Sitting of 12 June 1979

Preamble
The House met at half-past Two o'clock
PRAYERS
[Mr. SPEAKER in the Chair]
PRAYERS
  PRIVATE BUSINESS
    SCOTTISH EQUITABLE LIFE ASSURANCE SOCIETY BILL
    Read the Third time and passed.
    GREATER LONDON COUNCIL (MONEY) BILL
    Read a Second time and committed.

    EAST KILBRIDE DISTRICT COUNCIL BILL (By Order)
    Orders for Second Reading read.
    To be read a Second time upon Thursday.

ORAL ANSWERS TO QUESTIONS
  DEFENCE

    NATO (Ministerial Meetings)
    Mr Arnoldasked the Secretary of State for Defence when he expects to meet his NATO colleagues.
    The Secretary of State for Defence (Mr. Francis Pym): I expect to meet my NATO colleagues at the ministerial meetings of the nuclear planning group and defence planning committee later this year.
    Mr. Arnold: When my right hon. Friend next meets his colleagues, will he try to obtain an ordered response to the new problems posed by the conclusion of the SALT negotiations in circumstances in which ratification appears to be problematical? Does my right hon. Friend believe that that is possible?
    Mr. Pym: Yes. Our American allies have kept us closely informed throughout the negotiations that they have been conducting bilaterally. By the time the meetings to which I referred take place no doubt the signature of SALT II will have taken place, and, possibly, ratification, too, though that is a more doubtful proposition.
    Dr. M. S. Miller: Does the Secretary of State think that it makes any difference that the Warsaw Pact countries have the ability to destroy the world three times over while we have the ability to do it only twice?
    Mr. Pym: One factor is vital, particularly in view of the sustained build-up of forces on the other side of the Iron Curtain. It is that the deterrent capability of the West should be in first-class order and should be seen by the Soviet Union and Warsaw Pact countries to be totally capable of deterring them from any aggressive intention.
    Mr. Buck: When my right hon. Friend meets his NATO colleagues, will he start paving the way for a major initiative for the recasting of the NATO role so that it can truly become the defensive shield of the Western world, irrespective of its geographical guidelines as they now exist?
    Mr. Pym: I am sure that that is something to which we can give consideration. It is doubtful whether any changes in the boundaries of NATO would make a great deal of difference, but I am certain that all the countries of the free world are interdependent and that the greater our collaboration the greater will be the success of our deterrent and security effort. However, I would certainly not exclude possibilities such as those my hon. and learned Friend has in mind.
    Mr. Frank Allaun: Do the new Government adhere to the previous Government's professions at the United Nations disarmament conference a year ago? If so, how does the Secretary of State reconcile that stance with the further expenditure on arms now proposed?
    Mr. Pym: Arms control is a process to which this Government, as did the last, have given a great deal of attention and sustained support. But it will not come about by itself. It can come about only from a position of negotiating strength, and therefore we must retain the balance of the two.
    Mr. Proctorasked the Secretary of State for Defence when he expects to meet his NATO colleagues.
    Mr. Pym: I refer my hon. Friend to the answer which I gave earlier today to my hon. Friend the Member for Hazel Grove (Mr. Arnold).
    Mr. Proctor: Is my right hon. Friend aware that the Labour Party's manifesto for the recent election contained a reference to the withering away of NATO? Will he reverse this and do all that he can to increase the numbers in our Armed Forces by increasing their pay, conditions, equipment and morale?
    Mr. Pym: I am grateful to my hon. Friend for those remarks. That which he urges me to do is the Government's intention. Within a couple of weeks of being appointed I was fortunate enough to go to a NATO defence Ministers' meeting. It was helpful to me to have an early opportunity to discuss these important issues with other members of NATO. It is the Government's intention to increase our defence capability. As my hon. Friend knows, we have already increased the pay of members of the Armed Forces in accordance with our commitment. That
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    by itself is not enough completely to restore morale, but it is an important part of that job. The decision was taken within a few days of the Government being elected to office.
    Mr. Skinner: The right hon. Gentleman has said today that the Government are still considering a new generation of nuclear weapons but in an interview on BBC2 that was shown last Saturday the Foreign Secretary, Lord Carrington, committed Britain to a new generation of nuclear weapons. I should like to know who is speaking the truth. Is it not a scandal that someone from another place should make a statement committing Britain to all the public expenditure involved in such a policy when the right hon. Gentleman does not admit it from the Dispatch Box?
    Mr. Pym: The hon. Gentleman is trying to make a scandal where none exists. Our commitment to a nuclear deterrent is clear. I have made it clear from the Dispatch Box this afternoon. We are determined to maintain that deterrent. There is no division or scandal such as the hon. Gentleman would like to invent.
    Mr. Jim Spicer: Is my right hon. Friend aware that there is a strong body of opinion within the NATO Alliance which believes that there is a case for the establishment of a second ACE mobile force with a parachuting capability? Will he undertake to discuss that with his NATO colleagues when he next meets them?
    Mr. Pym: I take note of what my hon. Friend says. I have not yet considered that matter, but I take note of his request.
    Mr. Stoddart: Will the right hon. Gentleman confirm or deny that there is to take place later this year a planned nuclear test explosion? If he confirms it, will he stop it?
    Mr. Pym: I think that I am right in saying that no Government of any colour have ever declared any circumstances or details about any possible nuclear tests. I do not think that that has ever taken place under any Government, and I do not propose to break that tradition.

    Service Men (Pensions)
    Mr. Stephen Rossasked the Secretary of State for Defence what steps he

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    intends taking to rectify anomalies in pension provision for Service men who retired during 1977.
    The Under-Secretary of State for Defence (Mr. Keith-Speed): The anomalies arise from the incomes policies of the previous Administration, and affect not only the Armed Forces but a wide range of other public service pensioners. Consequently, it is likely that any remedies would be complex and have significant repercussions on public expenditure. I shall, however, carefully examine this issue, but cannot hold out any hope of early remedial action.
    Mr. Ross: Judging by the remarks made by Government spokesmen when in opposition, does the Minister accept that many people, particularly those in the Forces who retired in 1977, were hoping for a rather more forthcoming answer than that? Can the Minister give us some indication of the timing of the review and when those who retired from the Forces in 1977, who incidentally were suffering losses of over 30 per cent., can expect to have some remission of that loss?
    Mr. Speed: No, Sir, I cannot because we cannot consider the Armed Forces in isolation. There are many thousands of people involved in the public service sector. This is a very complex situation largely arising from the statutory policy of the Labour Government. They created the problem. We are doing our best to sort it out as quickly as possible.
    Mr. Viggers: Does the Minister accept that a grossly unfair situation has arisen as a result of the strict pay policies of the previous Government and that on a long-term basis the right answer is to create a floor and to say that no one who retired with a certain number of years' service at a certain rank should be paid less than that floor?
    Mr. Speed: That is certainly one of the options that we shall be looking at. There are a number of possible solutions to this problem and I ask the House to be patient until we have examined all the options, bearing in mind that it applies to the whole of the public service and not just to the Armed Forces.
    Dr. Summerskill: In view of the welcome decision, revealed to me in a parliamentary answer today, that the entitle-
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    ment, generally, of Service women will be brought into line with that of Service men, will the Minister assure us that the gross discrimination against women in terms of pensions, on the ground of sex, will be urgently reconsidered and their position brought into line with that of Service men?
    Mr. Speed: That, with respect, is another question, but I certainly hope that there will not be gross discrimination in this way.
    Mr. Duffy: May I congratulate the Under-Secretary on his ministerial debut at Question Time, and may I extend to him most sincere good wishes in the discharge of what, after all, is a privilege, and a precious task, namely, the representation in Parliament of the Royal Navy? Will the Minister confirm that there has been no want of willingness to rectify these anomalies and acknowledge that, because of the repercussive effects on the public sector which he has described, it is most difficult to find a practical and acceptable solution?
    Mr. Speed: I thank the hon. Gentleman for those very kind remarks, which I appreciate. It is a privilege to represent the senior Service in this House. The second part of the question is complicated. We have got to look at all the people concerned and not one particular section. That is why it will take time.

    Departmental Land
    Mr. Andrew F. Bennettasked the Secretary of State for Defence what plans he has to speed up the return of his Department's land to civilian use.
    Mr. Dalyellasked the Secretary of State for Defence what plans he has to make available land and houses, superfluous to his Department's use, to civilian use by local authorities.
    The Under-Secretary of State for Defence (Mr. Barney Hayhoe): The Services need sufficient land to meet their operational, training and housing needs but we shall continue to release land and property as soon as it is clear that it is not required for defence purposes. I am carrying out a thorough examination of the scope for speeding-up this process. The disposal of surplus land etc., is of course the responsibility of my right hon.

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    Friend the Secretary of State for the Environment.
    Mr. Bennett: In view of the enthusiasm of the Conservative Party for selling off national assets, will the Minister speed up the return of land of outstanding natural beauty at Lulworth Cove, Dartmoor and in the Pembrokeshire area to farmers and for recreational use?
    Mr. Hayhoe: We shall be considering all the possibilities for disposal of land and this review will take place as soon as possible.
    Mr. Dalyell: Will it be before the end of July?
    Mr. Hayhoe: I cannot give an undertaking as to time because, as the hon. Gentleman knows, this is a substantial matter. We would like to do it thoroughly and properly.

    Defence Codification Authority and Agency
    Mr. Peter Bottomleyasked the Secretary of State for Defence when was the last review of the decision to relocate the Defence Codification Authority and Agency away from Mottingham, London, SE9.
    The Under-Secretary of State for Defence (Mr. Geoffrey Pattie): I refer my hon. Friend to the reply given in a written answer yesterday by the Minister for the Civil Service announcing a review of the overall dispersal programme, including that of the Ministry of Defence.
    Mr. Bottomley: Is my hon. Friend aware that he could save the waste of nearly £2 million by leaving the most substantial employer in my constituency in my constituency?
    Mr. Pattie: I am indeed aware of that fact and it will be taken into account in the review.

    Neutron Bomb
    Mr. Stallardasked the Secretary of State for Defence if he will make a statement on the official policy concerning future development and use of the neutron bomb.
    Mr. Pym: We accept President Carter's decision of a year ago to defer a final decision on the production of enhanced
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    radiation weapons. This remains the United States' position. There is no British development programme of enhanced radiation technology, nor is one planned.
    Mr. Stallard: I am grateful for that reply. However, in view of the Prime Minister's recent interview in Time magazine, in which she expressed the view that our forces should be equipped with more effective nuclear weapons, is it now the policy and intention of the Government to put Britain back into the nuclear arms race?
    Mr. Pym: Britain is, and has been for a long time, in the nuclear arms race. Our nuclear forces, strategic and theatre, are absolutely indispensable to our security and to that of our NATO allies.
    Mr. Cormack: Is my right hon. Friend aware that not everybody in this country is entirely happy with President Carter's handling of these matters?
    Mr. Pym: That may be so but it is certainly not my responsibility.
    Mr. Stan Thorne: In dealing with official policy for the future is the Secretary of State prepared to consider the Lucas Aerospace corporate plan with regard to diversification and resources?
    Mr. Pym: I have to tell the hon. Gentleman that I have not yet had the opportunity of studying that plan in any detail but at this stage I would not be prepared to exclude consideration of it.

    China (Weapons Sales)
    Mr. Adleyasked the Secretary of State for Defence if he will make a statement on the sale of defensive weapons to the Government of China.
    Mr. Pym: We want to enlarge our trade relations with China. We are considering Chinese requests for British military equipment and shall continue to do so on a case-by-case basis. We are willing in principle to supply some items of equipment, subject to our international obligations.
    Mr. Adley: In thanking my right hon. Friend for that reply, may I ask him to confirm that Her Majesty's Ministers will stick with the same line that our party took in opposition on this matter? Will he give an unequivocal undertaking

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    that the Government will now expedite the sale of the Harrier to the Government of China and take rather less notice of the Tribune group than was taken by the previous Government?
    Mr. Pym: Negotiations for the sale of the Harrier, which began in the time of our predecessors are, of course, continuing between the industries involved and the Chinese. Naturally we hope that a satisfactory outcome will develop in due course.
    Mr. Newens: Does the right hon. Gentleman recognise that there is no clear line of demarcation between defensive and offensive weapons and that the supply of any form of military equipment to China would raise world tension? Does he wish to avoid this?
    Mr. Pym: I do not accept that the supply of arms to China necessarily increases world tension. I accept that it is difficult, perhaps, to differentiate exactly between the purposes for which a weapon may be used but, as I have said, we, like our predecessors, are considering the possibility of selling equipment on a case-by-case basis. We are looking at it in that light and I believe that that is the best way to proceed.
    Dr. Gilbert: May I ask the right hon. Gentleman whether he proposes to apply any different criteria to those applied by my right hon. Friend in such matters as defence sales?
    Mr. Pym: I have nothing to add to the reply I gave in my original answer, that is to say that, subject to our international obligations, we shall look at these requests when they come on a case-by-case basis.

    Emergencies (Military Response)
    Mr. David Priceasked the Secretary of State for Defence what measures he proposes to take to increase the ability of Her Majesty's forces to respond rapidly to emergencies, including brush fire police activities and natural disasters in both a NATO and a Commonwealth context.
    Mr. Hayhoe: We have already made clear by our actions that defence is being accorded a higher priority by this Government Improvements in the Services' general capabilities should aid our ability to take military action, where it might be
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    judged appropriate, in the wide range of circumstances my hon. Friend appears to have in mind.
    Mr. Price: Does my hon. Friend agree that the ability of our country to respond to the kind of emergency that I have outlined in my original question is severely limited by the shortage of transport aircraft?
    Mr. Hayhoe: I am not able to comment on that problem but this can certainly be looked at speedily in view of the comment of my hon. Friend.
    Mr. Molyneaux: Dealing with the Army's role in Northern Ireland in support of the civil power, is the Minister fully satisfied that units have the required degree of flexibility to enable them to meet the rapidly changing tactics of their enemies?
    Mr. Hayhoe: Yes, on the information available to me I am satisfied that that is so. I hope soon to make a visit to Northern Ireland to see something of these matters for myself.
    Mr. Churchill: Since the strength of Britain's Armed Forces, after full mobilisation, is smaller than that of Switzerland, Sweden or even tiny Finland—with one-twelfth of our population—is my hon. Friend satisfied with the level of our reserve forces, and, if he is not, will he announce that it is his firm intention to increase the size of those forces?
    Mr. Hayhoe: We certainly place substantial importance upon the role of the TAVR in the defence of our country. There are critical manning problems, and we hope that the pay rises which have been announced will at least go some way towards resolving these.
    Mr. Hooley: Will the Minister ensure that British forces are trained and undertake exercises to equip them for taking part in United Nations peacekeeping operations?
    Mr. Hayhoe: As the hon. Gentleman knows, we are at present taking part in the United Nations peacekeeping force in Cyprus and we give logistic support to the United Nations force operating in the Lebanon. Certainly, the training that our forces have fits them to play a first-class role in this respect.

    Polaris Submarine Fleet
    Mr. Canavanasked the Secretary of State for Defence whether he will abandon any plans to replace the Polaris nuclear submarine fleet.
    Mr. Newensasked the Secretary of State for Defence if he will indicate his policy on the development of a new generation of nuclear weapons to replace Polaris in due course.
    Mr. Cookasked the Secretary of State for Defence if he will make a statement on whether he intends to replace the Polaris fleet.
    Mr. Pym: The Government are fully committed to maintain an effective strategic deterrent. We shall, therefore, continue the programme to modernise the present Polaris force so that it remains a deterrent to aggression into the 1990s. We shall also be considering what steps should be taken to maintain that capability thereafter.
    Mr. Canavan: Since the Polaris fleet has already cost us over £2,000 million and will probably cost over £3,000 million at least to replace, and in view of the Treasury's obsession with the need to cut public expenditure, will the Government make a valuable contribution to the national economy and to the development of international peace by scrapping any plans to replace Polaris with another generation of weapons of mass destruction?
    Mr. Pym: In view of the role which Polaris has played for our country and our NATO Allies, it was cheap at the price. Unless we are satisfied that our forces and capability, with those of our Allies, are adequate to preserve our security, there will not be any country left to preserve.
    Mr. Newens: Does not the right hon. Gentleman recognise that the creation of a new generation of nuclear weapons would pre-empt a huge amount of public expenditure at a time when many of us are expecting savage cuts to be made in other spheres concerning education, health and welfare? Ought we not to place a higher priority on the standards of our people at home than on creating a deterrent which in the long run can only make
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    this country more vulnerable to nuclear attack than would otherwise be the case?
    Mr. Pym: It is difficult to put a price upon the preservation of our freedom and our civilisation, but that is the most important thing. Of course, arms control is an objective of this Government, as of our predecessors, but it must be done on the basis of strength. One of the worries in defence at the moment—in fact, the principal worry—is the massive build-up on the other side of the Iron Curtain. The Warsaw Pact countries spend an enormous sum of money on increasing their arms—far beyond anything necessary for their own defence, I may say—and what we want to see is a willingness on the part of the Warsaw Pact countries to negotiate genuinely for arms control similar to that which prevails on this side of the Iron Curtain. So I must say to the hon. Gentleman that in the meantime, even though it is expensive, and even though obviously no one actually wants to spend money in this way, it is necessary so to do in order to preserve our security and to get us into a position where we can, one hopes, negotiate from strength in the direction which he wants.
    Mr. Cook: The right hon. Gentleman has referred to arms control. Has he noted that next year will bring the next quinquennial conference reviewing the non-proliferation treaty? Does he expect that there will be the slightest hope of any of the potential nuclear States, such as India and Brazil, paying any attention to anything said by Britain if that conference takes place in the wake of a decision by Britain to cling to its own bankrupting membership of the nuclear club?
    Mr. Pym: As the hon. Gentleman knows, this Government's predecessors, supported by him, took a view very similar to that which we ourselves take. Obviously, I cannot answer his question in detail about the attitudes which might be taken next year at such a conference, but in our view the position remains that, like it or not, unfortunately it is absolutely essential that we have a nuclear capability at this time.
    Mr. Biggs-Davison: Is my right hon. Friend giving consideration to collaboration with France in keeping an up-to-date contribution to the Western deterrent on our side of the Atlantic?
    Mr. Pym: Yes, Sir; I want to see the closest collaboration not only with France but with all our Allies in NATO. I regard this as a most important development and I want to give every impetus that I can to extending it. Certainly that is true with regard to France. I shall be going over fairly soon to Paris for conversations with my opposite number there, and I should certainly like to develop in that direction.
    Mr. Meacher: Do the Government now propose to build a nuclear cruise missile in this country as a partial replacement of Polaris, and, if so, how can it be an independent deterrent if the microelectronic circuitry work has to be sub-contracted to the Americans?
    Mr. Pym: All these matters are coming under consideration now, as they would have done under the Labour Government. It is too early to take any decisions, but all the possibilities, options and factors to which the hon. Gentleman refers must be taken into account before any decision of the magnitude we have been talking about could possibly be taken.
    Mrs. Kellett-Bowman: I welcome my right hon. Friend's assurance that he will go into the question of the capability of the Polaris submarines' successors after 1990. Will he do all in his power to expedite the covered facility at Barrow which would enable Barrow to build the next generation of nuclear submarines, should he so decide, as I hope he will?
    Mr. Pym: Perhaps my hon. Friend will put down a separate question on the subject of Barrow, when I shall certainly look into it.
    Mr. Flannery: In view of the massive and increasing nuclear power of the Americans, which, of course, would be a retaliatory power, does not the right hon. Gentleman think that whatever we have is insignificant compared with that, and will he tell us bluntly: who is he expecting to attack us?
    Mr. Pym: The nuclear strength of the United States—as is our own nuclear strength—is essentially deterrent. It is retaliatory, too, but it is deterrent, and our own nuclear capability is an addition to that deterrent, since without it the Soviet Union or the Warsaw Pact coun-
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    tries would have to take into account only the United States retaliatory strike capability, whereas, by having it ourselves, we are able to have a second decision-making process for nuclear retaliatory capability. That is undoubtedly an added strength to NATO and is thought to be so by our NATO Allies.

    Recruitment
    Mr. Gwilym Robertsasked the Secretary of State for Defence what are the latest figures available for the cost of recruiting a soldier, sailor or airman.
    Mr. Pattie: In the financial year 1978–79, 43,366 men and women joined the Armed Forces. On this basis, the average cost per recruit was £588. The figures for the Navy, Army and Royal Air Force were £787, £488 and £680, respectively.
    Mr. Roberts: Will the hon. Gentleman agree that these figures are too high and they could be somewhat reduced by our getting rid of the prestige recruiting offices that we have in job centres, concentrating recruitment in town centres and concentrating it through the job centres in the same way as other engineering and technical jobs are recruited?
    Mr. Pattie: I am aware of the hon. Gentleman's consistent interest in this matter, and his suggestion about job centres is being actively pursued at present. I ask him to bear in mind that the overall cost of recruiting also includes the cost of processing applications and the whole of the pre-assessment that goes on, so that the figures are not excessively high at present.
    Mr. Onslow: Will my hon. Friend point out to hon. Members on the Opposition Benches that the best way of achieving economies in this respect is by having a Government who care about having efficient Armed Forces, who care about the pay and morale of Service personnel, and who offer a worthwhile career in the defence of our country?
    Mr. Pattie: I am grateful to my hon. Friend for his constructive remarks. He and the House may be sure that the recent pay award will do a great deal to improve Service recruiting.
    Mr. Douglas: Will the hon. Gentleman bear in mind the pay and conditions of the personnel in Her Majesty's dock-

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    yards? Skilled men are being lost at Rosyth because the pay and conditions at the dockyard are not comparable with those in outside employment.
    Mr. Pattie: The important matter that the hon. Gentleman raises is primarily for the Civil Service Department. None the less, it is of concern to the Ministry of Defence and it will be watched accordingly.
    Mr. Mulley: Will the Minister give an assurance that the cuts proposed for the Civil Service will not apply to the industrial Civil Service so as to deprive the dockyards and other essential elements of the Ministry of Defence of the skilled manpower that they need to recruit?
    Mr. Pattie: The former Secretary of State should be aware that the matter to which he refers is not properly for me but is for the Civil Service Department.
    Mr. Wellbelovedasked the Secretary of State for Defence if he intends to implement in full the recommendations contained in the report of the Review of Recruiting Organisation; and if he will make a statement.
    Mr. Pattie: I am of course aware of this report and am now considering it in detail.
    Mr. Wellbeloved: Will the hon. Gentleman speed up his consideration? Is he aware that the report contains many worthwhile proposals which will improve efficiency, increase recruitment and reduce the unacceptably high cost of recruitment?
    Mr. Pattie: I am aware of the interesting proposals contained in the report. It comes ill from the hon. Gentleman to urge the Government to speed matters up when we consider what he left behind him.
    Mr. Stephen Ross: Does the hon. Gentleman accept that recruiting economies will be of no avail if the drain from the Services continues? Will he confirm that Service men in the Navy are still leaving in large numbers despite the recent substantial pay increase? Is he aware that ships that should be in commission are now being laid up?
    Mr. Pattie: It is much too early to say what will be the effect on Service per-
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    sonnel who were thinking of leaving the Services. However, the hon. Gentleman is right when he suggests that in tandem with the important matter of recruiting goes the equally important matter of retention.

    Soviet SS20 missile
    Mr. Wallasked the Secretary of State for Defence if he will make a statement on the methods he proposes to adopt to counter the Soviet SS20.
    Mr. Pym: As my hon. Friend knows, NATO has never sought to match particular systems deployed by the Warsaw Pact with particular systems of its own; but the deployment of such systems as the SS20 has increased the urgency of ensuring that NATO's longer-range theatre nuclear forces are kept up to date.
    Mr. Wall: Is my right hon. Friend aware that NATO does not have a weapons system in its armoury that can match the 3,000 miles plus range of the SS20? Will he press ahead with our American allies to develop a cruise missile, and also, possibly, a mix with a new long-range tactical nuclear missile?
    Mr. Pym: I assure my hon. Friend that I am already pursuing the possibilities and options for modernising our theatre nuclear forces. It is a matter of great urgency. I have had the opportunity of discussing these matters with some of my colleagues in the United States and Europe. It is the intention of us all to press ahead in this area as a matter of urgency. The nature of the threat that we face has increased, and that is serious. That is why we are proceeding as quickly as we can.
    Mr. Alan Clark: Does my right hon. Friend accept that there is an increasing weight of opinion that the best way of countering these missiles is not with an added weight of retaliatory nuclear explosive but through electronic counter-measures? Will he assure the House that in the next defence budget the appropriation of funds for research and development in that work will be greatly increased?
    Mr. Pym: At this stage I cannot possibly commit any detail of next year's defence budget. I assure my hon. Friend that all the possibilities and options are

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    being considered most actively so that between us we may make what will be the soundest choice in view of the circumstances that confront us.
    Mr. Cook: Does the right hon. Gentleman agree that it was a pity that 10 years ago Western European Powers lobbied the United States to leave out medium-range nuclear systems from the SALT talks? Does he agree that if they had been included it might have inhibited development of the SS20? As NATO still has a superiority in forward based systems, does he agree that it would be sensible to achieve a negotiated arms control in that area rather than clutter up Europe with yet more theatre nuclear systems?
    Mr. Pym: Whatever may have happened, been advocated or taken place 10 years ago, we have to face the situation as it is today. The Government feel that Britain's defences have been run down to a capability that is not adequate for our needs. As I have said, we are actively considering with our allies the modernisation of our nuclear forces. The unfortunate fact is that we shall not be able to achieve the reduction of arms on both sides as the hon. Gentleman wants, and everybody wants, unless we are strong enough to be able to negotiate a satisfactory disarmament agreement.

    NATO (United Kingdom Contribution)
    Mr. Viggersasked the Secretary of State for Defence if he is satisfied with the United Kingdom contribution to the southern flank of NATO.
    Mr. Pym: I do not believe that there is any room for complacency in any area of our contribution to the Alliance. In consultation with our allies we shall aim to make our contribution as effective as possible.
    Mr. Viggers: Does the Secretary of State accept that our present contribution to the southern flank of NATO is nothing more than negligible? In view of the improvement in morale and commitment that we could encourage by making some further presence on the southern flank, does he accept that we should now reappraise the area in which we make our contribution to NATO?
    Mr. Pym: I have a great deal of sympathy with what my hon. Friend has said. I have already had the opportunity of having discussions with the defence Ministers of, for example, Portugal and Turkey. Our commitment and presence there is of a limited kind. None the less, we have been able to be helpful to Portugal in the matter of equipment. We are giving aid to Turkey. We want to develop this relationship because we share the view that the southern flank of NATO is obviously an important part of the Alliance.
    Mr. Flannery: Will the Minister assure us that members of the Conservative Party do not live in a state of permanent terror, expecting somebody from Eastern Europe constantly to bombard us with nuclear weapons? We have a general impression that the Tories are all ready to get into uniform.
    Mr. Pym: I think that a uniform would do the hon. Gentleman quite a lot of good. [HON. MEMBERS: "Withdraw".] The hon. Gentleman is enjoying it. We shall not live in anything that may be described as a reign of terror, as the hon. Gentleman suggested, provided that our defences and security are adequate to ensure that we are able to continue in peace.
    Mr. Flannery: On a point of order, Mr. Speaker.
    Mr. Speaker: Order. We take points of order at the end of questions.
    Mr. James Callaghan: Is the Secretary of State for Defence aware that my hon. Friend the Member for Sheffield, Hillsborough (Mr. Flannery) served in the Armed Forces as gallantly as anybody in this House? Will he therefore withdraw any aspersion that he made.
    Mr. Pym: I am aware of that. I was not implying anything about the hon. Gentleman—although he made accusations about Government supporters. If he feels offended, I shall certainly withdraw. At the time I made the remark it seemed to me that he thought it was quite humorous.

    Shir Tanks
    Mr. Dickensasked the Secretary of State for Defence, if he will take steps to

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    underwrite the order for tanks placed by the previous Iranian Government to ensure their use by the British Army.
    Mr. Hayhoe: We are giving urgent consideration to all the implications—and there are many—of the cancellation of the Iranian order for Shir tanks.
    Mr. Dickens: Is my hon. Friend aware that, due to termination notices in my constituency, many skilled tank workers are likely to be put out of business unless the Government do something?
    Mr. Hayhoe: The Government are fully aware of the employment implications of the cancellation of this order. Careful consideration is being given to these aspects of the matter.
    Mr. Mulley: Cannot the Minister give a little more encouragement in response to this question? Are there no alternative possibilities? Before the general election I was aware of a number of other sales possibilities. I had hoped that by now something rather more positive could have been said.
    Mr. Hayhoe: As the right hon. Gentleman will be aware, there are other possibilities for sales. These are under consideration. It has been the practice of successive Governments not to give details of such orders when they are at this stage.
    Mr. Churchill: Bearing in mind that last year the previous Administration placed in mothballs more than 10 per cent. of the operational Chieftain tanks of the British Army of the Rhine, can my hon. Friend say when he will be able to assure the House that these tanks are fully operational?
    Mr. Hayhoe: If my hon. Friend will table that precise qustion, we shall certainly give him an answer. It has very little to do with the cancellation of the Iranian order.
    Mr. Dalyell: Does the Minister have a cost estimate of acceding to his hon. Friend's request, and, if not, why not?
    Mr. Hayhoe: Not in reply to a question about the cancellation of the Iranian order.
    Mr. Kaufman: Will the Minister consult his right hon. Friend the Secretary of State about what urgent action may
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    be taken to deal with the cancellation of the Iranian order at Yarrow shipyard in view of the important employment implications on the Clyde?
    Mr. Hayhoe: Urgent consideration is being given to all aspects of this cancellation. The employment consequences are, of course, one of the major considerations.

    Service Doctors (Recruitment and Remuneration)
    Mr. Charles Morrisonasked the Secretary of State for Defence if he will make a statement on recruitment and remuneration of doctors in the Armed Forces.
    Mr. Pym: During the past few years the Armed Forces have been unable to recruit the number of doctors that they require. One of the reasons for this shortfall has, no doubt, been the level of pay.
    The Armed Forces Pay Review Body makes recommendations on the appropriate pay levels for Service doctors and dentists as well as for the combatants. The Government have decided that, like the combatants, Service doctors and dentists will receive their full appropriate levels of pay effective from 1 April 1979. We are now awaiting a supplementary report from the review body on these appropriate levels of pay for Service doctors and dentists. When these have been implemented I believe that recruitment into the medical services will improve.
    Mr. Morrison: Will my right hon. Friend say when this report will be available?
    Mr. Pym: I cannot give a precise date, but it will be in the fairly near future.

    NATIONAL ECONOMIC DEVELOPMENT COUNCIL
    Mr. Michael Lathamasked the Prime Minister when she expects next to take the chair of the National Economic Development Council.
    The Prime Minister (Mrs. Margaret Thatcher): No dates have yet been arranged.
    Mr. Latham: When will the NEDC examine the shameful and dreadful figures for British productivity and national income compared with those of

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    France and Germany, which were so eloquently reported to the previous Labour Government by our new ambassador in Washington?
    Mrs. Thatcher: I share my hon. Friend's interest in that dispatch from Sir Nicholas Henderson. We had been trying to put across the analysis for a considerable number of months. I agree with my hon. Friend that if we want a German and French standard of living we must have a German and French standard of work. I trust that later today my right hon. and learned Friend the Chancellor of the Exchequer will have something to say about giving incentives for that.
    Mr. Maclennan: Will the right hon. Lady take the opportunity of the NEDC meeting—and the earliest opportunity in the House as well—to expand on her remarks made at a press conference recently about the future of her plans for energy, and especially for alternative energy supplies and the nuclear programme? Is she aware that the House would like to hear that from her at an early date?
    Mrs. Thatcher: I fear that if I did so it might take the rest of Question Time. If we are to keep up and expand the level of production in the world we must look for alternative sources of energy and vigorously pursue them.
    Mr. Adley: Is my right hon. Friend aware that when she goes to the NEDC she will probably be advised by trade union representatives that all the workers in all the nationalised industries are opposed to whole or partial denationalisation? Is she aware that that is untrue and that many people in, for example, British Aerospace and British Airways look forward to hearing the Government's proposals? Will she therefore find some way of ascertaining not the views of the politically motivated trade union leaders but those of the work force?
    Mrs. Thatcher: I am grateful for what my hon. Friend says. Like him, I have not found nationalisation popular among the electorate. In due course we shall present proposals for attempting to have less public sector ownership and more private sector ownership. When we do that we shall pay special attention to those who work in the industry and to giving
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    them a chance to purchase shares in the undertakings in which they work.
    Mr. Anderson: As a combination of public expenditure cuts and stricter controls on cash limits is bound to lead to higher unemployment, especially in times of a growing world recession, will the right hon. Lady indicate what she considers to be an acceptable level of unemployment?
    Mrs. Thatcher: The combination to which the hon. Gentleman referred would release more resources for the private sector. The private sector tends to be the productive sector. It is the sector from which future jobs will come.

    PRIME MINISTER (ENGAGEMENTS)
    Mr. Geoffrey Robinsonasked the Prime Minister if she will list her public engagements for 12 June.
    The Prime Minister: This morning I presided at a meeting of the Cabinet. Later I was present when Her Majesty the Queen welcomed the President of the Republic of Kenya. In addition to duties in this House, I shall have further meetings with ministerial colleagues and others. This evening I shall attend a dinner given by Her Majesty in honour of President Moi.
    Mr. Robinson: That is obviously a very busy schedule, but may I ask the right hon. Lady whether, in the course of it, she can find a moment to seek confirmation from her right hon. Friend the Secretary of State for Industry that the detailed and convincing case submitted to his Department today for a waiver of interest and a recapitalisation of the Government loan for the Meriden co-operative will be considered on its merits and not on the basis of any irrelevant political or ideological prejudices?
    The Prime Minister: My right hon. Friend always considers things on their merits, and fairly and justly as well. The hon. Gentleman, if I understand his question correctly, is asking for interest to be waived on loans. That is a very serious thing to ask. Governments have to borrow money in order to lend it again. Governments cannot waive their interest, and I hope that when undertakings borrow money in these circumstances they

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    will deem it a matter of honour to meet the interest payments.
    Mr. John Mackay: May I ask the Prime Minister whether, in the course, of her busy day, she has had a chance to read an article in The Daily Telegraph yesterday about Rhodesia, in which it was suggested that the European Commissioner for Development at the EEC had written a letter to Mr. Joshua Nkomo congratulating him and urging him on in his fight there? If I may quote from the article—
    Mr. Speaker: Order. The hon. Member is probably not aware that hon. Members may not quote at Question Time.
    Mr. Mackay: The letter is said to have continued by wishing Mr. Nkomo well in his gallant struggle. If my right hon. Friend has seen that article, would she like to comment on it?
    The Prime Minister: It so happens that I saw the article and the quotation to which my hon. Friend refers. I took the view that it was most inappropriate for a member of the Commission to send a communication of that sort, and I have reason to think that other members of the Commission took the same view.
    Mr. Heffer: In view of the fact that the right hon. Lady says that she and her right hon. Friends consider matters on their merits, will she tell the House what is the view of the Government concerning the National Enterprise Board, particularly as it has rescued a number of private enterprise companies which had failed and turned them into profitable organisations? These organisations would be lost to the nation if they went back to private enterprise.
    The Prime Minister: The National Enterprise Board requires a great deal of taxpayers' money to continue its operations, and we have to consider the alternative use of taxpayers' money. We shall consider the future of that board on its merits. One of the merits is that it is taxpayers' money that is being used. We cannot get away from that.
    Mr. Eldon Griffiths: Will my right hon. Friend take an opportunity in the course of today to consider a matter on which I imagine the whole House will wish to congratulate her, namely, the resounding
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    success of the Conservative Party in the European elections? Will she take an early opportunity to give to the country and to the European Parliament her own views as to how the new Europe will be able to formulate common policies in the vital fields of energy and foreign policy?
    The Prime Minister: I agree with my hon. Friend that we wish all new Members of the European Parliament well. It is the first democratic international Parliament. It was a historic occasion. We could have wished that there had been a higher turnout. Energy, of course, will be one of the problems that the Parliament can tackle. I trust that our Members will put a forthright view on matters which are of particular interest to this country concerning other aspects of European policy.

    CANNOCK CHASE
    Mr. Gwilym Robertsasked the Prime Minister if she plans to visit the Cannock Chase district.
    The Prime Minister: I have no plans to do so.
    Mr. Roberts: Has the right hon. Lady studied the figures, showing that only 27 per cent. of the electorate in the Cannock Chase district voted in the recent EEC election? Does not this reflect the general disenchantment of the British people with the EEC? In this context, will she give the British people in the next year or two an opportunity of voting again on continued membership of the EEC?
    The Prime Minister: No, Sir.

    TUC
    Mr. Stoddartasked the Prime Minister when last she met the Trades Union Congress.
    The Prime Minister: I have not met the TUC but I met the general secretary on 31 May.
    Mr. Stoddart: When the right hon. Lady meets the TUC, will she assure it that all the talk of confrontation was so much electioneering blather on her part and on the part of her right hon. and hon. Friends? Will she tell them that it is her

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    intention, and the intention of her Government, to co-operate with the trade unions and seek the co-operation of the TUC and the Government, which proved to be so good for this country over the past four or five years?
    The Prime Minister: I must point out to the hon. Gentleman that I talked not about confrontation but about a proper balance between power and responsibility, which is vital to the future of democracy. I stand absolutely on those statements. I believe that we shall receive the co-operation of the trade union movement. Without the votes of many trade unionists we should never have had such a large majority.
    Mr. Mellish: That is absolutely right.
    Mr. McCrindle: Would not the laudable objective to which the hon. Member for Swindon (Mr. Stoddart) has just referred be considerably advanced if the trade union leaders were prepared to accept that they cannot and should not stand in the way of the pursuit of policies upon which the Government were returned only a few weeks ago?
    The Prime Minister: I do not believe that the trade union leaders will stand in the way of those policies. This country needs to raise productivity. For that we need to get rid of some overmanning and some restrictive practices. I hope that when people have the incentive to do so they will get rid of them, and that when we have top management once again we shall be able to make advances which will enable this country to compete on full and equal terms with our European competitors.
    Mr. Wigley: When the Prime Minister meets the TUC, will she, in view of the petrol shortages and the increasing price of petrol, give an assurance that her Government will in no circumstances allow any railway lines to be closed?
    The Prime Minister: I could not possibly give any such assurance, and I doubt very much whether the hon. Member expected me to give an unqualified, positive answer. I point out to the hon. Gentleman that the petrol shortages now are very small compared with those that we endured in January.
    Mr. Mike Thomas: When the right hon. Lady meets the TUC, will she ex-
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    plain to it her use of the English language in parliamentary answers to me? How is it that, in the matter of the advanced gas-cooled reactor turbine generator orders, she is able to say of the Think Tank that she has not received guidance from it, she has not received information from it, yet was able suddenly to discover yesterday that she has received advice from it?
    The Prime Minister: Because between the hon. Gentleman's first question and his second question on this matter I received advice from it.
    Mr. Marlow: Will the Prime Minister agree that the turnout for the European election was disappointing and that to a certain extent the European Parliament is on probation? Does she further agree that if, in five years' time, at the next European election, we do not have a better turnout, showing a greater interest by the British people, we shall have to consider afresh our relationship with our friends in the European Community?
    The Prime Minister: I must be as candid with my hon. Friend as I was with the hon. Member for Cannock (Mr. Roberts). The answer is "No", but I think that the political parties may be able to increase the numbers voting at the next European election.
    Mr. Thomas: On a point of order, Mr. Speaker. I hesitate to raise this matter on a point of order, but is it in order that the right hon. Lady should provide me with what I believe to be inaccurate information through the mode of both written and oral parliamentary answers?
    Mr. Speaker: Order. The Prime Minister is responsible for her own answers. This is not the first time that hon. Members have not liked the answers which they have received.
    Mr. Thomas: Further to that point of order, Mr. Deputy Speaker. I am sure that your predecessor has not left the Chair deliberately. Is it not a matter of the greatest seriousness for the Chair and the House, not that I should receive a reply that I do not wish—of which I would not complain—but that I should receive an inaccurate reply?
    Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. It is not for the Chair to give a direction on the kind of answers that Ministers give to questions.

WAYS AND MEANS
  BUDGET STATEMENT
  Mr. Deputy Speaker (Mr. Bernard Weatherill): Before I call the Chancellor of the Exchequer, it may be for the convenience of hon. Members if I remind them that at the end of the Chancellor's speech, as in past years, copies of the Budget resolutions will not be handed around in the Chamber but will be available to hon. Members in the Vote Office.

INTRODUCTION
3.32 p.m.
The Chancellor of the Exchequer (Sir Geoffrey Howe): It is a little over five years since my predecessor, the right hon. Member for Leeds, East (Mr. Healey) rose at this Dispatch Box to present his first Budget. The House will have seen today the honour recently conferred upon him by Her Majesty. I am sure that the House will wish to join me in congratulating the right hon. Gentleman on the great honour that has been conferred upon him.
Like me, the right hon. Gentleman approached this task within a very few weeks of his party's success at a general election. In compressing the huge and complex process of Budget-making into so short a time, he faced—as I have done—a formidable task.
It is right for me to say that I have received unstinting support, not just from my fellow Treasury Ministers but from many people, of every rank, within the Treasury and the two Revenue Departments. But for their willingness to work far beyond the call of duty it would scarcely have been possible for me to present this Budget at all. So I gladly echo my predecessor in acknowledging this assistance with a very real sense of gratitude.
I echo the right hon. Gentleman, too, in saying that I approach my task—and I assure the House that I quote his very words—
"in a mood of humility and trepidation"—[Official Report, 26 March 1974; Vol. 871, c. 277.]
I say that not just because of the novelty of the experience for me—although that is daunting enough—but
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much more because of my sense of dismay at the disturbing familiarity of the occasion from the point of view of almost everybody else.
As the House will recall, this is the fourth Budget in the last 15 years to be introduced by a new Chancellor in a new Government. The late Iain Macleod, alas, did not live long enough to be included in this series. Before me there was, in 1964, the present Leader of the Opposition; in 1970, my noble Friend Lord Barber; and, in 1974, the right hon. Member for Leeds, East.
The depressingly familiar feature of the first Budget speech of each of those three predecessors is that every one of them found cause to complain, with more or less justice, about the disagreeable nature of the estate that had come his way.
The House will understand, in the light of the most recent evidence about inflationary trends, monetary growth, Government borrowing and the deteriorating trade balance—not to mention the postdated cheques for public sector pay that I found on arrival at the Treasury—that I am certainly in no position to discontinue the tradition of my predecessors.

THE YEARS OF DECLINE
So many other facts tell the same story. Consumer spending rose last year, in percentage terms, by seven times as much as manufacturing output. We actually manufactured 4 per cent. less goods in 1978 than in 1973. But the volume of manufactured imports went up by 13½per cent. Though demand was rising strongly, and unemployment remained high, the economy was almost unable to increase supply. The current account of the balance of payments was barely in surplus last year, despite a massive contribution of £3½ billion from North Sea oil and gas. And well before the last Administration left office inflation was back on a rising trend. Although many price increases had been held back behind the general election dam, the rate of inflation in the six months to April—excluding seasonal foods—was running at no less than 12·3 per cent. at an annual rate.
On that form and on the policies which brought it about, there is little reason to expect any improvement in the future.

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Productivity is rising less than half as fast as in the early 1970s. There is no sign of any change for the better there. Last year's growth in demand could never have been sustained, because, as the trade figures make clear, it was largely met from imports. That was the main reason why the recent fall in unemployment was, in any event, likely to be reversed.
It would be easy to conclude that these difficulties are all the fault of the last Administration. Certainly the Labour Party bears a heavy responsibility. Labour Governments have, after all, been in office for 11 of the last 15 years. Even so, I want to consider our problems in an even longer perspective.
Only a quarter of a century ago—within the memory of almost every Member of this House—the people of the United Kingdom enjoyed higher living standards than the citizens of any of the larger countries of Europe. Amongst the free nations of the world, Britain was then second only to the United States in economic strength.
It is not so today. For example, France and Germany's combined share of world trade in manufactured goods, which in 1954 was almost the same as Britain's alone, is now more than three times as large as ours. The French people now produce half as much again as we do. The Germans produce more than twice as much, and they are moving further ahead all the time.
There has, of course, been plenty to say in mitigation of all this. At least until recently, we have been able to claim a good record in most of those things that can be summed up in the phrase "the quality of life". But in the last few years the hard facts of our relative decline have become increasingly plain, and the threat of absolute decline has gradually become very real. That is not a prospect that I am prepared to accept. Nor, I believe, are the British people. They realise that we cannot for ever go on avoiding difficult choices in the fatal, and increasingly futile, quest for easy solutions.

INTERNATIONAL BACKGROUND
Of course, as inhabitaints of a country that has always been deeply involved in the international economy, we pay a great deal of attention to events outside
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our own country. But it would be very dangerous if preoccupation with this or that world crisis—the oil crisis, the dollar crisis or whatever—led us to believe that our economic troubles could be blamed mainly on the outside world. The truth is that our troubles are very largely home-made. If we tackle them ourselves, we can pull our own economy round, even in a world of slow growth. If we do nothing to change course, nothing that happens beyond these shores can help us.
As it happens, the international environment is unlikely to give us any comfort in the years immediately ahead. Oil prices are now, on average, about 30 per cent. higher than six months ago. That is one reason why growth in most countries is likely to be significantly lower than in 1978. So we clearly now need to do more about both conservation and supply of energy.
For that reason, it will be an important subject for discussion at the next meeting of the European Council and at the economic summit in Tokyo at the end of this month.
In this disturbed situation, the European Community can, and should, be a source of stability and strength for its members. In one important area, however, present EEC policies are seriously hindering our efforts to help ourselves. The United Kingdom and Italy, which are among the poorer members of the Community, are transferring substantial resources to richer member States—[HON. MEMBERS: "Oh."]—chiefly through the Community budget. We have already made it very clear to our partners that this cannot be allowed to continue. [HON. MEMBERS: "Oh."] It is plainly unfair, and it is against the interests of the Community itself. We shall continue to press for an agreement which meets our case.
I repeat, however, that progress internationally, whether on energy policy or within the Community, will not cure the deep-seated weaknesses of our own domestic economy. Nor will North Sea oil. Growing production will certainly put us in a better position than other countries, without oil of their own, but it must not be allowed to conceal the grim truth about what has been happening to the balance of our own trade, particularly in manufactured goods.
North Sea oil will itself do nothing to solve the problems on the supply side of our economy. Nor will it check inflation. Indeed, in some respects it may actually make matters worse, unless we correct some other aspects of policy which are at present working in the wrong direction.

THE CAUSES OF DECLINE
So we find ourselves, yet again, asking the question: how are we to check, and then reverse, the long decline? In particular, what can we, here in this House of Commons, do about it?
We do well to begin, I suggest, by acknowledging that there is a definite limit to our capacity, as politicians, to influence these things for the better. I suspect that that view is much more widely accepted outside this place than it is within.
I do not mean to be unkind to my predecessor when I invite the House for a moment to consider his experience. The Government of whom he was a prominent member consistently behaved as if it were possible for the Government to manage, indeed to plan, the economy, so as to promote efficiency and growth. The right hon. Member for Leeds, East did this with notable enthusiasm. In five years of office he introduced no fewer than 15 Budgets and economic "packages", and financed a wide range of policies in the name of "the regeneration of industry".
But at the end of five years the right hon. Gentleman must ask himself, to what avail? Has the industrial strategy, as he conceived it, really transformed the outlook for British industry? Are we not driven to the conclusion that the notions of demand management, expanding public spending and "fine tuning" of the economy have now been tested almost to destruction?
Certainly the Leader of the Opposition has come round to that view. He said in a memorable speech on 28 September 1976 to his own party conference at Blackpool:
"We used to think that you could just spend your way out of a recession and increase employment by cutting taxes and boosting Government spending. I tell you, in all candour"—
said the right hon. Gentleman—
"that that option no longer exists …".
The right hon. Member for Leeds, East has, in the event, been proclaiming
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the same conclusion. He has, throughout, asserted the importance of monetary policy. He rightly began the practice of setting money supply targets, and he claimed to make his public spending plans accordingly. This means that I am able to approach my task this afternoon on this one, crucially important piece of common ground: that the poor performance of the British economy in recent years has not been due to a shortage of demand. We are suffering from a growing series of failures on the supply side of the economy.

A NEW BEGINNING
It is our belief that many of these failures are themselves the result of actions and interventions by the Government themselves—laws that stand in the way of change and stifle enterprise; and, as important as anything, a structure of taxation that might have been designed to discourage innovation and punish success.
Of course there are many other causes of our decline. That is not in dispute. But we believe that it is more sensible for the Government to make those beneficent changes that are undoubtedly within their power than to preach the need for changes that lie well beyond their authority. Certainly, improvement remains unlikely unless we are prepared to change the laws and taxes to which I have referred.
That is why the British people are convinced—as we believe—that it is time for a new beginning. Our strategy to check Britain's long-term economic decline, which has gathered pace in the last five years, is based on four principles.
We need to strengthen incentives, by allowing people to keep more of what they earn, so that hard work, talent and ability are properly rewarded. We need to enlarge freedom of choice for the individual by reducing the role of the State. We need to reduce the burden of financing the public sector, so as to leave room for commerce and industry to prosper. We need to ensure, so far as possible, that those who take part in collective bargaining understand the consequences of their actions—for that is the way to promote a proper sense of responsibility.
Those principles require substantial change in the way in which our economy is allowed to work. The tax changes that I shall propose today will be only the

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first step. They will take us a long way in the right direction.

INFLATION
But those changes will not themselves be enough unless we also squeeze inflation out of the system. It is crucially important to reestablish sound money. We intend to achieve this through firm monetary discipline and fiscal policies consistent with that, including strict control over public expenditure.
Financial responsibility on the part of Government must be supported by responsibility elsewhere. People must understand and accept that the only basis for real increases in wages and salaries is an increase in national production. Higher pay without higher productivity can lead only to higher inflation and unemployment. It is important for that to be fully understood by all those concerned with wage negotiation. We shall be more than willing to consider better methods of ensuring that it is.
Given the monetary and fiscal policies to which we are firmly committed, irresponsibility is bound, as I have said, to threaten jobs. This indeed is the clear evidence of recent history, most plainly in the private sector.
Responsible bargaining necessarily means different things to different people and in different kinds of firms and industry. But on both sides of the table, and on both sides of the House, certain limitations must be recognised: in the public sector, what the ratepayer and taxpayer can afford; in industry, what the customer is prepared to pay, what the firm needs to invest, and what the pressure of competition demands; and, throughout the economy, the limits imposed by the need to control the money supply.

MONETARY POLICY
As I have already observed, my predecessor was undoubtedly right to adopt a system of monetary targets. But his other policies were seldom consistent with his own monetary objectives. Thus, although monetary growth in 1978–79 as a whole was just within the target range of 8 per cent. to 12 per cent., it was growing in the second half of the year at an annual rate of almost 13 per cent. Moreover, the May figures, now becoming
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available, indicate that the underlying growth is still above the top of the range and, if anything, accelerating. One cause of this has been the alarming rate of central Government borrowing—£2½ billion in April and May alone.
It is now clear that the public expenditure policies which we inherited would have made it quite impossible to meet the right hon. Gentleman's 8 per cent. to 12 per cent. target without a further savage squeeze on the private sector, involving not just higher interest rates but also a sharp increase in the total tax burden. Not for the first time, the levels of public spending and borrowing which he permitted were far too high to be compatible with his own monetary targets. Reluctantly, I shall myself be obliged to take painful action to correct that mistake.
We are committed to the progressive reduction of the rate of growth of the money supply. I therefore intend, despite the discouraging backcloth, and as the first step in this process, to reduce the targe range for the remainder of this year, 1979–80. The new target range, to apply to the growth of sterling M3 in the 10 months to the banking make-up day in April 1980, will therefore be an annual rate of 7 per cent. to 11 per cent., but I will roll the target forward by six months in the autumn.
Equally important, I intend to improve the way in which the monetary target is achieved. We need to rely less on curbing the private sector, and put more emphasis on fiscal restraint and economy by the public sector. That requires, as a first step, a significant reduction in the public sector borrowing requirement from the figure of around £10 billion that it would otherwise have reached this year.
There are, however, limits to what can be done in this Budget, with two and a half months of the financial year already passed, to curtail the scale of public spending in the current year. This is indeed a severe handicap. Even so, I intend to reduce the public sector's financial needs enough to make it possible to achieve my monetary target with less restraint on the private sector.
But the fiscal measures which I am announcing today must inevitably take time to take effect. They cannot immediately reduce the seriously excessive monetary growth that we have inherited.

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Particularly given the continuing surge in bank lending, I have concluded that there is no option but to act directly to reduce that growth. It is not enough to speak of the importance of monetary policy, unless one is prepared to carry one's words into practice.
The Bank of England is accordingly rolling forward the supplementary special deposit scheme, or "corset", by three months on the existing basis. In addition, the Bank is announcing, this afternoon, an increase in its minimum lending rate by 2 per cent. to 14 per cent. [HON. MEMBERS: "Oh".] I must make it very plain to the House that the necessity for this action ranks alongside last week's trade figures as entirely characteristic of the legacy of the last Administration.
I return now to consider the right size of the public sector borrowing requirement in the current year. As my predecessor found to his cost, this is a fickle and elusive statistic, so I offer my judgment of the scale of Government borrowing in 1979–80 with a degree of caution. Having said that, my best estimate is that the changes in taxation and public expenditure which I am announcing today will be sufficient to reduce the PSBR to £8¾billion in the current year, as compared with the outturn of £9¼billion for 1978–79. As a percentage of GDP, that will represent a reduction from over 5½per cent. last year to under 4½per cent. in the current year. The public sector deficit will also fall from 4½per cent. to 3¾per cent. of GDP. These are important steps in the right direction. I intend to continue along that path in the years ahead.
It will no doubt be argued by some—although I do not think that it can be so argued by my predecessor—that fiscal action to bring down the PSBR to the figure I have mentioned is unduly severe. Indeed, the conventional forecasting arithmetic, which, in accordance with custom and stature, I am publishing in the Financial Statement, does suggest that the economy will show no growth in the period immediately ahead.
But this prospect, in so far as it can be viewed as a reliable prediction—which itself is open to doubt—cannot be taken to mean that the Budget is, in the traditional language of neo-Keynesian economists, perversely contractionary. To make that claim is to argue
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that an alternative course of fiscal policy would produce more growth and more employment. I believe that argument to be profoundly wrong.
To aim at a significantly higher public sector borrowing requirement—in other words, to case the stance of fiscal policy—would serve only to fuel the fire of inflation. In the end, we should have less growth, less employment, and even higher prices. Even the Leader of the Opposition must accept that, in the light of the words that I quoted from what he said at Blackpool nearly three years ago. It follows that any decline in economic activity which might, on a narrow view, be attributed to this Budget will be essentially the consequence of the economic situation which has made such measures inevitable, while inflation is being brought under firm control.

EXCHANGE CONTROL
I come now to my proposals, and I deal first with the question of exchange control. Sterling is at present relatively strong, and I expect it to remain so. That strength flows partly from the realisation that, as a result of North Sea oil, the United Kingdom is better placed than most of our competitors to deal with present world oil problems. Moreover, our fiscal and monetary policies should maintain confidence in the currency. This is, therefore, an appropriate time to start dismantling our apparatus of controls on outward capital flows. Our present regime is more restrictive than that of any other major industrialised country. There is an overwhelming case, in this context as in others, for giving both companies and individuals wider freedom of choice. This should reduce the distortions and costs which controls are bound to impose on economic decisions. These costs bear particularly heavy on smaller companies.
We intend to move one step at a time. In the initial stage, the emphasis will be on direct investment overseas. Details are being made available in the Vote Office. The main relaxation will be to make official exchange, to the extent of £5 million per project per year, freely available for new outward direct investment. This should allow the majority of United Kingdom firms which invest overseas all the sterling finance they are likely to want. The two-thirds rule, which restricts the reinvestment of profits earned overseas,

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will be abolished. In response to Labour Members, I must say that this greater freedom in the financing of direct investment abroad does not, as is sometimes feared, and as they suggest, threaten jobs in the United Kingdom. The weight of evidence is that overseas investment generally strengthens our position in world export markets to the benefit of output and jobs in this country. Moreover, additional investment overseas today will yield an income that will stand us in good stead when the overseas earnings from North Sea oil begin to decline.
During the sterling crisis of 1976, the last Government stopped the use of sterling to finance third country trade. That restriction has placed British merchants at a disadvantage in international business, and I am taking the opportunity to restore the facility to them as soon as the details can be worked out.
I have also decided that there should be some immediate easement of the controls affecting individuals. I am therefore, making significant relaxations in the rules concerning travel and emigration allowances, overseas property, and cash gifts and payments to dependants. In regard to portfolio investment, I am taking two modest steps at this stage. I am abolishing the requirement to maintain 115 per cent. cover for overseas portfolios financed by foreign currency borrowing, and official exchange will henceforth be available for meeting interest payments on such borrowing. The 1975 controls on gold coins will also be abolished. As the House knows, the liberalisation of exchange controls is one of our obligations under the EEC Treaty. I have accordingly discussed with the Commission the decisions that I am announcing today.
As time goes by, I intend to take further steps in the progressive dismantling of exchange control. The pace of relaxation will obviously be influenced by sterling's strength, as well as by the speed with which we can solve the economic problems that face us.
In our external policy we have also to take account of our official external debts. These at present amount to$22 billion—a massive increase on the$8 billion which the previous Government inherited in 1974. It is our intention to reduce that burden of external debt substantially during the life of this Parliament.

PUBLIC EXPENDITURE
In order to reduce the borrowing requirement and the burden of direct taxation, we must make savings in public spending and roll back the boundaries of the public sector. We are totally committed to improving standards in the public services. But that can be achieved only if the economy is strong in the first place. So that will be our first priority. Finance must determine expenditure, not expenditure finance. Substantial reductions in expenditure can, and will, be made in the remainder of this financial year.
First, as I made clear three weeks ago, we shall not raise the cash limits to cover prices higher than those provided for in the cash limits originally published for this year. On pay in the public services, while we will honour the commitments to the universities and the health authorities entered upon by our predecessors, in general we shall limit the adjustment of the cash limits so that substantial offsetting economies will have to be found.
The need for substantial economies applies equally to local authority expenditure, where the Government's contribution is made through the rate support grant. As I said three weeks ago, we shall take account of pay settlements in calculating the increase orders for the rate support grant, but we shall make a significant across-the-board reduction from the total so calculated.
I can now tell the House that the reduction will be £300 million for England and Wales and £35 million for Scotland. That is, of course, to be set against total rate support grant expenditure of about £9 billion. These figures may have to be increased when we know the cost of further pay increases and will be finally determined in November, before the increase orders are made. In coming to this decision, a major factor has been how much in present circumstances it is reasonable for the taxpayer to contribute.
The cash limits on Departments and fringe bodies are being set to ensure that economies of 3 per cent. are achieved on manpower costs this year, as announced by my hon. Friend the Minister of State, Civil Service Department. I estimate that this cash limits policy will reduce the volume of planned expenditure by about £1 billion at 1979 survey prices.
On top of these reductions resulting from the policy on cash limits, my right hon. and hon. Friends have reviewed the plans for their Departments and the nationalised industries and have identified further specific reductions which are being made this year. The changes are listed in a notice to be issued by the Treasury and available in the Vote Office. Further details will be given by the Ministers concerned. But the House will want to know where the main reductions will be made. All figures that I quote are at 1979 survey prices.
We are making an immediate start in reducing expenditure on industrial and employment subsidies. My right hon. Friend the Secretary of State for Industry is cutting expenditure on industrial support this year by £210 million. This will come mainly out of the provision for new projects by the Department of Industry and by the National Enterprise Board, and by imposition of a delay of four months in payment of approved claims for regional development grant. Support from the employment programmes is to be concentrated on the areas where unemployment is highest. Savings of over £170 million will be made in those programmes this year.
In the area for which my right hon. Friend the Secretary of State for Energy is responsible, savings of over £320 million are being made this year in the finance for BNOC and the electricity, gas and coal industries. The industries have been asked to avoid so far as possible increases in fuel charges beyond those required to meet the cash limits announced by the previous Government.
My right hon. Friend the Secretary of State for the Environment is making savings of about £440 million from his programmes this year, mainly by scrapping the Community Land Act, deferring water authority investment and reducing existing allocations to housing authorities.
As we have repeatedly made clear, it is not our intention to reduce spending on the Health Service. But we cannot ignore the fact that the contribution made by some health charges has greatly diminished in recent years. This applies especially to prescription charges, which have stood at their present level for eight years, during which prices have risen
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over two and a half times. It is therefore proposed to increase prescription charges to 45p. This will still leave them cheaper in real terms than they were in 1971, and the present wide range of exemptions covering children and the elderly amongst others will, of course, be maintained. Certain dental charges will also be increased. Those changes will yield £34 million in 1979–80 for Great Britain as a whole.
My right hon. and learned Friend the Secretary of State for Education and Science is reducing expenditure in those areas of the education and science programmes within the Government's direct control by about £55 million. We shall not add to the increase of 5p in the school meal charge which was planned by our predecessors for the autumn term.
The aid programme this year is being reduced by £50 million. Savings are also being made on the transport, trade and arts programmes.
My right hon. Friends the Secretaries of State for Scotland, Wales and Northern Ireland are making comparable reductions in their own programmes.
In total, these reductions amount to almost £1½ billion this year.
In addition, we do not intend to use as large a Contingency Reserve as provided for 1979–80 in the previous Government's public expenditure White Paper. We have decided to cut the reserve by £250 million. Any further decision to add to the volume of programmes in the remainder of this year will be met from the balance of just over £250 million which will remain in the reserve after today.
In two areas we are providing for increased spending—defence and pensions. An extra £100 million is being provided for the defence budget this year. This will enable essential projects in the equipment programme to go ahead. I shall return to pensions improvements shortly.
As I have already indicated, we are only just embarking on our review of the plans we have inherited and of the scope for reducing the size of the public sector. But it is already clear that the scope for sale of assets is substantial.
Sales of State-owned assets to the private sector serve the immediate purpose of helping to reduce the excessive public sector borrowing requirement with which

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I was faced. This is all the more necessary this year, given the difficulty of cutting back public sector spending programmes once a year has already begun.
But such sales are not justified simply by the help they give to the short-term reduction of the PSBR. They are an essential part of our long-term programme for promoting the widest possible participation by the people in the ownership of British industry. This objective—wider public ownership in the true meaning of the term—has implications not merely for the scale of our programme but also for the methods of sale we shall adopt.
So far as this year's disposals are concerned, we must obviously retain flexibility on timing and on the precise mix of assets in order to ensure a fair price. I do not, therefore, propose to announce the details today. But I intend to ensure that the proceeds of sales in the current financial year will amount to some £1 billion and I have taken account of this in the Budget arithmetic. The biggest contribution to this total will come from the sale of a further part of the Government's shareholding in British Petroleum, where we shall be following the example set by the previous Administration.
In total, I estimate that the economies I have announced will amount this year to about £½ billion at 1979 survey prices and £4 billion at current prices. Yet, given the scale of the problem we have inherited, I must look for a further contribution from indirect taxes to finance the first stage of our plans for the reduction of income tax.
Before turning to the first of my tax proposals, I must make it clear that today's Budget will be able to deal with only a small part of the Government's tax agenda. Coming, as we do, to a Finance Bill at this late stage in the year, there is a physical limit to the amount of legislation that can be proposed and enacted. We have been unable to deal with many important matters. There will be other opportunities to consider those. At this stage, we have concentrated on tax changes of strategic importance. I turn now to the first of these.

INDIRECT TAXATION
We made it clear in our manifesto that we intended to switch some of the tax burden from taxes on earnings to taxes
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on spending. This is the only way that we can restore incentives and make it more worth while to work and, at the same time, increase the freedom of choice of the individual. We must make a start now.
I have reviewed the whole field of indirect taxation to decide where the increased revenue could best come from. There are many cogent arguments at this stage in favour of value added tax.
First, large areas of consumer spending, in fact about half the total, are not chargeable to VAT. Food, children's clothes, heating and light, public transport, house prices and rents are all zero rated.
Second, poorer households tend to spend proportionately more of their income on such zero-rated goods. This means that, unlike most indirect taxes, VAT is not regressive.
Third, by comparison with taxes such as those on alcohol and tobacco, VAT is much more broadly based.
Fourth, there is a real opportunity for simplifying the operation of the tax by having one rate instead of two.
In his speech in the House on 22 May, the right hon. Member for Leeds, East seemed to favour increases in the surcharge on national insurance contributions or in advance corporation tax. The national insurance surcharge falls on the whole of British industry, including production for export, but not on imports. It is inferior in that respect to VAT, which falls on imports but not on exports. That is clearly significant in the light of the latest trade figures. An increase in advance corporation tax, which he also seemed to suggest, would damage the overall liquidity of industry at a particularly difficult time: by contrast, an increase in VAT actually increases liquidity.
For all these reasons, my choice must fall on VAT. Moreover, the increase I make must be sufficient to provide for substantial and worthwhile reductions in income tax. I propose, therefore, that as from next Monday VAT should be charged at a new unified rate of 15 percent.
Allowing for the wide range of goods and services that are zero rated, and will stay zero rated, the new rate that I propose is equivalent to 8 per cent. averaged

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over the whole of consumer expenditure. That is significantly less than the average in the European Community.
The yield from the increase to 15 per cent. is estimated at £2,035 million in 1979–80 and £4,175 million in a full year. Thus, it will provide scope for further direct tax reductions in later years. The relatively small size of the yield this year reflects the loss of over two months' revenue between April and the present and the time lag allowed to traders before they pay over VAT receipts to the authorities—an average of over three months. I have referred to the helpful contribution that that gap provides towards improving liquidity. As these funds build up in traders' hands, they provide a substantial boost to the liquidity of the firms and companies concerned. Concern has been expressed that an increase in VAT could lead to some particular difficulties, for example in relation to telephone bills for calls made before the date of change. I am proposing transitional provisions to deal with that and some other problems of that kind.
The increase in VAT will of course add significantly to the point of sale prices of drink and tobacco. For example, the VAT increase will mean about an extra 28p on a bottle of whisky, approximately 2p on a pint of beer and 6p on a typical packet of 20 cigarettes. In these circumstances, I do not think that it would be justifiable to make a separate increase in the excise duty on drink and tobacco this year.
I fully realise that this increase in value added tax will result in a rise in prices—in fact, a rise of about 3½ per cent in the retail price index. This is, of course, a once-for-all effect. But there never will be a time when it is easy to effect the switch from direct to indirect taxes, and the present moment is clearly no exception. That much-needed reform has been postponed too long already.
The House should bear in mind that, as I have already indicated, VAT does not fall on a wide range of necessities. That means that the increase will fall less heavily on people in the lower income groups. As will be apparent when I come to my income tax proposals, I shall be leaving people with more money in their pockets with which to pay the increased VAT. I appreciate, however, that those
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who are not liable to income tax—and I have in mind particularly many of those living on retirement pensions—will not benefit directly from my income tax proposals. That brings me to our proposals in the field of social security.

SOCIAL SECURITY PAYMENTS
The Government have decided to increase the standard rate of retirement pensions in November by £6·10 to £37·30 for a married couple and by £3·80 to £23·30 for a single person. These increases take full account of the underestimate which the last Government made of the actual rise in earnings between November 1977 and November 1978, and are well above the figures of £4 and £2·50 announced by the previous Government. Other social security benefits will also be increased, and my right hon. Friend the Secretary of State for Social Services will announce full details tomorrow.
This means that social security pensioners will be fully protected against the increase in prices. That is what is really important. But the extent to which we can afford to go further than that—to add improvements in real terms—must depend on the productive capacity of those in work.
Under the present rules, pensions are uprated on the basis of the movement in prices or earnings, whichever is the greater. The Government have decided, however, that for the future the requirement for the statutory uprating of pensions should be based on price movements, and we shall be introducing legislation to that end. That will be a minimum requirement and will fully protect the value of these pensions against price increases at all times, including those arising from indirect tax changes, such as I have just announced.
Mr. J. W. Rooker: That is treasonable.
Sir G. Howe: Of course we want, as much as the hon. Member for Birmingham, Perry Barr (Mr. Rooker), to be able to do more, but we realise that that depends on the strength of our economy. I am confident that in time, as our economy improves, it will be possible to do more and ensure that pensioners share in the increase in national prosperity. That is one more reason why my other

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proposals today are so important. They are intended to strengthen the productive capacity of the economy as a whole, for the benefit of pensioners as well as every other citizen in the community.
We also propose to improve certain other social security benefits. Child benefit went up by £1 per week only two months ago, and we do not propose a further increse this year. But single-parent families face particular problems, and we propose that the one-parent premium should go up from £2 to £2·50 next November. We also want to help the disabled. Mobility allowance will accordingly be increased from £10 to £12 in the autumn, and we shall, of course, honour our commitment to pay a Christmas bonus this year of £10.
These measures overall are worth about £1,100 million in 1979–80 and £2,700 million in a full year. They are largely covered by the existing social security programme, and the balance has been charged to the Contingency Reserve. As the House knows, our general policy is to make substantial reductions in public expenditure, but that must not be done in a way that bears unfairly on the more vulnerable members of society.
Our social security system has become far too complicated and it sometimes acts to reduce the incentive to work. The problem is widely recognised on both sides of this House. We are therefore studying a number of aspects of the social security system to see what can be done to simplify it. My right hon. Friend the Secretary of State is also putting in hand urgent measures to tighten up on abuse and fraud.

TAXATION OF OIL AND PETROLEUM
Hydrocarbon Oil Duties
I dealt earlier with the excise duties on tobacco and drink. The oil duties, however, raise wider issues. I have already mentioned the general case for measures that will help us to meet the growing and undoubted need to conserve oil. At a time when there is a worldwide shortage of crude oil, it is essential that we should play our full part in achieving the 5 per cent. reduction in consumption to which the previous Government rightly committed us.
I therefore propose to increase all the main oil duties this year. In the particular case of petrol, the VAT increase from 12½ per cent. to 15 per cent. will be smaller than for many other items. With that in mind I propose to increase the petrol duty by 7p a gallon, which will result in a total price change of about 10p a gallon. I also propose to increase the duty on derv by the same sum, 7p a gallon, and the duty on heavy oil other than derv by ½p. 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. The yield from these excise duty changes is estimated at an additional £525 million in a full year and £400 million in 1979–80. The immediate increase in the RPI will be about a quarter of 1 per cent.
Vehicle Excise Duty
In view of the increase that I am proposing in the road fuel duties, I have decided to make no change in the rate of vehicle excise duty. Our predecessors announced their intention of abolishing the duty on petrol driven vehicles. As my right hon. Friend the Minister of Transport has already said, we are reviewing the future of this duly and we shall announce our conclusions in due course. For heavier goods vehicles, my right hon. Friend will be announcing plans for restructuring the form of this tax.
Car Leasing
Before I leave the subject of motor cars, there is a particular issue that I need to deal with. There is a weakness in the present legislation on capital allowances which enables leased cars to avoid the special rules restricting allowances for business cars. This has resulted in a loss of tax which is currently running at about £175 million a year, and which could well rise to £200 million next year if I take no action. I propose to put this right with effect from today.
Petroleum Revenue Tax
I turn next to petroleum revenue tax. The previous Government announced last August that they proposed to increase this tax from 1 January this year. These proposals were discussed very fully by the last Government with the industry and we ourselves have had representations about

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them, which we have carefully considered.
I have judged them now against the background of recent rises in the price of oil. On that basis, the original package of PRT proposals for giving the Government more revenue from the North Sea is now fully justified. Accordingly, there will be provisions in the Finance Bill to implement it. I also propose, however, to introduce some changes in the PRT expenditure rules for which the industry has been pressing for some time. The British National Oil Corporation will no longer be exempted from PRT.
These proposals will increase the Government's revenue from the North Sea—at 1978 prices—by about £110 million this year and by about £1,800 million over the period to 1985.

BUSINESS TAXATION—INCLUDING CAPITAL TAXATION
Before I deal with the taxation of business profits I propose to refer to the taxation of capital, a matter of vital interest to business as well as to individuals.
We made it clear in our manifesto that we were determined to make the taxation of capital simpler and less oppressive. The objection to capital gains tax in its present form is that most of the yield comes from paper gains arising from inflation. The tax is, therefore, a capricious and sometimes savage levy on the capital itself. The capital transfer tax, despite the improvements secured in the last Parliament by constant pressure from the Conservative Benches, is oppressive, harmful to business and a real deterrent to initiative and enterprise. It is perfectly natural that people should want to build up capital of their own and pass it on to their children, and this is particularly true of the small business proprietor.
The issues involved in both of these taxes are difficult and complex. I have, therefore, decided that we should not attempt to deal with them in the coming Finance Bill—abbreviated as it is bound to be—but should press ahead with a thorough study, with a view to legislation on all these matters at an early date. There is, however, one specific issue on
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which legislation is required in order to hold the present position. I propose to extend for a further two years the period for CTT transitional relief for capital distributions from discretionary trusts and to defer for two years the introduction of the periodic charge.
The development land tax, however, is a very different matter, which calls for immediate action. This tax has combined with the Community Land Act to prevent much worthwhile development and to increase unemployment in the construction industries. We have already said that we will repeal the Community Land Act. I propose now to deal with the development land tax. In place of the present rates of 66⅔ per cent. and 80 per cent., which the previous Government intended should rise to 100 per cent., I propose that development land tax will in future be charged at a single rate of 60 per cent. The amount of development value which can be realised in a financial year without liability to development land tax will be raised from £10,000 to £50,000. Both these changes take effect for disposals made on or after today.
I do not propose to make any further reductions in rate, and the generous increase in the exempt slice should mean that it will not need early revision. Owners of development land will, therefore, have no reason for holding back in the hope of further tax reductions. What I have said today should remove the major uncertainties which have been hanging over the market.
I now turn to the taxation of profits. A vigorous, profitable and expanding company sector is essential if we are to rebuild this country's prosperity. Profitability has dropped sharply in recent years and the rate of return on capital employed is now far too low, especially in manufacturing industry.
Without higher profits we shall not see the new investment and jobs which are so urgently needed. Achieving those profits is very largely the task of management and workpeople. The Government can help or hinder them, and this is no time to add to the difficulties that they face by raising taxes on profits still further. Against that background I propose no change this year in the general system or in the rates of corporation tax. Nor would it be right to make any major

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changes in the system of company taxation without careful consultation in advance.
Looking further ahead, however, it is important that the tax system should take account of the effects of inflation on businesses, and do so in a way that is reasonably objective, equitable and simple to administer. The Government will therefore be reviewing this matter along with the accountancy profession's latest proposals for current cost accounting. I am arranging for the Inland Revenue to consult the accountancy profession and business later in the year.
I need, however, to deal now with the question of stock relief. The Finance Bill will include legislation to honour the undertaking which my predecessor gave last year, and which we supported, to write off the deferred tax liabilities arising from stock relief given for the first two years of the scheme—1973–74 and 1974–75—and thereafter to write off these liabilities in respect of each subsequent year, after they have been outstanding for six years.
In addition, following consultations which the Inland Revenue has had with industry, I am proposing two further changes in the stock relief scheme. I intend to reduce the profit restriction for unincorporated businesses from 15 per cent. to 10 per cent.; and all businesses will be given greater flexibility in the amount of relief that they can claim. Both these changes will be of particular benefit to small businesses.
Details of the stock relief and car leasing proposals will be given in Inland Revenue notices which I am making available in the Vote Office.
I come now to dividend control. If industry is to flourish, it needs not only adequate profits, but a vigorous capital market to provide funds for investment and expansion. The control of dividends has now outlived its purpose, and will accordingly come to an end when the existing legislation expires on 31 July.
We on the Conservative Benches have consistently championed the cause of smaller businesses. So I also propose to raise this year the qualifying profit limits for the small companies rate of corporation tax to the figures of £60,000 at the lower end and of £100,000 at the upper
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end. This will go some way further than is necessary to maintain their real value.
In the tax field, however, there is one measure that will do more than anything else to encourage smaller businesses—indeed, businesses of every size. That is a major reduction in the burden of income tax.

INCOME TAX
That brings me to the keystone of our policy. Excessive rates of income tax bear a heavy responsibility for the lack-lustre performance of the British economy. We need, therefore, to cut income tax at all levels. For the reasons I have already explained, I cannot do as much this year as I should have liked, and I cannot do as much as is needed. But, although it is only a first instalment, there should be no doubt in anyone's mind that this Budget marks a turning point.
I begin with the higher rates of tax. The upper rates no longer affect only those on very high incomes. They apply—and Labour Members may find this surprising—not only to senior executives and middle managers in industry but increasingly to skilled workers, as well as to professional people and the proprietors of small businesses. These are the people upon whom so many of our hopes for initiative, greater enterprise and national prosperity must depend.
It is universally recognised, or almost universally recognised, that the present top rate of 83 per cent. on earned income is an absurdity. The rate of 98 per cent. on investment income is even worse. Such rates bring in very little revenue. But they kill incentive and are patently un-just. Some members of the previous Government recognised this, but they did nothing about it. I now propose an overdue measure of reform. The top rate on earned income will be cut from the present 83 per cent. to 60 per cent. This now top rate will apply to taxable income over £25,000. [HON. MEMBERS: "Oh".] If hon. Members will wait, I shall come to the other end. At the other end of the higher rate scale, the present threshold of £8,000—and many skilled workers cross that threshold—is too low. I propose raising it to £10,000. Even at this figure, the starting point for taxation

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at higher rates will be no higher in real terms than it was in 1973. Between £10,000 and £25,000, I propose a new scale of rates less steeply progressive than the old scale.
The top rate of 60 per cent. on earned income I now propose fulfils our commitment to reduce the top rate to the European average. For example, the top rate in France is 60 per cent., in Germany it is 56 per cent., and in the United States it is only 50 per cent. The new top rate will still be reached at an income level which is lower, and in some instances significantly lower, than is common elsewhere. This is a matter to which we may need to return on a future occasion.
So, while the reductions I propose are substantial, they are no more than the circumstances require. They will still in general leave people in the top income groups more highly taxed than people in corresponding positions in other industrialised countries. We have to compete with such countries, not only in the sale of goods and services but in attracting and retaining the talent required to run our industry efficiently and profitably and thereby provide the employment opportunities that our people so desperately need.
We have over the years spent far too much time and effort trying to "level down" This is no good to anybody. It is much more important to have a successful and prosperous society, and we cannot have a successful and prosperous society without successful and prosperous individuals.
But it is not only at the top of the income range that the burden of income tax is particularly oppressive. The same is true for those on the lowest taxable incomes, where the tax system can help to ensure that some people are actually better off out of work. That is the importance of the tax thresholds, to which I turn next. The increases proposed in the April Finance Act, which were not of course implemented, were plainly inadequate. I propose to double those increases. This means that the amount a single person can earn tax-free will go up not by £90 but by £180. The married allowance will go up not by £140 but by £280. A single person's tax-free earnings will
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thus go up by nearly £3·50 a week. The amount that a married man can earn tax-free will go up by £5·38 a week. These increases in personal allowances are quite apart from the change that I have in mind for the basic rate of tax.
I have in fact three other changes to propose before I come to that. First, to help the elderly, the age allowance will be raised by £240 for the single person and £380 for the married person. These again are double the figures proposed in the April Finance Act. Last year the income limit for the full age allowance was £4,000. This year I propose raising it to £5,000, more than twice the increase proposed in the April Finance Act.
Secondly, I propose raising the threshold for the investment income surcharge. The justification for retaining the surcharge is itself debatable. Certainly there can be no argument but that it bites at far too low a level of income. Almost half the surcharge is paid by people over the age of 65. This is, moreover, a tax which falls with particular severity on those who have had to make provision for their retirement out of their savings and have no occupational pensions to fall back on. The undue severity of the tax was recognised by the previous Government, but they introduced no more than palliatives, in the form of a reduced rate applied to the first slice of income liable to the surcharge and a slightly higher threshold for those over 65. I propose instead to raise the threshold to £5,000 for everyone; the rate above that level will remain at 15 per cent. This approach goes further than is necessary to take the matter back to where it stood in 1972, and it combines a considerable simplification of the tax with a measure of justice that is long overdue.
Thirdly, I propose to implement immediately our election pledge to war widows. Provision will be made in the Finance Bill to exempt their pensions entirely from tax.
I come, finally, to the basic rate. For the great majority of taxpayers—some 21 million in all—it is the basic rate which determines their tax liability. It is the basic rate—plus, of course, the national insurance contributions—which represents the deterrent effect of tax on additional earnings, whether those extra earnings come from overtime or greater productivity or reflect greater skill or the

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rewards of promotion. Everywhere one meets complaint and criticism that income tax erodes differentials, reduces the rewards of skilled workers and discourages effort, initiative and responsibility. This year I propose taking a first and significant step to deal with these complaints by reducing the rate from 33 per cent. to 30 per cent. Our long-term aim should surely be to reduce the basic rate of income tax to no more than 25 per cent.
The total cost of these income tax reductions, including the cost of increases in personal allowances proposed in April but not then implemented, will be £4,540 million in a full year. The lion's share, no less than £3,460 million or over three-quarters of the total, represents the cost of increasing the personal allowances and reducing the basic rate. The cost this year of all the income tax changes will be £3,500 million.
As a result of the increase in the tax thresholds, 1·3 million people who would otherwise have paid tax this year will not be required to do so. The number of people paying tax at the higher rates would have been 1·2 million. This will be virtually halved, to 650,000. The number liable to the investment income surcharge will be reduced to about a third of what it would have been—from 850,000 to 300,000. All these changes will simplify administration and reduce the work load on the Inland Revenue.
The changes in allowances will be implemented for most taxpayers on the first pay day after 12 July. The reduction in the rates of tax will be given effect as soon as new tax tables are ready in October.
A full year's income tax reductions will be received, even though my Budget is being presented two months or more after the start of the year. On this basis the income tax changes mean that for the married couple where the husband earns £100 a week, which is close to average earnings, there will be an increase in take-home pay averaged over the remainder of the financial year of over £4 a week. The increases in VAT and petrol duty will increase average family expenditure by about £2·75. So that, taking both the direct and indirect tax changes into account, the average family will be about £1·30 per week better off. Similarly,
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where the husband earns £60 per week there will be a real gain of over 75p a week, while the position of the couple on £150 per week will improve by nearly £2 a week.
These reductions in the burden of income tax, which are as substantial as they are unprecedented, mean that wage and salary earners will have more money in their pockets to buy the goods and services they help to produce. True, the prices of a good many of these goods and services will be increased by my tax proposals. But we have done everything we can to ensure that every family in the land will have more money coming in to pay the increased bills. What is more, the choice of the way they spend their income will rest increasingly with people, and not with the Government.
These changes represent only the first stage in the major reduction in the burden of direct taxation that we are determined to make. I emphasise this point particularly for those who will be involved in pay bargaining in the year ahead. Take-home pay will be substantially increased by these unprecedented cuts in income tax. This will more than make good the price effects of higher spending taxes. Any further attempts to cover those price effects by higher pay claims will be utterly self-defeating. The money will simply not be there to finance higher pay as well as lower income tax. Any attempt to have it both ways will simply end up by threatening jobs and putting firms—on which jobs depend—out of business. That is why it is so important for this Budget to be considered as a whole.
I have stressed the urgent need for new policies to reverse the decline of the British economy. These policies start with our conviction that it is people and not Governments who create prosperity. This Budget seeks to reduce the role of Government. Government will spend less, Government will borrow less. This will lay the foundations for controlling inflation.
In today's world, higher prices for oil and petrol are inescapable. So, too, in the short run, are the consequences of the inflation that has afflicted us for so long. Until that is controlled, some check to the growth of output and employment is unavoidable.
That underlines the other half of the Budget strategy. It is not a give-away Budget. Indeed, it is not in the power of the Government to give anything away. However, it is an opportunity Budget. The shift from taxes on income to taxes on spending will widen choice and improve incentives. Above all, it will enlarge opportunities.
The Budget is designed to give the British people a greater opportunity than they have had for years to win a higher standard of living—for their country and for their families as well as for themselves. I dare to believe they will respond to the opportunity that I have offered them today.
Mr. Deputy Speaker: Under Standing Order No. 94, the first motion, entitled "Provisional Collection of Taxes", must be decided without debate. When that matter has been disposed of, I shall call on the Chancellor to move the motion entitled "Amendment of the Law". It is on that motion that the Budget debate will take place today and on the succeeding days. The remaining motions will not be put until the end of the debate on Monday, and they will then be decided without debate.

INCOME TAX

  PROVISIONAL COLLECTION OF TAXES
  Motion made, and Question,
  That pursuant to section 5 of the Provisional Collection of Taxes Act 1968 provisional statutory effect shall be given to the following Motions—

  (a) Value added tax (Motion No. 2).

  (b) Hydrocarbon oil etc. (Motion No. 3).—[Sir Geoffrey Howe.]

  put forthwith, pursuant to Standing Order No. 94 (Ways and Means Motions), and agreed to.

BUDGET RESOLUTIONS AND ECONOMIC SITUATION

  AMENDMENT OF THE LAW
  Motion made, and Question proposed,
  That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but, without prejudice to any authorisation by virtue of any other Resolution, this Resolution does not extend to the making of—

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  (a) any amendment with respect to value added tax so as to provide—

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

  (ii) for refunding any amount of tax;

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

  (iv) for any relief other than relief applicable to goods of whatever description or services of whatever description; or

  (b) any amendment relating to the surcharge imposed by the National Insurance Surcharge Act 1976 and applying to some only of the persons by or in respect of whom the surcharge is payable.—[Sir Geoffrey Howe.]

  4.45 p.m.
  Mr. James Callaghan: Any Chancellor of the Exchequer occupies one of the most onerous positions in government. The present occupant, like his predecessors, is one of the loneliest figures in the Cabinet. Usually he has only the Chief Secretary to defend him when all the interests of his other colleagues are pointing in the direction of more spending—irrespective of how far they have come along with him on this occasion. Therefore, the Chancellor is deserving of the understanding of the House in the task that he has to perform.
  It is customary to congratulate the Chancellor upon the manner in which he has prepared and delivered his Budget. I believe that, now and again, it has even been possible for an Opposition Front Bench speaker to congratulate the Chancellor on the substance of the Budget. However, I fear that I shall not wholly be able to do that this afternoon, but I do, with pleasure, compliment him on the lucidity, clarity and shortness with which he has presented it. The House appreciates shortness on these occasions.
  He presented an extremely full and comprehensive Budget which will undoubtedly set the pattern for the next few years for the British economy. To do that is an ordeal which, perhaps, is appreciated most by those who have been through the fire. I agree with him that when he has had a few weeks only to grapple with the material the task is that much harder. Of course, he will be fully blooded only when he has got his Finance Bill through Third Reading.

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  I beg the right hon. and learned Gentleman to beware of the plaudits that the press will heap upon him tomorrow. I have seen how rapidly the garlands fade. I have no doubt that he will be greeted, as he was this afternoon, with great enthusiasm—with greater enthusiasm by the newcomers to the Conservative Benches than by those who were here in 1970. I shall return to that point. After 24 hours of favourable publicity—this applies not only to him—the rot sets in. He will find that the defects of the Budget will loom larger and that the virtues will be forgotten. Before the garlands fade, let me mention some of the things of which my hon. Friends and I heartily approve.
  There was reference to the European Community budget. The Chancellor has the full support of the House on the question of reducing Britain's contribution. The Labour Government pursued that. I believe that the time is now more favourable—as I have said on earlier occasions—for pursuing that purpose. I hope that the Government will take full opportunity to pursue that. It may be that if the Chancellor is unable to secure the reduction by negotiation, one of our ideas will have to be taken up—a firm decision will have to be taken by the Government. The Government may have to put a ceiling on the contribution that they are ready to make to the Community budget, and to announce that they will do so. I do not suggest that they should do so until there have been the fullest negotiations on the matter. I believe that the time may come when that idea should be put into operation. That is the first thing of which we approve.
  Second, I approve of the Chancellor's proposal to increase pensions and other social security benefits, including that for the single-parent family. However, we regret and will oppose the Bill that is introduced to limit the increases in pensions only to price movements. The whole purpose of this reform, which was introduced by the last Government, was to enable the ordinary pensioner to share in the increased prosperity of the wage earner. That was why the pension was fixed to be adjusted according to the increase in prices or the increase in earnings. I am afraid, therefore, that we shall be able to give only halfhearted approval in this direction.
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  We approve of the doubled relief on tax thresholds. We believe that that is something that could and should be done, and we think that the Chancellor was right to do it.
  I referred to the enthusiasm of the newcomers to the House when the Chancellor sat down. They waved their Order Papers. Perhaps the enthusiasm was not quite as strong among the older Members. One is struck by the similarity of this Budget to that of 1970. The basic rate of income tax then was reduced by 2½p. Prescription charges were then put up. There seems to be a certain similarity with what is proposed today. The cost of school meals went up, industrial investment grants were cut, company taxation was reduced and London commuter rail fares were increased. So the whole programme today is unfolding as it unfolded in 1970.
  In that Budget the lame ducks were to be strangled and rents and rates were increased through cutting subsidies. All the things that the Chancellor has today told us were tried in 1970 for the purpose of reviving the lack-lustre performance of British industry. This, then, is like the rerun of an old film—and we know how the old film ended. It ended in December 1973 with tax increases, but I will not go through the entire panoply of events that took place in that period.
  The Chancellor is therefore embarking upon a colossal gamble this afternoon. It is a gamble that is almost equivalent to a man robbing the gas meter in order to put his money on a horse that he is not even sure will run and that he has seen fail in its previous outings. I do not have confidence that the right hon. and learned Gentleman's prescription—what he called the keystone of his policy, a reduction in taxation—will achieve all the wonderful virtues that he has outlined to us.
  The other point that occurs to me immediately is the cavalier manner in which the Chancellor treats the increase in the retail price index. One would almost think that it had ceased to matter. We are told that 3½ per cent. will go on inflation as a result of the VAT increase, a quarter per cent., which will be a half per cent. by the time it has worked through, on petrol duty, and that other increases will arise out of the cuts that he is making in services, especially in the

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  public industries, that are bound to feed through into the retail price index.
  I must press the Chancellor on one point that I am astonished he did not explain. What is his estimate of the increase in the retail price index? Where does he think it will be by the end of this year? I make my own rough calculation. It was our view, when we left office, that as a result of what was happening in terms of commodity price increases, oil price increases and earnings increases it might rise to about 12 per cent. by the end of the year. These are factors that the right hon. and learned Gentleman should be taking into account. He is operating against a most unfavourable international background—
  Mr. Denis Healey (Leeds, East): The figure is 16 per cent. It is in the Red Book.
  Mr. Callaghan: I am grateful to my right hon. Friend.
  The Chancellor will be entering, in seven weeks' time, upon a new pay round without any guidance as to what he thinks should emerge, except that the public sector will pay what the Government can afford, whatever that means, and that in the private sector the negotiators will go for what they can get. If the Chancellor believes that in 12 months' time he will be able to stand at the Dispatch Box and defend that policy, he is more naïve than I thought him to be.
  I am grateful to the Chancellor for having sent us the Financial Statement and Budget Report. My right hon. Friend the Member for Leeds, East (Mr. Healey) says that the figure is in the document. The Chancellor did not give it, so perhaps I may. It says that the retail price index, between the third quarter of 1978 and the third quarter of 1979, will be increased by 16 per cent. That will be by the third quarter, not by the end of the year. There will be more to feed through after that. I had intended to give an estimate of 17 per cent. by the end of the year. I reckon that I shall not be far out. Indeed, I may be my usual moderate self on this.
  Does the Chancellor truly believe that, whatever he says and whatever sermons
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  he preaches, the trade union conferences and negotiators will be able to go into the next round with no guidance and claim on behalf of their members anything less than the increase in the retail price index? Of course they cannot.
  We were brought down in the end by the fact that we were over-ambitious in trying to reduce the retail price index to 5 per cent. by the end of 1980. It is clear that that gave rise to last winter's troubles. That was the beginning of them. But I would sooner fail on the basis of trying to get the retail price index down to 5 per cent. by the end of 1980 than enter on the next pay round informing the workers of this country beforehand that they will start on the basis that they can anticipate that the index will be going up by 16 per cent. within the next four months and by much more by the end of the year.
  If the right hon. and learned Gentleman is relying, as are some of his Back Bench supporters, on tax cuts to ease the wage claims, they have learnt nothing from our experience. Tax cuts last year amounted to £2·4 billion. What was the response to that of the Prime Minister, then the Leader of the Opposition, speaking from this Dispatch Box? She said "£2·4 billion? That will be eaten up by inflation during the coming year". I can tell her and the Chancellor that his tax cuts will be eaten up by inflation within the next six months. I am bound to say that one of the classic parliamentary phrases that will go ringing down the pantheons of time will be his immortal words "I am putting more money into their pockets so that they may pay the value added tax".
  I shall not go into the impact of the value added tax or of those other imposts that are proposed on those who will not benefit from tax reliefs. I am most grateful to the Chancellor for increasing pensions. That was the least he could have done in that area.
  But what about the low-paid workers? How will they benefit? I am speaking of those who are not subject to tax or who are paying very little. It is upon these people—and let us learn from our own errors and our past mistakes—and it is upon their claims that the whole of the incomes structure and the structure of wage claims is built. Trade union negotiators will, in the next few months, base

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  their claims upon the lowest paid. It is the lowest paid who we will not be able to prove are getting benefits out of this Budget Indeed, they are suffering severe burdens. I merely add on the industrial side that I am astonished that at a time when the Chancellor claims he is putting a lot of money into people's pockets it should be estimated—he estimates—that there will be no increase in output during the coming year. If that is so, what is all that money to go on? It is to go on imports. Is that where it is supposed to go, or is he hoping that it will all be saved?
  Here we are with the basic weakness. I do not disagree with the Chancellor's analysis, the familiar litany that we heard at the beginning of his speech, which has been preached by every Chancellor—and I have heard 13 in this House-on the need to increase the productivity of British industry or the need to meet the needs of our overseas customers and all the rest of it. Does he really believe that the lack-lustre performance of British industry will be overcome by a reduction in income tax of 3p? If he does, he is living in a world of wonderland.
  The plain truth is, as I have said many times from that Dispatch Box—and I have no reason to change my view now that I am here—that it will be a long job for Britain to overcome its deficiencies. Of course taxation has a part to play; nobody denies that. But I deeply regret that the Chancellor had not one word to say about the industrial strategy. Tories used to jeer at it, but now that they are on the Government side of the House I had hoped that they might have some words to say about it, because they will not succeed until they can secure the total co-operation of workers and management of this country, working with industry through the working parties which were set up. In other words, they must preach in every factory the moral that the Chancellor preached today. If the right hon. and learned Gentleman really believes that by raising the minimum lending rate to 14 per cent. he will encourage industrialists, who will now be paying 17 per cent. or 18 per cent. for the money that they borrow from the banks, that, too, is an astonshing phenomenon.
  I am grateful for what the Chancellor said about the work of my right hon. Friend the Member for Leeds, East.
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  What I said about the Chancellor's burdens applies equally, if I may say so, to the burdens of my right hon. Friend, who carried us through a very difficult time. That was a time of world recession in which oil prices had increased fivefold. At that time we protected those who were in need and those who were sick. We did not visit the consequences of tax cuts, or our difficulties, on them, and I am grateful for the work of my right hon. Friend, as I am grateful for what the Chancellor has said.
  This is not the Conservative Budget that was promised on 24 April, the Budget that would raise production and bring real prosperity. It has nothing to do with that. This Budget is unfair in the distribution of reliefs, unjust in the additional burdens that it imposes, inflationary in its effects on costs and prices, and a reckless gamble with our economic future.
  5.4 p.m.
  Mr. Geoffrey Dickens: Mr. Deputy Speaker, I crave the indulgence of the House for my maiden speech. I was sad to hear the Leader of the Opposition make fun of the new Members and their enthusiasm in waving their Order Papers because they approved of the Budget. It is because we new Members have arived in Parliament that the Prime Minister and the Chancellor of the Exchequer have the opportunity of a new beginning for this country. This Budget laid the foundations for that today.
  I start by paying tribute to the man I succeeded, Kenneth Lomas, who served the House of Commons and the constituency of Huddersfield, West, in West Yorkshire, for 15 years. He commanded the respect of all political parties in my constituency for the sympathetic way he understood the problems of that constituency and for the way he dealt with those problems. I am pleased to follow him, even though he sat on the then Government Benches. He did a thoroughly good job. I am sad to say that he has not enjoyed the best of health for a number of years. He has just had his fourth operation. It will interest the House to know that unfortunately his wife, Helen, was recently taken seriously ill. I am sure, Mr. Deputy Speaker, that you and Members of the House will wish to join me in sending our good wishes for better

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  health and for their continued happiness to both of them.
  I should like, if I may, being the first Conservative Member of Parliament for 100 years to serve Huddersfield, West, to briefly to describe my constituency. It is a very busy, bustling town lying, like many West Yorkshire towns, within a valley close to the Pennines and close to the Derbyshire Peaks. It serves the world extremely well through its textile industries. These have been established in Huddersfield for generations. If any Member is wearing a suit of Huddersfield cloth, he is travelling first-class, because the woollen worsted materials of Huddersfield are recognised to be the finest materials in the world.
  The textile industry—not only the weavers but also the yarn spinners and dyers, and all the small businesses which trade with the giants—is the largest employer in the Huddersfield area. We also have many engineering giants as well, which produce valves for power stations, gear boxes, environmental plants and drilling equipment. The area has a wealth of engineering, and Huddersfield, as I am sure the hon. Member for Huddersfield, East (Mr. Sheerman) will agree, is a town that can take off again very rapidly because we now have the benefit of the M62 and Ml motorways. They provide us with very good communication links, and I am sure that Huddersfield will once more be one of the most important towns in Yorkshire. I am honoured to be one of the two Members of Parliament to serve the town.
  The small businesses play a very important part within the constituency, as they do in most other constituencies. They are very big employers and we rely greatly on them. However, Huddersfield enjoys fame in other spheres. We have the Huddersfield Choral Society, known throughout the world, and we produced Anita Lonsborough, the Olympic gold medallist, as well as Derek Ibbotson, the mile world record holder. We also won the first division of the Football League for three consecutive years. I was not born at the time but we did it. It would be unfair if I did not say that the right hon. Member for Huyton (Sir H. Wilson) went to school in Huddersfield, so I will be fair and say it.
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  There were certain omissions from the Budget which disturbed me. I am sure they also disturbed the ratepayers of the United Kingdom and the ratepayers of Huddersfield in particular. In the 1970 general election campaign the Conservative Party campaigned very forcefully for the abolition of the domestic rate. We felt, quite rightly, that it was an unjust and unfair rate to levy on our people. It is unjust because there are elderly people, perhaps widowed, living in accommodation which may have a larger roof than that of the house across the road. Perhaps such people have full central heating and have to pay a very big share towards local government finances. Yet across the road we have the slightly smaller house with perhaps six wage earners living there and only one of them making any contribution towards local government.
  The present system cannot be fair and it cannot be just. Already we are hearing rumblings about the water rates that are being levied. There are instances of seven people using water and paying less than one dear old lady living on her own who uses only one-seventh of the water that they use. That cannot be a fair system, yet nothing has been said about it in the Budget Statement today.
  I fully understand why we have been unwilling to raise the question, since we are committed to reduce taxation and, naturally, if we collect local revenue in any other way it must be done either through a local tax or through direct or indirect taxation of some kind. Nevertheless, it remains a burden, and I imagine that local councillors will probably face a big problem when this subject comes up again because they fear that if rates are collected nationally they will not be able to call the tune locally.
  I believe, however, that local councillors who hold that belief are wrong. For example, many right hon. and hon. Members have experience of parish councils precepting the district council, and the system works very well. The parish still makes up its mind on where it will spend the money and what its priorities shall be. I do not, therefore, feel that we need worry too much about that. I think that local councils will still be able to say how the money will be spent and what the priorities should be.

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  It remains my firm conviction, however, that what we must move towards is a just and fair system. We owe this to the ratepayers. We in the Conservative Party in particular owe it to the ratepayers because we have encouraged them to believe that it is something for which we stand. As I say, I understand why there has been no mention of it in the Budget today, and I do not wish to detain the House on this occasion, but hon. Members can be assured that they will hear from me again on the issue. Although there has been no reference to it today, it is an issue on which I have campaigned and shall continue to campaign because I regard the present system as totally unjust and unfair.
  I thank right hon. and hon. Members for their attention.
  5.11 p.m.
  Mr. Ken Eastham: I am grateful for this opportunity to make my maiden speech, although, obviously, since I sit on the Opposition Benches, I shall not put quite the same interpretation on today's events as did the hon. Member for Huddersfield, West (Mr. Dickens) in his maiden speech.
  I have the honour to represent the northern area of Manchester known as Blackley. It is a traditionally sound area with its people drawn from the professions and the artisan skills. As a new Member for part of Manchester, I am delighted to say that, although the Conservatives claimed many times during the election campaign and afterwards that the nation supported them, this proved not to be the case among Mancunians, who, with their good sense, stayed solid in support of the Labour Government and the Labour Party.
  A great deal of sterling work was put into the election campaign, and I know that the House will allow me to pay tribute to the workers in the Blackley constituency. In particular, I mention my agent, Mrs. Alison Kelly, a lady of great reputation in the Manchester area, and I pay tribute to the solid work which she did. I am much indebted to Mrs. Kelly for the support which I had during my campaign, just as I am indebted to the other workers who also contributed to such an outstanding victory in the general election.
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  I feel that I should pay tribute also to the new Under-Secretary of State for Education and Science, the hon. Member for Brent, North (Dr. Boyson), because he chose to visit the constituency during my campaign. He is not someone really well thought of in education circles in Manchester, and he may well have contributed to my success. Perhaps, when we fight the next election campaign, the hon. Gentleman could be invited to come to my constituency on two occasions instead of one. I am sure that that would help us in Manchester, as I believe it did just recently.
  I pay tribute also to Paul Rose, my predecessor as Member for Blackley. When Paul Rose was elected as Member for Blackley in 1964, he was at that time the youngest Labour Member of Parliament. He enjoyed a fund of good will and respect among all right hon. and hon. Members. He took a stand on many vital issues, being well known for his positive attitudes on such questions as Rhodesia, Northern Ireland, racialism and Fascism. It was a sad day for Blackley when Paul Rose decided not to stand again, due to illness, and I know that the good wishes of all Mancunians will be extended to him, with a debt of gratitude for the vital work which he did and the contribution which he made to the life of the city of Manchester.
  I cannot pay the same glowing tributes to the Chancellor of the Exchequer for his Budget as the hon. Member for Huddersfield, West felt able to do. As I see it, the rich will get richer and the poor will get poorer. There is no doubt about that. It is a fact of political life—I have pointed this out in many public speeches in the past—that the Conservatives fight elections not to do more but to do less, and the consequence is that they lower the quality of life.
  We see already what is in store through cuts in public expenditure. I think in particular of curtailment in local government, and I foresee dire consequences for many things which go to the standard and quality of life of our people. Having been a member of the Manchester city council for 17 years, I have gone through some of these episodes many times in the past when, at the direction of the central Government, cuts have been made in local government services and funds.

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  Immediately, there are grave consequences. Local government is labour-intensive, so the first natural consequence that comes to mind is an inevitable loss of jobs.
  Perhaps I may be permitted to quote the words of a former distinguished Member of the House, and a great friend of mine, Will Griffiths. He told me once of an occasion when he visited America. He said "There is great wealth there, without doubt. People live in big houses, and there are three large cars to be seen outside almost anybody's front door, but if you look round the back there is a mass of garbage spilling over because local government money is not being spent to improve the quality of life" It is that kind of order of priorities that we see when expenditure is curtailed.
  For a number of years I have been interested in education in my own city, and I noted during the election campaign that Conservatives talked about our standards of education not being high enough. Education also is labour-intensive, and I do not believe that standards of education will be improved when the instruction goes out to curtail expenditure. This is one area which will immediately suffer, and suffer seriously.
  We should remind ourselves also that local authorities programme their building schemes on a three-year cycle, and projects which were planned three years ago will now just be coming to fruition. If they are coming to fruition and the instruction goes out that no more money is to be spent, what will be the result? If local authorities are not to have the manpower to open new schools or welfare service establishments because they cannot afford the people to operate them, they cannot provide the services which people need. That is the logical conclusion that I forecast.
  We shall soon see unemployment soar. Any balanced and sensible Government should be thinking about creating more jobs, not fewer jobs. Will there be consultation with and protection for organised labour? The trade union movement has been saying for many years that we should be thinking about reducing the working week to 35 hours. Such a reduction would create more jobs. We pride ourselves on so-called efficiency, but often the result is a loss of jobs.
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  The unemployed have to be fed and clothed. They still have to be provided for in society. However, we are told that they must be unemployed, and that is the consequence of the Budget. It is a Budget that will eat away the seedcorn of the nation's future. I can forecast only that we shall be heading for a grave disaster.
  5.22 p.m.
  Mr. John Townend: I congratulate the hon. Member for Manchester, Blackley (Mr. Eastham) on his maiden speech. I only hope that I manage to cross the hurdle as well and as satisfactorily as the hon. Gentleman. I also thank you, Mr. Deputy Speaker, for allowing me to catch your eye on Budget day. It will certainly make by birthday this year a very memorable occasion. I have been impressed with the staff of the House and with the friendliness shown to new Members by Members on both sides of the House.
  I understand that it is the tradition in a maiden speech to pay tribute to one's predecessor. No doubt that is easier in some instances than in others. I am fortunate in that respect as my predecessor, Richard Wood, was much liked and respected throughout his constituency. In the few weeks that I have been in the House I have found that these feelings are shared by Members on both sides of the House. He had an excellent war record but was unfortunately severely disabled by the loss of both legs. A lesser man would have retired to his beloved Yorkshire countryside. Richard made light of his disability to such an extent that many people in his constituency thought he had lost the use of only one leg.
  Richard Wood entered Parliament as the first Member for the new constituency of Bridlington in 1950. The son of a former Foreign Secretary, he obtained high office, serving as Minister of Pensions and National Insurance, Minister of Overseas Development, Minister of Power and as a member of the Privy Council. By his example he has been a constant inspiration to the disabled throughout the country to overcome their disabilities.
  I am grateful for the kindness and friendship Richard Wood has shown me over the past six years. He is indeed a fine English gentleman and I am sure

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  all hon. Members will join me in wishing him every success in his new business venture, which involves providing employment for disabled people.
  I consider myself fortunate to have succeeded Richard Wood and become the Member for Bridlington. It is without doubt the finest constituency in the country. It is one of the longest constituencies in England, with a coastline 70 miles long, and at the centre where I live it is only two miles wide. Tourism is an important industry and Bridlington is one of the finest resorts in the country. I cannot say that it is the finest resort—if I did I would upset my constituents in the delightful seaside towns of Filey, Hornsea and Withernsea.
  Agriculture is our most important industry. In Holderness we have some of the most fertile and productive land in Britain. It is said that we have more pigs than people. However, that will not continue unless the Government act quickly to enable our pig farmers to compete on equal terms with the pig farmers in the EEC. To do that they will have to obtain the reform of the method of calculating MCAs, which is heavily biased against the United Kingdom producer.
  We have an important and growing inshore fishing industry and we are looking to the Government to maintain the 12-mile exclusive limit and obtain preferential limits up to 50 miles.
  Apart from the large BP chemical plant, we depend for employment in the Bridlington constituency on small businesses. We have a very high level of unemployment. I welcome the measures proposed today by my right hon. and learned Friend the Chancellor of the Exchequer to encourage the expansion of small businesses. I am particularly pleased with his taxation proposals. The Budget is bold and imaginative. As the Chancellor said, it is only the first step in a fundamental change of direction. If it does not encourage the entrepreneurs, the small and medium-sized business men, to invest and provide more jobs, nothing will and Britain's future will be bleak.
  I welcome my right hon. and learned Friend's undertaking to reform the capital gains and capital transfer taxes, which weigh so heavily on small businesses. If we are to solve our unemployment prob-
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  lem in Bridlington, the Government will have to take action to change the farcical situation where Bridlington, with an unemployment rate of twice the national average, is not a development area but is surrounded by the development area of Scarborough and Hull, with a much lower unemployment level.
  Although I fully support the Government's proposals to cut public expenditure, I welcome their emphasis on the protection of the realm. I support the increased expenditure on defence. There is, however, one aspect of the protection of the realm that seems to have been ignored, namely, the prevention of parts of our country from disappearing by being washed away. Coast erosion is a major problem in my constituency. On the Holderness coast over 2½ metres of land are lost every year. Nothing has been done to protect the coast in rural areas. Responsibility for coast protection comes within the 1949 legislation and rests with the maritime district council, in my constituency principally Holderness but to a lesser extent North Wolds. Holderness is a small rural district council with a low rate base and it cannot possibly contend with the problem.
  Government grants are limited to protection works in urban areas because the Ministry considers that coast protection of agricultural land is not cost effective. That might seem logical to a bureaucrat sitting in an office in London. However, if a farmer sees some of his best land disappear every year into the sea it is a different matter. The loss is cumulative every year. In my constituency we are losing 30 acres a year.
  There are two additional danger points that the Ministry does not seem to have taken into consideration. At certain points along the coast, at Sand-le-Mere, Kilnsea and Barmston, where the hinterland is below the high-water mark, there is a dange of the sea breaking through. As the fall of the land is inland, that could result in thousands of acres of good farm land being flooded. That would be serious for many fanners who could be put out of business and it could result in a substantial loss of food production.
  If the land flooded by salt water were subsequently redrained, it would cost a lot of money to bring it back into production. The Yorkshire water authority is responsible for building the flood

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  banks, but that is only a short-term palliative because they in turn will be washed into the sea.
  The second danger point is at Spurn peninsula at the mouth of the Humber where the sea defences were maintained by the military until the early 1960s. Since then they have been allowed to fall into a state of disrepair. At Spurn there is imminent danger of the sea breaking through the narrow land and turning Spurn into an island. That could result in the mud flats that protect the flood banks on the northern banks of the Humber being washed away with, again, flooding of thousands of acres of good agricultural land. More important, it could affect the navigation in the Humber and, consequently, the port of Hull.
  The Humberside county council, of which I was the leader, approached the previous Government and invited the hon. Member for Manchester, Gorton (Mr. Marks), a Minister in the previous Government, to visit the area and see the problem on the ground. We thought that it would be advantageous if he saw the problem from the air. We hired a helicopter. Unfortunately, as often happens in the United Kindom, the weather was appalling and the helicopter could not get off the ground. Therefore, the Minister was not able to get a bird's eye view.
  The protection of our coast is not a local problem; it is a national problem. It should be financed by the Government. Small rural maritime districts do not have the resources to deal with it. It is ridiculous that flooding caused by coast erosion is dealt with by the water board, yet coast protection is dealt with by the district council. The responsibility should be with one body, the national Government. Immediate action must be taken at Spurn, to protect the prosperity of Hull. The long-term problem could be solved if we reclaimed the land inside Spurn Head. That would provide several thousand additional acres of agricultural land. If this had been Holland, that would have been done 30 years ago.
  Action must also be taken where the hinterland is below sea level. I am the first to admit that there is no easy answer to this problem. But it would be money well spent if some of the Government's oil revenues could be spent on more widespread experimental work and on non-
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  traditional methods of coast protection, which could have national implications and, if successful, would be more effective than traditional methods.
  There is one certainty. We shall not obtain any more land as a commodity. Let us guard what we have. It is precious.
  5.34 p.m.
  Mr. Allan Roberts: It is a great honour to be making a maiden speech in the House of Commons.
  First, I should like to refer to my election campaign. It was fair as far as the Conservative opponent was concerned. However, it was marred somewhat by the importation by the Liberals of a nephew of the retiring Member of Parliament, Mr. Simon Mahon. If Mr. Mahon were here, he would be equally strong in rejecting the idea of nepotism. Nepotism would not be accepted by the people of Bootle. Mr. Mahon owed his success—as did I at this general election—to the people, the Labour Party and movement and the loyal Labour voters of Bootle who returned him as Member of Parliament on many occasions from 1951 onwards and who returned me with an overwhelming majority. That was a good result for the Labour Party in Bootle.
  I pay tribute to Simon Mahon. I shall continue the work that he did in the constituency. If he were here today, he would agree that we both owe everything to the Labour movement and the Labour voters in Bootle.
  My constituency has many problems. Their resolution will not be helped by the speech of the Chancellor of the Exchequer and the consequences of the Budget. If I look at the situation in Bootle in the light of the Chancellor's speech, perhaps hon. Members may realise what I have in mind.
  Nationally, there are about 1½ million people unemployed. The facts in Bootle and Merseyside are far more serious than the national figure indicates. Bootle is characterised by a strong dependence upon the port, which has been declining for a considerable number of years. There is a weak manufacturing sector in Bootle and on Merseyside. Unemployment among active males in the constituency is between 12 per cent. and 14 per cent. The majority of the unemployed unskilled men are

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  not benefiting from any expansion which has taken place in white collar employment in central Bootle in the past 10 years.
  Between 1961 and 1971, the population of the inner part of the city—the major part of my constituency—declined by 24 per cent.;15,000 people left the area as there were no employment prospects. Only 5·3 per cent. of the economically active men in the area between the ages of 17 and 65 are in the professional classes, about 24 per cent. are unskilled manual workers, 74 per cent. of the house-holds do not own a car, and 21 out of the 24 primary schools are classified as social priority schools.
  It is obvious from those statistics that there is a great deal of deprivation in the area. Many people receive unemployment benefit and social security payments and are on low incomes. Not one of them will benefit from the Budget. They will suffer considerably in a number of ways. First, industrial and employment subsidies will be cut. No doubt the Secretary of State for Industry will say whether Merseyside will retain its development area status. Nationally as a result of the Budget we shall lose £380 million, which would have gone directly to support and help and create jobs that were provided by the previous Labour Government.
  The people of the area are sick and tired of politicians in London and else where blaming Merseyside's problems on the militancy of the trade union movement and the work force. The militancy occurs as a consequence of the problems and unemployment—and not the other way round. The unemployment and the problems came first.
  In the early 1970s, Liverpool saw the continuation of the trend of the previous decades in declining job opportunities in the city. Over the 10 years from 1961 to 1971, 75,000 jobs were lost from the city and 19 per cent. of the local work force left Liverpool. That dramatic decline was halted only temporarily by the national economic boom of 1972 and 1973. Further substantial losses have been recorded since then, according to the planning officer of the city of Liverpool.
  I come to the Government's cut of £440 million in the environment programme. When the Chancellor announced that he would repeal the Community Land Act
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  and that that would save money, and spoke of the water authorities and cuts in housing, Government supporters cheered. They especially cheered the announcement about the Community Land Act. The budget for the Community Land Act in this financial year is only £54 million. Of the £440 million to be cut from environmental expenditure, only £54 million can be taken from the Community Land Act—and that will happen if everything in the pipeline is stopped and no more loans sanctions are given.
  From where will the £440 million come? Not from Community Land Act expenditure. It will come from the water authorities and housing. There is provision of £478 million in this year's Budget for the water authorities. Before the Budget, local authorities and regional water boards had been instructed to stop letting out capital contracts. What will happen? The water rate will go up over and above the 3½ per cent. increase in the cost of living resulting from the VAT increase.;
  There is underground dereliction in the North-West. Merseyside and Manchester are ignored. Sewers are already collapsing. That problem must be dealt with. Proposed industrial development and housing schemes, either for sale or rent, will not be able to go ahead as the water authority must not let the capital contracts to provide the infrastructure and drains.
  Then there is housing, with £1,500 million revenue spent this year and £2,146 million on capital. That is where the cuts will come. In addition to the increase in VAT and rents going up, housing programmes will be halted. Council houses will not be built. How can this help the people of Bootle, the people of Merseyside, the people in industrial areas, who are on waiting lists? These people will face a terrible situation.
  Then we have the bank rate going up from 12 per cent. to 14 per cent. That will hit small businesses. It will also hit the owner-occupier with his mortgage. I do not know how the so-called enforced sale of council houses will be funded. How will local authorities lend the money when they are having to borrow it at more than 14 per cent.? No one will be able to afford to buy a council house. That is the position before the new policy is even introduced.

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  There will be more cuts. The Chancellor of the Exchequer said so. I urge all Labour local authorities, wherever they are in the country, to levy a supplementary rate now. I urge them not to wait until next April, when the Chancellor's Budget has been forgotten and the voters might blame the Labour councillors. I advise them to put on a supplementary rate now. Every Labour councillor in the country should tell the people in his area that it is the consequence of the Chancellor's budget, and that the authority intends to raise the money now so that the house-building programme and the essential social services may be maintained. The people in areas such as Bootle need these services because they are on low incomes and are entirely dependent on the social wage. They cannot afford to pay for their use of the Health Service, or for their housing, without help from the Government.
  I am very concerned about the drift towards the means-test State. I am by profession a social worker. I am probably the first social worker, if not one of the first social workers, by profession to be elected to Parliament. I believe that in that respect I have some responsibility for fighting in this House for the deprived, for the underprivileged and for the very people who were stigmatised during the election campaign by the right hon. Lady who is now the Prime Minister. These are the people to whom Conservative Members refer so easily and so glibly as the scroungers.
  I have the duty as a social worker to fight for the people who represent minority groups in our society. I am a member of the British Association of Social Workers. I pay tribute to the work that social workers do, and I shall fight on behalf of the underprivileged. The underprivileged will not benefit from measures designed to shift the burden of taxation from direct to indirect taxation. The very idea that this shift will give more freedom to poor people to decide how to spend their money when they have no money to spend anyway is absolute nonsense. The widow, on a pension, buying something in the shops, pays the same amount of VAT as a millionaire buying the same product. It is absolute nonsense to talk about giving people more freedom.
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  The Tories intend to increase the cost of housing, prescription charges and so on. Instead of giving a universal benefit and providing everybody with a subsidy, their intention is to put up the charges and then to tell the people who are in need that they can fill in a form in order to apply for a rebate, and fill in a form in order to have an annual means test. It is annual financial striptease that these people are being asked to undertake. This must be fought on behalf of the people who are underprivileged, the people who are in need and the people who often do not get the benefits and rights to which they are entitled.
  Bootle is a Labour constituency and the problems of my constituents are not helped by the fact that it is situated in the metropolitan district of Sefton, which seems to be permanently Tory-controlled. The area includes Crosby, Formby and Southport. We have in Bootle government from Southport. The Southport Conservatives are so Rightwing that they make the Stockport and the Tameside Conservatives look like Communists. I do not know why Stockport and Tameside get all the publicity and Sefton does not. It absolutely amazes me. I shall fight in this House to stop government from Southport and to get a change in local government boundaries, so that the people of Bootle and Litherland, the area that I represent, can have their own council back and decide their own future for themselves.
  The hon. Member for Brent, North (Dr. Boyson) once said that the increase in crime was in proportion to the increase in the number of social workers. There is one fewer social worker since I was elected for Bootle, so the crime rate should go down.
  5.45 p.m.
  Mr. John Stokes: I congratulate the four maiden speakers who have spoken in the debate this afternoon. Three of them observed the long-standing convention of the House that a maiden speech should not be controversial. The last speaker, the hon. Member for Bootle (Mr. Roberts), chose to ignore that convention. I admire and salute his sincerity and passion. In the nine years that I have been in this Chamber I have found that it is a kind and tolerant place. In

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  the end it is the sort of person that an hon. Member is that matters more than the party label.
  I think that it is for the ease of everybody if those of us who are less senior than many others—and I am less senior than many others here—pay at least some attention to how affairs are conducted in what is, after all, the greatest debating Chamber in the world. I congratulate the maiden speakers on their confidence and fluency, and also on their devotion to their constituencies. I am glad that here we still have a close link between a Member and his constituency.
  It is difficult, after such a Budget, full of meat, to review all aspects of it. I congratulate my right hon. and learned Friend the Chancellor of the Exchequer most warmly on his Budget. Representing, as I do, an industrial seat, composed mainly of people who work in factories, I know that they will be as pleased as I am with the emphasis in the Budget on the individual and on manufacturing industry.
  I welcome the help for small companies, as I believe that it is from the small companies that the greatest contribution will come, in the end, to reducing unemployment. I am glad about the increases in pensions and the help for old people. I welcome the encouragement to savers by the improvement in the investment income surcharge—I felt that the previous level was most unfair—and also the ending of dividend controls, which were mischievous and quite irrelevant.
  The cuts in public expenditure had to come. There is great resentment in the West Midlands at the shrinking of the manufacturing sector and the increase of the public sector. This Budget starts to reduce that imbalance. I felt that the whole tone of the Budget and its trend set the standard for the future recovery of our country.
  I was disappointed that the Leader of the Opposition did not rise to the level of events. There was no apology at all from him for the failures of his own Administration, and his speech left a taste of sour grapes in the mouth.
  We have this Budget in the last quarter of the century, when this old and great country of ours faces two supreme challenges. One, as we all know, is related to the loss of morale, or national pride, which has been continuing since the end
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  of the war, and which I believe will be redressed by the return of the national and patriotic party of this country. But to halt the decline in the economic performance of this country and to start building up our productive capacity will, I believe, take much longer than a five-year term of office. It will mean a complete change of attitude for many people.
  Perhaps the hon. Member for Bootle will listen, if only to this part of my speech, because the transition will be painful for some people. I believe that we must instil into everyone—above all, into our young people—that their individual effort will count much more than actions by the Government. That is where the Budget will be helpful. It is on the actions and decisions of millions of ordinary people that economic success will come to this country. The Government cannot do it; individuals and firms can.
  The stark fact—there is no disagreement between the two sides of the House on this—is that we are failing to produce either enough or with the efficiency and competitiveness which the modern world demands and in which France, Germany, the United States of America and Japan are so far ahead of us. That is why this country is now flooded with foreign goods, from cars to refrigerators and textiles. That cannot go on indefinitely without the country facing ruin.
  The tax changes in the Budget will not alone suddenly transform the situation and improve the sluggish performance of our factories overnight, with their gross overmanning and underutilisation of plant and machinery, but they will at least be a start. They will be an encouragement to our directors, managers, foremen and chargehands to lead their workpeople better and to put them more in the picture about the aims and objects of their enterprise. They will encourage the skilled men, of whom there are many in my constituency and in the West Midlands, and they will encourage also young men and women to enter industry and consider learning a skilled trade. We must make the phrase "British made" once more the hallmark of quality and excellence. We have the brainpower. We need to harness it to commercial development and success.
  All that I have been saying, and the theme of the Budget, is not sordid materialism. It is natural for a man to

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  want to work harder to give his children a better start in life than he had. Similarly, if a nation wants hospitals, schools, roads, city centres and social services, it can provide the means only from the wealth-producing sector of the economy—the products of its factories. These products must be well designed, properly made, produced on time, delivered punctually and, if need be, well serviced afterwards. If the French, Germans, Americans and Japanese can do that, there is no reason why we cannot. More of our young people should be encouraged to consider a career in manufacturing industry rather than in the public service. This is primarily a job for industry.
  There remains the tremendously difficult problem, which has built up over many years in this country, of too many people, unfortunately, being employed in the Civil Service, both nationally and locally. I welcome the cuts in the Budget in this regard. They are essential to this country's health and well-being. It is no use the Opposition bemoaning the lack of jobs. Jobs which the nation can neither support nor afford are not real jobs. They merely camouflage unemployment. If our industrial base were to contract any more, we should have a rapid and disastrous decline in our standard of living and fearful cuts in all our social services.
  This Budget, like the Government, supports industry, which supplies the life-blood for almost the whole of our national life. Within industry I include salesmen, both home and export, who are vital to our industrial success, and the service industries—banking, insurance and so on—which support them.
  I believe that our industrial success as a nation will be helped if we denationalise some of the public corporations as rapidly as possible. I welcome the Budget proposals in that direction.
  As a small business man before I entered the House and now, having previously been a manager in industry for many years, I know that it is the necessity to make profits and to avoid bankruptcy which supply the necessary disciplines to all ranks in industry. The absurdly high redundancy payments in the steel industry and in the docks, and the proposed granting of large increases in wages to miners, whose productivity is
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  falling, would be avoided—in the long run to the benefit of all concerned—if those organisations were responsible to shareholders for the success of their operations and had to show a profit at the end of the year.
  Socialism has had nothing to offer industry. It only seems to reinforce failure and to bolster up what should be allowed to die. It also stifles invention and incentive. For 11 out of the last 15 years we have had a Socialist Government. I believe that they have held back the country grievously, and that is one reason why our industrial performance has fallen so far behind that of our competitors. I am grateful that the industrial heartlands of this country, such as my own, returned the biggest swings against the previous Socialist Government.
  I hope that we shall see a faster dismantling of the various bodies—a matter touched on in the Budget—which presume to advise industry and, indeed, all of us. I see that the noble Lord Diamond's Royal Commission on the distribution of income and wealth has now gone. Good riddance. The whole thing was a complete waste of time and money to the tune of £1½n. If each day we can cancel one of these boards, we shall not only save public money and a great deal of time but release the men and women working for them into more profitable work and lift a burden which has been lying for too long on industry.
  I wish that it had been possible in the Budget to reduce the borrowing requirement still further. We must get back to paying our way and balancing our budgets if we are to rid ourselves of inflation. I believe that inflation is caused by Governments. There is no other way to do it.
  The increase in bank rate is harsh. It will affect small businesses badly. Nevertheless, it is essential as we were fast running into a dangerous period of inflation yet again.
  The Budget will undoubtedly prove strong medicine for some. It appears to be strong medicine, as we have heard today from one speaker, but I believe that it is exactly the medicine that the patient needs.
  This is probably our last chance as a country to pull ourselves together in 1979

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  economically, financially and industrially. We must learn to survive in a hard and competitive world. In the end, no one will help us but ourselves—certainly not the EEC. The world is now looking at us, at this Budget and at the House of Commons to see whether at last we really intend to turn the corner. I believe that we do. I have the utmost confidence that the Prime Minister, the Chancellor of the Exchequer and the Government will steer this great nation on to the high seas of success, where we can again earn the admiration of the world.
  6.0 p.m.
  Mr. Alfred Dubs: Thank you, Mr. Deputy Speaker, for giving me this opportunity to speak in the House for the first time. I hesitate to use the word "maiden" because there are some members of the women's movement in my constituency who query that adjective.
  Many years ago, when I was canvassing during the course of an earlier election campaign, I rang the doorbell of a multi-occupied house and a lady and a small child of about four came to the door. I did not know who she was because the doorbells did not have names on them. I stated that I was canvassing, and the lady slammed the door in my face. As I was puzzling which name I should mark as being a supporter of the opposite party to my own, the door again opened, the lady with the small child was still there, and she said to the child "There is nothing to see. It is only a politician."
  That comment set me thinking, over the years, whether we politicians—I presume I have now become one through becoming a Member of the House—have established the right level of credibility with the people whom we represent. If the people sneer at us and say "It is only a politician" and slam the door—I believe that was not an isolated reaction—we must be careful to ensure that we do not distance ourselves too far from the communities and the people whom we represent.
  My predecessor, Ernie Perry, was a Member of this House from 1964 to 1979. He was undefeated throughout his series of election campaigns. He had been on Wandsworth borough council, had previously served on Battersea council—indeed, he had been a mayor of Battersea
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  —and whilst in the House was an assistant Government Whip. I also mention another previous Member of Parliament, Mrs. Ganley, born 100 years ago this year, who served Battersea, South from 1945 to 1951 and was an active Socialist and co-operator in the London area.
  Battersea, South is a constituency which has suffered more than its share of boundary changes, and I suspect that it may indeed disappear when the next lot of boundary changes are announced in the course of, I believe, this week. Batter-sea, South has also suffered through being a typical inner city area. It has suffered from a declining population and the effect that that has had on local services. It has suffered because of the disappearance of much employment, and it is suffering so much because of poor public transport that one could almost say that the main occupation in Battersea, South is waiting for a bus, a tube train or a train.
  As with so many inner city areas, Battersea, South has been under attack over the years. Perhaps a symbol of the attack on Battersea is what occurred as recently as last week to the mural on what was locally called "Morgan's wall" the remains of which can still be seen as one comes over Battersea Bridge. I appreciate that that it is not in Battersea, South. It is in Battersea, North. However, it has been a symbol of the whole community. It was a vivid mural, depicting the feelings of the people of Battersea. That mural was bulldozed at three o'clock one morning last week in order to prevent people knowing that it was happening. It was an act of stealth, and in some ways it symbolised the sort of attacks that are made on people who live in inner city areas.
  I appreciate that one is not supposed to be controversial when making one's first speech in the House, but that is difficult if one has recently been elected in the course of a controversial campaign and when one represents a constituency in an area which has, perhaps, one of the most controversial local authorities in the country. I am speaking of Wandsworth council.
  Wandsworth town hall is in my constituency, and since the Conservative Party won control last year Wandsworth council has been held up as the sort of

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  local authority which typifies, at local level, what the Conservative Party would wish to do nationally if it had the chance. Indeed, the Conservative Party now has that chance and we have seen, in today's Budget, how it intends to use it.
  Before the Government get too excited about the opportunities that are ahead of them over the next few years, perhaps I could just comment that although there was a big swing to the Conservatives during the local elections in Wandsworth last year, there was a large swing away from the Conservatives in the general election. I doubt very much whether I should be here today had the people of my constituency not had the evidence before them of what happens when a council such as Wandsworth comes under Conservative control.
  In terms of the Budget, I believe that many of the fundamental problems facing our economy have not come to light over the last few years, or, indeed, the last 25 years. Many of the real problems facing our economy have been with us for 100 years or longer. What we have seen is a steady trend of events which have weakened our economic position as a country on a long-term basis. Therefore, I should like to make a judgment of the Budget both in terms of its short-term effects on the people in my constituency, and others, and in terms of whether it will make a long-term contribution to the real problems that affect the British economy.
  Without wishing to enter into any area of controversy, I do not see that this Budget will do much for people of the inner city areas such as Battersea in terms of providing more jobs or making it possible for local authorities to improve housing conditions, or, indeed, that it will do anything significant about achieving economic growth, which I believe is the key to creating more jobs. I find it difficult to see how our long-term economic problems will be solved unless one Chancellor or another introduces a measure of import control to make possible the more rapid economic growth that will give us more jobs and the prosperity that we have long been seeking.
  Both in the short and long term I do not see this Budget making a significant contribution to solving the overall prob-
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  lems facing this country, though it may well help certain sectors—usually the better off—within it. I fear that by this time next year we shall see increasing levels of unemployment, inflation and imports, and the sort of debate that we shall have a year from now will be very different.
  It was said this afternoon that one of the underlying philosophies of the Budget was freedom of choice. It has always been my understanding that there is not, as it were, a sum of freedom which can be increased or diminished. The truth is that there is more freedom for some and less for others. The real issue is how widely the freedom of choice about which the Government talk will be distributed. It seems to me that giving more freedom of choice to, say, certain council tenants to purchase their council houses will lessen the freedom of choice for those waiting for decent housing or seeking a housing transfer. Similar considerations apply in many other aspects of the freedom about which we are talking. I fear that the freedom that has been increased for some people today will have to be balanced against the lessening of real freedom for other members of our community.
  When I began talking I mentioned what happened when I once canvassed during an election campaign and I quoted the searing comment that was made about politicians by the person who answered the door. One of my personal aims is to try, as best I can, to lessen the gap of credibility between politicians and the community they serve. I shall do my best to achieve that as regards the people to whom I am accountable in my constituency, both the members of my party and my constituents in Battersea, South.
  6.9 p.m.
  Mr. David Knox: It will be nine years next Monday since I was first elected to the House. Over that period of nine years I have not yet followed a maiden speaker. Today, however, with the exception of my hon. Friend the Member for Halesowen and Stourbridge (Mr. Stokes), I am following five maiden speakers. I should like to congratulate all five—my hon. Friends the Members for Huddersfield, West (Mr. Dickens) and for Bridlington (Mr. Townend) and the hon. Members for Manchester, Blackley (Mr. Eastham), for Bootle (Mr. Roberts) and for Battersea, South (Mr. Dubs).

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  I remember only too well the trepidation with which I approached my maiden speech. I am sure that it showed on that occasion. Certainly there was no sign of any similar trepidation on the part of any maiden speaker whom we heard today. All spoke with great confidence and all showed great ability. I am sure that I speak on behalf of all hon. Members when I say that I hope we shall hear often from all of them in the future. But perhaps I can make the point that I hope not too often when I am trying to catch the eye of the Chair.
  All the maiden speakers paid tribute to their predecessors. It was right that they should do so, because all five had predecessors who were held in high regard on both sides of the House. As their daughter teaches in my constituency, perhaps I can say how sorry I am to hear that both Kenneth Lomas and his wife are ill. I hope that both will soon be restored to full health.
  I congratulate my right hon. and learned Friend the Chancellor on his first Budget. In the debate on the Gracious Speech four weeks ago today I said that I hoped he would be a bold Chancellor. Certainly he has introduced his first Budget with a boldness to which we were not accustomed during the many Budgets which his predecessor introduced over the five years that he was Chancellor. I hope that this boldness will continue.
  I welcome my right hon. and learned Friend's general strategy. I believe that it is essential to cut direct taxation. The people of this country think that they are paying too much tax, and, because they think that, it has an effect on them in terms of disincentive to hard work, initiative and enterprise. I believe that the Chancellor has today taken the right first steps towards reducing this strong disincentive effect.
  I believe also that the effect of the direct tax cuts will be to encourage economic expansion and to get economic growth going once again. As the hon. Member for Battersea, South pointed out, it is only if we can get economic growth that we can achieve the rising living standards and better social and public services that all of us want. I welcome also the pension increases which my right hon. and learned Friend announced today, as well as the improvement in the mobility allow-
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  ance. These and other measures that have been mentioned should make it clear that the Conservative Party cares quite as much for the disadvantaged in our society as does the Labour Party.
  Although I welcome my right hon. and learned Friend's strategy, I welcome some of the specific measures rather less than others. I was sorry that he felt it necessary to make the VAT rate quite as high as 15 per cent., although I strongly welcome the unification of the rate. It always seemed to me to be absurd to have two different rates, causing excessive complications to those running businesses as well as encouraging bureaucracy. The fact that we are now reverting to one rate only will, to my way of thinking, be a great advantage to industry and commerce.
  In the current oil situation, I believe that my right hon. and learned Friend might have gone a little further in increasing the tax on petrol. I gathered from what he said that there will be a total addition of 10p per gallon, and this seems somewhat modest in view of the extraordinarily difficult energy situation which faces not just this country but the whole world.
  I should now like to say a few words about the effect of the Budget on jobs. I am particularly concerned, as I have been during my period in this House, about the unemployment situation. I am hopeful that today's Budget will lead to a reduction in the level of unemployment, but this will inevitably take time. Under the Labour Government, unemployment more than doubled over the past five years. On a seasonally adjusted basis, it rose from 574,000 in March 1974, when the Labour Party came into office, to 1,247,500 last month, when the electorate eventually rejected the Labour Party. Since September 1975 over 1 million people have been out of work.
  I remember, as do all of us who sat in this House between 1970 and 1974, the noise and synthetic anger which the then Labour Opposition showed in the early 1970s, when unemployment briefly and temporarily exceeded the 1 million mark. I noticed that the attitudes and reactions of Labour Members were somewhat different after September 1975. The fact is that unemployment under the Labour Government was higher than at any time since the war, and it has been far too

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  high for far too long. The Labour Government did precious little to reverse the rising trend of unemployment over which they presided or to create real jobs. It is true that they more than compensated for this lack of real action by a great package of cosmetic measures. That approach may well have satisfied the Labour Party, but it did not satisfy anyone else. It did not satisfy the British electorate, as it showed last month in the general election.
  There is great public concern about the level of unemployment in Britain today, and rightly so. There is a great public demand for the creation of real jobs for the people at present without work. There is no doubt in my mind that unemployment is one of the greatest social evils in our society. It creates bitterness against society in general, and bitterness between those out of work and those in work.
  The Leader of the Opposition, when Prime Minister was right when he said that that biggest differential of all was between those in work and those out of work. Unemployment also undermines the self-confidence of those affected, with a detrimental effect on the quality of their lives. High unemployment alienates those affected from the society in which they live, particularly from a society, such as that in this country, which is organised on democratic lines.
  High unemployment among young people, especially young black people, has had a serious effect on the fabric of our society. It is, therefore, necessary and urgent that something should be done about it. Unemployment is also bad from an economic point of view. It is wasteful of valuable economic resources, and the most valuable economic resource of all is human beings. After all, if the unemployed were at work we would produce more as a nation and there would be a bigger cake for all of us to share in terms of both personal living standards and better social and public services.
  For those and other reasons, it is imperative that we get unemployment down considerably. The previous Government failed miserably. I hope that my right hon. and learned Friend's Budget will start the process of reducing unemployment. If we are to succeed in this task
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  we must raise the level of economic activity in this country. We must create a demand for more goods and services to be produced within this country, which in turn will create a demand for more people to produce those goods and services. In taking action to deal with unemployment in the future, I hope that my right hon. and learned Friend will be even bolder than he has been already. There is always a danger that he might take what can be described as an accountant's attitude to the problem and adopt an accountant's approach. Even though some of the measures that can be taken to reduce unemployment might initially result in an increase in the borrowing requirement, it should be remembered that if one succeeds in creating new jobs and reducing the level of unemployment the borrowing requirement will then be reduced, because less money will have to be spent on benefits for the unemployed.
  When considering unemployment we must also remember that there is a time lag of about 12 to 18 months between the taking of measures to deal with unemployment and those measures becoming effective. However much I hope that we have started on the right road today, I believe that it will be some time—at least a year from now—before we see the effect of these measures.
  I turn finally and briefly to the question of the European monetary system. Last week we had the Euro elections. I think most people will agree that the turnout was very disappointing. I believe that that showed great public apathy about the EEC rather than necessarily great opposition to it. If we are to engender a greater degree of enthusiasm among the public, we in this House and the Government must show a much more enthusiastic attitude towards the Community. In economic terms, I believe this means that we should aim to join the EMS at the earliest possible moment.
  I am sorry that my right hon. and learned Friend did not mention this today, but there are plenty of other opportunities for him to do so. I certainly hope that he will set about the task of preparing the country for joining the EMS at the earliest possible moment. I should like him to set a firm date for our joining, because the greater the degree of economic integration that we have in

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  Europe, the greater the degree of economic prosperity there will be among the member countries of the Community, and that means, as we are a member country, a greater degree of economic prosperity for Britain. Britain's economic future undoubtedly depends upon the prosperity of the Common Market. We must start contributing much more positively to that to make it work much better, and that means joining the EMS as soon as possible.
  6.20 p.m.
  Mr. R. B. Cant: I have been a Member of the House for about 13 years. Whenever I have spoken in Budget debates I have generally made a sort of critical appraisal of whatever diet has been put before us in monetary or fiscal terms. On this occasion, however, as I suppose that once again I shall be serving on the Finance Bill Committee, I propose merely to isolate one item of the Budget and to talk in general terms about that.
  I want to refer to the cuts that are to take place under the heading of trade and industry, cuts amounting to about £250 million, because within this particular sector of the accounts there is one item to which I hope the Government will turn their attention, perhaps in a slightly reforming spirit.
  There is no doubt that the most significant set of statistics to emerge during the past week—not those contained in the Budget—indicated the deterioration in the balance of payments and, in particular, the growth in the volume of imports and the relative decline in the volume of exports. We can see quite easily that the de-industrialisation of Britain is going on apace. It seems absolutely appalling that, in the face of this major economic issue which confronts us, the Government should be cutting down in this area.
  I want to make a few comments on one subheading under this item—regional support and regeneration. That is a very grand title. It covers what I think we normally refer to as regional policy.
  The Conservative Party manifesto said:
  "We do not propose sudden, sharp changes in the measures now in force."
  Lord Trenchard made a statement in Newcastle the other day saying that he refused to give any commitment that Government grants, even for the special development areas, would not be cut. He
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  gave an oblique warning to the intermediate areas. He questioned whether it was cost-effective to treat nearly half of the country as a special case.
  The cutting process has begun. As Peter Jenkins said in The Guardian,
  "Just watch out for this particular item, because what you see is just the tip of an iceberg".
  This is what worries me if the present Government are allowed to continue for a full five-year term. I wonder whether cuts in this area will have damaging consequences for the country.
  I am really making a plea to the Government—I shall not please all my hon. Friends by doing so—for an agonising reappraisal of this thing called regional policy. It has been with us for about 50 years, going back to 1934, when we had the Special Areas (Development and Improvement) Act. At present half of the country, the whole area north of a line from Wrexham to the Wash and west of a line from Wrexham to Plymouth, has some sort of special treatment. The time has come when we should examine this situation more carefully—without, of course, throwing out the baby with the bath water. I live in an area which is totally unassisted, apart from assistance in the matter of land dereliction. My plea is that we should no longer tolerate the anomalies which have arisen.
  I am sorry that the hon. Member for Macclesfield (Mr. Winterton) is not present. I take Cheshire as an example. This prosperous county, on any possible indicator of prosperity, growth, wealth and so on, is an intermediate area. That is so for one simple reason: three Tory Members of Parliament, at a particular moment in time, had sufficient political clout to get it designated as an area which should enjoy intermediate status.
  But the greatest irony and the greatest anomaly of all is the intermediate area status of Oswestry. Oswestry is a remarkable little place. It has a remarkable Member of Parliament. We all know him to be dedicated to the whole spirit of competition, free enterprise and so forth. He has been appointed to the Treasury and he is responsible for these cuts in public expenditure, aided and abetted by the Financial Secretary to the Treasury. Yet here is a man who, when it suits his own purpose—perhaps I should have mentioned this to him; I thought that he

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  would be present—tries to get bestowed upon his own constituency that little bit of assistance which makes all the difference.
  The Financial Secretary to the Treasury (Mr. Nigel Lawson): As my right hon. Friend is not present, I think it only fair to point out that the question of which areas shall be intermediate areas and which shall not be such areas is entirely a matter for the Secretary of State for Industry and his Department, and it has nothing whatever to do with the Treasury.
  Mr. Cant: That is quite true, but I do not see how it affects the argument I am putting forward. Even if another Department is involved—and Ministers occasionally meet one another—a little bit of arm twisting in the right place can do a world of good.
  When some areas have totally outgrown the need for assistance, the prospect of ever getting these areas demoted so that they no longer attract these privileges is extremely remote. I have asked one of my right hon. Friends who has been responsible in the Department of Industry for the designation of intermediate areas "What right have you to allow Aberdeen to continue to enjoy special development area status?" He has said "Well, it is impossible to demote any area once it has got the privilege." Ministers always duck out of the question. If I had been a Minister, I would have done the same.
  The situation has been further complicated by the fact that the previous Government and, no doubt, the present Government have gone soft on industrial development certificates. It is much easier to get them than it used to be, but there is no real operative policy.
  Mr. Donald AndersonAnd on offices.
  Mr. Cant: And offices. The situation has also been further complicated by the policy of the Department of the Environment on the inner city areas.
  I am not saying that the Labour Government's policy was in any sense a failure. The previous Minister of State said that we could be well satisfied with the achievement through the scheme of 325,000 jobs in assisted areas, and that certainly is not a failure. If this Government are to start making cuts in regional
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  support and regeneration, they must reevaluate the policies and programmes.
  The Select Committee on Expenditure said that Parliament needs to be put in a position to assess the effectiveness of the programmes more accurately than has hitherto been possible. The difficulty is that once one decides to revise existing policies, the changes that emerge may be too drastic.
  Dr. David Eversley, speaking of regions in change at a meeting of the Royal Town Planning Institute, said that the Government's regional policies were flying in the face of economic logic. He envisaged the emergence of a sun belt, a new commercial and industrial zone covering large areas of the East, South-East and South-West of England, which is thriving and likely to continue to thrive despite all Government attempts to frustrate it. We do not want that.
  The blanket approach to regional policy should be modified by greater selectivity and flexibility. Some areas and towns in the country that have chronic problems not only get special development area status but receive more money than is implicit in the policy. The hon. Member for Bootle (Mr. Roberts) spoke of the terrible level of unemployment in his area. In Sunderland the unemployment figure is 13 per cent. It is ridiculous that between a development area and a special development area the difference is only 2 per cent. in the assistance given. We should not adopt such a blanket approach, and more money should go to those areas that need it more desperately.
  On the other hand, we must start declassifying some areas. An analysis of the position in Cheshire no longer justifies intermediate area status, and money could be saved here to be spent elsewhere. Like my constituency, Crewe is an old town, yet it enjoys intermediate area status. The level of unemployment there is the same as in Stoke-on-Trent, but because Crewe is in an intermediate area it has today attracted a new industry offering 1,000 new jobs. That will be appreciated in Crewe but not in Stoke-on-Trent, which is just a few miles down the road.
  Grants to highly capital-intensive Industries should be reviewed, which would also save money. Substantial grants are

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  automatically offered to firms on administrative and economic grounds, and, for example, with a petroleum refinery plant, a grant can amount to millions of pounds. For a project costing £10 million, for example, with a petroleum refinery plant and it may employ only 48 men.
  There are firms such as GEC, sitting on a cash mountain of about £700 million, which may want to link up with Fairchild to get on the microprocessor bandwagon. It asks for a grant and that is automatically given. But why should the Government pour out the taxpayers' money to provide GEC with £17 million, or £70 million—one gets lost with these petty cash sums—when it has substantial cash reserves? That has no justification or logic.
  The main thrust of the Government's regional policy should be directed to development in those areas where the industrial potential is essential to our future, and they must look carefully at de-industrialisation. More money must be spent on areas where our future industries will develop. In the industries, areas and firm that are in decline, money should be used to reduce the impact of unemployment, but unless we start backing the winners we shall not win the battle for our industrial future.
  My area of North Staffordshire gives us a key to the problem and contains the foundation for a new regional policy. The criterion for giving aid should not be the imminence of collapse but whether the industry of an area is strong on import substitution and export ratios. Money should be put into those industries that save us importing and that make a considerable contribution to exports—for example, the pottery industry in my constituency. In that industry 60 per cent. of a growing volume of output goes to exports, yet we get nothing to assist in future development, apart from land reclamation and making the area more beautiful—though that is doing a fine job.
  The Government will obviously make cuts in regional policy—no one can stop them—but there should be a total reshaping of regional policy financing. The industry sector schemes should continue with a reactivation of selective investment schemes.
  My main point relates to industrial development certificates. This is one of
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  the great mystery areas. People talk about the number of refusals being very low, but no one ever talks about the volume of applications that are never made. Obviously people do not bother to apply to go to an area that does not enjoy intermediate or development area status. I believe that the IDC exemption limit should be raised to 30,000 sq. ft. and that IDCs should not be required for firms that wish to expand in their present premises, for example, throughout the whole of the West Midlands region. Also, I believe that IDC control should be removed for foreign firms, whatever their size and wherever they propose to develop.
  We must remove the restraints on development in those areas that will make a key contribution to our industrial future. If this means spending more money on regional support and regeneration, so be it. There is no doubt that our future is bound up with industry. This is the fundamental national economic weakness, and as long as we put constraints on those areas which obviously will make a contribution to this country's future we shall diminish our hopes of national success.
  6.41
  Mr. Michael Morris: It has been a great pleasure to listen to the five new Members who have contributed to the debate this evening. It is particularly pleasing that four of them have joined the House of Commons from local government. I am not sure about the hon. Member for Battersea, South (Mr. Dubs). Everyone in this House held the hon. Member's predecessor in great respect. He was dearly loved and we wish the hon. Member as happy a time here as his predecessor had. If it is true that the parliamentary constituency of Battersea, South will disappear, we hope that the hon. Member who has recently joined us will still be here after the next election—provided that it is not in a marginal seat.
  The most surprising thing about the response of the Leader of the Opposition to the Chancellor's Budget was his complaint that the Chancellor had spent no time on the industrial strategy. When one reflects on the industrial strategy, the time and energy that the previous Government spent on it and the result, one wonders whether that was time

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  well spent. Of all the policies that the previous Government followed, the industrial strategy was singularly the most ineffective. My right hon. and learned Friend was quite right in not devoting a single word to it.
  The Chancellor itemised four principles that had guided him in constructing his Budget. I shall comment on three of them: the need to provide greater incentives for our people, the need to provide them some freedom of choice, and the very important need to reduce the burden of public finance.
  There is no doubt that if there is one word that encapsulates this Budget it is "incentive" During the election the then Leader of the Opposition who is now Prime Minister went around the country with one clear message. The then Government thought that she would be put off her stride, but her clear message was that this country needs incentives at every level if it is to succeed in getting out of its problems of the last decade. The Budget today is a very large step along the road of incentives.
  The key to the Budget came right at the end, and it related to income tax, first of all to the standard rate. Many of us felt that a 3p reduction was the minimum that could be considered as being a significant step forward. I welcome the fact that the Chancellor has put on the record that his target is to get income tax down to 25p in the pound. We must look to that target within the lifespan of this Parliament.
  The Chancellor was also right to draw attention to the fact that across Europe the top rate of tax is about 60 per cent. I am so glad that my right hon. and learned Friend did not follow the traditional British approach of nibbling at the problem and cutting down from 80 per cent. to 73 per cent. to whatever. The Treasury team took the decisive step of going straight down to what it considered was an appropriate rate of 60 per cent. with adjustments. That is the central theme of the Budget, and my right hon. and learned Friend is to be congratulated.
  There is also an understanding of where the problems lie. Take, for example, land supply. I am only sorry that the hon. Member for Bootle (Mr. Roberts) has left
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  the Chamber. There is no doubt—and Labour Members know this as well as I do—that the amount of land coming forward in the last two years has decreased because those who own it believed that the situation was too fluid. We have now had a positive statement about a 60 per cent. rate of tax. That is still a fairly stiff tax and there will not be any great windfall gains to be made out of land. I think that 60 per cent. is a realistic level and it should ensure that those who have the land will now bring it forward so that the private housing sector can move for-word apace to meet the demand.
  The other dimension on which I wish to reflect is that of social benefits. I have known the Chancellor ever since he was chairman of the Bow group, and the image that I had of him long before he achieved high office was that of a man of great social conscience who spent a good deal of his early political life trying to find ways to help those in greatest need. He has always tried to ensure that the nation used its money and resources to look after those in need as well as to give incentives to others.
  I believe that when Labour Members have had time to reflect they will see that in this Budget the incentives to those who are able bodied and who can respond to the challenge are counterbalanced by help for those who cannot respond. Not before time—and this is to the shame of all hon. Members—war widows' pensions are to be removed from taxation. That was the very least that could be done. I congratulate my right hon. and learned Friend on doing it. Many have talked about doing it, but he has actually done it.
  Alongside that, I noted the extra contribution for single-parent families. That has been debated in this Chamber over the last couple of years, but it is my right hon. and learned Friend who has responded. He has responded, too, to the point that was made that the pensioners were short-changed in the last year. Some hon. Members may say that they were short-changed by only a week, but the fact remains that they were short-changed and they feel very strongly about it. It is right that that has been corrected.
  In addition, I am pleased that pensions are to be increased by more than originally stated. Indeed the Budget goes

  305
  further. We have had news of the increase in mobility allowance but, most important of all, there is the removal from tax altogether of 1˙3 million families. I hope that, if we reach the prosperity we expect, next year we shall see even more families outside the tax net. Therefore, there will be a quid pro quo in respect of those in the lowest earning bracket who will benefit from a Conservative Budget.
  I wish to say a few words about exports. I am sorry that the hon. Member for Stoke-on-Trent, Central (Mr. Cant) has left the Chamber. I agree with some of his remarks, and his words are worth considering. Undoubtedly part of the problem of exports is associated with the new-found strength of sterling. It is easy for exporters—and I speak as somebody who was engaged in exporting—to sell when sterling is declining. However, it is much more difficult to sell against an international market when one's currency is stable on increasing in value.
  I am not surprised that the figures now illustrate that the volume and value of our manufactured exports and our invisibles have declined in the last quarter. What the country is looking for is not commodity exporting but exporting by British industry on a value-added basis. That means that we must sell goods the quality of which cannot be matched by other countries. Those are the exports that need encouragement.
  There is one area in which incentives will also help industry. I believe that we must re-examine the incentives given to exporters. Such incentives have suffered changes over a period of time. My colleagues on the Treasury Bench should listen to our trade colleagues who ask for a switch to export incentives. I welcome my right hon. Friend's relaxation in respect of direct investment overseas.
  Many Labour Members are worried about the loss of employment opportunities in the short term. I wish to point out to them—and I have worked in this area of activity—that that is not the result in my experience. Those companies which wish to invest directly overseas are often the most profitable and successful companies in the nation. There is a great deal of activity between the United Kingdom and the EEC and the developing world. I believe that we as a country are right to safeguard our future by in-
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  vesting directly overseas. Thanks to North Sea oil, we have some room for manoeuvrability. We should make good use of that factor and should not be too inward-looking. We must recognise that we work and trade in a world market. We should go where we get the greatest return—not just in the short term but in the medium and long term.
  Furthermore—and this possibly is a more controversial part of my speech—I believe that we should all respond to my right hon. and learned Friend's plea on energy. I believe that as a nation we would be foolish to seek to avoid paying the world price of oil. If in isolation we seek to keep up our home consumption, I believe that that will be to the disadvantage of our balance of payments in the longer term.
  I wish to deal with the need to reduce the burden of financing the public sector. My right hon. and learned Friend rightly said that he expected to have an income of £1,000 million arising from the realisation of assets. The only company he mentioned was BP, and I thought that he was right not to mention the others in public. I remind the Government that the New Towns Commission is sitting on several hundred million pounds worth of publicly owned assets. We do not need the New Towns Commission. Its job is completed and its assets must be returned to the people. The sooner that job is carried out, the better. I believe that it should be done in the coming year or so.
  There are many other aspects to be considered. I hope that we shall be ruthless in closing down direct-labour departments which consistently make losses. It is time that the continued comments of district auditors and the adverse reports about some direct labour departments were acted upon, instead of these losses being allowed to continue year after year.
  I wish, in passing, to mention another small investment—namely, the minority State holding in the British Sugar Corporation. I believe that we do not need that holding.
  My right hon. and learned Friend was right to say that cash limits should remain, because those limits are to do with revenue. I hope that I have the message loud and clear. We have at last got through to the Treasury Bench the fact that it is not merely a matter

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  of cutting Treasury expenditure and forgetting all about revenue. There needs to be a balance between the two. I think I discern such a balance in the proposed cuts.
  I wish to make clear to my hon. Friend the Financial Secretary that local government accounts for one-third of expenditure and central Government for two-thirds. On my rough calculations, local government has provided more than its one-third share of the cuts announced so far. I urge the Government to recognise that those proportions should not be violently altered. Local government has a job to do and it should do it. I shall respond as much as anybody else to any call to ensure that that happens. I also hope that we shall not forget the words of the headmaster at a recent conference who said that it is nonsense to spend £400 million on school milk as a subsidy when there is still a need for more books and equipment.
  Let me mention a further piece of nonsense. I gather that serious consideration
  is being given by a working party set up by the Labour Government to the establishment of a third London airport. That will involve the expenditure of enormous capital sums and will have a great effect on the environment in certain parts of the country—not least on Northampton, South. I believe that the House should reject such a proposal because it can only be a white elephant.
  This Budget is unique. It is a great step forward and will be talked of for a very long time in political circles. It takes the steps that we all hoped would be embarked upon. We went into the election with a manifesto containing a clear commitment. The Treasury Bench has had 40 days and 40 long nights to work on it. It is a pioneering Budget, and I believe that the country will respond to it. I very much look forward to the next instalment.
  Motion made, and Question put, That the debate be now adjourned.—[Lord James Douglas-Hamilton.]
  The House divided: Ayes 146, Noes 58.

  Division No. 7]

  AYES

  [7.0 p.m.

  Alexander, Richard

  Finsberg, Geoffrey

  Mawby, Ray

  Alton, David

  Fletcher, Alexander (Edinburgh N)

  Maxwell-Hyslop, Robin

  Ancram, Michael

  Forman, Nigel

  Mellish, Rt. Hon. Robert

  Aspinwall, Jack

  Fraser, Peter (South Angus)

  Meyer, Sir Anthony

  Atkins, Robert (Preston North)

  Garel-Jones, Tristan

  Miller, Hal (Bromsgrove & Redditch)

  Atkinson, David (B'mouth, East)

  Glyn, Dr Alan

  Mills, Iain (Meriden)

  Banks, Robert

  Goodhew, Victor

  Miscampbell, Norman

  Beaumont-Dark, Anthony

  Gow, Ian

  Moate, Roger

  Beith, A. J.

  Gower, Sir Raymond

  Molyneaux, James

  Best, Keith

  Graham, Ted

  Monro, Hector

  Blackburn, John

  Gray, Hamish

  Moore, John

  Body, Richard

  Grieve, Percy

  Morrison, Hon. Charles (Devizes)

  Bonsor, Sir Nicholas

  Griffiths, Peter (Portsmouth N)

  Morrison, Hon. Peter (City of Chester)

  Boscawen, Hon. Robert

  Grimond, Rt. Hon. J.

  Mudd, David

  Boyson, Dr Rhodes

  Grist, Ian

  Murphy, Christopher

  Bright, Graham

  Gummer, John Selwyn

  Myles, David

  Brinton, Timothy

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

  Needham, Richard

  Brocklebank-Fowler, Christopher

  Hamilton, Michael (Salisbury)

  Neubert, Michael

  Brown, Michael (Brigg & Sc'thorpe)

  Harrison, Rt. Hon. Walter

  Newton, Tony

  Bruce-Gardyne, John

  Hawksley, Warren

  Normanton, Tom

  Butcher, John

  Henderson, Barry

  Nott, Rt. Hon. John

  Cadbury, Jocelyn

  Hogg, Hon. Douglas (Grantham)

  Onslow, Cranley

  Carlisle, John (Luton West)

  Holland, Philip (Canton)

  Page, Rt. Hon. R. Graham (Crosby)

  Carlisle, Kenneth (Lincoln)

  Howell, Ralph (North Norfolk)

  Pattie, Geoffrey

  Clarke, Kenneth (Rushcliffe)

  Hunt, David (Wirral)

  Pawsey, James

  Cockeram, Eric

  Hunt, John (Ravensbourne)

  Pollock, Alexander

  Cocks, Rt. Hon. Michael (Bristol S)

  Jenkin, Rt. Hon. Patrick

  Proctor, K. Harvey

  Cope, John

  Jopling, Rt. Hon. Michael

  Pym, Rt. Hon. Francis

  Cormack, Patrick

  Kellett-Bowman, Mrs. Elaine

  Raison, Timothy

  Costain, A. P.

  Kitson, Sir Timothy

  Rathbone, Tim

  Cranborne, Viscount

  Lang, Ian

  Rhodes James, Robert

  Dean, Paul (North Somerset)

  Lawrence, Ivan

  Roberts, Allan (Bootle)

  Dickens, Geoffrey

  Lawson, Nigel

  Rodgers, Rt. Hon. William

  Dover, Denshore

  Lloyd, Ian (Havant & Waterloo)

  Ross, Stephen (Isle of Wight)

  Dunlop, John

  Lloyd, Peter (Fareham)

  Shaw, Michael (Scarborough)

  Dunn, Robert (Dartford)

  MacGregor, John

  Shelton, William (Streatham)

  Durant, Tony

  McQuarrie, Albert

  Shepherd, Colin (Hereford)

  Edwards, Rt. Hon. N. (Pembroke)

  Major, John

  Shepherd, Richard (Aldridge-Br'hills)

  Eyre, Reginald

  Marland, Paul

  Skeet, T. H. H.

  Fairgrieve, Russell

  Marlow, Antony

  Smith, Dudley (War, and Leam'ton)

  Faith, Mrs. Sheila

  Marten, Neil (Banbury)

  Speller, Tony

  Fenner, Mrs. Peggy

  Mather, Carol

  Steel, Rt. Hon. David

  Stevens, Martin

  Walker-Smith, Rt. Hon. Sir Derek

  Whitney, Raymond

  Stewart, Rt. Hon. Donald (W. Isles)

  Wall, Patrick

  Wilkinson, John

  Stradling Thomas, J.

  Waller, Gary

  Williams, Delwyn (Montgomery)

  Taylor, Robert (Croydon N. W.)

  Ward, John

  Winterton, Nicholas

  Thorne, Neil (Ilford South)

  Warren, Kenneth

  Trippler, David

  Watson, J.

  TELLERS FOR THE AYES:

  Waddington, David

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

  Lord James Douglas-Hamilton and

  Wainwright, Richard (Colne Valley)

  White, Frank R. (Bury & Radclifle)

  Mr. Anthony Berry.

  NOES

  Bidwell, Sydney

  Hogg, Norman (E Dunbartonshire)

  Race, Reg

  Brown, Ronald W. (Hackney S.)

  Holland, Stuart (L'beth, Vauxhall)

  Rooker, J. W.

  Campbell-Savours, Dale

  Home Robertson, John

  Ross, Ernest (Dundee West)

  Canavan, Dennis

  Homewood, William

  Sever, John

  Carter-Jones, Lewis

  Janner, Hon. Greville

  Short, Mrs. Renée

  Cartwright, John

  Lambie, David

  Skinner, Dennis

  Craigen, J. M. (Glasgow, Maryhill)

  Lofthouse, Geoffrey

  Soley, Clive

  Cryer, Bob

  McGuire, Michael (Ince)

  Spriggs, Leslie

  Cunliffe, Lawrence

  McKay, Allen (Penistone)

  Stallard, A. W.

  Dalyell, Tam

  McNally, Thomas

  Stoddart, David

  Davis, Terry (Br'm'ham, Stechford)

  McNamara, Kevin

  Straw, Jack

  Dean, Joseph (Leeds West)

  Marshall, Jim (Leicester South)

  Taylor, Mrs. Ann (Bolton West)

  Dixon, Donald

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

  Thomas, Dafydd (Merioneth)

  Dobson, Frank

  Maxton, John

  Welsh, Michael

  English, Michael

  Maynard, Miss Joan

  Whitehead, Phillip

  Fletcher, Ted (Darlington)

  Mikardo, Ian

  Woodall, Alec

  Foster, Derek

  Mitchell, Austin (Grimsby)

  Foulkes, George

  Newens, Stanley

  TELLERS FOR THE NOES:

  George, Bruce

  O'Halloran, Michael

  Mr. Stan Thorne and

  Grant, George (Morpeth)

  O'Neill, Martin

  Miss. Jo Richardson.

  Haynes, David

  Powell, Raymond (Ogmore)

  Question accordingly agreed to.
  Debate to be resumed tomorrow.

GREATER LONDON COUNCIL (GENERAL POWERS) BILL (By Order)
Order for Second Reading read.
Motion made, and Question proposed, That the Bill be now read a Second time.
7.12 p.m.
Mr. William Shelton: It is with great pleasure that I recommend the Bill to the House, in the hope that it will be given a Second Reading. I shall keep my remarks brief, since the measure is not especially contentious. No petitions have been received against it and it will therefore go to the Committee for unopposed Bills, should it succeed tonight. The Greater London Council (Money) Bill was given an unopposed Second Reading earlier today.
Hon. Members from all parts of the House always welcome a debate on London. It is our capital city, and it suffers from many of the inner city problems that we see in our other great cities. It also has special problems of its own. Figures that I received recently showed that last month unemployment in Greater London was under 4 per cent., a most satisfactory level, but unemployment in the docklands and the adjacent areas was
310
13 per cent., which gives some measure of the special problems to which I have referred.
In 1966 the population of London was about 7·8 million. Eleven years later it was 6·9 million. That is an indication of the decline of the city, a decline for which all London Members, whatever their political persuasion, feel great concern.
It is always a great pleasure to debate London, and I and many of my hon. Friends looked rather wistfully during the last Session of Parliament at the time that was allocated to debates on Scotland and Wales.
I warmly welcome my hon. Friend the Member for Hampstead (Mr. Finsberg) to the Government Front Bench. He has made a great contribution over the past two years to solving some of London's problems, and I hope that he will intervene in the debate.
I shall deal briefly with the clauses in the Bill. The first of any substance is clause 3, which deals with the licensing of public entertainment in Greater London and seeks to amend schedule 12 to the Local Government (Financial Provisions) Act 1963. The GLC licenses public entertainments in London—that is, music and dancing—specifying such matters as the number of ushers who shall be present. Many of the specific requirements of the licence are often contravened by licence holders, but they can be

311
prosecuted for only one offence—breach of the licence. The penalty for that is currently a maximum fine of £200. That may have been satisfactory in the past when a licence holder was anxious to retain his licence year after year. That has changed in certain respects, especially with the introduction of pop concerts, for which the holder may wish to hold only one licence, never to return for another. It is becoming increasingly profitable for such a licence holder to ignore all the requirements of the licence and not to worry about such matters as the numbers attending, the number of stewards, sanitary conveniences, and so on. He does so because he knows that he can be prosecuted for only one offence, and that is breach of the licence.
The objective of the clause is to create separate offences for each and every breach, and to increase the fine to a maximum of £500. In an extreme case, therefore, if there were 10 distinct breaches of the licensing provisions a licence holder could be fined as much as £5,000. This sensible provision has been brought forward as a result of the Council's more difficult experiences with pop concerts at which almost every code of the licence has been breached.
I turn now to clause 4. The Council has a statutory duty to maintain various committees to operate alongside certain statutory bodies. There is, for example, the London Transport Executive. In 1970 the London Transport passengers' committee was set up. This consists of a chairman and members who in return for their duties receive travelling, subsistence and pay allowances. They do not receive salaries. The previous Government recommended that the chairmen of all major consultative bodies for the nationalised industries should be paid. For instance, the chairman of the transport users' consultative committee receives a salary of £1,000 a year. It is proposed in clause 4 that the Transport (London) Act 1969 should be amended and that the chairman should be paid a salary instead of attendance and financial loss allowances.
I felt that this provision needed to be looked at fairly closely, and I discovered that the duties of the committee and its chairman are considerable. It is no sinecure. In 1978, 237 matters were
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brought before the committee, mainly consisting of complaints by the public. Each year the committee meets six times, and the chairman is on a sub-committee which also meets six times. In 1978 he attended 23 working parties. What we are doing is bringing the chairman of this useful committee into line with the chairmen of most of the other consultative committees to the nationalised industries.
Clause 5, which is not of major national importance, refers to advertisements, such as those on the drums in Oxford Street which were put up not only to advertise but to enhance amenities. It refers also to the maps—with advertisements round the edge—which identify where the onlooker happens to be. They are often put up by councils which receive some small income from them. Apparently it is not certain whether it is legal for the Greater London Council and other councils to do this. It seems that they are not empowered to do it. The issue has never been challenged or tested, but it was felt that it might be sensible to regularise a position which might be irregular. This clause seeks to legalise the existing situation so that those advertising drums in Oxford Street will not be removed.
Clause 6 is a tidying-up clause of no significance. Nor is clause 7 of great significance. Apparently the provisions of the Road Traffic Act 1974 regulating parking on grass verges and footpaths will come into force in October of this year. As the GLC currently possesses similar powers in relation to such parking, it was felt that it coud be embarrassing to have two similar, though not exactly similar, provisions, one under the Road Traffic Act 1974 and the other under GLC powers. Clause 7 therefore seeks to repeal the powers of the GLC to regulate parking in certain places as and when the provisions of the Road Traffic Act 1974 come into force. When those provisions come into force, and if this clause is accepted, the GLC will simultaneously lose its similar powers, which will be taken over by the Government. I think we all agree that these are sensible provisions.
Clause 8 touches on what might be thought to be a contentious matter, which is the transfer of Greater London Council housing estates to the boroughs. However, the clause itself is in no way contentious. It proposes to establish the

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machinery to ease the transfer when it takes place and seeks powers to set up a staff commission which will ease the transfer of staff consequent upon the transfer of the GLC estates. As staff are transferred to the local boroughs, there will inevitably be a rundown of GLC staff and a build-up of staff in the boroughs. This commission will assist in the transfer of staff from the GLC to the boroughs. Perhaps my hon. Friend the Member for Hampstead will enlighten us as to the date of the transfer.
The purpose of the commission is to safeguard staff interests. Clause 8 goes into some detail as to its general purposes. They are:

"(a) considering and keeping under review the arrangements for the recruitment of staff by the Council or a transferee authority …

(b) considering such staffing problems arising in consequence of a staff transfer order …

(c) advising the Secretary of State on the steps necessary to safeguard the interests of staff"

and so on.
The commission is not controversial. It has general support from the white collar unions. I understand that the previous Secretary of State, for the Environment, the right hon. Member for Stepney and Poplar (Mr. Shore), also supported the commission, which is a matter of machinery and not of principle. Consultations are still proceeding with staff representatives and the authorities concerned. I am sure it would be right, proper and sensible to give the Greater London Council the powers that it seeks in this case.
With clause 9 we move on to what is, perhaps, a more debatable issue. It certainly caused considerable debate last year, as many hon. Members will remember. The clause refers back in some ways to the inner city problems which London faces. The purpose of the clause is to give the Greater London Council and London boroughs powers to guarantee loans made to companies by banks and other institutions for the purpose of constructing, extending or improving industrial or commercial building. The nonsense is that at the moment the GLC and the boroughs have power to make such loans but not to guarantee loans. In other words, they can go the whole hog and
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put their money into a venture but they do not have the power to go to a bank and guarantee part of a loan which the bank is proposing to make to this or that company.
There was some controversy last year about this proposal. It was accepted after considerable discussion by the Select Committee and then removed on Report. The proposal meant a far wider use of various powers in this context. The clause that we are now examining is much less ambitious and concerns only the power to make guarantees. It is hedged about, as right hon. and hon. Members have seen, by certain safeguards. For instance, it is proposed that this power should expire at the end of 1984 unless it is then renewed. In London it is restricted to areas designated as such by the Inner Urban Areas Act 1978, so that this power can be used only in those areas of which the House is aware. The local authority concerned will, of course, assure itself that a loan will help the development of the economy in the area in which that loan was being made and that the financial prospects are sound. There will have to be evidence that the private market has provided some venture capital and is taking an un-guaranteed first risk.
Mr. Guy Barnett: I am interested in the safeguards described by the hon. Gentleman. Is there any limit on the amount which a local authority, or the Greater London Council, may guarantee in a particular case? Will any sanction be required from the Government before a guarantee is made?
Mr. Shelton: My understanding is that if the Greater London Council is given this power no sanction will be required. However, I shall check on that and also on the limit. My understanding is that there is no limit, but I shall assure myself that this is so before the end of the evening and if I am wrong I shall tell the House.
This provision is also in line with the recommendations of the interim report of the Wilson committee on the financing of small firms. I confess to some difficulty about this, because if it is a sound venture that gives a return, why should the company look to the local authority for a guarantee? The only answer that I can give is that the problems that we face in

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London are of such gravity, in some cases, that I believe that this would be a tool in the hand of local authorities which, in certain cases, could be advantageous for the area.
I have already spoken of the 13 per cent. unemployment figure in the dockland and associated areas, which is extraordinarily high compared with the 3 per cent. figure in the Greater London area as a whole. We must, I suggest, look to every measure that we can adopt to improve the situation, and I believe that this is one of them. In any event, I repeat that it seems to me extraordinary that councils have the power to lend all the money themselves but do not have power to guarantee a loan. This is a normal piece of financial management. Of course, it is much cheaper for a council to make a guarantee, provided that the guarantee is not called upon, than it is to put up all the money itself as first provider.
Mr. John Hunt: Will not this power be of particular value to small firms in Greater London and inner London which are not covered by the existing Industry Acts? In that sense, are we not extending the help which is already given under existing legislation but specifically gearing it to inner London and its problems and the contribution which small firms can make towards their solution?
Mr. Shelton: My hon. Friend is absolutely right. This is a point made also by the Wilson committee on the financing of small firms. We on these Benches—I believe that the Opposition join us in this—look to small firms to contribute substantially to the reduction of unemployment in London. I do not wish to be drawn into the activities of the Location of Offices Bureau over the past 10 years, but at least it seems to have reversed its movement and is now trying to bring back firms into Greater London. At any rate, this question of guaranteeing loans can be thrashed out in Committee, and I very much hope that it will not hinder the Second Reading. We can look at it in detail in Committee and make our decisions then.
Part IV, which covers a considerable number of closely written pages in the Bill, deals with the registration of hostels by borough councils. This is an issue
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which certainly calls for action. Over the past few years a considerable number of problems have arisen where hostels have abused their position and those who use them, allowing too many youngsters to use them, putting up tents in the back garden, not providing sufficient amenities, and so forth—in other words, overcrowding in the summer period. I believe that there must be a move towards their regulation.
However, I must tell the House that all the clauses in part IV are under consideration and discussion. There is some reservation about them—about the wording, not about the objective—and I think it likely that they will be withdrawn before the Committee stage. I believe that they will then be represented next year, so the Bill will lose a good bit of bulk when it goes to Committee. Since the whole of part IV will almost certainly be withdrawn, I shall not now weary the House with the intricacies of the regulation of hostels.
The final two clauses calling for comment, clauses 22 and 23, are both London borough clauses included in the Bill at the request of the London boroughs. Clause 22 is not exactly of transcendental importance, although one presumes that those suffering infestation by the brown-tailed moth feel badly about it, since I understand that the windblown hairs of this moth, if they happen to lodge in a person's underclothing when it is on the clothes line, will cause that person considerable inconvenience when the underclothing is next worn. I understand that the moth also kills trees and shrubs.
I notice that the invasion by this moth started from Canvey Island. I see that my hon. Friend the Member for Essex, South-East (Sir B. Braine), who is responsible for that area—no doubt, he is exhausted by his exertions yesterday—is not here to defend Canvey Island or to explain how he came to release on the world this pest from Canvey Island, which has now reached Tower Hamlets and is advancing westwards.
Mr. Ian Mikardo: And southwards, so the hon. Gentleman had better watch out.
Mr. Shelton: The GLC is seeking powers in the hands of the boroughs to serve notice on occupiers of land infested by the moth, requiring that they should

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spray their land or, if they do not do so, power for the authority to do it itself and to make a charge. Exactly how the councils propose to identify which bit of land has the moth on it, apart from which trees and shrubs have been stripped by it or which people have been made uneasy in their underwear, I really do not know, but I am sure that this is something that will be welcomed with acclaim by all those who find themselves in the path of its attack.
Clause 23 promises relaxation and fun for our capital city. Reading it carefully, one reaches the conclusion that its purpose is to allow councils to give permission to restaurants, cafes and so on to place tables and chairs on the pavements. At present they are theoretically prohibited from so doing by the various Road Traffic Acts, or whatever it may be, but if they have this power, perhaps, when the sun shines, we may see London looking a bit more like Paris, at least in the way that tables and chairs are put out. I am sure that we should all welcome that and that it must be regarded as a good thing.
I have now come to the end of my brief description of the various clauses of the Bill, and I hope that the House will give it a Second Reading.
7.38 p.m.
Mr. Ronald W. Brown: The House will wish to thank the hon. Member for Streatham (Mr. Shelton) for the courteous and friendly way in which he has sponsored the Bill and gone through the clauses. He has had an advantage over the rest of us in having very few clauses to go through, since this is one of the thinnest Greater London Council (General Powers) Bills that we have had for some time.
I warmly support what the hon. Gentleman said about clause 7. This seems to me to be extremely important, and I feel that the GLC could have done far more in transport matters anyway with particular reference to highways and footways. In my constituency roads are blocked. Graham Road, in particular, is regularly blocked, yet the GLC seeems unwilling to do anything about it. We are constantly drawing attention to the vast array of heavy vehicles travelling up and down that road. Only in the past three months, three of my constituents were injuired.
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Although it is aware of the problem, the GLC does absolutely nothing about it.
Last week I put a question to the Minister of Transport asking if he would call a meeting between the GLC and the Hackney borough council, since there seems to be no way in which they can call themselves together. The answer the Minister gave me was that he could not do that; it was the responsibility of the GLC, which ought to do it. I hope that the hon. Member for Streatham will tell his friends at County Hall that it is about time they acted. Graham Road is an important area. When the GLC decided that lorries would be banned from going over Tower bridge, they were re-routed. They now use Graham Road automatically.
We are merely told the effect of clause 7, but even that is a tragedy. As the hon. Gentleman knows, 1 October 1980 is the operative date. We shall have to wait until then before help can be given in our boroughs.
The hon. Gentleman indicated that he considered clause 8 to be non-contentious. I must advise him that that is not so. It is extremely contentious. I do not believe that the unions are entirely in favour of its provisions. NALGO has indicated clearly that implementation on 1 January 1980 will be far too quick. It considers that implementation should be delayed until 1 April 1980 so that everything may be brought together.
Also challenged is the need for a new commission. It argues that the New Towns Commission, which is sitting and has been sitting for a long time, is running out of work and that it could pick up another brief. It is argued that it is not necessary to establish a fresh bureaucracy to undertake the work. I hope that the GLC will consider whether it is necessary to establish such a commission.
As we are talking about the setting up of a commission and all the other nonsense that is taking place, housing estates in Hackney and in other London boroughs are being deliberately run down. There is no maintenance and tenants are unable to be transferred. Property is being kept empty for months on end. All that is costing the ratepayers a great deal of money. To argue about a commission is not dealing with the point that we wish to make to the GLC, namely, that

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the whole exercise is ridiculous. No provision is being made for those in my constituency to enable transfers to be made to other property outside Hackney. Therefore, there is strong objection. How can the GLC claim that it is handing back 200,000 homes without any transfer agreement and without any agreement on the financial issues as it affects all London boroughs? Surely that is nonsense.
We know that the GLC talks to its friends in the outer London boroughs. Of course, those boroughs have a particular interest. They do not want to allow transfers from inner London to outer London. They are happy to have transfers from outer London to inner London if they have a problem of which they wish to divest themselves. They do not accept the reverse argument.
On clause 8, I take a different view from that expressed by the hon. Gentleman. I do not believe that the GLC has made any real endeavour to undertake its own responsibilities seriously. It is trying to offload the problem. There are involved 32 boroughs, 22 district councils and over 7,000 staff. However, the GLC regards it as a simple exercise to set up a commission on 1 October 1979. It seems to think that everything will come right on the day. It is fascinating that the one word that never appears is "tenant", the person for whom the GLC is supposed to be working. Tenants are living in the property that it owns. They are the people whose lives can be affected by these decisions.
I find clause 9 fascinating. When I read it I thought that there was something rather familiar about the wording. It is part gobbledegook and I remembered it. I found that clause 9 was clause 14 in the 1977 GLC Bill. Clause 14 also seemed familiar and I read the debate on Second Reading. I found that the hon. Member for Streatham and some of his hon. Friends tabled a motion seeking the exclusion of clauses 8, 9, 10, 11 and 14. The hon. Gentleman wanted to prove that he was against clause 14. He was not satisfied merely with tabling a motion. In the Division, the hon. Gentleman served as a Teller.
Against that fascinating background, I waited tonight to hear the conversion on the road to Damascus. I waited to hear the hon. Gentleman explain his enlighten-
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ment and why he is now in favour of the scheme. I read the Official Report of the 1977 debate. I noted how the hon. Gentleman approached his task on that occasion. He said:
"I put my name to the motion for an Instruction and I wish strongly to associate myself with the persuasive and crisp speech of my hon. Friend the Member for Hampstead (Mr. Finsberg)".—[Official Report, 26 April 1977; Vol. 930, c. 1145.]
It is fascinating to read the words of the hon. Member for Hampstead (Mr. Finsbery), now Under-Secretary of State for the Environment. The hon. Gentleman referred to a mess and mass of politically motivated clauses. He talked about "Bennery". He would have none of it. He told me that on 5 May 1977 it would not be part of the Bill. If that was his attitude at that time, why have it tonight?
I thought that there must be something different in the Bill now before us. I read it carefully and found that there were only two differences. First, the 1977 Bill defined the words "industrial building". Those words were defined closely, but this Bill does not offer a definition. I hope that the Under-Secretary of State will tell my why it does not. "Commercial building" were words described closely in the 1977 Bill. That was done so that we would know what the term meant. There is no such definition in the Bill. I wonder why. We want to know what "industrial buildings" and "commercial buildings" are in terms of the guarantees that are being given. I hope that definitions will be spelt out.
On a further re-reading, I thought that the only possible argument was that application would be until 1984. That is a change, but it is not a change in principle. If one were to oppose it, seek its withdrawal and become a terrier against it, surely there would have to be a more persuasive argument than the fact that it will fall five years from now.
I hope that the House will be told why the clause that Labour Members argued passionately for and were prepared to vote for in a Division, which was then opposed by Conservative Members, is now being sponsored by the Conservative Government. During the passage of the 1977 Bill, Labour supporters did not have the advantage of the assistance of Government Whips, but I suspect that the

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Government Whips will be present to-night. In 1977 we did our private whipping. On that occasion 192 Members voted in favour of the clause.
If part IV is removed from the Bill, there is little left after clauses 8 and 9. I intend to discuss in detail the value of hostels. Moreover, the hon. Member for Streatham has taken that issue away from me, so my hare has gone. I regret that.
The GLC must be invited next year to put before Parliament a general powers Bill that will do genuine work for London. That which is of any good in the Bill now before us belongs to the boroughs. If we take away the brown-tailed moth, which belongs to the boroughs, we do not have much left. I hope that the GLC will take its task seriously.
I do not want to launch into a political attack on the GLC tonight. It is relatively easy meat. However, some of us are getting rather fed up with it. Its behaviour in London is appalling. It is doing everything by means of secret sessions. The idea of committee meetings has long since passed. Things are done by chairman's edict. Members know nothing until after the event. That is bad for democracy.
I was not in favour of the GLC in the first place. I though it was an excess that we could do without. However, once it was established, I was happy that it should play a strategic role. But now it does not wish to be strategic. It does not want the housing responsibility and the work that it should be doing, including planning responsibilities. It seems to be divesting itself of its basic responsibilities. The Bill is an indication that the GLC has run out of steam, if it had any in the first place. Under this Administration it is wilfully abdicating its responsibility. The sooner 1981 comes and those at present in power are gone, the better it will be for London.
7.51 p.m.
Mr. John Hunt: This Bill, by the standards of general powers Bills, is a fairly thin and modest measure. Its proposals are modest and constructive and are, on the whole, non-controversial—even the part which deals with the activities of Euproctis Chrysorrhoea. I thought that he was a member of the Greek underworld. However, it is the brown-tailed moth, which has created a
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trail of havoc and destruction from Canvey Island to Tower Hamlets.
I shall deal briefly with those parts of the Bill that I deem to be the most important. In the process, I shall take up one or two of the comments made by the hon. Member for Hackney, South and Shoreditch (Mr. Brown).
I am glad to see that under clause 4 the chairman of the London Transport passengers' committee is to be paid a proper salary. That is the right way to go about the matter. The committee is one of the few statutory bodies of its kind for which no provision was made. To pay its chairman a salary will help to give the committee the status it deserves. We should like to congratulate Mr. Ian McLeod on his recent appointment as chairman of the committee. We wish him well in his watchdog work on behalf of the often harassed and frustrated users of London Transport.
Clause 8 deals with the commission for the transfer of the GLC housing staff. That is a consequence of the transfer of the housing management functions to the London boroughs. The transfer is a separate issue. However, the hon. Gentleman referred to it.
On the latest figures that I have, 23 London boroughs went along with the GLC proposals. Five of those boroughs are Labour-controlled. The hon. Gentleman referred to the shortage of time and the inadequacy of consultation. The target date for transfer has already been extended once. That is an earnest of the GLC's intentions in this matter. There is no wish to rush the transfer. However, Government supporters believe that it is a desirable move.
The hon. Gentleman said that there had been no reference to the interest of the tenants. The transfer of the GLC estates to local boroughs will be of benefit to the tenants. It will bring about an element of decentralisation and bring the tenants closer to the officials and councillors with whom they have to deal in the boroughs in which they live. Therefore, there is a lot to be said for the transfer. I do not think that this is necessarily a party political issue.
Mr. Ronald W. Brown: How many GLC estates are there in Bromley?
Mr. Hunt: There are 750 GLC properties within the London borough of

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Bromley. I am sure that a number of those tenants will prefer to make their complaints and contacts at the Bromley town hall rather than at the remote and distant County Hall. This step will be welcomed by most tenants.
I turn now to clause 9 and loan guarantees. The hon. Gentleman had fun at our expense. He alleged all kinds of inconsistencies by some of my hon. Friends. Similar powers were sought in last year's general powers Bill. Those efforts were obstructed on that occasion not by Conservative Members of Parliament but by the Department of Industry, which was greatly opposed to them, largely on the basis that it did not want powers granted to London which would then perhaps be requested by other parts of the country. I did not know what was the motivation. However, this was in line with the general discrimination against London which we have found too often from Government Departments in past years. The Department of Industry was opposed. I think that the Department of the Environment was not too happy, either.
Although the provisions referred to were supported in Committee, they were rejected on Report, presumably as a result of the votes of Members of the Labour Party, and certainly by the payroll vote. I do not think that the hon. Gentleman is in any position to cast aspersions upon Government supporters. I am persuaded by those in office across the river that these powers are necessary and will be of great benefit to the revival and regeneration of inner London.
The proposal for loan guarantees in designated districts will be of special assistance to small firms which, most of all, may assist in the revival of London which Members of Parliament on both sides want to bring about. Many of these small firms do not at present qualify for help under the Industry Act. This is an attempt to supplement existing legislation and to reduce the high level of unemployment in inner London which, in parts of dockland and elsewhere, is running as high as 13 per cent.
On this occasion the GLC again requests these powers, albeit in a more restricted form than hitherto. My hon. Friend the Member for Streatham (Mr. Shelton) detailed a number of safeguards that are being written into the Bill on
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this occasion. For example, it is to apply in London only in districts designated for the purposes of the Inner Urban Areas Act 1978. It will expire on 31 December 1984. The power is not to be exercised unless the designated district authority is satisfied that the industrial and commercial buildings concerned will be of benefit to the district and that the building is unlikely to be provided, extended or improved unless the guarantee is given.
These are very strong and very adequate safeguards. On that basis, I can see no possible objection to these powers being granted. They will be of direct help in bringing new jobs and better prospects to the most rundown and depressed areas of inner London.
For all these reasons, I believe that the Bill, modest as it is in its scope and intentions, is worthy of support on Second Reading. I hope that it will be given an unopposed Second Reading. Points of detailed discussion can be further considered at a later stage, but I think that in principle we ought to approve the Bill tonight, and I hope that we shall do so.
8 p.m.
Mr. Douglas Jay: I am sure that the Bill contains many worthy minor proposals. I am fully prepared to accept the views of the hon. Member for Streatham (Mr. Shelton) about the brown-tailed moth because, as far as I know, it has not reached either Battersea or Hampstead.
Mr. Mikardo Mr. Mikardo: There is one on the way.
Mr. Jay: I am also fully in favour of the guarantees for industrial loans. Unlike the hon. Member for Streatham and the Under-Secretary of State for the Environment, I was fully in favour of those in 1977 and 1978 as well as in 1979. But when we come to clause 8 and the proposals connected with the transfer of GLC housing to the boroughs, it is a very different story. As has been said already, there has been very little mention of the tenants of council houses so far, or indeed of the feelings of the people of London about these proposals. There is no doubt that housing policy has far more effect on the lives of ordinary people and ordinary families in London than any other proposal in the Bill.

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I believe that the transfer of GLC housing to the boroughs will have a very harmful effect on housing. Over the last 20 or 25 years, I have found that of the distressed families coming to me for help with their housing, there is always a number of council tenants. They are often widows whose families have grown up and moved elsewhere and whose sole desire is to move to another part of London outside their own borough because they wish above all to live near to their son or married daughter.
I have proposals from families to move, for instance, from Battersea to Islington, or to somewhere in North London. Up till now, almost the only practical way of doing that, if they are too poor to buy a house and are only on the council list of their own borough, is through the old London County Council and GLC arrangements which enabled people to move from one part of London to another. If nearly all this GLC property is to be transferred, that possibility will be severely curtailed. I am seeing cases where it is already happening.
It is rather ironic that we had the Chancellor of the Exchequer saying four times today that one of the objects of his proposals was to increase freedom of choice for ordinary people. Nothing will restrict freedom of choice in housing more than restricting movement to the narrow boundaries of the boroughs. That has no particular relation with ordinary human life.
Mr. John Hunt rose—
Mr. Jay: I think that the hon. Gentleman is intending to say that there is to be an arrangement for exchanges and for a central bureau between the boroughs. I am sure that the intention is good, but I have found in the past that it hardly ever works for families who are really in need. Although I am sure that it is well-intentioned, I shall believe it when I see it, and I am sure that the transfer will curtail movement between boroughs to a very much lower level than that which existed when the GLC was really a housing authority.
We have to remember that at the same time the GLC is selling council houses and flats wholesale. In order to do this, it is at the present time holding empty a large number of properties. I do not
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know how many properties are involved—perhaps the Minister can tell us later—but it is certainly holding properties empty while they await sale. The double effect of these two actions is to reduce the total stock of council property available for people who wish for transfers and who cannot afford anything other than rented council property. Indeed, the GLC at the present time seems not merely to be ceasing to be a housing authority but becoming a positively anti-housing authority in that all its actions are making the housing position in London worse.
There might be some mitigation of this situation if the transfer to the boroughs were to create a better position in the boroughs, but unhappily, in the case of my borough council, which is now under Conservative control, it is merely aggravating the position further, because that council is following precisely the same policies. In the first place, it is also engaged in an almost reckless sale of council properties, not merely to existing tenants—for which there is no doubt in some cases a good argument—but of newly-built properties on the open market.
The major effect of this is, of course, that the vacant premises available for the transfer of overcrowded and distressed families are now steadily shrinking in number month by month. I am finding in my surgery and my correspondence—which is as to nine-tenths concerned with housing—that the whole process of transfer, which, goodness knows, has always been slow enough, is now being further slowed down. I am being compelled to say to people who come to see me in these circumstances that if these Conservative policies continue both at County Hall and in the boroughs I can see very little hope after some time of any transfers at all being possible.
In the case of the Wandsworth borough council, not merely is all that true but it has aggravated the position further by an extraordinary decision that transfers from council flat to council flat may only take place within small areas within the borough—areas of not more than a few hundred yards or so in extent. If one adds that to the difficulty of moving from one part of London to another, one can only say that it is a remarkable way of giving free choice to people as to where they live.

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The total effect of all these policies will, I believe, very soon be to make the housing position in London—which has always been the most acute problem for ordinary people, certainly in my area—worse than it has been at any time since the war. One of the factors contributing to this is the GLC abdicating or dismantling its whole housing policy. The present GLC seems not to care at all how people live in London. That is the only explanation of its policies. I believe that its policy will have a deplorable effect.
Although, as I said earlier, some of the proposals in the Bill are worthy or justifiable, I do not think that we ought to let it pass without some sort of protest about the effect on the lives of people in London of the housing policies of the Conservative GLC and some at least of the Conservative boroughs.
8.9 p.m.
Mr. John Wilkinson: I should like first to support the remarks of my hon. Friends the Members for Streatham (Mr. Shelton) and for Ravensbourne (Mr. Hunt) and then to refer the House to item 10 of the schedule, which covers flood prevention. In particular, I refer to the urgent need for flood control works to be initiated in the Ruislip Gardens area of my constituency to avoid a repetition of the serious flooding which occurred in August 1977, causing about £750,000 worth of damage. Since then, there has nearly been further flooding on at least two occasions. It has been estimated that about 250 homes in Ruislip Gardens are currently at risk of flooding in extreme weather.
To its credit, the Greater London Council has acknowledged the extent of the problem, and only a week or two ago the new chairman of the GLC's public safety committee met the two Bourne ward councillors from South Ruislip, Councillors Maher and Howarth, and the flood committee chairman, Mr. Barrand The GLC member for Ruislip-Northwood, Mr. Cyril Taylor, has been unremitting in his efforts to secure an early start to the flood control measures necessary in South Ruislip. Hitherto, the GLC had indicated that work on this preject would begin as soon as the design work had been completed.
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Last year the GLC approved a 30-year flood alleviation programme for non-tidal rivers costing £81 million, entitled RCS 110. The document, in the first paragraph, admits:
"As recently as 1977, severe and damaging floods inundated some 1,200 homes in north-west and south-east London and since then more properties have been flooded during 1978 in south London and in January 1979 in west London. As well as the direct damage caused to property, both public and private, there is extensive indirect damage due to dislocated telecommunications, road and rail transport systems and public utility services (for example, some 40,000 telephones were out of action for up to six weeks in 1977)".
Mr. Ronald W. Brown: I am trying to follow the hon. Gentleman. To which clause of the Bill is he referring? There is no item 10. I have been searching for it. He has defeated me in following him.
Mr. Wilkinson: I anticipated that question. The parliamentary solicitor to the Greater London Council specifically advised Members in the GLC area that they were entitled to raise the subject of flood control, and he brought to the attention of hon. Members—
Mr. Brown: I believe that the hon. Gentleman is on the wrong Bill. I think that he is on the Money Bill, which was unopposed. We are on the general powers Bill now.
Mr. Wilkinson: In that event, I got my opportunity wrong. It is important that the flood—
Mr. Mikardo: On a point of order, Mr. Deputy Speaker. I do not want to be unkind to the hon. Gentleman, who is obviously struggling, but, if I understood him aright, he said that the solicitor to the Greater London Council sent out information about what was and was not in order on the Bill. Surely only the Chair can decide what is in order in our discussions. If what the hon. Gentleman said is right and I have not misunderstood, surely the solicitor to the GLC was acting grossly ultra vires in suggesting what we may discuss. Is that right?
Mr. Deputy Speaker (Mr. Bryant Godman Irvine): I am grateful for support from the hon. Member for Bethnal Green and Bow (Mr. Mikardo). In fact, I had not heard what the hon. Member for Ruislip-Northwood (Mr. Wilkinson) said,

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because I was dealing with another matter. If he said what is alleged, I think that he must be wrong.
Mr. Wilkinson: I think that the hon. Member for Bethnal Green and Bow (Mr. Mikardo) is being a little harsh on the solicitor. He should really be harsh on me, not the solicitor. The solicitor was clearly giving advice on another piece of legislation which the hon. Member for Hackney, South and Shoreditch (Mr. Brown) rightly reminded the House had been passed earlier today. I was erroneously seeking to raise the issue of flood control in South Ruislip. Perhaps you, Mr. Deputy Speaker, would advise me whether it is possible to raise that subject as there are measures in the schedule—for example, the Ilford Corporation (Drainage) Act 1950—which refer to flood control measures.
Mr. Deputy Speaker: If, as I assume, Ruislip is in London, the answer is that the hon. Member may refer to it.
Mr. Wilkinson: I am garteful to you, Mr. Deputy Speaker. Your ruling is as had anticipated, although I have been quite rightly reproved by the hon. Member for Bethnal Green and Bow.
I revert to the question of flooding in the Greater London area. However, under the scheme no work could begin on any river catchment area other than that of the River Brent until the Brent river flood control works were finished. The River Crane catchment area, which includes the Yeading Brook, in my constituency, has the next highest priority. Surely the positive approach would be to initiate design work on the South Ruislip flood control culvert and start concurrent negotiations with London Transport and British Rail so that the construction of the culvert and related works can begin as soon as the River Brent flood control scheme is completed.
That seemed to be the approach of the GLC, but we now learn that a shortage of design staff means that the necessary construction work in South Ruislip will not start until 1984 and probably will not be finished until 1985. I understand that authorisation for the engagement of a further 22 design staff has been given and that the interviewing of applicants has begun.
Mr. John Page: Everything said by my hon. Friend about Ruislip is of intense interest to the people of Pinner and concerning the River Pinn, which overflowed on the same night. Is he suggesting that the delays in the design work being started are because the GLC wishes to employ 22 new experts on this matter? I should have thought that that was an inferior practice. There may be consulting engineers ready to deal with this matter. I should be indebted to my hon. Friend for his advice.
Mr. Wilkinson: I asked that very question. My feelings and initial judgment were the same as those of my hon. Friend the Member for Harrow, West (Mr. Page). The advice that I received was that previous experience had taught experts in the GLC that it was best for them to engage appropriate staff themselves. My instincts were entirely those of my hon. Friend.
Anyway, I suggest that, as soon as these gentlemen are hired, they be engaged on the South Ruislip project, bearing in mind that the original target date for completion of the project was 1982. The slippage which has occurred is of acute local concern. As I said, the total cost of the works is about £500,000. The total cost of the flood control measures in RCS110 is £81 million. The damage that was caused in Ruislip Gardens in 1977 was £750,000. Therefore, the project is not a local amenity issue; it is a cost-effective programme which is necessary to protect the property of my constituents. Unless urgent steps are taken to speed things up, I shall seek every means such as exploiting schedules to Bills of this kind to raise the matter again.
8.19 p.m.
Mr. Ian Mikardo: I should like to make a few observations on the Bill. If I may offer a word of comfort to the hon. Member for Ruislip-Northwood (Mr. Wilkinson), who has just spoken and who got into a bit of a jam, I hope that he will not take it too much to heart. We have all dropped that sort of clanger in our day and survived it. I dare say that he will.
I am sure that the House is grateful—I certainly am—to the hon. Member for Streatham (Mr. Shelton) for the clear and concise way in which he took us through the clauses of the Bill and straightened

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out any complexities that there might be in it. I join my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Brown) in thanking the hon. Member for Streatham for the way in which he moved the Second Reading.
As has been said, this is a relatively, though not altogether, non-controversial Bill. That is why it has had a relatively easy passage so far any why, I believe, it will continue to have an easy passage this evening. I hope that those who sit in County Hall will not make the mistake of deducing from that that there will be any lack of vigilance in the House about what they are up to or about any further measures which they may seek to introduce.
Some of us are highly suspicious of what the Greater London Council is up to and deeply disturbed by some of the things that it is trying to do. I hope that those in County Hall will not become complacent because the Bill receives a Second Reading this evening. I hope that they will inform their solicitor not to tell Members of the House what is or is not in order to discuss on a Bill. If he continues to do that, one day he will be kicked very hard in a sensitive part of his anatomy.
There are two or three parts of the Bill to which I wish to refer, following what was said by the hon. Member for Streatham. I refer first to clause 7, which, as he explained, moves the control of parking on footways, grass verges, and so on from one authority to another. It does not matter who is responsible for controlling such parking. What matters is that it is controlled. The degree to which it is controlled varies considerably from one area of London to another.
I was pinched—quite properly, and I make no complaint about it—and fined. I pay tribute to the vigilance of the policeman who noticed it. I was pinched for leaving my car parked in a square in Westminster with the nearside rear wheel just on the pavement. For that, I got it, quite properly, where the chicken got the chopper. I should like to take hon. Members and the Commissioner of Police for a walk, any day of the week during the hours of eight in the morning to six in the evening, down Hanbury Street, E1, which runs eastwards from Commercial Street and crosses Brick Lane. There is
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not one yard of that street—it is a narrow street with narrow footpaths on either side—which, for seven days a week, not five, does not have vehicles parked on it within 1ft of the wall of the buildings. People walking down Hanbury Street have learnt to move no longer as homo sapiens but as crustaceans. They walk sideways, because the only way that one can walk up Hanbury Street is sideways between the vehicles and the walls. There is not room to walk straight forward.
I do not believe that that would be permitted for one minute in the more delectable parts of the borough which the hon. Member for Hampstead (Mr. Finsberg) represents. It certainly would not be permitted for one minute in the city of Westminster where I live. How is it that it goes on with impunity in an area where only working people live? Is that the reason? If not, what is the reason? I repeat that what clause 7 does, by transferring control from one authority to another, is meaningless. What is meaningful is the extent to which the control is implemented.
The provisions in clause 8 about the machinery are relatively uncontroversial, though, as was said by my hon. Friend the Member for Hackney, South and Shoreditch, who is a great expert in these matters, they are not altogether uncontroversial. However, as my right hon. Friend the Member for Battersea, North (Mr. Jay) said, the principle is very fundamental indeed. One day we shall have to look at this principle. It really will not do in a conurbation such as Greater London to imagine that one can satisfy the needs of the people with about 30 pockets of housing administration.
We have been saying for years that what we need in this country is more mobility and that people should be able to move in order to change jobs. My right hon. Friend the Member for Battersea, North gave graphic instances of the way in which mobility worked. The instances that he quoted were for social reasons—widows who wanted to be with their children, or the daughter who wants to move to be near her ailing mother to give her a hand—and, for heaven's sake, why not? But there are other instances.
I put a point to the hon. Member for Ravensbourne (Mr. Hunt). He seems to have missed it, but I am sure that he is

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conscious of it. At my last advice bureau but one I saw a chap who lives in Bethnal Green. He lost his job and now has the chance of employment in the West Essex fringe of the Greater London area. He starts at six o'clock in the morning, and he does not have a car. There is no way in which he can get public transport from Bethnal Green to the Essex border to be at work by six o'clock in the morning. It was precisely for that sort of case that the system of nominations from the boroughs to the GLC was developed. Although it did not work by any means perfectly, and although there were many snags about it, it made a real contribution to deal with that sort of case.
I do not believe that this vague, co-ordinating get together will be a substitute for that system of nominations, and I do not know anyone who believes that it will. Somehow or other we must find a way of creating housing mobility. If the GLC does not want to do it, some other way must be found. We must find a way of creating housing mobility in Greater London, otherwise we shall get a situation in which the social and economic life of Greater London will be fossilised because people will be locked in the boroughs in which they live, and in employment terms will be locked within the public transport accessibility radius of those boroughs.
Labour Members enjoyed openly, and Conservative Members must have enjoyed a little wryly, the outcome of the research undertaken by my hon. Friend the Member for Hackney, South and Shoreditch into the peripatetic gyrations of the Conservative Party with regard to the guarantee of loans in designated districts. Before I speak on this, I must declare an interest as the chairman of the Tower Hamlets centre for small business, which exists to promote small businesses in the borough. It is a highly non-financial interest that I declare, because the office of chairman of this centre is a highly unpaid one. Nevertheless, I declare the interest.
The hon. Member for Streatham posed a valid question, namely, that some people may ask "Why should a company have to look to the local authority? Why does not the normal banking and financial system satisfy it?" The hon. Gentleman found one answer to his question. I shall provide a different answer, from
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which he may not altogether dissent. It is that the banking and financial system is incompetent and too narrow and too unimaginative to deal with it. It works in Germany, France and Holland, but our financial organisations are much more conservative, much less inclined to lending except on stone bonk assets than are the banking and other financial institutions in the other countries of Western Europe. That is the reason that I put to the hon. Member for Streatham why provisions of this sort must be there. Doubtless it is a belated understanding of that fact which has brought Conservative Members to abandon the views which they expressed a little while ago.
My hon. Friend the Member for Hackney, South and Shoreditch ought not to worry about this. He ought not to complain about the inconsistency of Conservative Members and about the fact that they are now promoting something which they bitterly opposed. Has my hon. Friend forgotten that there is more joy in heaven over one sinner that repenteth? He is witnessing something that we should all applaud. The Minister—the hon. Member for Hampstead—has been smitten by a blinding light on the road to the Front Bench. We should all be glad of that and grateful for it.
We know why we ought not to spend much time dealing with part IV. It has been explained that we shall be having a separate look at that. However, I should like to make one comment about hostels. Hostels are like prisons, borstals and airports, in that everyone is in favour of them if they are put somewhere else. Everyone appreciates that we must have another airport—"But not where we are; put it somewhere else". We understand that there may be need for another prison because we are short of prison accommodation—but there is a very good reason for putting it somewhere else. It is the same with a borstal, a mental home, a mental hospital or a hostel for alcoholics, vagrants, handicapped persons or other under-privileged persons. No one wants such things near himself. Everyone is in favour of them as long as someone else is their neighbour.
Having said that, I believe that we really ought to look at the distribution of these social institutions through Greater London to see where they are

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and how it is that some people in some parts of Greater London—Hampstead, Westminster, Kensington and Chelsea—manage to achieve the desideratum of having them somewhere else. Let us look at East London. Of course, it is not 100 per cent. one way or the other. However, I ask the Minister to get a map of Greater London and to mark out and list all the institutions to which people, reasonably or unreasonably—sometimes they are unreasonable—could take exception in their locality. Let him look at the relative density of such institutions in various parts of London. He will find it highly instructive.
Finally—resisting, gravely, the temptation to have a long dissertation on the brown-tailed moth—I move to clause 23, which is concerned with the matter of putting tables and chairs in cafes, pubs and other places. Perhaps I may confess to a personal weakness. I love to eat and drink outdoors. I think that it is one of the attributes of civilisation to eat and drink outdoors, whenever the weather allows. When people ask why there is so much less of this in London than in other countries, others will sometimes say "We have this terrible climate" But our climate is no different from the climate of Amsterdam, Brussels or Paris, and on the whole it is better than the climate of Berlin, where eating and drinking outside is commonplace.
But there is a "but". The habit has been greatly increased by the business of putting porches out on pavements. Our planning authorities must adopt a more flexible approach. There are snags and grounds for resistance, but we need to be more flexible if we are to encourage outdoor eating. A soft roof and some element of heating make it pleasant to sit under an open awning in autumn as well as on a summer evening. We do not use our imagination in the way that they do in some Continental cities and in North America, where the climate in the north and east is, by and large, worse than ours. Pavement life adds much to the gaiety of a city, and we should have more of it. It requires imagination from the restaurant, cafe or pub owner and more flexibility from the planners.
I shall not be unhappy for the Bill to have an unopposed Second Reading, but in Committee we must look more
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closely at one or two things. To end as I began, I warn the chaps in the big building on the other side of the river that they must not be too complacent after this evening and imagine that their deeds will go unwatched and their intentions unexamined.
8.37 p.m.
Mr. Guy Barnett: I congratulate the hon. Member for Streatham (Mr. Shelton) on the way in which he brought the Bill before the House and explained it. I also congratulate, or commiserate with, the hon. Member for Hampstead (Mr. Finsberg), who finds himself in the seat that he now occupies.
Clause 9 has been mentioned several times, and my hon. Friend the Member for Hackney, South and Shoreditch (Mr. Brown) spoke of the Government's attitude. One enormous difference between the situation when the Conservative Party in its previous incarnation opposed that clause and now is the existence of the Inner Urban Areas Act. That Act gives the designated districts with which the Bill is concerned the sort of powers which they require, except the power which is contained in the clause.
I am interested to know the attitude of the Government to this clause. The Under-Secretary of State may not be able to tell us this evening, but perhaps he will do so later. If there is to be an extension of powers to local authorities to enable them to assist industry in their areas, that should be done nationally in terms of relative national need. That is why the then Secretary of State designated certain districts not just in London but in the country at large.
I might feel some misgivings if the Government were inclined to allow local authorities in different parts of the country to outbid one another in claiming powers through private legislation which enabled them to compete with the kind of wares which might be available to them for attracting industry to their areas. Attractive as it might be to those of us who represent London constituencies to see our own local authorities acquire powers which might enable them to have the edge over other local authorities, it could well be that if local authorities began outbidding each other in this way London would be worse off than it is now.

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The districts that are mentioned in the Bill are precisely those which have been singled out for special assistance under the Inner Urban Areas Act. The hon. Member for Streatham drew our attention to the relative rates of unemployment in the Greater London area as a whole, and dockland in particular. It was precisely because the situation in dockland was so serious that not merely was it made a designated area under the Act but it was given extra powers as a special area. That gave it priority or preference over designated districts. I shall be most interested in the Government's comments on this matter.
Can the Minister say whether the Government would accept the situation in which powers of this kind were acquired by local authorities without the necessity of any sanction from central Government, and without any necessary financial limit being placed upon the size of the guarantee that might be made? I recognise that the Minister might not be in a position to answer those questions this evening.
In other respects I find the Bill relatively non-contentious. Although there are issues upon which several hon. Members have expressed doubts and reservations, most of these can be cleared up in Committee, and I personally have no intention of dividing the House on the Bill.
8.43 p.m.
The Under-Secretary of State for the Environment (Mr. Geoffrey Finsberg): The Greater London Council (General Powers) Bill is one of those annual events which draws, depending on whether there is an election in the offing, more or fewer London Members. In that respect, it is like the Consolidated Fund Bill. Tonight, in the aftermath of a general election and the European elections, there are fewer London Members present. That may also be due to the fact that this is a less interesting Bill than usual.
Briefly, I shall answer one or two of the points that have been made and then give an indication of the Government's attitude to the Bill. I congratulate my hon. Friend the Member for Streatham (Mr. Shelton) on the way in which he introduced the Bill. He did so with great skill, and there is no excuse for any hon. Member to fail to understand the
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Measure's contents or the reasoning behind it. Some of my hon. Friend's arguments were not unfamiliar because we have been over part of the course on at least one other occasion. The major arguments put forward by my hon. Friend should convince the House that the Bill deserves a Second Reading.
The hon. Member for Hackney, South and Shoreditch (Mr. Brown), whom we welcome back from Europe—perhaps Europe will welcome him back here—made his usual intervention in a London debate. London debates would be very much poorer without his interventions.
The hon. Gentleman's remarks on the transfer of estates were not germane at all to this Bill. However, they were a useful rehearsal for the debate which no doubt we shall have when the transfer order is debated. It will certainly help whoever has to deal with that matter to know the kind of arguments the hon. Gentleman will adduce on that occasion.
I do not grumble at the fact that the GLC has produced a fairly thin Bill, because that fits very much into the philosophy of the present Government—namely, that there has been far too much legislation in the past. I hope that the GLC will not be tempted by the hon. Gentleman's remarks into filling up its Bill next time. I do not use the phrase "filling up" in the accepted Private Bill sense but in the sense of finding more clauses containing more powers.
The hon. Gentleman spoke as though the GLC were unpopular, and indeed he said what a bad organisation it was. That was certainly not proved by election results in the GLC area when the swing against Labour was almost identical to the earlier swing against Labour. The people of London are happy with what the GLC is doing. Their votes prove it, particularly in the constituency of Holborn and St. Pancras, South, where the swing in the election, compared with 1974, was the same 10 per cent. against Labour.
My hon. Friend the Member for Ravensbourne (Mr. Hunt), in a most helpful speech, added extra information to what we already knew. His remarks about the estates managed by the GLC in Bromley were useful in the context of accepting that local borough management of housing must bring matters closer to the tenants, which is the whole object of

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the exercise. A local borough is usually in a better position to keep in touch with tenants' problems than is a county, irrespective of its political control.
The right hon. Member for Battersea, North (Mr. Jay) was predictably against the transfer of estates, and certainly against the sale of council houses, but those two policies appear to me to be the wish of the electors and of the tenants, otherwise I would not be on this side of the Chamber.
I welcome to our London debates my hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson) from his previous Yorkshire incarnation. It was helpful that he brought to the notice of the House the flooding problems in his constituency—exactly as I would expect any constituency Member to do. My hon. Friend may wish to know that there ore some nasty episodes of flooding in Hampstead, and I hope that they, too, will be dealt with. I make that remark, as did my hon. Friend, strictly in accordance with the Bill and its long title, which uses the phrase "and for other purposes".
The hon. Member for Bethnal Green and Bow (Mr. Mikardo) mentioned parking on footways. He must not believe that such problems do not also exist in Hampstead. I could take the hon. Gentleman to many streets in so-called salubrious Hampstead which are permanently blocked by vehicles on the pavement. One of the reasons for this situation arises from the shortage of police manpower. I believe that the increase in the number of police which we hope will follow from the recent pay award will begin to make an impact on this problem. I have an odd feeling that anybody who parks in Hanbury Street after this debate has been read in certain quarters may find things slightly warmer than has been the case so far.
Mr. Mikardo: I believe that is right. We have all talked to the police. They always say that they do not have enough manpower for constant vigilance, and, of course, they do not. However, I do not understand why they do not use the occasional blitz technique—it does work. The bus drivers refused to drive down Roman Road in my constituency and the police had to do something about it.
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Every six weeks, they or the traffic wardens come down that road on a Saturday, hand out tickets and tow away vehicles. For the next four weeks everything is lovely. Then the problem starts to drift back and the operation is repeated. If the police were to spread out their manpower intelligently in that way, much good could be done.
Mr. Finsberg: I am grateful to the hon. Gentleman. He is perfectly right and I shall see that those remarks are drawn to the attention of the Commissioner to see if there is anything more that can be done.
I understand that the basis of this clause is that it is felt better that the power should be exercised under a Government Act rather than an Act promoted by a local authority. It is not a change from one to the other, but the provision will be strengthened by being part of a Government Act when it comes into force.
Mr. Ronald W. Brown: The problem of police power is that an obstruction has to be identified. If parking on the pavement is not an obstruction, the police cannot handle it. That is why on 1 October 1980 the police will be able to take action against parking on the highway.
Mr. Finsberg: One can recognise an obstruction if one has to scuttle crabwise past it, as the hon. Member for Bethnal Green and Bow told us occurs in Hanbury Street. There are similar obstructions in Belsize Lane or Birchington Road in my constituency. I am sure that all hon. Members can repeat the story.
Mr. Michael Neubert: Will my hon. Friend indicate whether the Government accept the commitment of section 7 of the Road Traffic Act 1974 being brought into effect on 1 October 1980? Even that date is a long way away and the problem is with us now.
Mr. Finsberg: My understanding is that that is so. That is precisely why the GLC has asked for the withdrawal of its powers in the Bill. If my hon. Friend has any doubt about that, I shall ask my right hon. Friend the Minister of Transport to write to him on the matter.
The hon. Member for Bethnal Green and Bow referred to cafes and open-air restaurants. Again, he is right that we are not enterprising enough in this country.

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I hope that the Bill will give the green light to restaurateurs and so on so that the public will begin to demand these facilities more and more.
The hon. Member for Greenwich (Mr. Barnett) uttered some sound words about clause 9. I shall refer to his remarks later.
I should like to give the House an indication of the Government's attitude to the Bill. For the most part, we have no objection to what the GLC seeks to achieve. Its proposals have been discussed with its representatives and we shall be setting out our views in due course in our customary report to Parliament. The provisions about hostels may well be withdrawn because we do not feel that they are satisfactory. The GLC may prefer to have them reintroduced next year in a more acceptable form.
I hope that my hon. Friend the Member for Streatham will forgive me, but I regret that in his excellent introduction to the Bill he made no reference to schedule 1. I should be fascinated to know what section 191 of the Erith Tramways and Improvement Act 1903 was, since we are being asked to repeal it. Perhaps if my hon. Friend catches your eye, Mr. Deputy Speaker, and obtains the leave of the House to speak again, he might tell us.
There are two points about which I wish to comment, the first being clause 8. It provides for the Secretary of State to establish a staff commission to oversee the transfer of Greater London Council staff both to the borough councils and to certain district councils outside London in connection with the transfer of housing from the GLC to those authorities. This Bill in no way deals with the principle of the transfer of GLC estates.
The Government regard a statutory staff commission as an essential means of protecting the interests of those staff affected by the transfers. I therefore welcome this clause and strongly commend it to the House. I believe that this will not be controversial, since the previous Secretary of State, the right hon. Member for Stepney and Poplar (Mr. Shore), took the same line at the end of January.
My right hon. Friend the Secretary of State proposes to establish the commission directly this clause becomes law. In the meantime, we hope it will be pos-
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sible informally to announce the names of its members and give them an opportunity to become familiar with the terms and conditions and all that is involved. We are at present consulting the local authorities and unions involved on the membership and asking them for their views, and we hope to be able to make an announcement about this very shortly.
My right hon. Friend will in due course lay orders before the House providing for the transfer of staff and property to those authorities that have so far requested him to do so. As has been stated, those authorities are not of one political persuasion. The negotiation of transfer terms and associated arrangements are essentially a matter for the GLC and the other parties involved, and I believe there are not many issues still to be resolved between them. I hope the parties can reach final agreement soon—perhaps with the help of some neutral umpire, though I am not volunteering for that role myself.
Be that as it may, the Government whole heartedly suport the GLC's wish to transfer its housing management responsibilities at the earlier possible date. However, the intervention of the general election has meant that progress towards laying the necessary orders and, in particular, the passage of the Bill which proposes the commission have been delayed. Of course, I am not complaining about the election. I am glad that we had it.
The commission must be formally established before the first date on which staff are to be transferred, and the commission can be formally established only when this Bill is on the statute book. Therefore, I think it is realistic to take 1 January 1980 as the date for transfer, and I hope that all concerned will proceed accordingly.
I turn now to clause 9. I am grateful to the hon. Member for Hackney, South and Shoreditch for reminding the House of the eloquent speech that I made from the Opposition Benches on a previous occasion. I think that his words were even more flattering than that. I should remind him, however, that I made not one, but two speeches. He needs to read both of them in order to appreciate the full flavour of those debates.
I remind the House that earlier in this speech I said that the hon. Member

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for Greenwich had uttered some sound words about clause 9. The Government are firmly opposed to clause 9, which would allow the guarantee of loans in designated districts. I recognise very clearly—and the House would not expect me to say anything else—the desire of local authorities to participate in efforts to promote industrial development in their areas.
There is no doubt that local authorities can help to create a better environment for the development of industry through sensitive planning policies and procedures. However, the Government are concerned at the prospect of what I might call a proliferation of powers for local authorities to give financial assistance to industry, whether by means of loan guarantees, as in clause 9, or by giving grants or loans on favourable terms. I have to remind the House that such powers are being sought in several of the Private Bills at present before the House.
Mr. Mikardo: What is wrong with that?
Mr. Finsberg: My reason for taking this view is perfectly clear. At a time when this new Government are taking a critical look at the extent of their own powers of assistance to industry, it would be wrong for local authorities to obtain new powers in this area. We will therefore oppose provisions in all the local authority Bills now before Parliament which contain any new powers to assist industry or any extension of the life of existing local powers beyond 1984. The power which the GLC is seeking is a new power and a substantial one. It would not only be new to the GLC; it is one that is held by no other local authority in the country. We believe that this must await any review of general policy which we carry out.
Mr. Mikardo: What the hon. Gentleman has been saying makes it manifest that all that he and other members of his party said before and during the general election about helping small business was a piece of arrant hypocrisy. The first time that we get something in this House to help small business, the Tories are against it.
Mr. Finsberg: Doubtless the hon. Gentleman did not hear the Budget, which
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certainly helps small business. If he bothers to read the first speech to which I referred, he will see that there are many other powers available to help small business. This local power cannot be brought in while the Government are reviewing the scope and extent of their own powers, and I do not accept the words the hon. Gentleman has used.
I ask the House to give the rest of the Bill a blessing and a Second Reading so that it can go to a Committee which can examine its provisions in the usual detail.
9.3 p.m.
Mr. Ted Graham: I should like to speak with particular reference to clause 8.
I join in the commendations which have been made of the hon. Members for Streatham (Mr. Shelton) and for Ravensbourne (Mr. Hunt), who have, quite rightly, said that this is a modest debate. There is not a great deal of controversy in it and yet we have already heard, particularly in the comments from the Opposition Benches, that there is a great deal of disquiet about clause 8. The Minister was right to say that the clause does not deal directly with the transfer of property. Nevertheless, it does deal with the protection and conditions of the employees who will be involved in the management of the properties which are to be transferred.
When, as in the London borough of Enfield, there is the unholy alliance of a Conservative council and the Conservative GLC, there are a great many people there for whom this is not good news at all.
Let me begin with a confession. I am certainly not one of those who are against the sale of council houses, and I am certainly not against the spread of home ownership, but I am definitely one who, attending his surgery as often as he does, hears the stories of misery and despair of many constituents for whom the only possibility of escape from some of the conditions in which they live—principally in high-rise tower development—is to get what they always speak of longingly as ground floor development with a garden.
In the London borough of Enfield we have the sad spectacle of 7,000 families on the waiting list and 7,000 on the transfer list, their great hope primarily being to escape from high-rise development or to

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get into council housing, and for this purpose we must keep in our housing stock the very houses which are likely to be sold.
It is all very well to speak of transfers of staff. I was a member of the council of the London borough of Enfield in 1964, 1965 and 1966 when we experienced the great trauma of the transfer of staff from Middlesex and from the LCC. I am fully conscious of the need to have adequate protection for the pensions and conditions of work of the employees. But in what will they be engaged? It will be in the management of property, and we have already seen that the GLC is anxious to get out of housing as quickly as possible. Enfield also wants to get out of housing as quickly as possible. Therefore, the staff who will be transferred, whether directly or indirectly, into the housing department of the London borough of Enfield will be engaged in helping in that process.
I made some inquiries today and I must tell the House that, although there has been reference to the transfer of estates and the staff who will be involved, we have no GLC estates as such in the London borough of Enfield. We have about 400 properties. The former authorities of Southgate, Enfield and Edmonton were not engaged in GLC estate building. Southgate built very few council houses. Edmonton had its own direct labour force, and Enfield followed it in a great many respects. In fact, the GLC has some 400 properties in Enfield, and it is engaged in selling them off as fast as it possibly can to anyone willing to buy them.
One of the most treacherous acts perpetrated between the GLC and the Conservative London borough of Enfield in the past few years was the way they treated the Klinger site in Silver Street, Edmonton. This was a site bought by the GLC in the late 1960s and developed in collaboration between the GLC and the council, whether Labour or Conservative, over the past 10 years. It was developed in order that houses would be made available for rent primarily for people to be transferred there from high-rise development and the like.
Then, last year, the deadly deed was done. The GLC decided not to continue the collaboration with Enfield, so that it
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would not substantially be Enfield waiting list and housing transfer people who would occupy those dwellings but the houses would be sold. Thus, 350 houses which were built for rent are now to be put on the open market at prices which I frankly doubt that many people will be able to afford. Indeed, I hope that the GLC will have the greatest difficulty in selling those houses, which would have done so much for my constituents.
The GLC and the Enfield council will talk about giving council tenants the right to buy their own houses, and we now understand that if people have lived there for a long time the discount will be 50 per cent. Whose assets do the Conservatives think they are distributing? They are community assets. The asset belongs not just to the person living in the dwelling but to the ratepayers and taxpayers of the country as a whole.
The Conservatives are determined in their dogmatic approach to get out of housing and to give lucky tenants who have lived in their homes for years—lucky tenants living in desirable houses—the opportunity to purchase. Staff who have been transferred will take part in a process that will be socially divisible. A great many people are buying their houses for the first time and they have to pay the market value. They will bitterly resent the fact that a council house tenant has the opportunity to buy his own home at a bargain price after having lived in it for a long time.
The Bill will not be opposed, but it contains, especially in clause 8, a sad continuation of a saga that is socially divisive. For my constituents that will mean the continuation of their deep desire to obtain better housing. The Bill will do nothing to aid that process.
9.12 p.m.
Mr. Michael Neubert: I welcome the annual opportunity afforded by the Greater London Council (General Powers) Bill for a discussion of issues concerning our great capital city, although three brief hours are scarcely commensurate with the scale and importance of London in our national life.
I have to acknowledge, as others have done, the insubstantiality of the Bill before us today. With the Minister's announcement that the Government are to oppose clause 9, it becomes a very

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slight measure indeed. In certain respects it is expressly disappointing. If the Bill is an expression of Conservative opinion that less legislation is healthy, I can support it. However, there are at least two respects in which the Bill disappoints me where delay is foreseen in matters which are pressing and which require firm action now.
First, I refer to the powers to control parking on footpaths and grass verges. I have the good fortune to represent a constituency in one of the leafy outer London boroughs which so exercise the resentment of Labour Members who, for political effect, on so many occasions seek to strike a division between inner London and outer London.
Mr. Michael English: Not all Labour Members. To some of us they are both the same.
Mr. Neubert: That may be the view of the hon. Gentleman, who represents part of the East Midlands. He is entitled to express a view, and we welcome him to our closed society of London Members.
In towns such as Romford, there are roads which have the benefit of grass verges which are being spoiled and damaged irreparably by the parking of cars. In one road there has recently been a great detraction from the amenities. The local council has found it necessary to cut down several mature lime trees. The road has grass verges, and there is a constant problem with the parking of cars on those verges.
In my correspondence with the council I was referred to the predicament that both the Road Traffic Act 1974 and the Greater London Council (General Powers) Act 1974 contain powers yet to be implemented. We are told that the reason for clause 7 is that the Greater London Council wishes to withdraw its power in favour of the Government in order to avoid duplication. That power will not be implemented until 1 October 1980, which is 18 months away, and I find that disappointing.
That is a problem, although it does not affect the working-class area of the hon. Member for Bethnal Green and Bow (Mr. Mikardo), as he insists on describing it. The hon. Gentleman would no doubt be amazed, if he were in the Chamber,
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to learn that only a few years ago I worked in Brick Lane. It is no good his coming here complaining about the absence of enforcement of parking conditions in Hanbury Street. If he has ever tried to park a car in that locality, he will know that the facilities are not there. Motorists do not park on pavements with the intention of annoying local residents. They do so because they have no choice.
Anybody given the choice of parking without charge in a proper place would do so. However, in such areas and in other parts of London, there is not the parking capacity to meet the demand. It is not enough for us to press for greater controls and an increase in the power of the police to enforce them. We must look to the greater problem, that of providing adequate capacity for parking in London's busy streets.
The Minister indicated that the Government felt that at this time of a general review of assistance to industry they could not support clause 9.
On the previous occasion when we debated this issue, the then Minister implied that we could not at any time discriminate positively in favour of London. I do not think that that is a valid argument.
As our capital city, London is in unique circumstances. It has a unique claim to different treatment. There is no question of London being treated like any other major city or region of high unemployment. London must be looked at in a different light. There may well be a case for certain powers being conferred on the Greater London Council and not on any other local authority. I should be prepared to support that in principle.
I wish to see an area such as dockland, with its high rate of unemployment, supported in any way possible. I should be prepared to resist the arguments of hon. Members representing other regions of the country against such a proposal even though it would mean setting a precedent.
We are told that part IV of the Bill will lapse in Committee. Here I express my disappointment. The problem of hostels is urgent. I should like to correct an impression given by the hon. Member for Bethnal Green and Bow that this was the concern only of privileged parts of London—expressly the Royal borough of Kensington and Chelsea. He also gave

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the impression that this related solely to hostels for social welfare purposes.
As I understand it, the major purpose of the clause is to control the use of hostels by people staying overnight who overflow London hotel accommodation and who find it difficult to find any other accommodation in the centre of our attractive city. Tourism is immensely popular in London—at least to those who visit London but not always to those who live here. There are problems related to properties being used as hotels overnight without the necessary controls.
As the problem of greater numbers of visitors to London is not noticeably decreasing, I regard the registration of hostels as urgent. I greatly regret that the proposals are not in a form that is acceptable to the Government. Apparently it will mean another year before we can come to them again.
Hostels may be a nuisance to local residents. The case that came to my attention was not in a privileged part of London. It was in the London borough of Newham, where the taking over of a substantial, formerly privately occupied house by a hostel to accommodate drug addicts, derelicts and other layabouts has caused a nightmare for other people endeavouring to live a normal, decent life in that residential street. The occupants of this hostel apparently sleep during the day—they have no other call on their energies—and they make the nights hell on earth for the people who live next door, causing people who must work and children who go to school to have sleepless nights and bad health. We have an obligation to those who are unfortunate, who have no other accommodation, or who find it difficult to find gainful employment, but we must also recognise the need of people to lead reasonable lives. If the local authority could be given greater powers of control over such hostels, it would find it of great assistance in a case such as the one that I have mentioned.
I turn to clause 22, and, at the risk of destroying the gravitas of my speech, I have to point out, coming from the London borough of Havering, that the control of the brown-tailed moth is a very live issue there. It is not so in Romford, in the north of the borough, I am glad to say. The caterpillars of this moth
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certainly cause a very painful rash. Although it may seem extraordinary to most people that it is necessary to enact legislation to secure the eradication of the brown-tailed moth, I support the clause. I hope, however, that this will not bring me into trouble with the animal lobby. After the campaign to put animals into politics, I hope that my advocacy of the eradication of the moth will not lead me into difficulties with my constituents.
I wonder, in passing, how it is to be established where the moths are to be found. Does a local enforcement officer get the instruction "Follow that moth"? Does he go to the owner of the property and say "You are suspected of having moths on your property"? It seems absolutely like Disneyland in its concept.
I welcome clause 23, which would provide for the control of tables and chairs—and perhaps even sun umbrellas—on the pavements of London. I welcome it not because it is something novel to London—it is to be found in many places—but because it seems to be symbolic of an acceptance that tourism is of prime importance to London. I hope that it indicates that tourists are to be welcomed. They have a great contribution to make not only to national prosperity but to the prosperity and welfare of London itself.
When we consider how much is contributed by tourists to the public transport services, we realise that without that contribution we would have a skeleton service on our trains and our buses. In addition, many small businesses, many shopkeepers, depend upon the extra revenue which comes from foreign visitors and visitors from other parts of the country to London.
Even though we do not have the spacious boulevards of Paris, we should none the less have some of the amenities of that lovely city, with people dining and drinking at tables on the pavement. The very existence of clause 23 will, I hope, once again underline the commitment of all those concerned for the future well-being of London to the importance of tourism.
With those remarks, I welcome the Bill. I hope that some of the measures in it will be implemented rather sooner than is anticipated and that it will have a very rapid passage through this House.
9.23 p.m.
Mr. John Cartwright: I follow the hon. Member for Romford (Mr. Neubert) in referring initially to clause 7, because I believe that the problem of parking on pavements is a growing menace in many parts of London. It is not just the odd car with a couple of wheels on the pavement; it is very often a car with all four wheels on the pavement or, worse still, it is the problem of heavy lorries parked on the pavement. There is not just the question of the impact on amenity, in the sense of the look of the thing, which is disgusting enough, I accept. There is the damage done by this sort of practice, particularly when heavy lorries crunch across the paving stones, leaving them shattered for the ratepayers to repair afterwards.
We often forget the impact that this practice has on the disabled, and on the blind in particular. A campaign was launched last week by a number of disabled groups and by the Pedestrians Association under the general title "Give us back our pavements". It ought to have a lot of support in this House. The disabled, and the blind in particular, ought not to have to contend with these extra hazards of parked vehicles on pavements.
Although I accept all that has been said in the debate about the operation of section 7 of the Road Traffic Act 1974, the position does not seem to be quite as explicit as some hon. Members, and particularly the Under-Secretary of State for the Environment, have suggested. The GLC has provided us with an excellent and very helpful brief. Perhaps I ought to say this in view of some of the stern words of my hon. Friend the Member for Bethnal Green and Bow (Mr. Mikardo) about the GLC solicitor. The brief referred to section 7 of the 1974 Act and said that the Secretary of State in a previous Government announced that it would be made fully operative on 1 October 1980. However, the brief goes on to say that the intention of the present Government is not yet known. There seems to be a less clear-cut situation than that presented to us.
I hope that when the hon. Member for Streatham (Mr. Shelton) replies to the debate he will make it clear that, if there is any delay in the operation of section 7 of the 1974 Act, some attempt will be made to use the GLC's current powers
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which are to be repealed only contingently on the operation of section 7.
Referring to clause 8—the transfer of GLC housing staff—the principle of transfer has to some extent been dealt with. Like the Under-Secretary of State, I have always been in favour of housing being managed as near as possible to the tenants. It is a good thing for the tenants. It is also a good thing for elected councillors who are responsible for providing the services. One of the great indictments of GLC housing is that people sit in an ivory tower in County Hall and take decisions about estates that they have not seen and are unlikely to see. Therefore, it is a good thing to manage housing as close to the tenants as possible.
Many GLC tenants in Greenwich will be strongly in favour of being transferred to the Greenwich council, first because they see much lower rents in Greenwich housing than in GLC housing. For example, the average rent increase for Greenwich council housing was 20p compared with £1·50 for similar housing on GLC estates in Greenwich.
It is also true that many GLC tenants locked up in high-rise flats regard transfer to the borough council as the only way in which they will get houses. They sit in those high-rise flats, often with young children, on the sixth, seventh or eighth floor of a block, and look down and see houses empty week after week and month after month and they know that there is no way in which they can have those houses. Why? Because they have been put up for sale. Some houses in my constituency have been empty for eight or nine months because they have been put up for sale. Therefore, GLC tenants say "We know that the London borough of Greenwich is not selling its houses. The best chance for us to get houses with gardens for our children is to be transferred to the London borough of Greenwich".
I accept what others of my hon. Friends have said about mobility. I understand that the problem of transferring from one part of London to another has been made easier by the operation of the GLC's housing schemes. On the other hand, I notice that there is to be a mobility scheme attached to the transfer of GLC housing. I understand that the scheme will require between 20 per cent. and 50 per cent. of the net vacancies in transferred

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property to be reallocated by the GLC to other needy boroughs in London. No doubt the aim is laudable, but the thought of two boroughs and the GLC being involved in the exercise makes me wonder how much bureaucracy will be entailed and how long it will take someone to get a transfer from, for example, Hackney to Greenwich when so much red tape is involved, with three local authorities handling the operation.
Coming to the question of protection of staff, which is what the clause basically is about, I accept that we should protect the standards and position of the transferred staff of the GLC. But we should also have some regard to the standards of the borough staff who will have GLC transferred officers working alongside them. I understand that the proposal is that not only the income of the transferred staff but conditions of service, hours of work, overtime and bonus schemes shall be protected. In that situation, harmonisation of the two groups of staff will be a costly and difficult exercise. If we have two groups of staff—one transferred from the GLC and one existing in the borough—on different rates of pay, different standards of overtime conditions, for example, and totally different bonus schemes, it will need a lot of delicate and difficult adjustment to sort out that problem.
I understand that powers will be taken to restrict the boroughs when it comes to the appointment, replacement and promotion of staff. That again is something which I believe will cause difficulties, with staff who have worked for many years for a borough housing department finding their promotion opportunities blocked by staff coming in from the GLC. It is therefore very important that in protecting the standards and conditions of transferred GLC staff we ensure that it is done fairly.
I hope also that when we talk about standards we remember the standard of service to tenants. Certainly in my experience the standard of maintenance which the GLC provides for its tenants is sadly deficient compared with that of the average borough council. I could delay the House with many horror stories of GLC tenants living for three months without heating or hot water, or people who ask to have windows repaired and receive
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calls not from glaziers but from electricians and plumbers.
If the transfers go through, I hope that we shall have a rather higher standard of maintenance of the transferred property. I hope, too, that if we are to protect the conditions of the transferred staff we shall not have the monstrosity of mobile caretakers inflicted on boroughs which accept the transfer. Most GLC tenants would say that a caretaker whizzing around in a van gives little protection and very poor service indeed. It is, I believe, the view of many that some of the vandalism problems on GLC estates are not helped by the caretaker getting into his van and disappearing at top speed whenever trouble crops up.
Finally, I turn to clause 9 and the question of powers to guarantee loans. Like other hon. Members who have spoken from the Opposition Benches, I support the principle enshrined in this clause. I accept what was said by the hon. Member for Ravensbourne (Mr. Hunt) that this would give help to small firms. In my borough we have had some of the worst large-scale industrial closures of any part of London. We lost 50,000 jobs over a period of 10 years. What we have been able to do in more recent years is to bring in a large number of small firms that have taken the place of at least some of the large companies that have gone out of existence. In our experience, many of these small firms need financial assistance, or at least financial backing. Many of the facilities available through organisations such as the NEB, Finance for Industry and the big banks are not what the small, one-man operation is looking for. Therefore, I believe that the guarantee powers proposed in clause 9 are very useful indeed.
I was sorry to hear the statement of the hon. Member for Hampstead (Mr. Finsberg). If he is not dizzy with his convolutions, I think that most of the rest of us are. He started by opposing the powers, then he supported the powers and now he is back again opposing the powers. [HON. MEMBERS: "Flexible".] Flexible, perhaps. "The india rubber man", some may say. My hon. Friend the Member for Bethnal Green and Bow talked about a conversion on the road to the Front Bench. One conversion we can understand, but two conversions seem somewhat excessive.

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I am very sorry that the hon. Member for Hampstead has to adopt such a position. He may well argue that today's Budget creates a new climate and that the entrepreneur will now walk the land and private enterprise will rescue all these small firms and provide all the money for which they are looking. The GLC brief, which I find a very useful document, says that this clause is intended to benefit areas where there is a lack of investing confidence. That, I believe, is the nub of the problem.
Many of the areas we are talking about, such as dockland, are areas which the banks have turned up their noses at, the red lined areas and so on. I am very sorry that the Government have found it necessary to reject what I think is a useful initiative by the GLC.
Mr. Ronald W. Brown: May I draw my hon. Friend's attention to the fact that he and I were described as traitors by the Under-Secretary of State in the Evening News, because he said that we voted against that clause? How does my hon. Friend rate that in relation to the performance of the Under-Secretary of State?
Mr. Cartwright: I shall look forward to a confession from the Minister in the next edition of that London newspaper now that he has attained his exalted position.
Despite the disappointment which, no doubt, the GLC feels as a result of the Government's rejection of what I regard as a useful initiative, I very much hope that the GLC will stick to its guns on clause 9 and will try to fight it through. If it does, it can be assured of some very solid support from Labour Members.
9.36 p.m.
Mr. John Page: I apologise to you, Mr. Deputy Speaker, to my hon. Friend the Member for Streatham (Mr. Shelton) and to other hon. Members for not being in the Chamber when the debate began. The reason was that I was at a meeting of Greater London area Conservative trade unionists. It was a celebration of the election. There were so many of them, they were so enthusiastic and they had so much advice to give me to pass on to my right hon. and hon.
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Friends that, unfortunately, I was delayed coming back to the House.
Speaking late is always a challenge, because the best points have already been made. Some of my points have been made by my hon. Friend the Member for Romford (Mr. Neubert). I hope it will not damage the hon. Member for Woolwich, East (Mr. Cartwright) if I say that I had intended to make one or two points that he made. Of course, that allows a greater amount of shorthand.
My hon. Friend the Member for Ruislip-Northwood (Mr. Wilkinson), by an act of parliamentary sleight of hand, was brilliantly able to introduce the question of flood control in the neighbourhood of that part of Middlesex. My hon. Friend the Member for Ealing, North (Mr. Greenway) is present, and he will remember that famous, horrible night in August 1977 when the Welsh Harp overflowed and the River Brent and River Pinn, which is usually a smallish culvert, became raging torrents. I was glad that my hon. Friend was able to raise this matter.
In my constituency, the Pinner Association has arranged a magnificent self-help system of voluntary flood warning officers. That is something that should be followed. However, I must tell my hon. Friend the Under-Secretary of State that I am disturbed to hear that background work on the flood prevention system is likely to be delayed by the GLC which rightly says that it cannot afford to take on new staff—until 1982. I know that many consulting engineers in London, probably extremely experienced, are not over-burdened with work at the moment.
Mr. Stuart Holland: They are probably unemployed.
Mr. Page: The hon. Gentleman talks about there being unemployed surveyors and architects. They will not be employed until 1982. But if the work were given immediately to consulting engineers, they could be employed tomorrow, as I hope they will. I hope to take this matter up with the GLC member for my constituency, who happens to be Mr. Horace Cutler. I hope that he will bring pressure to bear.
I shall be brief, because I want to sit down before 9.45. I support clause 3. It is rather a neat plan that offences for music, dancing, human posing, boxing,

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wrestling and so on should be taken separately.
I turn quickly to clauses 5, 7 and 23. I raise one point connected with all three. Clause 5 talks about advertisement units and showcases, even those especially for the GLC, on pavements. Clause 7 deals with parking on footways. Clause 23 deals with tables and chairs and pavement cafes. The hon. Member for Woolwich, East mentioned something in relation to these clauses, and I should like to mention it more strongly. I sincerely hope that the advice of the National Institute for the Blind and other local blind organisations will be taken into serious consideration here. Twenty or 30 years ago, a blind person or a nearly blind person with a stick could get along pavements, but now there are so many cars parked on pavements and so many obstructions—regrettably, possibly even these new pavement cafes—which could all cause danger to such people.
I should like to mention in passing a growing nuisance in my constituency. Perhaps it applies to other constituencies. That is the increased amount of bicycling by young people on the pavements. Again, the hon. Member for Vauxhall (Mr. Holland) is tut-tutting in a rather nurse-maidish way. Does not he feel that the roads are probably the best place for bicycles to be ridden, so that elderly people, blind people and people with children in prams are not knocked about?
Mr. Stuart Holland rose—
Mr. Page: I shall not give way to the hon. Gentleman, out of fairness to my hon. Friend who moved the Second Reading, but I promise to try to do so at a later date if the hon. Member wishes to interrupt me.
I revert to clause 23. I very much enjoy eating out in the open, provided that it is not in an area which is infected by Euproctis Chrysorrhea—the brown-tailed moth—whose caterpillars might well fall into one's Camparis. Where these pavement cafes are organised, it should be done, if possible, on a kind of permanent basis, so that blind people will know very easily where they are.
In considering the provisions relating to registration of hostels, under part IV, I hope that my hon. Friend will not make the restrictions too severe or too difficult
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for cheap accommodation to be found in London for young visitors from home and abroad.
Here I must tell, very quickly, an anecdote in connection with a hostel, which concerned me about six weeks ago. I was rung up at five minutes to four on a Saturday afternoon—I was leaving at four o'clock—by a young relative of my wife, who said that she was outside a hostel and standing by a taxi and she did not have any money. She had got a cheque book, but no one seemed to want to cash a cheque for her. She asked what she ought to do. Then she got the taxi driver to speak to me. I said "How much?" He said that it was £16 on the meter because they had been out to London airport and back to try to cash a cheque.
I arranged for the driver to call at the House of Commons. I said that I would be delighted on the following Monday to give him a drink and some money. I asked him to ring me up in the evening to say how much it was. He rang me up in the evening and said "You owe me £27, because I gave her £5 for a night a the hostel and another £5 to spend."
That man happens to be a taxi driver and he is a member of the Samaritans. In view of some of the things that people say about London taxi drivers, that is a fine example of the fact that at least this good Samaritan turned up.
I must stop now. I would only remind my right hon. and hon. Friends on the Front Bench that over the years we have suggested a full day's debate on London every so often, at least annually, and not trying to hang our coats on the various pegs of general powers Bills. I hope that we shall have the support of my right hon. and hon. Friends for such regular debates.
9.44 p.m.
Mr. Frank Dobson: Unlike the happy wanderers on the other side of the Chamber, I shall confine my remarks entirely to clause 4—and I hope that no one will object to that statement. I am concerned about the proposal to pay a salary instead of allowances to the new chairman of the London Transport passengers' committee. A number of questions need to be answered: why is that salary needed, what level of salary is likely to

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be proposed, how will it be paid and will the public get value for money?
To date the chairman of the London Transport passengers' committee has got by on allowances and expenses, and I do not understand why it is necessary for the new chairman to receive a salary. The GLC councillors put themselves to the trouble of going to the electorate for approval, but when they attend meetings at County Hall they only get allowances. From what we have heard tonight, it is clear that those councillors who are not idle attend considerably more meetings and do more work than the chairman of the London Transport passengers' committee. I therefore question the introduction of a salary for him.
One reason for increasing pay is to attract people to a job. The reports of London Transport indicate that it is difficult to recruit bus drivers, tube drivers and such people to provide services. London Transport is jibbing at paying those people enough money, but the GLC is paying to encourage someone to be chairman of the committee.
We have an unhappy example of GLC payments to senior people at London Transport. I remind the House of the peculiar arrangement whereby the GLC agreed to pay the present deputy chairman of the GLC—not by sending him a cheque on which he pays tax—and I quote from its report that authorised the payment:
"By a special arrangement with Dumon Stansby & Co. Ltd., the services of Mr. J. Stansby as deputy chairman have been contracted for a period not exceeding 3 years, subject to a payment to the company of £22,500 a year".
I should like to be assured that the GLC will not come to any arrangement over the payment to the chairman of the London Transport passengers' committee other than payment directly to him.
Above all, people elected to this House should be concerned to see that the public are getting value for money. The GLC informed me that last year the London Transport passengers' committee cost about £23,000 and the hon. Member for Streatham (Mr. Shelton) has told us that it dealt with 237 complaints. My mental arithmetic is pretty bad, but that is about £100 a complaint. Its annual report
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for last year shows only about 70 complaints, and that works out at considerably more than £300 a complaint. I am not sure that we are getting value for money.
We have been told that if the chairman gets a salary it may add to the status of the committee. It certainly needs to, because although the committee reports to the GLC and not to London Transport, last year its report was so significant in the eyes of those in control of County Hall that they did not even bother to discuss it at the meeting of the Council. That is a reflection on them and the status of the committee.
I have galloped through my speech to enable the hon. Member for Streatham to reply. I shall not go into the highways and byways raised by the Under-Secretary of State, but he says that people in London are perfectly happy with the GLC. In the immortal words of the Duke of Wellington:
"If you believe that, you will believe anything."
The GLC has rightly been described as the slowest bureaucracy this side of the Kremlin, and the sooner it is abolished the better.
9.50 p.m.
Mr. William Shelton: With the leave of the House, Mr. Deputy Speaker, I shall take the few remaining minutes to answer the questions that have been put. I appreciate the helpful manner in which the Bill has been treated by hon. Members, and I also express my personal thanks for the kind words that have been said about me.
I begin by telling the Minister that the Erith Tramways and Improvement Act 1903 was a distinguished Act to improve the tramways in Erith.
The hon. Member for Holborn and St. Pancras, South (Mr. Dobson) referred to clause 4 and asked why the chairman should have a salary. The principal reason is that it was recommended by the previous Government that he should. It seems the sensible thing to do, and I suspect that his salary will be less than his present remuneration. The chairman of the transport users consultative committee draws £1,000 a year, and this may be some guide to the amount that this chairman will receive.

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Clause 7 deals with parking. I agree that the present situation is not particularly satisfactory as the powers of the GLC are not in force, principally because of the request made to the Minister of Transport in 1975. The London boroughs felt that implementation could not be achieved. In other words, there was not sufficient money to make sure that cars did not park on pavements and verges. Therefore, it is not illegal to park in such places at present. I understand the difficulties of the London boroughs because of the cost involved. However, the Under-Secretary has given us the assurance that the Road Traffic Act 1974 will come into force in October 1980. I agree that that is too long to wait, but I understand that it is a matter of cost.
Clause 8 has been the subject of most discussion this evening. It is simply a piece of machinery to ease the transfer of houses. It is nothing to do with the fact of the transfer of houses, which no doubt will be debated extensively by the House when the order is laid. In this Bill we are merely talking about a way of helping the staff in the transfer. The Minister has given the date of transfer as being 1 January.
The hon. Member for Hackney, South and Shoreditch (Mr. Brown) asked whether there was any trade union support. I understand that the GLC staff committee supports the principle of setting up a staff commission, as does NALGO. I was also asked whether the tenants had been consulted. Certainly they have been consulted in Camden, where a survey was undertaken. Perhaps rather to the dismay of the local authorities in Camden it was found that there was general support for the principle of transferring to the boroughs.
Hon. Members talked about the importance of mobility in housing. I agree entirely and believe that the House recognises the importance of this. I should be very unhappy if I thought that the transfer of estates from the GLC to the boroughs would diminish mobility. We must make sure that this is increased, and, in my view, the sale of council houses will increase rather than diminish mobility. People will have an asset which they can sell when they wish to move rather than a refuge from which they have to venture with little chance
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of achieving a similar refuge, as is now the case with council housing. From the point of view of mobility, I can see only advantage in the sale of council houses, but if the transfer of houses to boroughs decreases mobility we must ensure that that trend is reversed.
It was asked why the New Towns Commission should not merely replace the staff commission mentioned in clause 8. The answer is that it is not improbable that certain members of the New Towns Commission might find themselves on the staff commission. Certain discussion has taken place about the transfer in general. It appears that so far only seven London boroughs have categorically refused to accept the transfer.
Clause 9 also resulted in a certain amount of discussion, the ardour of which has been somewhat dampened by the remarks of my hon. Friend the Minister. No doubt there will be considerable discussion of these matters at later stages of the Bill's progress.
The hon. Member for Hackney, South and Shoreditch talked of conversions on the road to Damascus. It must have been a fairly crowded road, and I welcome the hon. Gentleman to it, because I well recall that last year, as he has already confessed, he cast his vote against these proposals.
I was asked why there was no definition of industrial and commercial buildings. The short answer is that, rightly or wrongly, the same phraseology is used in this Bill as was used in the Inner Urban Areas Act 1978.
The hon. Member for Greenwich (Mr. Barnett) asked whether there would be financial limits to the guarantees. The answer is in the negative. He also asked whether there could be Government sanctions and controls. The answer again is in the negative, but this matter can also be discussed at later stages. Certainly such steps are not foreseen at present.
Questions were asked about the sums involved. In general, we are talking of small businesses, and therefore the amounts may not be very great. If this Bill is enacted, an exception might be made on the lines of the Trammel Crow trade mark case in Southwark, which was discussed last year.
In regard to part IV of the Bill dealing with hostels, my hon. Friend the

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Member for Romford (Mr. Neubert) thought it was a pity that these provisions were not brought forward earlier. I agree that it is a pity, because I understand that one of the major problems is that in certain parts of London hostels have been taken over by undesirable persons who go to such hostels with the plea "I shall give you £500 for this hostel for the month of August". For that month that group will take control of the hostel and exploit it in every possible way. Such a group may tend to overcrowd the hostel and deny those in the hostel their rights and privileges. Because of housing pressures, such a group may get away with it. This is one of the principal reasons why registration is important.
It has been said several times that this is a modest Bill, and I welcome that fact.
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I deprecate the thought that we should ever have legislation for its own sake. I trust that we shall be able to cope with the withdrawal symptoms of less legislation as we move along our path. I am grateful to the House for its kind words, and I commend the Bill.
Question put and agreed to.
Bill accordingly read a Second time and committed.

BUSINESS OF THE HOUSE
Ordered,
That the Motions relating to the Committee of Selection may be proceeded with at this day's sitting, though opposed, until any hour.—[Mr. Brooke.]

COMMITTEE OF SELECTION
Order read for resuming adjourned debate on Question [11 June],
That Mr. Ronald W. Brown, Mr. Walter Clegg, Mr. A. P. Costain, Mr. Ifor Davies, Mr. Paul Dean, Mr. James Hamilton, Mr. Philip Holland, Mr. Harry Lamborn and Mr. Kenneth Lewis be members of the Committee of Selection.—[Mr. Cope.]
Question again proposed.
10.1 p.m.
Mr. Deputy Speaker (Mr. Bernard Weatherill): Before we start the debate on the motion, I should inform the House that Mr. Speaker has selected the amendment standing in the name of the hon. Member for Antrim, South (Mr. Molyneaux).
I should also inform the House that Mr. Speaker has given careful consideration to the motion for an instruction in the name of the hon. Member for Nottingham, West (Mr. English) in which the hon. Gentleman proposes to give important new duties to the Committee of Selection. The powers and duties of the Committee are conferred upon it by the Standing Orders of the House. To alter those powers in the way that the hon. Gentleman proposes would require amendment of Standing Orders or a new Standing Order. The hon. Gentleman's motion does not do that. Therefore, in the view of Mr. Speaker, it is out of order and cannot be called. If the hon. Gentleman wishes to oppose the nomination of Members to the Committee of Selection on the ground that it is inappropriate until the powers of the Committee have been reviewed, he is entitled to do so.
10.2 p.m.
Mr. Michael English: I accept Mr. Speaker's ruling, Mr. Deputy Speaker. Therefore, I object to the motion. The reasons for my objection can be explained, at the risk of boring you, Mr. Deputy Speaker, by some brief words on the functions of the Committee of Selection.
Several Members have recently asked me for an explanation of what the Committee of Selection does. For all practical purposes the Committee appoints the members of Standing Committees and of Private Bill Committees. However, it
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is no secret to you, Mr. Deputy Speaker, that in practice the Whips of all parties propose the members of Standing Committees, the ad hoc committees to consider particular Bills. Private Bill Committees, the ad hoc Committees to conusual sort. They consist of four Members, usually two from each side of the House.
In its forty-sixth recommendation the Procedure Committee proposed that the nominations for Select Committees should go through the Committee of Selection. The idea was to protect Members of Parliament from being under the complete domination of the Whips on both sides.
An illustration of what the Committee of Selection has done in the past is that on one occasion a Chief Whip proposed that a vested interest that he had a connection with should have two members on a Standing Committee. The then Chairman of the Committee of Selection, Mr. Hugh Delargy, ensured that the vested interest opposed to that of the Chief Whip should also have two members—quite different from the original proposal. On another occasion it was suggested by one individual that Members should be knocked oil a Select Committee not because of anything that they had done on the Select Committee but in connection with another matter on the Floor of the House. [Interruption.] In spite of the approbation to the contrary of the Deputy Chief Whip on my side of the House—he has a certain vested interest in these matters—Back-Eench Members need some protection from the hierarchy of the Whips' offices on both sides of the House.
Therefore, the Procedure Committee proposed that these nominations should go through the Committee of Selection as a sort of check. It did not propose to deprive the House of its ultimate right to appoint the members of Select Committees. I shall not go into the details. Hon. Members can find them if they wish on page lxxiv of the Procedure Committee's report, paragraphs 6.18 to 6.21.
It is therefore important that before we make this appointment tonight, since the next motion in the name of the Government Deputy Chief Whip proposes that we should appoint the members for the whole of the Parliament, the Leader of the House should tell us his desires about the Procedure Committee's recommendation. If we had had the debate that he

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has promised us on the Procedure Committee's report, this issue might never have arisen. That debate will arise some time before the Summer Recess, however, as the Leader of the House and the Prime Minister have told us. Until we have had that debate, the House will have had no opportunity to consider any recommendation of the Procedure Committee.
In all, 265 hon. Members wish to have that debate and wish the House to have an opportunity of deciding on the main issue of setting up departmentally related Select Committees. I accept that the method of appointing that or any other Select Committee is a somewhat subsidiary issue. We want to know whether, if the House should decide to accept the main recommendations of the Procedure Committee and to set up departmentally related Select Committees, the right hon. Gentleman will allow the House some opportunity to reconsider the powers of the Committee of Selection.
Like most hon. Members, I have no objection to the names that are put before us tonight. It may be that the hon. Member for Carlton (Mr. Holland), for example, who is a near neighbour of mine in constituency terms, will happen to become chairman. I would think only that Nottinghamshire would appreciate that fact. He is probably an ideal man for that job. However, we would want him to have greater powers in that capacity than he would have under the present arrangements. One would wish him to have the existing powers of that position over Standing Committees and those Select Committees that deal with Private Bills, and in addition to have the powers recommended by the Procedure Committee over all other Select Committees.
May we have an assurance from the Leader of the House that, if the House were to decide the main issue in favour of the Procedure Committee's recommendations or something like them, we should have an opportunity at some stage to propose, as Mr. Speaker's ruling implied, a change in Standing Orders to permit us to consider the secondary issues raised by the Procedure Committee? If we could, I do not think that the right hon. Gentleman would
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encounter any difficulty with this motion. However, we want to know where we are going before we take the final step of appointing the Committee for the whole of the Parliament.
10.9 p.m.
Mr. J. W. Rooker: I wish to raise a slightly different point from that of my hon. Friend the Member for Nottingham, West (Mr. English). I am not sure whether all the nine hon. Members named in the motion are now in the Chamber, but before I agree to the motion I want to know from each of them here in the Chamber, so that what they say is on record, that they will do their job according to Standing Orders on behalf of the House and not on behalf of the two Front Benches.
In the last Parliament the Committee of Selection did not do its job. It kept from Standing Committees hon. Members on both sides of the House who had a justifiable right to serve on them. Representations were made and just swept away. As hon. Members know, when the membership of Standing Committees is put before the House by the Committee of Selection, there is no possibility whatever, under our present procedures, of objecting in the way that is possible on a Select Committee appointment. We must like it or lump it. It is in the Standing Order. There is nothing we can do about it.
I wish to give two examples which highlight the problems that hon. Members on the Back Benches come up against. Let new hon. Members on the Tory Benches who in a year or two, if things have not changed, wonder why they have not been on a Standing Committee reflect on this debate tonight.
In 1977 the hon. Member for Wolverhampton, South-West (Mr. Budgen) served on the Finance Bill Committee. He made speeches on that Committee that members of his own party did not like. He told the truth on many occasions. I agreed with some of the speeches he made and opposed others. Nevertheless, he went into that Standing Committee and spoke the truth as he saw it. I used to watch the winces on the faces of the Front Bench leadership on that Finance Bill at what was coming from the Back Benches. That was in 1977. In 1978, of course, the

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hon. Member for Wolverhampton, South-West was not on the Finance Bill Committee, and there was nothing that he could do about it.
Last year the Labour Administration brought in the Social Security Bill. The chairman of the Labour Back Bench social security group, the then Member for Coventry, South-West, Audrey Wise, was excluded from membership of that Committee. We checked back on the times that that had happened in the past to Members on both sides of the House. We checked where the chairman of a subject group relating to the work of a Department had been kept off what was a miscellaneous provisions Bill for that Department, though with every right to serve on the Standing Committee.
No measure of representation behind closed doors in this place was enough. I went along with my colleagues. The Chief Whip and the other bosses of this place listened to us. Those Members with the right honourable titles and the Chairman of Selection were there as well. The Chairman said "I only did what I was told to do". All that the Committee members were doing in the last Parliament was receiving two or three lists of names and rubber-stamping them. They were in and out of the room in 10 minutes when the Committee of Selection met—or less than that, I am told.
It is not good enough, when we appoint, as we are doing tonight, hon. Members to work on behalf of the House of Commons—not on behalf of the Government Front Bench or on behalf of the Opposition Front Bench but on behalf of all of us on the Back Benches as well—that when a Bill gets a Second Reading, in a few days, or in some cases a few hours later, the Chairman of the Committee of Selection is given a couple of bits of paper, told to convene a quick meeting upstairs and—bingo—out comes the Standing Committee.
Mr. Bob Cryer: I know that my hon. Friend is too modest to point this out, but there was another occasion when the Committee of Selection seemed to take a positive pleasure in debarring my hon. Friend and the then hon. Member for Coventry, South-West, Audrey Wise, from the Finance Bill Committee. There were many Labour Back Benchers who were very keen to see them on that
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Committee in view of the very reasonable improvements which they made to a previous Labour Finance Bill.
Mr. Rooker: I hope that that intervention by my hon. Friend will not be lost on whoever will be the Chairman of the Committee of Selection and that he will not use his rubber stamp. We shall have a Finance Bill within a couple of weeks at the very outside, unless all the Finance Bill is taken on the Floor of the House. If that happens, I tell Conservative Members that they will have no Summer Recess; that is for sure.
The point is an important one, Mr. Deputy Speaker, and I should like each of these hon. Members to stand up and say to this House that he will not be bound by lists that are given to him and that he will not be used as a rubber stamp. I should like each one to say that he will do the job laid down in the Standing Orders. Otherwise it is a farce. The Committee of Selection is the key to all other Standing Committees. It will be no good any hon. Member complaining in future about the composition of Standing Committees. This is the time, here tonight, when we have to take action. All that we can do is either not appoint the whole Committee or take the word of hon. Members that they will not be used as rubber stamps. I ask each of these hon. Members to give this undertaking before the debate is over. If they will not, I shall have to divide the House on the whole issue of setting up a Select Committee in the first place.
10.15 p.m.
Mr. Robin Maxwell-Hyslop: I believe that there is a point of principle to be made here, but I cannot join the hon. Member for Birmingham, Perry Barr (Mr. Rooker) in his censure of what he regards as a lack of integrity among those of his parliamentary colleagues who serve on the Committee of Selection. I do not believe that to be true or fair. But the point of principle is whether nomination to Select Committees should be made by the Government and the official Opposition or by a Committee of Selection which has the confidence of its colleagues in the House of Commons. I believe the latter to be the right principle for the proper service of the House.
We have not yet had an opportunity to debate the recommendations—more

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than 70 of them—of the Procedure Committee. Many of the most important of those recommendations concern a restructuring of our Select Committee system, which we debated in the last Parliament but on a motion which was not executive. In my modest contribution to that debate, I endeavoured to point out that whatever we did about changing the structure of our Select Committees would nevertheless be ineffective unless the House took unto itself the task of choosing which of its Members it wished to serve on those Select Committees.
Do what we will to our Select Committee system, it cannot command the full confidence of the House which our Select Committees are charged to serve unless their composition also, is within the control of a Committee which is not itself a puppet body.
I disagree profoundly with the hon. Member for Perry Barr in his belief that the Committee of Selection is a puppet Committee. I do not believe that it is. It has a most difficult task in manning the Committees of the House. There are colleagues who wish to serve on a Committee but cannot. There are probably far more who are put on Committees when they would rather occupy their time in other ways.
The Committee of Selection, on which I have never served, has a most unenviable task, but I personally have confidence in its integrity, and I believe that its integrity is such that it deserves from the House the duty of recommending to the House those who should serve on Select Committees whether or not the structure of our Select Committee system is altered on the lines recommended in the last Parliament.
This is a question of principle, and if the feeling in the House is, as I hope it will be, that our Select Committee system is to be not a new way of wasting the time of busy Members but a continuation of the process of bringing back to the House of Commons the accountability of the Civil Service in particular, I think that it is a necessary condition, though not a sufficient condition, for the discharge of their function that the task of recommending to the House of Commons the composition of Select Committees, within the normal guidance which the House
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gives to that Committee about the comparative strength in all parts of the House, should be entrusted to the Committee of Selection.
Mr. Rooker: What is the position when a Minister in Whitehall, in receipt of advice from civil servants, draws a list of those whom he does not want on the Committee and sends it across to his Whips' office with the message "These are the ones I don't want on the Committee of Selection"? That is the Executive controlling the function of this place. I know that that happened in the previous Parliament. I like to think that it will not happen during this Parliament, even under a Conservative Administration. All I want the nine hon. Members to do is to say that they will have no truck with the approach that I have described if it takes place.
Mr. Maxwell-Hyslop: I have been in the House rather longer than the hon. Gentleman. I have been in this place for nearly 20 years. It is my experience that hon. Members who are put in decisive positions on the recommendation of the usual channels in the hope that they will be confined have their personal integrity still intact and have very often disappointed those who appointed them.
There is no foolproof system except the personal integrity of every hon. Member. We all know that to be true, independent of party. If we cannot repose our confidence in the Committee of Selection, we cannot repose it anywhere.
Mr. Christopher Brocklebank-Fowler: Will my hon. Friend give comfort to those of us who would like to believe what he says but who wonder why only three or four of the nine hon. Members it is proposed should form the Committee are present in the Chamber while we discuss this important issue?
Mr. Maxwell-Hyslop: I have no means of answering my hon. Friend's question, except that I totally reject the suggestion made by the hon. Member for Perry Barr—I do not doubt that it was made with the best of intentions—that his colleagues should have to pledge themselves to behave honourably. I should expect my colleagues to do that without making such a pledge. The idea that our colleagues who are being proposed

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to be entrusted with this unpleasant task, which is primarily one of collecting brickbats rather than accolades, should be present tonight to recommend themselves does not recommend itself to me.
Mr. Brocklebank-Fowler rose—
Mr. Maxwell-Hyslop: I shall give way shortly. I should not wish it to be the custom in the House that when there is a motion to appoint hon. Members to any Committee those hon. Members should be under an obligation to be present in the Chamber to defend their selection.
Mr. Brocklebank-Fowler: My hon Friend may have put an incorrect interpretation on my question to him. It is not my argument that hon. Members should be present to defend or advocate their own membership of the Committee of Selection. I was suggesting that they should be present at least to listen to the arguments about the Committee to which they hope to be appointed.
Mr. Maxwell-Hyslop: I can think of few weaker arguments than that. The principal reason for being present in the Chamber is to contribute to debate. There are certain circumstances in which it is generally felt that colleagues should not contribute to a certain debate. Surely colleagues should not try to catch Mr. Deputy Speaker's eye to justify their nomination to the Committee of Selection, which is an especially important Committee. I am rather sad that the question of principle, which is whether the Committee of Selection or the usual channels should exercise this crucial function—
Mr. Rooker: It is the same thing.
Mr. Maxwell-Hyslop: It is not the same. The water should not be muddied by allegations, none of them specific, against any hon. Member that members of that Committee are corrupt. The hon. Member for Perry Barr has been in this House long enough to know that if he wishes to allege that colleagues are corrupt he should name them so that they may defend themselves against the accusation.
Mr. English: The hon. Gentleman is allowing himself to be deflected from the issue of principle. I mentioned two specific
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occasions when a former Committee of Selection had defended the rights of individual Back Benchers against the usual channels.
Mr. Maxwell-Hyslop: There are many other cases of which some of us may know. Many of our colleagues perform their duties in circumstances of moral courage, unknown to their colleagues, because they do not declare them.
I do not think that the House will do itself a great service tonight if it abdicates the task before it of deciding which of two alternative courses it should take—whether the recommendation for membership of Select Committees should be made through the usual channels or by the Committee of Selection—by going into unprovable, extraneous and not very laudable arguments of ad hominem type but without specifying the Members against whom allegations are made. Let us focus on the crucial point of principle—that is, the clear decision which the House must take. The balance of advantage lies in favour of the Committee of Selection being entrusted with this most important duty.
10.27 pm
Mr. James Molyneaux: I beg to move, as an amendment to the Question, to leave out "Mr. James Hamilton" and insert "Mr. A. J. Beith"
I shall resist the temptation to become embroiled in the difference of opinion between the hon. Member for Tiverton (Mr. Maxwell-Hyslop) and his colleague the hon. Member for Norfolk, North-West (Mr. Brocklebank-Fowler), who seemed to be arguing on an admirable basis that is common to a great many institutions, namely, that Members are eligible for election only if they are present or have tendered an apology. I shall not go deeper into that question tonight.
We tabled this amendment because we and the other minority parties that we represent simply cannot understand why we should be deprived of a place on the Committee of Selection for the whole of the present Parliament. We could have understood the decision, and therefore have been much more sympathetic, had the Government acted in accordance with the report of the Select Committee on Procedure. However, the opposite is the case. The Government are acting

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contrary to a recommendation of the Select Committee on Procedure.
Secondly, we could have understood the change in the previous structure if over the years it had proved to be unworkable. But here again the reverse is the case. I was one of those most closely involved in the various consultations. I cannot recall a single occasion on which the mechanism broke down.
I invite the few members of the former Committee of Selection who are present to point to any meeting at which their deliberations were hindered or obstructed by lack of co-operation on the part of the minority parties. Those parties always succeeded in reaching agreement on the spokesman to be nominated to any particular Committee. What is more, when we had managed to make such an appointment, it was invariably found that we had appointed someone who was the appropriate spokesman for the minoritly parties, and, even more important, had some knowledge of the subject under discussion.
The hon. Member for Tiverton mentioned two categories. He said that there were those who wanted to be on and those who were pushed on. I would add a third category—those who were quite useless once they were pushed on to a Committee.
It appears now, Mr. Deputy Speaker, that if the present motion were to be carried unamended, we would revert to something like the pinned-on-a-list system which totally failed us in the past. Unless the Government display some willingness to listen to reason and display much more flexibility—and the kind of co-operation which the Government and the Opposition Front Bench received from the minority parties in the last Parliament—I shall advise my right hon. and hon. Friends and colleagues to divide the House.
10.32 p.m.
Mr. Charles Fletcher-Cooke: This is a most interesting debate.
When I first entered this House, nobody wished to serve on the Committee of Selection at any price. Nobody, 300 years ago, wished to serve in this House. People had to be shanghaied into this House. Twenty years ago people had to be drafted on to this Committee. But
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now, of course—and quite rightly, as the hon. Member for Birmingham, Perry Barr (Mr. Rooker) has pointed out very eloquently—the nuances of different shades of opinion in this House have become extremely important, and the selection of the selectors has become almost like the question of who sits in the House of Lords on an appeal. One of the reasons why in the Supreme Court of the United States all nine judges have to sit is that, if one were to sit in a division there, one could get one's verdict by reason of the judges one selected
This is a very important matter, therefore, and the hon. Member for Perry Barr has made a very important case. But this is quite a modern development, and it is a good one, in my view. In the old days it was very rough justice between the two sides of the House of Commons. Those who had the majority put on their stooges and those who were in the minority put on their stooges, and it worked. It worked quickly, efficiently and cleanly, and nobody disagreed. But now we have got into a sophisticated area in which that does not work at all.
The selection of the selectors is very important indeed. Although I think we ought to pass this motion tonight—because the House has to have its work continued—we ought to look into this matter for the future, because the various shades of opinion are very important, and the system is much more democratic than the old system.
Those who have objected to the motion have a case. At the same time, I think that they are a bit premature. There are, as the Chancellor of the Duchy of Lancaster would agree, about 76 proposals of the Committee of the hon. Member for Nottingham, West (Mr. English). I always think of him as the author of these matters. I may be doing him an injustice, or even too much justice—I am not quite sure which—but nevertheless this matter must be looked into. Tonight we must get on with the job.
Mr. English: I must point out to the hon. and learned Gentleman that the report was originally drafted, as most reports are, in the name of the Chairman by Officers of the House. Almost every clause was discussed by all the members of the Committee. While we were unanimous on certain recommendations,

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no one member of the Committee could conceivably claim to be responsible for the Procedure's Committee's report.
Mr. Fletcher-Cooke: The hon. Gentleman is modest, as always. Nevertheless, his name is rightly linked with these proposals. They will be looked into.
The hon. Member for Perry Barr put forward a very good argument on the selectors. All I suggest to him is that, at 20 minutes to 11 tonight, before the 76 proposals of the Committee of the hon. Member for Nottingham, West, or whoever's Committee it is, are discussed, we cannot—
Mr. English: My hon. and learned Friend the Member for Warrington (Sir T. Williams).
Mr. Fletcher-Cooke: I am obliged to the hon. Gentleman.
We cannot tonight hold up the whole procedure of the House, because the selectors of the selectors are the foundation and groundwork of our procedures. Let us get on with it tonight, but let us accept the view that we can no longer go on with the rough and ready, black and white, Whips from both sides—
Sir Bernard Braine: Hits and misses.
Mr. Fletcher-Cooke: Hits and misses, as my hon. Friend the Member for Essex, South-East (Sir B. Braine) puts it. Let us get on with it tonight, but take seriously what the hon. Member for Perry Barr has said. The question of the selection of the judges is crucial to the life of the House and of democracy.
10.36 p.m.
Mr. Donald Stewart: I do not think that the House should accept the advice proffered by the hon. and learned Member for Darwen (Mr. Fletcher-Cooke). If the motion is passed, the Committee will be in effect for about a year.
Mr. Cryer: Five years—the life of a Parliament.
Mr. Stewart: There are two issues here. There is the question raised by the hon. Member for Birmingham, Perry Barr (Mr. Rooker), with which I shall not deal at the moment, but that does not
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mean that he has not put forward a good argument.
I wish to support the submission made by the hon. Member for Antrim, South (Mr. Molyneaux). I understand that the reason for the exclusion of a representative of the minority parties is that the formula precludes such a representative on the ground of insufficient numbers in the House. In the last Parliament the mathematics did not work out at all, but, for all that, we were represented on the Committee. I served on the Committee for a year. It worked very well. Therefore, I see no reason for exclusion on this occasion.
The country has just gone through an election which has raised grave doubts about fair representation. I do not think that we should add to any questions raised by jerrymandering of this kind. It will mean that the voters represented in the House by the Liberal Party, the Ulster Unionist Party and the Scottish National Party will have no say on the Committee of Selection. The matter can be resolved by good will and fair practice on both sides. I ask the Leader of the House to pay attention to the argument for inclusion on the Committee of a representative of the minority parties in the House.
10.39 p.m.
Mr. A. J. Beith: I wish to contribute briefly to the debate because it is important to look at the circumstances in which the practice of representing the minority parties on the Committee of Selection arose. It led to the appointment of the right hon. Member for the Western Isles (Mr. Stewart) as the first of a number of us who have done the job by rota. It arose during the last Parliament when, as members of minority parties, we found increasingly that our views on membership of individual Committees were not being respected, not out of any lack of good will on the part of the members of the Committee of Selection but because of the practical difficulties of relying upon a member of another party to assess the relative claims of members of a group of parties with whom his links were limited.
The hon. Member for Carlton (Mr. Holland)—I see that he is nodding—manfully sought to carry out this task. I would not wish it upon him when combined with the greater responsibilities

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which he might yet enjoy on this Committee if the main motion is carried tonight.
It was obviously a more sensible arrangement to have someone who could speak for the minority parties, and who would not only do that but engage in consultations week by week with the other parties to reach some agreement on who would claim places on particular Committees. That we were able to do with considerable success. However, we were not able to do so until we first crossed the barrier of getting representation on the Committee.
We had many consultations and many arguments, and many letters went to and fro. We advanced a case based upon numbers. We advanced the case that we ought to have a place on the Committee because of the size of our representation in the House and the numbers we had outside the House, the votes that were cast.
However, the Committee of Selection did not accept the case based upon numbers. It took a quite different view. The Committee, under the chairmanship of the right hon. Member for Sunderland, North (Mr. Willey), made a special report on the subject, in the 1975–76 Session, in which it said:
"In nominating Members to serve on Standing Committees Your Committee is well aware of the difficulties arising from the present composition of the House, especially in regard to the Members of the Minority Parties: that is to say the Liberal Party, the Scottish Nationalist Party, the United Ulster Unionist Coalition, and Plaid Cymru.
Your Committee has given careful consideration to the proposal that one of the members of Your Committee should be drawn from the Minority Parties."
The Committee went on to argue that these minority parties
"cannot claim, even collectively, to qualify for a place on Your Committee"
on the grounds of number. The report continued:
"Nevertheless, having regard to the nature of Your Committee's work and the need for acceptance by the whole House of decisions of Your Committee, Your Committee proposes the inclusion of one member from the Minority Parties."
The Committee made a positive recommendation, which was then implemented. In order for it to be implemented, the consent of the then Opposition party was
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necessary, because it was in effect one of that party's places, an Opposition place, which was given up for the purpose.
The whole argument tonight is about whether the present Opposition are prepared to surrender one of their places for the same purpose. The unwillingness in this respect is strange indeed. I look to the right hon. Member for Lanarkshire, North (Mr. Smith) to speak to it in due course. I think that the speech that we ought to hear tonight is really one from the right hon. Member for Wakefield (Mr. Harrison), who is the person who made this decision. We have all been waiting for many years for a speech from the right hon. Gentleman. On this issue he could contribute manfully, because I am quite sure that it is he who lies beind it.
But once the Committee had made that special report, the House, with the co-operation of the then Opposition and, indeed, the Government, who consented to this arrangement, went on to implement it. The right hon. Member for Western Isles took his place on that Committee. Some time later, by agreement between the parties concerned, I succeeded.
The arrangement worked well as an arrangement between the minority parties. We were able to arrive at agreement on who should serve on the Committees, and that saved a great deal of difficulty, because otherwise the Committee of Selection itself has to decide whether to put an SNP Member, an Ulster Unionist Member or a Liberal Member on a Committee considering a United Kingdom Bill, or whether—and this is often the more difficult question—to put a Liberal Member or an SNP Member on a Committee considering a Scottish Bill where each party has representation and votes in that country.
We resolved these difficulties and saved the Committee a great deal of work. It worked well within the Committee itself. I know that the right hon. Member for Sunderland, North, the then Chairman, and, I am confident, the then Opposition leader on the Committee, the hon. Member for Carlton, both found that it eased their responsibilities and enabled the Committee's work to proceed smoothly—so smoothly, indeed, that I cannot recall in all my time on the Committee a meeting of the Committee of Selection ever lasting longer than seven minutes. I can

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recall at least one occasion when the Committee made five decisions in the course of one minute and brought its proceedings to a conclusion.
There was a great deal in what was said by the hon. Member for Perry Barr, because at least the minority parties were able to assist the Committee's work and ensure that it did not have to spend its time making assessments of which minority party should serve on a particular Committee.
The minority parties, which are seeking a continuance of a practical and effective working arrangement, represent substantial bodies of opinion in the country, and they represent groups whose position in the House ought to be considered. The idea that qualification for a place on this Committee can be decided only on a numerical basis was rejected by the Committee and the House in the last Parliament. We have no need to advance the case on that ground, but we advance it because it is a practical and sensible working arrangement. There is no good reason why the present Opposition should seek to overturn it, and I seek the support of all hon. Members in continuing something that has been practical and useful.
10.45 p.m.
Mr. Clement Freud: I speak to the amendment in the names of the right hon. Member for Western Isles (Mr. Stewart), the hon. Member for Antrim, South (Mr. Molyneaux), and my hon. Friend the Member for Rochdale (Mr. Smith).
On a number of occasions in this House we have had words about the Committee of Selection, most notably in May 1976 when the Government lost yet another by-election and the number of Members on both sides of the House was pretty even. The current dispute is different. It is occasioned by what can only be called the churlishness of the Opposition Whips. The amendment quite simply is not a personal one. No one would like to say anything unpleasant about the man who, we hope, is to be replaced by my hon. Friend the Member for Berwick-upon-Tweed (Mr. Beith). It is simply a question of allowing a minority party to have a say.
Business in the House has always been transacted with a mixture of expedience
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and precedence. I draw the attention of the House to the establishment of the Committee of Selection in 1839. In that year Lord Melbourne was the Prime Minister. The Members were fairly volatile in their party allegiance, but the original Committee of Selection had on it five Members. They were Mr. Estcourt, who was an independent Liberal university member, and he was joined by two Liberals and two Conservatives. It seemed absolutely right to have that sort of composition. There were no minor parties in Parliament at that time, unless one called them all minor parties.
The idea of the Committee of Selection at that time was to include people who had either a pecuniary or a geographic interest in the matter to be transacted by the Committee. I quote from the Procedure of the House of Commons, Vol. II, 1908:
"The Committee of Selection, to which reference has already been made in several places. This committee consists of the chairman of the Standing Orders Committee, who is ex-officio chairman, and ten other members: three are a quorum. The work of the committee is continuous organisation."
It has always been the idea of a Committee of Selection to represent people who best know the quality of those Members who are due to serve on it. For that reason it is important to have a representative of the minor parties.
The 1976 dispute ended in the sad death of Mr. Hugh Delargy, but on 3 May 1976 he said about the Members:
"They are independent parties with their own Leaders, their own Whips and, more important, their own policies. They are the Liberals, the Scottish National Party, the United Ulster Unionist coalition and Plaid Cymru There is also the SDLP of Northern Ireland. None of these parties was elected to support the Conservative Party in this House. They were not elected primarily to oppose the Labour Party. They were elected for positive reasons—to pursue certain policies and to serve their electorates.
Combining those parties as though they were one united group is wrong. Uniting them with the Conservative Party is doubly wrong. Lumping those parties together and saying they are a united Opposition is simply a wild and crashing confusion of thought."—[Official Report, 3 May 1976; Vol. 910, c. 984.]
In that debate the hon. Member for Cirencester and Tewkesbury (Mr. Ridley) said something which I shall read because it is important and well put. He said:
"Before the Committee of Selection proceeds to that task, it seems to me right that the Committee should be representative itself of this

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House. At the moment, five of its members are supporters of the Government and only three represent the Opposition parties. Indeed, there are no members of the Committee who represent the four minor parties which sit on this side of the House. That seems to me to represent a totally undemocratic situation and one which should not be allowed to proceed.
The Committee does not report to the House and have its policy approved by a motion, and the House does not have the opportunity to approve the general principles upon which the Committee will be proceeding. That means the Committee could proceed to nominate Standing Committee representation which could be totally unrepresentative of the House. It is for that reason that it seems to me all the more important that the Committee itself should at least carry parity of membership from both sides of the House before it deliberates on its policy."—[Official Report, 28 April 1976; Vol. 910, c. 389–90.]
When I was fortunate enough to draw the No. 1 position for Private Members' Bills, I was faced with the selection of Members for the Committee. It is the tradition of the House that if there is no Division on Second Reading, he who moves the Second Reading may nominate the Members of the Committee. Having given two Members each to lead for the two major parties, I suddenly faced problems because the Government Whip decided that he would like a third person. It is essential that all Members of Parliament have someone on the Committee of Selection to whom they can plead their case. Had I not been fortunate enough to have my party's Whip serving on the Committee at that time, I would have lost one supporter. When there is no Division, it is right that the rule of the House should be continued in this way.
I draw the attention of the House to the composition of the Committees of Selection. In 1935, when there were 387 Conservatives, 154 Labour Members, and 21 Liberals, the Committee of Selection consisted of six Conservatives, three Labour Members, one Liberal, one National Liberal and one National Conservative. And so it went on, year after year. Look where you will—Gretton, Colonel (Chairman); Albery, Sir Irving; Boulton, Mr.; Davies, Sir George; and so on. In 1947 there were six Conservatives, three Labour Members, one National Liberal, one Opposition Liberal and so on.
The Committee of Selection should by rights have a majority of Government Members. But whether the Opposition
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have one, two or three fewer seems to me totally unimportant, and doubly unimportant after what we have heard about the length of time of deliberation. What is important is that the Opposition Members on the Committee of Selection, who should, democratically and rightly, be outnumbered by Members representing the Government, should represent all parts of the Opposition. It is wrong that these Members should be confined simply to the Labour Party when there are, albeit in lesser number than previously, a good selection of independent parties in this House.
Therefore, I ask Government Members to be fair-minded. I ask Opposition Members to be brave and admit that they were elected for themselves and not to serve the deputy Opposition Whip. I ask them to look at this motion, which seeks to give the five minority parties in this House a representative on the Committee of Selection, and to vote in favour of the amendment.
10.55 p.m.
Mr. John Smith: I am sorry to disappoint the hon. Member for Berwick-upon-Tweed (Mr. Beith) in speaking for the Opposition rather than my right hon. Friend the Member for Wakefield (Mr. Harrison), but the motion before us is simple. The hon. Gentleman referred to the special report of the Committee in the Session 1975–76 and quoted accurately from some part of it, but he omitted to read the final sentence, which said:
"Your Committee will review the position during the Session, especially in the context of any changes in the composition of the House."
The difference between this and the previous Parliament is in the composition of the House. In the previous Parliament the minority parties numbered 40. In that situation the view taken by the Committee was that although they did not reach the number of 70 which would automatically entitle them to a seat on the Committe of Selection—on a proportional representation basis, I suppose, apart from anything else—the fact that they had more than half that figure, arriving at 40, entitled them to one seat The present situation now is that there are 27 Members representing the minority parties, less than half the number that would automatically entitle them to a seat. I think that that is a very good reason

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for making the change proposed in the motion.
Mr. Beith: The right hon. Gentleman is overlooking the most important interpretation of those words in the Committee's report. The Committee, when it made that point, was not supposing that the representation of minority parties would be drastically reduced at a series of unlikely by-elections following the deaths of a large number of Members of the five parties. The Committee was anticipating what actually happened, namely, that the Government's majority in the House might disappear and that it would have to return to the issue of the overall balance between the two sides of the House.
Mr. Smith: I am content to rest not on the interpretation but on the plain meaning of the words, namely, that the recommendation was conditional upon the balance of forces in the House of Commons remaining as it was at the time when the Committee made its recommendation. The report makes clear that the normal basis of selection in getting a Member on to the Committee of Selection would be to achieve the number of 70, which is one-ninth of the membership of the House, excluding Mr. Speaker and the Deputy Speakers. Therefore, I think it is clear that the Committee had in mind that its recommendation was conditional on the balance of forces obtaining at that time.
The simple fact is that, as a result of the election, the balance of forces in the House has changed significantly by reducing the number in the minority parties from 40 to 27, thereby greatly weakening the case they had when they had 40. The matter is as simple as that, and I ask the House to support the motion and to reject the amendment.
10.58 p.m.
The Chancellor of the Duchy of Lancaster and Leader of the House of Commons (Mr. Norman St. John-Stevas): The House is indebted once again to the hon. Member for Nottingham, West (Mr. English) for having initiated an interesting debate on the procedure of the House. If anybody was in doubt before this debate about what the Committee of Selection actually does, that doubt will have been dispelled by this debate. We have been shown what
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an important role that Committee performs.
In the course of this debate the proposal of the Procedure Committee in recommendation 46—namely, that there should be a new procedure for the appointment of Select Committees—has been mentioned from time to time, but it is true to say that that is not, strictly speaking, before the House tonight. Until the House has debated the various recommendations of the report it would be inappropriate for Members in general to express a final view. It would certainly be inappropriate for me, as Leader of the House, to preempt what will, I hope, in due course be a debate on this subject. Until the House decides otherwise, the old procedure remains in force.
Although I agree that we should proceed as expeditiously as possible with the discussion of the various recommendations of the Procedure Committee, I would remind the House that there are 76 recommendations. They cannot, in the nature of things, all be debated at once. We must have some kind of priority for them. I have listened carefully to the hon. Gentleman, and I have stored his remarks up for consideration at perhaps a more appropriate moment.
Mr. Gordon Wilson: Does the right hon. Gentleman accept that one of the problems is that there is another motion on the Order Paper which attempts to perpetuate the life of the Committee of Selection until the end of this Parliament? Therefore, by taking the decision tonight that the Committee of Selection should be appointed as it is, we shall be taking a decision which could last until the end of this Parliament, regardless of the recommendations of the Select Committtee on Procedure.
Mr. St. John-Stevas: The motion on the Order Paper refers to the composition of the Committee of Selection. It does not affect its powers, and it would be possible to alter those powers even if the motion were passed tonight.
Mr. English: The right hon. Gentleman is quite right, if one phrase is added; namely, that the Government will give time for such a matter to be debated. Is the right hon. Gentleman committing the Government to that?
Mr. St. John-Stevas: It would not be right for me to make that sort of commitment when we have not begun to debate the important recommendations of the Procedure Committee. We should proceed in an orderly way. I hope that in due course all the recommendations will be debated. It should also be remembered that eight reports on procedure still await debate in the House.
I listened with great interest to the hon. Member for Birmingham, Perry Barr (Mr. Rooker) and the machinations that he described with a certain amount of pained surprise that such things could be alleged to be going on in the House. I should like to make the point that it is nothing to do with me—I was not even in shadowy office at the time. There seems to be an internal dispute in the Labour Party, and it would be unfeeling and presumptuous of me to intrude into some kind of private grief.
Mr. Rooker: That is not true. I deliberately gave two examples, one from each side of the House, where hon. Members have been kicked off Standing Committees. It is not a matter that affects one side of the House only, as time will tell.
Mr. St. John-Stevas: Whoever it affects, it has nothing to do with responsibilities—
Mr. Rooker: The right hon. Gentleman black-balled the hon. Member for Wolverhampton, South-West (Mr. Budgen).
Mr. St. John-Stevas: I did nothing of the kind. I shall do what I can to ensure that this unhappy pattern of events does not occur—if it did—again.
I turn to what my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) said. It is not necessary, as was suggested by the hon. Member for Perry Barr, that hon. Members should declare their intention of acting honourably. We apply that presumption to all hon. Members. Until the opposite has been established beyond all doubt, we must have confidence in hon. Members that they will act in the best interests of the House and not as puppets for the usual channels on either side of the House.
I turn to the amendment that was moved by the hon. Member for Antrim, South (Mr. Molyneaux). It is an import-
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ant amendment, its purpose being to remove the hon. Member for Bothwell (Mr. Hamilton) from the Committee and replace him by the hon. Member for Berwick-upon-Tweed (Mr. Beith). I hasten to say how much I agree that there is nothing personal in this issue. The hon. Member for Bothwell is the corpus delicti in every sense of the term, and he has been selected for this position only as a matter of convenience.
I have a considerable degree of sympathy with the argument that has been advanced by the hon. Members for Antrim, South, for Berwick-upon-Tweed and for Isle of Ely (Mr. Freud), the last in a most interesting historical exegesis, for which we are grateful to him and, no doubt, to the Library staff. But we are bound by the condition that is laid down by Standing Order No. 109 on private business that there can be only nine members on the Committee, and, as the hon. Member for Isle of Ely generously admitted, it is right and proper that the Government side, whichever party that happens to be, should have a majority on the Committee.
So this whole issue comes down to a question of the Opposition. It is the responsibility of the Opposition, not of the Government, how the Opposition seats are divided up. The right hon. Member for Lanarkshire, North (Mr. Smith) advanced a numerical argument. He said that there were 41 minority Members in the previous Parliament and only 27 in this; and if 41 justified a member on the Committee, 27 did not. But then he seemed to say that 41 did not justify a Member anyhow and that the minority parties needed 70 Members to justify having a Member on the Committee.
I am more literate than numerate, but there does not seem to be an overwhelming numerical argument for this case.
Mr. Fletcher-Cooke: Give them half a seat.
Mr. St. John-Stevas: I am grateful for the support of my hon. and learned Friend the Member for Darwen (Mr. Fletcher-Cooke). Incidentally, I found his reminiscences most interesting. They stretched back over some 300 years. I knew that my hon. and learned Friend has experience. I did not know that he had that much, and it is not surprising that with such extensive experience my hon. and

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learned Friend got straight to the point, which concerns the powers of the Committee. This matter is not before us at present.
This has been a useful debate. In considering these difficult issues, which must be resolved speedily for the good of the
House, I shall certainly bear in mind all the important points that have been made by hon. Members today.
Question put, That the amendment be made:—
The House divided: Ayes 11, Noes 186.

Division No. 8]

AYES

[11.10 p.m.

Alton, David

Penhaligon, David

Wainwright, Richard (Colne Valley)

Beith, A. J.

Powell, Rt. Hon. J. Enoch (S. Down)

Dunlop, John

Ross, Wm. (Londonderry)

TELLERS FOR THE AYES:

Howells, Geraint

Spriggs, Leslie

Mr. Gordon Wilson and

Molyneaux, James

Stewart, Rt. Hon. Donald (W. Isles)

Mr. Clement Freud.

NOES

Ancram, Michael

Fletcher-Cooke, Charles

Morrison, Hon. Peter (City of Chester)

Aspinwall, Jack

Forman, Nigel

Mudd, David

Atkins, Robert (Preston North)

Fraser, Peter (South Angus)

Murphy, Christopher

Atkinson, David (B'mouth, East)

Garel-Jones, Tristan

Myles, David

Baker, Kenneth (St. Marylebone)

Goodhew, Victor

Neale, Gerrard

Baker, Nicholas (North Dorset)

Gorst, John

Needham, Richard

Banks, Robert

Gow, Ian

Neubert, Michael

Beaumont-Dark, Anthony

Gray, Hamish

Newton, Tony

Bendall, Vivian

Greenway, Harry

Normanton, Tom

Berry, Hon. Anthony

Grieve, Percy

Page, Rt. Hon. R. Graham (Crosby)

Best, Keith

Griffiths, Peter (Portsmouth N.)

Patten, Christopher (Bath)

Blackburn, John

Grist, Ian

Patten, John (Oxford)

Blaker, Peter

Gummer, John Selwyn

Pawsey, James

Bonsor, Sir Nicholas

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

Percival, Sir Ian

Boscawen, Hon. Robert

Hamilton, James (Bothwell)

Pollock, Alexander

Boyson, Dr. Rhodes

Harrison, Rt. Hon. Walter

Raison, Timothy

Braine, Sir Bernard

Hawksley, Warren

Rathbone, Tim

Bray, Dr. Jeremy

Haynes, David

Renton, Tim

Bright, Graham

Henderson, Barry

Brittan, Leon

Hogg, Hon. Douglas (Grantham)

Rhys Williams, Sir Brandon

Brocklebank-Fowler, Christopher

Holland, Stuart (L'beth, Vauxhall)

Rippon, Rt. Hon. Geoffrey

Brown, Michael (Brigg & Sc'thorpe)

Hooson, Tom

Roberts, Michael (Cardiff N. W.)

Brown, Ronald W. (Hackney S)

Hunt, David (Wirral)

Roberts, Wyn (Conway)

Browne, John (Winchester)

Hunt, John (Ravensbourne)

Robertson, George

Buchanan-Smith, Hon. Alick

Jenkin, Rt. Hon. Patrick

Rooker, J. W.

Buck, Antony

Jessel, Toby

Rossi, Hugh

Butcher, John

Jopling, Rt. Hon. Michael

St. John Stevas, Rt. Hon. Norman

Butler, Hon. Adam

Kellett-Bowman, Mrs. Elaine

Shaw, Giles (Pudsey)

Cadbury, Jocelyn

Lambie, David

Shaw, Michael (Scarborough)

Callaghan, Jim (Middleton & P)

Lamborn, Harry

Shepherd, Colin (Hereford)

Carlisle, John (Luton West)

Lang, Ian

Shepherd, Richard (Aldridge-Br'hills)

Carlisle, Kenneth (Lincoln)

Langford-Holt, Sir John

Short, Mrs. Renée

Channon, Paul

Le Marchant, Spencer

Sims, Roger

Chapman, Sydney

Lennox-Boyd, Hon. Mark

Skeet, T. H. H.

Clarke, Kenneth (Rushcliffe)

Lester, Jim (Beeston)

Skinner, Dennis

Cocks, Rt. Hon. Michael (Bristol S.)

Lloyd, Ian (Havant & Waterloo)

Smith, Rt. Hon. J. (North Lanarkshire)

Colvin, Michael

Lloyd, Peter (Fareham)

Snape, Peter

Cook, Robin F.

McElhone, Frank

Speller, Tony

Costain, A. P.

MacGregor, John

Spicer, Jim (West Dorset)

Cowans, Harry

MacKenzie, Rt. Hon. Gregor

Spicer, Michael (S. Worcestershire)

Cranborne, Viscount

McNair-Wilson, Patrick (New Forest)

Squire, Robin

Cryer, Bob

McQuarrie, Albert

Stanbrook, Ivor

Dalyell, Tam

McWilliam, John

Stevens, Martin

Dean, Joseph (Leeds West)

Major, John

Stewart, John (East Renfrewshire)

Dorrell, Stephen

Marlow, Antony

Stradling Thomas, J.

Douglas-Hamilton, Lord James

Marshall, Jim (Leicester South)

Taylor, Mrs. Ann (Bolton West)

Dover, Denshore

Marten, Neil (Banbury)

Thompson, Donald

Dunn, Robert (Dartford)

Mather, Carol

Thorne, Neil (Ilford South)

Durant, Tony

Mawby, Ray

Thornton, George

Eastham, Ken

Mawhinney, Dr. Brian

Townend, John (Bridlington)

Edwards, Rt. Hon. N. (Pembroke)

Maxwell-Hyslop, Robin

Townsend, Cyril D. (Bexleyheath)

Eggar, Timothy

Mayhew, Patrick

Trippier, David

English, Michael

Mellor, David

Viggers, Peter

Evans, John (Newton)

Meyer, Sir Anthony

Waddington, David

Eyre, Reginald

Miller, Hal (Bromsgrove & Redditch)

Wakeham, John

Faith, Mrs. Sheila

Mills, Iain (Meriden)

Waldegrave, Hon. William

Farr, John

Moate, Roger

Wall, Patrick

Fenner, Mrs. Peggy

Monro, Hector

Waller, Gary

Finsberg, Geoffrey

Moore, John

Ward, John

Fletcher, Alexander (Edinburgh N.)

Morrison, Hon. Charles (Devizes)

Watson, John

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

Wickenden, Keith

TELLERS FOR THE NOES

Wheeler, John

Wilkinson, John

Mr. John Cope and

White, Frank R. (Bury & Radcliffe)

Williams, Delwyn (Montgomery)

Mr. Peter Brooke.

Whitney, Raymond

Winterton, Nicholas

Question accordingly negatived.
Main Question put and agreed to.
Ordered,
That Mr. Ronald W. Brown, Mr. Walter Clegg, Mr. A. P. Costain, Mr. Ifor Davies, Mr. Paul Dean, Mr. James Hamilton, Mr. Philip Holland, Mr. Harry Lamborn and Mr. Kenneth Lewis be members of the Committee of Selection.
Motion made, and Question proposed.
That the members of the Committee of Selection nominated this day shall continue to be members of the Committee for the remainder of this Parliament.—[Mr. John Stradling Thomas.]
Mr. Deputy Speaker: With the agreement of the House, I propose that at the same time we should discuss the motion
That this Order be a Standing Order of the House.
11.20 p.m.
Mr. Bob Cryer: The motion states:
"That the members of the Committee of Selection nomated this day shall continue to be members of the Committee for the remainder of this Parliament."
The "remainder of this Parliament" could be several years. The logical prognostication is a year or 18 months. We should lay down general ground rules at the beginning of the Parliament that are sensible and reasonable, especially in the light of the comments that have been made tonight.
I am not imputing any suggestion that the Committee of Selection is corrupt or is not trying to carry out its duty. However, the House should have some degree of accountability. Some serious reservations have been issued and aired by the minority parties and by representatives of both the Conservative and Labour Parties. It has been said that there have been areas of dissatisfaction in the past on both the Conservative and Labour Benches.
The debate could be accurately described as a House of Commons occasion. We are not imputing that the members of the Committee are not trying their best when we make some criticism of the setting up of the Committee for four or five, years. We are saying that there
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should be a greater degree of accountability.
It is a fact that House of Commons occasions have some relationship to the realities of ordinary people. The composition of a Standing Committee may affect the outcome of the legislation before it and so affect those who come within it. It is reasonable that Members of Parliament should have the opportunity once every year to re-elect the Committee of Selection. The re-election would probably go through on the nod, but if reservations were expressed about the performance of the Committee during the preceding 12 months the re-election would be the occasion for scrutiny and alternative suggestions.
I suggest that although the election at the end of 12 months may be without dissent, it may be controversial, and it may be challenged. That right ought to be given to hon. Members. It would extend, and not diminish, the rights of hon. Members. The right hon. Gentleman should withdraw the motion and bring to the House a motion that pro-vides that the Committee that we have appointed shall sit for no more than 12 months before returning to the House for reappointment on an annual basis.
That would be fairer. It would give us a greater degree of scrutiny and afford an extension of powers to Back-Bench Members of Parliament. If the criticisms that were aired tonight about the past performance of the Committee are valid—I believe that they are—the record of the Committee should be scrutinised, instead of allowing the sores to rub along the whole length of this Parliament. The private selection arrangements cause resentment. They may be seen by those involved to be perfectly proper. Nevertheless, they cause a good deal of resentment and a sense of frustration among the Members of Parliament involved.
This is a House of Commons occasion which has important repercussions. If there is a debate late at night it gives the Back Bencher a greater degree of involvement in the conduct of this Parliament. That is a reasonable step forward for this Parliament to take.

393
I ask the Leader of the House to withdraw the motion and to assure the House that he will bring back the motion which I suggested, namely, that there should be an annual election of the members of the Committee.
11.26 p.m.
Mr. Maxwell-Hyslop: I take the point made by the hon. Member for Keighley (Mr. Cryer). It has considerable force. However, I should like to put forward an alternative point which I think also has some validity. This motion is far more binding on the Government than it is on the House. It is the equivalent of the parson's freehold. The historical object of the parson's freehold was to prevent his being sacked by those more powerful than himself if he preached views that were unpopular with the powers of the day.
This motion makes it difficult for the Government to remove members of the Committee of Selection if they exercise the independence of judgment which I am confident they will exercise. I point out to any of our colleagues who are not totally conversant with our procedure that although the House, having taken a decision, cannot properly reverse it in the same Session of Parliament, it can properly do so in subsequent Sessions.
Secondly, it is not unknown to find at the beginning of the Order Paper that Standing Order No. 1, which says that the House should rise at 10 o'clock, is to be suspended. I do not regard that as precluding the House from making changes in the Committee of Selection should that Committee unhappily fail in the task entrusted to it by the House. Apart from a motion to suspend a Standing Order, there can be a motion of censure on the Chairman of the Committee. That is perfectly permissible. But these are technical points rather than the point of substance to which I return.
I regard the motion as giving security of tenure to the Committee of Selection to carry out its task honourably and with such weight that it would be a public scandal for the Government to remove its Chairman or members because they were not complaisant to the wishes of the Government. On that balance of judgment, I come down against the valid
394
point made by the hon. Gentleman in opposing the motion
11.30 p.m.
Mr. English: We have heard my hon. Friend the Member for Keighley (Mr. Cryer) and the hon. Member for Tiverton (Mr. Maxwell-Hyslop) produce arguments in opposite senses about the motion. But there is a third possibility. This issue does not need to be discussed at all tonight and does not need to be decided at this hour.
The point at issue is perfectly simple. The Prime Minister has given a commitment that the debate on our procedure, the main issue, will be held before the Summer Recess. The Leader of the House, naturally enough, supported her in that, and we expect that that debate will in due course be held and the House will be able to make a decision upon it.
We now have a Committee of Selection—the previous motion gave us that. Indeed, all the Labour Members voted with the Conservatives to ensure that we should have that Committee of Selection. We shall continue to have that Committee of Selection until October 1980 if nothing else is done. If this motion is not passed, we shall only be able to discuss the matter again in October 1980; that is all that will happen. But before the forthcoming Summer Recess the main issue will be discussed and decided upon by the House.
I suggest to the right hon. Gentleman that, having had the motion moved to extend the life of the Committee of Selection for the life of this Parliament, he should simply adjourn it, leave it on the Order Paper and bring it back to the House after the procedure debate to be held in a few weeks' time.
11.32 p.m.
Mr. St. John-Stevas: Again, we have had an interesting debate. It has been brief, as is perhaps not entirely inappropriate at this hour. We have had a classic deploying of arguments.
The argument put forward by the hon. Member for Keighley (Mr. Cryer) is the classic Chartist argument for annual elections, annual reviews, a chance for checking to be made on those who are elected, a re-selection process, if one likes. The other argument was advanced by my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) and was based on the

395
case for security of tenure, which, of course, is the great guarantee of independence in our society. Most of it, unfortunately, has been eroded, and the parson's freehold which he used as an analogue has, alas, by and large gone—I think unhappily and mistakenly so.
Let us see in this issue that the arguments are balanced one against the other. It is not, in my view, an entirely clear question, and one could argue the matter at great length.
Mr. Maxwell-Hyslop: There is a memory that I should like to recall to the House. When the parson's freehold was about to be abolished in an unjust way, my hon. and learned Friend the Member for Royal Tunbridge Wells (Mr. Mayhew), who is now Under-Secretary of State for Employment, drew to the attention of the House what was happening, quite unexpectedly, and the House threw out the Church measure that was proposing to do it. Some colleagues may remember that. So the House is very tender on this point.
Mr. St. John-Stevas: I am grateful for that interesting reminiscence. I recall the debate. Although in a sense it had nothing to do with me, I waited for it until a reasonably late hour to vote for the parson's freehold, on general grounds of Conservative principle.
I recognise the balance of the arguments in this case. Quite frankly, I think that if one has a balanced argument one does not go far wrong if one follows the accustomed course. I am sure that the hon. Member for Nottingham, West (Mr. English) will produce some precedent which none of us has ever heard of so I shall measure my words carefully.
In recent years, certainly, it has been the custom for the Committee of Selection to be appointed for the duration of a Parliament.
It is true that we could withdraw the motion and start again, as the hon. Gentleman suggested, but the argument against doing that is that it would lead to more delay and it would delay the opportunity which I hope the House will have, perhaps even sooner than the hon. Gentleman expects, to debate and decide
396
upon important recommendations made by the Procedure Committee.
Meanwhile, we have to get on, and the reason why I want this Committee to be appointed tonight is that only when it is appointed can we get on—
Mr. English: The Committee has been appointed.
Mr. St. John-Stevas: I see the distinction. Only when these motions are decided can we proceed rapidly with the appointment of the domestic Committees which I know it is the wish of the hon. Gentleman should be done.
Mr. English: I am sorry to challenge the right hon. Gentleman, but he is wrong. He had to have the Committee of Selection appointed. I understand that, and it has just been done. But the reason why the right hon Gentleman wants this motion is that it is not in accordance with most precedents. I suggest to the right hon. Gentleman that we should act as he should, like a Conservative, and not have this motion because it is designed to overturn the practice of the House.
The practice of the House is that the Committee of Selection that we have just appointed, for an unstated period, is, by the common custom of the House, appointed for this Session, which, as we all know, will end in October 1980. The motion is trying to reverse that practice of hundreds of years and say that the Committee should be appointed not for only a Session but for the whole of this Parliament. I suggest to the right hon. Gentleman that he should follow the argument that he used for conservatism.
Mr. St. John-Stevas: I did not say that.
Mr. Dennis Skinner: Does the right hon. Gentleman have "Erskine May"?
Mr. St. John-Stevas: Yes, I have "Erskine May". I recommend it to the hon. Gentleman. It will put him to sleep at almost any time.
I am not saying that there are not arguments balanced on each side, but we have a limited amount of time. We have a very full Session ahead of us. We have a limited amount of time before the Summer Recess for debating procedural matters, and it would complicate matters further if we did not resolve this matter

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tonight. I recognise the force of the argument, but I hope that we can resolve this matter tonight, and then the way will be clear to resolve other and more important procedural matters.
Question accordingly agreed to.
Ordered,
That the members of the Committee of Selection nominated this day shall continue
Mr. Deputy Speaker: I shall put the Questions on the two motions separately.
Question put:—
The House divided: Ayes 159, Noes 18.

Division No. 9]

AYES

[11.38 p.m.

Ancram, Michael

Greenway, Harry

Page, Rt. Hon. R. Graham (Crosby)

Aspinwall, Jack

Grieve, Percy

Patten, Christopher (Bath)

Atkins, Robert (Preston North)

Griffiths, Peter (Portsmouth N.)

Patten, John (Oxford)

Atkinson, David (B'mouth, East)

Grist, Ian

Pawsey, James

Banks, Robert

Gummer, John Selwyn

Percival, Sir Ian

Beaumont-Dark, Anthony

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

Pollock, Alexander

Bendall, Vivian

Harrison, Rt. Hon. Walter

Raison, Timothy

Berry, Hon. Anthony

Hawksley, Warren

Renton, Tim

Best, Keith

Henderson, Barry

Rhys Williams, Sir Brandon

Blackburn, John

Hogg, Hon. D. (Grantham)

Rippon, Rt. Hon. Geoffrey

Blaker, Peter

Hogg, N. (East Dunbartonshire)

Roberts, Michael (Cardiff N. W.)

Bonsor, Sir Nicholas

Hooson, T.

Roberts, Wyn (Conway)

Boscawen, Hon. Robert

Hunt, David (Wirral)

Rossi, Hugh

Boyson, Dr. Rhodes

Hunt, John (Ravensbourne)

St. John Stevas, Rt. Hon. Norman

Braine, Sir Bernard

Jenkin, Rt. Hon. Patrick

Shaw, Giles (Pudsey)

Bright, Graham

Jessel, Toby

Shaw, Michael (Scarborough)

Brittan, Leon

Jopling, Rt. Hon. Michael

Shepherd, Colin (Hereford)

Brooke, Hon. Peter

Kellett-Bowman, Mrs. Elaine

Shepherd, Richard (Aldridge-Br'hills)

Brown, Michael (Brigg & Sc'thorpe)

Lamborn, Harry

Sims, Roger

Brown, Ronald W. (Hackney S.)

Lang, Ian

Skeet, T. H. H.

Browne, John (Winchester)

Langford-Holt, Sir John

Smith, Rt. Hon. J. (North Lanarkshire)

Buchanan-Smith, Hon. Alick

Le Marchant, Spencer

Snape, Peter

Buck, Antony

Lennox-Boyd, Hon. Mark

Speller, Tony

Butcher, John

Lester, Jim (Beeston)

Spicer, Jim (West Dorset)

Butler, Hon. Adam

Lloyd, Peter (Fareham)

Spicer, Michael (S. Worcestershire)

Cadbury, Jocelyn

MacGregor, John

Squire, Robin

Carlisle, John (Luton West)

MacKenzie, Rt. Hon. Gregor

Stanbrook, Ivor

Carlisle, Kenneth (Lincoln)

McNair-Wilson, Patrick (New Forest)

Stevens, Martin

Channon, Paul

McQuarrie, Albert

Stewart, John (East Renfrewshire)

Chapman, Sydney

Major, John

Stradling Thomas, J.

Clarke, Kenneth (Rushcliffe)

Marlow, Antony

Thompson, Donald

Cocks, Rt. Hon. Michael (Bristol S.)

Marten, Neil (Banbury)

Thorne, Neil (Ilford South)

Colvin, Michael

Mather, Carol

Thornton, George

Cope, John

Mawby, Ray

Townend, John (Bridlington)

Costain, A. P.

Mawhinney, Dr. Brian

Townsend, Cyril D. (Bexleyheath)

Cranborne, Viscount

Maxwell-Hyslop, Robin

Trippier, David

Dorrell, Stephen

Mayhew, Patrick

Viggers, Peter

Dover, Denshore

Mellor, David

Wakeham, John

Dunn, Robert (Dartford)

Meyer, Sir Anthony

Waldegrave, Hon. William

Durant, Tony

Miller, Hal (Bromsgrove & Redditch)

Wall, Patrick

Edwards, Rt. Hon. N. (Pembroke)

Mills, Iain (Meriden)

Waller, Gary

Eggar, Timothy

Moate, Roger

Ward, John

Eyre, Reginald

Monro, Hector

Watson, John

Faith, Mrs. Sheila

Moore, John

Wells, P. (Hertford & Stevenage)

Farr, John

Morrison, Hon. Charles (Devizes)

Wheeler, J.

Fenner, Mrs. Peggy

Morrison, Hon. Peter (City of Chester)

Whitney, Raymond

Finsberg, Geoffrey

Mudd, David

Wickenden, K.

Fletcher, Alexander (Edinburgh N)

Murphy, Christopher

Wilkinson, J.

Forman, Nigel

Myles, David

Williams, D. J. D. (Montgomery)

Fraser, Peter (South Angus)

Neale, Gerrard

Winterton, Nicholas

Garel-Jones, Tristan

Needham, Richard

Goodhew, Victor

Neubert, Michael

TELLERS FOR THE AYES:

Gorst, John

Newton, Tony

Mr. David Waddington and

Gow, Ian

Normanton, Tom

Lord James Douglas-Hamilton.

Gray, Hamish

NOES

Alton, David

Holland, S. (Lambeth, Vauxhall)

Skinner, Dennis

Beith, A. J.

Howells, Geraint

Taylor, Mrs. Ann (Bolton West)

Callaghan, Jim (Middleton & P.)

Marshall, Jim (Leicester South)

White, Frank R. (Bury & Radcliffe)

Cook, Robin F.

Molyneaux, James

Dunlop, John

Penhaligon, David

TELLERS FOR THE NOES:

Eastham, Ken

Powell, Rt. Hon. J. Enoch (S. Down)

Mr. J. Rooker and

English, Michael

Ross, Wm. (Londonderry)

Mr. Bob Cryer.

Freud, Clement

to be members of the Committee for the remainder of this Parliament.
Ordered,
That this Order be a Standing Order of the House.—[Mr. John Stradling Thomas.]

BRITISH RAILWAYS (INVESTMENT)
Motion made, and Question proposed. That this House do now adjourn.—[Mr. Mather.]
11.49 p.m.
Mr. Peter Snape: Perhaps I may, first, congratulate you, Mr. Deputy Speaker, on your elevation to your present post. I know of no other Member of this House who could be transported, as it were, from the Mafia to the judiciary and receive only praise for having been moved so. It is a hallmark of the respect and affection in which you are held on both sides of the House that I give you my sincere congratulations this evening.
I congratulate also the Parliamentary Secretary on his appointment. I warn him that the National Union of Railwaymen will be a fairly strict watchdog over his and his Department's activities. I hope that he will give due consideration to our views. He must do that in respect of not only our views but the views of others. I hope that he will bear in mind that any criticism that we might make will, at least in these early days, be more constructive than obstructive. I cannot promise that that will continue. A lot will depend on the attitude of himself and his Department in the years to come.
Having got the polite stuff out of the way, I now move on to the meat of what I should like to say. I had better declare an interest straight away as the secretary of the NUR group in the House. Also, I concede that the railway industry gave me a steady, if not particularly lucrative, source of income for all of my former working life, as it did for my father also.
Many of us who work or have worked on the railways feel that we get a very raw deal from various commentators and various, sometimes self-styled, experts and that for too long we have been used as a music hall joke by the national newspapers and by others.
The NUR believes that Britain gets its railways on the cheap. By any international comparison, pound for pound of taxpayers' money, British Rail gives the best value for money in Europe. It is
400
often said that West Germany is an example for this country to follow. Again, pound for pound of taxpayers' money, British Rail does twice as well as does the Deutsche Bundesbahn. That ought to be acknowledged far more often than it is at present.
In real terms, over the past three years the cost of the railways to the British taxpayer has been reduced, because of frozen cash limits and investment levels, by 25 per cent. Not much credit is given for that by the Conservative Party or the national press, but it happens to be true. We believe that British Rail has done a magnificent job in the face of mounting financial difficulties. Those difficulties will continue to worsen if the situation is not changed. A change in Government policy is needed.
I am not saying that the present Government have actually laid down policy. Previous Labour Governments, of which I have been a member, ought to have faced reality concerning their financial attitude to British Rail, because in the long term the Labour Government's attitude to British Rail would have been extremely damaging.
I hope that the Parliamentary Secretary will do his best to see that his Department provides more cash, in the form of investment cash, if he wants the present success story—that is what it is with the railways—to continue. At present, the Railways Board is 15 months in arrears with its track renewal programme. Should such arrears continue and worsen over the next few years, the speed restrictions which are already affecting many main lines will be brought down lower and lower, and point-to-point timing will be extended further and further—a complete reversal of the situation over the past decade or so.
Many trains, on many lines, are still signalled and the bell codes are passed between signal boxes constructed at the turn of the century. Without the necessary investment, that will continue, and it is poor economy to allow that to happen. Not only are those signal boxes outdated and labour-intensive—and those signalmen are members of my trade union—but the cost of mechanical renewals gets higher every year.
Self-styled and occasionally self-appointed experts on the railway system say that the key is productivity and that

401
somehow we can wring more and more out of fewer and fewer railwaymen. I see a smile on the face of the tiger opposite, the hon. Member for Eastbourne (Mr. Gow). Over the past five years he has expressed his views on the railways and nationalised industry as a whole. I am surprised that he can tear himself away from his important duties. I noticed his picture in The Observer a couple of weeks ago—and he looked most fetching—as one of the men of influence surrounding the Prime Minister. I hope that he will tell the Prime Minister that I have had a good debate on the railway system and that all it needs is a little more cash, which might go against some of the hon. Gentleman's basic philosophies.
Turning to the locomotives, of the present fleet of about 2,000 the vast majority will be life-expired by the end of the 1980s. The present building rate of new locomotives is 20 a year, and at the present rate only 290 new freight locomotives will have been built by 1986. That does not give much hope for the great transfer of freight from one mode of transport to the other. It may not be what the present Government would like, but it will not happen, and nor would it under the policies of the previous Government.
It is said, more often than not by newspapers, that the railway unions are the big stumbling block to productivity. When one looks at the east coast main line, the old LNER—it is not a company for which I worked—one finds that it is hoped by the end of the 1980s to have the whole line controlled by no more than six signal boxes. That means the elimination of hundreds of existing mechanical, electro-mechanical and some fairly modern existing power signal boxes and an obvious vast reduction in the number of jobs for signalmen. My union welcomes that investment. We hope to redeploy those of our members who are displaced because of the closure of those signal boxes.
A signal box that opened at Kings Cross in October 1977 and replaced 57 former mechanical signal boxes. It covers 83 route miles of track and 260 track miles, and signals in the peak hours 94 trains in the course of an hour, all with six signalmen, a supervisor, an assistant and two station announcers. That is a fine example of productivity for which
402
the railway unions get no credit, and it is about time that they did.
The central issue on investment is the renewal of the diesel multiple unit fleet. For many people in this country they are the only trains that are available. There is so little electrified track that the DMU fleet is the workhorse of the commuter system outside the South of England. Every one of the 3,400 diesel multiple units was built during a short period in the 1950s, and all are now nearing the end of their lives.
Under the fairly small refurbishment programme—and it may not even be carried out under present cash limits—no matter how refurbished, these vehicles cannot survive for more than 10 years, yet there is nothing in the offing to replace them. British Rail's current estimate is that the cost of renewing that fleet is about £300 million. That money is not available to BR under the present investment ceiling and, to be fair, would not have been available under the previous Government's philosophies.
On 28 March the present Minister of Transport, in posing a question to the then Secretary of State for Transport, said:
"there is absolutely no justification for another Beeching round of cuts".—[Official Report, 28 March 1979; Vol. 964, c. 434.]
In fact, the Minister has already spelt out the first spending priority of the Ministry of Transport, because without the investment for which I am calling—that £300 million—another round of Beeching cuts is inevitable. There is no point in maintaining the lines if trains cannot be run on them. The fact is that there will not be any trains after a 10-year period because the diesel multiple unit fleet will then be condemned to the knacker's yard, or its mechanical equivalent.
British Rail assesses the investment that it needs at £380 million a year for the next 15 years, and after that at £360 million a year. Indeed, just to replace the worn-out assets the Board would need an investment level about 30 per cent. higher than it is at present over the next decade. What proposals do the Government have to provide the Board with the investment that it requires to sustain the railway at its present size and level of activity? I would appreciate some indication of this from the Parliamentary Secretary.

403
It would be unwise to look at railway investment without comparing the investment poured into its main competitor—the road haulage industry. I am not one of those who say that we should abolish every heavy lorry, although occasionally, when I find myself driving a car behind one, I wish I were. There is a great deal of unfairness about the respective investment in the two modes of transport. If one analyses expenditure within the railway system, one finds that 47½ per cent. of it goes on day-to-day maintenance, another 47½per cent. on renewal of existing assets and a mere 5 per cent. on improvements. A similar analysis of the road system shows that the story is very different—6 per cent. on maintenance, 11 per cent. on renewals, and a massive 83 per cent. on improvements. Of course, at present the roads investment is based on a rather specious method of cost-benefit analysis, while investment in rail and other forms of transport is generally taken on the basis of normal commercial criteria, so beloved of the hon. Member for Eastbourne and his good friend the former director of the International Monetary Fund. Dr. Witteveen.
This situation surely biases investment in favour of roads and against railways. Recently the Leitch committee in its work on trunk road assessment looked at these two methods in detail. It took a sample of five railway schemes using both cost-benefit techniques and commercial criteria. It found that in each case the benefits projected on the basis of cost-benefit analysis exceeded those projected on the basis of normal financial appraisal, and the benefits ranged from 39 per cent. more to a staggering 1,770 per cent. more. Not unnaturally, the Leitch committee concluded that cost-benefit analysis would normally be greater than normal financial appraisal benefit, and that the system should be given a try on the railways. At the very least, the two modes of transport should be compared in a similar way, because the present system militates against railway investment.
No debate of this kind would be complete without some mention of electrification. Given the present fuel situation, it is shortsighted, to say the least, to have reductions in public transport, particularly the railways.
404
Indeed, the Secretary of State for Energy came out with something very worrying during questions on Monday. He implied that those railway services that had been cut were not essential anyway and were lightly used. Of course they are. But they are not peak-hour services, which are most expensive—another revelation perhaps for the hon. Member for Eastbourne and the good doctor, too. They are off-peak services, which cost very little because the fixed assets and the staff are there anyway. Those are the very trains which are now being withdrawn.
It is a strange energy policy to pursue if it is said "Let us leave it all to the free market". If the Department of Energy feels that it should all be left to the free play of market forces, perhaps we can save some money right away by abolishing the Department of Energy. That Department does not appear to wish to play any part in the management of the country's resources. If we do not go in for greater railway electrification, we are abdicating our energy responsibilities.
I appreciate that I am encroaching on the Minister's time to reply to this debate, but I hope that he will forgive me. However, I wish to mention the vexed question of Southern region commuter services. I see in their places not only the hon. Member for Eastbourne, but the hon. Member for Faversham (Mr. Moate), both of whom have expressed concern about the plight of commuters. I do not want either hon Gentleman to think that the NUR is anti the Southern region commuters, despite their unfortunate propensity for voting in the wrong direction every five years. The NUR is certainly not anti those commuters. If the hon. Member for Eastbourne wants to denationalise the whole of the public sector, let him find me a few enterpreneurs in Eastbourne who want to buy and run the Southern region commuter service. It is one of British Rail's biggest loss-makers.
Hon. Members who represent constituencies in that part of the country should remember that every day millions of pounds of capital assets, paid for by the taxpayer, do nothing at all for 20 hours out of 24 so that Southern Region commuters can start work in London at or about nine o'clock in the morning and return home at or about 5 p.m.

405
I do not blame those constituents, or the hon. Gentlemen, but I appeal to them to display a little fairness in future. If normal commercial criteria are to apply, and if the doctrines and philosophies of the hon. Member for Eastbourne and the good doctor are to apply, we know that, on British Rail's own figures, freely available in the 1979 annual report, the rate of fare increases required from Southern region commuters, particularly those in the inner areas, is about 25 per cent. Therefore, if the free market philosophy is to prevail, the two hon. Gentlemen to whom I have referred should pop back to their constituencies and say "Sorry, folks, but the philosophy for which you voted means that you will have to pay an extra 25 per cent. for your rail tickets". Those are the facts, and I hope that both hon. Gentlemen will temper their criticisms by respecting them.
I shall resume my seat almost at once, but I wish to conclude by saying that there is a new spirit in our railways. The railway unions and most of those who work in the railway industry feel that in Sir Peter Parker they have a chairman who is concerned, involved and hoping to bring forward a new railway era. Certainly the railway unions are prepared to do their bit in co-operating. I hope that the Government and their Transport Ministry are also prepared to do their bit.
12.9 a.m.
The Parliamentary Secretary to the Ministry of Transport (Mr. Kenneth Clarke): I wish to begin by thanking the hon. Member for West Bromwich, East (Mr. Snape) for his kind words. I wish to thank him also for raising the subject of railway investment. He is always assiduous in the House in his interest in railway matters, and I look forward to debating this subject frequently with him over the next few years. This is a good opportunity for the Government to give some idea of their approach to the problem.
The hon. Gentleman will appreciate that, as yet, the Government have come to no conclusions on the investment problems of British Rail, because we have been but a brief time in office. Indeed, the pattern of investment decisions in the nationalised industries is such that no Government could come to decisions at this stage of the year. But I emphasise
406
that this debate gives an opportunity to give an idea of our approach.
I wish to assure the hon. Gentleman that there is no question of the Government treating the serious matter of railway investment as a party political foot-ball. I am not sure that we shall always achieve maximum agreement, but we shall certainly do our best to achieve an understanding on a sensible approach to the problems of railway administration.
I begin by taking up what the hon. Gentleman said about cash limits and the position of commuters in the context of what has been announced today about the Government's pattern of spending and the cash limits of the railways. Today it has been announced that the previous cash limits of British Rail have been reduced by £15 million. I am sure that all hon. Members appreciate that in the context of restraint in public spending it would be unreal for transport not to take its share. British Rail has to consider its contribution in the light of the revised cash limits.
I should like to make clear and reassure the hon. Gentleman that today's announcement has no effect on the investment ceiling set for British Rail. It also has no effect on the grant to passenger services and will not necessarily affect the level of passenger fares. In his response to my right hon. and learned Friend's Budget Statement, the Leader of the Opposition referred to the effect of the Budget compared with previous Budgets and suggested that it might affect the level of commuter fares. That is not the case. The Board will consider the situation, and it and the Government hope to manage without further increases in passenger fares this year. The Leader of the Opposition's comments were inappropriate and misleading.
The Government have been formed for only a few weeks, and it will be some time before a considered view on British Rail investment is reached. Every Government have accepted that, while investment priorities rest ultimately with the Board, investment plays a fundamental role in determining the railways of the future. No Government can ignore the cost to the nation of the investment decisions of British Rail. Successive Administrations rely on statutory powers and have always imposed a ceiling on the

407
Board's total investment. That policy shall continue.
I should like to return to what the Board has achieved within the ceilings imposed. At times, the hon. Gentleman was playing down the Board's achievements in the modernisation that has taken place beneath the ceilings that have operated. The hon. Gentleman referred to the peaking of investment that is tending to occur largely because of the peaking in investment in new equipment on the railways which took place in the late 1950s and early 1960s. That will have an important influence on the renewal needs of the railways in the 1980s.
The Government have taken careful note of Sir Peter Parker's remarks in the Board's annual report and accounts for 1978 about the renewal needs. The hon. Gentleman mentioned the earlier peaking of investment and said that the Board wishes to aim for an investment level of 30 per cent. higher than at present to replace worn-out assets.
Much is being done to renew rolling stock, locomotives and other assets which require replacement in the earlier investment peak. The Board has authority to renew 25 freight locomotives and 1,550 wagons per year. It has similar authority for the construction of 220 electric multiple units a year—largely for commuters, especially in the London area. Substantial programmes are in hand for renewing track, signalling and other infrastructure assets, which amounted last year to £165 million.
The hon. Gentleman asked whether these already large programmes of renewal need to be increased and whether the increases can be accommodated within the Board's existing investment ceiling. He particularly mentioned diesel multiple units, so I shall take them as an example of the present position and the point that the Board's planning has reached. I understand from the Board that replacements for the current fleet have not yet been developed. They are still in the design stage, although considerable work has been done. The Board expects to complete a prototype of a new diesel electric multiple unit by the end of the year. Testing has now been completed of an experimental unit based on body parts from the Leyland National bus, to-
408
gether with a modified freight wagon underframe. The research on this project was jointly funded by my Department and British Rail.
The Board has now authorised the construction of a two-car prototype rail bus based upon the principles embodied in the experimental vehicle. It aims to begin trial runs in 1980. If successful, such a rail bus might be suitable for providing services on lightly used local lines. It will be some time before the Board submits any proposals to my Department for replacing its diesel multiple unit fleet, either with the new vehicle that I have mentioned or with some other design. When proposals are submitted they will be urgently considered, together with the implications that they will obviously pose for the investment ceiling. Meanwhile, the Board is undertaking a major programme of refurbishment of existing diesel multiple units in order to improve their reliability and the level of comfort for passengers.
Let me now turn to the main and overall problem. It is helpful in considering the Board's future investment programme to divide the business into two main groups. Let me begin with the large network of commuter services in London and South-East England, the local stopping services in many parts of the country and the services operated under agreements with the passenger transport executives in the main conurbations outside London. These services are all those which receive support for social reasons—often called the social railway. Obviously there will be a continuing requirement of support of some kind, although the railways must contribute to the Government's public expenditure policies, and support for these services—those in the social railway—must be kept as low as possible.
In this area, where we accept the basic case for continued support, the Government will wish to hear from the Board what is the lowest cost way of renewing assets required for those services. The Board will need to assess the likely traffic and the least expensive way of providing a reasonable service. We shall need the Board's estimates of the extent and timing of renewal needs of these services. When we get those estimates, we shall give careful consideration to the Board's view that they will need investment funds

409
devoted to them above the level advocated in its present programme.
Let me turn to the Board's other businesses. These are the aspects which, in the Government's opinion, should be and are operated on commercial lines. These are the intercity, freight and parcels sides of the business.
The Board's investment ceiling obviously covers all its activities, including not only the ones that I have mentioned but subsidiary businesses such as Sealink UK Ltd. and British Transport Hotels Ltd. All those businesses there-fore have a bearing on the level of investment ceiling required. There is no social or economic case for subsidising any of these commercial businesses. It is the Board's policy, as well as the Government's, that they should be operated on commercial lines. Many of them are large by any standard, and a substantial part of the Board's investment programme is devoted to commercial development and renewal of their assets.
This means that investment in them must show a satisfactory commercial return. When assets are worn out, it must not be assumed, as it cannot be assumed in any other business, that they should automatically be renewed A careful
410
assessment must be made of where the market opportunities justify renewal, and, if so, in what form. Nor is it enough for investment simply to improve the quality of service and technical performance. It must cover any extra costs of doing so and show that they can be justified by an adequate return. Businesses must also be able to finance the investment within public expenditure limits.
The result is—and this has been repeatedly accepted in the Board's statements, particularly in respect of inter-city traffic and freight traffic—that the case for increased investment in the commercial sector must depend upon sound evidence that plans for better commercial performance are working. We are looking forward to the Board's own work in setting proper financial targets to these aspects of the business, and the investment programme for those aspects will be judged against those commercial targets.
The Question having been proposed after Ten o'clock on Tuesday evening and the debate having continued for half an hour, Mr. Deputy Speaker adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at nineteen minutes past Twelve o'clock.

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  Small Businesses
  Small Businesses
  Public Sector Borrowing Requirement
  Public Sector Borrowing Requirement
  State Shareholdings
  State Shareholdings
  European Community Funds
  European Community Funds
  Objects of Art
  Objects of Art
  Value Added Tax
  Value Added Tax
  Public Bodies
  Public Bodies
  Pay
  Pay
NORTHERN IRELAND
  Ministerial Appointments
  Ministerial Appointments
  Upper Galway, Newtownbreda (Development Application)
  Upper Galway, Newtownbreda (Development Application)
ENVIRONMENT
  Bathing Areas (Designation)
  Bathing Areas (Designation)
  Housing Act 1974 (Loan Charges)
  Housing Act 1974 (Loan Charges)
  Ministerial Appointments
  Ministerial Appointments
  Atmospheric Emissions
  Atmospheric Emissions
EDUCATION AND SCIENCE
  School Meals
  School Meals
  Ministerial Appointments
  Ministerial Appointments
TRADE
  Seal Skins
  Seal Skins
  Paper and Board Industry
  Paper and Board Industry
  Ministerial Appointments
  Ministerial Appointments
  DC-10 Aircraft
  DC-10 Aircraft
  Consumer Advice Centres
  Consumer Advice Centres
  Knitwear
  Knitwear
TRANSPORT
  Roads (Traffic Statistics)
  Roads (Traffic Statistics)
  Liverpool Inner Ring Road
  Liverpool Inner Ring Road
  Ministerial Appointments
  Ministerial Appointments
  Heavy Goods Vehicles
  Heavy Goods Vehicles
  Vehicle Excise Duty
  Vehicle Excise Duty
EMPLOYMENT
  Strikers' Incomes
  Strikers' Incomes
  Employment Protection Act
  Employment Protection Act
  Self-Employed
  Self-Employed
  Industrial Tribunals
  Industrial Tribunals
  Ministerial Appointments
  Ministerial Appointments
  Working Week
  Working Week
  Microelectronics
  Microelectronics
ENERGY
  Oil Supplies
  Oil Supplies
  Ministerial Appointments
  Ministerial Appointments
  Selby Coalfield
  Selby Coalfield
AGRICULTURE, FISHERIES AND FOOD
  Butter
  Butter
  Ministerial Appointments
  Ministerial Appointments
  Irish Cattle Imports
  Irish Cattle Imports
  East Germany
  East Germany
WALES
  Motorways and Trunk Roads
  Motorways and Trunk Roads
  Hill Farmers
  Hill Farmers
  Milk Production
  Milk Production
  Water Rates
  Water Rates
  Ministerial Appointments
  Ministerial Appointments
  School Transport
  School Transport
SOCIAL SERVICES
  Fraud Detection
  Fraud Detection
  Cohabitation
  Cohabitation
  Medical Certificates (Fees)
  Medical Certificates (Fees)
  Ministerial Appointments
  Ministerial Appointments
  Hospital Closures
  Hospital Closures
  Medical Records
  Medical Records
  Supplementary Benefit
  Supplementary Benefit
  Regional Secure Units
  Regional Secure Units
  Eraldin
  Eraldin
  World Health Organisation
  World Health Organisation
  Retirement Pension
  Retirement Pension
  Special Hospitals
  Special Hospitals
  Drag Monitoring
  Drag Monitoring
  Hillingdon Hospital
  Hillingdon Hospital
  Hearing Aids
  Hearing Aids

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

THE ELIZABETH GARRETT ANDERSON HOSPITAL
Lord BROCKWAY: 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 there have been further discussions with the Action Committee once the terms for the retention of the Elizabeth Garrett Anderson Hospital were announced.
Lord CULLEN of ASHBOURNE: My Lords, since announcing his plans for the future of the hospital, my right honourable friend the Secretary of State for Social Services has asked the North East Thames Regional Health Authority to establish a project team jointly with the Area Health Authority, the Elizabeth Garrett Anderson Hospital and those concerned at University College Hospital, to prepare proposals for the development of the hospital. The Regional Health Authority has already initiated discussions with all interested parties. In addition, my honourable friend the Minister of State for Health has had informal discussions with representatives of the Action Committee on the question of raising funds from voluntary sources.
Lord BROCKWAY: My Lords, in thanking the Minister for that reply, and congratulating him upon his appointment, may I ask whether, while individuals have met, it is not desirable that there should be a meeting with the highly representative Action Committee, which includes all the doctors, all the staff, the six trade unions involved and the South Camden Community Health Authority? Is not further
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discussion desirable in view of the fact that the beds are to be limited to 40 in number and are to be restricted to surgical purposes only, when very often women have disorders which are medical?
Lord CULLEN of ASHBOURNE: My Lords, many discussions have taken place already with the doctors, the staff of the EGA, and the Action Committee.
Lord WELLS-PESTELL: My Lords, may I ask the noble Lord the Minister what was the over-riding factor which caused his right honourable friend to keep the hospital open, bearing in mind that this matter had already been gone into very carefully and two former Secretaries of State, the Regional Health Authority, and the Area Health Authority decided that it should be closed in view of the fact that there are already far too many beds in that area? Now the hospital is to be maintained at a cost of £2 million initial outlay, with a yearly expenditure of £1 million in an area where there is a shortage of money, and I question whether this is the right thing to do.
Lord CULLEN of ASHBOURNE: My Lords, as I said, the decision was the result of long discussions with the authorities concerned. The noble Lord knows a very great deal about this subject, as the House has heard many times in the past, and he will be aware that the Government intend to make an arrangement whereby the £2 million approximate cost will be shared between the Government and voluntary bodies, and discussions are now taking place on how this should be done.
Lord WELLS-PESTELL: My Lords,will the Minister be good enough to ask his right honourable friend the Secretary of State to ensure that in future the maintenance costs of the hospital (which I understand will be about £1 million) will be found over and above what is allowed and allocated for the area as a whole?
Lord CULLEN of ASHBOURNE: My Lords, I think I shall have to write a letter to the noble Lord: I cannot find the relevant information in my brief.
Baroness BROOKE of YSTRADFELLTE: My Lords, is the Minister aware that those of us who have the well-being of the hospital at heart, who

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know that it is of a peculiar and very special variety and who know also about the patients with whom it deals and the service that it offers, are utterly delighted with the decision that has been taken to prolong its life?
Lord CULLEN of ASHBOURNE: My Lords, I am grateful to the noble Baroness.
Lord SOMERS: My Lords, will the noble Lord agree that one of the overriding reasons for keeping the hospital open is the fact that it is a women's hospital and that many women prefer to be examined and treated by other women?
Lord CULLEN of ASHBOURNE: My Lords, that is absolutely so, and in many cases on religious grounds, too.
Lord BROCKWAY: My Lords, while on this rare occasion welcoming the attitude of the Government rather than that of my own Front Bench, may I ask the noble Lord this question: Is it the intention to keep the hospital closed for three years? Meanwhile, will the doctors at the University College Hospital, where wards are being opened for them, be women doctors treating women if they so desire? Will the voluntary fund which is to be used be under the surveillance of the staff, so that they can be sure that it will be used for need rather than money?
Lord CULLEN of ASHBOURNE: My Lords, I think it is a little early to ask these questions, because the decision has only just been reached. The project team, which will be going into all the details, has now been established.
Lord BOWDEN: My Lords, may I, too, welcome this decision taken by the Government and remark that it has been very much welcomed by an enormous number of women?
Several noble Lords: No!
Lord BOWDEN: Is the Minister aware of the fact that almost every women's organisation, from the Women's Institute to the Inner Wheel—I could enumerate them, but I will not—have all earnestly besought the Government to keep the hospital in being so as to provide opportunities for women to be treated by
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women; and that the original document under the Act of 1946 prescribes specifically that women should practise both surgery and medicine for women? So may I beg the Minister to keep this in mind and hope very much that he is aware of the importance that a very large number of women's organisations attach to the maintenance of this small but very important hospital?
Lord CULLEN of ASHBOURNE: My Lords, I am fully aware of that, and so is the Secretary of State.

BANK HOLIDAYS AND THE ECONOMY
Lord THOMAS: 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 state of the economy of the country, they will give consideration to reducing the number of statutory and bank holidays per annum to help restore the international status of industrial Great Britain.
The MINISTER of STATE, DEPARTMENT of EMPLOYMENT (The Earl of Gowrie): My Lords, the Government's responsibility in this matter extends only to prescribing days on which the banks are to be closed to the public. The granting of holidays on such days is, strictly speaking, a matter for the employers and employees concerned, though it is of course customary to grant time off or a day in lieu. There are at present eight such holidays.
Lord THOMAS: My Lords, while thanking the Minister for that thoughtfully considered and courteous reply, may I ask him whether he agrees that nowadays every so-called holiday in fact develops into a holiday period, and would it not be better for the dates to be selected so as to avoid this overlap of grey areas before the holiday and after it? We really want to get this country more productive and more efficient.
The Earl of GOWRIE: My Lords, while wholly sharing the views of my noble friend on the need for greater productivity

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and efficiency, we try to minimise dislocation of the type he suggests by, as far as possible, holding statutory holidays, apart from Christmas, Easter and the New Year, on a Monday, so giving a long weekend.
Lord ALPORT: My Lords, may I ask the noble Earl whether the Government would consider amalgamating the Spring bank holiday and the May 1 bank holiday into a Whit bank holiday, as there has been over many centuries and which has been greatly enjoyed by the public in this country?
The Earl of GOWRIE: My Lords, I am very happy to consider that.
Baroness GAITSKELL: My Lords, is it not true that on the Continent, in Europe, they have many more holidays than we have, both religious holidays and other holidays?
The Earl of GOWRIE: My Lords, the noble Baroness is perfectly right, they do have more holiday days on the Continent. That is perfectly true of the Federal Republic of Germany, which is not noted for its low productivity. Nevertheless, if they fall at a weekend they do not usually have them as a holiday, so we make up a little bit there. But I should like to point out to the House that we are still below most of our continental partners.
Lord INGLEWOOD: My Lords, is my noble friend not aware that, while in the North of England great emphasis is put on Christmas Day and Boxing Day, our neighbours North of the Border in Scotland put less emphasis on those days but a great deal more on New Year's Day, the day before it and the day after it, and now the habit is growing that everything stops, or is likely to stop, for about 10 days? What are my noble friend's views on that?
The Earl of GOWRIE: My Lords, it would be a very rash Minister who attempted any interference with Hogmanay as it is presently constituted. I certainly do not propose to start.

ZIMBABWE-RHODESIA: NEW CONSTITUTION
2.50 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 they consider that the fifth principle for agreement with the régime in Zimbabwe-Rhodesia has been fulfilled when the new constitution has been submitted to the white but not to the black electorate.
The FOREIGN SECRETARY and MINISTER for OVERSEAS DEVELOPMENT (Lord Carrington): My Lords, the new constitution has not been submitted directly to the black electorate. My right honourable and noble friend Lord Boyd has given his judgment that the parties participating in the elections did so on the basis of the constitution. Mr. Drinkwater, QC, separately reached the same conclusion. The Government intend to build on what has been achieved to bring Rhodesia back to legality with the widest possible international recognition.
Lord HATCH of LUSBY: My Lords, while thanking the noble Lord for that Answer, and apologising for changing the Question and for any inconvenience that that has caused, may I ask whether he will answer directly the Question on the Order Paper: Does Her Majesty's Government accept or not accept that the constitution which has been devised in Zimbabwe-Rhodesia satisfies the fifth principle of being accepted by the population of Rhodesia as a whole?
Lord CARRINGTON: My Lords, I think that the noble Lord, Lord Hatch of Lusby, in common with all of us in this House hopes to see a peaceful settlement of the Rhodesia problem. There are very delicate consultations taking place this week. My noble friend Lord Harlech went yesterday to speak to the front-line presidents, and Mr. Derek Day is already in Salisbury speaking to Bishop Muzorewa. I hope that noble Lords on all sides of the House will understand if I do not go further today.
Viscount BOYD of MERTON: My Lords, may I ask my noble friend if he accepts that, having watched the Rhodesia elections very carefully, being convinced that they were fair and as free as possible and knowing that the parties, both black and white, campaigned under the banner of the new constitution, I think he has given the wisest possible answer in the present circumstances?
Lord CARRINGTON: My Lords, I am grateful to my noble friend and grateful to him and his colleagues for his report.
Lord GISBOROUGH: My Lords, will the noble Lord agree that the fact that 65 per cent. of the black electorate voted might indicate that they were not totally dissatisfied with the constitution?
Lord AVEBURY: My Lords, on the contrary, does the noble Lord not agree that the size of the turnout has not necessarily any bearing at all on the support of the electorate for the arrangements under which it was made? In this connection, did the noble Lord see the ITN poll on the elections which have just been held for the European Parliament which showed that of those who abstained only 25 per cent. did so because they were in disagreement with the arrangements for our entry into Europe?
Lord CARRINGTON: My Lords, there are some who think that and others who do not.
Lord CHITNIS: My Lords, does the noble Lord know what facilities were afforded to those who sought to campaign against voting in the election on the grounds that to do so might be taken as signifying their acceptance of the constitutional settlement?
Lord CARRINGTON: My Lords, if the noble Lord would like to put down a Question on that I will seek to answer it.
The Earl of KIMBERLEY: My Lords, can my noble friend say how many African countries that object to Bishop Muzorewa have elections themselves?
Lord CARRINGTON: My Lords, not without notice.
Lord BROCKWAY: My Lords, not wishing to prejudice the present discussions, may I ask whether the noble Lord has noted the statement of President Carter in the USA in which he said that, while there was a majority election, the constitution was only submitted in a referendum to the whites and that the majority of the election was not about the constitution?
Lord CARRINGTON: My Lords, I have noticed what the President said in what was a judicial determination. I hope that the noble Lord also read the entire statement that the President made, because he also said that he thought the elections were reasonably and fairly conducted and that there has been great progress made in Rhodesia. Equally I have had conversations in the last few weeks with Mr. Vance, and I have no doubt that the American Administration is supporting the proposals and the action that Her Majesty's Government are now taking.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, while entirely understanding the delicacy of the present situation and not wishing in any way to embarrass the noble Lord, may we take it that Her Majesty's Government hope to have an improved constitution in Zimbabwe-Rhodesia?
Lord CARRINGTON: My Lords, Her Majesty's Government hope for a settlement which has the widest possible international recognition.
Lord HATCH of LUSBY: My Lords, may I ask the noble Lord a final supplementary question? Would he agree that there is some parallel between the situation in Zimbabwe-Rhodesia today and that which existed when his noble friend Lord Home of the Hirsel put his constitution to the population of Rhodesia? Is there not a difference between voting under a constitution which is the only constitution you can vote under and voting for a constitution?
Lord CARRINGTON: My Lords, there was a difference in the test of acceptability. One was an election and the other was not. I hope that the noble Lord, Lord Hatch of Lusby, has read the

541
reports of my noble friend Lord Boyd and also of Mr. Drinkwater. I think they have a bearing on this subject.

ENTRY TO UK: REFUSALS AND DETENTION ARRANGEMENTS
2.55 p.m.
Lord AVEBURY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will instruct port medical officers that passengers refused leave to enter the United Kingdom on grounds of mental illness should not be detained in prisons.
The PARLIAMENTARY UNDERSECRETARY of STATE, HOME OFFICE (Lord Belstead): My Lords, where a mentally-ill passenger has to be detained, arrangements are normally made for his admission to hospital. Where detention in prison is unavoidable the need for medical treatment is taken into account when allocating the detainee.
Lord AVEBURY: My Lords, the Minister is probably aware of the case I am thinking of—that of Mr. Choonara, which was taken up with his honourable friend Mr. Timothy Raison. Does he not agree that when a consultant psychiatrist has expressed an opinion that the patient is fit to be released from hospital, and the chief immigration officer in charge of the case has said that provided medical advice is favourable he will agree the man can be released into the custody of his family, the port medical officer should not then step in and countermand the advice of the consultant without examining the patient or discussing the case with the psychiatrist concerned?
Lord BELSTEAD: My Lords, under Rule 61 of the Rules for Control on Entry it falls to the port medical inspector to use his clinical judgment as to the disposal of someone in this unfortunate position. I am aware of the case of Mr. Choonara to whom the noble Lord referred. It is true that Mr. Choonara had to go to the hospital wing at Pentonville because there
542
was nowhere else available for him to go when he came out of hospital at Southall. The noble Lord may wish to know that arrangements were made for Mr. Choonara to go to Prestwich hospital in Manchester on 11th June.
Lord AVEBURY: My Lords, is the noble Lord aware that Mr. Choonara has been in the Pentonville medical wing for four weeks as a result of the decision by the port medical officer? Quite apart from the immigration rules, does he not agree that this is a question of medical ethics and that the port medical officer should not make this decision without examining the patient and without discussing it with the consultant psychiatrist whose decision is was that he was fit to be released from St. Bernard's Hospital?
Lord BELSTEAD: My Lords, this is a question of the statute law and the practicalities of where people can be placed. The law is quite clear. Under Rule 61 it falls to the port medical inspector to use his judgment. In the case of Mr. Choonara, the best arrangements possible have been made—which have been, successively, hospital, the hospital wing at Pentonville, and now once again (for, I hope, a short time) hospital.

UNIVERSITY COLLEGE LONDON BILL [H.L.]
Read 3a, and passed, and sent to the Commons.

SOUND BROADCASTING
The CHAIRMAN of COMMITTEES (Lord Aberdare): My Lords, I beg to move the first Motion standing in my name on the Order Paper.
Moved, That, as proposed by the Committee of Selection, the Lords following, with the Chairman of Committees, be named of the Select Committee on Sound Broadcasting:—

Cathcart, E.

Lloyd of Hampstead, L.

Orr-Ewing, L.

Phillips, B.

Winstanley, L.

That the Committee have power to adjourn from place to place and to report from time to time;
That two be the Quorum of the Committee;
That the Committee have power to appoint Specialist Advisers;
That the Committee have power to join with any Select Committee on Sound Broadcasting that may be appointed by the Commons;
That the Committee have power to agree with the Commons in the appointment of a Chairman for any joint meeting. —(Lord Aberdare.)
On Question, Motion agreed to; and a Message ordered to be sent to the Commons to acquaint them therewith.

PERSONAL BILLS
Lord ABERDARE: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
Moved, That a Select Committee on Personal Bills be appointed, to which all Petitions for Personal Bills shall stand referred; and that, as proposed by the Committee of Selection, the Lords following, with the Chairman of Committees, be named of the Committee:—

Bledisloe, V.

Cross of Chelsea, L.

Hampton, L.

Houghton of Sowerby, L.

Mancroft, L.

Wilberforce, L.

—(Lord Aberdare.)
On Question, Motion agreed to.

INDUSTRIAL TRAINING LEVY (ENGINEERING) ORDER 1979
3 p.m.
The Earl of GOWRIE: My Lords, with the eyes and ears of the nation upon one today, I beg to move that the draft Industrial Training Levy (Engineering) Order 1979 be approved. This is the second time that an Engineering Industry Training Levy Order has come before the
544
House for approval. Last year the order was introduced in this House by the noble Lord, Lord Wallace of Coslany, and was supported by my noble friend Lord Long, and I am sure we can look for the same bipartisan approach today. I also hope that, as last year, the debate will cover training in the engineering industry generally because the engineering industry is one of the key wealth-creating sectors of the economy. Its training arrangements are therefore of great importance in equipping the industry for future needs and growth.
I should perhaps explain that under the Industrial Training Act 1964, as amended by the 1973 Employment and Training Act, industrial training boards raise and collect levy from establishments within their scope for the purpose of encouraging adequate training. There is exemption for small firms and for other firms who meet the board's training criteria. The boards consist of representatives of employers and unions in the industries concerned, and members representing educational interests.
This particular levy order is before the House because one part of it involves a levy of 2 per cent. on large employers in the mechanical and electrical engineering construction sector. Under the Act an order giving an industrial training board power to raise a levy in excess of 1 per cent. of emoluments must be approved by both Houses. This order is identical to last year's. For the main part of the engineering industry the proposed levy is 1 per cent. of a firm's aggregate wage bill with small firms with less than 60 employees excluded. For the foundry sector the proposed levy is also 1 per cent. with establishments with payrolls of less than £25,000 excluded.
For the engineering construction sector the proposed levy is 2 per cent. on large companies and, unlike the other sectors, there is no provision for exemption except in the case of head office staff. The 2 per cent. levy will apply to all site employees of companies wholly or mainly engaged in engineering construction activities and to other engineering companies in respect of workers wholly or mainly engaged on site on engineering construction activities. That is simply there to stop the levy being avoidable. It will not apply in respect of workers not

545
employed on sites, such as those working in companies' head offices for instance; and for them the levy will be 1 per cent. It will be assessed in stages—no levy on the first £50,000 of an employer's payroll for site employees, 1 per cent. on the next £450,000 and 2 per cent. on the payroll above £500,000. This means that only large employers will pay the 2 per cent. and then on only part of their payroll. The board estimate that the average levy on the total payroll of a large employer will be about 1½ per cent.
These proposals follow a period of extensive consideration and consultation. They have been unanimously approved by the Engineering Industry Training Board and by the Manpower Services Commission. The Oil and Chemical Plant Constructors Association and the Engineering Employers Federation, which represent the majority of employers in the engineering construction sector were consulted by the board about the 2 per cent. levy and showed overwhelming support, with only eight of the 155 firms consulted opposed.
The reason for the 2 per cent. levy is that in the engineering construction sector training is difficult to organise because of the peripatetic and fluctuating nature of the workforce, and because the place of work is of course not normally a permanent one. This has led in the past to a rather poor training effort over the years in this sector—indeed until recently there was no formal apprentice training—which the Engineering Industry Training Board is now seeking to improve through the funds raised by the levy that we are discussing. For example, in the coming year grants to the sector to be made available from the levy funds will be used to finance first year craft and technician training, the training of operatives in important skills such as welding, instructor and training staff training, safety training, and fellowships to improve the standard of site management in the industry. The board's efforts will be assisted by the provision of some £365,000 from the Manpower Services Commission to support training in the engineering construction sector.
The whole House will support the efforts being made by the board to improve training in this key sector whose work impinges on so many parts of our economy; for example, I am thinking of
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the construction and assembly of power stations, gas works, steel mills and oil refineries—all of which rely on the job being done to high standards, and all of which are crucial to our future prosperity. Moreover, the engineering construction sector is a high-risk industry in which it is essential that there is proper training to maintain standards of safety. It is also a highly skilled industry with an unusually large proportion of skilled workers where the industry should make a significant contribution to its own skill needs. As I have said, this is widely accepted by the industry.
As this levy order covers the mainstream engineering and foundry sectors of the industry, as well as the engineering construction sector, I should like to conclude with some more general remarks about engineering training. If we are to achieve faster growth on which rising living standards and more jobs depend we must improve our industrial performance and competitive position, not least in key wealth-creating industries such as engineering. This is a central objective of the Government's policies and industrial training closely related to current and prospective needs for skills can play an important part in that process.
That is why we will continue to give substantial help to the EITB in its efforts to improve training at craft, technician and professional levels and to secure the entry to the industry of enough young people of the right calibre. The board is pursuing a number of approaches to achieve these objectives. It is operating the Engineering Careers Information Service to publicise to young people the careers available in the engineering industry. It is operating a wide range of advisory services like the export and consultancy service to help firms with the development of their export business. It is providing financial support for group training schemes which bring together small firms to share training facilities. It is operating a number of scholarship and grant schemes, including scholarships to encourage girls to train for posts in industry. These are, in the nature of things, mainly technician posts at present; but as the Minister responsible for female employment questions, I am extremely anxious to encourage the situation where more girls can take up formal engineering training. We attach particular importance

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to this because it will play a major part in the Manpower Services Commission's programme for training additional computer software personnel and in meeting the needs of the new micro-electronics-based technologies. These will in part be the subject of our debate in this House next Wednesday. We also attach particular importance to the board's work to improve apprentice training in the engineering industry.
It is playing an important part under the Manpower Services Commission's new Training for Skills programme which is designed to improve the assessment of the needs of industry for skilled workers and the quality and quantity of industrial training. Over the past year the board has on its own initiative issued the important discussion document, Review of Craft Apprenticeships in Engineering. If your Lordships wish, I shall see a copy is made available in the Library. The document proposes some fundamental changes in the apprenticeship system to make it more flexible in responding to the needs of the engineering industry for skilled workers and in preparing young people for work in an industry which will be changing very speedily in the future with the pace of technological change. I understand that some of the board's detailed proposals have proved to be controversial. They will obviously need further discussion, but I am sure that the objectives and principles of the proposals are rights: for instance, to move away from timeserving to achievement of standards at a speed suited to the individual's ability and aptitude; greater flexibility on age of entry to apprenticeships and better links between school and work. It seems to me that moves in these directions will be essential both to meet the challenges of the future for the industry, and also to provide more flexible training arrangements for young people and other workers in the industry. I therefore welcome the initiative the board has taken and hope progress will be made in consultation with all concerned in the industry and educational world. In commending this order to the House I am also glad to have the opportunity to pay tribute to the work of the members of the Engineering Industry Training Board, not least to its chairman, the noble Lord, Lord Scanlon, who I do not think is in his place, and to
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all its staff and to be able to express the importance which we in the Government attach to the work of the board. I beg to move.
Moved, That the draft order laid before the House on 28th March, be approved.—(The Earl of Gowrie.)
3.10 p.m.
Lord WALLACE of COSLANY: My Lords, may I first thank the noble Earl for his very clear and useful explanation of this order. On this side, we welcome the order which virtually repeats the provisions of the order which I had the duty of placing before the House last year. The noble Earl also went on to give us very important views on the training for the new technical skills. I welcome these remarks and would say that we also welcome the continued co-operation of managements and trade unions in this field: it is vital to Britain's future of training for skills.
A word of praise, I feel, is also due to the Manpower Services Commission for the work it has done and is doing in encouraging and creating training opportunities. Long may that work continue. The shortage of skilled workers continues to be a major problem in Britain. One company, Fords, has consistently to advertise on television for skilled workers, offering attractive side benefits. This may meet their problem, but in turn it creates problems for other companies who lose skilled tradesmen as a result.
The Manpower Services Commission's Training for Skills, a programme for action, and its training opportunity scheme, had the full support of the Labour Government. Can the noble Earl give a categorical assurance that the present Government will give support without restriction to these programmes? Managements and unions can and do play their part, but they must receive full Government backing to succeed in this very vital field.
Industrial training, whether in engineering or other industries, cannot be wholly effective unless it is adequately backed by the educational system in schools, colleges of further education and evening institutes. Day release is backed by many far-sighted employers, including

549
nationalised industries. Especially in view of the debate taking place in another Chamber, can the House be assured of expansion and not cuts in these fields, which themselves are vital to industrial training?
In dealing with the limited but welcome provisions of this order, we are touching on a problem of which the noble Earl gave a fair indication and the solution of which is vital to the industrial future of Britain and the prosperity of its people. I therefore trust that the House will look forward to and take full part in a full-scale debate in the not-too-distant future on the need to expand our skilled workforce and to meet the challenge of new technologies. My Lords, we welcome this order.
Lord ROCHESTER: My Lords, we on these Benches would like to join in thanking the noble Earl, Lord Gowrie, for the clear way in which he has explained to us the terms of this order. We have noted that it has been the subject of wide consultation within the Engineering Industry Training Board, on which sit representatives of both engineering employers and engineering unions. We have noted also that it has received the approval of the Manpower Services Commission, and I should like to endorse the praise which has already been given to the chairman and members of the Engineering Industry Training Board in this connection, and also to the Manpower Services Commission.
We are especially glad to approve the raising of a training levy in this particular industry because, as has already been indicated, it will be used largely for the training of people for skilled occupations. We hope that it will eventually prove of considerable help in meeting that shortage of skilled engineering workers, which is acting as a continuing constraint on the growth of output in manufacturing industry generally.
Lord LEE of NEWTON: My Lords, I was pleased that the noble Earl paid a tribute to my noble friend Lord Scanlon, who has done a first-class job of work in this respect. We have come a long way from the days not so long ago when the whole training in engineering was done by a few big firms and the rest pinched the products. The scheme we are now dis-
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cussing has had a big influence in widening the scope of training for younger people. Indeed, as my noble friend Lord Wallace said, I have known a time, no matter how depressed the economy is, when there is not an overall shortage of skilled engineers. I see that the noble Lord, Lord Gridley, is present: he will remember, as I do, that even when Northumberland and those areas were very depressed there was an overall shortage of skilled people in the shipyards. Indeed, if we could have obtained the requisite number of skilled people, they themselves would have resulted in the employment of unskilled people. This is a problem which radiates very widely in this respect.
I should like to ask the noble Earl whether the Government are considering why it is that, despite the fact that we are doing a reasonably good job now in the training of engineering students, we continue to have an overall shortage. Is it not the case that, having trained them, a huge number find no attraction in remaining within the industry? I should have thought it would be appropriate that, when Governments are analysing why we are not getting the maximum benefit from our training, they should bend their energies to discovering the causes of so many of these highly-trained young men then going into all sorts of other jobs which are certainly not as advantageous or as vital to the nation as engineering. I therefore commend the idea to the noble Earl that he should take the study a little further. Let us try to find why it is not attractive enough to keep the chaps, once we have trained them, doing the kind of thing for which they are so well qualified.
Baroness GAITSKELL: My Lords, may I just add one sentence to this? There is one man, the noble Lord, Lord Baker, who was one of the first distinguished men to draw attention to the great shortage of engineers in this country and all that we have suffered from this shortage.
3.18 p.m.
The Earl of GOWRIE: My Lords, I am grateful for the reception which the order has received. The noble Lord, Lord Wallace of Coslany, asked for categorical assurances. I do not think the Chancellor has yet got up in another place and so I am certainly in no position

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to give categorical assurances about any Budgetary questions whatsoever. I think, however, that the tone of my remarks, which were very carefully considered in the light of the situation, are such as to demonstrate the concern which we feel about the importance of having highly-skilled workers in the key wealth-generating sectors. I would say, however, that it is in my opinion a myth that worthy programmes can only progress by the constant injection of fresh cash. A shortage of cash is not, in this particular area, the main problem.
I would welcome the remarks made by the noble Lord, Lord Rochester, from the Liberal Benches and I have a word to say to the noble Lord, Lord Lee of Newton. He asked why it was that, despite a programme of intensive training of this kind, people leave. I really wish the noble Lord, Lord Lee, could come and make this remark at Conservative Party meetings up and down the country, because this is exactly our theme. It is increasingly not worth it in the present economy for people to remain in skilled areas of employment. They often do better in unskilled areas of employment. It is my earnest hope that the Chancellor is about to do something about that in another place. I would end by commending the order again to your Lordships and thanking the House for the general reception it has received.
On Question, Motion agreed to.

EEC FARM PRICES, 1979/80: 19TH REPORT OF ECC
3.20 p.m.
Lord WALSTON Lord WALSTON rose to move, That this House takes note of the Nineteenth Report of last Session of the European Communities Committee on the Commission's agricultural price proposals for 1979–80 (4648/79) (H.L. 127, 1978–79). The noble Lord said: My Lords, this report was prepared by your Committee in a considerable hurry. I should like to pay tribute to our officials and specialist advisers for their very great help in enabling this to be done, because we felt that it was important for it to be produced in sufficient time to help both Her Majesty's Government and those concerned with these matters in Brussels, before a final
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decision was taken on the price policy for the current year.
Your Lordships may remember that we were scheduled to debate this report on 3rd April, but various events over which we had no control supervened, as a result of which the debate had to be postponed until today. The unfortunate results of that postponement are, first, that we have lost from the Committee the very valuable services of our noble colleague Lord Trenchard who is now doing other, and I hope equally valuable, work elsewhere, and is therefore unable to take part in this debate, as I know he would have wished to do. It also happens to coincide with a rival attraction in another place which has perhaps somewhat depleted your Lordships' House and reduced the number who would otherwise have spoken.
But the balance is not entirely on the debit side. On the credit side, no decision on the prices has yet been taken in Brussels or by the Council of Ministers, and this debate is therefore still very pertinent to this important problem. Secondly, we have the privilege which we should otherwise not have had of having my noble friend Lord Peart speak from the Opposition Benches; and, also, of having the noble Earl, Lord Ferrers, making his initial speech—if not his maiden speech—in his new position. While it would be premature for me to congratulate him on what he is to say, it would not be premature for me to congratulate him on holding this extremely important position, which I know all of us in this House are very glad to see him doing.
The general background to these proposals of the Commission is somewhat complex, but to summarise—perhaps at the risk of over-simplification—I would say, first, that in any assessment of prices for agricultural products there is an overriding need to contain inflation, not only in this country but in the Community as a whole; but particularly in this country where, alas, the rate of inflation is among the highest. That is the first consideration to be taken into account. The second is the fact that, as we all know only too well, surpluses of certain commodities are great and are still rising. Thirdly, for certain commodities, consumption is in fact falling, thus exacerbating still further the accumulation of surpluses. Fourthly, to contradict the general policy

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which might stem from those three factors, there is the other fact that the cost of agricultural imports, in company with all other costs throughout the whole of Western Europe, is rising also, with the result that the costs of farmers throughout the Community are rising too. It is a fairly delicate balancing feat to adjust a policy so as to take account of all those conflicting factors.
The main proposals of the Commission can be summarised as follows. There are many subsidiary ones but I shall not weary your Lordships with them, though I hope that some later speakers may perhaps develop some of these. First, the Commission propose that there shall be a complete freeze on prices; there shall be no increase whatsoever. Secondly, they propose what is described as a co-responsibility levy for milk and dairy products, by which is meant that those who produce the dairy products which are in surplus should to some extent share the burden of disposing of those surpluses. I shall return to this in due course.
Thirdly, in view of the very considerable surplus of sugar that there is at the present time within the Community, and indeed in the whole world, the Commission propose that there shall be a reduction in the "B" quota for sugar.
Again without going into the details of this, but very broadly for the benefit of those of your Lordships who may not understand entirely the complexities of the "A", "B" and "C" quotas for sugar, one can say that sugar producers are given a certain figure for the "A" quota, and any sugar produced under the "A" quota is paid for at the full guaranteed price; that there is a "B" quota where they can take a gamble and they will get some price which is intermediate between the world sugar price and the guaranteed price; and, finally, that there is the "C" quota, which very few people pay attention to or make use of, where the producers are simply gambling on the free market price. The proposal is that the "A" quota should remain as it is, but that the "B" quota should be reduced.
Fourthly, the Commission propose that there should be a devaluation of the green pound in the United Kingdom of 5 per cent., thereby, in effect, increasing the prices to the United Kingdom producer
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by a like amount; and thereby also, one must say, increasing to some extent—though not to a very high amount—the cost of food to the consumer.
Before dealing in more detail with these points, there is just one general point that I would make on behalf of the Committee. We felt very strongly that the price review lost a great deal in its value and in its efficacy by reason of the fact that it came out so late. It was, of course, originally supposed to influence patterns of production to some extent. But there is no need for me to remind your Lordships that today, in June, with the prices still not yet fixed, we in this country will within six weeks be harvesting many of our crops, and the plans laid for our livestock have been made many months, if not a year or more, ago. Indeed, in certain parts of the Community crops are already being harvested. It is therefore quite clear that by fixing these prices so late in the year any effect that the prices might have on the immediate production patterns is in fact nonexistent. So we urge in our report that there should be a speeding up of this process.
While the old idea of the February price review that we used to have in this country also had its faults, in that it did not come out soon enough, at least it gave some indication several months in advance of what kind of prices farmers would receive for their products. Every year this is slipping increasingly far behind, and we believe that it is a matter which the Commission and the Council of Ministers should look at with a great deal of seriousness. Again, let me remind your Lordships that while the Commission must bear some responsibility for the delays in arriving at these prices, the ultimate responsibility for the present delays rests squarely on the shoulders of the Council of Ministers. The ball is now in their court, where it has been for many months—since, indeed, the beginning of March—and still no decision has been taken.
Let me deal in a little more detail with some of the specific problems. With regard to sugar, our recommendation is not that the "B" quota should be reduced but that the "A" quota should be reduced. A great deal of argument has gone on for many years, and is still continuing, as to

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whether surpluses can best be controlled by the price mechanism, or by the introduction of quotas, or by some other means. There already exists a system of quotas for sugar, but it does not work because the Commission and the Council of Ministers are too cowardly. They are not prepared to jeopardise the support of a large number of farmers in many countries—a very small number in this country, less than 3 per cent., as your Lordships know, but a significant force in other countries—by reducing the amount of this profitable but not entirely needed crop that is creating a headache when it comes to the question of surpluses.
The Commission and the Council of Ministers have taken a little nibble at this problem by suggesting that the "B" quota should be reduced. We believe, however, that the "A" quota should be reduced because it is the most efficient producers who will grow on the "B" quota. They are low-cost producers who are prepared to take a gamble and who think that they can beat the market, whereas the "A" quota producers embrace all the marginal and less efficient producers—the ones who, on economic grounds, should be phased out of sugar production. We believe that it would be far more effective, in dealing with this very thorny problem, if the Commission and the Council of Ministers took their courage in both hands and reduced the "A" quota rather than the "B" quota.
When we come to milk and the co-responsibility levy, those of your Lordships who have studied this problem and read our previous report may think that we are reversing our policy in coming down against the co-responsibility levy as proposed by the Commission. Our earlier report was in favour of a co-responsibility levy, but I suggest to your Lordships that there is nothing illogical or inconsistent about this. A co-responsibility levy can be a very valuable mechanism if it is geared to the degree of surpluses, so that the more milk that is produced the higher is the co-responsibility levy, and if it falls evenly on all milk producers throughout the whole of the Community.
The proposal of the Commission does neither of these things. It is not geared to the degree of surplus. It is a fixed levy. In other words, it represents no
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more and no less than a reduction in the price of milk. In addition to that, for social and political as opposed to economic reasons, it exempts a very large number of milk producers throughout the Community —although, I may say, a small number of milk producers in this country—with the result that the levy would fall particularly heavily on the most efficient producers and most heavily on the dairy farmers of the United Kingdom, an area which, as your Lordships well know, is a deficiency area in terms of dairy products.
We have to import not liquid milk but a very large amount of our cheese and butter. Therefore it might be considered to be logical that we in this country should increase our milk production, whereas in the poorer areas of Southern Germany, parts of France and so on where they have a surplus of milk which they have great difficulty in disposing of, a very large number of those producers would be entirely exempt from this co-responsibility levy. It is for that reason—not because we are opposed to the principle but because we are opposed to the way in which this co-responsibility levy is proposed and the effects it would have on milk production—that we come down in this report against the co-responsibility levy.
Thirdly, we come to the thorny question of the price freeze. Is it right that the price should be frozen, as the Commission propose, or is it right, in view of the rising costs for producers, that there should be some increase in the price that the farmer gets? We come down very squarely on the side of a price freeze. We believe that it is right at present, when there are surpluses, when those surpluses are growing and when we must contain inflation at all costs, that this should be done. However, it is only fair and honest to point out that a price freeze, as proposed by the Commission and as supported by my committee in this report, is not in fact a price freeze to the British farmer because, if it is taken at the same time as a devaluation of the green pound of 5 per cent., as the Commission propose, it would mean an increase in price, albeit a modest one, to the British farmer.
We accept this price freeze, but we do so in the full knowledge that it is impossible to control the scale of agricultural production by the price mechanism alone.

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We had certain differences of opinion within the committee—which is only natural as there are differences of opinion among expert economists and many others—as to the efficacy of the price mechanism in controlling production. However, I would point out to your Lordships what happened in 1920. Some of your Lordships may remember that during the First World War the Corn Production Act was passed which fixed prices at a very remunerative level for the British farmer. It gave him security and encouraged production.
In 1920, it was found that the cost of this legislation was becoming prohibitive, so the Corn Production Act was repealed in that year. If one looks at the figures, one sees that in 1923 the price of wheat and oats had just about halved, compared with the 1920 level. Nobody is talking at the present time about halving prices within the Common Agricultural Policy, yet it is interesting to see that, despite this halving of price, the acreage of oats—which in those days was a very important crop—dropped by a mere 7½ per cent. and the yield by slightly less, by 6 per cent. The acreage of wheat dropped by only 5 per cent., and in that particular year the yield of wheat went up by 4½ per cent.
I do not want to draw too many conclusions from this, but I think it is worth bearing these facts in mind. I believe that a more detailed study of the effects of the repeal of the Corn Production Act would be valuable. If they have not already done so, perhaps the Ministry of Agriculture would consider looking at these figures. All I am suggesting to your Lordships is that if we believe that purely by freezing prices—not halving them, as was done in 1920—we shall be able to do away with the surpluses, the mountains, we are very gravely misleading ourselves and other people. We must do other things besides that.
Quite apart from the freeze in prices, which we support, there is the question of the devaluation of the green pound: 5 per cent. as suggested by the Commission, 5 per cent. as supported, I believe, by the late Government, and 15 per cent. as asked for by the National Farmers' Union. We had long discussions in the committee and we did not reach full unanimity, although in the end no minority or dissenting report is contained in the
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report which is before your Lordships today. I hope that some of my colleagues who hold somewhat different views will express them later in this debate. However, we eventually came to the conclusion that 5 per cent. was insufficient and that 15 per cent. was unrealistic. Therefore, we went for the figure of 7½ per cent.
This is not solely in order to be kind to farmers, even though some of us on the committee happen to be farmers. It is because we feel that it is very important that this country should retain its competitive position vis-àvis our partners in the rest of the Community. If they are to enjoy prices significantly higher than those which the British farmer enjoys there is no doubt whatsoever that over the years their production will increase not only in quantity but in efficiency, because efficiency can only come from retained profits, whereas if our farmers were unduly starved our competitive position in this country would diminish. That would not be terribly happy for farmers but, far more important, in the long run it would not be very happy for the British consumer, it would not be very happy for the economy as a whole and it would not be very happy for our balance of payments. For that reason we believe that the Commission's proposal of 5 per cent. is somewhat on the low side and we should be happier to see a 7½ per cent. devaluation.
I am afraid that I have spoken for too long but this is a complex subject. All I will do now is to repeat, because I believe it to be of enormous importance, that a price policy alone cannot possibly remove surpluses. There are many other structural and other methods which are needed, and as we mentioned in our report they should be based not on the Common Agricultural Policy but on a common food policy. The Commission should direct its thoughts to the amount of food which is required from Community production within the whole Community and then evolve a system, using prices, possibly using quotas and indeed a whole variety of weapons in their armament, to achieve the amount of food that the consumer requires.
Of course, coupled with that there must be a social policy because inevitably there will be fewer people producing food, the margins of some of them will diminish; there will be social hardship in certain

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rural areas, and that is of concern to all of us. It is no better to have an underprivileged and poverty stricken rural population than it is to have urban slums, steel workers out of work and people on the dole. There is no easy and cheap answer. If we are to be assured of adequate food supplies for the generations ahead we must be prepared to pay an insurance premium so that we get that food, whether there are world surpluses or world famines; whether we are being competed with by the growing population of a world which is getting more money, or whether we can remain on our present relative economic levels. The insurance policy must be paid and also the social insurance policy must be paid. It is to those matters that all of us concerned with this problem must give increasing thought and I hope that in the months ahead your committee will be able to make a contribution in that direction. My Lords, I beg to move.
Moved, That this House takes note of the Nineteenth Report of last Session of the European Communities Committee on the Commission's agricultural price proposals for 1979–80 (4648/79) (H.L. 127, 1978–79).—(Lord Walston.)
3.46 p.m.
Baroness ELLIOT of HARWOOD: My Lords, I rise with very great pleasure to follow the noble Lord, Lord Walston, since I am a member of Committee D of your Lordships' House, over which he presides so efficiently and with such tremendous knowledge. When listening to him your Lordships will realise that you are listening to a real expert on agriculture, and that is something which we all admire very much indeed. As the noble Lord has said, this debate has been delayed for quite a long time since our report was made on 21st March and since then there have been tremendous events. The result of the General Election has given us a new Parliament, a new Minister and possibly some new policies, although I would say that in Committee D, where all Parties participate and our excellent chairman presides over us with great bonhomie, we seldom disagree in our discussions on the agricultural policy.
Nevertheless, as this is the first speech that I have made in an agricultural debate
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in this Parliament I should like to congratulate the noble Earl, Lord Ferrers, on his appointment and to wish him, and Mr. Peter Walker, the new Minister of Agriculture, Fisheries and Food, every good fortune in the future. I should also like to congratulate the noble Earl, Lord Mansfield, who represents Scottish agriculture. Being myself a farmer in Scotland I welcome his appointment very much indeed. I know that he is highly knowledgeable and is also engaged in the same occupation.
I think the CAP featured prominently in both the elections that have just taken place. There has been criticism from the Labour Party on the CAP, and also to some extent from the Conservative Party as well, but the returns in the European Elections were a disappointment to me. I thought it very disappointing that we only managed to get something like 31 per cent. of our population interested in this very important event. Personally, in casting my vote for a European MP I felt a thrill that I never expected to feel. It was something that I thought I should never do in my life, having lived through two wars in which Europe was involved. However although this may not be as influential and great an event as I had hoped it would be, I still think that we have begun something of enormous importance in European history.
I should like to make two other generalisations before I contribute to the debate on the hill and upland farming. There has been much talk and criticism of the surpluses, but how much worse would it be if they were shortages! At the present moment we are all anxious about the shortage of oil and petrol. How relieved we should be if there were a surplus of oil and petrol instead of a shortage! Once there was a shortage of sugar and we all became terribly agitated about that. We struggled to get more, and we did. I remember one year when there was a shortage of potatoes; that was perhaps not quite so important as sugar, but nevertheless everyone became agitated about it. I think the opposite is true of the commodities mentioned by the noble Lord, Lord Walston—milk, butter and wine—but surely, in spite of that, it is better that there should be surpluses rather than shortages. What I do not like is the way in which the CAP disposes of these surpluses, selling cheap to the

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consumer in the Communist world. I would much rather that the underdeveloped countries in the other parts of the world had a chance to obtain cheap supplies.
Your Lordships may know that once a year Committee D visits Brussels and we have the opportunity of meeting the Commissioner for Agriculture and many of his staff. I am tremendously interested because it is obviously a great opportunity to discuss matters. One of the things that strike me strongly whenever I go there is that in the Agricultural Commission no effort is made to increase the sales of the produce which is in surplus. As we know, we were highly criticised by the Commission on one occasion because our dairying industry is organised through our Milk Marketing Board. I am particularly interested in the Milk Marketing Board because it was in 1933 that my husband actually started it. Even then it was considered to be rather revolutionary and was much criticised. There could not have been a more remarkable referendum than that which took place among milk producers last year, when the Commission asked that before they approve of the British dairying industry continuing with the Milk Marketing Board, we should take a vote. That vote came out at something like 99.2 per cent. of producers of milk in the dairy industry in this country in favour. There could not be a more certain and important verdict than that.
One of the things the Milk Marketing Board does is to help to sell the produce of milk—not only the milk on the doorstep, which we all know is the key to selling milk, but cheese and butter and a whole mass of other things, and this is done by excellent propaganda through the Dairy Federation and so on. Nothing of that kind goes on in Europe; nobody tries to sell milk. I presume that they try to sell wine; they certainly do in France. Could they not do more in this direction? They do not try to sell things in the way in which we in this country organise the selling of milk and dairy produce. I should like to suggest—very humbly, because I am only a back-bench member of this Committee—that when our Minister of Agriculture goes to Brussels he should try to find out why no effort is made to try to sell the produce instead of waiting till the surpluses become so great that they are literally almost given away to the Communist countries.
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That is my own personal view on this, and so far I have failed to find anybody in Brussels who is prepared to try this method. For some reason which I do not know, they all seem frightened of the idea of having marketing boards for some of these commodities. If we can make a great success of our Milk Marketing Board why cannot there be marketing boards for some of the other surpluses in Europe, or some method of trying to get propaganda out to make people consume more? Of course, I agree with the noble Lord, Lord Walston, when he says that we do not want to encourage production in areas where it is not necessary to have any more production of that particular kind, but I still think that much more could be done through selling agencies.
Like Lord Walston, I am not very happy about the milk levy. We discussed this at considerable length in our Committee. We felt that in our industry, which is well organised and efficiently run, which produces economically, where we do not import milk at all and where we are self-sufficient both in production and in selling, we do not want to have to be burdened with a co-responsibilty levy. We should like our Minister to oppose that. But I would entirely agree that production of milk should not be undertaken in unprofitable areas—for example, in hill areas or on non-productive land. We could switch over in some areas, particularly the hill and upland areas, from production of milk to production of beef cattle, where there is not the same surplus, leaving the dairy industry to the richer lowlands. I think there could be in this country, and possibly in Europe too, a change from dairying to beef cattle and sheep production.
Passing to another subject, consumer prices are discussed in our report in paragraphs 27 to 29. I recommend your Lordships to look at them. Of course, vast numbers of the population are concerned about prices. We are all concerned about prices, but it is no good having an agricultural industry which is running at a loss or cannot pay workers the wages to which they are entitled. That is no way of running a great industry. Furthermore, in my experience, there is no industry in this country which is such a gamble. Weather conditions govern all our production. The winter we have just had is the worst I can remember in some

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40 years of farming. It will take as at least two or three years to recover from this. One year can be a disaster, and this one has been a disaster. It takes two or three years to recover. Dead lambs cannot be restored in a year; it takes at least two or three years to make up the numbers.
This is where the hill cattle and sheep subsidies come in. If your Lordships read the paper submitted to the Committee by the National Farmers Union—paragraphs 29 to 35 and the subsequent discussion—you will see how disturbing has been the decrease in beef cattle and sheep this winter, and the need to devalue the green pound in order that our produce can be sold at an economic price in the market is underlined. The NFU called for a 15 per cent, devaluation of the green pound. The CAP suggests only 5 per cent. We suggested 7½ per cent., and I doubt if that is enough. I should have preferred either 10 or 12 per cent., but under the persuasive influence of Lord Walston we all agreed to 7½ per cent. In making my speech here, I would like to say that I think we would have done better to have been a little more generous.
I should like to support the noble Lord, Lord Walston, very strongly in drawing attention to the need for long term policies for British agriculture. Farming is quite unlike other industries. You cannot change your policy overnight; it takes several years to change from dairying to beef. If you think you should change from one breed of sheep, like the black-faced sheep, to, let us say, Suffolk cross lambs or whatever you think would be more profitable or more worthwhile, it takes five years to do it. So it is quite impossible to run an industry like this unless we can have a longer-term policy both from our own Government and also from the Commission.
I am sure that those who control the agricultural policy here do appreciate this and will be prepared for us to plan ahead. But it is seldom done. Lord Walston stressed that very ably in his speech. I have no idea what the price of wool is going to be—although I produce thousands of sheep—until a quarter way through each year. Surely it should be possible for the producers of mutton and sheep to know a little beforehand, perhaps
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for two or three years, what the price of wool is going to be. All these things vitally affect the farm returns. This is one of the things which I hope very much that our Government, and particularly the Ministers we have here in your Lordships' House, will appreciate, because, as active farmers, they really must know what these delays and difficulties mean when you are laying out a tremendous amount.
Farming is not a cheap industry. We are having to spend huge sums of money in order to get any return at all. We do not mind doing it provided we get the return. But we always have this terrible gamble on the weather conditions. If you are working in a factory, it does not matter whether it rains or snows or what happens: you are not affected. If you are working on the land every day; if you have snow in May as we had this year; if you have the conditions under which we have all been working this year, it is a very hard business and it is very difficult to make two ends meet. So it is really extremely important that we should have a plan for prices in our farm policies which give some chance of bad conditions being accounted for, with, if you like, better opportunities when conditions are good. Certainly it will take a long time—the next three years—before our farming industry recovers.
My Lords, I have spoken long enough. Three are many very important proposals in this report. I hope that our representatives in Brussels will consider our comments carefully. I speak now as a member of the Committee; we are all concerned in agriculture as producers and as consumers. The Committee consulted a great many different bodies associated with our industry, such as the National Farmers' Union and the Milk Marketing Board, and everything is contained in the report. The Committee's recommendations were made with great care and by people who are deeply concerned and who are not anxious to enter farming and then to come out of it. Farming is our life and it is what we are all concerned about. We want the farming industry to be a greater success for the whole country. I hope, and have every confidence, that, when our new team goes to Brussels—knowing as it does the importance of

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agriculture to this country—it will ensure that we get the best possible deal for everyone.
4.1. p.m.
Lord SAINSBURY: My Lords, I should like to begin by offering your Lordships' House an apology as I may have to leave your Lordships' Chamber before the end of the debate, but no discourtesy is intended. It is difficult to talk about EEC farm prices for 1979–80 without making a brief comment on CAP generally or at least referring to the food surpluses which its policies cause. I hope that, with the usual kindly tolerance of your Lordships' House, that is permitted. As is well known, the bulk of those food surpluses have to be sold on world markets with the aid of subsidies paid for by the taxpayer. I need hardly add that Britain bears more than its fair share of that burden.
As an indication of the magnitude of the sums involved I point out that at the end of last year it was estimated that the subsidised disposal of food surpluses was likely to have cost the EEC budget £1,858 million in 1977. That would represent 52 per cent. of EEC expenditure on agriculture or 27 per cent. of the Community's total budget for that year. To take one commodity as an example, in 1977 the EEC paid a total of £400 million to dispose of more than 3 million tonnes of sugar outside its frontiers. To recast those huge figures in terms of the individual, it has been estimated that in 1978 surplus production was costing over £40 per year for every worker in the Community.
Also, it must not be overlooked that, in the interests of international goodwill and world trade, the dumping of these excessive surpluses must be eliminated. The low prices at which Community surpluses are exported are most damaging to world markets and to other nations. For example, the New Zealand Dairy Board claims that it is losing much of its butter market in the Caribbean because of aggressive cut-price selling by a member of the Community. To quote another example, the Australian Minister for Trade was reported in October last year of accusing the EEC of dumping sugar in Papua, New Guinea, right on Australia's doorstep, in a market which Australia regards as traditionally its own.
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Nor can one ignore the effect of those surpluses on public opinion at home. Taxpayers and consumers are rightly displeased, for example, at butter being sold behind the Iron Curtain at a third of the price that they have to pay for it. They resent what they consider as subsidising consumers outside the Community with their money. In my view, such a system calls for urgent and radical reform.
I believe that the major cause of this over-production is the level of prices, and that this level should move much nearer to world prices. Instead, there is evidence that the gap is widening between Community and world market prices. For example, figures published in March 1979 by the Ministry of Agriculture show that the Community price is more than double the world price for barley, nearly four times the world price for butter, over four times for skimmed milk, and over two and a half times for sugar.
I hope that your Lordships will forgive me for repeating my long held view that large and long-term surpluses which result from permanent over-production will be finally removed only when farm prices are at a level as to force the less efficient farmers out of production. There are those who believe that short-term palliatives are a waste of time as well as being ineffective. As an example of such ineffectiveness, there have been many reports that the effects of grants to reduce dairy production have been circumvented. In my opinion, any hardship caused to very small farmers, especially those with small dairy herds, by a harsher price policy should be dealt with by aid under national schemes or grants from EEC Social or Regional Funds.
Turning at last to the bulky 19th Report of the last Session on Farm Prices, I should like to point out that the minutes of evidence and tables supplied by the Ministry take up most of the space, and the conclusions of the Committee consist of only eight paragraphs. It is only fair to say that the chairman, my noble friend Lord Walston, found it difficult to reconcile the varying views of the members of the Committee, and he is to be congratulated on his achievement. I personally would have liked much greater emphasis placed on the fact that the first and most forceful

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action must be on prices. We state in paragraph 36 of the report that
"The ultimate objective must remain price harmonization at price levels which do not engender permanent surpluses".
I would have liked it brought out more strongly that a price freeze is the minimum action required, that it must last as long as structural surpluses exist, must involve a drop in real terms, and ideally should have the same impact on all member countries.
I am sure that your Lordships will all agree that this latter objective is very greatly complicated by the green currencies, and that is brought out in paragraph 34 of the report. If the Community's policy is to limit production through prices, countries with weaker currencies or negative MCAs, like Britain, could counteract an attempt to do so by further devaluing their green currencies and thereby increasing the price to their own producers. Although I fully accept the desirability of phasing out green currencies, as recommended in our report, the timing and the degree of devaluation should, in my opinion, be left to national Governments. As we point out, the National Farmers' Union suggested a devaluation of 15 per cent., and the decision of the last Government was 5 per cent. The Consumers' Association said in their evidence that they would like to see any change in the United Kingdom's green rate contingent upon a revaluation of the green mark and green currencies of the Benelux countries. They suggest that
"green rate movements should be used only as part of an overall strategy to realign prices around a reasonable 'common' level",
and I have sumpathy with their view. The amount by which the green pound is devalued should, in my opinion, be related to what happens to the price of the various surplus products in terms of units of account at the annual review of the Commission's proposals.
I understand that on 18th June the new Minister of Agriculture will be attending a Council meeting of his fellow Agricultural Ministers where there will be renewed consideration of farm prices for 1979–80. In my opinion, it would be a tactical mistake if Mr. Walker were to press for a further devaluation of the green pound because, as a result, we would be in danger of not achieving the Commission's hope
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for a freeze in farm prices. The recent silence on the part of the National Farmers' Union may be indicative of their expectations. We are told daily by the media and from the public platform of the need to reform the CAP, but the corporate will of the Community to take action to alter the CAP's imbalances seems to be lacking. In my view, action should not be long delayed because the effect may be disastrous to the European Community and harmful to the well-being of the vast majority of its people.
4.15 p.m.
Earl FORTESCUE: My Lords, I should like to add my thanks to the noble Lord, Lord Walston, for initiating this debate. When I spoke on this subject last year I complained that there was little or no reference to pigs. I am glad to say that that omission has now been rectified, although so far no speaker has specifically mentioned that commodity. However, I would hope to return to the subject of pigs later.
I should like to congratulate Sub-Committee D on absorbing so much evidence and for formulating such a good report. As to the Sub-Committee's conclusions, in so far as I am competent to speak on other commodities, I would very largely agree with the Committee's conclusions. I endorse the conclusion in paragraph 33 that the surplus problem in certain commodities cannot be solved by price reductions alone and that some special social measures are necessary. I endorse the conclusion in paragraph 34 that those countries which have an overvalued green currency should be allowed to devalue in accordance with their own circumstances. For this country the Sub-Committee recommends a devaluation of 7½ per cent. I doubt whether that is sufficient, even now; and particularly in view of the recent increase in the price of oil and its inevitable inflationary effects.
I strongly endorse the conclusion in paragraph 35 that the farming industry should be given longer-term guarantees, and in real terms if that is possible. It is certainly not good enough to have the price announced well after a crop has been planted or when the animal has not only been conceived and born but has been reared for several and maybe many months. I agree that the possibility of a

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special devaluation of the green pound for certain commodities only may well be worth examining—that is to be found in paragraph 38.
I confess that I found our post-war Deficiency Payments Scheme, with its guaranteed prices, infinitely preferable to the present scheme under the CAP. Under the latter scheme producers in different countries get widely differing prices, and some countries are subsidising other countries to an unacceptable extent. Our old Deficiency Payments Scheme had a number of advantages which are largely lacking at present. First, it was reasonably simple and easily understood. Secondly, it enabled this country to buy so-called cheap food at world market prices. Lastly—and of extreme importance—any additional payments to the British farmer were paid for by the British taxpayer; by that I mean that the money stayed in this country and it did not go to subsidise unwanted production on non-viable farms or smallholdings on the Continent of Europe. Our Deficiency Payments Scheme may be unacceptable to the EEC, but I would recommend that the basic thinking behind it be remembered when the present CAP scheme is reformed.
I should now like to revert to the commodity of which I have most experience, and that is pigs. Rather more than a year ago I informed your Lordships of the plight of the pig farmers in this country and of the effect on the ancillary industries. I urged the Government to take steps to rectify the situation. Little happened. The situation has now gone from bad to worse. When I last spoke pigs were fetching 80p or thereabouts per kilogramme; now they are worth rather less. Barley was then bought for about £80 per tonne; now it costs very nearly £100 per tonne, and barley is the main ingredient in a pig's diet. Pig breeders have gone out of business in considerable numbers. Nearly one-fifth have done so in the last four years. The June return for the pig breeding herd this year is likely to show it lower than it has been for the last 10 years, while there have been large increases in the numbers of pigs in most Continental countries. The number of breeding pigs indicates the number of pigs for slaughter in the coming months. It also reflects the recent profitability of the finished pig.
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Your Lordships will understand that no pig farmer is inclined to get out of pigs unless the financial situation is serious. I suggest that this point has now been reached in very many cases. A devaluation of the green pound will, I think, not solve the pig problem, as the pig's feed costs will also rise as a result. A guaranteed pig price linked with a feed index would be enormously helpful. The pig problem is not confined to pig farmers alone; it also affects the processing factories. I know of at least five factories which are closing down their plants, and these range from Aberdeenshire to the London area and to Wiltshire, and several thousand jobs will be lost as a result. If the Government want a viable pig industry in this country (as I believe they must) then they should introduce some measure of encouragement before the industry loses all its confidence. I should add that, once the industry's confidence is lost, it will take some years to regain, and it will take even longer to regain our share of the market for pig products.
4.22 p.m.
Lord COLLISON: My Lords, it is a pleasure to follow the noble Earl, and to be able to say that, in comparing our old deficiency payments scheme and the scheme operated in the Common Market, I entirely agree with him. Unfortunately, we went in too late to influence things very much in that direction, and of course it is very difficult to overturn something which has now been operating for a number of years. I understand that there is also a problem about costs.
Our thanks, of course, are due to the noble Lord, Lord Walston, for introducing this important report and for doing it so ably and with such clarity. I do not wish to take up a great deal of your Lordships' time. Therefore, I propose to deal with only two aspects of the Commission's proposals and the Committee's response to them. First, the question of the freeze in relation to the green pound, and the other point I want to deal with is the question of the co-responsibility levy. Other noble Lords have taken up other issues. I was glad to hear what has been said about pigs and sugar, but obviously there is no time for any one of us to cover the whole ground.
Having listened to the evidence and read all the written evidence, it is clear that

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on this occasion there is pretty well unanimous agreement that there has to be a price freeze not only for this year but for several years to come. I think that this is due to the fact that a response is happening to the enormous groundswell of criticism about the way the support scheme is working. I expect your Lordships know—I most certainly do—what housewives have to say when they learn about butter being sold in Russia supported by money paid by the British taxpayer; when they hear so much about this mountain and that mountain, and the wine lake. They are fed up with it, and they want a change. This has resulted in the acceptance that prices have a good deal to do with this, and that there has to be some kind of freeze. But your Committee did not think that a price freeze alone would be sufficient to reduce these surpluses quickly enough.
We also recognise that, desirable as it might be—and I entirely agreed with the noble Lord, Lord Sainsbury, in this matter—price reductions large enough to be effective, particularly on the Continent, and thinking of Germany among others, are not politically possible. So the report states quite firmly that before the next Price Review thought should be given to structural and other methods designed to bring production and consumption into balance, and that means an overhaul and a revision of CAP itself. I believe that such
an attack is urgently necessary not only because the revision of CAP is required in the interests of agriculture and the farming community—and when I talk about farmers I am talking about farm workers as well; most people think of farmers and farm workers in the same breath—but also to alleviate the criticism that I have just mentioned.
People get mixed up between the basic aims of the Community and the Common Agricultural Policy, and in feeling so strongly and in criticising so strongly the CAP people drag down their conception and respect for the Community itself. This saddens those of us who believe in the concept of a European Community and who want to see it succeed. So it is generally accepted that a price freeze is required, but to say to oneself, "Let's have a price freeze—full stop!", is not enough, for a freeze can only have a damaging effect on the farming industry
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by reducing farmers' incomes unless it can be offset by a revaluation of the green currency. I am quite sure of course that as import costs continue to rise, although offset to some extent by improving efficiency all the time—and in our industry the United Kingdom can take credit for continued improvements—nevertheless the farmers' real incomes are bound to fall, and this in the long run, as has been said, is going to be damaging to the industry and to our prospects of achieving what we have been asked to achieve in the White Paper.
Indeed, the National Farmers' Union maintain that it is already happening. In their written evidence on page 29 of the 19th Report they say:
"Farm costs rose appreciably faster than farm output prices last year and, in consequence, the industry's income position worsened. Aggregate net farm income declined by about 3 per cent. in money terms and by some 11 per cent. in real terms in 1978. In fact, real income was at its lowest level for a decade and some 12 per cent. below the average for the years 1970 to 1975."
I know that that comes from the National Farmers' Union, but I see no reason why one should doubt the outcome of their very good and intensive research.
Whatever one may think about that, it is patently clear that the higher the rate of inflation the harder it will bear on net real incomes in a situation where you have prices frozen. As the report says in paragraph 34:
"It is evident that a price freeze, unless offset by green currency changes, will have most impact in those countries suffering relatively high rates of inflation."
For this reason the Committee recommended a green pound devaluation of 7½ per cent., against the Commission's proposal of 5 per cent.
My Lords, your Committee studied the Commission's proposals and took evidence, as we have already heard, some time ago. That was in March. At that time inflation was running at considerably under 10 per cent.; as a result of a question from me to one of the witnesses, it was established that it was at that time something over 8 per cent. Sadly, we have seen the inflation rate beginning to rise again since then and most observers believe that it must continue to rise, and maybe what is happening in another place this afternoon will have some bearing on that. Experts estimate that by the autumn

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the inflation rate will reach between 14 and 15 per cent.
I am therefore suggesting—this is the point of my intervention on this subject—that the suggested 7½ per cent. devaluation should be looked at again. The report says the Committee believes the green currencies should be phased out within five years. This implies that is should be done year by year and step by step, and it is the size of the step to be taken now which I believe should be reviewed again. I should have thought that there need be no criticism of the Committee's finding in suggesting 7½ per cent., for a considerable amount of water has gone under the bridge since then and circumstances have changed considerably.
I wish next to draw attention to the Commission's proposals with regard to the co-responsibility levy. Our Committee made it perfectly clear that we could not support the proposals, for reasons which were clearly stated by the Milk Marketing Board in their written evidence. The Board confessed, as we confess, that originally we promoted the idea, but that was with the object of creating a fund for direct market management by producers to expand demand. The Milk Marketing Board made it clear to us—and we are making it clear to noble Lords today—that it was not their intention that the levy should be used as a tax with the prime purpose of reducing supply. Nor is it ours. There are other ways of doing that to help the small producer. We know about them and have reported on them before; we are well aware of how to help people out in the industry, how to give them aid and so on.
The proposition as it stands is inequitable in the extreme. In the first place, the levy would be collected only on milk delivered to dairies. Thus the "tax" would bear much more heavily on our own producers, since a very large proportion of our production is sent direct to dairies, whereas comparatively little milk is sent direct to dairies on the Continent.
Another, I believe insuperable, objection is the administrative problems which would arise. I described them in Committee as an administrative nightmare. The exemptions proposed for small farmers have to satisfy all of six conditions. Those
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are, first, those whose principal occupation is farming; secondly, those who are under 55 years of age; thirdly, those who deliver not less than 60,000 litres of milk a year; fourthly, those whose agricultural holding is not more than 25 hectares; fifthly, those who undertake not to increase their number of dairy cows; and sixthly, those who have not more than one dairy cow per hectare. The prospect of the amount of paper work in determining who is in and who is out is absolutely daunting.
Quite apart from those objections, there is the discrimination against United Kingdom producers, the administrative nightmare and the fact that the proposals promote uncertainties. In fact, we were told that every 1 per cent. of co-responsibility levy was equivalent to a drop of 5 per cent. in real income. Farmers would not know where they were with prices bobbing up and down like a cork in a rough sea. I therefore agree with those who say that what we want is a clear policy and I agree, too, with those who believe it is unfortunate that the proposals came late and therefore had to be dealt with late. What is most certainly required is a clear farming structure and a firm policy which will enable producers to plan ahead with confidence.
I repeat, it is urgently necessary that our people in Brussels should tackle this problem both on the agricultural side and in the new Parliament. I am very glad indeed that among those elected is Sir Henry Plumb, the ex-president of the National Farmers Union. Those who have heard him on the radio since his election will have heard him say that he recognises the urgency of the problem and will do all he can to get it sorted out. We should all be behind our colleagues there and I hope that in producing a report of this character we are providing just a little help in the right place.
4.37 p.m.
Viscount BROOK EBOROUGH: My Lords, it is a great pleasure indeed for me to speak following the noble Lord, Lord Collison, whose deep knowledge about agriculture is well recognised everywhere. I congratulate the noble Lord, Lord Walston, on the extremely able way in which he introduced the debate. I also congratulate the noble Earl, Lord Ferrers, on his present position and I look forward

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to representing to him the problems of agriculture in Northern Ireland.
Mention has already been made of the problems that are created by the differences of value of the green pound, enabling as it does various EEC countries to draw subsidies to enable them to export various products to other countries in the EEC. If that has caused distortion in the markets in Great Britain, noble Lords will easily understand that in Northern Ireland, where we have the only land frontier of the United Kingdom, the distortions are enormously greater. One of the results has been the flourishing industry of smuggling, and if I declare an interest in farming, I regret that I have none in smuggling, or no profitable ones. There was a time—I am sure the noble Lord, Lord Peart, knows about it—when the rumblings of the refrigerated lorries past our doors used to keep us awake at night as one phantom load after another went up and down across the Border.
The position about the EEC levies and MCAs is crazy, and perhaps I may give a personal example, though not of smuggling. I have to buy a certain amount of Canadian oats. A boat would come into Belfast—this is an actual case—to one of the silos and I would telephone the silo and ask, "What is the cost of the oats?" and the answer would be, "£120 per ton". I would then telephone the silo owned by the same people in Dublin and ask, "What is the price of the oats in Dublin?" and the answer would be, "£120"—but of course once the cargo lands in Dublin its country of origin changes and the oats become Irish oats, so I then buy the Irish oats which came from Canada having gone past Belfast, and draw back £21 out of MCAs and ACAs. That is how crazy the situation is. If people benefit from a crazy thing like that without it being illegal, how much easier it must be for the phantom loads to operate. And of course this kind of situation is operating in regard to MCAs and free movement of meat from East Germany to West Germany, for all of which we are paying with British taxpayers' money.
The noble Earl, Lord Fortescue, mentioned the problems of the bacon industry, and I should like to couple with that the
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problems of the meat industry. What applies to the United Kingdom applies even more forcefully to Northern Ireland. During his reign, the noble Lord, Lord Peart, introduced what was called the MIES (which was the meat industry employment scheme), which undoubtedly saved the meat and bacon industry of Northern Ireland from total extinction. I know that it will not surprise Members of the House to know that the noble Lord, Lord Peart, is held in very great affection in Northern Ireland, not only because of the MIES, but also due to his very kind handling of the problems of the farmers there. As the situation was, with the Border and the MCAs, beef would have gone to meat plants across the Border. MCAs would be collected once again, and so those involved would get the best of both worlds. We would have unemployment, and we as a country would be paying a subsidy on British cattle which had been merely slaughtered in the South. The pig industry, and indeed the meat industry, in Northern Ireland would have been extinguished, not because it is inefficient—it is a very efficient industry, and the processing is very efficient as well—but because of a monetary decision; namely, not to devalue the green pound.
Having dealt with that matter, I should like to raise with the Government one matter in a little more detail. I refer to the pricing of milk in Northern Ireland. I am a president of a small, local cooperative creamery, and so I have at least a small amount of experience of the subject. I have been in close touch with our Milk Marketing Board, for which I have the very highest respect. The dairy side of the farming industry in Northern Ireland provides 25 per cent. of the total gross product of what is the largest industry in Northern Ireland. Meat provides 25 per cent.—a quarter—of the raw material which comes to this country, mostly, for sale. The milk processing industry is a very valuable and a very efficient employer of labour, as well as a converter of milk products. It is a great contributor to a happy, well-employed countryside which I believe to be very important to our country.
At the moment, there is a considerable loss of confidence within the industry. This has been brought about by many causes. First, like everywhere else in the United Kingdom, we had a very bad

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winter. Indeed, I wonder whether we have had our one day of summer—yesterday. However, I hope that the weather will not continue to be as bad as it has been. At present we have 3 per cent. more cows than last year and we are producing 2 per cent. less milk. So there are 3 per cent. more cows, costing considerably more to keep, and 2 per cent. less milk. Secondly, our Milk Marketing Board is much more in the dark than are the Milk Marketing Boards here about what it will be able to pay to the producers, because once again we are in difficulty over the green pound. The price fixing for our milk products includes an element which varies slightly, but which is over 10 per cent., and it comes from what is called milk aid. This is an element which is paid for by the British Treasury, but it is subject to ministerial approval at Brussels. As I understand it, the milk year starts on 1st July, and if ministerial approval is not given to the continuation of the milk aid, we shall be faced with a disastrous situation. I hope that the Government can give us an assurance on this matter, about which I have given them notice. I hope that, irrespective of the final prices which are determined for the review, permission will be given at the next meeting for the United Kingdom Government to pay out what, after all, they want to pay out. We should like an assurance on that for our milk industry.
Lastly, so far as the milk industry in Northern Ireland is concerned, we are terribly worried about the escalating costs of milk distribution, which caused a rise of l½p per pint. So far as we are concerned, very little of that l½p rise will go to producers. So, faced with rising costs, the farming industry has no alternative but to look to the Government to give us a fairly substantial devaluation of the green pound. I should like to endorse the report.
4.46 p.m.
Lord PEART: My Lords, I am sorry that some speakers have dropped out of the debate; I expected that I would have been speaking rather later. I should like to thank the noble Viscount for what he said. I still feel affection for Northern Ireland—I always have done. It is probably because many years ago, when I was a young student, I carried out my first geological surveys there, in County
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Antrim, and I have kept up my connections with the Province. I cannot answer for the Government today. I must leave that to the noble Earl, Lord Ferrers. I should like to say to the noble Earl how delighted I was when I heard the news that he was again to be a Minister in the Ministry of Agriculture. He will be a key figure. He knows the industry so well. I regard him as a most competent and able parliamentarian, and I hope that on some occasions he will have the privilege of going to Europe. I am sure that his Minister will allow him to do that, as I was allowed to do on many occasions. I wish the noble Earl well in his new position. I also wish the Minister well. After all, it is essential that we succeed in Europe.
I wish to congratulate my noble friend Lord Walston upon the way he introduced the debate. He chaired a special subcommittee which examined the EEC farm prices. I have read through the report of the sub-committee. I know that it is easy to boast about this, but I found it fascinating, and I think that my noble friend should be well satisfied with the reception that it has had today. He has indicated the attitude of the members of the sub-committee. I have carefully read some of the evidence, particularly that of the Dairy Trade Federation and other bodies including, naturally, the National Farmers' Union, and I shall come to that later.
I had some sympathy with the noble Earl, Lord Fortescue, when he talked about our deficiency payments system of the past. I tried to get such a system in Europe, and I shall deal with that a little later. I think that the noble Earl was rather nostalgic; he made me feel a little nostalgic. It was a very good system, but it did not always work. I recall the time when the present noble Leader of the House, Lord Soames, faced great difficulties when the deficiency payments scheme got into trouble. That was a long time ago, but it must be remembered that the system was not always perfect. I believed that what we tried to do in Europe—to get a deficiency payments system which worked, and which was rather like the one in our own country—was right.
I must take up some of the points raised by my noble friend. I cannot

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answer every point that has been raised by noble Lords on this side of the House; that is a matter for the Minister. I agree very much with my noble friend in his analysis. I agree with him particularly when he talks about agriculture in a wider sense. I know that he travels widely and takes a great interest in agricultural production in various parts of the world, especially the Caribbean. He knows his industry; but he always keeps his sense of idealism, linked with a measure of realism. He recognises that the development of agriculture—the development of European agriculture, the development of world agriculture—is vital. That is why I myself take a great interest, and always have done, in FAO; but I am glad that he himself, as a practical farmer, raised this matter as he concluded. His recommendations have been endorsed, really, by this committee, and I think the Government will have to consider carefully what is their attitude; and no doubt this afternoon we shall hear from the Minister what is the Government's reaction. After all, it is for the Government to make the decision in relation to whether we have a change in the green pound by way of a 5 per cent. devaluation or whether it is to be halved, as the committee have recommended. It is really for the Government to make the decision.
I think we have to recognise that we are in Europe, and that we must play our part there. Unfortunately, a lot of people forget it. I am not as critical of the CAP as some people. I am critical when it produces surpluses which are not disposed of properly, and I blame the people who are responsible for that. I think this is where administration is very important. As to the selling of surplus products at cut-down prices to people behind the Iron Curtain, I am not averse to having trade with the Iron Curtain on a commercial basis. I believe that when we had a skimmed milk problem, which I had to face as a Minister in Europe, it was right to suggest that we should send it to Egypt, for example, who were prepared to buy some of it. I thought also that it would be good food aid in the world, although in some parts of the world to which it went there was a reaction against it. But I would agree with noble Lords that we want to have a pricing system which does not make for over-production and so
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make the whole system appear ridiculous. So I trust that Ministers will pursue this.
Again, when we talk about surpluses—forgive me for going off the committee report, but even in that report many of these matters have been discussed and examined very carefully—let us look at the CAP, and let us realise what it is trying to do. Let us recognise that there is a lot of agricultural produce in store. Of course there is. We hear talk of mountains of butter. Let us examine the latest figures in the case of some of the products. For barley, there are 200,000 tonnes. What does that represent? It is two days' consumption in the Community. Beef, 190,000 tonnes. What does that represent? It is 10 days' consumption. Butter, 293,000 tonnes, 63 days' consumption; rye, 630,000 tonnes, 76 days' consumption; skimmed milk powder, 488,000 tonnes, 92 days' consumption; wheat, 1 million tonnes, 11 days' consumption; wheat (durum), 160,000 tonnes, five days' consumption. I think this puts the matter in the right perspective.
I would rather have surpluses than shortages. I remember when I was a Minister and I had to face the dreadful foot and mouth outbreak, and the worries we had about the future of our cattle, our great dairy and beef industries. After all, most of the beef comes from the dairy herds. I was a very worried man, and I know that the farming community were worried as well. Again, I remember the difficulties we had not so very long ago, again when I was a Minister, when we had a terrific drought which caused shortages and affected our crops. I remember having to cancel (which I think I did quite rightly) a visit to Brazil, where I was going to examine some of Brazil's irrigation schemes. I thought it was right to be in Britain when our farmers were facing drought conditions. I say to those people who talk glibly about overproduction that there is often this terrible tragedy of under-production as well. So I hope critics of the CAP will be realistic sometimes. I do not condemn it entirely. Of course there are problems.
As a negotiating Minister I tried to do my best when I first went over for the Wilson Administration, and I think we achieved certain things. I know that during the election campaign much was said about the role of Ministers in Europe,

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and I have here the Conservative Manifesto. That says:
"What is more, the frequently obstructive and malevolent attitude of Labour Ministers has weakened the Community as a whole and Britain's bargaining power within it."
I can speak only for myself, but I never tried to attack people in the Community. When I first went there I thought it was right to act in the Community reasonably, and to realise that you had to win the argument rather than rely on abuse; and I am sure I achieved something. I have here the White Paper, and I could go through it. We did get a deficiency payments system—the beef premium system, which at one period, I was flattered to know, was called the Peart premia. It is there. I should like to see that system operate throughout the Community. We tried to have a better pricing system altogether; a proper balance between production and distribution.
We also did other things which I thought were important. One was to continue to allow access into our own country to countries like New Zealand, who sent their dairy products to the United Kingdom. I see that even this week, today, this is now another issue which is going to have to be tackled by the Government. I read today in the Guardian that the New Zealand Conservative Prime Minister, Mr. Robert Muldoon, said after talks with Mrs. Thatcher yesterday that he was very concerned for the Queen's life, but then he went on to talk about other matters. It says that he:
"discussed with British ministers the problems of getting New Zealand dairy products through EEC barriers. He described the present Common Agricultural Policy as economic madness".
I would not quite go with him there. On the other hand, I believe he is on good ground when he talks about changes in Brussels concerning low-cost farm products from New Zealand, which gained permanent access to the Common Market, rather than what we have—a temporary yearly concession. This, again, I know, has been dealt with in the Select Committee's report, and we have the evidence from the Dairy Federation, who feel very strongly about access of New Zealand products to this country.
Personally, I have always defended New Zealand. I am probably sentimental
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about this. After all, in a time of crisis, at a time of war, they did not have to be asked: they volunteered. I said this to farm audiences. I said it to a big dairy conference, even though the chairman, the president at that time, attacked my attitude. I believe they should have fair and reasonable access. Indeed, this was one of the main negotiating items of Prime Minister Wilson when he was at the summit in Dublin. We have had our good links through this. I have always argued that we should also try to have a greater access to the Community. Again, I read in a very responsible British farm journal, the Big Farm Weekly of 7th June, 1979, the headline:
"Australian cheddar returns to EEC next year".
It says:
"Australian cheddar will start coming back into the EEC next year as a result of a final settlement between the Community and Australia of their differences over the GATT multilateral trade negotiation.
"The disagreements were patched up when the EEC Farm Commissioner, Mr. Finn Gundelach, visited Australia last week. He also offered Australia additional access for beef.
"The cheese quota is understood to be 3,000 tonnes. This means that, overall, the EEC has conceded access for 18,000 tonnes of cheddar—although some of it will be used for processing—during the GATT talks."
Then he went on to say:
"The main beef concession is for high-grade meat and brings the total concession to 20,000 tonnes."
Here is an example of something which I never thought would be achieved, leaving it just to a European Commissioner. Anyhow, there it is. In other words, it is what we always argued: that we must have liberal access given to countries whose products we feel can make a useful contribution. So there is an example of where there is a change, and we can see how that change is developing.
Again, I remember that I had the privilege of negotiating the details of the 1·4 million tonnes of cane sugar coming into this country from the Caribbean, the Pacific and other parts of the world. That was, I think, something which was right and proper. That was really something which helped considerably, although I believe that at this stage there are still difficulties in relation to approaches that have been made to the countries that
have been affected. Nevertheless, I

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believe that that was right and proper. Here is where we can, through our approach in the agricultural field, offer so much aid to people elsewhere.
Again, it was a Labour Government which negotiated the famous Lomé Convention which helped to liberalise trade. I hope that there will be no attack on the principles of Lomé. I have seen reports that the Government are somewhat critical about what has happened. I hope that the noble Lord will see that his own Government stand by what a Labour Government did and that we shall see that our friends in the underdeveloped parts of the world can improve their agricultural trade by the help we give. So, I believe it is important that we should have a debate of this kind.
Naturally, it is right and proper that we should consider our home producers. I hope that I have not been discourteous to the National Farmers' Union which I think is a fine organisation. They have published their own evidence and no doubt noble Lords have read it. The NFU say:
"In the conclusions to their report the Select Committee recognise the need for a green pound devaluation in excess of 5 per cent. Whilst this is welcome, the NFU believes that in proposing a 7½ per cent. devaluation, the Committee may no have taken sufficient account of the decline of farm incomes, and the consequent severe difficulties for the industry which would still result from limiting the green rate adjustment to that level. The further rise in farm costs which have taken place since the Committee considered evidence underlines the need for an overall 15 per cent. devaluation, i.e. the need now for a further adjustment of about 10 per cent. to supplement the 5 per cent. move made, for most commodities, in April."
They go on to mention sugar, which I know many noble Lords know about. They will have this document.
I understand the NFU's point of view. It may be that they are asking too much for the devaluation. On the other hand, they have a case. Farmers will face increased costs when we think of oil. No doubt, other sections of industry will have to face these costs as well; but the farming community will in many ways have to face a very heavy burden and I know that there will be considerable difficulties. This is a matter that I assume the Government and Ministers will be watching carefully. It does not affect
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just the farmers here but farmers throughout the Community and in other parts of the world. Oil prices could have a really terribly retarding influence and we regret it.
My Lords, I feel that I should not delay the House any longer with my point of view, I have been speaking for over a quarter of an hour. I try to keep to the Motion I moved in the last Session, that we should limit our speeches to a quarter of an hour. I have much more to say but I can leave it to a further occasion. I wish the noble Earl well. I hope that his Government realise that many of us on this side of the House consider that there is a need for reform of the Common Agricultural Policy but still believe it right that we are in Europe and feel that we can influence it if we provide the necessary leadership.
5.5 p.m.
The MINISTER of STATE, MINISTRY of AGRICULTURE, FISHERIES and FOOD (Earl Ferrers): My Lords, the noble Lord, Lord Peart, ended on a happy and welcome note, one to which I shall come later. Our position in the European Community is absolutely vital and our membership of it is something which is going to be, I hope, a constructive one. I should like first to thank the noble Lord, Lord Walston, for having introduced the debate and for having given us the opportunity to discuss these matters. In fact, it is a very timely occasion. The Council of Ministers are to meet in Brussels next week and we have had the benefit of what must be, I suppose, one of the best informed Committees that there could be on this subject, one which has taken evidence, which has studied the problem, and made this report. I should merely like to say that the Government value greatly the Committee's work and the trouble to which they have gone. I should like also to thank the noble Lord, Lord Walston, and others for the welcome they were kind enough to give me. He said, he thought it was my maiden speech as a Minister. He is nearly but not quite right. Any generosity which your Lordships would give to a maiden speaker has been forfeited by me I am afraid because one of the charming idiosyncracies of this House is that when appointed to the Ministry of Agriculture, the first thing that one does is to answer a debate

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on the extended powers of the European Parliament. Therefore, although it is my first occasion to speak on agriculture, it is not the first occasion on which I have spoken as a Minister on other Government matters.
There is no doubt that agriculture, whether in the Community or our own, is presented with some pretty formidable problems. I would hope that one might be allowed to take this opportunity briefly to sketch the situation as we see it as a new Government and to try to explain to your Lordships the problems which we visualise and our attitude as a Government towards them. The first thing to remember is that, whatever Government took office, those problems were there to greet them on their arrival and that there is no quick, instant solution. They are, if not caused, certainly exacerbated, by many factors largely outside the control of Governments, certainly, outside the immediate action a Government can take; and yet they are certainly affected by the manner in which Governments take action. One thinks particularly of inflation, of surpluses in the Community, and of world food shortages which happen at the same time; the requirement for agriculture and the supporting industries to be given the proper remuneration for the work involved and yet the requirement not to add to increasing food prices.
This afternoon your Lordships have touched on almost all of these points. There are one or two things which I think are fundamental factors in this situation, some of which are directly opposed to others, yet which are parameters in the situation, and parameters within which we have to move. First, it is our desire and intention to ensure that, so far as possible, British agriculture is and remains successful and prosperous and is enabled to contribute to the food requirements of the nation. But the last Government's White Paper showed that during 1978 the real income of agriculture dropped by 11 per cent. I state here categorically that I intend to make no Party points. I merely record the fact. The noble Lord, Lord Collison, was right when he said that as conditions appear at present, due to the continued increase in costs, it looks as if real income during the current year will take a further drop. That is a very serious situation not only for the nation but for farmers and farm workers.
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But we are members of the European Community and any action that we take must be taken in accord with our membership of the Community and in the context of our determination to add our full weight as constructive partners to the solution of the difficulties, many of which have been mentioned today, which confront the Common Agricultural Policy. There are, as we all know, some commodities which are in structural surplus, and to increase the price of these will merely encourage their production. I was interested when the noble Lord, Lord Walston, said that a freeze on prices itself would not reduce production. I was interested by the reference that he made to the 1920s. I shall certainly study that.
Lord WALSTON: My Lords, may I correct the noble Earl? My recollection is that I did not say a freeze on prices would not reduce production, but would not solve the problem of over-production.
Earl FERRERS: My Lords, I am not certain of the distinction that the noble Lord has made. I shall study that, too. I take his general point that in his view a freeze would not in itself be adequate.
At the same time—and this is in a way the absurdity—we in Britain produce only some 65 per cent. of the food which climatically we can produce. It may be considered as illogical—and indeed is—that our own agriculture, and the output from it, should be penalised by the surpluses to which we have not contributed, especially as the efficiency of our agriculture enables us to compete favourably with those of our colleagues in Europe on many occasions, and at lower prices.
Yet the overall problem is that in the United Kingdom we contribute the largest net amount of money of all member-States to the total Community budget, three quarters of which, as has been said this afternoon, goes to pay for the Common Agricultural Policy, and most of this goes for surpluses. Then of course we come to the problem that almost all noble Lords have touched on, that the green pound is some 12 per cent. out of alignment. This itself throws a judder through all normal and equitable trading arrangements and common prices. Those are the stakes within which somehow we have to try and steer a course.

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The Commission's price proposals; which were published on 31st January, were for a price freeze on virtually all commodities. The noble Lord, Lord Walston, said that he was appalled that it should have taken so long to come to a conclusion. I would agree with him. It is highly desirable that these prices should be resolved earlier; but on this particular occasion we have had sonic slight complexities with British elections, Italian elections and European elections. That has thrown the normal plan slightly off course. The Government strongly support the proposed standstill in the interests of both taxpayers and consumers in the United Kingdom, and the Community as a whole. We want to see a freeze in common prices for products which are in structural surplus, and we want this maintained until the surpluses are eliminated.
I was glad to hear the noble Lord, Lord Peart, say an encouraging word about surpluses, and indeed my noble friend Lady Elliot did too. Surpluses may provide difficulties; shortages frequently provide even greater difficulties. A small shortage can provide a terrible price increase. One only has to look at what happened to potatoes three years ago, when there was a common shortage.
While we must do all that we can to prevent these surpluses, we can take some slight comfort that, in a world predominated by shortages of many commodities, particularly in parts of the world other than Europe, at least we do not suffer from them. The production of some of these commodities is really enormous. I am bound to refer to the fact that according to the Commission, milk production exceeds consumption by about 17 per cent. Intervention stocks of skimmed milk powder, at nearly 450,000 tonnes, are equivalent to about two years' Community consumption at full market prices. These are very big figures.
Community butter stocks in intervention and aided private storage are nearly 400,000 tonnes; and in both cases large quantities are sold under schemes for special subsidised sales. When we come to sugar, the Community supplies in 1978–79 exceed demand by nearly 3¼ million tonnes, which is equivalent to
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over one-third of Community consumption. There is an imbalance between production and consumption in many other sectors as well. It is these surpluses which inflate the Community farm budget, and to which the noble Lord, Lord Sainsbury, in particular referred with great emphasis.
They are estimated to cost some £6,676 million in 1979. This represents about three-quarters of the total Community budget, and the cost is growing faster than ever. If the trend of recent years is anything to go by—and this is the frightening aspect—the cost of the agricultural budget will reach nearly £10,000 million in 1982. As many noble Lords have said, this expenditure imposes a severe and, we believe as a new Government, an unfair burden on the United Kingdom. On the basis of actual receipts and payments, we are by far the greatest net contributor. Even if one takes into account—which we do not think is fair—the monetary compensatory amounts paid by other countries, we are still the second largest net contributor. We want to see a fairer arrangement; but in any case, we need to hold down the prices of surplus products so as to restrain the total expenditure.
It is argued by some that a firm policy should be balanced by social and structural measures to alleviate hardship. The noble Lord, Lord Walston, said that price freezes were not enough and they should be accompanied by some form of social policy as well. The noble Lord, Lord Sainsbury, said the same thing. I agree. Where there is a structural problem of farms there should also be a social commitment and this should not be funded out of the normal farm budget.
My noble friend Lady Elliot referred to the fact that her husband started the Milk Marketing Board in 1933. And what an achievement that was! How pleased he would have been if he had seen the result of the referendum on that Milk Marketing Board, and what an extraordinary reflection on the success of it and the confidence it has given to milk producers that we should find ourselves in such a successful milk producing position as we are in today.
The sales of liquid milk are of course vital to this country. When my noble friend said what a pity it is that the

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French and other Community countries cannot do the same, I agree. However, the trouble is that is not part of their custom, nor part of their habit. If it were, a lot of the structural surpluses of milk would disappear. Whether or not we would be able to persuade them to do that is another matter. We have no doubt that milk production should be cut back in the Community as a whole, and we welcome the Commission's recognition that tough new measures are needed to restore the balance in the milk market.
I was glad to see that the Committee did not like the idea of a co-responsibility levy. The noble Lord, Lord Walston, my noble friend Lady Elliot and the noble Lord, Lord Collison, said that it was inequitable. 1 agree. The reason why it is inequitable is that it would reduce production by cutting returns directly. It would reduce the farm budget and it would cut consumer prices. But in fact of course all the other member-States prefer a levy and we have to recognise this fact. We feel that we cannot accept the way in which the proposed levy would discriminate against the larger and more efficient United Kingdom producers. The levy has to apply—if it does apply—fairly. The Commission's proposal does not provide for this since it exempts the small and less efficient producers, while penalising the efficient ones. If I could give your Lordships an example, it would be this: the original proposal the Commission put forward would exclude from the effect of the levy about 14 per cent. of the dairy herd in the Community as a whole and yet only about 1 per cent. of the United Kingdom herd. Later on the Commission put forward alternative ideas but these would still hit our producers with large herds and high yields more severely than producers in the other member-States.
My noble friend Lord Brookeborough expressed concern about the future of the Northern Ireland milk aid. He was of course quite right to refer to that. This aid was agreed by the Council last year for one year and it was extended temporarily in March when it became clear that progress on the year's price negotiations would be delayed. Any additional extension will have to be the subject of a decision in the Council, and this depends of course on the wider discussions which are at present going on there. I will certainly
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convey my noble friend's remarks to my right honourable friend, who will be bearing this in mind during the discussions in the Council next week.
The area which gave the noble Lord, Lord Walston, a lot of concern was the sugar sector, and quite rightly so because, apart from milk, this is the sector which causes the greatest problems. The current level of the Community's exports, of over 3 million tonnes, is having a damaging effect on the world market, and the cost of the export refunds to the Community budget is about £500 million. That is an excessive amount. In these circumstances, we strongly support the Commission's proposal for a price freeze and for a cut in the maximum quota, which together represent a significant reduction in the level of support for production. The proposed cut in the maximum quota to 20 per cent. of the basic quota would reduce production eligible for support by an estimated 459,000 tonnes and would save the Community farm budget an estimated £54 million. The noble Lord, Lord Walston, referred to the possibility of a cut in the "A" quota. Of course, this is a possibility but it was not part of the Commission's proposals and as such therefore it would not be something which could be considered for operation this year. However, it is certainly a point worthy of consideration.
My noble friend Lord Fortescue referred to pigs and the closures of pig factories. I have no hesitation in saying that this is an area of agriculture which is causing the Government a very great deal of concern. For a long time our pig meat processors and producers have suffered from the excessive subsidy which applies to imports. The result has been an overall decline in our pig herd of quite alarming proportions. The pig breeding herd of the United Kingdom has fallen by over 15 per cent. since 1973, which is in marked contrast to the herds of some of our Common Market partners, such as Germany, which has increased by 12 per cent., the Netherlands, which has increased by 23 per cent., and Denmark, which has increased by 36 per cent. I accept that the previous Government tried to tackle the problem of the incorrect basis for the calculation of the monetary compensatory amounts but, for one reason or another, they did not get success. In their price proposals the Commission

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made scarcely any mention at all of pigs. I can assure my noble friend Lord Fortescue that we shall take the problems which he has described very firmly into the reckoning in our approach to the negotiations. We shall not give up our efforts to try to secure fairer conditions for competition within the industry
I have tried to explain a little the Government's approach to the price fixing on the main commodities, but I should like to pass to one other matter which I think underlines almost all this; that is the green currencies. The Commission proposed a 5 per cent. devaluation of the green pound, and agreement was reached on that. Some other changes in green rates were also proposed at the end of March. Some noble Lords—indeed, most of them —have argued this evening that a bigger change is needed this year in order to help our producers, who have had a particularly difficult winter and who now face very significant cost increases. Frankly I have a great deal of sympathy with that view. My noble friend Lady Elliot said she wanted that. The noble Lord, Lord Collison, said he thought that should be done, and my noble friend Lord Fortescue said he thought it should be done; but the noble Lord, Lord Sainsbury, in a characteristically independent, though not controversial way, said he did not think it should be done. So there was not exactly a unanimity of view. But of course the basic philosophy of the Common Agricultural Policy is, and was, that it should be just that —a "common" agricultural policy, and one that enabled agricultural produce to be traded freely throughout the European Community —and a common pricing system is therefore a fundamental feature of that policy.
The green currency situation was devised in order to deal with temporary financial problems of member-States. It was never anticipated, nor intended, that in a Community of Nine there should be in effect nine different pricing systems, each of which would not only militate against the other eight countries but also bear in a different way and with differing effects on the different commodities within those countries. That being so, you soon have a problem not of arithmetic proportions but of geometric proportions and, rather like the ten digits of a telephone dial,
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you can get a colossal variety of different answers.
My noble friend Lord Brookeborough referred to one of those when he explained what happened to the Canadian oats and referred to it as an absurd situation: I think he called it "a crazy situation". That is one of the results of the particular position we are in, and until we get our green pound devalued to a more equitable level we shall continue to get examples of manifest unfairness over which nobody has any control and against which the system offers no redress. Even if we get the level of the green pound to a state which enables British farmers to trade on equal terms with their European counterparts there will still be difficulties; but the nature of the difficulty will be more readily ascertainable and the effect of remedial action will be more readily discernible. That is what we intend to do.
I would merely add this. It has become fashionable in all quarters to criticise the Common Agricultural Policy. That has become the whipping boy of politicians and public alike, as if there is nothing good in it. While I would be the first to admit that those parts of it which have been criticised today have been validly criticised and there are many inadequacies and injustices in it which we must seek to resolve, it is not all bad. The CAP is often considered to be the cause of high food prices; and yet if I might quote the previous Minister of Agriculture—not in any controversial way, I would add—he said that during the life of the previous Government food prices had gone up in this country by 110 per cent. but that of that only 10 per cent. was due to the Common Agricultural Policy. So in fact the Common Agricultural Policy has been responsible for a far smaller increase in food prices than is normally attributed to it.
I would stand up for the Common Agricultural Policy on one other ground. We want to remember that it was the complexities of the agricultures of the various member-States which at one time seemed almost impossible to resolve and to reconcile, and which might well have prevented the European Community from coming into existence. Without some form of Common Agricultural Policy, the European Community might easily not have come about. A form of Common

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Agricultural Policy was devised which could be accepted by all of the member-States and, despite all of its shortcomings, of which we are well aware, the EEC was therefore formed.
If one thinks back to the problems of Europe over the last thousand years, its history has been written not by co-operation but by disagreements. Even 35 years ago, these countries were locked in conflict against each other and, as my noble friend Lady Elliot quite rightly said, the present position would have been unthinkable then. Last week we saw the elections to the European Parliament, when nine countries were electing representatives to join a common Parliament in order to try to solve the problems corporately. It was the Common Agricultural Policy, with all its imperfections and idiosyncracies and apparent injustices, which I suggest has contributed to this coming about.
Therefore, I hope that some people—not your Lordships—instead
of taking the convenient option and always decrying the faults and denigrating what exists, can rejoice in the achievements and be prepared to build on them, which is what we as a new Government certainly wish to do. We wish to be full and enthusiastic members of the European Community, to play our part with our partners in building on the successes which have already been achieved, recognising and determining the shortcomings which at present exist and doing our best to improve and strengthen both the Common Agricultural Policy and the European Economic Community.
The debate which we have had this afternoon has certainly helped us considerably as a new Government, and I should like to thank the noble Lord, Lord Walston, not only for his responsibilities with regard to the Sub-Committee, but also for the manner in which he has introduced this debate this afternoon. It has been of great assistance to us all.
5.32 p.m.
Lord WALSTON: My Lords, I am most grateful to the noble Earl for his final remarks, and indeed for all his speech. I am also grateful, as I know is the whole House, to all those who have taken part in this debate. It is always invidious to single out any individual
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speaker, but I shall do so. I am particularly glad that the noble Earl, Lord Fortescue, returned once more to the matter of pigs, which is of enormous importance to the agricultural industry and to the food processing industry. If it had not been for his intervention the subject, while not being neglected, might not have been stressed as much as it deserves. Also, the noble Viscount, Lord Brookeborough, made the long and difficult journey from his border country and gave us a great deal of wisdom of a very practical kind.
There has been a very great measure of agreement here. In fact, one could scarcely call this a debate, because all speakers, with the very minor exception of one point made by my noble friend Lord Sainsbury, agreed, complimented —with both an "i" and an "e"—and supplemented each other's points. I am very happy indeed that the noble Earl has made it clear to us that, in general, the Government's thinking is very close to the lines of the Committee's thinking. It now remains to be seen how far the Government are able to implement their hopes and their wishes, and what is in fact practical once one gets into the atmosphere of Brussels. All I can say on that score is that we—I hope that I can speak for the Committee—will give every support we can to the Government if they, as they say they will, proceed along these lines.
Perhaps the most encouraging part of the whole debate was the way in which my noble friend Lord Peart and the noble Earl, Lord Ferrers, both reiterated the overall support of both sides of the House for the concept of the Common Market, and also for the concept of the Common Agricultural Policy—faults and all. It was very valuable that that should be done and that, I am sure, will have a great impact in Brussels as well as in this country, too. I am grateful to those who have taken part in or have remained to listen to this debate.
On Question, Motion agreed to.

TYNE AND WEAR BILL [H.L.]
Report from Her Majesty's Attorney-General received, and ordered to lie on the Table.
KIRIBATI BILL
Brought from the Commons; read 1a, and to be printed.
SCOTTISH EQUITABLE LIFE ASSURANCE SOCIETY BILL
Brought from the Commons; read 1a, and referred to the Examiners.
  CAT AND DOG FOODS IMPORTS
  CAT AND DOG FOODS IMPORTS
  INDIAN SUB-CONTINENT: DEPENDANTS' ENTRY CERTIFICATES INTO UK
  INDIAN SUB-CONTINENT: DEPENDANTS' ENTRY CERTIFICATES INTO UK
  NUCLEAR POWER PLANT SHUT-DOWNS
  NUCLEAR POWER PLANT SHUT-DOWNS
  HIDE SHORTAGE AND LIVE ANIMAL EXPORTS
  HIDE SHORTAGE AND LIVE ANIMAL EXPORTS
  EEC INTERVENTION STOCKS
  EEC INTERVENTION STOCKS
  ELECTION TURN-OUT INFORMATION
  ELECTION TURN-OUT INFORMATION
  SPOILED VOTING PAPERS
  SPOILED VOTING PAPERS
  PRIMATES: RESEARCH AND BREEDING
  PRIMATES: RESEARCH AND BREEDING
  PRIMATES AND DEFENCE RESEARCH
  PRIMATES AND DEFENCE RESEARCH
  SCLEROTINIA CAMELLIAE: IMPORTS INTO THE UK
  SCLEROTINIA CAMELLIAE: IMPORTS INTO THE UK
  KOREA: ANNUAL EXPORT STATISTICS
  KOREA: ANNUAL EXPORT STATISTICS
  EEC REGULATION 1463/70 AND FARM VEHICLES
  EEC REGULATION 1463/70 AND FARM VEHICLES
  PIGMEAT: PRODUCTION AND CONSUMPTION IN THE UK
  PIGMEAT: PRODUCTION AND CONSUMPTION IN THE UK
  SEA FISHERIES COMMITTEES: GOVERNMENT POLICY
  SEA FISHERIES COMMITTEES: GOVERNMENT POLICY
  NATURE CONSERVANCY COUNCIL FUNDING
  NATURE CONSERVANCY COUNCIL FUNDING
  EEC MEMBERSHIP: EFFECT ON THE ECONOMY AND PRICES
  EEC MEMBERSHIP: EFFECT ON THE ECONOMY AND PRICES
  PIGMEAT MONETARY COMPENSATION: COEFFICENTS
  PIGMEAT MONETARY COMPENSATION: COEFFICENTS
  SCALLOP STOCKS IN THE SOUTH-WEST: OVER-FISHING
  SCALLOP STOCKS IN THE SOUTH-WEST: OVER-FISHING
  SMALLHOLDINGS: SALE BY LOCAL AUTHORITIES
  SMALLHOLDINGS: SALE BY LOCAL AUTHORITIES
  IMMIGRATION: PORT MEDICAL OFFICERS' ADVICE
  IMMIGRATION: PORT MEDICAL OFFICERS' ADVICE
  VAT: INSPECTORS' PROCEDURES
  VAT: INSPECTORS' PROCEDURES
  SPECIAL DRAWING RIGHTS AND UNDERDEVELOPED COUNTRIES
  SPECIAL DRAWING RIGHTS AND UNDERDEVELOPED COUNTRIES