Sitting of 16 May 1979

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

MEMBERS SWORN
The following Members took and subscribed the Oath, or made and subscribed the Affirmation required by Law:
Right honourable Norman Harold Lever, Manchester Central.
Sir Stephen James McAdden, CBE, Southend East.
Reverend Robert John Bradford, Belfast South.

DEBATE ON THE ADDRESS (ALLOCATION OF SUBJECTS)
Mr. John Page: On a point of order, Mr. Speaker. At the beginning of business yesterday, you kindly informed the House that on certain days certain subjects would be chosen for debate. May I ask you whether it will be in order for hon. Members speaking in those debates to mention other subjects and whether it is possible for the Leader of the House in
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some way to inform his colleagues of the points that are raised outside the subjects that are due to be discussed?
Mr. Speaker: I am much obliged to the hon. Gentleman for the fact that the first point of order in this new Parliament is an easy one. During the debate on the Queen's Speech, of course, it is possible for hon. Members to speak on a wide range of subjects, even though it may be the general will of the House that as far as possible we should on certain days keep to the subjects that I enumerated yesterday. However, if hon. Members catch my eye they are free to speak on any subject that they think ought to be in the Queen's Speech.
The Chancellor of the Duchy of Lancaster and Leader of the House of Commons (Mr. Norman St. John-Stevas): Thank you for that ruling, Mr. Speaker. I agree with you—let a thousand flowers bloom.

SECOND DEPUTY CHAIRMAN OF WAYS AND MEANS
The Chancellor of the Duchy of Lancaster and Leader of the House of Commons (Mr. Norman St. John-Stevas): I beg to move,
That Mr. Richard Crawshaw be Second Deputy Chairman of Ways and Means.
Mr. Speaker: Apparently one flower will bloom today.
Question put and agreed to.

ORDERS OF THE DAY

  DEBATE ON THE ADDRESS
  [SECOND DAY]
  Order read for resuming adjourned debate on Question [15 May]:
  That an humble Address be presented to Her Majesty, as follows:
  Most Gracious Sovereign,
  We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.—[Sir William Elliott.]
  Question again proposed.

  HEALTH, EDUCATION AND SOCIAL SERVICES
  2.39 p.m.
  The Secretary of State for Education and Science (Mr. Mark Carlisle): Despite the point of order raised by my hon. Friend the Member for Harrow, West (Mr. Page), I am glad that the Opposition have decided to choose today to ask that the House should concentrate mainly on issues of education and the social services in the debate on the Gracious Speech. That shows that they themselves recognise the importance of these two areas of the Gracious Speech, although, speaking purely for myself, I would have liked a few more hours before making by debut at this Dispatch Box.
  Although, obviously, it is my intention to deal mainly with those parts of the Gracious Speech that deal with education, I am sure that the House would expect it of me that I should at the outset make a few comments about another matter that has been of grave concern to myself during the past 10 days, namely, the question of teachers' pay. I shall deal with this matter at once by saying that whilst I am sure that the House expects me to say something about it, I know that hon. Members will recognise how important it is for anyone to avoid saying things that in any way would prejudice or disrupt the normal processes of negotiation within the Burnham Committee.
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  Hon. Members will recognise that I inherited a problem that the previous Administration had been unable to resolve. I do not attempt or wish at this stage to apportion blame, and I accept that the problem is an intricate one. My own desire has always been to see an honourable settlement and a return to complete normality in the schools and colleges as soon as possible. At the beginning of last week I wrote to all the unions concerned, and the other parties concerned, to explain this to them, as soon as I took office. A meeting of the Burnham primary and secondary committee has now been arranged for Friday of this week, and one of the further education committee for Wednesday of next week.
  The House will recognise, in view of the way that the talks have been going, that the Government have a particular responsibility with regard to any question of access to the Standing Commission on Pay Comparability. Therefore, without prejudging more general decisions about the role of the Commission, I have today seen the leaders of both the management and teachers' panels of the Burnham Primary and Secondary Committee to indicate that the Government would be content for the teachers' relativity claim to be referred to the Standing Commission. But I also had to indicate that certain amendments to the terms of reference provisionally agreed by the Burnham Committee were essential if the Government were to agree to the Standing Commission reference.
  The Government's view—I have conveyed it to both sides—will be considered by both panels before negotiations resume on Friday, and it would be inappropriate for me at this stage to go into any further detail. However, I wish to add the hope that the terms of reference that I have put to the parties will be found by them to be acceptable should they choose to go down this route.
  If agreement is reached on the terms of reference, negotiations will proceed in the proper forum—namely, the Burnham Committee—on the other aspects of the claim. If, unfortunately, agreement cannot be reached on the terms of reference, it is highly relevant that arrangements exist for arbitration either by agreement or at the request of either side if the independent chairman judges that full

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  opportunity has been allowed for discussion and negotiation.
  Perhaps I may just add that I am sorry that the teachers unions felt unable to respond to the request that I made to them to resume working normally while negotiations continue. I made it clear immediately on taking office that I would look upon the teachers' pay dispute as a matter of first priority, and that I believe I have done. I can only add that I fear that with the continuation of unwillingness to resume normal working conditions, the only likelihood is that this will damage the case of the teachers in the eyes of the public as a whole.
  Mr. Christopher Price: On this very important point, the Secretary of State says that it is "highly relevant" that arrangements exist for the matter to go to arbitration. Does he mean by that that he will allow the matter to go to arbitration? Secondly, does he adhere to the principles in the Houghton report about teachers' relativities?
  Mr. Carlisle: The hon. Gentleman must appreciate what I have said. I have no way to stop them going to arbitration, nor can I drive them to arbitration. The decision whether to go to arbitration arises if the chairman of the Burnham Committee rules that the negotiations have broken down. But it is a complete misapprehension to understand that either I or, indeed, the previous Government, have any rights or powers in this matter.
  As for the hon. Gentleman's other question, I think that I have said as much as I wish to say at this stage. As I have said, I have referred the terms of reference to the parties for their consideration. I told them that I would be telling the House that I had done so and that I would leave them the opportunity to consider the matter before Friday.
  Before coming to education, since we are debating also health and social security, I now turn to those aspects of the Gracious Speech that deal with these matters. As the House knows, we are committed to simplifying and decentralising the National Health Service and cutting back bureaucracy. This means simplifying the present structure, giving much more responsibility at the most local level of authority and reducing the intervention by higher authorities in local matters. We
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  do not, however, propose to make any changes in the structure of the service until the Royal Commission reports, which we hope will be in July. But we shall do everything we can within the existing structure to ensure that decisions are taken at the right level, and in most cases this should be the district.
  Concerning the elderly, we shall publish a White Paper on the elderly after carefully reviewing all the evidence that has been submitted by the many individuals and groups concerned with their care. In particular, we must examine closely the needs of and services for the growing number of very elderly people. Consequently it may not be possible for my right hon. Friend to publish the White Paper until rather later this year. As we made clear, we shall introduce a Bill to enable the pensioners' Christmas bonus to be paid.
  I am not—nor is my right hon. Friend—in a position at present to give precise figures today on the uprating of social security benefits. The previous Administration quoted figures of about £22 a week for single pensioners and about £35 a week for a married couple. My right hon. Friend the Prime Minister, speaking then from the Opposition Benches, undertook that a Conservative Administration would match those amounts. I cannot go beyond that and give firm figures today for the size of the uprating, for one very simple reason. We have to calculate on the latest available figures for price movements before finally settling the rates. The present Government, like their predecessors, must therefore wait until the Chancellor has announced his Budget, so that the most up-to-date and most nearly correct figures can be used in forecasting the way in which prices will move over the whole period from November 1978 to November 1979.
  Concerning health, our policy on private medicine—
  Mr. Mike Thomas: Before the Secretary of State—
  Mr. Carlisle: The hon. Member will appreciate that we are dealing with education and other matters for which I am not the Minister directly responsible. As my right hon. Friend the Secretary of State for Scotland will be winding up the debate for the Government. I think that

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  it would be better if the hon. Member made his point at that stage. However, if he wishes to make a point now which can be considered by my right hon. Friend, I would accept that.
  Mr. Thomas: I am grateful to the right hon. and learned Gentleman. I hope that he will not misunderstand me. He has dealt extensively with the business of uprating pensions, but he has not dealt with whether he will uprate pensions in line with incomes if incomes rise faster than prices. I do not think that it would be unreasonable to ask the right hon. and learned Gentleman to deal with that matter now.
  Mr. Carlisle: I have said what my right hon. Friend the Prime Minister said—that we would match the statement made by the previous Prime Minister when we were in office, and this we shall do.
  Mr. Thomas: That does not answer the question.
  Mr. James Callaghan: I realise the right hon. and learned Gentleman's difficulty, but he went on to say that we must see the latest figure on prices. That is where the question of my hon. Friend the Member for Newcastle upon Tyne, East (Mr. Thomas) is relevant. The statute refers to prices or earnings. If the right hon. and learned Gentleman cannot answer, perhaps we could be told before the end of the evening whether the Government accept the undertaking that pensions shall be uprated in accordance with the increase in prices or earnings, whichever is the bigger.
  Mr. Carlisle: With great respect to the Leader of the Opposition, I cannot add to what I said. In making the statement the Leader of the Opposition was able to give only approximate figures, and we are therefore not able at this stage to give firm figures.
  Mr. Callaghan Mr. Callaghan rose—
  Mr. Carlisle: With respect, I have given way twice on matters that are not within my departmental brief.
  Mr. Callaghan: I do not want to embarrass the right hon. and learned Gentleman, as it is not his Department, but the question is simple and clear, and I want to make sure that he understands
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  it so that we can have a reply. Will the uprating be in accordance with the increase in prices that he mentioned or the increase in earnings, whichever is the greater? The answer to that is either "Yes" or "No".
  Mr. Carlisle: I repeat that the Leader of the Opposition must await the statement of my right hon. Friend at the time of the Budget. It has been made clear that we shall carry out our legal obligations to pensioners.
  Mr. Jack Ashley: Although it is not within the Minister's special remit, he mentioned private medicine. Will he go on record with his view whether the Queen's Speech policy that was outlined yesterday will result in shorter or longer waiting lists in National Health Service hospitals?
  Mr. Carlisle: I had not said anything about private medicine, but was about to when I was interrupted. The Queen's Speech made clear our policy on private medicine. We believe that pay beds should be available where there is demand for them. Legislation will be needed, and we intend to make progress on that this year. It is important to get the legislation right, and my right hon. Friend will be consulting the interests concerned before taking these matters further.
  Turning to the parts of the Gracious Speech that deal with education, the House will wish to know in some detail our plans for legislation, which are considerable. At the time, we made our opposition to the 1976 Education Act quite clear. That Act proceeded on the basis that all maintained secondary education in this country should be reorganised on comprehensive lines, which was a decision that we believed was unjustified on proved educational merit. Further, whilst paying lip service to the rights of local education authorities to organise their own forms of secondary education in accordance with local wishes, in practice the Act required them to submit and implement proposals with which they often did not agree, and on the basis of inadequate resources.
  We made it clear, and repeated throughout the election, that we would give the highest priority to a Bill to remove the compulsion on local education authorities to reorganise their secondary schools

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  on comprehensive lines. That we propose to do, and I hope that that Bill will be published tomorrow. Meanwhile, local education authorities and the governing bodies of schools will wish to know how they stand until that Bill gets on the statute book. I therefore take this opportunity to make a statement about action that I have already taken. At the end of it, I shall give way if there are any questions, but I shall be grateful if hon. Gentlemen will allow me to make the statement without interruption.
  The previous Government required certain local education authorities and voluntary schools, under section 2 of the Education Act 1976, to submit proposals or further proposals for reorganisation. I have taken the necessary formal steps to withdraw those requirements that are still outstanding. This means that those authorities and schools that have not submitted proposals or further proposals in response to the requirements will no longer be under any legal compulsion to do so. Authorities that have already complied with such requirements will be asked whether they wish their proposals to stand.
  The previous Government also gave a number of directions under section 3(1) of the 1976 Act. The effect of these directions was to require authorities to give public notice of the proposals they had submitted under section 2 and to proceed further with them as though they had been submitted under section 13 of the 1944 Act. Where section 3(1) directions have already led to the giving of such public notices and the proposals have not yet been approved, authorities will be asked to inform my Department if they wish me to proceed with consideration of their proposals. In those cases where the public notice stage has not been reached, I have already withdrawn the directions. Authorities and other bodies directly concerned are being informed.
  Some proposals made as a result of action under the 1976 Act have already been approved under section 13 of the 1944 Act but have not yet been implemented. Some authorities may wish to proceed with the reorganisation on the basis of the approved proposals. Others, however, may wish not to reorganise, or to reorganise on the basis of different proposals. These authorities will be
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  asked to inform my Department of their intentions so that once the Bill has become law the necessary action can be taken to relieve them of any statutory duty to give effect to the approved proposals.
  I have also revoked directions contained in orders made under section 99 of the Education Act 1944 in relation to secondary reorganisation proposals and steps are being taken to terminate legal proceedings where these have been taken.
  Turning to another aspect of the Education Act 1976, the former Government used their powers under the Act severely to restrict the freedom of local education authorities to support pupils at independent schools. We shall restore that freedom. Although not in the Bill to which I have referred, I hope in due course to introduce legislation to remove the powers of control over the support by local education authorities of education in non-maintained schools contained in section 9(1) of the Education Act 1944, section 6(1) of the Education (Miscellaneous Provisions) Act 1953 and section 5(2) of the Education Act 1976.
  In the meantime, my right hon. Friend the Secretary of State for Wales and I propose not to exercise our powers of control. We are therefore taking the necessary formal steps to give general approval to local authorities' arrangements to assist or to take places at independent schools, so that, pending legislation, those authorities wishing to make such arrangements will no longer need to seek specific approval. My right hon. Friend and I have made, and shortly will lay before the House, an amendment to the Scholarships and Other Benefits Regulations 1977 to relieve authorities of the need to secure ministerial approval to payments under regulation 4(d) of those regulations in respect of the attendance of children at non-maintained schools.
  The effect of all the measures that have announced is to honour as quickly as possible the Government's election pledge to allow local education authorities to take up places at independent schools if they wish to do so, and to remove from them the compulsion, imposed by the previous Government, to reorganise along comprehensive lines when they do not wish to do so. I am glad that the Government have been able to carry out that pledge at such an early stage of their administration.
  Mr. A. J. Beith: I hope that the Secretary of State does not suppose that from end to end of the country parents will now be in a position to send their children to Eton. Does he realise that even many Conservative-controlled authorities will place more emphasis on improving their own State schools than on diverting money in this way?
  Mr. Carlisle: Of course. The hon. Member would be surprised if I said anything but "Of course". But, as a representative of the Liberal Party, surely he will welcome the restoration of freedom to local education authorities to do that which they want to do.
  Mr. Douglas Jay Mr. Douglas Jay (Battersea, North) rose—
  Mr. Carlisle: Before I give way to the right hon. Member from another public school, may I say that what I have done is to restore the freedom of local education authorities to choose as they wish, in accordance with the wishes of people, the type of education in their area.
  Mr. Jay: Does the Government's wish to give greater freedom to local authorities extend also to the issue of the sale of council houses?
  Mr. Carlisle: With great respect to the right hon. Member, I am dealing with education. [HON. MEMBERS: "Answer."] Of course I shall answer. I shall deal with that shortly, when I refer to the assisted places scheme, which is on the same basis as the sale of council houses. We shall take control over its administration to ensure that certain local education authorities will not be able to prevent parents from taking advantage of a scheme that they believe is in their interests. The same undoubtedly applies to the sale of council houses.
  As for the 1976 Act, I have announced measures and will introduce legislation tomorrow which will have the effect of restoring to local authorities their rights under the 1944 Act to choose the form of secondary education that they consider most appropriate for their area.
  Mr. Eric S. Heffer: I am not an Etonian or a Wykehamist: I went to an ordinary elementary school. Will the Secretary of State indicate whether his policy means a return to the
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  type of privileged education that existed in my youth, or is it a move towards the egalitarianism in which we on the Labour Benches believe?
  Mr. Carlisle: It is a restoration of the situation that existed prior to 1976.
  Mr. Heffer: That is precisely it.
  Mr. Christopher Price: Is the Secretary of State aware that local authorities are under an obligation to the district auditors so to arrange their expenditure that they do not incur unnecessary expenditure? Is he saying that if there are a considerable number of empty places in local authority schools, his legal advice is that local education authorities would be within the law in incurring extra expenditure for independent schools, ignoring the existing empty places within their own schools?
  Mr. Carlisle: All I am saying is that we have restored the situation to that which existed before the 1976 Act, when the sort of points that the hon. Member has just raised would have been equally relevant.
  I now turn to another firm undertaking that we gave in our election manifesto—the introduction of an assisted places scheme. As the Gracious Speech has indicated, we plan to go ahead with this as quickly as possible. The previous Government's phasing out of support for the direct-grant grammar schools did a grave disservice both to the education system and to the individual children who benefited from it. In practice, the effect has been to turn the vast majority of those schools into wholly independent schools. Thus, the opportunity to attend them has been removed from the children whose parents cannot afford to pay the fees.
  In practice, the Labour Government, in pursuit of what I suppose they would call the ideal of equality, have in fact removed the opportunity for children to get to such schools on merit and have replaced it solely by the opportunity for them to get there on the length of their parents' purse. Thus, the child rich in intelligence but poor in cash has been deprived. A recognised avenue of opportunity for the bright child from a deprived area of our inner cities has been destroyed.
  Mr. Martin Flannery Mr. Martin Flannery (Sheffield, Hillsborough) rose—
  Mr. Carlisle: I am not sure whether I am giving way to a bright child or to a child from a deprived inner city area.
  Mr. Flannery: Is the right hon. and learned Gentleman really implying that in the great comprehensive schools, which about 85 per cent. of our secondary school children now attend, there is no chance of receiving an advanced education? Is he saying that children have such a chance only if the 11-plus examination is reintroduced and if what he calls "merit" is the criterion? Is he really saying that in the face of the vast progress made in examination results, these children do not have a chance of a good education now?
  Mr. Carlisle: The hon. Member knows that I am not saying that. He and I were members of a Committee on an Education Bill for a long time together and he knows that I have never said that. What I am saying is that the opportunity for education at schools such as Manchester grammar school, which was available to children from the city areas of Manchester, is no longer available, and that is not in the interests of the children of that area. I believe in restoring the opportunity to those children by our proposed scheme. We shall restore opportunity to the child who is bright in intellect and who would benefit from that type of education.
  A recognised avenue of opportunity has gone. We are determined to repair that damage by bringing forward proposals for a scheme to allow such children access to the academic standards that those schools provide. We shall do so by giving help to the parents of those children through an income-related grant towards fees.
  The scheme will differ from the direct grant scheme in a number of important respects. For example, I want to try to ensure a better geographical spread of opportunity. I accept that there are many issues to be examined, and we wish to consult the direct grant and independent schools associations, local education authorities and other bodies on the main details of the scheme. Our proposals can be discussed in the debate on the education Bill proposed for later in this Session.
  In answer to the hon. Member for Sheffield, Hillsborough (Mr. Flannery), I want
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  to underline a point that I know he has heard me make on many occasions. I wish to emphasise that these proposals do not in any way affect our concern and the concern of the Department for the maintained system in which the vast majority of children are educated. We wish to encourage the best in both sectors—maintained and independent. We want to see a closer relationship between them rather than a widening of the divide. Furthermore, we want to restore to more parents an element of choice in the education of their children.
  I am concerned to see that the importance of the views of parents on the education of their children is fully recognised. The Gracious Speech refers to the Government's intention to introduce legislation to ensure that parents' wishes are taken into account and that there is a local appeals system. We know that parental choice cannot be absolute, but we believe that arrangements for the admission of children to schools should be designed and operated so as to ensure that they are as responsive as possible to those wishes. Parents who are dissatisfied should have available to them an effective channel of complaint at a local level to ensure that their case has had a fair hearing. If parents are to be able to make a choice they need the information on which such a choice can be based, and we will make it a requirement for LEAs to provide the widest possible information about their schools.
  Mr. J. Enoch Powell (Down, South): Do the Government intend that provisions corresponding to those that he has just outlined will be put into effect in Northern Ireland?
  Mr. Carlisle: I shall have to take note of that question. It is not directly a matter for me, but I shall bear the point in mind and consult my right hon. Friend the Secretary of State for Northern Ireland.
  Mr. Roy Hattersley: What about tomorrow's Bill?
  Mr. Carlisle: It is not in tomorrow's Bill; it is in a Bill that is proposed for later in the year. I apologise if I did not make that clear.
  Mr. Robert Adley: Will my right hon. and

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  learned Friend say whether the information that local authorities will be required to provide will include information about examination results?
  Mr. Carlisle: Yes, it will include the widest possible information, if it can be made available. [HON. MEMBERS "Oh."] Of course that must be the case. If a parent is to make an important decision about a child's future, that parent must be given the widest possible information about schools.
  The fall in the school population presents the Government and local education authorities with very substantial problems of managing available resources in the interests of all children. But it also provides us with a challenge and with the opportunity to make the system much more responsive to the wishes of parents. Therefore, the wishes of parents must be part of the planning process from the beginning, and not just a supplementary factor to be taken into account at the end.
  Mr. Ted Leadbitter: The Secretary of State is making a great deal out of the matter of consultation with parents and their wishes, and has emphasised the need for appeals machinery. What does he mean by "appeals machinery", and what form is it likely to take?
  Mr. Carlisle: With respect, the hon. Gentleman must await the Bill. It will be an appeals procedure at a local level. A parent who is dissatisfied, having expressed a preference for a particular school and the LEA having allocated the child elsewhere, must be covered by a system in which appeals are heard by people other than those who took the original decision. That is what I have in mind, but the details still have to be worked out.
  I think that it is equally important that parents should have some say in the running of schools. Therefore, I hope that the legislation to be introduced later in the Session will include provision on school government. The Taylor report and the ensuing debates on the Education Bill in 1978–79 stimulated a continuing public debate about the role and composition of school governing bodies. I am sure that such bodies can make an
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  effective contribution to the life of a school and are an important way of bringing parents and teachers together and of involving parents in decisions about the schools attended by their children. We want to ensure, as a minimum, that each school should as a general rule have its own governing body, and that elected parents and teachers should be included on all governing bodies.
  I mentioned the matter of opportunities presented by falling rolls. Within a few years there will be a large number of surplus places in schools. This provides opportunities to improve the quality of the service—for example, by relieving overcrowding, converting spare space for nursery and other educational uses, bringing older buildings up to date, and taking out of use wholly unsatisfactory accommodation, including old temporary classrooms which have remained in use for longer than was originally intended. We shall progress as fast as possible, but it will be necessary to determine priorities to make better use of existing resources.
  As I have said, with falling rolls there are problems as well as opportunities. As school rolls fall, positive steps will be needed to protect the curriculum. This will depend crucially on the deployment of the available teachers if we are to ensure, for example, that important minority subjects, such as some languages, are not lost from many of our schools. This will depend on the size of schools. Primary schools that fall below a certain level may well have to make alterations in the pattern of staffing. Similarly, smaller secondary schools raise issues about the staffing levels required if their pupils are to enjoy the range of curriculum and options available in larger schools. Local education authorities will have to tackle the problems and formulate their policies.
  The crucial question is how to maintain and improve educational opportunities as schools get smaller. I shall do my best to help, but I, in turn, will need their support. Together we must face the fact that after three decades of expansion in the school population, we are now in for a decade of falling numbers in most areas.
  What I have already said will have made it clear that one of the Government' priorities, as the Gracious Speech

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  makes clear, is with the education standards in our schools. I repeat what I said on another occasion: I am aware that the concern of parents is vital and primary in terms of the standards of education in the school attended by their children. Standards depend on the interaction of many factors. There is no single and simple measure of education standards, and there is no single or simple way of maintaining or improving them. However, the Government will seek to work through and co-operate with the wide range of relevant agencies, including the LEAs, the teachers, the inspectorate and the examination boards, and on all the relevant aspects of school work and life.
  But academic standards are not our only concern. Standards of behaviour are just as important, and this is an area to which we shall be giving close attention. I am particularly keen to consider the problems of truancy, especially among those who are in their final year at school. The Government, the local education authorities and the schools should keep the aims of schools continually under review to ensure that they match the social and economic needs of both individual pupils and the community.
  The debate on education initiated by the previous Administration, which concentrated on curriculum and standards, made it clear that there is a need to ensure that as social and economic circumstances change schools' curricula should reflect those changes while continuing to provide a thorough grounding in the basic education skills.
  The Department's circular No. 14 of 1977 asked local education authorities to report on arrangements for schools' curricula in their areas. Analysis of their replies is almost complete, and my Department will shortly publish a summary of them. At that stage we shall open discussions with local education authorities, the teachers and other interested parties with the aim of reaching agreement on the steps that should now be taken to help ensure that the aims and curricula of individual schools match the needs of the day and keep under review the educational standards achieved in the schools.
  Improvements of standards in schools is dependent to a considerable extent upon the nature and quality of the education and training that we provide for our
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  teachers, both before entry to the profession and throughout their careers. We welcome the move towards higher standards of entry to the teaching profession, but it is not enough to improve the quality of entrants to initial training and to raise the level of courses that they are offered. The courses must be relevant to their professional needs. They must give the intending teacher a secure foundation in the practical skills that are required to encourage good work and good behaviour from pupils. We wish to see more emphasis placed on those practical skills and we welcome the increased attention that is now being given to those matters in training institutions.
  There are important matters concerning the education and training of those between the ages of 16 and 18, but time does not permit me to deal with them in any detail now. [Interruption.] I shall do so if hon. Members want me to. I was being kind to the House. Our manifesto undertook to review the relationship between schools, further education and training. In the light of that, and the flow of comments relevant to it that are now being received in response to consultative papers published by our predecessors, the House cannot expect any definitive statement at this time.
  I should like to make clear, however, that I attach the greatest importance to trying to meet in the most effective way the wide diversity of aims and needs among young people of that age group. I am also conscious of the needs of the 200,000 or more 16-year-olds who enter jobs each year in which no further education or training courses are planned. My right hon. Friend the Secretary of State for Employment is associated with me in examining this vital area of the relationship between schools, further education and training.
  What I have said about education should be looked at in the context of the Gracious Speech as a whole. In that speech, we have said that we shall ensure that parents have a say in the choice of their children's schools and that a variety of types of school should be available to meet the differing abilities of different children. Above all, our aim is to provide the highest standards of education obtainable. But in the end the speed with which we can achieve our aim depends on the resources that a country can

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  provide That is why it is so important to see our proposals in the context of the Gracious Speech.
  The need to revive the economy must remain a paramount issue. It is only out of that revival and the wealth that it creates that we shall be able to provide the standards that in a civilised society we all wish to see.
  3.25 p.m.
  Mr. Roy Hattersley: I believe that nobody who listened to the Prime Minister's speech yesterday could possibly have doubted the strength—indeed, the passion—of her ideological commitment. I mean that as a genuine compliment. The distaste for ideology affected by some of her Cabinet members has always seemed to be dishonest or wet, or both. I assure the Prime Minister at once that there is no one on this side of the House who will regret that the political battle lines were drawn clearly and precisely by her yesterday for the rest of this Parliament.
  Those battle lines—the rival positions of the major parties—are further apart today than at any time since the Second World War. Those sections of the Gracious Speech which deal with health, education and social security—I agree with the Secretary of State that they must be taken in the context of overall Conservative policy—demonstrate how wide and deep is the gulf between the two parties. The proposals in those passages invariably and consistently support the strong at the expense of the weak and help the rich to the detriment of the poor.
  I believe that they stem from the Prime Minister's definition of freedom, a condition which she seems genuinely to believe will come about as a result of the policies which she presents. She thinks of freedom as the absence of interference by the State. All the policies by which she proposes to implement that philosophy turn out in the end—as they must—to favour the haves at the expense of the have-nots.
  Apparently, the Prime Minister can construct a moral defence of a system which allows—indeed encourages—one man to buy himself a privileged place in the queue for hospital beds and thus denies another man the right to obtain the quickest treatment that the Health Service can provide. The Prime Minister
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  will find it difficult to discover a quotation from St. Francis of Assisi that justifies that sort of behaviour.
  Mr. Peter Bottomley: Will the right hon. Gentleman explain how, after five years of disappointment under the Labour Government and after getting rid of £44 million extra to the Health Service from pay beds, the Eltham and Mottingham hospital in my constituency, which was nationalised at the start of the National Health Service, is threatened with closure after all the compassionate words from Labour Members?
  Mr. Hattersley: Of course I can explain that. We have not been able to devote sufficient resources to the Health Service over the last five years. The divide between the parties is that of those of us who knew that public expenditure cuts had to be made and made them with reluctance and those now in the Government and Cabinet who regard them as good in themselves and believe in them as an article of policy and faith.
  I should like to return to the philosophy of the right hon. Lady, about which I am sure we shall hear a great deal during the lifetime of this Parliament. I believe—this is supposed to be a compliment as well—that she will imprint it clearly upon her Cabinet and her Government. Knowing that the right hon. Lady is inclined to accuse those who disagree with her of conversion to Marxist tendency, let me put my criticism of her philosophy in its proper democratic context. Her error was explained 30 years ago by Professor R. H. Tawney, who said:
  "It is assumed by the privileged classes that when the State holds its hand what remains as a result of its inaction is liberty. In reality, what remains for the mass of mankind is tyranny"
  —the tyranny of private wealth and private power, but tyranny nevertheless.
  I must tell the Prime Minister that her definition of freedom, with all the damage that it will do to those whom the Labour Party traditionally represents, is a concept in both principle and practice which we shall fight through the lifetime of this Parliament.
  I have already given one example of the privilege which the Government, on their own acknowledgment and confirmation this afternoon, intend to extend within

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  the Health Service. The second example, a grosser one, is to be found in the whole paragraph of the Gracious Speech concerning education. It contains four specific promises. Each one in the context of overall education policy can only help, and is designed only to help, a minority of our pupils and their parents.
  Here is the first. No one, I believe, not even in the furthest recesses of the Tory backwoods, pretends that the selective secondary system is better than non-selection for the 85 per cent. of our children who do not qualify for grammar schools. I believe—and I hope that I can demonstrate this before my speech is over—that the academically gifted boy or girl has nothing to lose and much to gain from education in a comprehensive school. But, even if I am wrong, the central issue which divides us concerns the majority of our school population.
  We believe that the country's education system ought to be based on the principle that all our children and all our young people are of equal worth, equal merit and equal value. A system which segregates and separates, the system which the Gracious Speech seeks to defend and extend, is bound to operate to the benefit of a small and, I believe, a decreasing minority.
  I hope that throughout the life of this Parliament we shall be spared any more nonsense about grammar schools and comprehensive schools coexisting side by side. I promise that this will be my only quotation from the Under-Secretary of State for Education and Science, but since this is one of the few things that he got right in the past five years I think it worth repeating—it is his view, not ours:
  "One cannot have grammar schools alongside comprehensive schools, or the latter will be nothing but misnamed secondary modern schools."
  Therefore, let the Secretary of State for Education and Science say frankly and honestly that in those areas where the grammar schools are to be preserved the secondary modern schools will be preserved as well for 80 per cent. or 85 per cent. of our children.
  While we are on the subject of the new freedom—those were the words, "the new freedom", used by the Secretary of State—I wonder whether the right hon. and learned Gentleman could tell us how it will operate in practice as well as in
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  theory. For instance, if the new council in Tameside decides that it wants to convert its secondary schools to comprehensive schools, will the new freedom apply to it, or does the new freedom operate in only one direction?
  Hon. Members: Answer.
  Mr. Mark Carlisle: Of course I shall answer. The Tameside council will be free, if it wishes, to submit a section 13 proposal under the 1944 Act, and it will be looked at in the Department. It will be dealt with in the Department in exactly the same way as applications under that Act are always dealt with.
  Mr. Hattersley: Some of us have memories of the Prime Minister objectively and honestly looking at proposals for comprehensive reorganisation between 1970 and 1974.
  The Prime Minister (Mrs. Margaret Thatcher): The Labour Secretary of State for Education and Science lost her seat.
  Mr. Andrew Faulds: She was a better woman than you.
  Mr. Speaker: Order.
  Mr. Faulds: I show more foresight than most of the lads around her.
  Mr. Speaker: Order.
  Mr. Faulds: A disaster area.
  Mr. Speaker: Order. If the hon. Gentleman continues like that, I shall ask him to leave the Chamber.
  Mr. Faulds: A disaster area she will prove to be.
  Mr. Speaker: If the hon. Gentleman continues like that, I shall have to ask him to leave the Chamber. That is no way to conduct our affairs.
  Mr. Hattersley: I do not want to defend my hon. Friend the Member for Warley, East (Mr. Faulds), but I think you ought to know, Mr. Speaker, that the Prime Minister, speaking from a sedentary position, was offensive about Mrs. Williams, and many of us, I think, took great exception to it.
  I want to pursue the question of the new freedom which the Secretary of State revealed to us, because the new freedom exists for councils to choose which sort of secondary education they prefer, but

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  it does not exist for them to decide whether they want to take part in the assisted places scheme. I wonder whether, between now and half-past nine, the right hon. and learned Gentleman could explain to us the philosophical criteria which exclude one of those areas from proper freedom but do not exclude the other.
  The Chancellor of the Duchy of Lancaster and Leader of the House of Commons (Mr. Norman St. John-Stevas): It is a matter of parental choice.
  Mr. Hattersley: What is the right hon. Gentleman now? Chancellor of the Duchy of Lancaster, yes. The Chancellor of the Duchy says that it is a matter of parental choice, but let me remind him again that in the boroughs where grammar schools are preserved and secondary modern schools are preserved with them, the idea of parental choice, even under the new freedom, will be an absolute myth, as I shall demonstrate. If the Secretary of State is not capable of producing an explanation of why freedom works in some cases and not in others, we shall be driven to the conclusion that freedom works only when it is freedom to do what conforms with Conservative prejudices.
  I now turn to the aspect of the matter of which the Chancellor of the Duchy of Lancaster reminded me. The second item in the paragraph on education in the Gracious Speech gives the promise to ensure that
  "parents' wishes are taken into account in the choice of schools for their children."
  Opinion in education is, I understand, divided about the desirability of that. For my part, I am passionately in support of it, but I know very well that, in practice, it works only in a comprehensive system. In areas where the 11-plus or the 13-plus survives, for most families the idea of parental choice is a cruel hoax.
  In the past 48 hours I have looked up both the figures for and the practices of selection in Redbridge, Essex, Bolton, Bexley and Buckingham. If the House wishes, I, or my right hon. Friend who will speak later, will describe what happens in those authority areas, but let me at this point put the principle in brief.
  A tiny proportion of the children obtain grammar school places. In Essex,
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  for instance—what is called old Essex, that is, Colchester and thereabouts—2 per cent. go to grammar schools. Virtually all the rest go to the local secondary modern school—good or bad, overcrowded, understaffed, old or new. The local secondary modern school may be called a high school, or it may even be called a comprehensive school, but secondary modern school in reality it is, and there is virtually no choice as between one parent and another or one pupil and another regarding the school to which children are allocated. Moreover, those secondary modern schools often have worse facilities, are more overcrowded and are more understaffed because of the financial benefits heaped upon the grammar school in their immediate vicinity.
  That, I believe, demonstrates our major objection to a selective system which divides young people and their education. It widens the gap between the provision in those selective schools which are regarded as superior and those other schools which are regarded as the ordinary run-of-the-mill establishments to which ordinary run-of-the-mill children go.
  Exactly the same principle governs our objection to the existence of private treatment within the National Health Service. Whether there is a division and distinction within what ought to be a universal public service, the treatment enjoyed by the favoured minority improves and the service provided for the rest deteriorates. In fact, while the rich can buy something private and better, the public Health Service will never be good enough. Whilst the children of the influential go to different schools, sufficient resources will never be devoted to the maintained system. That is especially true in an era of scarce resources, when we cannot—I admit it again; I admitted it to an hon. Member below the Gangway who asked me a question and then left the Chamber—devote as much of our national income to these public services as we would wish.
  It is against that background—a background which I admit is one where not as much money as many of us would hope can be spent on health, education and the social services—that I want to ask the Government some specific questions on the funding of health, social security and education.

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  First, on health, the Gracious Speech says:
  "A Bill will be introduced to facilitate the wider use of private medical care."
  The Secretary of State for Education and Science has confirmed that that means the encouragement of queue jumping. May we be assured absolutely that it does not mean the introduction of some of the more bizarre notions for financing the National Health Service which the Secretary of State for Social Services provided for the House during his days in Opposition? Lest to some new hon. Members some of those ideas seem so improbable as to be inconceivable, I ought to say that I have the reference to each of the occasions when he suggested financing the National Health Service by the insurance principle, when he suggested hotel charges for hospital patients, and when he suggested visiting fees for general practitioner services. May we be assured that they have been dropped and forgotten for ever?
  Whilst we are pursuing those assurances, may we have some other reassurance on social security funding and benefits? The first concerns the upgrading of pensions. I do not think that I am being unfair to the Secretary of State for Education and Science when I say that not only did he not begin to answer the questions but as far as I could make out he did not begin to understand it. I ask it again, therefore. We, the Labour Government, instituted and accepted a legal obligation to increase pensions in line with either price increases or earnings increases, whichever were the greater. During the general election campaign the Government appeared to accept only the inflation uprating. If, as we hope, earnings rise faster than prices, under their scheme the pensioner will not receive any share of the growing national wealth and prosperity.
  I know from a television performance in which the Secretary of State and I took part on Friday 4 May that the right hon. and learned Gentleman is inclined to cavil about the nature of the uprating promise that we made. To avoid a tedious semantic argument, therefore, let me put the question in very simple terms. Will the Government accept the same pension obligation as the Labour Government accepted? Do they accept—[Interruption.] The right hon. and learned Gentle
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  man is cavilling already. Do the Government accept that they have a duty to forecast increases in earnings and prices and then increase pensions to the highest level of those forecasts? If they accept that duty, will they promise that they will do what we did? When their forecast is in error, will they make it up the next year as we ensured it would be made up this?
  Mr. F. A. Burden: On that very topic, is the right hon. Gentleman aware that I wrote to the Department and asked whether the 1·9 per cent. would be made up when the next arrangements for pensions were introduced? I was informed that they would be considered in April but that no undertaking could be given. It was not until the election campaign began that the former Prime Minister announced that it would be made up.
  Mr. Hattersley: I am happy to confirm all that the hon. Gentleman said. It was considered in April, we agreed to do it, and we announced it. I am sorry that he missed the announcement.
  On this area of social security, I deal next with the child benefit. We proposed, when in Government, to increase the level of child benefit to £4·50 in the autumn. Will the Government do the same? I hope that they will. Indeed, to be consistent with the image which they created during the election campaign they ought to increase it by more than that, because they belong to the party of tax cuts and there is now no way in which tax cuts can be organised to provide benefit to large low-income families. If the Government believe that financial reductions ought to benefit the community as a whole, as part of their fiscal policy for helping the lowest paid, especially the lowest paid with large families, they ought to increase child benefit by more than £4·50. We have not yet even been told whether they will do it up to the amount that we promised before the general election.
  That leads me to the funding of the education service. The Secretary of State for Education and Science begins his tenure of office with two major advantages. The first is the service which Shirley Williams bequeathed to him, which is in better shape in almost every way than it was at any time during the

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  last 25 years. I give only one example. Class sizes are now the lowest on record.
  Dr. Keith Hampson: That is due to the birth rate.
  Mr. Hattersley: I was going on to make much the same point. Hon. Members who have been attending will recall that I told them of two advantages. Mrs. Williams was the first. The second is the fall in the school rolls which she, I am sure, would happily echo, as I do standing in her shadow. That was one of the reasons why she was able to make the progress which was a spectacular part of our history when we were in office. During the time of our three Secretaries of State, especially the one who abolished the grammar schools and now serves in the Conservative Cabinet—[Interruption.] I am told that he is not in the Cabinet. I am sure that he is working on that. The advantage of falling rolls was undoubtedly an advantage to Shirley Williams, and it is an advantage to the present incumbent of the office which she held with such distinction.
  Dr. Hampson: Does the right hon. Gentleman recall that when he was last in the position that he is now as Opposition spokesman, in July 1973, he moved a motion of censure on my right hon. Friend the Prime Minister in which he attacked her vitriolically for reducing the number of teacher training places from 119,000 to 60,000, and he said that the difference between a Labour Government and a Conservative Government was that a Labour Government would not use a fall in the birth rate to have public expenditure reductions? Since his own Secretary of State then reduced the number of teacher training places not to 60,000 but to 32,000, is not that typical of the two-faced nature of the right hon. Gentleman?
  Mr. Hattersley: I remember vividly all the statistical arguments that I had with the right hon. Lady at that time. As I prepared my speech earlier today, I wondered whether I should refer to the one in which The Times, the Financial Times, The Times Educational Supplement, The Guardian and The Daily Telegraph all said that she had been proved conclusively wrong. I am not sure whether Opposition spokesmen are entitled to put
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  cuttings in the Library. If they are, I shall put in the Library the cuttings relating to that occasion, because I remember it with a great deal of pleasure.
  I have not tried to run away from the fact that the falling rolls are the cause of the condition which the hon. Member for Ripon (Dr. Hampson) described and were an enormous advantage to the Government who came into power in 1974. It is an advantage which can be looked at in two ways. One way is that it is an opportunity to improve the system, and I was delighted that the Secretary of State described it in exactly those terms today. The other way in which it can be looked at is as an opportunity to reduce public expenditure, and I must tell the right hon. and learned Gentleman that that is the way in which it was looked at throughout the election campaign.
  I was told that during the election campaign the Secretary of State had said that education and science was an area in which savings might be made. If that is not the case, I shall withdraw the allegation at once. But whether he said that or not, there is no doubt that the present Financial Secretary, who probably is now in Treasury Chambers increasing VAT, said in a broadcast on 24 April on "The Money Programme" that one of the main areas in which public expenditure could be cut and in which savings could be made was education.
  I hope that the new Secretary of State will resist that idea to the uttermost. Even if he is successful in that endeavour, all of us on the Opposition Benches accept that there will not be the funds available to do many of the things that he wants to do, and certainly many of the things that we want to do. It is in that context that we find it absolutely astonishing—indeed, absolutely disgraceful—that the only major area of new expenditure is £50 million to subsidise free places in independent schools.
  That is not a vast amount of money, but I ask the House and the right hon. and learned Gentleman to consider the other things that might benefit from £50 million—remedial teaching in inner city schools, the teaching of English as a second language, the whole range of positive discrimination to help schools in deprived and depressed areas and more in-service training for teachers who can then qualify in subjects where there is

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  now a chronic teacher shortage. None of those things, according to Conservative criteria, has deserved that extra £50 million. Instead, we have this shabby little concession to Conservative prejudice—subsidised places in private schools. Whatever happened to the idea of one nation? When was one nation officially removed from the Conservative philosophy?
  I am sure that we shall be told—indeed, we are told in the Gracious Speech—that those places will be provided
  "for assistance to less well off parents".
  I take it that by "less well off" the Conservative Party means the poor. There is a good deal to be said for calling the poor the poor. I assume that this is supposed to be the escape hatch by which the clever and the industrious ascend to the middle classes. Indeed, the Secretary of State described this provision in exactly those terms. I hope that he will examine the history of other escape hatches of that sort in the past 50 years—Fleming, under which working boys were to go to public schools, the entire direct-grant system.
  We have all been embarrassed by a single example of the working-class boy who is hawked in front of us to prove how democratic the public schools have become. In fact, all the assistance schemes basically help children who would have gone there anyway but who nevertheless, because of the schemes, receive added assistance from the State. That is certainly what happened during the period in which the direct grant system was in operation. I have no doubt that it will happen when the new scheme is instituted.
  That is the practical objection. There is a much stronger objection in principle. It is that the very notion of a superior element within the system—and everything that the Secretary of State said this afternoon suggested that there was this superior element to which all should aspire and which a few might attain—encourages the belief that most boys and girls can be forgotten as they go through the generality of the educational process.
  In fact, that will not happen, despite all the things that were said by the Conservative Party during the election campaign about comprehensive education.
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  The Secretary of State will understand that those who sit on the Opposition Benches feel that there is much to regret from those three weeks, not least the result. After the result, the most regrettable feature of that campaign seems to me to be the appalling campaign of denigration which was waged against comprehensive schools. [HON. MEMBERS: "Where?"] Have right hon. and hon. Members already forgotten the poster which said "Educashun isn't working"? What was the message that it was supposed to convey? It was supposed to convey the message that the comprehensive system had failed.
  That message was repeated by Conservative candidate after Conservative candidate, and for all I know it is believed by some Conservative Back Benchers. If they believe it, I hope that the Secretary of State will contradict them. If he needs any evidence, I hope that he will look at the press notice put out by the Department which he now runs on 22 September last year. It proved conclusively that the comprehensive schools were producing better education, better academic results, better all-round standards than we had ever known in this country.
  The achievement of the comprehensive schools on behalf of our young people and the country is largely the achievement of the philosophy of the Labour Party and the Labour Government.
  Mr. Ivan Lawrence: That is why they lost the election.
  Mr. Hattersley: Some things endure. Let me give the hon. Gentleman a quotation to prove it. I do not often repeat the words of the Secretary of State for Industry, but one of his more endearing aphorisms concerned what he called the Socialist ratchet—those things which Socialists have done which cannot be reversed, those changes which we have so made that the clock cannot be put back. One of those changes is the non-selective system of comprehensive education.
  The Conservative Party may do the system damage. It may harm the prospects of a generation of boys and girls in some of the boroughs that follow its prejudices. But the general improvement in education standards which the comprehensive schools have brought about, and for which the Labour Party is responsible,

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  will endure and will remain one of our great achievements over the years.
  3.55 p.m.
  Sir John Eden: The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) spoke scathingly about the new freedom, as he called it. The fact is that the people of this country, when given the opportunity, decisively rejected the old formula of freedom which he and his colleagues represented. When he talks scathingly about the new freedom, he might remind himself of the sort of freedom that existed last winter.
  That was the freedom to which the people objected when they had the opportunity during the election campaign. They rejected the freedom that some people enjoyed to leave rubbish piling up in the streets of our cities. They rejected the freedom that some people indulged in to leave dead people unburied. They rejected the freedom that some people seemed to enjoy, as organised bully-boys on the picket lines, to threaten law-abiding citizens and prevent them from going about their work.
  Those are the freedoms which the right hon. Gentleman and his party represented. That is why they are now on the Opposition Benches and why they have been decisively rejected. For all the right hon. Gentleman's huff and puff, his case was as unconvincing this afternoon as it was during the past three weeks.
  I well remember how strongly in many different constituencies during the campaign people represented to us their aspiration to be able to lead their own lives, to take decisions for themselves to exercise choice for themselves, not to have masters in Government breathing down their necks and doing those things for them. That is what people voted for. They rejected as out of date, out of touch and totally irrelevant the policies which the right hon. Gentleman and his colleagues represented to them. The people have chosen the alternative course.
  I congratulate my right hon. Friend the Prime Minister and her colleagues in Government on the formidable and forthright programme that they have put before the country in the Gracious Speech. I congratulate her in particular on the courageous and clear way in which she
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  presented it and commended it to the House yesterday. Yesterday was a truly historic day. It will live for many decades in the history of this country and in the appreciation of its people as marking the major turning point for which many have been waiting a long time.
  I well remember, as many other hon. Members doubtless do, the occasion during the broadcast of the election results on the BBC when Bob McKenzie referred to the quiet and simple way in which a changeover in Government is made in this country. It was a correct reminder to all of us who practise parliamentary democracy of how natural it is to effect such changes here. In so many countries it is not possible—without bloodshed or turmoil—to effect a change of Government.
  We are all inheritors of this great freedom. We can cherish the fact that the changeover has taken place quietly and simply. It has been a change of a considerable dimension, because it is that for which the people voted. I am convinced that they voted to keep more of the decisions in their own hands and to be able to lead their own lives according to their own choice. Freedom and choice for the individual were the themes in the Gracious Speech and in the speech of my right hon. Friend the Prime Minister. They were the themes which we presented thoughout the election campaign.
  I am greatly encouraged by what my right hon. and learned Friend the Secretary of State for Education and Science said this afternoon about how that freedom would be extended throughout the sectors of our health, education and social services. I ask him to consider carefully the position of the elderly, especially when it comes to the taxation that they now suffer. The elderly find it extremely difficult to make both ends meet in times of rising prices. I am afraid that there is no doubt but that we shall have to endure rising prices for a little longer yet as a result of the inheritance from the previous Government. I hope that we shall soon hear more about the pledge to remove, over a period, the investment income surcharge, and also progressively to abolish the earnings rule.
  The general theme that must surely commend itself to everyone in the House is the Government's determination to do

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  what they can to make all our national services more responsive to the needs and wishes of the people whom they exist to serve. That must apply every bit as much in education as it does and should in health and as it certainly should in other aspects of our social services. As the right hon. Member for Sparkbrook said, there is no doubt that in the Health Service there is a need for more resources. However, a great deal can be done by the proper application of resources and by the better management of our resources, and that I am certain we shall see.
  When considering the need for better resources in our Health Service, I hope that my right hon. Friend will not forget the need of doctors and nurses to be able to be certain of having proper career prospects and being able to carry out the immensely important work which they have in their trust. During recent pay discussions the nurses conducted themselves with great restraint. I hope that we shall not forget the example which they gave. I hope that we shall do our level best to ensure that the highest possible standards prevail in those professions and that we ensure that they receive a proper reward.
  I have an interest in private education which I must declare to the House, but it is not about private education that I wish to speak. I take up the remarks made by my right, hon. and learned Friend about greater parental involvement. I am sure that that can only be for the good. Why should anybody object to that? I have no doubt that all hon. Members desire to ensure that when they invest money in the purchase of any product they get value for money and that they know what it is they are buying. Various consumer protection legislation has been introduced. That has passed through the House from time to time, reminding us of the desirability that those who manufacture and market goods should clearly declare the nature of the contents of packages, the quality of the goods, what they will achieve and how they are composed. That should apply equally to education.
  When parents are making decisions about the future education of their children, it is important that they should have the opportunity to balance the re
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  spective merits or demerits of the schools on offer to them. I hope that parental involvement will be encouraged and increased at every possible level and in every possible way, including in comprehensive schools, where parents should know the standards that can be achieved in the best of them and the standards that are not being achieved in some of those which do not aspire to such high levels of performance.
  I was greatly encouraged to hear what my right hon. and learned Friend had to say about preserving local choice for the type and organisation of secondary education in local areas. That will give great encouragement to the constituency I represent, where there are first-class schools which were under threat from the previous Labour Government. That threat has now been lifted and those schools can continue so long as that is the parents' wish. That, surely, is the right approach.
  Surely it is not right to have a decision foisted upon the people that is against their wishes and taken in the arrogance and exclusivity of some Whitehall cabal represented by the right hon. Member for Sparkbrook. These are decisions affecting the life, livelihood and well-being of individual citizens and individual families. It is right that they should have the opportunity to choose for themselves the path that they wish to follow in these matters.
  I turn briefly to another area of choice but away from the subject matters immediately under debate. Probably one of the greatest choices available to us all, which I referred to in my opening remarks, is the freedom to choose the Government of our country. The opportunity for such a choice is not available in every country. One country has been moving towards that clearly and decisively, giving the opportunity for choice in the type and the composition of Government where it had not previously existed to such a great extent. I refer to Rhodesia. I listened carefully to what my right hon. Friend the Prime Minister had to say on the subject. I hope that she will be heartened by the example that has been given from across the Atlantic in the United States of America, by the evidence that has come from that country of a change of heart and a change of attitude. We now have an opportunity to make a fresh

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  start in Rhodesia just as my right hon. Friend is making a fresh start here.
  I am enormously encouraged that the themes that we pressed throughout the election are so strongly represented in the Gracious Speech. I congratulate my right hon. Friend on her courage and clarity.
  4.6 p.m.
  Mr. A. J. Beith: The Secretary of State is temporarily absent, but I begin by wishing him well in his appointment. He will have a difficult task talking sense into some of his right hon. and hon. Friends. However, he has earned respect. He, the hon. Member for Brent, North (Dr. Boyson) and I worked on an Education Bill in the last Parliament, and we gained a fair amount of respect for one another. There was a measure of consensus on some matters that are not prominent in the Gracious Speech but on which action could be taken during this Parliament. I wish the right hon. and learned Gentleman well in that work.
  I also wish well the Secretary of State for Scotland, whose territory borders mine and to whom I may have to address the occasional embarrassing question if he ventures on forays over his national boundary. There are similar problems to which the right hon. Gentleman must address himself and he, too, has our good will.
  A number of features of the Conservative election campaign on health, social services and education have not found their way into the Gracious Speech. I lay down some markers in the hope of hearing a little more about what is to happen about them.
  There is the briefest of indications in the Gracious Speech about the simplifying of the social security system. Most hon. Members who have had to take up cases on behalf of their constituents will feel that simplification is desirable. However, I do not understand how we can substantially simplify the system without moving substantially towards a tax credit scheme. I do not see how we can deal with the problems of the poverty trap—that is, the situation that I am sure every hon. Member had referred to him during the election campaign, namely, when someone finds that he is better off
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  receiving benefits than when in work—unless we move towards a tax credit scheme. There are many circumstances in which, alas, simplicity is not the answer. The simpler a scheme is, the more crude it is and the less effectively it deals with certain problems and circumstances.
  The second feature that does not seem to have found its place in the Gracious Speech, but which was briefly referred to yesterday, is social security benefit for strikers' families. There was a reference in the Conservative manifesto to placing on trade unions the obligation to support the families of strikers and to bear a larger part of that cost than the Government, or a larger part than at present. There has been no clear indication what the Government will do on that front. The proposal in the Conservative manifesto was blown up in the election campaign into the suggestion, widely supported in the Conservative press, that there would be a crackdown on social security benefits for strikers' families. The Government must come clean on that issue as well. In the past, I was convinced by what the Secretary of State for Industry said about such a proposal—that the difficulties outweighed the arguments for taking the action favoured by the Conservative Party. It may be that the Government have had a new thought on the subject. If so, let us hear what it is.
  We must be told more about how the trend of Josephism in the National Health Service will be reversed. How are we to reverse the substantial and expensive reorganisation that has put the emphasis in all the wrong places in the Health Service? It is not easy to do what I am glad the Government have now agreed needs to be done—to get decisions back to the level of the operating unit, the local medical practice, the local hospital and those most intimately concerned.
  I say that not least because many people have been appointed to posts at higher levels expecting to carry responsibility. What will be done about them? It is unfortunate that many of the best qualified professional people in the National Health Service were invited and encouraged to take posts in which they administered rather than treated patients—posts such as area nursing officers, area physiotherapists and area speech therapists, carrying administrative responsibility at area level. That meant that they

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  spend most of their time driving around in a car seeing how everyone else is getting on with the job. It takes a lot of unscrambling to change a system such as that. There are severe implications for salaries, professional status and for what happens to the individuals involved if that damaging trend is to be reversed, as it must be.
  We know little about the impact of the public expenditure cuts which are promised and which are inevitable if only to pay for the public expenditure increases in other areas and the tax reductions. Some of them will affect education—the Secretary of State admitted that in a radio programme in which I took part. There is a commitment in the Conservative manifesto that cuts will not be made in Health Service spending. Therefore, there must be a heavy impact on some of the other social services, not least as there is additional spending on the assisted-places scheme. Yet what is needed most to boost standards in education and health is resources. The one thing that makes more difference than anything else to education standards is the number and quality of teaching staff. That—above buildings and other facilities—is the most important. It will require consideration if individual attention is to be given to the most successful and gifted pupils, who need the extra stimulus, or those who are falling behind.
  The greatest attraction of private education to those parents who can afford it is that of small classes, the feeling that their children will receive more attention as the teacher has more time to devote to them. We want to bring that aspect much further into the public sector, and we have the opportunity as a result of falling school rolls. But we have that opportunity only if we maintain the present level of resources while school rolls fall.
  The Secretary of State said that he saw opportunities for savings as a result of falling school rolls. I do not see opportunities for savings. I see opportunities for higher standards. However, we shall not achieve those higher standards if public expenditure reductions go hand in hand with falling school rolls.
  We also need to get morale back into the teaching force. That will not be done until the present pay dispute is
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  resolved. I see serious difficulties here for the Government. They are trying to resolve the dispute without any background of general pay policy. In education as in the NHS, the suspicion surrounds everything they do that the real instrument of pay policy under the Government will be those who work for the Government, such as teachers, nurses and hospital ancillary staff. That is an explicit part of Conservative policy.
  The Government do not wish to exercise pay controls in the private sector but see a need to do so in the public sector. I do not share optimism that what they call responsible pay bargaining in the private sector will lead to such restraint that there will not be severe pressures in the public sector. There already are those pressures. There is a great leeway for teachers to make up, from the Houghton report to the present day. There is a great deal of ground to make up for many NHS employees. The increasing desperation that we saw among some public service workers—such as the hospital ancillary staffs—during the winter months was born of the crumbling of the pay policy and of the feeling that they could not beat the tactics which were used by strong unions in the private sector and that therefore they had to join in. The only answer to that is confidence that the Government are prepared to exercise an overall pay policy in which no one section of the community will be treated as a victim or as an example. The Government will live with that difficulty until they change their attitude to pay policy.
  I turn to the issue of comprehensive education. My colleagues and I believe strongly in a non-selective education system. So do the Conservatives in the part of the country that I represent. The Conservative-controlled county council in Northumberland planned, initiated and maintained a fully comprehensive education system. There are many others like it. It seems to me that among some Conservatives there is a strange rearguard action to try to make the comprehensive education issue a live, political issue.
  I admit that there are some places where the change has not taken place, where it remains a live political issue. But there are many areas where it is a settled matter and where it is widely accepted that this is the way in which we

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  must proceed—not that any of us can afford to be complacent. Many improvements must be brought about, especially in inner city areas, where the attempt to achieve a genuinely non-selective system is frustrated by the way in which our inner city areas have developed—and, indeed, by the way in which they have been denuded of talent as a result of the wholesale clearance of central areas.
  There is a problem in making comprehensive education work in some inner city areas. That is not an argument for trying to go back to a selective system. It calls for flexibility, the implementation of parental choice, letting parents opt for the schools which have proved their worth. It calls for co-operation between schools so that at sixth-form level some may specialise in some subjects and others in different subjects. It does not call for the philosophy of the very large school, which was one of the mistakes in the earlier development of comprehensive education.
  Dr. Hampson: Would the hon. Gentleman clarify a matter that used to be in dispute when the Liberal spokesman on the matter was the hon. Member for Isle of Ely (Mr. Freud)? There seemed to be a conflict as to whether the Liberal Party was against or in favour of direct-grant schools. Would the hon. Gentleman welcome the return of some kind of assisted-places scheme so that talented persons who are now missing out on A-levels in inner Manchester might be able to go to the Manchester grammar school?
  Mr. Beith: No, I would not. I want to make the system of education that is available to all our children good enough for all of them. I want it to provide the best facilities for the brightest children and the best remedial facilities for those who fall behind. I see the assisted-places scheme as an escape route from that system and an admission that it is not good enough. I shall return to that subject.
  The question we face with the first piece of legislation proposed by the Government is whether the decision on the nature of the local education system—selective or non-selective—should be made nationally or locally. That is what the first Bill will be about. A perfectly respectable case can be made out for allowing that decision to be taken locally.
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  That is not the view to which I came when I last considered the issue. However, there is a respectable case to be made for it if we can maintain consistency over a period in what we do.
  There is an equally strong case for saying that we must settle this issue nationally because children increasingly move around. We must set that argument against it. However, there is no case at all for encouraging a constant to-ing and fro-ing, almost a cat-and-mouse game, between the Government and local authorities over this issue. A member of The Daily Telegraph education staff wrote of the proposals in the Gracious Speech:
  "The new policy, a reversal of Labour policy, is a complete vindication of the delaying tactics used by large numbers of Conservative-controlled councils to preserve their grammar schools."
  I do not think that Ministers will relish the phrase about the success of the delaying tactics. We could be in the same game straight away as whatever the Government decide to institute is subject to delaying tactics from local authorities.
  Are we to see the same process in reverse by local authorities which want to rush proposals through while they have the opportunity to do so? Are we to see the same situation over council house sales? We must try to achieve a consensus on issues such as this, about where the decisions will be made, and make it last for some time. If local option is to be the rule for going comprehensive, it is difficult to understand the philosophy underlying the Government's approach. That is not the rule for council house sales. We are bound to bring that aspect into the debate when we see what is involved.
  The argument for letting local authorities decide whether to go comprehensive or retain a selective system is that they are in the best position to judge the local circumstances, and that they are elected democratically and have the right to do so. Why does that not apply to council house sales?
  There are different issues on the sale of of council houses in different parts of the country. I am very much in favour of people being able to buy their own council house. There are parts of my constituency where I would advocate that course, and there are big city estates

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  where, as long as we can replace the housing stock that has been sold, there are strong arguments for it. On the other hand, I can show hon. Gentlemen parts of my constituency where it would be a social disaster to allow a large part of the council house stock to come up for sale. Many Conservatives in the area have the sense to see that.
  In some of the beauty-spot coastal villages in areas such as mine and in similar villages in the hills, the inhabitants no longer live in the old village properties because these have become second homes and retirement homes. The real inhabitants of the villages live in the council houses. That is the only way in which they can afford to live locally. If those council houses were sold to their present occupants, although the problem might be deferred for some years, sooner or later no houses would be left for young families in the area. Any council house which later came on to the open market would command a high price, as some already do.
  I am sure that there are some Conservative Members who, given the high standards to which they aspire, would very much like to buy a council house in my constituency. Some of them are beautiful houses, standing in groups of three or four, with a magnificent view of the sea. They are set in beautiful conditions, perhaps 100 yards from the beach. This is a circumstance to which Conservative policy-makers do not appear to have given a moment's thought. How are they to ensure that, in areas where the market pressures are very severe indeed, there will be somewhere to live for people who are receiving very modest local wages? Unless we maintain the council house stock, we cannot ensure that.
  Mr. Anthony Kershaw: Why does the Liberal spokesman so bitterly resent anybody having a little capital as a result of his own efforts?
  Mr. Beith: As I said earlier, I very much favour people being able to buy their own council houses if we can replace the council houses concerned. But does the hon. Gentleman expect to convince the planning authorities in a constituency such as mine that it would be reasonable to replace every council house that we could sell in some of our beauty-spot villages? Of course it would not be
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  reasonable. We would have council houses from one end of the coast to the other because very many people want a sea view and a nice beach at the bottom of the garden. We simply cannot dispose of and replace the entire stock of council houses in such areas. People of the hon. Gentleman's own political persuasion, who know the area better than he does, are beginning to realise that. Indeed, some of them have realised it for years.
  I remember serving some years ago on a local authority that was dominated by Conservatives. The same issue arose, namely, whether to sell a row of four council cottages in a small farming village, with no other property within the reach of people in the area. The idea was dismissed with disgust by prominent Conservatives on the council who thought that it would be a discredit to the area not to ensure that there were houses available for local people to live in. If we cannot provide local options to the local authorities to make these decisions, we shall be making a very great mistake.
  I turn briefly to the assisted-places scheme, about which there are many questions to be asked. We are bound to ask how it is intended to work. Is it to be a new 11-plus, taken very widely? Or is it, as suggested at one of the press conferences during the Conservative election campaign, a scheme under which those who apply to and are accepted by independent schools can then subsequently apply for some finance from the State system? If it is the latter, I fear that very many of the children whom the Government wish to assist by the scheme will never even hear about it and will certainly never take advantage of it.
  If the scheme is to have any of the desired effects, even for the tiny number that the Government want to assist, it will have to be encouraged very widely. Inspectors from the Department of Education and Science will have to go to schools in poor areas, encouraging them to put forward their brighter children for the assisted-place schools and supplying the necessary particulars. Parents will have to be persuaded to participate in schemes of this kind.
  We shall return, if we are not careful, to the 11-plus position, where only 2 per cent. of the children passed. It will be either that or a scheme which will benefit most those who are quite likely anyway

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  to use the independent schools. That is not of very much advantage. The scheme will not be of any advantage to constituents of mine and of many other hon. Members who have no such school within 30 miles of where they live. I cannot see what help it will be to divert resources from comprehensive schools in my constituency when there is no such assisted-place school within anything like travelling distance.
  I welcome the remarks of the Secretary of State about school governing bodies because there was a curious omission in the Gracious Speech in that respect. If there is to be a larger Education Bill dealing with issues such as parental choice, these are the very issues in which the hon. Member for Brent, North (Dr. Boyson)—who is now Under-Secretary of State for Education and Science—and others, together with myself, were involved on another Bill in the last Parliament. Surely we can bring the whole lot back into play and begin to build upon the substantial measure of agreement that we achieved.
  We want significant parent and teacher representation on school governing bodies. We want to make these bodies effectively representative of the people they serve rather than creatures of a distant political majority or bodies dominated by those who may have good will towards the school but not the direct interest in it that parents and teachers have. There were disagreements about what the balance should be, but as there is common ground on the principle I feel that the Government ought to include it in any Education Bill they bring forward.
  There is, I fear, a theme running through the proposals for education and for health that worries me a great deal. The theme is that an opportunity must be provided by a Conservative Government for escape from a State system which will not be adequate. That escape is provided by the encouragement of private medicine. It is provided by the assisted-places scheme. It is provided by the rebuilding of the direct-grant school system.
  As a Liberal, I defend the right of people to use the money they have earned in order to buy facilities in health or education which they feel are more suitable than the State system can provide.
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  That is their right, if those facilities can be privately provided without detriment to the State system. But I am not prepared to see a second-rate State service which drives people into seeking an alternative so that they can jump the health queue, or because they find that they cannot get an adequate education for a bright child in a State school.
  That is not generally what we have now, but there are some very serious gaps in our present health and education services where it is precisely what we have—long waiting lists for some operations, bad inner city comprehensive schools, and insufficient individual attention for bright pupils and for some pupils needing remedial help. Conservatives seem to be too ready to accept the situation and to provide a way out of it—even to use resources to provide that escape route instead of putting them into the very areas where they are most needed. I find that profoundly worrying.
  For the vast majority of people it is the public sector that matters. They are concerned with the publicly provided service on which they depend. It is one of the marks of this country that it has long sought to provide free health and education services for our people. The quality of these services is a key factor in the quality of life of our people. I want to continue to take a pride in what we do in this country in education and health services. I do not want to see them become second best. I believe that they are among the first obligations of the Government. I am sorry to see any Government more willing to provide escape routes from them than to remedy their inadequacies.
  4.27 p.m.
  Mr. Barry Porter: I thank you, Mr. Speaker, for this very early opportunity to address the House. I do not know whether it is a breach of the traditions of this House also to thank the Speaker and the Deputy Speaker for the great warmth of welcome which has been given to so many new Members in this House. If it be a breach, I apologise, but I do not apologise for the sentiments I express in giving those thanks, because the Chair—whether occupied by Mr. Deputy Speaker or by Mr. Speaker—has made the role of the new Member very much easier than it might otherwise have been.

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  I have the honour to represent a division which was in the past represented by the previous Speaker, the late Selwyn Lloyd, in part by my right hon. and learned Friend the Chancellor of the Exchequer, and in part by my hon. Friend the Member for Ludlow (Mr. Cockeram). Immediately prior to my appearing at this House, the division was represented by Mr. Alf Bates, to whom I should like to pay a very warm tribute. He was a very hard-working and popular Member in the division with constituents of all political aspirations and allegiances, and with those with none. Indeed, as many hon. Members will know, he was a Government Whip in the last Administration. It was not an easy task, in view of the composition of that Parliament. My own slim majority reflected Mr. Bates's popularity, despite the electoral misfortunes—no doubt permanent—of his party. I wish him well, Mr. Deputy Speaker, in his future activities, although I trust that his ambition will range rather more widely than attempting to regain the seat.
  I would not wish to detain the House unnecessarily with a potted history of the division of Bebington and Ellesmere Port. Suffice it to say that it represents all that is best on Merseyside. Contrary to popular belief in the South, there is a very great deal that is good about Merseyside. I am sorry that the hon. Member for Liverpool, Walton (Mr. Heffer) is not here so that I might make an exception to that rule.
  Ellesmere Port is a bustling modern town with a diversity of industry which has not to date suffered the ravages of unemployment which are all too common in the North-West. This is equally true of Bebington. But I fear that the clouds are looming on the not-too-distant horizon.
  I hope and believe that the economic policies in the Gracious Speech will, in reasonable time, result in a general national level of prosperity which will be enjoyed by my constituents. I shall, of course, urge upon my right hon. Friends on the Treasury Bench such measures as are necessary to achieve that end. Merseyside must not be allowed to wither.
  Today's debate is in part about education. At a local level I have had the privilege of being responsible for the
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  education service in an area where, contrary to what has been said today, there are grammar, comprehensive and secondary modern schools. I know that I should not be controversial today so I shall state facts. Those schools were and are good schools. I do not rely entirely upon my opinion as chairman of the committee which is responsible for those schools. I rely upon an opinion poll—although I know that such polls are not popular. In 1974–75, after reorganisation, the local authority consulted parents, teachers and those most intimately involved about whether they liked the hotch-potch of a system which included grammar, comprehensive and secondary modern schools. It was clear that the parents and teachers liked what they had.
  It was interesting that the same passionate regard was held for the good secondary modern schools as for the grammar and comprehensive schools. I urge the Secretary of State and the Opposition to consider the experience of part of Wirral when dealing with such matters.
  I welcome the commitment to repeal appropriate sections of the Education Act 1976. I take the point that has been made about council houses because it is reasonable, but the principle is right—local authorities must be allowed to determine what system they want. I look forward to the early implementation of that election pledge so that in Bebington we may retain the Wirral grammar school, which was responsible for educating the right hon. Member for Huyton (Sir H. Wilson). Not long ago the right hon. Gentleman said that the Wirral grammar school and others like it would be abolished over his dead body. In view of what the Secretary of State has said today, the right hon. Member may be relieved from any further contemplation of suicide.
  I welcome the commitment to introduce assisted places at independent schools. I am a product of one of the direct grant schools—which might be considered to be an argument against the policy. But it is undeniable that such schools gave opportunity to the relatively disadvantaged. I do not say that I went to school without shoes, but, with pride, I can say that I am the first Conservative Member to emerge from Birkenhead school since F. E. Smith, whose maiden

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  speech was mentioned during procedures to elect Mr. Speaker. I looked up the maiden speech of the great man, F. E. Smith, who was then the Member for Liverpool, Walton at the time of the Liberal landslide in 1906. I am sorry to say that, although it was a jolly good speech, I could not understand much of it.
  Since F. E. Smith, one other old Birkonian has become a Member of the House as a result of a mental aberration on behalf of the electorate. He was Graham White, a Liberal. The direct grant schools have made an enormous contribution in terms of education and opportunity. If they did not exist, the State would have to invent them.
  The Chair has indicated that hon. Members should keep their speeches short, consistent with being moderately intelligent. I shall therefore content myself, and I trust the House, with saying that I look forward eagerly to the Bill to achieve the aim which was so clearly stated in the manifesto, on which I campaigned and which contributed in no small measure to my victory.
  4.35 p.m.
  Mr. Harry Ewing: I am grateful for the opportunity of congratulating the hon. Member for Bebington and Ellesmere Port (Mr. Porter) on his maiden speech. Obviously he is proud to represent such a good constituency. I am sure that Alf Bates, one of my close friends in the House before the election, would want me on his behalf to thank the hon. Member for his kind remarks.
  I know that Alf's constituents appreciated his efforts. That was not reflected in the election results, but I do not believe that it had anything to do with Alf's personal ability to represent his constituents.
  I welcome the new hon. Member for Bebington and Ellesmere Port. I venture to give the hon. Member some advice. In the eight years that I have been a Member I have found that the House of Commons does one of two things to a new Member. If a new Member arrives in an unreasonable frame of mind, the House makes him even more unreasonable. If a new Member arrives in a reasonable frame of mind, the danger is that he will become unreasonable as he
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  progresses through his parliamentary career. The hon. Member for Bebington and Ellesmere Port appears to be in a reasonable frame of mind. I hope that he will retain that reasonable approach. We can debate strenuously at times, but we can remain friends. I should be glad for the hon. Member to buy me a cup of tea at any time.
  I congratulate the new Secretary of State for Scotland. He and I disagree politically, but I look forward to hearing his speech tonight.
  I shall deal first with the question of education. The new Secretary of State for Scotland inherits a good system. We have the best pupil-teacher ratio in the history of education in Scotland. I hope that the Secretary of State will do nothing—however reactionary his colleagues—to damage that system. He is a reasonable man. I hope that he continues to be so. For him to follow the example of the Secretary of State for Education and Science and carry out the policies that are suggested for England and Wales would be a recipe for disaster.
  When listening to the Secretary of State for Education today I was reminded of the famous warning about the Secretary of State who started off not knowing where he was going. When he got there he did not know where he was, and when he came back he was not sure where he had been. The Secretary of State's proposals will damage education in England and Wales. I hope that the Secretary of State for Scotland will have sufficient gumption when fighting battles in the Cabinet not to allow anyone to talk down to him. I hope that he will put up the same strong fight as Willie Ross put up when he fought for the Scottish education system.
  The success or failure of the right hon. Gentleman will be measured by the achievements of our children through the educational system for which he now has management responsibility. I trust that he will bear that in mind as he seeks to introduce legislation dealing with education.
  I have never heard so much rubbish talked about parental choice as I did this afternoon from the Secretary of State for Education and Science. There is not a parent in the House who does not believe that his child is the brightest. There is

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  something wrong with a parent who does not believe that his child is the brightest in the class. Out of every 100 parents who seek to impose their choice on an education authority, 99 will be unsuccessful. Every Member of Parliament—Conservative, Labour, Liberal or of whatever party—will, in the months and years to come, have surgeries that will be full of parents complaining about the injustices that have been wrought on their children because of the legislation the new Conservative Government seek to introduce.
  Mr. Beith: I agree with much of what the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) has said, but he seems to be running down his colleague, Mrs. Williams, who brought a Bill before the House precisely in order to enlarge parental choice, and to write that principle into the law of the land.
  Mr. Ewing: I was coming to the point which the hon. Member for Berwick-upon-Tweed (Mr. Beith) has just made. In my constituency of Falkirk a discussion, to put it no higher, is at present going on because of the construction of a large local authority housing development at Hallglen in Falkirk. The parents there are claiming that, when their children leave primary school, they should be able to decide whether the children go to one comprehensive school as distinct from another because of the location of the local authority housing development. As we say, it is six of one and half a dozen of the other as to which school they go to.
  At the end of the day the education authority has the management responsibility of seeing that places in both these schools are adequately and properly taken up. It will be the devil's own job to satisfy the parents that their children are not being dealt with unjustly because of a decision by the education authority as to which comprehensive school they should go to. We are talking, in this case, about a geographical problem. We are not really talking about an education problem where children are streamed at 11 years old.
  All the appeal procedures in the world will not solve the problem that parents will have when they have to go to the education authority merely to be told "Yes, that is the proper school for your
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  child, but unfortunately you are about thirtieth or fortieth in the queue and the first 20 places were filled by the first 20 children. Therefore, you will have to take your place further down the queue to go to another school." If the new Government think for one moment that they can get away with that kind of policy, they are wrong because chaos will reign in education and it will not be the Government or parents who suffer, but the children. That is something that must be driven home.
  Mr. Mark Carlisle: I have been listening carefully to what the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) has been saying. I take up the point made by the hon. Member for Berwick-upon-Tweed (Mr. Beith), which was that this is the very same proposal as the Government of which the hon, Member for Stirling, Falkirk and Grangemouth was a member was putting forward, that all parents should have the right to express a preference. When in Opposition we always conceded that that cannot be absolute and that some parents are bound to be disappointed. Surely that does not mean that we should not try to help as many parents as possible.
  Mr. Ewing: The Secretary of State is right in saying that surely we should try, but all I am saying is that in trying the Government have given the impression that they will be able to satisfy everybody. In trying to do this the Government are perpetrating a cruel deception on parents. It will not be possible to satisfy 99 out of every 100 parents who wish to have their children allocated to one school as distinct from another. I am talking not about an attempt but about the failure rate. The failure rate will be 99 in every 100, which will create chaos.
  Ase Memebers of Parliament, we will find that every parent will be on our doorstep when that happens. The first time I write 10 or 20 letters, after I have had a survey against the background of the proposed legislation, I shall remember that the Seceretary of State for Scotland shook his head in disagreement.
  I turn briefly to the question of the Health Service. I was interested in what the Secretary of State for Education and Science said about the need to reorganise the Health Service. I was also interested

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  in the remarks of the Prime Minister yesterday when we from the Labour Benches—some of us rather rumbustiously, admittedly—accused the Secretary of State for Industry of being responsible for the reorganisation of the Health Service based on the McKinsey study team's report in the early 1970s. The Prime Minister was quite proud to say that we were in Government for four years and did not do anything about it. The right hon. Lady seems to forget that the reorganisation took place only in 1973 and the flaws in the reorganisation have begun to show through only in the last 18 months—particularly in England and Wales. The Labour Government never had a chance to do anything about it.
  The reason why I draw a distinction between England and Wales, and Scotland is that in Scotland, as the Secretary of State for Scotland knows well, we have a different system. Our Health Service is not organised in the same way as in England and Wales. We have a one-tier structure. We had the wisdom not to accept the advice of the McKinsey study team. Our Health Service has not been reorganised against the background of McKinsey. I hope to God that the Secretary of State for Scotland does not make changes merely for the sake of it.
  I am the first to admit that some changes are necessary and that line management is sometimes far too long. Some of those at the sharp end—those responsible for making people better when they are sick—get frustrated about the time it takes to get a decision from the point where it is made to the point where it must be implemented. I am saying not that changes should not be made in that respect but that it would not be right to upset the fundamental structure which has been developed in Scotland.
  It must be borne in mind that our structure is totally different from that of England and Wales. It has been proved that our strutcure works quite adequately, although, as I said earlier, I accept that some changes may have to be made as regards line management.
  The financing of the Health Service is one of the points that gave me cause for great concern. The hon. Member for Berwick-upon-Tweed said that there was a commitment on the part of the Tory Party not to cut public expenditure in
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  the Health Service. I think that there is a difference between the hon. Member's understanding of not cutting public expenditure in the Health Service and my understanding of not cutting spending in the Health Service. I believe that the two things are different.
  I have a suspicion—the Secretary of State for Scotland will have an opportunity to dispel my fears when he winds up—that the amount of money the Government are to spend on the Health Service, as distinct from the amount of money that will be spent on the Health Service, will fall. I have the suspicion that the way in which the difference between what the Government spend in terms of public expenditure and the amount of money that is required to finance the Health Service will be made up in a number of ways.
  In my view, one of the ways in which the difference will be made up is through an increase in prescription charges. Despite what Teddy Taylor said in Scotland during the election campaign, I also believe that it is part of this Government's thinking to introduce hotel charges, bed and breakfast charges, for patients when they are in hospital.
  The new Secretary of State for Social Services is on record as saying, when in Opposition, that that was one matter that was being considered. If that has been thrown out, I hope that the Secretary of State for Scotland will make it abundantly clear tonight, because if these things happen we shall then be in the motor car insurance business as regards the Health Service. In motor car insurance the driver who has the most accidents pays the highest premium. In the Health Service which would be introduced by the Tory Government, the person who had the most sickness would make the greatest contribution to the Health Service. That is not the way in which our people want a health service to be run.
  As to pay beds, no one is against anyone who wants to buy health care and who finds that he can buy health care in such private establishments as exist. What Labour Members are against, and what we shall fight against when the legislation is proposed, is the use of the people's facilities and resources—the operating theatres which the taxpayers and patients have paid for—so that consultants, surgeons and the rest can treat

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  their private patients. The Secretary of State for Scotland well knows that in Scotland pay beds have never really been a problem. Is it his intention in the future to introduce in Scotland something that has not existed in the past? If that is the intention, the people of Scotland will view it not only with disdain and displeasure but also with absolute abhorrence.
  In what I have said I hope that I have fired sufficient shots across the bows of the Secretary of State for Scotland. He will not expect his passage in the House to be an easy one. There will be many times when he is taken to task on the various issues that come between the two main parties. When the new House met, I had hoped that somehow or other it would settle down and that all the divisions that I feared existed would not materialise. I am sorry to say that the Queen's Speech has done nothing to confirm my hope that these divisions would not materialise. If anything, the Queen's Speech has illustrated quite clearly the great division that now exists between the two main political parties in this country. Over the next five years some terrible political battles will be fought, if the kind of policies about which the Tories are talking come to be introduced in the form of legislation.
  Let me caution the Government Front Bench as represented by the collection of Ministers who are present at the moment. Great Britain is a democracy. We are all delighted about that. The only way in which a democracy can be ruled is by obtaining the consent of the minority. There is a huge minority. Putting together the number of votes that were cast against the Tory Government, it is not a minority but a majority. The only way in which a democracy such as Great Britain can be ruled is by obtaining the consent of the people and not imposing on them solutions which are unacceptable.
  My fear at this stage is that the Government have made up their minds that if they satisfy one section of the United Kingdom—roughly a line drawn south of Manchester—they can remain in power. That is a recipe for division which most of us will reject. As this Parliament goes on, I hope that the Government will moderate their policies and will not seek to impose on us things in both health and education which are totally unac
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  ceptable to the vast majority of our people.
  4.54 p.m.
  Mr. Paul Dean: I am glad to follow the impressive maiden speech of my hon. Friend the Member for Bebington and Ellesmere Port (Mr. Porter). I join with the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) in congratulating my hon. Friend on an impressive, confident speech, in which he showed his obvious pride in his constituency, his knowledge of education—to which he devoted a great part of his speech—and his knowledge of his distinguished predecessors who have come from that part of the world. We look forward to the eloquence from my hon. Friend that was displayed by his predecessor to whom he referred, namely, F. E. Smith.
  In my view, this Gracious Speech is a refreshing tonic after the Gracious Speeches that we listened to in the last Parliament. Its themes are incentives, freedom and individual choice. It does not aim to impose State solutions, but rather to create the climate in which Britain's abundance of skills, energy and experience can thrive for the benefit of individual families and the nation as a whole. Indeed, this was the theme of the impressive and authoritative speech by my right hon. Friend the Prime Minister yesterday. We are already beginning to see that Conservative tonic for which the national voted so decisively in the general election.
  I warmly welcome that paragraph in the Gracious Speech dealing with our procedures, which states:
  "Members of the House of Commons will be given an opportunity to discuss and amend their procedures, particularly as they relate to their scrutiny of the work of Government."
  It is one thing for a party in Opposition to favour reforms to equip this House better to control Government. It is another thing for a Government to do so, especially when that Government have an overall majority. I am delighted to see this passage in the Gracious Speech, and I hope that my right hon. Friend the Leader of the House will give us an early opportunity to debate the recommendations of the Select Committee which reported in the last Parliament. I support its main recommendations relating to

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  Select Committees and to Standing Committees. I hope that the House will do so as well. In my view, we cannot have good government unless the House of Commons is an effective watchdog. It is not an effective watchdog under our present procedures. We are now given an opportunity to reform ourselves, with the Government's blessing, and I hope that we shall take this opportunity to do so.
  I wish to turn briefly to the matters in the Gracious Speech relating to health and social security. I declare an interest in these subjects. I am glad to see my hon. Friend the Under-Secretary of State for Health and Social Security in his place. I come first to health. It seems to me that the NHS has one problem which overshadows all others. It is a problem that came out strikingly during the disruption in the Health Service last winter, which caused so much suffering to patients and people waiting for treatment and which undermined the morale of skilled and devoted staff to whom strike action is abhorrent.
  As I see it, the main question is whether we can restore peace for patients and guarantee conditions in which skilled medical and nursing staff can carry out their duties and obligations, or whether our hospitals are again to be a battlefield, with a militant minority using patients as hostages. There can be only one answer to these questions, namely, to return to the original purpose of the NHS—to ensure that patients come first and that all staff accept that their first duty must be the relief of suffering and the cure of disease.
  I hope that the Government will do their utmost at an early stage to negotiate no-strike agreements with those involved in the NHS. After all, there is already a promising start. The members of the Royal College of Nursing reaffirmed only a few months ago their intention not to take strike action. Equally, the doctors have reaffirmed that strike action is contrary to their obligations to their patients. Therefore, I hope that the Government will feel that here are two major professions in the Health Service which have already said that they are not prepared to take strike action. I hope that the other trade unions involved in the Health Service will be prepared to do likewise,
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  and that if they are so prepared the Government will recognise this important step forward in the pay, conditions and terms on which those who work in the Health Service are engaged.
  In default of this—and I hope there will not be default—I hope that the Government will immediately consider contingency plans to ensure that volunteers are ready to man our hospitals if, unhappily, there should be further disruption, such as there was last winter.
  Mrs. Gwyneth Dunwoody: Is the hon. Gentleman suggesting that he would be prepared to accept for all ancillary workers in the NHS pay rises equal to those that have been suggested for the nursing profession and for the medical profession only in relation to doctors? Is that the sort of commitment in terms of pay that he is talking about?
  Mr. Dean: I am not suggesting that at all. What I am suggesting is that there are already two skilled professions within the NHS which have said that they do not intend to use strike action.
  Mrs. Dunwoody: At a price.
  Mr. Dean: I applaud them for that. I hope that others who work in the NHS will feel that they, too, should put patients first and will be prepared to negotiate with the Government terms and conditions which will take into account a very important factor. That is what I am saying, and I hope that the Government will succeed in negotiation on these lines, so that we can remove the insecurity which at present hangs over the NHS.
  My second point relating to health services is to welcome the reference in the Gracious Speech to the encouragement of independent health services. When the previous Government tried to get rid of private medical care, they took on a great deal more than they bargained for. The result is that the independent sector is now more confident. It is insuring more people and a wider section of the community. It is putting more resources into health than was ever the case previously. The private sector must certainly maintain its independence, but I hope that the Government will be able to build up a real partnership with the private sector and that they will recognise that there

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  are areas, particularly in preventive medicine and in diagnostic services, in which the private sector may very well be able to help the NHS and offer services to the NHS on an agency basis.
  Mrs. Dunwoody: At great cost.
  Mr. Dean: I believe that there are whole areas for a constructive partnership to be built to ensure that much-needed additional resources are available to health as a whole.
  I now turn briefly to pensions and social security. Again, I welcome the pledge in the Gracious Speech on pensions. Indeed, it was a previous Tory Administration who first introduced the annual guarantee for pensions and the Christmas bonus. But I now ask the Government to consider going a step further. Pensioners do not understand why they should have to wait some months between the announcement of an increase in pension and the increase actually being paid. They feel that they are losing out and that part of the increase is lost in rising prices before they get it.
  We have all had this experience with pensioners, particularly during the last election campaign. These are feelings which run deeply and are widely held. The time has now come for the Government to respond to these feelings.
  From my previous experience in the DHSS, I accept that time must elapse between the announcement of an increase and its implementation, because of the very big administrative job which is involved in updating the pension books of over 8 million pensioners. But I suggest to the Government that the increase should be backdated. If the announcement is made in the Budget Speech, as is usually the case these days, the increase should operate from then. Once instituted, this need cost no more, but it would remove a genuine grievance and misunderstanding among pensioners.
  My second plea on pensions relates to the relationship between the State scheme and occupational schemes. As my hon. Friend the Under-Secretary knows very well, there has been a spate of legislation in recent years. We now need a period of quiet, a period of no legislation, so that managers of occupational pension schemes have an opportunity to adjust themselves to the 1975 Act and to im-
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  prove their schemes in the light of that Act.
  The only thing that I ask the Government to consider in this respect is making a request to the Occupational Pensions Board to draw up a code of practice to guide pension trustees in their responsibilities, particularly with regard to accountability to their members, the sort of information that they should make available to their members, and the best methods of participation by members in the running of schemes. Pension trustees these days have enormous responsibilities. It would be a great help to them if an authoritative body such as the Occupational Pensions Board was invited by the Government to issue such a code of practice to guide pension trustees in this way.
  My final point on social security relates to the proposal to simplify the system. Again, I welcome this. I beg my hon. Friend the Under-Secretary not to be discouraged. Many of us have embarked on the simplification of the system, only to be defeated by the examination that has taken place. The fact is that no one these days understands the system. Ministers do not understand it fully—with respect to them. The House of Commons certainly does not understand it. The officials who administer the system in the offices around the country do not understand it. The public are completely bemused by the vast range of complicated regulations that exist. Of course, there will always be some conflict between equity and simplicity in social security. But we have now reached the stage at which the system has become so complicated that it cannot be equitable.
  The orginal tax credit proposals produced by an earlier Tory Administration were designed to simplify the system and to bring together the tax arrangements and the social security arrangements. I hope that in due course they can be introduced in an updated form. But in the meantime the social security system must be made more sensitive to genuine need. There are still cases and groups of people who are not getting the support and the help that they require. We all know of them from our constituency mailbags.
  The system must also be tougher on the able-bodied who are work-shy, those who find it convenient to coast along on

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  social security and moonlighting. That is as much a tax problem as a social security problem. If it paid people to work, there would be less temptation to abuse the social security system.
  In conclusion, in my view the best test of any Government's humanity is in their care for the elderly, the sick, the disabled, widows, one-parent families and children. A Government cannot care effectively unless they encourage the production of wealth and manage the economy properly. Economic health and social welfare are inseparable and go hand in hand. I believe that the Government's policies in these two all-important fields are right, and I congratulate them on the Gracious Speech. I shall support them in any Divisions which may take place in this debate.
  5.10 p.m.
  Mr. Frank Dobson: It is customary in a maiden speech to pay tribute to one's predecessor and have a quick trip round one's constituency. I have no sense of obligation in paying tribute to my predecessor, Lena Jeger. She was a most doughty fighter for democratic Socialism and a powerful advocate of the interests of the people I hope to represent. She first came into the House in 1953. She delayed her maiden speech until 1954, when she took the unusual step of talking about defence and foreign affairs, and did so most effectively. She was later told by the late Herbert Morrison that as a woman she should confine her activities to more womanlike topics. She upbraided him, pointing out that if husbands and children were killed in war it affected women as much as men. It was a lesson for Herbert Morrison and should be one for everyone in the House.
  The hon. Lady was a doughty fighter for many causes that were not popular when she took them up. She was a great supporter of the Cypriot people in their efforts to establish a democratic State in Cyprus, she was a stout defender of nuclear disarmament, and, despite what she said to Herbert Morrison, she stoutly pursued a large number of what might he described as women's issues at a time when they were unpopular and she was ridiculed for pursuing them.
  I am the first Labour candidate since 1945 not to be "Jeger for Labour" in
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  Holborn and St. Pancras, South. Lena Jeger succeeded her beloved husband, Dr. Santo Jeger, whose name is still revered by the older constituents, and rightly so. It is claimed that Boadicea is buried in our constituency under platform 9 at King's Cross station. Hon. Members, particularly on the Labour side, who came across Lena Jeger when her dander was up must have felt like the Romans when Boadicea's chariot wheels came towards them as she was leading the British. In my time I have suffered a severe dressing-down from her and I am sure that it did me good.
  Turning to a trip round the constituency, it is curious that what others regard as odd services we regard as major industries and employers. The area includes the Inns of Court, full of tax lawyers and other lawyers who are well off. We also have large centres of learning such as the university that provide a great deal of employment, and a substantial number of great hospitals that provide employment and do a great deal for the sick. The three main line railway stations of King's Cross, St. Pancras and Euston are probably the major employers in the area. It is with great pleasure that I tell the House that I am honoured to be sponsored by the National Union of Railwaymen, the better to represent those people who work at and travel through those stations.
  Although it may touch on controversy, except for those who live in the Inns of Court and who used to live round the great squares of Bloomsbury, most of the people in the area that I represent—those in Covent Garden, King's Cross, Somers Town and at Euston behind the stations—lived, at the end of the nineteenth century and the beginning of the twentieth century, in appallingly squalid conditions. Those conditions prevailed because of the free market. The services on which those people had to rely for housing, health and education were provided by a free market or, to be more correct, were not provided because the free market was not interested in them. Their ancestors' conditions were greatly ameliorated by churches and charities.
  It was no accident that Great Ormond Street hospital, University College hospital and the Elizabeth Garrett Anderson hospital were established in the area that I represent by people of a charitable disposition because they knew that those

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  services were needed. I say to those who are talking of introducing a private element into medical services that the motives behind that are very different from the wholly laudable motives that led to the establishment of Great Ormond Street, the EGA and University College hospitals. The motives behind the establishment of hospitals such as Wellington are profit-making. They provide no teaching facilities for doctors or nurses, and their establishment is a parasite that draws on publicly trained nurses and doctors.
  That principle applies also to housing. The disgusting housing conditions in which people lived in the area that I represent were ameliorated initially by housing trusts. Public expenditure by the local authorities over the years is the only thing that has established decent housing in the area. Therefore, the people I represent have much to fear from any erosion of public expenditure on housing, health or education, particularly in our area where so many people are dying to get their hands on the real estate that they see our area as representing.
  Although I did not intend to talk about education, having listened to the debate I shall do so. My children go to a local school. Like all the other primary schools in Inner London, it is comprehensive. All the children of the area go to that school. There is no testing. They have adequate and enthusiastic teachers, and children of all races, creeds, colours and levels of intelligence get a fine standard of education. Last Friday I received from the Inner London Education Authority a letter telling me that our eldest daughter would not get into the mixed secondary comprehensive school that we thought was best and that she preferred. We are sad and she is upset, but I believe that we are in a position to choose a school for her amongst a number of other mixed or single-sex comprehensive schools in our area. I am happy to be able to exercise that choice and do what I can to get her a good education, but also to ensure that the children who have less encouragement at home than my children will also be able to get a good education.
  To the extent that there are shortcomings in the area that I represent, they are because the Inner London Education Authority proceeded too slowly—not too
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  fast—in eliminating the relics of the grammar school system. Some of the comprehensive schools are more popular than others because until recently some of them were grammar schools and therefore attract ambitious parents more than others that have been comprehensives for a long time.
  During her speech yesterday, the Prime Minister referred to the average cost of educating a child at school. She gave the impression—and of course I may be wrong—that she thought that the figures were too high. She said:
  "The average yearly cost of educating a child in primary school is now £324. In a secondary school for children below 16 it is £455, and in the sixth form, £800 per pupil."—[Official Report, 15 May 1979; Vol. 967, c. 80–1.]
  I was amazed to hear that because I think that those figures represent a good bargain. It is a bargain for any ratepayer or taxpayer to get that sort of service from very dedicated teachers. I hope that the Government do not intend to reduce those averages by cutting down either on the standard of buildings or on the number or quality of teachers provided.
  The Prime Minister did not mention in her speech the cost per child of a local authority being forced to finance a child's attendance at school outside the local authority system. The Conservative candidate in my constituency in the election was a schoolteacher at Harrow. I made it my business to find out fees at Harrow school. I understand that, depending on the kind of service one wants, one can pay between £2,000 and £3,000 a year at Harrow. Although people decry the public sector, in this case, at least, it seems that the public sector provides a decent service at far less cost than the private sector.
  At the beginning of my speech I referred to the doughty and dedicated qualities of my predecessor, Mrs. Lena Jeger. I have gone to schools only as a consumer, either as a pupil or as a parent; I have no other connections with the education system. But wherever I have gone, particularly in the Inner London area, I have always found large numbers of dedicated teachers battling to provide a decent standard of education for everyone in the public sector. I hope that the Secretary of State will quickly

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  resolve the present dispute in the teachers' favour in order to ensure that teachers are given every encouragement and opportunity to provide the sort of education which our children need and which they are longing to provide.
  5.22 p.m.
  Mr. Anthony Kershaw: The House has listened with great pleasure and satisfaction to the hon. Member for Holborn and St. Pancras, South (Mr. Dobson). The House will admire his fluency. Anyone who can say that he had not intended to speak on education and then spend the whole of his maiden speech talking about it must have every fact at his command. He entertained and instructed us.
  I am grateful to the hon. Gentleman for another reason. I have always wondered what King's Cross station was for, and now I know that it is Boadicea's tomb. Also, the hon. Member revealed that he is sponsored by the National Union of Railwaymen, so now we shall all know whom to complain to when anything goes wrong with the trains. I am sure that the House will look forward to hearing the hon. Member's forthright opinions in the future. As he so rightly said, his predecessor was a doughty fighter but nevertheless a favourite of the whole House. I believe that he has started on that track as well, and we look forward to hearing from him again.
  I welcome very much the decision in the Queen's Speech to give local government and parents a greater choice in the types of education available for their children. Everyone who took part in the election will agree that one of the main talking points on the doorstep was the education provided for children. I am sure that this was a decisive factor in the election result. I met many people who had moved house perhaps only four or five miles in order to be nearer a good school.
  I can tell my local education authority—if it does not already know—which schools in the Stroud constituency are well regarded. I can tell it—I expect it already knows—that the schools that are well regarded are those where the children learn to read and count before they learn to play with plasticine and blocks of wood. I believe that headmasters should
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  take greater note of the feelings and wishes of parents than many do at present. Some headmasters take very little notice. I can give the "pecking order" of schools in my area, and the parents know very well which are the good schools and those of which they approve.
  Therefore, I welcome very much the intention to give, as far as possible, an increased choice to parents. I believe that this choice can be increased by the variety of education provided, and the Secretary of State this afternoon outlined his plans for increasing the variety available.
  I was astonished by the remarks of the hon. Member for Stirling, Falkirk and Grangemouth (Mr. Ewing). He decried the possibility of giving parents a choice. He thought that it would only end in heartbreak because in fact the choice would not be available. I believe that the increased variety of schools will provide that choice to some extent. Therefore, I very much hope that the hon. Member's fears will not be realised and that parents' wishes will.
  I refer to one other subject—the position of overseas students in this country. The House and the Government should make up their minds whether they welcome overseas students. I suppose that almost everyone would agree that we welcome such students and that we want to see them here, not only because of our liberal traditions of education but also because of the influence that returning students will, in due course, provide for our country and our way of life.
  Even if one can differ with me on that point, the fact remains that we have these students here and therefore we must make the best arrangements possible. We have at least 85,000 overseas students officially sponsored or known of, and we also have an obligation as members of the EEC to receive students from Community countries—an arrangement which has not yet started to show any results but which must introduce certain complications. We should prepare for these in time.
  Our attitude to overseas students is ambivalent and, in some cases, even grudging. We should try to put ourselves in the position of overseas students who come to this country. Some are mature

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  people who come with their families and do not need any special consideration beyond the facilities that they have come for, but the vast majority come alone. Possibly it is the first time many have left their families. They come to a strange country and a strange civilisation and they need special consideration to make them feel at home.
  The first responsibility for making them feel at home lies with the institution at which they are being educated and with the British students with whom they are studying. Some institutions are good at this and have much experience. Some are not so good and have less experience. Some have a pastoral tradition, some have not. Perhaps the Department of Education and Science should do all it can to draw the attention of these institutions to the special needs of overseas students.
  The second responsibility lies with the State. It is responsible for the arrangements made for these students. The State, represented by the different organs of Government, has a different approach according to the responsibilities of government of the various Departments. The Department of Education and Science, which is primarily concerned, is sometimes worried that large numbers of overseas students might swamp the British students and dilute the excellence of the teaching that they might receive.
  On the contrary, British students are not frozen out by foreign students. Indeed, some courses would not exist at all except for the foreign students who take them. Therefore, British students are able to take advantage of the same courses. There is a possibility that these matters are urged a little vigorously by institutions which profit from the presence of overseas students. It is possible that if the number of overseas students is cut drastically, many teaching jobs will disappear. I believe that the Department of Education and Science should take the view that these students are of benefit to us, and should not have too many misgivings about the quality of education provided.
  The Foreign Office and the ODM look at the matter from a different standpoint. The Foreign Office must consider future contact between this country and the countries that send students here, and the
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  ODM must consider the aid problems that arise. Both Departments must consider our relations with European countries whose sudents are bound to come to Britain in increasing numbers as the Common Market regulations are brought into force.
  The Department of the Environment must consider the housing and accommodation problems of foreign students, and the Department of Health and Social Security and local authorities must bear in mind what action to take if disaster strikes students and financial difficulties face them when conditions in their home countries change. At present Iranian students are in some difficulty because of changes in their country of origin, and we know that in other cases help has been withdrawn and students have been left in this country almost destitute. The problems of such students fall unevenly on local authorities throughout the country, but for the most part on London. Some local authorities, including that in my own area, never face this problem at all because they have no overseas students in their areas. Indeed, they would not recognise an overseas student even if one morning they woke up in bed with one. However, some local authorities, if things go wrong, have great pressures put upon them. Local people naturally resent their hard-earned money going to support people who happen to be in their area for a short time.
  The Treasury is ambivalent on this subject. I understand that the Treasury view is that the charges to overseas students should be increased. Yet another branch of the Treasury says that we earn £309 million gross every year as a result of the presence of these students because of the money they spend on accommodation, food, and so on. Therefore, I wish the Treasury would make up its mind whether such students are a net asset or a net loss to us. Personally I have no doubt that these students are a financial net gain to us. Every foreign student spends at least £1,500, perhaps as much as £2,000, a year maintaining himself in this country. That has to be set against university or college fees.
  The Home Department also has a great responsibility in this matter. The Department is concerned about immigration. We know that some students come to this

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  country and then, after a short time, disappear. They go to live with compatriots and cannot easily be traced. It is no crime in this country to disappear if one wishes to do so. We have no arrangements for finding anybody who wishes to disappear. I do not know whether there are statistics about the number of foreign students who disappear in this way. I suppose that we do not know where they are, otherwise we should be able to trace them, but clearly the Home Office must bear this consideration in mind. It is a different consideration from that which faces other Departments.
  Most people agree—and I share the view—that there could be too many foreign students in this country if we reach a situation in which we cannot maintain them properly, and if we cannot give them proper instruction, house them and ensure that they are content.
  If the numbers of overseas students are to be limited, how should we go about it? There are two obvious ways of tackling the problem. The first is to price them out. This appears to be the course on which the Labour Government started. Overseas students pay far more than British students in college fees. I do not regard that as a sensible way of proceeding. It is very much resented by the overseas students, because they are paying a higher price for the same commodity that is being sold to the British. Furthermore, it is clearly unfair because the higher the price, the richer the country or person has to be to maintain students here. Therefore, I believe that regulation by price will not be useful. It has already made the atmosphere worse than it should be. I believe that overseas students and British students should pay the same fees.
  The other way to limit numbers of students is by quota. I believe that that would be a desirable course compared with the price system. A quota system could be self-administered by the institution attended by the students. No institution is likely to enrol more students than it can safely or properly look after. An institution knows its capacity; it also knows the equipment that is at its command and the number of teachers and the amount of accommodation it has available. An institution will enrol
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  students in the way it knows it can best handle them.
  I believe that there would be no danger of too many students coming to this country if there were a self-administered quota operated by institutions. The grant which they would receive from the Government would be based on the number of foreign students which the institutions felt they could properly handle. I believe also that such a quota system would tend to solve the problem of the disappearing student. If an institution had to calculate how many students it can afford, it would keep a better eye on them and not allow them to disappear as they do at present.
  Because of all these different purposes of Departments and the varying ways in which these matters are administered, wonder whether my right hon. and learned Friend the Secretary of State for Education and Science will consider appointing an advisory council to co-ordinate efforts in meeting the problem of overseas students. I do not believe that it would need to be a very impressive administrative machine. It would obviously need a chairman and a very small staff. It would be able to co-opt people who knew about these problems.
  Mr. William Hamilton (Fife, Central): Another quango.
  Mr. Kershaw: The hon. Member uses the word "quango". I am slightly embarrassed to have been twigged so quickly in proposing another quango. However, it is a very little quango. Anyway, if it is considered unacceptable to the Government, I have an alternative. If quangos are definitely out for a year or so, I believe that the job could be done by a ministerial committee. I do not particularly care who takes the chair. I once chaired such a committee. The Foreign Office or the Department of Education and Science would be an obvious Department for such a committee. Probably the DES would make a better job of it.
  Such a committee could meet on a regular basis and discuss the problems which I have outlined. If that were to happen, I believe that the DES would be better advised than it now is in receiving as it does spasmodic reports from various sources. I believe that such a step should be taken because fairly soon we shall have too many overseas students

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  in this country to be able properly to handle, educate and treat them in the right way. Such students will return to their countries and may well influence their countries' future policies. If they have sad recollections of their stay in this country, that will be unhappy for this country and also for the people involved.
  I believe that a decision to pull all these strands together is required, and required fairly soon. I hope that my right hon. and learned Friend will be able to take such a step at an early date.
  5.39 p.m.
  Mr. Martin Flannery: Before I speak on the subject of education, I should like to spend a few moments dealing with the Queen's Speech in general.
  I was struck by the point made by my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley) when he outlined the tremendous gulf between the two parties. The Queen's Speech has undoubtedly deepened that gulf in the nation on a grand scale. At the same time as we were listening to the Prime Minister yesterday outlining her proposals in the Queen's Speech, the Secretary of State for Employment was trying to pour a little oil on the waters in Brussels, where he was questioned. He said that we do not want confrontation. I cannot imagine that if the Tory Party were to sit down cold-bloodedly and plan confrontation it could have been done more brilliantly than in this Queen's Speech.
  Those who have spoken of a winter of discontent will find, if we are not careful, that under the provocations which are about to be engaged in with working people we shall be in for five winters of discontent—on the assumption that the Government last that long—because the Conservative Party has learned nothing from the period between 1970 and 1974. I believe that we shall be in for five autumns, five springs and five summers of discontent because of the amount of provocation which is being engaged in.
  I disagree with my right hon. Friend the Member for Sparkbrook that this is the most reactionary Government since the Second World War. I believe that the ultra Right wing of the Conservative Party is now in command. It does not matter who grovels to its members: they
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  are in command. I pay tribute to the right hon. and learned Member for Runcorn (Mr. Carlisle) because I do not know how he came to be among them. He introduced a note of civilised and liberal conduct in the discussions on the Education Bill, which has gone its way for the time being at least.
  The policy that we are in for is cuts, cuts and more cuts. All the unions are now discussing what is in store for them—let us make no mistake about that—and coming to the conclusions which I fear are inevitably justified. However, when I say cuts I do not take into account certain areas into which, far from cutting, we shall see masses of money poured. I gather from the news this morning that no less than an extra £2,000 million is planned for so-called defence. I do not know how long that £2,000 million will last and I do not believe that we need that vast amount of money. That would bring defence expenditure to over £10,000 million. That comes side by side with attacks on education, the Health Service and all the public services.
  The unions will watch that with considerable care, as will the teachers. Since the Houghton report there has been an erosion of teachers' finances. Many others have received 30 per cent. increases, although some received less. None the less, their standard of living has been eroded, and, whether we agree or disagree with their demands, the teachers will have noticed the increase that has been given so easily to the police. I do not know whether hon. Members are aware that teachers' wages have always been attached by an invisible thread to police wages. When I was a member of the executive of the NUT we knew that when the police were given a major allowance without much struggle the teachers were activated immediately—the two went together. If anybody believes that the teachers will sit quiet or be easily won over now that the Conservative Party has rushed in to open the flood-gates, he will be in for an immediate summer of discontent. That person does not understand the difference between bribery and straight trade union negotiation.
  When I examine the areas into which the Conservative Party has poured finance, I wonder whether it is expecting trouble. I wonder whether the Conservatives are worrying in the background

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  or whether they are as deeply inexperienced as the composition of the Front Bench seems to indicate. Working people—let alone the teachers—will not sit still. Through Fred Jarvis, the Burnham committee, the AUEW and the NUR they will tell the Minister that they will not sit still. I cannot imagine anything more provocative, more unconcealed and more undiplomatic than the already existing conduct of this Government. They have rushed in without full explanation and engaged in bribery that has opened wide the flood-gates.
  We are in for confrontations which Conservative Members have placed deliberately on the agenda because they do not understand working people. When one listens to their speeches on education, one feels that they should talk to ordinary people and find out what they are like. [Interruption.] Hon. Members may laugh, but they are owners of vast amounts of money and directorships.
  Dr. Hampson: I am not.
  Mr. FlanneryThe hon. Member for Ripon (Dr. Hampson) is an exception. We have examined Conservative Members and we know that, compared with us, they are massively wealthy and they do not understand the unions and the working people.
  I turn to the issue where the class of Conservative Members is shown more nakedly than anywhere else—education. The section on education in the Queen's Speech states that
  "The quality of education will be maintained and improved."
  We have listened for years to the "Black Paper-ites" and Conservative Members attacking and denigrating the education system in this country and applauding every backwoods voice that they could listen to or get into print. Everything that they have said about education was admitted in a major report by the DES some months ago to be utter nonsense. Yet we have never heard Conservative Members admitting that they were in error.
  In his speech today the right hon. and learned Gentleman, who is in the grip of the Right wing and presumably has to say these things, indicated that we shall be taken back many years in education
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  from the achievements that have been gained. That remark was made by the leader of the National Union of Teachers.
  Twenty out of the 22 members of the Cabinet went to public schools. I read that this morning and I shall be corrected if I am wrong. What can they know about ordinary people? What can they know about the education of ordinary people? The hon. Member for Ripon laughs. Let me address some remarks to him that I prepared for him, because I knew that he would have to laugh at them. Does anybody think that the railwaymen, the nurses, the farm labourers or the miners can pay their way through Eton and Harrow? According to the Conservative Party, they have the freedom to do that.
  Everybody is supposed to have that freedom. But does anyone believe that ordinary people have the money? Every time they ask for an increase they are denounced as vagabonds and rogues by the Tory Party. The truth is that they have none of the chances that hon. Members opposite and their sons and daughters have to go to those other schools, yet the Tory Party is trying to head back in that very direction, and, of course, a Cabinet composed of public schoolboys is bound to think in that way It always will.
  I wonder how the Tory Cabinet views the State system. I remember the time when the Prime Minister, then Secretary of State for Education and Science, went to Sheffield. She went to one school, a direct grant girls' school, the girls' high school. Sally Viner went there. I think that she is called Sally Oppenheim now. The right hon. Lady had an adviser in teacher education and training. He had once been called—listen for it—the high master of Manchester grammar school. I think that he was known as Sir Eric James—Lord James now.
  Mr. Michael Brotherton Mr. Michael Brotherton (Louth) rose—
  Mr. Flannery: Let the hon. Gentleman listen. He will learn something. Admittedly, it will not be palatable to him, but nevertheless he will learn.
  That adviser to whom I have referred wrote a report on teacher education and training. He came to Sheffield. I know that he did because I was there. He

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  went to one little school, Westbourne preparatory school. But the Secretary of State and her colleagues and advisers were in charge of State education, with 250 schools in the area outside the door of that little school.
  The truth is that the Tories have no interest in ordinary children and ordinary families, and it shows in education more than it does in anything else.
  Mr. Brotherton: Will the hon. Gentleman give way now?
  Mr. Flannery: In a moment. The hon. Gentleman need not be too eager. I want to discuss what he and his hon. Friends call parental choice. I believe that the Tory Party has what is known laughingly as a parents' charter. As the Secretary of State knows, a Bill was introduced not long ago, which did not really see the light of day, and on that Bill the Tories argued about parental choice. The spokesman for the Liberal Party said that one of those speaking from our side had not quite understood the question of parental choice, so let us be clear about it.
  There is a great difference between what we on these Opposition Benches mean when we talk about parental choice and what the Tory Party means when it speaks of parental choice. The Tories do not mean the same as we do at all. They mean limitations on parental choice. They want parental choice for an elite grouping of their own people. That is the Tory doctrine on parental choice.
  Mr. Brotherton: Will the hon. Gentleman give way now?
  Mr. Flannery: As the hon. Gentleman is so impatient, I shall give way to him.
  Mr. Brotherton: The hon. Gentleman has spoken sneeringly of the high master of Manchester grammar school. Will he agree that Manchester grammar school was a great free school but, because of the legislation introduced by his Government, it has now had to become a fee-paying school? Does the hon. Gentleman recognise that legislation introduced by the Labour Government has turned that school into a school which places at a disadvantage children whose parents cannot afford to pay for their education? That is the price of Socialism.
  Mr. Flannery: Clearly, the hon. Gentleman knows little of what he is talking about, as I should expect. It was always a fee-paying school which offered some scholarships. Nobody forced it to go private. It could have stayed the same. It could have become comprehensive, and that would have been a great advance for all its pupils. They would have got a better education than ever before, and a much wider grouping would have got that better education. That is the reality, and hon. Members ought to know it. All the results are available to them. They can find them whenever they want. They have the DES report, which proves that education is better now than it has ever been in our history and more accessible to a wider grouping.
  All that is coming from the Government Benches now about parental choice is sheer Tory demagogy. Over many years the Tories have connived at excluding 85 per cent. of our children on the basis of what they call parental choice. The Tories have prevented 85 per cent. of parents in our country from having parental choice. What kind of parental choice was it that the Tory Party gave to our children and their parents?
  Now, of course, when we have comprehensive education and 85 per cent. of our children are in it, the Tories hate it and they are trying their utmost to stop it. Knowing all the facts, they still intend to go back in the direction of private education, with elitism as their aim, wanting private hospital beds for themselves, and the rest. They want all the favours out of the community, and they are arranging things to that end as best they can. But the people will realise what is going on.
  We sometimes hear the Tories glorifying the 1944 Act. It was a historic Act in its time, but let us be clear about it. As I said when the Bill to which I have referred was before the House, the 1944 Act enshrined selection and thereby it enshrined rejection as well. It had many good aspects, but the truth is that it was the father of the tripartite system, it was the father of the secondary modern school for ordinary working-class children. It was against comprehensive education because it could be interpreted in that way by a reactionary Government.
  We in the Labour Party, therefore, wanted to do something about education

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  under the 1944 Act, and we brought in the 1976 Act, which is one of the greatest Education Acts, tiny though it be, ever to be put on our statute book. It took a great leap forward in education, but the Tories are busily trying to turn backwards now in their own personal interest.
  The right hon. Member for Daventry (Mr. Prentice), now sitting on the Government Front Bench, used to be the Labour Secretary of State for Education and Science. He knows the truth of what I am saying. He has said it all himself over and over again. I have heard him myself when I have attended education Question Time and education debates. So he has got a bit of an argument to deal with now, I must say.
  Dr. Hampson Dr. Hampson rose—
  Mr. Flannery: No, I shall not give way just now. I want to go on to deal with the problem of the 11-plus examination, and I do so as an ex-teacher. I remember how the 11-plus hung like a black cloud over education in our country. It meant that an examination had to be catered for so that children would get through it, to the exclusion of a full and broad education. All teachers steadily learnt this, and I shall never forget the time when that cloud was lifted from our city. I remember how we were then able to educate our children fully and properly, without worrying about the 11-plus.
  Many hon. Members may recall that in the classy areas over the weekend when the results of the 11-plus came out one often did not even see some of the children because they were ashamed of having "failed" the 11-plus; and their parents, too, were ashamed that their children had failed.
  How dare we as a society say to a child at 11 that it has failed something? That is what competition in education produces. We have now rectified that to the best of our ability, but what are the Tories trying to do? If they can, they will resurrect it. It became clear in a speech made earlier today that if they get away with this they will go further. The clock will be turned back even more than is apparent from those few lines in the Gracious Speech.
  I regard the 11-plus examination as a crime against our children. All who saw
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  and knew our schools when that examination went will understand what I mean. I know that the hon. Member for Ripon believes in comprehensive education. He is an ex-teacher himself. He can deny it if he wants, but when that cloud was lifted education flourished and, concomitant with it, comprehensive education went forward because, once that happens, all our children move into comprehensive education. Therefore, by trying to unscramble comprehensive education and to preserve elitism the Government and their supporters will take us a great deal further back.
  The truth is—I invite hon. Members to look up all the facts—that there has never been such a success story in our country as comprehensive education has been. All the prejudices of the Tory Party can be aired, but the facts speak for themselves. One has only to look at the examination results, at the satisfaction among our young people in education, at the number of them going to university now compared with what happened in the past.
  But what will the Tories do now? They want to create a situation in which progress in education is stultified. They want to go back to the time when the long purse buys education as it can buy pay beds. The hon. Member for Ripon does a great disservice by laughing when these things are raised, and he does no credit to the profession in which he himself was engaged—and, for all I know, may even go back to one day.
  I reiterate that not only Labour voters but the vast majority of Tory voters have accepted comprehensive education. It is said in justification of the Government's proposals that the electorate knew what they were voting for because it was in the Conservative Party's programme. But, of course, with the greatest propaganda machine that there has ever been at the disposal of the Tory Party and with many people upset about some of the events during the past winter, the reality is that the electorate fell for it. Now, after what has happened, the whirlwind will soon be upon them. When they see what is to happen in education and what the new Government intend to do, the vast majority of parents, including those who voted for this Government will rapidly be antagonised.

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  The teachers' unions are with the Opposition in their stand against the proposals. They are appalled at what they see happening because they fought on our side. The Tory Party is in process of recreating the secondary modern schools. As my right hon. Friend the Member for Sparkbrook said, when the Government cream off the top 5 per cent. to go to the grammar schools, they will call the schools which remain comprehensive schools, knowing that they are not comprehensive schools. They will bring all their propaganda machine into action to lie to the people, trying to tell them that their secondary modern schools are "comprehensive" schools. But the people are not silly. They will realise what is happening.
  The education plans in the Gracious Speech, like the rest of the Speech—although this is the area in which I am deeply interested at the moment—are backward and elitist. They are in the interests of a certain small group of people. They are not in the interests of the people generally. They are plans for the wealthy, directed against ordinary families and ordinary children. We shall oppose them relentlessly.
  6.3 p.m.
  Mr. James Hill: First, Mr. Deputy Speaker, may I add my congratulations to you on your appointment? May I also convey to you my pleasure at once again being in the House of Commons representing the constituency of Southampton, Test?
  My right hon. and hon. Friends may be disappointed to hear that I do not intend to spend any time at all discussing education. The Gracious Speech encompasses so completely the policies of this new Government that I shall instead refer to three specific subjects, namely, the European Economic Community, the proposals to strengthen law and order, and the sale of council houses.
  As a former Member of the European Parliament, where I had the honour to chair the committees concerned with regional policy and transport, I am especially pleased to learn that my right hon. Friend the Prime Minister intends to introduce some very firm, sober policies to deal with problems which have arisen over the past five years. Indeed, all three political parties are united in wishing to
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  see significant improvements in the common agricultural policy and the common fisheries policy, to say nothing of a fairer pattern of budgetary and resource transfers.
  As an ex-European Member, it seemed to me that the renegotiation of our Community membership in the spring of 1975 was conducted incompetently and that some of the problems four years later were due to the lack of foresight and negotiating skill of the then Prime Minister and his team. It is not surprising, therefore, that the budget is now so grossly out of step with the resources of the United Kingdom, and I am pleased to learn that my right hon. Friend the Prime Minister intends to deal with this in a very forthright manner.
  One of the sad decisions of the last Government, in their wisdom, was the turning down completely of the European monetary system. They have taken what I call a rain check on this very important policy. When one realises that the supply of Euro-dollars swilling around in the Communities is about 700 billion, it is clear that there must be an alternative currency. I feel that the European monetary system is a key element in developing European economic and monetary union and a step on the road to complete monetary union. The EMS responds to immediate demands for monetary stability, economic recovery and the creation of new jobs. It is especially pleasing to me to know that the Government which I have the honour to serve as a Back Bencher will be looking to the development of the European monetary system.
  The Leader of the Opposition said yesterday that there was no mention of aid in the programme. Of course, it was discovered later that there was some mention of aid. In any event, let me point out to those who do not follow the European scene as closely as they should that the development and co-operation committee in the European Parliament is sending far more aid to the emerging and developing countries than we could ever do. What is more, in our own small way through our budget contribution we are helping the emerging and developing nations through the Commission for Development and Co-operation in Brussels.

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  I make that point because a great many people seem unable to say a good word for Europe. There is no doubt that some hon. Members are in a fog of confusion about the institutions of the Common Market. It is a complex subject. There are many pillars holding up the European Community, and from time to time it is important to underline some of the advantages of our membership. In terms of regional policy alone, we get 28 per cent. of the budget from the Community for regional development in the United Kingdom.
  That is probably enough from me on the subject of Europe. I am sure that we shall have many debates on it in the coming five years.
  One of the provisions in the Gracious Speech concerns strengthening the powers of the courts in relation to young offenders and juveniles. It is a tragic statement of fact that, in urban conurbations such as Southampton, juvenile crime and vandalism are running almost out of control. Elderly people living on our vast council estates are unable to live quietly in their homes. One old lady brought to my surgery a carrier bag full of the most undesirable objects which had been pushed through her letter box by children having a lark. The effect upon her was profound. Windows are smashed and, of course, there is rape and there is damage to property and persons throughout our estates.
  The position in Southampton is not quite so bad as it is in certain other areas, but there is undoubtedly a need to strengthen police patrols throughout our council estates. In a small way, we have tried to crack this problem in Southampton by putting under the umbrella of the housing department estate patrol officers. We have between eight and ten security officers who will patrol the estates from the time that schools close until 11 or 12 o'clock at night. Their sole purpose is to involve themselves in the community, find out the pockets of problems and report any damage to property or persons either to the housing department or to the police.
  It seems strange that in 1979 a housing authority should have to take over what was always thought to be the province of our police force. Our police have
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  been under strain and they have been losing well-qualified officers. Consequently, when I heard the hon. Member for Sheffield, Hillsborough (Mr. Flannery) say that everyone would be looking at the pay settlements of others such as the police and, I presume, the Armed Forces, I made a mental note to say that I was 100 per cent. behind the new Government in wishing to support the police in every way. I do so because I feel that one of the pillars of the strength of our magnificent victory throughout the country was the law and order issue. People are worried and desperate. Many of them are helpless to fight the problem and look to the Establishment for protection.
  We in Southampton have had a scheme for the sale of council houses since 1967, offering a discount of 20 per cent. to 30 per cent. I appreciate that that is not the case in every local authority area. I welcome the proposed 50 per cent. discount for tenants who have been living in a property for 20 years.
  Some of the properties built over the past few years have had serious design faults. Some buildings have suffered from condensation and have attracted mould. There are badly designed buildings that are difficult to maintain. Buildings have been put up to the so-called Parker Morris standards in the past 10 years without a scrap of insulation. Consequently, there has been a vast drain of energy through the walls and roof.
  Some of the properties that we hope to sell have all-electric under-floor heating, which is extremely costly. I recall from the general election campaign figures showing that the cost of electricity went up by 163 per cent. in five years. It is no wonder if the tenants of such houses do not wish to purchase them, because they will wish to have an alternative supply of energy for heating.
  The insulation programme must be fully supported with finance and directives, because better insulation is a way to save energy. There should also be a fund for conversion from all-electric heating to, say, gas heating, whether by warm air or by radiators, in all council houses. There is opposition to the purchase of houses that no one can afford to heat.
  The scheme for the sale of council houses is a good one. I sometimes wonder at the dust that is raised when it is

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  proposed, because the majority of council tenants do not want to buy their houses. They are paying extremely low rents; they may not like the area or the house; they may be getting on in years and not want to have a commitment. The Opposition's idea that if we go ahead with the sale of council houses councils will end up with only high-rise blocks is rubbish, as has been proved in practice.
  The scheme is another aspect of freedom—freedom for the council tenants at least to have the ability to purchase the houses they are living in. My only sorrow is for people living in high-rise blocks. What a disastrous decision it was by many local authorities and architects to develop high-rise buildings, which are causing great social problems and are so constructed that they cost more to pull down than to build. They are a problem for the future. There is no chance of selling accommodation in any of them to sitting tenants.
  Many other housing units must be excluded. For example, we need the ground floors of most of our four-storey blocks for the disabled, so ground-floor flats may well have to be excluded. We have many purpose-built units now. There is the accommodation for old-age pensioners as well as the specialised buildings for the disabled and many other units which may be unsaleable. It is unnecessary for the Opposition to get into such a state over the sale of council houses.
  Anyone who goes through a council estate in Southampton will be able immediately to pinpoint the properties that have changed hands. Because of restrictions in cash flow, certainly within the past five years, most local authorities have become extremely poor landlords. There are tenants with poor living conditions, waiting for their houses to be modernised, who would not be justified at this time in purchasing those properties.
  Theory does not always work out in practice. The vast council building programme of the past, the building to keep ahead of numbers which never seemed to decrease, has resulted in vast expanses of council estates which are difficult to maintain. They are certainly difficult to administer, and it is very difficult to provide law and order within them. It is extremely difficult to give people hope.
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  We are still building such estates. My right hon. Friend who replies when we deal with housing might well need to state our housing programme. I believe that it is far better to provide funds to make sure that first-time buyers are allowed to go out into the private market, instead of joining a long council housing waiting list, than it is to subsidise them over the next 60 years.
  6.16 p.m.
  Mr. John McWilliam: I had not intended to make my maiden speech this afternoon but was prompted to do so by the debate on education. In my innocence, I had not realised that it would take place today.
  I begin by paying tribute to my illustrious predecessors in Blaydon, William Whiteley and then Bob Woof. I knew that Bob Woof was widely regarded within Blaydon as one of the most able constituency Members of Parliament. I knew that he was one of the most respected men in the constituency, respected from his days on Durham county council and from his days as the secretary of the Chopwell miners' lodge, and respected for the great amount of work that he did for Blaydon and the constituents.
  What I had not realised until I came here was the great respect and affection with which Bob is held by hon. Members on both sides of the House and by Officers of the House. I hope that in time I can learn to live with his reputation, and perhaps earn at least some of that affection for myself. May I also express the hope that I may be here as long.
  The other thing that I must mention about Bob is that his leaving the House is a mark in history. I have the honour to be sponsored by the Post Office Engineering Union. I am happy to join my hon. Friends the Members for Newcastle-under-Lyme (Mr. Golding) and Westhoughton (Mr. Stott). Bob was the last Member sponsored by the Durham area of the National Union of Mineworkers. This in itself indicates the kind of changes that have been taking place in the area.
  When Bob entered Parliament there were 22 pits in the constituency. There is now one. Such figures are true of many areas. The problems caused by the loss of that employment cannot easily be solved. The changes in the constituency are such that it will be a challenge to the

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  Government to try to keep the North-East from dying, particularly the outland areas such as Blaydon.
  The constituency runs from the Tyne round through the old mining villages up in the hills through such places as Chop-well. I have the honour to be one of the few Labour Members who have forests in their constituencies. The constituency continues down through the Derwent into the commuter belt and on into the industrial area beside Gateshead.
  There are places which were almost allowed to die, villages such as High Spen and Chopwell. I hope that measures will be taken to ensure that there will be no return to the planning procedures that listed those villages as defunct when there are so many who originated from those villages who work elsewhere and who choose now to travel and to try to build the villages into viable communities.
  I intend to address myself to the education debate. I understand the convention of not being controversial. Therefore, I shall confine myself to facts. I recognise that the hon. Member for Edinburgh, Pentlands (Mr. Rifkind) may not agree with the facts. I look forward to renewing the arguments about them with the hon. Gentleman on a more appropriate occasion.
  I have had some experience of education as a former education convener in Edinburgh. In that circumstance there was a concentration of direct grant schools and some highly selective State schools. I had to contend with the problem that the State selective schools were taking in roughly the top 2 per cent. of the ability range. That was a problem because the methods of selection were not especially fine. A vast number of children might or might not have been appropriately placed in those schools, but they were all refused places.
  When Labour effectively took control of Edinburgh, it reorganised education. A part of our reorganisation policy was the concept of improving parents' freedom of choice. That was a conscious policy. Bearing in mind the difficulties of such reorganisation, the result in the first year was that by far the largest proportion of parents—I think it was over 70 per cent.
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  —received the school of their choice for their children.
  If the Secretary of State is successful—I hope that he is—in establishing the principle of parental choice and if he can find some way of providing real parental choice in the State system, I hope that he will be able to provide the resources for the many parents—it is not the majority, but very many—who will be bitterly disappointed because they cannot be given their first, second or third choices. I make that comment against the background that I do not think anyone will disagree when I say that I have never argued against the principle of parental choice. However, I accept the constraints.
  I have seen the effect that the refusal of choice has had. I can have nothing but compassion for the problems that it has caused for parents and their children. At the end of the day it is a resource problem. More money has to be spent if it is to be alleviated.
  I was disappointed to see nothing in the Gracious Speech about the education of children who are both physically and mentally handicapped. It is an issue that has concerned me for some time. There is inadequate provision nationally. I hope that in future the Government will see their way clear to making provision that will assist the education of those children and will lead to some alleviation of the problems faced by the parents of such children. I cannot see that that is likely in the near future. I merely make the plea that the Minister considers it.
  I thank all hon. Members on both sides of the House for the friendly and helpful way in which they have received me. As a new Member I find this place, to say the least, somewhat strange. The assistance that I have received from hon. Members and staff has been invaluable and it is greatly appreciated.
  6.25 p.m.
  Dr. Keith Hampson: First, Mr. Deputy Speaker, I congratulate you on your elevation to your distinguished office. It is nice to see you in the Chair.
  Secondly, I pay a warm tribute to the hon. Member for Blaydon (Mr. McWilliam), who has made his maiden speech. It gives me great pleasure to say that. That is in part because I am

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  from County Durham. I was born there and I went to school there.
  I knew Bob Woof as a Durham councillor. He was regarded with great affection in the House. He was a real character and the sort of person who now tends not to come to this place. Many of those who for the first time heard Bob Woof speak in the House and who did not come from County Durham found it extraordinarily difficult to understand a word he was saying, so broad was the Geordie accent. He was one of the old-fashioned great characters that the House produced.
  I am also pleased to congratulate the hon. Member for Blaydon on his maiden speech as I spent six happy years in Edinburgh, where I know he was a councillor, and performed good public service in Edinburgh. He has today demonstrated his capacity in no uncertain way. His speech was naturally delivered. I think that we all felt that he knew his subject. He nicely paid tribute to the changing character of his constituency and the problems that it clearly faces. I have no doubt in saying that we all wish him the greatest success. I am sure that he will be with us for a long time and I have no doubt that he will be successful.
  It is unfortunate that every time we have an education debate we become bogged down in the argument about the structure of secondary education. It is vital that the new Government immediately redeem their pledge to revert to the Act that was the basis of English education provision—the Education Act 1944. That measure was based on partnership. It provided that the initiative for changing the nature of a local service provided by a local authority lay with the local authority and not with central Government in the form of the Secretary of State.
  In 1976 the Labour Government changed that basis. They changed the balance of power in the relationship of the partnership. It is right and proper that we restore it to comply with an Act in which the principles were laid down by Rab Butler. They were good, solid Conservative principles but—in those days—were supported by a Labour coalition partner.
  When we consider the reorganisation of secondary education that has taken place since 1944 under both Conservative and
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  Labour local authorities, it is clear that the 1976 Act, far from being "a great leap forward" as the hon. Member for Sheffield, Hillsborough (Mr. Flannery) would have it, merely tinkered with the periphery. At that time, 76 per cent. of secondary school pupils were already in comprehensive schools. The Labour Government mucked up the partnership and soured relationships in education. They brought back the stultifying argument of 11-plus selection to the forefront of the debate. They wasted officials' time at local authority and central Government levels.
  That was all for what? The purpose was to try to coerce as quickly as possible, because of Labour's doctrinaire and dogmatic beliefs, the small remaining percentage of those not in comprehensive schools. The purpose was to coerce even the authorities that had been in the forefront of the comprehensive changeover—often Conservative authorities—that had problematical areas and could not, and have not, found a proper or easy answer to the small rural school. That was often a secondary modern school with 200 or 300 pupils which did not have a sixth form and which clearly was not in a sense a true comprehensive school.
  Authorities in that position would have had severe problems. There are many such awkward areas. However, the Labour Government put the boot in and insisted that local authorities such as these should act as quickly as possible, irrespective of the upheaval, and proceed straight away with the final part of the comprehensive changeover.
  We should be concerning ourselves with the nature of education and the quality of what is happening in our schools, whether they be called comprehensive or grammar. I want to see an increasing role for the Government in an area which hitherto we have been frightened of entering as a Government or politicians. If we talk about the quality of education, we cannot opt out of being concerned about the curriculum, what is being taught and how it is being taught.
  The proposals put forward in the Queen's Speech for the assisted-places scheme and associated matters—the ability of local authorities to take up places at independent schools—are not

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  central policy issues in their own right. They are an attempt, albeit partial, to get to grips with what is a pressing problem in secondary education. It is no good members of the Opposition turning a blind eye to what is happening in many parts of the country, especially in our cities. There is no point in saying that all comprehensive schools are good because they are comprehensive.
  The hon. Member for Hillsborough was a headmaster in a middle school, which is different from other types of comprehensive schools. Even within the State comprehensive pattern, schools are different. Some are good, some mediocre and some bad. Some emphasise academic qualities and values; others emphasise other aspects. There is no point in labelling all schools as though they were the same. For heaven's sake let us recognise those differences. Let us applaud the fact that some schools have strengths. Let us back those strengths and ensure that those schools do their own thing with that degree of excellence of which many are capable.
  There are many problem areas in comprehensive education, partly because of the environmental nature of the problem and the way in which city populations have moved. Let us look at the position in Manchester. There have been a number of reports. The publication of A-level results there highlighted the problem. I shall not become involved in a comparison of the results with those of the neighbouring areas, but in their own right they highlighted a tremendous difficulty.
  The neighbourhood schools in many parts of our cities are not able to produce the environment in which there is the challenge and stimulus needed by people of academic ability. I do not believe that those responsible for education in Manchester would do other than acknowledge that they have a problem. That problem exists in many other parts of the country.
  Perhaps the problem will be resolved by changing the nature of the sixth form. With the falling birth rate—by one-third in the past 10 years—we may have to reconsider the position of schools with tiny sixth forms, which will become increasingly less valid. Perhaps those schools will have to become schools for 11 to 16year-olds, with the amalgamation of sixth-
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  form teaching in a central sixth-form college or a tertiary college.
  We cannot, whether in Opposition or Government, turn our backs on the need to search for and develop talent. That is just as important a matter of social and individual justice for the child in question as for the economic and future well-being of our country.
  Where these problems exist, we may have to concentrate facilities and staff to cope. But there are other ways. Schools in the independent sector often provide academic challenge and stimulus in the way in which they operate. Is it not sensible to say that the people with the capacity and aptitude to do well in that type of environment should have the opportunity to do so? That is the point of the assisted-places scheme.
  The Opposition denied opportunities to those families which hitherto they had had. I do not find that many members of the Opposition are ashamed of their own merit and talent.
  Mr. Ernest Armstrong: Is the the hon. Gentleman saying that the academic high-flyers must be segregated and sent off so as to justify the assisted-places scheme? Will he tell us how he will select them?
  Dr. Hampson: The details will be found in the Bill. One member of the Opposition pointed out that a simple way would be for those families—there are many in my area in terms of the Leeds high school and the Bradford grammar school—who want their children to enter those schools to take the initiative. They know that they cannot afford it. But it is sensible that parents who know that their child has aptitude and ability in a subject such as mathematics should have the right to choose. There is not a superfluity of mathematicians. We must develop that area.
  The Bradford grammar school has expertise in teaching mathematics. A child may be put forward for entry to that school. We must find out whether the child has sufficient aptitude in the subject to enable him to cope. I am not talking about this happening only at the age of 11. It could happen at 12 or 14. That is up to the scheme. This age provides a common point of transfer in the independent sector. So the parents may put

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  their child forward. If the child is accepted and the parents cannot afford the fees there should be some place to which they may turn to obtain assistance. That is a reasonable basis.
  It is absurd to argue that the numbers of children involved will result in the decimation of the comprehensive schools and the drying up of the ability of those schools to cope with the rest of the ability range. We are talking about tiny numbers of people. No one will persuade me that a school containing 1,000 or more pupils will be drained of high-quality academic staff because they find that they lack the four or five pupils in the class whom they otherwise would have had.
  It is equally absurd to imagine that the scheme would result in the destruction of the comprehensive nature of the system—which the Opposition, if they were not blinkered, would recognise is not comprehensive anyway. In many parts the system cannot be comprehensive because of the social nature and physical problems of the neighbourhoods in which the schools exist.
  I now move on to the nature of the curriculum. I want to see the Government move much more decisely in one area. This country needs to develop academic talent as far as possible. But we must recognise that that is not the only function of education. Nor is it the only matter about which we should be concerned. About 80 per cent. of young people are not academically gifted. Nor do they want to do academic work or go into higher education.
  All too often, we have geared our system, through the GCE examinations and the yardstick of A-levels, to the academic side of the equation. Most of our young people want—and, indeed, need increasingly in our technological revolution—the schools and social and technical skills to enable them to do well after school in their work end social relationships. Therefore, in addition to the concentration on and improvement of talent which is needed if we are to get the country moving again, we need a new thrust in vocational education to ensure that there are opportunities in the schools which the bulk of young people need.
  I itemise some of the areas in which this thrust should take place. It is
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  important to acknowledge that the last year of school should not be classroom-based. We have seen many good work experience schemes that proved the point. For many years in the United States, Canada and elsewhere it has been seen that the school classroom should be a base from which young people should go out and learn through experience. Far too many young people—this is not an indictment of teachers; it is a fact of education—are literally bored in their final two years at school. As a teacher, I had to drum into my pupils in the lower classes at a grammar school matters such as the Seven Years War. In retrospect I am amazed why I did it and why they bothered to learn it.
  We must reconsider the nature of the curriculum. The curriculum, especially in maths and science, must be related to the problems of the world outside, such as mortgages and family finance. The subject must not be taught in the abstract. Examples must be related to matters that will be of value to the pupils. Within their final years at school, they should be able to get some experience of occupations and life outside. It should not be simply a matter of the careers teacher giving them a few pamphlets to read, or of industrialists occasionally coming to the school.
  This is a difficult task but it must be done. We must find a way of relating these young people to practical opportunities outside, so that for a week or more they are able to sample various occupations and opportunities. That is necessary if they are to widen their horizons. All too many of them, through their family, their peer group and their teachers, have a blinkered view of their prospects.
  It would also enable them, when they are back in school, to have a greater sense of motivation and a sense of realism concerning what they are learning in the school. This would in turn help enormously in dealing with the problems of truancy, absenteeism and delinquency that we see in many of our schools. Too many young people do not relate what they are doing at school to anything that they believe they will face afterwards, and that is the real problem. That sense of irrelevance is something that they perceive, whether it is true or not, and it is a very destructive force.

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  If we are to tackle the problem effectively, it will involve looking at the curriculum and a major effort on the work experience front. The Department of Industry and the Department of Employment will need to be concerned with this effort. We must ensure that there is collaboration between the Manpower Services Commission, if it survives, and the new education unit in the Department of Industry. Thereby hangs a tale, for the Department of Industry has been so disenchanted with what the DES has been doing in this area that it has set up its own unit to further this sort of activity. There must be greater collaboration between our new Ministers to prevent duplication and proliferation of effort and money in this very critical area.
  Another important aspect is the level of understanding of industry and what it does. Much has been done to try to get teachers to understand industry better. There are several expensive schemes designed to release teachers to industry or to give them more experience during their teacher-training courses, but these efforts can only scratch the surface. It would be better to release young people from school so that they may have some experience in industry. If we are to get them to understand better how industry and commerce function, we shall have to be much more flexible in our approach than we have been so far.
  Private companies have produced training films dealing with such problems as cash flow and showing how businesses work and function. I should like to see Government Departments trying to get our schools and our teachers to use techniques of that sort, at no great cost. The effect would, I believe, be disproportionate to the small sums of money involved.
  One such example is Video Arts, involving BBC producers and staff, and using people such as Ronnie Corbett and John Cleese, who can project ideas at a level that young people can understand and in a way which does not turn them off. We ought to be looking more adventurously towards such flexible operations and such collaboration with companies of this sort, possibly in the form of leasing back the materials which they, perhaps in conjunction with the Open University, could provide in this
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  area, so that there is a cheap form of supply of material for our schools and for our teachers.
  In our educational system at the higher end, and in further education, we have a wealth of resources in buildings, facilities, laboratories and workshops, and also in terms of the quality of the people. We are limited by financial restrictions and cannot now think in terms of being able to add on a new room or a new laboratory, or of being able to provide new facilities and staff. We have instead to think in other, more flexible directions, and this must involve collaboration.
  Why is it not possible to press for the use of the local polytechnic or college of further education as a resource centre for the rest of the local system? This relates to my point about the search for talent, particularly in critical areas such as engineering, technology and modern languages. Sometimes we see attempts by school staff to do this sort of thing, but it ought to be much more positively a matter of policy that we twin the staff and departments of higher and further education institutions with particular schools, where there is already a good base in terms of the quality of the teachers and what they are doing.
  That would enable an extra stimulus to be brought into the school by the staff of the polytechnic, so that pupils were not simply playing with abstract notions in terms of engineering and science but building things such as solar panels and racing cars, and enabling pupils to see a horizon which otherwise they would not have seen. That would have an enormous effect in drawing out talent and also in conditioning the attitudes within a school, so that technology becomes something that is respected and for which most of the able people will aim, rather than for subjects such as history—my own subject—or English.
  Although there are no longer any DHSS Ministers with us, I should like to mention one or two other points. The idea of collaboration should extend much more in terms of Departments. The whole notion of vocational education, which is so important, hangs to a fair degree on the further education system. That is where the real skill instruction lies. We must try to make the last years of school more flexible, so that young

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  people can be involved in further education. That would be a major step forward.
  But those who leave school with few qualifications, or with the need for more technical education, run up against the problem caused by the lack of financial help. There is no effective answer to this problem in Mrs. Williams's scheme for miserable payments to sixth formers, for educational maintenance allowances and so on, nor is the discretionary system satisfactory, because it is being cut back on such a wide scale. But there is already plenty of money in the system, provided that departmental Ministers will collaborate across the divide between the DHSS and the DES, and work together.
  I want to give a very strong warning so that our DHSS Ministers do not inadvertently do a great deal of damage in pursuit of what I believe is a very worthy objective, namely, to save money. In their pursuit of the work-shy, the definition of availability for supplementary benefit obviously needs to be reexamined, but if we are not careful we may do great damage to the prospects of many young people. We should be careful not to operate in such a way as to make young people less able to retain their supplementary benefit while on courses. Indeed, we should be making a virtue of the fact that they can retain it.
  The last Administration issued an important circular which said that a young person spending more than 21 hours a week on a course was entitled to retain supplementary benefit. That is terribly important, for with that amount of time it is possible to do almost any course. The tragedy has been in the way in which the DHSS has operated the circular, particularly in its local offices. Young people have been told that if they do a proper full-time course for an A-level examination or for a TEC diploma, they will not then be available for a job if it arises, so they get no money.
  We know that there are work-shy people who will not take up opportunities when they arise because they want to be able to go on receiving supplementary benefit, but our attack on this problem should not be made in such a way that it affects adversely the position of young people who wish to be involved in further education. I want to see them able to acquire marketable qualifications while
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  at the same time keeping their supplementary benefit. At the moment, if they keep their supplementary benefit, they are in the position of having to take up only the odd ad hoc courses that further education colleges are prepared to provide, and such courses are really inadequate for what is required in a fast-changing world.
  We know that already about 200,000 young people are leaving school without decent qualifications. We have to ensure that there are opportunities for them to receive further education. This applies to those who have inadequate qualifications, to those who want to upgrade their existing qualifications, and to those who want to have a chance to get on in the world.
  Conservatives believe not just in freedom in general, freedom from restraint, or freedom from Government intervention. We believe in freedom to aspire and to achieve. Children in an inner city comprehensive school, for example, should have freedom to develop their talents and abilities to the full. Equally, in terms of vocational opportunities in the last years of school and after school, they should be assisted so that they may acquire the skills which they will need increasingly in the technological world that we are now entering.
  We must use properly money which is already in the system. We are not asking for more money. When cutting waste we must ensure that we achieve value for money. It would be a retrograde step simply to tighten up on the DHSS so that the value of the money paid, in terms of the courses taken by students and the opportunities they create for jobs, is reduced. That would be an improper use of available money. We must balance and we must collaborate. We must be flexible in our approach. I believe that this is the general approach that lies behind the specific areas of policy mentioned in the Gracious Speech.
  6.50 p.m.
  Mr. Christopher Price: The hon. Member for Ripon (Dr. Hampson) made a touchingly loyal speech in view of the scurvy treatment that he has received from his party. I am sad that he is not on the Government Front Bench because education would be better protected with his skills than with those of the present Front Bench.

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  I wish to discuss the way in which the Conservative Party seems to be pushing education. I hope that I am wrong, but it seems that the Conservatives are making education a commodity which can be bought and sold like anything else. If that is so, it is a sea change which is greater than anything that has happened in education since 1870 when it was decided that we must have a free education system. It was significant that the right hon. Member for Bournemouth, West (Sir J. Eden) had to declare an interest in private education. I wonder how many other hon. Members on the Government Back Benches have a profit-making interest in the private education which is to be boosted with public money. I do not know what interest the right hon. Member declared.
  At the last election the Conservative Party used the slogan "Educashun isn't working". In retrospect, that will he seen as cheap and tawdry. It will be seen to be unworthy of the objectives which both sides of the House should share when speaking of education. The slogan was produced by Saatchi & Saatchi—the same firm which thought up "What a lot I got" for Smarties and "Drinka Pinta Milka Day". Such advertisements have done more to deface the English language in the last 20 years than anything else, except perhaps certain television advertising. The Conservative Party cannot even spell "literacy" in its press releases. My opponent in the election circulated a leaflet deploring the failure in education standards and the growth of "burocracy". That proves the utterly cynical way in which the Conservative Party approached education in the election campaign.
  I hope that, with the welter of officials in Elizabeth House, from the permanent secretary down, just as the Prime Minister, when she was Secretary of State for Education, was made to understand a few realities, the new Secretary of State—for whom I have a high regard in many ways—will have realities dinned into him. I hope that certain ideas will emerge in the light of the spirit in which education has been administered by Tory and Labour Governments since the 1920s and 1930s. I should be sad if Tory policy resulted in a complete break in that trend, as it seems that it might.
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  When asked what he would do if Tame-side proposed plans to go comprehensive, similar to those proposed before, the Secretary of State answered, using his brief, that he would consider action under section 13. That is the proper answer. In the next month or two the Secretary of State will have to operate under the law. That law will include the Education Act 1976, which requires the Secretary of State, as well as the local authorities, to have regard to the need to educate children in schools where they are not selected by ability or aptitude. The Secretary of State is as subject to that law as anybody else.
  If Tameside is blocked by the Secretary of State's fiat, I suspect that he will bring upon himself a civil law ease in the same way as did his predecessor in office, my right hon. Friend the Member for Sheffield, Park (Mr. Mulley). Since he is at least as good a lawyer as my right hon. Friend—perhaps even a slightly better one—I hope that he will weigh his decision carefully before he uses his powers to block the democratic wishes of the metropolitan borough to go comprehensive in September. These events will take place before rather than after the Royal Assent to any prospective Bill. I hope that the Secretary of State will have regard to the law in that respect.
  It is impossible to operate the English education system—a central service which is locally administered—without a policy on secondary education. That was what was wrong between 1970 and 1974. If the Conservatives want as their policy a tripartite system, a bipartite system, or a 5 per cent., 10 per cent. or 15 per cent. selection system to be their policy, they must say so.
  When the Prime Minister was Secretary of State she simply withdrew circular 10/65 and left all local education authorities in Britain in a complete vacuum for four years. They did not know the principles under which they could put forward proposals. They had no idea whether proposals would be accepted. She could not say on what principles she accepted or did not accept schemes. The best explanation was that she accepted schemes about which she knew nothing and rejected those schemes about which complaints were made to her at tennis clubs. One such scheme in Surrey was well documented.

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  The Tory Party should come clean. Does it want an 11-plus or does it not? If it wants an 11-plus, what are the principles under which it should operate, what is the percentage elite which it should select, and how will local authorities be expected to administer it? I suspect that the Tory Party has no policy in that respect.
  The Conservatives want to do two incompatible things. The first is to allow local education authorities to subsidise independent schools out of public money. The second is to appear to be in favour of comprehensive education and against a resurrection of the 11-plus examination. Nobody is more eloquent about the impossibility of that situation than the hon. Member for Brent, North (Dr. Boy-son), who is now in charge of higher and further education. He has said that it cannot be done that way and that one must have a policy.
  The Government have said what they intend to do in particular ways but have not stated any overall policy whatever for secondary education. The system of planning secondary education and secondary schools—it takes 10 to 15 years from the start of planning to develop a system, especially with a new population—does not admit of a Government having no policy. I hope that the Conservative Party will eventually come up with a policy.
  If the present proposals that have been made are allowed to drift forward, we shall return to a type of 11-plus situation for 2 to 4 per cent. of the population. We shall go back not to 1945 or the 1920s but to the 1880s or 1890s, with a tiny elite selected to attend private schools, subsidised by taxpayers' money, and an impoverished section of schools getting shorter and shorter of money where education is not as good as it could be. We cannot get away from the fact that every penny of the £50 million that the Conservative Party intends to put into independent schools will mean that one child in a primary or secondary school next door to the independent school will go without a textbook, pencil, ruler or rubber—the most elementary materials that are needed to keep basic education going. It is no good pretending that this £50 million is extra, because it is not.
  Local authorities have a specific responsibility under the law to spend their
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  money properly and without waste. Suppose that a local education authority with, say, two or three comprehensive schools in its area finds that because of the drift in the population those schools are 70 or 80 per cent. full. It then decides to spend a certain amount of money—based on principles it works out itself—on sending youngsters, whose need for special education or anything such as that cannot be proved, to independent schools. It is almost inevitable that, because of present stringency, a ratepayer will take that local authority to court for misusing public funds. I do not know whether, to cover such circumstances, the Secretary of State intends to include in his legislation provision to the effect that local authorities must not waste public funds except in regard to education.
  Although it is not exactly analogous, the Greater Manchester council lost its case and received some very tough comments from the judge about the improper use of money by a non-education authority for education purposes. I hope that the Secretary of State gets the law right. Whether he gets the law right or wrong, there is absolutely no doubt that this proposal consists of a transfer of resources from the poor to the rich, from education facilities which are already impoverished to education facilities which are quite adequate. It will simply mean that this is an extra to the tax cuts for the rich which are to be brought in, an extra bribe to the middle classes. I hope that when the Secretary of State gets down to the smaller small print he will think again about the legality of encouraging local authorities to spend money on independent schools in this way.
  The election was fought with constant talk about freedom. The Conservative Party attempted to hold itself up as the purveyor of freedom whereas the Labour Party was not. We heard that the Conservative Party would not allow local authorities to have that particular freedom. We have had indications from the Secretary of State for Education and Science that he may well deprive Tame-side of the freedom to organise its education as it would wish.
  The most glaring omission from the Queen's Speech relates to the final page, where it is proposed to amend the Official Secrets Act. On the face of it, amending the Official Secrets Act seems a fine thing

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  to do, but if we amend the Official Secrets Act without at the same time giving some right of access to individuals in the community to official information we shall restrict the freedom of civil servants and members of the public. The hon. Member for Edinburgh, Pentlands (Mr. Rifkind), who has been promoted to the Front Bench, is on the Front Bench. He and I worked together on the Official Information Bill in the last Session, which got quite a long way. We discussed the ramifications of the amendment of the Official Secrets Act.
  One clear fact that emerged—it certainly convinced me and perhaps convinced the hon. Member for Pentlands, because he was on the side of the angels in those days—was that we cannot half do this job of open government. The criminal law which protects information and the law which allows access to information must go together. The Americans discovered that because of Watergate and they have now a properly constructed Freedom of Information Act. The Swedes have had one for well over a century, and other Scandinavian countries have one.
  What terrifies me about this proposal in the Queen's Speech is that it is simply an attempt to restrict the freedom of civil servants regarding what they are allowed to expose in terms of bureacracy and government. It gives no freedom whatever to the public to obtain further information. I hope that those on the Government Front Bench who in their hearts are still on the side of the angels will persuade the Government, when they are framing the repeal of section 2 of the Official Secrets Act—it is common ground that it has to go—that they cannot simply leave it in a vacuum at that point but must go on in one package and amend section 2 on the lines of the Franks report in a way which is completely agreed by both parties. At the same time we must make clear those elements of public information which should be available to every citizen, as they are available in many other civilised countries.
  7.9 p.m.
  Mr. John Mackay: I am grateful that I have managed to catch your eye, Mr. Deputy Speaker, so early in this Parliament. I feel like a young lad being
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  taught to swim who has been thrown in at the deep end. As the hon. Member for Blaydon (Mr. McWilliam) said, there is so much help from all Members of the House to us new boys that I believe it will be quite easy for me to get to the shallow end and out of the pool within 10 minutes.
  My predecessor, Mr. Iain MacCormick, was a Member of the House for five years. He was a hard-working, likeable and popular Member. My appearance here is due to no personal fault of his but to the fact that the people of Argyll did not wish to be counted as people who wanted to break Britain asunder. We in Argyll are proud to be both Scottish and British, and it is the reassertion of that pride which has brought me to this House.
  Argyll, if I may say it without raising too much controversy, is by far one of the most beautiful parts of these islands. Doubtless many hon. Members, and certainly many of their constituents, will have holidayed in Argyll. We in Argyll pride ourselves on our excellent tourist trade, where we give mental and physical therapy to all those who work in our cities and conurbations. It is, therefore, of vital importance that tourism, agriculture and fishing are sustained in a healthy state so that Argyll can welcome its visitors to a living beauty. The conviction of my right hon. Friends on the the Front Bench of the merits of small businesses and the self-employed will give great comfort to the people of Argyll, who depend on just those businesses for their livelihood, jobs and wealth.
  Argyll has the distinction of having a coastline which is longer than that of France. That is a useless piece of information, but it is always good for making people look very impressed. Naturally, that is partly caused by our many islands, all of which are inhabited. Needless to say, sea transport is of vital importance to these islands. I look forward to hearing from my right hon. Friend the Secretary of State for Scotland his proposals to lessen the burden of freight charges on the ferries to these islands. Such a promise was contained in the manifesto of our party, and all my island constituents look forward to some help being given to them in this direction.
  However, one of the subjects of today's debate is education. I have come to this House, so to speak, straight from the

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  chalk face, and the mathematical chalk face at that. Despite all the bland words of educationists, usually very far from the chalk face, there is a general feeling of a decline of morale in schools in Scotland. We in Argyll are lucky in that we have been spared some of the excesses of the experimentation which the so-called progressives have inflicted on education. Thankfully, most of our teachers in Argyll retain a firm belief in the benefits of the three Rs and the traditions of discipline and order in the classroom.
  The Gracious Speech mentions standards, and these are of vital importance. Committees such as the Munn and Dunning committees put forward ideas for change, but, with particular reference to Dunning, I urge my right hon. Friend to make no changes to both higher and ordinary grades, whose standards have been maintained by the Scottish Certificate of Examination Board over the years. It is important that children have an aim, and for those children who can aim for it the O-grades and highers form a sensible aim. In particular, I should like to see introduced tests in numeracy and literacy which will be suitable for those children who cannot aspire to O-grades and higher but who also need an aim and a lower level than the O-grades.
  Equally, in primary schools, it is important that we have some national or, if we cannot have that, agreed local standards at which the teachers and the pupils in the primary schools may aim. The teachers and pupils need to know at what they should be aiming during the course of primary education so that when a child moves on to secondary education it does so on the basis of equality with children moving from other primary schools. In Argyll we have many feeder schools to each secondary school.
  I urge my right hon. Friend to allow secondary schools, in collaboration with their primary schools, to set up tests in numeracy and literacy on which they can agree and at which they can all aim. I assure my right hon. Friend that the teachers in the primary schools, in particular, would welcome such a change.
  There are many other points that I should like to raise, but I fear that I might err on the controversial side if I were to raise them. For example, I think of the educational disaster which the
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  mixed ability system has imposed on the secondary schools of our country. I think of the need to give much more help to the slow learners in our schools. Much more attention ought to be paid to them. I think also of the need to encourage excellence in our schools.
  In my trip around Argyll at the last election, I went into a small church in a place called Kilmodan, in Glendaruel, where there is a plaque on the wall to the kind of person we so need in this country but whom I fear our education system may well be discouraging. That plaque is to a man called Colin Maclaurin. If there are any mathematicians in the House, they will realise that there is a difficult calculus theorem that bears his name.
  Colin Maclaurin left his home in the eighteenth century at the age of 16 and went to university to study mathematics. At the age of 19 he was professor of mathematics at Aberdeen, and at the age of 22 he was professor of mathematics at Edinburgh. I should like to think that our system, private or public, would encourage such excellence and genius today, but I rather fear the contrary.
  I do not know whether there is anything that my right hon. Friend wishes to say at this stage about the teachers' salary negotiations in Scotland, but I should like to say to him that if an early and reasonable settlement is not forthcoming the general dissatisfaction among the teaching profession will continue. This dissatisfaction is not caused by money alone. It is caused by many other things, including some of the ill-considered changes which we have had in education over many years, usually for reasons of what are called social engineering and not for reasons of education. If my right hon. Friend can give Scottish education five years of stability and five years without drastic change—by all means let us have change, but let it not be drastic—in either the curriculum or the examinations, he will earn the gratitude of teachers, pupils and parents in Scotland.
  7.17 p.m.
  Mrs. Ann Taylor: I must first congratulate the hon. Member for Argyll (Mr. Mackay) on his maiden speech. Like many other hon. Members, my main association with Argyll is as

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  a tourist. Many of us have visited his constituency and know it to be very beautiful and attractive. I think that the hon. Gentleman may be tempted to spend a lot of time up there rather than coming down to this House, and I am sure that he will resist that temptation and make many contributions in the House such as he has made today, which seemed good humoured, well informed and generally constructive. I am sure that the hon. Gentleman will enjoy his time in this House.
  I want to concentrate my remarks on education, not least because education was a very important issue in my constituency for both parties during the general election. I do not think that it is any coincidence that the Conservatives did so badly in Bolton when a great deal of attention was concentrated on education.
  The Queen's Speech mentions education in several ways. The first commitment it makes is that
  "The quality of education will be maintained and improved."
  I was pleased to read that because, listening to some Conservative spokesmen over the last few years, with all their complaints about schools today and falling standards, one would have thought that there was no quality at all to maintain. I regard that comment in the Queen's Speech as a kind of backhanded compliment to the work of Shirley Williams and the Department of Education over the last few years.
  But the other main commitment in the Queen's Speech is one that worries me very much indeed. That is the one which says:
  "Legislation will be introduced to remove the compulsion on local authorities in England and Wales to reorganise their schools on comprehensive lines."
  That is what I want to concentrate my remarks upon. The other points mentioned in the Queen's Speech are important—the moves on independent schools and the subsidising of places at non-maintained schools are all important—but these follow on logically from the kind of hierarchy in education which is the only alternative to a comprehensive system.
  This is where the gulf exists between the two major parties on this issue. Once
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  one makes the basic decision that all children will not have equal opportunity and that all children will not go to comprehensive schools, it naturally follows that the Conservative Government will look for ways of reinforcing the privileges that exist for a few at present.
  I am afraid that one of the worst examples of the denial of equal opportunities to children exists in my constituency in Bolton. I am afraid that if the Government persist in some of their proposals—for example, subsidising places at fee-paying schools and discouraging authorities from going comprehensive in the future—the educational opportunities of the children in Bolton will continue to be very limited indeed.
  I know that many people would think that Bolton was a very progressive and go-ahead place. In many respects it is. But so far as education is concerned we are really rather a dismal backwater. In Bolton, children are still segregated at the age of 11, some being told "You are failures", whilst the others are told "You are successes". We spend far more on the education of those who pass the 11-plus in Bolton than we do on the education of those who fail the 11-plus, who are, of course, the majority.
  Let me give the House just two examples. There is one grammar school in my constituency at which the amount per head spent each year is now running at £547. Not very far away from that school is a secondary modern school in my constituency, at which the amount per head spent is £457. Ninety pounds a year less is spent on the children in a secondary modern school. That is just about 20 per cent., and it is the majority who are suffering so that a few can have some privileges.
  We in Bolton have a very clear two-tier system. In the circumstances, it is not surprising that so many children in Bolton get turned off education altogether. I should have thought that anyone who is seriously trying to do more than pay lip service to the idea of equal opportunity in education ought to be condemning the kind of system that exists in Bolton rather than, as does the curent Secretary of State, supporting it and saying that it should continue.
  This system will continue in Bolton this year. We are now in the very strange

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  position that because we have a Conservative Government this year's 11-yearolds in Bolton will be taking an 11-plus examination over the next few weeks. It is an appalling situation that need not have arisen at all. Indeed, the local Conservative-controlled council said that it would not arise.
  To explain why Bolton's 11-year-olds are today having to face the prospect of taking an 11-plus examination, we have to go back to 1976 and the passing of the Education Act by the Labour Government. When that Act became operative, the Conservative council in Bolton said, first of all, that it was not against comprehensives and, therefore, was quite willing to reorganise on comprehensive lines. Secondly, it said that if that was the law, it would not disobey the law and it would go comprehensive, as it was directed to do.
  It did not say, as other Conservative authorities said, that it would defy the law or defy the Secretary of State and challenge her powers. Bolton council said, quite openly and without coercion, that it would go comprehensive. It drew up its own scheme for doing so, and the scheme was approved by the Department of Education and Science. Money was provided so that that scheme could be implemented.
  The scheme was due to start this September. The children who are leaving primary school in Bolton this July were due to be the first year's intake of the new comprehensive schools. Parents were told of the change. They were sent preference forms asking which comprehensive school they wanted their children to attend. Everyone was told that there would be no 11-plus in Bolton this year—much to the relief of pupils, parents and teachers alike.
  But there was a snag. Earlier this year, at just about the time that the tenders should have gone in to the DES for confirmation of the allocation of money, the Conservative council, whose own scheme it was implementing, decided that it needed to think again. First of all, it found what it thought were faults in its own scheme, its own plan, which it had been working out for several years. "I had not quite understood it before", said the leader of the Tories in Bolton—which says a lot for him.
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  Then the council refused to take up the allocation of money from the DES which had been made available to improve schools in Bolton. This meant a loss of over £1½ million for three schools which are badly in need of spending, and have been for several years. But the local Tories seemed to adopt the attitude that, bad though these schools are, defects though they may have, as long as they are secondary modern schools and their own children are not going to them, it is all right and those schools can exist as they are at present. But they also refused over £1 million for a sixth-form college for Bolton, which was badly needed to give O-level and A-level opportunities to those 11-plus rejects who had gone to secondary modern schools and who had been denied proper opportunities there.
  But, thirdly, the council decided that it would, after all, at this very late stage, take legal advice on the powers of the Secretary of State regarding comprehensive education. It got this very high-quality, special legal advice. The advice showed very clearly that the council did not, in fact, have a leg to stand on and that its chances of winning a court case against the Secretary of State were virtually nil. But what is very interesting is the last page of the legal advice. After five or six pages of explanation as to why the local authority would lose any legal battle, the last page says:
  "It is by no means unusual for proceedings to be commenced which have a scant chance of success for a variety of tactical or financial reasons."
  This advice, which was, incidentally, professional advice from the hon. and learned Member for Cleveland and Whitby (Mr. Brittan)—now Minister of State, Home Office—was what the local authority based its decisions on. It decided that it would adopt a legal position to try to challenge the Secretary of State in the hope of delaying the implementation of a comprehensive scheme pending the return of a Conservative Government.
  It is very clear that the local Tories were willing to disrupt a year's education for Bolton's 11-year-olds in order to score a political point. They therefore refused to take up the money that was provided, and they refused to take further steps to implement the comprehensive scheme.

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  Of course, at this stage, they had to start thinking about what alternative form of allocation they were going to use, because they had told parents and children alike that they would be allocated to comprehensive schools and, therefore, there were no alternative arrangements.
  We are now in May, well past the date on which children are normally told which school they will be attending, only two months from the end of the children's final year in primary school, and still the 11-year-olds in Bolton have no idea which schools they will be allocated to next year. The Conservative council has come up with the only answer that it saw possible—an emergency 11-plus examination.
  I think that everyone in this House should know that the 11-plus, at the best of times, is a very inaccurate examination. We are all aware of all its faults. For example, we have seen in the past, at a local level, primary schools with a pass rate of 75 per cent., whereas other schools have had a pass rate of nil. But I ask the House to consider how much more unfair this system will be this year, especially when some schools seem to have got wind of what was happening and what was going on in the minds of the council, and some schools have actually been practising the 11-plus examination whilst others took the local council at its word and assumed that they would be going comprehensive. I am afraid that in Bolton over the next few weeks 11-year-olds will be sitting examinations.
  The question of choice was raised by the Secretary of State and by my right hon. Friend. It is a fallacy that choice exists in a selective system, and that can be seen by looking at the figures for Bolton. At present, in the whole Bolton area there are 4,300 11-year-old children. For these children there are 857 places in comprehensive schools and they are all outside the old Bolton borough area. They are popular schools that are oversubscribed; parents are keen to get their children into them. There are 654 places in the Catholic schools in the town that are also going comprehensive this year, completely independently of the local authority.
  That leaves 2,789 children who are competing for 660 grammar school places, which is all that there are. Of those 2,789 children, 2,129 will be unable
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  to choose to go to a grammar school, and of those who can many will not get their first choice. The Conservative Party, however, still spreads the myth that parental choice can be exercised in a selective system. What about the 2,129 children? They will not get much choice in Bolton this year.
  The Secretary of State said that he recognised that there could not be 100 per cent. parental choice but that he was in favour of as much as practicable. Does he think that Bolton's parents are getting as much choice as practicable under the scheme put forward by the Tory council? If he does, he still has much to learn about education and the conditions that exist. If the situation in Bolton continues, the hierarchy will continue. Some pupils will go to school with better facilities, where more is spent on each child and the staff-pupil ratio is better. Other children will go to secondary modern schools where the council spends as little as it can get away with.
  Given what has happened recently in Bolton, I have several questions for the Secretary of State. The hon. Member for Brent, North (Dr. Boyson) is not here at present, but I am sure that he is pleased at what has happened in Bolton; he believes in putting the clock back. But does the Secretary of State think that it is in the interests of the children of Bolton to have an emergency 11-plus examination at this stage in the school year with the unfairness and pressure that will result for pupils, parents and teachers?
  Secondly, the Secretary of State has said that he will produce legislation, to be published tomorrow, to remove the legal obligation on local authorities to go comprehensive. What will be the effect of that legislation? Will it have restrospective consequences? He knows of several actions that were going ahead and he is almost trying to introduce restrospective legislation to get places such as Bolton off the hook.
  Thirdly, who should pay for the court action by the Tory group on Bolton council? It was taken on the advice of the hon. and learned Member for Cleveland and Whitby for tactical rather than legal or educational reasons. If it is suggested that the ratepayers of Bolton should pay, some of us will look to the district auditor for his comments.

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  Fourthly, will the Secretary of State guarantee that the money earmarked by the Labour Government for schools in Bolton will still come to Bolton? It amounts to over £2·5 million, and substantial improvements are necessary in our schools. We need that money.
  Finally, as a matter of urgency, what does the Secretary of State intend to do about the shortfall of sixth-form places in Bolton? The proposed sixth-form college would have gone a long way to meeting that demand. If we are not to have that, what alternative provision will be made and how will the problem be dealt with in the short term?
  I apologise for spending so much time on Bolton, but these are important questions and there are lessons to be learned on the national scale. The people in Bolton gave their verdict on the local Tory record by returning two Labour members and ten new council members at the recent elections. The Secretary of State should take that as an indicator of what parents and teachers will think of a Government who try to put the clock back as the Bolton Tories did. If he tries to do on a national scale what the Tories in Bolton did, the Conservative Party will suffer the same electoral consequences.
  7.36 p.m.
  Mr. Roger Moate: I shall not follow the hon. Member for Bolton. West (Mrs. Taylor) on the schools situation in her constituency, but I shall take up her remarks about my hon. Friend the Member for Argyll (Mr. Mackay), who completed his maiden speech before she rose. He underwent the process of "devirginisation" with immense credit. His speech was forceful and eloquent and he displayed a power that will be greatly appreciated in this House. He said that his constituents, like himself, demonstrated their pride in being not only Scottish but British. That sense of nationhood came alive in the debates on devolution and it inspires this Gracious Speech and many of the legislative measures proposed in it.
  I was reminded of my right hon. Friend the Prime Minister some time ago saying that we are one nation or we are no nation. That phrase applies equally to the component parts of Great Britain and Northern Ireland and to the various sec
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  tors of our society—the haves and have-nots, the privileged and under-privileged. Throughout the election campaign and this Gracious Speech there was the understanding that we are working for one nation and for a stronger country. This Parliament and the nation can look forward with a spirit of greater confidence and optimism than for many years past.
  I wish to refer principally to education and touch briefly on hospital services, but because of my interest in Common Market matters perhaps I shall be forgiven for saying a few words about that. A number of us in the past have opposed membership, but I accept that, certainly for the foreseeable future, the debate about the principle of membership is over. The referendum decision made that clear.
  The Gracious Speech makes it clear that we are endeavouring to secure our legitimate national interests. Nations striving for that and endeavouring to get the best that they can for their country do not in any way undermine the ability of the European Economic Community to continue to exist. I should say that the reverse is true. If Britain is stronger and fights for her national interests, that is the basis of true international co-operation between the members of the EEC. That is why I particularly welcome the emphasis in the Gracious Speech on the need to secure a fairer pattern of budgetary and resource transfers and significant improvements in the CAP. I also welcome the emphasis on securing a strong fisheries policy in the interests of our fishermen and our consumers.
  These are vital areas of national interest which were neglected by the previous Government. During the election campaign, nothing rang more hollow than the claim of Labour spokesmen that there was a need to reform the budget and the CAP when they themselves had already claimed that they had fundamentally renegotiated all this previously. They failed signally during their period in office to do anything about these major issues.
  It now falls to our Government to fight for our national interests. In this, I believe that the Government will have a united House of Commons behind them. If the Government strive to ensure that Britain carries only her fair share of the European budget and to remove the excesses of the CAP, they will have the

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  unity of the whole House. Also, I believe that if the Government pursue these things vigorously they will have the united support not only of the House but of the country as well.
  I now turn to the question of education. I congratulate the Secretary of State upon his appointment. I think that he will bring great lustre to the post. His announcement about the removal of the worst features of the 1976 Act is one of the most welcome steps that this Government could take. In my area and in many other parts of the country the threat of change being forced upon them by the previous Labour Secretary of State caused great alarm and despondency among people of all political complexions. That threat has been removed by the election victory, and I am delighted that it has been given such prominence in the Government's programme.
  Not only is my constituency my immediate concern, but the situation there demonstrates the damaging dogmatic attachment of Labour Members to comprehensive education for its own sake. I refer here particularly to Sittingbourne, where we have the Thamesside—not Tameside—system of education. This is a system which could aptly be described as a halfway house between the 11-plus and full comprehensive education. It is a system which sends all children to comprehensive schools at the age of 11 and then at the age of 13, on the basis of parental and teacher co-operation, allows some to transfer to more academic schools and proceed to advanced level education.
  This scheme has worked well for many years. It was introduced with the approval of the then Labour Government, yet it was a Labour Government who insisted that the scheme was inadequate and needed changing. The previous Secretary of State gave the Kent county council just three months to produce new proposals. But hardly a soul to whom I have spoken in my constituency wants a change. There were endless consultations a year or two ago to discover local wishes. The teachers generally were contented with the Thamesside scheme, the pupils and the parents were well contented and people of all political complexions thought that it was good and that it should be retained.
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  This scheme represented an excellent compromise, satisfying the wishes of the local people. Yet, for reasons that can only be described as doctrinaire and dogmatic, the previous Government said that the system was unsatisfactory. Thank goodness that the threat of enforced and rapid change has been removed. Had such a change been enforced, it would have cost large sums of money which would not have been forthcoming. Therefore, it was an unrealistic proposal, and had it been enforced within the prescribed three months it would have been an act of educational vandalism.
  Now that the threat has been removed, I hope that my right hon. and learned Friend will consider carefully the possibility of going one stage further. When that Thamesside scheme was introduced some years ago, it was described as "interim". However, it has worked so well—and in educational matters we should all be pragmatic—that I hope he will find some way of assuring local people that it is now permanent.
  At the same time, I appeal to Labour spokesmen on educational matters. Where one has a degree of co-operation and consensus about a halfway system which works exceptionally well—obviously there will always be some complaints and some probems—can we not have an agreement to leave things as they are? I hope that we will all agree that the Thamesside system is an acceptable, viable and permanent solution. I am not saying that it would work in all areas. We should ask for diversity in educational matters. I do not believe that some standard comprehensive system should be applied right across the country, because the cities are different from rural areas and one town differs from another. We can reasonably ask for different systems of education, even within the same educational area.
  Within my constituency, I have three separate systems. I have already described one. Another operates in Faversham, where we still have the 11-plus. I trust that we have moved away from that depressing ideological trench warfare between 11-plus on the one hand and full comprehensive education on the other. There are many areas in which the 11-plus needs to be changed, but it needs to be changed in accordance with local wishes and not at the diktat of a Secretary of State.

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  I would like to see the Thamesside system incorporated in other areas wherever it would work. It preserves good schools with proven academic traditions and at the same time allows some excellent comprehensives to be established alongside. There must be viable sixth forms, but one cannot have these if one has very tightly delineated geographical limits, division by division. We must look beyond divisional areas if we are to have greater freedom of choice and freedom of movement.
  It is commonplace on the Labour Benches to sneer at the idea of choice. Hon. Members opposite say that it does not exist. But there is nothing more depressing than to talk to parents who are locked into a single school system when they are desperately worried about their children's educational standards. For them there is no choice; there is nowhere else to go. That applies in certain areas of the country. It does not necessarily apply in the larger cities where there is a greater element of choice. But in some areas there is one coeducational 11-plus school with no alternative.
  If the child is not achieving a satisfactory standard, what do desperately worried parents do? The previous Government tried to impose that sort of situation on other areas, particularly my constituency. Thank goodness that Government's threat has now been removed and we can now look at the position in a leisurely and sensible manner in order to see what is in the best interests of the people of that area. If Labour had imposed its ideas upon us, it would have been a disaster for many parts of Kent.
  In the recent dispute with the teachers, there were threats of industrial action. One threat was that teachers would no longer use their own cars to drive from one part of the school to the other. The local authorities would have had to provide taxis. I wondered what kind of lunacy it was that created schools in which teachers had to drive from one part of the school to another to conduct lessons. Yet that is exactly what would have prevailed in my constituency had the previous Secretary of State for Education and Science had her way. I shed no tears—although I do know that some people did—over her departure from this House. Apart from her presence on the Grunwick picket line, I thought that her
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  threats of a rapid imposition of total comprehensive education, regardless of the needs of the children, merited her defeat at the hands of the electors.
  I wish to make one more plea to my right hon. and learned Friend. This is particularly appropriate in my constituency, but I suspect that it also applies to other areas. I wish to make a plea for the village school. Many areas experience the problem of diminishing school numbers. Judged by normal economic criteria, it is seen to be necessary to close a village school. But when one closes a village school one does more than deprive an area of an educational establishment. One takes away part of the very heart of a living community. This has happened in many areas, and often the county council is blamed. However, we know that it is the Department which has insisted on searching criteria being applied on strictly economic grounds to many village schools.
  Obviously, one cannot keep open schools that have virtually no pupils. There is a cut-off point below which it is unrealistic to expect such a school to exist. However, I hope that there will be a great bias in favour of keeping such schools open. The educational standards which they offer are generally very high and the social benefits conferred are great indeed. Therefore, I hope that the Department will be unashamedly biased in favour of the small village school.
  I wish to turn briefly to the subject of hospitals. Again unashamedly, I wish to refer to my own constituency, which is part of the Medway health district. We are in what was referred to earlier this week as the golden triangle—the South of England. However, many of my constituents do not feel that they live in a golden triangle. In one part of my constituency unemployment amounts to almost 10 per cent., and in terms of hospital resources the Medway health district is one of the most deprived—not just in the region, but in the country. There are many pockets within the otherwise prosperous areas which have suffered acutely. To a certain extent, this problem of deprivation was accentuated by the policy of the Labour Government through their resource allocation working party. Under that policy, many other regions of Britain

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  have benefited, but the South-East region generally has lost out.
  Within that region, Kent has lost out especially. Although the region may theoretically be said to be prosperous, I must make clear that within it are many deprived areas. It was impossible for the region to divert resources to its deprived districts when the region was losing funds so rapidly to other parts of the country.
  Our problem arises in part from the fact that in the South-East region we have the London teaching hospitals. Those hospitals consume the lion's share of all the resources available to our region. We are sometimes told "The region generally benefits from those teaching hospitals", but that is true of the whole nation. I do not wish to see the London teaching hospitals deprived of resources. They perform an invaluable role and, if anything, they, too, do not enjoy adequate resources compared with the amounts of money available to major hospitals in other nations. However, we cannot allow a situation in which Kent is deprived of money and does not obtain new hospitals simply because the London teaching hospitals require so much.
  I hope that the Government will reexamine the whole structure of regional planning in the hospital service. It seems to me more logical that the teaching hospitals should be separately funded by some other system. At least the suggestion should be examined. Even if that cannot be brought about, I hope that the Government will re-examine the allocation of resources between one region and another.
  We are talking about a fairly considerable sum of money. Hardly a new hospital has been completed in the South-East of England—with one exception—since the NHS was started. It is not a matter of pride to anybody that that is the case. A large amount of money has gone on maintenance and improvements, and one pays full tribute to all those who work in the hospitals and who make do with old facilities. But we desperately need new and better hospital facilities.
  On the subject of resources, during the last year the authorities, following a considerable amount of battering from almost everybody in the area, allocated to our
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  district a few hundred thousand pounds extra. The reason why extra money became available was that the region itself, and particularly the London teaching hospitals, had gained extra resources of about £1 million or £2 million. It was money which they had not expected to gain in that year.
  That money had come largely from extra revenue from pay beds. It had come from private patients putting money into the Health Service in London. Therefore, in our area we benefited directly from the extra funds which came in as a result of private patients—people ready to pay for their own health in the London area—yet the Labour Government were prepared to cut that off for arbitrary and doctrinaire reasons.
  This is all a question of resources. It we want better hospitals, we must find the money to pay for them. If individuals are willing to put in cash to pay for better health, it would be an act of utter folly if we were to refuse them the right to put money into our hospital services. I have just quoted one example where all our people will be better off if we can persuade individuals to spend their own money on hospital services. I hope that the Government will take a positive look at how to encourage people's willingness to spend money on their own health. I hope that we shall see a reversal of policy in that direction.
  Throughout the last Parliament, we pleaded time and again for Ministers to come to the Swale area to examine our problems. They never quite made it, except during the election campaign. Suddenly the former Secretary of State for Social Services found a moment or two to pop into our constituencies and pledge more money for the hospital services. I extend an invitation to my right hon. and hon. Friends in the new Government to come down to my area during the course of this Parliament—unlike their predecessors, who only found time to visit us during a general election.
  7.58 p.m.
  Mr. Frank McElhone: I wish at the outset to express sincere congratulations to the Secretary of State for Scotland and his junior Minister, the hon. Member for Aberdeenshire, West (Mr. Fairgrieve), on their appointments. I wish them every success

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  in the Scottish Office. I spent a very happy three years and eight months in the Scottish Office, and I very much enjoyed my work. The House knows that there is no highway code for Ministers. One is left very much to one's own devices.
  Perhaps I may be allowed to tell a story about a former Secretary of State for Scotland, William Ross. When I first went to the Scottish Office after my appointment, I said to William Ross "What shall I do as a Minister?" His strict advice to me was, in the Scottish vernacular, "Dae as yer telt." William Ross is an ex-schoolmaster and was an outstanding Secretary of State for Scotland. I am delighted to report that my right hon. Friend the Member for Glasgow, Craigton (Mr. Millan) carried on in much the same vein.
  When I arrived at the Scottish Office in September 1975, there was still part-time education in Scotland, particularly in the West of Scotland. I felt it most grievous that in urban areas of deprivation there was a great deal of decay. That is where the problem was most acute. I am pleased to report that when I left office on 3 May not only had we abolished part-time education but we had the best teacher-pupil ratio ever in the history of Scottish education. That gives credit to the Scottish Office, and to my right hon. Friend the Member for Craigton in particular. Achieving that teacher-pupil ratio was one of the reasons why we defeated the Scottish nationalists so resoundingly. I do not make an anti-nationalist argument, but the teacher-pupil ratio was much better than in England—14·5 to one in the secondary schools and 22 to one in the primary schools. Those are good figures, but we were still not satisfied.
  The retort from the Government Benches today was that there was a fall in the birth rate. However, if the Secretary of State for Scotland checks the last White Paper on education in the Scottish Office—he was a Minister at the Scottish Office between 1970 and 1974—he will see that it says that when we reach a total of 53,300 teachers for secondary and primary schools we will have reached our ultimate and teacher recruiting should stop. The White Paper said that that was a very ambitious figure and it was hoped that it would be reached in 1982.
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  Let me tell the right hon. Gentleman that we have not only reached the figure of 53,300 teachers, but we have 58,000 full-time teachers in Scotland. My big worry when I look at this Government's proposals is that there is no reference to Scottish education. The right hon. Gentleman, like the previous two Labour Secretaries of State, will have to fight for his corner to ensure that the Scottish position is recognised at the Cabinet table. If he needs any encouragement, he has only to present the Prime Minister with the outstanding majorities that we had in the parliamentary elections in Scotland. That is his best argument for getting a place for Scotland at the Cabinet table.
  I am conscious at the same time that I should not rest on the laurels of the best teacher-pupil ratio that we have ever had. Education in this changing society must be the best vehicle for change. There are many problems in our society. We are living in a greedy, materialistic society and no longer is there the "touch the forelock" attitude. Something should be done to harness the undoubted talents of our young people, especially in schools, while at the same time recognising that they no longer "touch the forelock" to their superiors. We are no longer living in a deferential society. However, although there is more freedom, there is an awareness among young people not just of the problems within their own community but of the wider national and international problems. A change in the curriculum is responsible for that as well as the presence of the television set in the living room of nearly every home in the country.
  I was conscious that achieving the best O-grades and higher certificates in Scotland was not enough. Something more had to come out of our education system. It was not only from the experience of listening to my advisers and the inspectorate in the Scottish Office—for whom I have a high regard—and listening to the local authority officials or the headmasters but from listening to the pupils that I realised the problems. One fault of Ministers—perhaps I was guilty of it myself at the beginning—is talking too much and never listening. In the various regional areas of Scotland I made a practice of taking aside young people of at least 15 years of age with 10 years of

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  State education behind them and listening to their views on the curriculum, preparation and guidance for college, university, corporal punishment and many other aspects of school life. That was a revelation to the officials at the Scottish Office and it helped to change attitudes at that level.
  If I have any regrets in leaving the Scottish Office, they are that the schemes for the launching of community schools were not fully realised. If we are to succeed, especially in the deprived communities, the school should be the fulcrum around which the community revolves. That is the best assistance the Government and local authorities can give—to ensure that every school is properly staffed with proper resources so that it can become a fulcrum around which the community revolves.
  If the right hon. Gentleman examines the records—I hope they are not too secret—he will find that the policies are laid down clearly for community schools in every area that has a desire to have one. I am not merely referring to the £6 million community school in Wester Hailes, in Edinburgh. I welcome that, but I was anxious that there should be community schools in the deprived areas of Scotland.
  I was delighted when a Scottish colleague who represents one of those deprived areas told me that in that area parents who unfortunately received a poor education because of part-time education and who formerly looked at the school gates as a Mason-Dixon line which they were afraid to cross had been enticed into the school. The cry from one headmaster was that if only he could get a parent-teacher association—which are all too often in areas where they are not needed—he could achieve that involvement.
  After a year of perseverance with the concept of community schools in deprived areas, 40 couples were enlisted in a secondary school in a deprived area of Glasgow to use the spare accommodation to study for their O-grades and higher certificates. That is a tremendous breakthrough by any standards. They were coming of their own volition and were not pressurised in any way. They were encouraged by the attitude of the local authority and the headmaster and his staff. If I take any credit at all, it is that
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  the idea was conceived in the Scottish Office and it was an initiative of mine that launched the scheme. One takes a lot of stick as a Minister; perhaps one can take a little credit as well.
  Perhaps the only thing that I was pleased to hear the Secretary of State for Education and Science say was that the Government intend to make use of spare accommodation. There is spare accommodation in primary schools, and I do not doubt that the right hon. and learned Gentleman will receive requests from local authorities to close primary schools. I hope that he will have courage in that matter and that when he meets the COSLA education committee he will not accept every recommendation to close schools.
  A Tory convener on Tayside took me to task at the COSLA education committee because I refused to close a village school in Tayside. I believe that I took the right decision. It is important not just to ensure that the school is the fulcrum around which the community revolves in big cities like Glasgow but to recognise that the village school is an important establishment in the community. I hope that the Secretary of State will realise the importance of village schools as community schools and community centres. I hope that he will take that on board, because pressure will be placed on him by local authorities to close many primary schools.
  It is worth recognising that in a year or two there will be the same pressure to close secondary schools. I discussed with the principals of the eight universities in Scotland that in seven or eight years' time, because of the fall in the birth rate, many universities will have difficulty in filling their faculties to reasonable numbers. It is an immensely challenging period of education.
  The fall in the birth rate provides an opportunity to use the resources to give education not just to children between the ages of five and 16 but to those who unfortunately missed out because of part-time education and difficult family circumstances.
  I hope that the concept of community schools will not stop just where it was when the Labour Government left office, and I look forward to that initiative being carried forward during the period of the

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  present Secretary of State. I believe that the rewards to be gained from it will not just benefit his Government but will benefit society as a whole in Scotland.
  I turn now to another aspect of education in Scotland. As a former PPS to the Secretary of State for Industry, I was very conscious of the many industrial problems which we had at that time. It was always my desire as a Minister responsible for education in Scotland to make schools and teachers in schools aware of the real world outside. I have a high regard for the members of the teaching profession, and especially for any teacher who tries to look after a class of secondary pupils nowadays, but I feel that too many teachers go from school to college and then back to school totally unaware of the real and competitive world outside education.
  With that in mind, again with the help of the Scottish Office officials and the inspectorate, we launched the scheme known as education for the industrial society, and within that concept a major aspect has been the teaching of industrial relations in schools. I am pleased that, with the help of the regional authorities, we now have teachers seconded to industry, and with the help of the CBI in Scotland and of the STUC more and more regional authorities are now teaching industrial matters.
  This work is being done not as an addition to the curriculum. I emphasise that because, if there is anything that teachers, especially head teachers, distrust, it is additions to the curriculum. I think that we did the right thing in ensuring that this concept permeated the curriculum and was made part of it. I am sure that that contributed to its success.
  I am pleased to tell the House of the reaction to the project which I received from representatives of Germany and Sweden, countries which do not have a great deal of industrial troubles, when I spoke about it at Strasbourg to the European Education Ministers. Those two countries are now copying the scheme which we have in Scotland today. This is a tribute to Scottish education, which has always in international terms been seen as, perhaps, offering the best education system in the world. I recognise that it has many defects, but I make to the Secretary of State the plea that that concept of understanding industry in
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  school and ensuring that industry gets involved in education at all levels should be strongly pursued. It is showing tremendous rewards already. It has a long way to go, but I hope that it is something that the right hon. Gentleman will do his best to encourage.
  I come now to one or two comments on our health services. Although my hon. Friend the Member for Stirling, Falkirk and Grangemouth (Mr. Ewing) spoke directly about health matters, drawing upon his knowledge as a very capable Health Minister in the Scottish Office, I have one or two worries about the situation in Scotland. Just as we have the best pupil-teacher ratio in education, so, similarly, we have the better ratio of general practitioners to population in comparison with England, and we have the best level of community medicine specialists in comparison with England. Pro rata, we have many services in health and allied matters in excess of what is available in the rest of the country.
  That level of provision is available to us because of the vigorous efforts of my right hon. Friend the Member for Craig-ton and his predecessor when they held office. But I am worried when I hear comments about coming cuts in public expenditure. I hope that no one is looking for tax cuts in salaries at the expense of our hospitals or the numbers of general practitioners or community medicine specialists, especially in our deprived areas. I hope that that is not to be taken as the "one nation" scenario that seems to come out of the Gracious Speech and which greatly worries us.
  The Secretary of State will remember that he is responsible also for social work. The Social Work (Scotland) Act 1968 which my right hon. Friend the Member for Craigton piloted through the House was a significant Act at that time, and what was then envisaged has advanced considerably with the help of the regional local authorities. But there are two extremely significant aspects of the work under that Act, and I refer, first, to the care of the young offender.
  We have in Scotland what are known as list D schools. We have 26 of them. I was more than annoyed when I found what was happening in relation to a number of the youngsters who end up in list D schools, especially as someone representing one area from which they

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  came. When I arrived at the Scottish Office, I found a waiting list of more than 400 youngsters waiting to get into list D schools.
  There had to be an initiative. We had to change attitudes. I remember launching a scheme called the community parents scheme. Briefly, it was designed to encourage working-class families to foster young offenders in their own homes. If we cannot redeem young people of 12, 13, and 14 at that time in their lives, I see little hope for them when they grow much older.
  I was quite pleased when progress was made with that project. Although it was a small project in terms of numbers, it has been very successful. It is creating responsibility within the community itself. I can tell the House of one spin-off benefit about which I was pleased to hear from the director of social work of Strathclyde. He said that not just the creation of interest in young offenders made the scheme a success, but there was the further fact that it encouraged thousands of other parents to foster ordinary children in the children's homes which we have in Scotland.
  Because of the break-up of marriages—even in Calvinist Scotland, I am sorry to say, one in four marriages ends in divorce—all too often the children of such broken marriages end up in the care of the local authority. What is very pleasing is that of the 11,000 children whom we had at one time a significant number have been fostered because of the encouragement of parents prepared to take young offenders into their own homes.
  I believe that that example set by those brave parents has been of great value. There have been no failures. It is a great encouragement. Perhaps it is a cliche, but it is worth saying again that if we want responsibility to be shown we must give responsibility and encourage responsibility.
  The philosophy which I tried to lay down as a Minister—I hope that this does not seem in any way arrogant—was care in the community rather than care in the institution. That was the philosophy laid down in the Scottish Office, whether for the geriatric unit, the old folk's home or the young offender. It does not always
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  work. We still have to have the geriatric unit and we still have to have the old folk's home. But I hope that we shall reach the point when we do not start building many more because, by a sort of Parkinson's law, the more old folk's homes we build, the more they will be filled.
  There must be not only a change of attitude on the part of local authorities but a change in attitude on the part of families, because wives work now as well as husbands. We have in Britain the highest percentage of working mothers among all the countries of the EEC. I am not against mothers working—they do not do it just for pin money—but I think that the present trend tends to obscure the natural responsibility that people have for their elderly parents.
  I think it distressing that all too often the programme for local authorities in the past was to keep on building geriatric units and old folk's homes, creating—as I put it rather crudely, perhaps—yet more and more human filing cabinets. Perhaps that was a crude definition, but I am sorry to say that it was a definition which fitted the rule among many local authorities a few years ago.
  I am glad to register in the record of the House my highest regard for the people who work in these institutions. Anyone who nurses in a geriatric unit, where most of the patients are incontinent, is a very brave and resourceful member of society. We should always recognise that the job of such a nurse is a very difficult one. All too often elderly people are taken into geriatric units when they are past normal care and attention. A visit to such a unit is a very sobering experience for anyone who is involved in the National Health Service.
  I touch on one other matter in social work which I hope that the Secretary of State for Scotland will pursue. It is a subject in which many of us are interested, but we do not often have the opportunity to do anything about it. It is concerned with the care of our mentally handicapped, especially our young mentally handicapped.
  For the most part, the provision of occupational centres is reasonable, but it is not enough. We need far more of them. But we are grievously short of facilities once a youngster reaches the

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  age of 16 because he has nowhere else to go than back to his parents' home. Because of the immense energy of these mentally handicapped youngsters, they become extremely difficult, especially for their mothers. Any general practitioner who has to deal with a family in such circumstances will confirm that all too often the mother becomes an old woman before her time.
  The resourcefulness of the young mentally handicapped is worth examining. I almost clinched a deal with a large engineering company to take mentally handicapped youngsters and, after a period of training, put them on the shop floor in a certain part of the factory. Because of their mental condition they can do tedious, monotonous jobs with regularity and efficiency. In Philips, in Eindhoven, there are mentally handicapped people employed on television assembly work. They have a very high productivity rate and an excellent attendance record. The quality control there is first rate. That has been started in Scotland, albeit in a very spasmodic way, but it is worth encouraging.
  I get more and more concerned about the number of mentally handicapped youngsters in our society. It is to the credit of my hon. Friend the Member for Midlothian (Mr. Eadie) that, as a Back Bencher in a previous Government, in a Private Member's Bill he made sure that they became the responsibility of the education authority and did not just remain in the care of the social work authority. In other words, there was a responsibility to educate them, and 99 per cent. of them can be educated. If we do that, we are not simply adopting a compassionate attitude. If they are taken out of their homes and brought back into the community, they are capable of making a considerable contribution to society.
  I hope that I have got across to the House the importance of care in the community rather than care in our institutions. The tragedy is that I do not detect any compassion or any element of caring in the community in this Gracious Speech. The Secretary of State for Scotland is a compassionate and a caring man. I hope that he can convince me that what I read in the Gracious Speech is totally wrong.
  8.22 p.m.
  Mr. Michael Ancram: Although this is not my first speech in the House, since I am what is affectionately termed a "retread", I hope that I shall be allowed to say a few words about my constituency and about my predecessor, Michael Clark Hutchison, who represented Edinburgh, South in this House for some 22 years. I believe that he will be remembered in this House for his quiet wisdom and laconic wit. He will be remembered for the courage and strength with which he stood up for his beliefs and for his kindness and generosity to all those whom he met. It is an honour to me to follow him in the constituency, and I hope that no one will object to my taking this opportunity to wish him a long and happy retirement.
  It is an honour for me to have been elected to represent the most beautiful of the seven constituencies in the capital city of Scotland. Comprising, as it does, some 59,000 electors, it has the compactness and unity of a vital part of a major city while managing to retain the strongly identifiable communities from which it originally sprang. From Gilmerton to Liberton to Morningside, each area retains its identity, with its own problems and aspirations to conserve what is good in each while adapting to the pressures and demands facing every modern city today. The challenge of representing and working for all the people in the constituency is one that I look forward to with great pleasure.
  I am very grateful for the opportunity to take part in this debate, especially as so much of the Gracious Speech concerns the hopes and aspirations of so many of my constituents. I do not wish to detain the House for long, but I should like to make a few observations about the Government's proposals for the public sector of education in Scotland.
  I have heard much from Labour Members during today's debate about the effects of the Government's proposals, suggestions that they are divisive, suggestions that they will create privilege. What could be a more insidious and damaging form of privilege than that which has arisen over the past years from the catchment zones? In constituencies such as mine, the only way in which people have

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  been able to exercise parental choice has been by being sufficiently well off to buy houses in the catchment areas of the schools of their choice. What greater social divisions can be created not by where one sends one's child to school but by where one buys one's house—indeed, buying it at a premium because it happens to be in the area of a desirable school?
  It is the rigid catchment zones, which have been so strictly applied in cities such as Edinburgh, that have caused so much resentment among thousands of parents who have found over past years that they have no say in where their children are schooled, who find in certain circumstances that their children are being transported some miles to one school while their neighbours' children can go to the local school, and who find that it is a decision taken by the drawing of an arbitrary line by an arbitrary official of the education committee.
  I listened with great interest to the speech of the hon. Member for Blaydon (Mr. McWilliam), who told us that he was involved in education in Edinburgh some time ago. He said "At that time we tried to create choice." All I can say is that that is not happening today. I believe that the resentment of parents in cities such as Edinburgh is well justified, because their undisputed right to have some say in where and how their children are educated has been almost totally ignored. It is for them that I welcome the proposals in the Gracious Speech to introduce legislation to ensure that parents' wishes are taken into account in the choice of school for their children.
  I can say with confidence that in Edinburgh there will be a vast welcome for such legislation, when the hated catchment zones are at least relaxed. That welcome will be even greater when parents find that their wishes are considered for the first time in years and that they can have a real say in where their children go to school. The greatest bonus of all will come when the decisions which affect not only the parents but the children, which affect whether the children go to their local school or another school better suited to their particular needs, are no longer taken exclusively by faceless bureaucrats but are taken by parents and headmasters as well.
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  Of course, there will be some problems; of course, there will be some initial disappointments. But it is dangerous and irresponsible to exaggerate them. Of course, the majority of parents will wish to see their children going to the local schools. But the difference after the legislation goes through will be that they will go to the local school because their parents want them to go there rather than because the State forces them to go there.
  Therefore, I believe that the proposals are a brave and realistic step towards creating the rights of choice for all parents in the public sector of education, rights which have been denied to them for far too long. I hope that my right hon. Friend the Secretary of State for Scotland will realise the urgency of the proposals and implement them as soon as possible.
  8.29 p.m.
  Mr. A. P. Costain: Having had the privilege of serving with you on the Chairmen's Panel for a number of years, Mr. Deputy Speaker, may I say what a delight it is to see you occupying the Chair tonight. To have the honour of being the first person to be called by you augurs well for the future. We wish you many years' happy experience in the Chair.
  I am delighted that so early in the debate on the Gracious Speech two subjects of special significance to my constituency—education and health—have been selected. I have listened to most of the debate. It has been interesting from the point of view that I cannot believe that those who are now Opposition Members were canvassing in the manner of those elected as Conservative Members.
  At most of the houses at which I called, I found that education and health were considered two of the most important matters. I was always asked to give a promise that a Conservative Government would give freedom of choice in education and that they would not abolish the grammar schools. I was asked to confirm that that is what the Conservative Party really meant. Several householders took great care to observe that a Labour Prime Minister, the right hon. Member for Huyton (Sir H. Wilson), at one stage in his career swore that grammar schools would be abolished over his dead body,

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  and yet the Labour party went on to abolish them with all that that involved.
  The hon. Member for Sheffield, Hillsborough (Mr. Flannery) refused to give way on two occasions. As soon as he finished his speech, he walked out of the Chamber. He showed no courtesy to the House. He did not give us the opportunity of telling him what we thought about his proposals. It was fascinating to learn what he was doing as a headmaster. I contrasted what he said about schools with the comments made by my hon. Friend the Member for Ripon (Dr. Hampson), who also has teaching experience. My hon. Friend paid tribute to the successes of children and referred to what is needed in education. The hon. Gentleman talked only about failure. He talked about children who failed their 11-plus taking a lower position in society. Having said that, he claimed that the success of comprehensive schools is demonstrated by examination successes. He does not want examinations when they do not suit him, but he wants them when they do.
  My hon. Friend the Member for Faversham (Mr. Moate) is a Kent man, like myself. He is familiar with the excellent service that is provided by the Kent education authority. He is as familiar as I am with the desire in the villages to maintain village schools. We have all been shown how village schools give communities a centre point. One of my village schools is used as a social centre. It is used to provide for children's welfare. It would be a great mistake to abolish village schools.
  In Folkestone we have two effective grammar schools. We also have private schools and language schools. The language schools have formed a new industry that has been built up since Britain's membership of the Common Market. It has been a successful venture and has done much to expand the town's ability to look after visitors, because there is an all-round season with the presence of the language schools.
  I urge that consideration be given to the building of schools and that a comparison is made between school building and hospital building. I make a special plea that my hon. Friend the Minister for Health gives consideration in his programme for hospital building to the various reports that have been issued by the
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  Public Accounts Committee, on which I have had the honour to serve for a number of years. Hundreds of millions of pounds have been wasted.
  There is something peculiar about the Department of Health and Social Security as opposed to the Department of Education and Science. The Department of Education and Science learns by its mistakes, whereas the DHSS does not. Indeed, it exaggerates its mistakes. For example, the teaching hospital in Liverpool cost £40 million. When construction was completed, it could not be opened. Another example is the hospital that has been built on the other side of the River Thames opposite this place. There has been vast expenditure.
  Mr. McElhone: I am listening intently to the hon. Gentleman's comments on hospital building. His own family firm built a hospital in Glasgow, the sick children's hospital. I was a Minister responsible for such matters at the time. I described it as a catalogue of errors. Every corridor had to be screeded more than once. The water supply was totally inadequate. None of the 300 windows—my daughter was a patient, so I know what I am talking about—could be opened. It was a great disaster and it was built by Costain. I hope that the hon. Gentleman will think deeply before he talks about hospital building.
  Mr. Costain: I am deeply grateful to the hon. Gentleman for mentioning that fact. Costain took over three hospitals and completed them successfully. I was not in the company at the time. I wish that the hon. Gentleman had given me notice of the question as I cannot be expected to speak on a subject without notice.
  The construction of the Peterborough hospital became overdue—the contractor went bankrupt over it—as a result of a planning failure. We took over that hospital and successfully completed it. So often the Department blames the builder when difficulties arise in the construction of hospitals. The hon. Gentleman made a valid point. A constructor carries out only what he is instructed to do in the specification. If the hon. Gentleman complains that the windows leaked as a result of bad specification, he makes my point conclusively. The hon. Gentleman is not getting away with this one.

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  My company—I used to be chairman—built hospitals to its own design in the Middle East. I was responsible for the design of a heat-stroke ward in the Middle East which saved hundreds of lives. We were allowed to design and construct those jobs. The hon. Gentleman must not come the old game of always blaming the contractor. That is good old stuff.
  One of the problems of hospital design is that when a regional authority builds a hospital it produces a new committee, the members of which have no experience in building. Its members are generally medical men, who are excited to have the opportunity of constructing an enormous building. If only the authorities would put a builder, quantity surveyor or architect on that committee at that stage of the proceedings, they would be able to learn from experience. I am most grateful that the hon. Gentleman made the point. He made my point better than I could have done.
  At St. Thomas' hospital we see wide corridors which were designed so that patients could be propelled at 30 m.p.h. and so that beds might pass each other. The corridors are twice the required width. The wide corridors at that hospital cost £4 million. They must be heated, cleaned and maintained at great cost.
  My hon. Friend the Member for Faversham mentioned the lack of hospital facilities in Kent. I agree—in the shadow of a London teaching hospital—that too much money has been allocated to teaching hospitals. We have been the poor neighbour in the shadow. My hon. Friend said that he did not begrudge the money spent on the London teaching hospitals I refer to the small, private St. Saviour's hospital in my constituency. At one time it was situated in Paddington. It was sold for its site value. The authority took over and extended a modern hospital with the money received from the sale of the site.
  I often wonder whether the high site values of the London hospitals qualify them to be where they are. Some of them are not kept on their present sites for patients' convenience. Probably they are there more for the convenience of specialists, who want to be near Harley Street.
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  The area medical facilities were considered at a conference held in Guy's hospital. As a joke, I suggested that we should sell St. Thomas' hospital and put the European Parliament there. We could obtain £100 million for that site and do away with the nonsense about Strasbourg and Luxembourg. What a wonderful asset that would be in London. Following that suggestion, several specialists told me that that was not such a silly idea. Think of the site value of St. George's hospital. Think of some of the site values of the London hospitals. We have depopulated London. We are moving people out of London, yet we are still building hospitals in London. It would be easy to raise £100 million by the sale of some of these hospital sites, and the money could be distributed to places where hospitals are really needed.
  There is a great problem with hospitals in my constituency. I will not go into too much detail because the former Minister for Health came to my constituency some time ago and I had the opportunity to show him round. He was able to see some of the problems and I know that he realises them. But let us consider for a moment what has happened. It was decided in about 1960 that Kent needed a new hospital, and there was a long argument as to where it should be built. It was decided to build it at Ashford. This was so inconvenient for Folkestone that after two years it was decided that it should be at one end of the bypass in order to make the journey a little shorter. Building then commenced. The seven operating theatres have been built, but there are now no funds with which to provide the beds. We have this very modern engine room of a hospital, but we have not the accommodation to deal with the patients.
  At Folkestone we have the Royal Victoria hospital, which is held in considerable affection in the area. There was great despair when it was decided not to extend the hospital. Dover and Folkestone are two of the major passenger ports, and a new motorway is being built in the area, yet in Folkestone we do not have a casualty unit after 6 p.m. My constituents are not clever enough to have accidents only before 6 p.m. It is amazing that after 6 p.m. they have to go 20 miles to Canterbury for treatment. There is real concern about this.

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  It was found that the new William Harvey hospital at Ashford was to be open for similar hours. Thanks to the help of my hon. Friend the Member for Ashford (Mr. Speed), we were able to pressurise the present Minister to such a degree that we now have a promise of a 24-hour service at that hospital. But in a town such as Folkestone, with a large summer population—visitors are usually more accident-prone than the local people—it is ridiculous that we have only very modified services. When there was a cry for some more complicated cardiac machines, one of the sisters in the hospital raised £3,000 in a fortnight. That showed how much feeling there was on the matter.
  I hope that my hon. Friend the Minister, with his medical experience, will investigate this matter very carefully. I am satisfied that it will be possible for him to make savings of millions of pounds, and I hope that this money will be properly distributed for the alleviation of suffering.
  There are many complaints concerning over-administration in the hospital service. Only last Friday I was sitting next to one of the sisters in the Canterbury hospital. She was full of complaints that, instead of being able to do the work for which she was trained, she is spending her time filling in forms. We must as a party take some blame for producing such an organisation, but it went wrong largely because Socialist government breeds bureaucrats. If I could get from the Minister some assurance tonight that he will look personally at this matter, I would feel that from my point of view the debate was well worth while.
  8.45 p.m.
  Mr. Frank Haynes: I am grateful for the opportunity of making a contribution this evening. During the pre-election period and following the disclosure of the result, I promised the people of Ashfield that I would come here and do a job regularly on their behalf. I have been here only a few days and I have been appalled by some of the things that I have found. I can give an example. People have stopped me, telephoned me and written to me wanting to know whether I would pair.
  I tell Conservative Members that no way will I pair with them. I have been
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  elected to do a job, and that is what I aim to do. Any question of pairing with me is not on. I hope that heed will be taken of that.
  I listened carefully to what was said about the Queen's Speech. I listened carefully to what was said about the Health Service and the elderly. Until 2 o'clock today, I was the chairman of a community health council, and had been so since the reorganisation of the National Health Service. My feet are on the ground. I know what the Health Service is about. Many hon. Members who have contributed to today's debate know very little about the National Health Service. They know very little about the nitty-gritty and the "shop floor" of the service.
  I am worried about what the Government propose for the National Health Service. I shall watch carefully. We have a pay-bed system. The Labour Government, slowly but surely, cut down that system. No doubt the Conservatives, who have the votes, will extend the pay-bed system. That system abuses the National Health Service.
  An example is to be found in my locality. A private unit is adjacent to the general hospital. Some people who can afford only a couple of days in the private unit pay for that and then transfer to the general hospital. They jump the queue. Extending the pay-bed system in the way intended by the Government will make matters worse. It will affect my constituents who are involved with mining and depend heavily upon the National Health Service. They will not like an extension of the pay-bed system.
  I should like to make a suggestion about teaching hospitals. The Central Nottingham health district has suffered financially since 1948. The distribution of finance is unfair. The hon. Member for Folkestone and Hythe (Mr. Costain) talked about his area. He should think himself lucky because about £125 per head of population per year is spent in his area on the Health Service, but in my area about £65 per head of population a year is spent. There is a massive difference.
  The Labour Government did their job in setting up the resource allocation working party, which suggested that there should be fairness in the distribution of finance for health services in the regions. The Labour Government accepted that

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  report. We accepted it locally, except that it will take far too long to obtain equality.
  I hope that the new Secretary of State will take cognisance of what I am saying and speed up the process. It will take about 15 years to obtain equality across the nation. I hope that it can be speeded up so that only seven and a half years is needed in order to give my own locality the opportunity of providing the service that is really necessary because of the lengthy waiting lists of people who require various specialty services.
  We have a particular problem with regard to chiropody for the elderly. There is no doubt that it is a national problem. However, in my locality we have looked at the figures and we suffer more than any other part of the country. What does that mean? In my constituency we have elderly people who, because of the want of a chiropodist, sit in their chairs day after day, week after week. Their bodies deteriorate, and before we know where we are they need a hospital bed—all for the want of a chiropodist. I agree that this is a national problem, and it must be looked at seriously. I hope that the Secretary of State will grapple with it. In my area we have a worse problem than elsewhere. This is a cry for help in the hope that something will be done.
  In my area a controversy has been raging, in relation to the Health Service, about medium secure units. We have met all sorts of people in the locality, people who are to provide the service, including the National Society for Mentally Handicapped Children. The powers that be want to put a medium secure unit on a campus for the mentally handicapped, and it does not fit there.
  I well remember the previous Secretary of State for Social Services making a statement when he was president of MIND in which he said that the mentally ill and mentally handicapped should not be mixed. There is a distinct danger of mixing those two specialties because of the wish to put that medium secure unit on the campus for the mentally handicapped.
  We have met all sorts of people, all those who really matter, and they are against this proposal. Yet the powers
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  that be are determined that they will win their fight and ignore the representations that have been made. I hope that note has been taken of what I have said, that some action will be taken with the people who have the power to make such a decision, and that the decision will be reversed. We are not suggesting that we do not want the unit in my locality. We want the unit desperately, but it must be in the right place.
  I conclude in the hope that the appeal I have made to the Secretary of State with regard to the Health Service in my locality will help in the way I have suggested so that we can get out of the desperate situation in which we are at present and have been for far too long—reaching as far back as 1948. I make that appeal and I thank you, Mr. Deputy Speaker, for having given me the opportunity to do so.
  8.54 p.m.
  Mr. J. F. Pawsey: First, I thank you, Mr. Deputy Speaker, for allowing me to catch your eye. Indeed, perhaps I may have that pleasure on further occasions in this Chamber.
  I acknowledge immediately the work of the former Member for Rugby, Mr. William Price, who was first elected in 1976. He was rightly regarded in Rugby as one of the best constituency Members. I also had the honour of knowing Mr. Price's two immediate predecessors, the late Mr. Roy Wise—also known to you, I believe, Mr. Deputy Speaker—and his predecessor, the hon. Member for Kingston upon Hull, West (Mr. Johnson), who is equally well known to you, Mr. Deputy Speaker.
  Rugby is one of the few select towns which has given its name to a national sport. I am, of course, referring to rugby football. Rugby is also well known for many other facets. For example, it is well known that it is the heart of the heavy turbine industry. Indeed, the heavy turbine industry at GEC is probably regarded as the premier example of that industry in this country. Equally, Rugby is known for the importance of the motor industry. Part of Chrysler is situated within the constituency and is well known for the excellence of its motor cars. Finally, Rugby Portland Cement is also an integral part of the Rugby constituency.

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  Having mentioned those three industries within the bounds of the constituency, let me say that Rugby has a large agricultural contingent. Rugby is an excellent mix of industry and agriculture, and perhaps hon. Members may be interested to know that the River Avon itself rises close to the bounds of the constituency of Rugby.
  It is appropriate that I rise for the first time in this Chamber to speak on the subject of education. I say that not just because I have six sons but because education is close to my heart. I am a member of the local education authority, which is the Warwickshire county council. I was delighted that the Gracious Speech referred specifically to the repeal of that part of the Education Act 1976 which referred to compulsory comprehensive education. I am also delighted to note that it will be speedily repealed.
  I believe that parents know best what is right for their own children, and I certainly believe that local education authorities are best fitted to respond to the needs of the people within their localities. Rugby has kept its grammar schools, and I was delighted to accept a description applied to me during the run-up to the campaign, namely, that I have fought the greatest rearguard action since Dunkirk in defence of those same Rugby grammar schools.
  As a Warwickshire county councillor, I am well aware that the people of the Rugby constituency hold those schools in high regard. It is fair to mention that about 63 per cent. of parents within the constituency voted to keep those schools. That vote was recorded in an impartial questionnaire organised by the then area education officer. Rugby wishes to keep its grammar schools, and I am pleased that the Conservative Government and the new Secretary of State will allow the Warwickshire county council, as the local education authority, the opportunity of keeping those grammar schools.
  Parents in Rugby do not believe that that is elitist, but they do think that it is best. Certainly the only privilege that Rugby parents ask for is the privilege of choice. The cost of reorganisation within the Rugby constituency was estimated at about £2 million. I believe—I am sure that many of my hon. Friends will agree—that £2 million could be spent in
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  many better ways than on a reorganisation which is neither required nor wanted.
  I move from the question of reorganisation to that of falling rolls. I believe that falling rolls, particularly in primary schools, represent a magnificent opportunity to improve the teacher-pupil ratio. I am well aware that this hinges on the amount of money that will be available to local education authorities. Equally, as a member of a local education authority, I am aware that the previous Administration slashed the amount of rate support grant to certain county councils, particularly the shire counties. Indeed, it is factually right to say that Warwickshire has lost about £13 million over the past three years, and the burden that that has placed on ratepayers within the county of Warwickshire is indescribable. One must hope that the present Administration will be looking to ways and means of restoring to the shire counties the weighting that previously existed, for certainly the shire counties have carried a great burden of rates generally.
  Indeed, I hope that the present Administration will look for fairer means of financing local government, for the present system of financing local government is manifestly unfair. I believe that a new system should be speedily brought into being, and with the least possible delay, and that the new system should reflect people's ability to pay. As I say, the present system is grossly unfair.
  However, I was delighted to hear the reference made by my hon. Friend the Member for Faversham (Mr. Moate) to village schools. I have fought very hard for village schools within my own constituency. Village schools provide a valuable service to the community. They are, in fact, the heart of the community. So often we find that when the village school goes the community gradually begins to die. Fewer younger families move into the area. Many villages, particularly around our larger towns, become mere dormitories. Certainly the village school performs a most valuable function. It is to be hoped that the new Secretary of State for Education and Science will place particular emphasis upon keeping our village schools, for certainly in this connection biggest is not best.
  I take note of the hour and how it advances. In closing, perhaps I may

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  make a passing reference to hospitals. We in the Rugby constituency have a hospital known as St. Cross, which performs an excellent function and provides a good facility to the people of my constituency. Yet for too long that hospital has been starved of funds. For too long funds have been directed to area hospitals nearby. One must hope that hospitals such as St. Cross, which perform an excellent function and satisfy the need of smaller communities such as Rugby, will be able to attract a fairer slice of the cake.
  I am obliged to you, Mr. Deputy Speaker.
  9.2 p.m.
  Mr. Bruce Millan: During the debate today, we have had no fewer than six maiden speeches. I think that I have heard every one, and every word of every one. I shall comment on that in a moment, but before doing so, Mr. Deputy Speaker, I should like to express to you the congratulations of the whole of the Opposition and, indeed, of the House generally, I am sure, on your assumption of office. We know your qualities as an ordinary Member of the House, and we look forward very much to sitting under your chairmanship.
  As I say, we have heard six maiden speeches. I have been impressed, and not a little surprised even, by the self-confidence and fluency with which all of them, without exception, have been delivered. All the hon. Members concerned paid tribute to their predecessors in very felicitous terms. All of them described some of the problems of their constituencies, again in very felicitous terms.
  One of the things that the House appreciates is a maiden speech founded on the local experience of the Member. We had that from every hon. Member who made a maiden speech today, including the hon. Member for Bebington and Ellesmere Port (Mr. Porter) and my hon. Friend the Member for Ashfield (Mr. Haynes), who spoke from very practical experience of the Health Service. We heard what I thought was a particularly good maiden speech from my hon. Friend the Member for Holborn and St. Pancras. South (Mr. Dobson). Again, we heard a very good maiden speech from my hon.
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  Friend the Member for Blaydon (Mr. McWilliam), who is a fellow Scot, although he has moved to England.
  Perhaps I might give just one word of advice to the hon. Member for Argyll (Mr. Mackay). He described his constituency as one of the most beautiful in the United Kingdom. It is the convention of course, to describe one's constituency as undoubtedly the most beautiful in the United Kingdom. In the case of Argyll, I think that that happens to be true, so it is a pity that he did not say it. I take great pleasure in saying it for him. The hon. Member for Rugby (Mr. Pawsey) spoke from his experience in his own local area in education. We shall look forward to hearing all these hon. Members again.
  We welcome also the right hon. and learned Gentleman the Secretary of State for Education and Science. By Conservative standards, he has a liberal, moderate reputation, although this afternoon he did his best to obscure it. In welcoming him, I express my regret, which will be widely shared by everyone here, that Shirley Williams is not with us today. I welcome, too, the right hon. Gentleman who has taken over from me as Secretary of State for Scotland. I have told him personally, and I repeat in the House, that I hope very much that he enjoys that difficult and sometimes thankless ministerial job.
  I shall start by mentioning pensions, and I repeat the questions of my right hon. Friend the Member for Birmingham, Sparkbrook (Mr. Hattersley). The debate has been dominated by speeches on education but it is also about health and social security, including pensions. I hope that the Secretary of State will give definite answers to two specific questions. We did not get definite answers from the Secretary of State for Education and Science and we were not even sure that he understood the questions. I dare say that since these questions were put the Government have used the seven hours to get proper answers. The Secretary of State for Social Services is looking as well informed as ever, and I hope that he will give the answers.
  First, will there be an increase in child benefit? Increases in social security benefits in the autumn are mentioned in the Queen's Speech, but do they include

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  child benefit? The Labour Party manifesto included a definite pledge to increase child benefit. Do the Government intend to do the same?
  Secondly, and even more important, what do the Government intend to do about retirement pensions? We did not get an answer from the Secretary of State for Education and Science this afternoon, and the question is simple. At present the 1975 Act provides that the Secretary of State must increase pensions according to whichever is higher, the rise in the cost of living or the rise in earnings. That is a statutory obligation. It is not at his discretion or an administrative convenience. Will that statutory obligation continue, or will the Government repeal that part of the legislation?
  The Government must know the answer. It is not a detail. Details of other pieces of legislation have been described to the House this afternoon, but that is a major issue. As we are to have legislation later in the Session, and it is specifically mentioned in the Queen's Speech, we are entitled to know whether it will repeal that obligation.
  The Conservative Party was extremely coy about it during the election campaign. It committed itself to increases in pensions to take account of rises in the cost of living, but that is a less onerous obligation than is at present in the statute. If pensions were solely increased according to rises in the cost of living, one would simply be freezing the real value of pensions. If one compares the Labour Government's record over the past five years with that of the Tory Government before them, one finds that it is considerably better in terms of increasing the real value of pensions. They went up by 20 per cent. under the Labour Government. That is partly because we took on the statutory obligation of making the increases at the higher of the two rates.
  I am not asking what the increase in November will be. That was not the question put to the Secretary of State, although he gave an answer based on it. I do not want to know whether the increase will be £2·50 or £4 in November. The Government naturally do not want to give an exact commitment on the amount at present.
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  The right hon. and learned Gentleman said very frankly that the Government wished to await the Budget to see what would happen on prices. As we believe that the Chancellor intends to put up the rate of VAT, we can understand why the Government want to await the Budget to get an estimate of the increase in prices up to November of this year. I am not asking for a figure; I am asking about principles. Do the Government intend to keep the obligation that is in the 1975 Act, or will they repeal that provision?
  Unless we can get a specific assurance from the Government this evening that they will continue that obligation, we must assume that that provision will be repealed. We said during the election that we feared that this would happen. I hope that every retirement pensioner in the country will take note of the fact. The Secretary of State for Scotland has had plenty of notice of this question, and I hope that he will give us the necessary assurance. If we do not get it, there is only one conclusion that we can draw.
  I turn to the National Health Service. There is a passage in the Queen's Speech about it, but its terms have not yet been explained to the House. I am not complaining that the Secretary of State for Education and Science did not explain it. He is not a Health Minister, but the Secretary of State for Scotland is. No doubt he is well informed about this provision in the Gracious Speech, and I hope he will explain it. It says:
  "A Bill will be introduced to facilitate the wider use of private medical care."
  What does that mean? Does it simply mean abolishing the Labour Government's Act to phase out private pay beds, or does it mean something more? The House is entitled to an answer.
  My fear—and I have every reason for my apprehension—is that the Government are about to introduce two different standards of health service. There will be the ordinary service available to the bulk of the population, and the preferential favoured service available for those who can pay for additional facilities. Is that what the Government intend to do? I very much fear that it is. If the Secretary of State can reassure us on this matter, we shall be very happy to hear it.

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  The whole issue of pay beds is an absolute irrelevance to the development of an effective National Health Service in this country. It is of particular irrelevance in Scotland, where it has never been the issue that it has been south of the border. The number of pay beds left in the NHS in Scotland is now only 114 as a result of the previous Government's efforts, and the Health Service is all the healthier as a result.
  There are real issues in the Health Service in both Scotland and the United Kingdom as a whole. Perhaps the Secretary of State will say something about them. For example, we are told that the administration will be altered. The previous Conservative Government made a disastrous mess of the Health Service reorganisation in England and Wales. I am glad that in Scotland some of the same mistakes were not made. I hope that the right hon. Gentleman, in looking at the Scottish situation, will not be dragged along on the coat tails of his English colleagues. I hope that he will look at Scotland separately. There are one or two things in Scotland that require attention, but I am not convinced that wholesale reorganisation is necessary. Certainly we take the view that it is necessary south of the border, and obviously we shall look at the proposals when they come forward in due course.
  The issues in the Health Service are not just issues involving administration and structure. They relate to resources, hospital building and other matters. For example, the Labour Government in 1977 issued in Scotland a capital programme involving 12,000 beds and new hospital building. There was particular emphasis on accommodation for geriatric, psychiatric and mentally handicapped patients. It would be useful to know from the right hon. Gentleman whether he intends to continue with that programme. I do not ask him for details at this stage because that would be unfair, but some speeches have been made about maintaining small hospitals—which by themselves sound very attractive but which have considerable implications for the large programme of district general hospitals throughout the country.
  I should like an assurance that that well-established programme, which has been going on for rather too long—and at
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  least I agree with the hon. Member for Folkestone and Hythe (Mr. Costain) about that, because these things take a long period to come to fruition—should not be upset, because if that were to happen it would be a disaster. I hope that the right hon. Gentleman will assure the House that that is not the Government's intention.
  I hope that the right hon. Gentleman will also say that he is equally committed to the development of health centres, because the record of the Labour Government in Scotland in that respect had been a very good one. Indeed, we doubled the number of health centres in operation in the five years from 1974 to 1979, and at the date of the general election we had a considerable additional number at the planning stage. I hope that the right hon. Gentleman will say something about priorities in long-stay and psychiatric hospitals. It is vital to maintain momentum and continuity in that important part of the service.
  More than anything else, I hope that the right hon. Gentleman will say something about the resources which the Government intend to devote to the NHS. Unless there is a commitment of money and resources to the NHS, none of these priorities can be achieved. It is all very well to talk about cutting out waste, excess and extravagance. Nobody is against that.
  No doubt in any large service it is possible to find areas where savings could be made, but we can only have a healthy NHS in this country if there is a commitment to increased resources for it—even if that commitment is on only a comparatively moderate rising trend, as it was in the last public expenditure White Paper published by a Labour Government. It is not enough to say "We do not intend to cut back". It is necessary to say that there should be at least a modest expansion if we are to cope with demographic changes and the incidence of ageing people in our population.
  I hope that the right hon. Gentleman will give some assurance on that matter tonight. If we do not have such an assurance, I think that we can only reach the conclusion that the right hon. Gentleman is more concerned about the comparatively small number of people who can benefit from private pay beds and

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  the private sector of hospital provision than he is about the vast mass of the population who depend on the NHS—and a very good service it is, too. It is necessary for the right hon. Gentleman to give us some assurances on that score tonight.
  I wish to turn to the subject of education and to ask one or two questions about teachers' pay. The Secretary of State for Education and Science was vague about what was happening in certain aspects of teachers' pay. I do not press the Secretary of State for Scotland to give absolute details because I understand that negotiations are proceeding. However, it is a pity that during the general election campaign the Under-Secretary of State for Scotland who has responsibilities for education made some foolish remarks about the negotiations. We forgive him for that as it is typical of the individual concerned, but we shall expect rather more from the Secretary of State for Scotland. Will the right hon. Gentleman tell us whether there has been any movement in Scottish negotiations? That is the first factual matter about which I hope he will provide us with some information.
  I welcome what the right hon. and learned Gentleman said this afternoon about the Standing Commission being open to the teachers. My own view, which I expressed before the election—it has not changed now that I am no longer directly responsible for these matters—is that the offer that was made to the teachers in Scotland was very fair and that they were unwise to reject it. That offer included a reference to the Standing Commission. However, I am glad that the right hon. Gentleman has again made that offer available.
  We do not yet know the Government's policy on public sector pay. They seem to be proceeding by a series of ad hoc decisions—the decisions about the Armed Forces and the police and now some sort of decision, although we are unsure what it is, about the teachers with reference to the Standing Commission.
  It will not be possible for the Government to deal with the teachers, the nurses or the local authority workers by a series of ad hoc decisions. They will have to take a view about public sector pay. The Conservatives avoided doing that before the election and said that it was not neces-
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  sary. If the Government believe that they can persuade the teachers to accept a settlement which the teachers do not feel to be fair in relation to other settlements that the Government have made in the past few days, they will be disillusioned quickly. If they think that they can persuade the teachers or anybody else that they are receiving fair treatment, that treatment has to be set within the context of a general policy on public sector pay. Today is as good as any day for the Secretary of State for Scotland to provide an indication of the Government's view on public sector pay.
  The impression that has been given so far is that the Government have not thought about the matter and are proceeding by a series of individual decisions. That could build up considerable problems for them. The Secretary of State for Scotland has an opportunity tonight to provide more information than his right hon. and learned Friend provided this afternoon.
  I turn to the main question that has dominated the debate—comprehensive education and selection. I regret that in their first Queen's Speech the new Government have gone out of their way deliberately to reinstate and inflame arguments about selection which had died down in most parts of the country. They have created divisions where there need not he divisions. That has been the effect of the passages in the Queen's Speech about the intentions of the Government on assisted places and the reinstatement of aid to grant-aided and direct-grant schools. It is an indication that the Government are obsessed with the interests of the few to the detriment of the interests of the majority.
  Comprehensive reorganisation in Scotland is virtually completed. Almost 100 per cent. of secondary pupils in Scotland—outside the small previously private granted sector—are now educated in comprehensive schools. That has not been achieved with the deterioration of academic or other standards, for standards in secondary schools have improved. That is not only my own view or the view of politicians but the view of independent examination boards, the inspectorate, the teachers' unions and everyone who is involved in education in Scotland.
  If it is a tragedy to restart the arguments south of the border, it is an even

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  greater tragedy to restart them in Scotland, where they are dead. Comprehensive education is accepted by the vast majority of parents in Scotland.
  There are problems of parental choice within the comprehensive system. I shall listen to what the Government have to say about parental choice, but "parental choice" in a selective system is a misnomer, a falsehood and a snare and delusion for the vast majority of parents. Parents cannot choose grammar schools for their children. A selective system by its nature is bound to disappoint the vast majority of parents who choose a grammar school for their children. There is no real freedom of choice for parents or anyone else within a selective system. Indeed, it is recognition of that fact which has led to the selective system being so discredited not only in this country but in most other countries of the world.
  There are bad schools within the comprehensive system, or, at least, there are schools with problems, but the way to deal with schools which have problems is to put additional effort and resources into them, which I am glad to say the Labour Government did by providing special money to local education authorities in Scotland to employ additional teachers in schools which had previously suffered from teacher shortage and part-time education. That is the way forward to deal with the particular difficulties which we have in some of our urban areas. I dare say also that there are certain possibilities for parental choice which can be applied there as well.
  But to set aside the comprehensive system and to go back to selection is to throw the baby out with the bath water; it is to reinstate a system which creates divisions, jealousies, recriminations and considerable bitterness and disappointment for thousands of parents and children. Yet that seems to be what the Government are intent on doing.
  I believe, with the hon. Member for Ripon (Dr. Hampson), that what we should be talking about far more in our education system today is what happens within the schools themselves—problems of curriculum, problems of assessment, problems of making the education within our secondary schools in particular relevant to the world in which our children and all of us live.
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  That is why I hope that the right hon. Gentleman will even at this early stage say something about the Munn and Dunning reports and the response which I made to them two or three months ago. Again, I am not asking him to give a detailed response tonight, but I strongly took the view then—I hope that he will take the same view—that one of the essentials or priorities within secondary education, even under the comprehensive system, is to develop, in particular, courses for the less able pupils, courses which they will find relevant, courses with which they will identify and which will motivate them, thereby eliminating some of the problems which we have at present in our secondary schools.
  That was my priority. I very much hope that the right hon. Gentleman will adopt the same kind of priority for secondary education in Scotland and that his right hon. and learned Friend will do the same for secondary education in England and Wales as well.
  There are the problems of the 16-to-18 age group. The right hon. and learned Gentleman referred to them today, but in very vague terms. It seemed to me that the only time when he was precise came when he spoke about Conservative plans for assisted places in the direct grant schools. He seemed to know exactly what he wanted to do there, but when he talked about the vast majority of pupils he went into vagueness and platitudes almost beyond belief. We must expect a little better from the right hon. and learned Gentleman, and I hope that the Secretary of State for Scotland will have something rather more definite to say about some of these other problems in education when he replies.
  There are considerable problems still in education, but they involve public expenditure. An effort to solve them entails a cost in money and resources, and we shall not begin even to tackle the problems that we have unless there is a commitment to maintain and increase resources in our education service. When the Prime Minister speaks, as she did yesterday and on other occasions, about getting value for money and about deploying resources—the right hon. and learned Gentleman spoke in similar terms this afternoon—we are entitled to know exactly what is meant, for most of the

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  resources in education go on paying teachers' salaries, on buildings and on the essential fabric of the education service.
  If this Government are to save money by cutting back the essentials, it will be extremely damaging to education. But it will also be damaging to education if they embark upon a cost-cutting exercise which means cutting the so-called frills. I have in mind, for example, an attack upon nursery education—although that is not a frill in my book, and I do not think that it is a frill in the books of most hon. Members—or an attack upon adult or community education. These have been the victims before, but if this Government start the process of looking at our education service on the basis that they must save money they will do considerable damage to the service and they will fail to grasp the opportunities which are available to us from the falling school rolls in the primary and secondary sectors.
  We are right to be suspicious of this Government because they fought the election on their intention to cut public expenditure. We said in the election campaign that it was impossible to achieve considerable savings in public expenditure unless essential social services were cut. There is the indication already in the Gracious Speech that that is precisely what they intend to do.
  It is a divisive Gracious Speech. It contains proposals which will cause divisiveness and confrontation where there should be co-operation. It confirms some of our worst fears about pensions in its lack of real commitment to the system that we have operated over the past five years. It is a Speech that is lacking in specification for the education service except in relation to a small privileged sector of education.
  The same is true of the National Health Service and the same is also true of the problems of our inner cities. Nothing was more fatuous than the Prime Minister's reply yesterday to the questions put directly to her about the inner city programme. To talk about personal freedom and personal initiative in sloganising, vague and simplistic terms when one considers the massive and complex problems of our inner cities is an insult to the people who live there and an insult to all those, not all of them on the Labour Benches, who grapple with the
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  very serious problems of our inner cities and the deprivation that we see there.
  The Government have given the House a Queen's Speech of which we are suspicious and extremely apprehensive. If our worst fears about the social services are realised, as I am afraid they will be, I give notice to the Government that we shall fight them every inch of the way.
  9.32 p.m.
  The Secretary of State for Scotland (Mr. George Younger): On behalf of my right hon. and hon. Friends, may I say first how very pleased I am to see you, Mr. Deputy Speaker, in the Chair. We are certain that you will perform the duties of that office extremely well, and we hope that you will do so for a very long time.
  We have had one of the most refreshing debates in this House for some time. If it is a sample of the standard that this new Parliament will produce, I look forward very much more than I perhaps was to our debates.
  I want especially to thank the right hon. Member for Glasgow, Craigton (Mr. Millan) and his hon. Friends the Members for Stirling, Falkirk and Grangemouth (Mr. Ewing) and Glasgow, Queen's Park (Mr. McElhone), who were members of the Scottish Office team in the last Administration, for their warm and genuine welcome to me and my hon. Friends in our new offices. We much appreciate their good wishes and, although I cannot congratulate them on any of the political matters they left behind, they have been much respected in their offices and I hope very much that we shall see them shadowing for Scottish affairs for a very long time.
  We have had a remarkable series of maiden speeches today which have given great pleasure to all who have listened to them. We heard from my hon. Friend the Member for Bebington and Ellesmere Port (Mr. Porter), whose assurance in making his maiden speech made me feel that he must have been here before for some considerable time. His experience of education, in particular, has been extremely valuable to this debate. After his splendid maiden speech, I very much hope that we shall hear my hon. Friend often.
  I was sorry not to hear the whole of the maiden speech of the hon. Member for Holborn and St. Pancras, South (Mr.

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  Dobson), but I greatly enjoyed what I heard and I hope that the hon. Gentleman will address us often.
  I also heard only part of the maiden speech of the hon. Member for Blaydon (Mr. McWilliam), but it was a pleasure to listen to him. The part of his speech that I heard was extremely thoughtful, which, my right hon. Friends tell me, the whole speech was. As we know the hon. Gentleman in Scotland, it is a pleasure to see him here and we look forward to his contributions.
  We also heard a fine maiden speech from my hon. Friend the Member for Rugby (Mr. Pawsey), which showed a detailed knowledge of the workings of the education committee and education generally in his area. My hon. Friend also gave a review of his constituency, which he clearly knows extremely well. We enjoyed what he said.
  There was also an enjoyable maiden speech from the hon. Member for Ash-field (Mr. Haynes). Most old hands in the House will have particularly enjoyed his statement that he would never pair with anyone. I welcome his courage, and I am sure that we shall see him here frequently. We look forward to that.
  My hon. Friend the Member for Edinburgh, South (Mr. Ancram) was very diffident in his approach, describing himself as a retread. We knew very well from his many contributions to the House in the past that he would be an asset to this new Parliament. I very much welcomed what he said. It was good to see him here.
  I have left to last in this review of our maiden speeches, which I hope is complete, the remarkably fine speech of my hon. Friend the Member for Argyll (Mr. Mackay). It is a pleasure to find someone with such a deep knowledge of education contributing to our deliberations. I am particularly pleased to see my hon. Friend after the long time he has spent waiting to get here.
  I was very flattered that the right hon. Member for Craigtown approached this subject with a wide-ranging number of requests to me to solve all the problems on education and social security which he knows only too well are lying around on the shelves. He seems quickly to have caught the Opposition disease of amnesia.
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  His memory is excellent for everything that has happened since 4 May, but he seems to have forgotten almost entirely all that happened previously.
  Listening to the list of demands which the right hon. Gentleman produced with such confidence, one would have thought that he knew that he had left behind a treasury overflowing with golden doubloons ready to be spent on every possible education and social service matter that could be thought of.
  The right hon. Gentleman knows very well that there are many problems. I am sure that he will not expect me, in 10 days, which is all that I have had so far, to have solved all the problems he left behind.
  I shall do my best, as is always my way, to answer as many questions as I can in the time available. I hope that the House will enable me to deal with most of them.
  Various hon. Members referred to Health Service charges. I assure the hon. Member for Sheffield, Hillsborough (Mr. Flannery) and other hon. Members that the Government have no plans to introduce any new Health Service charges. We made that clear during the election, and I make it clear once more. We await with great interest the report of the Royal Commission on the National Health Service.
  There was an element of courage in the hon. Gentleman's raising the subject. We cannot help remembering that it was the Labour Government that reintroduced prescription charges. This they conveniently forget when it suits them to do so. It seems that they have also forgotten that they increased ophthalmic and dental charges during their term in office, so lately lamented, on two or possibly three different occasions. I hope that they will keep a sense of perspective when they are carried away by the higher flights of oratory, as were several Opposition Members this evening.
  I was especially interested in the speech of the hon. Member for Hillsborough, who seems to live in an entirely imaginary world.
  Mr. Dennis Canavan: It is called Westminster.
  Mr. Younger: I do not know whether the hon. Member for Hillsborough can

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  give directions how to get to his imaginary world, because as far as I can see it is peopled by Conservatives—I think I am quoting him correctly—who are incredibly rich while everyone else is incredibly poor. I wish I could find this place, and I should be glad if he showed me the way.
  I understand that the hon. Gentleman is standing for election as Chief Whip of the Labour Party. It is an excellent proposal, but he will be aware that one of the features of being Chief Whip is that one never makes a speech. It may be that his speech today will encourage many of his hon. Friends to vote for him.
  Mr. Ewing: The right hon. Gentleman has made the important statement that it is not the intention of the Tory Government to introduce new health charges. May we take it that there is no possibility during the lifetime of this Parliament of prescription charges being increased or, even more important, hotel or bed-and-breakfast charges being introduced in the NHS? May we take that from the right hon. Gentleman's state-must?
  Mr. Younger: The hon. Gentleman should have listened carefully to what I said.
  Mr. Ewing: I did.
  Mr. Younger: The hon. Gentleman has some of it right. I said that we have no plans for the introduction of any new charges.
  Mr. Ewing: What about hotel charges?
  Mr. Younger: I referred to "any new charges". I am not aware that there is a hotel charge now. The hon. Gentleman may make his assessment of that. As I have said, the previous Labour Government altered the existing charges on several occasions. No Government would ever give an undertaking that they would never in their career increase any of the charges. The previous Labour Government did not do that, and nor so far have the present Government.
  There has been a great deal of discussion by Opposition Members about a social security uprating. Our position has always been clear. The previous Administration offered upratings of about £22 for single persons and £35 for married
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  couples. That offer was clearly designed as an election bribe. It seems to have been extraordinarily unsuccessful, judging by the composition of the House. However, we have given an undertaking that we shall make that increase. That has been made clear. The precise amounts depend upon figures that are not yet available. The figures will be taken into account as soon as they are available.
  It is true that there is a statutory obligation to have regard to changes in earnings as well as prices. However, the Opposition, when in Government, did not do any better in maintaining the real value of pensions than the previous Conservative Government.
  Mr. Millan: That is not true.
  Mr. Younger: If the right hon. Gentleman cares to overcome his amnesia, he will be as aware as I am that in two years out of the past three, taking those years by themselves, the previous Government did not succeed in carrying out that duty. He must face up to that fact. Although there was no statutory obligation to carry this out, Conservative Governments consistently increased pensions by more than the rise in the cost of living. The right hon. Gentleman cannot get away from those facts.
  Mr. Millan Mr. Millan rose—
  Mr. Younger: I think that I must proceed.
  Mr. Millan Mr. Millan rose—
  Mr. Deputy Speaker (Mr. Richard Crawshaw): Order. If the Minister does not give way, the right hon. Gentleman must sit down.
  Mr. Millan Mr. Millan rose—
  Mr. Deputy Speaker: Order. I hope that the right hon. Gentleman will pay regard to the Chair. If the Minister does not give way, the right hon. Gentleman must sit down.
  Mr. Millan Mr. Millan rose—
  Mr. Younger: I am sorry. The right hon. Gentleman knows that I am always courteous in giving way. However, I have a large number of questions to answer. I have given way quite enough. I must get on with my speech.
  Mr. William Hamilton: On a point of order, Mr. Deputy Speaker. The Minister's job is to answer questions. The Minister is specifically refusing to answer the 64,000 dollar question—whether the Government will accept the proposition in the 1975 Act.
  Mr. Deputy Speaker: It is within the power of the right hon. Gentleman to give way or not. If he does not give way, there is nothing that the Chair can do about it.
  Mr. Younger: What I said may be read and studied in Hansard. It is clear and complete. I shall now move on to the next question.
  The right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) asked about child benefit, as did the right hon. Member for Craigton. The right hon. Member for Sparkbrook gave the answer for me. He pointed out that this was a matter for the Budget. He would not expect me, any more than he would have expected himself if he had been in office, to forecast the contents of my right hon. and learned Friend's Budget speech. I shall make sure that my right hon. and learned Friend will have drawn to his attention the remarks made by the right hon. Gentleman this afternoon. That is as far as I shall go at this stage.
  Mr. Hattersley Mr. Hattersley rose—
  Mr. Younger: I shall not give way. I have only a quarter of an hour in which to answer questions. The right hon. Gentleman seems to be determined that I shall not have time in which to answer his questions, which is a pity.
  The right hon. Gentleman asked about private practice. The question of private practice is not nearly as important in Scotland as it is in the rest of the country. The right hon. Gentleman wanted to know what was intended by our pledge to facilitate the wider use of private medical care. The answer is that we meant exactly what we said. We shall allow people to pay for private treatment if they wish. We shall cease the vendetta that was waged against the private sector by the Opposition when in office. This can only assist the National Health Service, which would lose revenue approaching £30 million, not to mention
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  good will, as a result of the previous Government's policy on this matter.
  My hon. Friend the Member for Somerset, North (Mr. Dean) raised a number of important issues on social security—an area with which he is extremely familiar. We are most grateful for his suggestions. I know that my right hon. Friend will consider them seriously. My hon. Friend drew attention to the considerable administrative difficulties which confront Ministers when they seek to effect such changes and the need to draw a balance between flexibility and simplicity. We very much share my hon. Friend's concern, especially about the need for simplification and the need to tackle the "Why work?" syndrome.
  I turn to the subject of education. I am anxious to have some time in which to cover that. I hope that if I have omitted anything on Health Service matters I may return to the subject later.
  I was asked, quite correctly, to say what I could about the negotiations in Scotland concerning teachers' pay. As the House knows, pay negotiations for Scottish teachers take place in the Scottish teachers salaries committee. A recent pay offer in the committee proved unacceptable to the teachers' union and, while negotiations were not formally broken off, the management side undertook, without commitment, to explore with the incoming Government the possibility of securing some improvement in the cash offer and in the proposed staging arrangements.
  I have subsequently been approached by the general secretary of the Educational Institute of Scotland. I am very conscious of the need to reach an early resolution of this problem and I have been considering it as a matter of the greatest urgency. My hon. Friend the Minister with responsibility for industry and education at the Scottish Office has arranged to meet the chairman of the management side of the Scottish teachers salaries committee on Friday of this week. He will be seeing the joint secretary of the teachers' side subsequently on the same day. The House will be glad to know that the Scottish teachers salaries committee has arranged to meet again on 25 May to continue its earlier discussions. In the meantime, I do not think that it would be right for me to make any statement that might prejudice these discussions, which I hope will be successful.

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  We have had some discussion today about parents' rights, parents' choice and a parents' charter. We believe that what lies behind this is the desire to give parents a greater influence over school education, and we believe that this will help to raise standards. At present, education authorities designate catchment areas for their schools and sometimes enforce those with what many parents consider to be undue rigidity. Most of us meet this in our constituencies in one way or another. I appreciate the very complex administrative task with which education authorities are faced. Obviously the management of the system is considerably eased if authorities know precisely the area which each school will serve, but we are allowing the weak spots of the system to be concealed if we do not allow parents to vote with their feet to some extent. It may be right to expose some schools to criticism and to require education authorities to give serious consideration to ways of bringing them up to standard.
  The relaxation of catchment areas and the introduction of a system which allows parents to exercise a choice of schools will require extensive consultation with the Convention of Scottish Local Authorities and other interested bodies. It is not a change that I propose to introduce overnight, however much I may sympathise with those parents who have already laid their cases before me and former Ministers.
  It is interesting to note that the desires of parents are not by any means always concerned with the place where they live. Many parents would like to have their children go to a school near where either the mother or father works. This sometimes makes it much more convenient. In the meantime, I hope that education authorities will consider sympathetically the requests they receive from parents for the admission of their children to schools other than those serving their area. I take this opportunity of reminding them of the provisions of the Education (Scotland) Act 1962, which requires them, as it requires me, to
  "have regard to the general principle that, so far as is compatible with the provision of suitable instruction and training and the avoidance of unreasonable public expenditure, pupils are to be educated in accordance with the wishes of their parents".
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  That may help to put the question into perspective.
  The next subject, which has been covered a great deal, is the standard of education in our schools. Some concern has been voiced recently, particularly in industry and commerce, about educational standards in schools and the low level of achievement by some school leavers. But I am also told by those in education that such evidence as is available in Scotland suggests that pupils' performance in the basic skills of literacy and numeracy has not fallen over recent years. [Interruption.] Wherever the truth lies, I am anxious to improve the quality of education and to encourage the schools and colleges of further education to keep pace with the changing demands of modern life. Since my hon. Friend the Member for Edinburgh, North (Mr. Fletcher) will be responsible in the Scottish Office for both education and industry—[HON. MEMBERS: "Where is he?"]—he will be very well placed to encourage the development of close links between these important sectors. I have asked my hon. Friend to have full consultations with the education bodies and with both sides of industry about the best ways to improve the quality of education.
  I was asked about the Munn and Dunning reports. It is over 18 months since those reports were published, with their major proposals for changing the curriculum and assessment in the last two years of compulsory schooling. The process of consultation on those reports by the previous Secretary of State for Scotland seems to have been somewhat leisurely. I do not share his apparent hesitation to tackle the problem of differentiation between levels of courses. I am somewhat surprised about the lengthy time scale which he proposed for further development. I intend to consider as quickly as possible the question of further action on those two major reports.
  I turn to the question of grant-aided schools. Opposition Members might notice that the whole of my speech on education so far has involved the mainstream of the maintained sector. I hope that that will put right the wrong emphasis which has been expressed in some speeches today. Our top priority is the

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  education of the majority of our children. It will continue to be our first priority.
  The Labour Government's policy towards grant-aided schools could scarcely have been more misguided. They invited the schools to enter the public sector but offered them no inducement to do so. Those schools were supposed to hand themselves over to the local authorities, retaining no powers of management, continuity or anything else to safeguard their character and traditions which are thought to be of high character and standard, whether one agrees with them or not.
  It is not surprising that the schools preferred to aim at independence. The inevitable result was to raise fees and to exclude from those schools a most valuable element—the able children of lower income families, the children of parents who wanted to see their children make the most of their ability and who were prepared to make sacrifices but who could not afford to pay the full cost. [HON. MEMBERS: "Oh!"] I hope that the jeers from the Opposition will be noted. We are discussing parents who wish to see the best possible education for their children.
  Our aim is to undo as far as possible the harm that has been done. We have not yet had time to make detailed plans. My intention is to concentrate on reopening and, if possible, widening the path for promising children from lower income families.
  I have done my best in the time available to answer as many questions as I can. I have not had time to tackle some questions, and I shall do my best to write to those Members concerned.
  This is my first opportunity to address the House as Secretary of State. The way in which I wish to tackle the job is to bear in mind that there is a role for both sides of the House in the conduct of Scottish affairs in this Parliament. On many occasions the Opposition and I will disagree. I shall be prepared to tell them that I do not agree with them and I shall put my point of view as strongly as I can. However, I hope that the Opposition will always feel that the Scottish Office is open to them so that they may ask questions and approach me on constituency matters. I shall listen
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  to everything that is said by the Opposition. I hope that I shall be able to accept as many suggestions as possible that they make in debate.
  I hope that the interest in education and the Health Service in this Parliament will be as great as it has been in the past. We shall, no doubt, produce legislation on these subjects in the course of this Parliament. I hope that the Scottish Grand Committee, when it considers these matters, will have the value of the advice of as many hon. Members as possible, particularly those new Members who made maiden speeches today which have been so valuable.
  There remains the question of Health Service policy in general. I hope that as soon as possible we shall have time to discuss these matters at greater length. I am glad that we have had this debate today. The Opposition have done a service—
  It being Ten o'clock the debate stood adjourned.
  Debate to be resumed tomorrow.

  WINTER FUEL DISCOUNT SCHEME
  Motion made, and Question proposed, That this House do now adjourn.—[Lord James Douglas-Hamilton.]
  10 p.m.
  Mr. J. W. Rooker: I had not realised, until I walked into the House this evening, Mr. Deputy Speaker, that you had assumed your exalted position. I offer you my congratulations. I know that you will serve the House with distinction. I do not take personally the fact that my colleagues are walking out on me, because this is a rather mundane subject. However, I humbly submit that this type of subject is the stuff of which majorities of 491 are made. That is why I am raising the matter of the operation of the winter fuel discount scheme in the Midlands during this last winter.
  I will be honest and say that I am not too happy to see the hon. Gentleman who will reply on that side of the Chamber. However, it would be churlish if I did not offer him my congratulations on his Government appointment—though

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  I hope that it will not last for long and that he will soon be back on this side of the Chamber.
  I have here a leaflet published by the Department of Energy entitled "Help with your electricity bill this winter". It is aimed basically at those who receive supplementary benefit, family income supplement, rent or rate rebate or rent allowance. By and large it covers the overwhelming majority of pensioners, as well as other members of the community. The leaflet explains how they get 25 per cent. off the winter quarter electricity fuel bill £25 per cent. off the amount over £20.
  The opening page of the leaflet makes it abundantly clear that the bill which counts for the discount is the one for the electricity meter reading between 1 January and 31 March. It is that bill that is taken to the Post Office and enables the discount on the amount over £20 to be obtained.
  The scheme has worked reasonably well. I confess that I am not in favour of this kind of scheme, as I have said before. I prefer pensioners and others who qualify to have proper benefits in order to pay charges as does every other member of the community. I am against butter tokens and energy tokens.
  Nevertheless, we have the scheme and it has been widely advertised. Millions of pounds have been spent advertising it. Over the past three years, the take-up has not been enormous. Money is left over, certainly from the last three years. But something happened in my constituency—. I have reason to believe that it has happened in other constituencies also—that requires ministerial action. The present Government are not responsible for this position. It is a decision taken by the faceless bureaucrats of the Midlands Electricity Board and probably other electricity boards. I do not want to defend such people when in Opposition because I did not defend them when I was on the Government Benches.
  Certain of my constituents who were due to have their electricity meters read in January had them read last December. They did not get their next meter reading until April. That meant that they did not get an electricity meter reading taken between 1 January and 31 March. No meter reading took place during the crucial three months.
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  The Midlands Electricity Board, in its wisdom—because it claims to know best—gave a discount on the bill received by my constituents last December, which was an earlier bill than would normally have been acceptable. As everybody knows, October, November and December were much milder than January, February and March. I am not arguing on the basis that other people had their meters read in January or towards the end of January. That is the luck of the draw. Nothing changed for those people. However, the MEB brought forward the meter reading for a certain group of my constituents. and I will quote three examples of what that meant.
  I have a constituent whose meter was read on 21 December and who got a bill for £25. His discount on that bill was £1·25—that is, 25 per cent of the amount over £20. His next bill on 2 April was for £41, and his discount should have been £5·25p. But he had already received a discount of £1·25, and he cannot get the other £4. That is the problem.
  The case of another constituent is even worse. Funnily enough, all the meter readings are on the same date—21 December. The bill was for £16, and there was no discount because it was not over £20. The next bill, on 2 April, was for £38. The discount should have been £4·50. But no discount was payable to a 77-year-old pensioner living alone.
  In another case, the first reading on 21 December produced a bill of £33, with a discount of about £3. As a result of the 2 April reading, the bill was £63, and the discount should have been £11. That pensioner had already received a discount of £3, and in a way he deserved the other £8. But he will not get it.
  The Midlands Electricity Board wrote to one of my constituents, a Miss Ganderton, who received a bill for £16. It said:
  "Your previous account was, of course, well below the level of £20·00 and we regret, therefore, that we are unable to take any action to enable you to obtain a discount under the terms of the scheme."
  But the MEB changed the terms of the scheme. The scheme, as printed in the leaflet, was based on the reading taken between 1 January and 31 March.
  I believe it was fairly simple to change what has now become a lottery or a

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  lucky dip, depending on whether one lived in an area where the electricity board took the view "we shall go and take some early meter readings". Perhaps because of bank holidays, the weather or even staff shortages, the electricity board decided to even out the work. I understand that. But in fairness and natural justice I believe that the board should now at least equalise the two bills, average the two and pay the discount on the basis of the two bills.
  That is a simple matter. It would not cost an enormous sum of money, because not all that many people are affected. I know of only six constituents, although from press reports I understand that there are many more. All the constituency cases about which I know are in the same area. Clearly, this was a case of one or two meter readers' walks being brought forward.
  I have talked to colleagues who saw the subject of tonight's Adjournment debate listed, and they asked me about the problem that I was raising. I told them, and they said that they have also come across this problem in other parts of the country. They did not know the reason, but people told them either "Something went wrong with my discount. I did not get the full amount." or "When I produced the bill I was told that I was not entitled to a discount". As we know, the bills are printed by computer, and it states in the corner whether the bill is one on which discount is given. Many people who had a small bill for the three months before Christmas did not get a discount at all, and they feel that they are justifiably entitled to a discount on the next bill. Of course, they do not understand why all this has happened. It is clearly happening in other parts of the country.
  I do not know whether the Minister, in the short time that he has been in office, has been able to find out what the take-up has been. I know that we are in the middle of the period and that bills are still going through. Perhaps it will be possible to say how much has been spent on publicity and what the Department estimates will be the take-up. I know that about two years ago we may have spent more on publicity than we spent on take-up. I may be exaggerating, but it was very close. That was ludicrous—a
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  view expressed on both sides of the House.
  The scheme was then made more flexible. But it must be made even more flexible now, because it has gone out of the control of this House and into the control of a few civil servants at local level who are working for a nationalised industry, which is not a pillar of public ownership. It is just another State bureaucracy which has no human face. When people see this sort of thing happening, it only further justifies their claims and fears about the operation of these organisations. I say this in no party spirit. I made the same remarks, as did many of my hon. Friends, when I sat on the other side of the House.
  I hope that the Minister will take a grip on this problem, because I am sure that it is within his control and competence to put matters to right. This is a wonderful opportunity for the Minister, since he comes to the Dispatch Box for the first time tonight, to show that he has a grip on his own civil servants and that he will not be, pushed around by faceless bureaucrats who tell him to come to the Dispatch Box and tell me that that is the scheme, that my constituents had better like it or lump it, that they missed out on the discount, and that it is tough luck.
  I do not think that the poor people of this country, the working poor who are on family income supplement, the millions of pensioners who are receiving rent allowance, rate rebate and supplementary allowance, deserve that kind of treatment from any Government of either of the major parties. It is up to hon. Members of this House and to Ministers, of either of the major parties, to take a grip on the Civil Service and to make sure that it is known that these changes in the scheme have taken place. I hope that the civil servants will get due notice tonight that this House will not stand for it.
  I hope, therefore, that the Minister will be able to explain why this happened, and if, perhaps, any other electricity boards took the same decision, what the cost implications are, and how soon we can put matters to rights. It is all on computers. It is very easy to compute it and find out the Bills that were brought forward deliberately. It concerns only those that were brought forward because of what I have explained on behalf of those of whom I am speaking. Everyone else

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  must be treated in the same way. Those are the rules of the scheme.
  If the Minister could explain and give a good answer to me and to my constituents, I think that the short time that we have spent at the end of today's main debate will have been time well spent.
  10.11 p.m.
  The Under-Secretary of State for Energy (Mr. Norman Lamont): The hon. Member for Birmingham, Perry Barr (Mr. Rooker) is always well researched when he comes to this Chamber. He is always extremely assiduous in pressing the interests of his constituents, and he has been very energetic in raising cases in the past for consumers who have the heavy burden of increasing electricity bills. He has raised this matter on a number of previous occasions, and we all respect the way in which he brings the subject to the House.
  Right at the beginning, perhaps I may deal with a number of very specific points that the hon. Member raised. He asked, first, about the take-up of the scheme. If I may also include, under the heading of the take-up of the scheme, the £5 payment which goes to those below a certain level, as the hon. Gentleman knows, virtually all the 3 million people entitled to the £5 payment have received it. Take-up of the discount itself is uncertain, because the number of people among those eligible receiving bills over £20 is not known. On the latest figures available, it is expected that nearly 2½ million discounts may be claimed. This compares with 700,000 in 1977–78, when half as many people were eligible, and 1·6 million in 1976–77.
  The hon. Member also asked about the cost of the scheme. This will not be known precisely until the scheme is over. As the hon. Member may recall, £45 million was allocated to it, and it is expected that most of this will be used. This includes administration costs of about £4 million.
  The hon. Member also asked about advertising costs. I am advised that this year they will be about £250,000 and that last year the cost was about £160,000.
  This is a rather complicated matter. I want to deal fully with the very serious points that the hon. Gentleman has raised. It might help to put it in perspective if
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  I outline matters for the benefit of all the hon. Members attending this debate and for the benefit of those who will read the reports of the debate. We want the debate to be read and we want the problems to come to light. That may help us to deal with some of the difficulties that have arisen.
  The hon. Member will know that the electricity discount scheme has now operated over three winters. A number of changes have been made both to the benefits offered by the scheme and in relation to those benefiting from it. But the main features of the scheme have remained unchanged. It was originally introduced with the sharp rise in electricity tariffs between 1973 and 1976, which was obviously causing very considerable problems for poor consumers. Many of them were elderly and many lived in all-electric homes and had absolutely no alternative source of heat.
  Under the arrangements for last winter, the scheme offered help to three main categories of consumer who could be identified as having low incomes—that, is about 3 million recipients of supplementary, benefit, some 80,000 to 90,000 families receiving family income supplement and a further 3 million people receiving rate or rent rebate or rent allowance. The scheme was extended to this last category for the first time last winter.
  The help offered by the scheme is in two forms. The first is a lump sum payment of £5, but that goes only to recipients of supplementary benefit and family income supplement. They are generally regarded as among the worst-off groups helped by the scheme.
  Secondly, all those eligible can claim a discount on one winter quarter bill exceeding £20 received from an electricity board. As the hon. Gentleman said, the discount is 25 per cent. of the amount over £20. The bill on which the discount can be claimed is one for a three-month period of consumption ending between 1 January and 31 March. These set the main operative period of the scheme. Whether or not a bill is eligible for discount is determined by the date on which the meter reading on which it is based is due to take place. I would emphasise the words "due to take place" because that is at the core of the problem that the hon. Member has raised.

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  In effect, these operative dates of 1 January to 31 March mean that consumers may claim the discount on a bill for a three-month period of consumption falling between 1 October and 31 March. As the scheme was set up, by the last Government, it is unfortunately an inherent feature that the consumer who is entitled to benefit has no choice as to the period within those limits that the bill will cover. That will depend entirely on when the meter is read, and consumers do not have their meters read at a fixed date: that in turn will depend on the individual's position in the hoard's meter-reading cycle.
  There are, of course, practical problems that have to be overcome in order to make the scheme work smoothly and fairly. That has involved close co-operation with area electricity boards and the Post Office in setting up the scheme and in its day-to-day operation. We are grateful for help given by them and their staffs, notwithstanding that the Government of course pay for their services in operating the scheme.
  I shall not dwell on the £5 payment that was made automatically with their benefit to those eligible in the week beginning 22 January. However, the method of operation of the discount side of the scheme bears a closer examination in view of the points raised by the hon. Member.
  As I have said, the bills eligible for discount are those for a three-month period of consumption ending between 1 January and 31 March. Area electricity boards' computers identify these bills, calculate the discount and automatically print the discount on the bill in a simple coded form. That code enables an eligible consumer to know which bill he can claim on and how much discount he can claim. He takes the bill to the post office together with proof of his eligibility for the scheme. The code then confirms the eligibility of the bill to the post office staff and tells them the amount for which to make out a discount voucher.
  Clearly, therefore, the correct identification of the eligible bill is very important. That has to be done automatically. Area boards do not know which consumers are eligible, so all 19 million or so domestic bills are coded for the
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  operational period of the scheme. The computer is able to identify the eligible bill by the date on which the quarterly meter reading is due. That is sometimes incorporated in the consumer's reference number on the bill. If that falls between 1 January and 31 March, the discount is calculated and the bill coded. That procedure was agreed with the industry to ensure that each consumer received one coded bill and one only.
  That brings me directly to the point that the hon. Gentleman raised. There are two aspects of this which are somewhat intertwined. The first is the action of electricity boards—the hon. Member referred specifically to the Midlands Electricity Board and I do not know of other examples—in reading some meters early. The hon. Member has pointed out that this has denied some of his constituents a part of their discount.
  The second problem is the more general one of the rough and ready nature of the scheme and the fact that it gives some consumers discounts on their bills but does not automatically guarantee discounts on those bills which reflect the worst periods of cold in the winter—in this case, the cold spell of January and February.
  I shall try to separate those two issues. First, I shall deal with the question of when the boards read the meters. One must recognise that there is a genuine problem in superimposing a scheme of this kind on the day-to-day operations of the boards. They cannot always read meters precisely on the due date used in identifying the bills in question. Changes in the meter-reading programme can occur because of staff shortages or sickness or because of an influx of people from a new housing development—people who must then be incorporated into the scheme. There are changes in mind to make it easier to deal with the latter problem. When such programme changes occur, it would not be easy to take corrective action by the computer in the way that the hon. Member has suggested.
  In the great majority of cases falling within the period of the scheme, a delay of a few days in reading a meter does not cause problems. However, problems can arise for a minority of cases on to be read either shortly before or shortly the margins—those whose meters are due

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  after the start of the scheme. Obviously, this can produce uncertainties as to whether the correct bill was actually coded. This is referred to in the Department's leaflet which the hon. Member quoted and which points out that bills read in December and arriving in January are not, as a rule, eligible and will not be coded.
  The hon. Member has drawn the attention of the House to a number of cases which do not appear to fall within those rules. I know of one particular case because I have been in correspondence with the Midlands board about one of the hon. Member's constituents whose meter was read on 21 December but who was still coded for a discount. I understand that the due date was actually meant to be on the first working day in January.
  I am informed that this unusually early reading was brought about by a combination of the circumstances to which I referred earlier, plus the prolonged Christmas and New Year holiday period. Because of substantial new developments in some of their districts, the board's staff have had to begin their meter readings at an early date in order to complete them in time. Of course this could have the effect of denying an eligible consumer of part of his or her discount.
  I will look at the other cases that the hon. Member has quoted but it is not my understanding that this situation would rob them entirely of their discount unless those discounts were very small sums. One must compare the discount with what that person would have got had the meter been read on the due date and not with what the discount would have been had it operated in another quarter.
  Mr. Rooker: I realise that there is this problem caused by bringing the meter reading forward about three weeks because of the long Christmas holiday. I am not saying that these people should have the discount on the next bill, but I should point out that this means that the quarterly electricity bill that these people received was not even for a full quarter—in some cases it was only a 10-week bill covering a mild part of the year. The fact that the meter reading was brought forward two or three weeks to 21 December for those whose due date was early January meant that these people
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  received a bill that was not even for a quarter's electricity. In my opinion, that makes the matter much worse.
  Mr. Lamont: I see the force of the hon. Gentleman's remarks, namely, that it may not be a full quarter. I shall see whether it works in that way, because that certainly adds to his argument.
  I return to the point I was making. In general, I do not think that it would cause many people to lose all the discount. In one case which I have studied there was a loss of the equivalent of 12 days' discount. This problem has not previously been drawn to the Department's attention. I understand that three people have written to the Department, and, following the hon. Gentleman's notification of his intention to raise this subject tonight, I have been in touch with the Midlands board about these cases, including the one which I have studied. I intend to have discussions with the board to find ways of seeking an answer to this problem as it has operated in the past. Furthermore, tomorrow I shall be meeting the chairman of the Electricity Council, Sir Francis Tombs. This problem will be very much in my mind and I shall discuss it with the chairman. I hope that the hon. Gentleman will let me have the details of the other cases he has mentioned so that I may examine them.
  I hope that a solution will be possible. I have tried to explain how the problem arises, but I understand that those who lose part of their discount in this way feel a sense of grievance and do not see why they should lose money because their meter was not read on the due date. Should any remedy prove possible in these cases, I wish to emphasise that it would apply only to a loss of discount between the date of the meter reading in December and the due date for the reading in January.
  I turn to the point that consumers do not always benefit from a discount on the highest bill of the winter. I think that the hon. Gentleman understands the nature of the scheme as it was set up and the rough and ready way in which inevitably it has had to operate. There are a number of ways in which this problem could be tackled. One could allow consumers to claim on whichever of their bills covered the higher of the winter periods, but I am told that that could

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  have considerable administrative and practical problems. Both bills would have to be coded. Consumers would have to hold or record both before pursuing the discount, and the complications to those involved in operating the scheme would be very considerable. The other alternative of extending the period of the scheme to cover two quarters would add considerably to its cost.
  I do not believe that it would necessarily help if the timing of the scheme were changed. The first scheme operated over the three months February to April in 1976–77. This was changed to a January start when the £5 payment was introduced in 1977–78. It was felt that this money should be in the hands of those entitled to it as early as possible in the winter period. Operation over February-April last winter might have helped consumers whom the hon. Gentleman has in mind. If, however, the cold spell had occurred in February-March, the same problem would have arisen for the minority of consumers whose meters were read in early February. I am afraid that neither electricity boards nor Governments—not
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  even a Conservative Government—have any control over the vagaries of the weather and the timing of the coldest spells.
  I should like to say a few words about the future of the scheme. It has operated in a variety of forms over the past three winters. It has played a part. Obviously rising fuel costs are of greatest importance to people on low incomes, and especially to the elderly. We are in a period when there is great pressure on energy prices, and it is important that the Government should have this problem in mind.
  I assure the hon. Gentleman that we recognise the importance of the issues involved and are very mindful of our obligations to the elderly. The hon. Gentleman will not expect me to indicate the Government's intentions. We have not had time to consider the scheme, but we are determined to ensure that those who have most to lose by rising energy prices are properly protected.
  Question put and agreed to.
  Adjourned accordingly at twenty-nine minutes past Ten o'clock

INDUSTRY
  British Aerospace
  British Aerospace
SCOTLAND
  Administration of Justice (Emergency Provisions) (Scotland) Act 1979
  Administration of Justice (Emergency Provisions) (Scotland) Act 1979

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Southwell.
The Earl of Galloway—Sat first in Parliament after the death of his father.
Several Lords—Took the Oath or Affirmed.

MARRIAGE (ENABLING) BILL [H.L.]
Baroness WOOTTON of ABINGER: My Lords, I beg to introduce a Bill to enable a person to marry any kin of a former spouse, or a former spouse of any kin. I beg to move that the Bill be now read a first time.
Moved, That the Bill be now read 1a.—(Baroness Wootton of Abinger.)
On Question, Bill read 1a, and to be printed.

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

Lord President (L. Soames).

Byers, L.

Denham, L.

Drumalbyn, L.

Hood, V.

Hylton-Foster, B.

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Listowel, E.

Llewelyn-Davies of Hastoe, B.

Peart, L.

Rochester, L.

Wigoder, L.

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

ADDRESS IN REPLY TO HER MAJESTY'S MOST GRACIOUS SPEECH
Debate resumed on the Motion moved on Tuesday last by Lord Camoys—namely, That a humble Address be presented to Her Majesty as follows:
"Most Gracious Sovereign—We, Your Majesty's most dutiful and loyal subjects, the Lords Spiritual and Temporal in Parliament assembled, beg leave to thank Your Majesty for the most gracious Speech which Your Majesty has addressed to both Houses of Parliament."
2.48 p.m.
Lord PEART: My Lords, we have a forecast of what is to happen when we examine the Government's policy as outlined in the gracious Speech. Most of us have been electioneering and we all know the issues and differences involved. My side has been campaigning, but unfortunately we lost and must accept what has happened gracefully. There is now a new Government and today I shall probe that Government. I must make a short speech because there are many Members of your Lordships' House who wish to make a contribution. As I say, I want to probe the Government and to know what they really intend as regards the nationalised industries.
The gracious Speech says:
"Proposals will be brought forward to amend the Industry Act 1975 and to restrict the activities of the National Enterprise Board. Other proposals will reduce the extent of nationalised and State ownership and increase competition by providing offers of sale, including opportunities for employees to participate where appropriate".
I am amazed that the Government are to adopt a doctrinal attitude, that they are seeking to destroy something which is working well. If noble Lords murmur, "No, no, no", I would invite them to go

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to our sales office and carefully read the annual report and accounts of the National Enterprise Board. After all, the men and women on that board, who are responsible for policy, are distinguished people. They include Alistair Frame, Joint Deputy Chairman and Chief Executive, Rio Tinto-Zinc Corporation; Mr. Gardiner, Chief Executive, Laird Group; Sir Leslie Murphy, formerly Deputy Chairman, Schroders Ltd.; Deputy Chairman Richard Morris, formerly Director of Courtaulds; and so on, plus two trade union leaders. That is a fine body and a fine organisation. It has already achieved a great deal. It is essential for the development of the regions, particularly the North of England, South Wales and Scotland. This board is important and it has delegated much of its responsibility for administration throughout the regions. It is there, providing a major service. Conservatives should read carefully what the Board has achieved and what its role is in, our economy.
As regards its achievement in 1978, its chairman states that:
"1978 has been a year when we have begun to make significant progress towards our goals. It has been a year when we have been able to show by our deeds what contribution the NEB has to make to the industrial life of the nation".
The chairman then continues and describes what has happened; he says that two major holdings were transferred to the National Enterprise Board by the Government at the outset— British Leyland Limited and Rolls-Royce. He says:
"there has been substantial progress by both of them in [what they call] the daunting tasks which they have faced ever since they came into public ownership".
I shall not weary our colleagues with the details; they are there for everyone to see. Despite all its difficulties, the chairman says:
"The new Board of BL, which the NEB appointed at the end of 1977, has achieved a major reorganisation designed to improve the overall management of the company. In 1978 BL sold more British manufactured cars in the UK than any other company. It met its profit, return on capital and cash flow objectives. The morale of the distributor network has been improved and so has the consistency of production".
I could go on:
"Rolls-Royce has had its best ever year in terms of sales".
How can we criticise that? If noble
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Lords are really fair, they must realise that if they still adopt a doctrinal attitude, they are doing a disservice to an institution which plays a major part in our economy.
In addition, it is not long ago that we had a very important debate on micro-technology, dealing with ACARD. I shall deal with that later, and I should like to put some questions to the noble Lord when I deal with matters of science. However, again, the National Enterprise Board has been involved in that field—this most important field dealing with computers and micro-economics. The chairman of the NEB says:
"The evidence was that, left to itself, the private sector would not have secured an adequate place for the UK in this major technical and industrial revolution. The NEB is proving to be an instrument that is capable of working effectively with the managers and entrepreneurs upon whom success will ultimately depend and has found ways of motivating these people to achieve success".
I remember defending that, and in that debate no Tory really attacked it. The chairman then mentions,
"The creation of INMOS (for standard chips and micro-processors), the setting up of NEXOS (for the office of the future) and the emerging role of INSAC (for the overseas exploitation of the UK's softwear skills)"—
Here we shall obtain major markets in the world. The chairman of the NEB continues:
"We are the majority shareholder in one of the largest exporters of medical equipment and supplies in the UK".
We are taking great initiatives in the Middle East. How can even Tories, who pretend to be doctrinal, object to that? This is a success story, and I hope that my party in both Houses will fight to retain it.
I should like to turn to another body, British Aerospace. Here I pay a tribute to the noble Lord, Lord Beswick. Again, noble Lords should go to our sales office and read the chairman's report. It says:
"This is a report of the first full year of British Aerospace as a single trading organisation. It is a year of consolidation, product progress and profitable results".
If we read the financial results of British Aerospace, we can see that this is another success story. Let me take its sales and orders. The chairman's report states:
"This year's results, highlighted on pages 4 and 5 and detailed in the formal accounts, show sales at £894 million as against £860 million for 1977".

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That is important; it is a creditable increase. The chairman continues:
"The order book at the end of the year, defined as orders received but still to be fulfilled, amounted to £2,951 million, an increase of more than £650 million over the year. Of these orders, 69 per cent. were for export".
The chairman goes on:
"Orders received towards the end of the year for Jaguar aircraft for India, Swingfire for the Arab Organisation for Industry and Sky Flash for Sweden, together with the go-ahead on the Jetstream 31 aircraft and the signing of an agreement with our Airbus Industrie partners, well illustrate this spread of activity".
Again, noble Lords, and Ministers in particular, should carefully read what we are doing in the nationalised industries.
Again, I take the view that inevitably there must be State intervention. This is a mixed economy. I am not doctrinal; I have never been doctrinal in industry. I was director of a major company—FMC—and I always played my part. I gave great support to the agricultural industry, which was not nationalised. I was never doctrinal about handing out or giving subsidies (and I use that term in the best sense) to people who were in private enterprise—I hope that the noble Lord opposite who is trying to make a speech while sitting, will stand and make his contribution after I have finished.
Therefore, I turn to agriculture; after all, this is an important industry. Again, I believe that the State should be involved. I have read what the Conservatives propose to do. They mention the uplands, to give just one example. Their Manifesto states:
"The Uplands are an important part of our agriculture. Those who live and work there should enjoy a reasonable standard of life".
Let me ask the Conservatives what they did when there was a major attempt to improve agriculture in our uplands, to improve the lot of the hill farmers and the men who produce some of our fine sheep products and hill cattle? Noble Lords must forgive me for being conceited about this, but I set up the Pennine Rural Development Board in an attempt to bring more capital to the hill farmers in order to develop roads leading to those farms, to provide more electricity and to give those farmers a status. I was always sympathetic because basically my constituency was a large rural area, comprised mainly of upland land. I was born, as were my grandparents going right back,
34
in Weardale and my family were fell farmers. I always thought that they had a bad deal. I am glad the Conservatives have mentioned this, but when we had an opportunity to do something about it, what did they do? Perhaps I could briefly outline the history.
I set up the Pennine Rural Development Board. This was supported by the Country Landowners' Association; by the National Farmers' Union; by the agricultural workers' union. This was a body you could call a Quango. I shall come to Quangos in a minute. It was a Quango in the best sense. It was approved by all sides of the industry. I appointed a chairman, and I never thought of necessarily appointing a socialist chairman. I appointed a vice-chairman of the National Farmers' Union, a distinguished farm leader, Tom Cowan, who knew the area. There we were, all set to go forward with this great experiment. Then a Tory Government came in and, at a stroke, the Pennine Rural Development Board was destroyed by Mr. Prior, who is now a member of the Government.
I know that the noble Lord, Lord Soames, has a great interest in Europe. I remember going to Bavaria as a guest of Sepp Ertl, the German Minister of Agriculture. I went to his place. We had a conference in Bad Wisse. I remember seeing what he has done in Germany for the upland farmers: new roads, electrification, et cetera. The sort of thing we could have had in the North of England. The sort of thing we could have repeated even in Wales and other upland areas in the North of Scotland. I will say to the country that it was a Conservative Administration which, at a stroke, destroyed that. Today the farmers regret it and would like again to have a Pennine Rural Development Board in that area.
I believe that the farming community are an important sector in our economy. I am certain that the noble Lord, Lord Soames, will fight for their interests in the best sense. I have often been accused of being "too farmer", but I believe that we have good farming; we have a fine industry, an efficient industry which is second to none and which must make its contribution. I shall not go into detail today about the farming community in relation to European policy. All I am saying is that here are examples where

35
something could be done and where a Government were doctrinal.
I give another small example, although the Pennine Rural Development Board was a major example which affected specifically my own constituency and parts of Southern Scotland. I refer to the State Management Scheme which had been set up in World War I. It was a successful scheme which worked well. It was a scheme of State management of a brewery, pubs, hotels, in a major area of the country which would have been advantageous to us as we develop our tourism in that part. What did the Conservatives do with that successful organisation? Again, at a stroke they destroyed it and put it up for auction. Many of the units were sold at cut down prices. It was a disgraceful affair, and the people of Cumberland know it. People who know that area must be ashamed of what the Conservatives did. There was another example. What I am pleading for the Government to do—pleading with my noble friend, who is now Leader of the House and who is an important man in the Government, pleading with the noble Lord, Lord Carrington, who is in the Government, pleading with those noble Lords, many of whom are in the Government—is not to be doctrinal. Please examine carefully what should be done.
Again, we have had attacks on socialist administration. I have here a book which was written by Mr. Philip Holland, Member of Parliament. It has the support of the Tory Central Office. He talks about Quangos. He takes the view that on these bodies which exist and are called Quangos appointments on solely political grounds should cease. He goes on to say:
"We [the Conservatives] reject the view that if these bodies are to continue to exist, then a future Conservative government should replace known Socialists with known Conservatives where possible. The new Quangos now act as powerful executive agencies: they patrol and extend the frontiers of the State. It should be no part of our task to recruit Conservatives for Labour's frontier force".
We had a major debate on Quangos initiated by the noble Baroness, Lady Young. It was a very good debate, and she made a fine speech. Again in that debate the speeches of noble Lords who took part did not drip with the cynicism
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that is in this pamphlet by a Conservative Member of Parliament, who made a great fuss of this during the election campaign.
After all, the noble Lord himself is responsible for setting up Quangos. He knows the cereal authority is very important. He knows the Meat and Livestock Commission which, in a way, was the fruit of an inquiry he set up. Conservatives have set up many in their time. These bodies are so important. The Milk Marketing Board is a Quango. The National Seed Development Organisation, which was set up by the noble Lord, is a Quango. I could go on giving details of these important institutions which are so sensible when Governments wish them to be administered separately and probably efficiently, as they have been in many cases. I do not attack Quangos. I hope that we are not going to have this political battle about appointments. I have appointed Conservatives, Liberals, Socialists, and goodness knows what other people who may have no political prejudices. I hope that noble Lords will not accept the advice of one of their Back-Benchers on this matter.
I say to noble Lords that really here is an opportunity for noble Lords to use their influence. Let us recant a little, and let us realise that in an election time we make promises; but I hope that they will be very careful in their approach to some of these institutions which are performing such a major service. I was chairman of the Advisory Council for Applied Research and Development. That was one of my ministerial duties. I hope that the noble Lord is going to do that. This is a very good body. It is not a Quango; it is a departmental committee which is responsible for helping to focus attention on some of the spots in the field of science and applied science where we need more developments, more innovation. We have made reports on this, and I hope that the noble Lord will find it fruitful to keep this body in being and that it will not come under the axe of a Tory Administration.
I warn the Government that if they seek to destroy some of these great bodies like the National Enterprise Board, if they seek to destroy the effect of shipbuilding institutions, et cetera, and those bodies that I mentioned, they will harm develop-

37
ment in those parts of Britain which I know so well. There really will still be what Disraeli said—and he was quoted yesterday—a two nation system, make no mistake about that. I remember in my own North how over years gone by we faced great difficulties in relation to coal, steel, mass unemployment on a terrible scale. Those days have gone, even though we still have large-scale unemployment which has to be conquered. All I am trying to argue is that our competitors are pouring money into areas like these. The Germans are doing it in the Ruhr. Even some of the developing countries, which were quoted in that debate on applied science, like Brazil, Taiwan and Korea, are bringing about a revolution, and their exports are competing with us in the markets of the world. I beg noble Lords opposite and Ministers not to be doctrinal. Here is an opportunity for them to spell it out in more detail. If they are doctrinal, we shall be very critical.
3.8 p.m.
Lord ROCHESTER: My Lords, since industry is the field in which my own experience lies, I hope that the House will permit me to contribute to the debate in that area, leaving my noble friend Lord Simon to talk later about matters in the broader economic field. I should like, first, to welcome the priority given in the gracious Speech to the objective of controlling inflation. If I cannot wholeheartedly extend that welcome to include the means proposed for achieving that objective—that is, the pursuit of firm monetary and fiscal policies—it is not because such policies seem to me to be without significance—quite the reverse—but rather that they will not, in my view, themselves provide the solution to this intractable problem.
I do not wish to sound too discouraging a note at the very start of the life of the new Government. We on these Benches sincerely wish the new Administration well in the daunting tasks that now confront them; but I am impenitent in the belief that the basic economic and industrial problems which now confront this country are so complex and deep-seated, and the measures needed to solve them are likely to provoke so much controversy and to prove so painful in their application that neither of the major parties will prove capable of solving them on their own.
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If anything, I feel reinforced in that view by the speech just made by the noble Lord, Lord Peart.
This applies particularly to the need to restructure large parts of British industry—for example, steel, shipbuilding and volume car production. It also has application to what is perhaps our main current problem—namely, that of long-term pay determination. However, on that particular matter, encouragement may be drawn from the signs that there is already a potential consensus among elements at least in all parties in the TUC and CBI on what I would call a sustainable incomes policy. Under it agreement could at least be reached on what amount the nation could afford each year by way of increases in wages and salaries, and that conclusion might be endorsed by Parliament as an integral part of the pay bargaining process in the private sector of industry.
There is no mention in the gracious Speech of pay policy in the public sector and in particular no mention is made of the Government's attitude to the Pay Comparability Commission which was set up by the previous Administration. As I made plain in the debate on the Address six months ago, I have for long felt that people employed in certain key occupations should have their pay determined by a single independent and permanently constituted body in which all parties repose confidence. That is partly to provide for that continuity of policy which, with the abolition or rejection of, first, the Prices and Incomes Board and then the Relativities Board, has in recent years been so conspicuously lacking.
When the Comparability Commission was set up a few months ago I thought it regrettable that no attempt appeared to be made by the Government of the day to consult with Opposition parties concerning the composition and terms of reference of that body or on the definition of comparability or other criteria on which its findings might be based. Perhaps no agreement would have been reached, but in my view the attempt should at least have been made. Now, all we can do is to suggest to the new Government that they should consult widely before determining the criteria they will use in fixing cash limits in the public sector, the future of the Comparability Commission and so on.

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Next, I wish to follow the noble Lord, Lord Peart, and largely to agree with him, in commenting on the proposals in the gracious Speech to amend the Industry Act 1975 and, particularly, to restrict the activities of the National Enterprise Board. That wording is no doubt deliberately used to leave the Government's options as far as possible open, at least for the time being. Presumably "restriction" does not mean outright abolition, a fate which earlier awaited the Industrial Reorganisation Corporation, but it could of course mean the elimination of all activities other than those for financing such companies as Rolls-Royce and British Leyland. In this instance also, we would advise full and early consultation with the chairman of the National Enterprise Board and, it may be, other interested parties, before final decisions are taken, for, in our view, there is a great deal to be said for the stability which an element of continuity and consensus in this matter would bring with it.
It is surely significant that every Government among the industralised nations has found that it needs the equivalent of a National Enterprise Board. In the case of this country, there are gaps in finance for new technologies, for small companies and for export initiatives, and these are all symptoms of a shortage of risk-takers that for the time being at least could be made good by the NEB. As Sir Leslie Murphy himself has made plain, to leave the board simply as a hospital would mean that it was called on too late. whereas one of the things it can now do is to rescue people before they are overwhelmed by their problems. The future of the titanium granule plant on Tees-side is only the latest of many such problems which have occurred in the past and will recur in the future, and I urge the Government to ponder very hard before they eventually decide the extent to which they will restrict the board's activities.
We have noted particularly in the gracious Speech the Government's intention to achieve a fair balance between the rights and duties of the trade union movement and we welcome the desire to encourage the wide participation of the great majority of members in the affairs of their unions. It was to be expected that, in the light of last winter's industrial disorder and of the Government's election
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pledges, legislation would be drafted to amend the law on picketing and the closed shop and to provide financial aid for postal ballots. On those points, I express the hope that the Government will make great efforts in their consultations with the trade unions to achieve the widest possible consensus before legislation is introduced, and indeed that they will consider the possibility of delaying the implementation of such legislation so that it takes effect only if and when the need for it under the new Administration has been demonstrated beyond doubt.
We note that no mention is made in the gracious Speech of the possible reduction in the amounts of benefit to be paid to the families of people who go on strike. I hope we are right in taking that as an indication of the Government's recognition that this is ground at which they would indeed be wise to look before they leap. My noble friend Lord Banks will have more to say on that subject in the debate tomorrow on those aspects of the gracious Speech which relate to home affairs.
Still on the subject of the rights and duties of trade unions, there is another requirement to which I have referred on a number of occasions in your Lordships' House but to which no reference is made in the gracious Speech. That is the need to find some agreed means of achieving throughout British industry the introduction and observance of negotiating procedures under which disputes concerning agreements that have already been entered into are settled by arbitration rather than by industrial action. I am delighted from these Benches to have the honour of being the first to congratulate the noble Lord, Lord Cockfield, upon his new appointment, and I hope that when he winds up he will be able to give an assurance that the introduction of effective disputes procedures is regarded by the Government as an urgent requirement.
Finally, once more I draw attention to the imperative need, as I see it, to reach a shared understanding that, although there is necessarily conflict in collective bargaining, it is at the same time essential to mark out an area of common ground with the aim of ensuring that employers and trade unions together fulfil the basic purpose of industry; namely, the production of wealth for the benefit of the

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whole community. Again, I hope that the Government will be able to assure us that they intend to give a clear lead in this direction, for it accords well with the philosophy set out in the gracious Speech: the creation of a climate in which commerce and industry can flourish; and in the co-operative creation of that climate we wish them well.
3.21 p.m.
The LORD PRESIDENT of THE COUNCIL (Lord Soames): My Lords, perhaps the two noble Lords who have spoken will forgive me if I do not follow them in everything they have said, but I should like to take up a couple of points. The noble Lord, Lord Peart, referred—with some vehemence, I thought—to the NEB, the activities of which, as he rightly said, we wish to restrict. How far the Government will decide to restrict those activities, it is too early to tell. However, I wish to put it to him that the reason we wish to restrict those activities is that we would not wish to see an increase of nationalisation either by the front door or, indeed, by the back door of the NEB.
The noble Lord, Lord Rochester, said that there was broad agreement for a formalised incomes policy, but certainly the TUC and the CBI have both turned their faces against any formalised incomes policy of the character which I understand his party would like to see. Therefore, I do not consider that there is a very profitable road to follow there, but I shall say more about pay later in my speech.
I feel very deeply that much of the nation still does not realise the underlying dangerous situation of our real economy, because North Sea oil has in effect masked the true pattern of our difficulties and maintained, after a small drop, the standard of living of the people as a whole. But without the £3,000 million a year income from the oil—and what that saves on our balance of payments—that standard of living would have fallen painfully by now and the employment situation would have been far worse.
I was in the Shetland Isles not long ago; went to look at Sullom Voe. I received a message from one of the local lads asking whether I would have a drink with him before I flew back to the mainland, and I gladly did. It seemed that previously
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everything had been leaving the Shetlands—people, and even sheep; the population had been diminishing fast. I said to him by way of conversation, "The oil must have revolutionised your life". He replied, "No, it hasn't. What it has done is to enable me to continue to live in the way to which I was accustomed hitherto". I feel that this is what too many people in this country think that North Sea oil is about, whereas we must put it to much better long-term use than that.
We shall certainly continue to press, as did the previous Government, for vigorous international action to help the world economy. This is a fundamental problem with which the last Government had to deal and with which we shall have to deal; it is a kind of built-in difficulty. But even if the world economy was in a much better position, we must still look after our own national economy; we must look to that. Our ability to cope with the problems of international origin is not helped by the weakened state of our domestic economy, for let us face it: the situation in British industry today on the whole is bleak. Manufacturing output was actually 3 per cent. lower in 1978 than it was in 1974. There was some recovery in output during 1978, but in many ways this highlighted our fundamental structural weakness, because 1978 was a year when consumer demand grew by more than 5 per cent., but our own manufacturing output increased by only 1 per cent. So of course there was a flood of imports.
Productivity and output per head lags far behind that in competitor countries and, as I said, last year's increased demand had to be met by imports. Last year the growth in unit labour costs was three times higher than that of our major competitors. Our share of world markets, which was almost 20 per cent. in 1955, is now only 9 per cent. Over the same period, West Germany's share, for example, rose from 15 per cent. to over 20 per cent. The slight increase at home of 1 per cent. in 1978 over 1977 was due largely to our very competitive prices based on the period when sterling was at its lowest before North Sea oil came to the rescue of the pound.
The profitability of manufacturing industry reflects the same somewhat

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gloomy state of affairs, I am afraid. The real rate of return of manufacturing companies was only about 4 per cent. in both 1977 and 1978. The productivity per man between 1973 and 1978, as was shown in the Bank of England Review of the first quarter of this year, rose by only a third of the figure for Italy, and I think that it was only about a sixth of the rise in West Germany.
We face major problems in industry which must be solved if this country is to survive when we no longer have North Sea oil—and it cannot last forever—and if 60 million people are to maintain themselves on these islands at anything like the standard of living to which they have grown accustomed and about which they have been taught by politicians, first of
one party and then of another. They have come to expect the growth in their standard of living each year as being their right. We cannot possibly achieve this unless the underlying state of the economy is right and our productivity and our competitiveness can match that of those with whom we trade throughout the world.
We hope to start a fresh national debate on the reasons for our lack of competitive ability in large areas of our manufacturing enterprises. We intend to pursue right across the board the goal of greater incentives—greater incentives to work hard, greater incentives to encourage acceptance of responsibility, greater incentives to self-improvement and encouragement of skill. Above all, we intend to cut the burden of personal taxation, to make it possible for individuals to benefit from the results of their own efforts.
I would now turn to what is, I suppose, the Gordian knot of the British economy, which is pay. We are an advanced and still, in certain sectors, a highly successful economy; but the way in which we determine pay levels, the contradictions in our methods of pay bargaining, are strangling us. This more than anything makes it depressingly likely that the British worker will continue to produce less and continue to be paid less—a low wage, low productivity economy—than his European and American counterparts: paid less, that is, even before he has to negotiate our tax system in the marginal
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bands. Of course, I am not suggesting that monetary pay is the be all and end all of life, or that there are not innumerable advantages, in non-money terms, to living and working in Britain. Of course there are; but we want to keep it that way. Nevertheless, I profoundly believe that the persistent decline in our standards of living relative to our commercial competitors and diplomatic allies is bad. It is bad for morale at home and for our contribution to the peace and prosperity of the West abroad. Nor do I see the slightest evidence that the people of these islands are satisfied with their decline or content with these reduced possibilities. I know that professional economists argue that this has taken place over a long period of time. That may be so; but the fact is, I think, that there has been a sharp acceleration—and I think that in our hearts we are all aware of this—over the past decade, and I am convinced that people want to see a stop put to it. If we are to put a stop to it, we cannot avoid the issue of pay.
Incredible as it must seem, we are still in the middle of last year's (if I may put it that way) pay round. Because we have taken office in the middle of a pay round and are tied to a considerable degree by commitments made by the previous Administration, I cannot comment on individual settlements which are being, or are likely to be, made; but, as noble Lords will be aware, we have honoured our immediate commitments to the police and armed forces. Our inheritance is industrial stagnation, wage settlements averaging around 14 per cent., a rapidly rising money supply and a buoyant—all too buoyant—public sector borrowing requirement. That is not a dowry to guarantee much fun, even on the very brief honeymoon which Governments traditionally enjoy. What I can do is to outline briefly what we feel should be the right way forward on pay—and I should like to have a go.
The gracious Speech laid emphasis on responsible pay bargaining. "Responsible" is not a euphemism for moderation. One group's moderation can seem like another group's excessive pay settlement. "Responsible" means being aware of cause and effect in any economy. If you pay workers more than they profitably produce, or if, indeed, workers pay themselves more than they profitably produce,

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you will go bankrupt and business and employment will come to an end sooner or later. If you are a Government and you behave in the same way, then you are tempted, in order to avoid that situation, to inflate your currency, and, in turn, business and employment will eventually come to an end. The thing takes place a little later, but the effects are the same.
Now we have to start with the much talked about and much postponed educative process: cause and effect; consequences of one's actions. If you pay too much in the public sector, where the Government carry ultimate responsibility, and if you are not prepared to inflate—that is, to print or to borrow money—then with all the political or economic wisdom in the world you have only three options open to you. You can lay off workers, so that fewer workers are paid more; you can charge more for the services provided, either directly or through the tax system; or you can cut expenditure in some other part of the system and face, with everyone else, the consequences of so doing. That is common sense and common responsibility.
For more than 10 years now Governments have, often with the best intentions, masked cause and effect behind pay policies or concordats or contracts. Both major political parties have learned through the pain of electoral defeat the harsh lesson that the social and economic climate of Britain forbids a permanent and centralised determination of pay levels throughout all sectors of the economy, whether one tries to achieve this formally or informally, with or without recourse to law. At the moment we arc suffering, I submit, the worst of both worlds, as we see in the present pay round. The rigidity of the last Government's pay norm, and their attempts to impose it through the very employers whose negotiating position with unions they had so considerably weakened by legislation, mean that the going rate has settled several percentage points higher than it need have done if the Government had stuck to their own monetary targets, their own cash limits, but otherwise kept out of the picture. We have learned from our own mistakes, but I can assure your Lordships that we have also learned from the mistakes of the party opposite.
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Our aim, then, is to have as much public discussion as possible and to make as much information available as we can. It is essential for employers and employees, the self-employed and the pensioner, the politicians and those who report them to be fully aware of the economic facts of life and how their individual decisions affect such realities. We believe that if people, with their innate common sense and responsibility, are given a chance to have a greater say in matters which affect them, they will act realistically and responsibly. If they do not, then goodness knows where we turn. That is why we shall look at ways of achieving a more concerted approach to economic management—a pay forum, if you like. That is why we want people to join trade unions, where it is appropriate to their employment, and, having joined, to make it easier for them to participate in collective decisions.
In wanting this, my Lords, we believe that we are in line with the wishes of the trade union leaders themselves. We are insistent only that the same principles of common sense and responsibility apply. That is why the implementation of our proposals for a selective and limited reform of industrial relations is one of our first priorities. I am sure that no one who experienced the industrial disputes of last winter will be in any doubt that some reform is necessary. We saw then how responsible collective bargaining had been undermined because of the power which rests in the hands of militant and unofficial groups, usually acting in defiance of their own trade union leaders. The purpose of our reforms is to ensure that where there is industrial power it is subject to the ordinary disciplines and fairness of our common law traditions.
I believe that there is very wide support among the British people, including the overwhelming majority of trade unionists, for our proposals to change the law on picketing and the closed shop and to encourage the use of secret ballots in union elections and in collective bargaining. We shall be consulting both sides of industry about the details of our legislative proposals, but no one should be in any doubt that we believe that legislation is needed in this Session of Parliament. The special role of trade unions in our society involves both power and responsibility. The special position

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which trade unions occupy under the law must bring with it its own obligations. The TUC recognised this when they issued their recent guidance on good practice in a number of important areas, including picketing and the closed shop, and we are on record as having welcomed such guidance. We must encourage the development of good practice, but we believe that the law has an important supportive role to play where good practice is not observed or is liable to be discouraged.
We have promised to hold full consultations. We want to act quickly, but we shall do so only when we have discussed our proposals with those who work in industry and have first-hand experience of the problems. We are not seeking to overturn our industrial relations system, but rather to strengthen it by tackling some of the abuses which threaten it. I believe we now have a chance to make such few, limited changes in the legislative framework for industrial relations as will at last take legislative controversy in this field out of British politics for several decades to come. We want enough limited changes in the law to ensure that we can forget about the law and get on with the job of earning our living as a country as well as that little surplus of leisure and security without which civilisation withers on the vine.
It would be unreasonable to pretend that these measures on pay and on industrial relations, the measures concerned with taxation and the new look at our manufacturing competitiveness are going to solve all the ills of the British economy. Our recovery will depend to a considerable degree on our ability to master inflation—and our inheritance in this respect is not an agreeable one. Not only have the Government taken over with inflation set on a rising trend—and already now into double figures—but also there are substantial inflationary pressures bottled up in the economy which will add to the difficulties in the months to come. It is inevitable.
We shall tackle this in two ways. In the first place, we intend to keep a firm grip on the rate of growth of the money supply; secondly, as an important contribution, we shall take action to reduce the scale of public borrowing. It is no use
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the Government asking the private sector to follow sound financial policies when the Government themselves do not do so. To allow excessive public borrowing in a regime of strict monetary discipline is a recipe for squeezing the private sector and, with it, our hopes for investment expansion and a reduction in unemployment. These are the main guidelines of the Government's economic strategy. We believe that they will result in a higher real wage which will be paid for by higher productivity in British industry.
There are many other areas, such as our plan for encouragement of small businesses, on which there has not been time to touch. Suffice it to say that we shall be following policies across a broad range with our sights set all the time on the central importance of restoring the dynamism and growth which has been so sadly lacking in recent years. No one expects us to guarantee success overnight. In large measure, it is a matter for individuals to see that the opportunities are seized and exploited. It is not the Government that can get the country out of its difficulties; what the Government can do is to provide a background against which the people themselves can get the country out of its difficulties. What we can and will do is to ensure that those opportunities exist and are worth exploiting. Above all, we intend to tilt the balance away from decline and stagnation towards success and the creation of wealth.
3.43 p.m.
Lord JACQUES: My Lords, I hope that without sounding presumptuous I may be allowed to congratulate noble Lords opposite on their appointments in Government—and especially those with whom I came into friendly conflict over the last five years. I hope that they will enjoy putting forward, and defending, the policies of their Government as much as I did. But I believe that, unfortunately for them, time will tell that they are fighting a lost cause. I thought that the last election brought out more than any other recent election the significant points of difference between the two main parties.
We Socialists believe that the interest of the community as a whole should be paramount; that these interests should take precedence over the selfishness of in-

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dividuals or of groups of individuals, whether those individuals be landlords or shareholders, salary earners or wage earners. We believe that the application of that principle is of paramount importance and should be accepted even though it might involve some little sacrifice of efficiency. There has been considerable progress made in the application of this principle in the post-war years. We have seen it applied in land use, we have seen it applied in rent control, in taxation, in the organisation of essential services like fuel, in the health service and, more recently, in education. I believe that the next few years will be nothing more than a pause, a pause for reflection; and that after that pause our people will see that that principle of the interest of the community has such great merit that they will support it wholeheartedly in subsequent general elections.
The things that I fear most in the policies of this Government are the consequences of their central economic policy. I could accept, at least in part, some of the things which are proposed on the periphery. Although I belong to a consumer cooperative movement and have done so all my life, I could accept a modest transfer of personal income tax to VAT, providing it was to be used to take thousands of our low-paid workers out of taxation. I would even accept it if it were used to increase personal allowances for income tax, although I know that the people who would benefit most would be those who pay the higher rates. Nevertheless, I would accept it because it would involve some element of incentive. But the temptation for the new Chancellor will be to use any money that he can raise on VAT to get rid of the higher rates of income tax because he can do that very cheaply and can get big headlines for doing it. But that would mean that the shoppers in the High Street would be paying for the tax relief of those who can best afford to pay.
The central policy of the Government rests heavily upon the control of money and credit. It has been put forward as a forward-looking policy. I submit that it is not only not forward-looking but is 50 years out of date. It is based upon two assumptions which in years gone by had some validity but which today are completely false. These are, first, the assumption that there is free trade. But we know from everyday observation that over large
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sections of our economy it is possible for trade unions to negotiate wage increases with companies and for those companies to increase prices to cover the cost almost immediately. That is not free competition; that is the use of monopoly power. Secondly, the central economic policy of the Government assumes that, as in the past, unemployment might inhibit applications for increased wages. It did that when workers were unorganised; it will not do it today. It is much more likely to give rise to militancy and to overmanning in the factories.
My Lords, I come now to a point where it might be felt that I am in some agreement with the Government. Five times during the post-war period we have had temporary incomes policies under both Conservative and Labour Governments. These policies have usually been hastily assembled and applied; they have usually been pretty rigid and have usually led to anomalies and discontent, and sometimes they have led to the floodgates being opened at the end of the period. I hope that we are at the end of that era. But I believe that if this country is ever going to have full employment without undue inflation, it has got to have a permanent incomes policy. I submit that the alternative to the Government's free-for-all is a permanent incomes policy.
I believe that we on this side of the House should in the next few years be giving all our attention, in consultation with the trade union movement, to devising a permanent and flexible incomes policy. I believe it is possible—I may be too optimistic—to do it along the following lines. First of all, I think that there should be a national body on which the Government, the trade unions and the employers are represented; but that body should not lay down any kind of norm. It should merely lay down guidelines for negotiators and conciliators. There should be free collective bargaining within strict limits. The limits should be that there should be two elements only for consideration in the negotiation and conciliation.
First, profitability and productivity. By that I mean past, present and future profits and productivity. Secondly, comparability of wages. By that I mean comparability within the industry and with other industries. Within the limits of

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those two elements—and those two only—there should be free collective bargaining, but on the understanding that if those who are party to the bargaining do not come to a conclusion, then there will be conciliation. At the end of a reasonable, agreed period, if the conciliator has not reached a conclusion and the parties have not reached agreement, then he will issue a report which will go to all the workers as well as the employers. Before strike action is taken there should be a ballot of those concerned. They will get the choice of whether or not they accept the report of the conciliator. I believe that a national incomes policy is absolutely essential; but it has to be tied up with the whole question of industrial relations and the avoidance of unnecessary strikes.
As an international trading nation we have to take note of certain factors which are affecting the pattern of international trade. They will affect us whether we like it or not. I should like to mention three factors which will affect the pattern of international trade. The first is the shortage of fuel and the increase in the price of oil. That has moved purchasing power; purchasing power has been shifted. As a result of the shift in purchasing power, employment in some industries and countries has been increased, and in other countries and other industries it has been decreased. That has already taken effect over the past few years; but it may affect us increasingly as fuel becomes more short in the next few years.
Secondly, there is the growth of manufacturing industry in developing countries. Here, as a Socialist, I have a real dilemma. I fervently believe that if there is a developing country, especially one which is a member of the Commonwealth and which, in the interests of its people, wishes to have a balanced economy, then even when it is against our interest we should help it and support it. We should do that because in the long run it will be beneficial to the Commonwealth. It will also be in the interests of international peace and that, in the long run, is in our interests.
On the other hand, I do not think that we should close our eyes to this problem, nor should we look at it with blinkers on. In some cases it is not all that it appears to be. I have in mind Hong Kong and South Korea. In both those cases what
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stands out most obviously is that American and European capital is exploiting cheap labour. The exploitation of child labour in those countries we would not have tolerated a hundred years ago. It is true of course that there is some benefit to the workers in the sense that, in spite of their long hours, in spite of their low pay, they are probably better off than they would have been had there not been that development. It is also true that consumers get some benefit; shoppers in this country get benefits from it. However, the greatest benefit goes to the entrepreneur who gets a much higher ratio of profit than would be the case if his investment was in America or Europe. The greatest disadvantage falls upon the workers in our manufacturing industries here at home; they are either out of work or are working short time as a consequence. Those are matters that we have to bear in mind.
A third factor which is affecting the pattern of international trade is the application of electronics. Reference has already been made to this matter. Unless we keep pace our decline will increase rather than decrease. As the noble Lord, Lord Soames, said, we have one advantage: North Sea oil. That is a God-sent advantage. Whereas in the past few years we have been importing equipment rather than exporting oil, we are now exporting oil rather than importing equipment. Where we are not exporting oil we are saving imports, which amounts to the same thing. We are now at the point of advantage and, in view of the revolution in industry which is taking place as a result of the application of electronics, we should be using that advantage to equip British industry. To face up to these problems we should be doing more and not less planning. We need our National Enterprise Board more than ever before. Instead of trying to restrict it and looking for ways of dismantling it, we should be encouraging it and using it so as it can make its contribution towards the re-equipment of British industry.
In conclusion, may I say that what I really fear is that the forces outside the control of the Government—and I have mentioned some of them—together with Government policy, which is out of keeping with the needs of our times, will give us unemployment on the scale of the 1930s. Having regard to our increased

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working population, that will number some 4 million people. Rabbie Burns said that toothache was the hell of all diseases. I believe that unemployment is the hell of all economic diseases. It is demoralising. The way in which it demoralises and the extent to which it demoralises depends very largely upon the character and environment of the individual; but it always demoralises. At one extreme you have the honest working man who feels that he is not wanted, that he has been put on the scrap heap far too early. He objects to the hand-out of what he regards as charity and, very often because of his experience, he is driven to the far Left or far Right of politics. I have seen it happen. At the other extreme you have the lazy chap or the chap who is inclined to be lazy and who by unemployment is encouraged to be lazy. He finds by experience that by making a little bit on the side to supplement his unemployment pay he can get along very nicely. That is equally demoralising.
The great majority of our people are honest working people who want to work for their living. I say to the Government: if as a result of your speculative economic policy you do cause great unemployment on the scale of the inter-war years, and if as a result of your financial policies you cause great hardship to our people who have the misfortune to be unemployed, you can expect a hell of a stormy passage from us on this side of the House; but if you succeed we will have the courage to compliment you.
4.1 p.m.
Lord HAWKE: My Lords, I certainly agree with some of the things that the noble Lord, Lord Jacques, said and I hope the Government will listen to his remarks about employment in Hong Kong and South Korea and, I would add, in other Far Eastern countries as well, because their industries are a positive menace to anything we have got in Europe. In the past I have sometimes noticed that a Government coming to power with a decent majority can go through a state of euphoria and then are apt to relapse into arrogance; but I do not think this Government are going to do that because they face such daunting problems, and at any rate we know that we have a Foreign Secretary in this House who will listen.
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The Government themselves have very great difficulties on the financial and economic front and they are pledged to a number of moves which will cost an awful lot of money. It will be very important indeed for them to explore every possibility of economy to pay for these things. I hope that in the course of time it will be possible to lessen the burden of the National Debt, which is rapidly creeping up to something of the order of £8,000 million a year. The last Administration borrowed enormous sums of money at very high rates of interest. Of course, there always seems to be a resistance to any fall in the price of money. The pension funds love dear money; the insurance companies like it and as for the banks, whatever they may say, I have never met a trader who did not welcome high prices for his commodity.
It does seem a bit anomalous at times that Governments seem to take pride in the size of the reserves, so much of which are only deposits which are represented by corresponding liabilities, and they have to pay high rates of interest to attract them here and keep them here so that their very presence ensures that the Government are in a state of permanent tenterhooks lest they take to their wings and depart. I have no doubt that a great search will go on for economies in the working of Government departments, but I have some doubt whether they will yield very much fruit unless there is a basic simplification of what Governments are to do. All the time there is demand from all quarters and all political parties for Governments to interfere more, act more and inspect more, and it is a change of mentality that is wanted if there is to be any substantial decrease in the cost of administration.
The noble Lord, Lord Peart, was very intent on defending the world of Quangos. I would not venture very farinto that world, but I think that somebody should look at them to see which are really necessary. We always have to remember that we have been borrowing at a rate of anything between 10 per cent. and 15 per cent. to keep them alive, and that takes a little bit of justification. One gets a sort of feeling that some of these speciality bodies have a vested interest in creating work for themselves.
I do not know whether we can call the Comparability Commission a Quango, but

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I wonder at times how on earth they can possibly deal with the various bucks which are passed to them. How can you possibly compare the pay of a civil servant who virtually cannot be sacked and has an index-linked pension with that of somebody in the private sector who finds it only too easy to be sacked on a reorganisation or a takeover, very often at a most awkward time of life? In addition, the civil servant may be entitled to much longer holidays. How can you evaluate all these factors in terms of cash? The answer is that of course you cannot: you have to botch it. The Government Actuary has made a valiant effort to prove that the indexed pension is worth only a small percentage of the salary, but in doing so he has had to make such assumptions that most people will find the result very difficult to swallow. They would really prefer the judgment of the market, which is that you cannot buy an index-linked pension in the market anywhere for love or money. I think a great deal of the work of this body probably lies in comparing the incomparable.
Some Quangos doubtless do useful work without being vital, and I wonder whether some of that work could be turned over to voluntary bodies. We are a nation with enormous quantities of these voluntary bodies—bodies to propagate this or prohibit that—and if indeed fresh bodies are required I am perfectly certain that we have more busy-bodies per 1,000 of population than any other country in the world.
In recent years there has been in Whitehall a great vogue for statisticians and economists. These gentlemen are at their best in telling you what you should have done six months ago. They can tell you what connection you ought to catch at Crewe when you get there, but they cannot tell you how late your train is going to be in arriving at Crewe, and I am not even sure that they are always able to collect the right figures. As an example—and there has been some talk about this lately—we all know that, although output in this country is apparently stagnant, an increasing amount of work is being done by people for cash either in their spare time or as a definitive career. It is known colloquially as "making a bob or two". Anyone in London who has had reason to call in a
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plumber, an electrician or a carpenter knows that it amounts to considerably more than a bob or two, and I very much doubt whether the statisticians have the slightest idea of what the total output from these sources really amounts to; but I know it is very big indeed and it is increasing.
The present Government may say that if we reduce income tax this phenomenon will vanish. I do not believe it for a moment. Even if we reduce income tax to the liberal level of 20 per cent. I do not think it will disappear, because basically it springs from the fact that over the years Governments of all sorts—and Conservative Governments have been just as bad as Labour Governments—have imposed enormous taxes on the better off which, through inflation, have become more and more progressive. The result is that the people concerned have gone in for more and more sophisticated schemes of tax avoidance. When you get that up at the top, the people at the bottom do not have these schemes but they go in for the only alternative, which is pure, simple evasion. Be that as it may, the statisticians and the economists at any rate, have been fairly well discredited, and I am sure that a great many of them could depart from Whitehall.
I suggest to the Government that there is one area of what might be called avoidance which really needs studying; that is, the question of personal transport. More and more firms are providing their staff with cars at the firm's expense, very often with the running expenses thereof, ostensibly to do the firm's business but in practice to convey the user to his office. If anybody buys a season ticket for a bus or a railway train in order to get to his office, he cannot charge that against tax, so that in practice the taxpayer is subsidising the car commuter to avoid the form of transport for which the taxpayer ultimately pays the loss. The matter needs looking into with a view to providing that the season ticket holder, whether by bus or by train, can charge that amount against tax as expenses. I believe that there is a very anomalous and unfair position at the moment, and such a change would be extremely popular.
We live in a dream world if we think that we can get inflation down to 5 per cent. Our price level is only just now

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reflecting the rise in oil prices of 1974–75—it has just worked through. Oil and coal are not only a form of energy but are very important raw materials, and our price level depends very much on their cost. We have just now been faced with further rises from the oil countries, and the coal monopoly never lags far behind. Meanwhile, dozens of the poorer countries are sinking deeper and deeper into bankruptcy, as a result of these crippling oil bills. They can be kept afloat only by loans and gifts from other countries, which can he repaid only out of further loans and gifts. It is a vicious circle. I hope that it will be part of our foreign policy to put to the Arab world the effect of their monopoly exploitation, in the shape of world stagnation and the encouragement of revolution, and to remind them that they are not immune and their rulers would be wise to build up goodwill outside, in case they themselves have to cut and run for it. The parable of the unjust steward would not be amiss.
I cannot conclude without mentioning the gracious Speech. I should like to say that, though I am not a Liberal, I regret that there is no mention of electoral reform, for without such reform I feel that there is a danger of this country being taken over by Marxists, through a Marxist take-over of the Labour Party.
4.14 p.m.
Lord BALOGH: My Lords, your Lordships would not expect me to congratulate the serried ranks who are occupying ministerial posts in this Government. If I, as an economist, have one factor to console me, it is that it all looks very much like 1970. Social observers have many handicaps imposed upon them by the nature of their subject. None of them is as grave as our incapacity to undertake controlled experiments. History does not quite repeat itself, and the very fact that things past codetermine things future renders forecasts treacherous and lessons learned from the past often misleading. Eternal truths enunciated by the unwary, such as Sir Keith Joseph, first on the all-cure quality of floating exchanges and, more recently, on fixed and very high rates of exchange, have a tendency to collapse under the weight of events. In economics, a year seems an eternity.
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But as I look at the Benches opposite the thought strikes me that we have here a déjá vu, and as perfect a repetition of the past as our imperfect lives can offer. Mrs. Thatcher, to me, seems very much like Mr. Heath mark 1, only perhaps more energetic. Her principal advisers, if not the very same men, are rather good animated copies from Tussauds—all good fighters in the cause of freedom for the well-to-do, and the devil take the hindmost à la Friedman. It will be fascinating to watch the monetarist experiment re-open; an experiment which my right honourable friend the ex-Chancellor pursued with such notable lack of success. We shall also bear witness to the education in economics of the pint pots from which quarts cannot be drawn, even by the Transport and General Workers Union or NUPE; the education in economics of current leaders, which might be as costly as the education of Mr. Jack Jones or Lord Scanlon in 1979. They all ought to have followed last winter the wise advice of the then Prime Minister, which they did not.
In Austria, there is a very good example to show what can be achieved. There is a permanent incomes policy and permanent institutions controlling and guiding it. Unemployment is below 3 per cent. and the growth of the national income, in real terms, is above that level, with inflation running at 2½ per cent. But, of course, there is a balanced policy. The restraint is not unilaterally imposed on workers, while their chairman gets away with an increment in yearly salary equivalent to a decade's earnings for the average manpower; nor do civil servants get 25 per cent. when the Government intend to keep the inflation rate below 10 per cent.; nor is militancy provoked by their selling shares of nationally owned companies on which a 50 per cent. capital gain is earned within a year.
I sympathise very much, especially on the analytical side, with what the noble Lord, Lord Soames, has said. His analysis of the world situation and of the British dangers is one which we can all accept. The difficulties arose at the end of his speech—which was, logically, perfectly satisfactory up to that point—when he suddenly spoke as if money supply and the PSBR could really make matters much better in controlling the economy. As my noble friend Lord Jacques explained,

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that type of policy can operate only through mass unemployment. It was good to hear some reaffirmation, from both the Labour and the Liberal Benches, of the fact that we need to have a permanent incomes policy. But if the view of the noble Lord, Lord Soames, is correct, that this is impossible in this country, then I foresee a great deal of trouble. As I said, we are confronted with a dangerous situation. The sheer bargaining muscle of our trade unions has been immensely strengthened by two things—a highish employment rate and no serious fluctuations such as those in 1929 or 1937. But at the same time there was a very sharp concentration of power on both sides of industry.
Industrial concentration enables cost increases to be shifted on to the consumers. Resistance against excessive wage claims crumbles, especially in the private sector where prolonged strikes might well mean bankruptcy. While the sheer borrowing power changed in favour of labour, the distribution of income and capital do not correspond to the new situation, and here is a contradiction and a source of danger almost unparalleled. I know that it is claimed that national income and wealth distribution has improved, and I know that a Royal Commission is burrowing away to show it. Unfortunately, they will never get to their aim. When we hear groans about the high level of taxation from the side opposite, we think of the perks which are never mentioned—the chauffeur-driven Rolls, the flats in London, the gourmand get-togethers, the business trips to Cap Martin. All this true income to the few represents costs of production to the many.
I have repeated more often, and over a lengthier peiod of time than I care to remember, that restraint on the part of the well-to-do is a precondition of restraint by the poorer. This we have not heard from the noble Lord, Lord Soames. We have heard about legislation but we have not heard about a balanced approach to the working classes of this country. Without consensus on incomes and a general social policy, we shall not get peace of mind and the will ever to master inflation. We shall continue to have social unrest such as we had last winter. We must have a permanent incomes policy firmly based on consent and handled by a single agency.
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So long as a multitude of agencies co-exist, each handling the salary of a single profession or of a single industry, we shall have leapfrogging inflation. The process will be exaggerated if the principle of comparability is accepted and introduced into the law. I am convinced that the neglect of these elementary lessons which ought to have been learnt between 1964 and 1970 was one of the most important reasons for the failure of the Labour Government in the election.
I do not wish to discuss in detail today the problems that arise if an attempt is made to control or manipulate the economy mainly or exclusively by monetary and fiscal policies, except to say that those methods depend on mass unemployment to keep inflation in check. Not for nothing have the OECD countries 16 million, or more, unemployed, since monetarism made its triumphal march through the treasuries and central banks of the industrialised world. We shall have ample opportunity to consider this when we discuss the Budget, and in any case it would be decent to await the first fruits of the teaching by the civil service of the incoming Ministers. I hope, however, that neither will be seduced or even influenced by some mechanical and very scientific-looking gadget as a criterion in the preparation of the Budget.
It is very satisfactory for Ministers to find a shelter from the heavy burden of the day-to-day analysis of complex situations. How much simpler it is to say that the money supply must be brought under control within target limits and that the PSBR should be cut. If the money supply has these wonderful powers, why not bring inflation totally under control? Why not have 5 per cent. as a target instead of 8 to 12 per cent.? And a 5 per cent. growth target is more legitimate than 9 to 13 per cent. The gracious Speech is typical of the inconsistencies of this approach. It promises simultaneously an increase in investment and a tight money policy. It hopes for confidence and believes in the reduction of taxation. Yet interest is payable whatever happens to profits. Taxes are paid only when a profit emerges.
The basic assumption of the new approach by our Government is false. Let me give your Lordships a warning example. It has been widely reported

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that a proportion of BP shares—crassly undervalued even at their peak and now very much further depreciated by these rumours—is to be sold to the market. This will diminish both the PSBR and the money supply, yet if the Government spend the money they receive for these assets in current expenditure the transaction will be highly inflationary, despite the fall in the PSBR. Incidentally, I very much hope that potential buyers will be warned that the shares will be secured back for the nation at not a penny above the price which they have given for them. It was Mr. Heath, not Mr. Callaghan or Mr. Wilson, who felt the exorbitant power of the supranational corporations and complained bitterly of their refusal to serve Britain first and foremost. Because of the present situation which we have created, this could not happen now.
Through my persistent questioning of the Ministers of the previous Conservative Government and through successful Motions, I have saved the country some money which would have accrued to foreign companies as profits and would have left Britain, mostly over the exchanges, thus imperilling the balance of payments. This has not been mentioned by the noble Lord, Lord Soames. It was because it was taxed that we got money, but 60 per cent. of the oil has been given away to foreigners.
I personally think that the system was insufficient from the beginning and that it ought to be thoroughly reformed. Unfortunately, our financial authorities were not up to an expert analysis of the requirements. Still, at long last, we got a reform accepted which will mitigate the worst shortcomings. If well handled, the revenue from oil should carry the main proposals of the Conservatives without increases in prices. It is to be hoped that the Government will cease their tactics in opposition of preferring foreign profits, if private, to national benefit, if public. They will be helped in this patriotic conversion by their natural instinct to lower their own taxes.
I very much hope that I shall be proved wrong and that the liberated British entrepreneurs will, like tigers, storm forth to perform miracles, and, guided by the invisible hand, will lift us up to achieve a wondrous transformation of the trends of
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the whole of the last 100-odd years. For myself, I foresee a consumer boom, eating up the windfall of oil and gas, further pressure on our international competitiveness and further class dissension—indeed, a boring repetition of our lamentable history.
4.30 p.m.
Lord LEE of NEWTON: My Lords, in the course of his speech the noble Lord, Lord Soames, told us of the great problems which the Government have inherited from their predecessors. This is the kind of thing one always expects to hear when power changes hands. I wish he had used a little more imagination in the kind of language he deployed. My noble friend Lord Shinwell will remember, as I do, the meeting, I think of the Parliament after the 1951 election, when we were told by the late Captain Cruikshank of the horrors that they had inherited. I thought he did it delightfully and I have had a soft spot in my heart for him ever since. He told us that when they reached their departments they found the cobwebs hanging from the candelabra. That really expresses it all, and I was rather disappointed that the noble Lord, Lord Soames, could not vie with that kind of language.
The more I study the contents of the gracious Speech the more I understand the precaution taken by the noble Earl, Lord Onslow, in coming armed to the teeth when undertaking the task of recommending its contents to us. The new Prime Minister has made it clear on a number of occasions that she is no admirer of consensus politics, and now indeed we have the proof of that in the content of the gracious Speech. It seems to me that the Prime Minister leaves no option to those of us on this side of the House but to respond in pretty well the same spirit. By their threatened attack (which my noble friend the Leader of the Opposition mentioned) on the National Enterprise Board and the Price Commission they repeat the follies of the Heath Government in abolishing the Industrial Reorganisation Corporation and the Prices and Incomes Board—follies which resulted in that Government having to spend the second half of their life in trying to reconstruct those bodies in all but name.

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They then turn their hand to emasculating the profitable sectors of the publicly owned industries by handing them back to private enterprise while leaving to the public the task of financing those industries which are not profitable. I remind them that the energy producing industries are either wholly or partly in the public sector and to cause grave unrest among them at this critical period for our energy supply would he an unmitigated disaster.
Is there not indeed a very deep cynicism in the content of that part of the gracious Speech when they tell us that there will he actions which will disrupt the conduct of those industries in the public sector at the very moment when the nefarious City exploits of Mr. Christopher Selmes have brought once more to light the unacceptable face of capitalism, without the Government giving the slighest intimation of any action to stop that kind of thing? Perhaps they are trying to lure Mr. Selmes back to Britain along with Mr. John Bloom and other whizz-kids, at the thought of some more easy pickings, but this time in the public sector. It seems to me that on the subject of Mr. Selmes they would do well to take advice from the chairman of their 1922 Committee.
I have no wish to dispute the fact that the Government are quite entitled to put into operation the economic measures which they advocated at the election and which were accepted by the southern half of the nation. Indeed, if they do there will be considerable inroads made into the advantages derived by large numbers of people from the provisions of the Welfare State. According to the break-down of priorities that I was reading in one or two of the opinion polls, the two most popular demands of very considerable numbers of the electors were reductions in income tax and the preservation of those welfare benefits which cost most, such as health, education, housing and so on. It is now the task of this Government to explain that they cannot have both and that those who have been paying little or no income tax are going to face a reduction in living standards in order that those who pay most may increase their living standards. Reductions in living standards will of course be even more pronounced if, when the Budget proposals are announced, VAT
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is increased in the sacred cause of substituting indirect for direct taxation.
These are simple illustrations of the effect of the decision to transfer resources from those who need them most to those whose needs are fewer. Nor do I believe that it is enough for the Prime Minister to speak as though she has made an original discovery when she argues that if we produce more wealth we can have higher living standards—a point which the noble Lord, Lord Soames, made today. To my recollection every Government since the War have been saying the same thing, and while of course living standards have improved I submit that there is nothing in the gracious Speech to suggest that the present Government have anything at all which will enable them to break records in the field of productivity and increasing wealth production.
The gracious Speech also mentions a fair balance of power and responsibility in the trade unions. Well, in due course we shall see what that means, but the relationship of the trade unions to the Labour Party was made into a prime issue during the campaign, the object of course being to pin on to the Labour Party the unpopularity which came from the strikes and the unrest of the winter. I give them the credit that their campaign succeeded. Even that was not without its humorous side. At one and the same time the present Prime Minister was informing us that many trade unionists were muggers and wreckers and that more of them than ever before were going to vote Tory.
I found myself wondering whether there was a hidden connection between the two points. I hope that it had nothing to do with the emergence of Mr. Pete Murray as an adviser to the Tory trade unionists. Perhaps they were trying to pass him off as the other Mr. Murray, but I would not know about that. In any event the Prime Minister was obviously quite justified in claiming that large numbers of trade unionists would vote Tory, and I think this party has the job of examining why. It was certainly not because of any fall in living standards during 1978. With wage increases and tax reductions it was a year in which living standards increased enormously—something like 6·3 per cent. Indeed it appears that the average wage increases were about 14 per cent. so there was no noticeable restriction on advances.

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But of course all this was happening while Ministers were still proclaiming that they were insisting upon a 5 per cent. ceiling. Whether people believed it or not I do not know, but certainly it was not happening.
On the other hand, both the Tories and the TUC were preaching a return to free collective bargaining with no Government interference, so despite the fact that for years every indication was that the majority of people, including trade unionists, had pronounced in favour of incomes policies and against a free-for-all, once the nation was offered by a potential Government what they took to be far greater advances than the figure quoted by Ministers, they jumped at it. This Government have now to live with that position or disillusion millions of those who believed them.
The irony of the events of last winter is that with the breakdown of incomes policy—and I agree so much with what my noble friend Lord Jacques was saying on this subject—the very collective bargaining which the Tories, led by Mrs. Thatcher, had been advocating reduced the nation to sheer chaos, while they blamed the Government whose policy they had done so much to defeat. They got away with it, and they have now inherited the inflation which inevitably must follow the defeat of the incomes policy.
The remarkable thing about last winter's developments is that those unions which are by their very nature industrially powerful behaved very reasonably indeed. One has in mind the settlements which the NUM and the railwaymen made; local agreements in engineering and by the power workers: all those things of which people were fearful passed without any disturbance at all. But the comparatively new phenomenon with which we were confronted was that organisations with little or no industrial power, and indeed the majority of whose members are part-time workers, were sufficiently ill-advised to believe that they could achieve their aims by the kind of activity we saw instead of placing their reliance on incomes policy.
Why are they low-paid workers? They are low-paid workers because they have not got the power to demand decent living standards. That being the case, for them to opt to go back to collective bargaining is to opt to remain low-paid workers. This is quite inevitable. But there was a
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sad reaction to their feelings of frustration in that they then decided that if they had not got the industrial power they would be diverted to mounting a quite deliberate attack on the public. It was a type of activity which did more to bring about the election of the present Government than anything that Saatchi & Saatchi or any member of the Government could do. Of course the media jumped at it with both hands and exaggerated it for all they were worth. It has also brought feelings of anger and despair to large numbers of men and women who have given a great deal of their lives to building the most responsible trade union movement that the world has ever known.
I was pleased to note that in his speech at Blackpool to the Civil Service Union on 11th May—after the election, I hope people will notice—Mr. Len Murray followed up the TUC agreement with the last Government by saying that the TUC was committed to bringing in guidelines on the conduct of disputes, union organisations, the closed shop and so on. He was then arguing against attempts to introduce legislation to regulate industrial relations. He was pleading for consultation before decisions were made. Now we read in the Queen's Speech that the Government are definitely going to introduce legislation no matter what Mr. Murray or any other member of the TUC has to say. What is the good of discussion if the die is already cast? I suppose that if then there are discussions which break down it is to blame the TUC anyway for the breakdown.
On this subject I see words in the Speech that I do not understand. Perhaps somebody from the opposite Front Bench will tell us what is meant by encouraging
"wider participation of the great majority of members in the affairs of their unions".
I think I know the union rule books of practically every union in Britain. I defy anybody on that Bench to show me where there is any restriction whatever on any member of any union from taking as wide a part as he wishes in the affairs of his union. I just do not understand what that kind of nonsense is about.
To look to the future, I think it would be a great mistake for all of us to believe that the methods that were used by some strikers last winter are a sort of one-off

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job which cannot be repeated. I think they are a new development in the collective bargaining process which in varying degrees will continue from those who, while having little industrial power, insist upon opposing incomes policy. They include very many of the so-called white collar unions, such as the air controllers, who set out to ruin people's holidays. I recall that, when they began it, the chairman of their strike committee was an official of the Conservative trade unions. I believe we on this side must watch this development. We are seeing an increase in the number of unions which have no allegiance whatever to the Labour Party—they are certainly not affiliated—the teachers, the civil servants and so on. And yet the same tactics of trying to pin on the Labour Party all the problems of unrest in industry will continue.
It must be made abundantly clear that, with the rise of unions which have no possible relationship with us, we certainly cannot control their activities and we want nothing whatever to do with the backwash of the things they do. The revolt of the middle class, as well as the manual workers, who use the breakdown of their union power from the official leadership to the localities, is something which is not conducive to finding solutions under the ideas of collective bargaining. There are thousands of agreements being made every day which are not within the compass of the trade unions themselves. How in heaven's name do you correlate all this? How do you find a way in which any Government can in fact plan the economy as a whole when they have not a clue as to how that portion of the national income which will go on incomes is being subdivided.
If the Government really want to tackle the industrial problems we all have, why not start with the pay relationships between the low paid and the highly skilled who are concerned about their differentials? It is a huge problem that needs a great deal of thought. It has nothing to do with the puny nonsense talked about in the Queen's Speech. There is the problem of the size of the manufacturing sector, which is now in decline. The noble Lord, Lord Soames, said a lot about this. What type and what size of manufacturing sector do we need? What efforts are to be made?
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We are told that public expenditure is too high. Are the Government going to attack the enormous sums now being used to bring more and more trained people to the use of our manufacturing sector? Quite frankly, if that is to be the type of saving they are going to make, the manufacturing sector will decline to a smaller and smaller proportion. What are they going to do about that kind of problem?
There is the problem which has arisen recently in the North-East. We have the National Enterprise Board going into partnership to produce titanium, a vital ingredient of the manufacturing sector. What are they going to do about it? If they are going to emasculate the NEB, who will take over from them in enterprises of that kind? These, then, are the real problems of the manufacturing sector. There is the effect of the coming of the silicon chip and its influence on jobs and on the training of people for new processes. If they really want to talk about the problems of the manufacturing sector why are these problems not being tackled in the hope of being resolved? I see that Mr. Prior was saying that there is no scope for a decrease in the working week. Good heavens! what is innovation of this type about? What is the point of substituting machines for men if men are to be expected to work the same number of hours? I hope that, instead of the rather futile nonsense which is mentioned in the gracious Speech the Government will begin to examine some of those problems which are now almost at a critical stage. For, on those and related problems, the gracious Speech reveals a marked poverty of thought which bodes ill for the future.
4.50 p.m.
Lord HASTINGS: My Lords, while I was listening to the opening remarks of the noble Lord, Lord Peart, in which he made a strong plea for a non-doctrinal approach on the part of the new Government, I could not help thinking how much better it would be, how much for the greater benefit of the greater number, if the affairs of this nation were conducted in the atmosphere of your Lordships' House. However, having dismissed that possibility as a Utopian dream, I rather wondered why the noble Lord had not addressed his remarks to his own Party during the

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past five years. I know that the recent Prime Minister, Mr. Callaghan, has set out to prove that he is a great unifier of the nation and that the Conservative Party is of a singularly divisive character. Nevertheless, in my memory I cannot think of any other Government which have succeeded in actually dividing one trade union against another, in dividing individual members of the same trade union against each other and in dividing the skilled trade union members against the unskilled.
I wish to make just two points in connection with the remarks in the gracious Speech about the reform of trade unions. I shall dwell on that matter very briefly because we have just heard a long and knowledgeable speech entirely about trade union reforms. I speak in this connection as someone not involved either with manufacturing industry or with trade union organisation, except as regards agriculture which is an entirely different field of operation. I speak rather as an ordinary voter, and the ordinary voters in the recent general election decided quite definitely that they wanted something done about trade union reform.
The first point that I should like to make is that the gracious Speech merely says that the Government will seek
"to provide for financial aid for postal ballots".
I should like to point out that there are two forms of ballot, only one of which was mentioned by the noble Lord, Lord Jacques—namely, a ballot before going on strike. However, the other ballot is the one that takes place in connection with holding office in a trade union. It seems to me, as an outside observer, that the Government, with the type of overall majority which they have and with the expression of the will of the people who voted in the general election for something positive to be done, should really make a secret postal ballot for the holding of office in trade unions a statutory obligation. We know that there are trade union leaders who have been elected by a very small minority—as low, I believe, as 10 or even 5 per cent. of those taking part. How can a man then carry the authority he needs or carry credibility in the nation if he is so unrepresentative of the majority of trade unionists? I believe that there would be a great strengthening of the trade unions if there were a statutory ballot for the
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holding of offices. That would be to the benefit of the unions and their members as a whole. If that were to happen then in my view many of the other reforms would be unnecessary because other changes would follow in due course.
Secondly, the noble Lord, Lord Lee of Newton, asked what was meant by "participation" in union affairs. It seems to me that there is an omission in the gracious Speech because no mention is made of participation in the businesses in which the trade union members are employed. Within the past year or so we have seen the publication of the Bullock Report which did not seem to meet with the overall approval of any political party, the TUC or the CBI. However, I imagine that there must be some good in it. I believe that we should be thinking along the lines of further union participation in business affairs. If the new Government are to introduce trade union reforms, I have no doubt that, despite the recent conciliatory remarks of Mr. Callaghan, there will be a great deal of opposition from the Labour Party and a great deal of opposition from some of the union leaders. It is imperative that we should bring in reforms which are not only fair and reasonable in our view, but which are seen to be fair and reasonable from the point of view of the general public and in particular trade union members.
In any law reforming trade unions, with or without agreement, I should like to see another statutory obligation concerning the setting up of at least advisory councils in businesses, along the model that pertains in West Germany. I do not want to see responsibility for management or workers on the board—which I believe is not acceptable either to management or to trade unions—but, there should be advisory councils where matters can be discussed, new ideas put forward and explanations made. That is at least a step in the right direction of partnership. For goodness sake, let us get rid of the terrible attitude of "them" and "us", which is fermented, unfortunately, in some circles which I need not name by a minority of people, whether politicians or militant trade unionists. It is a terrible situation, and until we get away from the attitude of "them" and "us" I do not see any future for the prosperity of industry in this country. Therefore, I

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should like to suggest that if we bring in these reforms—and I have suggested going even a bit further than the Government have said that they would go—and make it a statutory obligation for there to be ballots for office, let us balance that with statutory advisory councils in industry where a spirit of partnership can be built up.
We can carry the matter even a little further. I do not think that this can be done by law, but I do not see why improvements cannot be made as regards sharing schemes, which are already in force in some businesses, by actually sharing profits as well. I do not mean a piece of paper on which one gets a small return annually or which one can cash in: I mean cash, because that is what counts. If we can do that balancing act I believe that we can put forward reforms for the benefit of unions and industry as a whole.
That leads me to the next matter about which I should like to talk, namely, agriculture, which of course will particularly interest the noble Lord, Lord Peart, and the noble Lord the Leader of the House, both of whom, as we heard in the friendly exchanges yesterday, were previously Ministers of Agriculture. In fact, the first speech that I ever made on the Front Bench in this House concerned the introduction of the Agricultural Estimates, and I spoke on behalf of the noble Lord, Lord Soames, when he was Minister of Agriculture in another place. He did me the honour to sit on the steps of the Throne—at least I hope that it was an honour—to hear what I was saying on his behalf. Perhaps he did so in a supervisory capacity.
At any rate, be that as it may, quite recently the Agricultural Workers' Union has let it be known that it is to put forward a claim for a basic wage rate of £100 a week, which, of course, is just over twice the present basic rate. I am sorry to say that that was accompanied by the usual remarks (which are repeated every year) about the meanness of the farmers and that it is entirely their fault that they do not pay higher wages. As a farmer on some scale myself, 1 happen to believe that the skill of the agricultural worker is at least equal to that of workers in the car manufacturing industry in this country, and in some cases is considerably higher. I do not see why
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they should not be as well paid. Yet, when I read in one of the nation's newspapers not long ago a schedule of the wage structure in this country divided into four categories, and found that the miners, the teachers and a few others were in the top category and the agricultural workers were in the bottom category, I am hound to say to the farmers that I thought it absolutely disgraceful. I should love to pay my men what they want. I think that they are worth it, but they should not blame me or my fellow farmers for not doing so, because ever since the war all Governments have followed a cheap food policy.
We speak of consumer subsidies to the farmers, but, in fact, they have always been subsidies to the consumers in order to keep food cheap. It makes political sense because over 90 per cent. of our population live in urban areas, and that is where the votes lie. However, when we joined Europe we immediately ran into trouble because food there is very much more expensive. In spite of inflation, we still have relatively cheap food here compared to the cost of food on the Continent. I suppose that in due course the cost of food here must rise to the level of that on the Continent. Until we abandon the cheap food policy—and admittedly this must be done gradually, over a period not of one Government but of two, which means a decade—I do not see how the agricultural workers will be paid the sort of wages which they should be paid.
I remember nine or even 10 years ago a debate on agriculture in this House when it was pointed out that, whereas the average real income had risen by 25 per cent. since the war, that of the farmer had risen by only 8 per cent. The situation has improved since then, but in real terms it is nowhere near the average rate of improvement, even now. Until it is, we cannot pay the agricultural worker what he is worth. I believe that that is wrong; it is a shame.
Agriculture is a subject which must be studied by the Government, who made only a very few remarks on agriculture in the gracious Speech. They said the usual thing which farmers are used to hearing. They said that the agricultural industries must have an opportunity to make their full contribution to the economy, and to compete on fair terms, which I imagine is more a reference to Europe and the

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difficulties in the European Economic Community. However, during the course of this Government I should like to see a real study in depth of the long-term future of agriculture, including its capital structure, land ownership and taxation of all sorts. In agriculture there is such confusion over subsidies and rebates; they vary; they go up and down and no one knows where he stands. There is also capital transfer tax, and in the area of forestry in particular I hope that legislation will be amended to what it was before. It is a wonder that private owners plant trees at all nowadays, but some—because, thank goodness, they like trees—still do. However, there is this long-term problem which needs studying in depth.
If, for example, the Labour Party had won the last election, it might have sought to introduce its proposed wealth tax. I do not know whether it had sorted out how that tax would have applied to agriculture. It is hard to believe that it had done so because it would have altered the entire structure, not only of land ownership but also of agricultural production, and I think disastrously. However, the situation is bad enough because of taxation, in particular capital transfer tax. If in the long-term it is decided that it is wrong, economically or morally, that there should still be large landowners but it is decided that there should be owner-occupiers owning up to a limited number of acres—say, up to 1,000 acres and no more, but noble Lords can take whatever figure they like—we still have to work out our capital transfer tax and what will happen in the future, because we cannot build up only to destroy.

Agriculture is an entirely separate subject. It has never been studied in depth by any Government since the war. I plead with this Government to make such a study in depth and to introduce legislation which will enable the farming community to increase its production and make the necessary contribution which it should make. The Government can do that during their term of office, but I ask them to consider the future of the whole of the agricultural industry, for I believe that in the second half of the 1980s we shall have to tackle the future capital structure and ownership of the land, coupled with the abolition of a cheap food policy and the proper payment to
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agricultural workers, putting them in the top category where they belong, together with the miners and car workers, for we cannot live without food.
5.6 p.m.
Lord KALDOR: My Lords, as a loyal supporter of the Labour Party, I cannot say that I welcome the outcome of this election. However, I can say that I have mixed feelings about it. After struggling manfully for years with urgent day-to-day problems and emergencies, with accelerating inflation—which they inherited from the previous Government on account of that Government's threshold agreements which had to be honoured—with the sudden onset of the oil crisis, the world recession, the sudden fall in the pound and so on, the outgoing Government were, as time went on, progressively less able to formulate a coherent long-term strategy for national survival. They certainly did not say how they were going to arrest or reverse the de-industrialisation of this country if they were returned to office. It is difficult to say what they would have done if they had been returned with a strong majority. In order to formulate and agree upon new policies the Party badly needs a period in opposition for recuperation and reflection.
On the other hand, one can hardly be happy with the alternative of having a Government with a strong majority committed to a strategy based on the strongly ideological orientation of the present leadership of the Conservative Party, if one is convinced, as I am, that that particular strategy is wholly misguided and that its pursuit will make our situation a great deal worse and not better than would have been the case if we had just drifted on with no strategy at all.
However, looking at the matter from an even longer-term point of view, I can also see positive advantages in the present outcome, for it provides a unique opportunity to settle for good the great philosophical issue which has plagued our political life and our economic progress for well over 100 years. I refer to the philosophy of laissez-faire. Despite its French name, it is a philosophy which is almost entirely British in origin. It owes its success to the English Utilitarians like Jeremy Bentham, who was the real father of the

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Manchester School and whose general rule, in his own words, was that:
"Nothing ought to be done or attempted by Government";
or, to take another of its fathers, to Herbert Spencer, who in 1851 published a book with the intriguing title State Education is Self-Defeating, and 30 years later published another book called Man versus the State. This philosophy has frequently been condemned and pronounced dead and buried. It was condemned by the Conservative economist Cairnes as early as 1870 in his famous inaugural lecture. It was condemned a generation later in the early 1920s by a Liberal economist, Keynes, and the authors of the Yellow Book. But, in spite of all this, it is now bursting into life again embraced by a Tory Party, which historically always opposed it. It was opposed by Shaftesbury at the beginning of the 19th century, by Benjamin Disraeli, and by Joseph Chamberlain, to mention only a few of the leading Tory statesmen. Like true converts, the new Tories propound the creed with the fervour and vitality of a new religion, and in total oblivion of its dismal past record.
I confess that I can think of few historical situations in which the rigid application of the principles of the free market and the suppression of State interference would he less appropriate than in present-day Britain. Our industrial future is in serious jeopardy, and we arc in acute danger that the century-long period of our relative decline—a decline relative to other industrial nations who started much behind us and then surpassed us—is about to turn into an absolute decline with falling production, employment, and falling real income year after year, and with all the stresses this is bound to cause to our social fabric and to the whole of our institutional heritage. Indeed, if it had not been for the godsend of North Sea oil we would be in that miserable state already. I was glad to hear this afternoon that the Leader of the House confirmed that this is indeed their view, and not just ours.
Judging by the rate at which our industrial situation is worsening, the revenue from the North Sea, which will go on increasing for some years, will only postpone the evil day by a few years—by five years at most. There is a steady
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stream of factory closures, of industrial areas becoming derelict, of whole industries disappearing in front of our eyes: the motor cycle industry, where we were leading world exports 10 years ago, has gone completely; the motor-car industry, which is still one of our major industries, is disappearing fast, while others are kept alive only with the aid of large-scale Government subsidies.
The noble Lord, Lord Soames, said that he is well aware of the fact that this process of decline has gone on for a long time, but he thought that in the last 10 years there was an acceleration. I am sorry that he is not here now to hear what I have to say. Indeed there was an acceleration—and some of us predicted it—as the ineluctable consequence of Britain joining the Common Market in the industrial conditions we were in as against the industrial situation of the other Common Market countries. If Lord Soames wishes to have evidence of that, I shall be only too pleased to send him all my papers published in 1970 and 1971 in which I predicted the "negative" dynamic effects of membership in the form of a decline of British industry, and what has actually happened has fully borne out one's expectations.
Now we have Sir Keith Joseph—he has not spoken yet as Minister of Industry—and if he is true to his beliefs (and I am sure he is true to his beliefs, he is an honourable man and of deep convictions) he will do all he can to stop the subsidies, to close down and sell all the loss-making enterprises. But what I am sure he fails to see is that the net result of all this activity will make us more, and not less, vulnerable to foreign competition. It will make us less, and not more, able to protect ourselves in case of a national emergency. It will make the shrinkage of our output and income, and the misery of regional decay and mass unemployment greater and not less than it would be otherwise. That misery will be no less acute for its being concentrated in peripheral areas; in Scotland, in the North of England, in Northern Ireland, in Wales and in Cornwall. Those of us who are fortunate enough to live in the South-East—close to Europe—will be relatively shielded from it, and thus not Sufficiently aware of what will be going on in the rest of the country.
The fundamental error of free market philosophy resides in the notion that profit

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is the true and the only relevant criterion for deciding whether a particular form of economic activity is of benefit to the nation. It is only under highly abstract and unreal assumptions that commercial profit or loss can be treated as any certain indicator of social gain or loss. The main assumption of thesis —which is manifestly not true in our Present circumstances—is that the labour and other resources which are released by the cessation of a loss-making activity have a more profitable alternative employment waiting for them. However, if closing down an aero-engine factory (I use this for the sake of example) like Rolls-Royce does not lead to the re-employment of its many skilled workers and technicians in other more efficient factories but at best to their emigration to some foreign country; if the cessation of shipbuilding on the Clyde means only that fewer ships will be built but that nothing else will be produced instead, in these circumstances the application of the profit criterion is not a road to salvation; it is a road to ruin.
It has become so fashionable to run down our nationalised industries as a result of the chorus of ceaseless derogation by the media that it requires an act of courage to speak up in their favour. Whatever may be said against State enterprises on account of excessive bureaucracy, and so on, pales into insignificance in comparison with the merit of State enterprises in having kept up (until recent years, at any rate) a large flow of capital investment as a result of which their capacity was modernised, their efficiency improved, and the basic industries were brought up to date, something which could never have been achieved under private enterprise. Could anyone seriously contend that our coal industry would be superior today if it had not been nationalised—or the electricity industry, or the gas industry, or the railways, or the steel industry?
Between 1880 and 1930—a period of 50 years—excluding the war years hardly any new money was sunk into the coal industry or the iron and steel industry, and very little money—in comparison to Germany, not to speak of the United States—was put into the new technology industries which arose out of the invention of electricity, the motor car, heavy machinery, synthetic dye-stuffs and other chemicals.
The Earl of ONSLOW: My Lords, is it not a fact that at present the nationalised gas industry is a distributive industry and that most of the gas is got out of the North Sea by private enterprise?
Lord KALDOR: It may be a distributive industry, my Lords, but that does not seem to make any material difference to the point I was making.
The Earl of ONSLOW: One is nationalised and the other is private. That is the difference I am making, my Lords.
Lord KALDOR: My Lords, I fail to appreciate the point the noble Earl is making, but I shall be glad to correspond with him on the subject. Whether it is a distributive or productive industry, I am saying that it would not have been as efficient as it is, and as it is acknowledged to be by technical experts who regard it as the result of long-term overall planning combined with a readiness to sink large sums of money into the industry. That readiness has been lacking in the private sector because of the need for the approval of the Stock Exchange which means that it must make a large profit in a short period to justify itself.
I was saying that very little money was invested in those years. Instead, vast sums were invested abroad. In some years during the Edwardian period, when home investment in manufacturing industry was almost zero, no less than 10 per cent. of our national income was invested abroad. I would remind the noble Earl, Lord Onslow, that in those days there were incentives galore. However much present Ministers may try to revive incentives through tax reductions, they can never hope to achieve the Victorian or Edwardian peaks in fiscal incentives, when income tax was not progressive and it was seven old pence in the pound or 3 per cent. instead of the present 33 per cent. Yet with all those incentives, the economy was stagnating. If people think we will now see miracles as a result of cutting income tax by, say 3p or 6p in the pound, I can regretfully prophesy that it is more likely to make no difference whatever.
I have no doubt that without nationalisation we should have had the same situation after World War II as we had for 40 years before World War I and throughout a larger part of the inter-war

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years, and if one thinks that the period after World War 11 was a bad situation, I can only say that in the opinion of all economic historians who have studied this matter seriously, the 20 years of the 1950s and 1960s showed more rapid economic progress and more rapid growth of productivity than any comparable 20 years in previous British history. That that was due not just to a reflection of a world trend is shown by the fact that while it was true of Britain it was not true of Germany or the United States; in other words, their post-war record of productivity was not higher than what they had achieved in the previous periods. It was true in our case, and it is only in the last 10 years that our economic progress has broken down, for the reasons I mentioned.
Contrary to the general presumption, investing less in some industries does not mean that we shall be investing more in others. So far as the United Kingdom is concerned, it may merely mean less investment all round. For a more appropriate diagnosis of our basic troubles, 1 would refer to a new study on the economic growth performance of the United Kingdom which has just been published in the staff papers of the International Monetary Fund, an institution not noted for irresponsible, radical, Left-Wing views. The author of the study, after an exhaustive examination of the causes of Britain's comparative failure in the post-1945 period, concludes:
"In the United Kingdom, there has been a relatively greater flow of capital resources [in the private sector] into lagging industrial sectors such as textiles, food and beverages and relatively less into the more dynamic export-oriented heavy and science-based industries. Accordingly, United Kingdom industry has not been able to take full advantage of the marked upswing in world trade in manufactures over the post-war period. This tendency has manifested itself in a loss of export market shares and rising import penetration, which in turn have led to periodic balance of payments constraints on the growth of output. It is possible that in certain industries the shortage of complementary factor inputs, such as skilled manpower at the technician and engineer levels, together with inefficient management, may have contributed also to depressing output returns on new capital formation".
In the light of that, can there really be much doubt about whether our prime requirement now is more laissez-faire or the very opposite—more Government planning and more Government support for industrial investment?
5.27 p.m.
Lord HEWLETT: My Lords, the noble Lord, Lord Kaldor, has made out that this new Government are no other than pure laissez-faire and devil take the hindmost; but he knows better than that —he must know better than that—and so must all noble Lords in this House. We have a mixed economy and we shall keep a mixed economy. What we shall do is to shift some of the emphasis, and that will be an extremely good thing. I am sorry to be rather direct about this, but, frankly, the Opposition have taken a direct line and they had better have a direct riposte. Their Benches contain in their numbers today some of the architects of Britain's poor industrial performance. The very poor economic advice given to the then Prime Minister, Sir Harold Wilson, gave Britain a shocking record in the last period of Socialist Government. The statistics show it and we in industry know it.
The noble Lord, Lord Hastings, referred to the undesirability of the continuance of the "us" and "them" syndrome. That was my theme in my maiden speech in your Lordships' House in 1972. How right he is now and, I say with respect, how wrong it is for certain Opposition Peers to be so blindly partisan today. What has happened in the intervening period? There has been a general election and the will of the people has been expressed, so perhaps a little more modesty on the part of the Opposition in hearing what they did wrong in the eyes of the electorate would be appropriate.
Lord KALDOR: My Lords, I began my speech by concentrating on the failures of the last Government—for not having a strategy for national survival—and I do not think I could have made myself plainer than that. I said I did not know what they would have done had they been returned to office and whether they would have had any long-term strategy. I also said it was their decision to join the Common Market which had been responsible more than any other factor for the very much speedier decline of British industry and for the de-industrialisation of the 1970s.
Lord HEWLETT: My Lords, I take the noble Lord's apology for the outgoing Government's failure; I accept it in good part. I do not agree with him about the

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Common Market, but I hope that I shall be allowed to develop my own speech for a few moments.
I think that the Opposition Benches at least ought to stop trying to fight the battles of the 1930s, or even of the early 1970s, because, after all, we arc now only six months off 1980. In a totally uncharacteristic speech the noble Lord, Lord Lee of Newton, threw down a strong challenge on union meetings. He referred to it as being nonsense to try to encourage more active participation by union members in their union affairs. I say to the noble Lord, "Come off it!" On all sides of the House we know perfectly well that there have been many union meetings called late at night, in inconvenient locations, at which the bullyboys have come into their own, and as a result militants have taken over branches of a union. I say to the noble Lord, shake not your head; I too come from Lancashire, and I know what day of the week it is in these kind of matters.
My suggestion to management and industry is simply this: why not make time and location available for union meetings in business time on business premises? Obviously there would not have to be unlimited time, otherwise nothing but talking would be done, but a fair and reasonable amount of time should be made available for union meetings. The four or five unions which there happen to be in the company in which I am in charge hold meetings in company time. They have good union attendance, and as a result our industrial relations record is but two disputes in just under 90 years—not too shabby. I think that those kind of union meetings could be allowed, and I would encourage management to do that.
Now I turn to another point. What about what the noble Lord said about the emasculation of the NEB? He really must refer to the gracious Speech and not to figments of the imagination. What we are suggesting is that,
"Proposals will be brought forward to amend the Industry Act 1975 and to restrict the activities of the National Enterprise Board".
That is intended to prevent the board expanding to the extraordinary extent which we witnessed just before the dissolution, when in the other place millions and millions of pounds were, so to speak, voted on the nod for the extension of
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NEB activities. The noble Lord the Leader of the House said that he did not like the concept of back-door nationalisation and, frankly, nor do most of the people of this country, and again on this matter they made their views known on polling day.
How warmly I welcome the contents of the gracious Speech from the Throne. How strongly I congratulate the Government upon the speedy and confident manner in which they have handled the situation in the first intance; it really is rather like a breath of fresh air. When I was speaking in numerous marginal seats in the North West of England during the general election campaign what was significant was the obvious desire for something better than the turgid, restrictive socialist approach of the past 15 years, barring, that is, the short interlude of Mr. Heath's Government. During that interlude Mr. Heath and his Chancellor of the Exchequer, Mr. Barber (now the noble Lord, Lord Barber) did all they could to encourage investment and expansion, but for reasons that we all know the response of industry was poor and the result was disappointing.
Then there were justifiable fears of the effects of the actions of OPEC in 1973 and of the mounting union antipathy to the Government, leading in fact to the downfall of Mr. Heath's Administration. That simply must not be allowed to occur again, and I think that all sides have learnt much in the past five years. Certainly Britain could not possibly stand another such terrible period, and there is no reason why the country should have to do so. The high proportion of trade union members who must have voted for this Government demonstrates that militant and aggressive trade union leadership is not in accord with the wish of the vast majority of union members, or of the rest of the public, too. This evening a Press report indicates just such a feeling expressed by a union representative, as noble Lords will see if they look at the first news article on the front page of the Evening Standard.
What we need in Britain is a period of stability; in fact the conditions in which enterprise—I do not mean only private enterprise, but all enterprise—can prosper. It is, I submit, one of the principal duties of Government—to see that such conditions are created and maintained, and

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the whole tone of the gracious Speech is directed to this end.
I am sorry that the Leader of the Opposition has temporarily withdrawn from the Front Bench, because I must say that in a most intense and excited speech, which was most uncharacteristic of the way in which he led the House right up to polling day, he became tremendously upset about the possible future of the National Enterprise Board. He said that expanding the work of the National Enterprise Board was needed in the North and the North-West of England. But, my Lords, 1 am sorry—we do not need an extension of the National Enterprise Board. Instead, we need what I mentioned earlier: conditions in which industry, agriculture and commerce can prosper. That is not achieved by sending in more cohorts and more money from Government to try to administer the affairs of British business. Do not believe it, my Lords. What we want is not an extension of the work of the National Enterprise Board, but—
Lord HATCH of LUSBY: Will the noble Lord allow me to intervene? I am very grateful to him. Would he apply the argument which he is now advancing to the House to the manufacture of titanium on Tees-side, which has been rejected by—
Lord HEWLETT: That point was mentioned earlier and I intend to reply to it a little later in my speech; but if I do not, no doubt the noble Lord will call my attention to it. It must be remembered that I am just a common or garden Back-Bencher; I am not replying for Her Majesty's Government.
The noble Lord the Leader of the Opposition referred to the Pennine Rural Development Board which he set up, and he proclaimed that it was a great success. Yet in the next breath he said that it never got off the ground. Well, if that was never proved, though he thought that it was going to be a great success, what have he and other noble Lords been doing for the past five years in Government? They could have instituted the Pennine Rural Development Board and much else had they wished; but no, it was not worthy of that, yet it made a
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bull point of the Opposition speech this afternoon. Attack is always the best form of defence. I say to noble Lords opposite, "Your political, industrial and economic record while in office was appalling, and so of course you are going to lambast this side of the House as much as you can before we have even had time to sit down and take our places"—
Several noble Lords:Oh!
Lord HEWLETT: I knew that this would upset noble Lords, but they must take it because they have been giving it. We must not barrack in this House; I am sure that that is certainly against Standing Orders.
Now I turn to Quangos—yes, good old Quangos. In recent years far too many individuals have been appointed to positions in which they have not been answerable to Parliament, nor to the electorate. There have been far too many jobs for the boys, and for too many jobs have gone to the same individual, and we know, on all sides of the House, that that is not good democratic government. A healthy reduction in the number of Quangos was very much in the minds of the British people when they voted in the way they did on polling day. I believe that this brief authority extended to people who are not answerable to the proper democratic order of the Houses of Parliament and to the electorate should be drastically reduced. I do not say that this should apply to all of them, but I say to noble Lords opposite, "Many of your political advisers and PR men are for the chop." I am sorry, but they should be for the chop. They should not have been there in the first place, and noble Lords opposite know it. I also say to them, "Well, you can take it or leave it."
The Leader of the Opposition said that in elections we all make promises. By Jove! we do, my Lords. What is to happen here is that the promises we have made will be carried out resolutely. The party opposite—and I wish the Leader of the Opposition was present—do not have a monopoly of caring for the North. I am becoming a little tired of this argument being trotted out in relation to Workington onwards. There are other places in the North. There are conurbations such as Greater Manchester and

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Merseyside, as well as the great industrial area of Lancashire, which swung a considerable amount on polling day, though not so much as the rest of the country. I have spent 30 years actively in industry and politics up there.
I do not claim a monopoly any more than would the noble Lord, Lord Peart. But I agree with him on one point: yes, two nations are being developed; but not two nations along the lines of which we were perhaps thinking. The two nations are along the lines of the very point made by the noble Lord, Lord Kaldor; namely, that there is increasing wealth and power coming to the metropolis and the South-East of England, but decreasing power and influence in the North and North-West. In the time I have been in industry, ever since the war, practically every headquarters of every major decision-making enterprise has been shifted from where it was in Merseyside or Manchester to London. No wonder people in the North are beginning to resent the extreme centres of power here and the lack of response to the requirements of the North! I see the noble Lord, Lord Bowden, sitting opposite me. I dare say he would subscribe to this view, for indeed we spoke about it together on radio and television only a few months ago.
My advice to Her Majesty's present Government, or to any other Government who may succeed them, is: do not forget that, as in Italy, where Milan and Turin actually make the money even though Rome may administer it, so a tremendous amount of the wealth of this nation is created in Birmingham, Manchester, Liverpool, the North-East, Wales and so forth, and the feeling of not belonging is very clear in people's minds. Decisions are being made here at the centre with very little regard being paid, perhaps, to the effects locally. I recall that, speaking in your Lordships' House at the time of the major crisis, I referred to the plight of the folk in Greater Manchester. I make no apology for referring to it again, because I could not get a response from the party opposite when they were in Government, your Lordships may recall. I protested, but I received no reply.
The circumstances in Greater Manchester at the beginning of this year were: no petrol, no lorries, no buses, no water, no sewerage and no opportunity
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to bury the dead. It seemed to me that, in the South, more interest existed in the fact that the trains were running late into Charing Cross, or not at all to Waterloo. My Lords, I am deadly serious. We in your Lordships' House had better take a little more notice of the feelings outside the periphery, north of Watford, because that, honestly, is where the wealth is very largely being created. I am not speaking of the invisible earnings of the City, for which I have the highest respect: I am talking about industrial, creative wealth. So let this new Government not give scant interest to those parts of the nation. Let them take a keen and active interest in the development of free enterprise and a mixed economy in these other parts of Britain.
If I refer to the titanium question, I would only say that I am in the chemical industry and I know full well the requirements and needs of titanium. I do not know—because, as I have said already, I am a Back-Bencher—the detail of the position of titanium in relation to the National Enterprise Board. It is no use the noble Lords opposite getting cross with me; I am not answering for the Government. I know only my side of the chemical industry, and in a few moments I will give your Lordships so much about that that your Lordships will ask for mercy; so do not press me any more. If I may say so, the erstwhile Government party, which lost the general election, paid the price of neglect as far as concerns the opportunity to create the conditions favourable to investment and wealth creation. I am sorry, but they deserved to lose. What they could not do was poll their own strength. No matter what the noble Lord, Lord Lee of Newton, says, they could not get their own members out. I was round in all the marginal seats, and saw the attitude perfectly clearly. It was not an enormous swing to Conservatism or free enterprise: it was disillusionment with the then Government of the day.
The Leader of this House, the noble Lord, Lord Soames, was so right when he said that, clearly, it is only North Sea oil which at the present time is bolstering our national income to the point that, in the short run, we can maintain our present standard of living. But, as I mentioned earlier in my speech, those self-same dangers of 1973–74 are still with us. One of my business colleagues who has

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just returned from the United States has reported to me as follows—and, if I may, I will quote from his telex, because I have not yet had the chance to see him as I was here with the rest of your Lordships at the opening of Parliament yesterday by Her gracious Majesty the Queen. This is his report:
"Supply of aromatic chemicals. The key to the problem is the United States Government's policy on energy and on environmental protection and in particular how these impinge on the gasoline market. Its environmental protection policy has been directed towards reducing contamination of the atmosphere as a result of (1) discharge of unburnt petroleum products and (2) discharge of lead present in gasoline as an octane improver.
"Under current legislation all new cars have to be fitted with catalytic after-burners which preclude the use of leaded petrol, since the lead will poison the catalyst. In order to maintain the octane performance it has been necessary to add a substantial quantity of toluene to the gasoline as substitute for the tetraethyl lead. The situation is, of course, gradually becoming worse because the demand for unleaded petrol is steadily increasing as older cars are phased out and the proportion of new cars unable to burn leaded gasoline increases. It is likely to get dramatically worse if the prospective United States legislation governing the lead content comes into force in October this year as planned. Under this new legislation, the lead content of leaded gasoline will be reduced by two-thirds, making still more demands on the toluene availability. In fact, there simply will not be enough toluene in the world to meet the demand.
"Toluene is not a particularly important feedstock in the manufacture of aromatic chemicals. Its greatest use is as a solvent but it is a prime raw material for the production of benzene by dealkylation and, of course, benzene is the major intermediate for a vast range of aromatic chemicals such as phenol and aniline".
Our lives would be very different indeed if there were not adequate supplies of both phenol and aniline for this country.
My Lords, if I may continue:
"The United States has traditionally been long in aromatics and has maintained a big export business with Europe and the rest of the world. These exports are now rapidly drying up.
"There would therefore appear to be a double squeeze in terms of the situation in Europe. First of all the general redirection of aromatic chemicals into gasoline is likely to affect the availability in the United States of downstream aromatic products and at the same time exports of basic aromatic building blocks such as benzene are likely to be greatly diminished.
"We have seen a steady increase in the price of aromatic products in Europe but, probably because no one wishes to set off a round of panic buying and overstocking such as we experienced in 1974, it would seem that the real position is not being properly disclosed. Apart from planning the short term business programmes in terms of material
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available, allocations and so on, the longer term situation must have a bearing on investment decisions [in Britain], and while there is clearly a dilemma to be faced between the risks of initiating panic buying and the uncertainties of not knowing the true situation, surely on balance a mature consideration of the problem, with the basic facts being made available, is the only sensible approach".
The major producers of aromatic chemicals should keep supplies out of the hands, yes, of the speculators and merchant houses, to ensure that there is not the panic buying and the stocking up as in 1974, and that we come up with a fair and open allocation system to keep British industry going and much able to cope with this critical situation. I think your Lordships will realise that I am speaking rather seriously as a result, not only of Iran but of policies developed by the United States Government, which theoretically are in the very best interests of all the electorate but which practically may he to the severe disadvantage of the self-same people they are meant to benefit.
If I may revert to the gracious Speech for one moment, reductions in personal taxation should help increase productivity, encourage harder work and increase risk-bearing. Our country's very success depends on a shift of emphasis in favour of the individual. How much industry will welcome a reduction in legislation and in Government and State interference! It has been an unwarrantable burden, particularly on the medium and smaller sized enterprises. In many cases it has been counter-productive, as we said from the Benches opposite when we were in opposition, thinking in terms of the Employment Protection Act, which has in fact inhibited employment and has not benefited those it sought to benefit.
I hope that Her Majesty's new Government will give great care and thought to whatever propositions are brought up in respect of industry and employment. The Price Commission's departure from the scheme is welcome news, indeed. Yes, it is! The market itself, with intense overseas and home competition, will see to it that excessive profits cannot be made. I have given an ample illustration in my report from the United States. Industry's problem today is to get a proper return on investment. Without that, we shall not be able to invest further in the future and create wealth for this country.

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My Lords, all my opponents keep disappearing from this Chamber. The noble Lord, Lord Jacques, spoke of the Socialist principle of benefits for all. There is no monopoly of that in the Socialist Party any more than in the Conservative Party. We want benefits for all. All that we differ about is the way of getting there.
Lord ELWYN-JONES: My Lords, if the noble Lord goes on long enough, maybe those who "disappeared" will come back again.
Lord HEWLETT: My Lords, if I may reply to the noble and learned Lord who was formerly on the Woolsack, I have given way to every interruption in the true spirit of democracy. What can I do?
It is by the individual's effort that wealth will be created. My objection to socialism is that it creates no wealth whatever. It is just an inefficient and wasteful redistributor of wealth. It is, frankly, anti- or, at least, counter-productive on the shop floor as much as in the board room. The noble Lord, Lord Jacques, spoke of the abuse of monopoly power. I find it thrilling of the Opposition to speak of the abuse of monopoly power and yet to defend nationalised industries. When there is time, one day, we must hear how they explain this apparent paradox. The worst abuses of monopoly powers are exercised by the nationalised industries, and in some cases by other organs of Government. Ten years ago, of the total gross national product of this country 40 per cent. went to central and local government and the nationalised service industries; five years ago it was 50 per cent.; and, last year, more than 60 per cent. of everything created in Britain went to central and local government and the nationalised service industries. That is the answer to the noble Lords, Lord Kaldor, Lord Balogh and Lord Lee, and the whole cohort—and I nearly said something very different. That is the answer. You have interfered too much. That is why you are in Opposition. Long may you remain there!
As for the final touch in the noble Lord, Lord Jacques, saying what trouble there would be if we have high unemployment, that is rich coming from a Government which had the all-time peacetime
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record of unemployment as they leave office—barring the 1929–1931 period of Labour misrule. It is no wonder that the party opposite is on the attack. If I were in their position, I should be so, too. It is much the best form of defence. There is only one problem: you cannot defend the indefensible. Your record, my Lords, on that side of the House, is appalling. The electorate know it. You lost many of your traditional supporters on polling day. I suggest that on your side of the House, there should he a degree of graciousness to this side. Let the new team have a fair chance to do far better.
Lord HATCH of LUSBY: My Lords, before the noble Lord sits down, may l as a fellow Northerner ask him to answer my question? One does not have to he a member of the Government to follow the line of one's own argument. As I understood it, the noble Lord said that the North does not want the National Enterprise Board. Does that include Tees-side where the NEB is prepared to produce titanium, which is vital to this country, and where private enterprise is not?
Lord HEWLETT: My Lords, with respect, I did not say that the North and the North-West do not need the NEB. I said that they do not need an extension of the work of that Board. That is a big difference. I must ask the noble Lord—and I am sure that Hansard, as always, will be correct—to take the point that I said "extension". We have not spoken of the abolition of the NEB. The Front Bench will make this clear; but the NEB could not go on expanding at the rate it was expanding because it was distorting the economy completely. In my opinion, it is for free enterprise and the nationalised industries to earn sufficient wealth to keep this country's position competitive abroad. One can only do that by conditions created in which we can prosper and not by free hand-outs, Government subsidies, aids and supports of all descriptions.
Lord TAYLOR of BLACKBURN: My Lords, may I ask the noble Lord whether he would agree to an extension of the NEB in the North-West?
Lord HEWLETT: My Lords, I do not think we need an extension of the the NEB in the North-West. I am not asking for certain of the schemes presently being

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undertaken (which may be of value and without which certain industries may fail) to be ceased. Not at all. But I feel that we do not need an extension; we do not need constantly to be propping up industries. The duty of Government is to create the conditions in which industry, agriculture and commerce can prosper. Whatever Government are in power, if they can do that there will be no need for the National Enterprise Board.
5.55 p.m.
Lord WEDDERBURN of CHARLTON: My Lords, it is always interesting, if difficult, to follow the noble Lord, Lord Hewlett, and to hear yet again the case against socialism as appalling and indefensible—which I last remember hearing when we both spoke in the Cambridge Union in 1949. I would wish to address your Lordships on a rather narrower canvas in welcoming that part of the gracious Speech which states:
"Legislation will be introduced to amend company law".
This is an objective which I welcome greatly. Essentially, I wish to touch upon four aspects of company law reform in saying, first, that few areas of law could be more important than the law which governs the small and medium businesses and the vast and growing concentrations of capital which are now of giant and often transnational character. I hope to illustrate to your Lordships that this is not merely a technical subject. Most proposals of a technical kind for company law reform will not excite partisan or party passions. I take it as a token of the Government's serious intention to operate more than superficially upon the body of British company law that the Prime Minister has seen fit to appoint as Secretary of State for Trade the right honourable gentleman Mr. John Nott, who is undoubtedly one of the most energetic Ministers that the Government are likely to have and who will bring to his task assuredly the enthusiasm to be expected of an ex-officer of the Gurkhas and one who should be encouraged to wield his kukri surgically and to good effect on that body of law.
As to the first of the four points, in the short term there is the need to meet the requirements of the second and fourth Directives of the European Commission
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the second Directive of 1976 concerning the formation, classification, subscription and maintenance of capital and payments of dividends in regard to companies, and the fourth Directive of 1978 about company accounts. No doubt the Government will be greatly assisted in this task by the commercial and legal knowledge which can be brought to bear on the subject in your Lordships' House. I will confine myself on the first point to one comment upon the two forthcoming Bills necessary to bring British law into conformity with these European Directives. Whatever the other merits of the Directives, the second Directive of 1976 illustrates the absurdities which can be forced into British law from Brussels if the United Kingdom Government are not sufficiently vigilant with the Commission. On this point, all the earlier Governments have to take some part of the blame.
The Directive requires us to introduce into the definition of a public company an obligation to have a stated minimum of share capital. While we continue with our present structure of company law and the type of capital market in which it works—one, for example, where we do not have "no par value shares"—the introduction of a minimum nominal capital, which may make sense in Germany and France, makes no sense here and is quite unnecessary. I would urge the Government to take particular care in respect of the other draft Directive which is forthcoming on the harmonisation of company law, and not merely the draft Directive on harmonisation of company law but the draft Community statute on the "European company". It is said that this is now going to be taken very seriously by the Commission and pushed into Community law in the 1980s. The important point in the European company is that it is not only equally at home in every jurisdiction of the member-States of the Community, but also that it would establish, as the text now stands, an apparent but totally illusory workers' participation. If that statute is made Community law, as it now stands, the provisions of British law on companies and industrial democracy will be automatically overridden.
As my second heading, it is to be hoped that the Government can find time for a codification of British company law.

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Company law today derives from a very large number of statutes: The Registration of Business Names Act 1916; the Companies Act 1948; the Prevention of Fraud (Investments) Act 1958; the Protection of Depositors Act 1963; the Stock Transfer Act 1963; the Companies Act 1967; the Companies (Floating Charges and Receivers) (Scotland) Act 1972; parts of the European Communities Act 1972; parts of the Fair Trading Act 1973; the Stock Exchange (Completion of Bargains) Act 1976; the Insolvency Act 1976; and the Companies Act 1976. In addition, there are countless regulations and a mass of case law.
It is time to relieve practitioners, let alone laymen, of the task of finding their way through this veritable maze of company law and then through the taxation statutes which surround it. The case for rapid codification after the enactment of the two Bills needed to implement the European Directives is overwhelming and should be a matter of priority for the Department of Trade. After all, they have plenty of spare manpower now. Those who were put on to the good work of preparing measures on industrial democracy can now be seconded to codification of company law. The day will come when they will be needed again; but no doubt for a few years they must be put on to something else. It may well be that parts of the judicial case law cannot be codified. The valiant attempt of the department to codify, in Clause 44 of the 1978 Bill, the fiduciary duties of directors, may indicate that some areas of the judge-made law cannot be included in a codification; but at least the statutes could be swept up into a consolidating net in order that a practitioner and layman can find one code of company law.
My third heading, however, points to the fact that codification is not enough. Despite the constant legislative activity of the past 30 years, there still remain proposals made by the Jenkins Committee in 1962, and even by the Cohen Committee of 1945, which have still not been enacted. Many of these are technical adjustments of company law to meet modern requirements. Politicians know very well that there are few votes to be won or lost in reforming such delightful but arcane principles about the rights of shareholders, known to company lawyers as the rule in Foss v. Harbottle. Any politician or civil
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servant will tell you, as it is always put today, that company law reform is not "a sexy subject" which excites the electorate.
However, there are other areas of rather greater social importance. Some appeared in the 1978 Bill. It will be a challenge to the Government—now they are a Government—to see how many of these they incorporate into their reforms. Insider dealing—at long last the majority of city opinion appears to accept the control of such dealings, after a long 20 years of argument—should be made something in the nature at least of an offence. A further control of warehousing and nominee shareholdings; a proper system of disclosure and control of many other dealings between directors and controlling shareholders and their companies; and new laws on corporate conglomerate groups. All these are needed urgently.
Only yesterday, as the noble Lord, Lord Lee of Newton, has pointed out from these Benches, there was published the report of two distinguished inspectors appointed under the Companies Act 1948 to investigate the Ferguson and General Investments or Dowgate Company and CST Investments Limited, an affair which, on reading the report your Lordships will find, involved malpractices concerning many millions of pounds. In Chapter 32 of their 372 page report they make 12 minimal proposals showing how the law is now quite inadequate to control the kind of abuses which they revealed. As they point out, it is not even compulsory at the moment for the leading character in a story of outrageous malpractice to appear before the inspectors who are appointed to unravel the plot. As the inspectors put it in the report:
"Mr. Selmes has chosen not to give evidence before us save to a very limited degree through a solicitor ‖".
My Lords, that is an absurd situation. Of course the inspectors are right in proposing that they should have power to demand testimony by relevant persons; and of course they are right that, if necessary, those persons should be brought back to Britain by extradition; and of course they are right that these persons should be examinable on oath, if necessary in court, for the purposes of such an investigation. They are right in their 11 other proposals too, and I trust that the Government will incorporate them in their measures.

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This report brings me to my fourth heading. There is now, I submit to your Lordships' House, an unanswerable case for the establishment by statute in the next few years of an administrative agency to administer, enforce and consider reforms of our company law. The case for a Companies Commission, let me be clear, is not based on any mistaken premise that the majority of British companies are improperly managed. They are not. However, the case for a Companies Commission (which, rumour has it, is not being taken very seriously by the committee appointed under the chairmanship of Sir Harold Wilson, two years ago; a rumour which it is devoutly to be hoped is quite untrue) must be met by any Government within the next few years which is serious about the reform of company law.
It is true that the self-regulatory agencies of the City have accomplished a great deal to enforce reasonable commercial ethics upon errant companies and errant businessmen. The Stock Exchange; the Issuing Houses Association; the Accepting Houses Committee; the British Insurance Association; the Institute of Chartered Accounttants; some but not all of the Merchant Banks; above all, of course, the City Panel on Takeovers and Mergers; and the fledgling Council for the Securities Industry have all played their part in this effort. But they are not enough.
As the panel said in the statement approved by its own appeal committee of 24th March 1976 in the Ashbourne Investments case, which it said occupied the attention of the City Panel for almost two years:
"The case illustrates … the fact that the panel's effectiveness and the degree of support it may expect as a voluntary body are related to the extent to which it is dealing with persons who are willing to comply with a voluntary system and who wish to have continuing access to the facilities of the City".
The panel, it is true, added its belief that the advantages of a non-statutory informal body still outweighed those of a regulatory agency. That was three years ago, and I submit that if it were right then even, it is not right today. As the noble Lord, Lord Shawcross, in his capacity as chairman of the panel, said in 1974:
"The City code… does not seek to have the force of law".
There is no reason why the self-regulatory agencies should not continue their work.
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But voluntary agencies are weekly and monthly being shown to be inadequate by themselves. There is an urgent need that their work should be co-ordinated and supplemented by an independent companies commission, established by statute in the interests of the community as a whole.
Let me repeat so as not to be unclear on the point: the vast majority of companies in Britain are managed honourably. But the exceptions to that rule have become too numerous for complacency. This need for greater control is more and more evident. The very names of the past 18 years tell the story: the Jasper Report; Cadco; the saga of Haw Par; SUITS; the House of Fraser; Lonrho; London and County Securities; the Peachey case; the "Hungarian Circle"., and countless others, not to speak of the yet unresolved allegations of "slush funds" operated by national and transnational corporations; and not even to whisper—and this is a point to be savoured—the names that regularly appear on the City page of Private Eye. Before noble Lords opposite laugh too much at that point, it is one page of that particular journal which has cost the proprietors almost nothing in libel damages since the journal was created. It is compulsory reading for most students of company law today.
Is there a single Member of your Lordships' House who does not believe that if these scandals over a period of 20 years had arisen in the British trade union movement, that the British trade union movement would not have been subjected to savage legislation? Of course it would. And it is time that complacency on this matter ended, under whatever Government. I was critical of my own party on this matter when it was in office. It is time for action. To the unhappy scars on the face of the private sector system of our economy the report was yesterday added as yet another ugly and unacceptable feature. In the course of the takeover battle involving Grendon Trust—I shall keep your Lordships only a moment more but I wish to make it quite clear how appalling this case was—the inspectors found that the leading character, Mr. Selmes (mentioned earlier in your Lordships' House), who organised the malpractices, said to a Grendon director: "I have looked after your chairman ". The chairman—and I have

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notified him by letter and telephone as a matter of courtesy that I would say this—was the noble Duke, the Duke of St. Albans, who was found in yesterday's report secretly to have sold his shares in consequence of what the inspectors found to be an allegedly "improper inducement". The point is that that allegation of an improper inducement to the noble Duke in regard to his actions as Grendon chairman was brought to the attention of the Takeover Panel hack in 1973. But as the inspectors record on page 146 of their report, the Panel decided "in fairness" to the noble Duke to "make no reference at all" to this evidence in its report. The Panel said nothing about it: that is a very good illustration of the unsatisfactory limitations of the Panel—limitations which one can understand if one turns again to page 146 of their report, because on that page will be found the chairman's explanation of why the Panel did not go into the matter. It was said that the Panel—here I quote:
"has not got the advantage of being able to demand discovery of documents and the like so that its exercises in interrogation are necessarily of a very limited character".
That was six years ago. How long do we have to wait before we have a body which can demand discovery rapidly of documents and which can insist rapidly on ferreting out the truth of company frauds?
The Ferguson and General scandals will no doubt soon be swept under the carpet like the rest, but there are exceptions. Let me repeat it. Only today the new chairman of the merchant bank involved in the affair—and let me be quite clear that the affair occurred lone before he became chairman—is quoted in the Daily Telegraph as saying this about the Grendon affair:
"We really want to play this down now. This sort of thing doesn't do us any good and most of the people involved are now gone".
Of course they have gone. They have passed on. But, if history is not to be reversed by some curious quirk, they will be replaced by others. Indeed, one wonders what has happened to people like Dectective-Sergeant Lilley. Your Lordships may not know his name but if your Lordships read the Evening Standard of 7th June 1978, you will find the gentleman described as one of the "Fraud Squad's most experienced officers "—a veteran of fraud company investigation.
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In his speech to the International Professional Security Assocition in 1978 on 7th June, he said that London had become "a paradise for fraudsmen", that company frauds were a "cancer growing with each decade", with more than £280 million at risk, to his knowledge, in London in 1977. That was the opinion of a veteran and most experienced officer in the Fraud Squad. Workers have been mentioned in the debate, but workers who see their jobs being whittled away by the removal of State aid, and who see what is euphemistically called on the other side of the Chamber "the restriction of the National Enterprise Board", will not forgive and will not forget when they see the wealth created by their hands and by the sweat of their brows being taken by those who wish to filch the money that ought to belong even to their companies.
There is a final reason, perhaps less controversial, which may do something to make my speech a little acceptable to noble Lords opposite—there is a final reason why it is imperative to establish a companies commission, which can sink its teeth rapidly into the fly-by-night financial huckster as much as into the more comfortable manipulator of corporate pyramids. The reason lies in the enforcement of company law, which today, is unbelievably fragmented. We have as enforcement agencies the Department of Trade and inspectors appointed by that Department, legal actions by creditors, liquidators or shareholders, the Official Receiver, the Director of Public Prosecutions and the police Fraud Squad, not to speak of special machinery in particular areas such as banking and insurance. We must have a co-ordinating agency—preferably not the Department of Trade, but if it cannot be a commission then surely it must be the Department of Trade—for enforcing company law: not a large bureaucracy like the Securities and Exchange Commission of the United States but, as Doctor Tom Hadden has put it in his recent book Company Law and Capitalism—an author whom I can assure your Lordships is no revolutionary—
"the need is for the much smaller investigatory and enforcement organisation which has been developed around the office of the Attorney General in most Canadian jurisdictions".
I commend these Canadian experiments to the Government, and indeed I have no doubt they are already aware of them.

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We need a companies commission and we need it soon. Of course it will be called a Quango, but, as the noble Lord, Lord Hawke, suggested that Quangos have to look for work to do, I suggest that this would be a small Quango that would not have to look for work at all. At this stage of our social transition, the double function of company law is to provide an opportunity for companies in the private sector to work efficiently and not to entrammel them with unnecessary regulations, but it is also to deal firmly with the exceptions that I have described.
The noble Lord, Lord Soames, earlier talked of his Party's proposals on trade union law as based upon "common sense and responsibility". We shall no doubt see about that when those proposals come before your Lordships' House and I hope, if I may say so without offence, that they will be discussed on a different basis from what the noble Lord, Lord Hewlett, referred to as,
"what we all know about bully boys".
What is sauce for the goose is sauce for the gander. If social responsibility is to be demanded in some new way by legislation on the trade unions, then the enforcement of social responsibility upon the minority of those in charge of companies must surely follow. What is needed is a Government which will face, as indeed no Government have faced, the essential question put in Professor Gower's book on the principles of modern company law: what should be the conditions on which the State permits incorporation with limited liability by mere registration? That is the essential question, and any Government that fail to approach it in their approach to company law reform will have failed in their national duty.
Lord HEWLETT: My Lords, I wonder whether the noble Lord would be kind enough to grant me this indulgence: would he not agree that perhaps the brief extract that he gave from my remarks was a little unfortunate? My reference to bully boys was purely in regard to the abuse on a small scale, in individual union branches perhaps, and unfair procedures. Just as I concede that there are bad things about managements in certain cases, so he must surely agree that there is on occasions an abuse of power in small branches of unions in particular cases.
Lord WEDDERBURN of CHARLTON: My Lords, if the noble Lord will supply me with details of cases of bully boys bullying anyone, I shall no doubt join him in criticising them.
6.19 p.m.
Viscount SIMON: My Lords, 1 hope the noble Lord, Lord Wedderburn of Charlton, will forgive me if I do not follow the very interesting points he has raised in his powerful speech. There are two main reasons why I do not attempt to do so: the first is that I do not know nearly enough about the subject, and the second is that of course the Government's proposals for company law reform are not before us and we do not know what it is that the Government will do. I am sure that when their proposals come here we shall find there are many noble Lords in this House who will be able to contribute to a serious debate on the subject.
The proposals in Her Majesty's gracious Speech to Parliament yesterday have to some extent already been amplified by the Prime Minister in another place. But much of the agenda for this long Session necessarily remains still in outline only. I make no complaint about that. In fact, I should have been even more alarmed than I am if, after less than a fortnight in office, the Government had come forward with detailed plans of all the legislative proposals that they are going to lay before us.
They have, of course, a clear commitment to reduce the burden of income tax, and for the details of this we must naturally await the Budget. But when the time comes, although the influence of your Lordships' House in this field is necessarily restricted, we shall wish to consider very carefully whether the manner in which they propose that relief should be distributed as between the different income levels is an equitable distribution, and, further, whether the means by which the shortfall in revenue is made up—whether it be by alternative taxes or by cuts in expenditure—will impose unfair burdens upon lower income groups. All these things must wait until the Budget.
The Government claim that reducing the burden of income tax will restore incentives and will encourage efficiency. I take leave to doubt whether such

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relatively small reductions as are possible in present circumstances will achieve much in these directions. I think that the noble Lord, Lord Kaldor, made rather the same point. Indeed, I am not sure that I understand the connection between tax restrictions and efficiency. As regards incentives, the Prime Minister said yesterday in another place—your Lordships will find this in column 78 of yesterday's Commons Hansard—
"People have preferred to reduce their tax bills by working less hard than to increase their earnings by working harder".
If the right honourable Lady said that, she must know that perhaps some people have done this.
But I should like, if I may, respectfully, to ask noble Lords opposite, many of whom have worked with distinction in many fields: Has this been your reaction to increases in income tax? When it last went up, did you slack off, because if you did not why should we assume that others are differently motivated? If we are concerned, as we all are, with the standard of living of ourselves and of our families, surely our proper reaction when faced with increased costs, whether they arise from tax or from anything else, should be to work harder.
I wonder how many of your Lordships saw a programme on television some months ago, where they were investigating the reactions in the United States to the inflation which was beginning to bite rather heavily there. It was very interesting. They stopped people in the streets, as they are apt to do. There was quite a mixed gathering of people—shopfloor workers, office workers, executives and others—and in nearly every case, when they finally came to the question "What are you going to do about it?", they rather shrugged their shoulders and said" We shall just have to work harder". I only wish that that kind of reaction could be obtained from the people of this country.
I know that there are some anomalies in the tax system, especially in relation to social service benefits and the so-called poverty trap, and I hope that the Government will propose to iron these out, in which I am sure they will have the support of all quarters of the House. But apart from those few special cases, is it not a fact that an increase in gross pay always means
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an increase in take-home pay? I should have thought that if people were worried about a falling standard of living, they would be motivated by that thought.
No, my Lords, to my mind, if the aim is to restore personal incentives, a wide extension of profit-sharing schemes—in which, of course, managers as well as shop floor and office workers would be included—would have a far greater effect and would work much faster. I believe that when I had to be out of the Chamber for a few minutes the noble Lord, Lord Hastings, made a comment in this sense and I warmly support him. If such an extension of profit-sharing schemes were to be accompanied by a real effort to establish what I might call a family feeling in every business enterprise—the kind of thing that the noble Lord, Lord Hewlett, spoke about—the result could be remarkable. I am sure he will agree that this is something not to be achieved merely by formal means, but by a genuine desire on the part of those in charge to stimulate and cultivate a common interest in the prosperity of the enterprise.
May I turn briefly to two other matters? Here, I am afraid, I disagree with the noble Lord, Lord Hewlett, with all his long experience of business in the North. The proposed abolition of the Price Commission at this moment seems to me a grave mistake. It may not have worked as well as some people hoped it would, but is not it, or something like it, an essential part of any programme to encourage moderation in wage negotiations? Noble Lords opposite may call it "cosmetic", which seems to have become a rude word, but until inflation is finally crushed the need to show that there is in existence—whether or not it has to be used on some occasion—a means to control prices is, I suggest, a psychological necessity. The Prime Minister asserted yesterday—your Lordships will find this in column 79 of the Commons Hansard—that the Price Commission had,
"destroyed jobs and new investment as well as imposing extra burdens on industry".
Quite frankly, without more details, I should not accept that as a balanced statement. But if there are defects in the operation of the Commission, then let them be remedied.

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The other matter to which I should like to refer is the proposal in the gracious Speech to,
"reduce the extent of nationalised and State ownership and increase competition by providing offers of sale".
The noble Lord, Lord Peart, made some reference to this in his opening speech. The sentence seems to me a rather incomplete one, but I assume it to mean offers to sell profitable parts of nationalised industries, because, obviously, unprofitable parts would be unsaleable. From these Benches, we have regularly opposed recent extensions of nationalisation, but that does not mean that we are in favour of chopping and changing, with all the upheaval that this involves, both in administration and among employees. I believe that it would do great harm to the nationalised industries, which, as has already been said, have an important part to play in the economy of the country, if they were constantly being chopped and changed about. I hope that the Government will have further thoughts about this. After all, to hive off profitable parts of the business, and leave the nationalised industries with socially necessary but unprofitable parts, seems to me crazy. If the intention is that the unprofitable parts should then be allowed to die, then of course the social consequences of that have to be faced and dealt with in some way.
Finally—I did not mean to speak for too long—I was very interested as a Liberal in hearing the views of the noble Lord, Lord Jacques, about incomes policy, and he appeared to have support from the noble Lord, Lord Balogh, as well. I should very much like to know at some time what the Government think about that, but I recognise that it is too soon after the election for the Government to take a suggestion of that kind seriously at this stage. But perhaps, when the noble Lord, Lord Bruce of Donington, winds up for the Opposition, he would like to tell the House whether that is the general policy of the Labour Party these days.
6.29 p.m.
Lord BRUCE of DONINGTON: My Lords, if I may have the leave of the House to make a purely personal matter clear, I should like to say that when I was a
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Member of another place—a young politican, somewhat inexperienced—it was always my ambition one day to speak from the Front Bench. I little thought at that time that such an opportunity would be given to me for the first time in your Lordships' House. Therefore, I have to ask for the indulgence of the House on this occasion, which is my maiden speech at the Box. In the course of the remarks which I shall venture to address to the House I shall endeavour, within the limitations that my temperament places upon me, to be as non-controversial as possible, bearing in mind the extremely controversial terms in which some of the contributions have been couched.
At one time it seemed to me that some of the speeches that were made were hot from the hustings and that in fact they may have been due to noble Lords mislaying their notes. However, I am encouraged by the somewhat dulcet tones in which the noble Lord, Lord Hewlett, addressed us to pursue this entirely non-controversial tone. I should like to assure the noble Lord at the outset, so that we do not have to be further reminded of it, that we on these Benches are already aware that our party lost the election.
In approaching the whole question of the gracious Speech and looking at it from an economic aspect, I was tempted to pay the utmost attention to those parts of it which, it seemed to me, were basic to the carrying out of the policy of the party opposite. We are all citizens of a great country, and it is our duty, as the loyal Opposition, to give such constructive help as we can to the newly-formed Government in the carrying out of policies for which they have received the decisive support of the electorate as a whole. I trust, therefore, that my interpretation of the gracious Speech and of the policies contained therein will enable Her Majesty's Government both to take heed of the points that I shall venture to make and also possibly to take seriously some of the warnings that I may feel constrained, on behalf of my party, to give to them in following the path that they have chosen.
It seems to me that the basic concept which has now been adopted, aside from free competition to which reference has already been made, rests very substantially on two things: the need to cut direct taxation and the need to contain and,

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indeed, to reduce public expenditure. It was with those two canons firmly in mind that I examined the gracious Speech and divided it, in so far as fiscal matters were concerned, into two distinct sections, since this is the way in which I, as an accountant, am accustomed to looking at these matters.
First, I looked at those sections of the gracious Speech that meant either that the Government would deliberately pay out more or would deliberately receive less by way of taxation. I have called those the debits. Then I looked at the items on the credit side—in other words, at the sources of their revenue and also at the sources of their savings. It yields some very interesting results. On going through the gracious Speech, one finds that the pay of Servicemen is to be increased. That has been done. One finds also that the pay of the police is to be increased, and that has been done. That is a mere £160 million. I am not disputing its necessity. This is the policy of the Government.
I observe from today's Press, although it is not mentioned in specific monetary terms in the gracious Speech, that over the next five years some £2,000 million extra will be spent on modernising our forces. Well, that amounts, if one averages it out—I am not saying that it will be spent evenly over the period—to another £400 million. Then one finds that a minor amount of finance will be spent upon aid for postal ballots, that there will be increases in pensions, war pensions and other social security benefits and that provision is to be made for assistance to less well-off parents for the education of their children in non-maintained schools. These are very admirable objectives which the party opposite has full electoral authority to institute. The Government also propose to reduce the burden of direct taxation.
This is going to add up to a fairly formidable total debit. Therefore, if one has any regard for the national accounts, one has to say to oneself, "What provision does the gracious Speech contain for the financing of these benefits?" We find that parts of the nationalised industries are going to be offered for sale. That will yield something. At the local authority end—which is ultimately dependent, of course, to a very large extent on central Government finance—there will be the sale of council houses. I do not
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know whether orthodox business principles apply these days on the Government Benches but I was always taught, perhaps wrongly, that it really was not a good thing to treat the realised value of saleable assets as part of one's normal income. This is a good business canon which I have no reason to believe anybody would dissent from. According to the gracious Speech, therefore, part of the revenue is obviously going to come from the realisation, doubtless at knock-down prices, of assets. This is not a frightfully sound way, if I may say so at the beginning, of conducting the nation's affairs.
If I may turn to another point in the gracious Speech, I find that there is going to be an avoidance of waste. I do not think that anybody would dissent from that proposition. May I, in the friendliest possible spirit, offer Her Majesty's Government some suggestions as to where they might conceivably begin. They will doubtless remember the institution of the new local government scheme under Mr. Heath, in the latter stages of his Government, which resulted in a grossly inflated bureaucracy at the highest levels. Doubtless they will wish, in the spirit of contrition, of which I am sure the noble Lord, Lord Hewlett, would approve, to admit their own error and retrace their own steps, for the benefit of the country as a whole. So we hope, indeed, that there may be significant savings in that particular section.
There are other sections, too, in which there has been an inflation of bureaucracy: for example, Sir Keith Joseph's reforms of the National Health Service under the last Conservative Government. The Leader of the House will recall that Sir Keith Joseph took the somewhat unusual step of bringing in an American firm of consultants to advise him as to how the National Health Service should be reorganised. Well, we know how it has been reorganised, do we not? We know that administrators, very often in high places, have proliferated throughout the whole Service, to a point where the administrators outnumber those who are actually pursuing the work for which our hospitals are designed.
May I respectfully suggest to noble Lords that perhaps they might care to recall their American firm of consultants and ask them for advice as to the unscrambling of the wholly unwieldy admin-

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istrative structure that they as a Tory Government inflicted upon the country. Or, perhaps, to be a little more patriotic about it, may I commend to them the possible use of the organisation and methods division of the Treasury. After all, that is a domestic concern which contains many fine brains and it might do the job far more cheaply than the re-engagement of the American consultants who were previously employed.
Those are the only three items in the gracious Speech which so far promise any credits—any new sources of revenue—save one, and that is the Common Agricultural Policy. I observed with some pleasure that in the gracious Speech the Government will press for a fairer pattern of budgetary and resource transfers in the European Economic Community. Here is promising territory because at the present time, after all receipts, we are contributing net into the Community budget over £1,000 million a year. We have a Government now that believe in economies in public expenditure. Surely this is an item which they can get down to immediately.
I was somewhat dismayed to read in the Daily Telegraph that the new Chancellor of the Exchequer expressed astonishment at this figure, which means of course that he had not realised that this figure existed. We are all reasonable men and I would suggest to your Lordships that in any language £1,000 million—and some put it as high as £1,500 million—is a figure to which we ought, as businessmen and as administrators, to pay some attention. But the Chancellor of the Exchequer expressed astonishment. I always understood that shadow Chancellors had access to all published documents, in the same way as any private Member. Why should he express astonishment when these figures have been quite openly disclosed for the last four years? I will give the reference numbers: there is page 9 of Cmnd. 6721, Part 2, of February 1977; page 8 of Cmnd. 7049, vol. 2, of January 1978, and page 39 of Cmnd. 7439 of January 1979. Are we to assume that our new Chancellor of the Exchequer advised his party on the formulation of public policy, particularly fiscal policy, while he himself was in ignorance of the net contribution of the United Kingdom to Community funds?
Lord SOAMES: My Lords, will the noble Lord allow me to intervene for a moment because he has drawn me to my feet against my wishes, although as in a way this is a maiden speech perhaps I should not do it. The noble Lord is making a great deal of the word "astonishment": I think the astonishment expressed by my right honourable friend the Chancellor of the Exchequer was that this matter had not been dealt with by the party opposite while they were in power.
Baroness LLEWELYN-DAVIES of HASTOE: That is not what he said at all, my Lords.
Lord BRUCE of DONINGTON: Oh no, my Lords, that is not at all what the Chancellor said, and indeed the noble Lord, Lord Carrington, who made an observation on the same occasion, admitted to a similar degree of what I will term "uninformedness" when he was interviewed on the subject. He said: "I do not know what the figures are, but whatever the figures are it only lends credence to what I believe is a fact, that our contribution is disproportionate". I should have thought that this matter could have received far more vigorous attention than this. It will be in the recollection of your Lordships' House that I pointed out this question over two years ago round about this time of the year, and indeed the facts have not been unknown. The facts have been published in The Times. The whole trouble is that until now the Conservative Party have pretended that this did not exist and they have now suddenly been confronted with the facts. So we shall sincerely hope that they will tackle this matter.
They are going to have difficulties and this is where the warning that I have to give has point. As the noble Lord, Lord Soames, will know perfectly well, the Common Agricultural Policy, which is responsible for the bulk of this deficit—this is beyond any dispute—is out of control. Even though the agricultural price this year is not increased in respect of items in structural surplus, it will still grow and nobody can stop it unless it is changed. The noble Lord knows just as well as I do that the words which are in the Press today, concerning the position taken up by the French and the Belgian Governments, are one reason why it cannot happen without the unanimity of

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all the members of the Council; and as he knows, France and Belgium have already gone on record as advocating price increases during the current year.
So from this side of the House we wish our new agricultural Minister or the new Minister dealing with EEC affairs— Mr.Walker—and of course the noble Lord, Lord Carrington, well, and we promise them that in any endeavours that they make in this direction we shall endeavour to sustain them; but they had perhaps better forget now their entirely unjust and unworthy denunciations of Mr. John Silkin, who fought precisely for these matters in order that the British taxpayer should not have to pay any more.
In case there is a bit of a hypocritical attitude about it may I say that the representatives of the party opposite in the European Parliament in October last had a chance to do what Her Majesty's Government at the moment profess that they want to do. Amendments were tabled in October 1978 which sought to reduce by some 500 million the 1,500 million European units of account spent on storage. These were supported by British Socialists, by some Germans and by some Italians. Perhaps I should say to the House—and 1 have the records—that except for two, that is to say, Sir Derek Walker-Smith and Mr. Fletcher-Cooke, the entire Tory delegation, including its leader, Mr. John Scott-Hopkins, voted down our proposals to reduce the expenditure on storage and thus cost the country an extra £70 million. So I hope these points may be borne in mind as and when the Government opposite begin to get the feel of events.
The only other source to make up the deficit to finance the extra Government expenditure they are making, the tax reliefs that they propose—and, of course, unofficially there is reported some extra revenue from North Sea oil although that has not yet been confirmed by the Government—is an increase in indirect taxation. The Party opposite has, of course, a mandate. But what it has not got from the electorate is a mandate to increase indirect taxation—no mandate whatsoever. This is what the Conservative Manifesto says:
"We shall cut income tax at all levels to reward hard work, responsibility and success, and simplify taxes like VAT".
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Well, of course, it would simplify it to make it 10 per cent. instead of 8 per cent. It is rather easier to do it mathematically. Perhaps that could go through in the new Budget under the guise of simplification. Or, of course, 20 per cent. would be simplifying it because you only have to divide by five rather than contort yourself doing the 8 per cent. sum. So perhaps we will get an increase of VAT under the guise of simplification. All I should like to say, as indeed the House can confirm, is that there is no mention in the gracious Speech of any intention to increase value added tax. Indeed, of course, according to the Election Manifesto there is no mandate for it at all. So bearing in mind that the Government have to have money to carry on their business, and they are already committed to increased expenditure all round, with comparatively minor economies, it will be interesting for us to see how they make up the deficit.
There is another source, of course, and I am emboldened to mention this by some remarks that fell from the lips of the noble Earl who seconded the Motion for the Address—the noble Earl, Lord Onslow— who referred to direct taxation on corporations. On this matter the Conservative Manifesto of 1979 is singularly silent. There is no mention of it in the gracious Speech. There seems to be a conspiracy of silence about it. Is it in mind, or if it is not in mind may I put it in the mind of Her Majesty's Government that a considerable increase in corporate taxation is highly desirable, that in point of fact, as against the nominal rate of 52 per cent. corporation tax which is supposed to be paid by larger companies with larger turnovers, the figure actually materialises at something nearer 26 or 27 per cent.
It is quite true that there should be a shift from direct taxation on individuals. Indeed Mr. Healey had plans, as he has already outlined, to do precisely that. But surely the best way of doing it, rather than doing something for which there is no mandate, is to transfer the burden to corporations, who are in fact bearing less than their due share of tax and have done so ever since the reliefs that were accorded them by the Heath Government of 1972; you had 100 per cent. depreciation on all new plant and machinery and new capital plants have been a charge against profits ever since. He bitterly complained afterwards, which

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only goes to show that you cannot have incentives for companies as distinct from individuals, or disincentives. He complained in August 1972 that, in spite of all the aids his Chancellor had given them, British industry was still not investing, because apparently there was no climate to invest.
So in considering the whole vexed question of taxation, upon which the Government's fortunes seem so much to depend, may we respectfully suggest to them that these matters have their attention, particularly bearing in mind that the total tax and social security burden borne in Great Britain is still significantly less than the same total in the remainder of Europe despite what anybody else may say. These are all matters on which there will be much thought and we hope some revision of thought. Power brings responsibility, and responsibility brings, one hopes, a good deal of argument and disputation as to the correct priorities to be adopted. So it is all going to depend on incentives.
One of the most disappointing features about the whole approach of Her Majesty's Government to incentives is that, despite the qualification given to it by the noble Lord, Lord Soames, which qualification does not seem to be universally shared by his Administration, the real appeal of the Conservative Party for the revival of the nation's fortunes seems to be, "Grab all you can as quickly as you can". The appeal is a material one. People will not respond unless the incentives have the character of more this, more that and more the other. This is the gamble. We have to concede, and on these Benches do concede, that it is possible that you might conceivably be right, in a social climate in which acquisitiveness for the sake of acquisitiveness is advertised and blared out by the Press media, by the broadcasting media, to a point where the whole be-all and end-all of life as presented to our citizens is concentrated on nothing else but acquiring more and more material goods, either for their alleged comfort or to keep up with the Jones's. It is very dangerous, however, to rely on this incentive because you might conceivably be wrong.
There are other values. There are, for example, the incentives which arise from more and more direct involvement in
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work, direct involvement in the whole social organism of the workplace itself, a growing interest and permanent involvement in the actual work you are doing and its enjoyment. There is such a thing as ensuring the maximum use of people's abilities. Most people do not like to work in a way whereby their personal abilities are not fully used; this is important, as is the incentive of opportunities for more creative leisure, which is also a vital factor of incentive if there is to be recovery in our country. Our business has got to be to create the social climate within which this can happen. The social climate does not of necessity depend purely on financial gain. It depends on getting a spirit of co-operation among our people. It all depends on this. As one gathered from the very excellent speech of my noble friend Lord Wedderburn, at times when we tend to be critical of people of whom we disapprove we should remember that there are beams in somebody else's eye that ought to be paid attention to as well.
My Lords, with those sentiments in mind, and trusting that I have not exceeded the decent bounds of controversy on this my first occasion from the Box, I say, as indeed my Leader in the Commons did, that we welcome Her Majesty's Government here on short tenure but we do not feel that they are going to become a permanent institution.
7 p.m.
The MINISTER of STATE, TREASURY (Lord Cockfield): My Lords, during the last two years there have been a number of debates in your Lordships' House on economic affairs, productivity, innovation and other apsects of our economic life and fortune. Those debates have been of a uniformly high standard and have contributed to public enlightenment and to a deeper understanding of the issues involved. Today's debate has followed in that tradition. So many points have been raised that I hope I may be forgiven if I speak at somewhat greater length than I had originally intended.
I was particularly interested in the speech of the noble Lord, Lord Peart, who seemed to think that by describing our policies as doctrinal that relieved him of the necessity of examining those policies on their merits. His speech

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reminded me of the old legal adage: No case—abuse plaintiff's attorney. If, of course, the noble Lord regards a profound belief in the freedom of the individual, a profound belief in individual enterprise and initiative, a profound belief that the powers and functions of the State have grown excessively and ought to be reduced—if he regards all those things as doctrinal then we are happy to plead guilty to the charge.
At the other end of the debate I was particularly glad to hear that we have the wholehearted support of the noble Lord, Lord Bruce of Donington, in the steps we propose taking to reduce bureaucracy and to cut out waste in Government expenditure. We shall remember that pledge of support. I was fascinated by the attempt of the noble Lord to deliver his own Budget speech—something which in the real world we shall mercifully be preserved from. I am afraid that all I can say to him is that he will need to possess himself in patience until 12th June.
A number of noble Lords raised the question of the National Enterprise Board. As my noble friend the Leader of the House said, we are opposed to further nationalistion whether by the front door or the back. We recognise that certain of the companies presently held by the NEB—for example, ICL and Brown Boveri Kent—have in themselves been extremely successful. However, I see no reason to suppose that they would not perform equally well, if not better, under wholly private sector ownership.
I think that it is as well that I should remind your Lordships, as indeed my noble friend Lord Hewlett did, that our Manifesto commitment was:
"To amend the 1975 Industry Act and restrict the powers of the NEB".
We are now considering how best to implement that policy. We recognise that circumstances may arise where assistance from Government is needed. Perhaps I may quote what my right honourable friend the Prime Minister said last week in Perth:
"We accept that Government has a duty to mitigate the effect of industrial change. While we see no benefit in pouring vast sums of taxpayers' money into firms or industries which have no future or which lack the will to adapt to the new demand of their customers, we will certainly not turn a blind eye to industries which need assistance to overcome the problems of transition. We will
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be prepared to help them along the way, as long as there is a real prospect of success".
A number of noble Lords—
Viscount SIMON: My Lords, before the noble Lord leaves the question of the NEB I should like to raise one small point. He said that the proposals were to restrict the "powers" of the National Enterprise Board. That seems to me a little different from what is said in the gracious Speech; namely, to restrict the "activities" of the NEB. I wonder whether there is any difference in meaning?
Lord COCKFIELD: My Lords, I do not think that one can really separate the activities of the various parts. I cannot see that there is any substantial difference, or indeed any difference, between what was contained in the Manifesto and what was said in the gracious Speech. I went on to say that we are now considering how best to implement those policies.
I should like to turn to what was said both by the noble Lord, Lord Peart, and other noble Lords about what, in these days, are referred to as Quangos. We recognise that many of these boards and organisations make an important contribution to our national life. But our priorities are clear. We said in our Manifesto:
"We will see that Parliament and no other body stands at the centre of the nation's life and decisions and we will seek to make it effective in its job of controlling the Executive".
We firmly intend to review the nature and operation of Quangos in the light of that commitment.
The noble Lord, Lord Rochester, asked me about disputes procedures. Good procedures have existed for many years which allow for arbitration as a precursor to industrial action. For several decades Governments and both sides of industry have recognised the importance of such agreements. Indeed, in recent years Governments of both parties, directly through the Department of Employment and indirectly through the creation of ACAS, have recognised this and provided an advisory service to industry to put across the message. Of course, no procedure creates of itself industrial peace. That depends on the industrial climate and the open-mindedness of both sides of industry.

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There was also a great deal of talk about incomes policies and a number of noble Lords called for permanent incomes policies—in particular, the noble Lord, Lord Rochester, the noble Lord, Lord Jacques, and the noble Lord, Lord Balogh. I do not think that a winding-up speech is the occasion for going into the philosophy of centralised or governmental controls over wage bargaining and wage levels. But I am bound to say that it does sound odd to us to hear these appeals for permanent incomes policies coming from supporters of a Government who increased the trade unions' bargaining muscle on the one hand while constantly repeating that no pay policy would ever stick that did not have the consent of the unions on the other. The unions made a sharp reply to the Government's 5 per cent. norm last winter and we shall suffer the consequences for a long time. The truth is, as my noble friend the Leader of the House said in his speech, that centralised pay controls are simply not "on" at present, whichever Government are in power and whatever the pros and cons of the arguments concerning them.
I must also say that we refuse to be castigated by the noble Lord, Lord Jacques, as a generator of unemployment when the noble Lord himself served in a Government which increased unemployment during their period of office by over 130 per cent. I do not lay all the blame on the Labour Government for that record, but I lay enough of it not to take the noble Lord's strictures too seriously.
On the question of unemployment, the noble Lord, Lord Balogh, suggested that a tight monetary policy would raise unemployment. The Government are, indeed, pledged to keep a firm hold on the money supply, but it is quite wrong to suggest that unemployment would be reduced by a lax monetary policy. On the contrary, only if inflation is brought under control can we hope to achieve a reduction in unemployment. We have consistently made it clear that a responsible monetary policy will have a major part to play in the battle against inflation that lies ahead.
I was grateful to the noble Viscount, Lord Simon, for his comment in relation to company law, a point which was also raised by the noble Lord, Lord Wedderburn of Charlton. A Companies Bill
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will be introduced after the Whitsun Recess, and this will make provision for the changes in our legislation necessary in order to implement the EEC's Second Directive on company law. Further legislation to amend company law will be necessary next year, and a number of additional measures of company law reform will be included in this later Bill. As the noble Viscount said, these Bills will provide the right opportunity for debating these important issues.
I should now like to turn to the general question of the state of the economy. There can be no doubt at all about the seriousness of the situation which we face. This point was rightly stressed by my noble friend the Leader of the House. On the basis of the policies followed hitherto, the prospects for British industry, both in the immediate future and in the longer-term, are far from encouraging. Manufacturing output is lower now than it was in 1974; output per head is not much higher than it was then and it is hardly increasing at all. With output static, increased imports met much of the demand caused by the upturn in consumption last year. The profitability of manufacturing industry is low. Employment in manufacturing is, indeed, now about 7 per cent. lower than it was in 1973. Industry is simply not creating enough new jobs to make any real impact on the present level of unemployment, let alone absorb the large number of extra workers who will come into the labour force within the next few years. That is the measure of the problem which faces us as a result of what has happened over the last five years.
I know that it has become commonplace to claim—as, indeed, the noble Lord, Lord Kaldor, has done both today and on other occasions—that the industrial decline of this country has been going on for 100 years or more. Like so many examples of commonplace wisdom, that is neither universally true nor true in respect of all times within this period. Thus, in so far as comparisons are available, the inter-war years showed a remarkable recovery by the United Kingdom, with productivity growths exceeding those of most other industrialised economies to a pronounced extent. In terms of real gross national product per head, the United Kingdom was passed only by the United States in the pre-World War II

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years. But of more immediate relevance is the fact that in the period 1951 to 1964—the 13 golden years of Conservative Government—our national income rose by an average of more than 3 per cent. per annum. In the years 1970 to 1973 it rose by 3·6 per cent. per annum. In sharp contrast, in the last five years the rate of growth has been a dismal 1 per cent. per annum.
Of course, there has been no shortage of alibis; indeed, the production of alibis has been one of the few areas of outstanding growth in the manufacturing sector in the last few years. For example, there is much talk of the oil crisis of 1973, and that argument was repeated today. But that did not prevent Western Germany achieving a growth rate over these last five years two and a half times greater than we did; or the United States achieving a growth rate more than three times our own; or France nearly four times, or Japan five times. None of these countries had the benefit of North Sea oil, as we did.
Lord KALDOR: My Lords, perhaps the noble Lord will allow me to ask a question. Will he agree that the great difference between the periods in which we did well and the periods in which we did badly related to our net exports?— that is to say, the periods when we did well in the inter-war years and after the war were when our imports were kept down either by high protection or by import controls, which the Conservative Government re-introduced in 1951 and which continued until the end of that decade. Will he also agree that, equally, the performance of Germany and France in relation to us is largely explicable in terms of the differences in the trends of their exports in relation to our output and to world trade, and in their declining import penetration when our import penetration had risen beyond all bounds?
Lord COCKFIELD: My Lords, I think that the noble Lord's intervention can be answered very simply indeed. The major difference was that the periods of high growth were periods of Conservative Government and the periods of low growth were periods of Labour Government.
Of course, the past is essentially a matter of history and it is relevant to our present
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problems only in so far as we can learn and profit from it. What we are really and deeply concerned with is not the past but the future. If there is one lesson that we can and must learn from the past in order to apply it to the future, it is that for most of the last 15 years—that is, since 1964—we have been marching up the wrong road: growing state involvement in industry, growing intervention in the economy, excessive Government expenditure and excessive taxation.
Earlier this month the people of this country decided that this had got to stop, that we must follow a new path which will help and not discourage; which will strike off the shackles not rivet them on; which will be a broad highway to progress, not a path to decline. We do not underestimate the immensity of the problems, but we have the policies to deal with them; those policies are set out in our Manifesto, and many of them have already been included in the gracious Speech. Action has already been taken in a number of important fields. The next major step forward will come when my right honourable friend the Chancellor of the Exchequer opens his Budget, which he will be doing on 12th June.
The most urgent problem facing the country is that of inflation, which was clearly on a rising trend before the election. This we shall tackle, and tackle resolutely, by following sound fiscal and monetary policies. Sound money is the foundation of a stable society and the only base on which prosperity can be built. But even if, as we intend, a proper fiscal and monetary discipline is re-established, the basic problem which still faces this country is that we do not produce enough. We do not produce enough because our productivity is too low. Our productivity is too low because we do not use our productive resources efficiently enough. We do not use our resources efficiently enough because neither management nor workers—sometimes one, sometimes the other and sometimes both—do not have the willingness, the determination or the incentive to do so. We do not create enough new businesses, and as a result we are failing to create the genuine and productive new jobs which we need. This is the result of an inadequate level of profits, excessive taxation and discouragement due to Government restrictions and regulations. None of these things can be

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cured overnight, but they can never be cured at all unless the Government take the lead and create the right atmosphere in which people can themselves tackle these problems and cure them. Let us never forget that Government is the servant of the people and not their master.
Our principal objective must be to reverse the decline which has occurred in the private sector. Our proposals in the field of direct taxation are specifically designed for this purpose. They will provide incentives which have been absent for so long. Incentive is not just a question of making sure that the rewards for an extra hour's or extra day's work are sufficient; it is also a matter of ensuring that it is worthwhile for individuals to improve themselves through education or apprenticeships, of encouraging people to work for promotion, and of helping management to take on extra responsibility. Without a sufficient framework of incentives we have no hope of spurring individual effort and initiative, and on this our economic recovery depends.
The erosion of differentials through taxation has been a potent source of grievance, has harmed output and productivity, and has created industrial strife. Our policy, therefore, rests upon the twin pillars of providing incentives and removing discouragements. The success of such a policy depends—and we would not attempt to burke this issue—upon the reaction of management, of workers, of investors, of savers, and indeed of all sections of the community.
When I read economics many years ago—I never had the good fortune of being a pupil of the noble Lord, Lord Kaldor, but I was a pupil both of the noble Lord, Lord Robbins, and of Professor Hayek—it was often debated whether economics was an art or a science. It is certainly not a science in the exact sense of mathematics, physics, or chemistry, but it is a science of human behaviour. Human behaviour, not always, but most of the time, is rational. People can see where their best interests lie and they tend to follow the course which is most to their advantage. There is no reason to suppose that people will not react reasonably and sensibly, and to their own advantage and to the advantage of the community as a whole, to the
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policies we propose, and there is every reason to suppose that they will react reasonably and sensibly. Indeed, the decisive rejection by the people of this country of the Labour Government and of the policies they followed over the last five years is the clearest possible evidence that people do understand these matters, and that, however long it may take them, they do take the right decisions.
None of us in your Lordships' House doubts the spirit of the British people. None of us on these Benches doubts that the ills of the economy can be cured. None of us doubts that the people will respond favourably—not necessarily in what they may say but certainly in what they do—to the policies we propose. When at the end of the lifetime of this Parliament we look back our only surprise will be that it took so long to start out on the right road.
Lord DENHAM: My Lords, on behalf of my noble and learned friend the Lord Chancellor, I beg to move that this debate be now adjourned.
Moved, That the debate be now adjourned.—(Lord Denham.)
On Question, Motion agreed to, and debate adjourned accordingly.

BRITISH RAILWAYS (SELBY) BILL
Brought from the Commons and (pursuant to the Resolution of the 4th April last) Bill deposited in the Private Bill Office, together with the declaration of the agent: Bill presented;read la; read 2a pro forma and committed to an Unopposed Bill Committee with the Instruction agreed to by the House on the 12th of March last.
IPSWICH PORT AUTHORITY BILL
Brought from the Commons and (pursuant to the Resolution of the 4th April last) Bill deposited in the Private Bill Office, together with the declaration of the agent; Bill presented; read la, and referred to the Examiners.

SHEFFIELD GENERAL CEMETERY BILL
Brought from the Commons and (pursuant to the Resolution of the 4th April

121
last) Bill deposited in the Private Bill Office, together with the declaration of the agent: Bill presented; read 1a; Reported from the Select Committee with Amendments pro forma and Re-committed to an Unopposed Bill Committee.

CHESHIRE COUNTY COUNCIL BILL [H.L.]
COUNTY OF MERSEYSIDE BILL [H.L.]
WEST MIDLANDS COUNTY COUNCIL BILL [H.L.]
WEST YORKSHIRE BILL [H.L.]
The Chairman of Committees acquainted the House, That (pursuant to the Resolution of the 4th April last) the Bills had been deposited in the Private Bill Office, together with the declarations of the agents: Bills presented; read 1a, and pro forma passed through all their remaining stages: Bills sent to the Commons.

CANE HILL CEMETERY BILL [H.L.]
The Chairman of Committees acquainted the House, That (pursuant to the Resolution of the 4th April last) the Bill had been deposited in the Private Bill Office, together with the declaration of the agent: Bill presented; read la, and reported from the Examiners.

GREATER MANCHESTER PASSENGER TRANSPORT BILL [H.L.]
UNIVERSITY COLLEGE LONDON BILL [H.L.]
The Chairman of Committees acquainted the House, That (pursuant to the Resolution of the 4th April last) the Bills had been deposited in the Private Bill Office, together with the declarations of the agents: Bills presented; read 1a and pro forma read 2a, and committed to Unopposed Bill Committees.

DARTMOOR COMMONS BILL [H.L.]
GREATER MANCHESTER BILL [H.L.]
ISLE OF WIGHT BILL [H.L.]
SOUTH YORKSHIRE BILL [H.L.]
TYNE AND WEAR BILL [H.L.]
The Chairman of Committees acquainted the House, That (pursuant to the Resolutions of the 4th April last) the Bills had been deposited in the Private Bill Office, together with the declarations of the agents: Bills presented; read 1a, and pro forma read 2a, and committed to Select Committees.

VAN DIEMEN'S LAND COMPANY BILL [H.L.]
The Chairman of Committees acquainted the House, That (pursuant to the Resolution of the 4th April last) the Bill had been deposited in the Private Bill Office, together with the declaration of the agent: Bill presented, read 1a, and pro forma read 2a, and reported from the Unopposed Bill Committee.
House adjourned at twenty-five minutes past seven o'clock.