Sitting of 4 July 1979

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRIVATE BUSINESS
  CONFIRMATION
  Mr. Secretary Younger presented a Bill to confirm a Provisional Order under section 7 of the Private Legislation Procedure (Scotland) Act 1936, relating to Ross and Cromarty (Coastal Waters Pollution): And the same was read the First time; and ordered to be considered upon Wednesday 4 July and to be printed. [Bill 37.]
ORAL ANSWERS TO QUESTIONS
  SCOTLAND

    Ex-police Sergeant William Jamieson (Royal Prerogative)
    Mr. Dalyellasked the Secretary of State for Scotland what study he has made of the case of ex-police sergeant William Jamieson of Bo'ness; and whether he will consider making a recommendation to the Queen for operation of the Royal Prerogative.
    The Under-Secretary of State for Scotland (Mr. Malcolm Rifkind): My right hon. Friend is now looking into the case of ex-police sergeant Jamieson. This case has not previously been raised with him in relation to the possible exercise of the Royal Prerogative of Mercy. My right hon. Friend will write to the hon. Member as soon as possible.
    Mr. Dalyell: Does that mean that the issue is being kept open?
    Mr. Rifkind: That is correct. The issue is being kept open. We shall try to
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    come to a speedy decision, as is appropriate.

    Scottish Development Agency
    Mr. Dewarasked the Secretary of State for Scotland if he will make a statement on the funding of the Scottish Development Agency; and what effect the reduction in its budget will have on the agency's activities and terms of reference.
    The Under-Secretary of State for Scotland (Mr. Alexander Fletcher): As I told the hon. Member for Glasgow, Maryhill (Mr. Craigen) on 19 June, it is intended to achieve a reduction in the agency's published Supply Estimates for 1979–80 of about £20 million. This will still leave the agency with about 25 per cent. more available to it than it spent last year.
    Mr. Dewar: Does the Under-Secretary of State accept that that is almost certainly a cut in real terms, given the high rate of inflation that we can expect from the Conservative Government? Will he accept that it is the worst type of ideological prejudice to restrict the operation of the Scottish Development Agency at a time when we can expect cataclysmic unemployment as a result of the Government's policies? Will the Minister please undertake to guarantee that there will be no cut in the type of investment that the agency can make or in the range of its interests, even if he is being mean about the money?
    Mr. Fletcher: There is no question of the Government being mean about money for the SDA. It was seriously over-funded. The provisions that are being made for the future of the SDA will be in no way restrictive. They will help to make it more efficient and effective in its future operations.
    Mr. Gordon Wilson: If the Minister feels that the SDA is over-funded, why did he not transfer that over-funding to help Scottish shipyards or, indeed, to maintain its interest scheme for the construction of oil rigs in order to maintain employment in Scotland? Is the hon. Gentleman really satisfied with the co-ordination of economic policy as it affects Scotland? How are his policies likely to create employment in Scotland?
    Mr. Fletcher: The most important need of the Scottish shipbuilding industry is

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    orders for ships. It is not a matter of funding the SDA or anything else.
    Mr. Lang: Does my hon. Friend agree that, useful though the SDA is, like its predecessor, the most important role that the Government can play in creating new jobs in Scotland is to encourage incentives amongst individual men and women? Will he reaffirm the commitment to give all the help that he can to small businesses?
    Mr. Fletcher: Yes. We are committed fully to giving help to small businesses. In that respect we believe that the SDA has a useful role to play.
    Mr. Mlillan: Since all the SDA's activities—whether industrial development, factory building or clearing derelection—are connected with the provision of jobs, is it not inevitable that a cut of £ 20 million in the planned budget for next year will result in the loss of thousands of jobs in Scotland?
    Mr. Fletcher: That is a gross exaggeration. I am surprised that the right hon. Gentleman should make it. He must know better than anybody the extent to which his Government over-funded the SDA's operations. The SDA will still have 25 per cent. more funds available to it this year than it had last year, despite the cuts.

    Hill Livestock Compensatory Allowances
    Mr. Mylesasked the Secretary of State for Scotland if he will make a statement on the level of hill livestock compensatory allowances for 1980.
    The Secretary of State for Scotland (Mr. George Younger): My right hon. Friends and I will review the level of hill livestock compensatory allowances for 1980 towards the end of the year when we know the outcome of the autumn store stock sales and have up-to-date information on changes in production costs.
    Mr. Myles: Does my right hon. Friend agree that it is vital that primary producers of calves in the hill areas have their confidence restored so that we may be in a stronger position when the predicted shortage of beef occurs?
    Mr. Younger: I agree very much with my hon. Friend, and we shall take these matters very carefully into account in the review we will be making this autumn.
    Mr. Russell Johnston: Is the Secretary of State aware that that is a very disappointing answer and that the agriculture industry is expecting some increase now to take account of increased fuel costs and rising inflation? Is he aware also that Conservative candidates in the election campaign gave the impression that action would be taken speedily if the Conservative Party came to power? Is it the right hon. Gentleman's intention to pay up to the EEC limits in future?
    Mr. Younger: The question is directed to the levels for 1980, and I have answered it in that sense. In relation to the present situation we hope to announce a decision very shortly.
    Mr. Pollock: Does my right hon. Friend agree that what farmers require, above all, is a clear and strong commitment by the Government to supporting a home-based food industry? Does he agree further that his colleagues at the Ministry of Agriculture, Fisheries and Food are to be congratulated on the successful negotiations in Europe which will be of real help to consumers and farmers alike?
    Mr. Younger: My hon. Friend is absolutely right. There is no doubt that the success of my right hon. Friend the Minister of Agriculture, Fisheries and Food in his negotiations in Europe last month was an extremely good boost in confidence for the farming industry. Scotland is no exception to that.

    Fishing
    Mr. Sproatasked the Secretary of State for Scotland when he plans next to meet representatives of the fishing industry.
    Mr. Younger: I met representatives of the United Kingdom fishing industry both at home and in Luxembourg at the time of the Council of Fisheries Ministers on Monday 25 June 1979. I am arranging meetings at an early date with representatives of the industry in Scotland.
    Mr. Sproat: When my right hon. Friend meets those representatives, will he, in the light of the tragic loss of the

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    "Carinthia" last week and the 22 fishermen from the North-East who have died at sea in the last 12 months, seek to persuade them, in conjunction with his right hon. Friend at the Department of Trade, to make far more use of the new radio open line for reporting in? Can he tell the House what consideration he is giving to compulsory survival training for fishermen?
    Mr. Younger: I agree with my hon. Friend that the number of tragedies in the fishing industry should cause us great concern. I shall be discussing these matters with representatives of the fishing industry at the earliest possible opportunity.
    Mr. Grimond: What will the Secretary of State be able to say about herring when he next meets the fishermen? Does he agree that there is evidence of an increase in the number of herring in the North Sea? Can he say what he is currently telling fishermen about whiting quotas?
    Mr. Younger: We are convinced that it is necessary to continue the herring fishing prohibitions in 1979, because we must allow for the recovery of depleted stocks. Naturally we regret the hardship which closures of this kind can cause, both to catchers and processors, but we cannot ignore the compelling scientific evidence that demonstrates the need for continued protection of herring in our waters. As for whiting, that is a matter we shall also discuss with the industry.
    Mr. Donald Stewart: Will the right hon. Gentleman, in conjunction with his right hon. Friend the Minister of Agriculture, Fisheries and Food, be prepared to give a sympathetic reply to the request from the Western Isles fleet for a fixed quota of herring caught by drift net for the local market on the lines of a similar dispensation given to the Dutch?
    Mr. Younger: This is a wider question, but I shall consider that suggestion before meeting representatives of the industry.
    Mr. Henderson: In his discussions with the fishing industry, will my right hon. Friend include talks with the Fife Shell Fishermen's Association about the disastrous state of the crab market which has resulted in hundreds of boxes of crab
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    bodies being thown overboard each week? Will he take steps to prevent the dumping on the market of cooked crab meat from outside the EEC?
    Mr. Younger: This problem is causing great concern in some quarters of the fishing industry. I cannot say that we have a reasonable and readily identifiable solution to it, but it is a matter that we shall discuss.
    Mr. Robert Hughes: When will the right hon. Gentleman be able to announce a decision about funding for the development of the fish market in Aberdeen? Is he aware that there is concern in the city following the meeting of his right hon. Friend Lord Mansfield with the Aberdeen harbour board, when he gave its members a very dismal view of the funding that might be provided by his Department?
    Mr. Younger: I do not know about the last part of that question, but the case which was put by the Aberdeen owners for consideration for parity with the English ports is very much under consideration by my Department.

    Civil Servants (Dispersal)
    Mr. Gregor MacKenzieasked the Secretary of State for Scotland what assessment he has made of the employment consequences to Scotland of the dispersal of Civil Service jobs from the Ministry of Defence and the Overseas Development Administration to Glasgow and surrounding districts.
    Mr. Younger: This depends on assumptions about local recruitment and the multiplier effect, but the regional implications and the importance of job structure will be taken fully into account in the current review of the dispersal programme.
    Mr. MacKenzie: Is the Secretary of State aware that many right hon. and hon. Members on both sides of the House are very concerned to hear that there will be a review at all, in view of the specific assurances given by his predecessor and by him at the Dispatch Box only a month ago that the full dispersal would go ahead? May we now have from the right hon. Gentleman an assurance that there will be no diminution of the numbers going to Glasgow

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    and East Kilbride? Will he tell the House how much has already been expended by the SDA, and local authorities, in preparing for these people coming to Glasgow?
    Mr. Younger: I should have thought that the right hon. Gentleman would have been a little chary of expressing such extreme remarks and would have regarded a review as an extremely reasonable exercise to undertake, particularly in view of the extreme dilatoriness of the previous Government over this question. I understand from the Property Services Agency that it has spent £3·45 million on the acquisition of sites at St. Enoch's and Anderston for the dispersal proposed there.
    Mr. Galbraith: Will my right hon. Friend please contradict the rumours, now prevalent, that the Ministry of Defence is not to move to Glasgow? Will he confirm that this vital aspect of decentralisation and devolution is to be carried out as soon as possible, as I asked him to confirm in our recent debate on the Scotland Act—which I do not think was mentioned in his reply? I have also written to him and have not had a reply.
    Mr. Younger: I am grateful to my hon. Friend for his interest. I have made clear that no decisions on this matter have been taken. All these factors, and the concern expressed by my hon. Friend and others, will be taken into account in the course of the review, but no decisions have yet been taken.
    Mr. Cook: If the Secretary of State is unable to persuade his colleagues in Parliament to disperse Civil Service jobs to Scotland, will he at least resist their demands that he slash the number of Civil Service jobs already in Scotland? Will he not at least recognise that his statement on Saturday that the Scottish Office was a great success—a success of which the people who worked in it should be proud—must have been greeted with a hollow laugh by most of his staff, bearing in mind the commitment to cut out one in eight posts in the Scottish Office?
    Mr. Younger: There is no such commitment. What I have been discussing with my staff is the necessity, which all Government Departments must recognise, in view of the parlous state of the
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    economy of this country as it was left by the previous Government, to reduce our expenditure on necessary services to a level we can afford. If the hon. Gentleman does not like it, he should have persuaded the previous Government to do something about it.
    Mr. Allan Stewart: Does my right hon. Friend agree that one of the problems about dispersal has been the unfavourable image projected of Glasgow and the surrounding area? Will he impress upon those concerned the excellent amenities and the very high quality of life available in many parts of West Central Scotland including, of course, East Renfrewshire?
    Mr. Younger: I agree with my hon. Friend that the best answer to the so-called unfavourable image is the extreme success of the Post Office savings bank which has been successfully established in Glasgow. People there enjoy it very much.
    Mr. Harry Ewing: Will the Secretary of State accept that the kind of wriggling replies that he has given this afternoon are liable to do him an injury? Will he also accept that if Glasgow and West Scotland do not get these 6,000 Civil Service jobs that will be regarded as a total and complete betrayal of Glasgow and West Scotland?
    Mr. Younger: I hope that the hon. Gentleman will not anticipate the results of the review. It is perfectly reasonable, and right, for a new Government to review such matters as these. I hope that he will await the outcome of the review.

    Road Development (Glasgow)
    Mr. Galbraithasked the Secretary of State for Scotland to what extent he is involved in the development of roads in the city of Glasgow.
    Mr. Rifkind: My right hon. Friend makes each year an overall allocation of capital resources to Strathclyde regional council for the provision and improvement of public transport and roads within the region. Within that allocation the regional council decides which road schemes it wishes to proceed.
    Mr. Galbraith: As a road, by its very nature, affects a wide area and is therefore of more than local interest, and

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    when so much taxpayers' money is involved, should not the Secretary of State take a greater interest, and will my hon. Friend agree that some road proposals, such as that for a road to go through Glasgow Green—
    Mr. William Hamilton: Reading.
    Mr. Galbraith: I do not know what the hon. Gentleman is talking about—the road proposed to go through Glasgow Green, the Crow Road expressway in my constituency, and, formerly, the Great Western Road project;—
    Mr. William Hamilton: Reading all the time.
    Mr. Galbraith: Will you please shut up?
    Mr. Speaker: Order. No one could have been quieter than I was. Will the hon. Gentleman come to a conclusion?
    Mr. Galbraith: I am trying to do just that, Mr. Speaker, and if hon. Members opposite did not interrupt so much I might be able to get to the point, which is that the roads which I have mentioned—the proposed road across Glasgow Green, the Crow Road expressway, and formerly the Great Western Road scheme—involve issues of aesthetic and environmental interest and financial—
    Mr. Speaker: Order. The hon. Gentleman is not being fair to the rest of the House. It was not just that he was interrupted. It was a very long supplementary question.
    Mr. Rifkind: I know that my hon. Friend is voicing a matter which is of interest and concern to some of his constituents. I think that he will be aware that the proposals for the Crow Road expressway in particular have been before the regional council and the local authority since 1965. They were subject to extensive public consultation on the part of the local authority and also involved a public local inquiry into a compulsory purchase order. I am sure that my hon. Friend will agree that on a matter which is essentially local it is right and proper that Strathclyde regional council, which is the relevant authority, should decide its own priorities on the basis of what it believes to be appropriate.

    Scottish CBI and STUC
    Mr. Allan Stewartasked the Secretary of State for Scotland when he plans next to meet the Scottish CBI and the STUC.
    Mr. Younger: I have already had meetings with both these bodies and shall be meeting them again later this summer.
    Mr. Stewart: I am grateful to my right hon. Friend for that information. In his future discussions with both sides of Scottish industry, will my right hon. Friend emphasise that some recent news from Clydeside, notably from John Brown Engineering and Clydework Engineering, shows how industrial success can be achieved in Scotland if the key problem of improving productivity is tackled successfully by joint efforts on the part of management and employees?
    Mr. Younger: Yes, I appreciate what my hon. Friend says, and I think it important to bear in mind that, even in the present situation which we have taken over in government, there are still good things as well as bad happening even on Clydeside, and we welcome that very much. As regards higher productivity, the strategy of the Budget is intended to encourage people to have an incentive to attain just that, and I am sure that it is most valuable for the future expansion of business in Scotland.
    Mr. David Steel: When the Secretary of State talks with the Scottish CBI and STUC, will he convey from those bodies to his colleagues in the Department of Industry the important fact that development area status in Scotland has been accorded not just on the criterion of levels of unemployment but also on the criterion of levels of depopulation, and that nothing should be done to damage that criterion?
    Mr. Younger: I entirely agree that unemployment levels are not the only factor in this context, and all these other matters must be taken into account. They are being taken into account in our review of regional policy.
    Mr. Norman Hogg: When the Secretary of State next meets the Scottish Trades Union Congress, will he listen carefully to the alternative economic

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    strategy being offered by the general council of the STUC and, in particular, to the views of its local government committee, which is expressing great concern about the savage attacks being made on the public sector by his Government?
    Mr. Younger: I shall always listen with the greatest interest and care to all that is said to me by the STUC. I can only share the concern which it must feel about the effects on local government of the reductions in public expenditure which we are forced to make. No one can deny that they are extremely difficult to deal with, and the reason for them is that there is simply not enough money left after the depredations of the last Labour Government to pay for the services which we would like to have.
    Mr. John Mackay: When my right hon. Friend meets representatives of the STUC, will he urge on them the need to solve the inter-union dispute which is keeping the steel complex at Hunterston closed? Does my right hon. Friend agree that such continued closure does nothing for Scotland's image or for our prosperity?
    Mr. Younger: I agree with my hon. Friend. I was present at the opening of the Hunterston complex, and it was extremely sad that an inter-union dispute should have made it impossible to work it on that day. I shall do anything I can to encourage those concerned to come together, but it is primarily a matter for the British Steel Corporation and its employees.
    Mr. Millan: How does the Secretary of State propose to justify to the CBI and the STUC when he next meets them the Government's decision to discontinue the scheme of assistance for the offshore industry, which has brought many thousands of jobs to Scotland and whose discontinuance is bound to put many of these jobs at risk?
    Mr. Younger: I appreciate the point that the right hon. Gentleman makes. My colleagues in the Department of Energy are closely involved in this matter. As regards discontinuance of the scheme, as the right hon. Gentleman will be only too well aware there is an extreme shortage of money to deal with many problems throughout the country. If he had
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    thought about this a year or two ago, we might not have been in that position now.

    Primary School Teacher Training
    Mr. Maxtonasked the Secretary of State for Scotland when he intends to announce his plans for the introduction of a four-year primary education degree for all students undertaking training as primary school teachers in Scottish colleges of education.
    Mr. Alexander Fletcher: My right hon. Friend is considering proposals by the General Teaching Council for Scotland for replacing the primary diploma with a four-year degree and will make a statement in due course.
    Mr. Maxton: I am glad to hear that the Scottish Office is at least considering the issue, but is the hon. Gentleman not aware that the GTC put forward these proposals several years ago, colleges have already drawn up their proposals and all the teacher unions in Scotland are urging this measure on the Government? Further, is the hon. Gentleman aware that in England and Wales such proposals are well advanced, and if these proposals are not introduced in the near future the Scottish teacher training system, which has been in advance of that in England and Wales throughout this century, will fall behind? Finally, will the hon. Gentleman take it that there will be some disappointment in Scottish education circles about the delay which seems to be indicated by his answer?
    Mr. Fletcher: The hon. Gentleman will be aware that the degree course in England and Wales is for three years, as compared with the recommendation for four years in Scotland, and that adoption of the Scottish proposal would mean a considerable increase in public expenditure. My right hon. Friend will make a statement as soon as posible, but I cannot at this point say just when that will be.
    Mr. John Mackay: Will my hon. Friend remember that the present three-year course at the colleges of education provides excellent teachers for the primary schools of Scotland, and will he guard against adding on an extra year which may increase the theory content of

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    these courses to the detriment of the practical ability of the teachers coming from the colleges?
    Mr. Fletcher: I am grateful to my hon. Friend for making that valid point. We must continue to look at this matter not only on financial grounds but on educational grounds and make sure that it is necessary in the first place for this step to be made.
    Mr. Dempsey: Before making up his mind, will the Minister consider also the strong representations and convincing arguments on this very subject adduced by the Presbytery, which I have communicated to his Department, and will he bear in mind that, irrespective of the number of years which may be involved, if a degree course can be introduced in England and Wales it ought surely to be introduced in Scotland?
    Mr. Fletcher: I shall take those representations into account, and I note again the points that the hon. Gentleman makes.

    Fuel Supplies
    Mr. John Home Robertsonasked the Secretary of State for Scotland if he is satisfied with the state of fuel supplies in rural areas of Scotland, and what steps he proposes to take now and during the coming winter to ensure that essential public services and industries will receive adequate fuel supplies.
    Mr. Younger: While I am satisfied that supplies in rural areas are in general adequate, I recognise that there have been distribution problems in specific areas. I am satisfied that the major oil companies are making efforts to achieve an equitable distribution of oil products and are well aware of the need to rebuild stocks for the coming winter. The Government are watching the situation closely and will do all they can to help where serious difficulties arise.
    Mr. Home Robertson: Is the right hon. Gentleman aware that the fuel supply problem in many rural areas is being aggravated because the percentage reductions being applied by the various companies, which range from 5 per cent. to 20 per cent., are based on the 1978 figures, which were themselves distorted because there was a price war going on during 1978? Is the Secretary of State
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    aware also that the position in my constituency is already serious and that many petrol stations are running dry, including some which normally supply ambulances? May we have an assurance that he is prepared, if the need arises, to take urgent and active steps to ensure supplies when demand surges at the time of the harvest and in the coming winter?
    Mr. Younger: We shall always do our best to respond to any crisis brought to our attention. In one instance it was brought to our attention that there were difficulties in obtaining supplies of fuel for ambulances, and I believe that that has been resolved satisfactorily. The local supplier is the best person to respond to genuine local difficulties. Where that procedure fails to resolve a serious problem for an essential service, or where there is revealed inequity of treatment by the supplier, I shall always be prepared to help if I can.
    Mr. David Steel: Will the right hon. Gentleman try to persuade his colleagues in the Department of Energy that there are serious problems in the Borders area of Scotland that must be considered distinctively? Is he aware that some suppliers are facing cuts in supply of up to 50 per cent? There is now a lay-off of lorry drivers among the small hauliers, which is extremely serious with the late harvest approaching.
    Mr. Younger: The problem is complex. It is made more so because different companies have different quotas and different sources of supply. In general, supplies are available in most areas. Where pockets of difficulty arise we can usually do something to iron out the problems. I shall try to do that wherever possible.
    Mr. Peter Fraser: I recognise that some petrol companies are indulging in slightly doubtful tactics under the cover of a distribution crisis. However, will my right hon. Friend take this opportunity to reassure would-be visitors from south of the border that Scotland is not a petrol desert north of the Tay, and that there are still real opportunities for them to enjoy their holidays in Scotland this summer?
    Mr. Younger: I appreciate what my hon. Friend says. I think that the oil companies are mostly doing their best in what is a difficult situation for them as

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    well. Some tourists have been having difficulty, but in general none of them need fear that if they come to Scotland on holiday they are likely to be left completely dry of petrol. I understand that the Scottish Tourist Board will soon be mounting a campaign to try to counter that idea.
    Mr. Gordon Wilson: As Scotland will be exporting 55 million tonnes of oil this year, how can the Government justify any fuel shortage?
    Mr. Younger: Scotland will be importing a good deal of gas from other parts of the United Kingdom. The hon. Gentleman should realise that it is an international market and that the United Kingdom is currently extremely well placed. We are in a much better position than most of our neighbours, provided that everybody exercises common sense in a difficult situation.
    Mr. George Robertson: On 11 June, the Secretary of State for Energy assured his hon. Friend the Member for Aberdeenshire, East (Mr. McQuarrie) that he was taking immediate steps to deal with the crisis in rural areas and that these steps would be effective. As it is clear that there are still widespread problems throughout Scotland, how can the right hon. Gentleman sustain the myth and the fiction that a free market in petrol will solve the problems of the rural areas? How can he say that tourists will have no problems in finding petrol supplies this summer?
    Mr. Younger: First, I welcome the hon. Gentleman to his new responsibilities, upon which I congratulates him. Secondly, I cannot agree with him if he suggests that there is a widespread and wholesale impossibility of obtaining petrol throughout Scotland. That is not so, and I hope that those who are thinking of coming to Scotland will not take that view. There are bound to be difficulties. Nobody can pretend that everything will be plain sailing. If there are special difficulties in certain areas, the Scottish Office will always be willing to try to help. We have been able to provide help so far whenever a request has been made.

    Public Authority Housing (Security of Tenure)
    Mr. Adamsasked the Secretary of State for Scotland what action he intends to take to ensure security of tenure for persons resident in public authority houses in Scotland.
    Mr. Rifkind: My right hon. Friend is considering whether security of tenure provisions should be included in the Government's proposed housing legislation.
    Mr. Adams: Is the hon. Gentleman aware that the law in Scotland treats the tenants of local authority houses as second-class citizens, and that a local authority may proceed within the sheriff court to obtain an eviction order against a tenant without offering any reasonable proof to substantiate its action? Does he agree that the cornerstone of any such legislation should be to place a burden of proof on the local authority when it proceeds for the repossession of its property?
    Mr. Rifkind: The hon. Gentleman has correctly stated the legal position. It is only fair to point out that in the majority of cases local authorities do not resort to eviction unless there are reasons which I think Members on both sides of the House would accept would justify that action. Many local authorities are severely criticised for not taking such action when many local residents believe that eviction would be appropriate. I take the hon. Gentleman's argument. The Government are considering the matter. He will be aware that local authorities have considerable feelings on the issue, and we are interested to receive their comments on the consultative paper that was put before them some time ago.
    Mr. Ancram: Will my hon. Friend bear in mind the real hardship and misery caused to many respectable and law-abiding council house tenants by the behaviour of their anti-social neighbours? Will he assure the House that he will do nothing to make it more difficult for local housing authorities to deal with the problem effectively?
    Mr. Rifkind: My hon. Friend is correct to try to achieve a balance between the legitimate interests of the local authority and those of the tenant. We must

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    take into account the real fears of many good tenants about the difficulties that they will have in resolving problems with anti-social tenants with whom they live. There is a need to achieve a balance, and that is what we are trying to achieve.
    Mr. O'Neill: Is the hon. Gentleman aware that there are many within the public sector of housing because of their employment? Individuals who have been employees of the Falkirk district health board are being forced on to the streets because they have finished their period of employment. Does he accept that security of tenure should apply to retired hospital workers? At present there are many vacant houses in the possession of district health boards that could be provided for retired workers who are now being forced to join housing queues at a time when they are going through the trauma of retirement.
    Mr. Rifkind: The hon. Gentleman must accept that tied housing, which is the subject to which he is referring, produces a considerable number of different issues. It is difficult to provide security of tenure when an employee ceases the employment on the basis of which he was provided with a house. It is for the local authority, the body responsible for providing housing for those who need it, to respond to that type of need.

    Ardler High School (Dundee)
    Mr. Ernie Rossasked the Secretary of State for Scotland if he will give £3·5 million to Tayside regional council to build a new Ardler high school in Dundee.
    Mr. Alexander Fletcher: The hon. Gentleman will know from our recent correspondence that the regional council has decided to withdraw this proposed new school temporarily from its financial plan while various options for future school provision are considered.
    Mr. Ross: Is the hon. Gentleman satisfied that the Tory-controlled Tayside regional council deliberately underspent its capital education expenditure allowances for the past three years up to March 1979 by £1,584,000, half the amount that it would take to build Ardler high school? That is in a region where £57,000 has been removed from the financial plan for 1979, a sum which should have been
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    used for the initial design work for Ardler high school.
    Mr. Fletcher: Is the hon. Gentleman aware—
    Mr. Cryer: Is the Minister asking a question of my hon. Friend the Member for Dundee, West (Mr. Ross)?
    Mr. Fletcher: Yes; I am asking whether the hon. Gentleman is aware that the cuts to which he refers were requested by the previous Labour Government and the previous Secretary of State for Scotland.
    Mr. Peter Fraser: Does my hon. Friend recognise that the education authority of the Tayside region is facing a real problem and that there are already considerable priorities, such as Arbroath high school and other schools in Perthshire, to which it has to give its urgent attention?
    Mr. Fletcher: We shall consider carefully any proposals that the regional council makes to us.
    Mr. Harry Ewing: Is the hon. Gentleman aware that he has grossly misled the House? What he has said is totally without foundation. My hon. Friend the Member for Dundee, West (Mr. Ross) said that there had been an underspend and not a cut in public expenditure. I ask the Minister to withdraw his statement.
    Mr. Fletcher: Such underspends might arise for various reasons and as a result of various actions. I do not think that the hon. Gentleman can deny that his Government introduced drastic cuts in expenditure, including local government expenditure.
    Mr. Ewing rose—
    Mr. Speaker: Mr. John Mackay.
    Mr. Ewing: On a point of order, Mr. Speaker.
    Mr. Speaker: I shall take points of order after Question Time.
    Later—
    Mr. Ewing: On a point of order, Mr. Speaker. During an answer to my hon. Friend the Member for Dundee, West (Mr. Ross) on question No. 11 the Under-Secretary of State for Scotland—the hon.

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    Member for Edinburgh, North (Mr. Fletcher)—advised my hon. Friend that the reason that the Ardler high school in Dundee had been withdrawn from the building programme was not that the Tayside regional council had underspent, in a period of three years, about £1 million of its education budget, but cuts in public expenditure imposed by my right hon. Friend the former Secretary of State and those of us who were in the previous Government. I challenged the Minister at the time and advised him that he had misled the House and that he ought to withdraw his statement. He declined to do so.
    I put it to you, Mr. Speaker, and, through you, to the Minister, that, in view of the reply that the Minister gave to my hon. Friend yesterday, 3 July, giving all the details that I have indicated, he should now withdraw the statement that this was due to cuts in public expenditure.
    Mr. Speaker: Order. The hon. Gentleman has been a Member of the House for a long time. [An HON. MEMBER: "Hear, hear. Too long."] Order. It is official. None of us has been here "too long", or I should be getting anxious. The hon. Gentleman knows that he cannot address a question to the Minister through me on a point of order.

    English School Examinations
    Mr. John Mackayasked the Secretary of State for Scotland what is his policy regarding the increasing use of English CSE mode 3 examinations in Scottish schools.
    Mr. Alexander Fletcher: The use of these examinations in Scotland is a matter for individual education authorities.
    Mr. Mackay: Does my hon. Friend realise that the increasing use of the CSE mode 3 shows that there is a demand in Scottish schools for an examination below the level of the CSE O-level? Although he may not wish to go as far as the Dunning committee recommends, will he consider asking the Scottish certificate of education examination board to consider introducing an examination below O-level grade in certain specified subjects such as English and arithmetic?
    Mr. Fletcher: I appreciate my hon. Friend's argument. I am sure that he will agree that until decisions have been
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    made on the Munn and Dunning reports it will be difficult to take the matter any further. I agree that a considerable delay has taken place since the reports were commissioned in January 1975. My right hon. Friend will make a statement on the matter as soon as possible.

    Rents (Cumbernauld and Kilsyth)
    Mr. Canavanasked the Secretary of State for Scotland whether he will make a statement about his decision to oppose the limitation of rents in the Cumbernauld and Kilsyth district.
    Mr. Rifkind: The rent limitation order made by the previous Administration had the effect of limiting the increase in rents in Cumbernauld and Kilsyth district to £59 in the current financial year compared with the £71 which the district council proposed. My right hon. Friend took the view that there were no good grounds for interfering in this way with the district council's discretion and therefore exercised the powers given to him by section 2 of the Housing Rents and Subsidies (Scotland) Act 1975 to revoke the order. The revocation order was laid before this House on 20 June.
    Mr. Canavan: Will the Minister, who is one of the less reactionary members of this Government, come with me to my constituency and explain to the people of Kilsyth, Queenzieburn, Kelvinhead and Banton why the Tory Government are collaborating with the local SNP dictator, Provost Murray, who wants to impose a savage 40 per cent. rent increase? Is not the Minister ashamed to be a member of a Government who refuse to intervene to reduce prices yet intervene to increase rents?
    Mr. Rifkind: I thank the hon. Gentleman for the compliment with which he preceded his supplementary question. I am not sure whether it was meant to do me good or harm. Presumably he is aware of that. The hon. Gentleman is always noted for his moderate language. He should be aware that even if the district council—it will be its decision—chooses to impose this full rent increase, the average rent in Kilsyth and Cumbernauld district will become the average rent in Scotland.
    Mr. Norman Hogg: Does the hon. Gentleman accept that by reversing the previous Government's decision to limit

    1365
    swingeing increases in rents proposed by the SNP-dominated Cumbernauld and Kilsyth district council he is permitting the council to attack the living standards of council house tenants? Is he aware that the actions of this council, aided by the hon. Gentleman, have resulted in the erroneous comparison being made between houses built in Cumbernauld 21 years ago, or less, and houses built up to 50 years ago in Kilsyth and Croy, and that such a comparison has no validity?
    Mr. Rifkind: The hon. Gentleman must accept that it is only right and proper that elected local authorities should decide their rent increases for themselves and be answerable to their own tenants and electorates for the decisions that they make.
    Mr. Lang: Does my hon. Friend agree that the best way of limiting the rise in council house rents is by encouraging the sale of council houses, thus reducing the overall burden on housing authorities?
    Mr. Rifkind: Scotland has a deplorably low level of home ownership. One important major way in which that level may be increased is by means of the policy to which my hon. Friend referred.
    Mr. Millan: If the Minister is so anxious to allow these decisions to be made by local authorities, why do the Government propose to compel local authorities to sell council houses, even against their will?
    Mr. Rifkind: This is a question of priorities. The right of a tenant to own the home that he lives in is a far more important right to protect and enhance than the right of the local authority to prevent him from doing so.

    Fife Regional Council
    Mr. Gourlayasked the Secretary of State for Scotland by how much the Fife regional council will require to reduce its expenditure programme in the current financial year to meet the Government's requirements.
    Mr. Younger: It is for Fife regional council, like other local authorities, to decide how to respond to my request to all local authorities in Scotland to reduce their planned current expenditure at least to the level consistent with the rate support grant settlement for 1979 –80.
    Mr. Gourlay: Is the Minister aware that this represents a vicious attack on the living standards of the people of Fife, whatever measures the Fife region is compelled to take as a result of his measures? Bearing in mind that the Fife region already has the lowest rate level in Scotland, does he agree that the Fife ratepayer should not be faced with this reduction? Will the Minister say how Fife's present standards of service in education, youth employment and roads may be maintained in view of the parsimonious attitude of the Government towards local authorities in Fife?
    Mr. Younger: There is no doubt that the changes will result in difficulties for local authorities in their spending next year. However, the matter should be kept in perspective. They will still have more to spend after our rate support grant increase has been made than they would have had under the previous Government's rate support grant order. We have reduced the size of the increase that would have occurred. We must all cut back because the previous Government, of which the hon. Gentleman was a supporter, left the Exchequer so empty that there is no money with which to keep these services going.
    Mr. Henderson: Does my right hon. Friend accept that the previous Labour Administration were prejudiced against rural areas in rate support grant terms? For a Labour-controlled authority, Fife regional council has been careful of public money. Will he please discuss with the Fife regional council urgent action to deal with the long-put-off problem of maintaining the unadopted roads?
    Mr. Younger: It is my duty, and that of my officials, to do all we can to assist local authorities and their officials to make these reductions in the best possible way in the circumstances. It means great difficulties in the maintenance of many services. That is the result of there not being enough money with which to carry on as happened in the past five years.

    Timbury Report
    Mr. Foulkesasked the Secretary of State for Scotland why the report on

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    services for the elderly with mental disorder in Scotland—the Timbury Report—has not been published; and whether he intervened to delay its publication.
    The Under-Secretary of State for Scotland (Mr. Russell Fairgrieve): The report on services for the elderly with mental disability in Scotland was published by HMSO on Monday 18 June this year. There has been no intervention to delay publication.
    Mr. Foulkes: I am glad that we have reached this question. It justifies the presence of the Under-Secretary of State. Perhaps he might add to his reply by explaining why the Government have departed from their usual procedure, and that of previous Governments, by not issuing this report to the press and the public. Is the report being covered up in view of the scandalous situation that it reveals of services for the elderly with mental disability and the fact that the cuts in public expenditure proposed by the Government are totally at variance with what is proposed in the report—which is greatly increased public expenditure for this group?
    Mr. Fairgrieve: The report is now available for anyone who wishes to read it. There was no delay by the Government. I gave permission for the report to be published on 31 May, without commitment. The hon. Gentleman must realise that the implementation of this report would cost a great deal of money.
    Mr. Myles: Does my hon. Friend agree that the only way in which we may support and help the services to the mentally handicapped and the elderly is by improving the wealth of the country?
    Mr. Fairgrieve: I agree with my hon. Friend. If this country wants the services that European countries now have, we must have the same productivity as they have in Europe.

    Royal High School Building
    Mr. Knoxasked the Secretary of State for Scotland what are his future plans for the Royal high school building in Edinburgh.
    Mr. Rifkind: My right hon. Friend will await the conclusions of the inter-party talks about the government of Scotland before making a decision about
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    future use of the Royal high school building.
    Mr. Knox: How much public money was spent by the Labour Government in preparing this building for the proposed Scottish Assembly, and how much has been spent on it since 3 May?
    Mr. Rifkind: About £3·2 million has been spent so far on providing accommodation for this building. Further expenditure will be required to complete contracts entered into before the referendum by the previous Government. The total estimated cost was £3·75 million. However, we hope to achieve a saving on that sum by, for example, the diversion of furniture to other uses.
    Mr. Russell Johnston: Have the Government made any contingency plans for alternative use?
    Mr. Rifkind: It would be inappropriate to consider alternative uses until the completion of the inter-party talks, in which the hon. Gentleman is involved.
    Mr. Allan Stewart: Does my hon. Friend agree that this building might be sold to private enterprise, which could conceivably put it to productive use?
    Mr. Rifkind: Any question of the long-term use of the building must await the completion of the talks.

    Scottish CBI and STUC
    Mr. Douglasasked the Secretary of State for Scotland if he intends to discuss with the Confederation of British Industry in Scotland and the Scottish Trades Union Congress the Government's economic strategy.
    Mr. Younger: I have no doubt that, in the meetings I shall continue to have from time to time with both bodies, the Government's economic policies will be discussed fully.
    Mr. Douglas: Does not the Minister agree that if he goes along on that basis there will be an extremely short agenda? However, he might supplement the agenda by deciding as fast as he can to create jobs, especially in Fife, by making a decision on the Braefoot Bay-Moss Morran project. This is the longest running public inquiry on record. Will he put the developers, the local authorities

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    and the residents out of their misery by announcing today when he intends to make a decision?
    Mr. Younger: I should have thought that if I were to discuss with these bodies the Government's economic strategy it would be a very long agenda and hardly a short one—I hope it would be. As for Moss Morran, the hon. Member will not expect me to express an opinion either way, except to assure him that there will be no undue delay on my part in taking into account, in a proper manner, all the representations that are made, and making a decision as quickly as possible.
    Mr. Henderson: Does my right hon. Friend accept that a great many people who are concerned with this matter will much appreciate his answer? Many believe that this is not the right place for a development of the kind proposed.
    Mr. Younger: I make no pronouncements either for or against this development. All I can say is that I am carefully taking into account all the representations that have been made.

    Partick Health Centre
    Mr. Carmichaelasked the Secretary of State for Scotland when he expects to announce the start of construction of the Partick health centre; and if he will make a statement.
    Mr. Fairgrieve: I am not in a position to say when it will be possible to announce a starting date for this health centre. As the hon. Gentleman is aware, there have been difficulties in securing a suitable site for the development. These remain unresolved, but the health board is continuing its search.
    Mr. Carmichael: That was a most disappointing answer. Having newly arrived in his job, will not the hon. Gentleman cut through some of the medical red tape which is preventing a proper site being found for this centre?
    Mr. Fairgrieve: The hon. Member must know that the Strathclyde regional council has no longer made this site available and wishes to use it for another purpose. Another health centre is being considered at Baillieston, and the hon. Member also knows that there is the possibility of using part of the Western infirmary.

  COURTS ADMINISTRATION
  Mr. Gordon Wilsonasked the Solicitor-General for Scotland when he next will meet the director of Scottish courts administration.
  The Solicitor-General for Scotland (Mr. Nicholas Fairbairn): I shall be happy to meet the director of the Scottish courts administration at any time, but I have no plans at present to meet him. He is in regular contact with my right hon. and learned Friend the Lord Advocate.
  Mr. Wilson: When the Solicitor-General for Scotland eventually gets round to meeting the director of Scottish courts administration, will he express to him his worries and dissatisfaction about the slum conditions in certain sheriff courts which adversely affect staff, judges, juries and witnesses attending those courts? Will the hon. and learned Gentleman assure the director that the Government will not cut back on public money which may be needed for the improvement of facilities in those courts?
  The Solicitor-General for Scotland: I am extremely concerned that all facilities, where members of the public are affected when giving evidence or helping in the administration of justice, should be of the best. That is a matter for my right hon. Friend the Secretary of State. However, it is important that prudence in expenditure should be combined with the provision of facilities for members of the public who come forward to ensure that justice is done.
  Mr. Peter Fraser: Before my hon. and learned Friend meets the director of Scottish courts administration, will he consider whether the present level of prosecutions and those anticipated in the sheriffdom of Tayside central and Fife justify extra expenditure on court buildings within the city of Dundee?
  The Solicitor-General for Scotland: There has been great dissatisfaction for a long time about the provision of facilities in Dundee sheriff court and High Court—as it is when the circuit is there. This again is a matter for my right hon. Friend the Secretary of State. Considerable plans are afoot to improve those facilities and I hope that, with economy, we can make sure that the interests of

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  justice are served and that the public are accommodated.
  Mr. Dewar: When the hon. and learned Gentleman meets the director of Scottish courts administration, will he discuss with him the fate of juries in Scottish courts and some way of circumventing the archaic and, indeed, medieval Act of Parliament of 1587, under which juries are placed in a room to reach their decision and are not released or given any sustenance until such time as they reach a decision, whether it takes days or weeks? Will the hon. and learned Gentleman consider repealing that Act?
  The Solicitor-General for Scotland: This is an important matter which a recent case highlighted. The late Lord Milligan, in a case in the High Court, said "The law of Scotland prescribes that once a jury retires it cannot eat. Let us rise for a bun". It is a difficulty which has come to light because of the complexity of cases, though happily juries in Scotland do not take as long in reaching their decisions as they do elsewhere. Nevertheless, as a humane matter, we shall look into this with great urgency.

  CRIMINAL COURTS (INDUSTRIAL DISPUTE)
  Mr. Ancramasked the Solicitor-General for Scotland what are the long-term effects of the recent industrial dispute on the working of the criminal courts in Scotland.
  The Solicitor-General for Scotland: The immediate effect of the industrial dispute has been to increase the time taken to dispose of cases of all kinds. In the short term priority has been given to High Court and custody cases. This means that the long-term effects will be felt mostly in summary matters. I hope that by the end of this year at the latest solemn prosecutions will have returned to normal, and that by the middle of next year disposal times of all cases will have been reduced to their level before the strike began. Indeed, I should like to see the time taken to dispose of cases reduced to an even shorter time than it was when the strike took place.
  Mr. Ancram: Does the Solicitor-General agree that one of the most serious
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  consequences of the industrial action as related to the criminal law is the effect that it had on the 110-day rule, which is Scotland's equivalent to habeas corpus? Can he assure the House that the lessons learned from having had to extend that rule this year have ensured that should a similar situation arise in the future it will be kept to a minimum?
  The Solicitor-General for Scotland: I trust sincerely that a similar situation will never arise, and that those charged with serving justice will not feel the need for similar action. However, reforms are under consideration which will have an effect on the 110-day rule and will, I hope, reinforce its humanity as one of the most equitable provisions of the law of Scotland.

  R. W. McCONNACHIE v. DANCKARTS WOODWORKING MACHINERY LIMITED
  Mr. Cryerasked the Solicitor-General for Scotland if he has recently met the chairman of the Health and Safety Commission to discuss the matters raised with his Department by the hon. Member for Keighley arising from the decision in the case of R. W. McConnachie v. Danckarts Woodworking Machinery Ltd.
  The Solicitor-General for Scotland: No, Sir.
  Mr. Cryer: Does the hon. and learned Gentleman accept that the answer given by his predecessor on 14 March was completely at variance with his own to me? Does he also accept that in this case the prosecution arose because of a visual inspection of the machinery which disclosed that there was no guard on the chain and sprockets? Does he accept that in such circumstances, to run the machinery with the danger of injury occurring would be absurd when a clear visual examination had demonstrated a breach of safety regulations? Does the hon. and learned Gentleman also accept that in the event of running machinery, the occupier, not necessarily the importer, would be in breach of section 14 of the Factories Act 1961, which places an absolute obligation on employers to provide protection of machinery and guards against components? In those circumstances, what will

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  the hon. and learned Gentleman do? Will he leave it to lawyers to undertake a test, or will he really get down to some serious discussions?
  The Solicitor-General for Scotland: The answer to all those questions is "No, Sir". The hon. Gentleman misunderstands the situation completely. I do not know what his close interest is in this case, but he will know that guards were ordered for these machines and that the machines were tested, which is the statutory requirement of the Health and Safety at Work, etc. Act upon which he was advised when he last asked his question. Any person who imports—in this case it was imported machinery—has a duty to carry out or arrange for the carrying out of testing and examination as may be necessary for the performance of the duty imposed. If the hon. Gentleman really wants unsafe machinery to come into this country, he can arrange for a statutory provision which prevents its being tested before use.
  Mr. Cryer: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of that reply, I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest opportunity.

  EX-POLICE SERGEANT WILLIAM JAMIESON (STATED CASE PROCEDURE)
  Mr. Dalyellasked the Solicitor-General for Scotland whether, in the
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  light of the 70-minute interview which his noble and learned Friend gave to the hon. Member for West Lothian and ex-police sergeant William Jamieson of Bo'ness on Friday 25 May 1978, he has any proposals for reform of the stated case procedure.
  The Solicitor-General for Scotland: The Thomson committee made recommendations on reform of the stated case procedure in its third report. As the hon. Member is aware, it is the intention of my right hon. Friend the Secretary of State for Scotland to introduce major criminal justice legislation later in this Session, and reform of summary appeal procedure is high on the list of possible subjects for inclusion.
  Mr. Dalyell: Should not amendments and the reasons for their rejection, at least be known in written form to any court of appeal?
  The Solicitor-General for Scotland: As the hon. Gentleman will be aware, that was and is, I think, the only suggested reform capable of ensuring that this difficulty could be averted. Accordingly, it is my hope that in the criminal justice legislation the revised appeal procedure will ensure that if a sheriff rejects any amendments proposed by those who have asked for a stated case—namely, the appellant—they will form part of the stated case, as will the reasons for their rejection. Thus the appeal court will be able to adjudicate and make what I hope will be a fairer appeal system.

ORDERS OF THE DAY

  FINANCE BILL
  Considered in Committee. [Progress 3 July.]
  [Mr. Bernard Weatherill in the Chair]

  FINANCE BILL
    Clause 1

      INCREASE OF VALUE ADDED TAX
      Amendment No. 20 proposed [3 July], in page 2, line 27, at end add:
      '(6) As from the passing of this Act subsection (1) above shall not apply to any work of repair or maintenance of a building'.—[Mr. Horam.]
      Question again proposed, That the amendment be made.
      3.31 p.m.
      Mr. Geoffrey Johnson Smith: On a point of order, Mr. Weatherill.
      The Chairman: Before I call the hon. Member—I may be anticipating his point of order—perhaps I may tell the Committee that with this amendment are grouped the following:
      Amendment No. 36, in page 1, line 21, at end insert—
      'Provided that after the passing of this Act these changes shall not apply to insulating materials and other products which can be shown to conserve energy.'.
      Amendment No. 37, in page 2, line 27, at end add—
      '(6) As from the passing of this Act subsection (1) above shall not apply to any repairs to buildings listed as of historic and architectural importance.'.
      Amendment No. 36, which stood earlier on the Notice Paper, is no longer shown on today's amendment sheet, but it will be in order in this debate to refer to value added tax on insulating materials and other energy-conserving products.
      Mr. Johnson Smith: I am most obliged to you, Mr. Weatherill, for anticipating my thoughts with your usual perspicacity.
      Amendment No. 36 stands in my name. Last night we heard from the Opposition spokesman on these matters, the hon.
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      Member for Gateshead, West (Mr. Horam). We did not have the happiest of passages. The hon. Gentleman was his usual agreeable self, but the hour was very late and he addressed us at some length. We understood the reasons for that. He told us that materials purchased for the purposes of repair and maintenance, whether purchased by an individual or supplied by a contractor, attracted VAT, without any possibility of a rebate. From such as I was able to hear of the hon. Gentleman's speech, I gathered that he did not like that.
      At any rate, I should like to narrow this argument to those products which are concerned with the conservation of energy—insulation materials of different kinds—which attract VAT. If the Bill passes in its present form, they will attract a higher rate of VAT.
      I understand that the procedure on the Finance Bill prohibits my putting forward an amendment which would suggest to the Government that it would be to the country's advantage if insulating materials and other products which serve to conserve energy should not attract any VAT whatsoever. I cannot do that. There may be wisdom in trying to do it, in theory, but in practice it cannot be done within this Committee.
      However, be that as it may, I hope that my hon. and learned Friend the Minister of State will recognise that the present state of the law is unsatisfactory and that the burden of VAT which will be carried by insulating materials comes, perhaps, at an inopportune moment bearing in mind that my right hon. Friend the Prime Minister drew the attention of the House only yesterday to the importance of having a package of energy proposals, in which conservation of energy will play a notable part.
      My hon. and learned Friend will be aware that it is understood that until now materials for new construction and alterations, if supplied by the contractors, are VAT-free, and if purchased for these purposes by an individual, although attracting VAT, the tax can be rebated. This has meant, in effect, that double glazing and insulating materials are free from VAT.
      However, arising in a High Court case in October 1978, which involved a company called Morrison and Dunbar, and

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      Mecca Ltd., which I understand wanted to convert a cinema into a bingo hall, Her Majesty's Customs and Excise has put out a discussion paper. This paper proposes, I understand, that improvements and alterations to buildings should be liable to VAT. This will obviously come as a great surprise to those in the building industry and to individuals, because were this to go through it would cut right across the design and strategy of the Government's approach to energy.
      That is not the end of the matter. The present state of the law is also unsatisfactory. I think that it has, possibly, been so for some time. It has certainly led to lengthy arguments owing to the difficulty in determining the borderline between what constitutes a repair and an alteration.
      Be that as it may, it has led to anomalies. I cite only one, but I understand that there are plenty of others. For instance, if one wants to insulate, as many people do and many more need to do, an attic or a loft for the first time, the product will be zero rated in the end, because private individuals get the rebate. However, if for various reasons, such as the advance of technology, one wants to add to the insulation in one's loft, if it is inadequate or has, perhaps, lost some of its efficacy, that will attract VAT—presumably, and I can only guess on this matter, because it would come within the category of a repair or maintenance. As I have said, there are other examples which concern improvements to boilers and heating arrangements which would make greater use of fuel.
      My hon. and learned Friend needs no lecture from me on the value of energy conservation. He will be aware of a calculation issued by the previous Government which suggested that, if £450 million were spent wisely and properly on the conservation of energy and making more efficient use of energy, it would probably save the cost of two 1,500 megawatt nuclear plants which, give or take a few hundred million pounds, would come out at about £1,000 million apiece. Therefore, the spending of £450 million could result in a saving of £2,000 million worth of expenditure on producing new energy by nuclear reactors.
      I am not personally against an expanded nuclear programme. That is not the purpose of my argument. My purpose
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      is narrow. It is to ask my hon. and learned Friend to consider two things as he comes to consider the amendment—which I cannot now press to a vote. Whatever revenue may be lost initially, when he comes to consider the effect of VAT on energy conservation, I hope that he will realise that if we ever go so far as to zero rate all of these materials the investment in energy-saving materials could yield a handsome return and balance to the Exchequer.
      Secondly, I beg my hon. and learned Friend to consider the unsatisfactory nature of the law in view of the High Court judgment and the fact that, over the years, regardless of that judgment, there has been a wrangle over what constitutes a repair. I hope that he will consider both those aspects and especially the need to clarify the law. I beg to move.
      The Chairman: The hon. Gentleman cannot move his amendment because, unfortunately, we have passed that part in the Bill. He may discuss it, and he has done so.
      Mr. Michael Welsh: I support amendment No. 20. I am concerned about modernisation of houses Over the years grants towards modernisation or revitalisation have been of assistance in increasing our stock of housing. Over the past four years the Doncaster metropolitan council has made grants of £1 million a year. The youngsters living in those old houses have been grateful for that money and have brought their houses up to a high standard.
      Through the policies of this Government the youngsters will suffer. There is a planned rate of inflation of 17½ per cent., and modernisation of houses will cost more. Local authorities will make a grant of £2,500 for modernisation and a youngster will have to find a further £2,500. If he goes to the bank he will find that the MLR has gone up 2 per cent. over the past few weeks. He then needs a contractor, and that is where this amendment comes in.
      The £2,500 grant from the local authority is, by and large, for repairs. The increase in VAT to 15 per cent. will mean an immediate loss of £85 to the youngster. He has to find that from his own pocket or accept £85 less work. It does not end

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      there. The £2,500 from his own pocket is also, by and large, 50 per cent. for repairs, and he will lose a further £85.
      Until a few weeks ago the total £5,000 needed for repairs was rated at 8 per cent. VAT. At the 15 per cent. rate the youngster loses £170. He has either to cut back on the modernisation or to borrow more money with the increase in MLR.
      We should allow our youngsters to have good modern houses to live in. It is a top priority, and the increase in VAT does nothing to help to secure that desirable objective. Up to a few weeks ago things were not too bad for the young lad who bought an oldish house and asked for a grant to repair it. The planned 17½ per cent. inflation, the 2 per cent. Increase in MLR, and a 7 per cent. increase on his repairs, is prohibitive. The least that the Government can do is to accept amendment No. 20 and let the youngsters live in good modern houses.
      3.45 p.m.
      Mr. Patrick Cormack: I address my remarks to amendment No. 37, which I realise I cannot formally move. I appreciated the remarks made in the early hours of the morning by the hon. Member for Gateshead, West (Mr. Horam). We all congratulate him on his stamina and his conversion. In the past he was a doughty fighter for the heritage. One cannot blame him for thinking that Marsham Street was worthy of a temporary lapse. At least he saw from Marsham Street the heritage, even if he had to suffer an office in perhaps the most ugly building in London.
      In view of what the hon. Gentleman said last night, I am slightly intrigued and absolutely delighted that the previous Chancellor and the Minister of State, who resisted such amendments so strenuously over the years, appear to have been converted. One can imagine that the right hon. Member for Llanelli (Mr. Davies), while he was at the Treasury, was repeating day after day the prayer of St. Augustine, "Lord make me good but not just yet." We are now in Government and the right hon. Gentleman is able to see the iniquities of VAT on repairs to listed buildings.
      Mr. Denzil Davies: We are concerned with the 15 per cent. rate of VAT. That is too high for repair and maintenance of house.
      Mr. Cormack: I am deeply dismayed that the right hon. Gentleman's return to virtue has stopped half way. This morning the hon. Member for Gateshead, West made some telling observations, in spite of real difficulties. I should have liked to suggest that repairs to listed buildings should be exempt or zero rated, but the Budget resolution has been so skilfully and tightly drawn that that is impossible. The only thing that one can suggest is that the status quo should be preserved. I accept that a multi-rate VAT is untidy and has many disadvantages.
      I plead with my hon. and learned Friend to consider the matter with great care between now and the next Budget, to listen to my points and to receive deputations from people who are experienced in these matters, with a view to its being put right at the earliest opportunity.
      Last night we had an entertaining debate on the bloodstock industry. It was a cross-party debate and there were objections to the amendment from both sides of the Committee. The fundamental point of the advocates of that amendment was that here was a great British industry that stood at risk because of the imposition of a high rate of VAT and the way in which it was administered. I do not suggest that we are here talking about a discriminatory situation vis-à-vis another foreign country, but, if blood-stock is an important British industry, tourism is one of the most important and growing industries in the country.
      Tourists do not come to bask in our sunshine, enjoy our cuisine, or always just to see our races. They are attracted by our culture, heritage, enormous range of fine historic buildings, old towns and attractive countryside. The magnet of tourism will be very tarnished if we allow these buildings, which many people come many thousands of miles to see, to fall into a state of disrepair. Yet there is a real danger of that happening.
      Before I develop the argument about these buildings, I must point out that if my hon. and learned Friend accepted an amendment along the lines of No. 37 it would cost the Exchequer a minimal

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      amount—between £2 million and £3 million. The hon. Member for Gateshead, West made a splendid point last night when he said that the receipts from VAT on repairs now exceeded the amount given by the Historic Churches Preservation Trust to historic churches. Therefore, justice and necessity are on the side of the amendment.
      When we talk about listed buildings—I am glad that the Minister responsible is on the Front Bench today—we must realise that these buildings are statutorily listed, and those who own them or live in them have obligations placed upon them by law. They cannot add to the buildings or even repair them with ordinary materials. That is quite proper. They must abide by very stringent safeguards and regulations. Whether the building is a fine historic church, a small town house, a country cottage, a large country house or a stately home, it is an imperishable part of our heritage, and the people who live in it have certain obligations by statute.
      Therefore, listed buildings could be quite easily detached from the category of other buildings and from the general tenor of the broad amendment No. 20. Here, indeed, is a specially defined case. There are strong feelings in all parts of the Committee about this matter. The necessity is real and I have illustrated the justice of the case. Now I shall demonstrate the necessity to do something quickly.
      The hon. Member for Gateshead, West talked about country houses and the very real problems facing their owners who seek to maintain them. He also described the way in which the country would be impoverished, and the cultural heritage of the nation and the educational opportunities of our childen reduced if these places were no longer available for visits. We must bear in mind that 15 million separate visits were paid to country houses in Britain last year. Although tourism played an important part, the vast majority of those visits were made by British people, many of them children. These places are kept, not at public, but at private expense for the most part, and the owners have very real problems in seeking to maintain those properties.
      Value added tax at 8 per cent. is bad enough, but at 15 per cent. it is crippling.
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      Although the Budget proposals on income tax are to be welcomed, nevertheless many of these owners are not rich and they will not benefit enormously from the income tax concessions. That is even more true when one considers the vast range of smaller historic buildings, the owners of which have statutory responsibilities but generally speaking do not have the resources with which to meet repair bills. Another 7 per cent. on a repair bill is a real deterrent to doing an effective job. In fact, it is an encouragement to botching it up.
      I urge my hon. and learned Friend to consider the question of trusts. I declare an interest, although not a pecuniary one, as being a trustee of the Historic Churches Preservation Trust. It was founded 26 years ago, and during that period we have disbursed about £3 million towards the repair of historic churches. Until the long battle for State aid was won in the last few years—my right hon. and learned Friend the Member for Hexham (Mr. Rippon) was the first Secretary of State for the Environment to agree on this in principle and the last Government implemented his decision—the Historic Churches Preservation Trust was the one body which gave money for the repair of historic churches.
      The real problem we now face is that suddenly our income has diminished. Much of it comes from covenants. That brings me to the income tax position once again. Splendid though the tax cuts are, they mean that our covenant income will be reduced. Although one hopes that those who covenant will take account of the Budget provisions, many will not and there will certainly be a time gap. Therefore, we have a reduced income and a burden of 15 per cent. VAT. It is not just that which makes us feel that we are not entirely honouring all the wishes of our donors and helpers, but the fact that many a small parish up and down the country will be deterred from tackling necessary jobs. I am a warden of a church in my constituency. A few years ago it had to raise £10,000. If one adds £1,500 to that, it represents a very sizeable imposition for a small village. Whether one looks at this in a secular way or a religious way, or both, one must admit that these buildings are deserving of special consideration.

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      It must be difficult for my hon. and learned Friend when time and time again he has to answer special pleas. So many people urge him to accept special cases. But the fact remains that Governments of both parties in their wisdom have, over the years, agreed that there should be listed buildings. They have said that these provisions are right and proper and that they are necessary for the preservation of our heritage. They have placed very real and often severe obligations upon the owners. The time has come when VAT is no longer a nuisance, but a very real, and in some cases a crippling burden, which can be a considerable deterrent to an owner undertaking repairs at all.
      I want an assurance from my hon. and learned Friend that he will consider this carefully and sympathetically. Over the years he has shown himself to be sympathetic about our heritage and I know that he has a great knowledge of these matters. I hope that he will be prepared to see various groups to discuss this issue—he has already told me that he will see the Historic Churches Preservation Trust and I am grateful for that. We must try to work out a solution which will not impoverish the Revenue but rather enrich the nation.
      Mr. Tam Dalyell: I declare an interest in that I am a council member of the Scottish National Trust and my wife is a member of the historic buildings council.
      Hon. Members should understand that there are several views as to how the same end can be achieved. When hon. Members talk about bloodstock, for example, they must be aware that there is a question of priorities here. If I were to go along to many of my constituencies and tell them that the absolute priority for help was for the racehorses belonging to the Earl of Rosebery—my distinguished constituent—there would be many eyebrows raised. One must admit that last night the impression was given, by the attendance in Committee in the Finance Bill, that help to the racing industry was a considerable priority. Now we are giving the impression that help to historic buildings is an absolute priority also. All I am saying is that this must be seen in a general context.
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      First, what is the Treasury view of how extra VAT makes it more difficult to attract funds for the maintenance of historic buildings? Secondly—I gave the Minister notice this morning of my question—granted that it is a special problem for many historic houses that their sandstone exteriors have crumbled after 250 years and begun to deteriorate—that seems to be a critical period, as the Committee knows, because many of our most treasured buildings were built around 1800—what special help will the Government give to that range of houses? If no help is given there will be great difficulty in their restoration.
      4 p.m.
      I was recently guided, with other members of the historic buildings council, around the National Trust property at Killean. To make his point, the architect took a piece of sandstone from the facade of the building and crumbled it in his hands. Of course, the hon. Member for Staffordshire, South-West (Mr. Cormack) is quite right in saying that churches need restoring as well. However, the idea of restoring all these buildings over one or two decades is mind-boggling. We need to be convinced that it is better to try to cope with the problem through tinkering with VAT than by employing an overall Treasury strategy.
      I hope to hear the Government come forward not with a "Yea" or "Nay" to VAT but with an overall strategy. It would be much better to channel available funds through the historic buildings council and the agencies that help churches, stately homes and many of the smaller houses—as the hon. Member for Dumfries (Mr. Monro) knows only too well from examples in his constituency. The National Trust has done an excellent job there. I believe that if the money were channelled through the agencies rather than tinkering with the effects of the fiscal system, particularly through VAT, the position would improve.
      Although I have many of the same aims as the hon. Member for Staffordshire, South-West, I express considerable scepticism about fiddling with VAT to achieve those aims.
      Mr. Michael Morris: I should like to address my re-marks to amendment No. 37. I shall not

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      follow in the footsteps of my hon. Friend the Member for Staffordshire, South-West (Mr. Cormack), because he has already made out a persuasive case.
      I shall address my remarks to the anomaly that appears to exist in relation to listed buildings that are damaged by fire. There is a strong case for exemption from VAT of the reconstruction of listed buildings after damage by fire. I remind the Committee that if a listed building is dagamed by fire, and its owners, in agreement with the responsible planning authority, decide that the building is too far gutted to be restored, it can be rebuilt in absolute facsimile—as has been done on a number of occasions—and that rebuilding incurs no VAT. New constructon is zero-rated.
      On the other hand, a factor that is likely to impinge on higher-graded buildings is that, if it has been decided in the national interest that the facade—or a part of it—of the building should be restored although the internal construction is completely gutted, the VAT officers have no discretion about charging VAT. That would apply even where the facade might amount to as little as 4 per cent. or 5 per cent. of the total value of the contract.
      Logically, that is anomalous. However, it is even more anomalous when the law under the General Rate Act is examined. Under schedule 1(2)(c) to the General Rate Act 1967—rating of unoccupied property—no rates are payable on an empty listed building. Therefore that precedent has been set. Yet it is strange that the hands of the VAT officers are tied in relation to facades.
      Two recent appeal cases of this nature were Thomas Briggs (London) Ltd. at the London tribunal in 1977, and the St. Luke's church at Great Crosby at the Manchester tribunal, reference 78/59. I believe that it is intended that the latter case should come up before the High Court on appeal. I hope that the Minister will have a close look at the anomaly.
      I declare an interest by saying that I attended Bedford school, which was gutted by fire in the early hours of the morning of 3 March 1979. The restoration of that school will cost about £2 million. The inside incompletely unusable but the facade is to be kept. As
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      the law now stands it would appear—though it is not proven entirely—that the charity will be landed with the cost of £300, 000 in VAT to keep an external facade in the interests of the community. I do not expect a reply on this matter this afternoon but I hope that the Minister will look at the problem in order to find a solution that will meet the needs of those who are affected.
      Mr. Stephen Ross: I shall make a confession and declare that I, too, was educated at Bedford school, like the hon. Member for Northampton, South (Mr. Morris). The school has never officially recognised that fact, but I should like to support his plea—although it is most unlikely that the school will come to me for assistance. However, the school finds itself in a tragic situation, particularly with the increase in VAT. Anything that can be done by the Government to assist that school and others in the same unfortunate position is badly needed.
      I support amendment No. 37, upon which the hon. Member for Staffordshire, South-West (Mr. Cormack) made such eloquent and persuasive comments. My second interest is that I am a member of a buildings preservation trust. It has taken a long time to persuade my constituents that there is a great deal of architectural interest in the constituency. We have many Georgian and Victorian buildings that have been allowed to fall into a disgraceful state of neglect. However, over the past 18 months a number of local people have come together to try to put that right. At long last, our three local authorities have been persuaded to set aside funds, in each case about £30, 000. But, just as one or two minor schemes are about to be started, we find that we are faced with additional costs.
      That cannot be right thinking by anybody in the country, whether by this or the previous Government. We are appealing to private industry to assist us and we believe that these trusts should not be dissuaded from taking steps to restore buildings by the actions of this Government.
      My second plea is for our churches. My hon. Friend the Member for Come Valley (Mr. Wainwright) will know that I have received a letter from the vicar

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      of Newport, whose church was rebuilt by the Prince Consort in the middle of the last century. It now suffers eternally from vandalism. Almost every week windows are broken. The very small flock managed to find the money to repair the building, but now the repairs will cost 7 per cent. more because of the VAT, and I think that we have come to the end of the line. There is no way in which we can go on persuading the same small band of people to keep on coughing up money.
      When we go to East Anglia and see the fantastic churches in Suffolk and Norfolk, I wonder what their future will be. Shall we be able to preserve them? I know that we have taken certain steps.
      Mr. Dalyell: The great glories of medieval English architecture at Lavenham and Long Melford are in need of preservation and restoration, but I refuse to believe that tinkering with VAT is the way to deal with the matter. Surely it must be done through the historic buildings councils and by channelling money through various other agencies.
      Mr. Ross: I was merely saying that I hoped that we should have a statement of intent from the Government. I entirely agree with everything that the hon. Gentleman said in his speech.
      A fortnight ago about half a dozen windows in the church in the centre of Newport to which I have referred were smashed. Money was found to repair them. But next time that happens it is unlikely that people will be able to scrounge around to obtain the money, because the bill will be that much higher. We have reached the end of the line.
      It seems crazy that on the one hand we are prepared to give grants for conservation schemes through the historic buildings councils and other bodies, including some local authorities, and on the other hand the Government are taking money away. It is time the whole matter was cleared up.
      Perhaps I may put forward a suggestion that was made to me at lunch time today. If we cannot give zero rating for the repair and maintenance of historic buildings and ecclesiastical buildings generally, can we not at least do so within conservation areas? That would
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      be a step in the right direction, if the finance is not available to do it throughout the country. We should not leave the subject any longer. It is vital.
      Many hon. Members visit the Isle of Wight and go sailing in Cowes. I am ashamed to say that I think that the town of Cowes is in a very rundown condition. We put a plaque on a house there to say that we were honoured that the famous headmaster of Rugby school, Thomas Arnold, was born in it, but the house has been shored up with timber because no one can repair it.
      I am sure that the problems in my constituency are repeated everywhere else. There are empty houses that could be used for occupation by the many people on our waiting lists. I hope that the Government will not turn a deaf ear to what we say but will do something positive in the very near future.
      Mr. Michael Latham: It is a great pleasure to speak after the hon. Member for Isle of Wight (Mr. Ross), though it may not be such a great pleasure for him to listen to me, because he and the hon. Member for Liverpool, Walton (Mr. Heffer) will have to hear a repeated version of what I said at a function dealing with this issue attended by all three of us only three or four hours ago.
      I have an interest in the matter, as a director of a building company. I am also a director of Shelter, although that is not a paid interest.
      I am not in a position to support either amendment No. 37, in the name of my hon. Friend the Member for Staffordshire, South-West (Mr. Cormack) or the Opposition Front Bench amendment, amendment No. 20, because neither achieves what I want, which is zero rating in both the areas with which they are concerned. Because of the money resolution, the amendments cannot, as my hon. Friend clearly explained, aim to achieve zero rating, but they would bring about a standstill at the 8 per cent. rate of VAT.
      As hardly a word has been said today about amendment No. 20, which was moved by the hon. Member for Gateshead, West (Mr. Horam), last night, it may help the Committee if I remind hon. Members how the present position came about. New construction is and always

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      has been zero rated. It is maintenance and rehabilitation work that is positively rated, and always has been.
      Back in 1972, when the then Conservative Government produced their Green Paper on the value added tax for public consultation, I was one of the members of the staff of the National Federation of Building Trades Employers, and I had the job of drafting our comments on the Green Paper. We said that it was ridiculous to have zero rating for new construction and positive rating for maintenance, because there would be gross anomalies, moonlighting, irregularities and so on. Our advice was not accepted.
      4.15 p.m.
      It must also be said, in view of the Opposition amendment No. 20, that that advice kept on being given during the lifetime of the Labour Government and was continually rejected for five years. The Labour Government made no attempt to zero rate maintenance work, although the matter was frequently raised in the House of Commons and was the subject of regular representations from the industry. We are in exactly the same position as we were when the tax was introduced in April 1973, except that the rate has changed.
      It is worth remembering why the then Conservative Government rejected zero rating for maintenance. I think that there were two reasons. The first was presumably cost. I believe that the latest figure for such a concession is £300 million, although how scientifically it has been calculated I should be interested to hear from my hon. and learned Friend the Minister of State. I do not know how he calculates it, because much maintenance work is done on a self-employed, non-registered basis. No doubt my hon. and learned Friend can illuminate the Committee on this matter.
      The second and more coherent reason for rejecting zero rating advanced at the time by the Conservative Government, and advanced again by the Labour Government, was that if maintenance work were zero rated there would be gross anomalies over do-it-yourself. The householder who buys a pot of paint at the paintshop to redecorate his house pays VAT on the point. It is a matter of hard fact that—not simply because of VAT, but for many other reasons—the
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      vast majority of domestic internal painting work, perhaps now 90 per cent., is do-it-yourself. Hardly anybody now calls in a painting contractor, because people cannot afford to do so. That was the case when the tax was 10 per cent. and 8 per cent., and it will continue now that it is 15 per cent.
      It may be said that those reasons are not wholly persuasive and that they can be overcome. There is another reason that my hon. and learned Friend may choose to give, although it is not likely to impress many hon. Members. I refer to the question of the Common Market. It is well known that the. EEC does not like zero rates. If Ministers wanted to zero rate maintenance work, which I am sure all those who support the amendments really want, they would find themselves with a contrary pressure from the Common Market. They would be told "Instead of zero rating maintenance work you should be positively rating new construction work to bring them both into line, so that the anomalies are avoided." I am sure that no hon. Member would accept that, because it would mean a substantial increase in the price of new houses, and that would certainly be resisted by all hon. Members. The Committee should recognise that those difficulties cannot be easily overcome.
      Even if VAT were to remain at 8 per cent., as amendments Nos. 37 and 20 recommend, what would that achieve? There would be a two-tier rate, which would be undesirable in principle. Secondly, would it make any practical difference?
      Let us talk about the domestic householder, who is the main interest of amendment No. 20. I do not believe that VAT, although certainly serious and important, is the main determinant in preventing the householder from employing a contractor to do domestic maintenance work. On the contrary, the real problem is the price of building work generally. If it is to be done effectively by a proper contractor who is properly registered, and not by a cowboy, proper labour and material rates must be paid, and that puts the price well beyond the domestic householder.
      Many domestic householders get round the problem by d-i-y, which is already positively rated for VAT purposes.

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      Therefore, I do not believe that even if the amendments were made they would make a great deal of difference in the domestic sector, although if we had zero rating that might indeed make a difference.
      I turn now to the more specialised areas of my hon. Friend's amendment. I find amendment No. 20 impossible to accept in its present form, although I could have accepted a call for zero rating. On amendment No. 37, different considerations arise. The scope is much smaller, the concession financially much less and the anomalies less obvious.
      Like my hon. Friend, and the hon. Member for Walton, I have the pleasure of sitting on a number of committees of the Church of England. I must tell my hon. and learned Friend the Minister of State that the proposal for a 15 per cent. Tate on maintenance work will have grave effects on the churches and the maintenance of these important buildings. No one knows better than the hon. Member for Walton that work on historic churches is exceptionally craft-intensive. Stonemasons of the highest quality are required when repairing Salisbury Cathedral or Lincoln Cathedral. They do not come easily. They do not come cheaply. The added bill for their labour will be a serious matter. Money has to be raised almost entirely by voluntary subscription. I hope that my hon. and learned Friend recognises that this will not be an easy task.
      I would like to refer to historic houses. I had the privilege, in the previous Parliament, of serving on the Environment Sub-Committee of the Expenditure Committee which produced a report on the National Land Fund—a report that I want to see this Government implement as quickly as possible. Like my hon. Friend the Member for Staffordshire, South-West, I have been pressing the Chancellor of the Duchy of Lancaster to take action and to bring forward a Bill as quickly as possible. The report made clear that historic houses are one of our major tourist attractions. It will not be sufficient for my hon. and learned Friend to say that they can put up their prices. If those houses are to be kept in an adequate state of repair, proper consideration must be given to this new burden,
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      whether by tax deduction or by some other means. It will not be possible simply to generate extra cash. My hon. and learned Friend will have to consider this matter seriously before the Finance Bill next year.
      I would like to say a brief word about insulation. If the Minister is to accede to the proposal put forward by my hon. Friend the Member for East Grinstead (Mr. Johnson Smith), I hope that he will investigate the considerable number of irregularities that have occurred. Under the insulation scheme introduced in the Homes Insulation Act by the previous Government, 200, 000 grants have been made. That is nearly £8 million of public money.
      The Agrément Board and the Department of the Environment have still not produced an approved list of materials suitable for this purpose. I was with the Agrement Board only last Tuesday. It is still working through the enormous number of materials that have been submitted. It is totally unsatisfactory that a scheme of this kind should be permitted to go ahead before the approved materials are properly tested. This matter should be carefully borne in mind. My hon. and learned Friend has heard the debate. He knows the strong feelings that exist on both sides. I hope that he will take full account of them.
      Mr. Eric S. Heffer: The hon. Member for Melton (Mr. Latham), like myself, knows the industry well. I do not entirely agree with his arguments. It is true that we should be asking for zero rating, but that is impossible. We have to argue within the terms of the Finance Bill and the amendments that have been tabled. This means that we can argue only for the continuation of the present rate. I realise that we will have different rates, but it it is important not to go beyond 8 per cent.
      I seem to spend a lot of time, as the hon. Member for Walton, combating landlords. I do not regard myself as the landlord's friend, and landlords in Walton do not regard me as their friend. The reason is simple. I spend hundreds of hours in the course of the year trying to get landlords to carry out necessary repairs. If the VAT rate goes up to 15 per cent., the difficulties encountered with landlords will increase. At the moment,

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      when landlords finally get round to carrying out repairs and maintenance they might at least employ proper building workers, although "cowboys" are sometimes involved. If the rate is increased to 15 per cent., the number of "cowboys" carrying out repairs and maintenance for landlords will also increase. These are good reasons why Ministers should think again. Ordinary working people—who do a damned good job—living in the type of houses rented by landlords in my constituency, find great difficulty getting their houses repaired and maintained properly.
      I believe that the Bill will only aggravate an already difficult situation. I agree that the work should be zero rated. I argued for this course to be adopted when I sat on the Government side of the House. I am delighted to hear hon. Members who are at least consistent on this matter. There is an across-the-board lobby on the construction industry. Some hon. Members feel strongly about the industry and believe it is important that we should speak, as far as possible, with one voice on these matters.
      Thousands of ordinary people who live in rented property—some have lived in that property for 45 years—already face great problems in trying to ensure that landlords keep standards of repair and maintenance up to a decent level. They will find themselves in a very difficult situation. The problem does not apply to all landlords, but it applies to many—those who believe that owning houses means getting out the maximum and putting back the minimum in repairs and maintenance. If the rate goes up to 15 per cent., there will be an added reason for an increase in rents. This will put a further burden on to the shoulders of tenants living in that property.
      Another interesting point raised by the hon. Member for Melton, with which I agree, is the attitude of the EEC. It is well known in the House of Commons that I am not an enthusiastic supporter of the European Economic Community. At one stage in my early political life, I believed that we should go into the Common Market on the grounds of sheer political idealism. When I saw what entry to the Common Market really meant, my backsliding was much more rapid than that of my own Front Bench; they came late to the scene.
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      There are forces within the EEC that would like to see us impose VAT on new construction. The Government's efforts in the direction of the construction industry have not been marvellous. Even Sir Maurice Laing, who has just received an award from Aims of Industry for his great struggle for freedom against nationalisation of the construction industry—that was a phoney battle anyway, since we never intended to nationalize land—[HON. MEMBERS: "Oh."] Conservative Members obviously cannot read. If they could read, they would know what we said.
      The truth is that Sir Maurice Laing has made some interesting comments about the Budget's effect on the construction industry. Raising the rate will have a serious effect. I am sure that he will agree with me that it should be zero rated but that, if not, it should not bear a rate of 15 per cent. We do not agree on other issues, but I am sure that we will agree on that.
      4.30 p.m.
      The effect on repairs and maintenance will be marginal, although in the most important section of the industry, but there will also be a marginal effect on employment. More and more "cowboys" are likely to be involved, but good bona fide craftsmen and workers will be affected. Their unemployment is already far too high and it will get worse because of the Budget.
      I apologise to the hon. Member for Staffordshire, South-West (Mr. Cormack) for not being here for the whole of his speech, but I am sure, judging from the part I heard, that I agreed with most of it, as I always have done. It is vital to maintain our historic buildings and to develop them in the best way. We have a wonderful heritage, to which many people do not give sufficient attention I often go round historic buildings as one of thousands of ordinary people, enjoying what they are seeing. It is part of our history.
      Things are slightly different now, in that most of these buildings can no longer be maintained by the families because the feudal days have gone, but that does not mean that they should not be maintained. In the old days working people only worked in those buildings. Now at least more and more can see them.

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      Therefore, I fully support the hon. Gentleman's amendment and hope that the hon. Member will not be seduced by fair words from the Minister, who will probably say "We have the greatest sympathy with the amendment and we understand the problem, but we cannot possibly accept it." If that is the Minister's attitude. I hope that the hon. Gentleman will stand firm for a vote. I shall certainly be in the Lobby with him.
      Mr. James Hill: The hon. Member for Liverpool, Walton (Mr. Heffer) described the Budget's serious effects on the construction industry. He must have spent the last few years cocooned in the House of Commons and unaware of the effect on the industry of shortage of materials and escalating wages.
      Mr. Heffer: I cannot remember whether the hon. Member has been out of the House for a period, but his hon. Friends who were in opposition in the previous Parliament will know that, day in and day out, I never stopped arguing about the effects of my own Government's policy on the construction industry. I think that I might have had a marginal effect—not very much, unfortunately—by expressing that attitude. I just wanted to get that on the record.
      Mr. Hill: Whether the hon. Gentleman had a marginal effect or not, there was no effect outside this place. He may have been lobbying his Ministers constantly for the last five years, but during that time the number of bankruptcies in the building industry have risen to the point at which there is no future in apprenticing one's sons in the industry.
      The industry is delighted that the Community Land Act provisions are to be discontinued. We in the industry are hoping for more building land as a result. It is no good the hon. Member describing what a gallant fight he has been making. It was ineffectual and did not show where it matters—in the industry's labour pools. However, I thank him for his efforts.
      Anyone with a logical mind will agree that 15 per cent. VAT on repairs and maintenance is akin to madness. No one—whether local or national politician,
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      building developer or householder wanting to do his own work—wants a further imposition. The hon. Member for Walton may be right about the class structure and the fact that a private landlord may do even less work with a rate of 15 per cent. than he did when it was 8 per cent. Nevertheless, the crux of the problem is not so much the VAT—I agree that repairs and maintenance should be zerorated—as the inequitable levels of rents chargeable by private landlords, which effectively bars them from doing repairs and maintenance, whatever the VAT rate.
      This debate is not about simply the public or private residential sector. Repairs and maintenance in the business community will provide more work for the hon. Member's friends in the industry, but VAT at 15 per cent. logically leads one to suppose that 15 per cent. less work will be done.
      I hazard a guess that VAT on repairs and maintenance throughout the EEC is not 15 per cent. In Italy, for example, the Government would be foolish to charge VAT on repairs to historic buildings and even domestic housing.
      It is difficult to support any motion which bears the name of the previous Chancellor. That would be tantamount to an abdication of responsibility on our part. If the Labour Party had these views in the past, why did it not carry them out? However, the situation is grave, particularly on council repairs. Will the new rate mean a loss to the repairs and maintenance funds in our constituencies? Will money be transferred from one pocket to another? Surely we could zero rate not only repairs and maintenance but the insulation of property. However, that is a different matter.
      I support what my hon. Friend the Member for Staffordshire, South-West (Mr. Cormack) said about historic and important buildings, although for me that problem is second to the problem of domestic residential property. I hope that the Minister will look at the matter again, if not today then in a future Budget. There is a good case for zero rating all repairs and maintenance, not only to buildings of historic and architectural importance, but to ordinary residential property, whether public or privately owned.
      Mr. Bob Cryer: Conservative Members are not taking into account the compensations in the reduction in income tax levels which the Government are continually claiming. They refer to industry, owner occupiers and owners of historic buildings, and claim that the income tax concessions will bring new enthusiasm and a new zest in life, and will transform the economy. If the economy is not transformed they will be in a terrible mess. What will happen if the new elixir of cuts of a few percentage points in income tax does not work?
      Conservative Members have tabled amendments for exemption from VAT. Do they not believe in the new elixir? Did they not, during the election, put forward the case for a switch from direct to indirect taxation? Did they say then that there should be a number of exemptions? We are seeing them wriggle. Conservative Members are helping Labour Members to prove that direct taxation is fairer than indirect taxation. Increases in VAT affect all sorts of people, from those who live in grand houses—covered by amendment No. 37—to those who wish to install or improve insulation—a highly desirable aim, especially during an energy crisis. They are to be taxed because the policy of the Government is to switch from direct taxation to indirect taxation. It is a consequence of their principle and policy.
      Mr. Latham: Why did the former Prime Minister, during the election campaign, say at the Labour Party press conference that if the people wanted a change from direct to indirect taxation that would have to be done?
      Mr. Cryer: I do not stand at elections on the basis of personalities. The Labour Party succeeds not on the basis of personalities, but on the basis of policies. I stood on the Labour Party manifesto. Over the next five years, I shall be contributing to the new manifesto and trying to ensure that we develop procedures to ensure that the next Labour Government read their manifesto and undertake to adhere to it, word for word, when we have a Labour Government returned with a massive majority. Conservative Members may laugh, but they should go out into the country and discover how people regard their party. The Conservative Party held out the switch from direct
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      taxation to indirect taxation as some gigantic promised land. Now we see the reality. It denied that VAT would reach 15 per cent., but it has reached that figure. It is reaping the whirlwind. The Conservative Party is becoming increasingly unpopular and, as its industrial policies put workers on the dole in hundreds of thousands, we shall see political changes. Much political education is taking place. People are realising that a Conservative Government means a Government devoted to the interests of the class they represent and against the interests of the majority who work for their livelihood and their families.
      4.45 p.m.
      We have laid the preamble and put to scorn the claims of Conservative Members that moving a little on VAT will remedy the grave injustices. Labour Members would prefer zero rating, but we are limited to a return to 8 per cent. because of the procedure of the Finance Bill. No one would object to reducing VAT on buildings of historic and architectural importance. We all appreciate our inheritance. Contrary to the wishes of Conservative Members, most of whom represent the owners of the grand houses, the houses are now accessible to the public.
      Lord St. Oswald of Nostell Priory, for example, is not an enthusiastic Socialist, and other owners of grand houses are also zealous adherents of the Conservative Party. The increase in VAT has not helped them. We all appreciate and visit these houses and agree that it is important that they should be maintained. The VAT increase is an added burden for the owners. We should like a reduction in VAT on repairs and maintenance of historic homes.
      But what about the houses which are not so grand and which are lived in by ordinary working people? Our amendment No. 20 is my priority. The Government should be concerned with widows, widowers, pensioners and owner-occupiers who are faced with property repairs. In my constituency a large proportion of the housing stock consists of older housing from the nineteenth and, at best, early twentieth centuries and much of it needs a great deal of renovation and repair. In Tory-controlled Bradford, the record of council house building is

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      abysmal. Many Conservative-controlled authorities are eagerly selling their housing stock. Elderly owner-occupiers cannot afford the cost of repairing an aged house, but they have no alternative. Local authority dwellings are not available. They have to join a lengthy list and the only way to obtain a bungalow or a flat on the ground floor is to have a high degree of medical priority. Increasing VAT will make the repairs more expensive.
      A constituent of mine needed his roof repaired. The cost was £1, 000. The increase in VAT will add another £70 to that bill and put the repair that much further out of his reach. The owner-occupier who has savings sees the prospect of their being swallowed by increases in the cost of repairs. It is nonsense for the Government to make a further imposition on the cost of repairs and maintenance.
      My amendment No. 35 was deliberately designed to ease the tax burden by exempting those living alone and running a home, whether rented or owned, from the £750 of taxable income at 25 per cent. That would save them £190 per year. Single persons are often in more difficult circumstances than are married couples. Some gesture to help them should be made by the Treasury. Instead of that, the Government are imposing further burdens. It is an unfair imposition.
      I made representations to the local authority and it agreed to make loans not only in general improvement areas but throughout the metropolitan district council area to meet repair costs. This is now a charge on the property. It is an indication of the seriousness of the difficulties when a local authority is prepared to make special provision throughout its area.
      Now it appears that there will be a further burden. Not all local authorities are prepared to deal with the problem.
      Mr. Michael Morris: There is nothing new in putting a charge on a property. That has been done by local authorities for 15 years to my knowledge, and perhaps longer.
      Mr. Cryer: That may be true, but Bradford did not do it. The problems
      1400
      created by the cost of repairing old property was so great that after representations from me the local authority agreed to meet the situation to some degree. That is a useful contribution. Bradford did not agree to act until a couple of years ago.
      The Government are now placing a further burden on those who are less able to meet the obligations. In spite of the Government's protestations about encouraging owner occupation, they are discouraging owner occupation by placing a further burden on those who are least able to bear it.
      That is symptomatic of increasing the rate of VAT. It will bear most heavily on those who are least able to cope. For those reasons. I hope that we shall press amendment No. 20. I imagine that amendment No. 37 will disappear along with the courage of the hon. Member for Staffordshire, South-West (Mr. Cormack). We should try to make a dent in the intolerable burden which the Government are placing upon ordinary working men and women.
      Mr. Alexander W. Lyon: I rise only because of the fear of my hon. Friend the Member for Keighley (Mr. Cryer) that amendment No. 37 may disappear. I agree with his attack on the redistribution of income between direct and indirect taxation. I said that yesterday. But I was surprised at the response from the Government side. I hope that they long have the delusion that this redistribution will not be unpopular in the country and not hurt their electoral chances. The nearer we get to the next general election with them still in that state of delusion, the better our chances.
      My anxiety about VAT on the repair of historic buildings relates not only to Nostell Priory. I imagine that Lord St. Oswald will make enough out of the Budget to enable him to provide for the repairs to the priory. But there is a serious problem for historic buildings and buildings of architectural merit in a place such as York when the occupier of the premises has a relatively modest income. A serious setback to the conservation of small buildings and houses which are owned by such people will occur if there is an increase of this size in VAT.
      I do not believe that the Minister of State will say that he will accept the

      1401
      amendment. That means that there will be difficulty for schemes such as that run by the historic buildings council for town houses. It will not be possible to make up for the difference in the rate of VAT.
      Such organisations will be able to reclaim VAT on grants from local authorities, but they will not be able to do that with grants from the Department of the Environment. If they are to be subject arbitrarily to the cash limits without consideration being given to this important matter, there will be a serious setback to the conservation of the historic core. I hope that the Minister will take these arguments into account when allocations from the Department of the Environment are made for this purpose.
      Mr. Douglas Hogg: I support the preliminary remarks of the hon. Member for Keighley (Mr. Cryer). I was surprised that I agreed with him to the extent that I did. Indeed, it caused me some alarm.
      A number of my hon. Friends support the amendment. It is important that they should bear in mind a basic principle—that one cannot go on reducing the base of VAT without, at the same time, substantially reducing the ability of the Government to reduce direct taxation.
      We have embarked on a policy of reducing direct taxation and therefore we should not reduce the base of VAT. I hope that hon. Members will bear that in mind.
      I am in favour of a substantial reduction in the burden of direct taxation. Inevitably that means that we must accept a significant increase in the burden of VAT. I see no possible reason for exempting buildings from that approach. I urge hon. Members to reject the amendment.
      Mr. Cormack: My hon. Friend has not been in the Chamber. He has not listened to the arguments. He has not heard about the sums of money that are involved. He should not, therefore, make such an observation.
      Mr. Hogg: I have heard the arguments before at considerable length. I am confident that my view is correct.
      The Minister of State, Treasury (Mr. Peter Rees): The hon. Member for Keighley (Mr. Cryer) said that his pre-
      1402
      amble would put my hon. Friends to scorn. He introduced a note of partisan fervour which had been absent from the debate. I make no complaint about that, but he could have reserved his fervour for another debate. The debate was interesting. It was characterised by many highly informed and expert views from both sides of the Committee. Before I deal with those interventions I wish to state again the general considerations which inform the Government's thinking on VAT. I appreciate that I have used some of these arguments before, but there is always an element of repetition in Committee debates. I hope that I shall carry the Opposition Front Bench with me in saying that VAT is and should be a broadly based tax and that it is not suitable for advancing particular social and political objectives.
      Mr. Denzil Davies: The hon. and learned Gentleman said that yesterday. He should discard that part of his Treasury brief and try another argument today.
      Mr. Rees: The right hon. Member is being unusually harsh. He is usually courteous and self-controlled. I have heard some of the arguments that have fallen from his lips before. They may have been good and they may have been bad, but he has repeated them. Since some hon. Members who contributed to the debate did not hear earlier debates on other amendments, it is right to set this debate in its context and to approach it from the broad question of principle. I was taking up the theme introduced by' the hon. Member for Keighley. We should consider the broad principles of VAT. The hon. Member did not receive universal commendation from all of my hon. Friends. Perhaps that is what motivated my hon. Friend the Member for Grantham (Mr. Hogg) to make his powerful intervention at a late stage of the debate.
      VAT is a broadly based tax. We should try to maintain the base. If the base is eroded, leaving aside the loss of revenue, it follows that there will have to be higher rates on a narrower base. If the base contracts all the time then the problems of definition, as the hon. Member for West Lothian (Mr. Dalyell) perceptively said—
      Mr. Davies: Will the hon. and learned Gentleman tell us what the loss of revenue would be if this amendment were accepted?
      5 p.m.
      Mr. Rees: I will come to that. The right hon. Gentleman is showing unaccustomed ardour. Perhaps he had more hours in bed than I did. Obviously he is entirely revived, freed from the restraints of office. I resume on the general principles before I come to the amendment.
      As the hon. Member for West Lothian observed, the problems of definition that will become acute are those which were illuminated with such force and vigour by Sir Gerald Nabarro. It is better—I am sure that hon. Members on both sides of the House, on reflection, will agree—that we have a broadly based tax with the fewest possible exceptions.
      We can all make special cases. Some of my hon. Friends have done so with eloquence. However, I believe that they will realise overall that it is better to preserve the broadest possible base for this tax. Those who plead for special exemptions are honour-bound to consider what alternative sources of revenue could be tapped to supplement the loss of revenue which would result if their amendments were carried. This point was touched on by the hon. Member for Keighley and he and I will have a plainly argued difference of opinion.
      The hon. Member will say that there is no case at all for an increase in VAT and that we should concentrate the weight of our fiscal impost on direct taxation. I like to think that that is a point that was put fairly and squarely to the British electorate, which came down with an unequivocal answer on 3 May, and the Government are doing only what they were encouraged to do by their votes.
      I turn to the specific amendments and the powerful contributions which were made in discussing them. Amendment No. 20 was moved lucidly and moderately—and I hope that he does not lose face among his colleagues if I say so—by the hon. Member for Gateshead, West (Mr. Horam). I believe that it was his debut on the Opposition Front Bench in a financial debate and I hope that the Committee will allow me to congratulate
      1404
      him. He has, of course, the tremendous advantage over his right hon. Friend the Member for Llanelli (Mr. Davies), in that he comes with a fresh mind and untainted by experience in this area during the past five years. My hon. Friends the Members for Melton (Mr. Latham) and Southampton, Test (Mr. Hill) reminded him of that and, if I may go back to the racing analogy used earlier in this debate, he does not carry so much lead in this field.
      The hon. Member can argue with more vigour for all the special cases which he would have been disposed to resist had he been sitting where his right hon. Friend sat over the past five years. His right hon. Friend knows how many times he resisted pressure for precisely the good causes that are now being pressed on this Administration. The right hon. Gentleman murmurs "Eight per cent." I am reminded of what was said by, or about, Fouche during the French Revolution, that treason was a question of dates. To the right hon. Gentleman VAT is a question of rates.
      I believe it is a matter of principle. All the arguments—I made this point yesterday and I will go on making it so long as he puts the issue to me—that the right hon. Gentleman and his hon. Friends have advanced for special cases were arguments for zero rating or exemption. It is not a question of the difference between 8 per cent. and 15 per cent. He believes, as do some of my hon. Friends, that some cases deserve exemption or zero rating. I listened closely to his arguments and I think that they led, logically, to that conclusion.
      The right hon. Gentleman and my hon-Friend the Member for Melton asked for the cost of the amount of VAT collected on repairs. I may have given a figure of £300 million. The right hon. Gentleman will be under no illusion that I am not sufficiently numerate to have done the sums. The figure of £300 million given for zero rating repairs and maintenance is based on consumer expenditure estimates for 1979–1980 on repairs and maintenance work performed by contractors and purchasers of do-it-yourself materials. I will pursue the matter if the right hon. Gentleman wishes for more detail, but I think it will be better for the Committee if we pursue this rather technical argument in public.

      1405
      The cost of accepting amendment No. 20 would be around £100 million. That is not negligible. According to the hon. Member for Keighley this could easily be recouped by ¼ per cent. on the basic rate of income tax. As I have said, the British electorate have given their view on that. I approach amendment No. 20, and I hope that, on reflection, the Committee will agree—I appreciate its merits, which have been canvassed by the previous Administration—in the belief that we should preserve the broad base of VAT.
      There are definitional problems in that the thrust of the argument—though it may have not been put quite so exclusively as I have put it—was that it should be for essential repairs. The hon. Member for Keighley will appreciate the difficulty of defining precisely what constitutes an essential repair, though the right hon. Member for Llanelli is obviously getting worried about this argument. He did not move the amendment. If he wishes to intervene I do not discourage him, but he has a very able colleague who I thought did full justice to this amendment. The hon. Gentleman will realise that this amendment in its present form would permit a reduction in rate on inessentials, perhaps on mere interior decoration; the kind of things which the hon. Member for Keighley—who constantly uses the phrase "ordinary working people"—suggests that ordinary people might not be disposed to do. I suggest that ordinary working people do like to redecorate for aesthetic reasons. I have never quite understood the scope of that phrase.
      Mr. Denzil Davies: I do not quite understand this problem of definition, because the words "repair and maintenance" are taken exactly from the present legislation. If there is a definitional problem it is a present problem and is not changed in any way by reducing VAT to 8 per cent.
      Mr. Rees: Perhaps I did not put my argument sufficiently clearly. What I am saying is that the thrust of the argument of the hon. Member for Keighley was that meritorious repairs should be entitled to this reduction. Does the Committee feel that every form of interior decoration that is comprised in this amendment should be rated at 8 per
      1406
      cent. while other equally worthy activities should be rated at 15 per cent.'? It is for the Committee to judge, but at the end of the day I face this amendment by praying in aid the general considerations to which the right hon. Gentleman took exception but which I hope the Committee will consider good.
      Mr. Latham: Will my hon. and learned Friend address his mind to the question why we still persist with the situation—which has existed since 1973—in which new construction is zero-rated but maintenance is positively rated? I urge him to reconsider that matter.
      Mr. Rees: That could in some sense be regarded as anomalous. It could, equally, be cured by introducing a standard rate for both those activities, though I am not saying that this is in the Government's mind. As my hon. Friend is aware, that situation obtains in many Common Market countries. If he is so rigorously logical he will perhaps follow that particular argument through to its logical conclusion, but I do not know whether it is a conclusion that would attract him, me, or, indeed, the bulk of this Committee.
      I turn to amendment No. 36, spoken to so persuasively by my hon. Friend the Member for East Grinstead (Mr. Johnson Smith). The amendment is designed to keep at 8 per cent. insulation materials and other products designed to conserve energy. There are certain problems of definition in his amendment, however concisely it may have been drawn. What exactly is meant by insulating materials? Is plaster work or panelling regarded as insulating material? Will the Committee regard that as something to be charged at a lower rate?
      The conservation of energy is, of course, an objective that will command the support of the whole Committee. As for the example raised by my hon. Friend, does he believe that bicycles should be charged at the lower rate, as indeed they could be, under the form of his amendment? I appreciate that he wishes to ventilate the general principle and not the details but I hope he will permit me to observe that, as at present drawn, his amendment poses certain practical difficulties.

      1407
      My hon. Friend also raised some specific difficult points on the application of the Mecca case, which I believe turned on the conversion of a cinema to a bingo hall. I believe that the Customs and Excise endeavoured to circumscribe to a degree the meaning of alterations, endeavouring to say that it was a question of part alterations and part repairs—that part should be zero rated and part should be charged at the standard rate.
      That leads me to remind the Committee that alterations are zero rated and have been generously interpreted up to now. A great number of operations that achieve the objective that my hon. Friend the Member for East Grinstead has in mind, such as cavity wall insulation and double glazing, are in fact zero-rated. As my hon. Friend pointed out, the Customs and Excise authorities are a little concerned about that generosity of interpretation, but certainly no firm decision has been taken, and my hon. Friend's views, which seemed to find some favour in the Committee, will be borne in mind.
      Let me reassure my hon. Friend that there is no present intention that the definition of alterations should be cut down in any way, but, as I said, even in that respect there are problems of definition and I think it right that we should seek the view of those professionally concerned.
      Mr. Geoffrey Johnson Smith: May I take it, therefore, that the industry can expect any dubiety on this point to be cleared up in a matter of some months or less?
      Mr. Rees: Unless my hon. Friend is contemplating another Finance Bill in a matter of months—I do not think that that would find much favour with the Committee—it could be done only by an extra-statutory concession. I am always a little reticent about extra-statutory concessions, but perhaps I have misunderstood what my hon. Friend had in mind.
      Mr. Johnson Smith: I apologise for not making the matter clear. I was thinking that perhaps another circular could easily clear up any doubt that now exists in the industry.
      Mr. Rees: I shall certainly look at that question again. If we feel that there are
      1408
      grey areas or areas of difficulty, which are causing real concern, we can see whether it is possible to define them in that way, consistent, of course, with the duty of Customs and Excise to adminster a statutory code.
      Finally on this point, I remind my hon. Friend and the Committee that the Department of the Environment grant-aids insulation. I believe that one can obtain £50 for loft insulation, and 200, 000 grants have been made since September 1978.
      I come now to amendment No. 37, explained so eloquently, as one would expect, by my hon. Friend the Member for Staffordshire, South-West (Mr. Cormack). My hon. Friend has built up a considerable reputation in this subject. He modestly reminded us of his connection with the Historic Churches Preservation Trust, and I look forward to receiving some informed representations from that source. My hon. Friend was modest enough not to mention that he is the author of a considerable work on this subject, and I have no doubt that there will be a stampede to the Library, if not to the bookshops, to read that work before the subject comes up again. I need hardly remind hon. Members of "Heritage in Danger".
      I am in some difficulty here. The hon. Member for Liverpool, Walton (Mr. Heffer) said that the Committee was not to be seduced by bland or fair words, but I must state in general terms that this is a concern of the present Administration, as I hope it was also, to a degree, though not so observable, of the last. But there is a new flavour about opposition now, and perhaps the hon. Member for Gateshead, West will bring a fresh mind and a yet more favourable attitude to this matter. He certainly showed that he has a considerable grasp of it. Indeed, he mentioned one house which may be known to other hon. Members. We look forward to the hon. Gentleman's contributions, and I very much hope that we shall be able to establish a bipartisan approach to this important and continuing problem.
      5.15 p.m.
      I am sure that hon. Members noted the support from both sides for this objective. The difficulty that I feel about the amendment is that it merely isolates a problem

      1409
      of VAT. Of course, I recognise the problem, but I believe—and I hope that, on reflection, my hon. Friend and the Committee will believe—that it is wrong to identify this one facet of the problem and deal with it in isolation. I suggest that it would be better—here I take up the words of the hon. Member for Gateshead. West—to evolve a broad strategy which will involve looking at more than just the question of VAT, which will involve looking at—dare I say it?—the capital transfer tax and a whole range of other taxes. Moreover, it is not just a question of taxes, not just of removing fiscal disadvantages, but of a possible need for positive advantages. I know that my right hon. Friend the Chancellor of the Duchy of Lancaster has this in mind—it overlaps his responsibilities—and we shall certainly be looking to see how far we can over the months ahead evolve such a broad strategy. I hope that, when it is produced, it will command a measure of bipartisan support.
      Mr. Dalyell: It is all very well to think of messing around with the capital transfer tax, but everybody who has had experience of Finance Bills knows how difficult that is. Why should not the strategy be concentrated through the agencies, and particularly the historic buildings councils?
      May I now repeat the question of which I gave the Minister's office notice, namely, what is it intended to do about the problem of those 250-year-old and 300-yearold buildings, the stone of which is suddenly crumbling? This is a problem peculiar to stone of a certain age.
      Mr. Rees: There may be a difference of philosophy between the hon. Gentleman and myself on how support should be given. Perhaps there will have to be a mixture of fiscal relief and positive subvention. I suspect that at the end of the day it may be a question of balance, and perhaps the difference between us is not as fundamental as the hon. Gentleman and I might at first sight suspect.
      On the more particular question—I was grateful for the notice that the hon. Gentleman gave—I should like to say that we could indeed devise a specific and positive fiscal relief for that problem in the context of this Finance Bill, but I doubt that we shall. I recognise the problem. Perhaps the Committee will permit
      1410
      the personal reminiscence that I was privileged to be at a college in Oxford and I could plainly see the facade of the library crumbling and blackened because it was suffering from precisely the sort of decay and corrosion to which the hon. Gentleman has drawn attention.
      I do not believe that we shall be able to evolve in the context of the present Bill a specific relief in respect of that problem, although we shall bear in mind what the hon. Gentleman has to say. I am sure that, when we look at the overall strategy, there will be an important footnote to remind us to deal with it.
      Dr. Jeremy Bray: Will the Minister of State accept that this is a matter of urgency, and, in looking at it, will he examine the report by Lord Eccles, who, in the first Conservative Government after the war, accepted the principle that fiscal incentives could not deal with the problem but that grants were the only possible way of doing it?
      Mr. Rees: Of course, anything that my noble Friend, with his vast experience, prepares one will read and re-read with due respect. I just would not like to commit myself to accept wholesale what he said. Nor am I entirely knocked off my perch by the hon. Gentleman's suggestion that perhaps what I am saying today is not entirely in accord with his philosophy.
      As I said, I am sure that the Committee will recognise that it will take a little time to consider this matter, since it is not purely a fiscal question. I give as much as that to the hon. Gentleman. It is a subject on which we shall, I hope, be able to evolve a broad strategy, which will command bipartisan support.
      Mr. Cormack: I am grateful to my hon. and learned Friend for what he said, and I entirely agree on the need to evolve a broad strategy—that is vital—but we are here concentrating our minds on VAT and there is a genuine problem. Can my hon. and learned Friend assure the Committee that he does not rule out of the broad strategy a possible zero rating of repairs to listed buildings?
      Mr. Rees: If I say that I rule out nothing, I hope that my hon. Friend will not put too much weight on any specific aspect that he has in mind. He will

      1411
      appreciate that the solution of a particular problem may not command universal support. He will know that the EEC sixth directive obliges us not to extend zero rating. All our countries are signatories to that. I know that there are hon. Members on the Opposition Benches—the hon. Member for Walton in particular, who courteously informed me that he could not be here for the remainder of the debate—who will say that that is an argument of no weight whatever. But right hon. and hon. Members who are burdened with ministerial office or who have been so burdened—I am sure that the right hon. Member for Llanelli will agree—recognise that these international obligations are not quite so lightly brushed aside. It may therefore be a little difficult to approach the matter by the route which my hon. Friend suggests.
      Nevertheless, I hope that my hon. Friend will recognise that there is a fund of good will on the Front Benches and the Back Benches on both sides of the Committee. I am sure that, given a little time, a comprehensive, comprehensible and sympathetic strategy can be worked out. Against that background, I hope that my hon. Friend will not feel it necessary to press his amendment to a Division, whatever blandishments may be offered to him by the Opposition.
      Equally, I hope that my hon. Friend the Member for East Grinstead will feel that there is sufficient understanding of the problem which he has outlined and sufficient will to find some sort of solution to it that he need not press his amendment.
      As for amendment No. 20, we have yet to hear the fresh voice of the hon. Member for Gateshead, West tell us whether, in his new approach to these matters, he feels that the amendment should be forced to a Division. The hon. Gentleman will be conscious of the past of his own party while in office. He will recognise that there is a certain inconsistency in the position that he has been led to take up. He will recognise, too, that there is a certain virtue in maintaining the broad base of VAT. I hope that on that basis he will feel that justice has been done to his case and that he will not feel it necessary to divide the Commitee.
      Mr. John Horam: In replying to the debate, which we began at about three o'clock this morning and which we are curtailing at a rather later hour than I expected, the Minister of State used one of the Treasury's traditional arguments and followed it with a more bizarre argument which seems to have spread along the Treasury Bench since the new team took its place.
      The traditional argument is that we have a single rate of VAT and it is right that that should be broadly based. If we are all in favour of a single rate, we are all in favour of it being broadly based. That is the straightforward way to tax goods that come within the remit of the amendment.
      That is a good argument, but not one that applies to a rate of 15 per cent. That is the argument that has been advanced throughout by the Opposition since the increase in VAT was announced. What is possible and sensible for a VAT rate of 10 per cent. is neither sensible nor possible when the rate is 15 per cent.
      Once we move into the higher rate it is inevitable that certain problems are posed, whether they involve heritage properties or ordinary houses. Those problems are raised in an acute form. They do not occur in the same form if the VAT rate is 8 per cent. or 10 per cent. Therefore, I do not believe that the standard, traditional Treasury defence, which would have held good at a lower rate of VAT, holds good for the new higher rate. I ask Treasury Ministers to scrap that part of the brief. I hope that we shall hear no more of that argument.
      The second argument that the hon. and learned Gentleman produced was most strange. He sought refuge in accusing me of introducing a new definition for repairs and maintenance. He accused me of establishing a new category of meritorious repairs. That is rather akin to his right hon. Friend the Chief Secretary seeking refuge in the remarkable idea of discretionary clothing. We have "meritorious repairs" used as a reason for the rejection of the amendment, while the discretionary clothing argument was advanced last night. I find this most bizarre. The fact that that approach has spread so fast along the Treasury Bench indicates that it is a new tactic on the part of the Treasury. In some respects

      1413
      it is better than the old argument, but it still will not do.
      All that the Opposition are saying is that items of repair and maintenance that were taxed at 8 per cent. and will now be taxed at 15 per cent. should continue to be subject to a rate of 8 per cent. We are not changing any definitions. We wish merely to revert to the old rate. The Treasury Bench cannot deploy the arcane argument that I have described.
      I turn to the substance of the debate. I shall do so briefly. I am conscious that I dwelt overlong on these matters last night. However, there were certain pressing reasons for doing so at the time. I am glad that in the end we resolved those matters to the satisfaction of everyone. We were all glad that we were able to adjourn the debate rather than continuing it earlier this morning.
      First, I address my remarks to heritage properties. I mention those properties first, but not because I think that they are most important. I was interested and rather enticed by what the Minister of State said about the desirability of an overall strategy for heritage properties and what the Treasury team might do in that regard in the ensuing months or years. I hope that those are not merely bland words. I hope that they mean something significant. That is an approach that is felt necessary by both sides of the Committee, especially by my hon. Friend the Member for West Lothian (Mr. Dalyell) and the hon. Member for Staffordshire, South-West (Mr. Cormack).
      That approach is also necessary in other areas such as forestry which are important to the economy in a national sense and in a local sense. Those areas need a clear economic strategy within which is included a sensible fiscal regime. They should not be treated, as they have been countless times—and heaven knows how often right hon. and hon. Members have complained about this from the Front Bench and the Back Benches—as part of a lottery. They should not have merely to accept the consequence of overall taxation changes made for other reasons. I hope that the Treasury team means what it says.
      We must continue to discuss VAT. The Treasury team has expressed what may be a desirable long-term aim that we hope
      1414
      will lead to a positive achievement, but in the short term we face an increased rate of VAT for repairs and maintenance of heritage properties that we must oppose. It will mean problems such as lost jobs in various parts of the country. That is only one consequence.
      My hon. Friend the Member for Don Valley (Mr. Welsh), who is not in the Chamber, spoke graphically about the impact of these measures on young couples who have applied for improvement grants and who are carrying out repairs and maintenance as part of that procedure. Their costs will be increased substantially because of the higher rate of VAT and the increase in the MLR and interest rates generally that they have faced and will have to face. My hon. Friend gave an example of a young couple incurring an additional burden of £100 in the course of improving their home, a desirable social objective with which we all agree. It is a great pity that that desirable social objective is to be put beyond the reach of many young people.
      Many householders, especially after the severe winter of 1978–79, will be thinking about repairing and maintaining their homes. That will cost them more. As my hon. Friend the Member for Keighley (Mr. Cryer) said, that will apply especially in areas such as Keighley and Gateshead where there is a great deal of industrial revolution property in a bad state of repair and in constant need of repair and maintenance. Much of that property is occupied by pensioners and others of low means who can ill afford an extra –50 or whatever the sum may be that results from the proposed increase. The Government should have thought about that.
      A number of Conservative Members and some of my hon. Friends, most notably my hon. Friend the Member for Liverpool, Walton (Mr. Heffer), have spoken about the effect on the building industry. I cannot do better than to quote the press release issued by the National Federation of Building Employers when the increased rate of VAT was announced:
      "There are three main areas of potential growth for private sector construction demand: private housebuilding, repair/improvement maintenance work, commercial/industrial building. All three of these areas have been steadily recovering over the past 18 months or so, but this recovery will now be severely tested by the tight squeeze on the private

      1415
      sector which is announced in the Budget … it must equally be recognised that the increase in minimum lending rate to 14 per cent. will … reduce the availability of funds for house purchase … increase the cost of builders' work-in-progress … decrease the incentive for capital investment in building works … the imposition of 15 per cent. VAT upon repair and maintenance work will tend to discourage householders from undertaking these works as well as encouraging the 'moonlighting' and less reputable elements in the building business, and make the administrative and commercial existence of the VAT-registered builder doubly hard."
      It is the small-scale builder, so well known to the Conservative Party, who will be most hard hit by these measures. I thought that it was part of the intention
      of the new style of government to encourage those in that position. In fact, this Administration is hitting them hard.
      The increased rate of VAT will have a special effect on heritage properties and churches. It will affect the ordinary householder by increasing his costs. It will also have an effect on the building industry and cause a loss of jobs. For all those reasons the Opposition must press the amendment to a Division.
      Question put, That the amendment be made:—
      The Committee divided: Ayes 218, Noes 286.

      Division No.41]

      AYES

      [5.29 p.m.

      Abse, Leo

      Duffy, A. E. P.

      Leighton, Ronald

      Adams, Allen

      Dunlop, John

      Lestor, Miss Joan (Eton & Slough)

      Allaun, Frank

      Dunwoody, Mrs Gwyneth

      Lewis, Ron (Carlisle)

      Alton, David

      Eastham, Ken

      Lofthouse, Geoffrey

      Anderson, Donald

      Edwards, Robert (Wolv SE)

      Lyon, Alexander (York)

      Archer, Rt Hon Peter

      Ellis, Raymond (NE Derbyshire)

      Mcartney, Hugh

      Armstrong, Rt Hon Ernest

      Ellis, Tom (wrexham)

      McDonald, Dr Oonagh

      Ashton, Joe

      Ennals, Rt Hon David

      McElhone, Frank

      Bagier, Gordon A. T.

      Evans, Ioan (Aberdare)

      McGuire, Michael (Ince)

      Barnett, Guy (Greenwhich)

      Ewing, Harry

      Mckay, Allen (Penistone)

      Barnett, Rt Hon Joel (Heywood)

      Fitch, Alan

      McKelvey, William

      Beith, A. J.

      Flannery, Martin

      MacKenzie, Rt Hon Gregor

      Benn, Rt Hon Anthony Wedgwood

      Fletcher, Ted (Darlington)

      Maclennan, Robert

      Bidwell, Sydney

      Foot, Rt Hon Michael

      McMahon, Andrew

      Booth, Rt Hon Albert

      Ford, Ben

      McMillan, Tom (Glasgow, Central)

      Boothroyd, Miss Betty

      Forrester, John

      McNally, Thomas

      Bottomley, Rt Hon Arthur (M'brough)

      Foster, Derek

      McWilliam, John

      Bradley, Tom

      Foulkes, George

      Marks, Kenneth

      Bray, Dr Jeremy

      Freud, Clement

      Marshall, David (Gl'sgow, Shettles'n)

      Brown, Hugh D. (Provan)

      Garrett, John (Norwich S)

      Marshall, Dr Edmund (Goole)

      Buchan, Norman

      Garrett, W. E. (Wallsend)

      Marshall, Jim (Leicester South)

      Callaghan, Rt Hon J. (Cardiff SE)

      George, Bruce

      Michael (Gl'gow, Springb'rn)

      Callaghan, Jim (Middleton & P)

      Golding, John

      Maxton, John

      Campbell, Ian

      Gourlay, Harry

      Maynard, Miss Joan

      Campbell-Savours, Dale

      Grant, John (Islington C)

      Meacher, Michael

      Canavan, Dennis

      Grimond, Rt Hon J.

      Mellish, Rt Hon Robert

      Cant, R. B.

      Hamilton, James (Bothwell)

      Mikardo, Ian

      Carmichael, Neil

      Hamilton, W. W. (Central Fife)

      Millan, Rt Hon Bruce

      Cartwright, John

      Hardy, Peter

      Miller, Dr M. S. (East Kilbride)

      Cocks, Rt Hon Michael (Bristol S)

      Harrison, Rt Hon Walter

      Mitchell, Austin (Grimsby)

      Cohen, Stanley

      Hattersley, Rt Hon Roy

      Mitchell, R. C. (Soton, Itchen)

      Coleman, Donald

      Haynes, Frank

      Morris, Rt Hon Alfred (Wythenshawe)

      Concannon, Rt Hon J. D.

      Healey, Rt Hon Denis

      Morris, Rt Hon Charles (Openshaw)

      Conlan, Bernard

      Heffer, Eric S.

      Morris, Rt Hon John (Aberavon)

      Cook, Robin F.

      Hogg, Norman (E Dunbartonshire)

      Morton, George

      Cowans, Harry

      Home Robertson, John

      Moyle, Rt Hon Roland

      Cox, Tom (Wandsworth, Tooting)

      Homewood, William

      Newens, Stanley

      Craigen, J. M. (Glasgow, Maryhill)

      Hooley, Frank

      Oakes, Rt Hon Gordon

      Crowther, J. S.

      Horam, John

      O'Neill, Martin

      Cryer, Bob

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

      Orme, Rt Hon Stanley

      Cunliffe, Lawrence

      Huckfield, Les

      Owen, Rt Hon Dr David

      Cunningham, George

      Hughes, Mark (Durham)

      Palmer, Arthur

      Dalyell, Tam

      Hughes, Robert (Aberdeen North)

      Park, George

      Davidson, Arthur

      Hughes, Roy (Newport)

      Parker, John

      Davies, Rt Hon Denzil (Llanelli)

      Janner, Hon Greville

      Parry, Robert

      Davies, E. Hudson (Caerphilly)

      Jay, Rt Hon Douglas

      Penhaligon, David

      Davies, Ifor (Gower)

      John, Brynmor

      Powell, Raymond (Ogmore)

      Davis, Clinton (Hackney Central)

      Johnson, James (Hull West)

      Prescott, John

      Davis, Terry (B'rm'ham, Stechford)

      Jones, Rt Hon Alec (Rhondda)

      Price, Christopher (Lewisham West)

      Dean, Joseph (Leeds West)

      Jones, Barry (East Flint)

      Race, Reg

      Dempsey, James

      Jones, Dan (Burnley)

      Radice, Giles

      Dewar, Donald

      Kaufman, Rt Hon Gerald

      Richardson, Miss Jo

      Dixon, Donald

      Kerr, Russell

      Roberts, Allan (Bootle)

      Dobson, Frank

      Kilfedder, James A.

      Roberts, Ernest (Hackney North)

      Dormand, Jack

      Lambie, David

      Robertson, George

      Douglas, Dick

      Lamborn, Harry

      Rodgers, Rt Hon William

      Douglas-Mann, Bruce

      Lamond, James

      Rooker, J. W.

      Dubs, Alfred

      Leadbitter, Ted

      Ross, Ernest (Dundee West)

      Ross, Stephen (Isle of Wight)

      Stott, Roger

      Whitehead, Phillip

      Rowlands, Ted

      Straw, Jack

      Whitlock, William

      Sandelson, Neville

      Summerskill, Hon Dr Shirley

      Wigley, Dafyd

      Sever, John

      Thomas, Dafydd (Merloneth)

      Willey, Rt Hon Frederick

      Sheldon, Rt Hon Robert (A'ton-u-L)

      Thomas, Mike (Newcastle East)

      Williams, Sir Thomas (Warrington)

      Shore, Rt Hon Peter (Step and Poo)

      Thomas, Dr Roger (Carmarthen)

      Wilson, Gordon (Dundee East)

      Silkin, Rt Hon John (Deptford)

      Thorne, Stan (Preston South)

      Wilson, Rt Hon Sir Harold (Huyton)

      Silkin, Rt Hon S. C. (Dulwich)

      Tilley, John

      Wilson, William (Coventry SE)

      Silverman, Julius

      Urwin, Rt Hon Tom

      Winnick, David

      Skinner, Dennis

      Varley, Rt Hon Eric G.

      Wrigglesworth, Ian

      Smith, Rt Hon J. (North Lanarkshire)

      Walker, Rt Hon Harold (Doncaster)

      Wright, Sheila

      Snape, Peter

      Watkins, David

      Young, David (Bolton East)

      Spriggs, Leslie

      Weetch, Ken

      Stallard, A. W.

      Wellbeloved, James

      TELLERS FOR THE AYES

      Stewart, Rt Hon Donald (W Isles)

      Welsh, Michael

      Mr. Ted Graham and

      Stoddart, David

      White, Frank R. (Bury & Radcliffe)

      Mr. John Evans

      NOES

      Adley, Robert

      Dover, Denshore

      Irving, Charles (Cheltenham)

      Alexander, Richard

      du Cann, Rt Hon Edward

      Jenkin, Rt Hon Patrick

      Ancram, Michael

      Dunn, Robert (Dartford)

      Jessel, Toby

      Arnold, Tom

      Durant, Tony

      Johnson Smith, Geoffrey

      Aspinwall, Jack

      Dykes, Hugh

      Johnston, Russell (Inverness)

      Atkins, Robert (Preston North)

      Eden, Rt Hon Sir John

      Jopling, Rt Hon Michael

      Atkinson, David (B'mouth, East)

      Edwards, Rt Hon N. (Pembroke)

      Joseph, Rt Hon Sir Keith

      Baker, Kenneth (St. Marylebone)

      Egger, Timothy

      Kaberry, Sir Donald

      Baker, Nicholas (North Dorset)

      Elliott, Sir William

      Kellett-Bowman, Mrs Elaine

      Banks, Robert

      Eyre, Reginald

      Kershaw, Anthony

      Beaumont-Dark, Anthony

      Fairbairn, Nicholas

      King, Rt Hon Tom

      Bell, Ronald

      Fairgrieve, Russell

      Kitson, Sir Timothy

      Bendall, Vivian

      Faith, Mrs Sheila

      Knox, David

      Bennett, Sir Frederic (Torbay)

      Fell, Anthony

      Lamont, Norman

      Benyon, W. (Buckingham)

      Fenner, Mrs Peggy

      Lang, Ian

      Berry, Hon Anthony

      Finsberg, Geoffrey

      Langford-Holt, Sir John

      Best, Keith

      Fisher, Sir Nigel

      Lawrence, Ivan

      Bevan, David Gilroy

      Fletcher, Alexander (Edinburgh N)

      Lawson, Nigel

      Biffen, Rt Hon John

      Fletcher-Cooke, Charles

      Lee, John

      Biggs-Davison, John

      Fookes, Miss Janet

      Lennox-Boyd, Hon Mark

      Blaker, Peter

      Forman, Nigel

      Lester, Jim (Beeston)

      Bonsor, Sir Nicholas

      Fowler, Rt Hon Norman

      Lewis, Kenneth (Rutland)

      Boscawen, Hon Robert

      Fox, Marcus

      Lloyd, Ian (Havant & Waterloo)

      Bottomley, Peter (Woolwich West)

      Fraser, Peter (South Angus)

      Lloyd, Peter (Fareham)

      Bowden, Andrew

      Fry, Peter

      Loveridge, John

      Boyson, Dr Rhodes

      Galbraith, Hon T. G. D.

      Luce, Richard

      Bright, Graham

      Gardiner, George (Reigate)

      Lyell, Nicholas

      Brinton, Tim

      Gardner, Edward (South Fylde)

      McCandle, Robert

      Britten, Leon

      Garel-Jones, Tristan

      Macfarlane, Neil

      Brocklebank-Fowler, Christopher

      Glyn, Dr Alan

      MacGregor, John

      Brooke, Hon Peter

      Goodhart, Philip

      MacKay, John (Argyll)

      Brotherton, Michael

      Goodlad, Alastair

      Macmillan, Rt Hon M. (Farnham)

      Brown, Michael (Brigg & Sc'thorpe)

      Gorst, John

      McNair-Wilson, Michael (Newbury)

      Browne, John (Winchester)

      Gow, Ian

      McNair-Wilson, Patrick (New Forest)

      Bruce-Gardyne, John

      Gower, Sir Raymond

      Madel, David

      Bryan, Sir Paul

      Grant, Anthony (Harrow C)

      Major, John

      Buck, Antony

      Gray, Hamish

      Marland, Paul

      Budgen, Nick

      Grieve, Percy

      Marlow, Tony

      Bulmer, Esmond

      Griffiths, Eldon (Bury St Edmunds)

      Marshall, Michael (Arundel)

      Burden, F. A.

      Griffiths, Peter (Portsmouth N)

      Marten, Neil (Banbury)

      Butcher, John

      Grist, Ian

      Mates, Michael

      Butler, Hon Adam

      Grylls, Michael

      Mather, Carol

      Cadbury, Jocelyn

      Gummer, John Selwyn

      Maude, Rt Hon Angus

      Carlisle, John (Luton West)

      Hamilton, Hon Archie (Eps'm & Ew'll)

      Mawby, Ray

      Carlisle, Kenneth (Lincoln)

      Hamilton, Michael (Salisbury)

      Mawhinney, Dr Brian

      Carlisle, Rt Hon Mark (Runcorn)

      Hampson, Dr Keith

      Maxwell-Hyslop, Robin

      Chalker, Mrs. Lynda

      Hannam, John

      Mellor, David

      Channon, Paul

      Haselhurst, Alan

      Meyer, Sir Anthony

      Chapman, Sydney

      Havers, Rt Hon Sir Michael

      Miller, Hal (Bromsgrove & Redditch)

      Churchill, W. S.

      Hawksley, Warren

      Mills, Peter (West Devon)

      Clark, Hon Alan (Plymouth, Sutton)

      Hayhoe, Barney

      Monro, Hector

      Clark, Dr William (Croydon South)

      Heddle, John

      Montgomery, Fergus

      Clarke, Kenneth (Rushcliffe)

      Henderson, Barry

      Moore, John

      Clegg, Walter

      Heseltine, Rt Hon Michael

      Morgan, Geraint

      Cockeram, Eric

      Hicks, Robert

      Morris, Michael (Northampton, Sth)

      Colvin, Michael

      Hill, James

      Morrison, Hon Charles (Devizes)

      Cope, John

      Hogg, Hon Douglas (Grantham)

      Morrison, Hon Peter (City of Chester)

      Corrie, John

      Holland, Philip (Carlton)

      Mudd, David

      Costain, A. P.

      Hooson, Tom

      Murphy, Christopher

      Cranborne, Viscount

      Hordern, Peter

      Myles, David

      Critchley, Julian

      Howe, Rt Hon Sir Geoffrey

      Neale, Gerrard

      Crouch, David

      Howell, Rt Hon David (Guildford)

      Neubert, Michael

      Dean, Paul (North Somerset)

      Howell, Ralph (North Norfolk)

      Newton, Tony

      Dickens, Geoffrey

      Howells, Geraint

      Normanton, Tom

      Dorrell, Stephen

      Hunt, David (Wirral)

      Oppenheim, Rt Hon Mrs Sally

      Douglas-Hamilton, Lord James

      Hunt, John (Ravensbourne)

      Osborn, John

      1418

      1419

      Page, John (Harrow, West)

      Shaw, Michael (Scarborough)

      Townsend, Cyril D. (Sexleyheath)

      Page, Rt Hon R. Graham (Crosby)

      Shelton, William (Streatham)

      Trippler, David

      Parkinson, Cecil

      Shepherd, Colin (Hereford)

      Trotter, Neville

      Parris, Matthew

      Shepherd, Richard (Aldridge-Br'hills)

      van Straubenzee, W. R.

      Patten, John (Oxford)

      Shersby, Michael

      Viggers, Peter

      Pattie, Geoffrey

      Silvester, Fred

      Wainwright, Richard (Colne Valley)

      Pawsey, James

      Sims, Roger

      Wakeham, John

      Percival, Sir Ian

      Smith, Dudley (War. and Leam'ton)

      Waldegrave, Hon William

      Pollock, Alexander

      Speed, Keith

      Walker, Rt Hon Peter (Worcester)

      Porter, George

      Speller, Tony

      Walker-Smith, Rt Hon Sir Derek

      Price, David (Eastleigh)

      Spicer, Jim (West Dorset)

      Wall, Patrick

      Prior, Rt Hon James

      Spicer, Michael (S Worcestershire)

      Waller, Gary

      Proctor, K. Harvey

      Sproat, Iain

      Walters, Dennis

      Pym, Rt Hon Francis

      Squire, Robin

      Ward, John

      Raison, Timothy

      Stainton, Keith

      Watson, John

      Rathbone, Tim

      Stanbrook, Ivor

      Wells, John (Maidstone)

      Rees, Peter (Dover and Deal)

      Steel, Rt Hon David

      Wells, Bowen (Hert'rd & Stev'nage)

      Rees-Davies, W. R.

      Stevens, Martin

      Wheeler, John

      Renton, Tim

      Stewart, Ian (Hitchin)

      Whitelaw, Rt Hon William

      Rhodes James, Robert

      Stewart, John (East Renfrewshire)

      Whitney, Raymond

      Rhys Williams, Sir Brandon

      Stokes, John

      Wickenden, Keith

      Ridley, Hon Nicholas

      Stradling Thomas, J.

      Wilkinson, John

      Ridsdale, Julian

      Topsoil, Peter

      Williams, Delwyn (Montgomery)

      Rifkind, Malcolm

      Taylor, Robert (Croydon NW)

      Winterton, Nicholas

      Roberts, Michael (Cardiff NW)

      Tebbit, Norman

      Wolfson, Mark

      Roberts, Wyn (Conway)

      Temple-Morris, Peter

      Young, Sir George (Acton)

      Rossi, Hugh

      Thomas, Rt Hon Peter (Hendon S)

      Younger, Rt Hon George

      Rost, Peter

      Thompson, Donald

      Royle, Sir Anthony

      Thorne, Neil (Ilford South)

      TELLERS FOR THE NOES:

      Sainsbury, Hon Timothy

      Thornton, Malcolm

      Mr. Spencer Le Marchant and

      St. John-Stevas, Rt Hon Norman

      Townend, John (Bridlington)

      Mr. David Waddington.

      Scott, Nicholas

      Question accordingly negatived.
      Amendment proposed, No. 21, in page 2, line 27, at end add—
      "(6) As from the passing of this Act subsection (1) above shall not apply to the supply of laundry services.".—[Miss Richardson.]
      Question put, That the amendment be made:—
      The Committee divided: Ayes 212, Noes 293.

      Division No. 42.]

      AYES

      [5.43 p.m.

      Abse, Leo

      Cunningham, George (Islington S)

      Graham, Ted

      Adams, Alien

      Dalyell, Tam

      Grant, John (Islington C)

      Allaun, Frank

      Davidson, Arthur

      Hamilton, James (Bothwell)

      Anderson, Donald

      Davies, Rt Hon Denzil (Llanelli)

      Hamilton, W. W. (Central Fife)

      Archer, Rt Hon Peter

      Davies, E. Hudson (Caerphilly)

      Hardy, Peter

      Armstrong, Rt Hon Ernest

      Davies, Ifor (Gower)

      Harrison, Rt Hon Walter

      Ashton, Joe

      Davis, Clinton (Hackney Central)

      Hattersley, Rt Hon Roy

      Bagier, Gordon A. T.

      Davis, Terry (B'rm'ham, Stechford)

      Haynes, Frank

      Barnett, Guy (Greenwich)

      Dean, Joseph (Leeds West)

      Healey, Rt Hon Denis

      Barnett, Rt Hon Joel (Heywood)

      Dempsey, James

      Heffer, Eric S.

      Beith, A. J.

      Dewar, Donald

      Hogg, Norman (E Dunbartonshire)

      Benn, Ft Hon Anthony Wedgwood

      Dixon, Donald

      Home Robertson, John

      Bidwell, Sydney

      Dobson, Frank

      Homewood, William

      Booth, Rt Hon Albert

      Dormand, Jack

      Hooley, Frank

      Boothroyd, Miss Betty

      Douglas, Dick

      Horam, John

      Bottomley, Rt Hon Arthur (M'brough)

      Douglas-Mann, Bruce

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

      Bradley, Tom

      Dubs, Alfred

      Huckfield, Les

      Bray, Dr Jeremy

      Duffy, A. E. P.

      Hughes, Mark (Durham)

      Brown, Hugh D. (Provan)

      Dunlop, John

      Hughes, Robert (Aberdeen North)

      Brown, Ronald W. (Hackney S)

      Dunwoody, Mrs Gwyneth

      Hughes, Roy (Newport)

      Buchan, Norman

      Eastham, Ken

      Janner, Hon Greville

      Callaghan, Rt Hon J. (Cardiff SE)

      Edwards, Robert (Wolv SE)

      Jay, Rt Hon Douglas

      Callaghan, Jim (Middleton & P)

      Ellis, Raymond (NE Derbyshire)

      John, Brynmor

      Campbell, Ian

      Ellis, Tom (Wrexham)

      Johnson, James (Hull West)

      Campbell-Savours, Dale

      Ennals, Rt Hon David

      Jones, Rt Hon Alec (Rhondda)

      Canavan, Dennis

      Evans, Ioan (Aberdare)

      Jones, Barry (East Flint)

      Cant, R. B.

      Evans, John (Newton)

      Jones, Dan (Burnley)

      Carmichael, Neil

      Ewing, Harry

      Kaufman, Rt Hon Gerald

      Cartwright, John

      Fitch, Alan

      Kerr, Russell

      Cocks, Rt Hon Michael (Bristol S)

      Flannery, Martin

      Lambie, David

      Cohen, Stanley

      Fletcher, Ted (Darlington)

      Lamborn, Harry

      Coleman, Donald

      Foot, Rt Hon Michael

      Lamond, James

      Concannon, Rt Hon J. D.

      Ford, Ben

      Leadbitter, Ted

      Conlon, Bernard

      Forrester, John

      Leighton, Ronald

      Cook, Robin F.

      Foster, Derek

      Lestor, Miss Joan (Eton & Slough)

      Cowans, Harry

      Foulkes, George

      Lewis, Ron (Carlisle)

      Cox, Tom (Wandsworth, Tooting)

      Garrett, John (Norwich S)

      Lofthouse, Geoffrey

      Craigen, J. M. (Glasgow, Maryhill)

      Garrett, W. E. (Wallsend)

      Lyon, Alexander (York)

      Crowther, J. S.

      George, Bruce

      McCartney, Hugh

      Cryer, bulb

      Golding, John

      McDonald, Dr Oonagh

      Cunliffe Lawrence

      Gourlay, Harry

      McElhone, Frank

      McGuire, Michael (Ince)

      Orme, Rt Hon Stanley

      Stott, Roger

      McKay, Allen (Penistone)

      Owen, Rt Hon Dr David

      Summerskill, Hon Dr Shirley

      Mckelvey, William

      Palmer, Arthur

      Thomas, Dafydd (Merioneth)

      Mackenzie, Rt Hon Gregor

      Park, George

      Thomas, Mike (Newcastle East)

      Maclennan, Robert

      Parker, John

      Thomas, Dr Roger (Carmarthen)

      McMahon, Andrew

      Parry, Robert

      Thorne, Stan (Preston South)

      McMillan, Tom (Glasgow, Central

      Powell, Raymond (Ogmore)

      Tilley, John

      McNally, Thomas

      Prescott, John

      Orwin, Rt Hon Tom

      McWilliam, John

      Price, Christopher (Lewisham West)

      Varley, Rt Hon Eric G.

      Marks, Kenneth

      Race, Rag

      Walker, Rt Hon Harold (Doncaster)

      Marshall, David (Gl'sgow, Shettles'n)

      Richardson, Miss Jo

      Watkins, David

      Marshall, Dr Edmund (Goole)

      Roberts, Ernest (Hackney North

      Weetch, Ken

      Marshall, Jim (Leicester South)

      Robertson, George

      Wellbeloved, James

      Martin, Michael (Gl'gow, Springb'rn)

      Rodgers, Rt Hon William

      Welsh, Michael

      Maxton, John

      Rooker, J. W.

      White, Frank R. (Bury & Radcliffe)

      Maynard, Miss Joan

      Ross, Ernest (Dundee West)

      Whitehead, Phillip

      Meacher, Michael

      Rowlands, Ted

      Whitlock, William

      Mellish, Rt Hon Robert

      Sever, John

      Wigley, Dafyd

      Mikardo, Ian

      Sheerman, Barry

      Willey, Rt Hon Frederick

      Millan, Rt Hon Bruce

      Sheldon, Rt Hon Robert (A'ton-u-L)

      Williams, Sir Thomas (Warrington)

      Miller, Dr M. S. (East Kilbride)

      Shore, Rt Hon Peter (Step and Pop)

      Wilson, Gordon (Dundee East)

      Mitchell, Austin (Grimsby)

      Silkin, Rt Hon John (Deptford)

      Wilson, Rt Hon Sir Harold (Huyton)

      Mitchell, R. C. (Soton, Itchen)

      Silkin, Rt Hon S. C. (Dulwich)

      Wilson, William (Coventry SE)

      Morris, Rt Hon Alfred (Wythenshawe)

      Silverman, Julius

      Winnick, David

      Morris, Rt Hon Charles (Openshaw)

      Skinner, Dennis

      Wrigglesworth, Ian

      Morris, Rt Hon John (Aberavon)

      Smith, Rt Hon J. (North Lanarkshire)

      Wright, Sheila

      Morton, George

      Snape, Peter

      Young, David (Bolton East)

      Moyle, Rt Hon Roland

      Spriggs, Leslie

      Newens, Stanley

      Stallard, A. W.

      TELLERS FOR THE AYES

      Oakes, Rt Hon Gordon

      Stewart, Rt Hon Donald (W Isles)

      Mr. Jack Straw and

      O' Neill, Martin

      Stoddart, David

      Mr. Allan Roberts.

      NOES

      Adley, Robert

      Clark, Dr William (Croydon South)

      Gower, Sir Raymond

      Alexander, Richard

      Clarke, Kenneth (Rushcliffe)

      Grant, Anthony (Harrow C)

      Alton, David

      Clegg, Walter

      Gray, Hamish

      Ancram, Michael

      Cockeram, Eric

      Griffiths, Eldon (Bury St Edmunds)

      Aspinwall, Jack

      Cope, John

      Griffiths, Peter (Portsmouth N)

      Atkins, Robert (Preston North)

      Ccrmack, Patrick

      Grimond, Rt Hon J.

      Atkinson, David (B'mouth, East)

      Corrie, John

      Grist, Ian

      Baker, Kenneth (St. Marylebone)

      Costain, A. P.

      Grylls, Michael

      Baker, Nicholas (North Dorset)

      Cranborne, Viscount

      Gummer, John Selwyn

      Banks, Robert

      Critchey, Julian

      Hamilton, Hon Archie (Eps'm & Ew'll)

      Beaumont-Dark, Anthony

      Crouch, David

      Hamilton, Michael (Salisbury)

      Bell, Ronald

      Dean, Paul (North Somerset)

      Hampson, Dr Keith

      Bendall Vivian

      Dickens, Geoffrey

      Haselhurst, Alan

      Bennett, Sir Frederic (Torbay)

      Dorrell, Stephen

      Havers, Rt Hon Sir Michael

      Benyon, Thomas (Abingdon)

      Douglas-Hamilton, Lord James

      Hawksley Warren

      Benyon, W. (Buckingham)

      Dover, Denshore

      Hayhoe, Barney

      Best, Keith

      du Cann, Rt Hon Edward

      Heddle, John

      Bevan, David Gilroy

      Dunn, Robert (Dartford)

      Henderson, Barry

      Biffen, Rt Hon John

      Durant, Tony

      Heseltine, Rt Hon Michael

      Biggs-Davison, John

      Dykes, Hugh

      Hicks, Robert

      Blaker, Peter

      Eden, Rt Hon Sir John

      Hill, James

      Bonsor, Sir Nicholas

      Edwards, Rt Hon N. (Pembroke)

      Hogg, Hon Douglas (Grantham)

      Boscawen, Hon Robert

      Eggar, Timothy

      Holland, Philip (Carlton)

      Bottomley, Peter (Woolwich West)

      Eggar, Sir William

      Hooson, Tom

      Bowden, Andrew

      Eyre, Reginald

      Hordern, Peter

      Boyson, Dr Rhodes

      Fairbairn, Nicholas

      Howe, Rt Hon Sir Geoffrey

      Bright, Graham

      Fairgrieve, Russell

      Howell, Rt Hon David (Guildford)

      Brinton, Tim

      Faith, Mrs Shella

      Howell, Ralph (North Norfolk)

      Brittan, Leon

      Fell, Anthony

      Howells, Geraint

      Brocklebank-Fowler, Christopher

      Fenner, Mrs Peggy

      Hunt, David (Wirral)

      Brooke, Hon Peter

      Finsberg, Geoffrey

      Hunt, John (Ravensbourne)

      Brotherton, Michael

      Fisher, Sir Nigel

      Irving, Charles (Cheltanham)

      Brown, Michael (Brigg & Se'thorpe)

      Fletcher, Alexander (Edinburgh N)

      Jenkin, Rt Hon Patrick

      Browne, John (Winchester)

      Fletcher-Cooke, Charles

      Jessel, Toby

      Bruce-Gardyne, John

      Fookes, Miss Janet

      Johnston, Russell (Inverness)

      Bryan, Sir Paul

      Forman, Nigel

      Jopllng, Rt Hon Michael

      Buck, Antony

      Fowler, Rt Hon Norman

      Joseph, Rt Hon Sir Keith

      Budgen, Nick

      Fox, Marcus

      Kaberry, Sir Donald

      Bulmer, Esmond

      Fraser, Peter (South Angus)

      Kellett-Bowman, Mrs Elaine

      Burden, F. A.

      Freud Clement

      Kershaw, Anthony

      Butler, Hon Adam

      Fry, Peter

      Kilfedder, James A.

      Cadbury, Jocelyn

      Galbraith, Hon T. G. D.

      King, Rt Hon Tom

      Carlisle, John (Luton West)

      Gardiner, George (Reigate)

      Kitson, Sir Timothy

      Carlisle, Kenneth (Lincoln)

      Gardener, Edward (South Fylde)

      Knox, David

      Carlisle, Rt Hon Mark (Runcorn)

      Garel-Jones, Tristan

      Lamont, Norman

      Chalker, Mrs. Lynda

      Glyn, Dr Alan

      Lang, Ian

      Channon, Paul

      Goodhart, Philip

      Langford-Holt, Sir John

      Chapman, Sydney

      Goodlad, Alastair

      Latham, Michael

      Churchill, W. S.

      Gorst, John

      Lawrence, Ivan

      Clark, Hon Alan (Plymouth Sutton)

      Gow Ian

      Lawson, Nigel

      1422

      1423

      Lee, John

      Osborn, John

      Squire, Robin

      Le Merchant, Spencer

      Page, John (Harrow, West)

      Stainton, Keith

      Lennox-Boyd, Hon Mark

      Page, Rt Hon R. Graham (Crosby)

      Stanbrook, Ivor

      Lester, Jim (Beeston)

      Parkinson, Cecil

      Steel, Rt Hon David

      Lewis, Kenneth (Rutland)

      Parris, Matthew

      Stevens, Martin

      Lloyd, Ian (Havant & Waterloo)

      Patten, John (Oxford)

      Stewart, Ian (Hitchin)

      Lloyd, Peter (Fareham)

      Pattie, Geoffrey

      Stewart, John (East Renfrewshire)

      Loveridge, John

      Pawsey, James

      Stokes, John

      Luce, Richard

      Penhaligon, David

      Stradling Thomas, J.

      Lyell, Nicholas

      Percival, Sir Ian

      Tapsell, Peter

      McCrindle, Robert

      Pollock, Alexander

      Taylor, Robert (Croydon NW)

      Macfarlane, Neil

      Porter, George

      Tebbit, Norman

      MacGregor, John

      Price, David (Eastleigh)

      Temple-Morris, Peter

      MacKay, John (Argyll)

      Prior, Rt Hon James

      Thomas, Rt Hon Peter (Hendon S)

      Macmillan, Rt Hon M. (Farnham)

      Proctor, K. Harvey

      Thompson, Donald

      McNair-Wilson, Michael (Newbury)

      Pym, Rt Hon Francis

      Thorne, Neil (Ilford South)

      McNair-Wilson, Patrick (New Forest)

      Raison, Timothy

      Thornton, Malcolm

      Madel, David

      Rathbone, Tim

      Townend, John (Bridlington)

      Major, John

      Rees, Peter (Dover and Deal)

      Townsend. Cyril D. (Bexleyheath)

      Marland, Paul

      Renton, Tim

      Trippier, David

      Marlow, Tony

      Rhodes James, Robert

      Trotter, Neville

      Marshall, Michael (Arundel)

      Rhys Williams, Sir Brandon

      van Straubenzee, W. R.

      Marten, Neil (Banbury)

      Ridley, Hon Nicholas

      Viggers, Peter

      Mates, Michael

      Ridsdale, Julian

      Wainwright, Richard (Colne Valley)

      Mather, Carol

      Rifkind, Malcolm

      Wakeham, John

      Maude, Rt Hon Angus

      Roberts, Michael (Cardiff NW)

      Waldegrave, Hon William

      Mawby, Ray

      Roberts, Wyn (Conway)

      Wall, Patrick

      Mawhinney, Dr Brian

      Ross, Stephen (Isle of Wight)

      Waller, Gary

      Maxwell-Hyslop, Robin

      Rossi, Hugh

      Walters, Dennis

      Mellor, David

      Rost, Peter

      Ward, John

      Meyer, Sir Anthony

      Royle, Sir Anthony

      Watson, John

      Miller, Hal (Bromsgrove & Redditch)

      Sainsbury, Hon Timothy

      Wells, John (Maidstone)

      Mills, Peter (West Devon)

      St. John-Stevas, Rt Hon Norman

      Wells, Bowen (Hert'rd & Stev'nage)

      Monro, Hector

      Scott, Nicholas

      Wheeler, John

      Montgomery, Fergus

      Shaw, Michael (Scarborough)

      Whitelaw, Rt Hon William

      Moore, John

      Shelton, William (Streatham)

      Whitney, Raymond

      Morgan, Geraint

      Shepherd, Colin (Hereford)

      Wickenden, Keith

      Morris, Michael (Northampton, Sth)

      Shepherd, Richard (Aldridge-Br'hills)

      Wilkinson, John

      Morrison, Hon Charles (Devizes)

      Shersby, Michael

      Williams, Delwyn (Montgomery)

      Morrison, Hon Peter (City of Chester)

      Silvester, Fred

      Winterton, Nicholas

      Mudd, David

      Sims, Roger

      Wolfson, Mark

      Murphy, Christopher

      Skeet, T. H. H.

      Young, Sir George (Acton)

      Myles, David

      Smith, Dudley (War. and Leam'ton)

      Younger, Rt Hon George

      Neale, Gerrard

      Speed, Keith

      Neubert, Michael

      Speller, Tony

      TELLERS FOR THE NOES:

      Newton, Tony

      Spicer, Jim (West Dorset)

      Mr. Anthony Berry and

      Normanton, Tom

      Spicer, Michael (S Worcestershire)

      Mr. David Waddington.

      Oppenheim, Rt Hon Mrs Sally

      Sproat, Iain

      Question accordingly negatived.
      THE CHAIRMAN, being of the opinion that the principle of the clause and any matters arising thereon had been adequately discussed in the course of the debate on the amendments proposed thereto, forthwith put the Question, pursuant to Standing Order No. 48 (Debate on clause or schedule standing part), That the clause, as amended, stand part of the Bill.
      Mr. John Gorst: On a point of order, Mr. Weatherill. There is one point of principle which, so far as I am aware, has not been aired. I wonder whether I may have an opportunity to deploy that point very briefly.
      The Chairman: The hon. Member will know that the clause has been debated for 13 hours. I think that he has had adequate time to put his point.
      Question agreed to.
      Clause 1, as amended, ordered to stand part of the Bill

    Clause 2

      HYDROCARBON OIL ETC.
      Mr. David Steel: I beg to move amendment No. 7, in page 2, line 31, leave out "£0·0810" and "£0·0920" and insert "£0·0717" and "£0·0837".
      The Chairman: With this it will be convenient to take amendment No. 23, in page 2, line 31, leave out '£0·0810' and insert £0·0735', and new clause 10—Vehicle Excise Duty—
      'In the Vehicles (Excise) Duty Act 1971, in the fifth Schedule (both as it is applied to Great Britain by Part V of the Fourth Schedule to the Finance Act 1977 and as it is applied to Northern Ireland by Part V of the Fifth Schedule to that Act) there shall be substituted for "£50" the words "£40 as from 1st August 1979".'.
      Mr. Steel: What the amendment means in plain English is that we are proposing to alter the rate of excise duty on petrol and Derv in a manner that will

      1425
      index it to the rate of inflation that occurred during 1978.
      By way of preface, I say that it is my party's view that the Chancellor would have been wise throughout the Budget to go for the principle of indexing these various taxes on goods and services, thus spreading the load more equitably than he has chosen to do with the arbitrary increases in VAT and in excise duty and the non-increases in other goods which he has proposed in the Budget.
      However, I want to deal specifically with the case on petrol. Quite apart from the general principle of indexation, I hope to show to the Committee that the revenue which, in the Red Book, the Government forecast that they intended to raise by these increases will be greatly exceeded as a result of the increased prices at the pumps that have appeared since the Budget forecasting was done.
      There has been a savage increase in the price of both petrol and derv in the last few months. In January of this year the pump price of petrol was 80p a gallon. That included excise duty of 30p and VAT of 8p. Those two taxes greatly increased as a result of the increase in the basic oil price. On the present average pump price of 110p a gallon—I appreciate that it can be more than that—the excise duty as proposed by the Government will be 36·8p. As a result of the increased pump price and the increased excise duty, the 15 per cent. rate of VAT will bring in 14·4p a gallon.
      6 p.m.
      The effect of our amendment would be to reduce the price per gallon by approximately 4p. In the Red Book the Government proposed to secure an increased revenue of £375 million in a full year. Even with the aid of a calculator I found it difficult to work out what the expected rise would be, and perhaps the Minister will give us the Government's accurate and authoritative forecast? The actual revenue increase, however, will be about £600 million unless our amendment is approved, in which case the increased revenue will be about £405 million. That is still in excess of the Government's forecast. Given the increase that has taken place in the price of oil since the original forecasts were made, the Government owe it to the consumer not to take
      1426
      that extra slice of revenue. They should be generous and give back at least 4p a gallon.
      In formulating taxation on petrol and derv the Government have several objectives. First, they have to raise revenue. The revnue on petrol and derv cannot be exempt from the general trend. That is why we argue the case for indexation.
      As the Chancellor said in his Budget Statement, the Government also desire to increase people's consciousness of the need to conserve energy, and that was one reason for increasing excise duty more than other duties. There will be an increase of almost 50 per cent. in the pump price of petrol within 12 months, taking into account the statements of the OPEC countries. Against that background it cannot be said that the Government are falling down on their duty to ensure that conservation of consumption is heavily in the minds of the public. That is happening anyway. People will not rush to be spendthrift in the use of petrol and derv if they go down by 4p a gallon.
      The Government have a duty to raise revenue and ensure that the needs for conservation are firmly in the public mind. They also have a duty not to raise unnecessarily the basic cost of living in areas where petrol and derv are the necessities of life. We criticised the previous Government's 5 per cent. imposition on petrol tax. Our justification for that criticism equally applies to this Government's proposals. No Government have yet accepted that the consumption of petrol and derv is a necessity in some areas although it may be classed as a luxury in others.
      The Government must reassess vehicle excise duty and the duty on fuels. Until they do so it will not be possible to meet the needs of areas where the cost of petrol is a high component in the cost of travelling to work and moving goods. It is difficult for me to justify to my constituents the fact that the price of such luxuries as drink and tobacco will not be substantially increased but that the price of a necessity like petrol will be savagely increased by the Government on top of the other increases that have occurred. I do not believe that any Minister would care to defend that piece of discrimination to my constituents.
      I hope that the Government will move towards the concept of regionalisation in

      1427
      these taxes. There is discussion between the Chancellor and the Minister of Transport on whether to proceed with the previous Government's intention to phase out vehicle excise duty. The important question, however, is whether the Government will consider a real conservation policy by varying the excise duty if it is to be retained according to the size of vehicle or using the mechanism of petrol excise duty to vary it regionally. That is possibly less easily evaded and may be preferable. One way or the other, the Government must tackle the problem.
      Mr. Dalyell: Is the right hon. Gentleman saying that through the mechanism of excise duty petrol should be cheaper in, for instance, Hawick than in Edinburgh?
      Mr. Steel: At the time of the Budget two years ago the argument was that petrol was considerably cheaper in Edinburgh than in Hawick. I am not arguing that it should be cheaper in my constituency than in big cities, but in areas like Hawick where it is a necessity it is already dearer than in the cities. That situation is intolerable. It is dearer because the oil companies conduct price wars in the big city centres with massive reductions for the volume of sales and they are not able to do that in the small towns and villages. It is a crazy policy to have cheap fuel available for private cars in the big cities and expensive fuel where there is no public transport and a private car is necessary for people to get to work.
      Mr. Russell Johnston: Further to the intervention by the hon. Member for West Lothian (Mr. Dalyell), is my right hon. Friend aware that there are many areas in the Highlands where petrol is 15p a gallon more expensive than in Glasgow or Edinburgh?
      Mr. Steel: I am aware that my constituency is not by any means the worst hit, compared to, for instance, Caithness or the constituency of my right hon. Friend the Member for Orkney and Shetland (Mr. Grimond). The cost of fuel is an increasingly major contributory factor to the high cost of living the more remote people are from urban areas. I repeat that the problem has not been tackled by any Government. The amendment does
      1428
      not tackle it directly, but until the Government make petrol cheaper in the areas where it is a necessity and more expensive where it is a luxury, instead of its being the other way round, they cannot expect the House to vote large increases in excise duties.
      That is the burden of the case that I put before the Committee.
      Mr. John Bruce-Gardyne: I have heard some fairly nutty causes advocated by the Liberals over the years, especially in the economic field. They never cease to amaze me. The Liberal leader argues this nutty cause with rather more charm than the former Member for Cornwall, North, Mr. Pardoe, but that fact does not make it any less nutty. The Liberals were nuts about incomes policy, and they were nuts about indexation. Now the Liberal leader has this bee in his bonnet about regional petrol taxation. I agree with the implications of the intervention of the hon. Member for West Lothian (Mr. Dalyell). We would be landed in a pretty pickle if we followed the path of the Liberal leader, and I urge the House to resist the amendment.
      The purpose of the amendment—there is no denying this—must be to stimulate consumption of a resource that the world is trying to conserve. If that is not the purpose of the amendment, it has no purpose at all.
      The right hon. Member referred to the increase in VAT on spirits and tobacco as "a marginal impost". That was not the impression that I got from the debates yesterday. If the change in this amendment has any purpose at all it must be, by definition, to try to increase petrol consumption.
      Mr. David Steel indicated dissent.
      Mr. Bruce-Gardyne: It is no good the right hon. Member shaking his head. There cannot be any other conceivable reason for the amendment.
      Mr. A. J. Beith: Would the hon. Member explain how one of my constituents who drives with three passengers the 12 miles each way to work and back in a low petrol consumption car can possibly make any further reductions in his consumption?
      Mr. Bruce-Gardyne: I was coming to that point. I agree that this is a serious

      1429
      matter for those of us who represent rural constituencies where the car is often the essential means of transport. However, I do not see how we can attempt to shield the motorcar user, wherever he may live, from the effects of a period—and I believe it is only temporary—of oil shortage. The best way to return to a position of balance, or even modest surplus in supply is to allow the price mechanism to operate, and not the least part of this is the taxation taken by the Government.
      Several Hon. Members rose—
      The Temporary Chairman (Sir Stephen McAdden): Order. We cannot have three hon. Members on their feet at the same time.
      Mr. Bruce-Gardyne: I am just ending my remarks. I am sure that hon. Members will have their chance to make a contribution. The only purpose of the amendment is to increase the consumption of a scarce commodity. We should not be doing such a thing in this Budget. We should not deny the Government revenue and thus increase the already rather large public sector borrowing requirement. For these reasons I hope that my right hon. and hon. Friends will resist the amendment.
      6.15 p.m.
      Mr. Horam: In reply to the hon. Member for Knutsford (Mr. Bruce-Gardyne) I must point out that the only consequence of adding a tax increase of 10p to the petrol price would be to increase the peaks and troughs caused by market forces. The only sensible policy to pursue is to try to level out the peaks and troughs and not have them accentuated by arbitrary taxation changes.
      However, I do not propose to follow the hon. Member for Knutsford and I shall address myself to amendment No. 23 and new clause 10 which are combined with the Liberal amendment No. 7. The increase in petrol taxation at this time is an unnecessary imposition. It was a decision that was reached in haste and will be repented at leisure because it will make all our problems of inflation and recession very much worse and it will cause additional difficulties for the lower paid.
      Of course, from time to time we must increase petrol taxation in this way. If this must occur, it is sensible to decrease the rate of vehicle excise duty simultaneously.
      1430
      I shall explain the arithmetic of my amendments. As the Committee knows, the last Government were planning to make a switch from vehicle excise duty to petrol tax. The effect of new clause 10 and amendment No. 23 is to take the first step in that direction and reduce vehicle excise duty from £50 to £40. This will cost the Government about £170 million in revenue. Therefore, amendment No. 23 increases petrol tax by just a sufficient amount to offset this revenue loss from VED. In fact, I have been rather generous to the Revenue because I have not taken account of the consequential VAT which gives the Inland Revenue slightly more than it deserves. To the ordinary consumer the increase in the petrol tax would be roughly half what is proposed. It would be reduced from 7p to 3½p. This amount springs directly from the increase in excise duty.
      The main argument put forward by the hon. Member for Knutsford was that we should consider the wider issues of energy conservation, and of course that is right. It was in these terms that the Chancellor introduced this change. One cannot dissent from that. But it is right to make the change now taking account of all serious considerations? Is it right to make such a hefty increase in the middle of the second biggest rise in petrol prices in the post-war period?
      Let us look at the course of petrol price increases over the past six months. At the end of last year and the beginning of this year four star petrol was obtainable at from 75p to 85p a gallon. That was a low price compared with that obtaining in most of Western Europe. Traditionally we have always had lower prices than other countries in Europe where petrol prices then ranged from £1·12 to £1·40 a gallon. Since then the price has risen steadily. It went up to 98p for four star just before the Budget, and there was another increase of 3p almost simultaneously with the Budget increase. These steep increases reflected the change in price of Middle East crudes and the premiums associated with them. At the same time, we should have been aware, from close examination of the OPEC scene, of what the result of such changes would be. As we know now, they led to increases of between 6p and 9p on four star petrol.

      1431
      Therefore, without the Budget changes and the 10p increase, there was an increase in petrol prices, arising from the market forces alone, of from 75p to—at least—£1·08. That occurred over a period of less than six months. The Government have stated clearly that they consider that the increases are appropriate. They believe that the supply shortages should be left as they are and that the prices should take the strain. That aspect of their policy should be considered when we examine the changes in taxation.
      In the middle of all those increases and a policy on energy that is deliberately designed to allow prices to rise and to be carried through to the consumer, the Government have increased the price of petrol by 10p per gallon. The Prime Minister was questioned about that at Question Time by my right hon. Friend the Member for Cardiff, South-East (Mr. Callaghan). The right hon. Lady repeated the argument that has been put forward by the Chancellor that the object is to restrain demand. However, if prices do restrain demand in the way that the Government hope, is not OPEC already doing the job for us? Why is it necessary to accentuate an already steep price rise with a further self-imposed tax increase?
      The hon. Member for Knutsford said that he believed that oil prices would fall. In that case, is it not further madness to accentuate the peak of a change in prices by adding a further lop increase? Would it not be correct, to use the terms of the hon. Gentleman, to allow market forces to work their way through without the intervention of a further arbitrary increase in petrol taxation? In its own terms, the Government policy makes no sense.
      I believe that the increases have flowed from the internal logic of the Budget—as has been the case with many other changes that the Committee has been discussing. The Government had to keep the public sector borrowing requirement at the level at which they wished it to remain and, at the same time, they were committed to reducing the standard rate of income tax by 3p. To bridge that almost impossible gap not only was VAT increased to 15 per cent. but the
      1432
      steep increases in excise duty on petrol were necessary. That is the cause of the present problem.
      The Government decided that rather than increase excise duty on cigarettes or spirits—a more logical choice, given the need to consider the budget of the ordinary person—they would, for energy conservation reasons, increase the duty on petrol. Once again, the Government have looked at the narrow taxation points and they have failed to see the overall economic context of the Budget—"Lord Barberism" gone mad, once again.
      I made my maiden speech in 1970 in the debate on Lord Barber's Budget. He made the same mistake: he looked purely at the tax consequences and failed to see the overall economic context of his actions.
      Mr. F. A. Burden: Was it not the Labour Government who wished to abolish the road fund tax and replace it with a tax on petrol? Would not that have resulted in a considerable increase in the price of petrol? Those in rural areas would have suffered particularly as a result of that change.
      Mr. Horam: That move would have meant an increase of 20p in the price of petrol over three years. However, it would have been offset by the elimination of the vehicle excise duty of £50. I believe that the ordinary person would rather pay as he goes and buy his petrol rather than pay the lump sum of £50. That is a large impost on an ordinary person's wage. Therefore, I do not accept the hon. Member's argument.
      The net effect of this maladroit move is to add to inflationary expectations, to compound the recessionary trends which beset us, and to cause additional social hardship. An increase from 75p to £1·10 in the price of petrol is sufficient to cause the retail price index to rise by more than 1 per cent.—it will be about 1·2 per cent. In addition, there is the petrol tax increase which causes a rise in the retail price index of about 1·4 per cent.
      The Automobile Association calculates that the combined effect of VAT and petrol duty increases will be an addition to the cost of running the ordinary motorist's car of about £2 per week. In the

      1433
      previous Parliament I was a junior Minister in the Department of Transport and I was somewhat suspicious of estimates by the AA. It tends to exaggerate the effect on the ordinary motorist, but if that estimate is halved arbitrarily that still leaves a substantial increase in the cost of living. I calculate that the increase in excise duty, leaving aside the VAT increase, will mean that the ordinary motorist will pay between 50p and £1 extra per week on the cost of running his car.
      Some hon. Members have raised the problem of rural areas. That matter has been raised in the debate by the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel). Rural motorists have no choice about the matter and they cannot escape the cost of petrol. That point was made strongly by the present Chancellor of the Exchequer in the Finance Bill debate of 1977. In referring to the 5p increase he said:
      "This is a selective tax … it is deliberately biased against those who have no option about the method by which they travel to work. It is deliberately biased against those living in rural areas. It is deliberately designed to have precisely the wrong effect on the reverse yield gap between going to work and staying at home."—[Official Report, 9 May 1977; Vol. 931, c. 937.]
      I wonder what the Chancellor thinks about that matter now, when he has doubled the increase that was proposed at that time.
      That describes the clear social effect of the change; and added to that will be the economic effects. I believe that the increase will deflate demand, worsen the inflationary psychology and—whatever Conservative Members may say—it will add to the pent-up pressure for wage claims. It will be yet one more matter to be quoted throughout the course of the next 12 months as justifying further wage claims. I am sure that it justifies those claims.
      A further danger is that if some of the OPEC countries realise the move that has been made by the Government after they have imposed their increases, they will argue that we must believe that we can withstand further increases because we have added to their already large increases. That places us in a difficult position to argue that they should not impose further increases in the future. On all the grounds that I have mentioned,
      1434
      I believe that it is a thoroughly bad move in the present economic circumstances.
      I hope that the Treasury Bench will address itself to the question of how far the increase in prices will cut consumption. I hope that the Minister will comment upon that when he winds up the debate. That point is implicit in the comments about rural areas of the right hon. Member for Roxburgh, Selkirk and Peebles. The Daily Mail recently ran an article that showed that there was a 6 per cent. rise in petrol usage since last year, despite the price increases. A Department of Energy report in 1977 on energy elasticities showed that business use carries on unaffected by higher prices and that private use is little affected. The private motorist tends immediately to be more conservation-minded, but that is soon forgotten and the demand continues to grow. Therefore, the price elesticity is low.
      On this occasion it may be different. We do not know. I hope that the Government will say something about that—it may be that they do not know. I believe that the measure will cause an increase in the cost of living with no or little effect on energy conservation. The Government should have examined the matter before they decided on the precipitous and large increase. A proper fiscal regime is needed for petrol and it should be based on information about the relationship between consumption and demand and supply and price. We do not yet have that from the Government.
      6.30 p.m.
      Therefore, I repeat the plea of my right hon. Friend the Leader of the Opposition at Question Time recently that the Government should consider the increase in the light of the course of petrol prices since it was imposed. It does not fit in with that trend, and it is clearly seen as exacerbating the problems that ordinary motorists and the country as a whole face.
      If the Government will not do that, will they at least do what we also propose, which is that they look again at the level of vehicle excise duty? That would have the great advantage of allowing the increase in the price of petrol, and all the attendant possible conservation aids, to work its way through without affecting overall motoring costs. That would be

      1435
      a better way of taxing the motorist, because it would tax him as he used his car, rather than putting on him one impost of £50 a year or a smaller impost three times a year. It would also help the man who did a low mileage or who had a car that was economical in the use of energy.
      That point was made by the hon. Member for Tiverton (Mr. Maxwell-Hyslop) in the 1977 debate, when he said:
      "I would not have objected to the increase in fuel tax if it had been a substitute for vehicle excise tax."—[Official Report, 9 May 1977; Vol. 931, c. 960.]
      That is precisely what my Government were proposing. It had much to commend it for the ordinary person and for the general energy strategy. It would also mean a great simplification and would save a great deal of bureaucratic time. I should have expected that argument to commend itself to the Conservative Party, which is seeking to cut a swathe through the numbers of our civil servants.
      I was rather surprised when the now Minister of Transport came out so strongly against the proposal. The papers suggested, on the basis of his initial remarks, that he would reverse our policy. Then he went full speed backwards. It seemed plain that he was reversing his initial view because he had been got at by someone in the Treasury who had seen the advantages of our proposal. I thought that the proposal had a fair amount of bipartisan support, and I was surprised that he did not understand that.
      I hope that when the Minister of State replies he will tell us what are the Government's intentions for vehicle excise duty. There have been vague statements, with contradictory reports in the Press about the Government's intentions. The Minister of Transport seems to believe one thing and other members of the Government are reported is believing other things.
      There are important issues at stake, and not simply the question of the future of the Driver and Vehicle Licensing Centre at Swansea. There are all the larger questions of the transition, energy costs and the effect on the ordinary motorist. Therefore, I should like to hear from the hon. and learned Gentleman when the
      1436
      Government expect to announce their intentions on the duty.
      Our proposal had the merit of a logical approach, which is what we are seeking here. It would have allowed energy matters to work their way through satisfactorily, without causing undue hardship, and would have allowed the Government to do the economically sensible thing, without penalising ordinary people too much. That is the job of Government. The present Government are doing exactly the reverse—putting a harsh impost on ordinary people, without there necessarily being any energy benefit, and certainly with a bad economic effect.
      I hope that on these grounds the Government will reconsider their approach.
      Mr. Patrick McNair-Wilson: The hon. Member for Gateshead, West (Mr. Horam) was a member of a Government that had an equally bad record in this matter. I regret that the present Government show every sign of having a bad record. I believe that we are getting the whole question of taxation on fuel wrong.
      The Leader of the Liberal Party must also recall that as a result of his party's amendment to a previous Finance Bill, which brought about a reduction in the price of petrol, diesel oil became more expensive than petrol. Yet we are always told that it is with diesel oil that the internal combustion engine should be fuelled, because it is more efficient. No party comes out of this discussion smelling of roses.
      I do not like the suggestion of the hon. Member for Gateshead, West that we should abolish vehicle excise duty and dump the whole cost on petrol. Why should it all be dumped on petrol? It is unfair that the motorist should always be the one who is clobbered in any such changes. I dispute the hon. Gentleman's figures suggesting that it would cost only between 50p and £1 a week for the average motorist. That would certainly be the equivalent of the £50 licence, but I believe that the figures from which he quoted are in no sense a reflection of the new prices that are having to be paid by the motorist at the pumps today.
      All of us who represent rural areas know very well that motorists are committed to substantial mileages, whether

      1437
      they like it or not. They would be badly hit by such a change.
      During the debate on the Loyal Address I warned my right hon. and learned Friend the Chancellor of the Exchequer not to touch fuel tax, for the simple reason that the price increase would be made for him by the major oil suppliers of the Middle East. Perhaps I may declare a past interest. I know the Middle East quite well, as for some years I was a director of a company trading in the area. As Sheikh Yamani said recently, there will be pressure on the oil-supplying States in the Gulf from the new Iranian regime and its newfound friends in the Palestine Liberation Organisation to reduce supply to the West. As the supply dies down, so the prices will rise. Therefore, I do not believe that we require the Government to add additional costs, with great respect to my hon. Friend the Member for Knutsford (Mr. Bruce-Gardyne).
      Is there any limit to how much the Government are prepared to add to the cost of fuel? It can be continually argued that every penny added to the price means saving some more, but I believe that the benefits claimed are totally illusory.
      I once worked for a business that dealt with the cigarette industry. I think that I know something of the habits of smokers. I no longer smoke, but I know, as we all know, that the day the price goes up because of a Budget everyone says "That is the end of smoking for me." In a few weeks' time everyone is back at it again, and probably smoking even more. I predict that the rise in the price of fuel at the pumps will make no difference to the demand.
      Mr. Bruce-Gardyne: My hon. Friend will be aware that there has apparently been a 6 per cent. drop in consumption at the pumps over the past four months. If that does not reflect price, what on earth does it reflect?
      Mr. McNair-Wilson: That is an interesting point. I am surprised that someone as wise as my hon. Friend should be taken in by such figures. I defy anyone to compute on the basis of a price increase the drop in consumption. There has been a shortfall in delivery to the refineries, and as a result there has been a drop in consumption.
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      I return to my point that demand will be restricted for us by the supply. There is no need to put on artificial figures in this country. The supplying nations will restrict supply, and demand will have to be tailored to fit.
      I dispute the figure of 6 per cent. given by my hon. Friend. I saw a figure of 4 per cent. in one of the evening papers yesterday. I defy the Department of Energy to explain how, as a result of increasing fuel costs, demand has been reduced.
      I of course understand the philosophy behind what the Government are doing, but I believe that it is a bogus philosophy. I believe that this country and the whole of the developed world now require fuel for their general way of life on such a scale that doing what my colleagues in the Government have done can have only one ultimate result. That is to drive up prices all round. It could be argued that, if prices rise as a result of transport costs rising throughout the economy, we should be prepared to pay that price for making energy savings. This is not how we should approach energy saving. We should encourage the motor manufacturers and others to provide equipment that uses less fuel. We should not continue on both sides of the House to tackle this problem in the same old boring way.
      Mr. Nick Budgen: Will my hon. Friend explain how he proposes to encourage motor manufacturers, except through the price mechanism? Has he in mind some kind of subsidy or grant?
      Mr. McNair-Wilson: I thought I had explained this matter by pointing to those who have queued for petrol in the last few weeks. I make no secret of the fact that until recently I was driving a great gas-guzzling, six-cylinder motor car that held 20 gallons of petrol. It was a very fine motor car—a British motor car. It was one of the finest products of the British motor industry, namely a Jaguar. I now drive a tiny British motor car of four cylinders, with a cylinder capacity of 1,600 cc, which holds eight gallons. I can now drive round the roads of this country without the terrible fear that I will run out of fuel. That sort of consideration will determine the type of

      1439
      vehicles the motor industry produces. The industry will tailor its product to the demand. The number of people wanting to drive large gas-guzzlers, except those driving business cars, will decline.
      The hon. Member for Gateshead, West made a valid point. A report has shown that 70 per cent. of new motor cars are bought by businesses. The idea, supported by some of my hon. Friends and presumably by Labour Members when their party was in Government, that the private motorist will determine whether we save energy is shot to pieces by that report. The company motorist is not restricted in the same way as is the private motorist. He is not paying for petrol in the same way. He will not be so price-sensitive.
      The argument is not one of energy conservation. It is whether one wants to collect more taxation in this way. If the answer is "Yes", the question arises whether one is prepared to see inflation rise by a comparable amount. This question goes to the heart of the matter, whatever subject, including the abolition of the vehicle excise licence, is discussed. The motorist has been bashed hard enough. We should leave the additional impost on motorists' essential fuel out of our discussions about energy. It will not solve the problem. It may make the problem worse.
      Mr. Norman Buchan: I talked yesterday on a similar theme in relation to value added tax. I should like, however, to pick up some of the points that have been made. First, there is the curious controversy between the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) and the hon. Member for Knutsford (Mr. Bruce-Gardyne), and the astonishing situation that the right hon. Member for Roxburgh, Selkirk and Peebles displays a total conversion away from the virtue of spending taxes. The policy of the Liberal Party over the last 12 months or two years has been to shift the balance of taxation on to spending taxes.
      Mr. David Steel: It still is.
      Mr. Buchan: We now see the understanding that has penetrated even the Liberal Party. The Budget is so clear in
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      its implications and its unfairness that even that party is converted.
      Mr. Steel: The hon. Gentleman knows that he is being unfair. We have stated consistently throughout the proceedings on the Bill that we believe in making the switch. We believe that it should take place in an orderly and progressive way over the years. I argued in favour of indexing this process. We are not saying that there should be no increase. Our amendment proposes to index it. We propose that the other duties should also be indexed.
      Mr. Buchan: There is another reason. Liberal Members all represent rural constituencies. They understand the implications of the Budget. All we know is that this new Liberal proposal will be indexed. This will only be a start if the Government get away with the colossal increase in indirect taxes in this Budget. Who knows how much further they may advance?
      6.45 p.m.
      The hon. Member for Knutsford, who wrote a notorious article in The Daily Telegraph, argued that the only possible purpose of the Liberal amendment or the Labour amendment was conservation. Does this mean that his entire argument in The Daily Telegraph, which was based entirely on the virtues of indirect taxes, goes out of the window? Is he saying that the tax must be applied to conserve fuel? Is he putting that case in saying that the right hon. Member for Roxburgh, Selkirk and Peebles was arguing the opposite? It is a nonsense. We discovered from The Daily Telegraph, more so than we have discovered from the Government Front Bench, the rationale of the shift to indirect taxation and the cuts.
      The first indictment of these proposals is the curious fact that they are both deflationary and inflationary. They are inflationary in adding to every single cost of the normal consumer. They will shove up the retail price index. They are deflationary because the economy will be clobbered. To bring in this double effect at a time when we are facing an oil price crisis compounds arrogance and error with stupidity. I should have thought that on this matter at least the Government would think twice.

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      I want to look at the inflationary objections. This is not an evenly based inflationary concept. Like the other indirect taxes, it is directed most against the poor. Those who are less well off will have to pay more. That is true whether they can afford to be motorists or not. It will add to the price of every single essential product. By definition, those on low wages have to pay a higher proportion of their income than those who are well off for what they purchase. As with the general concept of value added tax, nothing can conceal the fact—based on the tax gap to which my hon. Friend the Member for Gateshead, West referred—that this is an addition to VAT in a different way. The petrol bought by the motorist will already have been increased by the tax, so that the value added tax on top of his total costs will be greater because of the petrol tax inclusion in it.
      The Government promised during the election that they would not double value added tax. They have pushed up the tax from 8 per cent. to 15 per cent. One wonders whether the petrol tax now placed on every commodity for which the motorist pays through petrol costs is not the missing 1 per cent. in pushing up the figure to 16 per cent. If the Government increased value added tax on petrol, they would now have an additional petrol tax. They may have done the impossible. They have done what the Tory Party said it would not, and could not, do.
      I want to deal with the argument of choice. Choice in relation to indirect tax is, in general terms, nonsense. One remembers the argument before the Budget and during the Budget about leaving people more money in their pockets by cutting direct tax. The petrol tax and the value added tax are a direct corollary of the cut in direct tax. If the Government had slapped on a wealth tax, there would not have been the necessity for the indirect tax. It is nonsense to argue that this leaves people with more money in their pockets to exercise choice. It was shown to be a nonsense yesterday over VAT and the same is true of this indirect tax, because it is being imposed on everyone, regardless of whether he is a motorist or not.
      Mr. Burden: Would not this argument apply if the Labour Party had carried out its promise to abolish the excise duty on
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      cars and increase the duty on petrol? Then, presumably, they would be saying to those who drove the cars "You have saved money on the excise duty; now it is up to you whether you spend it on petrol." The same argument surely applies.
      Mr. Buchan: It is a very different argument. I do not particularly want to go into it, because I had serious reservations about some of the consequences of that proposal for rural areas, but the proposal was simply an attempt to establish the average motorist's expenditure and to say that, since the individual motorist paid £50 a year, tax at a certain rate would mean that he was breaking even. It was an attempt to put no additional cost on the individual average motorist: it was an attempt to charge him in a different way.
      That is a different proposition from retaining the £50 excise duty—let us remember that this Government are retaining it—and slapping on a petrol tax. The question of choice is not even left to the individual. The individual motorist can exercise an individual choice, but not the producer of necessary commodities, because the petrol tax figures in the cost of his commodities through fuel costs. Far from this proposal giving more choice, the argument is an illusion and a lie. In fact, it deprives people of choice.
      The Tory Government have achieved something else as well. They have already mobilised against them the female consumer through the shopping basket and the increase in food prices. They have now mobilised the male consumer against them. As was said yesterday, this is the first Government since the war who have shown a total switch in popularity within two months of inheriting office. All other Governments have had a short honeymoon period; this Government have neither had such a honeymoon nor deserved one.
      By their taxation policies, the Tory Government have declared virtual war on the poor and the less well off. They have done it in the guise of incentives in direct taxation which by definition cannot apply or be effective for the vast bulk of working people. Such proposals can constitute only a post hoc punishment for working people.

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      This proposal is unfair and it cuts right across the economic needs of this country—at a period when, goodness knows, we have a sharp enough inflationary crisis because of the world oil situation. I wish to heaven that the Government would think again and apply intelligence, if not ideology, and that they would get back to sanity by removing this tax or accepting the amendment.
      Mr. J. Enoch Powell: There were ominous signs, even before the Budget was brought in, that the Government were going to claim that an increase in the petrol duty was an application of the market principle or the price mechanism, but I must confess that I would not have thought to hear that heresy propounded in the House of Commons by of all people, the hon. Member for Knutsford (Mr. Bruce-Gardyne).
      The imposition of a tax is not the application of the price mechanism. It has nothing to do with the price mechanism. It is a repressive measure, whereas essentially the price mechanism is a creative force.
      There are two sides to the working of the price mechanism. When the price of an article rises relatively—that is, when its real price rises—then that, to whatever may be the degree, represses demand, but it also stimulates supply. It stimulates supply because the increase in the price confers a temporary advantage on the supplier or the producer. It creates an inducement both ways—an inducement upon the consumer to consider that form of consumption in comparison with others, but an inducement on the producer or potential producer to produce and to supply more.
      There is a strong argument—it was one of the rational propositions, perhaps the only one, that came out of the Tokyo summit—for allowing petroleum to price itself at the supply-balancing-demand point in the internal market, whether or not the external market to which the internal markets eventually are referred is being rigged by OPEC or by anybody else.
      If that break-even point between supply and demand at the point of consumption, which is what ultimately tells, rises far enough, no amount of restrictive practices in the Middle East or elsewhere will
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      prevent further sources of supply from being exploited or the existing sources of supply from flowing more freely—not to mention calling into existence and profitability alternative sources both of petroleum and of energy. That is what the market mechanism is about and that is the justification for it.
      But it is not using the market mechanism, any more than riding a bicycle is riding in a coach, to pretend that, by slapping 10p tax on the price of an article, one is applying the mechanism of price and thus bringing about a new equilibrium, a beneficial equilibrium, between supply and demand—for one is not. No doubt one is repressing consumption because one is making the price higher to the consumer, but one is doing nothing whatsoever to bring into the field what ought to be the counterpart—the response on the side of production and of supply.
      Mr. Robin F. Cook: I do not wish to endorse the views of the hon. Member for Knutsford (Mr. Bruce-Gardyne), as I shall make clear if I have a chance to speak, but will the right hon. Member for Down, South (Mr. Powell) relate his argument about the price increase stimulating supply to the facts of the oil situation? It is a fact that for the past five or six years, we have been consuming more oil than we have been discovering each year in new reserves. That is the result not of any price factor but simply of geological exploration failing to find as much as we consume each year. How does the right hon. Gentleman relate that fact of the oil context to the general proposition that he is advancing?
      Mr. Powell: I do not happen to agree with that, because there is a certain point to which the real price can rise at which sources of supply and production of petroleum which at present are not economic become economic, and there is a certain point at which the pips begin to squeak in the repressive methods which are used, in the new world if not in the old, to control and limit the production of petroleum.
      Still, what the hon. Gentleman says, be it true or false, does not meet the argument that I am putting against the equation of a tax with the working of the price mechanism. For let us suppose that in this country, at the price which

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      would rule without the increase in the duty, there will be a given pattern—which must tend towards the optimum pattern, things being as they are, supply being as it is—in the use, consumption and conservation of energy from petroleum and from other sources. What is the effect then of increasing that price by the addition of a tax?
      The effect is that the Government, by choosing to do that, are altering the preference schedule in this country, altering the pattern of energy usage and demand, not in order to correspond with the real world but to meet a fiscal convenience.
      7 p.m.
      The Government are imposing upon the consumer and upon the general pattern of consumption something which is not the consequence of OPEC or of anything in the real world but which is simply the result of an arbitrary decision of Government—the decision to raise revenue in that way rather than in any other way.
      It is part of the case against all specific indirect taxes that they distort consumption and production. One can be relatively indifferent to the effects of an indirect tax, if we are indifferent, as we are in the cases of alcohol and tobacco, to the distortion of consumption and production. But we cannot be indifferent to the distortion of consumption and production of one of the major sources of energy. Whatever be the future, we wish to use the economically cheapest sources of energy in what is economically the most effective way.
      We prevent ourselves from doing that if we choose to put upon one source of energy a specific indirect tax. So far, therefore, from this increase in duty bringing into force any beneficial economic effect or producing any of the effects of the price mechanism, it is actually working against them. It is bound to work for less efficient use of energy and less efficient application of the petroleum which we would otherwise be willing and able to purchase and to use.
      It will do nothing to speed the day—which I and the hon. Member for Knutsford expect rather sooner than other people—when shortage is followed by its inevitable sequel, glut; the day when the consequences of the price rise produce
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      the rebound which they always do—the overhitting effect—and we find ourselves in a state of over-supply.
      Neither the one nor the other is good. But we are not averting the one or the other by increasing the tax precisely at this stage upon precisely this commodity. It is about the most uneconomic choice that the Government could have made in looking for places to obtain the revenue which they felt that they had to make good to offset remissions of taxation elsewhere.
      Mr. Russell Johnston: I remember my maiden speech in November 1964. It dealt with a 6d increase in petrol tax. That was proposed by the then Labour Government and opposed fiercely by the then Conservative Opposition. A characteristic of the Conservative Party, whenever it is in opposition, is to oppose any such tax increases.
      I do not intend to go into the economic theory, since that has been outlined lucidly by the right hon. Member for Down, South (Mr. Powell). I shall make a few remarks about the impact that the increase will have on my constituency, which is the largest in the United Kingdom. To propose such an increase at a time when commercial prices have risen so drastically can only worsen an already calamitous situation.
      I made a quick check round the tourist offices in my constituency, as this is the middle of the tourist season. The movement of people to the Highland area from other parts of the United Kingdom is important to the sustenance of the economy in that part of the country. In Inverness, I was told that there was unmistakeable evidence that although it had proved possible to combat the rumours of a petrol shortage, the price increases had hit everybody and hotel bookings were being cancelled.
      I spoke to the chairman of the Skye tourist association, Mr. George Campbell. He said that the price increases would put the tin lid on a disastrous season, since they would have a serious effect on the tourist industry. An official in Fort William said that in 10 years he had never known such a season. This had been a disastrous season, and the petrol price increases would make it worse.

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      There are theories and logical arguments, but that is what happens at the end of the road. The tourist season in the Highlands is short and the position is grave. The Government should consider how to alleviate that position. Instead, they are making it worse.
      I speak of tourism first because this is the time of the fat. If those involved in the tourist industry do not make the fat now they will have little to live on for the rest of the year. The impact goes beyond that, however. Those who live in rural areas have been affected savagely by the commercial increases.
      Hon. Members have mentioned the proposal made at the tail end of the last Government's period of office to scrap vehicle excise duty and to replace it by a 20p increase in petrol tax. In my part of the world, that was opposed by all and sundry. It was opposed by the Highlands and Islands Development Board and the regional council. All Conservatives opposed it with a unanimous cry. They said that it was disgraceful.
      Since January, the price of petrol has increased by about 35p. I forwarded many letters of complaint to the Labour Government. They came under severe bombardment over the suggestion that there should be a 20p increase in the price of petrol, in spite of that increase coinciding with the abolition of the £50 in vehicle excise duty.
      We have absorbed a 35p increase, of which 5p or 6p is due directly to the petrol tax. The consumption of petrol and dery is a necessity in some areas. The Government must accept that what they are doing is profoundly damaging to the rural areas.
      The right hon. Member for Down, South dealt more effectively than I can with the hon. Member for Knutsford (Mr. Bruce-Gardyne). The hon. Member for Knutsford attacked my right hon. Friend the Member for Roxburgh, Selkirk and Peebles (Mr. Steel) on the ground that our amendment would increase consumption. It is extraordinary that an hon. Member who is noted for his defence of laissez-faire economics should defend an arbitrary increase in tax in this way.
      In the last Parliament, the Conservative Party, to a man and to a woman,
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      supported the Liberal amendment which opposed the 5p increase in petrol tax proposed by the then Chancellor of the Exchequer. The Government are doing exactly the opposite of what they did when they were in opposition.
      The price of four-star petrol has risen by 35p a gallon since January. To reduce it to 31p a gallon—which would be the effect of this amendment—would not produce an increase in consumption though it would alleviate the situation for those who had no alternative but to use petrol. The hon. Member for Knutsford could have said, with certain justification, that the amendment afforded blanket coverage to everybody and that while one of the aims of the amendment was stimulated by rural problems it did not seek to differentiate in taking account of those problems. The hon. Gentleman and the hon. Member for West Lothian (Mr. Dalyell), seemed to suggest that there was no point in trying to differentiate. Perhaps it is difficult to do so, but the Government must be pressed strongly to seek ways whereby rural communities can be compensated.
      Those are rural communities where public transport is scarce and expensive and where a great many people have to rely on private transport. Both Front Benches must know that the major agency for development in the highlands, the Highlands and Islands Development Board, was actively engaged, with the relevant local authority, the Highlands regional council, in trying to work out a system for regionalising the petrol tax. They sought to effect at least some differentiation in anticipation of the change that the previous Government planned to introduce with regard to VED and a 20p increase in the petrol tax. The need for a change which would bring about that sort of compensation is now surely greater.
      Though I have spoken exclusively about that part of the United Kingdom which I represent, my arguments must obviously apply to all large rural areas. We are not just dealing with tourism. We must take into account agriculture. There will be an immediate and direct effect on costs for those in the industry, including travel to work and normal travel, and these conditions will apply alongside the general level of inflation.

      1449
      I find it difficult to understand why it is necessary to do this at all. If the judgment of the Government was that they required additional income, that income could have been derived from other sources less generally damaging to the community as a whole and specifically to rural communities. Conservatives always pose as defenders of rural areas with problems, but in this case they have caused hardship and damage arbitrarily. I hope that, even at this late juncture, the Government will reconsider their position.
      7.15 p.m.
      Mr. Keith Wickenden: I am new to this place and confess that my feelings of unreality may not be shared by all hon. Members on the Labour Benches. First of all we should look at the facts. A few weeks ago the price of four-star petrol varied between 75p and 80p a gallon. The price is now between 110p and 115p a gallon, and in some areas it may cost 120p. Of that increase, 5p or 6p will relate to the extra VAT that we are now asked to pay. My hon. Friend the Member for Knutsford (Mr. Bruce-Gardyne) said that the extra cost of 30p to 35p would result in a 6 per cent. reduction in consumption. Other hon. Members say there will be no reduction at all.
      If there is no reduction in consumption it means that we have not yet reached the market price for the commodity. We should ask ourselves what is the basis of our taxation. Should it be based on what we are prepared to pay or on what we earn thereby reducing the amount of money available for more productive investment?
      I, too, represent an agricultural constituency, albeit a southern one, and I live in a village that has virtually no public transport. It has no train service and no regular bus service. We can all cut our petrol usage, as, indeed, most of us have done. My hon. Friend the Member for New Forest (Mr. McNair-Wilson) told us that he had stopped using a six-cylinder vehicle and changed to a small car. We can all do that and save 5 per cent. or 6 per cent. of fuel without undue difficulty. I have done it. I have cut my fuel consumption by 40 per cent. in the last few weeks because I think it right to do so. Many others could do the same.
      1450
      We have all become used to wasting petrol in an era of cheap fuel. The hon. Member for Inverness (Mr. Johnston) spoke of hotel cancellations in his constituency. I have some experience of the holiday market, though in a different area, and that experience is quite the opposite. On the Continent, where fuel costs have for a long time been considerably higher than in this country, holiday bookings are up considerably; that is in spite of fuel difficulties and other problems. I suspect that the cancellation of hotel bookings in Scotland owes much more to the inclement weather of the last few weeks than to fuel costs.
      The argument that the increase in VAT will add to agricultural costs is spurious. Agriculture is a zero rated industry. Value added tax on agricultural costs is reclaimable. I do not think that it is denied that 70 per cent. of vehicles in this country are used for business, if that is so, 70 per cent. of all extra VAT incurred on fuel is also reclaimable as an input tax against one's general VAT liability.
      It is a simple ideological argument whether taxation should be recovered through spending or through earning. On the Government Benches I believe that there is strong support—I believe at one time that there was strong support on the Opposition Benches—for the idea that taxation was more efficiently recovered through spending than through direct taxation of income. Costs that we are being asked to bear, as individuals, are minimal in relation to the total increase in costs that we have all had to bear during the last few weeks. We can save them very easily by merely cutting back on our consumption. I find the indignation expressed from the Labour Benches on this issue unrealistic.
      Mr. Peter Hardy: I do not wish to be unkind to a relatively new hon. Member of this House, but it is all very well for the hon. Member for Dorking (Mr. Wickenden), who drives a large car, to say that we can all get a smaller vehicle and save fuel. I represent large numbers of people, many of whom already have small cars, if indeed they have cars at all. If a constituent of mine needs that car to get to work, I cannot very well urge him to walk

      1451
      or to buy a horse. His garden would not be big enough to accommodate a horse, and I hope that the hon. Gentleman will not apply the logic of his approach which would eventually lead him to recommend larger gardens.
      This morning, I took part in a phone-in on Radio Sheffield. My hon. Friends will be delighted to know that I discerned no favourable assesment of the present Administration whatever. On that programme, a Mr. Miles said that he had recently driven through Italy and France. He had experienced no difficulty at all in obtaining fuel. Thousands of my constituents have been having a great deal of difficulty getting fuel in Yorkshire, where we have only 85 per cent. of our normal fuel allocation. No doubt Mr. Miles would have experienced difficulty had he been driving in my constituency. But the Secretary of State for Energy and the rest of his colleagues in the Government seem to be suggesting that their energy and finance policies are designed to make it possible for us to avoid the experiences current in other countries.
      In that phone-in programme, I said to Mr. Miles that I accepted his experience and description of it, and I pointed out that last week I had been in Stockholm, where there was no difficulty whatever. Moreover, petrol is cheaper there, perhaps because the Swedes have had the good fortune not to have a Conservative Government for a long time.
      It is quite irresponsible and not particularly helpful for the Government Front Bench to suggest that Britain is being guided through all kinds of difficulties which everyone else is experiencing when to a very large extent the reverse is true. I do not consider that the Government are justified in assuming, as the Secretary of State for Energy did in the exchanges on Monday, that
      "It is not the concern of the Department of Energy to rush around controlling and intervening."—[Official Report, 2 July 1979.]
      His action is intervention. Adding 5p or 6p to the price of a gallon of petrol is intervention. It is all very well for hon. Members on the Government Benches to suggest that 5p or 6p is not a great deal. The truth is that the Government's action here is an example of great insensitivity.
      1452
      I turn now to the position in my constituency. Rother Valley has grown enormously in the past decade. Many private houses have been built there during the past 10 years, especially in the period 1967–73. Thousands of people came to live in my constituency, and they came there for three reasons: first, land was relatively cheap secondly rates were extremely low; thirdly, they could commute quite cheaply to the major centres of employment, to Sheffield and other areas because energy costs were low.
      We have seen those initial advantages destroyed entirely. People's rates in Rother Valley have risen enormously as a result of the Conservative local government reorganisation. Their mortgage interest rates will go up enormously again as a result of the absolutely absurd policies being pursued by this Government. Now, the costs and experiences which they will face in getting to work will present them with appalling disadvantages and perhaps a great deal of distress. In fact, what the Government are doing will stoke the very fires of inflation which bring this country into great peril.
      I believe that the Government's insensitivity in this matter is literally appalling. I suppose that I ought not to complain unduly about that because the political advantages and implications are significant. The people of the rural areas of England who, to a large extent, voted Conservative on 3 May are already bitterly regretting their decision. I believe that the Government will pay for it. I see Government supporters smiling at that, but they will learn the truth on the first occasion when an hon. Member on their Benches sadly departs from us and we have a by-election. I am convinced that in the by-elections which will occur even at local government level during the next few weeks in the rural areas of England, the Conservative Party will pay dearly for this appalling piece of stupidity.
      If the Government were to take the long view, if they were to say that the money had to be raised in order to finance sensible alternative policies and developments to cope with the energy shortage which all the world will experience, one might see logic in it. It would be useful if the Minister could tell the Committee that the money which the Government

      1453
      will raise from this dreadful imposition will be devoted to relevant and sensible purposes, applying at least a glimmer of intelligence to these matters. But thus far the only glimmer of intelligence on this subject from the Government Benches has come from the hon. Member for New Forest (Mr. McNair-Wilson), who revealed how at least some responsibility and imagination ought to be applied to this problem.
      If, for example, the Government Front Bench were to say that the energy implications for British agriculture were extremely serious and we ought to begin to see a change in the character and practice of agriculture in this country because of its enormous energy input, there might be some sensible purpose for this tax. If we were to see vigorous encouragement of conservation, the insulation of buildings, the installation of flues in new buildings and so on, one could see some logic in it.
      Again, if we could see some sign that public transport would be encouraged to assist rural areas, one might see some logic in what the Government were doing. The hon. Member for Dorking told us complacently that his rural area virtually lacked any public transport. I can tell him that in South Yorkshire we have seen bus ridership increase. It is the only area in Britain where it has. Only this morning I received a response on a problem which I had raised about communications, and now some of my outlying areas are to benefit from the experimental use of small vehicles. My own Labour Government were not quite as helpful to the South Yorkshire county council's transport policies as many of us would have liked, but what they did was infinitely better than anything which may be promised or interpreted as possible under the present Government.
      We have, as I say, increased bus rider-ship. We have spent a great deal of public money on providing bus services to small villages which in any other part of the country would have been isolated or cut off to a far greater extent.
      That public service is essential. It is good energy policy as well. If the Government were to devote some of the money which they will extract from the poor prisoners of the motor car who will have to pay, whether they like it or not, to
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      some of the purposes which I have outlined, we could perhaps take a somewhat different view.
      It has been said that people can reduce the size of their vehicles. I could not reduce the size of the vehicle in which I often drive around my constituency, because it is a Mini. I can, of course, get into it, but I should hate to go to a smaller car than that. I do not think that it would be good either for the decency and dignity of the House or for the comfort of the Member for Rother Valley if I did.
      If there were any sign of intelligence or imagination in the Government, they would be telling the House and the country that they were putting 5p or 6p on to the price of petrol so that the money could be directed to serious and important purposes. I speak of 5p or 6p, but it could be a higher figure because, as the right hon. Member for Down, South (Mr. Powell) said, it is a regression plus VAT. But if we were to have an assurance that the 5p or 6p was to be devoted entirely to developing energy saving without reducing industrial and economic efficiency, there might be some logic in it, but without that the whole position adopted by the Government is illogical.
      What is worse, the Government are merely tinkering with the problem, pursuing the most lunatic energy policy that anyone looking at the matter calmly could envisage. We are falling over ourselves to consume our offshore oil at the fastest possible rate. Hon. Members on both sides are aware also that the amount of gas being flared offshore is a scandal, and under this Government there will be more flames of folly to be seen from miles distant around our coasts.
      It seems to me that the situation is so serious that we ought to spend some of the money being raised at least in making sure that the gas is not frittered away in a manner which future generations will find particularly nauseating. But there is no sign of that sensible approach being adopted by the present Government.
      Mr. Patrick McNair-Wilson: Nothing was done under the Labour Government.
      Mr. Hardy: It is worse now than it was previously, and it will grow worse still. If some of this money were used

      1455
      in an effort to avoid that waste, we might accept that the Government were not quite so black as they are painted now.
      Mr. Patrick McNair-Wilson: The hon. Gentleman has raised the important matter of gas flaring. He knows that restrictions are available. Does he recall that his Government refused to enter into any deal to produce a gas-gathering pipeline in the North Sea?
      Mr. Hardy: Because at that time the Government did not wish to be prey to certain unsatisfactory influences or arrangements. But the situation is now even more serious. Let me tell the hon. Gentleman why I believe that certain steps should be taken and financed with the proceeds of this tax. I recognise that we are in a minority on these Benches and we cannot force the Government not to go ahead with this absurdity, but we can at least press for certain things to be done. For example, there are many parts of the country where people depend on oil-fired central heating. It seems to me essential that they be persuaded—I do not think that they will need much persuasion—to transform the heating of their homes. I believe that a crash programme should be introduced to secure that.
      I am a believer in energy conservation, and I think that my record shows it. That which I am about to say may be regarded as heresy when set against my past record. However, there are large areas of Britain where there is no gas connection and where oil central heating is fairly common. I am on record as suggesting that we should have flues and efficiently burn coal. Those systems will have to develop in the long term. In the short term it is essential that the British Gas Council, as a result of contributions from the increased tax yield, should extend the gas connection to places such as Harthill in my constituency, which is to a large extent an area of coal, oil-fired or electric heating and where the use of gas would be both economic and just. We must move in that direction.
      7.30 p.m.
      Possibly the use of gas should be rather more cautiously handled, but certainly we should not allow oil to be used for heating
      1456
      or steam raising. If the Government were to consider the energy problem from those standpoints, the United Kingdom would he immeasurably better off. That is the right approach. It is no good tinkering with a tax that will cause great hardship and inevitably stimulate inflation. It will not lead to social ease or any political content for the present Administration.
      Mr. David Penhaligon: I am pleased to take up the remarks of the hon. Member for Rother Valley (Mr. Hardy) as I think that he went to the nub of the issue—namely, the United Kingdom's fuel policy. One of the arguments in support of an increased rate of VAT is that it will encourage the saving of oil. There is a marginal element of truth in that. If we do not admit that, we are not admitting the truth. However, only about 20 gallons of oil of every 100 gallons imported into the United Kingdom are used by the motor car. In general terms I am prepared to support a fair oil conservation policy that is applied to a wide spectrum. It is clearly nonsense to select petrol, diesel and transport, which are already taxed to the hilt, as the only area in which to save fuel.
      If a person wants to buy oil to heat his swimming pool, the oil will be virtually tax-free. However, if a person in my constituency, for example, wants to buy oil to get to work, to bring food into the area or to make industry function, his fuel will be taxed heavily. There is no logic in that. I should be surprised to find an hon. Member prepared to argue the logic of that approach.
      Items such as plastic bags are nothing more than lumps of oil. We should consider the possibility of taxing plastic bags and other such items. We should encourage consumers to buy paper bags or, even better, to use no bags at all.
      Much of the diesel fuel that is consumed is not taxed. The diesel fuel used in agriculture and in most construction work—for example, the enormous earth-movers that are such a familitar sight in my constituency—is tax-free and will not be affected by the measure hat we are discussing. The hon. Member for Dorking (Mr. Wickenden) rightly said that most of the cars on our roads are owned and run by businesses and similarly are not affected.

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      It may be that the hon. Gentleman exaggerated the statistics. A recent statistic indicated that 70 per cent. of new cars were purchased by businesses, not that 70 per cent. of the cars on our roads were owned by businesses. Even so, all those cars will escape any attempt by the Government to conserve fuel.
      Many of us are protected. Many hon. Members buy a large car and drive to London and back twice. It is one of the few ways in which we can make money to pay the bill. The House pays me to drive from Truro to London. It pays me about £84 to do so. I do not know what it will pay me to take account of the recent increase in petrol prices. No doubt I shall receive a note from the Fees Office before long to tell me that my mileage allowance is no longer 13·9p a mile but 18p or even 20p a mile. I do not know what it will be under the new tax regime. We are all protected. It does not make any difference to hon. Members whether petrol is £1, £1·50 or £2 a gallon. Much the same goes for the entire business element in our society.
      I shall support any fair and realistic attempt to conserve fuel. We must stop the general practice of being able to drive for expenses without being made to use the rail alternative when that is reasonable. It would be reasonable to tell me that I shall be allowed expenses to drive around my constituency because there is no reasonable alternative. However, it would be unreasonable to tell me that I shall be able to have £100 a time to drive from my constituency to this place.
      Mr. Hardy: I have heard the hon. Gentleman talk about the mileage allowance in other debates, the implication being that hon. Members are not acting responsibly or sensibly. The hon. Gentleman owes it to the House to give it some idea of how much he claims.
      Mr. Penhaligon: I admit that when I have a large car bill to pay I am tempted to drive to London. That allows me to pay the bill. I am sure that many other hon. Members do likewise. I probably drive from my constituency to London once every six weeks. I do not drive from Truro frequently, because it is a long way. If we are honest, we all know that the mileage allowance and the way in which it is calculated is one of the ludicrous ways of making up for the
      1458
      many years that Members of Parliament have not been paid a reasonable and sensible salary. That is a fact.
      Mr. David Stoddart: Is the hon. Gentleman aware that the mileage allowance payable to hon. Members is below the allowance recommended by the AA?
      Mr. Penhaligon: That may be, but it is usually uprated to take account of petrol price increases. We are informed of the upratings by the Fees Office. The hon. Gentleman argues that the allowance is still below the allowance recommended by the AA. A spokesman has commented on the figures produced by the AA that it claims represent the cost of running a car. If its figures are correct, I fail to see how any of my constituents earning £50 or £60 a week can afford to run a motor car.
      Mr. Dalyell: I cannot sit in my place and allow the hon. Gentleman's argument to go unchallenged. I have not driven to London—I am sure that many of my Scottish colleagues are in the same position—for the past year. I have always used public transport.
      Mr. Penhaligon: That is clearly excellent. We should all be encouraged to do likewise by a change in the system.
      Much reference has been made to the vehicle excise licence. The previous Government considered changing it. We could make a much more effective change if we retained the system but graduated it so that it took greater effect against the gas guzzler. We should introduce a system that has the effect of charging the owner of a large car that consumes a great deal of petrol a high rate of duty. We could introduce a system that allowed the owner of an economical car to pay virtually no excise duty. That would encourage the car-driving public to buy economical cars.
      Once a person buys a motor car he tends to drive it in his own style. That is so whether he is an economical driver or a rash driver. If petrol increases in price he may temporarily change his style, but he will soon revert. However, if he begins by buying an economical car, that will save some fuel. Such a change in our vehicle excise licence system would do more to save fuel than abolishing the system and increasing the price of petrol.

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      The increase in VAT is punitive. I speak for Truro, the constituency that elected me to this place. It is a constituency with an unemployment level running at about 10 per cent. That has been the position for a considerable time. I am somewhat doubtful about the wages statistics that are produced, but they indicate that outside the Border region of Scotland Cornwall now has about the lowest average wage of any county. Increased VAT is merely rubbing salt into an existing wound.
      Not one member of the Conservative Party representing a south-western constituency is present. I remember the rhetoric from those Members of Parliament when the previous Government increased the price of petrol by a few pence.
      It took two or three months for the price to go down. Those Members of Parliament should explain to their south-western electorates why they were not present for this debate, although they decided to support their Whip and vote for the increase. The point at issue is the reduction in the living standards.
      Mr. Heffer: The hon. Gentleman said that no Tory Members of Parliament representing south-western constituencies were present. Earlier there was an important debate on the question of housing. I did not see many members of the Liberal Party present at that time. Perhaps there were one or two. Some of them represent areas such as mine, which have serious housing problems. It is time that hon. Gentlemen stopped this chear jack nonsense and argued the proper case and refrained from producing this rubbish, of which I am becoming tired.
      Mr. Penhaligon: The hon. Gentleman should remember that three Members out of 11 represent 27 or 28 per cent. of the Liberal Party members. That is a reasonable attendance.
      Mr. William Clark: The fact that we are discussing a Liberal amendment and that there are three Liberal Members of Parliament present indicates that there is always a good Liberal turnout for a Liberal amendment, but when housing is being debated, or if there is any other debate, the Liberals are absent.
      Mr. Stephen Ross: This is a stupid argument. There were two or three Liberal Members of Parliament present during the housing debate.
      Mr. Penhaligon: I see that I have upset some hon. Gentlemen, as I usually do when I speak. The increase which we are discussing is a deliberate reduction in the living standards of people living in rural areas. Many of our poorest people live in the rural areas. Not all of rural Britain contains the rich commuting areas of our prosperous cities. There are many rural areas like my constituency and Inverness. This is a deliberate reduction by the Conservative Government of the living standards of people in areas which, with few exceptions—in the South-West I am the only exception—have been faithful to the Conservative cause.
      Mr. Cook: Following the extraordinary speech of the hon. Member for Truro (Mr. Penhaligon), I must say that never in five and a half years have I driven from Edinburgh to London to attend Parliament. I would not seek to make a conservationist argument out of that. I have come by air on most occasions and, therefore, I suspect that I used more fuel than if I had come by car.
      I say to the hon. Member for Truro, for whom I have a high regard, that there is a perfectly credible and defensible argument for increasing the salaries of Members of Parliament. However, it does not assist that argument nor does it assist us in defending it to the public, if we lump in with it the view that it would encourage us to stop abusing the allowances that are available to us.
      I am glad to speak after the Liberal Party spokesman. I believe that the hon. Member for Truro was not present when the hon. Member for Inverness (Mr. Johnston) spoke.
      Mr. Penhaligon: I was present.
      7.45 p.m.
      Mr. Cook: I was surprised when the hon. Member for Inverness assented to the proposition of the right hon. Member for Down, South (Mr. Powell) that there would be an oil glut after the shortage. I was not surprised that the right hon. Gentleman advanced that proposition.

      1461
      However, I was amazed at the facility with which the hon. Member for Inverness assented to it.
      I meet Liberal Party energy spokesmen from time to time. I suppose from their remarks that I meet them more often than the hon. Member for Inverness. I see no evidence of a coming oil glut. We do not have to look only to the future. We may look at the empirical evidence of recent history. The increase in oil prices in 1973 was every bit as traumatic as the present increase. In the five years following the increase, from 1974 to 1978, we continued to consume more oil than we discovered. The price mechanism did not solve the fundamental problem that the oil supplies were small and were getting smaller.
      I agree with the right hon. Member for Down, South, who said that one effect of increasing oil prices would be that we should look for oil at the margin and that the reserves that were barely economic would become more economic. The right hon. Gentleman cannot be aware of the extent to which we are already operating at that margin. Had it not been for the increase in oil prices in 1973, the great majority of oil now coming out of the North Sea would already be uneconomic.
      If we go beyond the level in which we are now drilling for North Sea oil, we shall run into not price or economic barriers but technological barriers. We shall reach the stage at which we must wonder whether the input of energy to get the oil out is not a greater penalty to the economy than the oil gained from drilling.
      That is not a new argument; it has been going on for some years now.
      In 1974, when we were recovering from the price increases of 1973, I heard Professor Milton Friedman speak on the radio. It was an unpleasant experience. His spirit has hovered over our debates. He was asked what should be the Western response to the 1973 hike in the oil prices. His response was that we should not become unduly worried about it because it was the effect of a cartel and, like all cartels, would prove to be an artificial, temporary influence on prices, and that eventually the market mechanism would reassert itself, the prices would fall and we would return to an oil glut.
      1462
      That cartel has proved especially long-lived. I see no sign that in the next remarks that I meet them mor often more than in the past five years.
      It is fortunate that we have the opportunity, especially under new clause 10, to debate the Government announcement that they were reviewing the commitment given by the previous Government to phase out vehicle excise duty. That statement was made on the last sitting day before the recess in answer to a planted question. Those Members of Parliament who have been here for any length of time are aware that when a Government announce their policy by means of a planted written question on the last day before a recess it is because there is no rational defence for it.
      So it is in this case. Indeed, if we were to look for a policy pursued by the previous Government which would have been attractive to the fiscal policy of the incoming Government, we would inevitably be driven towards choosing the commitment to abolish vehicle excise duty. In theory, everybody is obliged to pay the tax. If vehicle excise duty were abolished, those who pay the tax would have the freedom to decide how much to contribute in the form of tax through the amount of petrol that they chose to consume.
      There is no point in hon. Members representing rural and agricultural constituencies saying that their constituents have no freedom of choice as they must travel a fixed mileage to get to their work or to the shops. In the VAT clause debate those representing urban constituencies listened to Government supporters saying that increases in VAT and cuts in income tax would give their constituents the freedom of choice to buy clothing, furniture and cookers or such fripperies and luxuries.
      There are other features in the abolition of vehicle excise duty that I should have thought were in harmony with the general policy pursued by the Chief Secretary. That measure would have removed £20 million of public expenditure at a stroke. It would have saved public manpower by allowing a reduction in the staff at the Swansea licensing centre. The Chief Secretary is in a paradoxical position. The logic of the decision to retain vehicle excise duty means that he will have to recruit additional manpower. The Civil Service unions that

      1463
      represent the Swansea staff have said that additional manpower will be required to enforce the vehicle excise duty and to catch the 8 per cent. who persistently evade it.
      It was not surprising that the Minister of Transport chose the last sitting day to announce that policy. The Government have rejected a change that would have been in harmony with their fiscal objectives because, as my hon. Friend the Member for Renfrewshire, West (Mr. Buchan) said, the shift would have achieved the fiscal objectives while being progressive rather than regressive. The average motorist who drives an average car with average petrol consumption would, provided he did not travel more than 8,000 miles per year—which is a substantial allowance—benefit from the change. Only the motorist who travels further or who drives the Jaguar that belonged to the hon. Member for New Forest (Mr. McNair-Wilson) would pay more. That change of tax policy would be in harmony with the Government's general objectives, and would also be progressive.
      It is not surprising that the Government rejected that alternative. It would have been out of place in a Budget that is throughout regressive rather than progressive.
      Wider considerations have been raised in the debate. A number of Members have questioned whether the imposition would have a conservationist effect. I have as much interest as any other hon. Member in conservation measures. This morning I assisted in the presentation of a petition against one of the more obvious energy follies of the Government, namely their decision to press ahead with another nuclear power station in Scotland. I have also urged on many occasions a switch of investment from private transport to public transport before the fuel runs out.
      However, the claim that the increase in duty will have a significant conservationist effect is nonsense. There is not the slightest support for it. In eight months, the price of four-star petrol has risen by 40p per gallon. It is nonsense to suggest that there will be any significant restraint on consumption by the addition of 7p per gallon.
      1464
      Newspapers that may be thought to be sympathetic to the Goverenment, such as the Financial Times and The Spectator, have condemned the Budget package, not because they dislike its effect but because it is inappropriate to the times. Nowhere is that seen more clearly than in the decision to increase the tax on petrol at a time when petrol prices are rising faster than at any time in the past five years. The Budget bears out the prejudices and even the fantasies of Conservative Members. They are unable to adapt to the realities of the world, especially the realities of the consequences of the OPEC price rises.
      The Government have introduced the duty increase because they are desperate to increase the revenue from anywhere and on anything in order to pay for the tax handouts that they are giving to those who drive the Jaguars referred to by the hon. Member for New Forest. If they had to increase tax, they should not have increased the tax on oil, which is the energy commodity whose price is rising fastest.
      If we were considering which energy commodity should be taxed in order to restrain consumption, we should have to choose gas. Gas is a commodity that is not labour-intensive, and has therefore been insulated against the inflationary pressures of the past five years. Most of the extraction installations were put in before 1974 and therefore bear a historic cost which pre-dates the rates of inflation since 1974. Gas is therefore being sold at a price that is cheap, reflecting the inexpensiveness of its extraction from the North Sea, but that does not reflect the value of that commodity in a world that is increasingly running short of energy.
      If the Conservative Party were to look round the energy market and introduce an impost for conservation effect, gas would be the choice rather than oil. The imbecility of the policy is clearly demonstrated when tax is added to a commodity in respect of which prices are rising fastest while the Government are leaning on the British Gas Corporation to hold down gas prices. People will switch from oil to gas, consumption of gas will rise, and our North Sea reserves will be depleted at an even faster rate.

      1465
      The duty increase will not have a conservationist effect. There is no coherent conservationist strategy in Government policy. Therefore it is doubtful that the increase has been introduced for conservationist motives.
      The bizarre decision last month to cut back fuel supplies to British Rail by 7 per cent. has had the inevitable corollary, at a time of increasing fuel shortages, of cutting services by 7 per cent. That decision was not taken by the Government or British Rail: it was taken by Shell and Esso, which decided that supplies to British Rail were to be reduced by 7 per cent. The Ministry of Transport says that it is not its business to intervene. The Department of Energy says that the market effect would be distorted if it intervened, that the matter should be left to the commercial judgment of Shell and Esso and that users of public transport should be left to the mercy of those commercial criteria. It is an irony that Parliament has voted powers to the Government to intervene—powers that they are choosing not to exercise.
      It is just arguable that the 7 per cent. cut in fuel to British Rail could be defended on the ground that it makes a contribution to conservation. It is arguable that that reduces the extent of the erosion of Britain's oil reserves. However, the Ministry of Transport and the Department of Energy are unable to tell us whether the 7 per cent. being saved from fuel supplies to British Rail will help conservation or whether there will be a greater consumption of petrol as commuters are driven from public transport to private transport because of the reduction in public transport services. No research has been carried out on that question. That is the extent to which the Government have backed away from intervening in a critical situation at a critical moment.
      Our constituents are suffering from that failure to respond. Conservative Members will suffer when they face the electorate in the months ahead. The electorate will not forgive them for neglecting their duty in a moment of crisis.
      Mr. Stoddart: I am sorry that the hon. Member for Truro (Mr. Penhaligon) has left the Chamber. He popped into the Chamber, was called to speak, and
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      popped out without having the courtesy to listen to the hon. Member following him. That demonstrates that the hon. Member for Truro is not interested in debate. He is merely interested in making a cheapjack statement and leaving the Chamber.
      If the hon. Gentleman misuses the expenses available to Members and uses his car on an inessential journey because he has a high repairs bill to pay, that is a matter for him. He speaks for himself and for nobody else in the House. The hon. Gentleman has no right to make such statements which he pretends apply to all hon. Members. I emphasise that he speaks for himself and condemns himself.
      8 p.m.
      Turning to the amendment, I agree with the remarks of the hon. Member for Inverness (Mr. Johnston) about the attitude of the Government. Their attitude has changed since 1977, when the Labour Government proposed, but did not follow up, an increase in fuel tax of 5p. I can well remember members of the Government, with crocodile tears in their eyes, describing the difficulties that would arise for retirement in rural constituencies.
      We were told how difficult it would be for poor, low-paid farm workers to get to town to do their shopping, and how awful it would be for people living in rural areas because they would be isolated and unable to visit their families and friends. How sorry we were for them. What a picture of deprivation Government Members set before us because of the imposition of this extra 5p. The price of petrol at that time ranged between 68p and 70p.
      What a change has come over the Government. During that debate these benches were full. There were so many Conservative Members who wanted to speak about the imposition of this extra 5p that they could not all be called. Where are they now? Are not their constituents still retirement pensioners who will have difficulty getting about? Are the people living in isolated communities now less likely to want to meet their friends and see their families? Why are not Conservative Members protesting at this increase of 10p in VAT? They opposed the 5p proposed by the Labour Government, so where are they now when

      1467
      this increase of 10p will be on top of 22p, which is the difference between the price of petrol in 1977 and now?
      Mr. Dalyell: My hon. Friend the Member for Swindon (Mr. Stoddart) asks where those Conservative Members have gone. The truth is that many of them have become Ministers of the Crown and are making the decisions.
      Mr. Stoddart: I am most obliged to my hon. Friend the Member for West Lothian (Mr. Dalyell) for making that point. I had overlooked that. It is amazing what a change of heart has come over Members of the Conservative Party now that they have the power of decision. I am sure that this will be noticed by the population at large.
      In view of the exorbitant price increases that have taken place, there is good reason for agreeing to this amendment. When this Budget was prepared, I am sure that the Government had no idea how high the price of petrol would go before the imposition of any further tax. They could have had no idea that the price of petrol would rise to its current level of £1·22 per gallon when they prepared the Budget.
      It is incumbent upon the Government to take the new circumstances, about which they could not possible have known before Budget day, into account and back down from this increase. They have the opportunity to rescue their reputation by agreeing to the amendment. The Chief Secretary could come to the Dispatch Box and say that the Government did not realise the implications of the rising price of petrol before the Budget was prepared. He could tell us that the Government have seen what has happened, have listened to the arguments and are prepared to remit this tax.
      Mr. Heffer: Or resign.
      Mr. Stoddart: That would be the best possible solution, but I am afraid that that is asking too much.
      The price of petrol has risen by 32p to 35p per gallon, which is an enormous increase. But it is even worse in some areas. My local newspaper, the Swindon Evening Advertiser, reported earlier this week that in Farringdon a garage was charging £1·41 per gallon. The garage
      1468
      owner explained that it was not his doing. He was a small business man and he did not want to charge his customers that price. However, because the Government had refused to do anything about allocation of fuel the garage proprietor could not get supplies from his normal source, and had to buy from independent sources, making his profit margin less than it would have been. Because of the inactivity of the Government in controlling the distribution of petrol and oil, not only do people in various parts of the country have to pay exorbitant prices, but those who supply the petrol are in danger of bankruptcy. They are the very people who voted Conservative and are the very people about whom the Conservatives expressed so much concern—the small business men.
      Mr. Dalyell: This is counter-productive in terms of energy saving, because many in country areas such as mine who regularly go to small garages now have to swan around covering many miles in order to find petrol.
      Mr. Stoddart: Yes, indeed. It is a self-defeating exercise. As my hon. Friend the Member for West Lothian knows, in the face of that problem the Government remain quite inactive and are prepared to leave the whole matter to international oil companies. One wonders why on earth they were elected to govern.
      The right hon. Member the Leader of the Liberal Party made that point a week ago. He asked why the Government were elected, if they did not expect that one of their tasks would be to ensure that essential oil supplies reached consumers on a fair basis and reached those parts of our economy which need the supplies.
      Mr. Heffer: Is my hon. Friend aware that, while his constituents in rural areas are suffering, in my own constituency, which has a motor-racing circuit, two nights a week and at weekends my constituents' ears are still blasted off as a result of this motor racing? An enormous amount of fuel is used. At the same time there are people who desperately need that fuel in order to get to their jobs.
      Mr. Stoddart: My hon. Friend underlines and emphasises the circumstances

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      that arise because of the non-intervention of the Government. By their inactivity they are allowing inessential users to take precedence.
      Mr. Donald Anderson: Why is my hon. Friend the Member for Swindon (Mr. Stoddart) surprised at this? This is surely the essence of Tory rationing. It is not rationing according to need but according to ability to pay. This happens in every sphere. It is Tory rationing.
      Mr. Stoddart: That is right. My hon. Friend the Member for Swansea, East (Mr. Anderson) knows that it was ever thus. Unfortunately, people at the last election had probably forgotten what the Tories were really like. Now they know. Some young people, perhaps, may be excused because they have not had to suffer under Toryism during their lifetime. Now they have got the mesage and if we had a general election tomorrow the outcome would be different.
      However, the increase in fuel prices will be felt right across the economy. We were assured by the Chancellor when he introduced his Budget that only inessential things would be affected by the increase in VAT, but the increased VAT on petrol and other fuels will affect every commodity, including food, in exactly the same way as VAT on packaging will also affect food. Therefore, it is not only inessential things that will be affected, but also essential things.
      Mr. Joseph Ashton: Does not my hon. Friend agree that there are secondary effects, for instance, on the value of property which has oil-fired central heating? There is not only the question of oil costs rising for the owner of the house with oil-fired central heating, but the fact that the value of the property is liable to drop by about £5,000 to £10,000 from now on because people will find that they cannot sell a property because of the shortage of oil supplies. Is not that a negation of the concept of the Tory property-owning democracy and the Tories' insistence on keeping up the value of owner-occupied houses?
      Mr. Stoddart: My hon. Friends keep raising very relevant points which need to be dealt with. I hope that the Chief Secretary will deal with them. My hon.
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      Friend the Member for Bassetlay (Mr. Ashton) is very much on the ball. From a message which I have received while sitting in my place, I understand that there is an article in a London evening newspaper illustrating the worries that are facing people who have homes with oil-fired central heating, not only because some of them will have to face an increase in oil prices but because they simply cannot get fuel. What is more, the projections of the oil companies show that fuel will be in even shorter supply next winter. As many people who have oil-fired central heating in their homes have only limited storage capacity in their tanks, they may very well have to go cold.
      My hon. Friend is absolutely right. In these circumstances, if a person wishes to buy a house but sees that it has oil-fired central heating, and if there is no possibility of converting to gas, he will not buy that house. The house may well be on the market for a very long time, and the owner may be forced into selling it for a much lower price than he had hitherto expected. That could cause grave hardship. It could prevent a person from taking a job elsewhere, for example, or from being able to retire to the area in which he wanted to retire. Therefore, that is another effect of Toryism and the failure of a Tory Government to deal with the things with which they should deal.
      Mr. Peter Rost: The hon. Gentleman has made a great speech about the so-called failure of the Conservative Government to intervene in order to increase supplies of petrol and fuel oil. Will he explain why there is no shortage of fuel oil in France, Germany and other European countries? Could it possibly be because they have been prepared to pay the world price and that the previous Labour Government deliberately tried to hold down the price and Labour Members are now advocating the same policy, which will lead only to further restrictions and shortages?
      Mr. Stoddart: I am obliged to the hon. Gentleman for intervening in that way. It is a further condemnation of his own Government. It was he who told us that in France and Germany there is no shortage of petrol. Those countries do not

      1471
      have indigenous oil supplies. Yet here, we, under a Tory Government and with our own oil supplies, are apparently unable to meet the demand.
      Mr. Ioan Evans: Will my hon. Friend underline the point that the confusion on British garage forecourts dates from 3 May, when the present Tory Government were elected? There was no shortage until the Tories were elected to office. It is their market forces that have caused it.
      Mr. Stoddart: That is right. I am amazed that the hon. Member for Derbyshire, South-East (Mr. Rost) should have intervened to condemn his own Government in such a way.
      8.15 p.m.
      Mr. RostWill the hon. Gentleman make quite clear that what he is advocating is a form of rationing and the selling of oil, because we have it under the North Sea, below the world price to our home consumers? How does he think that that will solve the longer-term energy problem?
      Mr. Stoddart: No, I am not advocating rationing.
      Mr. Rost: What is the hon. Gentleman advocating?
      Mr. Stoddart: What I am advocating is that the Government should ensure that oil supplies from our own sources are not diverted to other places, such as South Africa and the Common Market countries, at the expense of people in Britain. It is the hon. Gentleman's Government who have done that, and not the previous Labour Government. Again, therefore, for the second time, out of his own intervention, the hon. Gentleman has condemned the present Government's policy.
      Another point that I wish to make is about our own motor industry. The Government have been warned throughout the passage of this Bill that the doubling of VAT is bound to have an adverse effect on our industry. It will adversely affect our textiles industry and our footwear industry, as we heard last night. But an imposition on the price of petrol helps our foreign competitors in respect of cars, because a great part of
      1472
      the British small car market is supplied from abroad. Since the higher the petrol price, the smaller the car that will be in demand, so the worse our indigenous car industry will be hurt.
      I conclude by referring to conservation. It is no good talking about trying to conserve scarce oil supplies merely by the price mechanism. That simply will not do. I listen to the right hon. Member for Down, South (Mr. Powell) with great respect when he speaks on economic matters and Common Market matters. He talked about a glut. He virtually said that as sure as night follows day, a shortage will be followed by a glut. I wish that I could think that he would be proved right. Perhaps, over a period, and in normal supply and demand conditions, that would happen. However, in the case of oil there is no infinite supply. The market economy can and will work to the ultimate only if there is an infinite supply.
      There is no true glut if the supply is finite. Following a glut there will be a shortage until eventually oil runs out. That is why the Government should not consider controlling oil conservation solely by price but rather turn their efforts to finding alternative forms of energy. Many of these have been mentioned this afternoon.
      The Government should give encouragement and financial inducement to people better to insulate their homes. They should also ensure that our public transport services have a better allocation of oil. These services should be increased and the public encouraged to use public transport. That would consequently save oil. A great effort should also be made to bring in electric traction. Let me here put in a plug not only for electrification of our railways but a return of the trolleybus, which would save a great deal of oil. The trolleybus was phased out through the lobbying of the oil companies, but it was a great vehicle, capable of dealing with stage carriage transport. I hope that the Minister will persuade his colleagues in the Department of Transport to consider these alterative methods of traction.
      This amendment should be supported. I hope that there are enough Tory Back Benchers with good memories to support the amendment.
      Mr. Ioan Evans: The Chancellor of the Exchequer said that this was an opportunity Budget, but it is an "Opportunity Knocks" Budget. It gives an opportunity to the profiteer—the oil companies—and the national asset stripper, when public corporations are handed over to private enterprise. It knocks the consumer. Its VAT provision knocks the housewife and these taxes are knocking the motorist.
      The Government have been asked whether the increases are to raise revenue or conserve energy. There is an oil crisis, and that was discussed at the Tokyo conference. The Prime Minister went to Tokyo in an RAF transport plane. It would have been a gesture of the right hon. Lady's concern for oil conservation if she had travelled by British Airways. She would have been practising what she preached, although I believe that it is good for world leaders to get together to discuss such problems.
      If Ministers are concerned about energy conservation, instead of coming to the House in Daimlers and Rolls-Royces, they should come in British Leyland Minis or other small vehicles. That would also cut down public expenditure.
      Mr. Anderson: Hon. Members should come by bicycle.
      Mr. Evans: On occasions, I believe that the Chancellor rides a bike, but I do not go that far. If Ministers set an example by coming in smaller cars, that would also save public expenditure. The revenue proposals are not being put forward purely to conserve energy. The Tories made great play during the election of the fact that if elected they would cut taxes.
      There used to be a slogan
      "Put a tiger in your tank."
      Motorists now realise that every time they go to a petrol station they put a 10p Tory tax in their tanks with every gallon. This tax was imposed in the same Budget as reduced the tax on higher income groups from 83p to 60p in the £. That is a 23 per cent. reduction. Yet the basic rate will be reduced by only 3p in the £.
      Many people who take their cars to work have no alternative means of transport. To them a car is not a luxury. It is absolutely essential. Yet these people have an extra tax imposed upon them every time they fill up with petrol
      1474
      The previous Labour Government had a strategy for moving away from the vehicle excise duty, which would have meant the removal of the annual £50 tax on each motor car and the imposition of 5p extra on each gallon of petrol. That was a move to try to conserve energy. The more one consumed, the more one paid. I see that my hon. Friend the Member for Swansea, East (Mr. Anderson) is in the Chamber, and I realise that the Driver and Vehicle Licensing Centre is in his constituency. However, I believe that those people working at the DVLC could have been absorbed in other parts of the Government service. There was a lot of sense in the previous Government's proposal.
      Yet when that proposal was put forward, the Conservative Benches were full to overflowing with right hon. and hon. Members complaining that it was absolutely wrong to add 5p a gallon to the price of petrol. They said it discriminated against those living in rural areas and was a tax on old-age pensioners. That was only 5p, and it went hand in hand with the elimination of the £50 VED. At that time the price of petrol was far less than it is now.
      The Government believe in market forces. Market forces have already operated externally in this case, so the Government have no need to do anything more. The way the international price of petrol has gone up has meant that consumers have had sufficient restraints upon them without a further Government imposition of additional tax. We have heard a lot about the difficulty of petrol supplies and the need to impose tax because, for the time being, there is a shortage. Now we hear Conservative Members saying that this will only be temporary and that a glut may follow the shortage. Therefore, will the 10p tax also be temporary? When the supplies equal the demand, will the Government come to the House and remove the 10p, or will this tax be a permanent feature?
      Mr. Anderson: My hon. Friend should realise that this Tory tax will be as temporary as the concessions to higher income earners.
      8.30 p.m.
      Mr. Evans: In that case, I presume that while the Government are in office

      1475
      that will be a permanent arrangement. My hon. Friend has a point.
      When the Secretary of State for Energy made his statement to the House it was at a time of utter confusion in petrol stations all over the country. Some areas were completely without supplies, and many tourists found that petrol stations had closed down completely. That was because of the way that the supply of petrol was being managed. Queues were appearing everywhere. The Tories said that they would leave the matter to market forces.
      I recall that at that time there was not one petrol station supplying petrol on the M4. There was one petrol station displaying a notice saying.
      "£2 worth of petrol only".
      Two pound's worth of petrol does not get the motorist very far. In other petrol stations notices were displayed to the effect that they were selling not less than £4 worth of petrol. Nowadays, some petrol stations in London will allow the motorist to buy two or three gallons at £1·20 per gallon but, if he wishes to buy more, he will pay at a higher rate—possibly, £2 per gallon. That is the way that market forces operate.
      It has been pointed out that in this country we are rapidly becoming self-sufficient with our North Sea oil and yet there is chaos in our petrol stations that is unheard of in France or Germany, both of which receive North Sea oil. There have been difficulties in Ireland, but most of the countries who receive North Sea oil have not experienced such difficulties.
      What should be done to resolve the problem? The Government should become involved in it and the petrol companies should not be allowed to deal with the distribution of petrol in the way that they are with all the injury that is being caused to British motorists. The companies should not be allowed to get what they can from the market. At the moment, as far as they are concerned, anything goes.
      After the chaos had developed, the Government came along and imposed the 10p extra charge on each gallon of petrol. Since that time, the problem has not been resolved in many areas. In my
      1476
      constituency, the railways and other public transport services have been unable to obtain the oil that is required to allow public transport to operate. What sort of energy conservation is that when people cannot travel by public transport? They have been forced to use their motor cars by a Government who say that it is their intention to conserve energy.
      Oil-fired power stations are now working to full capacity, unlike the coal-fired power stations—despite the fact that there is 300 years' supply of coal and large stocks in the country
      The oil companies are taking full advantage of the lack of intention by the Government to become involved in the market forces. BP—a British-owned company with a 51 per cent. Government shareholding—is making large profits. The Government announced their intention to offer BP for sale. If BP were retained in the public sector, that at least, would mean that the benefit would be returned to the people. The extra prices that the motorist is paying at the petrol stations should not be sold out to private enterprise.
      If there is to be a so-called "sale of the century" will BP, which is now owned to a large extent by the British people, give the benefit to the British people, or will it be handed over to financial speculators from various parts of the world? Would foreign investors buy it? It is essential to maintain our control of the company. It would look very bad if the Government, after their handling of the oil crisis, sold it.
      With North Sea oil flowing, this country should not be experiencing the difficulties that other countries have.
      Mr. Rost: Will the hon. Gentleman confirm that he is saying that the Government should intervene to allocate supplies and restrict the price—in other words, rationing and a black market?
      The Temporary Chairman: I hope that the hon. Gentleman will not take up that question, but stick closely to the amendment that we are supposed to be discussing. We do not want a general debate on energy supply.
      Mr. Evans: I shall of course abide by your ruling, Sir Stephen. If I had the opportunity, I would answer the question.

      1477
      In preference to the present chaos I would accept rationing, but I do not think that it is necessary, because before 3 May we did not have chaos. We had a Labour Government, and supplies were flowing well to the petrol stations.
      We are concerned about supplies, and we have discussed oil conservation. I cannot understand the Government's pursuing a policy of selling oil to South Africa, through the swap arrangements.
      The Temporary Chairman: I am sure that the hon. Gentleman will realise that he is now straying a long way from the amendment. I hope that he will not continue to do so.
      Mr. Evans: The only point I am making, Sir Stephen, is that oil from the North Sea is straying, too, and I hope that it does not stray to South Africa and Rhodesia. I hope that we shall confine it to this country.
      The Government were elected on their promise to reduce taxation. Yet every time motorists buy petrol they are paying more in tax as a direct result of the Government's decisions. I hope that we shall be supported by those Conservative hon. Members who spoke so eloquently in the past of the suffering of people living in rural areas that an increase of 5p a gallon in the tax on petrol would cause. Recently we have seen an increase not of 5p or 10p but more like 15p, 20p and 25p. There is now talk of the possibility that before long the price will be £1·40 or £1·50.
      When the Government have allowed petrol to reach such a high price through the operation of market forces, why do they want to impose a further 10p increase? I hope that Conservative hon. Members will be with us in the Aye Lobby. Just as some of us made representations to our Government not to impose a 5p increase, I hope that they will show the courage of the convictions they once had and help us to pass the amendment.
      Mr. Alexander W. Lyon: I entered the debate with a genuine spirit of inquiry. I did not expect to learn so much about the peccadilloes of the Member for Truro (Mr. Penhaligon)—"Honourable" would be too high an appellation to apply to the gentleman. In the kind of aspersions he cast about fellow Members, I think
      1478
      that he was beneath contempt. I hope that my remarks may be conveyed through the hon. Member for Colne Valley (Mr. Wainwright) to his hon. Friend, as he is not here to receive any strictures in reply to the generalised aspersions he cast on fellow hon. Members.
      That kind of comment is reproduced in the newspapers and is carried now in the leader columns of The Daily Telegraph as a way of inducing in the public a sense that we should reduce our expenses, when they are given, and usually claimed, only for necessary travel and necessary costs incurred in our occupation. I am surprised that he has the Tory freedom to decide whether he will travel by car or by rail. I have only one car. To get the car to my constituency, I have to drive it there. If I use the car in the constituency in the service of my constituents, it is because I drove to the constituency to do so. If the House ever wishes to be generous enough to allow me to buy two cars, so that I can have one at each end, I shall be delighted to go by British Rail. As an hon. Member who represents a railway town, I should always wish to subscribe to British Rail. I hope that the hon. Gentleman will in future moderate the tone of his remarks in relation to fellow Members of the House.
      I come back to my genuine spirit of inquiry. I hope that the Minister of State will be able to help. My questions may relate to the Department of Energy, but I feel that they fall within the general judgment concerning this tax. Most increases in taxes by the Treasury are justified and justifiable on the basis of raising revenue. That is one of the arguments for this tax. It has been put by the Chancellor of the Exchequer and by the hon. Member for Knutsford (Mr. Bruce-Gardyne), whom I see returning to our debate, as a completely separate justification in terms of reducing consumption of desperately scarce energy. I do not understand the context in which this argument is made. It is highly relevant to whether we should impose the increase at this time.
      There is a shortfall in world supply, because of the Iranian situation, of 3 per cent. If reflected throughout the world, 3 per cent. would mean a small reduction in the amount of petrol that the average

      1479
      motorist could put into his 10-gallon tank. We have seen since 3 May a massive reduction in supply throughout the country. In some areas, the reduction is as much as 25 per cent. to 30 per cent. That is not reflected by the shortfall of 3 per cent. If the intention of this tax is to reduce consumption to allow for the present Iranian situation, it is a sledgehammer to crack a nut.
      The hon. Member for Knutsford has indicated already that the increased prices themselves, before the imposition of the tax, were actually reducing consumption within the country by 6 per cent. Why are we experiencing this degree of difficulty over supply if the overall world situation shows only a shortfall of 3 per cent? The answer cannot be as simple as the right hon. Member for Down, South (Mr. Powell) by his advocacy of the pricing policy, makes it.
      The market has been engineered by the monopoly which the oil suppliers, the oil companies, possess in most of the countries in which they operate. They are not open to competition. They make their own judgments about where supplies should go. They have said that this country, which has so much indigenous fuel and so much oil of its own, will have to bear a bigger share of the brunt of the 3 per cent. reduction in oil supply than is justified by our position or by the world situation. The reason was that they were subject to some check upon their operations here. They have now made up for that by diverting oil from this country and our supplies from abroad into other markets where they can get a higher return.
      8.45 p.m.
      I do not see how in those circumstances the Government can say that our people should bear, in addition to those difficulties, an impost of 10p per gallon, so that their standard of living is more seriously worsened than the standard of living of some of our major competitors. Hon. Members on both sides have pointed out that throughout the Continent the problems of supply have been infinitesimal compared with the problems in this country. Yet we have indigenous oil and they do not. Why has this happened? It has happened only because the oil companies were diverting it.
      1480
      I do not stray from the context of this debate if I refer to the Conoco swap with South Africa. The reason for objecting to that, quite apart from any of the merits of South Africa and the rest, is that it increases the difficulties of supply in this country and therefore is directly relevant to whether this 10p increase is necessary.
      I do not understand why the Government are acting in this way. If they simply want to raise revenue, surely the worst way to do so is by means of a tax which imposes an increased burden across the board on all our people in every conceivable way. There have been references to the difficulties of driving in the countryside, but adding more duty to petrol means that one is bound to increase the cost of living across the board, because transport costs overall are bound to increase.
      Therefore, the Government must, from a sense of concern for future inflation, have wished, if they could, to raise the revenue in another way. Some of the alternatives have been described today—taxes on wines and spirits, gambling and many other areas. It could have been done, if that was their real desire. They must at that stage have thought that it was necessary to put on this 10p to meet the shortfall from Iran and reduce consumption here at home.
      I hope that I have said enough to show that I am not convinced that that shortfall was necessarily so damaging to our economy as the manoeuvres of the oil companies. If the Government were to deal with those manoeuvres they would not need this impost at all. That was their judgment at the time that the Budget was decided four or five weeks ago, but since then there has been this major increase in the oil price, dictated by the last OPEC meeting.
      I recognise that that was foreshadowed to some degree by the spot prices which were being paid, but the OPEC decision meant that there was bound to be an increase in any case, having some effect, whatever effect price does have, on demand, and certainly more than the 10p increase imposed by the Budget.
      This is not the usual form of bashing away at the Government on issues on

      1481
      which the Opposition when in government used to advance the same arguments. This is a sensible argument about a specific situation in which there is a limitation on supply overall to the world and perhaps more markedly in this country because of the actions of the oil companies and the question of how to meet them.
      If there is any difficulty, it is being met by the more recent increase of OPEC. Therefore, we do not require this impost, which will make things even worse for the Government and—more particularly and more my concern—for the living standards of ordinary workers.
      In due course the increase will be passed on in the coming round of wage claims. That will cause a boost to inflation, which will be spurred by the 10p impost. In a genuine spirit of inquiry I urge the Minister of State to consider whether it is necessary to put on this impost when he could raise the same revenue in some other way.
      Mr. Dalyell: Much has been said about the country areas. All those hon. Members who represent such areas know that the immediate problem is the shortage of supplies to the small garages. There is a feeling that the small garages have no future and that oil company policy is to put them out of business.
      This matter was referred to by my hon. Friends the Members for Edinburgh, Central (Mr. Cook) and for York (Mr. Lyon). The basic issue is whether we should leave distribution problems to the oil companies.
      Mr. Patrick McNair-Wilson indicated assent.
      Mr. Dalyell: The hon. Member for New Forest (Mr. McNair-Wilson) nods in agreement. He also represents a country area and knows what the issue is. Is it the Government's intention to leave distribution to the commercial judgment of the oil companies, or are many small garages to have no future? I warn the Government that if small garages in country areas go out of business many people will spend petrol swanning around trying to find petrol, and will obtain it in ways that are more costly to them and more costly to the economy.
      This is the consequence of a laissez faire attitude. I do not care which
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      Department is involved. I am talking of the Government as a whole. I hope that the Government are not going to wash their hands of the problem and allow Shell, Esso and BP to ignore all but commercial interests. Many of us have written letters to Dr. Pearce, of Esso, about this matter.
      Whatever the rate of VAT or petrol tax, it is no excuse for the scale of distribution of petrol in rural areas. My hon. Friend the Member for Berwick and East Lothian (Mr. Home Robertson) represents an area that is even more rural than mine. He knows that unless the problem is settled and the Minister gives an answer that indicates that the Government feel that they are responsible and that they are not going to walk by on the other side of the road like a biblical Levite, the rural areas will experience grave problems.
      Mr. Patrick McNair-Wilson: In sight of where I live in my constituency is the largest oil refinery in Britain—the Esso refinery at Fawley. The small garage that I normally use is an Esso garage. It is now closed from 10 am on Saturday until Monday. Its supplies have been cut drastically.
      The reason for that is that when the price-cutting war took place about a year ago small garages were unable to cut their prices on the dramatic scale of some of the largest garages. Esso, like other major companies, is using the amount of petrol sold by garages a year ago to calculate supplies today. Small garages that were unable to make the colossal, across-the-board cuts to attract customers a year ago are now allocated petrol on the basis of what they sold 18 months or two years ago. Therefore, in answer to the hon. Gentleman's point, the Government ought to have further discussions with Esso Petroleum and all the other major companies to make sure that the situation created by price cutting by the major outlets is not now used to starve rural garages of petrol.
      Mr. Dalyell: The hon. Gentleman pays me a compliment of saying that I should have discussions with Esso. This problem is so serious that it is not up to individuals, or groups of Back-Bench Labour Members, to have discussions. This is a clear obligation on Government Ministers. I thought that in that long and

      1483
      absolutely worthwhile intervention the hon. Member for New Forest made precisely that point. Here is the problem, and the Government are washing their hands of it.
      I will give way if the Minister of State wishes to comment at this stage, but I ask him a direct question. Do the Government feel that they have a responsibility in this matter, which has been raised by my hon. Friends the Members for Edinburgh, Central and for York, by the hon. Member for New Forest and by others? I get no answer now, but as the Minister of State has always been a model of courtesy in debate I hope that he will deal with this matter when he replies and has had the opportunity of talking with his officials.
      Mr. Ken Eastham: This has been an interesting debate which, from time to time, has strayed from the issue of the shortage of fuel. A case has been presented for the introduction of these vicious new taxes that are designed to act as a deterrent and minimise the problem. We need oil for a variety of purposes and one readily accepts that it is a scarce resource. However, the punitive measures introduced by the Government cannot be justified. When the OPEC countries decide to fix higher prices for their products who can blame them when Governments, unconnected with the production of oil, suddenly introduce vicious increases in prices to consumers? The OPEC countries ask why they should not increase their prices when they see that people can obviously afford to pay those prices.
      If we really want to control the consumption of this valuable resource there is nothing wrong with rationing. I believe that it is morally unjustifiable for people to chase around in Rolls-Royce cars which probably consume the same amount of petrol as five Minis. Petrol is now being rationed by the purse and only poorer people will be affected. That is unjustified.
      We sometimes raise our hands in horror at the price being charged by Middle Eastern countries for their oil. At the same time we read in newspapers about the rip-off profits of the oil companies. Now we have the Government introducing vicious and unnecessary
      1484
      taxes which add to the burdens of poorer people. Great suffering is felt at the moment by people who have to use oil for heating their homes. We must face up to the problem. If we were really concerned we ought to be in the business of conservation and the search for alternative ways of helping people with heating problems.
      The situation is grossly unfair that, where there is no mains gas supply, people must use oil and pay heating bills which are twice as high as those paid by people round the corner who are able to use gas. If the Government really wanted to help to reduce oil imports and oil consumption, they could introduce some subsidies. I see nothing wrong in that. There could be subsidies so that gas mains could be laid, thereby reducing the consumption of oil.
      All these factors ought to be faced, because it is unfair that one person should be able to heat his home for half the cost that people nearby pay simply because of the fluke that there is no alternative provision in his area.
      9 p.m.
      Mr. Anderson: My hon. Friend will recognise that there will be a particularly adverse effect on low-income households, since if they wish to transfer from oil central heating to, say, gas central heating, they must meet not only the cost of bringing the gas from the main—which may be £500 or £600, depending on the number of neighbours who would wish to do the same—but also the cost of converting their appliance. The burden on an individual low-income household may be such as to have an adverse effect on the family's health because they cannot afford to heat the home properly.
      Mr. Eastham: I am grateful to my hon. Friend for raising that matter, because it precisely illustrates the problem. I have received substantial representations from constituents making a plea for gas mains to be put in so that they could avoid their present punitive heating costs. I do not regard that as unreasonable.
      People using gas or electricity may from time to time receive various subsidies or assistance. People can use what is called the white meter and pay for electricity on a reduced tariff if it is taken at a certain time. It is not unfair or unreasonable for people now suffering

      1485
      grievously under this imposition to ask why they, too, should not be subsidised.
      The Government ought to face this problem and do something about it. Not only would they be helping the nation and reducing imports but they would at the same time help to reduce pollution, which is another matter coming to the forefront of people's minds. All these matters could be considered if the Government really intended to do what should be done.
      The Government have no moral justification for an increase of this kind—a vicious increase of 10p which will make the poor in particular suffer. The person going about in a Rolls-Royce will not suffer. He can easily pay. If the price of petrol were trebled, he could still pay. It is the workers, the underdogs, who will be the ones to suffer.
      As my hon. Friends have said, there is still time for the Government to relent. They could have a fresh look at the matter. If they had anything good in them, they would see this as one clause on which they could give way. Only two months ago, in the election campaign, one of the big arguments was about the cost of living. If this is not a typical illustration of an unnecessary and punitive increase, I do not know what is.
      I hope that even today, before we go into the Division Lobbies, the Government will have a change of heart, recognise that there is no need to introduce this further tax, and agree tonight that it shall not be done.
      Mr. Anderson: The Minister of State is an honest man. He looks up a little startled at that, but I say it in the hope that, when he replies to the debate, he will put his hand on his heart and lay bare to the Committee the Government's motive in proposing this tax. Is the primary motive energy conservation, in which case certain consequences flow, or is it a concern to spread the area from which revenue is to be gathered for the various tax cuts which the Government regard as merited? I hope that the Minister of State will lay bare that matter in due course.
      It is clear that a substantial increase of duty will increase transport costs for the private motorist and for business. It will have a sharp effect on the cost of
      1486
      living and hence on inflation. It will have an indirect effect in raising transport costs and increasing the costs of private motoring, which is a sensitive consideration in the minds of trade union bargainers when they submit their wage claims. That is one factor that exercises their minds considerably. As we approach the new wage round that begins in August, that will be one of the fundamental considerations in the minds of those who negotiate on behalf of trade union members. It is one of the parts of the Budget, among many others, that will serve only to fuel inflation.
      Part of the increase in motoring costs is outside the Government's control, just as the fourfold increase agreed by OPEC in 1973–74 was outside the control of the then national Government and the oil consumers. Equally, the recent agreement reached by the OPEC countries could not be avoided by the United Kingdom. However, the proposed increase of duty is very much within the control of the Government. It is an extra impost decided by the Government, for whatever reasons. It is a Tory tax.
      We have been reminded by several hon. Members of the cries of "Shame" and the scenes of hysteria from the Conservative Opposition when about two years ago the Labour Government submitted their relatively modest proposal, by Tory terms, of increasing the tax on petrol by about 5p. There were sad stories of the effect that that would have on commuters and on low-income earners in rural areas. Such a head of steam was raised by the opposition parties that the Government were forced to withdraw their proposal.
      Where are those protesting hon. Members now? Where are those who only two years ago were so eloquent and so passionate in their appeals on behalf of rural dwellers?
      Mr. Dalyell: Most of them have become Ministers of the Crown.
      Mr. Anderson: If they have become Ministers of the Crown, I can only say "Shame on them" Shame on them for their inconsistency. Shame on them for the way in which they and other Conservative Members have posed as the motorist's friends. We can easily imagine the sort of campaign that they would have waged had the Labour Party

      1487
      implemented its modest proposals two years ago. Would we not have seen and heard on petrol station forecourts throughout the country the suggestion that the extra 5p or 7p was a Labour tax? I do not anticipate that when the extra 10p a gallon over and above the cost of the OPEC decision takes effect we shall see or hear that suggestion on the forecourts. If inconsistency is a political virtue, there is little virtue among those who were so eloquent only two years ago on behalf of rural dwellers and who forced, quite properly in many ways, a rethink on the part of the Labour Government.
      At the time when Conservative Members were so passionate in arguing against an increase in the price of petrol, the cost was substantially less than it is now following the OPEC increases. The Conservatives are not the motorist's friends as they have posed over such a long period.
      Mr. Wickenden: Does the hon. Gentleman accept that the difference between now and the period to which he refers is that now there is to be a reduction in direct taxation? The previous Government, which he supported, proposed to increase the tax on petrol without any reduction in direct taxation. That is the difference.
      Mr. Anderson: Yes. But I must ask this. For whom will the greatest benefit flow from the reduction?
      In his Budget speech the Chancellor of the Exchequer was careful to choose his figures illustrating the benefits flowing from those tax cuts. For example, he said that the person earning £100 a week would gain about 70p, taking into account the VAT and petrol increases but excluding the other matters that would directly or indirectly force up the cost of living.
      Only a small group of the population will benefit from the cuts in direct taxation—certainly not those low income earners who rely on their motor vehicles. They will carry the burden of the 10p increase, yet they will reap no benefit from the direct tax cuts. That is the reality. If the hon. Gentleman disagrees, let him say so now.
      The Government explored ways of raising revenue that would benefit the
      1488
      higher income earners. Their strategy is based on the fallacy that we must give incentives to that group because, somehow, investment and greater productivity will result. The gap between the high paid and low paid will be widened as a result of the reductions in direct taxation. There will be greater disatisfaction and bitterness in industrial and social relations.
      Before drawing up his Budget, the Chancellor cast about for areas in which revenue could be raised. He thought that petrol tax would be a good candidate. However, while he drew up his Budget the price of petrol was going up, in any event, as a result of the decisions taken by OPEC. The Government did not have sufficient flexibility to adjust their policies to the fact that the price of petrol was going up and they added the increased burden of 10p per gallon on the motorist.
      If the object were not merely to raise revenue but to conserve energy, we could seek other areas in respect of which the Government were taking energy conservation seriously. For example, why could not the Government have increased the home insulation grant or given greater encouragement in other ways? Why did the Government allow the petrol companies to reduce their supplies to British Rail at a time when, in view of the increase in motoring costs, it is in the national interest to encourage the use of public transport? Although the Government could not go as far as the Government of Sweden in reducing the cost of rail travel by half, why could they not take an initiative to encourage people to use British Rail, rather than threaten to withdraw the railway subsidy, and introduce additional ways of encouraging conservation?
      One looks in vain in the Budget—or any other decisions taken by the Government—for evidence that they take conservation seriously. If the Minister or any of his right hon. and hon. Friends can point out any such evidence, I should welcome it.
      9.15 p.m.
      My hon. Friends have pointed out that the Government are not only increasing the cost to the motorist as a result of the extra 10p, but are now apparently

      1489
      considering a further impost of an additional 20p as a result of their reconsideration of the proposal to phase out vehicle excise duty. That is contained in new clause No. 10 which we are now considering.
      The case for and against phasing out VED and putting an additional sum on to the price of petrol has been debated over the last few years. The Labour Government considered it. They came to the conclusion at the end of last year that, on balance, it was probably justifiable. There are respectable arguments in favour of phasing out VED. The major argument put forward against the Labour Government's proposal was that to phase out VED and increase the tax on petrol would penalise the consumer at a time of petrol scarcity.
      Now, of course, the consumer is already penalised. In terms of the real burden on the motorist, the circumstances are different, compared with last year when the Labour Government made their proposal.
      Another respectable argument is that, at one stroke, the phasing out of VED would avoid the substantial evasion of VED which at present costs the Exchquer a great deal of money. If there were to be an attack on the evasion of VED, it would also mean employing more civil servants at a time when it was against Government policy.
      There are other arguments for phasing out VED, but I shall not go through them all. They can be seen in the Labour Government's paper of last year. An increase in the price of petrol to compensate the phasing out of VED would affect the motor vehicle industry. We do not produce as many popular lower-powered vehicles as our competitors and, as the cost of petrol rises, more and more motorists will be inclined to buy smaller vehicles. The Department of Industry—the sponsoring Department—and the Treasury felt that this would have a substantially adverse effect on our balance of payments because of the increase in motor vehicle imports. That will now come about, in any event, as the increased price of petrol takes effect.
      Only this week we have heard of the extent to which our own domestic motor industry depends on company purchase & An astonishing 70 per cent. of domestic
      1490
      car purchases in the United Kingdom are made through company accounts. That shows the extent to which the perks system has developed. It is doubtful whether salary is as important to middle management as it is thought. Other areas alongside the salary, such as the company car and the subsidised mortgage, are much more attractive. One looks in vain in the Budget for any realisation by the Government of the extent to which the perks system has developed in British industry. There is no attempt in the Budget to deal with this. I fear that the Government will draw back from any attempt to deal with this problem seriously.
      Now we are told that on VED the Government may execute their first II-turn. Immediately after the election we were told by the Minister of Transport—the right hon. Member for Sutton Cold-field (Mr. Fowler)—that there was no real chance of the Government's going ahead with the previous Labour Government's plans to phase out VED. Then there was a planted question and a written answer on the very eve of the recess. Finally, there was the announcement by the Chancellor during his Budget speech that in spite of the earlier announcement it was unlikely that the Government would abolish VED and that this was now back under consideration.
      As many hon. Members know, I have a particular constituency interest in this matter. The Driver and Vehicle Licensing Centre is in my constituency. It employs—and employs well—a substantial number of my constituents. I hope that when the Government come to review this whole matter, as they appear to be doing—and I notice the rapt interest of my right hon. Friend the Member for Llanelli (Mr. Davies)—they will bear in mind the substantial social costs of abolishing VED in an area of high unemployment. If the Government were to go ahead with the abolition, over the next three or four years, as VED was phased out, there would be 800 fewer job opportunities in that area.
      Already young people in my area who have been interviewed for Civil Service jobs have been told that those jobs no longer exist because of the Government's ban on Civil Service recruitment. Together with the uncertainties over the steel

      1491
      industry and the effect of the minimum lending rate and the strong pound on the export possibilities of local companies, this means that there is an even more vital interest in the western South Wales area in the outcome of the Government's reconsideration of the future of VED.
      As the Government debate this matter, I trust that they will bear in mind the vital social effects of any abolition, the remarks made by the present Secretary of State for Wales when he was shadowing my right hon. and learned Friend the Member for Aberavon (Mr. Morris)—to the effect that he hoped that my right hon. and learned Friend would fight hard in the Cabinet against the abolition of VED—and the effects on rural areas, which the Conservatives claim to espouse.
      I look forward to the Minister of State's answers to some of the questions that I raised at the start of this all-to-brief intervention.
      Mr. John Maxton: I should like to return to the statistic that shows that 70 per cent. of motorists in Britain are having their motoring costs paid for them by their companies or other organisations. This is one of the key statistics in the philosophy of the Budget, particularly in relation to the increase in VAT and other taxes on petrol.
      What this means is that, like so much of the rest of the Budget, it is a class thing. Of course, the 70 per cent. of motorists who have their petrol paid for by companies or other organisations come in the main, although not entirely, from the ranks of the better off. The 30 per cent. are usually in the lower income bracket, and they not only pay for their petrol but have to buy their cars. It is a class matter, because these people are ordinary working men and not the executive class. It benefits the well off to the detriment of the poor.
      It is with reluctance that I take on the gurus of laissez faire—the hon. Member for Knutsford (Mr. Bruce-Gardyne) and the right hon. Member for Down, South (Mr. Powell)—but the existence of the 70 per cent. who do not buy their own petrol makes nonsense of the argument that the price mechanism has a direct effect on supply and demand. That 70 per cent. is not concerned with the price of petrol.
      1492
      The impact on supply and demand is indirect. The increased price paid by that 70 per cent. is passed on to the consumer through the company that provides the car. That in turn affects inflation. Inflation is not caused just by the increased cost in the transportation of goods but through this perk that is given to many in our society.
      The consumer will want increased wages to pay the increased prices. If there is no wage increase, the consumer cannot purchase the commodity and the manufacturer or supplier will be selling fewer goods. The supply of petrol will not necessarily be cut. It is more likely that jobs will be cut and unemployment increase.
      Mr. Allan Stewart: Is the hon. Gentleman essentially arguing that every British firm that gives its executives a company car is a monopoly?
      Mr. Maxton: I am not arguing that, but there will be a comeback on companies from the increased cost in petrol. It will impact, not on the amount of petrol consumed, but on other areas of that company's operations and ultimately on the economy.
      The 70 per cent. will not reduce their consumption. They are not paying for their petrol and are not worried about the price. The private motorist who has to pay for his own petrol will bear the brunt of the increased tax.
      It makes a nonsense of the Government's attempt to increase the differentials between those in work and the unemployed. Consider the case of the working man who is not very well paid but can afford to buy that old banger for travelling to work. This man does not earn much more than an unemployed man and suddenly he finds that to get to work he must afford a lot more money—either on public transport or on his own car. Therefore, in real terms the differential between the working man and the unemployed man has been reduced by this Budget.
      9.30 p.m.
      The Budget also hits the man who pays for his own petrol and who, once again, can just about afford to run his car for weekend trips with his children. Those outings are one of his basic pleasures.

      1493
      This Government have hit that pleasure, just as they have hit other simple pleasures of working people—the packet of crisps for the children, the bottle of orange squash, the chocolate biscuits. Conservative Members may laugh, but these small innocent pleasures of the lowly paid are being hit by 15 per cent. VAT. The working man can no longer afford to take his kids out into the country on Sunday afternoon because he cannot afford the petrol prices.
      Mr. Burden: Is the hon. Member suggesting that the present price of petrol is entirely due to the taxes of this Government? That is the implication of his last remark.
      Mr. Maxton: Of course I am not saying that, but this Government have increased petrol prices to a greater extent than was necessary. At a time when petrol prices are going up anyway the Government have imposed a tax on top, and that is intolerable. Also, the rise in petrol prices outside of taxation has been made worse by the Government's refusal to allow the Price Commission to consider the increases.
      I turn to the impact of these increases. We have heard a great deal about the impact on rural areas and I agree with a great deal that has been said. However, I am particularly concerned about some of the islands which surround our coastline. I holiday on an island that is only 40 miles from the centre of Glasgow—it is not a remote area in the middle of the Atlantic. That island could become rapidly depopulated as a result of the Budget. First, the cost of running the ferry across the short stretch of water will inrease as fuel costs increase.
      Mr. Wickenden: The hon. Member is referring to marine fuel, which is my business. This is zero rated. Therefore, there will not be any increases.
      Mr. Maxton: I accept that. However, every tanker load of petrol going across to the island is already paying large ferry dues. Already petrol costs on the island are 10p to 15p higher than those on the mainland. Tourists will not go there because they are not guaranteed petrol supplies. Garages on the island will find it difficult to survive. Among the islanders themselves, the small farmers running their tractors, and the contractors
      1494
      running their lorries will find fuel costs so much higher that they will not be able to compete. The depopulation that has already been one of the great sins of these islands over the past 100 years will continue and it will accelerate. There will be immense problems in rural areas—many of which are represented by Conservative Members.
      I wonder if the hon. Member for Bute and North Ayrshire (Mr. Corrie)—in whose constituency is the island to which I have referred—will comment upon the matter. Such islands will be in great social distress as a result of the increase in VAT across the board and the increase on petrol. I urge the Committee to support the amendment to reduce taxation on petrol.
      Mr. Frank Haynes: I shall make a brief speech because I realise that the Government Front Bench is becoming uneasy about the time.
      In my constituency, before the election Conservatives were saying that it was time for change. There was a change in Ash-field. The constituents got rid of the sitting Member of Parliament and elected me. However, the tragedy is that a Conservative Government were elected for Great Britain. Now the people are seeing the results of broken promises.
      In the election campaign the Conservatives did not mention the level of 15 per cent. for VAT. My right hon. Friend the Member for Leeds, East (Mr. Healey) pointed out at that time that if a Conservative Government were elected there would be a great increase in VAT. By God, he was right! We have a Government who are cruel to the people. Many people can ill afford these increases. I shall hazard a guess that the Conservative Government will be the Government in power when the price of a gallon of petrol reaches £2. I do not believe that I am far out in that estimate, considering the present trend.
      I represent people who find it difficult to live—they are struggling. They are dependent upon the county council and the district council. I refer to the elderly and the mentally handicapped. I foresee that the Nottingham county council will have to cut back on its meals on wheels service and the transport services that it provides for the mentally handicapped.

      1495
      People will be hit twice by the Government—first, by the increase in petrol and, at the same time, by the massive cutback in the rate support grant to the county council. I believe that the people will rise up eventually and say that they no longer want the Conservative Government. Some people are already saying it.
      Many people were conned in the election. They have not really woken up yet, but they will wake up, and wake up with a jolt, and then the Conservatives will get one or two surprises from some of those who they think support them.
      Allowing those who run petrol stations to charge what they like is a matter that has been mentioned time and again in the debate. They can charge what they like, and the Government do not do a damned thing about it. On television one night it was suggested by an Esso director, or somebody else who knew all about the matter, that prices would be £1·16 or £1·18, but we also saw on the television that people were sticking the price of £1·29 on the pumps.
      As I said, the Government are doing nothing about it. They are taking away the opportunity to do something by their proposal to remove the Price Commission, which could have held prices steady in the interests of the people, particularly the working class and the poorly paid.
      Conservative hon Members are grinning. They will not have many grins on their faces soon. With increasing petrol prices pushing up other prices to unacceptable levels the Government will have the trade unions saying "We want to be compensated for this." Some of us know what is going on over earnings. I shall have something to say when we debate the proposed increased in hon. Members' salaries. For now, I am talking about those outside and how they are affected by the massive increase in the cost of petrol. The Government have not helped with the extra 10p that they have themselves imposed.
      There will be a reaction from the workers, asking for compensation. It will not be long before Conservative Back Benchers are pushing for a U-turn and a freeze. It has happened before, and it will happen again. It is the same
      1496
      old story. We went through it all before with previous Conservative Governments.
      It was a tragic day when, on 3 May, the people did not return a Labour Government to give them the opportunity to see what a Labour Government could really do on behalf of the people. Conservative Members will be laughing on the other side of their faces in a while. I hope that they will remember my words. When Hansard is printed it will contain those words to keep reminding them.
      I said that I would be brief, and I have been. I do not use any gimmicks. I speak on behalf of the people whom I represent, as I see matters. I speak from the heart. I believe that I am a reasonable man. I am entitled to express my opinion. I believe that what is being said from the labour side of the Committee is fair, and I hope that many Conservative Members will seriously consider what we have said and support the amendment.
      Mr. Peter Rees: The hon. Member for Ashfield (Mr. Haynes), who is new to the House and the Committee, has contributed to our debates both yesterday and today. I was not oppressed with quite the same sense of tragedy as seemed to envelop the hon. Gentleman's speech.
      I turn with slightly more pleasure from the gloom with which the hon. Gentleman enveloped me, and perhaps other hon. Members, to the hon. Member for Swansea, East (Mr. Anderson), to whose blandishments I respond. He described me as an honest man, and compliments are hard to come by in this Committee. In addition, longer ago than either he or I care to recall, he was my Member of Parliament. He invited me to describe the Government's strategy. It may assist the Committee if I explain briefly, before turning to the amendments we are discussing, the strategy which led the Government to increase the hydrocarbon oil duties to the extent that they have done.
      9.45 p.m.
      It is plain to observe that there is an energy problem. The aim and the object of many civilised and industrial countries is to reduce their consumption by 5 per cent. We can debate legitimately how

      1497
      that reduction is to be achieved. There are Labour Members who would willingly take on the whole apparatus of rationing. I have no doubt that this was in the mind of the hon. Member for Ashfield.
      Mr. Haynes: That thought was not in my mind. I did not even mention it.
      Mr. Rees: I am enormously reassured. If I attributed any views that the hon. Gentleman does not hold, he is right to correct me, even though it may not strictly be a point of order.
      Mr. Dennis Canavan: It is a good point.
      Mr. Rees: It may be a good point. I am delighted that the hon. Member for West Stirlingshire (Mr. Canavan) is joining our debate. He will perhaps also confirm that he has no desire to inflict on the long-suffering people of this country the whole apparatus of rationing. There is an alternative solution that may not commend itself to the hon. Gentleman and his friends. It is the interplay of market forces.
      Mr. Russell Kerr: Rationing by the purse.
      Mr. Rees: That evokes a predictable response from hon. Members on the Labour Benches. I have yet to hear a credible alternative, at least in this debate. There may be other opportunities.
      The most notable contribution on this matter was that of the right hon. Member for Down, South (Mr. Powell). I am bound to say, although it is obviously a reflection on me rather than him, that I lost the thread of his argument at a certain stage. He seemed to be suggesting that the imposition of duties at this rate clogged, rather than eased, the play of market forces. The right hon. Gentleman asserted—he may be right—that these taxes are designed to suppress demand. Indeed, they are. What we hope to achieve, in effect, is to set the balance between supply and demand at a different point from that struck as recently as four months ago. This is surely a legitimate objective, although the right hon. Gentleman may be sceptical about the force that these tax increases will have.
      If the right hon. Gentleman concedes at least that demand will be suppressed in a situation where there is a finite
      1498
      supply of oil, this must surely be a legitimate objective and a legitimate means of achieving this objective.
      Mr. J. Enoch Powell: Taking into account what the Minister says, his case appears to be that the market price, the supply and demand price, without the tax, would not bring about a reduction in the consumption of petrol and that the tax is the element that brings about the 5 percent. reduction. He now has to justify a 5 per cent. reduction if, in the open market, on market principles, the consumption would remain level at the market price.
      Mr. Rees: I suspect that what lies between the right hon. Gentleman and myself is the time-scale over which market forces would operate without the interposition of this tax. I would assert that this tax may accelerate the process, which perhaps both the right hon. Gentleman and the Government would seek to achieve. I hope on that basis that the right hon. Gentleman will see that the tax is well conceived and that he will be able to give us his support at a later stage this evening.
      Mr. Anderson: Is it not unrealistic to talk about market forces in this context, since many of the decisions are political rather than economic decisions by the producer countries, often on a capricious basis, and since a substantial part of consumption in this country—70 per cent. of consumption—is not relevant to the market anyway?
      Mr. Rees: Political considerations may affect the OPEC producers. No doubt they do, and no doubt to a degree that is what affects the supply side of the equation. But the mere existence of political factors does not invalidate the proposition that this country faces the alternatives of rationing or at least the interplay of market forces. The point that I was taking up with the right hon. Member for Down, South is that he seemed to be suggesting—I may have misunderstood—that this tax would clog rather than ease the play of market forces. That is the only point that I was seeking to establish.
      There is another objective which is legitimate for any Government—that is, to raise sufficient revenue for their needs. In a full year, these increases will yield

      1499
      £525 million, and even in this year £400 million. Those sums are not lightly to be disregarded. Hon. Members who are tempted to vote against these increases are honour-bound to explain how they would replace them. We have been around this course before.
      Mr. Stoddart: With you.
      Mr. Rees: It has been my misfortune to intervene all too often—and perhaps the misfortune of the Committee too. I know how the battle lines are drawn. The hon. Member for Swindon (Mr. Stoddart) made a long and powerful speech and we know that he would favour leaving the levels of indirect taxation where they were when we took office. I would only say that that is one of the precise issues on which the electorate were invited to express their view. They have done so loudly and clearly and we have hearkened to what they said. It is up to the hon. Gentleman to adjust his thinking to that of the electorate.
      Mr. Denzil Davies rose—
      Mr. Rees: Does the right hon. Gentleman wish to adjust his thinking also?
      Mr. Denzil Davies: Did the Tory Party say during the election that it would put a tax on petrol to raise money to pay for cuts in direct taxation?
      Mr. Rees: The right hon. Gentleman is not as naïve as he sometimes pretends. We said rather more loudly than his right hon. Friend the Member for Leeds, East (Mr. Healey) that there should be a shift from direct to indirect taxation. His right hon. Friend was saying the same thing but in muted tones, because he was not certain whether his right hon. and hon. Friends and the Labour Party associations would have exactly welcomed that proposal. However, because he had been presiding at No. 11 for a long time and because of his undoubted capacity—if I may say so without being patronising—he could see how the wind was blowing and he knew also that there had to be a shift.
      Although the right hon. Member for Llanelli (Mr. Davies) chided me earlier for quoting that perceptive article by Mr. Peter Jenkins in The Guardian—
      Mr. Denzil Davies: Do not bore us again.
      Mr. Rees: I know that the right hon. Gentleman finds that article a little boring. It is always rather tiresome to have one's innermost thoughts read so clearly and candidly, by a friend—not by me.
      Mr. Denzil Davies: It was withdrawn.
      Mr. Rees: It may have been withdrawn—I know the subtle pressures and blandishments that the right hon. Gentleman can bring to bear—but let us not argue about the precise form of the Budget which the right hon. Member for Leeds, East would have introduced if he had been standing at this Box earlier this summer.
      The right hon. Member for Llanelli knows—he was long enough in the Treasury—that to achieve a public sector borrowing requirement of £8½ billion, a Labour Government would have had to do something fairly drastic and they would have had to do it by means of indirect taxation. The only difference is that they would not have made the bold and imaginative cuts in direct taxation that the Chancellor has proposed. But we shall be able to come to that tomorrow, when the right hon. Gentleman will be able to give his no doubt highly informed view of how he would have constructed the Budget and where he would have put the weight of his tax impost.
      Those are the two objectives, which I think are worthy and which I think deserve more widespread support than the Labour Party is at present disposed to give them.
      I turn now to the way in which the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel) moved the amendment.
      The leader of the Liberal Party referred to the indexation of goods and services. With courtesy the right hon. Gentleman invited me to debate that issue. I do not wish to dodge that invitation. I shall be happy to debate it on another occasion, but the Committee has been sitting for two days and it would not be appropriate to range far on that matter at this stage. I emphasise that the proposals involve a measure of revalorisation back to 1977. The Liberal amendment

      1501
      takes us back only to 1978. If anything, we have gone further than the Liberals propose.
      The retail price index impact is 0·25 per cent. Opposition Members spoke wildly about these measures stoking the fires of inflation. I wish that in the dark days of 1976–77 inflation had been fuelled at only that rate.
      The right hon. Member for Roxburgh, Selkirk and Peebles rode an old hobby horse—the idea of differential fuel duty. Of course that is attractive, but when one investigates the practicalities it does not stand close examination. For good or ill we live in a small archipelago and it is all too easy to cross regional boundaries to fill up our petrol tanks. The administrative difficulties would be considerable and the expense enormous. The administrative superstructure would not justify the results.
      Mr. Penhaligon: The oil companies operated this system for a considerable time. The basic price of fuel in Scotland and other distant regions has always been at least 1p more than it is in London.
      Mr. Rees: The hon. Member is talking about a differential that involves the cost of transportation. I am making a diffferent point. I appreciate the hon. Member's anxiety, since he represents a Cornish constituency, but his argument does not support the proposition advanced by his right hon. Friend the Member for Roxburgh, Selkirk and Peebles.
      The hon. Member for Gateshead, West (Mr. Horam) discussed amendments that are designed to go over the ground that he was tilling thoroughly when he occupied a position on the Government Benches. Obviously he is still enamoured of a switch from vehicle excise duty to increased petrol duties.
      At this hour of the night it is not appropriate to open up that debate. We have said that we shall deal with that matter. The hon. Member made a tentative step, which I do not think will commend itself to the Committee. We should let it rest.
      Inevitably, the hon. Gentleman said that the increases would justify further wage claims. He disregards the cuts in direct taxation. We are entitled to pray in aid the strategy that the right hon.
      1502
      Member for Leeds, East deployed in 1977. All that was offered was a tentative cut of 2 per cent., which eventually was shaded down to 1 per cent. The present Chancellor of the Exchequer has made a more generous offer to the country—if one talks about it in those terms which I do not. I hope that account will he taken of that.
      The hon. Member for Gateshead, West then said that the increases justified the OPEC oil increases. All that we are doing is revalorising these duties back to 1977. There is no provocation or incentive to the OPEC countries to make what we are doing a pretext for further price increases.
      The hon. Member made some fine points about price elasticity. If he is really worried I shall inflict an answer on the Committee. The available evidence suggests that a price increase of x per cent. leads to a fall in consumption of about 0·2x per cent. in the short term. In the long term, considering factors such as changes in the buying habits of car owners; the reduction is probably about 0–4x per cent. I leave the hon. Gentleman to digest and apply those figures.
      It being Ten o'clock, THE CHAIRMAN left the Chair to report Progress and ask leave to sit again.
      Committee report Progress.

  BUSINESS OF THE HOUSE
  Ordered,
  That, at this day's sitting, the Motion relating to Public Accounts and the Motion for an Instruction in the name of Mr. Michael English may be proceeded with, though opposed, until half-past Eleven o'clock or for one-and-a-half hours after the first Motion has been entered upon, whichever is the later.—[Mr. Cope.]

  FINANCE BILL
  Again considered in Committee.
  Question again proposed, That the amendment be made.
  Mr. Rees: I turn to the intervention of the hon. Member for Inverness (Mr. Johnston).
  Mr. Alexander W. Lyon: I have been trying to do the sum posed by the Minister of State. On the basis of the information that he gave us, does it not mean that on a 10p increase per gallon the reduction in consumption will be minuscule? Does that not undermine some of the arguments for introducing a 10p increase?
  Mr. Rees: I congratulate the hon. Gentleman, but I should prefer not to respond to his figures. I will look at it more carefully if he wishes and write to him about it. I would not trust my own mathematics or faculties at this hour of the night.
  It was inevitable that someone in this debate would ask how a rather similar debate was conducted a little more than two years ago, on 4 April 1977, when the right hon. Member for Leeds, East proposed increases in petrol duty. Liberal Members evidently detect a faint inconsistency between the position of the Conservative Party now and then. Let me endeavour to reassure hon. Gentlemen, if I can, by reading a short passage from Hansard of 9 May 1977, quoting from a speech by my right hon. and learned Friend now the Chancellor of the Exchequer:
  "The Government have pre-eminently selected the wrong mix to bring before the House. We are not asking for motorists and petrol prices to be exempted altogether from the burden of indirect taxation. That would be to go back a long way. Nor do we ask that they should be exempt from the burden of taxation in a general switch from direct to indirect taxation. However the Government have brought forward a package in which motorists have been selected as the special victims of the switch. …"—[Official Report, 9 May 1977; Vol. 931, c. 990.]
  Hon. Members will see at once, therefore, the basis on which we can distinguish what we propose today and what was proposed by the right hon. Member for Leeds, East on that occasion. I hope that that goes some way to reassure my hon. Friend the Member for New Forest (Mr. NcNairWilson), who has a long and honourable record of opposition to increases in petrol duties. He will realise that the situation is not precisely the same and perhaps he will be able to reconsider his position on this occasion, recognising that we have not singled out motorists for a swingeing impost. It is part of a calculated shift from direct to indirect taxation.
  1504
  I am tempted, though I do not think that the Committee would bear with me, to recall what the right hon. Member for Leeds, East said on that occasion. I could have quoted him almost word for word and that would, I believe, have supported what we are attempting to do now.
  The hon. Member for West Lothian (Mr. Dalyell), courteous as always, asked me another question. I am always staggered by the range of his interest and knowledge. On this occasion we move from the corruption of the stone facades of West Lothian to the distribution of oil. I hope that the hon. Member will not think me discourteous if I do not respond to the question, which falls more within the responsibilities of my right hon. Friend the Secretary of State for Energy. I do not think that I could do justice to the question, nor, if he will allow me to say so, is it directly relevant to the proposals that we are debating.
  Mr. Dalyell: It was a question that was put by no fewer than four Members, on both sides of the House, during the debate. I repeat that it is of great urgency to those of us who represent country areas.
  Mr. Rees: I entirely appreciate the motives that led the hon. Gentleman to put the question to me and led other hon. Members to raise it. I would only plead that my responsibilities are rather more limited. I am sure that my right hon. Friend will take note of the important points that have been made, and I do not doubt that the hon. Gentleman would prefer a more authoritative answer from my right hon. Friend to a perhaps not entirely considered response from somebody who has no particular responsibilities in that respect.
  I return now to the amendments. The amendment moved for the Liberal Party by the right hon. Member for Roxburgh, Selkirk and Peebles is rather tentative. If Liberal Members are enamoured of the idea of indexation, I suggest that they should look with more favour on the Government's proposals, since they go a little further down that route than their amendment No. 7 does.
  As for amendment No. 23 and new clause 10, spoken to so persuasively by the hon. Member for Gateshead, West, I

  1505
  suggest that the hon. Gentleman is perhaps following the interest that he pursued when at the Department of Transport and that on this occasion what we propose will be of more advantage to the country. Of course, it does not rule out proper consideration of a diminution or phasing out of vehicle excise duty, but it will be more to the advantage of the country as a whole, and of motorists in particular, for the Committee to approve
  1506
  the increases proposed by the Government instead of the rather tenuous proposals embodied in amendment No. 23 and new clause 10.
  On that basis, I hope that the hon. Gentleman will not be disposed to press his amendment to a Division, recognising that there will be an opportunity to consider all these issues again when my right hon. Friend has completed his review of the vehicle excise duty.
  Mr. Horam: First, on a procedural point, Mr. Crawshaw, I hope that it will be possible to have a separate vote on amendment No. 23 after we have voted on the Liberal amendment No. 7.
  As for the general tenor of the Minister's remarks, I can only say that he has not answered the central case which we have advanced. The point of that case is that it is wrong to impose this gratuitous tax increase when world prices are moving up as quickly as they are at the moment. Irrespective of the Budget increase, we had an increse, in effect, of 35p in the price of four-star petrol in this country over the past six months. The Government have now imposed a further increase of 10p of their own accord.
  The Government argue that they are doing that to cut back demand. Indeed, this was the point made by the Prime Minister in response to my right hon. Friend the Leader of the Opposition earlier this week. But our argument is that OPEC is already doing that job for them. Moreover, this point has been made not just from these Benches. It was made by the hon. Member for New Forest (Mr. McNair-Wilson) and by other hon. Members on the Government side. OPEC is doing the job without further help from the British Government.
  The pretentious of this tax to be a conservation measure are bogus. It is simply a revenue-raising measure, and as such it is on all fours with the increase in VAT to 15 per cent. It is made necessary by the Government's commitment to cut income tax by 3p in the pound. That is the logic of their position and that is how it remains.
  It is a harsh impost. It will hit the poor. As was said by many hon. Members on both sides, the business man will not be affected by the increase. The persons most affected will be those who have no alternative but to go by car to work. They will be the heaviest sufferers from an impost of this kind. Moreover, it will fuel inflation and it will steepen recession. And it will do all these things without even fitting into the Government's philosophy, because, as the right hon. Member for Down, South (Mr. Powell) pointed out, it is not even an application
  1508
  of market forces; it is an interference with market forces.
  I believe, therefore, that what the Government have done will begin to mobilise the men of this country against them, just as the VAT increases have mobilised the women. I am not surprised that this Government's political honeymoon has been the shortest in post-war history. The Minister of State has declined to reconsider his position on this tax, which many hon. Members on both sides have asked him to do, and we must therefore vote for amendment No. 23.
  Mr. Richard Wainwright: There are many topics debated in the House of Commons that illustrate the dangers and sometimes the hollow futility of adversary politics, but no subject illustrates the dangers and futility more than debates on petrol duties. During the past 35 years, for example, the alternating parties in Government have increased petrol duties only to be hotly opposed by the alternating parties in Opposition. Each party has in turn used virtually the same arguments against the adversary party. Tonight is no exception. I do not accept for a moment the Minister of State's claim that his action in increasing petrol duties this year is wholly consistent with the Conservative Party's opposition to Labour's increase of petrol duties in 1977.
  The Minister of State had the cheek to say that in 1977 the Conservative Party objected to the motorist being singled out for punishment. However, that is exactly what the Government have done this year. There was no increase proposed in the excise duties on alcohol or tobacco—merely a heavy increase in the excise duty on petrol. One of the many ways in which we could reduce the sham of adversary politics would be to make provision for automatic indexation of the specific excise duties that my right hon. Friend the Member for Roxburgh, Selkirk and Peebles (Mr. Steel) emphasised when introducing amendment No. 7.
  The Minister of State, who has a reputation for impudence in this Chamber, made the extraordinary statement that the Government were making a meritorious revalorisation of the petrol duties. That is to sidestep the whole argument of automatic provision for indexation according to a strict formula.

  1509
  The Government thought of a number, increased revenue and blamed revalorisation. That is a worthless argument. The Minister of State seeks to dress up the 10p increase as a revalorisation. The hon. and learned Gentleman thought of the number first and the excuse of re-valorisation subsequently.
  The debate has been valuable in smoking out completely the false attribute claimed in the Budget Statement for this savage increase. It was claimed to be a meritorious, virtuous and pious weapon, designed to reduce consumption. I am sure that we are all indebted to the right hon. Member for Down, South (Mr. Powell) for effectively wiping out that argument. The right hon. Gentleman reduced the Minister to the feeble defence that perhaps market forces would reduce the consumption of petrol sufficiently, but at least this year's increase in duty would help to do it rather more quickly.
  If that is the Government's defence of the 10p increase, it seems that the increase is merely an acceleration in the time scale of the reduction in demand. It follows logically that next year they will remove the temporary accelerator, as it will not be needed. According to the Government's gospel, market forces will have caught up, aided by the temporary boost that they claim skilfully to have introduced into the Budget. I hope that we can look forward confidently to the removal of the impost next year.
  10.15 p.m.
  As my right hon. Friend made clear, the amendment is based on the principle of automatic indexation. We argue that the additional revenue should be gained by the indexation of the specific excises on alcohol and tobacco. We tabled the amendment confident in the knowledge that the Treasury team, when in Opposition, was a group of fervent advocates of indexing the whole tax system. I do not wish to weary the Committee with more than one quotation, but regardless of the wishes of Conservative Members—I am sure that they know how embarrassing my quotation will be—they will get one.
  On 25 July the hon. Member for Blaby (Mr. Lawson), who was one of the Shadow Treasury team, said:
  "I have time and again consistently stated that I am in favour of the same form of indexation being applied to specific duties. I have made no secret of it. If my hon. Friend will read the speech I made in the Budget debate, he will see that I dealt in specific terms with the"—
  indexation of the—
  "petrol duty. If my hon. Friend will read the speeches of our right hon. and learned Friend the Member for Surrey, East (Sir G. Howe)"
  —the Shadow Chancellor—
  "he will see that for some time he has been making powerful speeches pointing out the evils of an unindexed tax system."—[Official Report, 25 July 1977; Vol. 936, c. 109.]
  I was disappointed that exactly a week ago tonight in the debate on the Second Reading of the Finance Bill the Minister of State, although he could not deny his colleagues' enthusiasm for indexation, took refuge in an obscure sentence. He said:
  "Formal indexation would create technical difficulties, and perhaps we can deal with that subject in Committee."—[Official Report, 27 June 1979; Vol. 969, c. 577.]
  I took the precaution of reminding the Minister of State of that by letter earlier this afternoon, yet tonight he refuses to return to the subject in Committee. He made an extraordinary excuse that we had spent a long time on this subject in Committee and that there was no time to go into the offer that he made a week ago. I hope that the Minister of State, on reflection, will feel that we are entitled to some amends for his extraordinary behaviour. The House and its procedures would benefit enormously from the automatic indexation of the various specific excise duties, just as it benefited enormously from the successful Rooker-Wise amendment for the automatic indexation of the personal allowances for income tax. The Liberal amendment proposes such an indexation. On those grounds, I commend it to the Committee.
  Question put, That the amendment be made:—
  The Committee divided: Ayes 37, Noes 295.

  Division No. 43]

  AYES

  [10.18 p.m.

  Allaun, Frank

  Carter-Jones, Lewis

  Evans, Ioan (Aberdare)

  Alton, David

  Clark, David (South Shields)

  Forrester, John

  Anderson, Donald

  Conlan, Bernard

  Grimond, Rt Hon J.

  Bray, Dr Jeremy

  Cryer, Bob

  Heffer, Eric S.

  Canavan, Dennis

  Edwards, Robert (Wolv SE)

  Howells, Geraint

  Johnston, Russell (Inverness)

  Newens, Stanley

  Wainwright, Richard (Colne Valley)

  Kilfedder, James A.

  Prescott, John

  Weetch, Ken

  Kilroy-Silk, Robert

  Robert, Gwilym (Cannock)

  Wigley, Dafydd

  Lambie, David

  Ross, Ernest (Dundee West)

  Wilson, Gordon (Dundee East)

  Lamond, James

  Ross, Stephen (Isle of Wight)

  Lewis, Ron (Carlisle)

  Skinner, Dennis

  TELLERS FOR THE AYES:

  Mckelvey, William

  Stewart, Rt Hon Donald (W Isles)

  Mr. A. J. Beith and

  Miller, Dr M. S. (East Kilbride)

  Thomas, Dafydd (Merioneth)

  Mr. David Penhaligon.

  Mitchell, R. C. (Soton, Itchen)

  Torney, Tom

  NOES

  Adley, Robert

  du Cann, Rt Hon Edward

  Lamont, Norman

  Aitken, Johathan

  Dunn, Robert (Dartford)

  Lang, Ian

  Alexander, Richard

  Durant, Tony

  Langford-Holt, Sir John

  Amery, Rt Hon Julian

  Dykes, Hugh

  Latham, Michael

  Ancram, Michael

  Eden, Rt Hon Sir John

  Lawrence, Ivan

  Arnold, Tom

  Edwards, Rt Hon N. (Pembroke)

  Lawson, Nigel

  Aspinwall, Jack

  Eggar, Timothy

  Lee, John

  Atkins, Rt Hon H. (Spelthorne)

  Elliott, Sir William

  Le Marchant, Spencer

  Atkins, Robert (Preston North)

  Emery, Peter

  Lennox-Boyd, Hon Mark

  Atkinson, David (B'mouth, East)

  Eyre, Reginald

  Lester, Jim (Beeston)

  Baker, Kenneth (St. Marylebone)

  Fairgrieve, Russell

  Lewis, Kenneth (Rutland)

  Baker, Nicholas (North Dorset)

  Faith, Mrs Sheila

  Lloyd, Ian (Havant & Waterloo)

  Banks, Robert

  Fell, Anthony

  Lloyd, Peter (Fareham)

  Beaumont-Dark, Anthony

  Fenner, Mrs Peggy

  Loveridge, John

  Bell, Ronald

  Finsberg, Geoffrey

  Luce, Richard

  Bendall, Vivian

  Fisher, Sir Nigel

  Lyell, Nicholas

  Bennett, Sir Frederic (Torbay)

  Fletcher, Alexander (Edinburgh N)

  McCrindle, Robert

  Benyon, Thomas (Abingdon)

  Fletcher-Cooke, Charles

  Macfarlane, Neil

  Benyon, W. (Buckingham)

  Fookes, Miss Janet

  MacGregor, John

  Berry, Hon Anthony

  Forman, Nigel

  MacKay, John (Argyll)

  Best, Keith

  Fowler, Rt Hon Norman

  Macmillan, Rt Hon M. (Farnham)

  Bevan, David Gilroy

  Fox, Marcus

  McNair-Wilson, Michael (Newbury)

  Biffen, Rt Hon John

  Fraser, Peter (South Angus)

  McNair-Wilson, Patrick (New Forest)

  Biggs-Davison, John

  Fry, Peter

  McQuarrie, Albert

  Blackburn, John

  Galbraith, Hon T. G. D.

  Madel, David

  Blaker, Peter

  Gardiner, George (Reigate)

  Major, John

  Body, Richard

  Gardner, Edward (South Fylde)

  Marland, Paul

  Bonsor, Sir Nicholas

  Gilmour, Rt Hon Sir Ian

  Marlow, Tony

  Bottomley, Peter (Woolwich West)

  Glyn, Dr Alan

  Marshall, Michael (Arundel)

  Bowden, Andrew

  Goodhart, Philip

  Marten, Neil (Banbury)

  Boyson, Dr Rhodes

  Goodlad, Alastair

  Mates, Michael

  Bright, Graham

  Gorst, John

  Mather, Carol

  Brinton, Tim

  Gower, Sir Raymond

  Maude, Rt Hon Angus

  Brittan, Leon

  Grant, Anthony (Harrow C)

  Mawby, Ray

  Brocklebank-Fowler, Christopher

  Gray, Hamish

  Mawhinney, Dr Brian

  Brooker, Hon Peter

  Grieve, Percy

  Maxwell-Hyslop, Robin

  Brotherton, Michael

  Griffiths, Eldon (Bury St Edmunds)

  Mayhew, Patrick

  Brown, Michael (Brigg & Sc'thorpe)

  Griffiths, Peter (Portsmouth N)

  Mellor, David

  Browne, John (Winchester)

  Grist, Ian

  Meyer, Sir Anthony

  Bruce-Gardyne, John

  Grylls, Michael

  Miller, Hal (Bromsgrove & Redditch)

  Bryan, Sir Paul

  Gummer, John Selwyn

  Mills, Peter (West Devon)

  Buchanan-Smith, Hon Alick

  Hamilton, Hon Archie (Eps'm&Ew'll)

  Miscampbell, Norman

  Buck, Antony

  Hamilton, Michael (Salisbury)

  Mitchell, David (Basingstoke)

  Budgen, Nick

  Hampson, Dr Keith

  Monro, Hector

  Bulmer, Esmond

  Hannam, John

  Montgomery, Fergus

  Burden, F. A.

  Haselhurst, Alan

  Moore, John

  Butcher, John

  Havers, Rt Hon Sir Michael

  Morgan, Geraint

  Butler, Hon Adam

  Hawksley, Warren

  Morris, Michael (Northampton, Sth)

  Cadbury, Jocelyn

  Heddle, John

  Morrison, Hon Charles (Devizes)

  Carlisle, John (Luton West)

  Henderson, Barry

  Morrison, Hon Peter (City of Chester)

  Carlisle, Kenneth (Lincoln)

  Hicks, Robert

  Mudd, David

  Carlisle, Rt Hon Mark (Runcorn)

  Hingins, Rt Hon Terence L.

  Murphy, Christopher

  Chalker, Mrs. Lynda

  Hill, James

  Myles, David

  Channon, Paul

  Hogg, Hon Douglas (Grantham)

  Neale, Gerrard

  Chapman, Sydney

  Holland, Philip (Carlton)

  Neubert, Michael

  Churchill, W. S.

  Hooson, Tom

  Newton, Tony

  Clark, Hon Alan (Plymouth, Sutton)

  Hordern, Peter

  Normanton, Tom

  Clark, Dr William (Craydon South)

  Howe, Rt Hon Sir Geoffrey

  Nott, Rt Hon John

  Clarke, Kenneth (Rushcliffe)

  Howell, Ralph (North Norfolk)

  Oppenheim, Rt Hon Mrs Sally

  Cockeram, Eric

  Hunt, David (Wirral)

  Osborn, John

  Colvin, Michael

  Hunt, John (Ravensbourne)

  Page, John (Harrow, West)

  Cormack, Patrick

  Irving, Charles (Cheltenham)

  Page, Rt Hon R. Graham (Crosby)

  Corrie, John

  Jenkin, Rt Hon Patrick

  Parkinson, Cecil

  Costain, A. P.

  Jessel, Toby

  Parris, Matthew

  Cranborne, Viscount

  Johnson Smith, Geoffrey

  Patten, Christopher (Bath)

  Critchey, Julian

  Jopling, Rt Hon Michael

  Patten, John (Oxford)

  Crouch, David

  Joseph, Rt Hon Sir Keith

  Pattie, Geoffrey

  Dean, Paul (North Somerset)

  Kaberry, Sir Donald

  Pawsey, James

  Dickens, Geoffrey

  Kellett-Bowman, Mrs Elaine

  Percival, Sir Ian

  Dodsworth, Geoffrey

  Kimball, Marcus

  Pollock, Alexander

  Dorrell, Stephen

  King, Rt Hon Tom

  Porter, George

  Douglas-Hamilton, Lord James

  Kitson, Sir Timothy

  Price, David (Eastleigh)

  Dover, Denshore

  Knox, David

  Proctor, K. Harvey

  1512

  1513

  Pym, Rt Hon Francis

  Speed, Keith

  Viggers, Peter

  Raison, Timothy

  Speller, Tony

  Waddington, David

  Rathbone, Tim

  Spicer, Jim (West Dorset)

  Wakeham, John

  Rees, Peter (Dover and Deal)

  Spicer, Michael (S Worcestershire)

  Waldegrave, Hon William

  Rees-Davies, W. R.

  Sproat, Iain

  Walker-Smith, Rt Hon Sir Derek

  Renton, Tim

  Squire, Robin

  Wall, Patrick

  Rhodes James, Robert

  Stainton, Keith

  Waller, Gary

  Rhys Williams, Sir Brandon

  Stanbrook, Ivor

  Walters, Dennis

  Ridley, Hon Nicholas

  Stanley, John

  Ward, John

  Ridsdale, Julian

  Steen, Anthony

  Watson, John

  Rifkind, Malcolm

  Stevens, Martin

  Wells, John (Maidstone)

  Roberts, Michael (Cardiff NW)

  Stewart, Ian (Hitchin)

  Wells, Bowen (Hert'rd & Stev'nage)

  Roberts, Wyn (Conway)

  Stewart, John (East Renfrewshire)

  Wheeler, John

  Rossi, Hugh

  Stokes, John

  Whitney, Raymond

  Rost, Peter

  Stradling Thomas, J.

  Wickenden, Keith

  Royle, Sir Anthony

  Taylor, Robert (Croydon NW)

  Wiggin, Jerry

  Sainsbury, Hon Timothy

  Tebbit, Norman

  Wilkinson, John

  St. John-Stevas, Rt Hon Normar

  Temple-Morris, Peter

  Williams, Delwyn (Montgomery)

  Scott, Nicholas

  Thomas, Rt Hon Peter (Hendon S)

  Winterton, Nicholas

  Shaw, Michael (Scarborough)

  Thompson, Donald

  Wolfson, Mark

  Shelton, William (Streatham)

  Thorne, Neil (Ilford South)

  Young, Sir George (Acton)

  Shepherd, Colin (Hereford)

  Thornton, Malcolm

  Younger, Rt Hon George

  Shepherd, Richard (Aldridge-Br'hills)

  Townend, John (Bridlington)

  Shersby, Michael

  Townsend, Cyril D. (Bexleyheath)

  TELLERS FOR THE NOES:

  Silvester, Fred

  Trippier, David

  Mr. John Cope and

  Skeet, T. H. H.

  Trotter, Neville

  Mr. Robert Boscawen

  Smith, Dudley (War. and Leam'ton)

  Vaughan, Dr Gerard

  Question accordingly negatived.
  Amendment proposed: No. 23, in page 2, line 31, leave out '£0·0810' and insert '£0·0735'.—[Mr. Horam.]
  Question put, That the amendment be made:—
  The Committee divided: Ayes 251, Noes 299.

  Division No.44]

  AYES

  [10.30 p.m.

  Abse, Leo

  Davidson, Arthur

  Hamilton, W. W. (Central Fife)

  Adams, Allen

  Davies, Rt Hon Denzil (Llanelli)

  Hardy, Peter

  Allaun, Frank

  Davies, E. Hudson (Caerphilly)

  Harrison, Rt Hon Walter

  Alton, David

  Davies, Ifor (Gower)

  Hart, Rt Hon Dame Judith

  Anderson, Donald

  Davis, Clinton (Hackney Central)

  Hattersley, Rt Hon Roy

  Archer, Rt Hon Peter

  Davis, Terry (B'rm'ham, Stechford)

  Haynes, Frank

  Armstrong, Rt Hon Ernest

  Deakins, Eric

  Healey, Rt Hon Denis

  Ashton, Joe

  Dean, Joseph (Leeds West)

  Heffer, Eric S.

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

  Dempsey, James

  Hogg, Norman (E Dunbartonshire)

  Bagier, Gordon A. T.

  Dixon, Donald

  Home Robertson, John

  Barnett, Guy (Greenwich)

  Dobson, Frank

  Homewood, William

  Barnett, Rt Hon Joel (Heywood)

  Dormand, Jack

  Hooley, Frank

  Beith, A. J.

  Douglas, Dick

  Horam, John

  Benn, Rt Hon Anthony Wedgwood

  Dubs, Alfred

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

  Bennett, Andrew (Stockport N)

  Duffy, A. E. P.

  Howells, Geraint

  Bidwell. Sydney

  Dunlop, John

  Huckfield, Les

  Booth, Rt Hon Albert

  Dunnett, Jack

  Hughes, Mark (Durham)

  Boothroyd, Miss Betty

  Dunwoody, Mrs Gwyneth

  Hughes, Robert (Aberdeen North)

  Bottomley, Rt Hon Arthur (M'brough)

  Eastham, Ken

  Hughes, Roy (Newport)

  Bradley, Tom

  Edwards, Robert (Wolv SE)

  Janner, Hon Greville

  Bray, Dr Jeremy

  Ellis, Raymond (NE Derbyshire)

  Jay, Rt Hon Douglas

  Brown, Hugh D. (Provan)

  Ellis, Tom (Wrexham)

  John, Brynmor

  Brown, Ronald W. (Hackney S)

  Ennals, Rt Hon David

  Johnson, James (Hull West)

  Buchan, Norman

  Evans, Ioan (Aberdare)

  Johnston, Russell (Inverness)

  Callaghan, Rt Hon J. (Cardiff SE)

  Evans, John (Newton)

  Jones, Rt Hon Alec (Rhondda)

  Callaghan, Jim (Middleton & P)

  Ewing, Harry

  Jones, Barry (East Flint)

  Campbell, Ian

  Field, Frank

  Jones, Dan (Burnley)

  Campbell-Savours, Dale

  Fitch, Alan

  Kaufman, Rt Hon Gerald

  Canavan, Dennis

  Flannery, Martin

  Kerr, Russell

  Cant, R. B.

  Fletcher, Ted (Darlington)

  Kilfedder, James A.

  Carmichael, Neil

  Foot, Rt Hon Michael

  Kilroy-Silk, Robert

  Carter-Jones, Lewis

  Ford, Ben

  Kinnock, Neil

  Cartwright, John

  Forrester, John

  Lambie, David

  Clark, David (South Shields)

  Foster, Derek

  Lamborn, Harry

  Cocks, Rt Hon Michael (Bristol S)

  Foulkes, George

  Lamond, James

  Cohen, Stanley

  Fraser, John (Lambeth, Norwood)

  Leadbitter, Ted

  Coleman, Donald

  Freeson, Rt Hon Reginald

  Leighton, Ronald

  Concannon, Rt Hon J. D.

  Garrett, John (Norwich S)

  Lestor, Miss Joan (Eton & Slough)

  Conlan, Bernard

  Garrett, W. E. (Wallsend)

  Lewis, Ron (Carlisle)

  Cook, Robin F.

  George, Bruce

  Lofthouse, Geoffrey

  Cowans, Harry

  Gilbert, Rt Hon Dr John

  Lyon, Alexander (York)

  Craigen, J. M. (Glasgow, Maryhill)

  Ginsburg, David

  Lyons, Edward (Bradford West)

  Crowther, J. S.

  Golding, John

  McCartney, Hugh

  Cryer, Bob

  Gourlay, Harry

  McDonald, Dr Oonagh

  Cunliffe, Lawrence

  Graham, Ted

  McElhone, Frank

  Cunningham, George (Islington S)

  Grant, John (Islington C)

  McGuire, Michael (Ince)

  Cunningham, Dr John (Whitehaven)

  Grimond, Rt Hon J.

  McKay, Allen (Penistone)

  Dalyell, Tam

  Hamilton, James (Bothwell)

  McKelvey, William

  MacKenzie, Rt Hon Gregor

  Parry, Robert

  Stott, Roger

  Maclennan, Robert

  Penhaligon, David

  Summerskill, Hon Dr Shirley

  McMahon, Andrew

  Powell, Rt Hon J. Enoch (S Down)

  Taylor, Mrs Ann (Bolton West)

  McMillan, Tom (Glasgow, Central)

  Powell, Raymond (Ogmore)

  Thomas, Dafydd (Merioneth)

  McNally, Thomas

  Prescott, John

  Thomas, Jeffrey (Abertillery)

  McWilliam, John

  Price, Christopher (Lewisham West)

  Thomas, Mike (Newcastle East)

  Magee, Bryan

  Race, Reg

  Thomas, Dr Roger (Carmarthen)

  Marks, Kenneth

  Radice, Giles

  Thorne, Stan (Preston South)

  Marshall, David (Gl'sgow, Shettles'n)

  Richardson, Miss Jo

  Tilley, John

  Marshall, Dr Edmund (Goole)

  Roberts, Ernest (Hackney North)

  Torney, Tom

  Marshall, Jim (Leicester South)

  Roberts, Gwilym (Cannock)

  U-win, Rt Hon Tom

  Martin, Michael (Gl'gow. Springb'rn)

  Robertson, George

  Varley, Rt Hon Eric G.

  Maxton, John

  Rodgers, Rt Hon William

  Wainwright, Richard (Colne Valley)

  Maynard, Miss Joan

  Rooker, J. W.

  Walker, Rt Hon Harold (Doncaster)

  Meacher, Michael

  Ross, Ernest (Dundee West)

  Watkins, David

  Mellish, Rt Hon Robert

  Ross, Stephen (Isle of Wight)

  Weetch, Ken

  Mikardo, Ian

  Ross, Wm. (Londonderry)

  Wellbeloved, James

  Millan, Rt Hon Bruce

  Rowlands, Ted

  Welsh, Michael

  Miller, Dr M. S. (East Kilbride)

  Ryman, John

  White, Frank R. (Bury & Radcliffe)

  Mitchell, Austin (Grimsby)

  Sandelson, Neville

  Whitehead, Phillip

  Mitchell, R. C. (Soton, Itchen)

  Sever, John

  Whitlock, William

  Molyneaux, James

  Sheerman, Barry

  Wigley, Dafyd

  Morris, Rt Hon Alfred (Wythenshawe)

  Sheldon, Rt Hon Robert (A'ton-u-L)

  Willey, Rt Hon Frederick

  Morris, Rt Hon Charles (Openshaw)

  Shore, Rt Hon Peter (Step and Pop)

  Williams, Rt Hon Alan (Swansea W)

  Morris, Rt Hon John (Aberavon)

  Silkin, Rt Hon John (Deptford)

  Williams, Sir Thomas (Warrington)

  Moyle, Rt Hon Roland

  Silkin, Rt Hon S. C. (Dulwich)

  Wilson, Gordon (Dundee East)

  Mulley, Rt Hon Frederick

  Silverman, Julius

  Wilson, Rt Hon Sir Harold (Huyton)

  Newens, Stanley

  Skinner, Dennis

  Wilson, William (Coventry SE)

  Oakes, Rt Hon Gordon

  Smith, Rt Hon J. (North Lanarkshire)

  Winnick, David

  Ogden Eric

  Snape, Peter

  Woolmer, Kenneth

  O'Halloran, Michael

  Soley, Clive

  Wrigglesworth, Ian

  O'Neill, Martin

  Spearing, Nigel

  Wright, Sheila

  Orme, Rt Hon Stanley

  Spriggs, Leslie

  Young, David (Bolton East)

  Owen, Rt Hon Dr David

  Stallard, A. W.

  Palmer, Arthur

  Steel, Rt Hon David

  TELLERS FOR THE AYES:

  Park, George

  Stewart, Rt Hon Donald (W Isles)

  Mr. George Morton and

  Parker, John

  Stoddart, David

  Mr. Thomas Cox

  NOES

  Adley, Robert

  Burden, F. A.

  Fletcher, Alexander (Edinburgh N)

  Aitken, Jonathan

  Butcher, John

  Fletcher-Cooke, Charles

  Alexander, Richard

  Butler, Hon Adam

  Fookes, Miss Janet

  Amery, Rt Hon Julian

  Cadbury, Jocelyn

  Forman, Nigel

  Ancram, Michael

  Carlisle, John (Luton West)

  Fowler, Rt Hon Norman

  Arnold, Tom

  Carlisle, Kenneth (Lincoln)

  Fox, Marcus

  Aspinwall, Jack

  Carlisle, Rt Hon Mark (Runcorn)

  Fraser, Peter (South Angus)

  Atkins, Rt Hon H. (Spelthorne)

  Chalker, Mrs. Lynda

  Fry, Peter

  Atkins, Robert (Preston North)

  Channon, Paul

  Galbraith, Hon T. G. D.

  Atkinson, David (B'mouth, East)

  Chapman, Sydney

  Gardiner, George (Reigate)

  Baker, Kenneth (St. Marylebone)

  Churchill, W. S.

  Gardner, Edward (South Fylde)

  Baker, Nicholas (North Dorset)

  Clark, Hon Alan (Plymouth, Sutton)

  Gilmour, Rt Hon Sir Ian

  Banks, Robert

  Clark, Dr William (Croydon South)

  Glyn, Dr Alan

  Beaumont-Dark, Anthony

  Clarke, Kenneth (Rushcliffe)

  Goodhart, Philip

  Bell, Ronald

  Clegg, Walter

  Goodlad, Alastair

  Bendell, Vivian

  Cockeram, Eric

  Gorst, John

  Bennett, Sir Frederic (Torbay)

  Colvin, Michael

  Gow, Ian

  Benyon, Thomas (Abingdon)

  Cormack, Patrick

  Gower, Sir Raymond

  Benyon, W. (Buckingham)

  Corrie, John

  Grant, Anthony (Harrow C)

  Berry, Hon Anthony

  Costain, A. P.

  Gray, Hamish

  Best, Keith

  Cranborne, Viscount

  Grieve, Percy

  Bevan, David Gilroy

  Critchley, Julian

  Griffiths, Eldon (Bury St Edmunds)

  Biffen, Rt Hon John

  Crouch, David

  Griffiths, Peter (Portsmouth N)

  Biggs-Davison, John

  Dean, Paul (North Somerset)

  Grist, Ian

  Blackburn, John

  Dickens, Geoffrey

  Grylls, Michael

  Blaker, Peter

  Dodsworth, Geoffrey

  Gummer, John Selwyn

  Body, Richard

  Dorrell, Stephen

  Hamilton, Hon Archie (Eps'm&Ew'll)

  Bonsor, Sir Nicholas

  Douglas-Hamilton, Lord James

  Hamilton, Michael (Salisbury)

  Bottomley, Peter (Woolwich West)

  Dover, Denshore

  Hampson, Dr Keith

  Bowden, Andrew

  du Cann, Rt Hon Edward

  Hannam, John

  Boyson, Dr Rhodes

  Dunn, Robert (Dartford)

  Haselhurst, Alan

  Bright, Graham

  Durant, Tony

  Havers, Rt Hon Sir Michael

  Brinton, Tim

  Dykes, Hugh

  Hawksley, Warren

  Brittan, Leon

  Eden, Rt Hon Sir John

  Hayhoe, Barney

  Brocklebank-Fowler, Christopher

  Edwards, Rt Hon N. (Pembroke)

  Heddle, John

  Brooke, Hon Peter

  Egger, Timothy

  Henderson, Barry

  Brotherton, Michael

  Elliott, Sir William

  Hicks, Robert

  Brown, Michael (Brigg & Sc'thorpe)

  Emery, Peter

  Higgins, Rt Hon Terence L.

  Browne, John (Winchester)

  Eyre, Reginald

  Hill, James

  Bruce-Gardyne, John

  Fairgrieve, Russell

  Hogg, Hon Douglas (Grantham)

  Bryan, Sir Paul

  Faith, Mrs Sheila

  Holland, Philip (Carlton)

  Buchanan-Smith, Hon Alick

  Fell, Anthony

  Hooson, Tom

  Buck, Antony

  Fenner, Mrs Peggy

  Hordern, Peter

  Budgen, Nick

  Finsberg, Geoffrey

  Howe, Rt Hon Sir Geoffrey

  Bulmer, Esmond

  Fisher, Sir Nigel

  Howell, Ralph (North Norfolk)

  1516

  1517

  Hunt, David (Wirral)

  Mitchell, David (Basingstoke)

  Skeet, T. H. H.

  Hunt, John (Ravensbourne)

  Monro, Hector

  Smith, Dudley (War. and Leam'ton)

  Jenkin, Rt Hon Patrick

  Montgomery, Fergus

  Speed, Keith

  Jessel, Toby

  Moore, John

  Speller, Tony

  Johnson Smith, Geoffrey

  Morgan, Geraint

  Spicer, Jim (West Dorset)

  Jopling, Rt Hon Michael

  Morris, Michael (Northampton, Sth)

  Spicer, Michael (S Worcestershire)

  Joseph, Rt Hon Sir Keith

  Morrison, Hon Charles (Devizes)

  Sproat, Iain

  Kaberry, Sir Donald

  Morrison, Hon Peter (City of Chester)

  Squire, Robin

  Kellett-Bowman, Mrs Elaine

  Mudd, David

  Stainton, Keith

  Kimball, Marcus

  Murphy, Christopher

  Stanbrook, Ivor

  King, Rt Hon Tom

  Myles, David

  Stanley, John

  Kitson, Sir Timothy

  Neale, Gerrard

  Steen, Anthony

  Knox, David

  Neubert, Michael

  Stevens, Martin

  Lamont, Norman

  Newton, Tony

  Stewart, Ian (Hitchin)

  Lang, Ian

  Normanton, Tom

  Stewart, John (East Renfrewshire)

  Langford-Holt, Sir John

  Nott, Rt Hon John

  Stokes, John

  Latham, Michael

  Oppenheim, Rt Hon Mrs Sally

  Stradling Thomas, J.

  Lawrence, Ivan

  Osborn, John

  Taylor, Robert (Croydon NW)

  Lawson, Nigel

  Page, John (Harrow, West)

  Tebbit, Norman

  Lee, John

  Page, Rt Hon R. Graham (Crosby)

  Temple-Morris, Peter

  Le Merchant, Spencer

  Parkinson, Cecil

  Thatcher, Rt Hon Mrs Margaret

  Lennox-Boyd, Hon Mark

  Parris, Matthew

  Thomas, Rt Hon Peter (Hendon S)

  Lester, Jim (Beeston)

  Patten, Christopher (Bath)

  Thompson, Donald

  Lewis, Kenneth (Rutland)

  Patten, John (Oxford)

  Thorne, Neil (Ilford South)

  Lloyd, fan (Havant & Waterloo)

  Pattie, Geoffrey

  Thornton, Malcolm

  Lloyd, Peter (Fareham)

  Pawsey, James

  Townend, John (Bridlington)

  Loveridge, John

  Percival, Sir Ian

  Townsend, Cyril D. (Bexleyheath)

  Luce, Richard

  Pollock, Alexander

  Trippier, David

  Lyell, Nicholas

  Porter, George

  Trotter Neville

  McCrindle, Robert

  Price, David (Eastleigh)

  Vaughan, Dr Gerard

  Macfarlane, Neil

  Proctor, K. Harvey

  Viggers, Peter

  MacGregor, John

  Pym, Rt Hon Francis

  Waddington, David

  MacKay, John (Argyll)

  Raison, Timothy

  Wakeham, John

  Macmillan, Rt Hon M. (Farnham)

  Rathbone, Tim

  Waldegrave, Hon William

  McNair-Wilson, Michael (Newbury)

  Rees, Peter (Dover and Deal)

  Walker-Smith, Rt Hon Sir Derek

  McNair-Wilson, Patrick (New Forest)

  Rees-Davies, W. R.

  Wall, Patrick

  McOuarrie, Albert

  Renton, Tim

  Waller, Gary

  Madel, David

  Rhodes James, Robert

  Walters, Dennis

  Major, John

  Rhys Williams, Sir Brandon

  Ward, John

  Marland, Paul

  Ridley, Hon Nicholas

  Watson, John

  Marlow, Tony

  Ridsdale, Julian

  Wells, John (Maidstone)

  Marshall, Michael (Arundel)

  Rifkind, Malcolm

  Wells, Bowen (Hert'rd & Stev'nage)

  Marten, Neil (Banbury)

  Roberts, Michael (Cardiff NW)

  Wheeler, John

  Mates, Michael

  Roberts, Wyn (Conway)

  Whitney, Raymond

  Mather, Carol

  Rossi, Hugh

  Wickenden, Keith

  Maude, Rt Hon Angus

  Rost, Peter

  Wiggin, Jerry

  Mawby, Ray

  Royle, Sir Anthony

  Wilkinson, John

  Mawhinney, Dr Brian

  Sainsbury, Hon Timothy

  Williams, Delwyn (Montgomery)

  Maxwell-Hyslop, Robin

  St. John-Stevas, Rt Hon Normam

  Winterton, Nicholas

  Mayhew, Patrick

  Scott, Nicholas

  Wolfson, Mark

  Mellor, David

  Shaw, Michael (Scarborough)

  Young, Sir George (Acton)

  Meyer, Sir Anthony

  Shelton, William (Streatham)

  Younger, Rt Hon George

  Miller, Hal (Bromsgrove & Redditch)

  Shepherd, Colin (Hereford)

  Mills, Iain (Meriden)

  Shepherd, Richard (Aldridge-Br'bills)

  TELLERS FOR THE NOES:

  Mills, Peter (West Devon)

  Shersby, Michael

  Mr. Robert Boscawen and

  Miscampbell, Norman

  Silvester, Fred

  Mr. John Cope.

  Question accordingly negatived.
  Question proposed, That the clause stand part of the Bill.
  Mr. Charles R. Morris: I seek elucidation from the Minister of State about the impact that the clause may have on domestic users of oil for central heating purposes. Those with oil-burning central heating systems may have been encouraged when the Chancellor of the Exchequer said in his Budget Statement:
  "I am not, however, increasing the duty for burning oil and for domestic paraffin, which is the oil used most commonly in the home, particularly by pensioners."—[Official Report, 12 June 1979; Vol. 968, c. 254.]
  However, in the brief issued by the Treasury, that undertaking was interpreted to mean, in terms of clause 2, that
  1518
  the exception for the increase in duty is that kerosenes that include domestic paraffin and over two-thirds of oil that is normally used for domestic central heating are exempt.
  Does it follow that one-third will bear the impost envisaged by the tax changes? Will the Minister indicate the burden that will be imposed on householders who have domestic oil-fired central heating systems? It should be borne in mind that those luckless householders have carried a burden of continuing increases in the cost of oil for domestic central heating over the past 12 or 18 months.
  10.45 p.m.
  A report in today's edition of The Sun indicates that these families might not he in a position to receive any such

  1519
  fuel during the forthcoming winter. It refers to warnings issued by Britain's oil distributors who have told the Minister of State, Department of Energy that shortages in paraffin and heating oil are more critical than the squeeze on petrol. Those householders could be affected if my interpretation of clause 2 is correct. Therefore, I should be grateful if the Minister could clear up that matter.
  Will oil for central heating purposes be increased as a result of the clause? I hope that the Minister will bear in mind that many householders are obliged to use oil because they live in geographically isolated areas where other forms of heating are not immediately available.
  Mr. Peter Rees: I shall respond briefly to the right hon. Gentleman's comments. The clause increases the duty on heavy oil that is not used as road fuel and furnace fuel that is used by approved persons from 0·55p per litre, or 2·5p per gallon, to 0·66p per litre, or 3p per gallon. The increase in kerosene applies only to aviation turbine fuel. The duty on other kerosene remains at 0·22p per litre, or 1p per gallon. I cannot be more specific, because various sorts of heating use various sorts of fuel. I hope that that answers with sufficient particularity the hon. Gentleman's point.
  Mr. Charles R. Morris: The Minister's statement will not have encouraged householders with oil-fired central heating. I am not concerned for the affluent, but I am concerned for the lower-income householders who have already borne an increasing financial burden.
  Question put and agreed to.
  Clause 2 ordered to stand part of the Bill.
  Clause 3 ordered to stand part of the Bill.
  To report Progress and ask leave to sit again.—[Mr. Biffen.]
  Committee report Progress; to sit again tomorrow.

  PUBLIC ACCOUNTS
  Ordered,
  That Mr. Joel Barnett, Mr. A. P. Costain, Mr. Terry Davis, Mr. Dick Douglas, Mr. W. W. Hamilton, Mr. Peter Hordern, Mr. Barry Jones, Sir Timothy Kitson, Mr. James Lamond, Mr. Nigel Lawson, Mr. Michael Morris, Mr. Arthur
  1520
  Palmer, Mr. Michael Shaw and Mr. Robert Taylor be members of the Committee of Public Accounts.
  Ordered,
  That the members of the Committee of Public Accounts nominated this day shall continue to be members of that Committee for the remainder of this Parliament.
  Ordered,
  That this Order be a Standing Order of the House.—[Lord James Douglas-Hamilton.]

  INTERNATIONAL YEAR OF THE CHILD
  Motion made, and Question proposed, That this House do now adjourn.—[Lord James Douglas-Hamilton.]
  10.50 p.m.
  Miss Betty Boothroyd: If he looks at the declaration of the rights of the child, will the Minister find, as I do, that it is hard to see which, if any, of its principles will be implemented? I can think of few greater impediments to their fulfilment than the growth in population. It is probably the greatest impediment of all.
  Demographers throughout the world have produced terrifying figures indicating that the world's population will grow at the rate of nearly 2 million children each week over the next 20 years. That means an additional 100 million children each year, all with the basic needs for food, clothing, shelter, pure water and health care. It is a daunting prospect. Equally daunting is the fact that the majority of that growth takes place in the less developed countries, where already about 80 per cent. of the world's children live, and where poverty exists in its various forms.
  Incredible as it may seem, about 1,200 million children cannot read or write, and for millions there are no schools. Such children grow up knowing no freedom from want. Words such as "progress", "democracy" and "achievement" are meaningless to them. Unless we can improve their status we shall deny them the fundamental right to become useful members of society, and they will be unable to develop their individual abilities.
  Ignorance brings poverty, too. Although malnutrition and disease are child killers, according to social indicators 300 million children today are kept alive by the

  1521
  barest minimum of food, and their bodies and minds become stunted, as they exist in a state of hunger from birth until they die. Their rights are nullified, because children starving to death have no rights under any international code of conduct.
  A most revealing statement was made two weeks ago in a broadcast from Calcutta, when a nun in the Mother Teresa clinic there said:
  "Many women in Calcutta throw away their children or kill them at birth because they are not wanted."
  The interviewer could not believe it. He asked her three times, and three times the nun repeated the same statement. No one who has seen Calcutta can fail to acknowledge that the sight of poverty there not only shocks the mind but invades the heart.
  In many countries the infant mortality rate is far too high. The reality behind the cold figures is that in a family of five one child dies before it can reach its first birthday. High mortality encourages larger families, because parents who expect children to die have more children as an insurance policy against their own old age.
  If we want the programme for the International Year of the Child to succeed. spasmodic relief, valuable as it is in some instances, is not the answer. It is like taking a sleeping pill. We have to find long-term remedies that take the population factor into account as well as the need that exists for family planning activities. It has to mean more than contraception. Fertility regulation programmes become effective only when life expectation and living standards have also risen. The first need is to relieve poverty and to create a social framework conducive to fertility regulation.
  One of the long-term remedies lies in assistance for the provision of primary health services to aid the reduction in infant mortality rates, to go further in assisting preventive health care, family planning work and the reduction in the loss of young lives from diseases that are curable if only they are tackled.
  About a year ago, I had the opportunity to see at first hand work going on in a health centre in a rural area of India. A good deal of the money had been made
  1522
  available from United Kingdom sources. I visited a sub-centre, where the health worker had prepared a short report on the use of vaccine in preventive medicine. His report said:
  "The vaccine is kept at the health centre in a refrigerator and is carried to the sub-centre in a thermos flask by a man 20 kilometres along a pucca road,"
  Neither you nor I, Mr. Deputy Speaker, would acknowledge that it is a pukka road. The report added:
  "A refrigerator is not available at the sub-centre and afterwards he carries the quantity back in a thermos flask and returns the unused vials. In case there is immediate need, it is brought quickly by a horse conveyance. At times, the subcentre cannot return unused vaccine in vials. Then a pitcher is kept in a wooden case surrounded by sand. The pitcher's mouth is covered by a gauze piece. The sand is soaked with water and all is kept in a dark place."
  I quote this report to show that with little opportunity, there is initiative and a real desire to do a job in preventive medicine. The sub-centre is responsible for the health of 94,000 people. There are two health workers, who have had three months' training. To have a doctor is beyond their wildest dreams. Their attainable aim is one trained worker per thousand of the population. The eradication of diseases that are curable, the spreading of knowledge and the avoidance of disease make it possible for those children who are born to be planned for, to be wanted and to be cared for. That is surely the object of the United Nations declaration.
  Programmes need to be encouraged to assist the urban and the rural poor to increase their productivity and their income. Over the past few years the World Bank has initiated programmes which confirm that development projects have doubled the income, particularly of rural families. The experience shows that appropriate technology, which makes plentiful use of the surplus labour available, and economic use of scarce capital provide increased family income. This leads to an improved standard of living for families and for children. By reducing poverty, the attendant fertility is also reduced, which is another objective.
  The key factor in providing the child's basic needs lies in improving the status of women, particularly in the less developed parts of the world.

  1523
  Two-thirds of the world's 800 million illiterates are women. Where they are isolated in their families, where they lack opportunities, where they are blocked by illiteracy from involvement in and contact with a larger society, their means of fulfilling their own lives are so narrow that childbearing stands out as the only alternative they have.
  But there is evidence that where women participate in programmes aimed at expanding their basic education, increasing their knowledge and instruction about child care and nutrition, and where they have access to knowledge and family planning techniques, they have fewer children and the children that they have are healthier and live longer, and receive improved care throughout their childhood.
  It is obvious that malnourished and illiterate mothers give birth to weak and unhealthy infants. Greater resources are needed to enhance the status of women in a variety of ways. Other Governments should be encouraged to introduce legislation about marriage and women's rights to ensure that better prospects exist for today's children in this International Year of the Child—for they are tomorrow's parents.
  The United Nations estimates that about $500 million a year, from all sources, private and governmental, is spent on population activities throughout the world. Would the Minister make many people happy by agreeing that it would be a good idea for the Government to take a lead in urging the international community to aim at a target of, let us say. $1 billion over the next five years so that the United Nations can have a cohesive programme of population activities, thereby implementing the point in the declaration of the rights of the child-It would be splendid if, in the International Year of the Child, the Government could give that lead.
  Can the Minister confirm my information that in 1977 £5- ½ million of aid by this country was spent on population activities, which is the equivalent of only 1 per cent. of our total aid budget? I believe that the survey for 1978 is not yet completed, but it seems that about £8 million or £9 million was devoted last year to this programme. If so, that is a grati-
  1524
  fying and sizeable increase and I hope it will continue.
  I seek an assurance that aid for population activities will not be reduced. I go further, and ask for a firm indication that the finance to be made available over the next few years will be increased. It would be tragic at this time if we did not acknowledge that the condition and future of the world's children is inseparably linked with the peace and prosperity of tomorrow's world, and if, particularly now that we are halfway through the International Year of the Child, we did not show by our deeds, rather than by words alone, our intention of reaching the objectives in that declaration.
  11.5 p.m.
  The Minister of State, Foreign and Commonwealth Office (Mr. Neil Marten): I congratulate the hon. Member for West Bromwich, West (Miss Boothroyd) on having secured the Adjournment debate and on having chosen this subject, which I know, from past experience, is very dear to her heart. She, like me, has travelled, thanks sometimes to the Commonwealth Parliamentary Association, on our delegations to overseas countries. We have seen what she so graphically described tonight.
  The hon. Lady asked about our financial support. Our contribution to be made for 1979 –80 to the International Planned Parenthood Federation is £2 million. For the United Nations fund for population activities we shall give another £2 million. Our direct expenditure for 1979 –80 under the aid programme on population activities will be about £10 million. I cannot be more precise, because that subject covers a wide area.
  The hon. Lady referred quite rightly to the fact that health is one of the most important factors in the future of a child. Perhaps I may outline the sort of work that we in the Department are supporting. We support several World Health Organisation special programmes, including the expanded programme of immunisation and the diarrhoeal diseases programme. We contributed £1 million to that in 1978, and I am glad to say that the United Kingdom was the largest contributor to the programme.
  We also supported the International Centre for Diarrhoeal Diseases Research in Bangladesh and its outstations in that

  1525
  country. Its programme now includes all acute diarrhoeal diseases and research into the relationships between them, malnutrition and overpopulation, which was the point made by the hon. Lady. We hope to increase our contribution in the future.
  We have given substantial aid to malaria control programmes—for example, in the Solomon Islands. Malaria is a notorious killer of young children. We propose to participate in the Sudan primary health care programme in South Darfur province, which will concentrate on mother and child health care. We are co-operating with the World Bank in a £4·32 million mother and child, health and family planning project in Egypt. We support a number of joint research links between the United Kingdom institutions and their counterparts in developing countries. There are one or two more, but I shall not weary the hon. Lady by going through the whole list. I think that I have shown that we are doing quite a lot on the health side.
  The Adjournment debate is specifically about the Year of the Child. Perhaps before coming on to that I can answer the hon. Lady's points about population matters in a broader context. We share her concern about population growth and the strain that a rapidly growing population imposes upon the development of nations. That is one of the reasons behind the existence of the population bureau in this Administration, which is directly concerned with these matters and which had provided the advisory service that led to the spending of about £9 million on population activities in 1978.
  I am happy to inform the House that I am considering, with my advisers, the family welfare project in India, and this is in addition to our other activities on the subject of population overseas. We are keeping a very close eye on the pattern of demographic trends. While these are still disquieting, we note that the dramatic acceleration in population growth which started around the middle of this century has been slowing down in some parts of the developing world.
  There is some hope that the population explosion can be contained, but it is a hope only. I see that the hon. Member
  1526
  for West Bromwich, West shakes her head at that.
  The slow improvement in the overall figures cannot blind us to the terrible discrepancies in life expectancy, birth rate and infant mortality in the world. In 1975 the birth rate in the poorest countries was almost three times as high as that in the industrialised world. That illustrates what the hon. Lady said. The death rate at birth was even more shocking. In the poorest of the developing countries it was over eight times the rate for the richer parts of the world. That surely is a challenge for population and aid policy.
  The population problem is an integral part of development. That is why it is given high priority in the aid programme. It is a complex problem, which must be approached in many different ways. For the Overseas Development Administration the chief lines of approach are measures to reduce infant and child mortality, with attention to nutrition, the provision of family planning information and services as an integral part of the maternal and child health care services. Sometimes there are clashes with religions. The obstacles do not always involve finance.
  In addition we are involved in the provision of improved welfare services and increased research into the cultural background of communities to identify the most effective means of offering family planning services and improving the status of women. That has a great part to play.
  I remind the House that the emphasis on activities under the International Year of the Child is with the national programmes for the children of one's own country. This is why, in a similar debate on 7 February this year in the House of Lords, Lord Wells-Pestell laid particular stress on the activities of the Government Departments in the United Kingdom concerned with the IYC which are fundamentally directed towards the needs of children within the United Kingdom.
  In line with traditional United Kingdom practice it is also correct that much of the responsibility for activities within the United Kingdom should rest with the voluntary agencies, which, under the general guidance of the United Kingdom Association for IYC are mounting an effective programme.

  1527
  As was made clear in the earlier debate to which I referred, this is by no means the whole story. We are of course concerned with the needs of children overseas, both as part of our general aid policy and as part of our more specific concentration on those people in greatest need in the poorest of the developing countries.
  Children are frequently amongst the most disadvantaged members of the community in the developing world and are consequently themselves much in the forefront of our current aid policy.
  We obviously support the aims and intentions of the IYC. However, we do not necessarily see the problems of children overseas as specifically and distinctively separate from the problems of the developing world as a whole. For this reason we particularly welcome the third of the aims of the IYC as defined by UNICEF—to promote recognition of the vital links between programmes for children on the one hand and economic and social progress on the other.
  The essence is that this is one development process in which all disadvantaged people share—perhaps children more than most. But the aid policy must comprise all those at greatest risk.
  Within this general concentration on aid to the poorest I should also point to specific areas of direct relevance to children which are of great importance to our aid programme. They are, first, the medical services, including primary health care, mother and child care and family planning; secondly, nutrition and food production; thirdly, education; fourthly, aid to multilateral agencies such as UNICEF, UNESCO, the World Health Organisation and so on, all of them concerned with the needs of children and, fifthly, aid to non-Government organisations active in assisting children.
  I must say also that we were pleased to see that emphasis has been laid on national and local action programmes which are likely to be of particular value in developing countries and which will, we hope, lead to a concentration of expenditure on activities on the ground. This practical approach is very much in line with our own assessment of the needs of the poorest people in the poorest countries.
  1528
  This concentration on the practical aspects of the International Year of The Child is at the back of our continuing support for UNICEF, which is most concerned with the provision of basic services to the poorer sectors of the communities of developing countries, including assistance to maternal and child health.
  This concern must be seen in the light of the very high infant mortality rate, the low life expectancy, the lack of health facilities and the absence of safer water supplies, which are characteristic of the poorest countries of the world.
  There is perhaps some indication of our support for this very practical policy in the fact that in recent years our support to UNICEF has been increasing steadily, almost doubling in the past two years, with the hon. Lady's party in Government, and now standing at £5·8 million. In addition to this, we are contributing about £1·6 million to UNICEF "noted" projects, which are projects identified by UNICEF but for which regular programme funds are not available.
  Mr. Frank McElhone: Having heard the Minister's comments about child welfare and particularly about infant mortality, may I ask him whether this programme, carried on from the previous Administration, will be affected by the £50 million cuts announced by the Chancellor in his Budget Statement.
  Mr. Marten: At the moment the £50 million cuts are being examined. I cannot give a specific answer to the question, but I would feel that the programme probably will not be affected. I would not like to be committed to that, because the examination of the cuts is not yet finalised, but I will let the hon. Gentleman know, of course, if it is affected. I hope that it will not be.
  The "noted" projects cover such very basic requirements as vitamin A capsules, drugs and diet supplementation kits, drugs for mother and child care clinics, assistance with school roofing and water supplies—all very practical features.
  I think that our support for the International Year of the Child is demonstrated more by our general support for UNICEF and its activities and by the general orientation of our aid programme

  1529
  than by any very specific measures directed towards the Year as a whole.
  I would like to make clear that we do not envisage the Year as an end in itself, in any way, but rather as an essential boost towards an ongoing programme of support for disadvantaged members of the community in the poorest parts of the world, among whom children are very prominent indeed. This is not to say, however, that there are no initiatives at all directed towards the Year.
  I can point in particular to three significant developments directly related to the International Year of the Child overseas. We have contributed £150,000 over a three-year period towards the cost of the international secretariat set up by UNICEF in New York to handle the arrangements for the Year. Secondly, we have contributed £40,000 towards the cost of a conference in London organised by the Institute of Child Health. An additional £115,000 is now to be made available to implement further ideas which came forward at the conference.
  Thirdly, we have offered to consider—I underline those words—meeting half the cost of suitable projects in developing countries put forward by the United Kingdom Association for the International Year of the Child. In 1978–79 my Department contributed £319,000 towards community health projects, including £211,000 specifically for mother
  1530
  and child health. Examples of projects include three mother and child health programmes in rural Nepal, mobile medical units in Orissa, India, Kenya and Tanzania, public health education in North-East Brazil, Zaire, and for nomads in Kordofan, Sudan, and sanitation programmes in Bangladesh and Sudan.
  Support has been provided chiefly through OXFAM, the Save The Children Fund and Christian Aid, to all of which I pay tribute for the work they do.
  To sum up, therefore, our response to the IYC has been threefold. Our support under our normal aid programme for the poorest people in the poorest countries will continue. We are already within the aid programme dealing specifically with areas of direct relevance to the needs of mother and child.
  We have already taken a number of specific initiatives directed towards the needs of the IYC for administrative and practical purposes, but we regard these initiatives as a part of our general commitment to poor people within the aid programme rather than as an end in themselves. They are part of a commitment which will not end with the completion of this particular year, important though that year is.
  Question put and agreed to.
  Adjourned accordingly at twenty minutes past Eleven o'clock.

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  Prison Service
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  Public Bodies (Budgets)
  Public Bodies (Budgets)
  Tom McDonnell
  Tom McDonnell
  Courts (Costs)
  Courts (Costs)
  Motor Vehicle Excise Licence
  Motor Vehicle Excise Licence
  Population Trends
  Population Trends
SCOTLAND
  Nuclear Waste Disposal
  Nuclear Waste Disposal
  Government
  Government
  Population Changes
  Population Changes
  Local Authorities
  Local Authorities
  Local Government Organisation
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  Highland Region
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  School Catchment Zones
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  Glue Sniffing
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  Public Expenditure Cuts
  Public Expenditure Cuts
  Caravan Sites
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  Craigroyston Power Station
  Craigroyston Power Station
  Unemployment
  Unemployment
  Rates (Excessive Payments)
  Rates (Excessive Payments)
DEFENCE
  BAOR (Local Overseas Allowances)
  BAOR (Local Overseas Allowances)
  Expenditure
  Expenditure
EMPLOYMENT
  Women Employees
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  Manpower Services Commission (Headquarters)
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  Disabled Persons
  Disabled Persons
  Unemployed persons (Northern Region)
  Unemployed persons (Northern Region)
  Liquefied Gas Terminals
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  Small Firms Subsidy
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  Pneumoconiosis
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  Accidents and Dangerous Occurrences
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  Long-term Unemployment
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  Factory Inspectors
  Factory Inspectors
ENERGY
  Nuclear Power
  Nuclear Power
  European Community (Coal Trade)
  European Community (Coal Trade)
  Nuclear Power Stations
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  Drax B Power Station
  Drax B Power Station
  Fuel Supplies (Country Areas)
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INDUSTRY
  Post Office Services
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  Microprocessors (Research and Development)
  Microprocessors (Research and Development)
  Footwear Industry
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  Northern Region
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NATIONAL FINANCE
  Fleet Street (Casual Workers)
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  National Land Fund
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  Value Added Tax (Petrol)
  Rating System
  Rating System
TRADE
  Prices (North-East)
  Prices (North-East)
  Textiles
  Textiles
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WALES
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EDUCATION AND SCIENCE
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  Further Education
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  Playgroup Facilities (Ormskirk and Kirkby)
  Playgroup Facilities (Ormskirk and Kirkby)
SCOTLAND
  Children in Care (Corporal Punishment)
  Children in Care (Corporal Punishment)
  Employment (Dundee)
  Employment (Dundee)
  Elderly Persons (Telephones)
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  Courts (Costs)
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  Motor Vehicle Excise Licence
  Employment
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  Mentally Handicapped Persons (Day Care)
  Mentally Handicapped Persons (Day Care)
  Prisons
  Prisons
  Roads
  Roads
  Mullwharcher (Test Boring)
  Mullwharcher (Test Boring)
  Sheriffs
  Sheriffs
SOCIAL SERVICES
  Cash Limits
  Cash Limits
  Clinical Audit (General Practice)
  Clinical Audit (General Practice)
  Tobacco Advertising
  Tobacco Advertising
  Pension Books (Delays)
  Pension Books (Delays)
  Mental Illness
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  Hypodermic Syringes and Needles
  Hypodermic Syringes and Needles
  North-East Thames Regional Health Authority (Expenditure)
  North-East Thames Regional Health Authority (Expenditure)
  Psychogeriatric Beds
  Psychogeriatric Beds
  Special Hospitals
  Special Hospitals
  Medical Education
  Medical Education
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  Finer Committee (Report)
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  Homoeopathy
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  Medical Treatment (Specific Types)
  Doctors (Postgraduate Training)
  Doctors (Postgraduate Training)
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  Health Education
  Health Education
  Health Service Commissioner (Report)
  Health Service Commissioner (Report)
  Invalidity Benefit Recipients (Travel Concessions)
  Invalidity Benefit Recipients (Travel Concessions)
ENVIRONMENT
  Victoria and Albert Museum
  Victoria and Albert Museum
  Greater London Council (European Community Aid)
  Greater London Council (European Community Aid)
  Rent Act
  Rent Act
  London Borough of Newham (Tower Blocks)
  London Borough of Newham (Tower Blocks)
  Local Government Finance
  Local Government Finance
  Rents
  Rents
  Council Housing (Electric Heating Systems)
  Council Housing (Electric Heating Systems)
  British Urban Development Services Unit
  British Urban Development Services Unit
  Council Houses (Sales)
  Council Houses (Sales)
  South Shields (Beaches)
  South Shields (Beaches)
  New Towns Overseas Engagement Committee
  New Towns Overseas Engagement Committee
  Water Authorities
  Water Authorities
  Water Charges
  Water Charges
TRANSPORT
  M42 (Tamworth Bypass)
  M42 (Tamworth Bypass)
  Heavy Lorries (Axle Weights)
  Heavy Lorries (Axle Weights)
  Road Works (Publicity)
  Road Works (Publicity)
  M25
  M25
  Wimborne (Bypass)
  Wimborne (Bypass)
  Bourton and Zeals (Bypass)
  Bourton and Zeals (Bypass)
  A25 (Reigate-Merrow)
  A25 (Reigate-Merrow)
  Motorways (Cost)
  Motorways (Cost)
  Motor Vehicle Excise Duty
  Motor Vehicle Excise Duty
  WORKS OF ART
  WORKS OF ART
NORTHERN IRELAND
  Road Works (Comber)
  Road Works (Comber)
  Courts (Costs)
  Courts (Costs)
  Motor Vehicle Excise Licence
  Motor Vehicle Excise Licence
  Murders
  Murders

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Southwell.
Several Lords—Took the Oath or Affirmed.

VIETNAM: REFUGEES AND UN ACTION
Lord SHINWELL: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether any action has been taken by the Security Council of the United Nations against the Government of Vietnam to prevent the compulsory exodus of many people who have lived in that country for years.
Lord TREFGARNE: My Lords, the responsibility of the Vietnamese Government for the exodus is undeniable. It involves much hardship and death for the victims and poses grave problems for the countries of South-East Asia and Hong Kong, where the boat people arrive. Our own efforts have been devoted to ensuring that a special conference is convened urgently under the United Nations. The United Nations Secretary-General has now decided to convene such a conference in Geneva on 20th and 21st July.
Lord SHINWELL: May I ask the Minister two questions, my Lords? First, are we to understand that at this conference in Geneva the Soviet Union and the Chinese People's Republic will be represented? If not, why not? Secondly, is it not a fact that the responsibility for much that is happening is due to previous action by the Soviet Union and the Chinese People's Republic? Would it not have been wiser for the noble Lord, Lord Carrington, for whom I have the highest regard, instead of troubling too much about Hong Kong to have pressed on
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behalf of Her Majesty's Government for the Security Council to be convened immediately, so that the two countries who are highly responsible for the trouble should have an opportunity of explaining their inability to act?
Lord TREFGARNE: The noble Lord raised a number of points there, my Lords. Certainly the countries to which he referred will be invited to the conference which is to take place in Geneva later this month, although I cannot yet say whether or not they will accept the invitation. Recourse to the Security Council cannot be ruled out at some stage. I recall that on the last two occasions, in January and March, when the Security Council debated events in Indo China the Soviet Union exercised its veto.
Lord SHINWELL: My Lords, is it not highly unsatisfactory that the noble Lord—I do not blame him for this—is unaware whether those two countries will be represented at the Geneva conference? If they are not, the conference deliberations will be futile. Surely that is the essential prerequisite of any, even possible, approach to a solution of the problem. Why has that not been considered? In any event, are we not to have a guarantee that those two countries will be represented at Geneva? Otherwise we shall be wasting our time.
Lord TREFGARNE: My Lords, we cannot force them to come to Geneva if they do not want to.
Lord GORONWY-ROBERTS: My Lords, I strongly support my noble friend Lord Shinwell in the main point he made in regard to the forthcoming Geneva conference. We had a similar conference about two months ago, the Minister will recall, when my honourable friend Mr. Luard represented this country. We thought we were getting somewhere at that conference, but in fact it proved abortive. I wish from this Bench to support what Lord Shinwell said about the need to impress on the Secretary-General—who, I take it, will be convening this conference—to have present all the relevant countries, including the perpetrators and originators of this infamy.
Lord TREFGARNE: We agree, my Lords, that all the relevant countries

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should be at this conference, and we agree that it would be desirable for the Vietnamese to be there, but I am not hopeful.
Lord GLADWYN: My Lords, would it not be counter-productive to bring this matter before the Security Council, when to do so would simply encourage the Soviet Union to apply its veto? Would it not be much more sensible, by all means in our power, to get them to attend this unofficial non-Security Council meeting?
Lord TREFGARNE: It is certainly our view, my Lords, that the conference in Geneva is a desirable precursor to any meeting of the Security Council.
Lord SHINWELL: My Lords, I am sorry to press the Minister, but if he agrees with what I said, supported by my noble friend Lord Goronwy-Roberts—that those two countries should be represented at the Geneva conference but will not be so represented—may I ask whether it is not essential for Her Majesty's Government to inform the Secretary-General of the United Nations? After all, the Security Council is responsible for dealing with international problems, and this is not an individual national problem but a world problem. It is therefore the responsibility of the Security Council, otherwise the Security Council might as well be disbanded, and be done with it.
Lord TREFGARNE: My Lords, if the Security Council met and any effective resolution was immediately vetoed by the Russians, I do not think anything very concrete would have been achieved. As for the conference in Geneva, we hope that all the important countries will be there, but we cannot force them to be there, and I have no doubt that the world community in general will draw their own conclusions if they do not go.
Lord GORONWY-ROBERTS: My Lords, I have no desire to press the Minister for the wrong reasons, but there is a point here—
Several noble Lords: Question!
Lord GORONWY-ROBERTS: My Lords, is the Minister aware that, while he is right that the conference should be held first, before recourse to the Security Council is practically considered, that course should not be ruled out? Nevertheless, it is plainly useless to go to Geneva to discuss theoretically what should be done and what might be done when the people responsible not only for originating this infamy but for continuing it are not there. I should like to ask the Minister to be a little firmer and more forthright in his indications to the Secretary-General that this country not only asks, but insists, that the other countries mentioned be present at the conference.
Lord TREFGARNE: My Lords, I have expressed our view that it is desirable for these nations to be present at the conference, and I repeat that now, but I am not sure how we insist upon it.
Lord MONSON: My Lords, given that at least 50 per cent. and possibly two-thirds of the people driven from Vietnam die in appalling circumstances before reaching the safety of dry land, would not the noble Lord agree that the Vietnamese Government's actions constitute in fact genocide, which is of course an offence under international law? Whatever other international action ought to be taken in consequence, would not the noble Lord agree that every encouragement ought to be given to the United States Senate to delay ratification of the SALT II agreement until such time as the Soviet Union has brought effective pressure to bear upon its protégés in Hanoi to cease their barbarous and genocidal activities?
Lord TREFGARNE: My Lords, I am afraid that I could not link the ratification of the SALT II treaty with this matter.
Lord SHINWELL: My Lords, with great respect, may I ask the Leader of the House whether he and Her Majesty's Government would consider the suggestion that I have ventured to make, supported by other Members of the House, that if the Geneva Conference takes place and it does not deal with the question of the exodus of people from Vietnam, the responsibility should then be placed on the Security Council? May I have his agreement to that?
Lord TREFGARNE: My Lords, the suggestions of the noble Lord will always be closely considered by any Government, and I will certainly see that his latest one is brought to the attention of my noble friend.
The LORD PRESIDENT of the COUNCIL (Lord Soames): My Lords, time moves on, and perhaps we should proceed to the next Question.

FALKLAND ISLANDS: SHACKLETON RECOMMENDATIONS
2.46 p.m.
Lord MORRIS: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what progress they have made in implementing the recommendations of the Shackleton Report on the Falkland Islands.
Lord TREFGARNE: My Lords, Lord Shackleton's Economic Survey of the Falkland Islands was published in 1976. Since then, this House has been informed from time to time of progress made in implementing the many recommendations it contained. Some were quite specific; others more general. All have been carefully examined. A majority of the recommendations have now been implemented.
Lord MORRIS: My Lords, interpreting the results of the action that has been taken on the Shackleton Report in the most conservative manner possible, it appears that only 31 per cent. of the recommendations have been implemented, 15 per cent. are in initial progress—
Several noble Lords: Question, Question!
Lord MORRIS: Is the Minister aware that only 15 per cent. are in progress, only 18 per cent. could be said to be under consideration, and that no action has been taken on 36 per cent? Bearing this in mind, will the Minister join with his colleague the Lord Privy Seal, who stated on 25th May in the other place that the
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majority of the recommendations have now been implemented?
Lord TREFGARNE: My Lords, my noble friend is mistaken: a majority of the recommendations have been implemented.
Lord SHACKLETON: My Lords, is the noble Lord aware that he and the Lord Privy Seal, like a Minister in the previous Government, have made a totally misleading statement? The most important recommendations, for instance in regard to the airfield, have not been carried through, and indeed have not been looked at? There is only a desk study on the fisheries matter, and the money that is being spent relates largely to expenditure incurred and planned before I ever went to the Falkland Islands. Would the noble Lord now consider very carefully whether the record should be put straight?
Lord TREFGARNE: My Lords, we totally reject the suggestion that my right honourable friend the Lord Privy Seal in any way misled the other place. He said—and I confirm—that a majority of the recommendations have now been implemented.
Baroness EMMET of AMBERLEY: My Lords, will the noble Lord agree that, bearing in mind the location on the map of the Falkland Islands to the Argentine, the only way for all these matters to be implemented is for the two countries to work together? Will he also agree that by doing so and by exploiting the minerals, the fishing, the seaweed and everything else, we may succeed in keeping some of our young people on the islands, so retaining our claim to them?
Lord TREFGARNE: Yes, my Lords, I certainly agree that the best way for the Falkland Islands would be with the agreement of, and in consultation with, the Argentine Government; but I confirm that this has to be done with the agreement of the Falkland Islanders themselves.
Lord GORONWY-ROBERTS: My Lords, may I ask whether the detailed statement which we have this afternoon been promised by the Minister will be qualitative as well as quantitative? It may be that the word "majority" has

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been understood in varying ways by various people. I think that my noble friends and I would be concerned more about how much has been done, rather than about how many small things have been done.
Lord TREFGARNE: My Lords, I do not think that I actually undertook to make any detailed statement, but I am quite prepared to do so. If it meets the convenience of your Lordships, I will arrange for the list of Lord Shackleton's recommendations and the action that has been taken on them to be circulated in the Official Report.
Lord SHACKLETON: My Lords, is the noble Lord aware that either I am accusing him and his right honourable friend of being liars or he is accusing me? I say this quite seriously, because, as the author of the recommendations, I can only repeat what I said and ask him: Have any of the major recommendations been carried out at all, and will he give the details?
Lord TREFGARNE: My Lords, I suppose there is some room for variation in interpretation of what constitutes a recommendation, but we certainly maintain that, quantitatively, a majority of the recommendations have been implemented.
[The list above mentioned is published at the conclusion of the Daily Part for Thursday, 5th July.]

THE BUDGET: EFFECT ON UNEMPLOYMENT
2.51 p.m.
Lord HATCH of LUSBY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether, in view of the speech made by the Minister of State at the Department of Employment in this House on 20th June, they believe that the Budget does not create unemployment or employment.
The MINISTER of STATE, DEPARTMENT of EMPLOYMENT (The Earl of Gowrie): Yes, my Lords; as I pointed out in my speech, the Budget is part of the Government's strategy to restore incentives, encourage efficiency and create a climate in which industry and commerce can create more real jobs. What happens to employment depends partly on the response of the private sector to the new opportunities it is given and partly on responsible pay bargaining.
Lord HATCH of LUSBY: My Lords, may I ask the noble Earl the Minister whether he still stands by the statement that he made in col. 1089 in the Official Report of 20th June:
"— one cannot say that a Budget is creating unemployment or employment"?
May I ask him, further, whether he is aware that the organisation Cambridge Econometrics has stated in its report that it estimates that the number of available jobs could shrink by 250,000 as a result of the Budget and that, of the cuts, 100,000 will be in the Civil Service and local government?
The Earl of GOWRIE: My Lords, I certainly stand by my earlier remarks. I am not quite sure whether the noble Lord is trying to elicit information or is trying to make a point on a difference of interpretation in economic strategy. I refer him to remarks, which I quoted in both my speeches, made by the right honourable gentlemen Mr. Joel Barnett and Mr. Healey, which seemed to be making the exact point that I was myself trying to make.
Lord HARMAR-NICHOLLS: My Lords, is my noble friend aware that it depends on whether you look at this in the short term or the long term? In the long term, high taxation and the extension of bureaucracy proves to increase unemployment. From 1929 onwards, when that policy has been applied by various Governments, that has been the result. When other Governments have adopted the opposite line, of reducing taxation and minimising bureaucracy, unemployment has come down. So if it is the short term that the noble Lord who asked the Question has in mind, it may well be that he wants to get his propaganda point in before the effect is proved to be otherwise.
The Earl of GOWRIE: My Lords, I am feeling slightly like the tennis net between my noble friend and the noble Lord, Lord Hatch of Lusby. However, I do not think this is quite the proper time to go into the issues of the debate, though I would certainly agree with my noble friend that one must look on Budget strategy as having a slightly longer-term effect than three weeks.
Lord GLADWYN: My Lords, may I ask the Leader of the House whether he believes that this is a matter which can be suitably dealt with in a Question and Answer period? Is it not really something which can be dealt with only by an Unstarred Question or a Short Debate?
The Earl of GOWRIE: My Lords, I agree with the noble Lord, but I must, of course, in all politeness, answer the Questions that I am asked.
Lord WELLS-PESTELL: My Lords, may I ask the Minister whether it is not a fact that, as a result of the cut-backs in local authority services which will be brought about by the Budget, there is going to be serious unemployment caused in local government building, resulting in increased unemployment generally?
The Earl of GOWRIE: My Lords, employment in the public sector will not increase at the rate that it has previously been increasing. I quite agree with that.
Lord SHINWELL: My Lords, may I ask a question which is not critical of the Minister? I am not entering into this controversy, but may I ask him this question, which may be helpful to the Government and to the country? Were we getting the truth about the number of unemployed? Is it not likely that a vast number of people are "moonlighting"; that is, taking odd jobs and earning something while, at the same time, they are registered as unemployed? Is that not possible?
The Earl of GOWRIE: My Lords, the noble Lord's empiricism is always a breath of fresh air.

COMPUTER TRAINING
2.55 p.m.
Baroness VICKERS: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether in view of the fact that in France 10,000 teachers will be trained in computer methods over the next three years and keyboarding will become a mandatory subject in the fourth and fifth years at schools, similar action is being proposed in Britain.
The MINISTER of STATE, DEPARTMENT of EDUCATION and SCIENCE (Baroness Young): My Lords, responsibility for the education of pupils in secondary schools in this country in keyboarding and computer skills, as in other areas, rests primarily with the local education authorities and the schools themselves. So also does responsibility for arranging in-service training programmes for teachers. The Government are aware of the importance of preparing teachers and pupils to work with computers and with the micro-computers, which will have an important effect on the pattern of life and work in the future. A number of useful initiatives have already been taken by educational institutions, and the Government are considering whether any central initiative in this field is needed.
Baroness VICKERS: My Lords, I thank my noble friend for that reply. I should like to ask her whether she would be willing to send out to local authorities recommendations or suggestions in regard to this, because it is going to affect employment in the future. Does she know that the French intend to install 10,000 micro-computers by 1981, and that if our pupils are not properly trained now they are going to have difficulty in getting jobs in the future?
Baroness YOUNG: My Lords, the Government have circulated local authorities on the question of what is already being done in schools by way of teaching on computers and micro-computers, and have also circulated a memorandum on this matter. In the time available I have not had an opportunity to check the figure

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of 10,000 teachers in France; but we have three long courses in computer education running at the moment and three part-time courses provided regionally with Department of Education and Science support.
Lord AVEBURY: My Lords, is the noble Baroness aware that the autonomy of local education authorities in this matter may be harmful to the development of computer education, since a large variety of different courses has been adopted by different schools in different LEAs, and that therefore the enormous purchasing power which would be held by the educational sector as a whole if a common policy was to be evolved is being forfeited? Therefore, would the noble Baroness consider developing something like the Computer Board, which purchases on behalf of universities and gets the bulk discounts which are derived from their purchasing power, so that all orders for computers placed by local education authorities and schools could be coordinated through such a body?
Baroness YOUNG: My Lords, the noble Lord has raised a very interesting point, but of course before the Government considered altering the relationship with local education authorities regarding the curriculum they would have to reconsider the whole of the accepted way in which that curriculum is decided.
Baroness DAVID: My Lords, may I ask the Minister whether, in view of the fact that her party has said that it wishes to improve standards in education, the Government are going to cut the money which is provided for the in-service training of teachers? Is that to be one of the cuts which is to take place in the education service, or is it thought that in-service training is so important in the improvement of standards that more money will be provided for that purpose?
Baroness YOUNG: My Lords, the question of the in-service training of teachers is outside the particular Question which has been asked, but, of course, it would be for local education authorities to determine how they use the money which is available to them.
Baroness DAVID: But, my Lords, if I may come back to the Minister, is it
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not true that the last Government put money into the rate support grant for the purpose of in-service training? I am willing to admit that it was not always used for that purpose.
Baroness YOUNG: My Lords, I think this is another question.
Lord SPENS: My Lords, is the noble Baroness aware that there is a polytechnic in this country which has a computer terminal which is so little used that the majority of the teachers do not know where it is? I am told that only two of the teachers use it, and that only very occasionally. And that polytechnic is supposed to teach business management studies.
Baroness YOUNG: My Lords, the noble Lord has in fact given me a piece of information which I had not at my fingertips. Perhaps he would be good enough to write to me about it, and I shall be glad to follow it up.
Lord GLADWYN: My Lords, would the Minister not agree that it might be better for the younger pupils in our schools to be taught the multiplication tables, at least, before getting on to computer techniques?
Baroness YOUNG: My Lords, I am grateful to the noble Lord for raising that point. That is one of the reasons why we put the improvement of educational standards in our Manifesto, and we are trying to do all that we can to carry this out.

ENERGY RESOURCES AND THE ROLE OF BNOC
3 p.m.
Lord STRABOLGI Lord STRABOLGI rose to call attention to the threat of a fuel crisis, to the role of the British National Oil Corporation, and to the importance of developing alternative energy resources; and to move for Papers. The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper, and in doing so I should like to say how pleased I am that the House has been given the opportunity to have this debate on energy. It is indeed a great privilege to be able to open it. I am sure that the leaders at

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the Tokyo economic summit were wise to concentrate on energy and the fuel crisis, and I am glad that there was general agreement to reduce oil consumption and imports and to develop alternative energy resources. Something will certainly have to be done. President Carter, Sheik Yamani and others have predicted a deep recession in the West unless we can cut our oil consumption. Indeed, there will be a major crisis by the 1990s unless there is a change from oil to coal and other alternatives.
I must therefore ask the Government whether they have any plans, both in the short term and in the long term, to deal with what could be a crisis of the first magnitude unless some action is taken. First, there is the question of the present world shortage due to the troubles in Iran, the unsettled situation in the Middle East and the attitudes of some other oil-producing countries such as Libya and Nigeria. I understand that the Saudis decided yesterday to increase their oil output by about 1 million barrels a day; but this will be only on a temporary basis, it appears. The recent shortage, of course, has been made even more difficult by the decision of the OPEC countries, made during the course of the Tokyo summit, to raise the average price by about 15 per cent. This is nearly 50 per cent. up on last year's price.
My Lords, the effect, as we all know, has been dramatic: severe shortages, closed filling stations, queues at the filling stations when they are open and steeply rising petrol prices. Four-Star has risen to nearly £1·20 a gallon and in some areas it is costing £1·40 and even £2 a gallon for larger orders. Essential users, such as hospitals and ambulance services, have had to pay these inflated prices, and there have been great difficulties in rural areas for farmers and others. The petrol companies say that there will be a further increase in August.
The Government do not seem to have any strategy or contingency plans. There has been a cut in rail services; the decision on whether trains should run or not seems to be taken by the fuel suppliers without any Government direction. The Road Haulage and Freight Associations have criticised, quite rightly, the lack of information regarding future supplies. The RAC and other motorists' organisations
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have said that the increases are a severe blow, coming so soon after the "bitter pill" of the Budget—as they describe it; and they are their words and not mine, although I agree with them—with its 15 per cent. VAT. The Government do not seem to have any idea of what to do beyond hoping that there will be a 5 per cent. reduction in consumption.
My Lords, how do they intend to cut fuel consumption? Have they any contingency plan? Are they hoping for something to turn up; or do they intend to rely solely upon market forces? How do the Government intend to protect essential users? Why cannot the Government take the "U"-turn that most Conservative Governments eventually take a little earlier than usual and reconvene the Price Commission and instruct it to carry out an investigation? Or cannot they take powers to freeze petrol prices until they are satisfied that any increases are justified by the OPEC decisions and are not new prices on old stock? Are the Government going to take a lead over energy conservation? The French Government have already announced that heating in French government buildings will be reduced and that there will be new subsidies soon to improve insulation. The Dutch Parliament has also agreed to compulsory energy-saving measures. Are the Government satisfied that a lead is being taken here by Government departments and local authorities?
In this country we also encourage householders to install home insulation, and I think that grants are given. But then what happens?—the local authority comes along and increases the rateable value. I know that the local authorities are only going by the rules but, from a national point of view, this policy is surely extremely short-sighted and counter-productive. I hope that the Government will try to do something about it. Will they consider allowing generous tax incentives for improved insulation?
My Lords, there are of course several possible renewable energy resources for the future, such as wave and solar energy. Some two months ago, as your Lordships will know, there was an interesting exhibition on alternative energy sources, assembled by British Aerospace, here in the Palace of Westminster. May I ask

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the Government whether, following this, there has been any proposal from British Aerospace for a feasibility study on solar energy, and what response they have given?
I should like now to say a few words about North Sea oil. I hope that the stories are not true that the Government are proposing to disband BNOC and abolish all control and that they are intending to return the North Sea to the multinational oil companies. I hope it is not true also that they are intending to sell off the North Sea assets of the British Gas Corporation and that the chairman, Sir Denis Rooke, has threatened to resign over this. When we came to office in 1974 we found a very unsatisfactory state of affairs over North Sea oil. There was no petroleum revenue tax and corporation tax was a purely nominal affair, as companies were able to offset losses in other parts of their multinational operations against profits in the North Sea. These largely ineffective tax arrangements, which would have led to substantial losses to the balance of payments by 1980 of over £1,000 million annually, were severely criticised by the all-party Public Accounts Committee of another place.
The Labour Government introduced PRT and a "ring fence" to safeguard corporation tax on North Sea profits. The arrangements made have helped to increase the nation's share to about 85 per cent. of North Sea profits from Fifth Round licences. We also set up BNOC as a State Corporation to advise the Government in their regulatory power over North Sea activity and to provide a national stake in the North Sea, since the private sector is heavily tilted in favour of foreign-owned multinational groups. Under the arrangements made by the then Conservative Government there was no control over development programmes, no control over gas-flaring and no control over the rate of depletion. Companies could have drained the oil fields at once or could have recovered as little oil as possible to give themselves the maximum return.
My Lords, we have always recognised, and will continue to recognise, the important role of the private sector; but this does not mean that as a nation we should
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not control this vital and valuable resource. As my noble friend Lord Kaldor said when we debated this matter in May of last year, the only controls that the Government could exert in the absence of BNOC would be controls of a negative character. They could discourage things but they could not prevent them. I should like to remind the House of BNOC's achievements. In just over three years the corporation has become a major operator, in both its drilling and its exploration operations. It has also brought on stream the Thistle oil field, which last year produced 2½ million tonnes of oil. BNOC has successfully concluded participation agreements with over a hundred companies and has become an active partner, through participation or equity, in every North Sea oil field. It is surely essential that Britain retains control over her North Sea oil. I hope that the present Government are not going to disband these arrangements and return to the situation of their own Fourth Round, when valuable concessions were given in exchange for only a few beads and trinkets in tax terms.
May I ask the Government to comment on the reported swap deal between BP and Conoco, involving about 1 million tonnes of oil a year, so that at a time of shortage South Africa can be supplied indirectly with North Sea oil at the expense of our home supplies and of supplies to our EEC partners. What effect do they think this deal, which we would certainly not have authorised, will have on future Nigerian supplies to BP?
North Sea oil, and probably world oil, have only a limited life. In the long term we shall have to rely on coal, and possibly on nuclear energy. I should like to ask the Government for their long term policy in the nuclear field. Is it true that they are planning five new power stations? The Prime Minister has said that we must go nuclear on a larger scale than we are now, although I am glad that Mrs. Thatcher emphasised that safety aspects must be taken into consideration. May I ask when the Government intend to approve the site for the commercial fast breeder reactor? Will this also be at Dounreay or will it be sited in the North-East? Will any decision be subject to a public inquiry as the last Government, the Labour Government, had intended?
Nuclear power could probably produce the equivalent of 95 million tons of coal by the year 2000, but one cannot run transport on it in our present state of technical knowledge, and it is an unknown, possibly hazardous, field. This is why the other alternative source, our vast coal deposits, becomes increasingly important. We need coal to replace oil in our power stations, and to replace oil and gas through the processes of liquefaction and gasification. I know that these processes are not commercially competitive with oil at present but, with increasing technical knowledge, they should come into their own when the oil begins to run out.
The United Kingdom has the largest and most modern coal industry in the whole Community and it is the only one with a policy of expansion. By the 1990s, half the total production should be coming from new mines or from extensions to existing mines. I trust that the Government agree—and I hope that the noble Earl will comment on this—that a bipartisan attitude is needed. I hope that this great national industry will not be subject to shortsighted economy cuts, and that the present Government will endorse the investment programme outlined in Plan for Coal. May I also ask the Minister to confirm that the Government do not intend to disband either the Energy Commission or the tripartite machinery, both of which are so important for forward planning? May I further ask what is the Government's policy on the building of more coal-fired generators?
As Mr. Edward Heath said in Vienna yesterday, our prosperity in future will depend increasingly on the use of coal. I am surprised that there was no mention of coal as an energy source in the Government's Statement yesterday following the Summit Meeting—the Statement that the noble Lord, Lord Soames, the Leader of the House, repeated in your Lordships' House. Perhaps the noble Earl will give the House the Government's view on the future of coal as they see it. My Lords, I beg to move for Papers.
3.15 p.m.
The Earl of GOWRIE: My Lords, I am grateful to the noble Lord, Lord Strabolgi, for initiating this debate. I must also congratulate him on the brief, cogent and trenchant way in which he put
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his points. There are of course quite considerable differences of emphasis and approach between the two principal parties of government on this great issue; but I do not think that we on this side of the House could complain in any sense that the noble Lord has left us in doubt as to where his sympathies are and where his policies and support for them lie.
My noble friends and the House as a whole will realise that the noble Lord has asked me a very considerable number of quite detailed questions. I am grateful to the noble Lord for giving me some advance warning of them. I was going to answer some of them in a wind-up speech, but perhaps now that they are fresh in the minds of the House as the noble Lord put them across, if I may be indulged a little on time—and I will be as fast as I can—I shall answer as many points as I possibly can in my opening remarks. The only time that I thought the noble Lord's approach let him down a little was when he seemed to suggest that the reconvening of the Price Commission would in some way impress those who held the OPEC monopoly. If that was ever throwing a butterfly at a wheel in order to break it, I do not know what is!
The noble Lord was quite right to point out that the events of recent months have pushed the question of fuel supplies to the forefront of all our minds, and he reminded us that energy was the main topic of the Tokyo Summit last week.
It would be idle to pretend that the short term oil market is anything but still very tight. But the Government believe that the measures agreed in the IEA and EEC earlier this year to reduce oil imports and consumption in the short term are now beginning to have a significant effect on the oil market. The co-operation and common determination to deal with the problem of oil supplies shown by our partners at the Summit give hope that further steep oil price rises can be avoided.
Last week's decision by OPEC to raise prices by a further 15 per cent. on average was regrettable and, I would say, premature, in view of the increasing effectiveness of demand restraint by customers round the world. There is now a real danger of world recession which will be in no small measure due to OPEC's

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pricing policies over the past six months. I do not doubt that these policies will bring the oil market back into balance—and it has been severely and damagingly unbalanced—but only at daunting cost. This cost will include adverse effects on inflation and employment, and spiralling oil import bills for many countries, and we must include those countries in the Third World which are least able to cope with them.
The Tokyo Summit has agreed oil import ceilings for individual countries for 1985. That is something which has not been done before; and it is a clear sign of the seriousness with which the West now views the medium-term energy outlook. The Government are encouraged by the readiness of the Summit countries to agree to the targets, and their fulfilment is of the greatest importance.
The short-term position in the United Kingdom is that there is a shortfall in oil supplies of about 5 per cent. Serious though the situation is, this is a relatively small amount in world terms and what is needed is for all consumers to make reasonable economies in their use of oil products. We have therefore taken steps to achieve an overall cut in demand of 5 per cent., which is in line with our EEC and IEA obligations. Following initiatives which I fully acknowledge were taken by the previous Government, the electricity generating boards are reducing oil burn in favour of increased coal burn—and I shall have something to say about coal in a minute—and the public sector are making a further determined drive to save oil.
The present Administration has pushed ahead wholeheartedly with these measures and has also appealed for voluntary savings on the part of all consumers. I think that is reasonably bi-partisan. Price also has an obvious part to play in encouraging demand restraint and this Government therefore firmly believe that it would be wrong to insulate consumers from the true cost of oil and oil products.
We must all now look closely at our oil consumption, whether in the home, industry or on the roads. If we all play our part then the measures I have mentioned should be sufficient to meet our 5 per cent. target. But the Government
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will continue to monitor the situation and will be ready to take further conservation measures, both to meet international commitments and the new Tokyo commitment, should that be necessary.
Contingency plans do, of course, exist for rationing or for Government-directed allocation schemes. But, as my right honourable friend the Secretary of State for Energy has made clear in another place, such action would not be justified by the present small level of shortfall. Rationing would be extremely cumbersome and expensive, and it would not produce a drop more oil for consumers. We also feel that it would be inefficient. Instead, the oil industry must be primarily responsible, under the scrutiny of the department, for handling its own supply problem. I acknowledge that at present some consumers are considerably more than 5 per cent. short. The Government have therefore pressed the oil industry to achieve a more even and effective distribution overall and to meet particular difficulties as a matter or urgency, where customers are threatened with real hardship. I imagine that many of your Lordships who will be speaking this afternoon will want to give instances of this and therefore I shall deal with this matter further when wind up later. The oil industry is well aware of the Government's view that it must find a solution to the distribution problem if Government intervention, with a.11 that entails for the industry and for consumers, is to be avoided.
At the same time, the Secretary of State made clear in another place that he was not satisfied with the arrangements he had found for supplies of oil into the United Kingdom market, particularly in circumstances where we are a major oil producer. North Sea production is now running at just over 1½ million barrels a day, compared with our present consumption of about 2 million barrels a day; and we should be self-sufficient in oil by next year. North Sea oil, as your Lordships will be aware, is not on its own the most economical source to use for the refined products needed in the United Kingdom; nor in fact can all the products we need be made from it. We have therefore to import some different types of oil and it makes sense to export a proportion of our own oil, particularly as our own oil

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is the "caviare", as it were, of the industry. We also have international commitments and we have to recognise that the present shortage of crude oil is a world-wide problem from which no country can expect to isolate itself. But we have to strike a balance between the international markets' needs and securing our own security of oil supplies in the United Kingdom.
With these considerations, particularly the latter, in mind, the Government have been looking very closely at the scope for increasing supplies of oil into our market. One result has been the decision to take the bulk of the royalty payable in the first half of next year in kind as crude oil. This should allow the Government to respond, to some extent, to any supply problems then and to even out irregularities in our own market. The British National Oil Corporation—I fully acknowledge this—has also been able to help the United Kingdom supply position. Noble Lords will already know of the major role BNOC has progressively assumed since the beginning of 1978 as a trader of North Sea oil. The Corporation's oil sales were around 5 million tonnes last year; this year they will reach 25 million tonnes.
With the prospect of this very large increase in the quantity of oil available to it during 1979, and in view of the slackness of the market during most of 1978, BNOC aimed during the last quarter of 1978 to arrange sales contracts for most of its oil. In view of the reluctance of United Kingdom refineries to commit themselves at that time, the Corporation was obliged—and I think the outgoing Government would acknowledge this—to seek overseas customers for a large proportion.
However, the disruptions arising in Iran from November onwards caused the oil supply situation to change rapidly, and by the beginning of this year a number of new requests for oil had been made to the Corporation. Although BNOC's strategy had been to commit most of its oil in advance it was, nevertheless, able to respond to some extent to these calls for increased supplies of oil into the United Kingdom. In February BNOC made arrangements to provide additional supplies this year to the United Kingdom of some 2 million tonnes from previously
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uncommitted crude. This oil was sold to our refiners.
The Corporation was, however, still exporting a substantially larger proportion of its North Sea oil than some other North Sea operators; it has therefore recently decided to do more to adjust the balance of its disposals. It has opened negotiations with its customers to see whether they could help in the current short-fall situation. Any arrangements will be voluntary and will have advantages on both sides. For example, some customers may agree to a re-phasing of deliveries which will extend BNOC's commitment to supply into next year but release some oil for the remainder of this year. That oil can be used to meet immediate United Kingdom demand. Other customers may agree themselves to deliver a larger proportion of their contracted oil into the United Kingdom in return for further supplies next year. Discussions are still in progress; we do not yet know the quantities involved but we would hope for further assistance at least on the scale of BNOC's initial help to the United Kingdom.
In those words, I have described the role BNOC has been able to play in easing some of the immediate problems. As noble Lords will know, my right honourable friend is undertaking a review of the activities of the Corporation, on the basis of which BNOC's future role will be decided. It therefore seems appropriate at this stage for me to say a few words about this review.
There are a number of reasons why it is desirable to hold such a review. First, it is clearly desirable for the Government closely to consider how each of BNOC's activities or potential activities contributes to the objectives of our national policy. It is not so much a matter of disagreeing with the noble Lord, Lord Strabolgi, as to what the objectives are or should be, but of how they might be achieved. Secondly, in the past three years BNOC has assumed major commitments on the United Kingdom Continental Shelf. It is clearly desirable for the Government to take close stock of these. Naturally, we shall take into account, in our examination, the Corporation's achievement over the past three years, but our main concern must, of course, be for the future. Thirdly, it is clearly right that we should examine

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the parliamentary and public criticisms of BNOC's role—and they have been very considerable and not restricted to this side of the House—that have been made over the last three years and assess to what extent these are justified.
I cannot, of course, speculate on the outcome of the review and unfortunately am not able to tell the House today when it will be completed, but I can say that great urgency has been lent to the review by the very disturbing decline in exploration drilling activity under the last Government. From the position in 1977, when 67 exploration wells were drilled offshore, the figure slumped last year to 37 and we had a Starred Question about this in your Lordships' House last week.
This has caused the Government considerable concern and we are going to give a first priority to the re-creation of conditions in which enterprise can flourish. Enterprise, of course, means risk, and risk means the possibility of reward.
For this reason, we have not hesitated to end without delay two of the privileges conferred on BNOC by the last Government which could not, in our judgment, be justified whatever view one takes of the company's future. These privileges were the Corporation's exemption from petroleum revenue tax and its right of first refusal in licence assignments. I also have no reluctance in telling the House that we are still sceptical about the claims made for BNOC by the party opposite as an essential instrument in protecting and improving the country's security of supply. It certainly does not appear to have been designed for maximum flexibility of response, as events in the last six months have painfully shown us.
Of course, the impact of the cutback in Iranian production, and the steep rise in oil prices that have followed, have been felt across the world. That was demonstrated by the very high priority accorded to the subject at the Tokyo Summit. And in Britain both parties had long realised that North Sea oil did not, and could not, insulate us from the world oil supply difficulties that might occur at any time. But I really think we could not expect that when those difficulties occurred the British consumer, and particularly the British motorist, would find himself worse off than his
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counterparts in France and Germany, for example. And yet that, I am sorry to say, has been the case in recent weeks.
There is no particular mystery about why it should have occurred. The last Government so constrained the market in this country that the inevitable effect was for supplies of oil and oil products to be diverted to those other markets close at hand, where the returns were better. From the tone of the noble Lord's speech—and, as I said, I admired the tone—one would have thought that this had been happening only in the last three weeks; in fact, it has been stopped in the last three weeks. So, despite our great wealth in oil, we found ourselves at a clear disadvantage by comparison with our partners and competitors, who, without any appreciable resources of their own, had not completely choked their domestic markets with controls. To put it simply, we also looked extremely silly.
This new Government have abandoned the pretence that Britain can be insulated from the price rises experienced by the rest of the world. Prices net of tax for diesel and petrol have now approximately come into line with the rest of Europe. As a result, in future, I believe that at the very least Britain will now fare as well as her European partners in receiving supplies. Realistic pricing will, of course, help. But we are entitled to ask, I believe, whether the BNOC itself has proved to be so very helpful or responsive in the context of the recent upheavals. I am not saying that this was the fault of the Corporation itself. The criticism that has often been made of the BNOC is that the roles wished upon it by the last Administration were confused or even contradictory, and this was, I think, demonstrated by the position of the BNOC during these last months.
To what extent did the last Government wish to act like other oil companies, to become an Eighth Sister, as it were, and always to behave commercially? And to what extent did they wish it to act as an agent of the Government? During the latter half of last year, the feeling seems to have been that the Corporation should act commercially. Against the background of a constrained home market that inevitably involved the Corporation in seeking long-term contracts abroad, it was exporting vast tonnages of North

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Sea oil. At the time when this Government came to office, and as the gravity of our supply position became apparent, the BNOC was heavily committed to customers in Europe and the United States. That does not argue to me that this is the best of all possible policies.
As a result, my right honourable friend has moved swiftly, against the background of the much more attractive British market, to encourage the BNOC to revert to a more normal pattern of trading in the third quarter. We are also sensitive to criticisms that, far from encouraging the growth of a vigorous and risk-taking independent sector in Britain, the BNOC has at times acted as a positive disincentive to smaller companies, preferring, in its ambiguous role of acting as an oil company on the one hand, and as an agent to maximise national revenues on the other, to treat principally with the majors. For all the strictures of the noble Lord, Lord Strabolgi, about multi-national oil companies, where you find a multinational oil company you will find the BNOC trading with it.
Speaking for myself, it is really astounding that more native risk capital—and we live in one of the great capital markets of the world—has not devolved into United Kingdom continental shelf exploration. It would surely be an appropriate role for the BNOC to help build up partnership rather than competitive associations with other native companies; and I believe that removal of PRT exemption and the first option rights will be an encouragement there.
I was asked by the noble Lord, Lord Strabolgi, about BNOC's role as an adviser and whether, by virtue of its 51 per cent. participation in offshore licences, it has an overriding role as regards policy and regulatory decisions concerning offshore activities. The position in law is quite clear, that BNOC has no supervisory or regulatory powers over offshore activities. These are vested with my right honourable friend and are exercised through his department. The Corporation can and does tender advice to the department, and what we are obviously examining in our review is the extent to which this advice is useful, and whether the conflicts which derive from its statutory position as an adviser on the one hand, and a commercial oil company on the other, are
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acceptable or otherwise from the Government's point of view.
We must make it plain, however, that our primary source of advice on oil matters is the special advisers in the Department of Energy. I hope that these remarks will give some indication of the kind of considerations that my right honourable friend will have in mind as he conducts his review. The Government are determined to look fairly at both sides of the equation, in order to assess how best the roles of State and private sectors may be harnessed in the national interest.
The noble Lord raised the question of supplies of oil going to South Africa. He will know that the Government's policy on the export of North Sea oil is to expect companies exporting this oil to do so in the markets of our partners in the IEA and the EEC. This expectation, however, in no way cuts across the maintenance, to the extent possible, of existing patterns of trade outside those regions. BP's plans to make North Sea oil available for sale in IEA or EEC markets in exchange for non-embargoed third country crude, which may be supplied to their South African subsidiary, are entirely consistent with this policy. The Government have therefore told British Petroleum that it has no objections to their plans. Indeed, to prevent the company from making such arrangements to meet contractual obligations would be to seek to impose an oil embargo on South Africa, which is not this Government's policy: and which was certainly not the policy of the last Government. Indeed, there has been no significant change. Oil went to South Africa under the aegis of BP when the previous Government were in office, and the proposals from BP about the Conoco deal were on Ministers' desks at the time of the election and they had made no decision upon them.
Coming now to the short-term problems of oil shortage, these are only manifestations of a much more important longer-term problem. The fact is that over the next 20 years or so we will, as the noble Lord has pointed out, be moving into an era of increasingly scarce and expensive oil. In this country, we are relatively fortunately placed. We have the prospect of being self-sufficient

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in energy during the early and mid-1980s. North Sea oil and gas, together with coal and the nuclear programme, which the noble Lord mentioned, should then be meeting all our needs. But when the United Kingdom's oil production begins to decline—and on present expectations that will be towards the end of the 1990s—we shall have to return to world markets for oil supplies which are likely then to be growing increasingly scarce and expensive. By the year 2000, energy prices generally could be about double their present levels in real terms.
So like other nations, we have the task of managing the transition to a fuel economy in which energy conservation, coal, nuclear power and, perhaps also, the renewable resources, will have a more important role than at present. Our present self-sufficiency provides the opportunity to achieve the necessary changes smoothly, but developments in the world energy economy will continue, even in the short and medium term, to be of intense concern to us. In no way can we isolate ourselves from the international community, whose well-being affects our own economic health as trading nation. We will also need to continue trading in oil.
Energy conservation and the more economical use of energy are at the very centre of energy policy, and the Government intend to pursue a vigorous policy to promote greater energy efficiency in all sectors of the economy. In the short term, as I said at the beginning, the main effort must clearly be directed at cutting back on oil consumption. Here the Government and the public sector must give a firm and sensible lead, and departments are reviewing the progress made in central Government and their agencies, and by local authorities and nationalised industries. It is no less important for industry and commerce to make further economies in their use of oil—not at the expense of production, but by greater efficiency. Many of our current conservation facilities can assist consumers here. We have the Energy Quick Advice Scheme and the Energy Survey Scheme providing consultant advice to help firms introduce measures which can have an immediate impact on energy consumption. In anticipation of the fact that other noble
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Lords will raise energy conservation questions, if I may I will proceed to the next part of my remarks and leave those until later.
The noble Lord, Lord Strabolgi, asked me about coal. Total recoverable reserves of coal in the United Kingdom are estimated to be sufficient to support present rates of extraction for over 300 years. Investment of over £4 billion is taking place—that is hardly an atmosphere of cuts, as the noble Lord suggested—to offset the exhaustion of existing pits and to create a modern and efficient coal industry which is capable of further expansion later on. So the Government are making their contribution, and it is now up to the coal industry to maximise production and minimise the kind of practices that keep uneconomic pits in being and coal price levels too high. The noble Lord asked me a number of detailed questions about coal policy. I have answers to these questions and I shall give them in my winding up speech to the House, if it gives me leave.
Mention was made of nuclear power. Already nuclear power makes a significant contribution to our energy supplies and will contribute some 20 per cent. of our electricity in the early 1980s. In the longer term, it has a vital part to play in our energy policy, as the communiqué following the Tokyo summit last week emphasised. The Government will be giving careful consideration to the future development of nuclear power programmes in the United Kingdom. We need to formulate a thermal reactor strategy which will help to meet this country's energy requirements as our reserves of oil and gas decline. We shall need to consider the future of the fast reactor, a technology which has been under development in the United Kingdom since the 1950s, and we shall need to play our part in the EEC's nuclear fusion programme, the next stage of which, the JET project, is sited in this country at Culham.
I can absolutely assure the House that in developing these policies we shall bear in mind the paramount importance of safety matters and in particular of learning the lessons from the Harrisburg incident in the United States earlier this year. But let us make absolutely no mistake about it: Britain needs a mixed economy for energy, and in that "mix" nuclear

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energy will play a controlled but steadily increasing part.
The very word "nuclear" is full of bad vibrations, as the 'sixties slang would have it. This is not surprising, in view of the way that atomic energy was first harnessed in the world. Death and destruction make for a bad opening chapter of Genesis. However, I am quite convinced that by the end of the century our continental neighbours and competitors will be providing a substantial proportion of their energy needs by nuclear means, and it is grotesque to assume that we ourselves shall be in a position to opt out. Perhaps the noble Lord, Lord Rothschild, would care to put down a Motion, drawing on his thoughtful work on risk assessment.
I am as concerned about safety as anybody. Health and safety at work is a major concern of my own department, but it is also grotesque to assume that a civilisation which quite contentedly consigns one in three cigarette smokers to death from cancer cannot learn to accommodate and control the infinitely lower thresholds of risk contained in advanced nuclear technology.
The noble Lord mentioned gas, and I shall deal with that question in my winding-up speech. Similarly, I shall deal then with the renewable resources, upon which I have a brief.
As members of an industrial civilisation which over the past six years or so has suffered the economic equivalent of a heart attack, a threat to our life's blood—a warning, if you like, that our diet has been too rich and our living too soft—we in this country nevertheless are very lucky. A transfusion is at hand. The most expensive treatment imaginable is available, at relatively small cost to ourselves. But that does not alter the nature of the warning.
As the noble Lord has said, we cannot go on as we are. Either we must change our lifestyle or we must develop alternative resources to invigorate it and allow it to grow. It would be quite wrong to squander this miraculous breathing space by returning to the old life as though nothing had changed. It is the Government's job to show how things have changed, and to let the effects of change be felt. We are as confident of the
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rightness of our own role as we are of the patient's response and recovery.
3.44 p.m.
Viscount SIMON: My Lords, the word "crisis" is perhaps one of the most overused words in our vocabulary, but I feel that in the matter which has been raised for us by the noble Lord, Lord Strabolgi, it is an appropriate one. In fact, I find myself differing only slightly from his Motion in that I should have thought that what we face now is not so much the threat of a fuel crisis as the promise of a fuel crisis. It is obviously uncertain at what point in history the crisis will be reached, but I am sure that it is not far off.
A good many years ago when we used to discuss these matters, we used the safe estimate of the middle 1980s. The noble Lord, Lord Strabolgi, mentioned the 1990s, and I believe that the noble Earl, Lord Gowrie, spoke about "20 years on". However, I should have thought that the events of recent years are more likely to bring the crisis forward than to postpone it. My own feeling is that we must be prepared within the next 10 years for a much more difficult situation than we have today. At any rate, we have to face up to that possibility in the not too distant future.
The Tokyo communiqué obviously reflects the broad thinking of the Governments who were represented at the summit, including our own Government. One might almost think that the noble Lord, Lord Strabolgi, had influenced those Governments in some way, because his Motion is to close to the wording of the communiqué. If I may read a short passage from the communiqué, they say:
"The most urgent tasks before us are to reduce oil consumption and to hasten the development of other energy sources".
The communiqué goes on to say that the Governments—and that includes our own Government—have already taken significant actions to reduce oil consumption and that they will intensify those efforts. The noble Earl spoke of some of the actions which have been taken, but I must confess that they do not seem to hit the headlines. I was rather alarmed to read on the tape this afternoon that, whatever significant actions have been taken to reduce oil consumption, oil consumption in this country during the

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first four months of this year was higher than it was in the corresponding period in 1978. Quite evidently, therefore, the significant actions which have been taken are not yet having very much of an effect.
I do not think that any Government, either the past Administration or the present one, would claim that the effect of rapid increases in price restricting demand is the result of any action taken by the Government. It is a very effective restricting influence, but it is not the result of action taken by the Government. When the noble Earl winds up the debate, perhaps he would tell us a little more about the steps which are being taken in this context.
As regards the development of other sources, I noticed too in the Tokyo communiqué the very important reference to the increasing use of coal and 1, like the noble Lord, Lord Strabolgi, was surprised that it was not mentioned in the Statement made yesterday to your Lordships. It seems to me to be an extremely important decision, one which has been long awaited in this country. I have tried to understand the coal position, but it is very difficult for somebody who has no close association with the industry to understand it. However, when I was privileged to sit on one of the EEC sub-committees, it seemed to me from the discussions we had with the Coal Board and others, that we had a vast availability of coal but that the Coal Board were unwilling to develop it any further than their programme called for because they did not think they could sell the coal.
As I understand it, the Central Electricity Generating Board have a statutory obligation to produce electricity as cheaply as they can. Therefore, so long as there is any oil and so long as that oil is a cheaper fuel for this purpose than coal, the board prefer to make their electricity by using oil. However, looking towards the future shortage of oil, which we have been looking at from afar for quite a long time, this seems to be a rather shortsighted policy. It would be preferable to convert to coal some of our oil-fired stations, even though the electricity produced would be more expensive than would be the case if we continued to use oil to produce it. If, though, we wait until the oil runs out,
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we shall find that we do not have the coal because we shall not have developed the further output of coal.
It may be—perhaps at the end the noble Earl will be able to tell us whether this is so—that it would be physically, though not financially, impossible to increase the output of coal. I do not know whether that is so. However, I should be very much happier if I thought that in the year 2000 there would be adequate supplies of coal to replace a great deal of the oil that is used in power stations today.
I do not want to make a long speech so I will turn now briefly to nuclear power. Here I am in a little difficulty, because, as your Lordships know, the policy of our party is to have no further development of nuclear power until more progress has been made in dealing with the disposal of wastes, and so on. I am sorry that my noble friend Lord Avebury, who was here earlier, was unable to stay and take part in this debate because of appointments elsewhere, as he would be able to explain much better than I can the policy of our party, but I think it is important that the Government and Parliament should understand the basis of that policy.
The noble Earl, Lord Gowrie, actually almost got on to the very same line that I was going to start with: this is not a policy dreamed up in the rarified atmosphere of the party executive. It is the result of very strong "grass roots" pressure, and that, in turn, has originated, as I see it, from what is nowadays rather inelegantly called a "gut reaction". It runs this way: that nuclear power is tainted because, as the noble Earl said, it arose as a spin-off from nuclear weaponry; and I think that on all sides of the House, whether or not noble Lords follow the Campaign for Nuclear Disarmament, they will agree that the development of nuclear weaponry is one of the saddest, the most distressing chapters in the whole history of human endeavour to master science and technology.
Starting like that, as the noble Earl said, there is an instinctive feeling that there is something dirty about this. There are also other risks which are clearly not fully understood. An added difficulty—which I think I am right about although perhaps some technically qualified noble

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Lord will tell me later that I am wrong—is that, for some reason which I do not clearly understand, nuclear energy can be developed effectively only on a very large scale. All our various sources of energy—steam, normal electric generation, the internal combustion engine—involved risks which were unknown at the time and could not be gauged, but all those could be started on quite a small scale, so that whatever degree of risk there was, the amount of damage which would be caused by an accident was quite small. As I understand it, the difficulty with nuclear power is that we cannot do it on a small scale, and consequently, whatever the degree of risk, the volume of risk is likely to be very great.
I believe that this deep feeling which has underpinned the Liberal Party policy is widely felt. In fact I am sure it is felt by many people who do not vote Liberal—and I wish that there were more who did vote Liberal. I disagree with the policy only because I cannot see how the gap in our energy supplies can possibly be closed except by an expansion of nuclear power. Of course we must give great priority to research and development into the means of disposing of waste products, recycling those that we can use and disposing of those which we cannot.
With regard to the development of other sources of energy, I think the Government are faced with considerable difficulty and I do not envy them, because clearly we have limited resources and priorities must be established. On the face of it, most of the unconventional sources that have been examined seem to be unlikely to contribute very much to meeting our energy needs. The most hopeful prospect is perhaps nuclear fusion, but it is also the furthest away and the most expensive. So in determining the priorities for research and development very difficult balances have to be made.
Whatever is decided upon, it seems to me that it is essential that a substantial amount of our limited resources must be spent on research and development into the control and disposal of nuclear waste products. This is not an easy decision to make, because that money will not produce another ounce of energy; it will merely, we hope, increase the safety of the operation. I hope the noble Earl will be
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able to say that adequate resources will be devoted to that very important piece of development.
I want now to say one thing about rationing and particularly with reference to petrol. The Government have made it quite clear that they do not think it is required now, and I believe the last Administration took the same view. They may well be right: as I think the noble Earl said, rationing involves the creation of a vast bureaucratic machine, it is not always very fair and equitable and it can lead all too easily to "fiddling" and to a black market. Nevertheless, I do not really think that the allocation of fuel can be left just to the oil companies, and as the position gets worse I believe that some form of rationing will be necessary. I hope that the Government, whose philosophy perhaps runs towards relying on rationing by the purse, will realise that that would be even more unfair than any form of rationing that could be devised. Particularly it would be unfair to people in rural areas whose needs are often greater and whose purses are often more slender than those of people who live in towns. So I hope that there is in preparation a comprehensive plan for rationing, ready to be brought into force when the need arises, because I believe it may arise much more quickly than some people think. Perhaps the comprehensive plan should include not only domestic petrol but also the rationing of energy for domestic heating purposes.
Going back to petrol for a moment, one recalls that during the last War we were very short of petrol. It was not necessary to exhort people very much because they could not go on joy rides, but there was a famous question which was put on hoardings and made on the radio—it would now be shown on television—"Is your journey really necessary?" I wonder how much we really take that to heart. When I came to the House today I saw that the car park outside your Lordships' House was just as full as ever. I do not want anyone to think that I am casting stones, because sometimes my car is there, although it is not there today, as it happens. No doubt some of those cars come from the country, some come from London; but is it always necessary? Is it always necessary for me to bring my car to the House of Lords?

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I do not think we take the matter seriously enough until we start to ask ourselves those questions. I wonder whether at some stage there could be a carefully worked out propaganda campaign similar to that carried out in the case of seat belts and whether that would really make people think before they took a trip in their car which they could equally well make by public transport.
4 p.m.
Lord ARMSTRONG: My Lords, I venture to speak for the first time in this House, with considerable misgivings and much diffidence, if only because, with the passage of time, one becomes more particularly aware of one's inadequacy. I have listened to debates in the past—it may comfort noble Lords that I have not intervened—and I am very much aware of the high standards of debate which are normally attained and to which I feel I can in no way do justice. However, I have felt that I might speak today, avoiding politically controversial issues and major strategic questions, to comment on a special situation, that of fuel distribution problems in terms of the present crisis in the more remote rural areas. This has been touched on by the noble Viscount who preceded me, but there may perhaps be some more to say about it. I shall confine myself, in a somewhat parochial way, to that part of the country where I live, Northumberland. There is a general feeling that the current crisis in this part of the country has so far affected us with above average severity. It is, I suppose, natural in situations of this kind that the problems which affect us directly loom more severely than those which affect our neighbours. At the same time, I think there is some justification for believing that this is true.
The problem in terms of the present and short-term future is primarily concentrated in two sectors: first, tourism, and, secondly, agriculture. It is probably true that in the past tourism in the North-East has been something of a poor relation. This situation has changed, one might say dramatically, in recent years, and thus one is confronted with a healthy growth industry as a result of active promotion on the part of local authorities and the several tourist boards, the British Tourist Board, the English Tourist Board and the
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Northumberland Tourist Board, as far as we are concerned.
However, hotel proprietors and catering establishments throughout the district have responded vigorously to the challenge of providing increased and improved facilities. Considerable capital sums have been invested for the purpose, mainly by relatively small family concerns. Apart from the steady progress in the provision of relatively inexpensive family holiday facilities, one is particularly struck by the very rapid increase in the number of overseas visitors in the area. It follows that if the industry is to suffer a major setback the consequences could well be seen to be more severe perhaps than in other areas which have benefited from large-scale tourism for a longer period. Bankruptcies are to be feared, and, further, if the growth were to be checked it could take a long time to restore it.
It is not easy to obtain comprehensive and up to date statistics on the matter, but perhaps your Lordships will allow me to mention a sample example which came my way when I was tempted to do some homework on the matter last week. Lindisfarne Castle on Holy Island, south of Berwick-on-Tweed, is a popular place of pilgrimage in normal times. There is no question, may I say, of personal vested interest in mentioning this matter, because it is most ably administered by the National Trust. Here, however, visitors during the month of June were down by some 40 per cent. as compared with the same period last year, which is a pretty major slice.
There is also evidence that other castles and country houses which form collectively part of the attraction of the area have also been affected, some more than others. The further away one is from the centres of concentrated population, the harder the problem becomes. Lindisfarne is some 70 miles from Newcastle and approximately an equal distance from Edinburgh. But stately homes statistics, comprehensive or otherwise, can only serve as an indicator, and the corresponding losses in the commercial field must represent by far the major part of the overall depression in what has been a very valuable growth industry in the area.
In attempting to state the disquieting aspects of a local problem one is confronted with something of a dilemma. It would

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certainly be unwise to exaggerate and to overdo one's case; it could well be counterproductive because our visitors may be deterred unnecessarily from coming at all. To some extent this has already happened. In the early stages of the crisis excessively alarmist statements were made, widely reported in the media, which must with hindsight be considered to have been ill-judged. Thus, pronouncements such as—I quote—"Motorists are warned not to travel on the Al; no petrol can be obtained between Newcastle and Edinburgh", have already caused much harm. But equally to take too complacent an attitude would be unwise, and were I to do so your Lordships might well say, "What is this fellow talking about! Why does he not shut up!"
For all that, I am aware that official representations have already been made. Questions have been asked on this particular matter in another place, and I am sure that the local authorities have made their voices heard in the appropriate quarters in Whitehall. There may be, however, a case for attempting some form of shortcut rather than allowing official processes to proceed through the usual channels. Our tourist season is short; it peaks in July and August. July is already well under way. I respectfully suggest that what is required is action today and tomorrow—if not yesterday !—and that if we were to wait for some weeks the solution to the problem would come too late.
I believe that what is required is, first, an immediate injection of additional fuel supplies. The total increase needed is probably not a very massive one, even in terms of regional norms, but needed it is; secondly, one would hopefully seek an authoritative assurance, which could receive the maximum publicity, that visitors to our area will not be stranded and that long planned holidays can be undertaken without undue concern. I believe that the situation is in fact stabilising, but that does not mean that one ought to be complacent.
Finally, I would wish to comment very briefly on what may be in many ways even more important, the agricultural position. The northern harvest is generally a late one and more often than not has to be pushed through in a critically short period of time, a matter of days, and in more senses than one it is all hands to the pumps. Such forecasts of the diesel supply situation as have been made available to date
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are far from reassuring. There is talk of allocation cuts, not of 5 per cent. but of 20 per cent. plus, and no guarantee of supplies being available at any particular date. The arithmetic involved in any shortage at such a period must be very simple and certainly requires no elaboration on my part. If a farmer needs 1,000 gallons for his combines and subsequent grain drying operations but only receives 750 gallons, then 25 per cent. of his production will be lost. It is evident that this, together with long-term problems must be the subject of responsible and intensive research at all levels. I feel that your Lordships will consider it inappropriate for me to press the matter further.
4.10 p.m.
Lord BALOGH: My Lords, it is a privilege and a pleasure to congratulate the noble Lord, Lord Armstrong, on his maiden speech, which showed profound knowledge of a very complicated question and a real addition to the sum of knowledge of this House. We hope to hear him again very soon.
The Motion before us is wide-ranging and I intend to limit myself to those problems of which I have some slight knowledge—namely, the problem of the BNOC and, secondly, the analysis of the expected crisis originating in the fuel shortage. However, before I move to the positive part of my speech I must take a course which is somewhat unusual in the House and declare an interest. I have been a critic of the North Sea policy of both Labour and Conservative Governments. As the noble Lord, Lord Drumalbyn, can testify, I pestered him for a long period. I then became a Minister and was responsible in this House for the two Bills creating taxation and the BNOC, and since the time I reached the Old Testament limit I have been, in one way or another, connected with the BNOC.
Let us then start with the BNOC. The noble Earl, Lord Gowrie, has voiced certain opinions about it and I should like to go back to the more rarified atmosphere of economic considerations. The BNOC is an important and sadly misunderstood, misjudged and under-estimated means of defending British interests against foreign undertakings. It is especially important because, unfortunately, in one way or another, a

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very large part of the North Sea was handed over to foreigners. About 60 per cent. of the reserves are in foreign hands. Therefore, unless we participate in the profits or tax, the balance of payments and the revenue will not benefit by it at all. Indeed, in a world economy which is not only influenced but totally controlled by a State cartel monopoly, itself ruling over a tight oligopolistic market dominated by supranational companies, the possession of a State company is an absolutely essential means by which one can get one's due share. Any abandonment of it will wreak a great deal of trouble and losses to our balance of payments and to the Government's revenues.
I am very sad that over the years that I have been in this House, Conservative Members have always preferred private profits, even if foreign, to public weal, even if domestic, and said so. There was an ominous ring in the noble Earl's exposition when he talked about the encouragement necessary to tempt mainly foreign companies to come back and sink wells. In view of the fact that those companies are not deterred by 80 to 85 per cent. agreements with Egypt, in a situation which is full of most obvious political dangers, I am absolutely at a loss to understand how anybody can say that those companies must have additional stimuli in order to condescend to take our oil. It is ridiculous.
When fledgling Ministers, imitating the boss, talk about the market they have obviously a completely different market in mind from what exists in reality. The market and the market forces which they talk about are characterised by the innumerable producers, innumerable consumers, and, what is more, a single price. If the noble Earl tells me that the prices at the gasoline stations are uniform and market clearing I would ask him to take some lessons in sixth form economics.
The Earl of GOWRIE: My Lords, I never said anything of the kind.
Lord BALOGH: My Lords, what the noble Earl said could only be interpreted in that way. One of the most disagreeable aspects of the peculiarity of this market is that the increase in prices by
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OPEC tends to increase demand and decrease supply. It is a very odd market. For instance, we had the latest OPEC increase, and Gaddafi, who is a sort of super-essential Arab, declared that he was going to cut his exports because he did not need any more money. He would rather hold the oil in the ground. A great deal of fun was had by the noble Earl as regards the abolition of the Price Commission. He said that OPEC would not obey it. However, is it OPEC that has created the present profiteering in this country or is it our garages? Would not the garages be rather discouraged from doing so if the Price Commission were still in action?
The BNOC, by monitoring swaps, transfer prices, arm's length sales and so on, has real knowledge. It is in the business itself, and can help the Inland Revenue, which is not very good at this type of game—it is a very complicated game—to find out the prices which the companies receive and their costs. As regards costs, there is a very important argument in favour of maintaining the BNOC, especially in the medium/long run, and that is that the private discount by which one judges investments is rather high—15 per cent. in the case of most oil companies. However, the social discount (the valuation of oil in the ground) is, of course, very much less.
Here there is a conflict of interest which I am sure the oil companies could be persuaded to heed, because they are quite responsible and intelligent people. However, they have to protect, unless they are pushed, the interests of their shareholders and it is right that they should do so. That means that the structures erected in the sea are minimising the costs relative to profit, and had the companies used a lower rate of discount—say 3 to 4 per cent.—then there would be a different structure and a higher final extraction rate.
Given the fact that we are all afraid of absolute shortages of oil, it seems to me that it would be only too justified—indeed essential—to have a company which can act commercially, but which at the same time takes into account national, rather than firm, interests. Nor can the private company discount increased prices in the future and thereby substitute for the ordinary market forces, forces which

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in this market do not function. Conservation policy can easily be fostered through BNOC, because, without immediate profit, it can search for and find oil, and at the same time not exploit it but use it as a reserve. If you wish to have a conservative endorsement, I would point out that President Coolidge—who was, I think, the ideal Conservative—after the Teapot Dome scandal, initiated the accumulation of the conservation of naval reserves, now called national reserves, all being in public hands.
Finally, and very importantly, it safeguards and reserves a minimum of oil for Britain without foreign interference, because they will not know. Therefore, I very much hope that before the Government take measures, they will consult some reputable economists in order to hear this general argument, of which there was no sign whatever in the noble Earl's otherwise very intelligent and interesting speech.
I now turn to the crisis. I fear that there is a grave danger that the nature of the threat to the Western industrialised countries will be misinterpreted. For instance, all reports and statements about Tokyo suggest that the leaders of the countries attending that Summit consider the increase in price, through intensifying inflation, as the main menace. Some even suggest that this will lead to a depression. In my view that is the wrong diagnosis. We hardly face an absolute, complicated physical shortage of oil such as we had in 1947, about which the noble Lord, Lord Shinwell, could tell us a few things. We suffer from a price increase. That means a shift of real income from the industrialised countries, which are rich, to the Arab countries, which are richer. It is unfortunate and it is not very equitable; but there it is.
However, it must be considered that this loss is a once-for-all loss. Once you have adjusted, its influence wanes. Unless there is some politically-motivated embargo, I think that we can get through this crisis without very much trouble, provided that sensible policies are followed. In contrast to 1973–74, when the loss was of the order of magnitude of 100,000 million dollars, the present increase is not likely to exceed half that amount, and it will probably he less, depending a little on how much the Arab sheikhs
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increase it relative to the basic Saudi Arabian price. It will certainly not amout to more than 2 per cent. to 3 per cent. of the national income of the West; that is to say, one very mediocre year's advance in normal times. Even this overstates the real impact, because it is mostly the desert countries which will gain, and, as yet they are unable to accept the real transfer of resources. They must take their gain in terms of increased liquid balances, or, at worst, investment. In the latter case, of course, they would be building up some trouble for our balance of payments in the future, but that is another story.
But even if they were able to absorb this real resource in the form of imports, the national real income of the industrialised countries need not fall. At the moment we have an enormous stock of idle resources, both manpower and capital. Indeed, people are saying that unemployment will increase and that there is a tendency towards a slump. All that is, of course, nonsense if we are sensible. If we are clever and do not allow the money supply to govern our minds, or have that sort of a fetish, we can easily deal with it.
The real problem is what may be called the multiplier effect of the shift in purchasing power. Should that occur, the damage might be extremely serious. There are two ways in which this multiplier effect may come about. The first, and in this country probably the more important, is if the increase in the price of petrol leads to higher wage demands. This would work itself through the system, at each turn increasing its force. It was from this point of view, of course, that the strategy of the Budget, which reinforced inflationary forces by increasing indirect taxes, must be condemned. It creates a situation in which restraint can be enforced only by unemployment and loss of income. I was astonished to see that in the debate on unemployment this particular aspect of the increase in unemployment was not mentioned. We shall pay dearly for the excesses of the unions last winter.
The second way, and perhaps less important from the purely British point of view—as we are shielded by the increasing income from the North Sea—is the impact on the balance of payments. In this respect, we must learn and must

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know—and nobody has learned it so far, certainly not the central bankers—that most of these excess exports of oil are unrequitable. They cannot be requited by exports from the industrialised countries to the desert Arabs, because they have no absorptive power. From this point of view the present situation is very similar to German reparations in 1929 when, as a result of the American recession, payments could not be absorbed either by us or by the Americans. The Germans forced the payments, thereby transforming a depression into a catastrophe.
Given the basic differences in Government policy and popular reaction in the various industrialised countries, I fear that sterilisation of these excesses—which ought to happen through safety nets—will not happen. In fact, Helmut Schmidt used most undiplomatic language to demand from the Americans exemplary self-infliction of wounds in order to qualify for monetary acclaim, and the bankers of the world, who will lose most if there is a depression, importunely reinforced this policy, and it is now likely that despite the slight recovery in Germany we shall all sink into a totally unnecessary slump. This is the danger in the short term, and with vivid remembrance of what happened in 1931 one should not disregard it. The Third World has over-borrowed, and some of the bankers have made advances, the soundness of which is very questionable. Any default might well have a domino effect. Every effort should be made to avoid such a catastrophe by timely action and timely mobilisation of sufficient funds.
The long-term problem is of a very different character. At present we are threatened with the energy price problem: what would be devastating to our way of life would be an acute physical shortage which might follow measures of conservation by the oil producing countries. I myself disregard this to a large extent because it seems to me that the political situation in the Middle East is such that it is unlikely that the rulers would allow an industrial catastrophe in the United States of America.
It is ironic to see that British Governments, both Labour and Conservative, should want to sell off at bargain prices the mighty asset they have through ownership of a large majority of British Petrol-
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eum. They both seem to prefer a meaningless diminution of the PSBR at the cost of a long run loss of increasing solid foreign exchange revenue. It is the physical shortage of energy and not the economic transfer of real income which is the real threat to the West. In my opinion the only safeguard of this Government is an agreed incomes policy plus international financial action. In view of the manifestoes published, I do not believe that this is practicable. I therefore think, as a pilot would say, that turbulence is ahead.
4.33 p.m.
Lord LUCAS of CHILWORTH: My Lords, it is my privilege from this side of the House to extend our congratulations to the noble Lord, Lord Armstrong, on the occasion of his making his maiden speech. If I should take up one or two of the points that he made, it is not with any intention of inducing into his remarks any note of controversy; it is just that I wanted to say some of these things in any event, and it should not detract at all from the measured and responsible speech we heard. I am sure that noble Lords will wish to hear the noble Lord, Lord Armstrong, again on other occasions.
Equally, my Lords, you would not expect me to follow the noble Lord, Lord Balogh. Indeed, I wish to come back to some rather more mundane and everyday topics in this debate. I start off by accusing the noble Lord, Lord Strabolgi, of introducing within three minutes of opening the debate a somewhat alarmist element. He spoke quite dramatically of the shortages, the queues, £1·40, £2 per gallon for petrol; he said there was a crisis approaching of the first magnitude. He accused Her Majesty's Government and my noble friend Lord Gowrie of leaving these matters to market forces, and asked what was going to be done.
On 19th March I asked the noble Lord, in his position as a Minister, some questions with regard to the grading of petrol, its price, and the need for investigation into certain matters with regard to conservation and price. He replied, at column 859 of the Official Report for the 19th March:
"My Lords, we think—and I am sure this should appeal to the noble Lord and his noble friends opposite—that this should be left to market forces".

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So I do not think he can accuse my noble friend of doing anything too dramatically different from what he was advocating only a few months ago. I would say, indeed, that the critical position in which we find ourselves is more attributable to the Government of the day in the period of the crisis in 1974 and the following years. A crisis did then occur, but the consuming nations did nothing whatever but go on consuming oil at the same rate. The noble Lord's Government did little to assuage that demand.
I turn, if I may, to a subject about which I know perhaps a little more, and that is the transport field. It would be right if I reminded your Lordships that I have the privilege to sit on the National Petrol Committee of the Motor Agents' Association. That Committee met today, so I think I am able to bring some little ray of hope to the noble Lord, Lord Armstrong, and to dissuade some other noble Lords from feeling that things are not quite as right as they would like them to be.
Let us he quite sure that the transport industry use no more, and some few points less, than 20 per cent. of a barrel of oil. It could be argued that a certain amount of freight and some people could be transferred from road transport. We have been over the first point many times. A measure of freight can be moved, and is being moved for other reasons, but it is not going to make a significant difference. Certainly the hauliers will argue that the other ways of moving freight will have to be more efficient.
It can be argued that if people are to be induced to use public or local transport, that service has to be vastly improved. The urban transport systems and the bus services are absolutely appalling. It is not only a question of prices—and they are going way out of the sky—it is that those services are not reliable. They just do not arrive. I am not interested in the reasons why; it is the job of the transport managers to overcome them. That is their opportunity to show their skills. If they cannot show them, they will lose.
Secondly, it has been the policy of successive Governments to house people outside the city centres: in other words, to bring a dependency upon personalised transport. You cannot change this overnight. What you can do is to embark
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upon housing systems, road systems, that over the years—and the noble Earl talked about the year 2,000—will eventually lead to some change in the pattern of personal transport.
There are other forms of liquid fuel consumption which ought to be looked into. One thinks of heating in public places. Perhaps it would be an idea if the Government looked further at the statutory requirements for heating in offices and factories. Indeed, one looks at this Chamber: there are 10 banks, each of six lights, which makes 60 lights. If we reduced that consumption by, if you like, 10 per cent. or 15 per cent., I do not suppose that we should not be able to see each other across the Floor. It would not make very much difference, but throughout the entire country it would make that little bit of difference that perhaps will go towards the saving of the 5 per cent.
I assure your Lordships that the retail motor trade is selling considerably less than 5 per cent. of gasoline than it was a year ago, so presumably the motorists are making some savings, and more credit to them. Whether it is because their social conscience has pricked them or that the price has hit their pocket, I leave to others to draw conclusions. Inevitably the price of liquid fuel will go up, and rightly it should. If one considers it over the last 20 years, the actual price paid for a gallon of fuel, whether it includes tax or excise duty, has remained about constant with the cost of living and the actual wage packet.
On the question of the shortage and the queues about which the noble Lord spoke, I listened to 23 men from all corners of the United Kingdom and Northern Ireland this morning. Northumbria, the Border counties of Scotland and some parts of East Anglia are suffering from local shortages, not that there is insufficient gasoline to be delivered but insufficient trucks and men to deliver it. The distribution of that liquid fuel which is available is in the hands of the oil companies, the "Seven Sisters", and I am not entirely satisfied that there is not some discrimination made in terms of that distribution. I remind the House that in 1978 the major companies were promoting price support schemes of up to 8p a gallon off. The schemes were being applied to high volume sites and those

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sites are owned by the petrol companies. The petrol supplying companies own over 52 per cent. of all the outlets by volume in this country.
A monopoly position exists and that was acknowledged by the Monopolies Commission report published earlier this year, although the commission said it need not be to the detriment of the public. I am suggesting today that that position can be detrimental and I urge my noble friend and his colleagues to ensure that the distribution is under the scrutiny of the department because, in my view, the sort of shortages to which the noble Lord, Lord Armstrong, referred occur mainly in the rural areas, mainly where the outlet is small, and where last year, because he did not receive any price support, he did not sell petrol; he was penalised then and he is penalised today because the allocation is on the basis of the 1978 deliveries. Thus, continually the volume of gasoline which may be delivered into the retail market goes to the high volume site, which is in the industrial area. There is no doubt therefore that some smaller outlets will go out of business—because they do not get supplies—and it is my contention that this may suit the long-term retail marketing plans of perhaps three of the "Seven Sisters" who control the bulk of our retail petrol, wholesaling and retailing; and I urge my noble friend to look at this point most carefully.
We have heard a little about rationing and it is not the view of the Motor Agents Association that rationing would be either a practical or a profitable proposition. Who would determine the essential user? Would it be the bureaucratic governmental department? No, I do not think they would be likely to make any better fist of it than almost anybody else. Of course, price is the great rationer. The distress of putting one's hand in one's pocket focuses sharply the need to save when using the heater in the home or the motor-car—when buying 500 gallons of oil or 10 gallons or one gallon of petrol. If the alternatives are made available, people will take to them, and I suggest to the Government that it is not their duty to impose penalties on a certain fuel source but to provide the kind of environment that will allow the developers of alternatives to place before the consumer a reasonable, practical and economic
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alternative. That is the duty of the Government and I should like to see that duty prosecuted with far greater energy and endeavour. It would be no excuse—no excuse acceptable to me, at least—were my noble friend to say, "Yes, but we have only limited resources." The resources are relative to the other side of the equation, the cost and the growing scarcity of the alternative of liquid fuel.
If this critical situation, focusing as it has today so far on petrol and gasoline products, is a battle—a battle of fuel and a battle of the economy—then the soldier is the driver in the front seat, the householder with his finger on the temperature gauge in his house. He, like any other soldier, will win that battle if he is properly, dynamically and energetically led—and that is the job of the Government.
4.47 p.m.
Baroness MASHAM of ILTON: My Lords, I too wish to add my congratulations to the noble Lord, Lord Armstrong, on his maiden speech which will be of encouragement to those people in the tourist trade. In the North-East our season is indeed short, and our winters are long. On a warm day in London the real dangers of a shortage of oil may seem far away when your Lordships enjoy iced coffee and the bustle of London traffic continues outside. It does not seem far away to me when one looks back a few months to life in the North-East of England last winter. Because of a stoppage of heating oil due to strikes, our schools were closed and we shivered in our houses. The roads were blocked with snow and the industrial towns were shrouded in fog. It was encouraging last night to hear His Royal Highness the Prince of Wales speaking about the needs of disabled people. He said:
"It can come to anyone at any time".
Disability came to me 21 years ago and I can tell your Lordships at first hand that being cold and damp is one of the worst threats to any paralysed person. It grips a person, giving chest pains and making one feel sick and hopeless. The circulation being slowed up in the body is one of the causes, but also urinary infections are an added risk. The elderly people in our community are also at risk due to cold houses, and hypothermia is a well-known danger.

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Another at-risk group who come very much from the industrial problem housing areas, such as cities like Glasgow, are young children who contract whooping cough, due to the not taking up vaccine because of the publicity. Many babies with chest conditions will die or be seriously affected unless they have warm houses. I hope the Minister will look into the needs of these groups and that these people living on Social Security benefits will be helped with the rising fuel costs. Many such families heat their houses by paraffin stoves, which in themselves are a danger, especially with young children, as fire becomes an added hazard.
Last winter the noble Earl my husband thought he would sell some logs to help out during the fuel shortage, as we live in a rural area and many people such as old-aged pensioners have open fires. He was horrified to discover that he could no longer sell logs in the traditional way, which was either by the bag or by the load. Because of consumer protection legislation logs would have to be weighed and sold by the hundredweight. To employ someone to undertake the weighing would make the loss too great, so, sadly, no logs were sold. It would be helpful if the Minister would look into this matter and see how badly this legislation is affecting the consumer, instead of protecting him.
Living in a rural area, I should like to bring to the notice of your Lordships the problems which small rural garages seem to be having. Our garages are now closed each weekend, and for several months one of them has been allowing only two gallons of petrol per customer. One garage owner told me that for the past three months he has been allocated 20 per cent. less than he was in the same months last year. If it had not had any petrol shortage, the garage would have expected a 12 per cent. growth. May I ask the Minister this question: As garages pay high rates, can they now expect a rates reduction?
There is great concern in rural areas as public transport is very limited. All the local railway stations around where I live have been closed and the tracks taken up, and local buses are very limited, and in some areas non-existent. If the problems are to become worse, people will be forced to leave the rural areas or go back to
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nature. Here I should like to declare an interest. I breed Highland ponies. They are hardy and can live out of doors all the year round. They are strong boned and without any problem can carry a man. They are versatile and sure footed, and can pull a trap. On our farm one of the farm men checks the sheep by riding a pony out of choice. This week the Royal Agricultural Show is taking place, and two weeks ago the Royal Highland Show took place in Scotland. Many noble Clydesdales and Shire horses have in the last few years returned to these shows. Perhaps in all seriousness a place can be found again for them on our farms to help out when fuel is short.
There are many fit young people who can use the energy of their bodies by riding bicycles. Could not more be done to make this safer by providing special paths in some of the towns, as is done in Germany? I should like to end by asking the noble Earl not to forget the disabled people who have to rely on their cars for their livelihood and for running their homes. They have no choice. They cannot ride a bicycle or a horse unaided, and they cannot use public transport, should there by any.
4.53 p.m.
Lord RITCHIE-CALDER: My Lords, I, too, should like to congratulate the noble Lord, Lord Armstrong, upon his maiden speech and express the hope that we shall hear him many times in the future. We are talking today about an energy crisis, but I should like to suggest to your Lordships that this is not a crisis; it is a climacteric. In fact, we are now approaching a point of no return. This is the end, or the beginning of the end, of liquid fuel. That is to say, we are to move towards a stage in which essential energy will have to come in a form other than the convenient form (which is comparatively recent) in which oil is put into internal combustion engines. This is a statement of fact. We are moving away from oil as simply a convenient, portable form of fuel which happens to suit us in the car age, the areoplane age—indeed, the age of the internal combustion engine.
When we are talking about the future of fuel let us consider two stages. We are going to go through a rough time because of what I was going to call the abruptness

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of the situation, but really it was not entirely abrupt. It should not have been abrupt; we had plenty of notice of it. At any rate, it is a situation in which at the moment people are inconvenienced because of shortages of oil arising from price difficulties. But we must think again and ask, what are we going to do in the interim period. We have to look ahead to the physical depletion of oil—not just North Sea reserves, but other reserves as well—and the stage will come when we shall have to find alternatives.
In my view—and I make no apology for returning to a theme that I developed at some length on a previous occasion—a move back to coal is absolutely essential. I do not mean the crude, vulgar and silly wastage which occurs in burning a piece of coal. A piece of coal is in fact an enormous chemical resource. When we again get to grips properly with coal, in the way that I want to see it done—with the development of coal and all its by-products—we must move pretty quickly into the hydrogenation of coal in order to produce and to carry us over the phase when we remain dependent on something which is fluid, which is convenient, and which we call oil. We must prepare now for that stage.
I should like to emphasise another point. This is difficult for someone like myself, as the ex-vice-chairman of the Campaign for Nuclear Disarmament. I do not see, and I cannot see that in the future—certainly in the next 10 or 15 years—we can possibly avoid recourse to atomic energy. I say that with reservations because the point has been made—indeed it was raised by the noble Earl himself in his introduction—that we inherited or acquired atomic energy under the worst possible circumstances. I have used the phrase before, and I repeat it: we are dealing with "nuclear superstition". This arises from the shock, the impact, of the release of atomic energy as a nuclear bomb. I was a member of a World Health Organisation study group which in 1952 considered the mental aspects of atomic energy. The mental aspects of atomic energy were the psychological aspects. We dealt with possible brain effects and so forth, but those matters were far less significant than the psychological, cultural impact. The phrase we used—I make no apologies for repeating it here—was that "we are now
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back in the childhood of mankind." We are cowering like our Neanderthal ancestors in the dark caves of our own emotions. They were trying to assuage the elemental gods of fire, flame, and earthquakes. But our elemental gods are radioactive; unseen, untasted, unsmelt, unfelt, and all-pervading.
Try, my Lords, to wrestle with and encompass that situation, even within a generation. There was one way in which we could have done it, because the answer to superstition is reason and explanation, but unfortunately we lost even that opportunity. That was because over the years—I say this without any reservation—the scientists, the experts on whom we rely, have indeed been the spokesmen of the atomic energy industry and they have lost the respect of the people whom they have been trying to persuade. Too often in dozens of cases, by prevarication, by deliberate suppression of facts, or by giving a misconstruction of what was happening, they have been proved wrong, demonstrably wrong, in big and sensational ways. I am reminded of what happened at Harrisburg. My hostess said to me, referring to a spokesman for the atomic energy people, "I am sure that I wouldn't buy a used car from that man", because what was said was completely and totally unconvincing. Indeed, it has been true for the last 30 years that my colleagues the scientists, the experts, who should have been explaining and reassuring us, have failed us. We have now got to the point where people do not trust what is said, and the result is that superstition has been exaggerated and people have been exasperated by what they regard as a betrayal.
Now, these are not stupid people. I do not suggest for one moment that we in CND (the Campaign for Nuclear Disarmament) were stupid. We were way ahead of our time. But the thing is that what we were doing was saying then what is now being said and clearly demonstrated; that is, that the risks from atomic energy were the things with which we had to cope. In 1961 I wrote a book called Living with the Atom, and I do not think there has been any question raised in the discussions now about what should be done with regard to the disposal of waste, and so on, which was not anticipated in that book. I am not claiming it as personal foresight, because I was the chairman of a committee which was examining

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this subject at the University of Chicago; that is, the radiation hazards of nuclear energy.
This is something which is very disturbing, because the fact remains that we shall not have fusion energy in any effective commercial way for at least another 20 years. I am prepared to put my money on the safety of fusion energy, although some of my colleagues question that. One thing I do say is that, if we are going ahead with nuclear energy, as indeed we must, we must look at the situations which are happening at Torness and elsewhere and say, "How can we indeed secure the safety of these places to the point at which we can convince the people who are now demonstrating?" This is something that we have failed to do, and for this I blame the Atomic Energy Authority. I think they have been slightly arrogant, perhaps, in the handling of the public on this matter, because they have said, "This is stupid, this is silly, all these people demonstrating". It is not true. The facts are that we are dealing with ignorance masquerading as knowledge, and we must convince people that it is true knowledge and not ignorance masquerading as knowledge, because it has been proved over and over again that they were ignorant. So we now have to cope with that. That is one thing.
The second thing—and this is the only further point I want to make, as I am dealing with my hobby-horses tonight—is this. I think it is absolutely essential, and will be more rewarding than anything I can think of, to push ahead with wave energy. There is no question about that whatever. Here is the purest of all energy, probably the most powerful of all energy, and certainly the most constant and enduring of all energy; and here we have it all around us, capable of being exploited. If anybody wants to make a real contribution to the solution of the energy crisis, it lies in things like wave energy, solar energy and wind energy. We have not developed them nearly enough. These things take a long lead time to develop. Under the last Government, I think we did pretty well in backing up wave energy, certainly, and I simply want to insist that it is essential to the future survival of this country, if we are going to have energy in abundance in order to have life in abundance, that
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whatever research and development is needed to promote it must, as from now, be made available, and we must not simply say, "Let us wait and see how much money we make out of what we are doing now".
5.4 p.m.
The Earl of BESSBOROUGH: My Lords, I am always happy to follow the noble Lord, Lord Ritchie-Calder. We have worked very closely together, on highly controversial matters, I may say, and he is always worth listening to on these subjects. In some of the things I shall say I shall certainly be following him. I think we should be grateful to the noble Lord, Lord Strabolgi, for initiating this debate and for giving us this opportunity to discuss these highly important energy questions, even if we do not agree with all he said. I shall refrain from commenting on the future of the BNOC—or "Bee-noc", as my noble friend Lord Gowrie describes it. He has given us the Government's views on that, and I shall confine my remarks to certain general issues concerning the threat of an energy crisis, not only in this country but in the world as a whole, and certain specific points concerning alternative sources.
But I must say this at the outset. I am concerned about the energy situation in Europe and, indeed, the free world as a whole. The cutback of oil supplies from Iran, as we know; the failure of the West to develop nuclear energy at the rate intended, for reasons which the noble Lord, Lord Ritchie-Calder, knows well; the increased petrol consumption earlier this year by motor vehicles in the United States, despite recent restrictions; and the fact that, apart from coal, alternative sources, such as those mentioned by the noble Lord, Lord Ritchie-Calder (solar, wind, tidal, wave, geothermal and, ultimately, fusion), are either likely to meet only a small percentage of the shortfall or are still so much in the research stage that we shall be well into the 21st century before they become practical—all these considerations give some cause for alarm; and the detailed production figures which can be adduced from them, as I have heard from the Director of the International Energy Agency, and even assuming increased Saudi production of oil,

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could well lead to an oil shortage in the West of 10 million barrels a day by 1990.
Even if nuclear reactors, whether pressurised water, gas-cooled or fast breeder, in fact come on stream in greater numbers in the 'eighties, we have to recognise the fact that nuclear power in the civil field is mainly only good for electricity generation, and perhaps in the future for powering nuclear containerships, and that it will be some time before many motor vehicles can be powered by nuclear fuel cells or even electric batteries, methanol, "gasohol" or even liquefied coal—to which, nonetheless, I believe very high priority should be given in research. The situation can be seen to look grim, as the noble Baroness, Lady Masham, indicated so very vividly indeed; and it makes it absolutely clear that this country—and I speak also, in a sense, like the noble Lord, Lord Bruce, with Europe in mind—as well as the United States, Japan and other larger consumers, must make greater efforts to conserve existing fuel stocks (and I agreed very much with all that my noble friend Lord Lucas said on that point) as well as developing alternative sources.
As my right honourable friend Mr. Geoffrey Rippon says in the foreword to the European Conservative Group's book on Energy for Europe—which I know some of your Lordships have seen, including the noble Lord, Lord Strabolgi, and my noble friend Lord Gowrie: If we wish to sustain and develop social and economic life in the world, public opinion must be mobilised to a greater extent to recognise what is at stake if we fail to take positive action. Some States are more thorough than others in pursuing an energy strategy. Certain projects, such as fusion research, of course, lend themselves to action by the Community—co-operative research—if only because of their enormous cost and speculative character.
The Community has a crucial role to play in co-ordinating such research and development programmes in order to avoid unnecessary and expensive duplication. This country and the Community must also, in conjunction with the International Energy Agency, agree programmes and exchanges for the benefit of all industrialised nations. Only so shall we solve the problem which will shape the
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destiny of generations to come and, not least, our own personal, political and economic freedom.
Control of the production and supply of important carriers such as oil and uranium resides frequently with non-European Community governments and firms. This political reality forces the urgency with which a coherent and comprehensive energy policy must be formulated. It permeates every sector of economic and political life, so that the very sovereignty of member States can be challenged by an external power. Energy policy cannot therefore concern itself solely with the need for energy investments which anticipate future demand. It must also concern itself with a strengthening of the political freedom of decision. In this sense, our political leaders—as our own Prime Minister has so wisely done in regard to increasing nuclear capacity—must give a lead in policy decisions which relieve people of anxiety as to the energy future, and induce confidence in the economic system in which they lead their individual lives.
I believe that such a policy can be formulated within the Community so that the Community's economy continues to generate prosperity for its own people as well as for those—and this is very important—of the developing world. Indeed, I personally believe that the commitment of European Development Funds to the Community's partners in the Lomé Convention, as well as research and development funds in already-accepted alternative energy sectors, is a fundamental element in assuring reliable suppliers of energy carriers and other vital raw materials. And encouragement of Community investment with others in the Lomé States is essential to the development of the right mutual dependence. It is worth noting that Europe's Arab friends regard these relationships as a test of sincerity. My own visits to the Middle East and talks with some of those most concerned with these matters have made this clear.
I am doubtful whether United States energy policy is yet being effectively implemented. Perhaps that is an understatement. Failure to implement it, compounded with delay in investment decisions, may well have disastrous effects—and not only on the United States' econ-

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omy. Whether the United States Government will fulfil its responsibility to its own people, I do not know; but the European Community, including Britain, must not fail to meet its responsibility to the citizens of the Community and to the developing countries.
The Community's crude oil imports for 1976 amounted to 46·9 billion dollars and, for 1977, 49·3 billion dollars, representing well over 3 per cent. of the gross domestic product. The Community's imports of crude oil in those years represented one quarter of total imports as compared with about 22 per cent. for the United States. However, the Community is a far more open economy than the United States. Third country imports represent over 12 per cent. of the gross domestic product as compared with only 7 per cent. for the USA. It is therefore fundamental that oil-producing nations should continue to enjoy confidence in the currencies in which they receive payment.
I believe therefore—and this is a point that has not yet been mentioned—that a necessary strengthening of OPEC confidence and of the financial system of the non-Communist world is the creation of the European currency unit, backed by the reserves of member States to parallel—and I use that word with circumspection—the dollar as the medium for world trade. The consequences of a loss of confidence by oil producers in their customers' currencies need no illustration. European monetary union is therefore an important challenge which, in my view, and in this context, must be taken up and won.
The recent report of the Workshop on Alternative Energy Strategies for 1985–2000 concluded that the end of the era of growth in oil production is probably, at the most, only 15 years away. I think that most noble Lords will probably agree with that. However, there may be a decade or so of more or less constant oil production after 1990 in which consumers will have to make adjustments necessary to face a decline in that oil supply. It is possible that oil discovery or recovery factors might be higher than has been assumed, but the effect would be to delay the impact for a few years, I think, rather than to solve the problem of transition to other fuels.
The warning of the Workshop assumes that political relations between oil sup-
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pliers and oil consumers are unchanging. This is very important. I believe that the risk of changes in these relationships could advance the critical date for the transition to other fuels. For instance, the installation in an oil-supplying State of a Government hostile to the Community might be sufficient to rupture supplies, either to this country or to the Community or even to the world market. During his visit (I think it was last year) to Washington, Sheikh Yamani, commenting on action by the United States Congress to embargo the sale of 60 F15 aircraft to Saudi Arabia, said that such action will
"diminish Saudi enthusiasm to help the West and co-operate with the United States".
Those words were stated moderately but they were not minced.
I should like to emphasise here that the pursuit of an even-handed policy towards Arab and Israeli interests by this country and by the Community, whether in trade policy or foreign policy, is essential not only for peace and stability in the Middle East but also as a yardstick by which Arab oil producers will judge our sincerity and, as a result, remain reliable oil suppliers.
The European Community's energy policy is therefore intimately linked to major international issues such as the Middle East, the North-South dialogue between the rich and poor nations (on which many Arab oil-supplying States place great store) and the East-West confrontation, particularly in the African theatre, where the Community's uranium ore supplies could be endangered. There is therefore an urgent need for the Community to reduce its dependence on oil. It is its responsibility to fulfil its role in the determination of energy policy according to the treaties, the European Coal and Steel Community and the Euratom Treaty, to which we are committed and to co-operate with member-States in their implementation of agreed energy policy so that omissions or delays or needs occurring in one member State do not lead to distortion of the economic development of that State in particular or of the Community in general.
An energy policy, once agreed, can be effective and comprehensive only if the political will exists in the Council of Ministers to implement that policy. Many of us—like the noble Lord opposite—who have served in the European Parliament believe that the Community will

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remain vulnerable to a possible oil embargo and potentially vulnerable to an enduring suspension of uranium supplies. For this reason, the Community must exploit its abundant coal reserves, search for and exploit existing and new sources for oil and natural gas, maximise the use of coal and nuclear power in electricity generation, identify indigenous sources—and there are some—of uranium ore; foster research into the harnessing of novel energy sources; and seek, as I have said, all reasonable economic means to conserve energy. There must be a concentration of investment in energy systems which will reduce or even might ultimately eliminate the use of oil, which should in any case, in my view, never be used when another fuel would serve the purpose equally well.
To conclude, I should like to remind your Lordships that it was the Soviet physicist Andrei Sacharov who asserted that the development of nuclear technology was one of the necessary conditions for the preservation of the economic and political independence of every country, whether developed or just developing. If the economy of these countries continues to be in any important way dependent on the supply of chemical fuels from the USSR or from countries which are under her influence, the West will find itself under constant threat of the cutting off of supplies. This will result in a humiliating political dependence. We must never be constrained or blackmailed owing to a lack of indigenous energy capacity.
The European council in Paris in March this year renewed its commitment to the achievement of total Community oil production of no more than 500 million tonnes of oil equivalent annually and its call for strengthening and speeding up, whenever conditions permitted, of programmes for nuclear power and the development of novel sources. After increased nuclear capacity, which is in my view and that of the noble Lord, Lord Rothschild, proven as safe as, if not safer than, other principal energy carriers, I would give high priority to liquefying coal. I have seen the latest figures, and the initial price for coal liquid produced by the Gulf plant in West Virginia is expected to he about 26 dollars a barrel; but the backers there
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tell me that the price will drop later and then not be so very different from expected fuel oil prices of 20 dollars a barrel.
Much as I applaud positive commitments by the European Council, I at times doubt the vigour with which governments of some member-States fulfil their commitments until electors, business leaders, officials and we members of Parliament are convinced of the energy strategy which they must adopt. Only they can bring governments to exercise the necessary political will to achieve essential ends. I was dining last night with the noble and learned Lord (who I was hoping would be sitting on the Woolsack at this time) and I thought what a wonderful example he gives to us of his pedal power and what a good conservationist he is.
5.24 p.m.
Lord TAYLOR of MANSFIELD: My Lords, it is always a pleasure to follow the noble Earl, Lord Bessborough, who is knowledgeable about the past and the present and who always makes very cogent remarks regarding the future and its problems. This is not the first time that I have had the pleasure of following him and, if I may say so, it is a great pleasure this afternoon to congratulate him on the objective speech that he has made in this realm of fuel policy. I am never quite sure whether I should declare an interest in a fuel in an energy debate—it is certainly not a financial interest. It is, within a few weeks, 71 years ago since I started work at the pit; and from that time until this present moment I have always made it my business to take a lively interest in the question of fuel and energy upon which our economy depends. It may be that during the course of the remarks that I have to make there is a partiality and bias towards the fuel of coal, and it is to that that I wish to make my remarks.
All the speeches today confirm the conclusion that I came to when I saw this Motion on the Order Paper, that nothing could have been more timely and more topical than the question of fuel and energy. When my noble friend Lord Ritchie-Calder was talking about the waste that was in a piece of coal, it reminded me of what used to be the normal experience in the pits so far as the production of coal was concerned.

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I have said for many years that one of the mistakes that I think this nation, both when it had a monopoly in the fuels sphere and even since, has made in the use of coal is that we have been very prodigal indeed and guilty of colossal waste.
It came to my mind while my noble friend was speaking that at one time in the pits no coal below a size of 2 inches was allowed to go out. It is not an exaggeration to say that, over generations, millions of tons of that precious fuel has been thrown into the gulf and can never at any time be retrieved. It is because of experiences like that that one comes to the conclusion, which may not be shared by everybody, that in the use of coal over the generations we have been exceedingly prodigal; and perhaps, with the change of circumstances, many of us now regret it. Fuel for energy at this moment is the preoccupation of the whole world; it is not confined to your Lordships' House. The far East, the American Continent, nations of the West, even the OPEC countries which produce and sell large quantities of fuel oil in one way or another, are discussing energy problems; and well they might be, because the economies of the world are very severely affected by this particular question.
Last week the matter was treated as very urgent and a conference was called—it was rather hurriedly summoned—of the Heads of State in many parts of the world. In fact, to summarise, from Tokyo to Geneva they were discussing the problems as customers and as producers of oil. Today your Lordships' House is no exception to the universal forum that is now taking place in many places throughout the world. I am sure that whatever our individual approach might be to the short-term or long-term problems of the fuels for energy, we are all grateful to my noble friend Lord Strabolgi for introducing this Motion and initiating discussion on this very important question.
On reflection and thinking of the last 20 years, I came to the conclusion that the circumstances of today, as projected by the meetings I have mentioned which have been taking place, the publicity which has been given by the media and the Press, are not bringing new problems but ones which appear in a different form. In the late 1950s and the 1960s, in 1973
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and now in 1979 there were then and there are still many problems in the field of fuel and energy. This is the third time in the last 20 years that fuel problems have surfaced and confronted particularly the industrialised nations.
Memories of the 1950s and 1960s must be still fresh and green in all our minds. Oil, by comparison with other fuels—particularly coal—was cheap at that time. There was an oil lobby—let us face it—inside and outside Parliament. Regrettably, I think, they won the day, with dire consequences for the coal industry and particularly in Britain. What were some of those consequences?—pit closures to the extent of 400, a decline of manpower in the industry of 500,000 and a decline in investment. I will refer further to that in a moment.
Since 1973, there have been those who said that what was done then was in no way a solution to the fuel problem in the long term. Would anyone now contest the opinion of those who argued against pit closures and putting men on the road to the magnitude I have mentioned? Would they say that they were wrong in their assumptions and conclusions? I recall saying in another place in the early 1960s that it was my opinion that we were putting too many eggs in the oil basket. I confess that what prompted that statement was not price, as it is today, or restriction of output. They were the two calculations then, but since there have been two additional factors: They were the price and the possibility of the restriction of output. There was also the factor of vulnerability respecting the supply of oil. First, it was a long haul by sea; the Suez Canal was closed and there was the long haul around the Cape. Secondly, there was the explosive nature politically of the area of the Middle East from which this fuel oil came. Nobody would like to have said what might happen or what might still happen.
I remember being in Iraq in 1957 and being told that from the town of Kirkuk, the oil centre of the oilfields of Iraq, there was a pipeline 600 miles long across the Syrian Desert to the landing port of Tripoli in Lebanon before the stuff was put into tankers to he hauled across the Mediterranean.
I thought then, and I still believe, that we made a mistake in running down our

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coal industry, because at that time fuel oil, as compared with coal, was cheap. With fuel resources in abundance beneath the crust of the earth here in Britain, to run down the coal industry to danger point and place so much on oil, many thousands of miles away from our own refineries and power stations, was a mistake. If I could summarise, it was clutching the immediate advantage but being blinkered to the long-term problems in the fuel sphere. I think this lack of faith and semi-abandonment of coal as a primary fuel has had repercussions in two spheres: first in manpower and, secondly, in investment.
I should like to make just one or two observations on both. The information that I have to give to your Lordships is taken from last year's annual report of the National Coal Board. That was the first year of voluntary retirement, and 9,235 experienced men who had worked underground for 20, 30 and 40 years, took advantage of the agreement that had been arrived at between the National Coal Board and the unions to retire. Surely nobody in your Lordships' House or anyone outside it would complain about the early retirement of miners, who spend one-third of their lives in artificial light: without it in total darkness.
Other wastage brought the total in the industry last year to 31,445. Total recruitment was 28,664, of whom 6,425 were under 18 years of age. The point I am trying to make in quoting these figures is that last year in manpower there was a minus of 2,781. It is to be seen also that the 9,235 men who retired had years of underground experience, and so there has been a loss; while, on the other hand, including the under-18s shown in the table there were 19,236 new entrants recruited. The important point to remember in this connection is that those new entrants, almost 20,000 of them, into the industry need training before they are put on actual production.
I turn to the question of capital expenditure. The figures indicate the minor role which coal has played in the economy of the country. Let us remember one point in this connection. The pits get older and coal, once mined and consumed, cannot be replaced. It is a wasted asset. Even in my county of Nottinghamshire,
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which is one of the most productive in the country and is regarded as the newest part of the British coalfield, there are only three collieries that are under 50 years of age. Happily, however, virgin areas of coal have been proven in certain parts of the country and, as the Minister indicated this afternoon, we have resources of coal on present production for 300 years.
On the main point of capital expenditure, in 1972–73, prior to the escalation in the price of coal, capital expenditure in the industry was only £76 million. Expenditure on major projects in excess of £500,000 was only £5 million. Faith in coal at that time was at a very low ebb. There were fewer pits and fewer men, as I have indicated. It was in 1973 that prices began to escalate. There was an interesting article in the Guardian of Saturday last, by a well-known lady columnist named Frances Cairncross, who said:
"In 1973, OPEC, by its price escalation, simply retrieved from the West the profits on oil which they could have been earning themselves long before."
At that time, the alarm signals were apparent. The new incoming Government in 1974 were alarmed at the situation and, with the NCB and the unions, they produced A Plan for Coal, which was referred to by the Minister in his opening speech today. So that there must be an increase in public expenditure to meet the challenge of the new situation laid down by the OPEC countries.
Since that time, there has been an upward curve in capital expenditure. The latest figures that I have from last year's annual report of the National Coal Board, are that capital expenditure was £334 million, and on major projects costing more than £500,000 expenditure was £130 million. That is a considerable advance upon the expenditure in those two fields in 1972–73. I just want to ask the Minister one question. I intended to talk about planning procedures and research, but my time is rapidly going. So I will just ask the Minister whether the Government approve of the tripartite plan for coal in the year 2000. In February this year, an assurance was given by the ex-Prime Minister to the NEC of the union, that that Government would continue to give their support to the plan for coal and would provide the necessary resources to ensure its implementation.

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I trust that this new Government will not depart from that undertaking given by Mr. Callaghan.
There are other points that I should have liked to raise, such as planning procedures and research, but I shall conclude on this note so far as research is concerned. It is sad to relate that throughout my lifetime—at any rate, since the Samuel Commission of 1924, which raised the question of the potential in coal and the fact that something should be done about it—there has been too much procrastination and delay in the field of research into the potential of coal. A scientist, a Member of your Lordships' House, said to me only the other day "The contents of oil and coal are the same. The only difference is that one is a liquid and one is a solid." I urge this Government to do what they can in this field of research into the extraction of petrochemicals and oil from coal, so that we shall be less dependent on fuel which has to be transported all those miles to our refineries and power stations.
5.48 p.m.
Lord COLLISON: My Lords, I regard it as a privilege to follow my noble friend Lord Taylor of Mansfield, whose services to this House and to the coal industry are so well-known. He has had so much practical experience, and this afternoon we have listened to words of wisdom from him which we are all pleased to have had the opportunity of hearing. I should also like to congratulate the noble Lord, Lord Armstrong, on his maiden speech. I found it particularly interesting, because he dealt with tourism and agriculture. I see tourism as an aid to agriculture, because it helps to bring income to farmers, particularly small farmers, in the tourist areas. Of course, my interest in agriculture is well-known. I was particularly interested in what he said about the northern harvest. Indeed, I shall say very much the same when I deal with this question in a moment.
We are, of course, grateful to my noble friend Lord Strabolgi. Certainly, there is a tremendous reaction to the latest fuel crisis. Indeed, everybody is suffering from a sense of shock, though why we should be so shocked I do not know, because for many years we have been warned that this had to come. I so much agreed with my
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noble friend Lord Ritchie-Calder, when he pointed out that we are reaching the end of one road and have to start to construct another road for the future. I was glad to hear the noble Earl, Lord Bessborough, point out that we have to think not only of ourselves but of the generations to come. I know very little—indeed, practically nothing—about nuclear energy. Therefore, it would be impertinent of me to enter into the controversy about its use or non-use and the type of nuclear energy stations which should be built. What one can say is that it is obvious that there is considerable public concern about the possible dangers. One cannot ignore Windscale and Harrisburg. These incidents happened and the public, quite rightly, want to know whether such incidents can be prevented in the future; they will want cast iron assurances from people whom they trust before they are prepared to consider the rapid development of this new industry.
I, for one, accept that nuclear energy has to come and I, for one, believe that our scientists can overcome and control the dangers which I have mentioned. Also, I believe that the problem of disposing of radioactive waste can be overcome. However, the public have to be satisfied, and I hope that that point will be borne very much in mind. The public have to go along with this, otherwise there will be continuing concern, suspicion and, maybe, even trouble.
However that may be, the crisis has caused genuine concern about ready supplies of fuel. I was very interested to hear what was said by the noble Baroness, Lady Masham of Ilton, about the impact of a cold winter on old and sick people. I have in mind in particular the supply of paraffin which is used by poor people and old people to supplement the warmth in their homes. 1, like other noble Lords, question whether it is good enough to leave it to the oil companies to decide how the oil should be distributed. I believe that the Government have a responsibility. I understand and accept that scrutiny will be exercised, but I want to be assured—and so will the people of this country—that the oil companies will not be left to go their own sweet way, if they appear to be going the wrong way, and that the Government will take action.
There is considerable worry about oil supplies in the agricultural industry. I am

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the chairman of the Land Settlement Association and therefore declare that interest. My association is responsible for over 200 growers. I know about their concern over future supplies and deliveries of oil. In the horticultural glass house industry, one cannot be absolutely sure what one's oil requirements are going to be. Last winter was very hard, and we had a very long and delayed spring. Because of atmospheric conditions, the use of oil on holdings was very much higher than it is when we have a normal winter. It is therefore impossible to define what the requirements of growers will be. Therefore it is impossible to set down quotas or to determine upon some kind of rationing.
Noble Lords will remember that right at the end of the last Session I asked for an assurance regarding the supply of oil for farming and horticulture. I was told by the noble Earl that he was sure the oil companies would see to it that essential supplies got through to farmers and horticulturalists. I can only repeat that I hope that scrutiny will be exercised, because horticulture and agriculture are our most important industries; those industries keep people alive by supplying them with food. If those supplies came to a stop due to the failure of the harvest, it would be a calamity not only for the people of this county but for the country as a whole in terms of our balance of trade.
If I may continue in the same vein, noble Lords will probably know that the president of the National Farmers' Union, Mr. Richard Butler, pointed out the other day that if we have dry weather at harvest time the industry will get through but that if we have wet weather at harvest time the whole process will slow down. He pointed out that the combine harvesters, tractors and grain driers might suddenly need a massive amount of fuel. This point was also made by the noble Lord, Lord Armstrong.
It is not possible for agriculture, any more than it is possible for horticulture, to define precisely what supplies of oil will be needed. This throws into doubt the whole possibility of quotas or rationing. Also, it raises the issue: who will see to it that essential supplies get through? I know that this might be considered to be
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special pleading and that people in other industries might make a similar plea for themselves. However, as I have already said, I believe that agriculture is an essential industry and that it ought to receive special consideration.
The Motion set down by the noble Lord, Lord Strabolgi, refers to the:
"… importance of developing alternative energy resources".
As I have said, I have absolutely no qualifications which entitle me to enter into the arguments relating to nuclear energy. Nor do I have any particular scientific skills which entitle me to speak about the conversion of coal into petrol or about the conversion of corn or maize into alcohol. However, there is one small corner of the field about which I do know and which I do understand. I refuse always to get on my feet and talk about things which I do not know about, but I do know about the collection of solar energy for heating domestic hot water.
Noble Lords may remember that about two and a half years ago I informed the House that I had become interested in solar energy. Since then I have continued to experiment. My interest was the result of curiosity. During that remarkable and glorious summer of three years ago, it was the "in" thing to talk about and do something about solar energy in the home. Collectors were being made by amateurs all over the country. I went to several exhibitions. I was so convinced by what I found when I built a quite small collector that I was encouraged to go on with my experiments. Since then, I have built what I call a proper collector. It is larger; it has been "plumbed" into the house system; and it is very successful.
I assure noble Lords that I am no genius with my hands, any more than I am a genius in any other way. All that it amounts to is that one prepares a plate of copper or aluminium, to which one attaches some copper piping. I procured a sheet of copper plate and soldered to it about 35 feet of 28 millimetre copper piping in the form of a snake. The system is supplied with water from a storage tank. The warmer water in the tank is at the top and the colder water is at the bottom. The colder water falls and goes to the bottom of the snake, the sun warms it and it rises to the top. It is very simple, and any handyman could set it up.

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Since then I have collected a great deal of data about commercially produced solar collectors. I ought to say in passing that when interest in solar collectors began to be taken as a result of that good summer, cowboys jumped on the bandwagon all over the place. All kinds of small firms were set up, many of which made exaggerated claims for their apparatus. Of course, the people who bought these things and tried them out were bitterly disappointed.
I want to make a special plea because when one explains to people what solar heating for domestic hot water is and that it is a viable proposition, one finds they tend to be disbelieving. However, it is different when people come along to one's house. Quite recently a class of sixth form schoolboys and schoolgirls came to look at mine. It is when people see the apparatus working and put their hands on the pipe or in the hot water that they realise that it really does work. There is a great degree of scepticism about it. People say, "But the sun does not shine much in this country"; but it shines enough and solar collectors will collect energy even when the sun is not shining. The sun does not have to shine all the time, so long as the weather is bright. One can then get temperatures in the storage tank of well over 100°F. One is also told that it is only a very small part of the problem. Perhaps that is so. The figure of 2½ per cent. possible saving is quoted at one as against the 5 per cent. which is required, but again I think it is fallacious to refrain from the development of this procedure because of that. It is results that count and I have kept meticulous records of the results I have obtained.
The average temperature that we have had since the beginning of the year until the day before yesterday, that is including the coldest winter months of January and February, was 91°F in the storage tank. I have kept records for the last 30 days, daily, and since the beginning of May the temperature in the storage tank has never fallen below 100°F. As at yesterday the average temperature over the last 30 days has been 115°F, and we do not have the heat on at all from the month of May until the end of August or the middle of September.
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I have also taken a record of the actual savings in gas used, because we are on gas. It is only a small house with two of us living in it and before we had any solar apparatus at all in 1975 we used 744 hundred cubic feet. In 1976, when the original experimental apparatus had been working for three months it fell to 609 hundred cubic feet; in 1977, in a full year, it fell to 448 hundred and last year, 1978, it fell to 408 hundred cubic feet. I converted that into therms and worked out the saving, which amounts to £53 per year. If one is worried about cost-effectiveness, I built the apparatus myself so my own labour went into it but it only cost me £200. The collector cost £70 and the plumbing into the house and the connections only took the figure to just under £200. So I am going to get a payback period of something between four and five years. The percentage of 408 as a percentage of 744 is 54·83—that was the actual saving in gas consumption.
My last word on it is this: The scepticism is there, I know, but I think it is fallacious to hold that scepticism. It may be thought that 2½ per cent. is a very small saving as against the 5 per cent. that is needed, but my point is that to the housewife that saving of fuel is quite significant. The good commercial firms which have kept records concur with my own findings that there is a saving of between 30 and 40 per cent. That is of considerable significance to the housewife and if one multiplied that up by all the houses which could have this apparatus put in, the saving must be colossal, and that is something not to be sneezed at.
I do not think this would apply to the Minister, but there are so many people who react to this in an adverse way because they just do not believe it. It is like the person who saw a giraffe for the first time—and said he did not believe it! People do not appreciate the saving on solar heating until they see it for themselves. I had some trepidation in telling your Lordships what I had done and, believe me, it is said in all humility. It is simply that I did something factual and I got factual results, and I thought it important that it should be recorded. I should now like to revert to the subject on which I started my speech and to ask the Minister to take very seriously the problems of agriculture and horticulture with regard to

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the possible shortage of oil and to ensure that the industry gets what it needs.
6.6 p.m.
Viscount HANWORTH: My Lords, it is not so very long since we had a debate on much the same lines as today's debate, and I do not want to repeat at length anything that I said then, so I am afraid that the remarks I shall make will be somewhat disjointed. In the first place, I cannot understand why, with the accent on energy saving, nobody yet seems to have done very much about house insulation—certainly not in new houses. We have not yet got a good standard of insulation, and, bearing in mind that extra insulation is cost-effective in two or three years, this would seem to be one of the first things we should do in order to try to save energy. It has practically no disadvantages. I should, therefore, like the Government seriously to consider drafting some further legislation on this subject.
I am quite convinced that the time has come when we have to face up to the breeder reactor and I am sorry that although there is a big programme for new advanced gas-cooled reactors there does not seem to be one for a breeder reactor. It is at least 60 times more efficient in the use of uranium than the ordinary reactor, and at the present time we have a very large stock of uranium which could be used in a breeder reactor and turned into useful fuel. Of course, I know the argument about a plutonium economy and there is the danger of plutonium getting into the wrong hands. It is clearly a danger, but I believe that the real danger in the future will be that the smaller nations will have reactors and therefore potential atom bombs, and anything we can reasonably do to see that the reactors are in the main constructed in the fully developed countries is wise, leaving the oil to meet the needs of the developing countries. I do not believe that constructing a breeder reactor will substantially increase the risk of nuclear blackmail.
I should also like to say a word on research. It seems to me that we should do this with our partners in the EEC so that we do not all duplicate each other's work. I think this could provide a more cost-effective approach to the money we must spend on research.
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Then I suggest that we might again dust down the files on the Severn barrage. In that connection, I believe that we should not look entirely at the economic cost on today's basis. Many of the possible projects will have a life of 20 years or more, and if the economics over a 20-year period are considered this will give a much better idea of whether or not we should do it. It is very seldom, it seems to me, that we do that.
I am profoundly unhappy at the present time about petrol distribution, and I have a suspicion, as has been said earlier on, that some companies are pushing out the smaller men so that they can get a larger control of the market. However that may be, there is no doubt whatever that the distribution of petrol is extremely uneven at the moment. I think the Government, whatever their views on trying to leave this to the companies, ought first of all to get from the companies their policies and then see to what extent those are in fact being implemented throughout the country. They can then, if necessary, produce guidelines for the petrol companies. I do not think that the situation can possibly be regarded as satisfactory at the moment. My Lords, these are just a few remarks which I thought perhaps worth making today.
6.12 p.m.
Lord WYNNE-JONES: My Lords, it was a pleasure this afternoon to listen to the noble Lord, Lord Armstrong, making a maiden speech in this House. To anyone coming from the North-East—and there are some of us in this House—it is a particular delight to welcome him as a speaker here. Perhaps I may refer to the fact that it was his ancestor who built Rothbury and who equipped it with the first electric light system in the country, using the lamp invented on Tyneside by Swan. I think I am right in saying that the first Lord Armstrong installed a water-powered electrical generator there in order to light the house. So it is peculiarly appropriate that the noble Lord made his maiden speech on this subject, and we shall look forward to hearing from him frequently.
This debate has been an interesting one and we are grateful to my noble friend Lord Strabolgi for having introduced it. It is particularly interesting because it

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comes at a time when all the economic aspects of energy are before us. In fact our crisis is not really a crisis of obtaining energy but of paying for energy. It is the economic effect which is the real crisis which is upon us. And here I think we are faced with a situation which is very strange. In this country we have been talking for many years now about the great advantage to us of having North Sea oil. I wonder whether North Sea oil has been of any advantage to us at all, because so far as we are concerned the only thing it seems to have done is to change our balance of trade; and what has that done?—forced up the value of the pound and made our exports uneconomic. In other words, it could be argued that North Sea oil, so far from having benefited our economy, has been a positive disadvantage to our economy, and it will be an even greater disadvantage unless we use North Sea oil for our own purposes in this country.
If we are going to treat North Sea oil simply as something that we produce out of the North Sea because the Arabs have put up the price of oil in their countries so high that it becomes economical to produce North Sea oil, it is going to be something of very little advantage to us. I think that my noble friend Lord Balogh, who spoke earlier in this debate, deserves enormous credit, as I have said before in this House, for having got the last Government to change the policy with regard to oil in order that the country should benefit more than it was doing previously. I think that it is only because he was able to do that that we have had any real benefit at all out of North Sea oil.
When we look towards the future we are told that there is an oil crisis, and we are told that it is now the policy of the Government to solve this oil crisis by producing nuclear energy. But, as the noble Earl, Lord Bessborough, said earlier in this debate, you cannot run a motor car with nuclear energy. Most of the purposes for which you use petroleum are quite unsuitable for nuclear energy. It is true that you can run a power station, but we have already been running our power stations less with oil and more with coal. We already have 12 per cent. of our electrical energy produced by nuclear energy. I believe that we ought to go further, but the idea that we are going to make a sudden magic solution
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for an oil crisis by nuclear energy is the most extraordinary misconception of energy that I have ever heard of in my life. The noble Earl shakes his head, but that is exactly what the leader of his Party said in Tokyo.
The Earl of GOWRIE: My Lords, no one has said this at all.
Lord WYNNE-JONES: Then, my Lords, all I can say is that if it was not said the right honourable Lady was singularly badly reported. It was certainly said in the Press that that was the policy. In the Guardian on Monday there was an article by Mr. Waldegrave, who is the chairman of the Conservative committee on energy, in which he said quite definitely that the solution of our petroleum problem was to produce more electrical energy by nuclear reactors.
The Earl of GOWRIE: Long term.
Lord WYNNE-JONES: I know it is nonsense. I agree it is utter nonsense, and it is exactly what is being said by the Government at the present time.
The Earl of GOWRIE: My Lords, I did not say "nonsense"; I said "long term".
Lord WYNNE-JONES: My Lords, my lip-reading was bad; I beg the noble Earl's pardon. But it is important to realise that we shall only be able to solve the energy problem if we understand that energy is not one single thing. It is like talking about food; you might say, "We produce enough rice in all the world to feed everyone". But man does not live by rice alone; it is important to have a balanced diet. If one is dealing with energy there has to be a balanced diet of energy. One needs petroleum; of course one does. The chemical industry could not run on nuclear power at the present time; the chemical industry needs petroleum. It could run on coal but it is more difficult. It is also important to realise that you cannot run motor cars at the present time except with petroleum. It is important to realise that there are a lot of purposes, such as heating, where you may use petroleum.
When talking about energy, it is vital that we realise that the highest grade of

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energy is electrical energy. It is precious and we should not squander it. We can produce it very suitably by nuclear reactors but we can also produce it by coal burning stations. In my opinion we should not use oil or gas for the purpose because they are too precious. The next form of energy, which I shall call high grade heat, is particularly important in chemical processes and for many purposes like that. It can be produced from petroleum, but it can also be produced very well from coal, especially if one uses a fluidised bed combuster. One can produce energy for chemical processes and many works processes extremely cheaply in that way.
Of course, the third form of energy is the one to which reference was made by my noble friend Lord Collison. His speech was of considerable importance to us. He emphasised low grade heat which is heat for which we should never use the best forms of energy. We should not use the best forms of energy for heating our houses, or water. As he said, that can very well be done by something like a solar heater which is a very simple device and not something elaborate which requires high technology.
Therefore, it is essential that we get these matters clear and understand our energy policy. I suggest that to talk at present about nuclear energy is just about as irrelevant as anything can be. It will not contribute anything in the next 10 years towards solving the problems which arise because of our petroleum shortages.
When we consider the industries for which petroleum is, at present, essential, we find that the chemical industry, transport and industries like that need urgent and vital consideration. How shall we be able to cope with transport in the future? There are methods, and my noble friend Lord Ritchie-Calder referred to one—namely, making oil from coal. That could be of very great significance in the future. It can be done now and it will become more important.
However, there is another process that we must think about very seriously and that is the use of hydrogen as a fuel. It is possible—and the Lockheed Company in America believes that it can be done now—to fly aeroplanes on hydrogen.
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However, in order to do so one must have a complete logistic system. One must be able to supply hydrogen to every airport in the world and one must be able to supply it in liquid form because, so far as I can understand it, one cannot possibly put it into an aeroplane under pressure because the weight of the container would be too great. Therefore, it must be done in liquid form so that a much lighter container can be used. That means that facilities must be available in every airport of the world. However, these things can be done.
It is important that the Western World should begin to think seriously about this matter now and not wait until, in another 10 years, another crisis arises and we find that on that occasion it hits us so hard and so suddenly that we are caught unawares and are unable to cope with it. We should start doing it now. Therefore, it is urgent that the whole of the Western World—this country, the United States, the whole of Europe, indeed everywhere—should be working towards solving these problems. I am not saying that we can solve what is happening today—there is very little that we can do about today except improvise to meet it—but we can start preparing for what will turn up later.
Another matter arises as regards nuclear energy. I hope that the noble Earl does not think that I am an opponent of nuclear energy, because that would be incorrect. I do not object to the Government going ahead with plans for nuclear energy. However, a rushed plan is no good at all because we cannot solve anything very much within a few years in any case. Therefore, there must be a clear plan that will give us the right answer at the right time. As the noble Viscount, Lord Hanworth, has said, I believe that the right answer is to go for the fast breeder reactor. It is important that we should seriously begin to do that.
I know that there has been a good deal of opposition to the fast breeder reactor, because the Commission on the Environment rightly pointed out about three years ago that there were problems which ought to be solved. That is perfectly correct. There was a panic move—and it was indeed a panic move—by the President of the United States to stop work on the fast breeder reactor. The American fast

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breeder reactor, which is known as the "Clinch River breeder reactor" was going ahead quite well, but work was stopped on it. It is by sheer accident that I received this morning a report from a congressman in America. It is a report to Congress by the Comptroller-General of the United States and the subject of the report is the Clinch River fast breeder reactor. The Comptroller-General points out in this very clear and excellent short report to Congress, that none of the reasons which were put forward by the Administration three years ago, has really borne analysis. When they were carefully analysed—and his Commission did the analysis and took evidence from witnesses—it was concluded that none of the arguments put forward could really be justified.
It is a very interesting report, and particularly interesting to me because it shows the difference between the American way of going about things and our way. The Comptroller-General severely criticises other Government departments and then we can see what the other Government departments reply. It is all down in a very interesting form. I only wish that the same happened in this country and that we could see the arguments put down as clearly as they are here. When one reads them one is able to make up one's own mind and to make one's own judgment. In my opinion the report establishes quite clearly that there is no justification for delaying work on the fast breeder reactor.
In this country we ought to go ahead with building a demonstration commercial reactor. We have had a smaller reactor going but, as has been pointed out, we shall never really reach correct conclusions unless we are able to get a full working model going. Therefore, I ask the noble Earl when he replies to say whether the Government will give serious consideration to the matter of investigating the fast breeder reactor, rather than simply saying, "We shall build as many of the ordinary thermal reactors as possible".
Lord STRATHCLYDE: My Lords, I hestiate to intervene, but is not the fast breeder reactor the reactor that we have been working at Dounreay and Caithness for many years?
Lord WYNNE-JONES: Yes, my Lords, the noble Lord is perfectly correct. Dounreay is a prototype fast breeder reactor. There are fast breeder reactors also in France, the United States and Germany. The point is that the Dounreay reactor is too small to give a full-scale test of its commercial feasibility. We know that it is technically feasible; we do not know its commercial feasibility. The proposal is that there should be built a full-scale reactor in order to test commercial viability.
6.30 p.m.
Lord WOLVERTON: My Lords, I shall be very brief, because this has been a long but a most interesting debate. I should like to thank the noble Lord, Lord Strabolgi, for so kindly tabling this very important Motion today. I wish to talk briefly on the second part, about the importance of developing alternative sources of power for the long-term future which confronts this and other countries. I am greatly obliged to the Central Electricity Generating Board and to British Rail for the small amount of information which I obtained from them for this debate.
First, I want to speak about the atomic energy programme. I understand that Mrs. Thatcher is about to announce—this has been reported in the Press and I agree with it—that we must go ahead with our nuclear programme. There is talk about building five more nuclear power stations. At present we have three nuclear power stations in course of construction at Heysham A in the North-West, Hartlepool in the North-East and Dungeness B. Dungeness B station, which houses an advanced gas-cooled reactor, has been in the process of construction for 10 years, and it is not yet completed. It is hoped to complete it next year. It has been most disappointing. It has suffered from strikes, technical problems and so on. If we are to get this programme going, it must go a little faster. I understand that the construction of the other two nuclear stations, Heysham A and Hartlepool, is also proceeding pretty slowly.
As your Lordships know, the late Government recently authorised two more nuclear stations. One is Heysham B, which has not yet been started, although a start may have been made on the foundations. The other is at Torness, near Dunbar in Scotland. Like the noble Lord,

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Lord Wynne-Jones, I am a great believer in the fast breeder reactor. It has been running at Dounreay for two and a half years. Dounreay is only an experimental station, but it has done everything that the experts wanted it to do and it has a large safety margin. The great advantage of the faster breeder reactor is that the waste can be reprocessed on site; it does not have to be transferred elsewhere.
We have heard from the Liberal Benches this evening that the Liberal Party is very worried and will not support a programme of increased nuclear energy until the problem of nuclear waste is solved. I am sure that one fast breeder reactor should be put into commercial operation. In a debate on 25th May 1977, the late Government promised that they would set up a high-level inquiry into the feasibility of building a fast breeder reactor. This morning I checked with the Electricity Generating Board, who told me that that inquiry has not yet been set up. A commercial station cannot be built until everyone is satisfied about safety values and so on, and until this high-level inquiry or Royal Commission has been set up. We do not have a great deal of time. If a station like Dungeness B takes 10 years to build and even now is not yet finished, in 10 years time we shall be faced with a great many energy problems, many more than we have today.
The railways still use a large amount of oil. By providing more nuclear power we can carry out much more electrification of the railways. According to the latest figures, there are 11 nuclear power stations in operation, which produce 14 per cent. of the available power produced by the CEGB. It is not a very large amount. I believe that 75 per cent. of the power is produced by coal-fired power stations. Noble Lords probably know that nuclear power stations are even more efficient than the most efficient coal-fired station, like Drax A. Therefore, we must consider the running costs of the stations for the public in order that the price of the unit is not too expensive. I hope that Her Majesty's Government will give very earnest consideration to setting up this high-level inquiry and, if it is satisfactory, authorise at least one commercial fast breeder reactor station. As noble Lords have said, the experimental one has been a tremendous success.
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This has been a very long debate, so I should like, briefly, to speak about the railway situation. In the debate on 25th May 1977 I spoke about further electrification of the main line railways. I told noble Lords that the first major electrification from Euston to Crewe to Carlisle to Glasgow, which took about 13 years to construct and which cost about £190 million, has been an outstanding success. I asked the then Government whether they would give earnest consideration to further electrification of the main lines, especially the Eastern line from Kings Cross to Doncaster to York to Newcastle and Edinburgh. That passes through an area housing a large number of highly-efficient coal-fired power stations and many good coal mines. I am sure that that work should be carried out. I know that the population density in that area is not as high as it is on the Western side of the country, and that for a good return on electrification one needs a fairly high population density.
If we do not obtain the oil we need in 10 or 15 years' time, how can we run the railways? British Rail kindly gave me some figures which I thought might interest your Lordships. Twenty-one per cent. of British Rail's route mileage is now electrified, out of a total of 2,341 miles; in other words, 40 per cent. of the train mileage is electrically operated. About half the electrification was completed in the last 20 years. I want to emphasise those figures. If it took 13 years to carry out the highly successful electrification of the Euston to Scotland western route, it will take about the same time to electrify the eastern route. I know that the railways and the Generating Board have to live within their cash limits—it is important that they should, in order to prevent heavy borrowings—but I hope that Her Majesty's Government will look into this matter.
I understand that about 18 months ago the previous Minister of Transport, Mr. Rodgers, set up a very high-level working party, of which the deputy chairman of the British Railways Board is an important member. The working party was to look into the question of further electrification of the main line railways. I am told that that working party will shortly report on its findings. However, time is not on our side and we must press ahead with these improvements. I agree with much of

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what has been said today. We must find alternative energy sources. Coal is extremely important. The last time I spoke I said that coal was still king, and it is, because 75 per cent. of our electricity is still generated by coal. However, in the future, as the noble Lord, Lord Wynne-Jones, has just said, coal will have to do much more. It will have to produce a large amount of oil, if we are going to have it for motor-cars and agriculture, chemicals, and so on. Coal will be in great demand in 10 or 15 years' time.
So I am sure that Mrs. Thatcher, the Prime Minister, was right when she said in Tokyo that all the Western powers must go in more for atomic energy. If all countries in the West are going in for more atomic energy, uranium, which your Lordships will know is mined in Australia and other countries, will become scarce. The fast breeder reactor re-breeds uranium and turns it into plutonium, and there is a great saving there in the amount of uranium used. I hope that Her Majesty's Government will give this earnest consideration, and get a move on with it.
6.41 p.m.
Lord HATCH of LUSBY: My Lords, I am tempted to follow a number of noble Lords in the subjects they have raised, particularly the noble Baroness, Lady Masham, in what she had to say about the deprivation of rural areas. I share with her the fate of living in such a rural area where both rail and bus transport are almost non-existent. I am also tempted to follow her in what she had to say about small garages. I have previously pointed out to your Lordships that that infamous advertisement which Mobil had in the main Press a couple of weeks ago pointed out that last year 1,500 small garages had closed. It would appear to me that that number is likely to be increased this year. In the Cambridge Econometrics report, which I quoted from earlier this afternoon, a paragraph suggested:
"Garages will also be squeezed by lower petrol consumption and fewer car sales. But sales of luxury cars should be supported by tax cuts for the well off".
I foresee that one of the results of the energy crisis, and the rationing by price, which is the policy of the present Government, is the driving out of a large number of small businesses, including small garages.
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I am also tempted to follow the noble Lord, Lord Taylor of Mansfield, whose personal experiences of the coal industry interested us all, and indeed touched us all so greatly. I spent a good deal of time with miners in Yorkshire, Lancashire, the North-East, and Fifeshire in working out plans for the coal industry. I resist these temptations in order to concentrate on one point, which I should like the noble Earl who is to reply to answer when he winds up.
I find it somewhat ironic that we are talking about an energy crisis as a reaction to present circumstances, when so many of us, in particular the noble Lord, Lord Ritchie-Calder, have been pointing out the dangers of the finite quality of energy for so long and have indeed been ignored by governments of both parties. I consider it to be particularly ironic that we are having this debate today, because if your Lordships will examine the gracious Speech you will find no mention of any energy policy. That is only a matter of six weeks ago. There was no apparent consciousness on the part of the Government, when they drew up the gracious Speech, that energy was a matter of national interest. Presumably by now they have learned the lesson that that finite quality of energy is a very present, current, and immediate national interest.
The one issue I find particularly ironic is that at this time of oil shortage in this country the Government are apparently taking specific measures which are going to reduce the amount of oil available to the domestic consumer in the United Kingdom. As the theme of my intervention, I want to quote the letter written by the noble Lord, Lord Carrington, to the right honourable David Owen, the previous Foreign Secretary, on 26th June. Lord Carrington writes—and this is a published letter:
"In response to an approach from the company we have told BP that we would have no objection to arrangements they propose whereby they would make North Sea oil available for sale in EEC or IEA markets in exchange for non-embargoed third country crude which can be supplied to their South African subsidiary".
In his opening remarks the noble Earl said, in mentioning this issue, that they found this on Ministers' desks when they arrived in office. They may have found it on Ministers' desks, but David Owen has gone on record as saying that it was never

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the intention of the Labour Government to grant the company's request, and that although this request had been made some time ago the previous Administration had not granted that request.
It seems to me that because of the situation in Iran, from where the South Africans obtained most of their oil, the new Government here in Britain are now going to replace the oil supplies that the South Africans have lost from Iran with the use—I say "use"—of North Sea oil. This raises two central issues. The first is domestic. Are the Government saying, or will the Government admit, that what they are doing is to give South Africa priority over the British consumer and our friends and partners in the EEC.
Secondly, on the international level, following the relevations, the exposures, of the Bingham Report, are the Government not aware that this action will be seen throughout the world to be, first, deliberately taking part in a political action to support the South African apartheid Government; and, secondly, to give these resources to that South African Government to supply the Rhodesians, thus continuing to break sanctions, as was exposed in the Bingham Report?
I know that Government spokesmen have said that companies have promised, and guaranteed, that the oil released by this swap agreement to be supplied to South Africa will not go to Rhodesia. I should like to ask a specific question, which I hope the noble Earl will answer in his winding-up speech: what guarantee can the companies, or the Government, give that the oil that is so released by this swap agreement between BP and Conoco will not arrive in Salisbury, because I do not believe that either the Government or the oil companies can give such a guarantee.
The reason I do not believe that they can give that guarantee is that if you look at the South African laws, you will see that those laws prohibit the disclosure of any detailed information on oil movements. Therefore, once that oil arrives in South Africa how can the Government, or the oil companies, give any guarantee that it will not be forwarded to Rhodesia? Neither the British Government nor the oil companies will be able to monitor what happens to the oil once it arrives in South Africa. I should like the noble
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Earl to answer the specific question, in the light of South African law regarding the disclosure of oil movements, of how they can give this guarantee.
Finally, what will be the effect of the announced arrangement for a British oil company, partly Government-owned, and the effect on the British Government who openly give that oil company permission to supply oil indirectly to South Africa, on public opinion in the rest of the world? What will be the affect in Nigeria? The last time there was any question of supplying oil to South Africa, the Nigerians cut their supplies to BP by 100,000 barrels a day. What do the Government expect the cut to be this time?
It seems to me that this act, particularly if taken in its context—in the context of the speech made by the Prime Minister in Australia about sanctions—is part and parcel of the Government's open flouting of international public opinion and of their international obligations so far as sanctions are concerned. I remind the House that these sanctions were introduced by a British Government, were sustained by successive British Governments, were taken to the United Nations by a British Government and have been applied as a mandatory measure by the United Nations against Rhodesia.
I should like a specific answer from the Minister to that question. Can he assure us and give a guarantee (and if so, how) that under this arrangement, which has been characterised as a normal commercial arrangement—if this is a normal commercial arrangement then we have really seen the bare face of the capitalist system in defiance of international law—between BP and Conoco, oil so released will not find its way to Rhodesia?
6.53 p.m.
Lord KALDOR: My Lords, this has been a wide-ranging debate and I would not have suspected that a debate on energy could have given rise to so many different aspects—political, technological and many others—and I do not envy the Minister's task in trying to reply to all the various points that have been made. I shall confine my remarks to one issue only, and even then I cannot guarantee not to repeat something that has already been said. I shall deal with the economic consequences of OPEC in the near- and medium-term

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on Britain, on the EEC and on the Western industrialised countries in general.
It must seem surprising to many people that this, the second oil crisis—in contrast to the first in 1974—finds Britain in a very fortunate and potentially strong position. As we heard from the noble Earl this afternoon, we are already producing the equivalent of three-quarters of our total requirements. In fact some statistics say that we shall be producing this year the equivalent of 85 per cent. of our consumption and, as he said, next year we shall be wholly self-sufficient in oil. After that we shall have a surplus of production over consumption to an increasing degree, for five years at least, and be a considerable exporter of oil over above our requirements.
All this may sound surprising. Why, then, should we suffer so much more, or apparently so, as a result of the oil shortage, than other countries in the EEC? There are no petrol queues in Germany or France and no week-end closures of garages. Only yesterday the German Chancellor indignantly rejected any suggestion that a speed limit be introduced on the German autobahns—on which nobody is allowed to drive at less than 90 mph!—for the sake of economising in oil. However, despite our strong position, producing all the oil that we do, we have all the things that have been described in this debate—confusion and hardships here and there, people unable to get petrol on the motorways, garages closed over the weekends, some garages profiteering and the rest.
As the noble Earl explained, this is all part of the usual muddle we have when something unexpected happens—the unexpected in this case being the Iranian revolution and its consequences on oil supplies; and the fact that, before that, we had contracted our own oil to foreign buyers without ensuring that we would get adequate oil in return. The blame for this does not lie with the present Government, but mainly with the previous Government because the contracts to sell our own oil were made before the present Government came to office. If any blame is to be laid on the present Government, it is for the failure of the Secretary of State for Energy to do anything to lessen the chaos and its effect on the motorist. To put it another way,
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it is due to the failure of the Secretary of State for Energy to operate the free market price system efficiently. An efficient price system operates in such a way that at whatever price, petrol is always available, all day and night and all over the country. Obviously this did not happen, and it does not happen now. One can say that no price system in the world is capable of coping with sudden changes in supply of this kind—that one cannot rely on the price system to do this job. That is true. The price system is all right in normal times, but it is not capable of dealing with sudden changes in conditions, just as the Government of Mr. Asquith found in 1916 when operating a free market system to the last, when they found that all the scarce shipping space had been booked by the brewers for importing barley and not by the millers for importing wheat. That was during the First World War.
California experienced the same thing. There were frightful queues, as those who read the newspapers know, but they did not maintain the position adopted by our Secretary of State for Energy—namely, that any form of rationing is odious and tremendously bureaucratic. Instead, they introduced a simple, rough and ready system under which drivers with plates with even numbers were allowed to fill up on even days and cars with odd numbers on odd days, and that did the trick immediately. The queues diminished or disappeared and petrol was available.
This Government must not be dogmatic on these matters. If they want to operate a free market system, let them do it in such a way that it works and not in such a way that it does not work. Given the fact that we are in this potentially good position, when it is only this year that we are short because of all the muddles—we have given away our oil and not secured equivalent oil to take its place—it is all the more surprising to find our Prime Minister echoing the gloomy pronouncements of Mr. Jenkins, the head of the Brussels Commission, who appears to have been rather badly advised on the subject. According to the Guardian's report from Tokyo last Friday:
"As the news of the latest OPEC price increases became known, the Prime Minister said that the dearer energy meant that a reduction in living standards was inevitable for Britain and many other industrialised countries".

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No one seems to have asked the question—at least not until this afternoon—why should a reduction in Britain's living standards be inevitable in consequence of the rise in world oil prices? Surely as a nation we gain as much from the rise in oil prices as producers of oil, as we lose in our capacity as consumers. Perhaps we gain a little less this year, but we will gain a little more next year. But there is no need for the living standard of anyone to fall, not unless we contrive, by special Government policies, to bring about a wholly unnecessary immiserisation of the people.
It is true that the price of oil will rise. It is true that the price of oil should rise. But that does not mean that living standards need fall. Much the greater part of the price rise—85 per cent.—will accrue to the Government in the form of taxation under the existing rules, and they could follow for the remaining 15 per cent. the proposals of the American Government to put on an extra windfall tax for such unrequited gifts as our oil companies will receive as a result of action by the OPEC countries, which was not something they bargained for. So, although the price of oil will rise in relation to other goods and other forms of energy, this can, and should, be compensated for by the reduction of other prices, and there is no reason for an acceleration of inflation, for a rise in the cost of living index, or for a reduction of the real disposable income of wage and salary earners.
Mr. Jenkins suggested that oil should be removed from the retail price index, meaning that the retail price index will necessarily have to rise as a result of the rise in oil prices. This piece of economic masochism is certainly not relevant to Britain. It is not even relevant (as my noble friend Lord Balogh pointed out this afternoon) to other members of the EEC, such as Germany and France, who will have a real loss in the form of a deterioration of the terms of trade but one which they are quite capable of paying for out of increased production, out of resources which are at present idle. The order of magnitude is such that if the OPEC countries spend their increased income on additional imports, this will mean an increased export demand for Germany and other countries which would increase their production and employment and would not cause any fall in their net real income.
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If one assumes that the OPEC countries will not spend their increased income, but will accumulate credit balances, then the rise in oil prices will be the equivalent of the imposition of a tax which is not compensated for by any increase in expenditure—has no counterpart in expenditure—and which therefore has a net deflationary effect, in much the same way as if the Governments of consuming countries themselves increased taxation when it was not necessary.
What follows from this? Given inappropriate policies, it may well happen that the rate of economic growth of the world will be reduced, or even that the real income and employment of many countries will fall. But there is no need for any of this to happen, and if it does, it will be a consequence of the inability of the presently ruling Western Governments to understand and master the nature of the problems with which they are confronted. It will mark a failure of the intellect.
For these ill consequences could be wholly avoided if the consuming countries offset increased OPEC surpluses by increased deficit spending in their own countries; in other words, by remitting taxes in their own countries. I fear that this is not understood. There were some ominous remarks in the Statement by the right honourable Lady the Prime Minister in the other place yesterday—a Statement which was repeated in this House. I refer to the passage where she said, as reported at column 244 of the Official Report of 3rd July,
"We were all determined [in Tokyo] not to print money to compensate for the higher oil prices …".
The words "not to print money" can mean all kinds of things. If the OPEC countries do not spend the money, it is inevitable that there will be increased balances in dollars or perhaps in sterling, which is now regarded as a very good currency for holding one's money. If one does not print money in the sense of allowing the balances to increase, obviously the result would be an unnecessary immiserisation of the British people. But it would be due to a lack of understanding of economics—and not to anything more fundamental.
Day after day we read the gloomiest forecasts about our economic future

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arising as a result not only of OPEC, but of all kinds of other things. There was such a forecast in Monday's Guardian by members of the so-called "Item Club", composed of respectable economists. In fact the main economist used to be the economic adviser, if I remember rightly, in the Conservative Central Office. These economists based their forecasts on the Treasury's computer forecasting model. The danger which they see is that we shall get into a vicious spiral of accelerating decline, due to the toleration or the encouragement of a rapid increase in prices and the belief in the free market mechanism (including free collective bargaining in wages) combined with a rigid adherence to monetary targets. The combination of the removal of any form of price control, the refusal to contemplate any form of rationing, the toleration or even the encouragement of increases in prices and charges, which will be inevitable in the public sector as the Government's plans for cutting expenditure are brought into force and which will result from the planned economies, could well create a situation in which the whole price system will become unhinged. It will lose any point of anchorage.
To believe that an inflationary wave of this kind, once set in motion, can be effectively countered by monetary targets can in practice mean only one thing—that interest rates will be driven higher and higher in a vain attempt to hold down the growth of the so-called money supply. But these high interest rates will increasingly attract funds from abroad, which means that the higher interest rates are, the more the value of the pound will rise in relation to its true purchasing power and in relation to its expected future value because the interest differential, as no doubt some noble Lords know, can be compensated only by a differential between the spot price and the future price. Then, the inflow of funds will bring about a further swelling in the money supply, which will then lead to further attempts to control it by further raising interest rates—there is no other way of doing it; you cannot attempt to control the money supply, as it is ordinarily understood, except by raising interest rates—and so the merry-go-round will go on. In the meantime, our manufactured exports will suffer an accelerated decline, and our manufactured imports an accelerated rise; and
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the whole of our domestic industry will run down like a clock.
It has also been suggested that the very rise in the pound, by making imports cheaper, will slow down inflation. If the rise in the value of the pound were the natural consequence of a strong balance of payments, as has been the case with Germany until recently, then I think this would undoubtedly follow; but in our case the balance of payments is in a strong deficit. In the first five months of this year the current account, allowing for distortions, showed a deficit of £1,400 million, or £3½ billion a year, at a time when we enjoy all these extra benefits from oil exports; and the increase in the value of the pound is bound to make the current account a great deal worse. It is far from certain that the rise in the pound in such circumstances will bring any net benefit in lower inflation, for the simple reason that it will be accompanied by, and caused by, ever-increasing interest rates.
What most people fail to take into account is that the rate of interest is an element in the costs of industry—in the cost of carrying stocks and in the cost of work in progress. As we know that, in general, stocks are turned over twice a year, so every 1 per cent. increase in short-term interest rates is equivalent to a one-half per cent. rise in cost per unit of output. So it is far from certain that a rise in the pound which is caused by internal factors, a restrictive monetary policy, the attempt to hold down the money supply through raising interest rates, will bring any net benefit in terms of moderating inflation, because the lower import prices will act in one direction but the increase in interest rates will act in another direction.
The Earl of GOWRIE: My Lords, I am much obliged to the noble Lord for giving way. Before he leaves that point, will he not recognise, though, that a stronger pound, which of course has attendant problems for manufacturing industry, may lower inflation on import costs?
Lord KALDOR: I am sorry, my Lords; I was talking about that. I was saying that a stronger pound will lower import costs, but if the stronger pound is brought about by steadily rising interest rates then those rising interest rates will

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raise costs. It is an entirely different situation when the rise in the currency is artificially brought about in this way. I say "artificially" because the fact that our balance of payments on current account is in large deficit should make the pound weak, and not strong. This is a completely different situation from that in Germany, where the currency rise is accompanied by low interest rates as a result of a large surplus in their balance of payments. It is idle to think that, in the absence of a firmly established qualitative superiority for our goods, such as the Germans have established and now possess, our exports will not be seriously damaged by a rise in the exchange rate, especially in circumstances in which interest costs get higher and higher.
My Lords, none of this, of course, is inevitable—either the predictions of the "Item Club" or what I have just been saying. I am painting a possible scenario; one which at the moment looks likely to happen, given the wholly misguided but firmly-held beliefs of our present Ministers in the cure-all of a monetary target—and I fear that they are going to adhere to their beliefs for much too long. If we are really facing the prospect of the misery of rising unemployment, falling output, low profits and high inflation at the same time, it will not be because there is anything in our situation that makes these things inevitable. It will be because of sheer lack of common sense in the conduct of our affairs.
7.16 p.m.
The Earl of KINTORE: My Lords, I want to begin my few remarks by congratulating my noble friend Lord Armstrong on his very fine speech, in particular because I come from further North and further East than he does, and the points he made are most applicable in my part of the world. Otherwise, by now most of the points that I was going to make have been made by other noble Lords much better than I could have made them, and I merely want, in passing, to underline just a few, without going into them again. As many noble Lords have said, it is an obvious and sensible thing to cut out waste and conserve materials which are in short supply; and I very much agree with the noble Viscount, Lord Simon, that we ought to be thinking
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of there being virtually no oil in probably 10 years' time. It is no good thinking 30, 40 or 50 years ahead: to my mind, the facts will disprove this timescale. Anyway, time is not on our side.
The noble Baroness, Lady Masham, made a very good point, I thought, which again I was myself going to make, about the value of bicycles and cycling. This, clearly, is something the Government should support, anyway by way of propaganda if in no other way. Again, no real harm would be done to education if we stopped heating to about 80 degrees Fahrenheit all the school swimming pools, which are very numerous, for the four winter months. We could, without any real harm, confine our swimming to the rest of the year, without heating during that period, and we should get quite a saving in that way. Another case is that of illuminated signs. There is no reason why they should not be turned off at, say, 11 o'clock at night. I think that type of thing should be done. What we really want is vigorous—and I mean vigorous—propaganda from the Government; not a sort of laissez-faire attitude. They must tell people what they expect of them. That point has been made by many noble Lords, and I entirely agree with it. Then, I agree with the utilisation of waste heat, far better insulation and lagging. Again, the Government should take a lead in urging this on people.
There is one point which I think has not been touched on, and that concerns the developing countries, in some of which I have worked for quite a number of years. We may be out of oil before these countries have developed. Many of these countries have great advantages which we in this country do not have, and I think these should be stressed. I am referring to the fact that they have large resources of labour and enormous animal resources. It is less than 40 years ago that we were farming and producing food in very reasonable quantities by developing animal power—and, of course, horsepower gives you a clue to that. A developing country which has these resources, whose people are not highly technically skilled but are skilled in the use of animals, could produce cheap implements and cheap equipment—for example, things like the old chain of pots for irrigation. Furthermore, one could apply modern

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technology on a small scale to the storage of grain. Instead of the bugs getting about 50 per cent. of the stored grain, one could very simply conserve grain on the spot in a number of small village granaries, so that the food is there, on the spot, for the people to eat.
I think that an educational drive on the use of those advantages which exist in such countries should be pushed forward, so that at least people's attention is drawn to them. I do not say that those countries should be starved of oil—of course, not—but they have these advantages. Incidentally, I do not think that any oil was used in the building of the Pyramids. With nothing but animal power I have built conservation dams and roads and other structures of that sort in one of those countries—and, at the end of the day, you could eat the animals. We should be leading these people down the garden path if we tried to develop those countries too rapidly under modern methods.
My Lords, what I really wanted to talk about was the next stage in nuclear power. At the moment, I think there are about 200 nuclear stations working or about to work. They are all producing plutonium and they are all utilising less than 1 per cent. of the uranium fuel put into them. In this country alone, we have the equivalent of 40,000-million tons of coal in stock in the form of uranium 238 which can only be utilised in the fast breeder reactor. It is time that we really got a bit of an urge on in getting a demonstration reactor. One noble Lord asked why things could not be done on a small scale. I should like to point out that things have been done on a small scale. We are now well past the small scale. We started 20 years ago or more at Harwell, then at Dounreay and now we have a prototype reactor with a respectable length of running time "under its belt". What is required now is the full-size demonstration reactor. I gather that there is a good deal of hold up by the Department "dittying" about "Who is going to run it; where is it going to be and what sort of inquiry are we going to have?" It is a matter on which the Government should get a move on. I am sure that this point has been made by other noble Lords and I apologise; but I think it is important.
There is one other point which I think is worth making. Let us take the virulent,
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highly-reactive effluent produced by a nuclear power station. I have the figures; they are very rough and ready, but are reasonably accurate. A large gas-cooled reactor of 1,320 megawatts (which is the large size now being produced) in one year produces 10,000 gallons of highly active effluent. If you reduce that figure to cubic yards, it is under 60. With that figure in mind, looking at this Chamber, I think it would contain the total virulent effluent output of (I cannot measure it) something well over 100 years' operation. We ought to consider these things in their perspective. Dangerous?—yes. But they are containable.
I think one should draw the attention of the environmentalists to what happens in the same size of station—my figures are a bit tentative and they come from Bodam power station, which is of 1,300 megawatts, the same size, and it is not yet running—which is designed to be oil or gas-fired. Somebody has said that coal and oil are much the same thing; except that, with coal, one has the trouble of disposing of the ash. But the figures are these. In one year's running 90 million kilogrammes of sulphur dioxide are produced. That works out (and I am not too happy with my conversion) at about 81,000 tons of sulphur doxide, 4.5 million tons of carbon dioxide—and that is not necessarily very harmful but some people think it is and that this, pumped into the atmosphere, would alter the heat from the sun. I do not know; I am not a scientist. Also produced are 10½ million kilograms of carbon monoxide, which is highly poisonous. That boils down to about 9,400-odd tons. In addition there are 4·5 kilograms of various oxides of nitrogen—about another 400-odd tons of highly objectionable discharges. This comes from coal and oil. As I said, certainly one gets effluent resulting from nuclear power stations; but one must compare the figures I have just given with the 60 cubic yards or thereabouts, that I have mentioned before. These effluents can be gassified. This has been done fairly successfully.
There are still arguments as to which is the best method, but for me, the facts I have mentioned put nuclear power right ahead of any other method because there is so little harm resulting to the environment. Any other of these stations causes enormous harm because of these undesirable

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discharges. A lot of this information is in a very fine booklet called Atom which is brought out monthly by the UKAEU. I do not think it is in the Library; but it should be. I think that many noble Lords would find extremely interesting the research information contained in that booklet.
My Lords, I want to finish by saying that time is running out, and, for goodness sake!, get a move on, with proper attention, of course, to safety. The record in safety with ourselves is superb. With regard to the American experience, there is another way of looking at it. Although, apparently, there was crass negligence with the measures of containment and so on, nobody was injured in the end; and the very same thing, of course, can be said of Windscale.
7.30 p.m.
Lord LEE of NEWTON: My Lords, may I join with others in offering congratulations to the noble Lord, Lord Armstrong. I thoroughly enjoyed his maiden speech. When he reminded us of the heavy unemployment in Northumberland, it certainly struck a chord with me. I once had the job of trying to cure the unemployment. When there was a sneeze in London, we had pneumonia up in the North-East. However, I thoroughly enjoyed his speech and I hope to hear him again on very many occasions.
At the moment it would seem that the main cause of public concern is concentrated on shortages of petrol and the increases which are taking place in its price. Of course, that is very understandable. I thought that the debate today suggested that the House considered itself to be in the preliminary stages of perhaps many future discussions that will increasingly concern themselves with the effects on our society as a whole of a permanent change in the provision and use of energy by our manufacturing industries, for space heating and for transport of both goods and people. In other words, I believe that the House was very seriously wanting to know where we are going on the main issues which as yet perhaps have not revealed themselves.
I think the Government's reaction to the oil shortage is causing some confusion. Prior to the Tokyo meeting, we were told
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by the Minister for power that it was merely a marginal issue requiring a little more care in the use of petrol and other oils. As I understood his statement, that was the reason advanced by the Minister for refusing to have a system of priorities, including priorities for industry, doctors and essential projects.
The noble Earl, Lord Gowrie, repeated that today. In the course of his speech he first of all said that a 5 per cent. saving is all that we need in the way of saving on oil. He went on a little later to tell us that we cannot return to the old life. I would not have thought that a 5 per cent. saving on oil is going to change our lives permanently. The Government must face the fact that at the moment the nation is very confused about what they are saying. Is it merely a question of driving a little more slowly, or is it something else? Indeed, the second quote I made from the noble Earl's speech means that we cannot again hope to return to our former way of life.
Now that the Tokyo arrangements, as outlined in the communique, presuppose long-term restrictions on oil uses, and the OPEC countries are threatening even higher prices within a few months from now, are we still to continue to ration ourselves by the purse or do we attempt to get our priorities right? It seems to me that we cannot continue to permit the price of petrol and oil to go on increasing which means that those with the biggest purses can get them. We must look after the interests of the nation as a whole, including industry and whether the doctors can have priority. I hope the Government will realise that this is causing great anxiety. I am not saying that we want a rigorous type of rationing, but surely we are all agreed that there are within this situation priorities which we really must try to ensure as we go along.
The question which the Government must answer is this. Why is it that at a time when oil producing nations are in such a dominant position as against the consumers we, an oil producer which will be self-sufficient in a short time, are told by the Prime Minister that we must accept a reduction in our living standards? There is an illogical issue here. If indeed to be possessed of your own oil gives you such a dominant situation as against the consumer, where do we come in? Is it

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really the time when we should be told that, because of the shortages which are now becoming obvious, we must accept a reduction in our living standards? The noble Lord should address himself to why we should accept a statement of that type.
Indeed, not only are we practically self-sufficient with our own oil but every time OPEC increase the price they increase our own oil values. It is not a question that we, in our position of having North Sea oil should be looking forward to a reduction in living standards; as I assert, our situation is improving as OPEC increase the charges. I am not for one moment suggesting that we should adopt the same selfish and rather arrogant policy as some of the OPEC countries are doing. These are straight, simple questions, which I feel are worrying the nation and they require an answer.
We all understand the need for imports of heavy oil. They need to be balanced by exports of our lighter oil. But how much guidance—and, indeed, instruction—are the Government issuing to the oil companies on the amount of exports and the destination of those exports? My noble friend Lord Hatch of Lusby mentioned the South African problem. I was looking at Sir Ian Gilmour's statement to another place, that they had received categorical assurances from the oil companies that no oil would reach Rhodesia. I would have thought that such a statement was quite without value while South African legislation prevented any disclosure about oil movements within South Africa. Noble Lords will recall that that legislation was deliberately passed not all that long ago in order to prevent anybody from knowing whether the oil actually went to Rhodesia. Therefore, I join my noble friend in asking the Government to make quite clear how they can possibly make certain that oil going to South Africa does not in fact reach Rhodesia.
May I also ask whether there is any way in which the Government can affect the spot prices going on at the moment in Rotterdam? This is really a shocking situation. These prices are soaring and I would have thought it a reason why the Government should attempt any way to control exports. Despite what the Tokyo communiqué says about controlling trade
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in oil, experience tells us that the power of international oil corporations is such that without determined Government intervention there just is no way in which the Tokyo decision can in fact be implemented. Most of those decisions are not really of much value to us because once we agree, as apparently we have, that the United States, whose consumption is far greater than that of any of the other countries, can adopt as a goal for 1985 the figure for 1977, when its imports were at an all-time high, while the Europeans tie themselves to a much more stringent base-date, it is very difficult to understand what satisfaction there is in the Tokyo arrangements, as far as we are concerned.
In their dealings with the oil companies, the British Government have a far better chance of exercising control than most of the other Governments, but of course they have the advantage of a majority holding in BP and the use of the BNOC to achieve that objective. The noble Earl writes books, and in the world inhabited by novelists it would require an author with a particularly sadistic turn of mind to create a plot in which a Government with those advantages proposed to throw away a majority shareholding in the one and actually to emasculate the other. Surely the House will agree that the situation which today we have been discussing demands a far closer working relationship between Government and both of these, in order to strengthen the nation's position. I invite the Minister to tell us why that should not be done.
Many noble Lords today have referred to the coal industry. My noble friend Lord Taylor, who has put many years of his life into it, gave us an account of the past in that industry. Indeed, many of us have echoed his sentiments. I think there is a need for a complete change of attitude towards the coal industry and that we should begin to try to effect such a change. During my period as Minister of Power, I was constantly charged with "propping up a declining coal industry". I have been looking up Hansard, and that was a charge levelled at me by one or two gentlemen who pressed me about it. They said that the industry "belonged to another age"—well, we have now seen the age it does belong to!
I rendered assistance to it by means of short-term measures which increased its

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market by 5½ million tons during 1965–66. The noble Viscount, Lord Simon, asked whether we could not do more to influence the Generating Board into taking more coal. The fact is that we can: if I may say so, I did it. So if the Government want precedents they have one there. That was purely to me an interim thing. I then wrote off £415 million of capital debt and produced the 1965 White Paper, which co-ordinated for the first time all the various sources of energy production by 1970, in terms of coal equivalent, of which coal was to be the supplier of 180 million tons per annum. I just do not understand why the coal industry did not stick to that, because those targets proved correct for 1970—the total target of 324 million tons of coal equivalent and indeed the 180 million tons which I suggested.
The British coal industry is, of course, among the most modern in the world. It now is in need of men; and I think this arises from this background of young men feeling that they were being written off and that there was no future in the coal industry. I hope that in their public relations work on this the Government will do everything possible to show that this is not something which is consequent upon a temporary crisis but that for as long ahead as men can see we are going to need more and more British coal. If that can be done effiectively, I think the crisis—I will not say, crisis: the shortage of manpower—in the coal industry could yet be rectified.
Noble Lords will remember that we have agreed to try to step up by the end of the century to 170 million tonnes. At the moment—I do not know whether the noble Earl, Lord Bessborough, knows more about this than I do—I am not very sanguine about our ability to do so. If we cannot, it will be another great setback. When all is said and done, the old pick-and-shovel days that my noble friend Lord Taylor could tell us all about are long since over. Technical achievement and engineering skill are now the basis of the kind of work that coalminers will be asked to do.
The communiqué from Tokyo states:
"We pledge our countries to increase as far as possible coal use, production and trade".
The noble Earl, Lord Bessborough, also mentioned that. In Britain we have
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already embarked on expanding our coal production. What of the other EEC countries? The only other "bulk producer" is West Germany and, as I understand their position, they are not planning to increase their total production of coal but are content to go on researching into technical improvements in the use of the coal that they produce—
The Earl of BESSBOROUGH: My Lords, brown coal.
Lord LEE of NEWTON: My Lords, brown coal: of course it is. I hope I am not arguing a selfish attitude in energy matters, but we are not playing for small stakes in all this; and I hope that in our discussions with our colleagues in the EEC we shall impress upon them that there is a dire need for each of them to go after the resources, wherever they may be in the ground, and to begin at once.
Exports of oil to EEC countries are going to increase, and our increased effort to extract more coal will, I suppose, be looked upon as a bonus for the Nine. We are therefore entitled to expect that, wherever there are coal deposits to be worked, the Community will go after them. The costs of importing all kinds of energy are going to increase rapidly and every effort must be made within the EEC to provide all possible quantities of each of the ingredients we are talking about, in order to minimise our dependence on imports from outside the Community. The part of the Tokyo communiqué that I quoted pledges all of us to increase our own indigenous energy supplies. We really must see to it that all of us pull our weight in that respect.
I am quite conscious that when relics of other days are brought back to the Front Bench there is always the danger that they will relive the past. I have done a little bit of this up to now, but I hope that what I have been saying in that respect has been relevant to our present debate. If I may go a little further with the same theme, it was on 25th May, 1965 that I was able to announce we had chosen to develop our own AGR reactor in preference to the American reactor. As I recall, although the initial installation costs of the AGR were higher than the American reactor, we were satisfied that its economics would be better. We also believed that there was a greater safety

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factor in the AGR than in the American reactor: that theme has run through many speeches today. Although the AGR, along with every other system of reactor, has had its setbacks, I believe we now know that so far as is humanly possible the safety factor in the AGR is very good indeed. When the noble Earl was talking about the expansion of nuclear energy, I do not think he said whether we are to concentrate purely on the AGR, or whether there are any water reactors or other elements to be brought in.
As I have said, one of the factors that we had in mind was the safety factor. I was very pleased that the Prime Minister mentioned the other day that we would do everything possible to ensure safety. When all is said and done, we are living on a comparatively small, crowded island. We do not have the space of the United States or the other great Continental countries. Therefore, to us the safety factor must be of overriding importance in all that we do. I trust that the Government have this kind of thing very much in mind.
I was struck by what my noble friend Lord Ritchie-Calder said about the mystique that is always attached to the Atomic Energy Authority. I remember one of my colleagues in another place, who would not trust an ordinary boiler for boiling water just because the Atomic Energy Authority in my constituency had bought it. I believe that the noble Earl himself talked about this mystique. Again, this is a field in which there is much work to be done and I hope that the Government will pay attention to it. Inhibitions of this kind could hold us back in our desire to develop atomic energy, and to get the resources of the coal industry up to the levels that we want by the end of the century.
I do not believe that the brain drain has robbed us of our best scientists. I believe that we have the capacity to produce a reactor system which will compete with anything in the world. I attach some importance to this. We were disappointed that we did not get our reactors away in the export markets in competition, especially with the Americans who are not very particular about what they do in getting their products away. I hope that the Government have this very much in mind. If we are to increase
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our efforts in the production of reactors, we really must try to get across the idea that for export purposes we are pre-dominent, or at least equal to anybody. If we do that, we can help ourselves in the days ahead when none of us is very sanguine about the levels of unemployment. We could get into employment that highly skilled number, which the noble Earl and I were discussing the other day, which, of themselves, could do a great deal to find employment for unskilled people.
Viscount HANWORTH: My Lords, before the noble Lord sits down, may I ask him a question? I avoided interrupting him in the middle of his speech. I think he said that we should use our oil revenue for propping-up the standard of living, when most of us think that it ought to be put to more useful purposes in investment for the longer profitability of this country. Would the noble Lord comment on that point?
Lord LEE of NEWTON: My Lords, either I said it very badly or the noble Viscount's hearing is defective. I did not say that, I did not mean that and I would not support such a policy.
7.54 p.m.
The MINISTER of STATE, DEPARTMENT of EMPLOYMENT (The Earl of Gowrie): My Lords, it has been a fairly long debate, but I, for one, found it extremely interesting and informative. I start by congratulating the noble Lord, Lord Strabolgi, on the way his debate has gone, and adding my congratulations to my noble friend Lord Armstrong on his maiden speech, which we all enjoyed. It is more than conventional politeness if I say that we hope he will bring to our attention his interests and activities in the North-East, as well as many other items, on many occasions in this House. We are glad to see him here.
It is appropriate that this House should debate energy questions in the present climate, because the present, and still extant, energy policies are largely the creation of three noble Lords—the noble Lord, Lord Balogh, the noble Lord, Lord Kearton, and the noble Viscount, Lord Stansgate. The noble Lord, Lord Balogh, was kind enough to write to me to say that he could not be here for the winding-up, so I shall not deal with his

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speech but will talk to him and the noble Viscount, Lord Stansgate, who was also otherwise detained, about their speeches. But I am sure the noble Lord, Kearton, when he reads Hansard tomorrow. will pay attention to what we have said. It was also agreeable to have a winding-up speech from a former Minister of Power. When I go along to the Department of Energy for my discussions and briefings for occasions such as this, I go down a long corridor and pass an admirable "mugshot" of the noble Lord, which is of course much admired.
I shall deal first with some of the points made by the noble Lord, Lord Lee of Newton, when he said that there may be some confusion in people's minds as to what the situation is. I have rehearsed the situation fairly carefully in two debates, and your Lordships would not wish me to go over it again, but would rather let me try to deal with an area where there may be confusion.
We have become very accustomed in this country, when there is a difficulty or a problem, to ask "What is the Government doing about it?". To some degree, it takes quite a lot of government to resist charging in and interfering, not with some theoretical notion of a free market—I am not concerned with that—but with the way existing systems of allocating resources work.
What we are doing is not letting the issue go. We are monitoring it very carefully. We are monitoring it in association with the United Kingdom Petroleum Industry Association, which has undertaken to handle the requirements of customers with problems in times of crisis as flexibly and swiftly as supply constraints allow. Where people are confused is between the twin issues of price on the one hand, and supply on the other. When my right honourable friend the Secretary of State talks about a 5 per cent. shortfall being copeable with, without a strict system of rationing or even formalised allocation of priorities, his feeling is not any doctrinaire objection to rationing as such, but the feeling that a shortfall of 5 per cent. simply does not warrant the expense, difficulty and delays that that rationing would involve.
But the pricing issue is very much a different affair. What we have to get
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over to people is that our whole industrial civilisation is moving into an era of dear energy costs, and very few people, once they have thought about it, even for a few minutes—and certainly very few people in this debate this afternoon—would expect us to use our North Sea oil resources at lower than international price levels in order to protect the standard of living of our own population, thereby, as the noble Lord, Lord Kaldor, pointed out, denying ourselves immense sources of export revenue. We are all simply having to adjust, and rather painfully, to new and higher levels of costs.
My noble friend Lord Armstrong, in his admirable maiden speech—and the noble Baroness, Lady Masham, echoed him in this—was worried about the effects of shortfalls on rural areas and on the farming community, which point was raised again in regard to horticulture by the noble Lord, Lord Collison. Obviously we are concerned with this, particularly at this time of the year, and that is why we are working with the United Kingdom PIA to see that more supplies are encouraged to go to particular areas, to villages and farming communities where the worst shortages exist.
Although particular customers have sometimes reached near crisis—and noble Lords will have their own experiences and tales to tell—we find that we have been able to provide help on a much more selective and efficient basis in this way than by drawing up general priority categories to make whole sectors immune from shortage. I suggest to noble Lords who have called for priority categories that if one starts to apply those there will probably be a sharp drying-up in the balances of supply. We do not feel that our 5 per cent. shortfall, which has been, on the whole, well responded to, at this stage warrants it. But I assured noble Lords in the former debate, and I assure them again, that this is something which, from its crow's nest or watchtower, the Department of Energy is monitoring. We feel, however, that fearful difficulties have occurred in the United States through the attempts to create immunities or privileged classes of customers, and we are trying to learn from their experience. We do not feel that that approach has helped.

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We are not allowing any emergency services to be put at risk, and I defy any noble Lord—I say this in a completely friendly spirit—to give me an instance where a life has been lost or where there has been an emergency breakdown of that kind, due to the shortage of oil supplies. If any public service has been in difficulty, the Department has intervened and has provided help with great speed; others have managed to deal with problems through their supplier or their distributor. I am confident that in the present circumstances we can continue with that system.
We are in touch with the Public Service Transport Operators' Committee. This is a committee which, I know, deals with the problems of rural areas. However, as my noble friend Lord Lucas of Chilworth said in his very cogent and commonsense speech, many of the rural transport proplems are not due to shortages energy; they have to do with the breakdown of certain standards of pay ratios in rural public services generally. They are severe problems and we shall deal with them, but they do not have anything to do with the energy shortfall. There is no way in which we feel that we can declare that certain groups will be totally immune from the shortage and the permanent new era of high cost energy which faces this nation and every consumer or worker, whatever his or her position.
My noble friend Lord Armstrong has experience of the tourist industry. I was glad to see on the wires this afternoon that the tourist association has advised tourists that there is no significant shortfall to worry about. The association is monitoring the situation and will give help where blockages occur. It is important to deal with this matter, since it is a question of confidence. If tourists feel that there is no petrol, they will not go touring, and one will find that there are surpluses of petrol.
I want to deal quickly with some of the extremely fascinating points which were made by the noble Lord, Lord Kaldor. His speech, like that of his noble friend, the noble Lord, Lord Balogh, was at a high macro-economic level. When I say that I shall read his speech, it is no mere politeness on my part. The noble Lord usually sends me copies of his speech. His speeches are studied with great care. I know that my right honourable friend
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the Secretary of State, as an ex-pupil, even though their ways have parted to some extent, is still very aware of what the noble Lord has to say. I do not want to paraphrase the rather unfortunate remark of the last Prime Minister when he said: "What chaos?" However, at the beginning of his speech the noble Lord, Lord Kaldor, painted a portrait of civil breakdown in this country. I have not been in Scotland but I have been on ministerial visits to the North and the West Country, and I have not yet seen evidence of giant pythons roaming in the streets while people are stranded or shooting each other at "gas" stations. We must keep this problem within the context of the 5 per cent. shortfall which I mentioned earlier.
I contest one point which was made by the noble Lord, and several other noble Lords on the other side also mentioned it. We are not relying on a market or pricing system. We are relying on a scissor system of price on the one hand and conservation on the other. I am glad that towards the end of the debate my noble friend Lord Kintore brought back our minds to the conservation issues which are so important and without which our attitudes towards pricing would, I agree, be meaningless. Conservation is dealing with the 5 per cent. shortfall. Pricing is dealing with the new climate which all the industrialised countries of the West are having to deal with.
The noble Lord, Lord Kaldor, ended his speech on a robust and even optimistic note; that bit of it I certainly agree with. He told us to counsel against a wholly unnecessary immiserisation of the people. May I respectfully suggest, as a fledgling Minister, as the noble Lord, Lord Balogh, described me, that we have no interest in immiserating the people. Nevertheless, my right honourable friend the Prime Minister of course recognises that there is a deflationary effect as a result of OPEC not investing back into our economies their dollar surpluses, and we shall do everything that we can to persuade them to do so. Whether my right honourable friend has gone on to make the enormous quantum leap—that the response to this is to go back to deficit financing—I am not yet sure, but I shall bring to her attention the noble Lord's suggestion and will see what sparks fly.

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I agree with the noble Lord that I am rather bullish about the higher pound. I see various aspects of inflation responding favourably to it. We should not be over-worried about this. Like the German economy, we have to adjust to manufacturing higher quality and more durable goods. Germany has been able to do that, and I see no reason why, with our many firms which have a reputation for quality, we should not do so as well.
May I turn quickly to the many points which were raised by the noble Lord, Lord Strabolgi, some of which I said I would have to put off until I wound up the debate. The noble Lord asked me about the effect of home insulation on rateable value. Insulation is not the only desirable improvement which one can make to one's home and which therefore affects the rateable value. It would be a little difficult administratively to distinguish between different types of improvement. When is insulation an addition, a decoration, or anything else? In practice, however, minor improvements, which would not increase the annual rateable value by more than £30—which must include the vast majority of home insulation improvements—are disregarded between general revaluations. As my right honourable friend the Secretary of State for the Environment announced recently, the revaluation which would have taken effect in 1982 has been cancelled, pending a total review of the system.
The noble Lord asked me questions about coal and, if I may, I shall deal with all of the coal issues which were raised by several noble Lords. The noble Lord, Lord Taylor of Mansfield, told us that he is coming up to the 71st anniversary of the day that he first went down the pits, and we all congratulate him upon that remarkable achievement. The substantive point about coal, which I made in my opening speech, is that we are making our contribution. A £4 billion investment programme is in train. We feel that now it is up to the industry to maximise production and minimise the kind of practices which keep uneconomic pits in being and the price levels of coal too high. We do not want to be in a situation where we are using our newly strong pound to buy overseas resources with which we are extremely well endowed.
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Various noble Lords raised the question of the tripartite machinery. So far as coal is concerned, I can assure them that the Government fully appreciate the value of the tripartite machinery and that we have every intention of making full use of it. My right honourable friend the Secretary of State for Energy will take the chair at his first such meeting with the National Coal Board and the unions on 12th July, thus continuing the tradition of such consultations regarding the coal industry's future.
The noble Lord, Lord Strabolgi, and also the noble Viscount, Lord Simon, asked about the Government's policy on building more coal-fired generators. The generating boards of England, Wales and Scotland are planning this year to burn nearly 90 million tons of coal. The boards expect coal to maintain a significant role throughout the 1980s and beyond, and they also expect to have the capacity to burn all the suitable coal which the Coal Board can make available. As noble Lords will be aware, over 70 per cent. of the fuel requirements last year of the Central Electricity Generating Board were met by coal. I can confirm to the House that the board are proceeding with the completion of the Drax power station which will add a further two gigawatts of efficient coal burning plant to their system in the mid-1980s. Decisions on further capacity will be taken as the need arises.
The noble Lord, Lord Strabolgi, also raised the question of the future of the Energy Commission. I believe that the noble Lord, Lord Taylor of Mansfield, also raised this question. The noble Lord, Lord Strabolgi, will be aware that the future role of all advisory bodies is currently under review. That is all I can say at the moment on this issue.
I dealt with the nuclear questions in my opening speech, but various noble Lords came back to them. There was a consensus in the debate, as reflected by the noble Lord, Lord Collison, that to some degree nuclear energy is necessary, that we shall have to go down a mixed economy road so far as energy is concerned and that our nuclear power future is very important. I have already remarked upon the safety aspect. I do not underestimate safety, simply because, on the grounds of time, I do not reiterate those

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remarks. I was very impressed by the phrase which was used by the noble Lord, Lord Ritchie-Calder. He said that we are suffering from "nuclear superstition". It will be a long, hard road in this country for us, as communicators, to allay the understandable fears of the public. I think that the noble Viscount, Lord Simon, speaking for the Liberals, was startlingly honest when he said that he disagreed with his Party's response to the nuclear issue. Perhaps the noble Viscount will guide his Party on to the right lines; we should all be glad if he did.
The noble Lord, Lord Strabolgi, referred to a report in the Daily Telegraph that the Government are planning five new nuclear power stations. That is inaccurate; no decisions of the kind described have been taken but we certainly stand by the communiqué issued in Tokyo last week and the importance that it attached to nuclear power.
The noble Viscount, Lord Hanworth, and the noble Lords, Lord Strabolgi, Lord Wynne-Jones and Lord Lee of Newton, asked about our policy on the construction of commercial scale demonstration fast reactors. The present position is that the United Kingdom Atomic Energy Authority and the electricity supply industries are considering the next steps in fast reactor policy, including the possibility of constructing a CDFR in this country with a view to putting proposals before Ministers. Ministers will have their own views about the fast reactor and I certainly have mine, but they should wait until we see what our aides are providing for us.
I said in my opening speech that I would say something about gas. Gas production is expected to rise steadily until about 1990 and then begin to fall slowly and gas, like oil, is of course a finite resource which we must use sparingly. It is therefore sensible to concentrate sales in those markets where gas has a premium value; that is to say, in domestic and commercial and industrial processes where high quality fuels are provided.
The noble Lord, Lord Strabolgi, asked whether the Government intend to sell off the British Gas Corporation's North Sea assets and he also linked with that some of the assets of BNOC. My right honourable friend the Chancellor of the
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Exchequer announced the Government's intentions with regard to the sale of State owned assets in another place and when he did so he said that we must of course retain flexibility on timing and the precise mix of assets to be sold in order to ensure a fair price. That remains the position, and I think the noble Lord will understand that that is really all I can say about it at the moment.
Mention was made of renewable energy sources. The noble Lord, Lord Ritchie-Calder, spoke about waves and the noble Lord, Lord Collison, about solar energy. I was very impressed by the speech made by the noble Lord, Lord Collison, in this context. We should like to see private industry and small business going into these fields.
The noble Lord described the remarkable bath system which he installed and perhaps he could market it and sell it for £270 to the rest of us! We are allocating quite substantial sums of money to research in these fields: wave energy research gets £5·4 million and solar energy, £6 million. As I have said, it is most important in this field to ensure that adequate industrial involvement is made because it is the private sector which will carry out the eventual commercial development.
Turning now to the speech made by the noble Baroness, Lady Masham of Ilton, I can assure her that this Government are generally conscious—and this Minister particularly conscious—of the needs of disabled people. I am in charge, in my Department, of employment issues as they affect disabled people and of course in these days there is little employment for such people without mobility and therefore energy and fuel shortage questions are of paramount importance to them. As a result we have in fact taken the initiative; we have approached the Motor Agents' Association, of which I think my noble friend Lord Lucas of Chilworth is a member, and who represent the garage trade, about disabled motorists. As a result the association has undertaken to bring the special needs of disabled motorists to the attention of their members.
I wish to congratulate my noble friend Lord Bessborough on his most interesting and stimulating speech. Certainly we

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must try to co-operate and make initiatives with our Community partners on energy issues as we are thoroughly involved with them. It is a question which my right honourable friend Mr. Heath also raised while speaking in Vienna last night and he emphasised the role that Britain has to play in the discussion of energy questions with our partners. I noticed what the noble Earl said about the European Monetary Union. When safely in Opposition I made some rather "bullish" noises about the European Monetary Union and I am still trying to promote it, so far as I am able. It may have significant energy implications and we should try to go down that road if we can conceivably afford to.
Perhaps I may say to the noble Lord, Lord Wynne-Jones, in great friendship, that he really should not make mischievous representations of a fellow chemist such as my right honourable friend the Prime Minister. No one—certainly not the Prime Minister—suggested that the nuclear is a kind of instant solution but we need to discuss it now because it takes a long time to come to fruition and resources and development have to be allocated at a very early stage.
My noble friend Lord Wolverton said, quite rightly, that there is a working party now looking into further electrification of the railways. The Department of Transport and the British Railways Board are both involved and the energy aspects about which the noble Lord is concerned will bean important element in the study. I agree with him that they have been somewhat slow about it and I will see what can be done to hurry them up.
I come now to the most controversial moment in the speech, as we would expect from him, when the noble Lord, Lord Hatch of Lusby, asked me about the BP-CONOCO deal and the question of petrol getting to Rhodesia via South Africa. There is not very much that I can add to what I have already said. I have spelt out the policies as carefully as I could and I should like to "come clean" with the noble Lord and say that petrol companies have given assurances to Ministers that oil will not get to Rhodesia through this allocation. I could not put my hand on my heart and say that one could earmark a piece of oil, follow it
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round the world and wonder where it ended up. Therefore it seems to be more reasonable to say that South Africa is a major trading partner of this country. That was certainly the condition that pertained under the last Government and under that Government there was no serious suggestion that it should cease to be. Where we trade with South Africa it is inevitable that some of our international obligations will be broken; as a trading country we have to trade with many countries of whose policies, domestic or foreign, we disapprove. But we will try to keep an eye on the situation. I will simply say that I cannot give him the guarantees that he would like. He should be a little careful in the strictures and the remarks that he makes about Nigeria. would point out to him that Zambia, Nigeria and other countries in black Africa are also trading partners of South Africa and despite their political attitudes probably all sorts of resources are getting through to Rhodesia in that way.
As I said at the beginning, this has been a long debate and the energy of this Minister, in any case, is beginning to wane. I should like to repeat my congratulations to all who took part and to the noble Lord, Lord Strabolgi, for initiating it in a trenchant and timely manner.
Lord HARMAR-NICHOLLS: My Lords, before my noble friend sits down will he make one comment on what is a minor part of the massive and informative speech which he has just given us; namely, the answer which he gave to the point raised by the noble Lord, Lord Strabolgi, about the cost of insulation affecting the rateable value of property? It is a great sadness that he gave precisely the answer that the noble Lord, Lord Strabolgi, and his noble friends used to give to me on that subject. It is possible for the Government to do something about this, if it is only to send a circular to valuation officers asking them not to take into account the cost of something that can clearly he seen as an installation to save energy costs. Can the noble Earl go that far on this point, which is a minor one but which will cause a lot of irritation if we cannot get satisfaction from him?
The Earl of GOWRIE: My Lords, I rather agree with my noble friend, and I

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am certainly anxious to give better answers than the previous Government, so I will see what I can do.
8.18 p.m.
Lord STRABOLGI: My Lords, I agree with the noble Earl, Lord Gowrie, that we have had a very good debate and I should like to thank noble Lords from all parts of the House who took part in it. I am particularly grateful to the noble Earl, Lord Gowrie, for his careful attention to all the points raised, including mine, and I should like to congratulate him on both his speeches but particularly on his winding-up speech. Having taken part from that Dispatch Box, I know myself how difficult it is to cover all the points raised in the fairly short time available and I should like to congratulate him on the way he did it and on his attention to all the points raised.
I should also like to congratulate most warmly the noble Lord, Lord Armstrong, on his admirable maiden speech and I hope we shall hear from him again on many other occasions. I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

PENSIONERS' PAYMENTS AND SOCIAL SECURITY BILL
Brought from the Commons; read 1a, and to be printed.

UNCTAD: MANILA CONFERENCE
8.20 p.m.
Lord BROCKWAY Lord BROCKWAY rose to ask Her Majesty's Government whether they are satisfied with the progress made at the UNCTAD Conference in Manila. The noble Lord said: My Lords, I beg leave to ask the Unstarred Question in my name on the Order Paper. Discussion of this issue has now been continued for five years. We have had special conferences about population, environment and food; we have had the North/South dialogue at Paris, and we have had five meetings over the years at the United Nations Conference on Trade and Development. I think we have to acknowledge tonight that at the end of all these conferences the confrontation between the
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poorer countries of the world and the richer countries is now more severe than it was five years ago. I know that endeavours have been made to suggest that at the Manila conference there was progress. In fact there was deep frustration in the representatives of the poorer nations. There was failure on the fundamental issue and a balance of failure on incidental issues.
My Lords, the basic problem between the industrialised nations and the nations of Africa, Asia and Latin America is the gulf between riches and poverty. I do not know how we can enjoy life, as I admit I do, when we remember that in the world today one in eight of the population is actually starving; that half of the population of the world is suffering from mal-nutrition; that a child who is born in Africa, Asia or Latin America has 15 times more likelihood of dying before that child is one year old than a child in the industrialised countries. Those are facts given in the United Nations survey. But this is not only a question of the poorer nations. The fact of the absence of purchasing power of three-quarters of the world's population means inevitably that there is unemployment in Britain and in all the Western countries. Therefore we must approach this problem from the point of view not only of the poverty of the third world but also of the relative poverty in our own country.
The present arrangements between the industrialised nations and the nations of the third world were decided at the Bretton Woods Conference in 1944. At that time the nations of Africa and Asia had no representation; they had not become independent countries. Although I recognise that at Bretton Woods there was certain benevolence, largely under the influence of Keynes, inevitably in that situation, without the participation of the representatives of the third world, the decisions were balanced heavily on the side of the industrialised nations. It was in 1967 that 77 countries from the third world met at Algiers to consider the situation. They have since been called Group 77. They demanded at that conference representation on all the international financial and trading institutions, and equality of treatment between the third world and the industrialised nations. They prepared proposals for a new international economic order. Those pro-

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posals are now endorsed not by 77 countries but by 117, three-fifths of all the nations of the world.
My Lords, continual references are made to the new international economic order. I am afraid that even those who are in favour of it are very often unaware of its composition, and tonight, at the cost of prolonging my speech, I propose for the sake of record to state the heads of the new international economic order. I think it may even be of value to do that for the Foreign and Commonwealth Office. The heads of this comprehensive plan are as follows: 1, the right of nations to own their own natural resources; 2, control of foreign investments and multinational companies; 3, a balance between prices paid for exports and imports; 4, a common fund to build reserves, to stabilise prices, and for research and to diversify the economy; 5, the fund to be financed by governments, supplemented by contributions from commodity agreements; 6, control of costs between the producers in the third world and consumers in the industrialised nations; 7, joint ownership of shipping; 8, relief of debts; 9, an international central bank, jointly owned, either by restructuring the IMF and the World Bank or by a new authority; 10, restructuring international institutions, such as UNESCO, FAO, WHO, with joint control; 11, recognition of the oceans as the heritage of mankind with an international authority to exploit minerals; 12, the international distribution of sciences and technology; 13, international control of the arms traffic to the third world; 14, an international currency to replace the gold standard and national or regional currencies; 15, an economic arm of the United Nations equal to the political arm.
The General Assembly of the United Nations has endorsed in principle that new international economic order and Group 77—now Group 117—has presented it at the succeeding UNCTAD Conferences which have been held. I want at once to recognise that this new world order is revolutionary compared with the present world economy. It transforms international finance and trading, and it is so drastic in its proposed changes that Group 77 does not claim that it can be immediately applied. The problem is that at the Manila Conference there was a rejection of the basic conception of
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planning and instead there was an endorsement of market forces, and that is the cause of the disillusionment in the third world.
Lord TREFGARNE: My Lords, the noble Lord referred to the basic rejection at the UNCTAD Conference of some matter which I did not quite hear.
Lord BROCKWAY: My Lords, I am sorry; I am getting a little older and a little deaf. I did not quite hear the point which the Minister was making. I hope that as I proceed I shall deal with it. I want to admit at once that some advances have been made. The most extraordinary advance is the agreement by the United Nations General Assembly to establish an economic authority equal to the political authority. That economic authority would control 80 per cent. of the activities of the United Nations and more than 1 billion dollars of its development funds. I have given rather short notice to the Minister, but I ask him for some information about the development of the new economic authority at the United Nations as we have had little information about it. There is undoubtedly some suspicion that there has been obstruction of its implementation.
Secondly, there has been an advance on the subject of debts. Switzerland, the Netherlands, Sweden, Canada, the United Kingdom and others, have cancelled many of the debts of the poorer countries. I particularly welcome the fact that Judith Hart, when she was Minister for Overseas Development, cancelled debts for 17 of the poorer countries amounting to £60 million in a year. I am asking the Government if they will maintain those cancellations and, indeed, extend them.
The third advance has been made on the common fund—the common fund to build reserves, to stabilise prices and for research in the developing countries to diversify their economies. At first there was great opposition by the Big Four—the United States of America, this country, West Germany and Japan—to the financing of the common fund by Governments. But, as a result of pressure partly in this House, partly in another place and partly by the world development movement, but more than anything else by the decisions reached at the Arusha Conference by

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third world countries, the Big Four have changed their attitude on this subject.
At Manila, Mr. Cecil Parkinson, the Minister of Trade, agreed in principle to contribute not only to the common fund, but gladly and gratefully to the second window—the most controversial aspect of it—the proposal for the diversifying of commodities in third world countries which were thought to be competitive with this country. Mr. Parkinson said at Manila that, while he accepted this in principle, he was unable to give any figure until the budget was presented. No figure has been given since and I am asking the Minister tonight whether he can announce the figure that has been decided.
All the matters that I have mentioned are incidental to the main plan for the new international economic order. At Manila, Group 77 asked for a panel of high level experts to evaluate the new international economic order proposals and to make recommendations—in effect a steering commission to implement the NIEO. No action was taken. That indicated the fundamental issue at Manila. Group 77 wanted a planned reconstruction of the world economy on a co-operative basis between the industrial powers and the third world. The Big Four wanted the fate of both to be left to market forces without intervention, and with that they expressed very much the philosophy of the present Government in this country.
But the proposal to leave the world economy to market forces overlooks two facts: first, the present interventions by the Western international financial institution—the IMF—to prohibit public services it does not like. Secondly, the dominance in the world economy of the great multinational companies which make nonsense of the reliance on competitive market forces. The Big Four at Manila made it clear that they will not have the new international economic order. The third world delegates went away disillusioned and frustrated.
In conclusion, I want to sound a warning. Unless the Big Four change their attitude, the third world will move in a direction which will be disastrous to the Western countries and particularly to Britain. Representatives of 81 developing countries met at Arusha in Tanzania prior to Manila. They accepted a new
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conception: self-reliance—the motivation of Julius Nyerere in Tanzania, not only in his own country but for the third world as a whole. They agreed to set up their own common fund by contributing 1 million dollars each to it, the OPEC countries assisting the poor nations to do so. It was largely that which made the Big Four change their attitude at a preliminary meeting before Manila.
Secondly, the delegates at Arusha decided to establish their own integrated economy: African, Asian and Latin American regional economic communities, with associated trading and financial institutions. Yesterday a conference met at Arusha to initiate an economic grouping of Tanzania, Zambia, Botswana, Angola, Mozambique, Namibia, Zimbabwe, Lesotho, Swaziland and Malawi. This new economic association in Africa itself would include a regional development bank. This is a foretaste of what is likely to happen throughout Africa, Asia and Latin America if the Big Four maintain their present position. But the determination of the delegates at Arusha is shown by the fact that they decided to set up a study group of 21 experts at Geneva to prepare for a Third World Secretariat to co-ordinate continuing activities towards the new international order.
However, self-reliance was not the only objective. The Group of 77 is still looking outward. They were encouraged by the fact that they have had the co-operation of many European countries, despite the attitude of the Big Four. Those countries included Scandinavia, the Netherlands, Belgium, Switzerland, Austria and Yugoslavia. The group have also the overall support of the Soviet Union and the Communist countries of Eastern Europe, though they have from time to time criticised the action of the Soviet Union in many respects.
This self-reliance will be accompanied by deliberate international co-operation within the broad spread of countries which I have described. It will become a formidable alliance. At present most of the overseas trade is done with the United States of America, the United Kingdom, West Germany and Japan. But unless the attitude of the Big Four changes, trade by the developing countries will be redirected towards the countries which are

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willing to co-operate with them, and particularly towards the Soviet Union and its allies, who will be quick to seize the opportunity of this further influence. That is the prospect which this country must face. I hope that before it is too late we shall have a change of Government here—a Government which will be eager to co-operate with the third world in world planning to end its poverty. My Lords, I ask the Question standing in my name on the Order Paper.
8.56 p.m.
Lord BANKS: My Lords, I am sure that the House will be grateful to the noble Lord, Lord Brockway, for asking this important Question this evening. For a long time those who have a moral concern for the impoverished peoples of the third world, to whom the noble Lord referred so movingly, have followed these UNCTAD meetings with attention and anxiety. But now that it is clear we are faced with a world energy crisis and a world recession, more and more people are coming to realise that North-South relations are relevant to that as well, and that they are bound up with the whole question of markets. Indeed, the noble Lord referred to this in his speech. So added to the proper moral concern, there is a growing enlightened self-interest.
It is in the light of that moral concern and that enlightened self-interest that we must ask whether UNCTAD V contributed to a solution of North-South problems, and whether it contributed to the solution of the economic problems of the world. John Palmer, the European editor of The Guardian, writing in that paper earlier this week took a gloomy view. He said:
"Relations between the developed and the developing world have rarely been worse".
In saying that, he is repeating what the noble Lord said in his opening speech. He continued:
"The attempt at UNCTAD to negotiate a 'new world economic order' lies in ruins and there is even a question mark over the future of the links between the EEC and those African, Caribbean and Pacific countries which are associated with the Community in the Lomé Agreement".
A fortnight earlier in the same paper, Denzil Perris, writing on UNCTAD V, said:
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"The crash of '79 is the collapse of UNCTAD and of the illusion that a new international economic order can be built on the conscience of the rich nations. At UNCTAD V in Manila, furthermore, the hairline crack in third world solidarity, faintly perceptible at previous international economic seminars, opened up".
Therefore, in these two articles we have a picture of relations between the developed and the developing countries which have rarely been worse: of rich nations not prepared to pay to boost demand in developing countries; of the developed countries resorting to protectionism and of divisions beginning to appear among the developing countries.
I ask the noble Lord, Lord Trefgarne, who is to reply to the Question asked by the noble Lord, Lord Brockway, whether that is a correct or a complete picture of UNCTAD V. On 9th June the Economist had a headline which was "UNCTAD Mouse". Certainly it seems that not much of importance was achieved. There was a considerable failure to agree and much was referred for further discussion. Of course, it is true that the common fund, in perhaps a somewhat watered down form, had been agreed upon in March this year, and therefore that controversial subject was not again at the centre of UNCTAD discussions. As the noble Lord has indicated, some consequential matters following on that—particularly relating to the pledging of contributions to the second window—were carried through at UNCTAD V.
A new programme of action to help the 31 least developed countries was agreed. Protectionism was condemned, and rightly so. There were complaints, of course, about the attitude of the West to imports from the developing countries, and of course the EEC attitude on textiles came into that. But I think there was the beginning of an understanding that industrial countries, if they are to take imports from the rest of the world, have to make some structural changes, and that there have to be temporary policies which preach the free trade principle in order to allow that to happen. I think some understanding of that got across at Manila.
There were complaints from the developing countries about GATT, and about the most recently concluded negotiations. There was a feeling that—whether or not the actual terms of GATT allowed

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for it—the developed countries intended to discriminate against certain of the developing countries. Nevertheless, by the end of the Manila Conference there was a more positive attitude towards GATT, and the Secretariat were asked to look carefully at and to analyse the package negotiated, and to see its effect on the developing world.
I believe that the GATT negotiations, whatever shortcomings and faults they may have—and I do not deny that they may well have those—are an advance. I would hope, therefore, that there would be a reconciliation to them on the part of the developing countries. A number of lesser matters were agreed and some useful things were done, but I think there is no doubt that the basic problems of North-South relations were left unresolved. There was no new economic order, whether on the basis that the noble Lord has outlined for us that was agreed by 117 nations, or on any other basis approximating to that which might have been negotiated and agreed upon. Perhaps the Guardian articles painted too black a picture, but they served to draw attention to these unresolved questions.
It would be wrong to put all the blame for disagreement on to the industrial countries. They have problems, and it certainly will not help the developing world if their economies decline or collapse. But the industrial countries must bear a share of responsibility for failure to build a new economic order. I think there is now a need for a new initiative on the part of the West. Perhaps it could be an EEC initiative. I should like to see it a two-pronged initiative. The first prong would be an emphasis on the need for the maximum freedom of trade between the developing and the developed world. The potential for expanding trade between the developing and the developed worlds is clearly great. The share of United States exports going to developing countries rose from 29 per cent. to 35 per cent. in the five years 1972–1977; the share of Japanese exports from 38 per cent. to 46 per cent.; German exports from 11 per cent. to 17 per cent.; French exports, 18 per cent. to 24 per cent.; and so one could go on.
The OECD reckon that the industrial nations have had a net gain of half a million jobs by trading with under-
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developed countries. Of course the under-developed countries, too, have benefited. The share which they have had of total OECD country imports has risen from 20 per cent. to 29 per cent. in the period 1970 to 1977. It is significant that the share in total socialist bloc imports fell from 8·9 per cent. to 7·7 per cent. An emphasis on the maximum degree of trade would be the first prong.
The second prong—and very much linked to the first, as the prongs must be linked for any effective result—would be (and I put this forward as an unrepentant Keynesian) that there should be an attempt at demand management on a world scale. This would include stabilisation of commodity prices through the common fund. It would include a world development programme on a substantial scale. It would include a world energy policy; and the oil producing countries would play a part in that, and play a part too in the financing of the development programme. I believe that such an initiative would offer a hope of transforming the present unsatisfactory state of North-South relations, and provide North and South alike with the means to tackle jointly the economic dangers which threaten us all.
8.56 p.m.
Lord RITCHIE-CALDER: My Lords, let us be quite clear: the fifth meeting of the United Nations Conference on Trade and Development was an ominous fiasco, the more ominous because the omens were obvious and were ignored. We have had a discussion here this afternoon for five hours in which we have been talking about the energy crisis into which we ourselves have been brought as a result of the operations of OPEC. Surely you learn what the lessons of OPEC are. We cannot imagine that the relations from now on between the rich nations and what have been called the less developed will ever be the same again. We have seen countries which were meaningless deserts 30 years ago emerge as the rich oil States. The beggar whom we turned away from our gates turns up 30 years later to foreclose the mortgage on the estate.
Exactly 30 years ago I was carrying out a UNESCO mission in the deserts of North Africa and the Middle East to see

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whether the deserts could be made productive. In Algeria I teamed up with an oil prospector from Oklahoma. He was searching for oil in the Sahara. Everybody, including the French Government of Algeria, regarded him as mad, and treated him as mad. We pitched camp at a camel watering place called Hassi-Messaoud. Today that watering hole is the centre of the oilfields of Algeria.
On the next lap of my journey I was in Libya, the poorest of the poor in the North African States. Famine was raging and the caretaker British Administration, preparing as they were at the time for Libyan independence, had to issue international food relief to an entire population in Tripoli and Cyrenaica—Cyrenaica, once the food granary of the ancient Greeks. Today Gaddafi is threatening to make the oil situation in Britain, even with our North Sea oil, worse and more difficult by stopping supplies which we need in exchange for our North Sea Oil. I am not suggesting that aid should be regarded as buying future good will. Aid, if treated as charity—the penny in the blind man's tin—and condescendingly so, can, and will, be resented. The beggar's thanks are the beggar's curse, and if we expect gratitude we shall not get it. I assure you of that from long experience, and the experience of all of us.
I agree that trade is better than aid. People can and should earn their own self-respect. But for the third world aid is essential if we are going to create, and share, prosperity. British aid policy, in my opinion, got it right. I salute my right honourable friend Judith Hart. We got it right. We were helping the poorest of the poor countries, and the poorest within the poor countries, and the poorest within the rich countries where they were neglected, to underpin their living standards and drive piles into the morass of poverty, to provide the basis of an economy which could be productive. We have been helping them to help themselves.
That principle has been underscored by the World Bank which, under the enlightened principles of the president, Mr. McNamara, is directing finance to the poorest of the poor, the lowest 40 per cent. of the people. This was the forthright recognition by the World Bank
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that the massive loans over the past 30 years made the rich richer in those countries and the poor were no better off; in fact, in terms of their increasing numbers they were definitely worse off. The idea that the wealth would somehow trickle down from the top to the bottom has proved beyond any question to be totally wrong. So instead of injecting it all at the top of the cistern of intended prosperity, considerable World Bank help is being injected at the bottom to provide the social services, education, health, housing, better training for jobs and for the invigoration of the rural communities. That, I assure your Lordships, is the hard-won truth, borne out by the experience of 30 years and acknowledged by the World Bank, which is scarcely a fuddy-duddy sentimental institution.
That has been largely undone by the behaviour of the industrialised nations, including our own, at Manila. The British delegation was there to expound the doctrine of laissez-faire and wealth trickling down from the top. Mr. Cecil Parkinson of the Department of Trade, the Minister, told the Press:
"Unless we have a thriving economy"—
that is we, the British—
"we shall not offer an expanding market for the developing world and we shall not be in a position to encourage our companies to participate more actively in their economic growth".
That growth model, in reply to the arguments of the third world for a new international economic order, reminds us of the 19th century when Imperial Britain prospered by putting Lancashire cotton pants on our colonial heathens, but it will not work today. There were sombre portents of cuts in British aid. Britain, unlike several other industrialised countries, threatened the programme of action for the poorest of the poor by, as my noble friend pointed out, withholding a pledge on the actual amount of what is called "the second window of the Common Fund". That decision was reserved for the new Conservative Budget. We are still waiting for it.
In the month of arguments, the confrontation was between the developing countries, with two-thirds of the world's population who produce only 7 per cent. of the manufactured goods, and the advanced countries which produce the rest. What the developing countries were

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asking for was a new division of labour globally affirmed. The industrialised countries openly resented the idea of a new international economic order as spelled out in the Arusha Declaration, to which Lord Brockway referred, adopted by the Group of 77 which comprises the developing countries. The developing countries were asking for a study of the workings of the world economy and the constraints it at present imposes on global development. They have not got it. They have got, quite flagrantly, the devil-take-the-hindmost system of the free market.
The developing countries have not missed the meaning of OPEC; what applies to oil can apply to other resources on which this country and the industrialised world are dependent. We cannot afford to spurn them, and we have. As one who has taken part in many discussions on the new international economic order, including the Club of Rome and the Group of 77, now 117, I can assure your Lordships that the new economic order is no longer empty rhetoric. It is on the table and it will not go away. Let us not make any mistake about that: it will not go away and, heaven knows!, the old economic order is in a hopeless mess.
9.6 p.m.
Lord HATCH of LUSBY: My Lords, we are all grateful to my noble friend Lord Brockway for putting down this Question. I confess that I feel somewhat of a pretender, if not a young pretender, in following Lord Brockway, with whom I have worked since I was a boy, who is probably the best known Briton in the Third World and who is certainly accepted, and has been accepted for many years, as the conscience of the Labour movement in Britain. It gives me pleasure to speak following my noble friend Lord Ritchie-Calder, whose practical work in the third world is acknowledged in every quarter.
I wish at the outset to echo Lord Ritchie-Calder's sentiments regarding the work of our friend, Judith Hart, as Minister of Overseas Development. More than that, I wish to bring her work to the attention of the Minister because it is the character of her work that is the issue in tonight's debate. As Lord Ritchie-Calder pointed out, particularly under the
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guidance of Judith Hart and her predecessors the Ministry of Overseas Development has followed a policy of concentrating British aid among the poorest, rather than allowing it to be used by the élite; and, secondly, using aid not only to fulfil our moral responsibilities to that half of the world population which is living in poverty, but also as an investment for the future of this country.
It is on this issue that I should like to concentrate tonight. In other words, I want to speak to Members on the opposite side of the House as businessmen—as I think they are accustomed to being spoken to. Under the policy of the Labour Government the Ministry of Overseas Development set out to provide employment, to increase trade, and to use aid as an investment to cushion us from the danger of world depression—which we have been discussing for the last five or six hours.
This argument is important because it brings together two matters which are of the utmost consequence, which indeed are crucial to political policy in the aid field. Whichever party is in office, we have to carry the electorate with us, and that is a difficult task, if we are simply putting the matter on moral grounds. I believe that in the past it could have been put much more forcefully on moral grounds, but the grounds have widened, and they have widened deliberately during the last few years when it has been pointed out that Britain's aid programme has been providing employment and has been enriching and stimulating the trade of this country. That, I suggest, is an important issue in carrying along with us the people of this country in providing aid to the developing world.
I fear that the present Government have lost sight of both these objectives, and have begun already to regard the developing world as being only on the periphery of the world economy. This, I suggest, would be fatal. As the noble Lord, Lord Banks, pointed out, the developing world is not on the periphery of the world economy. The United States sends 35 per cent. of its exports to the developing world, while for Japan the figure is 46 per cent. We in this country, with all our advantages of the Commonwealth connection, are still at a point of only 25 per cent. I suggest that that is

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a rejection of opportunity which it is the duty of the Government to correct, and I would support what I am saying by referring to a quotation, which has not been very widely publicised, of what Mr. Oliver Long, the Director-General of GATT, said recently:
"The immediate choice for the industralised countries is either to allow a substantial increase in imports from developing countries, or to risk not only a sharp fall in their exports to these countries, but possibly also a serious threat to their financial stability through widespread defaults on outstanding loans".
But, despite those words, despite the fact that the United States, Japan, West Germany, France, and ourselves have a substantial stake in trade with the developing world, last year the exports of the developing countries dropped—and dropped substantially; and as a consequence so did their purchasing power. In other words, the trading, relationship (which was admirably outlined by the noble Lord, Lord Banks) is under pressure today. It was in those circumstances that the UNCTAD meeting was held in Manila in June, and UNCTAD provided the opportunity—though I admit at very short notice—for this Government to show both where their interests lay and the extent to which they were prepared to carry on the policy of their predecessors. It also provided the opportunity to improve the economic situation and the economic prospects of this country by building up the purchasing power of the poorer world and by following the lead which had been given by President Nyerere in a remarkable speech in Arusha, to which my noble friends Lord Brockway and Lord Ritchie-Calder have already referred.
I should like to ask the Government this question. We on this side of the House have believed for a long time—and we have put our belief into practice—in the separate identity of the Ministry of Overseas Development. We believe this for all sorts of reasons, and I remember the discussions which took place in the early 'sixties about the pros and cons of separating that Ministry from other Ministries. The party opposite does not believe in this, and have again taken the Ministry inside the Foreign Office. I think this is a mistake. I think it is a mistake, not just because it has done away with the independence of the
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Ministry but also because, if you must take the Ministry of Overseas Development inside a larger department, it should be inside the Ministries of Trade and Industry rather than the Foreign Office. The reason I say this is because the interests of the Ministry of Overseas Development are the economic interests of Britain, of the British people and of the British Government.
I should like to ask the Minister who is to reply whether, in his department, he has yet come across the recommendation of the Central Policy Review Staff and of the Select Committee for Overseas Development that there should be a Cabinet Committee to co-ordinate inter-departmental considerations of the interaction of domestic and overseas policy. I should like to ask whether that has yet been seen by the Minister, because that is a recommendation, a double recommendation, which makes the point that I am bringing to his attention. Overseas aid, the policy of the Government at UNCTAD, in the Lomé negotiations, in the North-South dialogue, are all a part of our economic strategy, and it must not come, and must not be allowed to come, simply under foreign policy considerations.
I fear that the attitude of this Government in Manila suggested very strongly that they are already abandoning what has been the basic assumption: that if the industrial world can assist the third world, the developing world, to increase its purchasing power, to increase its living standards, then it will have gone a long way, both to bridge our own economic gap and to bridge, eventually, the economic gap that divides our two worlds. This is borne out by the domestic measures already taken by the Government; by the cut of £50 million in overseas aid, which, as I am trying to convince the Minister opposite, we consider to be a cut in investment which would have brought a much greater return than that £50 million itself.
My noble friend Lord Ritchie-Calder has quoted a sentence from what was said at a Press conference by the Minister who attended the conference at Manila, Mr. Parkinson:
"Unless we have a thriving economy, we shall not offer an expanding market for the developing world".
I should like the Minister to say whether it would not be a much more constructive

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policy and a much more constructive attitude, to reverse the clauses in that sentence:
"Unless we have an expanding market for the developing world, we shall not have a thriving economy in this country".
That is the central issue of our criticism of the Government's attitude to the Manila Conference.
There was another aspect of Mr. Parkinson's activities in Manila to which should refer. He suggested at the same Press conference that there is a link between overseas trade and British industry, in the sense that the present Government's policy of reducing subsidies to British firms will lead to a collapse of such firms, thus leaving the way open for the entry of manufactures from the developing countries. I reject that argument entirely. I will agree to the extent that there is a basic necessity for the restructuring of British industry; but you cannot just say: "So many British firms will have to close down because we are removing subsidies from them; and then you will get your chance." To what? To sell to those unemployed in this country as a result of the closures? There is a need, and a need that was expressed forcefully in Manila, for the restructuring of the industrial world's economies, but that restructuring necessitates the replacement of the old industries of the industrial world with new specialisations, with new employment opportunities so that we march along in a complementary way. As the developing world increases its manufactures of those goods which have traditionally been manufactured in the industrial world, so the industrial world is able to find replacements, for retraining and maintaining its economic stability, which is of immense importance to the developing world itself.
Like the noble Lord, Lord Banks, I fear that the dialogue between the North and South is going somewhat sour—whether at Manila, whether in negotiations over Lomé, with their tremendous potential, or in GATT. There is a new and more bitter wind blowing from Whitehall today towards the developing world than there has been for several years. This was summed up in what I consider to be an excellent phrase by Philip Madeley in the Guardian on 27th June when, in describing the activities of Mr. Parkinson and his advisers in Manila, Mr. Madeley said that it reminded him of the musical
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advisers of the Emperor Nero calling a news conference to announce that good progress had been made in finding a suitable tuner for the Emperor's fiddle. The fire raging round the corner was hardly their concern.
I hope that the noble Lord who is to answer my noble friend's Unstarred Question will be able to give us some assurances that the first signs that this Government have shown of their attitude towards the immensely important issue of the next generation and the generation after that, the relations between the developing and the developed world, is more optimistic and more constructive than it would appear to be at first glance.
9.23 p.m.
Lord TREFGARNE: My Lords, we are doubly fortunate tonight, first to hear the Unstarred Question put so eloquently by the noble Lord, Lord Brockway, and, secondly, to hear the first intervention of the noble Lord, Lord Hatch of Lusby, from the Dispatch Box opposite. Not often do we get a double bill of that stature.
The conference in Manila was the fifth such conference to be held by the developed and the developing countries in the last 15 years. Lord Brockway's commitment to the developing world is of long standing. He has done us all a service by underlying the importance of the issues debated at Manila. I should like to pay tribute to the noble Lord by underlining the words of the noble Lord, Lord Hatch; that the noble Lord, Lord Brockway, is certainly widely known and widely respected in the third world, more so, I would say, than any other Member of this House.
UNCTAD conferences are major events in the continuing dialogue on issues of economic development which has been under way for some years within the United Nations machinery. This is, I think, the first opportunity the House has had in this Parliament to discuss that dialogue, and I should like to start by saying something about the Government's general approach to it.
Successive British Governments have actively supported the economic development of the third world, and have played a constructive part in ongoing negotiations

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between North and South. That remains our policy. It is our policy because such development is the only way of improving the lot of that large proportion of the world's population which is unacceptably poor; because—as we made clear in our Election Manifesto—Britain, like other industrialised countries, has a vital interest in bringing prosperity to poorer nations which provide us with growing markets for our exports and supply many of the raw materials on which we depend; and because a progressive reduction in the gap between rich and poor countries, in the context of an expanding global economy, will help to promote greater political stability to the benefit of the world as a whole. So we are pledged to help the developing world both through aid and technical co-operation and—a matter to which we attach particular importance—through the development of trade and private investment flows. We hope that the relaxation of exchange controls, for example, announced in the recent budget will help stimulate outward investment in developing countries.
Of course—and my honourable friend the Minister of State for Trade, who, as several noble Lords mentioned, led the United Kingdom delegation in the closing stages of the Manila conference, made this very clear—our ability in Britain to assist economic development, whether through aid, trade or investment depends critically upon the strength of our own economy. Our level of overseas aid, for example, must be determined in the context of the public expenditure totals which we as a nation can afford. So at Manila we had to explain that we could not commit ourselves about future levels of aid, pending our review of public expenditure. Our first priority must be to get our own economy right.
Consistently with this general approach, our aim at UNCTAD V was to try to promote serious discussion of ways of furthering the international effort to deal with the real problems which face the developing countries, and to seek to persuade them that developed and developing countries alike share a common interest in maintaining and strengthening—not in overturning—the existing international arrangements for co-operation on trade and financial issues. It was in this
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spirit that we were able to support, and welcome, a number of resolutions which the conference adopted by consensus. I shall not try to list them all. But I should like to mention two or three major issues on which we believe that the conference achieved useful progress.
On trade issues—which were central to the debate in Manila—all countries were able to agree that the world's economic problems cannot be solved by concealed or open protectionism; and that further discussions should be set in hand on two matters of great importance to the developing countries: in the GATT, on new import restrictions affecting their exports; and in UNCTAD, on the continuing adjustment of global industrial structures in response to changing patterns of trade.
On international trade in primary commodities, a resolution was adopted by consensus which fills out the decisions reached at the previous UNCTAD conference—in Nairobi in 1976—to launch an "integrated commodity programme" involving international discussions on 18 individual products. The scope of this work has now been broadened to include an examination of ways of encouraging greater participation by developing countries in the processing, marketing and distribution of the commodities which they produce.
In the context of commodity trade, I should add that we, like other developed countries, declared our willingness in Manila to make a voluntary contribution to the "second window" of the common fund, which will assist certain commodity development measures alongside the fund's other activities in support of international buffer stocks. Perhaps I can add here that none of the major nations committed itself to a specific sum for the second window. Certainly we did not, but we have the matter very much in mind and in due course we will make an announcement.
Finally, comprehensive new programmes of work were agreed in two important areas: economic co-operation between developing countries themselves, which many of them, I believe, interestingly regard as one of their first international priorities, and assistance for the least developed among the developing coun-

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tries. On some other issues the conference was unable to reach agreement. A number of these were remitted for further consideration to the permanent machinery of UNCTAD; on others, resolutions were adopted only by a majority vote.
Like most of our industrialised partners, we voted against the developing countries' proposals in these resolutions. For example, we resisted proposals for cargo sharing in the bulk shipping trades, which would be damaging to us economically and, we believe, would distort the world shipping market in ways which would ultimately be harmful to developing and developed countries alike. Equally, we and other developed countries made it clear that we see no case for new work in UNCTAD on financial and trade issues, which are properly for other financial institutions such as the IMF and the GATT—institutions which have shown themselves well able over the years to respond effectively to the needs of the developing world.
Perhaps I could now turn to some of the specific points raised by a number of noble Lords. First, may I refer to the speech of the noble Lord, Lord Brockway. He asked whether the Government would maintain the cancellation of debts to poorer countries, a programme which was initiated by the previous Minister for Overseas Aid, Dame Judith Hart. The noble Lord, Lord Hatch, also raised that point. We will certainly honour the undertaking given by the previous Minister and will examine new applications for this arrangement on their merits; but I cannot hold out any hope that any new applications will be more favourably or more readily considered than they were by the previous Government. Indeed, cancellation of debts is a further charge upon our aid funds generally; and our funds generally, as noble Lords already know, are under some pressure. I will revert to that in a moment.
I have dealt with the point about contributions to the second window. I am not able to say how much will be contributed, but the matter is under consideration and an announcement will be made in due course. I noticed that the noble Lord, Lord Brockway, referred to Mr. Parkinson "gratefully agreeing" to the contributions to the second window. I am not sure that that is an adjective I
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would have used, but I recorded it with some amusement.
The noble Lord also asked me about the progress being made to implement a decision of the United Nations General Assembly to establish an economic authority to oversee development programmes in general. I am not aware that very much progress has been made on this matter since it was first raised in Algiers in 1967. We do not oppose the proposal in principle, but we shall need to scrutinise the details when they come before us. At the moment, I am afraid we do not have very much to go on—certainly in the short period that I have had to be able to look into this matter since the noble Lord drew it to my attention. If there is anything further that I can usefully add to what I have said, perhaps I may be allowed to write to him.
Lord BROCKWAY: My Lords, is not this quite extraordinary? Not only was the decision reached that this economic authority should be established, but a director was appointed and has been serving. Yet here we are, with the Government unable to give us any information whatsoever about what has happened to it.
Lord TREFGARNE: My Lords, I think there is a confusion in the mind of the noble Lord, because there are two separate organisations which have been brought to my attention. If the noble Lord will allow me, I will write to him with a clear exposition of that point.
If I may now turn to the question of overseas aid generally, which figured very largely in the speech of the noble Lord, Lord Hatch, we prefer to promote international trade by trade policies and by measures of that nature, rather than by simple subsidy which, in many cases, is what aid amounts to. We have been subjected to many strictures for what many noble Lords have referred to as a reduction in aid. That is not so. We certainly accept that many of the advantages described by noble Lords opposite which attach to aid are valid and sound. Our aid programme for this year has not been reduced; we have simply reduced the increase which was originally planned. We have cut £50 million from the sum, as the noble Lord will know. This year's allocation is, then, still

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£75 million more than last year's in cash terms, which is in fact 2 per cent. more in relative terms, which we think in our straitened financial circumstances is a pretty good performance.
Lord HATCH of LUSBY: My Lords, will the noble Lord allow me to intervene? Am I correct in this assumption, that the previous Government had planned for a 6 per cent. increase per year over the next three years, and that the present Administration has cut that 6 per cent. down to 2 per cent. for the current year, with no promise as to what it will do for the future?
Lord TREFGARNE: My Lords, we have certainly made no promises as to what we will do for the future. That is correct. We shall have to consider what we can do for the future, in the light of the circumstances in which we then find ourselves. As I said we accept many, if not all, of the advantages which noble Lords have described as attaching to aid. Even after these modest reductions, the programme is still massive in terms of total sums of money involved—something more than £800 million still for this year, which by any standards, I should have thought, was a vast sum of money.
The noble Lord, Lord Hatch, also asked me, very properly, about the decision of the Prime Minister to bring the Ministry of Overseas Development back into the Foreign and Commonwealth Office, rather than leave it as a separate Ministry. The noble Lord suggested that if it was going into any Department it should have gone into the Department of Trade. As I have said, we think that international trade is best developed by policies aimed at doing just that, and not by the kind of subsidising policies which a policy of overseas aid tends to imply. If there are any further points which noble Lords want particularly developed, I shall be happy to write to them in due course.
But several noble Lords asserted that the UNCTAD Conference had been a ghastly flop. We do not accept that. I suspect that few countries represented at UNCTAD expected to achieve a dramatic breakthrough towards new forms of international action on trade and development: that would have been unrealistic. But across the board, I believe
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that the outcome of the conference was positive. I have mentioned some of the areas in which progress was achieved towards closer international understanding and co-operation. And, even where no agreement was possible, it was clear that both developed and developing countries wished to avoid a breakdown in the dialogue between them. I hope that the debate at Manila will have helped to encourage a more practical and realistic approach to the issues in dispute. We, for our part, will certainly be working for this in continuing discussions, both in the permanent machinery of UNCTAD and in the other bodies responsible for international economic co-operation.

  FLAG OF CONVENIENCE LNG CARRIERS
  FLAG OF CONVENIENCE LNG CARRIERS
  MOSSMORRAN/BRAEFOOT: MAXIMUM COMPANY LIABILITY
  MOSSMORRAN/BRAEFOOT: MAXIMUM COMPANY LIABILITY
  KOREAN TEXTILE EXPORTS
  KOREAN TEXTILE EXPORTS
  CPRS MEMBERS: SERVICE IN EEC INSTITUTIONS
  CPRS MEMBERS: SERVICE IN EEC INSTITUTIONS
  NICARAGUA: IMF DOLLAR CREDITS
  NICARAGUA: IMF DOLLAR CREDITS
  THE OUTER CIRCLE POLICY UNIT: RECOMMENDATIONS
  THE OUTER CIRCLE POLICY UNIT: RECOMMENDATIONS
  PARKING: PAVEMENT DAMAGE
  PARKING: PAVEMENT DAMAGE
  HEATHROW/GATWICK TRANSFER OF SERVICES: CONSULTATIONS
  HEATHROW/GATWICK TRANSFER OF SERVICES: CONSULTATIONS
  THE ENERGY COMMISSION: FUTURE WORK
  THE ENERGY COMMISSION: FUTURE WORK