emanate. As to the comparability of this arrangement with other moves we have made in similar circumstances in other parts of Africa, he is right; the present contract in regard to one aspect of the defence of Zambia was signed by the then Labour Government in 1968 with the Government of Zambia. It was slightly amended by the successor Government in this country in December 1970 and deliveries began in 1971. And there are predecessors of what had been contracted to be delivered by us in 1968.
As to the position in Kenya, he is referring, of course, to the events of 1973 when the then Government—quite rightly, I think—made to the Kenya Government a grant of military assistance not dissimilar from the one that we propose to make to Zambia.
Lord HANKEY: My Lords, are the Government aware that their policy in this part of Africa is beginning to look somewhat one-sided? Not only have they given this assistance to Zambia—about which one has no real objection to raise—but, during the Recess, they announced the grant of a £10 million interest-free loan to Mozambique which harbours Mr. Mugabi and his guerrillas. Meanwhile they persist in continuing

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sanctions against the Government which has already gone inter-racial and is anxious to hold majority rule elections.
Lord GORONWY-ROBERTS: My Lords, I have much hope that before very long what my noble friend has said about the intentions of the present interim Government in Rhodesia may be proved to be true by facts and performance. So far, I cannot share his views on the intentions, let alone the practices, of that Government. As to it being onesided, certainly not. We are members of the Commonwealth. The Zambians, as the President of Zambia made clear in an eloquent speech at the last meeting in London of the Heads of Commonwealth Government, greatly value their membership of the Commonwealth. It is a great encouragement and assurance to those of us who still believe in the Commonwealth that they should have come to us in the first instance for help in their economic difficulties and their real military apprehensions which stem from one quarter and one quarter only. It is a matter of pride that we have been able to say: "Yes, we will help you and we will accept your assurances as to how you will use the help that your fellow partner of the Commonwealth will make available to you".
Lord PAGET of NORTHAMPTON: My Lords, is that answer quite correct: that they first came to us? Is it not the fact that when the legions of Kaunda and Nkomo were distributed to the winds or the bush, Kaunda came to us and Nkomo went to Russia? From Russia he got a dusty answer. The Russians told him—I ask whether this is so—that they had no intention of sending arms which the Rhodesian Government could collect at will. Kaunda got a softer answer from us. But what are we going to do when Rhodesia do decide either to intercept these planes into Salisbury—for they have control of the air—or simply to knock out the aerodromes before they are installed? It is very indiscreet, is it not?
Lord GORONWY-ROBERTS: My Lords, my noble friend, deliberately, I think, but without his accustomed skill, associates Nkomo with Kaunda. We are dealing with the Government of a country which is a fellow member of the Commonwealth with us, the Government of
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President Kaunda. We are not dealing with Nkomo. The Statement referred to requests made to us by the lawfully constituted Government—and there are lawfully-constituted Governments in Central Africa—for help in the economic and military field. We have said that we will do our best to help. There is nothing in this Statement or in this situation about Nkomo.
Lord BARNBY: My Lords, if I correctly understood the noble Lord in his references to the Benguela railway, it appeared that British technical aid was to be provided for the resuscitation of that portion of the line—presumably civil and not military—which went outside Zambia. Would that not bring those agencies into conflict over the length of the line? Some portion is within the control of the Government of Angola and other portions are within the control of its opponents. It would appear that the British Government would then be taking sides. Secondly, is it to be understood that the present passage of exports from Zambia to the sea, through Rhodesia and South Africa, is inadequate to meet the copper supply for which a market can be found?
Lord GORONWY-ROBERTS: My Lords, taking the second point first, it is pretty unanimously agreed that a far better way of exporting the copper—which, in any case, is largely exported to the West and to this country—is by access to the sea, to the Atlantic, to Benguela and the adjacent port. For this purpose it is necessary to repair in varying degree, in varying parts of Central and Southern Africa. It is a very long railway and it goes through at least three countries, as the noble Lord knows. In some parts it will need financial assistance and, no doubt, in others technical assistance. We are now considering with the various Governments concerned how best to help. As to the hazards in some of these countries, I do not think that this part of Angola, for instance, through which goes that sector of the railway ending in Benguela itself, gives rise to quite those apprehensions at the moment. Nevertheless, the situation is not wholly stable in any part of the territories through which this very long railway moves.
We need to help to reinforce this link and, as the Prime Minister has said, this

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will indeed be a very direct additive to the Zambian economy. It will cut costs, speed up deliveries and increase the effective output of the copper industry.

DEBATE ON THE ADDRESS
4.9 p.m.
Debate resumed.
The PARLIAMENTARY UNDERSECRETARY of STATE, DEPARTMENT of the ENVIRONMENT (Baroness Birk): My Lords, I was very entranced by the description of the noble Lord, Lord Thorneycroft, of his own credentials and his interests. Incidentally, I should think it would be better all round for him to be chairman of Trust House Forte than chairman of the Conservative Party. Speaking as an ex-Chancellor of the Exchequer, he shows such modesty and humility in his confessions of his failures that I already have an inferiority complex as I am not even a Treasury Minister who has had the opportunity to make any mistakes to which I can confess.
However, like the noble Lord, I, too, am starting on a completely non-controversial note. In the past year, because of the success of the Government's and the country's efforts to tackle inflation, the economy has been making progess and is on a more settled course of real improvement. Here, there are four key elements of improvement: the fall in inflation, the rise in national output, the rise in our living standards and the rise in industrial investment. These improvements did not come by chance; they are the direct result of a concerted strategy to tackle the country's underlying economic problems, and a climate of financial responsibility and confidence.
The Government are determined to hold fast to the course which has brought these benefits. The essential challenge remains: the double-headed monster of inflation and unemployment. Each is an old and well-known enemy but combined they constitute a new and powerful threat to our standards of life, and unless inflation can be cut out of the economy we shall be unable to make substantial progress towards greater productivity and full employment.
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Three elements are critical in the battle to preserve our economic and social fabric against this onslaught: incomes policy, monetary policy and fiscal policy. The Government do not believe we can rely on monetary policy or monetary and fiscal policy alone without incomes policy to control inflation. Obviously, if people did not moderate their wage settlements, the Government would have to rely on monetary and fiscal instruments. But we believe this would be a tragic outcome. If we use these regulators alone to control the effects of a wages surge on prices, the cost will be falling output, bankruptcies and rising unemployment.
The noble Lord, Lord Thorneycroft, was in some doubt—and he put it to me twice, once at dictation speed—on the matter of whether the norm is to be a permanent feature of our society. Though as he rightly said, I have The Right Approach not only as bedside reading but under my pillow every night, he has certainly not returned the compliment and taken the Prime Minister's speeches as his bedside reading. We are not committed to a rigid norm. But, at a period when any increase above what is feasible economically and financially for the country is dangerous, there must be a norm, there must be a barrier beyond which people cannot go. The Prime Minister has shown tremendous courage in setting this up because it would be much easier to say: "Let us have a free-for-all". One hopes that, as time goes on, the knowledge that one group's increase can be to another group's tremendous disadvantage will play its part in the attitudes of our society.
I look forward with some curiosity—if at the moment without a great prospect of enlightenment—to the contributions to the debate which will be coming from the many noble Lords who are speaking from the other side of the House. Trying to establish what Tory counter-inflation policy is these days needs a larger than usual sample to get a statistically signific-cant result. I did admire Mrs. Thatcher's speech yesterday; for, having seen in the Press photographs of her decorating her house, she obviously carried her wallpapering expertise into the debate by endeavouring to paper over the cracks in her Party's multiple approach to economic policy. I hope she knows that deep

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cracks need infilling if the paper is to hold.
The difference between our policies and the Tories' is that this Government firmly believe we cannot abdicate our responsibility on incomes. We have therefore declared our objective and our determination to take action to secure it. But it is true that Government can play only one part in this. In a democracy, the consent and co-operation of workers and management is absolutely indispensable. But I am still convinced that a Government which failed to give a lead on incomes and relied on monetary restraint alone to clear up the mess must be faced with the ugly choice between draconian measures and ineffectiveness.
In the past three years we have shown how much can be done by co-operation on pay policy to an extent which many on both sides of the House—I think I am right in saying—could not have imagined in the summer of 1975. Here, the unions, which have taken and will no doubt continue to take a considerable amount of bashing, deserve a great deal of credit. Many of the union leaders have gone to the extent of shaking their own credibility in the eyes of their members. But we have seen results: the retail price index, the year-on-year rate of inflation, is 7·8 per cent. for this September. That is a quarter of what it was in 1975, and a half of what it was a year ago in September 1977. The monthly rise this September was only 0·4 per cent., the lowest this year. Naturally, we want to get it lower; but it shows the decline. Our inflation is now slightly below the average rate of our industrial competitors. Nevertheless, I readily admit that we still have some way to go to get our inflation rate down to German and Japanese levels. Therefore, the aim this year must be to halve the rate of earnings increase, so that inflation is held down. This is what the Government's 5 per cent. policy is about.
We make no claims that this policy is perfect, nor that there are not possible loopholes in it. We hope to improve it through ideas and initiatives from every source. On this point, there certainly is the national dimension as well as the Party political dimension. We are not a Government of closed and rigid minds, and the current discussions with the trade
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unions are fundamental. I recall that Churchill said: "Jaw, jaw is better than war, war", and while they are talking that is hopeful, not just for the Government and my Party but for the country as a whole.
There is no gain in achieving paper increases in pay unmatched by increased output. Here, we would be talking of confetti money. A nation, it is said, sometimes gets the Government it deserves, but a nation always gets the incomes policy it deserves. It is undeniable that, on average, we raised our money incomes by too much last year. Earnings generally rose by 14 per cent. in the 12 months up to this July. If this continues, it will be passed on in price increases and we shall be back with rising price inflation. However, without an incomes policy the outcome would have been much worse in the last round. I do not think there is any doubt about that.
If individual groups of workers use their industrial muscle to press for settlements greatly in excess of what can be justified, they do so at the expense of others. Even with productivi y deals—and here is an example of an opportunity for flexibility, and the Prime Minister made it quite clear he was talking about real deals and not phoney productivity deals—all a Government can do in the final analysis is set a standard of conduct, a pattern of behaviour. This is what we are doing.
Inflation is a social evil, it destroys the value of savings, it depresses the real value of money and it particularly hurts the lower paid. Inflation is an obstacle to growth and a cause of unemployment. Inflation frustrates the intelligent management of the economy. Inflation destroys our international competitiveness. If we pay ourselves more than we earn—unless we devalue the currency, itself a stimulus to inflation—we price ourselves out of world markets and out of jobs. Inflation makes investment less certain, more risky and less attractive. Fewer jobs in investment goods industries, and a reduction of capital equipment are the results.
Against the background of a stable currency we can increase our rate of real output. The level of investment of British industry must continue to increase.

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Current figures are good—but I agree that they are not yet good enough. We are only approaching the volume of investment in manufacturing industry achieved in 1970. Profits are essential in public and private enterprise. They create funds necessary for the future building up of our economy and the incentives to which the noble Lord referred. It is true that profits in the aggregate are not yet high enough to secure this, but profits must not be confused with profiteering, which is quite a different kettle of financial fish. Our productivity is not high enough, I agree with the noble Lord. This is the concern of management as well as workers. This is a dual problem. Equipment needs to be improved and the organisation and working practices of designers, managers and shop floor workers need improving. The control of inflation is a prerequisite of increased productivity and highly sharpened competitiveness.
The organisation and effectiveness of our selling at home and abroad must be better. With the exception of the period of this Government, we have been losing our share in the world market for manufactured goods. The broad achievement of the last four years in breaking the long trend of a fall in Britain's share of the world market for manufactured goods, is being maintained. Nevertheless this "nation of shopkeepers" needs to learn to compete again. Imports of manufactured goods, although not flooding in as in the 1972/1973 boom under the last Government, continue to rise faster than exports, and we have still not solved the problem of competing effectively in our home market. The country can only improve its trading position against the background of a stable pound. International factors enter into this. The economies of the Western world are inter-dependent and we must welcome the endeavours of President Carter to stabilise the dollar. I do not think it is insignificant that he has felt the need to include wage restraint and a voluntary wage norm in his package of measures.
For the past two years—this was a point raised by the noble Lord, Lord Thorneycroft—we have been selling overseas very successfully indeed, and over that period our currency has continued to
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appreciate. The noble Lord had some interesting comments to make about the European Monetary System about which he was good enough to warn me in advance, and, like him, I shall listen with interest to what other noble Lords have to say in the debate. It is a complex issue and my right honourable friend the Chancellor of the Exchequer yesterday tabled an explanatory memorandum, setting out the background. For my part, I propose to say no more than that my right honourable friend has played a constructive and realistic part in developing the ideas for a European Monetary System and I repeat the Prime Minister's observation that the House of Commons will wish to debate the issue before the Government reach their own conclusions on the matter. It is not something we can go into very easily without a great deal of examination.
The other side of this tremendous problem with which we are faced is, ofcourse, unemployment. Although last month unemployment was 90,000 less than it was a year ago, it is still far too high—as indeed it is in the industrial world as a whole—and we cannot forget that the world recession is still with us. Our special employment measures have had a substantial effect, first, in preserving the production teams and building the skills which British industry will need to call on as it continues to grow, and, secondly, in that a quarter of a million people are now benefiting from these measures, and the number is expected to rise substantially. This means that we have successfully kept employment and training high in relation to the level of output. This depresses recorded productivity averages, but builds industry's future capacity.
One change in these special employment measures was announced in the gracious Speech. A subsidy for short-term working will displace the Temporary Employment Subsidy. This change, which is agreed with the European Commission, builds upon measures in operation by some of our European partners and is a further improvement in the pattern of our support for employment during the progressive build-up of our national output and investment. Such measures are, of course, no substitute for the falls in unemployment we have been seeing

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over the past year and which we look forward to seeing in the future. These falls have occurred while our special measures were being held at about a constant level.
Real growth in the economy and pay rises are not the sole reasons why we have seen an increase in people's standard of living this year. Fiscal measures have also played a large part in increasing and maintaining the purchasing power of incomes. Our economic measures are also tools for social ends, and this we must not lose sight of. Average real disposable income is over 7 per cent. higher than a year ago, and there is more money for families. Child benefits go up again this month to £3 for each child, and they will go up further to £4 per child next April. The effect of these benefits, taken with the Government's raising of tax thresholds and the introduction of the lower initial rate of tax, are together worth a very great deal to the family whose breadwinner is among the low paid. The Government give priority to pay rises for the low paid. But, before any rise, the family man with two children under 11 on £50 per week will this month find his family income 11 per cent. higher in real terms than it was a year ago. And this month pensions will be 20 per cent. higher in real terms than when we took office.
Our efforts to build up and keep the social side of our policies are not without difficulties. But they lead towards a less ill-balanced society. The Tories propose a fiscal policy consisting of tax cuts and public expenditure cuts, but they become very vague as to where the expenditure cuts will fall. The noble Lord, Lord Thorneycroft, himself pointed out that more needed to be spent on education. It is perfectly true that we all want more spent on the things that we feel need it—on the arts, for instance. I should also like to see more spent on my particular area of conservation of historic buildings and ancient monuments. We should all like to see more for the Health Service; but the Opposition also insist at one and the same time that they want greater tax cuts and a reduction in the overall public sector borrowing requirement. It is clear that one cannot have big tax cuts and immoderate wage settlements. If wages get out of hand, the Government will be forced to take the unpleasant alternative
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of higher taxation or else must make such huge cuts in public expenditure as would result in rocketing unemployment and severe damage to the quality of life. How, in the absence of an incomes policy, the Tories would propose to use fiscal policy to fight inflation without depressing the standard of living remains very unclear, I must confess.
The truth of the matter, of course, is that public expenditure growth must be controlled and the Government have been and are controlling it. In fact, there have been a great many grumbles heard about this. There are priority decisions to be made on where the available resources for public expenditure are best applied, and these are socially crucial. Of course, reductions in direct taxes are needed and these the Government have been introducing. Of course, economic incentives matter enormously. They matter for middle and upper income groups as well. The Chancellor is well aware of this and is committed to reducing taxation as soon as circumstances permit; but I must also point out that such incentives matter even more to those lower down the incomes scale, especially where tax liability and social security entitlement have overlapped. That is the poverty trap area which we do not hear so much about from the Conservatives.
The Leader of the Opposition, in her speech in another place yesterday, laid great emphasis on monetary control as a counter-inflationary instrument, although I must say she appeared to wobble on what, for her, is the minefield of incomes policy. She did not quite take what I wish she had taken from the noble Lord, Lord Thorneycroft—what he called the "judicious mixture approach". She was quoted in The Times as saying that constraint on the money supply was the only thing that would ultimately hold inflation. I made a note, "jolly good", when the noble Lord, Lord Thorneycroft, talked about the "judicious mixture". We attach great importance to monetary aggregates and keep a watchful eye on the money supply. This is essential: we have no intention of letting it get out of hand, and it is within the target range we have set.
However, there is a difference between the Government's approach and that of the Conservatives towards counter-infla-

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tion policy. I am aware that the Party opposite is not of one mind, although I do not want to intrude too greatly into private grief, but I take it that we must rely on the Leader to interpret the policy. We know that monetary restraint cannot be the only means of control and therefore we have to have an incomes policy that works. For the Conservative Party, relying on monetary control is another way of saying that they would ration the amount available to employers to pay wages. In practice, that would mean that the squeeze would be on companies in regard to the number of pay packets they could afford to fill as much as on the amount that they put into those pay packets. It would also be a squeeze on investment, and would be a very un-discriminating weapon indeed. The big companies would be able to protect themselves to some extent, because they would not go down, or sink, if they had to hive off some of their subsidiaries, or some of their workers; although even they would not be able to protect all their workers. Interest rates would go up, hitting people with mortgages as well as those wishing to borrow for investment. Among the small companies, there would be bankruptcies and it seems that, in this case, the Party opposite would be in the postion of manufacturing lame ducks, although it does not appear to want to help them. The Government are proud of their record of help to small businesses, and more is promised in the gracious Speech. It was interesting that the CBI survey, published on Tuesday, reported optimism and increased activity among small businesses. I should have thought that the CBI would be extremely worried that the Tories appear to be against an incomes policy.
I do not think that I have misrepresented the Conservatives' counter-inflation policy, since my "guesstimate" is as good as anyone else's. The noble Lord, Lord Thorneycroft, made what I thought was a very valid plea for flexibility, and I am a great believer in flexibility. But the flexibility in the approach of different leading members of the Conservative Party has almost gone haywire. It has gone beyond the reason and the common sense to which the noble Lord paid such attention. At Brighton in October, Mrs. Thatcher offered realistic, responsible
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collective bargaining, free from Government interference. Mr. Heath, to his credit, differed openly and there are reports—I do not know whether or not they are true—which seem to have filtered through from the Shadow Cabinet, that others share his view.
The question is simple; it is whether realistic, responsible free collective bargaining, free from Government interference, is an option at the present time—and I am not talking about any long-term future. I agree with Mr. Peter Walker that it is not. I do not agree with Sir Keith Joseph and others who have spoken of cash limits in the public sector and determination of pay increases by the market in the private sector. It may be kind to be cruel in the short-run, but a situation which can only result in a tremendously heavy increase in unemployment over and above the present level of unemployment is something which the Government would certainly resist very strenuously.
In the Sunday Times of last Sunday, Terence Higgins, who was a Treasury Minister with the Party opposite, explored the role of cash limits very lucidly and I cannot do better than quote directly from what he said. He said that,
"Sir Keith Joseph and Sir Geoffrey Howe implied at the Tory Conference that cash limits can prevent excessive public sector pay claims. In fact, as a recent Public Expenditure Committee report made clear, the relationship is the other way about. Public service pay accounts for almost half the total expenditure covered by cash limits. If the Treasury's pay forecasts are invalidated by excessive pay settlements, cash limits will inevitably be broken".
I do not think that I can improve upon that summing-up. Is the determination of pay increases by the market in the private sector any different from the first position of the last Conservative Government, and, if so, how is it different? I do not think I am alone in wanting to know some of the answers to this, particularly when, as the noble Lord put it—and I agree—the problems that we are facing are national ones.
What I think, though, is that our social ends are different. I believe that we want a different kind of society from that desired by the Conservative Party. The kind of society that we want affects the means by which we try to find it. We want a flexible position where we balance

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our economic needs with our social needs. It is clear that the need for restraint is something which the country supports. It supported it in the recent Gallup Poll, and even in the poll taken in a Midlands city the answer to the question whether people wanted the Government to set some limit was, Yes. Support was also clearly shown in the result of the Berwick by-election. So people are beginning to understand and accept what I would call the ethic of the importance of having restraint, in order to be able to enjoy very much greater flexibility in the future.
I wonder whether I may also quote something that I said in winding up the economic debate last year and which I think is still applicable this year. I said:
"The Government are trying to provide the economic, social and cultural balance that makes up a society that is compassionate and believes in the quality of life, but they cannot succeed without the participation of everyone".—[Official Report, 8/11/77; col. 147.]
I think that the Government are showing determination: they are showing courage and I believe that we have the country with us.
4.36 p.m.
Lord ROCHESTER: My Lords, the gracious Speech proclaims a number of intentions in the economic and industrial fields that are admirable in their general sentiment, and we on these Benches certainly welcome them wholeheartedly, particularly in regard to the priority being given to the control of inflation and the reduction in unemployment. Our doubts centre around the question whether the measures contemplated to achieve these objectives will have the desired effect. Indeed, in some cases we are not altogether clear as to what the measures themselves actually are.
For example, as has already been recognised, the major issue of the day is undoubtedly pay policy. We know of the Government's 5 per cent. guideline but, judging by the rejection of that policy by the TUC and the present state of play at Ford's and elsewhere, this has already been pretty badly knocked about, and we have still to learn what, if anything, is to take the place of that guideline as the outcome of the discussions which, as the noble Baroness has just reminded us, the Government are now conducting
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with trade unions. We are particularly doubtful as to this Government's ability to make their pay policy stick, and we are opposed to sanctions to uphold it which are operated, as at present, in rough and ready terms, and which do not have statutory backing.
My Party is clear that any sanctions should be authorised by Parliament and, indeed, related to the crucial factor of productivity, so that if in collective bargaining in the private sector it does not prove possible to maintain the ratio of labour costs to added value in any enterprise, then the increase above that ratio should be taxed. Having said that, I must make it plain that we should like to offer our broad support to the Government in this field. We certainly feel that their policy is much to be preferred to that outlined to us this afternoon by the noble Lord, Lord Thorneycroft, particularly in relation to the point which the noble Baroness has just emphasised; the fact, as we see it, that no Government nowadays can escape from their essential role of intervening in this field of pay policy.
There is, however, apart from the short-term problem, the problem in the long-term. Here our feeling is that there really is need to establish some way which involves Parliament, perhaps through an extension of the Select Committee procedure, in determining wages and salaries generally. The time when this should be done is not, in respect of the pay round 1979–80, in July 1979. That would be in keeping with what has been the case for the last few years. The time is now, so that we avoid the situation in which we have found ourselves in recent years.
On the other major issue of the day, that of unemployment, as the noble Viscount, Lord Amory, reminded us in the debate which he initiated last July, improved productivity, as we see it, is again the key, for it is only that which will enable us to compete internationally—a point which was stressed by the noble Baroness—and create the new and lasting employment opportunities that are needed. In the gracious Speech there is a brief reference to the need for higher productivity, but there is precious little evidence that I can find of the fundamental changes that are needed to bring this about. We would, however, in

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this matter like to welcome the promise to encourage the further education and training of young people for skilled jobs in industry and also the additional help to be given to small businesses, which we must hope will in due course be reinforced by reduced direct taxation. We shall await with interest—and for my part, I must say, with a certain scepticism, bearing in mind the need to keep down unit costs—the outcome of the consultations that are now going on with industry concerning short-time working and its financing.
As to the proposed legislation to provide additional finance for the National Enterprise Board—a point that has not, I think, yet been mentioned—I think I may say that we on these Benches have open, even potentially receptive minds, depending on the use to which the money is put. For my part, I have come rather to admire the more entrepreneurial aspects of the Board's work, but I think I should give warning that in our view the time is fast approaching when a halt will have to be called to the granting of further help for volume car production at British Leyland.
I should like to refer briefly to the subject of so-called industrial democracy, for again it is not plain—to me at least—from the wording of the gracious Speech just what the Government here have in mind. There is reference to legislation under which employees and trade unions would participate in discussions on corporate strategy and to the fact that there should be provision in due course for employees to sit on company boards. We certainly welcome the fact that on this occasion employees merit a mention as well as trade unions; indeed, they are put first in order. My Party has for long had its own distinctive policy in this field: that employees should be members of their companies and that, along with shareholders, they should participate in the election of directors in a way which would mean that those directors would not, in a potentially divisive way, be representative some of shareholders and others of employees but rather that they would all represent both. My own view continues to be that it is essential that a consensus should be reached on this vexed question. On one point we on these Benches are absolutely
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clear: that any legislation on this subject must apply not only to members of trade unions but to all employees.
I hope that on the major industrial issues I have said enough to indicate our general reaction to the Government's intentions. My noble friend Lady Seear will deal later in more detail with the economic aspects of the gracious Speech, and no doubt she will take the opportunity to say something about a point which was stressed by the noble Lord, Lord Thorneycroft: the question of the European Monetary System. What I should now like to do is to return to a theme which has on several recent occasions been raised in your Lordships' House and to stress my continuing conviction—stronger than ever in the light of current events—that the economic and industrial stability that our country so desperately needs will not be achieved until we as a nation can reach a common understanding that it is in the interests of all of us to increase the size of the national cake rather than spend so much of our time squabbling as to how it is to be sliced up.
In my view—and also, incidentally, in the view of a number of other people having industrial experience and whose opinions I very much respect, not all of whom are Liberals—this involves a number of things. It means that people employed in certain key occupations that are vital to the immediate support of life should in future be treated as being above the battle, and that questions affecting their pay and conditions should be determined, not by a number of bodies, as at present, but by a single independent body in which all parties repose confidence. This body should be altogether distinct from the Advisory, Conciliation and Arbitration Service, which has other functions to perform, and its maintenance and its independence should be guaranteed by commitments entered into not only by the Government of the day but by Opposition Parties, which would include an undertaking that in all circumstances, and irrespective of incomes policies, the findings of that body would be implemented. This would be in order to ensure the continuity of policy which, with the abolition by successive Governments first of the Prices and Incomes Board and then of the Relativities Board, has in recent years been so conspicuously lacking.

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There are many difficulties in the way of implementing this proposal, particularly some concerning the pay bargaining rights of trade unions and affecting the selection of the occupations which could be treated in this way. Moreover, I cannot for myself see that at present it is really realistic to suppose that the people concerned would all prove willing to forgo their right to strike, where they have that right, as a condition precedent for receiving this treatment. The assumption, therefore, would simply have to be made, as I see it, that in return for this privilege they would in future act responsibly. Whatever view may be taken on this point—and it is certainly a matter for debate—I am convinced that in the end we shall have to reach some such conclusion as this if our social cohesion as a nation is to be preserved.
Secondly, I believe it is high time that discussions were initiated between the Government, Opposition Parties and representatives of employers and trade unions designed to secure commitment throughout British industry to a specific proposition which should form the basis of an agreed code of practice that conditions should everywhere be established to enable negotiating procedures to be introduced in which both management and employees have sufficient confidence to see that they are observed. Under those procedures the aim should be to work towards a situation where, as now in Europe, in all disputes concerning the interpretation of the terms of agreements already entered into, and whether they affect individuals or groups, in the last resort they should be settled by arbitration which both management and employees would abide by.
Thirdly, and in my view most important, in order to meet the needs of all engaged in industry and for the benefit of the country at large, similar discussions should be aimed at establishing activities sponsored jointly by employers and trade unions and generously financed by the Government. Those activities should aim to meet the needs for society at large to gain, and particularly for management and employees to share, an understanding of some of the basic economic facts of life: how a business is actually run and the relationship between productivity, pay, prices, investment and, particularly, em-
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ployment, all directed towards cooperation in fulfilling the basic purpose of industry, namely, the production of goods and services for the benefit of the community as a whole.
I well know from painful experience that the joint participation of management and trade unions in such activities and in helping to establish and ensure the observance of the negotiating procedures I have been advocating, will demand both changes in management attitude and courageous trade union leadership, but in my view it is only if we can learn to work together in ways such as these that we shall be able to solve our basic economic and industrial problems.
4.54 p.m.
Viscount WATKINSON: My Lords, I propose to restrict my remarks to the gracious Speech to inflation, pay and employment. I would say to the noble Baroness who spoke for the Government that I thought (if I may dare to say it) she had some good clean fun in talking about what the Conservative Party did or did not do, but she was a bit short on saying what the Government could or would do, and perhaps I may say to her that in my view the economic situation has no Party politics.
What is the economic situation at the moment? Well, let us give the Government credit for this: just as we seemed to be making progress against inflation and unemployment the whole policy now seems likely to go on the rocks over the mess about pay policy; and yet, as the noble Baroness herself admitted, and as my noble friend Lord Thorneycroft set out at much greater length than I need do, our position in the industrial league is still disastrously low and the industrial outlook is menacing—more menacing than I have seen it in 50 years in business and politics. Who bears the blame? I think really it is time that somebody said that the Trades Union Congress bears most of the blame for this, and I thought my noble friend was just a little too kind to the trade unions on this point. Many trade unionists I claim as friends, although, sadly enough, most of my friends seem to be heading for retirement, like myself, and I agree with my noble friend that in my day trade union leaders could and did deliver. It seems sad that today trade

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union leaders—and they form the TUC—should reject the policies that have in fact made most of their members better off in real terms, in the last 12 months at least. I think that should be clearly said. I find it quite incredible and unbelievable, and it is sad for me to have to say, that new union leaders seem to have to learn again all the painful lessons of the past. Again we find being trotted out this astonishing misconception that if you limit prices then in some mysterious way you do not have to do anything about pay. I would only say, as I have said many times to people like Mr. Jack Jones and Mr. Hugh Scanlon, who sadly enough are no longer leading their particular unions, that if you want a recipe for greater unemployment and for long-term industrial disaster then confine industrialists to even lower profits than those to which they are confined at the moment. They are far too low for future investment, for better employment; cut them further and that is a real recipe for disaster. I thought that the TUC had at least learned that lesson, but once again they are trotting out the old silly saying that we should cut prices and not worry about wages.
However, not only the TUC are to blame. I think the Government—and I am sad about this—totally misjudged the situation and should have sought much wider debate and discussion, in whatever forum is appropriate—and I certainly would not rule out Parliament in this regard—before they embarked on the 5 per cent. guidelines or indeed any guidelines at all. If they had gone into that discussion I think they would have learned very plainly that a more flexible approach was the only one that was likely to make any sense at this particular time. They have now compounded their troubles by making a total and thorough mess of sanctions and they will find that with Fords and with one company after another. So I do not think the Government come out of this with any great credit at all.
I personally support the necessity to combat inflation and I certainly support the belief that if we do not have some reasonable limits on pay, if we have pay increases of 30 per cent. as we had earlier in the life of this Government, then any hopes of curing or even coping with inflation are totally illusory. I think the
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5 per cent. norm was suddenly conjured out of the air with very little discussion, so far as I know with either employers or trade unions. Wider discussion might have led to a more practical and more viable policy.
The trouble is that pay policies are inevitably very complex and I really wonder whether the TUC and the Government have done their long-term homework on this problem. As an example of how difficult it is, the CBI has been working on this problem for four years and even after four years in Britain means Business 1978, which is our current statement on industrial policy, which we shall be publicly debating at the Dome in Brighton next week, we are inevitably tentative about what had to be done. But at least we have tried to put something on paper; at least we have tried to bring some coherence to what is becoming a totally incoherent situation.
There is one proposal that I should like to mention here because it deeply concerns Parliament. I do not know whether our conference next week will overturn these proposals—conferences seem to have the habit of doing that these days—but none the less our present proposals are that there should be an economic forum linked closely to Parliament which each year, after public debate and discussion, would publish an independent forecast of what the nation might be able to afford in terms of pay and also indicate the monetary background against which the forecast must be placed. I must say that I hope Parliament will take some interest in this—and I say Parliament and not Government, or not Opposition if you like, because I think it is high time that Parliament, our own House and the other place, should be more deeply involved in a matter which concerns the wellbeing and livelihood of every one of our citizens. We cannot go on as we are now; and yet there is no easy way out of our difficulties, there are no single sentence solutions. Both Parties tried the legislative solution; both failed, and, in my view, would fail again. So that is not a runner.
Perhaps in an ideal world you might say "Well, free bargaining in a market economy, subject to market forces". But I have to say this, and I think most of us know it, and I think particularly many

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of my old trade union friends know it. Free collective bargaining as understood by the political activist offers only conflict and confrontation with an early recourse to the strike weapon. This cannot be in the national interest, nor in my view is it generally desired by people on the shop floor. So that, as understood by the Left Wing activist, is not a solution either. We need more flexible and freer bargaining; of course we do, and, as I have said before, if Government's position had been more flexible they would not be in the trouble they are in now. But such bargaining must be responsible and must take full account of the national interest.
Here one is forced back to the complex of policies with which, for good or for ill, perhaps the best brains in industry, in the CBI, have been struggling, as I have said, for four years. It is certainly a lesson to me, and I hope perhaps to trade union leaders and the Government, that it took 56 pages of our document The Future of Pay Determination—and I wonder how many trade union leaders or even members of the Government bothered to read it—to set out only some of the dimensions of the problem we have to solve.
So my Lords, there it is. I would make one last point, and an important one. Recent arguments about what kind of pay bargaining are, in my view, arguments about quite illusory choices. As my noble friend said—and how right he is—any British Government now or in the future will have to use every form of carrot and stick if it is ever to spur the lazy British people to a more sensible practice, to end the belief that somehow they won the last war and they do not ever have to try any more. If any Government are going to succeed in that they will have to use monetary policy, tax policy, production policy, and the lot; all will have to play their part if we are to win through and fight and beat inflation. Perhaps here we should discipline ourselves by realising that, even if we were to achieve the famous 5 per cent. on pay, it really would do nothing to slow down our slide to the bottom of the industrial league. If we want to rise again then quite different policies have to be considered. I make no apology for saying again to your Lordships what I ventured
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to say in the last debate we had on pay and productivity, and that is that unless we can get back to a high output/high earnings policy we cannot prosper and we cannot make progress upwards again.
It is worth reminding the trade union leaders, and perhaps worth reminding the organised employers, so to speak, that they gave an undertaking some three years ago at Chequers which we have all been singularly bad at implementing. It was agreed then—and I am only quoting from the public communiqué and not from any private source—that the performance of British industry since the war under successive Governments has been steadily deteriorating in comparison with the performance of our competitors. I do not think anybody argued about that. We then said—the trade unionists and businessmen who were present there said—that we would endeavour to transform a declining economy into a high earnings/high output economy based on full employment. Unless we do that, we really have no hope at all.
Although I personally hope that the present Government will not be seen to be too banged about by the trade unions—because I do not think that it is right that any Government should be dealt with in that way—none the less, whatever happens on this 5 per cent. argument, whatever happens in this so-called fourth round of pay restraint, unless we can get back to increased output, increased efficiency, a new feeling of drive and efficiency in industry, all we are going to do is perhaps to stop ourselves from going bankrupt and live on the bonus of North Sea oil as long as it is there. I wonder whether the present Government have the will any longer to take this line. Perhaps a new Government would have a better chance. I believe so anyway, and so perhaps the sooner we have that the better. But in the meantime we have to go on with life and work. I must say, in conclusion, that, whether it is now or whether it is under a new Conservative Government, which I think would bring a new impetus to industry, unless we can solve the problem of how to get better output, better earnings, at lower cost, we can go on arguing about pay until we are black in the face and it will not do us the slightest good at all.
5.7 p.m.
Lord KALDOR: My Lords, I agree with all previous speakers that, so far as the immediate situation is concerned, inflation is the most serious danger—the threat of inflation that would inevitably follow the collapse or the abandonment of the Government's incomes policy. I think I would add—I am sorry that Lord Thorneycroft is just leaving—a second danger which is almost equally serious, and that is if by some incredible folly we were to join the European monetary system. However, I do not think the second danger is as immediately pressing as the danger of inflation which would arise if incomes policy broke down. In the matter of incomes policy, the present Government have succeeded better than any previous Government, and the matter has been equally tried by Governments of both Parties. They have succeeded better in maintaining an incomes policy for three years in succession, and have thereby brought about a gradual and steady reduction in the rate of inflation, from the 25 per cent. to which it was boosted in 1974 by the automatic operation, the triggers, of the threshold agreements which the Labour Government inherited from the previous Government, to the present below 8 per cent. rate.
During all this period the basic weakness was that the incomes policies agreed on or pronounced on were temporary measures, temporary emergency measures and pronounced as such, and they have not been replaced by more permanent institutions and instruments. In every one of the three years a norm was announced for the coming year, with nothing said of what the long-term policy was to be. It was not put forward as a step towards a new system which would replace decentralised collective bargaining with a more reasonable method of reconciling conflicting claims. So far as one knows, there has been no serious discussion with either the employers or the unions on the question of replacing the present type of collective bargaining with something which would be more consonant with the national interest.
It is not so surprising, therefore, that many trade unionists now feel that three years have been long enough, that it is time to return to free bargaining again, and in this I am sorry to say they received
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unexpected support from the most unlikely quarters. They want to return to free bargaining without taking into account that on each occasion when it occurred in the past it was accompanied by a wage explosion. I have no doubt whatsoever—and I am glad that the noble Viscount, Lord Watkinson, is of the same view—that it would be so accompanied again. The only certain long-term achievement of the Government has been the improvement in public understanding of the connection between wage increases and price increases. The trade unions may not be ready to replace collective bargaining by a more planned or centralised system of incomes determination, but, there is no doubt that the country, the great majority of the voters and, indeed, the great majority of workers, are ready for it. How else could we interpret the strong support shown in the opinion polls for the Government's 5 per cent. limit?
The noble Lord, Lord Thorneycroft, asked whether the Government really intend that there should be a 5 per cent. limit for ever or some other percentage fixed limit. My answer to him is, No, but they do not intend a return to the free for all, either. That, unfortunately, the Conservatives have not made clear—in fact, they have made it very far from clear in this debate.
The trouble is that, while the country is largely united in the matter of inflation, both on means and on ends, the political Parties are disunited. As recent events have shown, there is no consensus within either of the two great Parties, let alone between them. Sound judgment on this issue is bedevilled by two misconceptions. On the one hand, there are those who believe that large wage increases can be had without price increases because they could or would be paid out of profits. There is no need in your Lordships' House to waste much time on refuting that particular heresy. On the other hand, there are those—and they form a far more vocal and articulate group—who believe that it is not the excessive increase in wages, but the excessive increase in the money supply which alone causes inflation. Those who hold that latter view—a view which is advocated by such traditional serious organs of the Press as The Times—who for the moment seem to have gained the upper hand among Members of the

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Party opposite, especially in the other place, suffer from a lack of understanding of the connection between money and prices in an advanced economy such as ours with such sophisticated financial institutions.
Whatever may have been the case in the 19th century, it is certainly not true today that the money supply, however narrowly or however broadly that concept is defined, is under the direct control of the monetary authorities or that such control, even if it could be achieved, would exert a powerful influence on the level of wages and therefore on the level of prices.
On the matter of controlling the money supply, no less an authority than the Governor of the Bank of England stated in his recent lecture that the control which the Bank can exercise is of an indirect and not a direct kind. While he believes in monetary targets as an expression of the aims and objectives of policy, the method by which the desired objectives are pursued consists of influencing the demand for money, not directly controlling the supply. He said, if I may repeat what may now be a familiar passage in his speech:
"Given the level of the national income and excluding temporary influences we"—
that is, the Bank of England—
"work on the theory that interest rates are the main determinants of the demand for money".
However, he went on to describe how difficult it is to predict the level and structure of interest rates at which the stock of money the public wants to hold will be brought into equality with the stock the authorities would like to see them hold.
The qualification "given the level of the national income" is important. What the Governor is saying here is that the amount of money people wish to hold will vary with the national income. He definitely does not say that the level of national income will vary with the money supply. There is nothing in his speech to support the extreme monetarist view according to which monetary policy can be used to impose a kind of cash limit on how much business firms can pay out in wages or in dividends or for the purchase of goods and services of various kinds which they use as inputs. The Government, true enough, can impose, and have imposed, cash limits on their
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own departments. But, the monetary authorities are quite incapable of imposing cash limits on private industry.
There is no way in which the Ford Motor Company could be told through the banking system that it is allowed to spend £5 million a week on paying out wages and no more. There is no way in which the Ford Motor Company could be prevented from obtaining the cash necessary to pay more, however far monetary stringency is carried. Those who take the view that it could be so restricted happily think that free collective bargaining can be safely restored and that nothing untoward will happen, provided that the right instructions are given to the Governor of the Bank of England. Indeed, that opinion was expressed only yesterday in speeches in the other place. Yet, that view is naive in the extreme. In my opinion it is asking too much to subject the country to another period of experiment just to prove to Members of the Party opposite that they have fallen victim yet again to a false ideology or to a phoney philosophy.
I realise that those who do not believe in the monetary explanation of inflation owe it to others to explain how it all happened, why inflation has accelerated so much in all the Western countries in the last decade; and also why the incidence of inflation has been so different between different countries. I should like to say a few words on this matter especially because—as I hope to show—it has some bearing on the question of the consequences of our joining the European Monetary System.
Some countries such as Germany and Switzerland managed to get rid of inflation almost completely in the last few years while others—and these include France, Italy or the United States—have not been able to do so; in fact, they continue to have inflation either at steady or at increasing rates. I have not included our own country only because, although our rate of inflation is very large and threatens to become very much larger, it has, during that period, reduced the rate of inflation to a greater extent than any of the other countries.
The answer to the first question—why inflation has become of an endemic nature in the capitalist world—has a great deal to

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do with the growing concentration of economic power and the rise of large multinational corporations, which are much less exposed to competition and therefore are under no compulsion to pass on the benefits of large cost savings in the form of lower prices to their customers. This in turn has serious consequences on the outcome of wage bargaining. Indeed, this matter was publicly aired in connection with the recent Ford dispute, when it was pointed out that, if a company makes £140 million additional profit in a year, it is not right that it should offer its workers only £10 million to £15 million of it in the form of increased wages—even if a greater increase would not be justified from a national point of view.
But the question is: how did this situation arise in the first place? I cannot develop this theme here; it is very complex. But, if I may, I should like to draw your Lordships' attention to an extremely thoughtful and scholarly paper on the subject by an American economist, Professor Scitovsky, which has just been published in Economica. So much for the causes of a general acceleration of inflation.
On the second question I think that the explanation is simpler; the pressure for wage increases varies very much with the growth in real incomes per head. The pressure becomes much weaker when real incomes are rising faster, and becomes stronger when real incomes are stagnant and falling. The rise in real incomes for industrial workers depends not only on the growth of production and productivity but also on changes in the terms of trade; that is, in industrial prices relative to food prices. For example, in this country in the latter part of the 1950s, around 1959—just when the noble Lord, Lord Thorneycroft, was Chancellor—inflation was virtually eliminated, despite the fact that there was a very high demand for labour and that registered vacancies exceeded the number of unemployed. There was very low unemployment in that period. I do not think that that result was due to the excellence of the noble Lord's particular policies. It was due to the very large improvement in the terms of trade in the second half of the 1950s which reduced the cost of living. With this element of fall in the cost of living, particularly in
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food prices, the pressure for wage increases naturally abated very considerably.
Turning to more recent times, those countries which had large surpluses in their foreign trade and which had strong balances of payments—such as Germany, Switzerland and Japan—were able to derive a large benefit through improvement in their terms of trade, which was brought about by the repeated up-valuation of their currencies, just as countries with repeated devaluations, had to put up with a deterioration in the terms of trade, which gave a boost to inflation.
But real income per worker depends not simply on the terms of trade but on productivity, which in turn depends very much on total production and total employment. All these things move together. It is for that reason that I regard anything which threatens to lower total production and, therefore, to lower consumption in this country as so dangerous. For example, if in the present situation we entered the European Monetary System and did so for reasons of prestige—on which the noble Lord, Lord Thorneycroft, put so much emphasis—or for a mistaken belief that this is the way to achieve greater monetary stability, by the very nature of that system we may be compelled to follow far more restrictive economic policies. We may be compelled to do so in order to maintain the parity of the exchange rates within the grid. Although these policies may cause rapidly growing unemployment, they will at the same time necessarily reduce real disposable income to the wage earner. For that reason they will make inflationary pressures not less but more severe, thereby necessitating still further restrictions.
I do not agree—and I think that I must say so quite openly—with the Prime Minister and the Chancellor when they announced that, if the 5 per cent. limit is abandoned, they will resort to far more restrictive fiscal measures in order to counter-balance the inflationary trend. Those restrictive measures will not counter-balance anything. they will cause a further compression of real incomes which will make the pressure for wage increases greater, and not less. No less an authority than the famous Professor Milton Friedman described in his Nobel lecture the relationship between unemployment and inflation as one of

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positive correlation, not a negative one; that is to say, the higher the unemployment, the greater the rate of inflation. I submit that the causation goes from unemployment to inflation and not from inflation to unemployment.
For these reasons, joining the EMS may thus cause us to get into a downward spiral while the more fortunate members of the system benefit from an upward spiral which has been partly activated by our downward spiral. The upward spiral will be the mirror image of the downward spiral. I submit that I cannot see anything worse from the point of view of the long-term future of this country than such an eventuality if it really happened.
5.28 p.m.
Lord ROBERTHALL: My Lords, I hope that it is not too late to begin by joining in yesterday's congratulations to the mover and seconder of the gracious Speech. I thought that the speeches were moderate and I enjoyed them very much. The Speech itself held no surprises. I take it that the objective of the Government is to keep the temperature calm and steady. It seemed to me that the Speech was designed to do precisely that. I do not propose to touch on it generally. I have been asked to say a few words about the European Monetary System on behalf of Sub-Committee A of the Scrutiny Committee. We discussed this the day before yesterday and we all agreed that the details of what is in the scheme, let alone the attitude of Her Majesty's Government towards it, are still much too uncertain to put us in a position to make any report to your Lordships. However, we are trying to keep the position under close scrutiny.
When the gracious Speech dealt with home affairs it began by saying, quite rightly, that the great problems before us were those of inflation and unemployment. I propose to confine myself to those two subjects, as a number of speakers have done already. On inflation, I shall not attempt to follow the noble Lord, Lord Kaldor, in those very intricate speculations in which he indulged. I think that anyone who has not read the Speech and perhaps looked up the references would be very rash to do that. But I agree with him—and I think with the noble Viscount, Lord Watkinson—that we are
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in for quite a marked expansion of wages, perhaps another wage explosion. From that point of view the situation looks very gloomy. The social contract is on the scrap heap. Perhaps one ought to say that half of the social contract is safely on the Statute Book, and the other half on the scrap heap.
Is the policy then in ruins? In the present situation I myself see some grounds for optimism. Your Lordships have often heard debates on the different remedies for inflation. Whether they be incomes policies or monetary policies, or a mixture of the two, it has become increasingly obvious for some time that the credibility of either of these remedies depends on finding a Government who are able and willing to carry out and enforce either of these policies. It has become increasingly clear that the trade unions are in a position, if they do not like a Government policy, to bring our economic life to a standstill and that in the end we are not likely to see a Government prepared to go on with that policy. It follows from this that until the Government have public opinion firmly behind them it does not matter what policy they put forward, it is either going to last a short time, as did the last experiment, or collapse as did Mr. Heath's.
That is where I see a certain amount of improvement. The noble Baroness, Lady Bacon, told us yesterday that in her part of Yorkshire people were now getting very concerned about inflation and thought that it was clear that it was high wage settlements that were the cause of it, and that these ought to be modified. Whatever we may think about the way that the Government introduced their present policy—and the noble Viscount, Lord Watkinson, was pretty severe with them—there is something new. The Prime Minister announced his policy in the teeth of the opinion of the trade unionists. They rejected it. But he stuck to his guns and he has done what ought to have been done long ago, and that is to say to the trade unions, "All right, you have got the power now. You say you are against inflation. If you don't want to do it my way, what is your way to do it?" That is a step in the right direction. I do not think they are going to come up with very much. In fact, they have suggested, as several speakers have said, that it ought to be done by controlling prices.

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Mr. Sam Brittan, a little while ago in the Financial Times, held up Mr. Moss Evans as the best monetarist we have. I am looking forward to Mr. Sam Brittan now acclaiming what an improvement on monetarism the policy of controlling prices will be, because then, instead of slowly squeezing the economy and getting bankruptcies and unemployment in that way, you just clamp down on prices and get all the bankruptcies and unemployment straight away. That is a real short circuit. It is only by attempting to bring home to the community as a whole the necessity for some kind of an agreed policy and the necessity for supporting the Government that we are likely to get anywhere.
In this connection I should like to say a good word, if it is not impertinent, for Mr. Heath. If he thinks it a matter of national importance and that a particular policy is the way to handle it, he is absolutely right to say so. We shall never solve this problem while it remains a Party matter. It is only with the whole of public opinion that we shall solve it. Any Government in power would be glad if they had not said too much in opposition (as we tend to do now) against the policies which we know perfectly well from our own experience, and that of other countries, they would have to follow when they came to power.
In the rest of my speech I should like to say a few words about unemployment. Here I am afraid I do not feel at all optimistic. This represents the great weakness in our economic system, and I do not see any signs of improvement. As some of your Lordships know, I was economic adviser to the Government in the early days of the full employment policy and had a good deal to do with the advice which they got. In those days we did not pay as much attention as I now think we should have done to what we meant by sustainable full employment.
The late Lord Beveridge (Sir William as he than was) wrote a book about full employment, with the help of Mr. Kaldor (as the noble Lord then was). He analysed the problem and laid down a sort of maximum of 3 per cent. made up of some people who were unable or unwilling to work at the going rate, some moving from one job to another, and some who were in a declining industry and
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took some time to be trained and brought into expanding industries. In the 1950s we did rather better than the 3 per cent. We had more like 2 per cent. unemployment. I gradually came to the conclusion that we overdid it; that there was rather overfull employment at 2 per cent. But I came to the conclusion that the best indicator was the movement of the index of industrial production, because as output expanded in an expansionary phase you reached a point where this index flattened out, and that obviously was because of bottlenecks in the system, and as people could not find the goods they wanted from home production they got them by imports or by holding back exports. I thought that the target then ought to have been nearer to 3 per cent. than to the 2 per cent. that we were working on.
It became evident in the ensuing years that the basic structure of the economy was altering so that the point at which we ran into trouble became a less favourable one. Mr. Jenkins, who was a successful Chancellor of the Exchequer, tried to flatten out the economy at between 600,000 and 700,000 unemployment—a much larger figure than we had had. Mr. Heath and Mr. Barber got it down below that, but at the cost of the most extreme inflationary pressure. But it was very disquieting at that time to notice how the index of industrial production was flattening out well before one would have expected. Now we have something like one and a quarter million unemployed, which would have been considered inconceivable in the days that I am talking about. I am sure that the noble Lord, Lord Thorneycroft, with whom I had the privilege of working—although I am afraid we did not always see eye to eye—would in those days have been aghast if we had got anywhere near, not one and a quarter million but 600,000 unemployed.
Why is it? It is not because politicians do not want to get rid of unemployment; they would love to get rid of it if they could. It would be nice to think it was because they had worse advisers and worse Ministers, but I do not think we can indulge in that, however gratifying it would be. It seems that we are now suffering from much more severe structural weaknesses than we used to have—of the kind Lord Beveridge analysed—and, to put in a nutshell, I think the

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economy has lost a great deal of its power of adaptability. In other words, we live in a changing world with forces coming upon us from inside and outside but we cannot make the necessary adjustments to them.
I spoke about the flattening out process, and we have this large amount of unemployment. The Government are worried—as the noble Baroness, Lady Birk, reminded us—and if we expand now our imports will go up and our exports will be held back, this at a time when there are complaints of shortages of skilled labour in all sorts of places. One need only walk round London and see all the advertisements for people. It does not make sense that we should have so many people out of work, yet nevertheless be unable to get them to make the sort of things which at present we insist on importing. That must be because we have lost so much of the power of adaptability.
I do not have time to elaborate on this subject, a subject which has been discussed many time in your Lordships' House; it was discussed in the last Session especially in the debates introduced by the noble Viscount, Lord Trenchard, on industrial relations, and those introduced by the noble Viscount, Lord Amory, on productivity. There are many reasons one could point to. For example, there is the influence of social security payments and what is called the poverty trap—the gap between what one earns and what one gets on social security—and while I do not say people do not want to work, it must be a factor in their minds when they are looking for jobs if they will not be very much better off by taking them. An enormous factor is undoubtedly the attitude of the trade union movement, which throws great obstacles in the way of any improvement in productivity or any redeployment of our resources. I believe the fact that so many of our resources are now in the non-manufacturing sector compared with the past is making the problem of adjustment more difficult. The task of managers has become excessively difficult, and managers here must spend much more of their time on things that in other countries are taken for granted.
Whatever the cause, it seems to me that the real explanation of why our unemployment problem is so intractable—I accept that the international situation has
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a little to do with it, but it is only a small part of the whole—is our lack of adaptability. I do not know what we are going to do about it. It is a complex problem and a slow one to resolve. I appreciate it is all very well to diagnose it—we can all give our own diagnoses—but how we solve the problem is a different matter. It will have to be solved, and here I agree with the noble Viscount, Lord Watkinson. To me, the attitude of the country is very like that expressed in the title to the film "Stop The World I Want To Get Off". We know the world will not stop, and anyway, how could we get off?
Some people advocate protectionism, but that would be like putting us into a part of the species that cannot cope with the environment any more. Unless the protectionists can explain how, under that system, we would recover our adaptability I cannot see any argument for what they advocate. Then there is the question of work sharing, and again if those who talk about work sharing were prepared to share the wages at the same time and say, "We want more leisure and less material goods", I could see it might be a logical solution, but that is not said; the claim for work sharing is associated with a claim for much higher wages. I feel, therefore, that we are in a bad way. Somehow we must recover our willingness to change and adapt. I can only say that I feel very gloomy and I fear that I am not likely to see it in my lifetime.
5.46 p.m.
Lord HAWKE: My Lords, I wish at the outset to inform my noble leader, Lord Thorneycroft, that I greatly enjoyed his speech. He is the only former Chancellor who ever did the slightest good for me and in consequence I have always had a soft spot in my heart for him, though I must tell him that the good he did was only a small one. It is obvious from the tone of this debate that the two great economic problems of the day are inflation and unemployment, and of course different people have different views about their cause. The general public has no illusion as to the cause of inflation; they believe it is due to higher wages, rises in pay. They see that every time the miners get more, the prices of coal and electricity go up; that every time the railmen get more, railway fares go up;

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that every time the busmen get more, bus trips cost more, and so on down the line. Wives in particular are the losers every time because by and large men do not pass on to their wives the full amount of their rises in pay sufficient to pay for the extra housekeeping. Indeed, most people in this country would like a pay freeze, provided of course it did not apply to their own pay.
When one comes to consider remedies, controversy rages in the way controversy raged over the centuries in the Christian Church, and just as furiously. Some say there should be a Government incomes policy and some even say it should be statutory. Others say the Government should not interfere. But we cannot get away from the fact that the Government are ultimately responsible for a very large proportion of the wages and salaries paid in this country. Some say free collective bargaining is sacred, while to other free collective bargaining means free collective blackmail and is a dirty word. Some want free collective responsible bargaining, but others ask who is to say what is responsible—who is to be the referee?—and point out that one cannot possibly have responsible bargaining unless somebody is there to referee; and I do not know who that is to be except the Government.
Then there is the fashionable school of monetarism which says that, through money control, all things are possible. The noble Lord, Lord Kaldor, from my old college, dealt with that subject thoroughly and I agreed with most of what he said. In any case, to the ordinary layman it is not quite as simple as it looks. If one has a very tight monetary policy, everybody starts collecting debts faster and faster and it is the little people who go to the wall—they go bankrupt—and the big ones survive, until of course they in turn go bankrupt either through lack of money or as the result of crippling strikes.
I have never found the theory of wage control through money control very plausible, remembering what happened in South America 30 years ago. There, the utilities were in the position that their fares and rates were very strictly limited by the Government. They could not borrow money because there were no lenders. But the unions never ceased to
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demand more and more wages, and the result was, first, that capital expenditure went, then renewal expenditure; finally, even maintenance expenditure was cut, with repercussions on safety. Eventually, as these things had to be kept going, the Government had to step in with the money.
In other words, if there is any money coming in, one cannot, by central monetary policy, stop militant unions laying their hands on it. The fact that there is so much controversy over causes and remedies shows how difficult the problem is, and I think that it would be churlish not to give the Government credit for trying hard to stand up to their principal paymasters, though I think they have been too inflexible. For instance, it would have been much wiser if, instead of having a complete 5 per cent., they had set an overall limit on the total pay of any one industry or factory, a proportion of which had to be devoted to restoring differentials.
I believe that the solution to the problem ends up in being concerned with the relations of the unions with the rest of the community. The other day when I was playing golf, one of the four was a member of the Amalgamated Engineering Union. While chatting about this and that, he said he thought the unions had done a great job for the working man but had become too big and powerful and were now trying to run the country, which was wrong. Incidentally, he approved of free collective bargaining, provided the unions could be prevented from being greedy. Those were his words, and I think that most people in the country would agree with them.
It seems to me wrong that the Labour Party—one of the two great Parties of the State—should have to rely so much on trade union money, and I should like to see that remedied in the same way as I should like to ensure that the Conservative Party did not have to rely to the extent it does on corporate subscriptions. There should be a system of State grants to any credible political Party, and that should be their sole means of support, at any rate so far as corporation subscriptions are concerned. It is a matter for argument whether individuals should be allowed to subscribe or belong. After that, when Parliament sees its authority being whittled away and usurped by unions, it then

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ought to be possible to have an all-Party approach to the problems of reform of the unions by providing for cooling-off periods, secret ballots, and all that kind of thing, which would give the individual trade unionist a better chance of standing up to militant minorities. At the same time, it should be possible to provide something which the Liberal Party appear to want to do; namely, that certain employments should be freed of strikes by means of arbitration and so on. That is very desirable.
The Government themselves have contributed considerably to inflation by allowing the pound to sink so low and by adopting a programme which involves them in borrowing immense sums of money, thus keeping the price of money very high. These two factors reacted on the cost of living and bred extra wage demands. After all, when one compares the price level on the Continent—in the EEC—with our own, there does not seem any justification for the fact that the pound should have to be so low in order to help subsidise our exports.
When we turn to the other problem—unemployment—we find that something very rum is happening. Everywhere we find that there are unacceptable numbers on the register, yet when one wants a man to do a job one cannot find him. In my part of the world the papers are full of openings for people. Admittedly most of them are skilled, but there are the comparatively less skilled jobs as well, and people do not seem to want to take up these jobs. A builder told me that if he goes to the labour exchange he will be sent the names of ten men. Five will turn up for interview, two will accept the job, one will turn up on the day, and he will pack it up after a week. A furniture removal man told me the other day that he was short of a driver. He went to the labour exchange and he was sent only one man. He invited the man to sit down to hear about the job, but the man said, "It's not worth my while sitting down unless you guarantee me £78 a week." That is the attitude of a great many people on the unemployment register. They are very choosy, and with a little bit of tax-free "moonlighting" they can sometimes do very nicely on unemployment pay. To sort this out without causing hardship to the genuine job-seekers
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will be difficult, but the crux of the matter is whether the taxpayer is justified in supporting those who could fill vacancies but do not want to do so because they do not like either the type of work or the hours of work. If we make up our minds on that point, we can clear many people off the register.
One knows that there are bureaucratic difficulties about employing older men. First, they do not always fit into the career structure of the firm which might like to employ them, and there is also the company pension scheme. I am not very learned in these matters, and it may be that there is a Government scheme to cover this point, but, if the fact of not fitting into the company pension scheme is preventing older people from being employed, the problem should be looked at; it will be much cheaper for the taxpayer to get those people into employment with some possible Government assistance rather than keep them virtually unemployed, particularly as they are very often the best workers in the community.
Finally—as I have mentioned previously—the menace to our industries from far Eastern competition grows greater. We cannot possibly compete in this country, or indeed in Europe, with the goods produced by the new light engineering industries of the Far East. These are goods which are built with cheap capital and cheap labour. The industries are manned by remarkably cheap labour, and if anyone does not work flat out the whole time he goes straight back to the rice-field and there are ten people willing to take his place. We cannot compete with that kind of thing in England or in Europe, and we shall never be able to compete with it. The EEC is working at the problem, but if we want to maintain a balanced industry in Britain, or in Europe, we shall have to forget the ideas about free trade which suited us very well when we were the cheapest producers in the world but which are irrelevant to our position today.
5.59 p.m.
Lord SHINWELL: My Lords, my noble friend Lady Birk occupied some time seeking to defend the general policy of the Government as outlined in the gracious Speech. I found it interesting but also, frankly, superfluous, because it

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appeared to me from the speech delivered by the noble Lord, Lord Thorneycroft, and the subsequent speeches on the general policy outlined in the gracious Speech that, so far as your Lordships' House is concerned, the Government's policy did not invite a serious criticism. Serious criticism might develop in another place from what is described as the Left Wing, but so far as your Lordships are concerned the policy outlined is non-controversial, I would almost dare to say innocuous. It certainly should not excite passions in the hearts of noble Lords opposite.
The debate began on a quite congenial note. The noble Lord, Lord Thorneycroft, appeared amiable, almost jovial. His speech this afternoon was in marked contrast to the speech he delivered the other day at the Conservative Party Conference, when he tore the Government's policy to pieces and, having done so, threw the pieces into the waste-paper basket. I wonder whether the by-election in Berwick and East Lothian has created a new climate. At any rate, no one could raise any objection to what the noble Lord said, except that towards the end of his speech he was inclined to disparage, not so much the activities of the existing Government but our efforts in the past 25, 30 or 40 years, at any rate since the end of the last war—a lack of efficiency, a reduction in productivity, a general malaise in industry and the like. However, he forgot to remind us that our country has gone through two great wars, and at the termination of both we were bankrupt. Of course, it may be argued that Germany was in a similar position, except that after the last war we continued to indulge in military expenditure. We maintained large forces. On the other hand, Germany forgot all about military adventures and military organisation, and focussed the attention of her people on the need for industrial development.
The first speech delivered in the course of this debate which was significant, specific and addressed to the relevant issues, not only before your Lordships' House but before the country, was delivered by the noble Viscount, Lord Watkinson. He directed attention to the need for an effective pay policy—and, indeed, this is what the debate is all about,
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if not in your Lordships' House then throughout the country. On the delivery of an effective pay policy depends our economic future. It is associated with the stabilisation of prices, with monetary policy, with productivity, with employment or unemployment and the like—I could go through the whole gamut in order to make my point as clear as possible. It is pay policy that we have to consider. I find myself, perhaps for the first time, in almost total agreement with many of the observations we heard from Lord Watkinson, and for a very good reason.
As Members of your Lordships' House are aware, I seldom use any notes; nor do I intend to use any on this occasion, but I happen to have in my possession—this is somewhat unusual—a Cabinet paper marked "Secret". But 30 years have expired, and therefore I cannot be accused of any violation of Section 2 or any other section of the Official Secrets Act. This is a Cabinet paper dealing with—what do you think? It deals with a national wage policy. And who was responsible for it? I say with my characteristic modesty—myself. It was produced in 1946 by the then Minister of Fuel and Power. What does it do? It coincides almost completely with every item we heard from the lips of the noble Viscount, Lord Watkinson, and to some extent, although somewhat with faint heartedness, from that eminent economist, my noble friend Lord Kaldor. It asks for a national wages authority, composed of the most eminent people in the country from industry, from the trade unions, from the universities, from the City of London and from elsewhere, with independent minds, presumably, ready to analyse objectively the issues involved. But it did more than that: it demonstrated beyond any possibility of doubt that the principle of collective bargaining was outmoded.
Now I come to the vital issue. Why this euphoria about collective bargaining? Why this free-for-all? Why this liberation of the enthusiasms and the passions of the proletariat? And why did the Government decide to put a stop to it; to cry, "Halt! We have had enough", and direct the attention of the general public, not to the personal and private interests either of employers, on the one hand, or the workers, on the other, but to the interests of the country in

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general—not forgetting, incidentally, the consuming public; a very important category indeed. Why did they do that? It was because it was obvious that collective bargaining was simply a shambles, a jungle, a mish-mash; something that was bound to lead to misunderstandings and complexities, complications and irrelevancies. The Government therefore decided, for the first time—I repeat with emphasis, for the first time—on effective and determined leadership by invoking a norm and declaring that those who went beyond it would suffer, on the workers' side, by increased prices which would erode the advantages derived from increased wages; and the employers would suffer because of increased prices of materials, equipment and ancillaries and would make fewer profits than before.
Here I digress for a moment. In the present dispute in which the Ford Company are vitally concerned, we have been told by the trade union leaders, without being inspired by the shop floor, that one of the reasons for making what appears to be excessive demands for increased wages and the like is attributable to the profitability of the company. So there we have it. If high profits are earned by a company, say the trade union leaders—or some of them at any rate—then the workers should share. But let us look at the other side of the coin. Do we therefore understand that in the event of low profitability the workers must accept a reduction in wages and longer hours of labour? Is that the position? We can have either one or the other. Profitability in any particular firm may be due to a variety of reasons. It may have nothing to do with productivity on a high level or remarkable efficiency; it may be due to skill and understanding of financial finesse. A whole variety of ingredients might be embodied. But I merely digress there.
I come to the point. I support the Government's 5 per cent. policy because of what has been described as a possible wages explosion. We see the beginnings of it at Ford and we have it at Chrysler and what is obvious, shop assistants, nurses (and rightly so) and consultants (and rightly so) and public employees, gas men and the like whose services are of the utmost importance will also demand higher wages—and why not? Why should the increased wages and better conditions
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go to those who are strengthened by the fact that they are in a stronger position as regards industry and output than to some others who are weaker, as, for example, the miners? Why should the miners be demanding £135 a week at the coal face? Of course, they deserve it. I have seen them working there. It is Bedlam, pandemonium; and few men can sustain it for long. Yes, pay them! But if they are to have higher wages, what is the result? The men on the surface will want higher wages, the tradesmen below, the electricians, carpenters, transport workers and the like. They will want higher wages—and why not? And we will have the wages explosion that the country is anxious to avoid. And if we have it, is it necessary to read all the economics treatises and the books suggested by eminent economists, for example, like the noble Lord, Lord Kaldor, this afternoon: that somebody in America has written another book on economics. It is not Mr. Friedman, I understand—and that will satisfy the noble Lord, Lord Balogh.
Incidentally, if I may indulge in another digression, why are we in this trouble in view of all that has been said and done by eminent economists for the last 30 or 40 years? They knew all about it; they still know all about it. We had an example this afternoon of somebody who knows all about it. What does it amount to in the long run? Could we not have in exchange a little common sense about this business? Would that not help? I mean by common sense that to understand this is as clear as the noonday sun: that if we are to allow wages to rise unnecessarily, against the wishes of the employers, against the interests of the employers and, particularly, against the interests of the consuming public, then, if that happens, our economic future is in jeopardy. That is just common sense. It requires no economic training or analysis to understand that.
Now here is the document, a national wage authority dealing with the need for more efficiency and higher productivity. The direction of labour: to put it here or there according to the needs of the country; not to have too many engaged in irrelevant occupations but to have them in occupations which contribute to industrial development. That is the idea

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submitted to the Cabinet in 1946; and rejected. Why? There are only two survivors of the original Attlee Cabinet—I say the "original" Cabinet; for some came in later, in 1948, 1949 and 1950. The two survivors are George Isaacs, whom I saw recently, (unfortunately, in a wheelchair) and myself, not yet in a wheelchair. I am trying to avoid it as best I can.
A noble Lord: You are doing very well.
Lord SHINWELL: My Lords, they are the two original survivors of this Cabinet. But who were the people who opposed this? It is significant, very significant. Ernie Bevin, the great trade union leader, and George Isaacs, the leader of NATSOPA, two trade union leaders, opposed it. Why? Because, they said, it would not be in the interests of the trade unions. Exactly. That is why. The Government's norm, the 5 per cent., in their opinion is not in the interests of trade union members. Here I want to indulge in what will be my final word on this subject, although I have got so much to say. It will be this: I think it was the noble Lord, Lord Roberthall—although it may have been another noble Lord—who criticised the Government's handling of the problem. So have I. But not in public; I thought it inadvisable to do it in public. I do not think that it was wise on the part of the Government to make the announcement without further discussion. If it had been left to me, I should have met the TUC and gone on meeting them, and not only meeting them but meeting the individual trade union leaders and then doing all the propaganda work available and the analyses in order to discover what the shop floor was thinking about. Then I would have made the announcement—and then, with some flexibility, with a little understanding what the public needs were. That is what I should have done; that is what the Government should have done. The Government rushed into it on impulse—perhaps rightly so in the circumstances—and now we see the result.
We have had collective bargaining since the beginning of this century. I have taken part in it; I was an official of a trade union, the Seamen's Union. I have had to negotiate time and time again. What has been the result? First, we had
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the need for obtaining recognition of trade unions and that was accomplished through legislation. Let us not forget that. Some trade union leaders said: "We want nothing to do with politics. Governments, keep out of it"—then they came along, day by day, asking Government to do this, that and The other. However, we obtained recognition and when we did that, largely as a result of legislation and the decision of some courts of law—although many times the decision was against us—then collective bargaining ensued. There is your precious collective bargaining, my Lords. Look at the result. Look at the economic malaise that we have; look at the disputes among the trades unions themselves. See the attitudes of the people on the shop floor. Listen to the wives of some of the men and consider the dire effect on the consuming public. That is collective bargaining.
Let us try to get an effective wage policy—if necessary centrally controlled—not necessarily without some flexibility, with some understanding of the need for differentials and the like. Of course, that is a possibility. I think it was the noble Viscount, Lord Watkinson, who told us that the CBI are having a conference shortly where they are discussing various items associated with pay, industry and the like. Indeed, I think I had an invitation to attend, if I wished to do so. One has to pay one's own expenses—that was a change!—so I thought I had better not do so. However, in any event if they are going to have discussions I advise them to try and get hold of this Cabinet paper. All they have to do is go to the Cabinet Records Office and ask for it. There is the whole of your policy, Lord Watkinson; put that into operation. Insist on that; ask for effective cooperation among the people. Never mind about politics, shibboleths, and all the rest of it. By effective co-operation, analysis and understanding develop a policy which if it is accepted, even in part, will help us on the way not to ruin, chaos and misunderstanding, but to success.
6.23 p.m.
Lord MACKIE of BENSHIE: My Lords, for obvious reasons it is always very painful to follow the noble Lord, Lord Shinwell. With all the weight of my

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50-odd years upon me, I will endeavour to exhibit some of his common sense and vigour. I should like to refer to some matters in the gracious Speech about which I think I know a little. I do not want to talk about the European Monetary System and I do not want to talk like an economist. Like everyone else, I have been much afflicted by them. The only good thing is—and I know that a noble Baroness will be listening to me—that some are much better than others and easier to listen to.
However, they all seem to think that the monetary system, the cleverness of the Government, has everything to do with the prosperity of the people. I do not think that anyone can really consider that the system of government, of trade unions and of monetary organisation in Germany is at the basis of their success. The basis of their success since the war lies in the application of the people at the work-bench, at the hard work of the salesmen and at the thought of long hours of work put in by executives. We have to think of Government policy releasing the energies of the people, if not entirely ordering them in the way the Cabinet Paper of 30 years ago seemed to suggest.
We have in the gracious Speech several worthy measures in which I am interested. One is the proposal that they reinforce the monetary support for the SDA in Scotland, the body for Wales and the NEB. Here I must declare an interest: I am the chairman of a small company manufacturing glass. It employs only 170 people but is growing. It grows at the rate of 20 per cent. a year. We make quite a lot of profit and we are proud of it. We have been helped in the Highlands by Government agencies. It is a very good partnership for the Government to provide capital and, in the case of the SDA, a factory for a small, growing business to rent without interfering with management and allowing a partnership between public and private enterprise which we have experienced. This is a decent and good proposal. Many of the other measures which are proposed are worthy if not entirely relevant.
When we come to small businesses the Government are avoiding grasping the nettle. If one considers the motor industry, it is interesting that BMC swallowed up all the profitable specialist motor businesses. They thought that with the
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advantage of scale—as they called it—they would make them more profitable. The reason for selling businesses, small or large, built up by an able man during his lifetime is normally because of the high rate of personal taxation. He works all his life building up the business but he cannot enjoy the results of it because until he sells for a capital profit he is not able to enjoy the money that he has ostensibly made. Until we reduce the rate of personal taxation to 50 per cent.—which is still enormous—then big business is going to swallow up enterprising and successful small businesses time and again, not because they can make them more efficient but simply because the tax system is unfair to the man who has built up that business.
It is also a fact that the energies of our young executives on whom we depend greatly are directed in the wrong way and are badly influenced by high taxation. It often pays them much better to consider how big their pension is going to be than it does to consider how much money they can earn by working harder. This is a poor way to energise a country.
I was talking to a friend of mine today who is in the export business. His son was coming home from school for half term when my friend received a sudden call to go to the Middle East. He said: "I swithered whether it was worth it". But he is going to do his duty and go to the Middle East. A wife, faced with this situation, could say to her husband: "You will not earn any more, they will take it away in tax", and then he is going to fail in his duty. The Government should grasp this nettle. The noble Baroness, talking about it, said: "As soon as possible we will reduce taxation". The Liberal Party have said quite often that we know that to talk of a reduction in taxation is talking nonsense in general terms in this day and age. What we want is a transference of taxation from earning to spending so that we can start the process of the release of energy of the younger and indeed the older executives and of individuals, who form the basis of success of companies in this country.
I should like to talk now about agriculture, which was mentioned in terms of the reform or alteration of the Common Agricultural Policy. Agriculture in this country is one of the most successful

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industries. If, in terms of productivity, every industry had performed as well as agriculture has, we would not be in the mess we are in today. A lot of allusions are made about agriculture and the CAP. One of them is that we have only to reintroduce the British system of deficiency payments into the CAP and all will be well, the public will get the benefit of over-production, and we shall be in a happy state. That is an illusion.
The CAP works quite well. We must always have surpluses if we are to have a sufficiency of production. The question is: how do you control the surpluses? There are eight other countries in the EEC. Germany has had an entirely different policy from Britain's. When Germany went into the EEC at the beginning and when the Common Agricultural Policy was first formulated, she actually reduced prices to her farmers. Her support was greater than the average support in the EEC. France always had a policy of support for a very large agricultural population, and that was for a great number of reasons, including that of stability.
If we think that we can reform the thinking of the other eight peoples by bullying them, we should realise that that is not a sensible way to negotiate. What we must do is to make the CAP sensible. It is obviously wrong that we should be producing an enormous surplus of milk, turning it into powder and putting it into store, when the surplus is far beyond what is necessary for a carry-over into the next year. There is a great difference between surplus and sensible carry-over. What we have to do is to produce the milk in the most sensible place, and the most sensible place is probably in the Low Countries and also in Great Britain and in Ireland. Those are places where the climate is best suited for milk production. But before we do that we must get rid of the gross surplus which we have in the Continent.
I think that slowly the Germans will come round to the idea that it is only right and proper to reduce prices, but it is going to take time. At the present time the British farmer is receiving rather over 40 per cent. less for his milk. He is more efficient and he should be producing it. However, it will take time to regulate the Policy and to get reductions accepted by
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the Germans and the French, who are willing to pay high prices for food. They are able to do so because of their high industrial production. So I do hope that this great industry of agriculture will be developed, but it must be developed sensibly and we must have the Commission's plan of ironing out differences in the levels of prices. That means adjusting the green pound over a period of time, which I would suggest should be about four years instead of the five or seven years the Commission suggested.
These policies do entail the Government's grasping the nettle. They have got to decide that when prices come down on the Continent there has to be a levelling up here if we are to get expansion. It is a most successful industry and one which really deserves the support and encouragement of the country. They do everything that many other industries do not: they work long hours. The wages are low but they do not grumble—perhaps the wages are not quite as low as they appear on paper, but nevertheless this is an industry which is successful and which should be encouraged.
I should like to say one last thing. It is a purely political point, but one which I think ought to be made. The Government have now produced worthy intentions in the Queen's Speech, but I think that what Mr. David Steel said is entirely relevant and true: they may be worthy but they do not fit the needs of the situation. The Government are facing enormous troubles, which they recognise, and they are facing a trade union movement which has had all the advantages of co-operating with the Labour Government. Yet the majority of the big unions are backing wage rises which, if they come into effect, will undoubtedly lead to runaway inflation.
The Government have got to oppose this, and I really think that while the Lib-Lab pact was for the benefit of the nation and seen as such by the Liberal Party and, to give them their due, also by the Government, the Government's efforts now and the arrangements they are making with the Nationalists and others to stay in power are not of the same worthy order. I think they are for the good of the Labour Party and that we are now tailing along and the Government have not got the authority they

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need to deal with the present situation. I myself do not desire the outcome so ardently hoped for by the noble Lord, Lord Thorneycroft, and others, but I do think that we should have had an Election so that the Government, whatever their colour, together with Parliament, having gone to the nation could tackle the problems with the authority of a fresh mandate.
6.37 p.m.
The EARL of DUDLEY: My Lords, in a year that is likely to be remembered for an exceptional level of pontification, I think this is an occasion on which to be as brief as possible on the point about pay which I should like to make to your Lordships. I was interested to hear the distinguished speakers who preceded me come out so firmly with the view that earnings this year had shown some improvement. Indeed, the noble Viscount, Lord Watkinson, was at pains to say that the improvement was of such a level that he felt the demands of the trade union leaders were unreasonable and even, to him, incomprehensible. He must have later figures than are available in the publication which may be obtained from the Printed Paper Office, for the fact is that those figures reveal that all the mammoth increases in earnings over the past seven or eight years since 1970 have been all but totally eroded by inflation. Those increases amounted to something like three and a half times the 1970 level, and of that increase something like 2 per cent. remained in 1978 as real, disposable earnings. Another figure which can be found in the same publication—and it may surprise your Lordships, although the noble Lord, Lord Mackie, indicated one of the reasons why that figure may be there—is that output per head since 1970 (that is during the same period) increased by nearly 20 per cent.
Yesterday in another place the Prime Minister said that there were three legs of a three-legged stool in his counter-inflationary policy; one being incomes policy, the second monetary policy, and the third tax policy. I would remind your Lordships that the normal use for that utensil is to milk a cow, and in my opinion that is precisely what the Government are trying to get the British workforce to accept. You cannot expect the annual yield to increase every year unless you are
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prepared to feed the animal the right foodstuffs, and I submit that the increases in output which have been effected in the last seven or eight years have remained largely unrewarded. Against this background, I really must chide the noble Baroness for endeavouring to distract noble Lords, with a few of her own cracks about falling plaster and wallpaper, from the ruins of the Social Contract and the defects in design of her own incomes policy.
Against this background, I agree with the Leader of the Opposition that a 5 per cent. norm simply will not hold, and I believe that many employers will take the view that in this year of increased prosperity 5 per cent. is simply not good enough, and will pay more and damn the consequences. So my purpose in breaking silence tonight and in following my predecessors, with their great records of experience—I am very humble at the thought of doing so—is to appeal for that unrewarded 20 per cent. to be spread over the next two or three years and added to the accepted 5 per cent. This would mean that the norm would rise to somewhere between 12 and 15 per cent. and I believe that we can, in this more favourable climate, afford 12 per cent. or thereabouts.
I do not know whether the Prime Minister's friendship with the President, and his visit to the United States, has anything to do with his decision to wear the uniform of Stonewall Jackson. But I fear that it will do him no good and that what he will experience is a series of humiliating retreats from lost emplacements. It will be a loss to himself if, like Stonewall Jackson, he falls to the bullets of his own side, and also a loss to industry if it is permitted to remain in a long period of uncertainty while this battle of seven months, or whatever it may be, rages, and if it is left in suspense as to whether in the end sanctions will or will not be lifted and the norm raised. This would be the worst thing that could happen.
Uncertainty is very bad for business and I urge the Government—they must feel in their hearts that they are not on a winner, to put it in the most helpful terms—to reconsider their policies, to endeavour to turn these talks which are going on into a successful Camp David, and to find an acceptable solution which will enable the trade union leaders to feel that they can

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demobilise and redefine their understanding of free collective bargaining. For I know that all of us are agreed that no Government can successfully manage the public sector, for which they are responsible, without some form of policy which will inhibit the various factors of the gross domestic product, which could have an adverse effect upon the economy and increase the pace of inflation. They must manage the public sector responsibly and effectively and, because they must do that, any policy which they have to deploy for countering inflation must inevitably spread over into the private sector, as no discrimination that was inequitable in policies between the public and the private sectors could possibly be acceptable to the people of this country. With those words, I once again urge that this matter be not too long delayed and that we be given the answer for which so many of us are looking.
6.47 p.m.
Lord ARDWICK: My Lords, the essence of the Government's economic policy was laid down by the Prime Minister in another place yesterday in unambiguous and simple words. He said that overcoming inflation was the core of the Government's policy for sustaining economic growth, reducing unemployment and improving living standards. It is very seldom that a Government's policy is put so plainly and so starkly as that. The Government have abandoned the old road to expansion that led via inflation to devaluation and depreciation. They have also abandoned the idea that floating a currency is a panacea that enables nations to expand without fear for their balance of payments. In fact, disillusionment has grown as to the amount of progress that might be achieved independently by national Governments. As Mr. Healey has put it more than once,
"If we are to solve this country's problems, we need to take action on a world scale because no single country can lead the world out of its difficulties. Indeed, no single country can by itself solve even its own problems".
That is what the Bonn Conference—a conference that had a modest success—was about.
The Government believe—and Mr. Callaghan said it again yesterday—that
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there ought to be no doubt in anyone's mind that monetary stability is better for world trade and the developing countries than the turbulence which the world has recently experienced. The Prime Minister was, of course, speaking in the context of the dollar and on a day when a major world effort was made to restore stability to the dollar. It is too soon to say whether the measures will achieve some lasting success, but the news today gives ground for hope and that would be a great turn for the better in this world.
The Prime Minister then went on to speak of the proposed European Monetary System and of his wish to see a durable scheme that would not force some countries unecessarily into deflationary policies, or others into high levels of inflation. He added that much work had yet to be done on this scheme. So it has, my Lords. The target was set for 31st October. Two days ago the Guidelines for the EMS were to have been completed by the competent Community bodies. I am the rapporteur in the European Parliament on the revival of the idea of the European Monetary Union, and I have my ear fairly near to the Brussels ground. I think that the competent bodies are still a good way from the completion of their task, and I doubt whether they are yet seriously into the concurrent economic studies which they are to make on the action needed to strengthen the economies of the less prosperous members in the context of such a scheme.
To those of us who are striving to achieve a more closely integrated Community, the news from Bremen four or five months ago was good news, to be warmly welcomed, but the communiqué that the European Council issued was disappointingly perfunctory. The phrases about "concurrent economic studies" looked as though they were an afterthought. Indeed, many financial pundits immediately claimed that this was just another attempt to get the dropouts—France, Britain and Italy—back into the Snake without any real provision to ensure that the creature was going to be less fragile than before. Bremen was generally regarded as something that had sprang out of the ground, something that had suddenly been conjured up by Messrs. Schmidt and Giscard—Herr Schmidt because he wanted to keep his relative

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competitiveness by taking all the other European currencies up with the mark, and President Giscard because he wanted an external discipline for M. Barre's rigorous economic policy.
There is a certain amount of truth in these suppositions. Both Governments would certainly be aided in this way. The scheme would probably be to their immediate advantage but, as the noble Lord, Lord Thorneycroft, pointed out, there is something more to it than that. It is something with much wider implications. Let us look at President Giscard's views as Finance Minister and as President. He has for many years been obsessively in favour of a fixed currency system. We must remember that France went back for a second time into the Snake and spent—what was it, a thousand million dollars?—trying to stay in, but in vain. As for Germany, nothing is more vital to her than the political cohesiveness of Europe. Here she is—a divided country with the Communist world beginning on her land frontiers.
Mr. Roy Jenkins said in his famous Florence lecture that the Community has three functions. It stands for a certain type of democractic society, as the applications for membership from the Mediterranean countries bear witness. It stands, too, for a political entity able to deal with a wide range of external relations. Its third function is to provide a central economic mechanism and it is in this third function that its weaknesses are conspicuous. If they continue, as Mr. Jenkins and, I think, many other people fear, the external cohesion of the Community—so vital to Germany—may be jeopardised. Indeed, the democratic nature of the Community could be threatened if in some countries inflation got out of hand and the unemployment rate soared upwards, too. When the noble Lord, Lord Kaldor, was speaking I was just thinking how anxious Germany must be to avoid his fears of deflation among the poorer countries in the System. The last thing that Germany wants is a Europe which is in economic difficulty and, therefore, in policital difficulty. So, if the weaknesses of the scheme which he mentioned are avoidable, I am quite sure that Germany will be ready to take steps to avoid them.
It was these considerations of the economic weakness of Europe that led
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Mr. Jenkins to revive the idea of the goal of economic and monetary union, in the belief this time that it would facilitate economic solutions and would facilitate economic stability. As he made clear, it is, of course, a distant goal. A union of this kind, with a single currency, would require the powers now exercised by nation States to be handed over to a central monetary authority and to a central political authority and would require a budget five to seven times that of the present one.
We are a long way off that kind of union. But at the same time as Mr. Jenkins's vision of the future the Commission proposed a practical programme. The general feeling in Europe was that you could never advance by one great leap to something like economic and monetary union—that you must do it in stages. What the Commission began to do was to prepare a pre-union stage, in the hope that when that was obtained it would be possible to look at the possibilities of full economic and monetary union. So it developed a five-year programme which did not envisage a single currency or immutably fixed parities. However, it did have a fixed but flexible and adjustable system in mind—a system from which there would be nine exit doors, not a system like the EMU from which there would be no exits at all. The Commission's thinking had been stimulated early last year by the European Council on the initiative of President Giscard and Herr Schmidt. So it was assumed, when Bremen happened, that Mr. Jenkins and Mr. Ortoli had ploughed the field and scattered the good seed on the land, and that now the Council was trying at Bremen to reap the harvest. But I think it was trying to reap it while the corn was still green.
I am wondering whether there is in the Bremen system any organic link with the good, constructive work that the Commission has done to try to get an advance at the same time on both the economic front and the monetary front. We shall soon know. In the meanwhile, I hope to introduce before the European Parliament next week but one, a report and a Resolution on this subject which has already been approved by the all-Party, all-nation Economic and Monetary Committee of the Parliament. The Resolution requires a system which contains the

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ingredients demanded by Mr. Callaghan and Mr. Healey—that is, that the zone of monetary stability should facilitate higher growth rates, with beneficial effects upon employment. It also speaks of the need both for the improvement of credit mechanisms and facilities and for a transfer of resources within the Community as a means of promoting self-help in the member nations.
It is far too soon to reach a definitive view about the proposed Bremen system. One can only discuss it in principle, since it is far from complete. I was extremely interested by what the noble Lord, Lord Thorneycroft, said earlier. I thought that he trod a little delicately around the economic and monetary system, but he suggested, if I am interpreting him rightly, that if the Government were to approve a system the Opposition would not harry them too much on questions of detail. If that is so, then I take it that the noble Lord shares with me the belief that a European system, with certain safeguards written into it, a system of fixed but adjustable parities, is a desirable alternative to floating and that that is Conservative Party policy. If I am wrong, I will give way and the noble Lord, Lord Thorneycroft, can correct me. I understand from him that that is the situation and I am very glad to learn it.
The proposal has already incurred remarkable opposition in this country. Who would have dreamed that the day would come when the noble Lord, Lord Armstrong, would be marching shoulder to shoulder with my right honourable friend Mr. Benn! There has been nothing more incongruous since Mr. Enoch Powell and Mr. Michael Foot joined in frustrating the reform of this Chamber. Who would have thought that Mrs. Castle and Mr. Biffen would be marching hand in hand? Who would have expected to see the new monetarists side by side with their rivals, the ancient order of unreconstructed Keynesians?
There are divisions, it seems, within every treasury and every central bank, as there are in every serious newspaper. The Times is hostile to the idea. The Financial Times are for it editorially, but if one looks at their columnists they are not always in agreement with what is being said in the editorial. There are
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important questions which nobody can answer with certitude—whether any adjustable peg system is feasible in the world today, or whether such a system could possibly be feasible with anything but the narrowest divergence among the inflation rates of the participating nations.
I ought to be able to cite the names of some impressive supporters of the EMS—supporters in principle, I mean, but at this moment, apart from Sir Jeremy Morse, I cannot think of many eminent people. They are keeping their heads down, but I am glad to learn that Conservative policy is as I hoped it would be. What I fear is that in this country public opinion is being allowed to drift further and further away from the European idea because of the absence of leadership, not just from the Government but in all Parties. We have to face the terrible situation that we are "in a spot" because there are no votes to be gained but only votes to be lost by anybody who adopts a conspicuously pro-European policy, and it is a difficult situation for leaders to be in.
It appears to me that many people who were once sympathetic towards the Community now feel that there are no advantages in belonging to it but only disadvantages. A form of xenophobia—"Europhobia"—is now occurring. It is feared that a gang of foreigners are bent on seeking their own advantage at Britain's expense by depriving us of our natural rights, that is, when they are not engaged in malicious pranks, in the name of harmonisation, with our bread, our beer, our ice cream and even the vinegar in our fried fish shops. Most of these bizarre stories are inaccurate, based upon a misunderstanding, or are exaggerated. I do not for one moment think that the excellent Press corps in Brussels are to be blamed for this. They understand the situation, but when their stories reach this country they sometimes fall into the hands of people who try to develop them but who do not have that inner knowledge of the strange and difficult workings of the Community, and so we get these distorted stories.
I am concerned about the general state of public opinion because, whichever Government are in power, this kind of hostile public opinion could obstruct any important constructive act that a Government wanted to make for the benefit of

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national and Community interests. And I fear, above all, that the kind of things that are going to be said during the direct elections may reinforce the prejudices of this nation instead of enlightening it. If the elections are not to do that, it will depend upon the Parties having some constructive proposals for Europe—not merely criticism of the CAP but some constructive proposals to provide a high tone of leadership.
7.3 p.m.
Lord HANKEY: My Lords, I am amazed at the wealth of experience and knowledge which speakers in your Lordships' House bring to bear on these questions. Listening to my noble friend Lord Ardwick and to the speeches we have already heard I felt it was quite remarkable and I wonder whether, if and when this House is reformed, we shall succeed in getting equal expertise into our councils? My noble friend Lord Thorneycroft made a most impressive speech based on a wealth of experience, and I should like to recall that no British Minister who went to OEEC ever left such golden memories behind. For many years afterwards he was remembered, to my certain knowledge.
Like my noble friend Lord Roberthall I am deeply concerned about the economic performance of this country and about its future. Having been closely concerned for some years with economic policies at OEEC and OECD, I shall try to be constructive and to see whether it is possible to draw conclusions from our sad experiences. If I cause pain to both the main Parties, I hope I shall be forgiven because I am going to try to be constructive.
Turning to the 5 per cent. guideline I should like to say first, with all respect, how much I admire the firmness which the Prime Minister brought to this. We have sadly lacked firmness, and firmness is very much better than gimmicks. But really something more than a 5 per cent. guideline is needed and something has to be done about differentials. The effect of Phases 1, 2 and 3 must be corrected because the country is seething with discontent about this. One only has to mention the motor car industry, the police, the army, the prisons, the Post Office engineers, the Health Service supervisors, and so on. It is almost universal. In a
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typical organisation which I know very well the junior staff are 8 per cent. down on their real pay compared with 1st January 1975 and the middle and senior staff are anything from 15 to 21 per cent. down. That is an intolerable situation.
I see much force in what the TUC and also Mrs. Thatcher have said about the 5 per cent. guideline. It is much too rigid by itself and cannot succeed in its pure form, probably not even with sensible and desirable concessions for the essential rise in productivity. I think we have to be extremely pragmatic about this, and certainly about differentials, but I do not believe this means that we can do without any guideline at all, at any rate not for the present.
This brings me to price control. The Left Wing of the Labour Party and the TUC in my view are wrong in urging price control as a cure for inflation. OECD experience shows quite clearly that price control is effective only in a marginal situation, in a sort of grey area, where there is a little inflation but not too much. With real inflation here now running at 8 per cent.—and it is a devastating rate in the long run; let us not be under any illusion about that—I think price control could not have any useful effect. It would ruin business, raise unemployment and still further discourage investment. Anyway price control was tried and found ineffective some years ago, though the high inflation rate then did not give it a chance. Possibly it would be useful in a "grey area", but I see no sign of a grey area now.
I now come to monetary policies. I think one must agree with Mrs. Thatcher and Sir Keith Joseph that monetary policies are extremely important. Indeed, the Labour Party have recognised that by trying to control the extension of the money supply, M3, in which they really have had a considerable success. It is high time, of course, because any more of the rates of increase that we had in 1972, 1973, 1974, 1975 and 1976 would spell ruin for the country. As Lenin very perceptively said, a high rate of inflation is the quickest and easiest way to ruin a country.
I think we have also been wrong to encourage local and other authorities to borrow abroad in order to finance expendi-

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ture which they could not otherwise finance at home. That policy certainly involves more money chasing the same amount of goods, and it cannot fail to be inflationary unless it ensures a very large increase in production and productivity. Of course, I perfectly well know that when one borrows abroad one increases the foreign exchange reserves, but I do not think that is generally an adequate answer.
So I really do not think that monetary policy can do the whole job of controlling inflation. By itself it might have to be too drastic. It could easily involve penal interest rates and drastic credit controls and would certainly have to be backed by fairly drastic fiscal measures. The effect on business and employment could well be very bad, as Mr. Heath has pointed out, and I really think we have to avoid knocking out big business in order to persuade the workers to be sensible and responsible. Some local influential Left-Wing militants do not seem to me to be in any danger of becoming responsible or sensible at all. I think they really want to destroy businesses, at any rate in the private sector, and we really must not give them a chance to do that. I shall come back to that presently.
So, I do urge your Lordships to agree that our country is in a state where all possible means have to be used to control the recovery of our economy in a wise, firm and careful way. This means, in my view, that there must be a guideline of some sort on the increase of pay based on the increase of production, of productivity and of prices. Inflation of the money supply and the extension of credit absolutely must be controlled by monetary policy as well, and, in my view, we are going to need all the means available, at any rate for a period until recovery is well under way. This time, I do think that our politicians and statesmen absolutely must avoid expanding demand by inflationary measures such as large annual budgetary deficits or borrowing requirements, which far too many people now take for granted. I am really surprised at the way even a Labour Government seems to put the blame on the trade unions for rising prices when they themselves have been very much to blame for causing the same thing by an unreasonable
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expansion of public expenditure at the cost of huge budgetary deficits and even borrowing abroad.
Both Parties have tried to pull the economy forward by the inflationary expansion of demand in the past and both Parties have failed. I do think we must learn by sad experience. I recall that the Heath Government tried to pull the economy forward in 1972 and 1973. The inflationary results wrecked their own Industrial Relations Act by causing vast problems over wages. The Labour Party's inflation was made worse by the oil crisis but was even more disastrous. We absolutely must learn from these grievous errors and the devaluations they have caused.
My Lords, I believe in any case that it is now no good trying to expand demand and pull or push the economy forward, because the trade union membership has been allowed to put the brakes on. We are losing an enormous amount of production and of markets through strikes and unofficial stoppages. If you try to drive your car forward with the brakes hard on, it gets very hot and the engine wears out and will soon stop altogether. That is where the British economy is today, in my view. I think any other view of our minor successes is sheer complacency. It is no good encouraging the British economy forward because almost any collective bargain or almost any contract can be broken under our labour legislation. We cannot keep delivery dates, we cannot keep factories running, we cannot maintain productivity or make effective use of any integrated industry like motor cars or shipbuilding. The Ford Granada and the Ford Cortina are made on the Continent, in Germany and Belgium. The British Leyland Allegro is made in Belgium. Even Minis are imported from the Continent. Foreign cars have about half our market. It is a dreadful picture. The perpetual unofficial stoppages are even more disastrous in their effect than the official strikes recorded in our statistics.
This brings me to free collective bargaining. A collective bargain which is not respected and kept until it has expired is really a collective swindle, neither more nor less. Our experience proves that you cannot run a modern industry on such a basis. On the other hand, if you make a

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collective agreement for a year and there is even 10 per cent. inflation, you cannot reasonably expect the workforce to keep to it without rising discontent. I do not think we have paid adequate attention to this fact. So either the Government should stop inflating the economy by their large budgetary deficit or else I think they should withdraw their objections to a measure of index-linking or threshold payments such as they have in the automotive industry in the United States. The agreements in the United States automotive industry are for three years. Index-linking is done every six months and a work stoppage costs the trade union 100,000 dollars a day. The system is much the same in the West Coast ports of America, to my certain knowledge. I am, of course, aware of the present difficulties in the United States, but I do not think they are due to that feature of the United States economy.
I do urge your Lordships to agree that the worst thing you can do to a man in this field is to limit his earnings and prevent him from profiting by his training and his skill, devotion, hard work and initiative. It is no wonder that every section of our workforce in both the private and public sectors is filled with indignation. Why not make it compulsory to respect collective bargains until they expire and admit a measure of indexing? Surely it would be better for everyone and for productivity. You cannot run modern industry on collective swindles. Index-linking might have a slight inflationary effect, as is often alleged, but if we got a large increase of productivity because there were less strikes—it could very well pay off. In the long run, I think we have to recognise that our wage levels and our productivity will both have to rise to European levels, and this is something we ought to plan to achieve over the years, because in no other way can our country be regarded as the equal of our partners on the Continent.
I am not blamng our great trade union leaders for the present muddle in our industry. I think Parliament is to blame for passing laws which, by giving trade unions almost complete freedom to break agreements and contracts, make it impossible for even the best trade union leaders—and we have many of them—to secure compliance on the shop floor with the collective bargains they negotiate. Take the case of the Chilean aero-engines.
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They were bought by the Chileans some years ago. They came over here in 1974 to be reconditioned by Rolls-Royce. When the time came for them to go back to Chile the Allende Government had been thrown out, and one of the trade unions—I think it was the Transport and General Workers' Union—at East Kil-bride blacked those engines because it did not like the Chilean Government. Do your Lordships realise that the 1974 Act, with the 1975 Act, says that an industrial dispute can arise out of any "matter" at home or abroad? The demise of Mr. Allende had nothing whatever to do with the Chilean contract, but those engines were held up, left out of doors for four years and could not be moved until this summer. I hope they have now gone back to Chile.
To make it all worse we dish out refunds of income tax and various social security payments to strikers or their families regardless of whether the stoppage is in breach of substantive or procedural agreements. I recall that the terrible Ford dispute, which has, I believe, caused losses of over £200 million already, started while the existing agreement was in force. I find that totally inexcusable. So the fact that we dish out these monies from official funds under various headings deprives the trade union leaders with any strike funds at their disposal of any real power to control an unofficial strike. I find that entirely wrong. In my view, no one should get any public money for action in breach of agreements. I know that that would be difficult to do, but it is what we must achieve.
Let us remember the Swan Hunter imbroglio. The boilermakers and outfitters quarrelled and went on strike about differentials, the enormous Polish order was lost and Swan Hunter had great difficulties in meeting its debts. The men who were going to be dismissed as a result of this collective idiocy were promised redundancy payments of up to £10,000 each. Hardly a feather in the cap of those responsible for our labour legislation, was it?
I think that it is also time to recognise that it must be made much easier for an employer to dismiss an inefficient employee or an employee who misbehaves. The 1975 legislation is very one-sided on the subject. I recently met a doctor who said

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that, in the strike last month, in the office attached to the hospital where she works and where doctors prepare their operations and cases, the fuses were taken away by one of the supervisors and the doctors had to work by oil lamps. I find that absolutely inexcusable. There cannot be any excuse for it.
I have a long connection with Sweden and I am very struck by the fact that the system our Labour Party has introduced here at the instance, I think, of their Marxist wing is more or less what the Swedish Communists tried to get and were not allowed to have by the Swedish TUC. We said in this House that this legislation would produce chaos throughout industry. We said that it would be a bully boy's charter for the Left-Wing militants, and so it has indeed turned out. Your Lordships will remember that it was passed only over our House's dead body by the use of the Parliament Act and I should think that the other place is not very proud of it. It has truly put the brakes on hard against our production and I urge that it must bs altered.
I recall that the Marxists do not allow anything like this to happen in their own countries, where strikes are entirely forbidden even when agreements come to an end. The Marxists use this system only for destroying the economies of other countries. If one reads the works of Admiral Gorshkov and Marshal Sokolov, the naval and the former military commanders-in-chief in the USSR, one will see that subversion of the enemy's economy, while delicately not spelt out, is a major feature of Soviet strategic weaponry.
To sum up, I urge both the main Parties not to reject any means—and I repeat, any means—by which our economy can be controlled and got going again. The country is still heading dangerously close to the rocks. The oil money which will not last forever is being largely wasted to prop up a system which is basically rotten. But it will take some years, five or 10 years, to reform the system, to reduce the budget deficits, to take the brakes off our industry, to make sense of the hopelessly over-complicated tax and social security systems which now remove most of the incentives to work. During the essential period of reform, we shall need
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some sort of incomes guideline, I am quite sure, and probably some temporarily severe monetary policies as well. I should like to see the National Economic Development Council or some economic forum such as my noble friend Lord Rochester mentioned, used to bring these various elements in our economy together in an atmosphere where they can discuss the essentials of our recovery without too much politics.
I believe that there is underlying all this pre-Election talk a very considerable measure of agreement about what in fact has to be done, although I know that some of the matters which I have raised today are pretty controversial. We need responsible politicians of all the main Parties to be involved, because, in fact, we must recognise that either of the main Parties can wreck any reform. The politicians must face up to this unpleasant fact. I also want to say to the Conservatives: If and when you come to power, please, for goodness sake, do not abolish the National Enterprise Board, because, in my experience, Governments always have to retain a power of rescue and direct influence in the economy while, of course, avoiding mere political interference, such as NEDO has so vigorously complained of. This is particularly important in the silicone chip microprocessing era which we are just entering. If British industry fails to get in on the bandwagon there, God help us!
So, I say to both Parties, for goodness sake be pragmatic and do not be theoretical or ideological on any of these matters. You will need every means within reach to get our economy going again, because it has gone a long way in the wrong direction. If we do not, after the next Election, and right soon, take proper steps to set this county on its feet, then I foresee that in 10 years' time it will be the biggest slum in Western Europe. Which will our statesmen choose?
7.26 p.m.
The Earl of LAUDERDALE: My Lords, the speech from the Throne recalled to me the words of those who rise from a banquet, loquacious before the hungry about the good things to come. The debate, focusing on inflation and unemployment has scarcely penetrated beyond line 2 of a speech which ran to

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112 lines. I want to push on to line 8 and its reference to North Sea oil. Apparently, the Government's interest, to judge by the Speech, is confined to the revenue to be squeezed out rather than the long-term energy basis for our recovery to which there is no reference whatever. In the past year the offshore has given us some excellent news and no doubt the Government will claim the credit. The good news is of truly significant finds of heavy—as distinct from light—oil West of Shetland. But the past year has also given us some less good news and in my habitual non-controversial style I propose to draw attention to this in a largely interrogative way.
First, there is surprise and anger among both the independent and the multinational companies about the antics of BNOC, commonly called "Benoc". There has been almighty confusion about the handling of our natural gas surplus of a kind to discourage research and development on the subsea gasefication of coal which can lead us to far greater supplies of energy when the oil runs out. No fewer than four means of getting it up in the form of gas have already been identified. We read of a new tax squeeze in prospect on the industry to raise the Government take. We hear warnings that BP must now be taken under full public control, despite Government assurances 18 months ago that this would not happen. Further, we read of a resolution passed at the Labour Party Conference proposing the outright nationalisation of North Sea resources. Those are bad enough, but worst of all is the virtual collapse of exploration drilling in United Kingdom waters.
In October last year there were no fewer than 26 exploration rigs drilling where nobody knew if there was oil or not. There were 26 in October last year and this year, what is the figure? My Lords, it is seven. Seven as against 26—a disastrous collapse and decline over a year. Of those seven three are drillings on licences that go further back than the fifth round and four are on fifth round licences issued 14 months ago. Compare that with the fact that the Dutch area has seven rigs and it is a much less exciting area, with less attractive gas resources to go for. Likewise, the Irish area contains more exploration rigs in its area of very
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uncertain prospects considerably less promising than we have in the North Sea. Why, therefore, has North Sea drilling collapsed?
Buried in the middle of the gracious Speech is a tantalising promise that the Government will "continue" to make information on public policy more readily available. This is where my non-controversial and interrogative approach comes in. Emboldened by the promise of more information, I have a number of questions to put.
With regard to the Government's chosen instrument, BNOC, why is it that only now—14 months after the last round—have the bulk of the licences been confirmed? Why is it that BNOC has actually discouraged wildcat drilling by blocking farm-outs to the minor companies? There is the case of Siebens who only got their farm-in on 3/28 East of Shetland after being squeezed of a further 15 per cent. equity by BNOC. As for Zapex, they were simply excluded from a farm-in on 3/29 in favour of Chevron, although Chevron, a major, offered a smaller slice of equity than Zapex. Why have BNOC either deliberately, or else by clumsiness, literally created an atmosphere of malice and distortion in their relations with Mesa Petroleum on the development programme for 11/30 in the Moray Firth? Why is it that the industry is now saying that BNOC's motto must be "All that is not compulsory is forbidden"?
How have the Government honoured the assurances that were given over and and over again in debate in this House and in another place that BNOC would be treated as a thoroughly commercial enterprise, despite being the Government's adviser in this area? Are the two roles indeed compatible? One may well ask that, especially in view of the very special treatment given to BNOC in Round 5 on at least four quadrants—29, 31, 26 and also 27/4. That favouritism suggests that in its application BNOC was using access to private information which it was privileged to have from Esso's data on block 30/17. The industry ask why it was that BNOC was given a special private allocation of awards on 205/10 and 206/6, West of Shetland outwith and after Round 5, without these being offered to the industry as a whole. Why is it, the industry asks,

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that these applications by BNOC in private, under the counter and behind closed doors, were so successful? Why were they pressed so hard, if not in the light of privileged information that BNOC had received from BP's and Conoco's experience on neighbouring blocks, 20/68, and 206/7.
Again, the industry ask—and I also ask, as usual uncontroversially and simply seeking the light—why was there a private award to the British Gas Council after Round 5 for another block in the Irish Sea which was not open to the industry as a whole? Cannot the Government understand that examples of this behaviour shock, anger and frustrate the industry on whose enterprise and independent investment successful exploration depend?
It has been said that, if politics is the art of choosing between the disastrous and the unpalatable, BNOC and the Government between them have set a new standard by choosing both. Indeed there is no dunce like a mature dunce. Listen to what BNOC is now getting involved in, trying to play with downstream marketing of oil in a market that is highly technical and difficult and certainly not a market for amateurs. Of course, anybody with 14 million dollars a day can buy one million barrels a day; but to refine and market at profit is quite a different matter. It will be difficult enough for BNOC not to lose money in marketing its 51 per cent. share. Why then are the Government's entitlement to take a further 12½ per cent. of its royalties in crude being added to that difficulty, so that BNOC will have an even greater volume of crude to refine and market? If in the coming year BNOC loses no more than 10 cents a barrel when the oil price is roughly 14 dollars a barrel, it will be out of pocket to the tune of about 50 million dollars.
The industry asks what is the Government's gas policy? To absorb the expected 6 billion plus cubic feet of natural gas available in 1982 will involve a United Kingdom economic growth rate of 8½ per cent. a year. The volume simply cannot be absorbed in the economy as we now see it. The Gas Council has take-or-pay clauses of one sort or another in its supply contracts which have the effect of causing it to take the maximum of the expensive gas from the Frigg area,
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which was fixed at somewhere around 1·60 dollars a barrel and from the Brent field at around 1·20 dollars a barrel while to a large extent closing off the cheaper gas at 60 cents a barrel which it contracted to take a long time ago from the Southern fields. That is the kind of tangle in which Government policy has got itself involved. Not only are they doing that but, instead of exporting the surplus, they have actually refused permission to Shell and Esso to go ahead with a pipe project to take the surplus of their gas into the Dutch system.
On gas policy, the Government are so conservationist that, as I understand it, they have refused to allow the flaring of gas from the Ninian and Brent fields so that crude can be piped dead along the pipeline to Sullom Voe while awaiting completion of the gas separation plant next year—this, at the cost of delaying crude oil deliveries necessary for the balance of payments, of which the Government are so proud.
Why is it? Can it be that the Government are frightened of weakening the British Gas Council's monopoly? Can it be that the Government have an ideological reason? Can it be that they realise that, if they once market gas overseas, it is bound to set a new and international price for gas in this country? Cannot the Government understand that this highly restrictionist conservation policy does two things: on the one hand, it discourages exploration, and, on the other, it discourages research and development, which will be badly needed very soon on the gasification of undersea coal reserves. We shall urgently need to draw on these 15 years hence when the North Sea oil has virtually run out.
In the scant reference to oil in the Queen's Speech there thus lies buried a picture of enterprise inhibited, of private capital discouraged, of British minors and the independants being penalised. The House may be interested to know that some companies have actually closed down or have virtually done so. Trans-Ocean (Houston) has reduced its staff from 18 to 2 in its main office in London. Home Oil from Calgary have gone away altogether.
Mesa Petroleum are smarting from the unfriendly treatment that they have

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received. All this is happening when the known North Sea reserves of about 23 billion barrels of crude oil and 175 trillion cubic feet of gas are not sufficient to last more than 20 years at the outside. This neglect, this dunce-like behaviour, is taking place at a time when anyone who studies it seriously can see that a decade hence the European energy problem may well be even worse than the problem in the United States is today.
In this House and elsewhere we have had such strange answers on all this as to recall George Orwell's cynical comment that political language is designed to make lies sound truthful and murder respectable, and to give an appearance of solidity to pure wind. The Government have now promised fuller information. The promise will be judged by the quality of the answers to this debate. It is high time that the Government came clean on their oil and natural gas policy and answered these questions properly. They should realise that there are no secrets that time brings not to light eventually.
7.41 p.m.
Lord BALOGH: My Lords, I must congratulate the noble Earl on a brilliant exposition of the large foreign company's case. It is very interesting that in every case on which he touched he preferred foreign profits to domestic take. I shall not follow him in this way. We have been having these amicable quarrels—
The EARL of LAUDERDALE: My Lords, would the noble Lord allow me to intervene? I am much obliged to the noble Lord. We are accustomed to exchanges of this kind of bouquets. I did not of course refer to profits but I did refer to the desirability of exploration. I will be fair to him and I will not interrupt him again.
Lord BALOGH: My Lords, I am very grateful. Unfortunately, as I was not told that oil policy would be discussed in detail, and I did not get permission to talk on the subject on which I am still in quasi-Government service, I cannot reply. May I look at the general position however. After so many disappointing years one can see something light in the tunnel. It may be extinguished later on, but at the moment it is not too bad. We have—
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and this is of the utmost importance—achieved a substantial increase in real wages and I hope that this fact will be emphasised over and over again by Ministers, for there is a notion around that great cuts were suffered by wages and that these cuts will have to be restored. It seems to me that the Opposition might have enlarged on that constructive line rather than make only destructive and, in my opinion, completely contrary remarks.
The Prime Minister and his economic team are, in my opinion, much to be congratulated. However we must not jubilate. Their achievements, important as they are, have not yet been consolidated. In our debate earlier this year on the impact and use of gas and oil I pressed the opinion that first of all we must make certain that a due share accrues to the nation and not to foreign oil companies, and that this benefit from the oil ought to be devoted primarily to a reconstruction of British industry to make it competitive and face some of the debts which have been accumulating, mainly after the abortive boom engineered by the noble Lord, Lord Barber. The Opposition thoughtlessly and recknlessly attacked our plans to increase the take on oil. They did this at a time when all but the whole of that take had been absorbed by the weakness of the non-oil current balance, a consequence of the inexorable flood of imports. The hoped for reorganisation of British industry has hardly even begun.
Taking one thing with another, it must be obvious that a number of prominent wage claims which have been put forward are violently unrealistic in the sense that they cannot be sustained in real terms for the simple reason that you cannot get a quart out of a pint pot by altering the marks on the pot. I marvel at the total irresponsibility of the Opposition as so eminently shown up by Mr. Heath and now hastily fudged over, and also of some of the trade union leaders, in once more advocating and demanding the end of the incomes policy just as they abandoned the Social Contract last year—the one great social achievement which might have reconciled stability and full employment.
We have had five attempts since the war at mastering inflation by restraints on incomes: in 1948–50, 1961–62, 1966–67, 1971–73, and the last one which expired

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just this year, 1975–78. They all ended in impatient demands for the restoration of what was called "free" collective bargaining. In consequence, we have had over a dozen exchange crises and the retreat from a sensible incomes policy was punctuated by reconsideration of policies of public expenditure cuts ending in the rise of the Friedmanite instruments of witchcraft, cuts in public sector borrowing requirement and domestic credit expansion, cash limits and all. These are now recommended by as balanced and sensible a person as Mr. Terence Higgins as the "new" Tory policy. Yet they have broken in the hands of both Tory and Labour Governments with regular repetition. The reason for these recurrent failures has been the total refusal, which has been demonstrated by the noble Lord, Lord Thorneycroft, to analyse the deep-seated structural changes in the economy, in particular the massive concentration of economic power into the hands of relatively few large-scale enterprises on the one hand, and the rise of powerful trade unions, on the other.
Coming simultaneously with the achievement of full employment in the 1950s and 1960s, this concentration of power resulted in a strengthening of the trade unions, on the one hand, and it allowed the manipulation of prices, on the other. A clash arose between the actual distribution of economic power and the distribution of income and wealth. For us to succeed this clash must be resolved consciously and peacefully. I must say that the speech made by the noble Lord, Lord Hankey, is just the sort of thing which would engender hostility and create divisions in the nation. This imbalance impairs the working of a mixed large-scale industrial system and must undermine the cohesion of society. Resistance against wage increases has been weakened. The law of the market, that is the law of the strong based on sheer bargaining power, can lead only to a bitter confrontation and utter common ruin. The attainment of a balance without mass unemployment depends, in my view, on making effective a sense of individual and group responsibility about policies for production, income distribution, and management and expansion of the public sector, especially of the social services. If that is not understood we shall never get anywhere.
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The noble Viscount, Lord Watkinson, who quite sensibly has departed home, wishes to have a free market for prices and a planned solution involving either a NEDO or some other organ so far as wages are concerned. But this will not do. Group responsibility and individual responsibility demands obligations on both sides of the two bargaining powers. I must confess I do not understand the strange alliance in this matter between Mrs. Thatcher and Mr. Moss Evans, Mr. Clive Jenkins and Sir Keith Joseph. They all seem to believe that wages have very little to do with inflation. Their Gaelic song surely accords ill with the would-be BBC accent. I have of course always had difficulties with my English pronunciation. What is one to do as a newcomer to the language when Chol-mondeley is pronounced "Chemley" and what is spelled "free collective bargaining" sounds in fact like "licentious sectional blackmail" to the detriment of the poor, the weak and the sick?
The much hoped for balance in the labour market has not been restored by the periodic restoration of free collective bargaining. It has turned out to be a war of all against all; nor were wage differentials rendered palatable by free collective bargaining. What in fact happened was that each round of incomes leapfrogged, leaving all discontented and riven into competitive factions. The ineluctable conclusion which emerges from this boring recurrence of our economic misadventures is that, with the growing concentration of economic power on both sides of industry, the equilibrating mechanism of the 19th century which even then worked very badly has finally broken. An incomes policy is a permanent requirement—that must be learned—and not an emergency contrivance. On this basic point I absolutely agree with the noble Lord, Lord Kaldor.
I know that these sentiments will not receive due regard or even acknowledgement either among weekly wage earners or among the professions, yet the whole problem really seems quite simple. If wage/salary demands are higher than the rate of increase in productivity and national real output, the demands for higher money wages will not result in higher real incomes but in higher prices, and our foreign balance will be endangered. Under these

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circumstances, the old adage that someone's wage increase is another's price increase is one more vindicated. The Prime Minister's stand on this question must inspire respect even among his opponents and it demands loyalty from his followers.
There are, however, two fields where I would reiterate the cautionary tales which I have previously adumbrated in a boring manner in your Lordships' House. The first is that in advocating and administering incomes policy there should be no special arrangements for special vested interests. The rot of inflationary pressure began when in 1968 the doctors received a rise which, however justified it may have been, was felt to be unjust by the majority of workers and established a minimum norm. The special review bodies then proliferated and with their proliferation the situation worsened. They dealt with each case as they saw it and the devil take the community. On the other hand, I feel it is futile to hope that Ford workers will accept less than 5 per cent. when their chairman has received an annual increase equivalent to many years' total wages. If professional people or those with high incomes do not believe in noblesse oblige, they ought at least to listen to sagesse oblige. This principle has not been practised in respect of the increase in top salaries.
The second problem concerns our international economic stance. My friend and pupil, Mr. Roy Jenkins, seems to be oblivious not merely to economic theory but also to economic history. He has launched upon a propaganda campaign for monetary unification in Europe before a unification of living standards and policies has taken place. In a situation of unequal partnership the weaker partner—that is, Britain—is bound to suffer and the closer the union the more it suffers.
Herr Schmidt and M. Giscard have espoused this madcap idea in an attenuated, "sneaky" way. I have incurred the displeasure of my noble friend the Minister of State for foreign affairs by characterising Herr Schmidt's proposals as the inverse of Clausewitz's famous dictum, "The European monetary system is the continuation of the drive towards conquest and dominance by other means". Inasmuch as the scheme will tend to
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mitigate the rise of the German deutschmark and the Swiss franc which is due to the flight from the dollar into those currencies, it will inevitably exert upward pressure on our own currency and that will lead to a nagging loss of reserves as we try to keep up with the Germans.
The noble Lord, Lord Thorneycroft, characterised the decision on this question as a question of politics. The point is, however, that politics can cost too much and politics, when they over-rule the basic principles of economic prudence, will be very costly indeed. The Germans refuse to expand their GNP and imports on the one hand and refuse to create and sell deutschmarks against dollars because of fears about the rise in their money supply. Yet their rate of inflation is below 3 per cent. and they have vast open and concealed unemployment problems.
The monetary impasse from which the world suffers is due to the peculiar, indeed unprecedented, position of the desert Arabs on the one hand, and to the wilful refusal of the Germans and Japanese to cease exporting their unemployment; last month's German surplus was over a billion dollars. In consequence, we are threatened with a setback in the trade of the rest of the world. The moneymongers of the world have been preaching at President Carter to "save the dollar" through cutbacks, misery and unemployment, caused directly through the Budget or indirectly by raising the rate of interest. Unfortunately, they were able to panic him into severe deflationary measures. Do they not realise that it was the United States deficit which kept the rest of us going? The "improvement" in the United States balance of payments will inevitably exert a serious deflationary pressure on the rest of us, especially as the larger part of that deficit is due to the import not of oil but of manufacturers. The Friedmanite rot has spread so far and wide that savagely deflationary measures are greeted by a Stock Exchange boom. It is to be feared that the United States recovery will be stopped or even reversed.
Concerted action to achieve expansion without inflation is possible only if the main trading nations come to an agreement about expansion, otherwise weare bound to get both a bitter struggle for markets and protectionism, whatever is said now. The

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one hopeful aspect of the situation is the acceptance by the American unions of an orderly packet spelling out a social contract.
The pressure on our exports would be bound to worsen our domestic situation were we to enter the monetary system pledged to maintain the present unrealistic rate of exchange which will stimulate the United States' exports and hinder our own. We should be entering a system far worse than the gold standard, the liberation from the shackles of which was celebrated by Lord Keynes at Bretton Woods. Yes, much worse. Under the rules of the gold standard the creditor countries had to contribute to the readjustment of the balance of payments. They automatically became "inflationary", expanding income and increasing prices. Thus, the creditors contributed to the readjustment of the original imbalance by increasing imports and absorbing potential exports.
In the European system of so-called stability, both the creditors and the debtor countries would deflate in the name of anti-inflation, thus prolonging and deepening the agony of the latter. It is no answer to say that there will be an intervention fund from which we could borrow and to believe that we can get ourselves out of our problems by doing so. The further we sink into debt the more prolonged and acute will be the stunting of our prosperity. We ought to do our utmost not to increase a monetary fund or swap arrangement but to reactivate the so-called scarce currency clause of the Bretton Woods Charter which provided for restrictions on the exports of persistent creditors. The creation of the European bloc would make such changes much more difficult, even if it did not outlaw completely changes in exchange parity. British Governments, both Labour and Conservative, have not been eager to devalue or tolerate depreciation and have lately "uncapped" sterling despite the fact that the upward pressure on sterling did not originate in a current surplus but in a flight of money from the United States.
Thus, the increase in our reserves was borrowed, not owned, and the uncapping meant that we lived on North Sea oil, if not on short-term borrowing. The politico-economic reasons for this attitude
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are quite clear: there is the disillusionment with depreciation as a solution to our trade problem and—connected but by no means identical with it—the growing realisation that depreciation in a situation of apprehensive anticipations might fire wage demands and thus nullify any stimulus to the balance of payments. One dangerous consequence of the EMS might be that our borrowing capacity would be increased through large swap facilities. This would encourage a defence of the parity at the cost of further indebtedness and further de-industrialisation. Thus we should exert such influence as we still have against the large swap arrangements, except for staunching an emergency, such as a mad confidence crisis such as lately visited the dollar. However, this should be done by the IMF and not within a narrow European system. We must beware of joining an anti-American bloc.
No rules should be laid down—as was done in Bretton Woods—to restrict changes in parity to cases of fundamental disequilibrium judged by some supranational organ. It must be left to the national Government to decide whether and how much of a change is justified. We must at all costs avoid a continuation of de-industrialisation on the basis of what amounts to the use of begging bowls. Therefore, we must face the possibility of having to remain outside. In that case, a decisive reinforcement of exchange controls will prove essential. A depreciation of sterling cannot alone take the strain. It is to be hoped that the present first signs of recovery will be consolidated. Without a new Social Contract, I fear that this is highly improbable. Those who attack the Prime Minister's stand for sanity have much to answer for.
8.3 p.m.
Viscount TRENCHARD: My Lords, the gracious Speech included the phrase:
"Building on the stronger domestic economy now established …".
I cannot feel that in any long-term sense we have started on that road, notwithstanding the short-term points to which the noble Baroness drew our attention. We have been fortunate in the movement of raw materials and the terms of trade, but in terms of underlying efficiency and competitiveness we have made little progress. When speaking in Viscount

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Amory's debate on 3rd July I offered the noble and learned Lord, Lord McCluskey, a bet that two-thirds of the current productivity deals would prove, when the national figures were out, to be bogus. I hoped that it would not be so. He did not take the bet. He might have won it on a technicality if one includes oil, in which case probably only half is bogus, but if one takes manufacturing industry outside oil the increase in the national product is approximately one-third of the extra increase in wages over and above the 10 per cent.
In all long-term measures, our shares of market and our productivity, we have not made any worthwhile progress. My noble friend Lord Thorneycroft spelt out some of the British qualities and posed the question of why did we do so badly when we had such talents? I would put it slightly differently: why have we held our talents in a straitjacket? We have held our talents in a straitjacket because of our quite natural, and in many respects correct, obsession to beat public enemy No. 1—inflation. In order to do so we have applied incomes policies. In order to do that, and to make them stick, we have had 11 years of severe interference with prices and with dividends. We have devised a taxation system which could not be better designed to blunt incentive at both ends of the scale. These controls have been the price of the incomes policy to try to beat inflation. In my view they are the reason why the noble Lord, Lord Roberthall, was able to point to the nation losing its adaptability.
Now there are those of course who do not believe that the market system is sufficiently powerful to provide adaptability and to provide growth, efficiency and productivity, and they suggest that it is because modern economies have developed such large economic units—both companies and trade unions. Having spent my life in a fairly big company I have never found the power of bigness in the market place. A look at the profits of large and small companies in this country, and at the decline of them, and at the totally inadequate level of them, I think proves this point. Economists have long referred to the lack of perfect competition, and when one questions them one finds that what in fact they mean by perfect, and what the economic text
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books, I am told, say, is the kind of competition which used to take place when the text books were written; namely, the competition in the market place with prices changing by the hour. The fact that we now deal with international competition on a bigger scale and on a longer time scale does not in any sense mean that the principles of competition and the market place are not as strong as ever. They are different, and some economists have mistaken differences in detail, method, and timing for a change in laws which are still very powerful and which, in my opinion, alone can produce the necessary growth efficiency in peace-time.
Now we shall not have a system that really encourages growth until it is again possible to say that a company or an individual, either through efficiency or through good luck, has actually made a killing and kept the large part of it and invested in consequence. It may well be through luck that he has been able to do so, but the organisation of the conditions for wealth creation need to be designed for wealth creation itself. They should not be muddled with social policies. Social policies, policies of compassion, should be kept separate. If the concentration on wealth creation is for the purpose of wealth creation itself, we shall soon find that there is substantially more cash for social policies.
I would make the same comment on the references in the gracious Speech to the preservation of employment and to work-sharing. We must not get the emphasis on unit costs and on the growth of pro-dictivity muddled with short-time working, which, on the whole, individuals do not like, certainly other than for a very temporary period. If we keep the emphasis on efficiency and on wealth creation separate from social policies, it will not be long before growth has removed unemployment—not nearly as long as we may now feel. In the meanwhile, we must provide the outlets for those in the hideous position of being unemployed separately from the creation of efficiency in the wealth producing sector.
My Lords, as I see it we are in a national impasse. We have put our talents in a straitjacket and destroyed our growth because of the need to try to make a pay policy stick; and even after putting all those things in to try to make it stick, it is

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not sticking. Why do we want an incomes policy? We want it because, as the noble Lord, Lord Shinwell, has said, in his view, collective bargaining is in some areas outdated. As I would say it, trade union power, particularly in the United Kingdom, is too strong. Nobody loves an incomes policy for itself. The thought of setting up a national authority to get right a flexible incomes policy over the whole of a complicated economy simply boggles the imagination. It really is not possible. It interests me that when we talk of the possibility of joining a European International Monetary Union noble Lords opposite, and the noble Lord, Lord Balogh, particularly, say that this is a national problem; it is not manageable internationally. I would say that within a complicated economy it is not possible to set up a flexible incomes policy which will be compatible with a dynamic market growth economy.
I have sympathy with those who believe that money control alone is not specific enough in view of industry-wide pressures, not only in the nationalised sector but in the private sector, such as oil tanker drivers. It is not specific enough to stop the very strong pressing of inflationary claims, and it has little bearing on our problems of productivity. That is why I like the word which has been used by certain trade union leaders and commented on today, and which has also been used by the Leader of my Party. I like the word "responsible" collective bargaining. It must be said, I think, that it is clear that the public has some doubts as to whether we will get responsible collective bargaining; but only flexible and free collective bargaining can be flexible enough for a complicated economy. The public doubts on whether we would get it would be shared by many industrialists, and I, certainly, at times, have been faced with claims where I have felt that I have had to make the choice between going broke immediately or going broke slowly. The Rootes car company took the former course and, effectively, one British manufacturing concern was removed from the competitive car business.
There are those who say that British trade union power is not the cause of our inefficiencies and our inflationary claims, and they often quote the comparison of
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international strike statistics to show that they are not. As I have pointed out before, my Lords, there is a natural economic law which controls the number of days that employers, particularly, and to a degree employees, social benefits allowing, can take off on strike. A company, even a big company, may be able to take one strike in a year if it is particularly profitable. The international strike statistics have no bearing on whether our position is better or worse than other people's. Apart from the fact that many unofficial strikes do not get recorded, it is the balance of power before strike, the strike threat position in the unique British collective bargaining and trade union situation, that in fact affects our productivity and our companies' ability to resist inflationary claims. They are resisted in other countries, where they have managed to practise free collective bargaining with certainty less inflation and, at times, almost none.
It has also been said that this cannot have anything to do with it because our performance over the last 100 years has been so poor. But that 100 years fits with our totally unique British trade union position. We had the Industrial Revolution first, and made the most mistakes as a result of it. We created an atmosphere out of history, and it is very hard to shake off atmospheres of history; but as a result we compensated with legal immunities starting in 1871, 1876, 1906 and 1946, and lately again to a major degree, as has been mentioned in this debate. The noble Lord, Lord Kaldor, has on other occasions drawn our attention to the fact that our productivity improved markedly in the late 'twenties and particularly our performance in the 'thirties, and he has actually likened it to almost a second Industrial Revolution. Has this anything to do with the fact that, regrettably, we had a General Strike in the late 'twenties and that 3½ million trade unionists out of 8 million tore up their membership cards? We do not want that again. We want a balance: a balance such as exists in other countries. Those who say that management incompetence is responsible have to explain that period of high productivity, and also the war-time successes and the very good areas in the British economy where our productivity is internationally competitive—and they range through the City, through agriculture,

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through retailing, through much of the service industries and through a lot of manufacturing, mainly in the small factories.
We return to this word "responsible" free collective bargaining. Perhaps, in a sense, what Mrs. Castle was trying to recommend, but which was never tried, was responsible collective bargaining; and perhaps the noble Lord, Lord Carr, was after the same objective. I would say to the leaders of our trade unions that they did not like either, and a lot of industrialists criticised both, but why do they not go and look in more detail at why free collective bargaining works, without inflation and with (I would almost say consequently with) high productivity, in other countries, like Germany? Let them take the CBI leaders with them—but study it and study how the Germans create a responsible free collective bargaining structure. I will dwell on the word "responsible" for a second. All, or most of us, have thought, certainly over parts of our career, that we are entitled to more money than perhaps other people think we are entitled to. To get a system of responsible free collective bargaining is not just an appeal to use the absolute power responsibly—which they have—in some cases, but that they should go and see how power is balanced better in other countries.
My Lords, incomes policies seem to me to be a treatment for a symptom of the disease. They are the equivalent of trying to hold down the lid on a saucepan rather than turning off the cooker. Perhaps the cooker itself could be likened to the money supply; but the current which produces the heat is the unique British position in relation to the atmosphere, structure and law surrounding collective bargaining. That is why I believe that there are no greater differences in the Conservative Party than in the Party opposite on this highly complex question, but I believe that we have to seek a solution to the disease rather than to continue to try to treat the symptoms—which, in my view, will produce an explosion.
8.21 p.m.
Lord WALSTON: My Lords, we have listened now for five hours to many speeches of very great wisdom, of very
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great learning, on economic theory, on industrial beliefs, on the merits of free collective bargaining and so on. I shall not attempt to continue on that line of discussion, but I would ask your Lordships to consider with me for a relatively short time one particular industry in this country, not one of the largest but one which I think is of some significance for a variety of reasons. I am referring to the agricultural machinery industry, an industry which produces something in excess of £1,000 millions worth of products a year—and that, of course includes the agricultural tractor—and which exports something of the order of two-thirds of that at the present time, a record which on the face of it looks good.
But a couple of years ago it suddenly struck me, as I was showing some foreign visitors round my own farm, that the great majority of the new machines and the interesting machines which I had on my farm were of foreign manufacture. I did not buy those because I have any particular predilection for foreign machinery; I did not buy them in any case because they were cheaper than British machinery. I bought them in the main because there was no comparable British machine that I could find or, in certain cases, because the British machinery, although suitable, had a very long delivery date and I could not afford to wait.
I thought it would be worth looking in more detail at this industry to see whether mine was an experience peculiar to myself or if it was more widespread. Unfortunately, I found that it was widespread and that I was simply one example out of many of a similar kind. Between the years 1966 and 1976, excluding tractors, there was a growth in the United Kingdom market of 35 per cent. United Kingdom production of agricultural machinery during that 10-year period rose by no more than 5·8 per cent. Put in a somewhat different form, this means that whereas in 1966 import penetration was of the order of 18 per cent., by 1976 it had risen to 45 per cent.
If one looks simply at one of the most spectacular of the farm machines, the combine harvester, in 1976 imported machines accounted for 25 per cent. of the total import bill and accounted for 79 per cent. of the imports of total domestic

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consumption. It is worth remembering that the United Kingdom has, in this area of combine harvesters, only one manufacture and that is a multinational. There are rumours that that particular firm will shortly be removing its combine harvester manufacturing out of this country, in which case we should have none, whereas not so many years ago, in the years up to the beginning of the war, we were the world leaders in the manufacture of threshing machines of all kinds. We had a head start there, as, indeed, we had a head start within Europe in the years after the war, too, because we had the most highly mechanised agriculture in the whole of Europe—in fact, in the whole of the world, excluding the United States. Our agriculture machinery manufacturers at that time were world leaders. That we have lost to a very disturbing extent. As a result of this, whereas in those 10 years between 1966 and 1976 agricultural machinery (excluding tractors) exports increased four times, which may seem at first sight fairly satisfactory, it is not so satisfactory when it is compared with the imports of machinery which increased nine times.
If one turns to agricultural tractors, exports increased during the 10-year period by 3½ times and imports, admittedly starting from a very low base, increased by 23 times; in other words, the whole picture is one of a steady and very disturbing deterioration. What are the reasons for this decline?—because, if we could find out the reasons, we might be able to answer some of the questions which have been asked during the course of this debate. I would say straight away that we can cut out as a reason declining markets. As I have already pointed out, markets have been steadily increasing within our own country, within the EEC and within the world as a whole at something like the rate of 2 per cent. per annum; so it is not that. It is not cheap foreign competition, because in most cases we have a price advantage over most foreign competitors. It is not strikes, because the record in the agricultural machinery industry, with the regrettable exception of one or two of the very large multinational firms, has been virtually entirely strike-free, very largely because they are small firms, personal firms, with close contact between management and
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workers; so one cannot blame any of those reasons, which are often put forward for our poor performance.
The Department of Industry produced an extremely interesting and valuable study earlier this year on this whole situation. It sets out the picture in an extremely objective fashion. They suggest some of the reasons for this decline in our relative position. They attribute it, among other things, to the Conservative nature of the majority of domestic producers who, despite increasing specialisation, have shown little real growth and apparently little desire for growth. They also attributed it to the low level of research and development investment in particular in development engineer resources; 1·3 per cent. of the total expenditure of the industry is all that is devoted to research and development. They also attribute it—and this may be the most important reason—to the failure of the industry as a whole to penetrate the major markets of the Western World and, in particular, of the EEC.
Why should that be, my Lords? Is it a purely personal factor? Is it lack of desire? Is it self-satisfaction? I do not know, but in last week's issue of the Farmers Weekly there is an article on a very big demonstration of sugar beet harvesting machinery in Germany. The headline says: "But where are the British?" It points out the virtual complete absence of any British manufacturer of sugar beet harvesting machinery, although we have some good ones in this country. They were not there to demonstrate their wares to the combined buying force of the whole of the Continent. They quote a spokesman for Standens, one of the largest manufacturers of beet harvesting machinery, who said that German farmers were keen on complicated automatic row crop steering mechanisms, whereas Standens themselves preferred simpler guide skids to keep machines on the row. It may be that the manufacturers prefer this; but they are making machines for the farmers, whether German, French or British. Surely they must consider what their potential customers want. If they go on producing simply what they like to produce and not what their customers like them to produce, no wonder the markets are lost.
Ransomes, another firm specialising in this form of manufacture, said it had

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only just sorted out some technical difficulties with its two-row harvester. Previously the machine had not been available with a top-saving attachment. This was essential in Germany where about 90 per cent. of the leaf was conserved. That has been going on, my Lords, for years. The German, French and Danish manufacturers have realised this and have made the machines accordingly.
It is only now that one of the leading British manufacturers is hoping to perfect and have available perhaps next year the appropriate machine for market requirements. This is a sad story because we have the potential; we are skilful; we have a big home market; we have good engineers and craftsmen. We had until recently a leading world position. But now that has been lost. I suggest to particularly the noble Viscount, Lord Watkinson, and probably to the noble Lord, Lord Thorneycroft, that one cannot put the blame on lack of incentives and high taxation. If it were that, why would we have such outstanding successes in other industries, big and small? Why do we have world leaders in ICI, Marks & Spencer or Trust Houses Forte which go overseas and make profits for this country? They have the same taxation as all other firms; but they have a management—and I do not say this in any way flatteringly to the noble Lord, Lord Thorneycroft—and other successful firms have managements, who have energy, vision and want to go ahead and do things.
Viscount TRENCHARD: My Lords, I wonder whether I may interrupt? The firms the noble Lord has mentioned are, with the exception of ICI—and ICI's position in the chemical industry would need careful analysis—those where the numbers employed per unit are comparatively small. This is true for even a big Marks & Spencer's store. We are highly efficient in the service industries, retail and distribution and farming. I have said this in this House over and over again. The noble Lord, Lord Walston, is making out my case. I believe taxation has a big part to play in it as well.
Lord WALSTON: My Lords, I am afraid that I cannot understand the noble Viscount's argument; perhaps he could develop it to me later on, face to face. The point that I am making is that the
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taxation which is paid by the management, the senior members of the staff, the junior members of the staff and the firm as a whole, whether it be in farming, a small industry, ICI, Marks & Spencer or Trust Houses Forte, is identical to the taxation paid by the firms to which I am referring. Yet in one case there is great success for themselves and for the country; in the others there is something which is very close to abysmal failure.
There are many other examples and we all know firms, particularly small, modern, science-based ones. I was hearing about an electronic firm today which is expanding its production and actually exporting equipment to Hong Kong for loudspeakers which will be incorporated in their radios and televisions. It can be done in this country. We have the technology, capital and ability. We do not have the overriding disincentive; we cannot blame it on that. Where there is good management, where there is a desire to get up and go out and do things, we still can do it. We must not be unduly pessimistic about this. What we must do is to pinpoint such firms. I have taken one overall industry—which, admittedly and happily, has some happy exceptions—and pointed out the abysmal failure of that industry which is reminiscent of the even more abysmal failure of the motor cycle industry. Once in this country there were Douglas, Norton and BSA. That industry was once the pride of this country. That has gone, and if we are not careful our agricultural machinery industry and other industries will go the same way.
Lord MACKIE of BENSHIE: My Lords, what the noble Lord is saying is that there are exceptions to the rule; but because some people are resistant to infection it does not mean that the infection is not there.
Lord WALSTON: My Lords, it is a question of how many are resistant and why are they resistant to infection? There are many factors governing resistance to infection. I am saying that we should put the blame where it lies; do not let us try to find excuses by saying it is the Government's fault for high taxation, or it is the fault of the unions because of strikes, or it is the CBI's fault because of its intransigent attitude, or it is the

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banks' fault for not supplying capital or whatever it may be.
The fault lies essentially with the people who are running the industries. If they are incapable of running those industries, if they do not want to do so because they cannot get enough out of it or if they have not sufficient training, then the sooner they go the better—but not for the country. What we want is have other energetic and skilful people to take over. We must concentrate on the good people and our good industries and not try to lay excuses for the failures on other people's shoulders when the fault really lies with the industries themselves.
8.39 p.m.
The Earl of LYTTON: My Lords, at this time I am sure that brevity, even without wit, will be welcome. I have come up to support the Government in the matter of the 5 per cent. I may be deaf and I may have been absent for some of the speeches, but I do not think anyone else has accorded the 5 per cent. their support. The noble Lord, Lord Thorneycroft, said that capacity for manoeuvring abroad is determined by our strength at home. I believe that is the phrase he used, and I believe that everyone will accept that we are not strong at home and that the main trouble is inflation. Everybody on all sides of the House—and this was also mentioned in the gracious Speech—is agreed that inflation stands at the top of our difficulties. Not everybody, however, has underlined the fact that inflation has many causes in history and that it has been going on in varying degrees from the 14th century at least.
At the present time it is "wage-push" inflation which dominates the scene, even when the scene is varied by OPEC rises in price of a phenomenal character. It is wage-push that is the trouble. Mr. Wilson, when Prime Minister, put it tersely when he said that one man's pay rise is the next man's price rise. Mr. Heath, almost immediately afterwards when he was Prime Minister, said that one man's wage rise is the next man's redundancy.
Those two things mark a turning point in people's thoughts. The first saying, that wage rises are the cause of price rises, is something which even now is not
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accepted, even by very intelligent people such as Mr. Enoch Powell. He says that wages have nothing to do with the rise of prices. He says that wages are a consequence. One fears that an era is passing and that there is a hangover. With regard to the other factor, it is only very recently that it was widely accepted that you could have unemployment or inflation: you could choose between the two. Mr. Heath's pithy saying marks the apex of that thought and it is rapidly declining. Now inflation is generally regarded as a substantial cause of considerable unemployment.
These two factors, I am certain, are not accepted by the great majority of people in this country. It has been my task to teach people the dismal science. I taught some intelligent people and some who were exceedingly dull. I had to make it interesting and I remember there was one chap who slept in the front row, and at the end of the term he came to me and said, "Your subject is very difficult. It keeps me awake at night". It is not easy and if I have anything to suggest about this I would say that public relations should be developed in order that these very simple elements of economics can be made available to young people in a palatable and amusing form so that they get to know them—because they do not know them. They do not know what is meant when somebody quotes either of those two Prime Ministers and the phrases I have just referred to.
This factor of wage-push is widely accepted as a special disease of our own. During a visit to California in the summer before last, I was asked to address a number of different audiences, all of whom were interested in England. Many of them regarded England as home and all of them loved England—and they said: "Are you going to be able to control your unions? Can Thatcher hold the unions?" By that they meant: "Can they be stopped from asking for more money than is reasonable?" The fear of my questioners was that England was going down and that it was going down because it could not resist wage demands. Nothing has so underlined my feeling that that is at the top of our problems than the interest of friendly Americans that we should not go down and their belief that this was the cause of

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our trouble and the enemy we had to fight.
Now we come to the methods by which it is fought. For example, we have had among the important factors incomes control. Of course, these factors suffer from all the difficulties and crudities which people have pointed out; but what are the alternatives? I hear from time to time a strident demand for a return to free and responsible collective bargaining. I agree with the noble Baroness, Lady Birk, that the option is not on the table; and for this reason—the parties come to the table, but one of them is heavily armed with lethal weapons. When I say "lethal" I mean weapons that kill. They use these weapons. You can say, "For God's sake! get back to work and save people's lives"; but they are not impressed because they think they are not responsible. They believe it is the people who refuse their demands who are responsible for those who die. Let there be no mistake: there are many vital industries where a demand is made and industrial action is recklessly pursued notwithstanding the grave risk to human life. These weapons are held by one side only. They are prepared to use them; they do use them, and a few of them prefer that form of use. The other side has nothing but coffee. In these circumstances, I cannot see that "free and responsible" collective bargaining is an option and therefore I think that the noble Baroness, Lady Birk, is quite right in saying that it is not an option which is there for us to choose.
Secondly, we are urged to keep control of the money supply. I cannot help thinking that the Leader of the Opposition, according to her speech yesterday in column 29 of Hansard, does not believe that this is the only ultimate means of controlling inflation. It seems to me that the Government are controlling the money supply. When they control incomes they are controlling it at one of the most dangerous points, if spending goes to excess. It is a form of control, and the old type of monetarism—bank rate, open market operation and Heaven knows what; these are far cruder things, which cripple spending on productivity. Therefore I cannot see that that particular form is acceptable.
I have listened during this debate to try and find out what the Opposition are
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quarrelling about with regard to the Government's policy, the 5 per cent. I also refer to the obviously very important speech of the Leader of the Opposition yesterday in the other place. She said that 5 per cent. for nothing as the starting point seemed to her an ultimate recipe for inflation. Therefore she is not worried by the smallness of the limit, the offer of 5 per cent.: she is worried by the fact that it was made the limit or the guideline, so far as I can make out.
I listened to the noble Lord, Lord Thorneycroft, and I thought that he was totally against any kind of percentages whatsoever. I thought that he denounced percentages as a false way of setting about the matter. He asked a special question—and I think he said it at dictation speed—which had a relationship to that matter. The noble Viscount, Lord Watkinson, was not bothered by percentages. He was bothered by the fact that it was 5 per cent. So there is, I think, a difference of emphasis. If I compare that with what the Leader of the Opposition said, I cannot see why they are troubled about it not sticking. All they have said will make sure that it does not stick.
As to that, it has been said in another place, in the speech from which I have been quoting, that the present Prime Minister did the same thing and made the same devastating criticism of Mr. Heath. That is true, and I must say that I deplore this tit-for-tat of denouncing as impossible what the other side is trying to do, in the gravest of situations that we have faced in peacetime during our lifetime. So I welcome the fact that at least one Member of the Opposition, Mr. Heath, has stood by what he said before and stands by this. It is a crude form of thing, but what can we do? I listened to the word "flexibility" and I am left with the impression that it is a kind of holy water sprinkled by a good man on a handful of propositions that have failed in the past.
8.52 p.m.
Baroness SEEAR: My Lords, I must first apologise to the House for the fact that I was not in my seat at the beginning of the debate. Before I knew the date when Parliament would reassemble and when this debate would take place, I accepted an invitation to speak in the north of England and that is why I was

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delayed in getting here. To make amends at this late hour, I intend to chop in half what I had intended to say, which I think will carry favour with the House, if nothing else that I say this evening does.
I should like briefly to reaffirm my Party's support for the idea of an incomes policy. Of course, we do not think that an incomes policy by itself is the answer. We believe, as I think the Government believe, in a multi-pronged approach. You have to attack the problem of inflation from a number of different angles, but an attempt to control the increase in pay is certainly one of the ways in which it needs to be done; all the more because, despite what the Government are saying about the success which they have achieved up till now, that success has to be viewed in context.
The fact of the matter, as the noble Lord, Lord Balogh, said, is that earnings increases last year were much in excess of what increases in productivity justified. Therefore, there is every danger that, left to itself, pay will increase to the extent that it will have an adverse effect on the overriding importance of controlling inflation. All the more so because—and this is a point which has not been made this evening—the extent to which inflation has come down has, in part, been due to a fortunate change in the terms of trade. As a matter of fact, whenever either Party in Government scores something of a success in controlling our economy, it is more often due to what has happened to the terms of trade than it is to the wisdom of Ministers on either side of the House, and this has happened again.
The Government's "success" in getting inflation down to under 8 per cent. is not unconnected with the good fortune for this country—but, of course, the bad fortune for overseas countries, not least developing countries—that the terms of trade have been in our favour and adverse from their point of view. So that underlines the need to keep control of pay. I would, however, go along with the critics who say that it was a pity that there was not wider consultation in advance. If there is to be wide consultation, may I once again urge that this should be extended more widely than merely to the TUC and the CBI, and that the voice of
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practising managers who have to operate pay policies inside the plants—and that, after all, is where it matters—should be heard in discussions about pay policy, and about the variations of pay policy which undoubtedly will be required.
Unfortunately, the noble Lord, Lord Balogh, is not here, and I believe it is contrary to the practice of this House for Members of Committees to defend their own work against attack from other Members of your Lordships' House. But when the noble Lord, Lord Balogh, said that the top salaries recommendations had been outside the requirements of pay policy he was, if I may say so, speaking as a member of the Top Salaries Committee and, I think, speaking not having checked his facts adequately. If he will look at the most recent report, he will find that on an annual basis the recommended increases at the top salary level were well within the pay policy recommendations. If he wants any confirmation in less Parliamentary language than that which I am endeavouring to use, he had better go and talk to the chairmen of the nationalised industries and find out what they have to say about the extent to which pay policy was, in fact, more than applied in their regard. That is a digression, but I felt that I could not leave that statement uncorrected.
Having said that, I want only in the rest of what I have to say this evening to attempt to put the problem that the Government are facing, and with which they are attempting to deal in the gracious Speech, in a slightly different context. It seems to me that the heart of the problem lies in the fact that the immediate problems lead Governments—and I believe that any Government would probably be tempted to do what appears necessary to deal with the immediate problems facing us, which are of the greatest political difficulty and often have very considerable social consequences—to take steps which make it more difficult to get out of our longer-term economic difficulties. I believe that this is the very heart of what we are up against; that the more we try to adjust to the present situation, the more difficult we make it to cure our underlying illness. If we could take this as the heart of the analysis, we should then ask to what extent the gracious Speech measures up to the challenge and how we are to overcome

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the conflict between the short-term pressures, which are very real, and the long-term needs. This is really what it is all about.
What are the long-term needs? The noble Viscount, Lord Watkinson, made the point most eloquently and absolutely rightly, when he was stressing the need to get British industry on a level at which it can compete effectively. In order to do this, where do we want to be? We want to focus our resources—and everybody really agrees with this—in those areas where there is high added value, and out of that high added value to pay for the services which are labour intensive, both public and private, which are in demand everywhere. That surely is the sensible objective; to concentrate our resources on high value-added. It does not matter whether or not a large number of people are employed, provided that they arc generating the wealth with which to pay for the labour-intensive services. That is where we are trying to be. But what does this require? It requires flexibility, it requires restructuring of industry, it requires all those measures which one needs to take to get a high level of productivity. If we are to do this, we have to do almost the exact opposite of what, in order to deal with the present level of unemployment, we are forced to do. That is the heart of the problem, and it is a very difficult one. I would only say that skill in dealing with it must lie in trying to isolate those actions which we can take which help in both directions and to give the highest possible priority to those things which will help in the short term and also move us in the right direction in the longer-term.
I should like to draw attention to two points in the gracious Speech which I think can be said to be movements in that direction—where one can help in both the short term and the long term, unlike so much else in which the short term need contradicts the long term objective. The first is the point made about skilled men. I make no apology about the fact that I have spoken many times in your Lordships' House about the importance of increasing the supply of skilled people in this country. Up and down the country companies are saying that they cannot get the skilled people they require. With unemployment running at the level that it is, it is an absurdity that
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there is a shortage of skilled people. Can we not make it of the highest urgency to deal with the supply of skilled people?
There are a number of things which need to be done. Training and retraining is one. I do not wish to speak about that now, as we have spoken about it on many other occasions and there is general agreement that this needs to be done. We also have to look at the issue of differentials. It is perfectly true that the level of pay that skilled men are getting in many cases is not enough to attract and is not enough to retain. Devoted though I am to the idea of an incomes policy, I should like to suggest that where it is quite clear in a local area that companies are unable to recruit skilled people at the going rate and that the local skill centres and the local job centres between them are unable to produce the skilled men required, this should be a legitimate ground for breaking the 5 per cent. It is easy to establish. If you cannot get them—and the skill centres and the job centres bear out the contention of the employers that at the rate that is being offered it is not possible to get these people—then this should be a ground for saying that you can pay above this level.
If this is not done, what happens? Not only do you not get skilled men but also one must remember that skilled people create work for the semi-skilled and the unskilled. They follow on after the skilled men. At the moment, I am concerned with one enterprise which is working in the export trade and they simply cannot get technicians. I believe that they might be able to do so if they could pay above the odds laid down by the incomes policy, but they try to conform to the incomes policy partly because they are, in part, supported by Government money and partly because they believe that they ought to do so. But this is defeating the objectives of the concern and it is defeating the challenge to inflation, because if you are not able to produce the goods, since you do not have the skilled men, you are also stopping the recruitment of the semi-skilled and the unskilled who are out of work in that area. The reason is that if the skilled men were there they could also employ more semi-skilled and unskilled men.
Can we also mobilise public opinion and the trade unions as a matter of the

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greatest urgency to ensure that the creation of skilled people goes on apace? It ought not to be possible for the kind of thing to happen that has been happening for months in ICI at Wilton, where it is a matter of obtaining artificers upon whom the work of that part of ICI depends and upon whom, therefore, employment in that area depends. What is the company wanting to do? It is wanting to retrain its own redundant staff for the artificer's job, but it is being stopped from so doing. Surely this is something against which public opinion ought to be mobilised, because if we do not get the skilled men all the other things we are speaking about go down the drain.
We must maintain the differentials of the skilled. I am sure that I shall not be misunderstood if I say that, with this in mind, I have had some hesitancy in supporting the approach that is once again being made towards the lower paid. "The lower paid" is far too wide a term. "The lower paid" includes the low paid family man. It also includes the young man or woman who is still living in the parents' home and who is often not paying very much to Mum or Dad. It is absurd to increase the rates of pay of "the lower paid", including these 18-year-olds who are starting at adult rates of pay, in order to help the family person.
In my view, the Government have taken the right steps in increasing child benefit, because poverty lies where the low paid have children, not where the low paid are living at home. It is ridiculous to support "the lower paid" as a general category on grounds of need, as though all people who are described as "the lower paid" have the same kind of need, for this is very far from the truth. If you improve the position of "the lower paid" within a 5 per cent. pay increase, then you will narrow the differentials of the skilled man still further. And that way lies disaster.
The second area where I think we can move in both the short term and the long term in step rather than in conflict is in relation to the small business. The Government—prodded, I may say, but prodded successfully by my own Party in the days of the pact—have done a good deal for the small business and the self-employed. The noble Baroness may
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laugh, but I could give her chapter and verse if I had time to do so. However, I promised not to speak for very long. Nevertheless, the small firm contributes economically; it contributes to the fight against inflation and it contributes to the problem of unemployment. If the small business can take on the extra one or two people, and if this is done on a large scale throughout the country by a large number of small businesses, then we shall begin to crack the problem of unemployment. As we all know, we in this country have allowed the small business sector to fall far too low in comparison with our competitors. The small business is a seed bed of ideas; it is a source of training; it is a way in which youngsters can be given good standards much more easily than in some of the larger concerns. If we went out of our way to promote the small business, I believe that we should be helping in both the short run and the longer run.
The final point I should like to make regarding the gracious Speech—and this is of the same order as help to the small business—concerns the reference to the collaboration between the Government and local authorities in inner city areas. The collaboration between the Government and local authorities is no doubt very good, but may I draw the attention of your Lordships' House to the fact that a very great deal of extremely good work by voluntary bodies and by companies is going on in relation to the problem of the inner cities.
The idea that it is only Government and local authorities who can do these things really makes my Liberal blood boil. Support for the great variety of voluntary activity and voluntary initiative for dealing with these problems of the inner cities is again a way in which we can help, both in the short term and in the long term. Will the Government please pay a great deal of attention—although these voluntary efforts are not referred to in the gracious Speech—to ways in which such efforts can in fact be helped and supported?
9.8 p.m.
The Earl of GOWRIE: My Lords, if I am rather difficult to hear today it is partly because I have a bad cold and partly because I have been left literally breathless by the misrepresentations from

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the opposite side of the House, particularly from the noble Baroness, Lady Birk, as to the position of the Opposition on pay. I intended to deal with this at the beginning of my speech at some length, but it is getting late and the reason why I feel I can hurry over it is not that I think it unimportant or that I think the Government's misrepresentations are any less acute but because, without wishing in any way to announce a new pact or to embarrass her, the noble Baroness, Lady Seear, has given a very intelligent, rational and detailed gloss on some of the objections that we have to a formalised incomes policy at the present time. But I think the more serious objection in political terms that we have is that it is being said that we are in some way in opposition to a 5 per cent. limit.
As I shall argue later, if everybody settled their wages at a 5 per cent. increase it would have an effect on wage inflation of only some 2 per cent., the rest being taken up in genuine output of, say, 3 per cent. That would be a very satisfactory state of affairs. What we are objecting to is that the 5 per cent. limit is not an incomes policy. It is not a policy; it is a statement of intent by the Prime Minister and I am prepared to applaud it and so are many people on this side of the House and in the country in the Conservative Party. But what we simply will not stand for is that this should be promulgated as an act of policy when it has not been put through Parliament, when there is no intention (rightly in my view) to make it statutory, but where sanctions will continue to be applied unfairly, and I would argue unconstitutionally, on the employers' sector.
It is fine for the Government—and we are entirely in accord with this—to make clear what general levels of wage rises are possible and what are desirable and what the consequences might be if those levels of wage rises are not achieved. It is absolutely wrong for the Prime Minister to believe that he can do Government by a kind of Despatch Box fiat. "Here I stand" he says, but in what way is he standing, on the National Health Service, on Ford's or on anything else? The short answer is that it is impossible for him to stand at the moment and I have every sympathy with him. But he should not hoodwink us or the country into thinking
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that a formalised incomes policy is being applied which in some general way should be supported. The fact of the matter is that since 1974 both Parties have come quite close together, not in their political rhetoric but in their agreement about what kind of sanctions are possible should a formalised incomes policy be unobtainable or should such a policy break down. It is not that mad monetarists are at loose in either Party or in the Treasury; it is simply that no one has thought of sanctions other than monetary sanctions with which to discipline powerful trade union organisations.
If we read the speech made by the Chancellor, Mr. Healey, at the Mansion House recently we see that he made remarks such as:
"That is why, during the last three years we have sought, and will continue to ask employers and trade unions alike to work with us to achieve responsibility in pay negotiations … That is why we will keep the economy on the path of monetary stability and will be announcing next month the first roll forward of the monetary target and the process to be repeated next spring".
He goes on to say:
"The essential instruments are monetary control with appropriate stances on fiscal policy and interest rates".
It goes on and on in this vein and most of your Lordships will probably have read that speech. If we correlate that speech carefully with our policy document in The Right Approach—and I will not take up time by reading it out in detail—we find very much the same; perfectly ordinary and responsible and reasonable sentiments uttered. I will give one quotation from The Right Approach. It says:
"In order to bargain realistically negotiators on both sides of the table must be well informed, so that the authorities must be as open as possible in their preparation and presentation of economic policy and of the calculations which underlie it. They have to explain the way in which monetary targets have been fixed and their implications for output and inflation and for cash limits. There are obvious dangers involved in enunciating a general target or norm for pay bargaining"—
and the noble Baroness has given some gloss on that.
It also says:
"Yet in framing its monetary and other policies the Government [a Conservative Government here] must come to conclusions about the likely scope of pay increases if excess public expenditure or large-scale unemployment is to be avoided, and this estimate cannot be concealed from the representatives of the employers and unions whom it is consulting".

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I made my maiden speech in this House almost exactly 10 years ago, and, therefore, I am rather a middle-aged chicken, but I must say that I really was somewhat shocked to hear what are essentially House of Commons propaganda techniques and misrepresentations being used in a rational and serious debate on the economy.
We are winding up a debate on economic affairs, but as we do so this evening we must not, I think, forget that foreign and economic policy are inextricably linked. May I say how much I enjoyed and appreciated the speech of my noble friend Lord Trenchard, which underlined this. One of the biggest threats to our economic wellbeing comes not simply from the pay and prices debate or the controversy on monetary supply but from the present political upheaval in Iran. The course of history is at the moment effectively determined by diminishing energy resources, by their uneven distribution, and by the political health of the countries who control them.
I am very glad that my noble friend Lord Lauderdale made a swingeing speech on the oil issues raised by the gracious Speech. Of course, this may change or be superseded by other governing forces, in time, but at present it is our reality. Nothing has depressed me more in recent weeks than the stream of criticism directed at the Iranian régime. Much of this criticism is in detail well-founded, but I must say it is puzzling to me to hear it based upon issues of human rights when the alternative régime we hear about would set the clock back, especially where women are concerned, for hundreds of years. I think the broad effect of a collapse of the Iranian régime would be of the utmost danger to the West and engender a new recession here, without, so far as I can see, there being many compensating improvements within Iran itself.
I must be fair in political terms at this point and say how much I respected and welcomed Dr. Owen's strong stand on the issue on television the other week. I understand a Motion has been tabled in the other place for the purpose of cancelling the royal visit to Iran mentioned in the gracious Speech. While we would all wish the visit to be cancelled if the security situation at any time dictated that it should
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be, my own view is that for this Motion in Parliament to go forward at present would have a damaging and demoralising effect on our relations with Iran at a critical time in her history, and I hope that the Foreign Secretary shares that view.
In that context I think it is depressing that our debates on economic affairs, not only in Parliament but in the media and in the trade unions, are progressively insular. We are fond of quoting Donne to the effect that no man is an island, but nowadays we should perhaps add that no island is one either. Your Lordships are rather better at looking ahead of you than are the Members of another place, perhaps because you do not have electors behind you. Mention has been made in this debate, but not as we would expect in the gracious Speech itself, of whether Britain should or should not join the European Monetary System when it comes into force in the New Year. I was certainly most interested in and attentive to the speeches of the noble Lords, Lord Kaldor and Lord Balogh, in that regard—the old firm at work again. The speech which I wholeheartedly endorse myself, and not just because he is my boss on this occasion, is the speech of my noble friend Lord Thorneycroft.
The point surely, and it is my noble friend's point, is not whether this is the ideal scheme for currency stabilisation within the Community or whether it is immediately beneficial to Great Britain; still less is it the level of acceptability or otherwise of the scheme to this or that faction within the Labour Party. The point is that it looks as if once again Britain will not be a prime mover of decisions which will irrevocably affect her. Like a transfixed Eve, but not, alas, with the figure, Mr. Healey is gazing at the super-Snake with awe and fascination. The awe is caused by the knowledge that if we did go in we would be subject to economic disciplines beyond the reach of day-to-day Party political management. We would find it difficult, for instance, to inflate our way out of political troubles caused by unemployment or to create short-lived pre-electoral booms and consumer spending. Both Parties would suffer thereby. The fascination is the other side, almost literally, of the coin because the burden of the Government's pay policy now falls on employers who are

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being leaned on or penalised in various ways if they make settlements out of line with the pay norms. Membership of the EMS would surely have the effect of maintaining the value, though not, of course, necessarily the present value, of the pound and so prevent industry from being compensated for high wage settlements by competitive devaluations. It would therefore act, in my contention, as something of a miniature pay policy in itself.
It does so happen that I myself am in favour of joining the EMS, first because, as President Carter is painfully learning, exchange rate stabilisation is a sine qua non of counter-inflationary policy. May I, while I am on that matter, point out to the noble Baroness that when President Carter announced that his counter inflation policies where going to be directed against wages, the dollar fell out of the sky and when he raised interest rates it firmed very rapidly.
Secondly, I am in favour of joining the EMS, because I do not believe that economic affairs can be considered in terms of domestic politics any longer. They are surely in the forefront of contemporary diplomacy. My own views are neither here nor there and in any case, as a Party politician myself, I sympathise with some of the misgivings about what is essentially a German and French directed scheme. But that is exactly why I am worried that this politically weak and vulnerable Government may obscure the necessary political debate on the issue.
In a democracy the political is surely part of the educative process—and the noble Earl, Lord Lytton, had something to say about that—the battle for the hearts and minds of men. That is why I share the feeling of my noble friend Lord Thorneycroft that we may be losing another opportunity to shape a Europe that will inevitably continue to shape us. We would all welcome the views of the noble and learned Lord, Lord McCluskey, on this matter when he comes to speak in a few moments. We shall not hold it against him if he airs his own views, just as I have aired mine, and divorces himself, if only for a second, from the Treasury Box. But we cannot debate economic affairs intelligibly and dodge this issue, and we cannot really postpone it.
In three vital areas of economic life—energy resources; the provision of
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services, including financial services; and agriculture—Britain has long been and remains an outstandingly successful and prosperous country. Although the noble Lord, Lord Walston, had reservations about our handling of agricultural machinery, I do not think that as a distinguished farmer he had much to criticise about our agricultural productivity. These successful areas take the strain of our standard of living. Our great weakness surely is that there is tied to this successful economy, what I, as a lover of Italy, sometimes think of as our industrial mezzogiorno: a manufacturing wasteland that we cannot afford to do without in terms of employment or overseas earnings, but whose steady and long-term decay has spawned most of the evils from which we suffer. It has spawned, for instance, fierce inter-union competition for decreasing shares. We constantly talk about the unions as if the confrontation was between them and bosses or managers, but most union competition is inter-union. It has spawned the closed shop and a political economy which sways in the wind of a handful of constituencies, most of them suffering themselves from industrial decay. These unsuccessful sectors of the economy help to corrupt and damage the successful sectors.
Capital transfer tax, for instance, is designed in terms of social justice, as a palliative to workers in the unsuccessful sector. Yet surely capital transfer tax, more than anything else, will destroy the efficiency of our agriculture within a generation or two unless drastic changes are made. High marginal rates of taxation are likewise a response to a situation rather than a dynamic in themselves. Very few of our competitors go in for them or believe that in some way they improve productivity. Of course, these rates of taxation, many of which have been mentioned by my noble friends on this side of the House, are responsible for all sorts of tensions in the work place. For instance, the tension when the chairman of an important industry, in order to get a small percentile net raise in wages, has to have his gross pay increase measured in thousands of pounds.
The newly nationalised industries are not nationalised in the sense that they are more responsive either to Parliament or to

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consumer needs—witness the attempts in the gracious Speech:
"to strengthen the consumer voice in relation to nationalised industries".
They are nationalised either because of the political problems inherent in their being allowed to collapse—the lame duck syndrome—or because, as with the partial nationalisation of North Sea oil, they are threateningly successful.
I hope that even noble Lords opposite will accept that what I am trying to say is essentially positive. Thanks to our energy position—and it is not just the windfall of North Sea oil; it is also our traditional energy source of coal—we are in a potentially favourable situation. We could recover much strength in the last years of this century and, again, we could gain time in which to develop the industrial and other economic capacity with which to face a threatening new millennium. As a matter of historical record I should say here that some of the leading European minds at the end of the last millennium thought that the last trump would sound on New Year's Day 1,000, so we are at least a little more optimistic than they were.
We are politically much more stable, much more soundly based than we think. We have progressed from an 8 per cent. rate of inflation in 1973—a nasty rate of inflation indeed—to 8 per cent. in 1978 by way of close upon 30 per cent., under this Administration, in 1976. How nasty it was and how nasty it indeed still is. Yet giant pythons did not roam the streets, as Private Eye predicted, and with unemployment still around the 1·5 million mark, tragic though that figure is, Britain's governability is not seriously in question. What we lack—and my noble friend Lord Thorneycroft, who opened the debate, bore this out—is any kind of target, objective, encouragement or hope for the future. I accept the sincerity of the measures in the gracious Speech, even as I accept their essential decency. The indecent proposals, be they an extension of the decayed public sector or constitutional changes, like doing away with the Second Chamber of Parliament, or new fiscal irritations, are safely tucked away in the plain brown wrapper at Transport House.
But I am depressed by the sense that this gracious Speech is one more stage in
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what I think the noble Lord, Lord Rothschild, called "the systematic and orderly management of decline". Why should we accept decline? There is no inherent reason for it to continue, just as there are, of course, inherent historical reasons for it to have occurred. Nevertheless, the decline will go on, at least until we discard tired political assumptions and discredited economic ideas.
Take, for instance, the debate, which I mentioned at the beginning, about incomes policies as against monetary policies as a method of controlling inflation. The Government have said that their policy pivots upon a wages policy—on the 5 per cent. norm—and the Prime Minister has said that he will go to the stake or the country on that norm. Very well. It is true that taking an average across the economy, if everyone settled for 5 per cent. on their wages, wage inflation in this country as against other factors would account for some 2 per cent.: the difference being swallowed by the general rate of growth of output. That would be an excellent idea and we would all subscribe to it.
But no one thinks that this will actually happen. In the first place, as I said, the policy is not a policy in law, and it would be dubiously enforceable even if it were a policy in law. In the second place, the previous stages of the wages policy have damaged differentials to such a pitch that a 5 per cent. fixed norm would in many cases effectively constitute a freeze and the relative improvement in output, which the Government have proudly noted, effectively precludes a freeze at the present time. Here surely is the lesson of Ford. The Government say 5 per cent. The management says 12 per cent., but is prepared to have its arm twisted to 16½ per cent. The shop stewards say 20 per cent. plus, but it is my fervent belief and my hope that the workforce will in the end settle somewhere around 16½ per cent., or would if they were allowed to ballot secretly. Left to themselves the company and its workforce would probably originally have settled, without that damaging base norm, for between 12 and 16 per cent., let us say 14 per cent. That is not good, but it is better than what we shall get in the end.
The workers at Ford know very well that the position of the company lies in

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their favour, but the workers at Vauxhall, at any rate in the Luton division, know that the position of their company is less favourable and they have, in effect, shown willing at least to settle accordingly. Nor is this only the case in the private sector. No one in the country believed that a NHS settlement could be achieved at 5 per cent.; as my noble friend said there was a token resistance, during which, disgracefully—and the noble Earl, Lord Lytton, mentioned this—a number of patients lost their lives, and which ended, rather ominously I thought, the day after a by-election, with a settlement of 15 per cent. So without that norm of 5 per cent. the 15 per cent. might well have been 2 per cent. or 3 per cent. lower. Again this is not good, there is no cause for rejoicing, but it is better than what we are obtaining now. And for all this (and the really punishing instances, I would claim, are still ahead of us) we shall most likely suffer a renewed bout of interference in pricing, in profitability, in investment and hence in recovery. The noble Viscount, Lord Watkinson, had a good speech to make about that.
The Government's desire to reduce inflation is not in question, but they will not wish to cut more spending in an election year and so they will have to put up interest rates and increase indirect taxation on goods. Why should they not save themselves the stored up aggression which will greet this manoeuvre and get it over with now? I am prepared to wager a bottle of good Scots whisky—there is something about the noble and learned Lord, Lord McCluskey, that seems to attract gambling—that this will happen by the end of April at any rate, so why should he not help his own political Party by suggesting that it be done now?
This argument between wage interference and monetary weapons is surely a bogus dilemma. It was not as if we had the 5 per cent. pay policy on offer. Policing such a policy through employers poses enormous difficulties for them in negotiations. Nor is it as if the Government have made any declaration as to what they anticipate will follow a year of 5 per cent. Will the noble and learned Lord tell us how differentials are to be restored even supposing that the majority of settlements are made at around 5 per cent.?—and I do not accept that they
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will be, much as I wish that they would be. Is there any target, any encouragement, any restoration of incentives in sight?
At the beginning of the debate on the Address seconding the Motion, the noble Lord, Lord Bruce of Donington, spoke sadly, and I think movingly, of the high hopes that he felt as a young Member of the first truly Socialist Parliament in 1945. Under the pressure of war, the leadership of Winston Churchill and the guidance of such great men as Clement Attlee and Ernest Bevin, my noble friend Lord Butler and Lord Beveridge, we created a society which was able to cope with the exigencies and troubles of war. In 1945, under the pressure of sincerely held but, to my mind, damaging political views the first properly Socialist Administration not only did not dismantle wartime controls but added to them. In 1951 a Conservative Administration took over and administered, in the main I think rather successfully, this rather recent and rather green social democracy. Nevertheless, all that time, under both Parties, we have seen a persistent playing down, an undervaluing, of all the ideas inherent in wealth creation. We have been concerned with distribution, with justice, with equity, and we have been, at any rate in Parliament and at the centre of political life, anti-materialist in our thinking. I believe that this is honourable and fine in intention; but it is not honourable and not fine to expect that we can somehow enjoy the luxuries of anti-materialist thinking and at the same time enjoy the luxurious standard of life of an advanced Western social democracy. Whoever is in power in the next few years, these attitudes will have to change. I agree with my noble friend, Lord Watkinson, that it would be better that they should change under the direction of people who at least believe that such change is overdue.
9.35 p.m.
The SOLICITOR-GENERAL for SCOTLAND (Lord McCluskey): My Lords, as I have listened to the debate I believe that the main themes which emerge from it are the underlying problems of the economic performance of the country, including productivity, the containment and reduction of inflation and the evils of unemployment. It is perhaps

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a pity that the House is now so bare because in the speeches which preceded the last one I detected a good deal of wisdom and freshness towards the end of the debate.
The debate has been marked by some remarkable alliances, including that between my noble friend Lord Shinwell and the noble Viscount, Lord Watkinson, who is still with us, when they found themselves on exactly the same side. The noble Lord, Lord Walston, referred to the wisdom of some of the speeches which had preceded his, but I think few of those could rival his for thoughtfulness and depth and the quality of his information. I thank the noble Earl, Lord Lytton, for the support which he has recently given us, but with this qualification, that when he refers to the United Kingdom I should prefer that he does not call it England. I particularly welcomed what Lord Walston said about directing attention to the responsibility of management, in a way that was largely missing from many of the speeches in this debate.
I want to welcome specifically the remarkable speech of the noble Lord, Lord Thorneycroft. He stood before us in sackcloth and ashes, displaying an attitude of penitence and humility that delighted us all as much as it surprised us. What I welcome is not the content of the speech, with which I did not entirely agree, not with it all, but the tone of it, and I hope I can emulate him in some respects by trying to follow that tone. I do not think his message was entirely dissimilar from the message which appeared in a leader in the Economist on 28th October 1978, from which I quote this small part:
"The philosophical argument over incomes policy quickly degenerates into semantics unless one believes (as the Economist does not) either that pay norms are always harmful or alternatively that they never are; the debate is meaningless detached from the context of one country at one moment of economic and political time".
I do not think that is very different from what Lord Thorneycroft said. I do not think it is very different from what the Government are saying, because we do claim perfection; we do not claim that there are golden rules and we believe we do practise what the noble Lord called for, a judicious mixture—I shall have to develop that—of incomes policy, of monetary controls and of fiscal policy.
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Criticisms are made because, for example, the 10 per cent. policy did not in fact hold wages to 10 per cent. But that is like saying the 30 mph speed limit does not hold people to 30 mph. If one has no restriction at all, where does one end up? And if the out-turn is that we give a guideline of 5 per cent. and we end up with an out-turn of 7 per cent., I think many people will be satisfied with that result.
Something else before I leave the remarkable speech of the noble Lord. He said, I think seven times, to the Government, speaking with a great deal of experience, "Don't do this, don't do that and don't do the next thing", and I concede there was much wisdom in all those "don'ts", but one cannot run the economy by not doing anything. The Government must, in the context of what the Economist said, at this time, at this one moment in economic and political time, do things; the Government cannot run away by simply saying, "We don't do this and we don't do that". If Mrs. Worthington does not put her daughter on the stage there is no-one on the stage.
The Government are not afraid to admit that their policy is not perfect. I need not specify the main features of the policy, but criticisms of particular imperfections have been made here and in another place, on television and in the Press. I would be dishonest if I did not acknowledge that some of those criticisms have force. Indeed, if we knew of a better policy that would work at this time and in this context, that would command acceptance in the country, would fight inflation and would contain, or perhaps reduce, unemployment, then we should adopt it. But we do not. And having listened to the variety of views today, I do not believe anybody else does either at this time in this context.
We recognise that the present policy is not a very comfortable one for the Government or for the nation. We recognise that it places some firms, some negotiators and indeed some members of the public in a difficult position and places many in situations where they must make unenviable choices. But the Government's policy is one that has been practised consistently and with success since it became plain that extraordinary measures were indeed required to reduce inflation from

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the spiralling peaks of early 1975. I believe that the Government are learning from their experiences and indeed from their mistakes; and the Government are certainly endeavouring to improve their policies as they go along.
I need not rehearse all the figures. We have been reminded more than once that in the past 12 months we have come down from an annual inflation rate of 17 per cent. to one of 8 per cent. The Government's firm pay policy has played a part in achieving this. I shall come back to the point made by the noble Baroness, Lady Seear, about the part played by the favourable terms of trade. Certainly, the Government's firm pay policy has played a part, and it must be recognised, it must be shouted from the rooftops, that, with inflation actually falling and with the Government's pay policy in force over the past 12 months—and in Phases 1 and 2 before that; but certainly over the past 12 months—real living standards have been rising, and rising as a result of gains in real wages supplemented by tax cuts (the fiscal measures I have mentioned) and improvements in child benefits, pensions, and other social benefits.
I should not want it to be thought that the Government are complacent about the United Kingdom's inflation rate as it now is. It is certainly about the average for industrial countries, and considerably better than the inflation rate in some. But it is also higher, and significantly higher, than the rate obtaining with some of our major competitors. I mean West Germany and Japan. I acknowledge that, unless there is an improvement in productivity, or a reduction in the growth of money earnings, unit labour costs in the United Kingdom will continue to grow too fast, and inflation will once again move upwards. For that reason, the increase in earnings in the coming pay round must be substantially lower than it was in the past. The Government have to listen to all voices and the representations of all the different interests, but at the end of the day it is the clear responsibility of the Government to indicate the level of growth in earnings which it considers appropriate and consistent with preventing an increase in the rate of inflation—or possibly achieving a decrease—and the Government cannot shirk that responsibility. Indeed, I do not know who says that they should.
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We have been referred more than once to this very interesting document, The Right Approach to the Economy. The noble Lord, Lord Thorneycroft, referred me to page 16, and I always intended to quote a short passage from it. What it says is as follows. I shall read only one sentence, but I hope that I do not do the whole passage an injustice:
"Yet in framing its monetary and other policies the Government must come to some conclusions about the likely scope for pay increases if excess public expenditure or large-scale unemployment is to be avoided, and this estimate cannot be concealed from the representatives of employers and unions whom it is consulting".
I do not think that there is a great chasm between that way of putting the matter and the way that the Government put the matter. When we talk about free collective bargaining, we must remember that everyone would like to see responsible free collective bargaining, but who puts in the element of responsibility? In our present time, and in our present context, the Government put in the element of responsibility; and the Government do so by saying: "This is what we think we can afford". The Government indicate the figure, but simple verbal persuasion is not enough—it is not seen to be enough—and we believe that we have to back it up in the ways that the present policy involves.
So that is the real basis of the 5 per cent. guideline to which the Government have committed themselves. It is not, I believe, wholly inflexible. Even within the 5 per cent. there is some measure of flexibility, although I acknowledge, as the Government plainly do, that a guideline tends to become a target, or a virility symbol, as is sometimes said. May I make the following point which I do not think has been made in the debate. The usual criticism made of the 5 per cent. is that it allows only for a small increase, but historically—and one does not need to go too far back into history—the annual rate of pay increases was substantially less than 5 per cent. and people managed to make their adjustments and hold their differentials, or alter them. So we believe that the present guideline provides a measure of flexibility and will allow some restoration of differentials where the erosion has caused a real problem. Again, self-financing productivity schemes, if they are honest, will operate, as in the last pay round, in order to allow further flexibility.

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Apart from these aspects of the policy, special treatment is provided for the very low paid. That is set out very clearly in the White Paper and in Government Statements, and perhaps I need not detain your Lordships with that point at this time of night.
The noble Baroness, Lady Seear, made the perfectly valid point that during the time when inflation has been coming down, the terms of trade have in fact been in our favour and have made a significant contribution to the reduction in the rate of inflation. I have to acknowledge that, and I am happy to do so. But it would not have been good enough had we simply stood back and said, "Luckily the terms of trade are in our favour, so we can forget about incomes policy." So we have to recognise that there are all these factors working together, and that by allowing complete and irresponsible freedom in relation to the raising of incomes we could have thrown away the advantages that were conferred upon us by the favourable terms of trade to which the noble Baroness has drawn attention.
I do not want to engage in a slanging match about the proposals which have come from the Opposition at different times, and the splits, as it were. So far as I can see in this House the noble Lords opposite are united by only one thing, and that is by an irresistible urge to issue challenges to me to engage in risky gambles with them. Without trying to make capital out of these divisions, the Government cannot indulge in the luxury of splits. The noble Earl asks me what divisions. He forces me to tell him what they are. I do not want to go into it in any great detail, but let me quote from what the noble Lord, Lord Carr, said on 8th November, 1977, in this very same debate. I quote from column 40 of the Official Report of Tuesday, 8th November, 1977, and your Lordships will forgive me if I quote at some little length. He said:
"My Lords, the fourth fundamental problem to which I wish to draw attention is the need for pay restraint".
I shall read short, my Lords.
"Pay restraint is vital, therefore, both to our long-term objective of raising our standards of living and also to our need to cut inflation.
"In the short run, the Government must be firm in maintaining their 10 per cent. guideline as the maximum permissible increase in earnings and they must do so not least in the public sector of
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the economy. I want to take this opportunity of assuring the Government that they can count on the support of the Opposition in seeking to achieve this objective".
What on earth has changed between 8th November, 1977, and 2nd November, 1978, that causes noble Lords opposite to depart from that firm and encouraging support for Government policy?
The Earl of GOWRIE: My Lords, it is the difference between guidelines and policy. What we are objecting to is the way a policy is applied through sanctions. The sanctions have not been legitimated.
Lord McCLUSKEY: My Lords, the Government have made a choice. The Government have decided, in this context, what their policy must be, and I believe that we would have the support of the noble Lord, Lord Carr of Hadley, were he here, that we must firmly stick with it. Our ears are not closed to representations, from whatever quarter they may come, but at the end of the day it is the Government which have to decide and have to endeavour to see that this policy is enforced with all means at their disposal. What we are reasonably certain of, my Lords, is that there is widespread support in the country for the policies which the Government are now proposing in order to contain the evil of inflation. We believe, furthermore, that that evil is now widely recognised, and we believe that it is very important that all people who are concerned with the future of the country should do their best to make the public aware of what are the issues. Indeed, that is, in a sense, the great value of this debate, that it helps towards the growth of public understanding.
Perhaps I may say a word or two about the precise criticisms of the Government. What I think the critics of the Government are saying is that the Government are doing too much, not too little. The suggestion, in other words, appears to be that the Government should not add to their present policies but merely subtract from them. They should withdraw the 5 per cent. guideline, as it were, and rely upon what the Prime Minister called "the other two legs of the stool". I would have thought that people in the country—and they have as much right to views on these matters as have the divergent economists—would laugh at the idea that the Government are doing too much.

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Some, indeed, like the noble Lord and the noble Baroness on the Liberal Benches, think that the Government do not do enough. They want the Government to have some kind of statutory pay policy. I believe that to be unrealistic, because I do not think that is an option which is open to us, even if it were desirable in this context and at this time.
So what the Government are attempting to do is to use persuasion, and to back that persuasion by every means at their command, including the use of sanctions and cash limits, as well as the control of the money supply and fiscal measures in so far as these prove to be necessary and helpful. Of course, the Government prefer an incomes policy of the kind they are endeavouring now to enforce because that, more than any other policy, leaves it open to the Government with the support of Parliament, and to negotiators, to make limited choices. The alternative weapons of monetary control and fiscal control even if effective—and doubts have been cast on the effectiveness in this debate—are cruder and blinder and much more likely to lead to harm which is not under the control of responsible Government. I say they have been criticised. They have been criticised by the noble Viscount, Lord Trenchard, and by the noble Lord, Lord Kaldor.
So if the Government were to seek to rely on monetary and fiscal measures that would not only have the kind of consequence which others in this debate have pointed out; but we believe that that kind of reliance would have a much greater effect on those who work in the public sector and who are liable to find themselves more severely hurt than those who work in the private sector. The Government can enforce a cash limit in the public sector and that can have consequences there, but the Government cannot, as I think the noble Lord, Lord Kaldor, pointed out, enforce a cash limit on Ford. It cannot be done. That becomes a differential policy and, therefore, an unfair policy.
I listened with interest to the speech by the noble Viscount, Lord Watkinson. I think that he differed substantially from the noble Lord, Lord Thorneycroft. He sought to lay the blame on the trade union leaders, whereas the noble Lord, Lord Thorneycroft, felt that the trade
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union leaders were not given enough power in relation to those whom they led. But I want to draw the attention of the House to a document which was published yesterday—or, rather, it appeared in the financial press yesterday—the CBI Quarterly Industrial Survey and Report and the noble Viscount, Lord Watkinson, is a distinguished ex-president of the CBI. That survey is moderately optimistic and concludes that the prospects for continued growth in manufacturing investment are still good across industry. It also argues that lack of price competitiveness is affecting the export orders of many companies. I quote from that document:
"…the need to curb increases in labour costs is therefore paramount".
It says that pay settlements must be agreed at "more reasonable" levels and be accompanied by better productivity. I believe that we are indebted to the CBI for publishing the survey and report yesterday, for their confidence and for their support. As the Prime Minister pointed out yesterday, industrial investment is now moving ahead and the last recorded figures for new plant and machinery were 10 per cent. higher than a year earlier. As regards the distribution and service industries, investment is more than 12 per cent. higher than a year earlier; and industrialists forecast that the increase will be maintained into next year.
I want to acknowledge the consistency of the noble Lords and noble Baronesses on the Liberal Benches. They have consistently stuck to their belief that a statutory pay policy should be put into force; but it is fair to ask those Members of that Party how the Party would wish to see a statute formulated and which guideline or guidelines they would propose. I am thinking not just of the long term but of the short term. And how would they expect such a statute to be administered? And, furthermore, whether such a statute could remain in force without any reasonable expectation of receiving the general backing of the people in the country. I believe that the Liberals have indulged in the luxury of making a proposal of this kind without facing up to the history of this kind of measure and without facing up to the difficulties of putting it into effect.
There was much in the speech of the noble Lord, Lord Rochester, with which

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I am happy to agree. I welcome the broad support that he and his colleagues offered to the Government and, in particular, their preference of the Government's choice of options over those offered by noble Lords opposite and their right honourable and honourable friends in another place. I was asked specifically to try to put some meat on the bones of the remarks about industrial democracy which appeared in the gracious Speech. At this time of night the proper thing for me to do would be not to attempt to add anything to what my right honourable friend the Prime Minister said in another place, but your Lordships will find the passage in column 40, volume 957, No. 1, of Commons Hansard for 1st November 1978.
Both the noble Lords, Lord Rochester and Lord Kaldor, made a case for the development of permanent machinery for regulating pay. I believe that the noble Lord, Lord Shinwell, was advocating something of that kind, too. No matter how attractive such an idea may be on paper or in elegant and objective discussion, one still has to find the cooperation of people in the country before that can be put into effect. The Government cannot by decree set up a board which will then regulate and everyone will sit down and obey it.
Let me turn to the matter of income tax. I do not want to take up time on this because, although it has been mentioned by the noble Lord, Lord Mackie of Benshie, the noble Viscount, Lord Trenchard, and others, the Government have moved to the position that the burden of income tax is too high. This has damaged the incentive to work throughout the economy both at the highest and the lowest levels. What happens both in Government and out of Government in many debates is that we, to some extent, convert one another. We are prepared to concede that the Government have moved in this direction and I do so. Of course, the Government in recent Budgets have cut income tax substantially. Indeed the tax cuts which have been made—some £6 billion in the past two years—include substantial reliefs for those paying the higher rate of tax. If examples are required, I shall be happy to give them to any noble Lord who cares to write to me.
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One other remark I want to make about pay policy is that I believe there is a vital difference between the rigidity of the pay policy which failed in the spring of 1974 and the Government's present incomes policy. I believe that on that occasion—and I consider the judgment of the country would be the same—at some point leadership became confrontation, and that is what happened to the pay policy. There was confrontation. What we have now is a situation where responsible Government Ministers found, as they found at the Labour Party Conference among other places, that those whom they were leading were not exactly in step and close behind them; then it was their duty to consult with them instead of fighting them. That is precisely what we are doing now. I hope—I cannot promise; I do not know—that these consultations, both with the CBI and with the Trades Union Congress leaders, will take us some considerable way towards finding ways and means of reconciling their desires, and the desires of many who support them, with the duty of the Government to keep down inflation.
A good deal has been said about unemployment and I want to say three things about it. First, although unemployment has risen considerably over the past four years, in fact one finds that over this period it is the increase in the labour force itself, not the fall in numbers employed, which accounts for the rise in unemployment. The rise in unemployment has been of the order of 800,000 in the four-year period between the spring of 1974 and June of 1978. But over that same period in effect another 800,000 people have come into the market looking for jobs. The numbers of those actually employed—including the self-employed and those in Her Majesty's Forces—has remained almost constant.
Secondly—and I am looking at a much shorter period—there has been a steady fall in unemployment over the past 12 months. The third point—without trying to elaborate it in great detail—is that what the Government can do about unemployment, apart from general measures, is to introduce particular schemes. At the moment there are no fewer than 11 separate schemes which have assisted a total number of 260,000 people towards employment. That is the Government's record, of which we can be justly proud.

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I was asked by the noble Earl—tempted, I should say—to divorce myself from the Treasury Box and announce my own views on the European Monetary System. I did in fact announce certain views on the European monetary system when I spoke in a debate just before the Recess, but I would say to the noble Earl that if I, as a Minister of the Government, were to start to divorce myself from the careful words prepared at the highest level, I should soon find myself divorced from the very high office which I am privileged to hold as a Minister of the Crown. So let me give you the careful words. The European monetary proposals, upon which so many able speeches have been made, are indeed highly complex. As the noble Lord, Lord Roberthall, said, they are still in the process of discussion and development. My attitude tonight must be that of one who listens and takes note rather than that of the substantive commentator. There are as yet in fact no final proposals to present or to comment upon. I think that is as far as I can go, but we can recognise that the overall objective of currency stability is one that it is worth undertaking a good deal to attain. We acknowledge that: that is why we go to these meetings very positively.
Many of the currency fluctuations which we have seen have been, in real economic terms, pointless. Some speculators have profited but the world as a whole has lost. The experience of the past few years has shown that there are also real economic forces behind the divergences in currency values. The greatest of them has been the divergence in rates of inflation; so wherever you start in this particular maze, you always come out of the door marked "inflation".
The noble Lord, Lord Thorneycroft, said in connection with the North Sea oil resources that nothing is being spared for investment and repayment of debt. I do have to repudiate that. As he will probably recall, on 30th October Her Majesty's Government repaid nearly one thousand million dollars to the IMF before it was due; and that was the second early repayment this year of IMF draw-
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ings. A sum of one thousand million dollars was repaid in April, so in this year the total repaid ahead of schedule is two billion dollars. Therefore I cannot accept that particular criticism; nor can I accept the other one; namely, that we are not using our existing resources for investment. He will perhaps now recall that the gracious Speech contains a passage reading:
"Legislation will be introduced to provide additional finance for the National Enterprise Board and for the Scottish and Welsh Development Agencies".
So I think these points are effectively answered.
In conclusion, I believe that this has been a valuable debate, even if perhaps little was said, certainly in the earlier part of the debate, that had not been said before. I think perhaps its value as a debate is that it helps the growth of understanding and I hope, if that is right, that people will be less easily misled by the irresponsible and the agitators who make claims or pursue objectives which are not in their long-term interests. Nothing is going to work, either in the short-term or in the long-term, in relation to the matters we have talked about—inflation and productivity—without the consent of the people in the country. That consent must be based upon a sound public appreciation of the very matters we have been discussing. If this debate has contributed to that, it has been well worth while for us and for the country, and the Government will be well pleased.
Lord STRABOLGI: My Lords, on behalf of my noble friend Lord Harris, I beg to move that the debate be now adjourned until Tuesday next.
Moved, That the debate be now adjourned until Tuesday next.—(Lord Strabolgi.)
On Question, Motion agreed to, and debate adjourned accordingly.
House adjourned at four minutes past ten o'clock.