Sitting of 7 November 1979

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

  MINISTRY OF OVERSEAS DEVELOPMENT
  THE VICE-CHAMBERLAIN OF THE HOUSEHOLD reported Her Majesty's Answer to the Address as follows:
  I have received your Address praying that the Ministry of Overseas Development (Dissolution) Order 1979 be made in the form of the draft laid before your House.
  I will comply with your request.

PRIVATE BUSINESS
  DUMBARTON DISTRICT COUNCIL ORDER CONFIRMATION BILL
    GREATER GLASGOW PASSENGER TRANSPORT ORDER CONFIRMATION BILL
      KILMARNOCK AND LOUDOUN DISTRICT COUNCIL ORDER CONFIRMATION BILL
        SCOTS EPISCOPAL FUND ORDER CONFIRMATION BILL

          STIRLING DISTRICT COUNCIL ORDER CONFIRMATION BILL
          Orders for consideration read.
          To be considered tomorrow.

ORAL ANSWERS TO QUESTIONS
  TRANSPORT

    Vehicle Excise Duty
    Mr. Rostasked the Minister of Transport if he will make a statement on the proposal to abolish the motor vehicle licence.
    The Minister of Transport (Mr. Norman Fowler): I have already made clear that various proposals concerning the future of vehicle excise duty are under examination. The Government will announce their decision in due course.
    Mr. Rost: Will my right hon. Friend confirm that a switch in tax direct to petrol would gain the Revenue about £60 million a year from those at present evading the tax? Will he remind the House of the administrative savings that would result? Does he accept the argument in support of energy conservation that would come from the fresh incentive not only to the motor manufacturers to produce more economical cars but to the consumers who might buy them?
    Mr. Fowler: Administrative savings and energy conservation have been very much in mind in the review. However, the energy considerations have decreased slightly in importance because of the increase in petrol prices since the previous Labour Government's proposals were published.
    Mr. Anderson: Is the Minister prepared to give any weight to the consequent loss of 800 job opportunities in an area of high unemployment? The employment structure of that area already has been threatened seriously by the Government's policy on steel and the withdrawal of regional development grants.
    Mr. Fowler: As the hon. Gentleman knows, I have had talks with members of the department in Swansea. I am sure that it is the wish of both sides of the House that administrative savings should be made in that area.

    Road Repairs (West Yorkshire)
    Mr. Fordasked the Minister of Transport if, in view of the serious backlog of road repairs in the West Yorkshire county council area and the consequent cost to the industrial economy, he will take special measures to enable the highway authorities to reduce these arrears of work.
    The Parliamentary Secretary to the Ministry of Transport (Mr. Kenneth Clarke): I accept that there may be a backlog of road repairs in the county, but that should be considered within the normal transport supplementary grant arrangements.
    Mr. Ford: Is the hon. Gentleman aware that his reply will be most disappointing to the Conservative dominated authorities of West Yorkshire? They are hoping to recoup the backlog of road repairs by virtue of the fact that they have been seeking strenuously to attract industry from both home and abroad. They are inhibited from doing so by the state of the roads in West Yorkshire. Will the hon. Gentleman please reconsider his answer?
    Mr. Clarke: I have said already that that problem will be considered as part of the transport supplementary grant arrangements. In finalising this year's transport supplementary grant settlement, we realise that many counties face difficulties with highway maintenance. If they make that a priority in their bids, we shall reflect that to some extent in the grants.

    Provincial Rail Services
    Mr. Andersonasked the Minister of Transport what is his policy towards provincial rail services.
    Mr. Fowler: I am considering currently how best to safeguard and develop rural public transport, and I am considering the views recently put to me by the Central Transport Consultative Committee about how best to maintain the existing rural rail network. But I have always made it clear that I can see no case for a further round of Beeching cuts.
    Mr. Anderson: How is "Beeching" defined in this context? Is the Minister saying seriously that the article in The
    380
    Guardian today is a complete figment of some civil servant's imagination, or that he was unaware of what was being done behind his back by civil servants in his Department? Is the Minister aware that if any cuts on the scale suggested in The Guardian go ahead, they will be fought all the way by the Opposition? We hope to be joined in that by many Conservative Members whose rural constituents would become more isolated if the cuts were to go ahead than they have been for a century.
    Mr. Fowler: Let me make it absolutely clear that the report in The Guardian is untrue. I read it with astonishment. As I have hold the House, I see no case for another round of massive cuts in the railways. I have no list of passenger services for closure such as is printed in The Guardian. There have been no secret talks between my officials and the Railways Board to discuss any such list of closures. I deplore the groundless anxiety caused by such inaccurate reports.
    Mr. Goodhew: Can my right hon. Friend assure me, if there are not to be massive cuts, that at least he will not cut the Watford to St. Albans line, which is a very convenient alternative to those who find the electrification of the St. Pancras to Bedford line, with its bad timekeeping at the moment, rather inconvenient?
    Mr. Fowler: There are no proposals of that kind. The statutory position is that British Rail cannot withdraw a passenger service or close a passenger station without my consent. The House may be reassured to know that the only cases currently in the statutory procedure are the Board's proposal to withdraw the rail service connecting to the Humber ferry when the new bridge opens, and its proposal to divert a service from Kentish Town to Gospel Oak on the North London line.
    Mr. Snape: Without commenting further on the accuracy or otherwise of the article in The Guardian, will the Minister give an assurance that if 900 or so miles of railway line were ever to be cut, he would consider it to be a resigning matter?
    Mr. Fowler: I would certainly consider it to be a disaster, and that is why I have made it clear that it is not the Government's intention to do so.
    Mr. Fry: In order that the House may take a slightly less emotional view of this topic, will the Minister supply details of the subsidy paid per passenger mile to rail as opposed to that paid to bus services? Would it not be a good idea to examine this matter in detail in relation to these rural lines?
    Mr. Fowler: Currently, the Government provide British Rail with more than £700 million a year, which is more than £2 million a day. Last week provision for the support of the passenger railway was reduced by £22 million, of which £9 million was decided by this Government and £13 million by the previous Government.
    Mr. Booth: May we take it from what the Minister said that he has an understanding with British Rail that it will accept the £22 million cut in Government provision without any withdrawal of passenger services? The House is not satisfied that what are called rural passenger services in this context are a minority interest. They cover a vast number of towns and cities. Will the right hon. Gentleman assure the House that the report just completed by the Policy Studies Institute into the effects of withdrawal of rural rail services will be available for study by Members of Parliament before any announcements are made about changes in the network?
    Mr. Fowler: I shall look into the second matter raised by the right hon. Gentleman. On the first one, obviously it is a matter for British Rail to decide how it should live within the cash limits. Sir Peter Parker sent me the Board's 1979 corporate review on 25 October. It contains financial evaluations of a number of options drawn up by the Board at the end of last year. They include an option on closing some services. However, as I believe has been made clear before, they were options. Certainly no decisions have been taken, and I have not even discussed the position yet with the chairman of the Board, since it arose only at the end of October.
    Several Hon. Members rose—
    Mr. Speaker: Order. I shall call one more hon. Member from each side. We shall then have had a good run on this question.
    Mr. McCrindle: Whatever may be the policy about rural services, and I accept
    382
    what my right hon. Friend said, will he take this opportunity to reaffirm that it is no part of this Government's policy to preside over a still further deterioration of London commuter services, especially when we are faced with a 20 per cent. increase in season tickets?
    Mr. Fowler: It is no part of my intention to preside over the deterioration of British Rail services, and that is central to our policy.
    Mr. Donald Stewart: Is the Minister aware that the cuts already made in Scotland under the Beeching plan left us with services far below an acceptable minimum? Is he aware, further, that the bus services in lieu mostly never materialised, and that where they did they have since disappeared? In many areas, the railway provides the only means of contact, particularly during inclement weather. Will the right hon. Gentleman repel any suggestions from British Rail that these should be cut further?
    Mr. Fowler: I have already made my position clear on proposals for a Beeching type cut, and it is for British Rail, if it wants to put forward suggestions for bus substitution on one or two services, to do so if it wishes.

    Heavy Lorries
    Mr. Bendallasked the Minister of Transport if he will make a further statement on the Armitage inquiry into heavy lorries.
    14. Mr. Iain Millsasked the Minister of Transport what progress the Armitage inquiry into heavy lorries has made to date.
    Mr. Cookasked the Minister of Transport if he will extend the closing date for submissions to the Armitage inquiry on lorries and their impact on the environment.
    Mr. Kenneth Clarke: Sir Arthur Armitage has been receiving written evidence from organisations and from individual members of the public since August. He has asked that it reach him by 9 November if possible, but I understand that he will be happy to consider any evidence submitted after that date, provided that it is received by the end of the year. He is asking for other evidence on specific matters as he sees fit.

    383
    I understand that Sir Arthur Armitage hopes to present his report to my right hon. Friend by around the middle of next year. We will have the report published as soon as possible after it is received.
    Mr. Bendall: Will my hon. Friend take account of the considerable concern of a large number of people in the large conurbations and other areas about the disturbance caused by very large lorries and the effect that these vehicles have on property in terms of subsidence?
    Mr. Clarke: I am in no doubt whatever about the strength of feeling on the subject in many urban areas and market towns. The problem of dealing with that is one of the matters that are before Sir Arthur Armitage.
    Mr. Cook: Is the Minister aware that the House will appreciate the extension beyond this month of the time limit for acceptance of representations? Does he recognise that it would have been unreasonably swift to have imposed a November time limit on representations to an inquiry which was announced only after Parliament rose for the Summer Recess? Will the Minister give a guarantee that the finding of his Transport and Road Research Laboratory that the damage to the towns referred to is caused by the noise of heavy lorries which creates vibration will be available to the inquiry?
    Mr. Clarke: Everyone is anxious that no evidence should be excluded on grounds of procedure or time. Sir Arthur Armitage has decided to extend the time for that reason. The evidence and information produced by the TRRL and its reports will be made available to the inquiry.
    Mr. Stanbrook: Is my hon. Friend aware that the best contribution that he can make to reducing the nuisance caused by heavy lorries in South-East London is to get on with the construction of the M25 there?
    Mr. Clarke: Motorways have made a great contribution to taking a lot of heavy traffic out of towns and villages. Our number one priority in the national road building programme is the M25. That will have a significant effect in relieving large areas of outer London of traffic which is too heavy for existing roads.
    Mr. John Wells: Will Sir Arthur Armitage be considering in any way the impact of the Channel tunnel project in so far as it affects the inquiry?
    Mr. Clarke: My right hon. Friend has already announced that the Cairncross inquiry will be looking at all aspects of the Channel tunnel project.
    Mr. Crowther: In view of the amount of very proper public concern about the safety of heavy lorries, is the Minister aware that great dismay will be caused by a proposal now being considered in his Department that the routine inspection of heavy lorries and public service vehicles should be hived off to the private sector? Is he aware that this will cause much alarm and ought to be dropped?
    Mr. Clarke: Nothing is being considered in the Department that will reduce the safety requirements imposed on vehicles. Any proposals that are made will bear in mind the need to ensure that the present high standards are maintained.

    Level Crossings
    Mr. Dykesasked the Minister of Transport what plans he has to introduce unmanned automatic level crossings.
    Mr. Fowler: I announced on 25 October my acceptance of the main conclusions of the joint Department of Transport and British Rail working party on level crossing protection. In doing so, I approved new standards for level crossings. That will enable British Rail to bring forward proposals to install new unmanned automatic crossings which are safer, cheaper and more effective than the old gated sort.
    Mr. Dykes: Is my right hon. Friend aware that his announcement on that date received a wide welcome from all parts of the community? I pay tribute to the many hundreds of level crossing keepers who do a good job, but does my right hon. Friend agree that all the statistical evidence shows that unmanned crossings are safer?
    Mr. Fowler: I am grateful to my hon. Friend. He is right. All the evidence shows that the number of accidents occurring at level crossings should be reduced rather than increased by the measure.

    Sheffield-Manchester Rail Link
    Mr. Hooleyasked the Minister of Transport what proposals have been put to him for major capital investment in the railway line from Sheffield to Manchester via Woodhead.
    Mr. Flanneryasked the Minister of Transport if he has been notified by the Railways Board of any decision regarding the future of the Sheffield-Woodhead-Manchester railway line.
    Mr. Kenneth Clarke: I have received no investment proposals in respect of this line, nor have I been notified of any decision regarding its future.
    Mr. Hooley: Is the Minister aware that this is the most modern of the four trans-Pennine tunnels? It is the only one that is capable of taking modern container traffic, and its electric cable could be renewed for £3 million over a period of five years. In those circumstances, would it not be mad to contemplate closing the line?
    Mr. Clarke: Those are operating considerations which British Rail judges, in deciding how best to deal with trans-Pennine freight traffic. The line is electrified, but not to the same system as the remainder of the network. In terms of the investment that may be required to modernise it, the hon. Gentleman should remember that British Rail has to decide on its priorities. Those may not always be freight lines that are duplicated by other routes.
    Mr. Flannery: Will the Minster accept that editorials in the local press in Sheffield and in other cities have complained that the decision has been taken to close one of the first electrified lines and the first great railway tunnel in the world? Will he also accept that, to the people of the great conurbation of South Yorkshire, that seems to demonstrate a lack of faith in the people in the area—[HON. MEMBERS: "Question."] I am asking a question. Will the Minister accept from me that people believe that, because of the wretched disgrace of the line from London to Sheffield through Nottingham and Derby, they are being badly treated?
    Mr. Clarke: The press reports on the decision probably emanated from The
    386
    Guardian, which announced that the decision was taken a fortnight ago. The Board assures me that it is embarking upon a wider process of consultation and that no decision has been reached. I am aware of the discontent that is felt in Sheffield about rail services generally, and I have been in correspondence with hon. Members representing Sheffield constituencies about the Board's proposals for bringing high-speed trains and other improvements to the area.
    Mr. Adley: I understand the emotional attachment that might be felt to the Woodhead tunnel, but is not it strange to hear from Opposition Members, who profess to believe in integrated transport, that they are upset about a decision which is an attempt to integrate the various transport systems between the two cities?
    Mr. Clarke: I hope that we all agree that a decision has to be taken by the Railways Board, whose members are the experts on management problems. It must decide how to provide the best and most economic freight service for the development of the freight railway business as a whole.
    Mr. Marks: When the Minister talked about opposing line closures, was he including the Woodhead line from Manchester to Sheffield?
    Mr. Clarke: My right hon. Friend confirmed that we had received no proposals for closure of passenger services. We are in no discussions with the Board about such closures. The future of freight-only lines is a matter for the Board alone. Ministers play no part in it, and we would not normally be notified of such decisions.

    Coaches (Safety Regulations)
    Mr. van Straubenzeeasked the Minister of Transport whether he is satisfied that existing regulations governing the safety requirements of coaches available for public hire are adequate.
    Mr. Kenneth Clarke: Generally, yes, but my right hon. Friend is preparing certain improvements in relation to future production of new vehicles on braking standards, emergency exits and strength of superstructures.
    Mr. van Straubenzee: I thank my hon. Friend for his helpful reply. Will he confirm that in relaxing bus and coach licensing laws, which I support warmly, he will do nothing to imperil the safety of passengers?
    Mr. Clarke: I am happy to give that assurance. Our proposals will not weaken the quality control that is exercised through the licensing system. It is the quantity side of the system which is too restrictive and out of date for modern requirements.
    Mr. R. C. Mitchell: Is the Minister aware that a large number of coaches for public hire that are used in the evenings, and sometimes return in the early hours of the morning, are driven by people who have done a full day's work in another capacity? Is he satisfied that the safety regulations are adequate in that respect?
    Mr. Clarke: I accept that the hon. Gentleman points out a weakness in the drivers' hours regulations. At the moment, they take no account of that factor. It is difficult to devise a workable system to cover the problem, but we are anxious to have a look at any worthwhile suggestions to improve the matter.
    Mr. Moate: Will my hon. Friend go further than he did in his answer to my hon. Friend the Member for Wokingham (Mr. van Straubenzee) and say that, when he encourages further competition in excursion, express and tour services, he will bear in mind that more rigorous safety standards than apply at the moment are needed? Will he give consideration to improving general safety standards for the protection of the public against sub-standard and badly maintained vehicles?
    Mr. Clarke: The details will have to await the publication of the Bill. However, I assure my hon. Friend that we do not propose to weaken the requirements on operators. They should be capable of maintaining their fleets in a proper condition. The inspection of vehicles to ensure that they are fit for public service will not be weakened.

    Bus De-Licensing
    Mr. Spriggsasked the Minister of Transport what representations he has re-
    388
    ceived about his proposals for bus de-licensing.
    Mr. O'Halloranasked the Minister of Transport what representations he has received about his proposals for bus de-licensing.
    Mr. Fowler: Since my proposals for relaxing the bus licensing system were published in August, I have received representations from the trade unions, the local authority associations, the bus and coach operators and many other organisations.
    Mr. Spriggs: Is the right hon. Gentleman aware that his proposals constitute a massive threat to the future of bus services in rural areas? Is it not the case that the inevitable result of the proposals will be the entry of cowboy operators who will cream off the profits on the most popular routes, leaving no cash for the National Bus Company to provide bus services out of its resources?
    Mr. Fowler: The hon. Gentleman is completely wrong. The aim of the proposals is to encourage new services to develop. The Guardian leader this morning stated that the best hope
    "for rural areas lies in the liberating provisions of the Government's proposed Transport Bill".
    I agree with The Guardian about that.
    Mr. Gummer: Will my right hon. Friend confirm that his proposals for bus de-licensing will mean that in rural areas small operations will be improved? In my constituency, one area's service is only two buses a month, which come under the traffic commissioners. They force the buses to stop only three times on seven miles of road in the village of Badinghani—they may not pick up more than that number of times altogether. Will he confirm that that sort of service will cease and that we shall be able to provide the community with the service it wants?
    Mr. Fowler: I agree entirely with my hon. Friend's remarks. In many rural areas, the bus services are inadequate and, in some cases, non-existent. We hope that we shall be able to encourage new operators to come forward.
    Mr. Booth: Will the Minister indicate when the Bill will be published with the

    389
    bus licensing proposals? Does he agree that it would be unrealistic to expect British Rail to be able to make arrangements with the National Bus Company for it to take over feeder services on loss-making routes while a major doubt hangs over any protection which exists for National Bus Company licensing, in order that British Rail can cross-subsidise such routes?
    Mr. Fowler: We have held full consultations with the bus industry and the National Bus Company. The right hon. Gentleman will be pleased to know that the Bill will be published during the course of the next two weeks.
    Mr. Temple-Morris: Does my right hon. Friend agree that one of the reasons why there must be change is the restrictive attitude of the National Bus Company, with its near monopoly, in objecting to literally every reasonable and inventive proposal to improve rail transport?
    Mr. Fowler: My hon. Friend puts forward an additional argument why reform is necessary. The bus licensing laws were set down in 1930. It is not revolutionary to suggest that they now need reform.
    Mr. Newens: Does the Minister expect any private operator to undertake an unremunerative bus service? That being so, the unremunerative services will still rest in the responsibility of the National Bus Company. Are we not therefore making it more difficult than ever for the National Bus Company to make a profit and striking a mortal blow at the nationalised service?
    Mr. Fowler: We are certainly not striking a mortal blow at the service. We are allowing county councils to be free to give revenue support to operators to run unprofitable services. The change will be that under this system those councils will have a much greater choice than at present.

    Motoring Offences
    Mr. Muddasked the Minister of Transport what plans he has to reform the system and administration of motoring offences; and if he will make a statement.
    Mr. Temple-Morrisasked the Minister of Transport if he has any pro-
    390
    posals to make on the subject of road traffic offences.
    Mr. Dickensasked the Minister of Transport if he will make a statement on any progress which he has made for plans to reform the system of motoring offences.
    Mr. Fowler: A review of road traffic law is long overdue. My right hon. Friend the Home Secretary and I have decided to examine those areas of the law which are of the most practical importance and on which we can expect to make quick progress. We have therefore selected the fixed penalty system and the totting-up procedure for a joint review with representatives of the bodies which administer the laws. Others such as the motoring organisations also have a contribution to make and will be consulted. I am placing a copy of the terms of reference in the Library.
    Mr. Mudd: I welcome my right hon. Friend's statement, but I wonder whether he could give some indication of the categories of offence that would qualify for the totting-up procedure and how he feels that this would assist in the administration of justice?
    Mr. Fowler: This is how it will assist. Under the important review that I announced, we shall examine proposals, such as the points system for traffic offences which operates in West Germany and Australia, and see whether they are suitable for inclusion in this country.
    Mr. Temple-Morris: Is my right hon. Friend aware that the review is welcomed by hon. Members on both sides of the House? Is he aware further that such a review—I believe it is evident from what he said—will include a "spot" penalty system? Does he agree that such a system, to be considered in the review, would be much more easily enforceable if everyone was obliged to carry a secure driving licence when driving, which would cut out the present widespread evasion?
    Mr. Fowler: Let me make it clear to my hon. Friend, to whose knowledge in this area I pay tribute, that we do not intend to consider the case for on-the-spot fines. We are examining how the ticket system may be extended. We intend to examine that area.
    Mr. Dickens: Would my right hon. Friend be surprised to learn that, because of the existing archaic system where one offence is similar to another for the purposes of totting up, in my constituency a young man of 21, who has been a member of St. John Ambulance since the age of 9, was denied even an interview for a job as an ambulance driver as he had one minor driving offence on his licence? That is unjust, unfair and unnecessary. Is my right hon. Friend aware of that?
    Mr. Fowler: The review, which is long overdue, will be welcomed by the public, by the type of motorist to whom my hon. Friend refers, and by the police and the magistrates in particular, who are weighed down by the traffic offences with which they deal.
    Mr. Greville Janner: I welcome the right hon. Gentleman's statement about the review, as far as it goes, but will the Minister explain why he is not proposing to review the chaotic state of the law on drink and driving, especially in view of the continued tragic part that drink plays in a substantial number of deaths and injuries on the road?
    Mr. Fowler: If the hon. and learned Gentleman looks at the Order Paper he will see that there is a later question on that subject.
    Mr. Sever: Has the Minister estimates of how many offences are committed by drivers of untaxed vehicles and how many untaxed vehicles there are?
    Mr. Fowler: I do not have that information with me. However, I shall provide it for the hon. Gentleman.
    Mr. Michael Brown: I welcome my right hon. Friend's statement. Can he confirm that the review will cover the possibility of introducing fixed penalty fines for minor motoring offences such as speeding?
    Mr. Fowler: That is in the fixed penalty area. Where the fixed penalty area should extend to is at the centre of this review.
    Mr. Prescott: Does the Minister accept that in adjusting our laws to the present European requirements, our lorry drivers will be required to work up to 16 hours—five more than under the present regulations? In his review, will he consider
    392
    the anomalies that exist as a result of imposing a European uniformity in our laws, and the differences in the penalties lorry-drivers face in this country and Europe for the same offence?
    Mr. Fowler: I am prepared to look at the point raised by the hon. Gentleman, but not, I fear, in this review. We have kept the scope of the review deliberately narrow so that we may make the quickest possible progress. I am sure that many lorry drivers in this country welcome the review.

    Commuter Rail Services
    Mr. Fryasked the Minister of Transport what plans he has to improve commuter rail services.
    Mr. Fowler: This is, in the first place, the responsibility of the British Railways Board, but I am sure that my hon. Friend will have welcomed the recent announcement of the Government's intention to refer London commuter services to the Monopolies and Mergers Commission.
    Mr. Fry: Will my right hon. Friend at least take up with the chairman of British Rail the future of commuter fares to ensure that, when the next increase takes place, the commuters do not suffer disproportionately as they did the previous time the fare increases were made?
    Mr. Fowler: As my hon. Friend will know, I made it clear—I again make it clear on this occasion—that I did not favour the weighting against commuters. The Board must decide the weighting of any fares increase for itself.
    Mr. Joel Barnett: Reverting to the question of commuter rail service cessations or closures, the House was pleased to hear that the article in The Guardian was incorrect. However, it will not be quite so pleased to hear the right hon. Gentleman's reply to my right hon. Friend the Member for Barrowin-Furnace (Mr. Booth), which seemed to throw some doubt on it. The difference between options and proposals is not altogether clear. If the options are to close some services, which were mentioned in the article in The Guardian, given what the Minister said about their disastrous consequences, will he say now whether he will turn down such proposals?
    Mr. Fowler: I must say to the right hon. Gentleman that no list of services due for closure has been put to my Department. I must rest on that. The right hon. Gentleman will find that British Rail is making a similar statement today.
    Mr. Bowden: Is my right hon. Friend aware that the commuters in my constituency are fed up to the back teeth with the ever deteriorating service? They are reaching the point that, if there is a 20 per cent. increase next year, that will be the last straw. Will he say why the commuters in my constituency must subsidise London commuters?
    Mr. Cryer: Because they voted Tory.
    Mr. Fowler: I understand the concern of my hon. Friend, who has consistently put the point of view of the commuters in the House. I hope that he will regard it as a constructive step by this Government to put the commuter services under the first stringent examination of efficiency by the Monopolies and Mergers Commission.
    Mr. Flannery: And shut it down?
    Mr. Snape: Will the Minister accept that it is difficult to organise commuter services so that they pay because of the millions of pounds worth of capital assets, which do nothing for 19 hours out of 24, needed to run the hon. Gentleman's constituents to their offices by 9 a.m.? Bearing in mind that the Government believe that people and industry should pay their way, will the Minister tell his hon. Friends to stop squealing? Does he agree that commuter services do not even remotely pay their way?
    Mr. Fowler: I advise my hon. Friends to keep up the pressure on this subject. The efficiency of British Rail is a matter of importance to hon. Members on both sides of the House of Commons.
    As for possible economies, although staffing on British Rail has been reduced generally in the past nine years, between 1971 and the present day, the number of senior officers and management staff employed by British Rail has risen from 7,800 to 9,250, an increase of close on 1,500. That is why we want a review.
    Mr. Costain: Has my right hon. Friend's attention been drawn to the fact that a large number of trains are not
    394
    running because of a shortage of guards? Will he ask British Rail to concentrate on this matter?
    Mr. Fowler: I know that the chairman of British Rail is very much aware of that position and is trying to improve it.
    Mr. Cook: If the right hon. Gentleman insists on a cut in the passenger services obligation which, as he fairly said, was on top of a cut by the previous Government, and if he is to discourage British Rail from increasing fares to certain sections of passengers, how does he expect British Rail to meet that deficit without going for the kind of closures over which the right hon. Gentleman has said he does not wish to preside?
    Mr. Fowler: I will tell the hon. Gentleman exactly. In the words of the chairman of British Rail when he took over the job, an improvement in the efficiency and productivity of British Rail is the rock upon which the future of British Rail is based. I hope that both sides of the House agree.

    Highways Agency Arrangements (Wiltshire)
    Mr. Stoddartasked the Minister of Transport what representations he has received concerning the unilateral decision of the Wiltshire county council to end the highways agency arrangement with the Thamesdown borough council.
    Mr. Kenneth Clarke: Apart from those by the hon. Member, only one letter, forwarded to Ministers by my hon. Friend the Member for Chippenham (Mr. Needham).
    Mr. Stoddart: Is the hon. Gentleman aware that members of Thamesdown borough council, both Labour and Tory, are incensed over the cavalier treatment that they have received at the hands of Wiltshire county council? The removal of the agency arrangement will not assist the administration of roads in Thamesdown. Does he not agree that removal of the arrangement is a blatant attempt by the county council to circumvent the hon. Gentleman's own code of practice which he expects to be instituted?
    Mr. Clarke: I cannot get involved in the details of a dispute between one county council and a district council. We are not happy with the present agency

    395
    arrangements and the disputes that occur. As the hon. Gentleman says, we have set up a working party involving the local authority associations to produce a code of practice in order to avoid these disputes and to make the agency arrangements work more smoothly. I hope that this will soon come to a satisfactory conclusion and that this kind of dispute will be avoided.
    Mr. Charles Morrison: When thought is being given to whether an agency arrangement should be entered into, or continued, does my hon. Friend not agree that the overriding consideration should be value for the ratepayer's money?
    Mr. Clarke: That should be almost the one and only consideration in these matters. But there is a wide range of practice all over the country. A number of disputes have arisen between major counties and some of their districts. We hope to set up a method of resolving disputes that will not give rise to so much trouble and that will enable councils to concentrate on giving value for money.

    National Freight Corporation
    Mr. Jesselasked the Minister of Transport what proposals he has for the National Freight Corporation.
    Mr. Tom McMillanasked the Minister of Transport what is his policy on the sale of shares in the National Freight Corporation.
    Mr. Cowansasked the Minister of Transport what is his policy on the sale of shares in the National Freight Corporation.
    Mr. Fowler: I intend to bring forward legislation very shortly enabling me to change the corporation into a limited company with a view to selling the controlling interest to private investors.
    Mr. Jessel: Have these proposals been approved by the National Freight Corporation board? Will some shares be available for employees?
    Mr. Fowler: I am grateful to my hon. Friend. I am glad to be able to tell him that the board has welcomed my proposal to introduce equity capital to the National Freight Corporation. We will want to make shares available to staff of the NFC.
    Mr. Cowans: Will the Minister explain why, in May, he was talking about a minority private share in NFC, why, in August, he was talking about a majority private share and why, three weeks later in September, he was talking of the whole NFC being sold off to private industry? What guarantee can he give that he will not hive off other subsidiary companies of British Rail, such as Sealink, British Transport Hotels and British Rail Engineering Limited?
    Mr. Fowler: I have always tried to make clear that my concern is to get the National Freight Corporation into the private sector. I do not believe that the hon. Gentleman's comments on my previous position are accurate. I have been absolutely frank about what I intended. That remains the aim and intention of the Government.

    Road Schemes (Preparation Times)
    Mr. Adleyasked the Minister of Transport if he intends to bring forward proposals to shorten the preparation times for road schemes.
    Mr. Kenneth Clarke: I have no proposals at present for major changes in procedures, but I am taking some steps to speed up our administrative processes and eliminate some unnecessary work. The main delay is caused by the procedures of consultation and public inquiry, but these are beginning to work better and win greater public acceptance, and I would not wish to reduce the open debate on schemes which they now produce.
    Mr. Adley: Will my hon. Friend try to concentrate his priorities on gaps in our motorway system between motorways and also on stretches of road that have exceptionally bad accident records? Is he beginning to note a swing back in the pendulum from overt insistence on listening to absolutely anyone who has an axe to grind, whatever his motives?
    Mr. Clarke: Those are all factors that have to be borne in mind in assessing priorities. Our main priorities remain the M25 and then the major routes between industrial centres and the ports. Most representations that I receive are from those who want roads to relieve environmental and other problems. We must not conduct the system in such a way that we disregard the wishes of those

    397
    who want to make representations about the adverse effects that some road schemes can cause.
    Mr. Cant: Does the Minister not agree that delays that have taken place in the West Midlands, where 36 miles of motorway have been built in 10 years, are disgraceful? In view of the fact that each year there is a massive under-spend on road building, will he have discussions with the Treasury to see whether more starts can be made, so that the amount allocated can be spent?
    Mr. Clarke: Delays are often caused by deep divisions in public opinion. In the West Midlands, in particular, great passions are aroused for and against the motorway schemes that are proposed. We are anxious to spend the right amount of money on improving the road system, but various factors intrude, not least the British weather, which make difficult the task of calculating precisely each year the amount that will be spent by the end of the financial year on road schemes.
    Mr. Dykes: Is my hon. Friend aware that residents of Harrow and North-West London are waiting impatiently for the completion of the outer orbital road, particularly because of its beneficial effect in diverting heavy lorries? Will he see whether completion of that project can be accelerated?
    Mr. Clarke: Very good progress is being made with the M25. In a year or two, subject to statutory procedures being completed, long stretches should be under construction all round London.

    Blennerhasset Report
    Sir Bernard Braineasked the Minister of Transport what progress is being made with implementing the proposals of the Blennerhasset committee on drinking and driving.
    Mr. Delwyn Williamsasked the Minister of Transport if he will now make a further statement about the proposals of the Blennerhasset report on drinking and driving.
    Mr. Fowler: I shall shortly be publishing a consultation paper with a view to legislation setting out the Government's provisional views on the recommendations in the report.
    Sir. B. Braine: I welcome my right hon. Friend's answer as a step in the right direction. But the Blennerhasset report was published four years ago. In the interval, thousands of people have been killed or injured on the roads in circumstances where alcohol was a major factor. Is my right hon. Friend aware of the recent warning of the Royal College of Psychiatrists that we are facing a crisis of endemic proportions in respect of alcohol abuse? Will he speed up the consultation process which began under the previous Government and ensure quick and speedy action?
    Mr. Fowler: I agree entirely with my hon. Friend about the seriousness of this question. I believe that this attitude is shared by hon. Members on both sides of the House. The consultation document that we are publishing was not started by the previous Government. It is intended to set out our views with a view to legislation. There are a number of issues, such as the proposal for unrestricted powers to test, on which we want to hear the public's view. It is important that any legislation that arises should be absolutely right. That is our intention.
    Mr. J. Enoch Powell: Will the right hon. Gentleman bear in mind that this committee produced irrefutable evidence that the breathalyser legislation had had no effect whatever upon the incidence of alcohol as a causative factor in road accidents?
    Mr. Fowler: The right hon. Gentleman should also understand that alcohol and drunken driving are a major cause of road accidents. It is incumbent on this Government to take the action that I am proposing.
    Mr. Penhaligon: Will the Minister confirm that the last year for which statistics are available shows that 40 per cent. of drivers killed in motor accidents were at the time over the limit with alcohol? In that light, how can he possibly welcome the sale of alcohol at motorway service stations?
    Mr. Fowler: I confirm the figure that the hon. Gentleman gave. On his second point, given my statement that there is no such proposal—a statement which is in Hansard and which has been made

    399
    clear—I am surprised that he should be so behind the times as not to understand the position.

  CIVIL SERVICE

    Index-linked Pensions
    Mr. Bruce-Gardyneasked the Minister for the Civil Service what progress he has made with his review of the computation of the value of the index-linked pension for purposes of Civil Service pay determination.
    The Minister of State, Civil Service Department (Mr. Paul Channon): The Government believe that the valuation of pensions in determining Civil Service pay should be subject to outside scrutiny and that this can best be done by the independent Pay Research Unit Board which reports on the work of the Pay Research Unit. We are in touch with the board's chairman, Lord Shepherd, and the national staff side with the aim of arranging for the board to receive and report both on the Government Actuary's assumptions and on his assessments of the appropriate adjustment for the 1980 pay settlement. Both reports will be published.
    Mr. Bruce-Gardyne: I am grateful to the Minister for that answer, so far as it goes, but does he accept that the basic problem is that, at present, on the basis of the last public expenditure White Paper, the taxpayer is subsidising a benefit for the public employee which is totally unobtainable from private insurance and that the purpose must be to ensure that the system is fully self-financing and that the £400 million a year from the taxpayer is eliminated?
    Mr. Channon: As my hon. Friend knows, I am responsible only for the pay and pensions of the Civil Service. Index-linked pensions relate to much wider groups in the public sector—including nurses, policemen, doctors, members of the Armed Forces and even Members of Parliament.
    Mr. Wrigglesworth: By how much is the pay of civil servants reduced on account of the pension scheme of which they are members? How much will the new scheme cost? Does it show any lack of confidence in the work of the Government Actuary?
    Mr. Channon: It certainly shows no lack of confidence in the work of the Government Actuary, who is now asked to have his work reviewed by the Pay Research Unit Board. Civil servants pay approximately 7 per cent., in a variety of ways, for their pensions—
    Mr. Bruce-Gardyne: No, 2·6 per cent.
    Mr. Channon: The figure of 2·6 per cent. is but one of the deductions made. The total is about 7 per cent. I do not think that the new system will cost any more—or, if it does, it will be very little.
    Mr. Renton: But is there not a real danger that, if there are to be years of recession and high inflation at the same time, a large gap will develop between those retired people who enjoy inflation-proofed pensions and those in work who have to pay for them? In those circumstances, will the Minister consider discussing with the leaders of the Civil Service unions the possibility of limiting inflation proofing to 10 per cent. a year—which would be comparable to many private sector pension schemes—and of civil servants paying a realistic deduction from their wages for that limited inflation proofing?
    Mr. Channon: I am sure that my hon. Friend is not suggesting that that should be done in isolation. If it were done, it would have to be done to nurses, policemen, Members of Parliament, teachers, and local government officers. [HON. MEMBERS: "Yes."] If that is the view of the House, I shall certainly discuss it with the Chancellor of the Exchequer.
    Mr. Straw: Is the Minister aware that the 1974 agreement requires the Government to give six months' notice to the unions of changes of this kind? Can he explain why, instead of six months, he has given only two days' notice? Is this not a cavalier way to run industrial relations with the Civil Service?
    Mr. Channon: I am surprised by what the hon. Gentleman says. We are hoping to discuss this matter in consultation with the national staff side. I cannot believe that any reasonable man could object to an independent assessment of a problem which causes public concern. That is in the interests of the general public and of the Civil Service itself.

    Retired Civil Servants (Employment)
    Mr. Cryerasked the Minister for the Civil Service what representations he has received regarding the limitations placed on retiring civil servants joining the boards of companies with which they have been dealing.
    Mr. Channon: None, Sir.
    Mr. Cryer: Does the Minister accept that there is considerable concern, of which there are many examples, about the way in which senior civil servants—permanent secretaries, deputy secretaries and so forth—have under Governments of both parties been able to move sweetly from the Civil Service into lush jobs in private enterprise? Does he not agree that senior civil servants retire on lush pensions, that the least they can do is stay retired, and that, especially when handling contracts worth millions of pounds or handling huge quantities of money, they should not, as is possible, pave their way when in the Civil Service, either in the Ministry of Defence or the Department of Industry, into the board rooms?
    Mr. Channon: The last Government reviewed the rules relating to business appointments and provided that whenever a civil servant within two years of leaving the service proposed to go to a firm with which he had special relationships or extensive contractual dealings, certain procedures had to be followed. Those rules were laid down by the previous Government. I have received no evidence which would lead me to believe that they should not be tried further before any change is made.
    Mr. Alexander W. Lyon: Why is it that business men who continually complain about the incompetence of civil servants are so anxious to recruit them when they leave the Civil Service, unless it is to buy information which they could not otherwise get?
    Mr. Channon: I think that that suggestion is reprehensible. If the hon. Member is suggesting that there is any evidence of impropriety in the present practice, I might point out that the rules were laid down by his own Government, when I believe he was still in office, and
    402
    that we have had no reason to change our minds about them.

    Whitley Council
    Mr. Strawasked the Minister for the Civil Service when next he will be meeting representatives of the Civil Service staff side of the Whitley Council.
    Mr. Channon: I am meeting them constantly, Sir.
    Mr. Straw: When the Minister next meets the representatives from the staff side, will he let them know what decisions the Government have reached in their consideration of 10, 15 or 20 per cent. cuts in the work of the Civil Service? Will he accept that the Government's failure to make decisions in this area is damaging morale even more within the Civil Service?
    Mr. Channon: I certainly accept that decisions have to be made in the near future. The Government have always said that we would be making a statement in the autumn. We still intend to do so.
    Mr. William Clark: When the Minister nexts meets the Whitley Council, will he point out the difference between pension schemes within the Civil Service and pension schemes in the private sector? Is he aware that to obtain Inland Revenue approval a private pension scheme can contain an inflationary element of only 5, 6 or 7 per cent.? Are we not creating two types of employee in the case of pensions if the rest are inflation proofed?
    Mr. Channon: As my hon. Friend knows, this matter goes far wider than the Civil Service. I have already taken note of the views of the House.
    Mr. Wrigglesworth: As the implications of the cuts of up to 20 per cent. are so great for the Civil Service and for all of us, will the Minister give an undertaking that he will not issue a statement as a written reply but that he will come to the House and tell us exactly what cuts in jobs and services there will be?
    Mr. Channon: When the Government have reached their decisions, they will be announced in the most appropriate way. I will take note of the hon. Gentleman's views.

    Professional and Technical Civil Servants (Pay Dispute)
    Mr. Peter Lloydasked the Minister for the Civil Service what steps have been taken to resolve the pay dispute with the professional and technical civil servants.
    Mr. Channon: An initial hearing of the Civil Service Arbitration Tribunal took place on 25 and 26 September. After receiving the tribunal's opinion, I met representatives of the institution on 18 October. Detailed negotiations are now in progress at official level and a fully considered response to the IPCS's latest representations has just been made.
    Mr. Lloyd: I congratulate my hon. Friend and the IPCS negotiators on making some progress in a dispute which has had more than its fair share of disagreement on the fundamental principles on which a settlement should be made. My hon. Friend referred to the advisory opinion of the tribunal. Can he now give an assurance that, if it is agreed that the dispute will be referred back to the tribunal for final adjudication, the tribunal will be able to take into consideration evidence from earlier settlements which gave awards well above the median?
    Mr. Channon: The tribunal will be able to consider any evidence that the IPCS or the official side cares to put before it.

    Civil Servants (Political Activity)
    Mr. Dalyellasked the Minister for the Civil Service what proposals he has to enable civil servants, other than those who are in the position of giving direct policy advice to Ministers, to take part in party politics.
    Mr. Channon: The existing rules for civil servants already allow this to a certain extent. Changes recommended by the Armitage committee which reported under the last Administration are now under discussion with the staff side.
    Mr. Dalyell: Is it not deeply wrong that hundreds of thousands of our fellow citizens should be debarred from political activity when they are far from giving policy advice to Ministers?
    Mr. Channon: I note the views of the hon. Member. This matter is being dis-
    404
    cussed with the staff side and I will bear his views in mind when we come to consider its recommendations.

    Ministers' Private Secretaries (Accommodation)
    Mr. Stevensasked the Minister for the Civil Service if he will take whatever steps may be necessary to ensure that Ministers, including junior Ministers, are provided with working space for their private secretaries within their ministerial offices.
    Mr. Channon: I assume that my hon. Friend has in mind secretaries who assist with constituency or party political work. Successive Governments have taken the view that it is not appropriate for facilities provided at public expense to be used for such work.
    Mr. Stevens: Does my hon. Friend accept that the work of constituency and private secretaries is seldom in any real sense political, and that by taking the view that they should not be allowed to work in the same offices as their Ministers the work of those Ministers is greatly obstructed? Will he instruct the Civil Service accordingly?
    Mr. Channon: I understand the views of my hon. Friend. However, it is a point of principle that facilities which we provide at public expense should not be available to hon. Members, or their secretaries, for work that is not public but is either constituency or party political.

HOUSE OF COMMONS (SECURITY)
Mr. Bowden: On a point of order, Mr. Speaker. I wish to raise a matter involving the security of this House. You will have observed earlier this afternoon that a number of badges, which contained very dangerous pins, were thrown into the Chamber. No one would have regarded that as funny if the pins had got into his eyes. Is it not unreasonable that the faithful custodians of this House, many of whom have given a lifetime of service in the Armed Forces and who are no longer young, should have to deal with thugs and hooligans who behave in this way? Will you kindly look at this situation and see whether the custodian force can be reinforced?
Mr. Speaker: A Committee of the House looks at these matters. I shall see that the point raised by the hon. Gentleman is referred to the responsible people.
Mr. Rost: Further to that point of order, Mr. Speaker. Would you consider it desirable that, as part of an investigation, the Serjeant-at-Arms be instructed to find out who issued the relevant tickets to the Strangers Gallery, in view of the possible risk to security?
Mr. Speaker: I am quite prepared for that to be done, though I must tell the House that on one occasion I signed for a visitor to come in and he misbehaved.

RHODESIA
The Lord Privy Seal (Sir Ian Gilmour): With your permission, Mr. Speaker, I shall make a statement on Rhodesia.
In my statement of 24 October I described the proposals that the Government had put to the constitutional conference for the holding of elections in Southern Rhodesia and the administration of the country in the pre-independence period. The full proposals that the Government tabled on 2 November have been placed in the Library of the House. We have also published today, as a White Paper, the summary of the independence constitution accepted by the parties at Lancaster House.
At Lancaster House we have now achieved provisional agreement on a constitution, and have made considerable progress towards agreement on the interim period. I hope that we shall soon be able to proceed to negotiations for a ceasefire and the arrangements for monitoring it. The conference is, therefore, moving towards a conclusion. We must be able to act without delay to implement the final agreement for which we are working with all parties. Any delay in putting a settlement into effect would cost further lives and could place the settlement itself at risk.
The purpose of the enabling Bill that the Government are introducing later today is to enable us to implement the interim arrangements without delay. It will enable the Government to make the independence constitution, to introduce parts of it before independence to allow elections to be held, and to provide for the appointment of a Governor with full powers. Existing legislation is not adequate for these purposes.
The Salisbury delegation has accepted the proposals that the Government have put to it as a basis for a settlement. The Patriotic Front has also accepted the principles of a British Governor and new elections. We are therefore very close to a settlement that is fully consistent with the communique of the meeting of heads of Commonwealth Governments in Lusaka.
In these circumstances the Government believe that it would be wrong now to take the positive action of renewing section 2 of the Southern Rhodesia Act 1965.

407
But as the House will be aware, the great bulk of sanctions—those relating to direct trade and the transfer of funds—depend not on section 2 but on orders made under other Acts, and they will continue until they are revoked. These sanctions will be lifted as soon as Rhodesia returns to legality with the appointment of a Governor and his arrival in Salisbury.
The Bill that will be placed before the House enables the Government to take whatever action is necessary in relation to Rhodesia, depending on the state of progress at the conference. This includes the power to continue those sanctions at present imposed under section 2. But, given the position now reached, the Government find it difficult to envisage circumstances in which this would be necessary.
While the Government would have preferred to give both Houses more time to consider the Bill, the timing of the introduction of the Bill has been related to the progress of the conference. It is essential that the Governor should be in a position when, as we hope, agreement is reached to give effect to a settlement without delay and for elections to be held as soon as possible. A great deal of progress has been made in the talks. We were glad to hear this morning that President Kaunda will be coming to London tomorrow. This will be a most timely visit. His presence will, I am sure, assist our progress towards a peaceful settlement.
Mr. Shore: The Lord Privy Seal's statement reports further progress at the constitutional conference, and we greatly welcome that. The prize of peace, a properly elected Government and lawful independence must certainly not be allowed to elude us after so many difficulties have been surmounted.
Will the Minister confirm that the discussion of the ceasefire—the last and perhaps most difficult stage—has yet to commence? Does he concede that agreement on the other issues is still contingent on the outcome of that discussion? Will he, therefore, explain to the House why he needs to introduce this Bill at such a critical stage of the Lancaster House conference? Does he agree —it is a matter of common sense—that it would be far better for the House to
408
debate such a Bill, which will inevitably lead to fierce argument, after and not before those negotiations are concluded? The House understands the need for an enabling Bill without unnecessary delay. Why does the right hon. Gentleman seek to push this Bill through in a single day and, moreover, within 24 hours of its publication?
I turn now to sanctions. Does the Lordy Privy Seal really believe that his decision not to renew section 2 is likely to promote agreement and good will at the conference? Is not the opposite more likely? Is this not a blatantly political move, designed not to assist the conference but to appease his own Back Benchers?
How does this decision square with our international obligations to the Security Council? Will it not be seen by the international community, whose support the Government have, rightly, so far claimed as essential to a solution, as a substantial change in British policy? In the light of all this, may I renew the plea that we have already made to the Minister and to his colleagues? With agreement, as he says, so close, and in the light of the visit of a very important President and neighbour from Zambia, will he please reconsider the timing of this measure and postpone its introduction until at least Monday of next week?
Sir I. Gilmour: I am grateful to the right hon. Gentleman for what he said about the progress that we have made so far. I regret that that welcoming tone was not carried through to the end of his question. We are proceeding now because we have to take account of the progress that we have made during the constitutional conference. We have progressed far towards a conclusion.
The 1965 Act is not sufficient for our purposes. We need new legislation. In those circumstances it must be right to introduce the legislation now. When the conference ends we must be in a position to make the arrangements to appoint a Governor and to proceed with the interim arrangements for governing Rhodesia. That is logical and right.
The right hon. Gentleman talked about sanctions. I made a careful statement about them. The right hon. Gentleman must realise that circumstances have

409
changed considerably since they were imposed in 1965. They have changed considerably since we debated this subject last year. Sanctions must be related to the situation that they were designed to remedy. Since last year we have had the May elections in Rhodesia, the Lusaka agreement and the Lancaster House conference, which has lasted for nine weeks. In those circumstances, and when the Salisbury delegation has agreed to all the proposals, which are in accordance with the Lusaka agreement, for us to say that we should renew section 2 would be a gratuitous insult.
The idea that this somehow will not help the Lancaster House conference is erroneous. The bulk of sanctions will continue until the Governor arrives in Salisbury and until Rhodesia returns to legality.
Mr. Shore: It has always been understood that the two acts should go together—that is, that sanctions should lapse when there is a return to legality and the Governor takes up his power in Salisbury. I question the wisdom of putting these two events on a different time scale. They should be kept together.
Apart from sanctions, does the right hon. Gentleman accept that there is no reason why the House should not debate this constitutional Bill, with its enabling powers to introduce a constitution, in the ordinary way, without undue delay? I should certainly hope to see it through well within the next week.
Sir I. Gilmour: We do not know what will happen in the few days before 15 November. Perhaps the events will not be separated. I can see that we are putting the House to some inconvenience by the timing. I do not deny that, but it is not unique. Labour Members will remember that a Labour Government introduced the 1965 Act on a Friday and that it was passed through all its stages in one day—the following Monday. The Opposition should not take too high-minded an attitude to the timing. We accept that we are putting the House to some inconvenience but we believe that the issues are so important that we are fully justified.
Mr. Rippon: I welcome my right hon. Friend's statement and congratulate him
410
and the Foreign Secretary on the progress of the talks. My right hon. Friend referred to this as being an enabling Bill. Can he confirm that the House will be able to monitor and, if necessary, debate the progress of the Bill, step by step? I welcome my right hon. Friend's assurance that sanctions will end as soon as the Governor takes office. It would be absurd to impose sanctions against ourselves. At what point does my right hon. Friend envisage that the Government will be able to go to the United Nations with a request to lift the resolution on mandatory sanctions?
Sir I. Gilmour: I am grateful to my right hon. and learned Friend. Of course the House will be kept fully informed of everything. This is an enabling Bill. Under it, in accordance with precedent, we shall be able to create the independence constitution, which will be introduced by Order in Council. However, that will not introduce the independence of Rhodesia, or Zimbabwe. That will be done in a subsequent Act, which we shall introduce when circumstances allow, preferably later this month. I cannot give a definite date. It is important to recognise that two Acts are involved.
Mr. Arthur Bottomley: I welcome the progress made in trying to find a solution to the Rhodesian problem. Our thanks are due to all involved. Would it not be polite to the President of Zambia to meet the wish of my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) that the debate be postponed until next week?
Sir I. Gilmour: I am grateful for what the right hon. Member said in the first part of his question. He will have heard what I said about the President of Zambia in my statement. We look forward to important discussions with him. I do not think that the President of Zambia will expect to be involved in debates in the House. The timing of the debate does not have any particular relevance to the timing of his visit.
Mr. Amery: I congratulate my right hon. Friend on his decision not to renew the sanctions order next week. Will he confirm the Foreign Secretary's assurance that although we want to see all parties committed to the agreement we shall not leave a veto on agreement in the hands of the Patriotic Front?
Sir I. Gilmour: It was said at Lusaka that no party should have a veto. That is still the position. I emphasise that we are working for a full agreement by all parties at the conference. That is our major objective.
Mr. Robert Hughes: Why is it necessary to rush the Bill through tomorrow? The right hon. Gentleman says that the Bill will be necessary following an agreement. Is he aware that the House would pass such an enabling Bill in hours if there were an agreement? Is he saying that the purpose of the enabling Bill is to allow the Government to proceed to conclude a separate agreement with the Salisbury delegation and to go ahead even if there is no general agreement?
Sir I. Gilmour: The hon. Member asked the same question as his right hon. Friend the Member for Stepney and Poplar (Mr. Shore). My answer is the same. Of course the object of the Bill is not to make a separate agreement with the Salisbury delegation. If we had wanted to do that I dare say that we should not have gone through nine weeks of the conference, we should not have had the Lusaka agreement, and we should not have spent many hours a day on the important objective of trying to gain agreement with all parties. That is still our objective.
I know that the hon. Member for Aberdeen, North (Mr. Hughes) follows these matters closely. We told the conference on Friday that legislation was imminent In the paper that we produced on Friday we said:
"The authority of the United Kingdom Parliament will be sought for the appointment of the Governor, the making of the Independence Constitution and the holding of elections under it. Legislation will be submitted to Parliament as a matter of urgency so that the Governor may, without loss of time after his arrival, take the steps necessary to allow elections to be held."
This Bill is to enable us to bring peace to Rhodesia. It has nothing to do with a separate agreement.
Mr. Whitney: I congratulate my right hon. Friend and my right hon. and noble Friend on the statement this afternoon and on what they have achieved in the talks so far. Does my right hon. Friend agree that the Opposition's attitude is an extraordinary manifestation of go-slow tactics? We have been told that two months is insufficient time for the Patriotic
412
Front, which we were previously told would be welcomed with open arms by all the people of Zimbabwe. Now the Opposition seek to deny the Government the speedy opportunity to restore Rhodesia to legality. Does not my right hon. Friend agree that this shows yet again the Opposition's total failure to comprehend the reality of present-day Zimbabwe?
Mr. English: On a point of order, Mr. Speaker. Clearly, the hon. Member for Wycombe (Mr. Whitney) was not aware that we have been forbidden to receive the Bill, which is in the Vote Office. I have been told by the Vote Office that instructions have been given to it that the Bill must not be given to any Member until after the statement and questions upon it are over. [HON. MEMBERS: "Disgraceful."]
Mr. Speaker: Order. I am listening to a point of order, and I want to hear it.
Mr. English: I ask you, Mr. Speaker, to exercise your right, as the person with power to give orders to the Vote Office, to order it now to issue to us the Bill, which is in its possession, so that we can make sensible comments to, and ask sensible questions of, the right hon. Gentleman, whose Department is clearly frightened that we might ask relevant questions.
Mr. Speaker: There is a very simple explanation. No Bill can be published before it is presented to the House. If hon. Members will look at their Order Papers, they will see that it is—
Mr. English: Why is it not available?
Mr. Speaker: The hon. Gentleman must not shout whilst I am speaking. If he reads the Order Paper he will see that presentation of the Bill follows statements, as is invariably the case.
Mr. English: Further to that point of order, Mr. Speaker. I am sure that if the right hon. Gentleman wished to make a statement after the Bill had been presented we should, in accordance with the normal customs of the House, allow him to do so.
Mr. Speaker: Let us continue with questions.
Sir I. Gilmour: I should like to revert to the question asked by my hon. Friend the Member for Wycombe (Mr. Whitney).

413
It is only right to say—I hope that the Opposition will not take this amiss—that the Opposition's attitude to this matter during the past three months has been extremely helpful, and we are very appreciative of that attitude. I have already said that I see that there is a procedural difficulty, to which any Opposition could object, but I hope that the attitude that they have displayed over the past three months will continue for the next week or two.
Mr. James Callaghan: I am grateful for what the right hon. Gentleman has just said, but is he aware that he has not given us any convincing reason why the Bill must be debated, in all its stages, within 24 hours of its presentation? That is the grievance. I think that it will contain matters of substance.
Nobody can suggest that the right hon. Gentleman must take important decisions about the future governance of Rhodesia by Saturday. That is simply not true. Therefore, what we are saying is that there should be time for reflection and time to consider these matters. I put it to the right hon. Gentleman again that the House as a whole should have time to consider these matters, even though Conservative hon. Members may not wish it.
May I ask the right hon. Gentleman one question? It is the view of a number of us that what he does on sanctions may be very much misunderstood and may lead the Government into great difficulties. I can understand that he may not want to renew sanctions for a 12-month period, in view of the advanced stage that he has reached, but will he not consider what I would hope he would have considered already? Why not renew sanctions for a shorter period? For example, why not renew them for three months, or even one month? [Interruption.] I understand that hon. Members on the Government Benches below the Gangway are not open to argument, but there are international complications here that are of great significance.
I do not want to see the Government bitch this matter at the end of the day. That is why we are putting to the right hon. Gentleman that he should not alter the balance on sanctions at this eleventh hour. If he asked for a renewal for a
414
shorter period than 12 months, we should certainly be ready to concede that, and, of course, should not insist that it should be for the period for which the order has been renewed in previous years.
Sir I. Gilmour: I am grateful to the Leader of the Opposition for what he said.
On the question of timing, I am sorry that evidently I did not make myself clear in answer to the Shadow Foreign Secretary. We have reached a crucial stage of the conference. At the same time, the existing legislation is not suitable—it is not sufficient—for our purposes. Therefore, we must legislate. Equally, the existing legislation, which is not sufficient, runs out next week. Therefore, there is a considerable hurry.
I see that theoretically there is a point for debating the Bill on Monday rather than on Thursday or Friday, but the right hon. Gentleman will know why we do not want to do that. [HON. MEMBERS: "Why is it?"] We must be certain of getting it through.
On the question of sanctions, of course, a balance must be struck. The Leader of the Opposition said that he did not want us to alter the balance of sanctions, but in our judgment—in view of what has happened, and as the Salisbury delegation has done everything that has been asked of it in pursuit of an agreement at Lusaka—to take the positive action of renewing sanctions, as opposed to running on the great bulk of sanctions that will run on anyway, would be a quite unjustifiable slap in the face for it. As I have said, the bulk of sanctions will continue. Of course, it is a matter of judgment.
I do not think that the right hon. Gentleman is right to say that the order is renewable for less than 12 months. I can see that it could be cancelled within that period. The ex-Patronage Secretary knows these procedural matters very well. I think that the order can be renewed only for 12 months. I take the point made by the Leader of the Opposition, but in our view it would be altering the balance of sanctions against the Salisbury delegation.
Some hon. Members and some people outside the House are inclined to forget that in the very intricate and delicate negotiation that is taking place at Lancaster House we are negotiating with

415
two parties. We must secure the agreement of both. Many people seem to think that our problem is only to get one party to agree. We must get both parties to agree. That is the major difficulty of this negotiation. That is what is informing all our actions in this matter.
Mr. Stoddart: On a point of order, Mr. Speaker. I listened to the Lord Privy Seal very carefully, and I believe that he committed a breach of privilege of the House and treated the House with contempt. He said that he was introducing the Bill tomorrow in order to be certain of getting it through. Whatever does he mean by that? I can well understand that Tory Members laugh at democratic procedures, Mr. Speaker, but I have always understood-I hope that you will confirm this—that a Government present a Bill to the House for debate and decision, and no Government should be so autocratically minded as to present a Bill in the certainty that it will go through. I believe that the Government have committed a grave contempt of the House.
Mr. Speaker: Since I have been here, many Governments have assumed that as they have a majority—normally—they will get the business. I did not feel that there was a breach of privilege in what the right hon. Gentleman said.
Mr. Russell Johnston: Is the Lord Privy Seal aware that all reasonable people in the House will wish him well in solving the problem? Nevertheless, he must be sharply aware of the fact that a great many people feel that he is being less than fair to the House in forcing it to deal with this matter so quickly. Can he assure us that there is no connection between the fact that sanctions are included in the Bill—and section 2 sanctions are only a small percentage, about 15—and the fact that the Government feel there would be a problem in dealing with the matter a week tomorrow? That is the crux of the matter. I am sure that the House will welcome the Lord Privy Seal's assurance on this issue. Could not this Bill have been presented before, or could not more time have been given to our deliberations on it?
Sir I. Gilmour: I am grateful to the hon. Member for his good wishes. As I
416
explained, the legislation existing at present is not sufficient for our purposes. We need other legislation. The Bill that we shall introduce will provide power to do everything that we would wish to do in Rhodesia, including the imposition of sanctions, should that be necessary.
On the point about the inconvenience caused to the House, I should make it clear that this is a four-clause Bill and the fourth clause is merely an interpretation clause. Therefore, it really should not exercise hon. Members' minds unduly. We should be able to get right on top of it tomorrow.
Sir John Eden: Timing is all important in these matters and it must be for my right hon. Friend to judge what is right. Surely it makes sense, however, in the light of all that has been achieved in these long and complex negotiations, to maintain the momentum towards independence and legality. Therefore, is it not absolutely right for my right hon. Friend to seek to have in his hands the powers to enable him to proceed expeditiously when the opportunity arises?
Will my right hon. Friend confirm that there are still some issues outstanding, and can he give us any information about them? In the light of the history of sanctions and in view of all that has been agreed to by the Muzorewa Government, would it not be very wrong to make any attempt to reimpose sanctions against that regime?
Sir I. Gilmour: Of course we wish to maintain momentum; that is very important. I hope that all parties at the conference will agree with that. On the question of the matters that are still outstanding, the Salisbury delegation has agreed to our interim arrangements and the Patriotic Front is still considering them. We discussed them yesterday and we are doing so again today. There is a certain difference of philosophy about this, but I hope that the Patriotic Front will signify its agreement fairly soon. After that we shall go on to discuss the arrangements for the ceasefire. That is the main outstanding matter at the conference and it is almost the most important.
Mr. Ennals: Is not what the right hon. Gentleman has just said one of the most profound reasons why we should not debate this issue tomorrow? Does he

417
recall that the last time he made a statement to the House, which I read when I was in Salisbury, Rhodesia, he asked that he should not be pressed on a number of the very difficult questions that he has just touched upon? Does he not think that at a time when the Lancaster House conference is at a crucial stage and when there are delicate issues still to be determined, for this House openly to discuss those issues is very unwise? Having said that the Opposition Front Bench had been helpful, surely the right hon. Gentleman must be aware of the strength of feeling that exists among Members of the several parties on the Opposition Benches. Will he consult other right hon. Gentlemen on his own Front Bench in order to get this Bill before the House without the sort of controversy that has resulted from his statement today?
Mr. Dykes: On a point of order, Mr. Speaker. Should not the leader of the other party also sit on the Opposition Front Bench?
Mr. Speaker: That is not a point of order.
Sir I. Gilmour: I know that the right hon. Member for Norwich, North (Mr. Ennals) has been in Rhodesia recently and that he met a great many people there. With respect, I believe that he has slightly misunderstood the position of the enabling Bill that we are introducing. That Bill does not affect the details of the transitional arrangements that we are debating now at the Lancaster House conference. I do not think that what the Government propose in any way cuts across anything that I said in my statement the other day.
Mr. Higgins: I warmly congratulate my right hon. Friend on the great progress that has been made so far. In view of the importance of upholding the rule of law, will he give us an assurance that the Government will take steps to ensure that we are at no stage in breach of our international obligations? Will he also confirm that it would not be the Government's intention to use powers under their proposed Bill in the absence of a general agreement, because that could be very dangerous?
Sir I. Gilmour: Of course it is the aim of the Government to remain fully in
418
accordance with their international obligations. No doubt that is true of all Governments. I have explained the situation about sanctions fairly carefully. This is an enabling Bill, designed to put into operation the results of an agreement at the conference. That is our aim, and in that objective I am sure we have the support of the vast majority of the House. If we fail in those endeavours we shall have to think again.
Miss Joan Lestor: Is the Lord Privy Seal aware that both the Lusaka conference and later Sir Shridath Ramphal, of the Commonwealth Secretariat, said that agreement at Lancaster House must be reached not only on the constitution but on the interim period. Since agreement on the interim period has not been reached, particularly in relation to the length of time before the election and on the security forces, will the Lord Privy Seal say whether he intends to proceed with his Bill if that agreement is not reached?
Sir I. Gilmour: I have already explained to the House that we have contingent agreement on the constitution and we are now discussing the interim arrangements. Then we hope to move on to the ceasefire. It does not need the Commonwealth Secretary-General—whom we all respect—to point out that we have not reached agreement. That is common ground. Our Bill is an enabling Bill, which will allow us to proceed with the future government of Rhodesia. At present there is no legislation that enables us to do so. That is why we seek the agreement of the House to proceed in this way.
Mr. Tapsell: May I put it to my right hon. Friend, speaking as someone who has consistently and strongly supported the policy of sanctions during the past 14 years, that against the background that my right hon. Friend has described I believe that the Government are right to take the limited decision not to continue section 2? Does he recognise, however, that a major diplomatic task lies ahead for us in explaining to the rest of the world—and particularly to sections of the Third world—the good faith that lies behind the decision? In explaining this, will he ensure that the full resources of the external broadcasting services of this country are brought fully into play?
Sir I. Gilmour: Naturally, we shall endeavour to put our case across by all means available to us. My hon. Friend has touched on a matter that is not strictly germane to our proceedings, but I am grateful to him for what he said about sanctions. I take his point that the reasons for what we are doing should be put across to all our friends, and, indeed, our enemies, such as they are, in the world today.
Several Hon. Members rose—
Mr. Speaker: Order, I propose to call four more hon. Members from either side. There is a Business Statement to follow, which is linked with this matter.
Mr. Alexander W. Lyon: As the Minister's statement is made on the assumption that an agreement will be reached, will he confirm that the agreement by the Patriotic Front so far has been contingent upon total agreement about the package? If that is not finally forthcoming, does the Bill mean that the Government can proceed to independence irrespective of the assent of the Patriotic Front?
Sir I. Gilmour: I certainly confirm—I have said it many times; it hardly needs confirmation—that the Patriotic Front's agreement to the constitution is contingent on agreement to the rest of the package, just as the agreement, which I hope will soon be forthcoming, to the interim arrangements will be contingent on agreement to a ceasefire. That is common ground. We hope that all parties will agree. If they do not agree, as was said in Lusaka, nobody can have a veto. That, I think, is generally agreed. If we fail in our endeavours, which I very much hope will not happen, we shall certainly have to consider how we should proceed.
Mr. Emery: Does my right hon. Friend realise that many people never expected this conference to attain anything like the success that it has already achieved? He and the Foreign Secretary deserve congratulations for having brought the conference to its present stage. Therefore, if his advice is that this piece of legislation is necessary tomorrow, most hon. Members should support him in reaching that conclusion. Would my right hon. Friend mind pointing out to certain Opposition Members below the Gangway that in November 1965 the Southern
420
Rhodesia Act 1965 was pushed through this House by the Labour Government of the day in one sitting.
Sir I. Gilmour: I am most grateful to my hon. Friend. I appreciate what he said about the conference. I believe that it is widely agreed that, while we still have some way to go, as we certainly concede, the conference has achieved a great deal. We all hope and pray that we shall bring it to a successful conclusion. As my hon. Friend said, there are certain precedents for what we are doing.
Mr. Hooley: Is the Lord Privy Seal aware that in November 1978 the Lord Chancellor made it perfectly clear that all the powers required for an interim period—which is what we are now discussing—were contained in section 2 of the 1965 Act? Is he also aware that even if that section were to lapse there are sufficiently wide powers in the 1961 Act to enable the Government to effect reasonable and sensible interim arrangements? In those circumstances, why are the Government asking for a new blank cheque? Does it mean that they wish to go ahead in the absence of real agreement?
Sir I. Gilmour: The hon. Gentleman has got it wrong. Present legislation would not entitle us to produce an independence constitution or to introduce, prior to independence, part of a constitution. Nor could we, without amending the constitution of 1961, introduce a Governor with executive powers. I believe that the House would agree that to approach future legislation by amending the 1965 Act or the 1961 Act would be an extremely muddled and retrograde way of proceeding. It must be better now to look forward rather than back.
Mr. Peter Bottomley: Will my right hon. Friend accept the good wishes of the House for trying to overcome the intransigence of the Patriotic Front in the same way as the Government have overcome the intransigence of the Rhodesian Front? Does this country now recognise the Salisbury regime? If we do not, why are we lifting any sanctions before we get the Governor in or produce independence?
Sir I. Gilmour: I would not like to refer to intransigence either by the Patriotic Front or by the Salisbury regime. I hope that both parties are

421
negotiating in good faith, although it is true that there have been certain delays, which I hope will soon end.
I think that I have made it clear that the vast bulk of sanctions, which do not depend on section 2 of the 1965 Act, will come to an end only when legality is restored to Rhodesia. It follows that the present regime is not legal and that we do not recoginse it.
Mr. S. C. Silkin: We welcome the emphasis that the right hon. Gentleman has placed on the need to obtain the agreement of both parties and not merely the agreement of one. In the light of that, will he give an assurance that, assuming that the legislation is passed through the House this week, none the less no powers under it will be exercised until the agreement of both parties is achieved?
Sir I. Gilmour: To do that would be to give a veto to one party or the other. That would be contrary to the Lusaka agreement and to common sense. If we were to do that, we would never obtain any agreement. I appreciate what the right hon. and learned Gentleman said at the beginning of his question. I repeat that our objective is to obtain the agreement of both delegations so that we can restore peace and security to Rhodesia.
Mr. Hastings: I congratulate my right hon. Friend and his team on what they have achieved so far. My right hon. Friend spoke of having elections as soon as possible after the arrival of the Governor. Does he agree that any unnecessary delay over these elections would increase the risk of confusion and intimidation? Many of us are aware, sadly, of the consequences of that in the past. The Foreign Secretary is reported to have recommended a period of eight weeks and no more. Can my right hon. Friend assure the House that in no circumstances will the British Government agree to a day more than eight weeks?
Sir I. Gilmour: I entirely agree with my hon. Friend. After the attainment of agreement, elections should take place as soon as possible. As we all know, electioneering is a very divisive process. After a war, such as that in Rhodesia, the last thing that a country needs is to
422
be divisive. Our proposals are that elections should take place eight weeks after the conclusion of a ceasefire.
Mr. Spearing: As the Bill will give a blank cheque for legality to Rhodesia—if it does not, perhaps the right hon. Gentleman would say so—why does he think that he can get the Bill tomorrow but would find it more difficult next week? Has he had consultations with the Commonwealth countries at the Lusaka conference concerning his intention to present a Bill tomorrow? If they objected, would they not only be agreeing that the work of the Prime Minister in Lusaka had been undone but that the likelihood of a ceasefire would decrease and the likelihood of civil war increase?
Sir I. Gilmour: The hon. Gentleman is not right about blank cheques, and I do not think that we ever said we would get the Bill tomorrow. We will start debating it tomorrow, and we hope to get it as soon as possible, but we are certainly not pre-empting any of the debating procedures of the House.
I do not think that it is the usual procedure to consult the Commonwealth about legislation to be introduced into this House. As I explained earlier, we adumbrated our intentions at the constitutional conference on Friday, when we put our proposals on the table, and the Commonwealth observers at the conference are kept in close touch with what we are doing.
Mr. Nicholas Winterton: I welcome part of my right hon. Friend's statement, particularly in relation to the Government's assurance that they will not seek to reintroduce sanctions, but is he aware that he and my right hon. and noble Friend are presiding over the destruction of a multi-racial democratic Government in Zimbabwe-Rhodesia? If the official Salisbury delegation has agreed to everything that the British Government have requested, will he please give specific reasons to the House now why he and the Government are not prepared to lift all sanctions immediately?
Sir I. Gilmour: Talk about destruction, and so forth, going on in Rhodesia does not bear serious examination. We are not seeking to destroy anything. We are seeking to build up a multi-racial society in Rhodesia based on a constitution that

423
gives genuine majority rule with safeguards for the minority community. We are seeking to bring peace to that country. I would have thought that my hon. Friend would have the sense to welcome what we are doing. I have answered his question about sanctions two or three times before. Sanctions will be lifted when the Governor arrives in Salisbury and Rhodesia returns to legality. Surely that is perfectly clear.

BUSINESS OF THE HOUSE
Mr. Speaker: Statement—Chancellor of the Duchy of Lancaster.
Mr. English: On a point of order, Mr. Speaker. May this statement be deferred until after the 30-second introduction of the Bill so that at least one Cabinet Minister can be questioned when we have read the text of the Bill?
Mr. Speaker: I am afraid that I must follow the normal procedure in the House. Statements come first.
The Chancellor of the Duchy of Lancaster and Leader of the House of Commons (Mr. Norman St. John-Stevas): With permission, Mr. Speaker, I should like to make a short Business Statement.
The business tomorrow will now be proceedings on the Southern Rhodesia Bill. The business previously announced for Thursday will be postponed until next week.
Mr. Merlyn Rees: We have already discussed the problem of timing in the Rhodesian context, about which there is a great deal of concern among Labour Members because we did not get a clear answer. As to timing in the House, this is an important Bill that we have not yet seen. The hon. Member for Honiton (Mr. Emery) said that the 1965 Act was rushed through the House. However, that Act was introduced on the Friday and not discussed until the Monday. Throughout the rest of today the Opposition will have to meet to discuss a Bill that they have not yet seen, and those discussions will include important matters such as the role of the Governor and the question of elections. The House does not see the need for hurry, but for reasons that have not been explained the Government take a different view.
Despite all these problems, we are expected tomorrow to discuss all the matters that have been discussed at the conference. There will be discussions on the date of the elections and the role of the Governor. Amendments will be tabled relating to sanctions. Being the sort of chap that he is, the hon. Member for Macclesfield (Mr. Winterton) will table amendments that match what he has said

425
today. It looks as though we shall proceed throughout tomorrow and into Friday and beyond. That is no way in which to present an important constitutional Bill to the House.
The Lord Privy Seal suggested that the House should forget party divisions and concern itself with important issues that face the country. This has been done in the past in relation to Irish matters and the like. If during the course of tomorrow the Leader of the House finds that there is no unnecessary fractious delay, will he consider postponing later stages of the Bill until the beginning of next week? It is not the wish of the Labour Opposition to play any party game, but we want to consider all these issues seriously.
Mr. St. John-Stevas: I am grateful to the right hon. Gentleman for his constructive approach to the problem. Of course, as Leader of the House I must balance the convenience of the House against the advice that I receive from my right hon. Friends who are responsible for these matters and the assurances that they give me that they must be in a position to give effect to a settlement at any time. I must attach the utmost importance and weight to the judgment of those who, after all, have been engaged in these negotiations for nine weeks.
Mr. Buchan: The Lord Privy Seal did not tell us; perhaps the right hon. Gentleman will.
Mr. St. John-Stevas: I am telling the hon. Gentleman.
With regard to the constitutional aspects, I should stress that this is an enabling Bill. The constitutional Bill as such is not before us. The legislation merely creates a situation in which that Bill can be brought forward. Of course, I shall consider any representations that the Opposition may make about these matters, but I hope that we can all advance in a reasonable way because every hon. Member wants a settlement. The prize of a peaceful settlement in Africa is so great that every hon. Member should be prepared to exercise restraint to bring it about.
Several Hon. Members rose—
Mr. Speaker: Order. I remind the House that today is a Supply day. We
426
have yet to deal with a Ten-Minute Bill, which could well be opposed, and on Monday I received a request from the hon. Member for Kettering (Mr. Homewood) for an emergency debate on the closure of the Corby steelworks. If questions on the Business Statement continue for too long, we shall be very unfair to hon. Members with steel interests who are anxious to have this matter discussed today.
Mr. Skeet: Will my right hon. Friend clarify one matter? I understand that the Government want the Bill to go through all its stages before the weekend. If the debate spills over into Friday and demolishes Private Members' business, will my right hon. Friend make provision next week so that a very good Bill—the Youth and Community Bill—gets its Second Reading?
Mr. St. John-Stevas: I very much hope that this short Bill will be disposed of in time to allow Private Members' Bills to proceed—[HON. MEMBERS: "Not a chance."] I cannot give an undertaking in respect of any particular Bill, nor can I make any judgment upon it. However, I am well aware of the importance of Private Members' Bills. Of course, if tomorrow's debate continued for that period and Private Members' time was lost, I would see that it was reinstated next week.
Mr. English: The press forecast this Bill over a week ago. One understands that it got the idea from the private Foreign Office briefings. If that is the case, why did not the right hon. Gentleman introduce it earlier? Will he ask the Lord Privy Seal to make another statement in a few moments' time when the Bill has been introduced? Up to now, cowardice has not been a feature of the Government, and it would be reprehensible if they hid behind a technicality and refused to answer questions on the text of a Bill that we have not yet been allowed to see.
Mr. St. John-Stevas: The question of timing is not for me. But clearly I must be guided with regard to timing. Whether the Bill is introduced earlier or later must depend on the advice of those engaged in the negotiations. Within a few minutes we shall have a full opportunity to look at the Bill, and we shall have a full opportunity to debate it tomorrow.
Mr. Ian Lloyd: In considering these matters, may I remind my right hon. Friend of what St. Paul said about the welcome that should be extended to late Christians? Before giving excessive weight to requests for delay, will he consider carefully the fact that in Rhodesia 1,000 people have died in the last eight weeks and that every hour of delay probably involves another death? Those who ask for unnecessary delay will have blood on their hands.
Mr. St. John Stevas: I think that every hon. Member is anxious to fulfil his responsibilities in a manner that will not cause any greater danger to the people in Rhodesia.
Mr. Jay: Is the right hon. Gentleman aware that when I asked the Lord Privy Seal only 10 days ago whether there would be a need for legislation he made no mention of a hurried Bill of this kind? Can the right hon. Gentleman say when the Government discovered the need for hurry and why they changed their mind?
Mr. St. John-Stevas: This situation has to be kept under continuous review according to developments at the conference. The conference has made very good progress, and we believe it to be essential that the powers should exist so that swift action may be taken when the need arises.
Mr. Maxwell-Hyslop: Will my right hon. Friend look into the possibility of putting the Private Members' business that is due on Friday above the line on Thursday? The result then would be that if we lost Friday's sitting unopposed Private Members' business could be called over when the House rose on Friday, it still theoretically being Thursday. In that way unopposed business would proceed with the minimum inconvenience to the House.
Mr. St. John-Stevas: I shall certainly consider that most interesting if somewhat complex suggestion. I will not commit myself beyond saying that this is definitely Wednesday.
Mr. Beith: Why did not the right hon. Gentleman's colleagues give him greater warning of the need which they now stress for hurried legislation? If they did not give him sufficient warning, did he
428
represent to them that it was an abuse of the procedures of the House to rush through a Bill in such a hurry? Will the right hon. Gentleman prove to us all that it is not a ploy to appease Conservative Back Benchers by having the Second Reading tomorrow and taking the remaining stages next week?
Mr. St. John-Stevas: I assure the hon. Gentleman that I have been in the closest touch with the situation, as has the entire Cabinet. However, it must be a matter for the Cabinet, advised by my noble Friend the Foreign Secretary, as to when is the right moment to proceed with an enabling Bill.
Several Hon. Members rose—
Mr. Speaker: Order. If hon. Members will co-operate, I propose to call those hon. Members who wish to speak, bearing in mind that there is a long list of hon. Members who are desperately anxious to speak on the subject of steel.
Mr. Harry Ewing: As protector of the rights of all hon. Members, will the Leader of the House assure us that he is not acting under pressure from his noble Friend, and that he is not party to an arrangement whereby unless the Government get the Bill tomorrow the talks will not proceed?
Mr. St. John-Stevas: That is not the case at all. I assure the hon. Gentleman that I am not a party to any such agreement, and I had never thought of the matter until he suggested it.
Mr. Pavitt: May I remind the Leader of the House that all 635 hon. Members are not engaged in all of the subjects all of the time? Traditionally all parties have had separate groups to consider matters of importance such as the one that we are to consider tomorrow. Did the right hon. Gentleman give consideration in his timing to the possibility of groups of both parties being able to have their meetings in order to consider the legislation?
Mr. St. John-Stevas: Yes, of course I did. I realise that, as my right hon. Friend the Lord Privy Seal said, this is not entirely for the convenience of the House, but in an emergency situation the House has traditionally been prepared to put aside its convenience for the greater good.
Mr. Alexander W. Lyon: Does the Business Statement of the Leader of the House mean that we can table amendments before 10 o'clock tonight and that they will be printed on the Order Paper tomorrow? In view of the acceptance by his right hon. Friend that the enabling Bill will allow Rhodesia to achieve independence before we discuss the constitution, does he agree that in the debate we can discuss all matters relating to the constitution over the next two or three years?
Mr. St. John-Stevas: It is not an independence Bill; it is an enabling Bill. An independence Bill would have to come before the House at a later stage. As to what is or is not in order, that is for Mr. Speaker and not for me. I have tabled the motion on the Order Paper precisely for the convenience of right hon. and hon. Members so that they can put down amendments before the Second Reading. The hon. Gentleman is quite right: that is on the Order Paper, and I hope that it will go through on the nod.
Mr. Buchan: Does the Leader of the House accept that it is not only his duty to announce business but to give a full explanation for it? His right hon. Friend has not managed to convince this side of the House at any rate that there is a need for the Bill tomorrow. Will he give us an explanation? Would it not be more for the convenience of the House to get such a Bill through by agreement next week, unless he can prove that there is sufficient urgency for that to be done tomorrow? There will be no delay in the effective legislation, and there is danger that such a move, far from helping the proceedings at Lancaster House, will hinder them.
Mr. St. John-Stevas: The hon. Gentleman has a point. There would be no discussion if there was not this difficult question of judgment to be made. The judgment that I have made is that if I am advised by those engaged in the detail of these negotiations that the powers are necessary I must follow that judgment unless a contrary case is proved.
Mr. Newens: The Bill raises important issues that could eventually place us in breach of our international agreements, because it may be seen as an ulti-
430
matum by one of the parties to the agreement. Does the right hon. Gentleman therefore recognise that hon. Members on both sides of the House will wish to discuss important issues of principle? Will there be adequate time for all hon. Members who wish to participate in the Second Reading debate to express their views? If not, is it not disgraceful to allow such an important Bill to be rushed through without affording that opportunity? Will the right hon. Gentleman reconsider postponing until next week at least the later stages of the Bill?
Mr. St. John-Stevas: We must see how the Bill progresses. With the concurrence of the House, it is my intention to provide adequate time for the debate on Second Reading. With regard to a debate on the various principles involved, I hope that all hon. Members will exercise a self-denying ordinance so that we do not jeopardise the progress of the conference.
Mr. Cryer: Is the Leader of the House aware that on 30 October Foreign and Commonwealth officials, in evidence to the Select Committee on Statutory Instruments, indicated that a Bill was in preparation and would be presented to the House? If that is so, surely it is not an emergency. The Bill could have been presented many days ago and hon. Members could have made a proper estimation of it. Is this not rushing the democratic procedures of the House in order to appease the Right wing of the Tory Party?
Mr. St. John-Stevas: The hon. Gentleman has made his point with his usual cogency, but I do not think that it is valid. It is surely a prudent protection to prepare a contingency Bill. That is quite different from making a decision to bring it before the House.
Mr. Ioan Evans: On reflection, does the Leader of the House agree that the House has been treated with contempt in the way that the Bill is being brought forward? There has been an illegal regime for 15 years. If there was an enabling Bill being prepared, why was it not announced last Thursday that it could be taken on Friday? There have been broadcasts of the intention to bring the Bill forward tomorrow, although the House was not informed until one o'clock today when notice of the statement appeared on

431
the annunciators. We should get away from the ramifications of the Bill and have some agreement in the House on this important matter. Surely, therefore, we should delay the Bill until Monday.
Mr. St. John-Stevas: There cannot be a contempt of this House because one day's notice is what is required; indeed, there are occasions when no notice is required. In "Erskine May" there are at least six examples to that effect.
Mr. Merlyn Rees: It is not clear what the Leader of the House was saying about amendments to the Bill. Can amendments be put down any time before 10 o'clock tonight or before Second Reading tomorrow? As the debate develops, there may be a need to table manuscript amendments. What will be the procedure then?
Mr. St. John-Stevas: Provided that the motion is passed, it will be possible to table amendments straight away. The question of manuscript amendments is for Mr. Speaker and not for me.
Mr. Merlyn Rees: What is the deadline? I understand that we shall be able to table amendments, but will we be able to do so until two o'clock tomorrow, half-past two, or four o'clock?
Mr. St. John-Stevas: Amendments may be tabled until Second Reading. It is for Mr. Speaker to decide whether he will extend facilities further and accept manuscript amendments. I hope that that is right.
Mr. Newens: On a point of order, Mr. Speaker. The right hon. Gentleman has said that the guidelines for the debate will be a matter for you. He said that he hopes that hon. Members will exercise some restraint in discussing the important principles that are involved. Will you clarify the position, Mr. Speaker, and make it clear that you will be prepared to accept contributions to the debate that deal with the important principles that many of us feel are raised by the introduction of the Bill? If we are allowed to discuss the Bill in only the narrowest terms many of us will feel that it is a travesty of the business of the House.
Mr. Speaker: There is no point in anticipating tomorrow's debate.
Several Hon. Members rose—
Mr. Speaker: Order. There is no need for hon. Members to get excited. I am making a simple enough statement. I shall select the amendments, and I shall bear in mind the time factor that has concerned the House. That means that I shall remember that hon. Members have not had much time to submit their amendments. Those remarks apply to the Bill's consideration on Report. Its passage through Committee is not my responsibility but that of the Chairman of Ways and Means.
Mr. Newens: Further to the point of order, Mr. Speaker. With respect, I endeavoured to ascertain from you whether you will be prepared to allow the debate to range over the issues of principle. Important issues of principle are involved in the submission of the Bill. It will be a travesty of the proceedings of the House if the debate is so narrowly drawn that we cannot discuss matters that many of us feel are of extreme importance.
Mr. Speaker: I shall make a statement at the beginning of the debate tomorrow on the content of the debate.

BILL PRESENTED
  SOUTHERN RHODESIA
  Sir Ian Gilmour, supported by the Prime Minister, Mr. Nigel Lawson and Mr. Richard Luce, presented a Bill to provide for the grant of a constitution for Zimbabwe to come into effect on the attainment by Southern Rhodesia, under any Act hereafter passed for that purpose, of fully responsible status as a Republic under the name of Zimbabwe, and to make other provision with respect to Southern Rhodesia: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed [Bill 72].

  BUSINESS OF THE HOUSE
  Ordered,
  That, in respect of the Southern Rhodesia Bill notices of amendments, new clauses and new schedules to be moved in Committee may be accepted by the Clerks at the Table before the Bill has been read a Second time.—[Mr. St. John-Stevas.]

  HARE COURSING (ABOLITION)
  4.42 pm
  Mr. Kevin McNamara: I beg to move,
  That leave be given to bring in a Bill to make hare coursing matches illegal; and for connected purposes.
  This is not the first time that colleagues and I have proposed the introduction of the Bill. I am conscious of the pressures upon those of my colleagues who wish to take part in the important debate on steel. Therefore, I shall cut short my remarks and refer my colleagues and newly elected hon. Members to the many excellent speeches that have been made by Labour Members on this issue in the past decade.
  Previous Bills have been defeated on Friday afternoons anonymously, and the Labour Government's Bill fell because of the Dissolution in 1970. On the second occasion, their Lordships so mangled the Bill that it became unrecognisable. Apart from the Aircraft and Shipbuilding Industries Act 1976, that was enough surely to seek the Dissolution of the other place. The Bill reflects a Labour Party manifesto commitment to abolish cruel sports, including stag and fox hunting, but the Bill deals only with hare coursing.
  The House will recall the interesting correspondence in The Guardian and Labour Weekly on the policies of the British Field Sports Society in seeking to bring influence to bear upon the Prime Minister to pay little heed to the demand for the abolition of hare coursing and other blood sports. Those of us who saw the right hon. Lady in the excitement of entering No. 10 Downing Street will recall that she quoted at length from the patron saint of animals, St. Francis of Assisi. We
  434
  look to her to support Bro. Hare and eventually Bros. Fox and Stag. We hope that she will ensure that they are not pursued for the entertainment of mankind. I look to the right hon. Lady's party for support.
  The proposed Bill contains one major clause, which states:
  "If any person causes or procures, assists or knowingly permits or suffers any place to be used for the coursing of the hare by two or more dogs for competition as to their ability, they shall be subject to summary conviction."
  That corresponds with previous legislation introduced by Labour Members and by the Labour Government.
  The Bill is an attempt to prevent the continuing spectacle of a hare being used in a tug-of-war between two hounds to the horror of animals and to the horror of all decent people throughout the world. Animals are on this earth for the use and the service of mankind. They are not here for abuse by man. They, too, have a dignity.
  In view of the pressures on the House, Mr. Deputy Speaker, I bring my remarks on the Bill to a close.
  Question put and agreed to.
  Bill ordered to be brought in by Mr. Kevin McNamara, Mr. J. D. Concannon, Mr. Eric S. Heffer, Mrs. Gwyneth Dunwoody, Mr. Austin Mitchell, Mr. Frank Haynes, Mr. D. N. Campbell-Savours and Mr. Nigel Spearing.

  HARE COURSING (ABOLITION)
  Mr. Kevin McNamara accordingly presented a Bill to make hare coursing matches illegal; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday next and to be printed. [Bill 73.]
ORDERS OF THE DAY
  SUPPLY
  [4TH ALLOTTED DAY]—considered

  STEEL INDUSTRY
  Mr. Deputy Speaker (Mr. Bernard Weatherill): Before this important debate commences, I make it clear that Mr. Speaker has selected the amendment standing in the name of the Prime Minister.
  Last week the House agreed to a number of changes in the form in which Questions are put on motions and amendments on Supply days. The purpose of the changes was to enable a vote to take place on the substance of an Opposition motion rather than, as hitherto, on the substance of a Government amendment.
  Under the new procedure, when the Opposition motion and the Government amendment have been moved, I shall propose the Question "That the original words stand part of the Question". On that Question the remainder of the debate will take place, and at 10 o'clock it will be put to the House for a vote if desired. If that Question is negatived and the motion is thus defeated, the next Question to be proposed by the Chair will be "That the proposed words be there added"—in other words, that the Government amendment be made. If the Government amendment is carried, there will be no further vote on the main Question or on the main Question as amended.
  4.49 pm
  Mr. John Silkin: I beg to move,
  That this House, noting the restrictions placed upon the British steel industry by Her Majesty's Government's pursuit of an unrealistic financial policy deadline, which also ignores unfair competition from European industries using heavily subsidised coking coal, condemns that policy which will do irreparable damage to the essential steelmaking interests of Great Britain.
  The debate is the third in a trilogy of vital debates that have gone right into the heart of the Secretary of State's responsibilities in the Department of Industry. We started with shipbuilding on Thursday. Yesterday we debated the National Enterprise Board and, to some extent, regional affairs, and today we are
  436
  debating steel. It seems right and appropriate that we should be doing so. As I said in the debate on shipbuilding, there is a linking factor between all these debates, namely, the interlocking need of British industry to work together and the duty that the Department of Industry and the Secretary of State have to ensure that it is profitable and well run.
  Nothing is so linked to other industries as steel supply. Therefore, the House must ask two questions. Do we want a British steel industry? If we do, what should we be doing to preserve it? The first question seems at first sight to be rhetorical. Every hon. Member would, of course, say "Yes", and so would the Secretary of State. However, his actions and his attitude seem to be the absolute reverse of that proposition. For example, let us consider his precondition for the steel industry—that it should break even in March 1980. His attitude is not that of a man who wishes to see a viable British steel industry but rather that of an inflexible suburban bank manager to the head of a local firm who says that he would quite like the firm to succeed if it can repay its overdraft, as overdrafts should be repaid, overnight and immediately. Perhaps the demand in this case is not for immediate repayment, but by March 1980. If the BSC does not do that, it is too bad. It is threatened with the most terrible consequences if it cannot break even by March 1980.
  I made my next point some months ago, and the more I look at it the more certain it seems to be. The BSC can break even by March 1980 only if it closes one or more of its major works. We should forget about the other closures that are imminent or being considered. It is true that an industry can be made to break even, if that is the test, and it is the test, more or less, in the Prime Minister's amendment. On that test, one would not need until March 1980. I could do it in three weeks, and the Secretary of State could do it in two. We would need only to close it down and its accounts would then perfectly balance and it would have broken even.
  However, is that what we really want to do with the steel industry? The essential difference is between the attitude of a Tory Government, with their suburban bank manager attitude to life, and what a Labour Government believe in.

  437
  The Labour Government were told some time ago by the chairman of the BSC that he expected or hoped that the Corporation would break even by March 1980. We replied that we were very interested to hear it, and wished him good luck if he could do it, provided the steel was produced. The important factor, however, was that the steel should be produced and the industry kept going. The test was not whether the overdraft could be repaid immediately.
  The implications of a break-even by March 1980 are terrifying. They involve further massive areas of Britain's industrial heartland being laid to waste in the 1980s. As a society we have to resolve one perennial and fundamental contradiction. It is most difficult, but it must be resolved. On the one hand is the need of British industry for a massive re-equipment and a strong market, and on the other the irrelevance represented by an orthodox, knee-jerk reaction of closures and cutbacks.
  An overall plan, a British plan for British industry, is needed. One of the things that distress me about the Secretary of State's attitude to industry is his mysterious ability to compartmentalise everything. He sees industry in unrelated sections—shipbuilding, the Post Office, steel and so on. Nothing is related. There is no great plan, except, of course, the plan of the market place, whatever "market place" may mean, because the market place has been subjected to direction throughout history. There never has been absolute laissez-faire. The Secretary of State would do well to serve a term, as I did, in the Ministry of Agriculture. He would find that there never has been a free market in agriculture since the Bronze Age. It has been subsidised for that length of time. One can never have an unsubsidised, undirected system of industry. Of course, one can try, and it was tried in the 1930s.
  Steel is the raw material of British industry. Perhaps the Secretary of State sees for British industry a different role from that envisaged for it by my right hon. Friends and myself. I have said that the Secretary of State sees industry as being compartmentalised, but he has told us that he would not be prepared to run British industry. He says that his only
  438
  duty is to make the economic conditions in which industry can run itself.
  What future does the right hon. Gentleman expect the British steel industry to have in the 1980s? I put a point to him yesterday, but neither he nor the Minister of State replied to it. Perhaps now, after 24 hours, they may be in a position to do so. There has been a report that forecasts have been made by the Treasury of industrial production between now and 1983 for particular sectors of British industry. Will the Secretary of State publish the forecasts that his Department is providing as part of the Government's industrial assessment system, and which his officials are alleged to be currently discussing with invited representatives of British employers? Will he confirm that his Department is expecting production in the three big steel-consuming sectors of motor vehicles, mechanical engineering, and metal goods to fall by over 20 per cent. by 1983?
  If that is to be the future for British manufacturing and the steel industry, the cuts in public spending recently announced will be only the first bitter instalment of a frightening bill which the British people must pay for voting Tory last May. Announcements of further redundancies across the breadth of British industry will come thick and fast. Perhaps it is appropriate that this should be the basis given to us by a Tory Party so long dominated by the interests of financial capital, a basis that tells us that we can expect announcements and closures with the effortless regularity of a banker's standing order.
  What should we be doing about steel? It is about time we began to grasp this nettle hard. First, we must reconsider our attitude to Europe and to trade with Europe. A new situation has arisen. I advise the right hon. Gentleman to spend a short apprenticeship in the Ministry of Agriculture. He would find it wonderfully clarifying. I spent three years there, and it taught me a great deal. It is now beginning to teach the Minister of Agriculture a trick or two—and, I hope, a lesson or two as well. We have seen the attitude of the other members of the EEC when their essential national interests are concerned. We have seen it with regard to French lamb. That is not one of the most vital things, but it gives us a clue to what is happening.

  439
  The French attitude to lamb is somewhat the reverse of a normal public attitude in an EEC member State. The public attitude of members of the EEC differs totally from their private actions when their own interests are concerned. We have to take that into account if we are to be left with any British industry.
  Mr. Ted Leadbitter: As an indication of the gravity of the point that my right hon. Friend is making about the importation of steel, in the port of Hartlepool, steel was brought in recently by a ship bearing a West German flag from a steel producer in Eastern Europe with a Common Market licence. Does not that seem crazy?
  Mr. Silkin: I am grateful to my hon. Friend for his remarks. A few weeks ago I took part in a programme called "Eurofrauds". I feel that it could be an introduction to a subsequent programme called "Son of Eurofrauds".
  Let us take the matter from the particular to the general. The United Kingdom exported 1 million tons more than it imported from the EEC up to 31 December 1972. On 1 January 1973 we joined the Common Market. Over the last two years, we imported 1 million tons more from the EEC than we exported to it. In other words, 20 per cent. of our domestic used steel comes from abroad.
  Last year, NEDO looked at the import penetration of stainless steel bars. It identified one important factor as being sales by European companies at below production costs. That is what British Steel has to compete with, and that is one reason for its lack of success.
  Mr. Tim Renton: I realise that the right hon. Gentleman has always been fervently anti-Common Market. However, in relation to the statistics that he has provided, does he not believe that some of the faults lie with BSC itself rather than with steel producers in other European countries? Will he confirm what his predecessors in office accepted, that the price stability scheme introduced by Commissioner Davignon has been of considerable assistance to British Steel? Without it, BSC would be in a worse plight today. That fact was spelt out in the previous Government's document "British Steel Corporation: The Road to Viability."
  Mr. Silkin: If I relate that to the sort of steel that we are discussing, the answer is "No". In general terms, the Davignon proposal was of benefit. What was the proposal? I am glad to see that the hon. Member for Mid-Sussex (Mr. Renton) is with me—dawn is approaching. The proposal was a measure of protection. It stopped import penetration into the EEC. I suggest that we go one stage further.
  The main threat to our steel industry comes not from outside Europe—certainly not after the Davignon proposal—but from inside Europe. Since joining the EEC, British industries using steel have lost their market share at home and abroad to their foreign rivals. As with the motor industry, multinational companies have supplied the United Kingdom market from plant abroad. The cost of that to British Steel is 2 million tons in lost production. The hon. Gentleman should remember that when he places too much blame on BSC.
  The import of cars alone is equivalent to an additional 1 million tons of steel. On 31 December 1972, 27 per cent, of our new cars were imported—we made 73 per cent. of our own cars. Today, the proportion is 55 per cent., and 38 per cent. of those come from the EEC. The same course is now being followed with trucks and other commercial vehicles.
  One reason for the increase of imports in foreign steel is the subsidies that are given by EEC members to their companies. That is particularly true with coking coal.
  Mr. Tom Ellis: To look beyond the EEC. does not my right hon. Friend believe that an important question that we should ask is why, from 1950 to 1973, before we entered the EEC, our steel production fell from 27 million tons to 25 million tons and yet Japanese steel production rose from 2 million tons to 90 million tons?
  Mr. Silkin: The Japanese bought the know-how from other countries and decided to concentrate on the items which they could produce. They found that they could make electronics and steel and they produced them. They went right at it—with investment.
  We need to use high-quality coking coal, not just to improve the quality of steel production but for the safety of

  441
  those who produce steel. The problem is that that is expensive. We compete with other countries which produce their steel with highly subsidised coking coal. What can BSC do? No wonder it is in difficulties and looks around saying "If the Government do not help, what can be done? Go abroad". Its plight can be well understood.
  The Federal Republic of Germany subsidises its coking coal 12 times as much as we subsidise coking coal. In France, the proportion is 15 times as much and in Belgium 25 times as much. That has an additional effect. Not only is our steel more expensive because we import EEC coking coal but we have to look around to buy coking coal from abroad. There is a dual effect of steel and other imports.
  Sir Anthony Meyer: Is the right hon. Gentleman suggesting that BSC, making a loss at the rate of £400 million per year paid for by the taxpayer, is not also being subsidised?
  Mr. Silkin: I shall return to the subject of BSC. I should like to come to that point later in my speech. I shall not avoid it but I shall meet it head on, if the hon. Gentleman will give me a little time to do so.
  The Minister of State, Department of Industry (Mr. Adam Butler): The middle stump.
  Mr. Silkin: No. that is not the middle stump. Obviously, the hon. Gentleman has not played cricket in years. Indeed, he does not look like a cricketer to me.
  We have to restrain import penetration and we should ensure that the Commission does not get its own way. In the previous Government my right hon. Friend the Member for Chesterfield (Mr. Varley), the then Secretary of State, spent much time opposing the Commission on some of its more outrageous pro-mainland activities. That is not a matter at which the right hon. Gentleman and his colleagues seem to be good. They seem to be good at going to Brussels and saying "Yes" to everything.
  Apart from the question of the EEC, we should ask ourselves what we should be doing to preserve the steel industry. One matter is clear: we should abandon the date of 1980.
  Mr. J. D. Concannon: Does my right hon. Friend agree that what he said about the coal industry means that we will have a problem, with closure of some coal mines, if we continue to import coal?
  Mr. Silkin: Of course, there will be a problem with the coal industry. It is not only a question of our steel industry contracting. We are having to buy not only steel cheaper from abroad but coking coal from abroad. Therefore, we should abandon the date of March 1980.
  Here I want to meet what the hon. Member for Flint, West (Sir A. Meyer) said. Of course, there will be losses; I accept that. However, can the hon. Gentleman accept this, as apparently he represents a constituency in which steel is produced at the moment? When we deal with and remodel an industry such as steel, how long is the process of remodelling? Is it six months until March 1980, or is it more like 10 years? If it is 10 years—I suggest that is what it is—we must be prepared to accept that there will be losses, as we go along, until we reach viability. A moment ago I spoke about the Japanese. They were prepared to make losses for seven years until they had one of the most powerful steel industries in the world.
  Let us be under no illusions about the matter. I am not convinced that the Secretary of State gives a damn about the steel industry. It is up to him to convince me. If we want a steel industry, we must be prepared to pay for it.
  Sir Anthony Meyer: The answer to the right hon. Gentleman's question is the time necessary to provide the investment. The answer is not endless prevarications and delays in the hope of buying votes in a place such as Shotton.
  Mr. Silkin: Of course, the answer is not endless prevarication. In 1973, when the Conservative Government considered the future of steel, they put a 10-year development plan on it. It was a lousy plan—but that is another matter.
  I referred to the first step that must be taken. The second is financial support and maintenance of employment and output. Here is the way in which we may run the steel industry at sensible levels that are agreed between all the parties involved—the Government, the British Steel Corporation and the steel

  443
  committee of the TUC. They must work together. It will not be an open-ended cheque. It will be a firm, viable undertaking, as the level of output will be agreed and realistic. That is what should be done. The third step is to preserve a substantial iron and steel manufacturing industry on a basis which will enable it to take advantage when the upturn in the market comes—for it will come. The Government are playing for total suicide—not for the upturn that, as I say, will come.
  I said that we should restrain the growth of imports. However, there is one important matter that I must accept. In the natural sequence of events there must be closures. I accept that. It is regrettable, but there it is. It must be accepted if there is to be a viable scheme. When there is a closure, we must always consult the unions and the men who work on the shop floor. I do not mean the type of consultation of which the Government are so fond, namely, telling people and saying that that is consultation. I mean real working together and negotiation. That is what the Labour Government believed in, and that is what they did.
  This is what is happening now under the tutelage, the aegis, the goatskin of the right hon. Gentleman. The British Steel Corporation calls the unions together and tells them what is happening in Corby and Shotton. It does not negotiate with them. The unions have the facts, the figures and a strong case. Is anything done by the BSC, under the right hon. Gentleman's diktat, to listen to them, to discuss with them, to see whether they may be right? Nothing is done about that.
  We have heard about Corby and Shotton. A few weeks ago my hon. Friend the Member for Flint, East (Mr. Jones) made an eloquent speech. He fought an extremely good fight—and rightly—for his people at Shotton. Meanwhile, we are told that the Corby closures will start in six weeks. My hon. Friend made clear—the evidence is there—that the closure of Shotton was a firm breach of a promise given by what we thought was an honourable management supported, we hoped, by an honourable Government. No; it was a false undertaking. It was broken the moment the Government came to office. What will that attitude do for morale?
  444
  Corby has been described as a one-industry, one-employer and one-class town. Two-thirds of the men in Corby work for the British Steel Corporation. What will be the consequences if the closure, bringing with it nearly 6,000 redundancies, goes ahead without discussion, peremptorily on the say-so of the British Steel Corporation, forced to do that by the suburban-bank-manager attitude of the Secretary of State?
  Unemployment in Corby is already 7 per cent. An independent study by the consultancy firm of Coopers and Lybrand showed that unemployment would still be 27 per cent. even after two years, if the BSC shuts the whole of its Corby works. However, we are told that the BSC will not close the whole of the works. It will not close the tube works. What confidence can Corby have in that? Those people can have no confidence in BSC's word after Shotton, nor any confidence in the Secretary of State.
  Secretaries of State change. If they do not change—as in the case of this Secretary of State—they change their minds. Proposals have been aired for designating Corby as an assisted area to attract alternative jobs. The town's development corporation attracted six firms to Corby in the first half of this . A total of 180 jobs were created, of which 105 were for women. Having decided to cut Corby's throat, the Government said that they might be prepared to breathe new life into the town.
  There is nothing new in that. What is proposed for Shotton and Corby is not new in history. We have seen it all before. We saw it in the 1930s. We saw it at Jarrow, where shipyards were closed and a steel plant was prevented from expanding. Jarrow was murdered. Ellen Wilkinson warned us what happened when the axe fell on a one-industry town:
  "When the industry of a town has been killed it seems as difficult to apply artificial respiration as on a human corpse.… All the traditions of the area seem to cling to the dead industry."
  We need to be reminded of what happened to Jarrow. Efforts were made to attract new industry. A small furniture factory was set up. A couple of works were created to supply metal tubes and castings. Ironically the town's small steelworks was eventually stimulated by the rearmament programme. Special area

  445
  status was granted. The Jarrow crusaders marched. However, after five years' efforts only 800 men and boys obtained jobs; 4,500 did not.
  We must ensure that Jarrow never happens again. That is why the Opposition feel so strongly. We believe in steel. We believe that it is vital for our industries and our people. When the cold winds of Tory Government, with all their threats and malice, blow, it is our duty to resist. In that spirit, I call upon my right hon. and hon. Friends to support this motion in the Division Lobby.
  Mr. Tony Marlow: On a point of order, Mr. Deputy Speaker. My hon. Friend the Member for Flint, West (Sir A. Meyer) asked a question which the right hon. Gentleman said he would answer. He did not manage to give that answer. Perhaps he could give it to us now.
  Mr. Silkin: Further to that so-called point of order, Mr. Deputy Speaker. I answered the question. When the hon. Gentleman wakes up and reads Hansard tomorrow, he will see it for himself.
  Mr. Deputy Speaker: Whether the question was answered or not, that was not a point of order.
  5.20 pm
  The Secretary of State for Industry (Sir Keith Joseph): I beg to move—
  Sir Anthony Meyer: I am grateful to my right hon. Friend for giving way. Since the Opposition will no doubt claim that they have turned out in force to defend the British steel industry, it might be worth pointing out that while the right hon. Member for Deptford (Mr. Silkin) was speaking, there were no more than 19 hon. Members present on the Labour Benches.
  Mr. Les Huckfield: More than on yours.
  Sir K. Joseph: I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
  "believes that the future of the steel industry depends on much improved productivity, efficient use of costly investments, and an early return to profitability".
  The Opposition have chosen the subject for debate. As my hon. Friend the Mem-
  446
  ber for Flint, West (Sir A. Meyer) has pointed out, they have mustered only a couple or three handfuls of hon. Members—
  Mr. Donald Coleman: On a point of order, Mr. Deputy Speaker. Are you aware that the reason why my colleagues are away from here is that we are having to discuss the Rhodesia question, which that crowd on the Government Benches have brought through so quickly?
  Mr. Deputy Speaker: Whether hon. Members are present or not present is not a point of order. It is not a matter for me.
  Sir K. Joseph: In choosing this subject, the Opposition have had to recognise, or should have had to recognise, that they were recently the party in Government. The difficult job of the right hon. Member for Deptford (Mr. Silkin), who opened the debate, has been to make a speech criticising the present Government's attitude to steel while detaching himself from the almost identical attitude to steel of his own Government. He carried out the task with a certain amount of dexterity.
  As one would perhaps expect, the right hon. Gentleman concentrated on a few subjects, such as coking coal and imports. He accepted, towards the end of his speech, that when an industry, under the policies of both parties, in successive Governments, is given huge sums of money by the taxpayer with which to create new investment, it follows that there are bound to be some closures. But he did tell the House straightforwardly that during their whole period in office the recent Government, of which he was a member, were grappling with the problem of encouraging and stimulating the steel industry to become competitive and to take advantage of the new investment provided by the plans of both parties when in office.
  From the right hon. Gentleman's speech one would not know of the series of crises that marked the period in office of the last Labour Government as they faced up, with increasing courage—I pay tribute to their courage—to the problems inherent in a vast investment programme and in making the steel industry competitive. The Labour Government, after shirking, flinching and shrinking from the

  447
  social problems, accepted, towards the end of their period in office, that closures were inescapable if the new investment was to fulfil its purpose. In the end, the Labour Government had to cancel pledges given under the Beswick review to delay the closure of a number of steelworks. I shall not list them. The House will be familiar with a whole series of steel plants, reprieved for a stated period of years under the Beswick review when the Labour Government first came to office, which, in the event, were closed, with a massive loss of jobs. I understand that the figure was 25,000 jobs lost earlier than the Beswick report had pledged though later than originally planned.
  Mr. Ron Leighton: Does the right hon. Gentleman agree that during the period of the Labour Government no closure occurred without the agreement of the unions? Ebbw Vale is a good example of how the Government of the day put in new industry so that when steel jobs were lost work was available elsewhere. This was done by agreement. From what I have seen, the right hon. Gentleman proposes, in places like Corby, to act without any agreement, throwing people out of work and on to the dole without any alternative employment.
  Sir K. Joseph: Governments want to get agreement for their policies. It is in a Government's own self-interest, if for no more civilised motive, to get agreement. The hon. Gentleman's party, when in Government, saw that the national interest, in the end, required decisions even when there was no agreement with the trade unions' steel committee.
  Mr. Gerald Kaufman: No.
  Sir K. Joseph: The right hon. Gentleman says "No" from a seated position and prepares to contradict me. On 15 January 1979, he said:
  "Of course, we ask the British Steel Corporation to consult the Trades Union Congress steel committee and workers about potential closures. But we cannot allow even the TUC steel committee to have a veto over a closure if the British Steel Corporation regards that as being necessary, and provided that proper negotiation has taken place.".—[Official Report, 15 January 1979; Vol. 960, c. 1308.]
  Mr. Kaufman: The right hon. Gentleman has done me the courtesy of quot-
  448
  ing my remarks, and has quoted me accurately, but the fact is that what we laid down to the British Steel Corporation, and what the right hon. Gentleman is now resiling from, was that no closure date for any steelworks should be set until the process of negotiation had been fully carried through. In every case, from Hartlepools to Shelton, that process of consultation was carried through. In no case, as my hon. Friend for Newham, North-East (Mr. Leighton) pointed out, did a closure take place without the agreement of the unions and the work force. In the case of Corby, the right hon. Gentleman is consenting to a closure date before the process of consultation has been properly carried through. In the case of Shotton, he is consenting to a closure when there is a specific pledge by the British Steel Corporation, endorsed by Government.
  Sir K. Joseph: The right hon. Member for Deptford says to his right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman) "Well done", but the essential common ground between the two parties, one recently in Government and one now in Government, is that both Governments accept that the decision is for the British Steel Corporation. In the case of Corby, the consultations were started by the British Steel Corporation as early as February this year, before the election, and have continued until this autumn. The British Steel Corporation, which, as the management, has the final decision, decided that the consultations had been carried as far as practicable. It has made its decision. We accept that decision, because, like the previous Government, we leave these decisions to the management of BSC.
  Mr. John Silkin: I understand the right hon. Gentleman's claim that he does not interfere in management. What is his view of a management that proposes to close a vital industry in a one-industry town on a particular date without negotiation when it is told that the facts and figures can be demonstrated to be false but does not even have the courtesy to examine those facts and figures with the people concerned?
  Sir K. Joseph: I do not know to what extent there has been a technical dialogue during the consultations. I know, however, that the cost of maintaining the

  449
  new works and the old works falls on the taxpayer. It is no kindness to struggle to defer the necessary increase in the competitiveness of the industry. The only result is to slim the industry even more than if change was accepted more quickly. The result of constant delays is to increase costs. The increased costs lose customers. The customers, once lost, do not quickly come back. The delay of the Beswick closures and the delay that the Opposition now seek to impose on the British Steel Corporation would produce a greater loss of jobs than accepting the closures at a time when the management wanted to carry them out.
  Mr. John Farr: Will my right hon. Friend confirm that if certain technical proposals were put to the chairman of the BSC to close Corby on notice of a few months without a proper answer and proper consideration being given to those proposals, that would be a policy that the Government could not support?
  Sir K. Joseph: Her Majesty's Government have two options: either to let the management manage or to seek to impose their own management judgment instead. I am no manager, and my right hon. Friends are not managers. We do not pretend to be. We are carrying on with the same management as was installed and supported by the previous Government. We are giving that management the same cash limits for the current year as were proposed by the last Government. We are carrying on with a process of consolidation and closure and of management prerogative to decide, as was carried out by the last Government. It ill befits the right hon. Member for Deptford to pretend that the policies that he is attacking under this Government are not identical to those followed by his Government.
  Mr. Tom Ellis: Does the right hon. Gentleman agree that the alternatives facing the Government are not either to manage or to allow someone else to manage the industry but to allow the BSC to manage the industry and then themselves to consider the social consequences of that management?
  Sir K. Joseph: The hon. Gentleman is absolutely right. I shall come to that part of the Government's responsibility in a few moments. First, I want to answer
  450
  another point made by the right hon. Member for Deptford. He maintains that the difference between the present Government and the Labour Government is that this Government are behaving like suburban bank managers—he is being a bit superior and condescending towards those people—by imposing a date by which the BSC must reach profitability.
  Even that is wrong, because this Government are doing no more than fulfilling what we thought was a commitment of the last Government.
  Mr. John Silkin: No.
  Sir K. Joseph: No doubt the commitment might have been departed from, but this is what my predecessor, the right hon. Member for Chesterfield (Mr. Varley), said on 22 May 1978:
  "The BSC must get its finances straight as quickly as is practicable. My hon. Friend will know that in the last financial year BSC, in common with many comparable steel companies overseas, lost money. It lost £440 million. Part of the Government's policy is that the financial objectives of the BSC should be to break even by the financial year 1979–80."—[Official Report, 22 May 1978; Vol. 950, c. 1105.]
  We are now in the financial year 1979–80, and all that we are doing is asking the BSC to break even one year later—by the financial year 1980–81.
  Mr. D. N. Campbell-Savours: Does the right hon. Gentleman accept that that is not an instruction and that implied in the decision that he took earlier this year to impose these constraints on the BSC was an instruction that will lead to a great loss of jobs nationally?
  Sir K. Joseph: I have respect for my predecessor. I presume that he meant what he said. I know that the chairman of the BSC planned and intended—and plans and intends, in the present tense as well as the past—to break even by the end of March 1980. That was the declared intention of the BSC board, encouraged and supported by the previous Government. We are adhering to that programme.
  Of course we accept, as the hon. Member for Wrexham (Mr. Ellis) rightly pre-supposes, that when the management has made a decision it is for the Government to take account of the social consequences

  451
  and to take what action they think fit in the light of them.
  I have now to make a statement on the remedial measures that the Government propose in connection with the announcement by the BSC last Thursday of its decision to close iron and steel making at Corby.
  In order to attract new employment for those affected by the steel closure, I intend, subject to the necessary approval of the European Commission—[HON. MEMBERS: "Shame."] Once again, we are carrying out the same policy as the previous Government, on which we expect an answer from the Commission within a matter of weeks—to make the Corby employment office area a development area. Firms there would then be eligible for the full range of regional incentives, including regional development grants on buildings, works, plant and machinery and regional selective financial assistance under section 7 of the Industry Act 1972. As a development area, Corby would be eligible for assistance from the European regional development fund towards infrastructure and industrial projects and, as a steel closure area, from proposed measures under the non-quota section of the fund and from the European Coal and Steel Community.
  The Corby development corporation has a substantial advance factory programme in hand and is also making efforts to attract private development. The Secretary of State for the Environment—the Minister of State is on the Front Bench—is making funds available for infrastructure and consolidation for an additional 70 acres at Earlstrees industrial estate. The corporation is investigating the suitability of another 200–250 acres of land at Weldon, in the Corby employment office area.
  It is proposed that the Commission for the New Towns will take over from the development corporation next year, when it would inherit its industrial assets and be given the resources necessary to continue site development work. The commission will be asked to devote priority to Corby within its responsibilities for other new towns. The commission is already participating in arrangements with the corporation and the local authorities to co-ordinate industrial development and promotion in Corby.
  452
  The Government have also announced recently that they are going ahead with the A1-M1 link along the route that can be completed most quickly. This means that firms in Corby will then have ready access to a high-quality trunk road connecting them to the industrial Midlands and the expanding East Coast ports.
  All these measures, taken together with Corby's favourable location in the East Midlands should mean that the town will prove more attractive to private investors, and this will thus improve the employment prospects of those affected by the closure.
  Mr. Peter Fry: Will my right hon. Friend note that there will be much relief and satisfaction in Corby and Northamptonshire at the fact that the Government have made this announcement? It is the first time that concrete proposals have been brought forward by any Government to assist Corby. But will he point out to the other competing authorities nearby—Peterborough, Northampton, Daventry and other expanding towns—that there is a regional as well as a national obligation towards Corby? Will he ensure that his Department will watch closely applications for firms to move to other parts of Northamptonshire, and will efforts be made to aatract them to Corby, where the jobs are so badly needed?
  Sir K. Joseph: I think that Corby has attractions, even without development area status, and that towns in the neighbourhood may themselves feel anxious about their capacity to attract investment with Corby now having been given, or about to be given, development area status—particularly since skilled labour may be released by the closure, and skilled labour is in scarce supply in many parts of the country.
  Mr. Dennis Skinner: Is the right hon. Gentleman aware that for him to make a statement about improving infrastructure, giving incentives and using Government intervention, supposedly to help the people of Corby, is the height of hypocrisy when one considers that only three months ago he told the House and the nation that what this country needed was the dismantling of the regional aids and of Government intervention? Why should the people of Corby listen to him now?
  Sir K. Joseph: The hon. Gentleman does me the compliment of attacking me almost as fiercely as he attacks his own side.
  Mr. Skinner: And it paid dividends with that lot as well.
  Sir K. Joseph: The hon. Gentleman assumes that we are able to move straight away from the oversubsidised, overtaxed and overspent economy that has existed for some time. He seems to believe that we can move straight from an excessive level of Government intervention to no Government intervention. I never maintained that. I hold out the prospect of much less Government intervention, which will come by a transitional route.
  The Government's regional policy, announced in our manifesto and carried through by me, is to reduce regional incentives by one-third. We do not intend to abolish them; we intend to take them away from areas where economic conditions do not justify them. We wish to concentrate them precisely on those areas where, if they have a value, they can be effective. That gives us the greatest scope and authority to use those incentives—for what they are worth—in an area such as Corby, where people will be released from their existing jobs.
  Mr. Bill Homewood: What is the time scale for the provision of new jobs? The British Steel Corporation intends to close the Corby iron and steelworks in March next year and to pay off the money until November. There is no factory ready for occupation. It is estimated that it will be three and a half years before the first new jobs materialise. Does the Secretary of State really believe that the population of Corby, with 6,000 men out of work, will sit around waiting for him to bring in the jobs?
  Sir K. Joseph: Indeed, I do not. With other possibilities within reach, many people released from jobs in Corby will seek work elsewhere in the sub-region. Surely it is right to assume that. Firms and investors will find Corby an attractive place in which to invest. Places more remote from London may fear the competition that will come from Corby because of the labour force availability and because of its inherent attractions, quite apart from the incentives that will be provided.
  Mr. Marlow: My right hon. Friend mentioned the M1-A1 link. Many people look upon Corby as being almost commercially inaccessible. How long will it be before this link road is in operation?
  Sir K. Joseph: I cannot give my hon. Friend information on that today but I shall write to him.
  The right hon. Member for Deptford accused me and the Government of compartmentalising our views on the economy. Could it not be that it is he who is doing that? He assumes that the Government can, if they wish, and without any ill consequences, continue a subsidy at a given level, or even expand it. The right hon. Gentleman surely knows that if the subsidy to BSC is not reduced the extra money has to come from elsewhere in the economy, thus destroying other jobs and prospects in industries in other parts of the country.
  Continuing a subsidy at the present level is not without consequences. It is not without consequence to carry the costs of all the new steel investment, and Corby as well, on the backs of the taxpayers. The benefit to the country will come only when the steel industry subsidy can be reduced and when the industry can pay its own way. The Government propose that next year the steel industry will be helped by the taxpayer with capital investment and related costs. We rely upon the board of BSC to carry out its own proposals, approved by the last Government, to operate at a profit during the financial year 1980–81.
  Mr. Leighton: Has the right hon. Gentleman got his arithmetic right? Has he worked out what it will cost the State in loss of tax revenue from the workers who, he says, will be released from employment? What will be the cost of paying those workers unemployment benefit? What will be the loss of rates to the local authorities? When the Minister has worked that out, he will find that he has not saved very much money at all. Would it not be far better to follow the Continental example? At Limburg, where the authorities proposed to shut down coal mines and steelworks, they waited until alternative jobs were available. Under these proposals the right hon. Gentleman will make no savings at all but merely cause human misery.
  Sir K. Joseph: The hon. Gentleman assumes that everyone who loses his job

  455
  stays unemployed for ever. That is not the case. The average duration of unemployment in this country—though my figures may not be exact—is from 20 to 22 weeks. As the hon. Member for Kettering (Mr. Homewood) acknowledges, many people will find jobs within the travel-to-work area. Good luck to them.
  Mr. Farr: It is obvious that my right hon. Friend is being sincere but also that he is not unaware of the situation at Corby in relation to the M1-A1. He said that he did not know how long it would take to build and suggested that the road would be ready fairly soon in order to help Corby. Is he aware that it will not be built before seven years have elapsed and that the Corby steelworks is due to close within seven months? It is really not fair to the House to suggest that the M1-A1 link can be any help before Corby is dead.
  Sir K. Joseph: Does my hon. Friend not realise that the question of improved transport facilities for Corby will be another ingredient in the investment decision-making of those considering Corby? I make no further comment.
  Complaints have been made by the steel unions about the safety of some of the coking coal provided by the National Coal Board. There is an awkward tussle between two great nationalised industries, with the taxpayer looking nervously at the consequences since they may well fall on his plate. I cannot give the House a certain answer about where the right decision lies. Discussions between the two nationalised industries continue, and it is correct to identify this issue as one between them.
  I deal now with the underlying thesis of the speech by the right hon. Member for Deptford. He spoke as if it were possible for the Government, if only they have enough good will, to give a guarantee against unemployment to the people of this country; to guarantee a rising standard of living; to avoid closures and to avoid damage to the economic prospects in a particular town. The right hon. Gentleman spoke as though the conditions that prevailed at the time of Jarrow were still with us.
  Surely he knows that his party presided over an enormous rise in unemployment. His party did not want a rise in unemployment. Did it lack heart because it
  456
  presided over rising unemployment? Of course it did not. No one on the Government Benches would argue that Labour Members were lacking in sympathy because they presided over a do g in unemployment.
  Employment cannot be guaranteed by the Government. Probably there was never a time when employment, let alone full employment, could be guaranteed by the Government. Surely we have learned from the experience of recent years that employment can be secured only by being competitive in the trading community and by good management co-operating with co-operative work forces to provide goods that consumers at home and abroad want to buy. Only on that basis, within a framework of laws, institutions and safety nets provided by the Government, can we hope to get back to anywhere near full employment. If the right hon. Gentleman pretends either to the House or to the country that it is open to the Government, simply because they care enough, to secure anything like full employment, he misleads himself and the people.
  Mr. John Silkin: I asked the Secretary of State a question yesterday and again today. It is relevant to his argument. I asked him about the 20 per cent. reduction, in 1983, in vital parts of industry. Is that figure correct?
  Sir K. Joseph: I do not know. I have seen the same reports as the right hon. Gentleman. I would not be a bit surprised if many jobs were in danger as a result of the indifference to unit labour costs by many work forces and the combination of inflation and lack of productivity and competitiveness. If work forces insist, through their unions, on being paid far more each year than the extra production that they create, inevitably there will be fewer jobs. Surely the right hon. Member for Deptford does not seek to make a political point about that. All hon. Members, whichever parties they represent, should be united in the view that it is madness, amounting to self-injury, to destroy jobs by wilful indifference to competitiveness.
  I hope that the right hon. Gentleman will accept that in answer to his general question, since it is highly appropriate to the steel industry. Upon the competitiveness of the steel industry and the co-operation between management and work

  457
  forces depend the security and standards of living associated with this industry
  5.53 pm
  Mr. Donald Coleman: I declare an interest, in that I am a member of the Iron and Steel Trades Confederation—the principal union in the steel industry. I do not think that dancing will take place in the streets of Corby tonight as a result of the Secretary of State's announcement. However, I am sure that the people of Corby will ponder on what is to happen to them while they are waiting for the promised great things to happen. The calamity is about to descend upon the people of Corby—not in seven years' time, but now.
  The debate takes place at a grave moment in the history of the British steel industry. The events of the last few days in Corby and London begin a sequence which, unhappily, is likely to continue at the meeting on Friday on the future of Shotton. These events have brought us to the stage where the ideas of the right hon. Member for Bournemouth, West (Sir J. Eden) and the hon. Member for Cirencester and Tewkesbury (Mr. Ridley), who suggest that bulk steelmaking in the United Kingdom should be abandoned, are a real possibility.
  My purpose is to try to create an understanding of these events. The responsibility for the present crisis rests upon a truculent management in Grosvenor Place and the exponents of masterly inactivity in the Department of Industry who manage to do a great deal by doing nothing at all.
  Let us consider first the British Steel Corporation management. About six weeks ago, at the first meeting with the TUC steel committee to discuss the future of Corby, the BSC management issued an ultimatum. It said that the union must produce alternatives for continuing steelmaking at Corby by 1 November. Imagine that! A management which has totally misread the market, and consequently has over-capitalised, proposes to take the axe to a thriving integrated business and gives the union six weeks in which to save it.
  What did the steel unions do? In six weeks they asked more than 80 questions of the BSC, probing the figures. With that information, they produced an argu-
  458
  ment that undermined the Corporation's case for ending steelmaking at Corby. The unions demonstrated that viable works were to be shut in favour of a leap in the dark. They showed that the best future for the commercial welded tubes business rested in an integrated Corby operation. The unions expressed the fear, which is clearly confirmed by the evidence, that shutting Corby was another step towards not a viable British Steel Corporation but a de-industrialised Britain evermore dependent upon imported manufactured goods.
  The unions' arguments were forcefully expressed in documents and in words. At a meeting on 1 November the Corporation's negotiators took no notice of the unions' case. The expression "do not confuse us with the facts" sums up the Corporation's approach. The unions offered to participate in a joint working party to explore ways of lowering the costs of Corby, but the offer was spurned. In an intemperate mood, Mr. Scholey issued the closure notice to take effect from January, thus trampling on his own commitment to give a year's notice of a major closure. It ill-becomes "Black Bob", as he is known in the steel industry, to threaten the leaders of the trade unions because of the action that they are taking to combat the closure. Trade union leaders have always shown, and will continue to show, a responsibility in their dealings with this great industry.
  The other head of the hydra is the Secretary of State for Industry. When the right hon. Gentleman arrived in his ministerial seat, he cast an unforgiving Gladstonian eye on the BSC. What did he see? He saw heavy productive industry. What did he think? He thought that that was bad. Furthermore, it was a nationalised industry, and that was even worse. However, there was some hope for it, because the BSC had delivered itself into his hands. It had imposed upon itself a commitment to reach break-even point on the current account by the end of the financial year. Anyone who knows anything about steel knows that that could not have been achieved.
  With glee the right hon. Gentleman and his hon. Friends took BSC at its word. But the right hon. Gentleman did more than that. He imposed a rigorous regime of cash limits. How that is consistent with the Government's philosophy

  459
  of non-interference has not been revealed. But the effect is clear. BSC feels emboldened to broach again the closure of the Shotton steelmaking plant, despite a previous promise by the chairman that the works were secure until 1982.
  Further, in the discussions about Corby BSC stated that there was no money for modernising the steelworks. Both these plants could be viable, but it would appear that they are to close in pursuit of a mad objective.
  The responsibility of the Government and the British Steel Corporation is to secure the maintenance of an adequate steelmaking capacity, fitting it to our consuming industries' needs. The fear of the Iron and Steel Trades Confederation is that the Government and BSC may abandon that responsibility. In the event of a surge in demand, there is a serious danger that BSC will not be able to cope, following the present closures. Someone will meet that demand and further ground will be lost to BSC.
  Worse still, there seems to be a paralysis creeping over BSC's view of the market. The Corporation seems to be content with its market share at home and abroad, even though it provides little more than half of the steel sold in the United Kingdom. It reacts to a weakening of demand but does not appear to be energetically seeking a larger share of that demand. Recently a BSC manager told the Financ Times:
  "We are chasing the market downwards."
  We have a management which appears to be unable to shake off its malaise. We have a Government who are steering towards a fall in output. The combination of those factors means for BSC, at best, a steady share of the falling home market and no progress on exports.
  A third factor compounds the first two. It is that BSC will not retain, and has not retained, the share of the market that was held by works that have been closed. This means that BSC will not be able to load the large major works to optimum levels. It also means that its share of the market will fall further and that a case will be made for further closures. This situation cannot continue. We must retain a capacity to manufacture a full and extensive range of steel products. We must have flexible works which can adjust quickly and efficiently to demand fluctuations.
  460
  The ISTC executive fears that its efforts may all have been in vain. We want Teesside, Ravenscraig, Llanwern, Port Talbot and Scunthorpe to succeed, but that must not be at the cost of medium-size thriving operations elsewhere. There is room for both. The management of BSC refuses to recognise that, and the Government endorse its blindness. Reluctantly the unions have concluded that the responsibility abandoned by the Government and management has passed to them.
  Right hon. and hon. Members will have read about proposals for industrial action tabled by the ISTC to the TUC steel committee. I trust that everyone has grasped the significance of this step. It is being taken by men who have always been renowned for the responsibility and integrity of their actions. It is intended to bring the industry and the Government to their senses. It is intended to focus public attention on what has been happening to our steel industry.
  The steel unions insist that there should be a full and searching inquiry into the administration of BSC. Some attempt must be made, without preconceptions, to identify what has gone wrong. We can no longer tolerate communities of steel workers paying for the mistaken policies of management. The evidence is in the documentation that has been provided by the unions. There are questions that demand answers, and I shall put some of those questions to the House.
  Is BSC's exclusive big plant strategy right? Is BSC too dependent upon imported ores from unstable sources for iron making? Has BSC the marketing ability to sell what it manufactures? What are the implications of BSC's pricing policy for its market shares? No further major steps should be taken within BSC until these and other issues have been thrashed out. The unions are willing to play their part, but there must be a commitment to serious discussions.
  I conclude by bringing the following three points to the attention of the House. First, everyone concerned, especially the Government, should study the union's documents. Secondly, an inquiry should be established into the running and the record of BSC. Thirdly, I request the Government to announce now that they will take the pressure off the BSC to break

  461
  even on the revenue account by March and say that they are prepared to fund sound investment projects at Corby and Shotton.
  Some right hon. and hon. Members have experience and knowledge of what happened in the Rhondda and other valleys of South Wales during the days of depression. We know what happened in those communities. We know of the misery and hardship that was brought to them when industries upon which they depended closed and unemployment stalked those valleys. We do not want to see that happening in Shotton or Corby. That is why we raise these subjects with the Government and BSC today.
  Several Hon. Members rose—
  Mr. Deputy Speaker: Order. Before I call the next speaker, I should tell the House that I fully appreciate that this debate is of great importance to many hon. Members, and that I have a long list of speakers. If hon. Members make speeches lasting half an hour, I shall be able to call very few.
  6.8 pm
  Mr. Kenneth Lewis: I wish to make some observations on this subject because my constituency adjoins Corby and some of my constituents work there, and because in my distant past I had some experience of steelmaking and other industries.
  I was pleased that my right hon. Friend the Secretary of State announced that Corby would be given development area status. That in itself is a case for moving the deadline forward from 1981 and taking the pressure off. There is no prospect of development area status bringing any relief to Corby in months or even within a year. It will take a good deal longer than that.
  My right hon. and hon. Friends may not appreciate the background. For many years Corby has been dominated by one industry. I mean "dominated", because the British Steel Corporation has not encouraged new industry to come to Corby. In many cases it has discouraged it, because new industry would have taken away from the corporation some of the skill that it required in the steelworks and plants.
  462
  The right hon. Member for Deptford (Mr. Silkin) said something about Jarrow. At the CBI conference yesterday, Sir John Methven said that we should get away from the complex about Jarrow. I was born and brought up in Jarrow, and I was not simply a spectator of what happened. My father was out of work for two and a half years in one stretch and was out of work after that on a number of occasions.
  The right hon. Gentleman was right to say that the problem started because of the closure of a steelworks, followed by the closure of a shipyard. As we approached the war, and as the war began, the country needed the extra steel production, so the Government started up something which was not as big as the original plant but which was necessary to provide the tools of war. They also expanded the shipyard in the neighbouring town of Hebburn, which is really part of Jarrow, being only half a mile away.
  I should be untrue to the whole of my background in politics if I did not warn the Government that, although some of us on the Conservative Benches realise that they have the job of trying to make British Steel a going concern and to balance its books reasonably, we believe that the question is "How quickly?" If a train has been running on the wrong lines for a while, it takes a little time to get it back on the right lines. Therefore, my hon. Friend the Minister should consult British Steel to see whether there is a better way.
  My right hon. and hon. Friends cannot throw up their hands and say "This is a nationalised industry." They have an almost greater responsibility than if it were a private industry. They cannot say that the Government have nothing to do with it. They know very well that we cannot put down questions on some matters connected with nationalised industries. The Department has a day-to-day involvement in what is going on.
  I want to try to be practical. There are three possibilities, or variants on them, that my hon. Friend the Minister might consider. First, there must of course be a cutback in production, but it could be carried out for part of the year. Between the wars the steel industry frequently did not operate for a month or two during the year. Although the

  463
  people of Cor by would like to be in work all the time, my guess is that they would prefer to be in work for nine months of the year and out of work for three months than to be out of work for 12 months in the year. I ask my hon. Friend to consider that possibility and to seek agreement with the unions on it.
  It will not help for the unions to indulge in militant strikes. Sensible discussions are required. The unions should base their strategy on achieving a compromise rather than on causing a clash.
  The second possibility is to phase out production over four years instead of by 1981, with a reduction in output in each year until production ceases at the end of the fourth year, if it must cease.
  The third possibility is a review of total steelmaking as between what will be produced at Redcar and what is likely to be produced at Corby while the recession lasts. I do not assume that the recession will last for ever, but I would rather there was a phasing out of Corby on the basis of lower production at Redcar than that production should be maximised at Redcar, resulting in a dead town overnight, with all the resultant social problems. I remind my right hon. Friend that those problems will have to be dealt with not by BSC but by him.
  Mr. Leadbitter: The hon. Gentleman is developing a very thoughtful approach to a serious problem. As he has referred to the unions, will he be more emphatic by suggesting that it is important that their point of view about policy and production be taken more into account by BSC? In the past, BSC has made decisions before carrying out consultations.
  Mr. Lewis: I am entirely in favour of the unions having discussions with the management over the whole matter, because there must be agreement. It is of no help if the unions are completely obstructive and give management the impression that they are not realistic. I hope that in any discussions they will be realistic.
  The Government have increased their defence budget. We need strong forces and the hardware to back them. Last week we passed a Bill to increase by about £200 million the amount of money made available to British Shipbuilders.
  464
  British Shipbuilders uses steel. In time of war, or the threat of war, we could not be sure of securing ships built abroad or built with foreign steel. We are an island, and we might not be able to get them or the steel here. We should need the maximum amount of hardware from our steel plants to support our forces.
  Therefore, in deciding upon our steel production units it is sensible to take into account two matters. The first is the possibility that trade will improve and that we shall need rather more production than we are advised now. The second is that we should have a reservoir so that we may increase production if, unhappily, we find ourselves in a war situation such as I have described.
  There is not a steel-producing country in the world that is not subsidising its steel production—not one outside Europe and not one inside Europe. I understand that over the past five years British Steel has had about £250 million in losses met by the Government. It is unrealistic to expect to turn that amount into a profit by 1981. Because of the social consequences, my right hon. and hon. Friends are not justified in sticking to that target.
  We all want the losses of British Steel to be minimised. I want realism to go with that. I should like it recognised that we are facing foreign competition which is unlikely to be under the same pressures as British Steel. British Steel was put under some pressure by the Labour Government and is being put under a little more pressure by the Secretary of State.
  Much has been said about U-turns, but I am not asking for one. U-turns on motorways are dangerous. Governments from time to time must make S-bends, and I would like an S-bend on the Government's steel policy so that there is some give that would facilitate an agreement rather than "aggro" and indifference, with their consequences.
  6.21 pm
  Mr. David Watkins: The hon. Member for Rutland and Stamford (Mr. Lewis) has made a thoughtful contribution to the debate and has rightly expressed the gravest misgivings about the Government's policies. He pointed out, quite rightly, that his constituency

  465
  adjoins Corby. I assume that there are a number of people in his constituency who would be affected by the proposals for Corby. I believe that it was Dr. Johnson who said that nothing concentrates a man's mind so wonderfully as the knowledge that he is to be hanged in the morning. I hope that the hon. Gentleman will join us in the appropriate Lobby tonight and avoid that possibility.
  The hon. Gentleman is right to criticise the Government's policy, because the sole criterion of that policy is that the steel industry must make profits quickly, regardless of the practicability of its doing so, regardless of the consequences for the industry, and regardless of the areas in which it is located.
  The Secretary of State made play, as he was entitled to, of increases in unemployment during the period of the previous Labour Government. However, that Government, faced with a world steel crisis, tried to do something to alleviate the effect as much as possible. The opposite is now the case, as the Government are planning deliberately to increase unemployment. The Chief Secretary to the Treasury made that point plainly in the public expenditure statement that was laid before the House on Thursday 1 November. It is clear that the steel industry has been particularly selected as an area for massive redundancies, because there can be no other consequence from that policy. Already the consequences of the constraints placed upon the steel industry can be seen.
  Sir Keith Joseph: Why does the hon. Gentleman think that his Government and the present Government used so much taxpayers' money for new investment if it was not to get higher output per man? The consequence of that must be what his right hon. Friend the Member for Deptford (Mr. Silkin) calls "remodelling".
  Mr. Watkins: I shall come to that later, but that is not the point that I have just made. I was trying to say that whereas the Labour Government recognised the need for modernisation and attempted to do something to alleviate the consequences of unemployment, this Government, by contrast, are deliberately planning to increase unemployment.
  466
  That was demonstrated by the statement on public expenditure last Thursday.
  The only way that the BSC can exist in the financial straitjacket imposed by the Government is by paying off more and more people. I warn the Government that anger and resentment are building up within the steel communities that could have the most explosive effects if they persist in their policies.
  I took a deputation to meet the chairman and other executives of the British Steel Corporation on 30 October. That deputation comprised members and officers of Derwentside district council and Durham county council. The purpose of that meeting was to express grave concern about Consett. Consett is another of those one-industry towns, totally dependent on steel. We were told that Consett is not safe until it is profitable and that BSC can guarantee absolutely nothing. We were also told that we must talk about profitability and not about numbers employed. That is the effect of the Government's straitjacket into which BSC is being forced. What a message to take back to a works that has recently suffered 400 redundancies due to the shutdown of its plate mill and 1,500 steel redundancies in the last 18 months. Everything now indicates another 700 to 1,000 redundancies ahead unless there is a change of policy.
  Returning to the remarks of the Secretary of State during his intervention, I accept that the world steel market is crucial to the situation in Britain. Neither the home nor the international outlook is good, and all the signs are that demand will decrease still further during the next two years. Inescapably, there must be some contraction in output because of that. If for no other reason than the neglect of generations of steel masters before nationalisation, there must be modernisation. Both those factors—the contracting market and the need for modernisation—mean that jobs are threatened. This is no time to reduce Government support for the industry. On the contrary, there is every conceivable reason for increasing that support, especially in those areas where the social consequences will be most serious.
  Mr. Barry Porter: If it is so obvious that Government support should be increased,

  467
  would someone care to explain—if not the hon. Gentleman, perhaps someone else at a later stage—why the previous Government did not increase their support? Why did that Government pursue exactly the same policy? There is no significant difference now.
  Mr. Watkins: If the hon. Gentleman had listened to the debate, he would not have had to ask for explanations about issues that have already been explained on numerous occasions, including since he joined the House. Is the hon. Gentleman anxious to intervene again?
  Mr. Porter: No I shall return to that when I speak.
  Mr. Watkins: I shall turn to the problem of introducing new industries into steel communities and speak first about BSC Industry Ltd.—the wholly owned subsidiary of the British Steel Corporation. The purpose of that company is to attract alternative employment into those areas most heavily hit by the contraction of the steel market. BSC Industry Ltd. was introduced into Consett by the Labour Government as part of their attempt to alleviate the situation. It is clear that the resources of BSC Industry Ltd. are insufficient to attract new industries on the scale needed. Without substantial Government funding to provide sites, buildings and infrastructure, BSC Industry Ltd. cannot do the job with the resources at its disposal. The company's budget for this financial year is £10 million for the whole of the country, and next year's budget is in doubt. If the Government's policies are any indication, that budget is likely to be cut rather than increased.
  The Secretary of State announced with a muted flourish that Corby was to be made a development area, as if he had suddenly discovered a solution to the dangers facing that town. Consett has been a special development area for a number of years. Even the right hon. Gentleman has not dared to cancel that in his recent cutbacks. However, in that special development area, even with maximum possible assistance being made available, only about one new job has been created for every four lost. This is a measure of what the Secretary of State has announced for Corby. It is just a drop in the ocean. Far more is needed.
  Mr. Leadbitter: My hon. Friend has raised an important matter. We have BSC Industry Ltd. in Hartlepool, and for two years we have had steel closures. The present level of male unemployment is 16 per cent., and the assistance has not produced the promised land. A factory was opened at a cost of £3·5 million two and a half years ago, but it closed. It had a second go recently, but that, too, fizzled out. This is what happens to promises of development after closures in my area. In a place like Corby, which is entirely dependent upon one industry, there will be much graver problems.
  Mr. Watkins: My hon. Friend has emphasised my case. The total effect of the Government's policy, irrespective of the home and international market, will be to produce an ever-smaller steel industry with no prospects of resilience and with no alternatives in the steel areas.
  In conclusion, I point out that sooner or later there will be an upturn in demand. I accept, realistically, that that upturn is likely to be later rather than sooner, but when it comes, as a consequence of the straitjacket into which it has been forced, the British steel industry will be so crippled that it will not be able to meet the required demand. Steel towns will be places of dereliction and the country will be dependent upon imports to a dangerous degree and at the mercy of steelmakers abroad, over whom we have no influence whatsoever.
  6.33 pm
  Mr. Patrick McNair-Wilson: It is a pleasure to speak after the hon. Member for Consett (Mr. Watkins). He and I have spoken in many steel debates over the years. I should declare an interest, in that I am associated with a company making melting electrodes. Fortunately, this area of steel production—Sheffield Arcs—makes a jolly good profit. Therefore, it is not all gloom.
  What worries me about the speeches that I have heard so far in this debate and about the Opposition motion is that hon. Members seem to be for ever looking for scapegoats in the steel industry. When I was in the Iron and Steel Federation in the early 1960s the great scapegoat was the private steelmaker. Yet, in 1964—my last year in the federation—the private steelmakers produced more bulk steel

  469
  than has ever been produced by the nationalised steel business, despite the fact that we now have, as the Labour Party would say, "the commanding heights of the economy" in our grasp. Unfortunately, the steel industry is not among the commanding heights. It is an extremely vulnerable section of the British industrial scene.
  It is no use hon. Members coming here and trying to beat the Government, management and the private steelmakers until they recognise that if there is no demand for our products there is no point in producing them. Even today we are stockpiling steel that we cannot sell.
  There are four major problems facing the steel industry. I hope, equally, that there are four solutions. The first major problem concerns the new technology that we all saw in the first converter at Linz in 1948. This has transformed steelmaking in this country. Labour Members were as keen as the Tories were in demanding that we should invest in the new technology and that we should build giant plants equal to those of the Japanese and others. Investment came forward and the plants were built, but the sad fact is that they are now operating at only 67–70 per cent. of their capacity.
  Surely it must be right to use that investment to the full. Inevitably that means that the older, uneconomic plants must be phased out. I am not hardhearted. I realise the problems. The solution is to buy out the people in the old plants. There is no way round it. I hope that at the Friday meeting at Shotton, and at the other meetings that will take place, this will be seen as the most sensible solution. Ageing plants should not be kept going, because they will make the rest of the industry uneconomic as well. Generous compensation should be given to those who have given their lives to the industry. We must recognise that the steel industry has changed its shape and technology and that it will require a different pattern of activity in the future.
  Obviously we must spend money to provide different types of employment. In towns such as Consett, which I visited frequently in the early 1960s, life revolves around one industry. It does not make sense to promise those who are in uneconomic plants that there is any future
  470
  there. That would be a grave disservice both to the industry and to those employed at these plants.
  The second problem is the energy crisis, which came in 1973–74 and led to the recession. This led to the change of plans by the British Steel Corporation management. It is only fair to remind hon. Members that in the famous statement by the chairman of the Corporation about Shotton in 1977 he made the situation clear in his penultimate paragraph when he said:
  "In view of our commercial objectives and of our proposal for the development of Port Talbot on the above basis, we have decided to remove any proposal or date for closure of iron and steelmaking at Shotton."
  As we know, the development of Port Talbot to a capacity of 6 million tonnes never went ahead. As a result, the £800 million that was to be spent was not so spent. Once that commitment disappeared, the promise about Shotton fell to the ground, because the two were interrelated.
  We are talking about a much smaller market for steel. The British motor car business is declining. Shipbuilding and heavy engineering are declining, as is the building of pressure vessels. Therefore, we have a smaller home market to operate. Regrettably, the quality of some of the products is not as good as it should be. I am not suggesting that individuals in the industry are not doing their best, but we must face the facts. We must cosset and look after the existing customers if we want to ensure that the recession does not destroy the industry altogether. I am sure that the BSC can look after its customers and find new ones on the basis of operating the most modern and efficient equipment within the business.
  The third problem is the cheap steel that is coming from the Far East and elsewhere. These are problems affecting us at a number of levels in the Western world, and they are not likely to go away.
  The right hon. Member for Deptford (Mr. Silkin) could have been more generous in his remarks about the Davignon intervention, and might well have pointed out that as a result of Davignon and our membership of the EEC we have been able to restrict and attain quotas of imported steel from Korea, Japan and elsewhere.
  Mr. John Silkin: I was not particularly generous, for the simple reason that I did not see the advantage to our country, under the Davignon plan, of preventing steel coming from Third world countries and then being deluged by European steel.
  Mr. McNair-Wilson: I am hardly surprised at the right hon. Gentleman's attitude to competition within the European Community, but I do not believe that he, in his heart of hearts, feels that living in protected markets, producing products that cannot compete with others, is the best way forward for Britain or her industry. We must make certain that our steel is every bit as good as anything that comes in from Germany or elsewhere, and I am certain that it can be.
  The fourth problem that we face is that of rising costs. I will not go over the coking coal argument; we are all familiar with it from what we have seen in the press and heard from our friends in the industry. Price differentials are very steep. Beyond that, there is the worry about the long-term availability of the product. The industry must plan ahead. While I wish that the National Coal Board was able to provide a comparable product at the right price, I would be even happier if I felt that it could also provide it on a long-term basis. Whether we like it or not, the bulk of our good coking coal comes from Durham and South Wales and, unfortunately, it will be necessary to go deeper and deeper to get at it.
  The NCB is trying to provide plans that will be available to the British Steel Corporation. I hope that a deal can be done. But we must recognise that if we are to operate big new investments for large blast furnaces, which are now becoming part of our steel industry, we need the highest possible quality of coking coal.
  In the old days, with older furnaces, the steel industry could operate on a lower quality of coking coal. Now we need the medium-volatile coking coal, which I think is grade 301, to enable these furnaces to operate efficiently. We would be doing a disservice to those who work in the industry if we did not make sure that they got this type of coal.
  Finally, having looked at the problems and the solutions—no doubt other hon. Members will find different ones—we must
  472
  point out that the picture is not entirely black. Port Talbot went from loss to profit, the Sheffield electric arc business is doing well, and other areas of the steel industry are now showing profit. It has been said that the Corporation has no hope of meeting a break-even point. I do not think that it is a bad thing to be set a target in life. It is no bad thing to have one's sights set high. I am sure that the chairman of the Corporation and all those who work at every level in the steel industry will do their best to meet that target.
  The fact is that we are to go on making steel in this country—bulk steel at that. We have a wonderful position in special steels, as many hon. Members know. The industry deserves our support and encouragement and we should not constantly rake over the ashes of an industrial past that many of us must recognise fills us all with shame.
  What we must also recognise—my hon. Friend the Member for Rutland and Stamford (Mr. Lewis) referred to this—is that we need an industry which can be sufficiently flexible to take up the challenge once the recession is over. Our steel industry can do that. It is running at only 67 per cent. capacity at present. We can take up the strain when it comes, but let us make certain that we have an industry that is efficient and that uses efficiently the massive investment that was given to it under the 1972 Act of a Conservative Government.
  6.44 pm
  Mr. Bill Homewood: I was pleased to hear the speech of the hon. Member for Rutland and Stamford (Mr. Lewis). His constituency is close to Corby and he is unable to divorce himself from what was indicated in the excellent speeches made on the steel industry, though they were not socially realistic in the context of Corby.
  Since I came to this House, practically every word I have spoken has related to Corby. I do not apologise for my repetitiveness. It should not be boring, because almost every day the statistics given by local social services office are more appalling than those of the day before.
  Last week, the local deputy director of social services was quoted in the local newspaper, under the heading
  "Corby on the brink of disaster",

  473
  as having said:
  "We are prepared for disaster if the steel works close, for there will be a radical change in family life. We feel what is happening at the moment are symptoms of a depressed town and a lot of it comes from fears of unemployment that will bring pressures to families."
  He then listed Corby's current black problems. There are nearly 300 children in council care—25 per cent. of the county total. A quarter of the overdose victims admitted to Kettering general hospital are from Corby, which accounts for only one-fifth of that hospital's catchment area. On Monday, I had that figure updated. In October, 28 overdose cases were admitted from Corby, of which 20 involved people below the age of 25.
  Corby has a higher incidence of mental breakdown than anywhere else in the county. The illegitimate birth rate of Corby is more than double that of neighbouring towns such as Kettering. Infant mortality is 50 per cent. higher than for the rest of the county and England and Wales. Twelve cases of child battering were reported during May and June of this year compared with two cases during the same period last year.
  There was an increase of 400 per cent. over the last five years in the number of elderly people needing help. More people need psychiatric help than ever before. Over 100 Corby people were admitted to the mental hospitals in Northampton during the first nine months of this year. This is the effect of living in a town which has 7 per cent. unemployment and a massive cloud of uncertainty hanging over it owing to the threat of the closure of the iron and steelworks. Last Thursday that threat moved much closer. I listened to the Secretary of State and other hon. Members holding out the hope of getting Corby fairly quickly out of the mess that will come from the closure of the iron and steelworks. Let us look at the facts.
  About 80 inquiries have been received by the various organisations from interested enterprises which have anticipated assisted area status in Corby. I estimate that it will take two and a half to three years for the infrastructure and the factories to be built. Of the 80 factories in the town, 64 will probably become enterprises.
  474
  I understand from the director of BSC Industry Ltd. that the average level of employment in each of the factories is 40 in those areas where the Corporation has assisted. Therefore, in four to five years there will be about 2,500 new jobs. Experience indicates that 25 per cent. of those jobs will be for females, which means that 1,800 new male jobs will be created in Corby, although the male unemployment level arising directly and indirectly from the closure of the iron and steelworks will be about 6,000.
  Mr. Marlow: In view of the fact that my right hon. Friend has today given notice that Corby will now have development area status, does the hon. Gentleman believe that that will assist the problem and reduce the discrepancy between jobs that are lost and jobs that will be made available in the future?
  Mr. Homewood: I do not think so at all. Quite frankly, people who are interested in coming to the Midlands already understood that the Secretary of State would today announce assisted area status. In fact, when we met him before the recess the right hon. Gentleman told us that he would grant assisted area status when the closure was accepted. The situation may get better later on, but at the present time we are already in receipt of the maximum number of inquiries that are likely to accrue.
  I am not ashamed to repeat what I have said before—that this House should have a special interest in Corby. I believe that Corby is a special case in regard to this House. In 1933, Stewarts and Lloyds created the iron and steel industry and the tube works in Corby on the basis of a £7 million low-interest loan. What would that be worth today? Therefore, the industry was the responsibility of this House. In 1951, this House made Corby a new town and provided all the facilities to attract the labour for the iron and steel industry. I recall that in the 1950s Stewards and Lloyds sent buses all over the country, along with recruitment officers, in order to attract labour to Corby. I can remember the management complaining that, although 200 people came, after three months only 20 took up permanent residence. Today, of course, it is the 180 who were lucky, because the 20 who remained will not be very lucky.

  475
  I insist that the provision of the money for the industry and the creation of new town status make Corby a responsibility of this House. In view of the Government's philosophy and policy, let us suppose that they still say "All right, that was our responsibility. We did it. But the suffering that will arise from the closure of the iron and steelworks is necessary, because only on that basis can we produce a situation within the steel industry and the country where on the basis of market forces and our monetarist policy we increase the standard of living of all the people." That circumstance is still not present in Corby. There is no gain to the public purse in closing the iron and steelworks.
  Some people have argued that closure would cost more than keeping the works open. I take it that such people were prejudiced and adopted a partisan attitude. Yet within BSC's calculations only £40 million at best would be saved. In no way can that offset the cost of redundancy payments, social security payments and the losses to the district council in rate revenue, as well as all the other factors that will arise should the iron and steelworks close. Therefore, such conditions do not satisfy the Government's case, nor do they satisfy the social case advanced by Labour Members.
  Sir Keith Joseph: Is not the hon. Gentleman assuming in that calculation that the people released from the steelworks will remain permanently out of work and that no new establishments will be paying rates and employing them?
  Mr. Homewood: Can the right hon. Gentleman give me a guarantee that they will be employed? I believe that a lot of them will remain unemployed for a long time.
  The right hon. Gentleman will have read the report of Coopers and Lybrand, which talks about an unemployment rate of 20 per cent. for two years should the whole undertaking be closed. Frankly, I believe that report to be optimistic. What the right hon. Gentleman does not understand is that 80 per cent. of the work force which will be thrown on to the labour market is unskilled in the context of anything other than the steel industry. Of course, the craftsmen will get jobs, but the vast majority of workers
  476
  will not get jobs very quickly. Therefore, I believe that most of those people will be out of work for a long time.
  Mr. Marlow: I have seen that calculation as well. It was produced by some people from Cambridge university. Is it not the case that if the steelworks are closed at some stage—I believe that most hon. Members think that it is inevitable that they will be—the redundancy costs and loss of taxation will have to be met? Therefore, they virtually represent a capital cost of the closure and cannot be set against the revenue benefits of making steel more cheaply in other parts of the country. I am afraid that the calculation is an entirely bogus one. We know that there are severe problems—
  Mr. Deputy Speaker (Mr. Bryant God-man Irvine): Order. If the hon. Gentleman is intending to catch my eye at a later stage, he is not going about it the right way.
  Mr. Homewood: If the hon. Gentleman does, Mr. Deputy Speaker, he will not take long, because he has made his speech already.
  I do not believe that the calculation is bogus. I do not accept either side of the argument about how much the closure will cost. Warwick university probably stretched it in one direction, and others have stretched it in the other direction. I take a basic view. Despite what the right hon. Gentleman said, I cannot see how the public sector borrowing requirement will benefit at all from Corby's closure. In fact, I think that it will be a net charge on the public purse rather than a net gain to it. The hon. Member for Northampton, North (Mr. Marlow) shakes his head, but if he goes into the figures I think that he will discover that what I have said is true.
  The closure of the iron and steelworks does not satisfy the Government's criteria. If they think that it does, I suggest that they ask the BSC management to go over the figures again. It certainly does not satisfy the criteria of the Labour Opposition, because we regard the closure as an immoral and inhuman act. Whom does it satisfy? It simply satisfies the BSC management, which has indulged in a cover-up exercise. Frankly, the BSC management does not have the courage to admit—I do not know why, because if it

  477
  did everyone would be sympathetic—that the 10-year strategy was a colossal blunder.
  The management does not have the courage to admit that the closures cannot stop at Corby and Shotton. Hon. Members who are more far-sighted believe that we should look to the future, but even considering the present it will not be just Corby and Shotton. At least two other major plants will be involved which were created out of the "big is beautiful" philosophy. If BSC had the courage to say that, we should have more sympathy.
  Mistakes get compounded when there is a cover-up, and that is what happened when Sir Charles Villiers gave an undertaking that BSC would break even in March 1980. BSC, the right hon. Gentleman and all hon. Members know that BSC has no chance of meeting that undertaking, and the two closures mooted will add to costs. The deficit will be larger than it need be.
  My most serious contention is that, when it announced those closures, BSC knew that the trade union movement would be put in a situation where it had to respond to threats by direct action. The management deliberately provoked the confrontation to cover up the fact that the Corporation could not break even by 1980, and it wished to use the trade union movement as the scapegoat for that failure. There is no other reason for the desperate rush for closure at Shotton and Corby.
  All that the trade unions proposed at Corby was the setting up of a working party. BSC gave the trade unions six weeks to come up with alternatives, and that was an impossible period. The trade unions came back and asked for six months and a working party to examine the position. The management simply sat in the room and refused to negotiate, although it went through the motions of sitting there for enough hours to give the impression of serious negotiations. The House should also remember that if BSC has its way Tory Members can build as many nuclear sites as they like but there will be no steel industry, which is especially important in the context of a security threat.
  On the basis of the facts that I have stated—and they are facts—hon. Members should vote tonight in the Opposi-
  478
  tion Lobby. The House should insist that there is an inquiry into the activities of BSC and the threat to Corby should be withdrawn while it takes place.
  Mr. Deputy Speaker: This is not a Second Reading debate and there is no question of the 10-minute limit being imposed. However, there are at least 14 hon. Members who wish to catch the eye of the Chair, and the only way in which 14 speeches can be accommodated in two hours is by hon. Members exercising considerable restraint.
  7.4 pm
  Mr. Michael Brown: I have so far spoken three times—for 10, eight and six minutes respectively. I shall try to speak for no longer that 10 minutes, although other hon. Members may be tempted to suggest that I speak for only four.
  My hon. Friend the Member for New Forest (Mr. McNair-Wilson) made an important point about demand. There has been over-capacity in Europe and Japan. That goes back to 1973, at the time of the Middle East war. Demand has fallen—and demand is vitally important. Clearly, we can produce a commodity only as long as a demand for it exists. The world recession accounts for a major part of the decrease in demand, and I hope that that recession will come to an end in the not too distant future. It is right and proper that the British Steel Corporation should be in a position to take advantage of an upturn in the world market. However, we cannot blame all of BSC's problems on the world situation.
  Hon. Members have mentioned two reasons for the decline in demand. First, there is the decline in demand for British products. We cannot isolate British Steel. British Leyland has also had difficulties. Other nationalised industries should play a part in assisting BSC. The British people will buy products made with British steel if they can obtain them. If British Leyland is unable to produce the goods because of industrial relations problems or other management problems, the British people will look elsewhere for their cars.
  The right hon. Member for Deptford (Mr. Silkin) mentioned unfair competition from the Common Market and coking coal subsidies. That was discussed at some length two weeks ago in a debate on EEC

  479
  documents, and I shall be brief. The House and the country are now fully aware that some action is necessary. I apologise to hon. Members who represent coal mining constituencies, but the fact is that the National Coal Board has a responsibility—and coal miners have a responsibility to their fellow workers in the steel industry—to consider how the Board can reduce the price of its coking coal. The quality of British coking coal leaves a lot to be desired, and one cannot blame the British Steel Corporation for seeking the cheapest source for its energy supply. I sincerely hope that negotiations between the BSC and the National Coal Board will resolve the situation.
  In addition to an amendment that I tabled to an early-day motion, there was an amendment tabled by the hon. Member for Redcar (Mr. Tinn), which I support. There is a clear responsibility on other nationalised industries to recognise the problems of BSC, particularly on the National Coal Board and British Leyland.
  Having said that, I believe that the major problem that we have to consider is how long the British taxpayer can continue to subsidise an industry that is not making profits. Like the hon. Member for Kettering (Mr. Homewood), I represent a one-industry town, and I know that many Labour hon. Members represent similar constituencies. We do the British Steel Corporation and steelworkers in our constituencies a disservice if we delude them into thinking that the BSC can exist in the long term without making profits. I can say with my hand on my heart that I have never deceived the steelworkers in my constituency. I have always said that until they turn the figures from red to black there will inevitably be a question mark over their future. I want to make sure that that question mark is removed.
  The central theme of the debate revolves around the closures of Shotton and Corby. I shall devote one or two moments to the comments made by my hon. Friend the Member for Rutland and Stamford (Mr. Lewis), who made a novel suggestion. However, I urge some caution. The problem about taking the advice of my hon. Friend is that if we encourage the high-cost new plants to operate below their capacity we shall
  480
  build up a tremendous problem for the steel industry in future. No steelworker will forgive us if we fail to take the urgent steps that are necessary.
  I was amazed by the remarks of the right hon. Member for Deptford. It seems that he has forgotten all the injunctions uttered by his right hon. Friend the Member for Chesterfield (Mr. Varley) when he was Secretary of State for Industry. I refer briefly to the document produced by the British Steel Corporation: "The Road to Viability". It stated that the Labour Government
  "will give full, sustained and public support to the BSC in their efforts, including the steps needed to achieve much needed improved productivity in the Corporation, and will continue to promote this in their contacts both with the BSC management and with the TUC Steel Committee".
  The right hon. Member for Deptford gave me the impression that he had forgotten all that was written in that document.
  It has been suggested that the Beswick delays have already cost the Corporation over £100 million a year. Steelworkers read the press and they know that they cannot make plans on a solid basis while the industry is propped up by taxpayers' funds. The major disease in the past has been that of delay. I pay tribute to my right hon. Friend for being prepared at this early stage in the Government's administration to consider seriously the future of the Corporation in an effort to assure ourselves of a viable steel industry in future. An uncompetitive enterprise or industry that does not survive on what the customer at home and abroad is willing to pay for its products is precarious and ill-rewarded.
  I have always urged in my constituency, and I do so publicly in the House, that we blight the prospect for the steel industry and the massive investment that has been put into the high-cost plants in not only Scunthorpe but Redcar, Llanwern and Ravenscraig—the basis of the steel industry in future—if we continue to live in the late nineteenth century and early twentieth century. It is painful to have to say that. I recognise the sincerity of the hon. Members for Kettering and Flint, East (Mr. Jones). Of course, they have a duty to represent their constituents. However, the House has a wider duty to represent the whole of the steel industry and to ensure its

  481
  future. That is why I feel able to support the Government's amendment to the Opposition motion.
  I recognise, and steelworkers recognise, that viability is crucial for the future. I pay tribute to steelworkers and to the Iron and Steel Trades Confederation, which, traditionally, has been a realistic organisation. We owe a duty to steelworkers, who throughout the years have shown realism, to be realistic ourselves. It is with the hope that my right hon. Friend is anxious to ensure that the industry becomes profitable and is able to carry out its function in future that I am able to support him.
  I urge my right hon. Friend to bear in mind that certain problems beset the Corporation subsequent to the target that he rightly set when the Government took office. He is not an ogre, as certain Labour Members have tried to portray him. Long before the general election he took the trouble to visit my constituency, with my right hon. Friend the Prime Minister. I know that he takes seriously the problems of the Corporation and does not duck them. However, there are problems faced by the Corporation. If it has difficulty in meeting its target, I feel that it will do its best, with good will on both sides. If there are difficulties, I am sure that my right hon. Friend will not merely allow the Corporation to be shut down.
  Mr. Leadbitter: The right hon. Gentleman has said that he will do just that.
  Mr. Brown: My right hon. Friend is a man of realism. I am sure that that is appreciated by the majority of hon. Members. I am confident that the Corporation will do its best. Of that I am convinced. I ask for an assurance that my right hon. Friend will take into account the outside factors that have subsequently intervened, such as industrial disputes beyond the Corporation.
  I implore the Iron and Steel Trades Confederation, which is renowned for its traditional realism, to think carefully about the suggestion that has been made by Mr. Bill Sirs. Last year the dispute involving the Transport and General Workers' Union in my constituency cost about£13 million. The steelworkers regretted that dispute. I feel sure that steelworkers will regret any dispute that takes
  482
  place beween now and the end of the present financial year.
  Mr. Leadbitter: The hon. Gentleman is talking about disputes. If we are to be realistic, we must accept that there is dispute and public concern. Will the hon. Gentleman address himself to that and ask his right hon. Friend to give us the full costs of closure, socially and financially—for example, the cost of unemployment benefit, the loss of rates, the loss of employment in the ancillary services and supply services, and the cost of unemployment as a whole?
  Mr. Brown: The cost is the cost of the existence of the steel industry in future. We cannot continue to pretend that the Corporation can continue in the long term without making profits. I feel that with good will generally the Corporation's target can be met.
  7.18 pm
  Mr. Barry Jones: I accept that the Secretary of State is not an ogre. However, as the head of a great steel industry he is a total disaster. I do not call him an ogre, but I describe him as a kind of Count Dracula. His leadership of the steel industry is as inappropriate as putting Count Dracula in charge of a local blood transfusion service. There is no doubt that his appointment is a bad one for the British steel industry.
  I did not agree with much of what the hon. Member for Brigg and Scunthorpe (Mr. Brown) said, nor did I agree with some of the remarks of the hon. Member for New Forest (Mr. McNair-Wilson). The latter hon. Gentleman made an eloquent and informed speech. It was interesting that he was defensive in his remarks on the commanding heights. Aneurin Bevan once said that
  "Remote control is the consequence of bigness, not of the nature of ownership."
  I took exception when the hon. Gentleman said that the men had to be bought out. They have not compaigned for eight years in Shotton and district to be bought out. On their behalf, I find that remark offensive. When the steel committee of the TUC goes to Steel House on Friday to meet the British Steel Corporation, it will not go there on its knees. That will certainly not be its approach with Mr. Bill Sirs leading it. It will not have buying out in mind.

  483
  Our steel industry is the bedrock of our economy. Nobody would deny that. There is a crisis of confidence in the industry that is largely of the Government's making. The Secretary of State pursues a highly controversial policy. The chairman of BSC is soon to leave. The work force is demoralised and angry, and their leaders moot a strike. Several steel communities move nearer to the brink of social and economic disaster. That is the background to the debate.
  At the heart of the problems are the rigid cash limits. The policy of not funding BSC losses in 1980 means that the Corporation can move nearer to solvency only by closures. The "break even at all costs" policy is a foolish mirage. It will not be successful and will severely damage this seed corn industry. Hasty closures will guarantee more steel imports.
  Is there an alternative explanation to the policy that is so rigidly adhered to by the Government? Is the policy designed entirely to secure early closures, in the knowledge that in the long term the policy is ruinous? When the closures are effected, the policy can be dumped. I disagree with that fundamental point of policy.
  In the years that I have tried in the House to help the Shotton steelworkers, I have learnt that their leaders—both production and staff workers—are able men. All over Britain the steelworkers could make the industry a brilliant success. They could rescue the demoralised hulk of the Corporation. They should be given an ungrudging, decisive, meaningful and substantial role in the running of the industry. Ministers should seek to regain the confidence of the TUC steel committee. That means paying greater respect to the voice of experience in a cyclical and complicated industry. The Corporation should make greater efforts to tap the professional skills and insight of its middle management.
  I sincerely hope that the Government will make even greater efforts to stem the damaging steel imports. We should fight for a bigger export market. We should not go for sudden closures. New plant and equipment should be run in very carefully. Some of the older plants could act as valuable balancing plants and
  484
  an insurance against breakdown or delay as the newer plant comes on stream. The steel customers should receive a better deal. Perhaps we are neglecting them to some degree.
  Largely speaking, North-East Wales and the North-West face the likelihood of becoming a steel desert—witness the closures at Irlam, Warrington, Workington and Mostyn, and, in the offing, if the Government and the Corporation have their way, at Shotton. Yet the North-West accounts for 8 per cent. of the United Kingdom domestic steel market. Within a 40-mile radius of Shotton there is an extremely heavy consumer presence. The North-West and the Midlands' markets are on Shotton's doorstep. Why obliterate an able producer and supplier? We have all heard of the domino effect.
  Merseyside can ill afford the decimation of Deeside. My area must inevitably become a determined competitor with stricken Merseyside to obtain new jobs. I do not seek or wish for that. I fear that the legion of the Merseyside unemployed will be dealt a heavy blow for many years to come. The social consequences of putting so many so swiftly on the dole will damage the social fabric of the community that I represent.
  In a modern industrial State, when was a proposal of that magnitude last performed? When were two such fearsome and awesome redundancy proposals as those at Shotton and Corby promulgated? These proposals are to be carried out at a time of widely forecast recession in the coming years. The Treasury Bench can say nothing that will alter the fact that at Shotton, Corby. Birkenhead, Liverpool and Greater Merseyside the outlook and the future hopes of the boys and girls leaving our comprehensive schools will be grim and miserable. Some will have to leave our areas to find work.
  As a community, we face that with great sadness. We are not sure that the Treasury Bench is taking full account of that problem. I should like to see the door of No. 10 opened to a major deputation from Shotton. It has been officially predicted that in the late new year in the town of Flint the unemployment rate will rise as high as 31 per cent.
  Mr. Adam Butler rose—
  Mr. Jones: I have heard the ayatollah intervening in other hon. Members' speeches and conducting his university seminar as if we on the Labour Benches were some dull blockheads. We do not wish for any witless interventions from the Minister. Yesterday he caused offence in the House. We do not wish to be preached to by aristocratic dropouts on auto pilot. The hon. Gentleman should go away. He is not good enough to handle the problems. When did that bunch soil their hands?
  The Under-Secretary of State for Wales (Mr. Michael Roberts): When did the Opposition last soil their hands?
  Mr. Jones: I shall answer that a little later if the hon. Member for Cardiff, North-West (Mr. Roberts) wishes to raise his head above the parapets. The record of his right hon. Friend is not very good. We shall look to him for many new jobs in Wales in the next year.
  Mr. Adam Butler rose—
  Mr. Jones: The Minister of State has intervened almost a dozen times in the debate. He should allow me to complete my speech.
  Mr. Adam Butler: Is the hon. Gentleman aware that the door of No. 10 has been opened to a deputation that has discussed Shotton? The Wales TUC presented its case in a more reasonable manner than the hon. Gentleman has done, and, therefore, was listened to better than he will be with the sort of langauge that he chooses to use.
  Mr. Jones: When Members of the Wales TUC left No. 10 after an hour of discussion, the epithet in their minds and on their lips was "callous". They made that clear in a press statement. A deputation from Shotton should go to No. 10 to present the case at first hand.
  The Government are now bleating and whinnying about the Corporation's losses. Let us put them into some perspective. Arbed of Luxembourg lost £6 a tonne last year. Klockner of Germany—the land of the economic miracle—lost £15 per tonne. The BSC lost £17 a tonne. Sacilor of France lost £18 per tonne. Cockerill of Belgium lost £20 a tonne and Italsider of Italy lost £21 per tonne. I conclude from those figures that the
  486
  British industry and its work force are not pathetic figures, and I do not think that we should denigrate and downgrade them so much.
  I see a deeply injurious situation arising with car imports. In 1970 Britain imported 157,000 cars. By 1978 the figure was 800,000. The figures show a decline of the United Kingdom car industry and point to a frightening decline in demand in Britain for strip steel. Perhaps it may be said that an import figure of 800,000 cars last year portends the possible polarisation of our steel industry.
  If our car industry had done as well since the early 1960s as the French have done, it is conceivable that the demand for strip in Britain could have been 1 million tonnes higher today. I say that in the knowledge that Shotton produces about 1 million tonnes of strip a year. In 1973, when we imported 504,000 cars, the motor industry accounted for 14 per cent. of steel output.
  I come next to the general subject of imports. Between 1972 and 1978 inclusive, the United Kingdom imported £5·2 billion worth of steel. Only last year we imported over £1 billion of steel and iron products. Figures such as those provided the reason for Roy Hodson writing in the Financial Times last year that imports were equivalent to the annual production of two works the size of Shotton. Foreign steel producers have found the United Kingdom a soft market for sheet steel sales and, of course, for motor cars, too.
  By ending steelmaking at Shotton, the Corporation and the Government will be throwing out the baby with the bath water. Shotton has many satisfied longstanding foreign customers. Why slam the door on them? I do not believe, as some imply, that the steel workers are Luddites. They have made their sacrifices. Since 1970 106,000 jobs have disappeared in the industry. More than 61,000 of them were on the BSC employees' list. Steel workers throughout Britain are resentful. They know that the TUC's steel committee leader, Mr. Bill Sirs, has not had a fair deal. The same applies to the committee that he heads. It has not been listened to with care, and the Treasury Bench should reconsider its attitude on this point.

  487
  Even as it is at present constituted, I do not believe that the industry has to be so secretive, bureaucratic and autocratic. Those three vices have been part of the trouble. The board is currently besieged and embattled. It is under pressure from its work force and from its masters, the Ministers. It is a misfortune that the industry should be headed by the current Secretary of State. His medieval economic theories are ill suited to this complex and cyclical industry. If he is to stay in office—and I should prefer him out of it—he should come down from his ivory tower, put away his books, abandon his nostrums and show less tetchiness, arrogance and impatience. So far, his actions represent a depressing testimony to a blind and biased philosophy. In its own time, and very soon, it will be proved wrong.
  7.35 pm
  Mr. John Farr: I support the Government amendment because it is impossible for the country to continue to fund successive annual British Steel losses of the magnitude that we have been seeing. Over the last four years the British Steel Corporation has produced an annual average loss of £268 million of taxpayers' money. No sensible Government can allow that to continue. I am sure that even if the Labour Government had still been in office they would have been just as concerned to tackle the problem as are my right hon. Friends.
  The White Paper "British Steel Corporation: The Road to Viability" is illuminating on production levels. It says that in 1976 the BSC produced 100 tonnes of liquid steel per man. The figure in Germany was 150 tonnes, and in France 120 tonnes. Figures for 1978 were given by Sir Charles Villiers, who described BSC productivity as the lowest in the world. In Britain, it took 10·9 man-hours to produce a tonne of crude steel. In West Germany the figure was 5·9 man-hours and in France 6·4 man-hours. On the basis of these factors, any self-respecting Government have to take action.
  I therefore express general agreement with a stringent policy, but I must record my disagreement in relation to Corby. I intervened twice when my right hon. Friend the Secretary of State was speaking. On 1 November the BSC announced its decision to close the iron and steel-
  488
  making plant at Corby next March, with the loss of between 5,000 and 6,000 jobs—one in three of the working population. This brutal decision will kill the town. Even if it is granted development area status, five months is an impossibly short time in which to make plans to counter the sudden closure of steelmaking plant.
  I am not sure what my right hon. Friend means by development area status. May we be told tonight what percentage of grant will be paid to industrialists who go to Corby? The House is well aware of the dramatic situation in the town. It was built for a steel company—Stewarts and Lloyds—in the centre of an iron ore field. Its population today is 52,000 and it has an integrated iron and steelworks and steel tube manufacturing works.
  The town is in the centre of the local iron ore field. The hon. Member for Kettering (Mr. Homewood), among others, said that it is a town that is intensely dependent upon the iron and steel industry to enable it to continue to flourish. The vast majority of workers in Corby are employed in the iron and steelworks. If the decision is taken next spring to close down the steel-making capacity it will be a tragic blow.
  Corby is more like an inner centre, as it is the centre of a group of new towns. Several hon. Members have emphasised that it is not just the fact of Corby's steel production closing and going to Redcar that should be borne in mind; the tremendous social cost and problems that will follow that move should also be considered. We should take into account the national cost of redundancy payments, retraining costs, unemployment benefits, social security payments, loss of tax revenue and health costs derived from the impact of redundancy as well as unemployed social services costs.
  We should also take into account the extra balance of payments costs that will be involved with the importation of foreign iron ore in place of the domestic iron ore in the Corby area. Redcar is a coastal site and will have to import foreign coal, as opposed to Corby, which uses domestic coal. There are also additional transport costs for strip steel.
  The BSC did not give proper consideration to several sensible alternative plans that were carefully drawn up. Two sets of plans were put forward. One advocated

  489
  that Corby would be made viable after a certain period, with the investment of £31 million. Another set of plans questions the projected loss figures given by BSC as the reason for closing Corby. I have read those plans carefully and I am impressed by them. I was particularly impressed by the document produced by Dr. Bryer and Mr. Brignall, from Warwick university. I was also impressed by the document produced by the joint trade union policy group. I do not have time to elaborate upon those plans, but I feel that they did not receive sufficient attention. Serious questions that were brought up in the documents have not been answered by the BSC. Indeed, it appears that the BSC do not intend to answer them.
  I hope that there is a chance that the BSC will look at the two papers, encouraged by my right hon. Friend the Secretary of State to do so. The promoters of the papers spent many weeks and months in Corby, and their valid points should be answered. More important, I hope that my right hon. Friend will interest himself in Corby. If the figures provided by Warwick university are incorrect—I do not believe that to be the case—and Corby is in a permanent loss-making position, there remain to be considered the social implications of phasing out steel production in Corby rather than ending it in a few weeks' time.
  A team from Cambridge university calculated that while the BSC may save £12 per ton by closing Corby the taxpayer will have to pay £36 per ton, because of support that will have to be given to the social services. The team emphasised that such a course would cost the community dearly. I believe that my right hon. Friend is sincere when he says that the A1-M1 link will help. Those of us who have been associated with the plans for that road know that, although the go-ahead has been given, the building will not begin for seven years and will not be completed before eight years have elapsed. By the time Corby has a route to the coast, the East, the Midlands and the West, it will be too late to save the town.
  If steel production in Corby is closed down, we should not cut it out next spring; we should phase it out after five or six years. That will give the link road a chance to bring in new industry from all over the country, so that Corby
  490
  can make the gradual change in a humane and sensible manner.
  7.46 pm
  Mr. James Tinn: In the debate many harsh words have been said about the BSC—most of them justified. At the same time, it is right, representing Redcar as I do, to point out some of the successes of the nationalised industry. The level of its investment over the last few years has been far greater than in the rest of the European industry. It has been a phenomenal success. The bulk of industrial investment in the United Kingdom in the last few years has been by the BSC—much of that, I confess with pride, in my constituency. We should be honest and admit that we, too, underestimated the total output of the BSC that would be required. Many of us who have criticised the undershooting of its plans come within that category.
  I believe that the investment in the coastal plant was right. In case I am accused of smugness, I remind the House that I said as much while the matter was still the subject of intense competition from Scotland, Wales and elsewhere in the United Kingdom. Inevitably, steel has to be internationally competitive. Our unit costs of production must be competitive with those abroad. However, that has been obtained at a heavy cost in terms of job loss both at the time and subsequently.
  I remind the House that over the last decade no less than 10,000 jobs were lost on Teesside. In only one closure was there a massive and well-organised protest, and that was not in my constituency but across the river.
  The Teesside workers recognised that modernisation was inevitable and that a price had to be paid for it. They paid the price before they got the new works. That is the best answer to any accusations that might still be heard that the steelworkers and their unions are Luddites. On the contrary, it is amazing to reflect how men's livelihoods and their children's future have been invested in the industry. I refer to the one-industry towns, or towns heavily dominated by steel, that agreed to the proposals. However, there are limits.
  There is no soft option. The modern plants are on the ground. The heavy financial cost is part of the burden that

  491
  the industry had to bear. Those heavy costs cannot be met by under-using the plant, understandable though the motives obviously are of those who see this as a possible easement of the position elsewhere. There is on us all—this applies especially to the Government and the leaders of the industry—the most massive moral obligation of the day to ease the impact and to do all we can to help those concerned. That should be done for humanity's sake. I do not belabour that argument, as it was made by hon. Members representing the constituencies most involved.
  We must avoid an unbalanced industry. If the Government refuse to relax their posture about the break-even date of 30 March 1980, the plan will go, not as part of an inevitable long-term modernisation of the industry but as a consequence of a requirement that the British steel industry should out-perform every other steel industry in the world by early 1980. It is unreasonable to expect this industry to break even so soon. That is a shabby requirement. It is an unworthy debating technique simply to say that that figure was put previously by the BSC to the Labour Government and accepted then. Indeed it was, but that does not meet my point about the present situation. I have every confidence that had Labour still been in power that date would have been modified to ease the impact on those concerned and to avoid the risk of too drastic surgery on the industry.
  The question of coking coal is connected with the new, massive 10,000-tonnes-a-day blast furnace at Redcar. I am also interested because of my background as a member of the National Union of Blastfurnacemen and because I was at one time a coke worker.
  I support the part of the motion that calls for action on the unfair subsidisation of foreign coals. British coal should be able to compete fairly on price. I stand by that. However, I must sound a note of caution. Quality is not just a red herring that the BSC is running to obtain cheaper coal abroad. It is vitally important, especially in the new large blast furnaces. The coke going into those furnaces heats the burden and performs a chemical reaction as part of the smelting process. It has an important function in easing and supporting the heavy
  492
  weight of the iron as it slowly comes down the furnace. That requires structural strength. In the larger, wider blast furnaces, carrying a heavier burden and a wider base, that becomes vital.
  I have a report about an incident in Japan and on the damage that occurred to some furnaces. Much worse than that, there is a fearful risk to the men working at the bottom of those furnaces if things go wrong and the coke breaks away.
  On an economic level, the question is not just one of subsidy, important though that is. I refer to the coking rate—the amount of coke used to smelt a tonne of iron. The United Kingdom rate is too high, at 590 kg per tonne of iron. That is 100 kg higher than in Germany, Holland or Italy. It is much higher than the Japanese rate, at 430 kg per tonne.
  I argue for caution on the question of coking coal. The BSC must be the judge of what it needs. As a result of discussions with the National Coal Board, the BSC increased the amount of British coal it used from 25 per cent. to 45 per cent. That is an indication that the Corporation is not turning a deaf ear to the needs of the mining industry. Above all, the safety of the workers in the blast furnaces must be considered.
  7.56 pm
  Sir Anthony Meyer: The hon. Member for Redcar (Mr. Tinn) is fortunate in representing the location of one of the British Steel Corporation success stories. However, the tale I tell does not correspond with his. He referred to the extent to which the Germans subsidised their steel industry. That is true. If only we as a nation created as much wealth as the Germans, to subsidise our steel industry would be an option open to the Government. I wish that option were open. I should like the steel industry to be subsidised to ensure that there need be no job losses. Unfortunately, as a nation, we are not creating the wealth. We cannot impose this burden on the rest of our industry and our social services. That is why, with a few hesitations, I shall vote for the amendment to the motion.
  I wanted to comment on the truly remarkable speech made by the hon. Member for Flint, East (Mr. Jones). However, in his absence from the Chamber, I shall refrain from doing so.

  493
  In a previous steel debate, after much consideration, I decided to vote against my Government and with the Opposition, but tonight I shall have little or no hesitation in voting with my Government.
  I should still like to save steelmaking at Shotton if possible. I emphatically do not mean winning yet another reprieve for the industry. That is the worst of all worlds. I want to secure the investment of the tens of millions of pounds necessary for the modernisation of Shotton's hopelessly antiquated open-hearth furnaces. With that goes acceptance of the need for manning at the heavy end of Shotton at internationally competitive levels such as have already been achieved at the new coatings complex at Shotton.
  The Opposition claim that they are fighting to retain steel making at Shotton. When they were in power, they delayed the closure proposals. Had the Labour Party won the last election, it might have continued delaying a decision. Certainly the endless stream of Labour Members of Parliament who yesterday went to meet the workers who came here from Shotton gave the impression that a Labour Government would have kept Shotton open. That is not true. Of course, they would have closed it.
  The hon. Member for Flint, East is back in the Chamber. Perhaps I may revert to his speech, to which I listened with great attention. It was the kind of speech we have come to expect from him on this subject. If the Labour Government, of which he was so egregious a member, had put their money where their mouth was, Shotton would not be in peril today.
  The hon. Gentleman has a great reputation, locally and nationally, for the fight that he has put up on behalf of his steelworker constituents. He would have added further to that reputation if, when Shotton's last chance of viability was removed by the rejection of the plan for tandem furnaces, he had said that he did not feel he could continue to be a member of the previous Government. Had the Labour Party won the election, it would have allowed the British Steel Corporation, in due course, to close down Shotton and Corby, as it allowed Shelton, Irlam, East Moors and Ebbw Vale to be
  494
  closed, though it might have allowed the situation to drag on for a little longer.
  I am not ready to take any lessons from the Opposition on this matter. Nor am I ready to take any lessons from the unions. The Iron and Steel Trades Confederation is one of the most moderate, sensible and constructive of trade unions, yet it allowed itself to be locked in combat with another union for six months at Hunterston in order to stop Ravenscraig operating fully as it was intended. This moderate, sensible and reasonable trade union has clung to manning levels and has resisted the transfer of men within steel works in such a way that it has gravely reduced the international effectiveness of the British steel industry.
  The unions bear a heavy share of responsibility for the non-competitiveness of the steel industry and for the insecurity of jobs within it. To talk of strikes and overtime bans in protest against closures will do nothing to save a single job at Shotton. On the contrary, it will do much to discourage the provision of other worthwhile jobs for steel workers if closure, unfortunately, goes ahead. Like the hon. Member for Flint, East, I am sick with worry at the prospect facing the Shotton workers. I am even more worried by the prospects facing those who will have no right to take part in any ballot on whether to accept the Corporation's severance pay offer and the school leavers who will not be consulted but whose prospects of finding a decent job in their own home area will dwindle to disappearing point.
  I shall hold the Government directly responsible for finding decent employment for these people. I shall expect from the Government a massive effort to bring aid to what would be a stricken area. Unless the Government demonstrate the will to make that massive effort, it will be much harder than it is tonight for me to support them in the Lobby. I still hope for a miracle to save Shotton. If the question before the House tonight was that the closure should not go ahead, it would be very hard for me to vote against it. If the question was that the necessary investment should take place in Shotton to modernise its steelmaking equipment, I should find it impossible to vote against. But those are not the issues on which we are voting. We are asked to reject a

  495
  demand that the steel industry should cease to impose the crippling burden of its annual losses on the rest of British industry and on our social services. I cannot vote against that proposal.
  I know that the British Steel Corporation will not break even next year. None of us expects that to happen. But, unless the BSC is told to start making an effort now, it will not do so, and the losses will pile up year after year. I shall be voting for the Government tonight with few hesitations, but on Friday I shall be praying for a miracle when the final decision on Shotton has to be taken.
  8.5 pm
  Mr. David Lambie: In view of the time available, I do not intend to deliver my prepared speech. Instead I will deal with some of the points raised in the debate. I want to try to outline the problem.
  This debate is similar to many concerning the steel industry in which I have taken part during my nine years as a Member of Parliament. It is a re-run of similar debates that took place during the period of the Conservative Government from 1970 to 1974 when the late John Davies was Secretary of State for Trade and Industry and when BSC put forward its 10-year strategic plan for the steel industry. The plan contained the fist indication that the steelworks in the Garnock valley, in my constituency, was to close.
  Since then, we have seen Governments change. The Labour Government, which took office in 1974, cancelled the 10-year strategic plan and announced a review of the whole situation. The job was given to Lord Beswick and there followed the subsequent Beswick report on which the Labour Government developed their policy. During that period, there was closure after closure. Five years ago there were 34 open-hearth furnaces in Scotland. Now there are none. The steelworkers co-operated in the closure of those furnaces. They knew that if the steel industry was to stay modern and viable the open-hearth method of making steel had to be dropped. There has been co-operation throughout my time as a Member of Parliament. Now we come to a re-run of debates on the steel industry that occurred during the period in office of the last Conservative Government.
  496
  I am glad to see that the hon. Member for New Forest (Mr. McNair-Wilson) has returned to the Chamber. His recommendation was that the problem would be solved by giving the boys the money. We have been giving the boys the money for nine years, but the problem is more intensive than ever. No person has a right to sell a job. Not only does that person sell his own job but he sells the jobs of the young people in schools, as the hon. Member for Flint, West (Sir A. Meyer) indicated. The Government are not selling jobs at Shotton and Corby. They are selling communities. Governments have no right to sell communities.
  The workers at Corby are mainly of Scots descent. Forty years ago they sold their jobs, or, if they had no jobs, left the Motherwell area after being told that there was a secure job for life amid the bright lights and green pastures of the steel industry in Corby. Now, 4,000 or 5,000 of them will be out of a job. They are not responsible for this situation. Previous Governments and previous managements of the steel industry are responsible.
  I believe that Governments and the management of the steel industry, whether private or public, have a responsibility to look after the interests of the steel communities. The hon. Member for New Forest argued that the workers should be given the money. In my area, where the open-heath furnaces were closed as part of the strategic plan under the Beswick report, because it was thought to be for the good of the valley, there is still 17 or 18 per cent. unemployment. Some of my hon. Friends are worried about 7 per cent. unemployment. I would regard 7 per cent. unemployment in my constituency as full employment. We have never been near that figure.
  I am glad to see the Secretary of State for Scotland here. I give him credit for following the policies of the previous Labour Government. The BSC and other industries have co-operated in building up industry in my valley. A task force is operating and everything seems to be going well—but we still have 17 per cent. unemployment. The people in Shotton and Corby should not listen to those who ask them to sell their jobs on the promise that more jobs will be provided. I listened to the Secretary of State for Industry saying that today.

  497
  The problem is not that the BSC and the Government will not co-operate in attracting industry to the valley; it is that, around the valley, industries keep collapsing. On the outskirts of the valley, where people must move for jobs, Talbot at Linwood has just declared 1,500 redundancies; Singer at Clydebank has announced 3,000 redundancies Monsanto wants 800 redundancies; Skefco wants 600 redundancies. The Secretary of State knows about this as well as I do, because, apart from his office he has a constituency interest. There will be an announcement on Friday by Massey Ferguson which may mean the closure of the last combine harvester production unit in Britain, with a loss of 1,500 jobs.
  We cannot solve the problem of the mining valleys when industry is collapsing around us. West Scotland is in danger of becoming an industrial desert.
  I often agree, unfortunately, with the hon. Member for New Forest. The BSC conducted a massive investment programme, of £1½ billion, in the years 1975 to 1977. Last year, £500 million of new plant was commissioned—a tremendous record—but the new plant in which money has been invested has come on stream at a time when the world steel demand has fallen. We are in the deepest steel recession since 1962–63. Why should we change our plans in midstream? It is the Government's responsibility to sustain the BSC through this difficult period.
  The picture is not altogether black. Last year the BSC's loss was £327 million, but two-thirds of that was for investment. Only a third was on the revenue account. The Government say that they will shoulder the investment burden, so why cannot they look after the other third over this difficult period? When the BSC is ready to stride forward into the future, why cannot the Government carry on the investments guaranteed under the Berwick review?
  Some hon. Members have mentioned the trouble at Hunterston. No one can justify that. Sometimes my brothers do not adhere to the philosophy of the brotherhood of man. Burns's cry that
  "man's inhumanity to man
  makes countless thousands mourn"
  498
  is followed only on 25 January at Burns suppers and forgotten in Scotland for the rest of the year.
  But the Hunterston dispute has been settled. We hope that the first ore carrier will be a lifeline not only for my rolling and finishing mills at Glengarnock but for Ravenscraig, which will be able to come on stream as one of the major steel producing units in the United Kingdom.
  I am sorry that the Secretary of State for Industry is no longer here, but I am sure that these remarks will be passed on to him. About £100 million has been spent at Hunterston, yet an ore terminal, stock yards and two direct reduction plants which have not produced one pellet have gone into mothballs. Why do we not continue with the Beswick proposals and provide the two electric arc furnaces which would make Hunterston an integrated unit and guarantee my constituents employment in the rolling and finishing mills at Glengarnock?
  The hon. Member for New Forest was right to praise the success of the electric arcs in the Sheffield area. Why is it only the private sector that has gone in for electric arcs?
  Mr. Stan Crowther: To get the record straight, it is not just the private sector. The BSC is successfully operating electric arc furnaces at the Rotherham works.
  Mr. Lambie: That justifies my point, that not only private enterprise but the BSC, where it has them, is doing well with electric arc furnaces. Why should the Government stop the investment in the Hunterston area? Why lose £100 million? Why do they not justify that expense by allowing the BSC to build electric arc furnaces?
  If that were done, we should have the basis for the Scottish steel industry that many of us have been looking for for years. We should then have two main centres at Hunterston and Ravenscraig, allied with my finishing mills at Glengarnock. That would create a viable Scottish steel industry and would be a basis for Scotland's future industrial development.
  We have had closures in Scotland for nine years, and we are still having them. My hon. Friend the Member for Redcar

  499
  (Mr. Tinn) said that he was proud to represent an area where the BSC was successful. Many of us have sat back after previous reviews and said "We are all right, boys. We do not need to worry about the rest of them. Our steel industry has been safeguarded."
  After the Beswick review, I said to my people at Glengarnock "We are all right. They can close any other area, but the review says that steelmaking will stay in the Garnock valley." Yet two years later there was a new policy to close the steelworks or part of it.
  I warn my hon. Friends in the more prosperous areas of BSC activities who think that they are safe now that their turn will be next. If we carry on with the policy of closures—we are talking about Corby, Shotton and some areas in Scotland—the next review will be whether Llanwern, Redcar or Ravenscraig should remain. If the Government's and the BSC's present policies of closure continue, one of those plants will have to go. The people of Scotland will say that Ravenscraig must stay; the people of Wales will say that Llanwern must stay; and the people of the North-East will say that Redcar must stay. But if we give way now, as we have unfortunately given way over the last 10 years, the BSC and the British steel industry will depend in future on two main units of production. I hope that one of them will be in Scotland, but that is again a selfish attitude. It will not solve the problem for those who are facing redundancy.
  Therefore, let us be united. Let us stand together. Let us not boast that we are doing well. Let no one boast that his area is doing well, because his day is coming, just as our day came.
  8.20 pm
  Mr. Mark Wolfson: The British Steel Corporation faces an enormous challenge and a daunting task. That challenge, which has come in for much stick in this debate, is to achieve a secure future for the continued production of bulk steel in Britain. That security is at risk, and we are not talking of only 10,000 or 20,000 jobs. If bulk steel production does not become viable, 100,000 jobs could be in danger in the long term. The Corporation's task is to achieve a secure future through a profitable industry.
  500
  It is proper that the House should, as it has in the past, debate the steel industry, because its performance is crucial to our economy. It is a key industry, with a proud history and a troubled present. It has a future either of high technology, high production and high wages or inevitable and sad decline. We properly debate the industry's future here, but I suggest that Parliament attempts at its peril to run the steel industry. It is the height of arrogance to suggest that politicians and civil servants can manage the industry better than can BSC, whose job it is.
  Steel has suffered more than its share of Government interference in management decisions. Successive Governments have been guilty of that. We must, therefore, learn our lesson and give BSC the freedom and the confidence to carry out its job, in consultation with workers in the industry. There have been grave mistakes, and BSC suffers from the worst of them. There was investment for an expected growth in world and home demand in the early '70s, but that growth never took place.
  It is vital that the industry becomes competitive, and that means moving with the times. Much has been said about how much the industry has changed. Many on the Government Benches wish that further change could be avoided or was unnecessary. In a competitive world, however, there must be change. There is over-capacity in Europe but new capacity in Korea, South America and Japan. We must keep up with the times. If quality, price or delivery date is out of line, it is the customer who goes on strike. There is no future without customers.
  Much of the debate, in and out of this House, has, not surprisingly, centred on the need to maintain production and jobs at all costs. Arguments to that end have been put for good and human reasons. The emphasis on job protection by trade unions and by the Labour Party stems from high ideals and a genuine concern for people, and that has been movingly and eloquently expressed today.
  Does such a campaign—easy to mount in Opposition and hard to fulfil in Government—really help to find a long-term solution for this or any other industry? Are the interests of those working at Corby and Shotton, let alone those in

  501
  other steel plants throughout the country, best served by an industry which is overmanned, unrationalised and still using uneconomic plant at taxpayers' expense? There can be no job security in such shaky circumstances. This is well understood by some trade union leaders as well as by BSC management.
  The problems of British Leyland have been well publicised. Hector Smith, general secretary of the blastfurnacemen's union, made his plea to the workers of British Leyland, which is one of the major Edwardes plan to slim and restructure British Leyland which is one of the major customers of British Steel. He said:
  "My plea to Leyland men is this. Back the plan, get Leyland competitive again, because if you don't you will be committing suicide, and the death of Leyland will be a devastating body blow to major suppliers like British Steel."
  He went on to say:
  "It is not easy to accept rationalisation and reduced manning, in fact its bloody painful as we in the steel industry know only too well. We've shed tens of thousands of jobs in the last few years. And it is especially hard for trade unionists and trade union officials to accept these changes. Their role has traditionally been to defend jobs, but unions are gradually seeing the truth that there is no point in fighting for every job if the end result is no work for anyone.
  In BSC we are still demanning. My union now says to BSC 'You show us where we are overmanned on the blast furnaces or coke ovens, and we'll negotiate phasing out these jobs'.
  At the end of the day we shall have a leaner, tougher organisation of dedicated steel-men who, with some of the best kit in the world—like the 10,000 tonnes a day blast furnace at Redcar—will knock the hell out of our competitors."
  That from a trade union leader sounds to me not unlike the message of my right hon. Friend the Secretary of State, though it is perhaps phrased in more robust language. The Leyland men have voted. We all know that voting is the easiest part of the process. Working out the policy is much more difficult, but one key customer of the British Steel Corporation has taken the first step on the road to economic common sense.
  For Hector Smith and other forward-looking trade union leaders in the steel industry, negotiations continue. It is right and proper to pay tribute in this House to the courage and dedication of such men. They and BSC have a common
  502
  goal and interest, which is long-term profit and security. The acceptance of the necessary changes is not easy for individuals or their communities. No one should underestimate what is being asked of them. We have heard the details from hon. Members who are directly involved.
  Let us make no mistake. The British Steel Corporation cares about communities. It has a target—to achieve viability. Governments of both parties have required such a target. That means closures, and we all know it. Each case requires negotiation, but a solution must be achieved. Surely at Shotton it is better to deal with the problem now and rebuild for the future than to continue in uncertainty and limbo for another seven years. Uncertainty can blight an area and the lives of all within it more seriously perhaps than can a closure. With no decisions and no settlement, there is nothing to look forward to.
  After the closure, what will be left? At Shotton there will be 4,000 jobs instead of 10,000. At Corby there will be 5,000 jobs instead of 11,000. In other areas the numbers involved are smaller, but the movement will continue. I say to the Government that tomorrow's industry and tomorrow's world need considerable midwifery. I have no doubt that there is a role for the Government. The Opposition have suggested that Ministers are abdicating that role and that Government policies do not fulfil it. I contend the opposite. Our policy of aid to new industry is designed to concentrate on those areas of greater need and those industries of real potential. We shall use loans and grants as catalysts of change and not as props for continuing decay.
  The steel industry must live within the market forces. Anything else is unrealistic. It requires great change. Many workers in the industry face sacrifice and disruption. However, there is no satisfactory alternative. Each plank in the Government's financial policy is designed to enable Britain to live within her means in the real world. The steel industry can be no exception. Those who manage that industry do not ask that it should be otherwise. The BSC asks two things of the Government. It asks for the freedom to manage its own affairs and for the support of the Government in the urgent creation of new jobs where demanning

  503
  and closures are achieved. I support those objectives, and I look to Ministers to fulfil them.
  8.32 pm
  Mr. A. E. P. Duffy: I shall confine my remarks to the Sheffield steel scene—both private and public. I shall be brief. The Sheffield economy is disproportionately dependent on steelmaking. As elsewhere local industry is experiencing a difficult time. Private steel is suffering from an average of 30 per cent. spare capacity, poor profitability, import penetration and rationalisation. Unemployment has increased, which is even more unacceptable and painful.
  Unemployment in Sheffield's metal manufacturing in recent years has soared well above the national average. The BSC Sheffield division is now expected to reverse its current annual loss of £25·7 million, following a loss of £30·1 million in the previous year, and to break even by next March. With the worrying reports about the River Don works and demand for steel expected to decline even further, the outlook for steel in Sheffield causes much local anxiety. In association with employers and trade unions, the city council is initiating a study into special steels. The special steels sector has been seriously affected by import penetration. A further blow has been dealt by the removal of aid under the regional policy.
  Against that background, I draw hon. Members' attention to the problems of special steels and the BSC's Sheffield division. Imports continue to cause serious problems to Sheffield. What is the current rate of import penetration?
  Commissioner Davignon has recognised the problem and has promised continued efforts to find a solution. Can the Minister report progress? Common Market officials were asked in August to investigate claims that a huge shipment of cut-price special steel from Brazil was heading for the British market. Can the Minister comment on the outcome?
  Can the Minister also say what progress the British Iron and Steel Producers Association—BISPA—has made, along with its European counterparts, in pressing for an extension of the Davignon surveillance from controlled and protected products into those which remain uncontrolled and unprotected?
  504
  I turn now from special steels to the BSC generally. The Corporation has lost—this figure has not been brought out so far in the debate—£1 billion in the past four trading years, while it has incurred a further £1 billion deficit by capital investment at the fastest rate in its history. Meanwhile, the capital spending is saddling British Steel with interest payments of more than £200 million a year. Every tonne of steel made is carrying a burden of £12 interest. If the interest component is deducted, it can be seen that BSC comes down to a relatively low rate of loss of £5 a tonne, which is a good performance by current European standards. But investments have been made and British Steel must try to pay for them.
  Is it possible for the Government to give the BSC some relief by means of a capital reconstruction? I do not think that any hon. Member who has sat through this debate and is therefore interested in the subject—and I suspect that most hon. Members present are well informed about the industry—can doubt that such a reconstruction will happen one day. Let us not delay it unnecessarily. The benefit would be felt most now.
  The Government should consider revaluing the Corporation's fixed assets on the basis that installed plant capacity is more than the BSC can "reasonably expect to utilise". Those are the words of Mr. Bob Scholey, the BSC's chief executive. Such Government support—it is not an unrealistic recommendation—for the Corporation's financial burden would be a great morale booster for the BSC's workers. As we have heard again and again from speakers on both sides of the House, BSC's workers are badly in need of such support now. Their morale must be at rock bottom.
  My own Sheffield division is a case in point. There, the steelworks group made a profit of £9 million this year. But losses by other parts of the division, such as stainless steel, light products, forges and foundries, turned that profit into a total division loss of £25·7 million. It is resented locally that the capital expenditure that is helping to improve performance and the special efforts and achievements of managements and men have not been sufficiently recognised and appreciated. Such plants at River Don, Tinsley Park

  505
  and Stocksbridge have been threatened with mothballing, or even closure.
  Sir Charles Villiers is aware of the special difficulties of the River Don works, and he has indicated that he is impressed at the way in which both the trade unions and management at that works have cooperated in developing a business plan aimed at profitability. However, a question mark still hangs over this famous plant. Does it have a future?
  Again, I ask the Minister whether he can offer any assurance about the future of this famous works. Can he confirm that the heavy forge development scheme will go ahead? That is a matter about which unions and men, not only at the River Don works but in the city generally, are anxious. It will take a little longer before the ambitious and technically highly successful stainless steel development at Tinsley Park and Shepcote Lane, in Attercliffe, achieve profitability. Like River Don, its contribution to the BSC is unique. Nowhere else in British steelmaking are those contributions duplicated. Both plants are indicted, because of their current and recent losses, but their essential and unique contribution is being overlooked.
  Thanks to the £130 million investment at Tinsley Park, we can look forward to the elimination of most imported stainless cold-rolled strip, which reaped a United Kingdom market share of 60 per cent. It is not only capital expenditure that will restore the fortunes of BSC. The joint contribution of management and men is just as important. Perhaps that is the most important factor of all. Recent visits to Tinsley Park and Stocks-bridge with my hon. Friend the Member for Penistone (Mr. McKay) have left me in no doubt about the concern of management and trade union representatives. To come across such determination to succeed in the present climate of British steelmaking is welcome.
  There has not been consistent operation at design levels at the Tinsley Park plant in the past, but that is improving. Both management and men are starting to make the plant grow. They are aware that if they can maintain that substantial improvement and achieve even greater efficiency of operation, there will be no question that their plant should be
  506
  mothballed as was threatened two months ago.
  That sense of partnership, dedication and commitment probably represents BSC's greatest asset—certainly in the Sheffield division. It is a precious and fleeting asset, as any business organisation knows. I appeal to the Minister and to his Front Bench colleagues not to jeopardise it.
  8.42 pm
  Mr. Tony Marlow: I am grateful to you, Mr. Speaker, for letting me catch your eye. I shall speak in support of the hon. Member for Kettering (Mr. Homewood) in view of the appalling problems faced by his constituency, particularly in Corby. I am a Northamptonshire Member and I have also worked in the iron and steelworks there that is threatened with closure.
  Anyone who has worked in the steel industry will realise what a hard, dangerous and difficult job is done by the people working within it. There is a great interdependence between one worker and another, and one group of workers and another. As with the coal mines or even a ship of war, there is team spirit, group loyalty and esprit de corps in the industry. Therefore, when a closure is threatened, it is not the same as the closure of any other factory or plant. It causes far greater feeling and a greater sense of dislocation. I hope that the Government are aware of that.
  Within the county of Northamptonshire, Corby was looked upon as a strange relation—the lodger that came and grew. It became the only part of the county, or perhaps of England, where a Scottish nationalist stood a good chance of being elected as a Member of Parliament. Recently we have come together, and we gladly accept Corby as a valuable and integral part of the county. If Corby is cut, Northamptonshire bleeds, and if Corby is hurt the county will cry.
  Many statistics have been put before us. As with lies, damned lies and statistics, they can be made to prove anything, but some, particularly those put forward by Cambridge university, contain flaws. They take account of the cost of closure, unemployment benefit and revenue that will be lost. If there is a

  507
  closure, these costs wil arise anyhow. Therefore, they cannot be put against the revenue savings in making steel in a more efficient plant elsewhere in the country. They are a capital cost of closure and they must be looked at in that light. To make a calculation and put it on one side and then put the revenue savings on the other is a mathematical and accounting illogicality.
  I have been in touch with the British Steel Corporation about the costs of closure and the savings that could be made. In my view, by moving steel production elsewhere we would be able to save nationally £30 a ton or £20 million a year. I am not saying that I am necessarily right, but it looks to me as if the die is cast. It is a question not whether steelmaking at Corby finishes, but when; it is not why it should finish but how. Tragedy has been defined as a very beautiful woman who grows fat at the ankles. Corby would never claim to be Miss Universe but at present the town is threatened with a double masectomy. This is a great tragedy.
  We must all be highly sensitive to the problems that Corby faces. We must all do all that we can to ease the transition problems and try to persuade the town that it faces not so much a problem but an opportunity.
  Having heard my right hon. Friend the Secretary of State today, I wonder whether the Government realise the size of Corby's problem. Governments in the past have encouraged the expansion of Corby. They encouraged the setting up of a new town and encouraged people to come to it, mainly from Scotland. The country, through this industry and the great steelworks which has been at Corby for many years, has benefited. There is now an absolute duty on the Government and the country to do everything to help Corby in its hour of need.
  If possible and where possible, the closures should be phased or delayed while other jobs come in and training takes place. There is an awful prospect, which has been outlined by the hon. Member for Kettering, of a gap between jobs required and jobs available. I urge the Government to phase where possible and to help where possible.
  508
  I turn to the question of roads. I asked my right hon. Friend earlier when he thought the A1-M1 link would be available. At present Corby is commercially inaccessible by road. We must bring viable roads into the Corby area as a priority. Perhaps we could get funds from Europe for this purpose, and we must press on faster than would normally be expected.
  When and if the steelworks close, there will be a massive loss in rateable value to the county of Northamptonshire. There will also be an increased demand on the services of the county. Under the normal terms of the needs element of the rate support grant, it takes two years for this to work through the system. If there is a closure at Corby, I ask my right hon. Friends to make sure that this deficit is made up at the same time as the closure takes place. Why should people who are already suffering have to wait another two years to get the money to help them in their trials and tribulations?
  We have heard today that development area status will be given to Corby. Labour Members have said that they do not think that this will make a great deal of difference. I do not know what the Government have in mind, but if development area status is not sufficient to help this stricken area I ask them to search their consciences and bring further measures forward.
  My final plea is to the trade unions in the steel industry. This is a terrible time for them. They must feel devastation and resentment. The Government, members of the Conservative Party, the British Steel Corporation and the chairman, Sir Charles Villiers, are not evil men. We are all trying at present to do what we think is right and best for the country.
  There is talk of industrial disruption, go-slows, overtime bans, and so on. I ask those involved to think hard before taking such action. I ask them to do so for the sake of the country, their industry, those who will lose wages, and the people of Shotton and Corby. If we have disruption in those towns and in the industry, it will be disastrous. One has only to look at Liverpool. Who would invest money in Liverpool, with its present reputation? For goodness sake, let us not have disruption and turmoil in

  509
  Corby and Shotton. That would destroy the very jobs that we are trying to bring to those areas.
  Mr. Porter: Like other hon. Members who represent the Liverpool area, I take grave exception to my hon. Friend's remark about it. It can only harm the prospects of Liverpool. I hope that my hon. Friend will see fit to give way and withdraw it.
  Mr. Marlow: I have finished what I had to say.
  8.50 pm
  Mr. D. N. Campbell-Savours: Thank you, Mr. Deputy Speaker, for calling me in this debate. I believe that, once again, my time has been severely cut.
  Before making my speech, I should like to say a few words about the speeches of other hon. Members. It was with great interest that many of us listened to the bleating—and it is bleating—of some Government supporters. I shall watch with great interest tonight in the Opposition Lobby to see with whom those hon. Members vote, particularly the hon. Member for Northampton, North (Mr. Marlow), who made a fairly impassioned speech on behalf of constituents in his region. I shall also watch closely the hon. Member for Harborough (Mr. Farr), whose speech I shall remember for its passion for many years. They are supporters of a Government seeking to slash expenditure and place before the country and the House the need to make cuts in moneys available to the British Steel Corporation.
  My constituency is Workington, and for many years it has been a major centre for the production of steel products. Whereas in many parts of the country a dark cloud hangs over the industry, that is not so in Workington. We look forward to a good and profitable future. Indeed, at the moment, Workington, with its steel exports, stands at the forefront of BSC. There are orders for Nigeria, for the Boston Main railway company and the mass transit railway system in the United States, for Kenya railways, and for railway construction between Damascus and Mecca in the Middle East.
  Our record in exports is first-class. It was with sadness that I heard of the
  510
  reports that stem from other parts of the Corporation. Now, and over the last few years, a depression has developed in the steel industry in Workington. It was perhaps aggravated this morning by the leak in The Guardian of the possible cutback in rail facilities in areas surrounding my constituency. The depression stems from the inability of BSC to take a firm and early decision on the coke investment programme for its plant at Mossbay in Workington. While that decision is outstanding, there is great disquiet and concern in Workington. We hope that within the next few weeks BSC will understand the position and take the decision that is so vital to the future of its activities in Workington.
  As a result of coke-oven investment, we shall see the restoration of the morale that has been slipping over the last few years in Workington. It will certainly lead to an increase in morale in the coal mines in the constituency of my hon. Friend the Member for Whitehaven (Dr. Cunningham), where investment in coke-oven facilities will ensure an adequate and real future for workers in that industry. Of course, there is the added benefit of the spin-off in the local economy. When one creates investment in a given area and ensures support for the future of its industry, local tradesmen and local people generally look forward with confidence and one sees a general revitalisation in all areas of trade.
  I now turn to the national issue. Here I express my great respect for my hon. Friends the Members for Flint, East (Mr. Jones) and for Kettering (Mr. Homewood) because of the way in which repeatedly during the five months that I have been here they have stated their case on behalf of their constituents. The speech of my hon. Friend the Member for Flint, East was one of the finest speeches that I have heard in the House. It was a speech of passion. If only the young men from Flint who came to see me yesterday had been able to hear that speech, they would be very proud of their Member of Parliament.
  If there have been difficult years for the BSC and its workers, it is interesting to note the response of Conservatives. Last year the Iron and Steel (Amendment) Bill came before the House and every Conservative Member voted against it, including the right hon. Lady the Prime

  511
  Minister and all those hon. Members who have spoken so passionately against the motion. Some months prior to that a Private Member's Bill sponsored by the hon. Member for Eastbourne (Mr. Gow) was introduced with the aim of denationalising the industry. All this has occurred at a time when, between 1973 and 1978, 25,000 jobs were lost in the industry, thus generating a great feeling of insecurity. This has taken place at a time of international recession, when people realised that unless the Government were willing to back industry and take real action the situation would only deteriorate further.
  Now we have a Secretary of State for Industry who has set such unrealistic limits that every hon. Member—including Conservative Members—is aware that it is impractical for them to be realised. Indeed, some interesting debates will develop next April on the limits for the next year of the BSC's operations. It was misleading for the Secretary of State today to tell us that the Government were not directly interfering in the management of the BSC. They are. By interfering with the amount of money that is available to fund the running costs of the industry, they are placing their imprint firmly on the future policies of the Corporation and how they affect the closures in the constituencies that have been represented in the debate.
  It is in that climate that the unions are now pressed to respond. They are demanding a national overtime ban. Here I refer to a newspaper report from my own constituency—a profitable sector. Under the heading "Doomsday warning for steel", BSC Cumbria chief, Mr. Langton Highton, said:
  "Workington's massive British Steel operation faces total collapse if workers back new strike calls."
  That is the response of management, not so much to the workers and the initiative that they are seeking to take but to the attitude adopted by the Secretary of State for Industry inasmuch as it is he who is provoking the industrial actions that will almost inevitably take place.
  There are other actions that I believe should be taken. There is a crying need for an inquiry into the whole future of the BSC. Indeed, a special examination should be made of the whole question of
  512
  imports. The latest import statistics show, as my hon. Friend the Member for Flint, East so accurately pointed out, that we are now importing in excess of £1 billion worth of steel each year. That is an unacceptable level of steel imports when the industry is clearly in recession and jobs are vital.
  If the problem of imports cannot be resolved by an initiative of the Secretary of State, the trade unions will have only one option—to take direct action and, after great consideration, consultation and discussion within the movement, selectively to blockade the import of those steel products that are destroying the jobs of their brethren in the British steel industry.
  9 pm
  Mr. John G. Blackburn: We have heard much about Corby, Shotton and Redcar, and this is one of the rare occasions when there is no pleasure in debate. Our hearts will be heavy when we go through the Lobbies to meet the people from the steelworks because we know the problems that they face.
  Although we have spoken of Corby, Redcar and Shotton, I have a political and moral responsibility to speak on behalf of my constituency, the northern end of which has been ravaged with unemployment as a result of the closure of the Bilston steelworks. I am not surprised to see the hon. Member for Wolverhampton, South-East (Mr. Edwards) here tonight, and I commend him for the battle that he fought on behalf of those fine men from the Bilston steelworks. Members of the Christian faith would say that Good Friday was a sad day, but it was a sad day for the hon. Member for Wolverhampton, South-East and myself when the steelworks were finally closed.
  In the centre of my constituency is a steelworks that is threatened with closure,—Cookley. Between 800 and 1,000 jobs are involved.
  Time is limited and I am grateful to the Opposition Front Bench for giving me the opportunity to address the House.
  There was a forceful speech from the hon. Member for Redcar (Mr. Tinn). He said that there had been mistakes, and that is certainly true. The mistakes of the British Steel Corporation have been

  513
  reflected in the most tragic of all terms—by unemployment for many of the fine steelworkers that we unitedly represent. Worse than that, however, there has been apathy. It is even more tragic that no remedial measures were taken to stop the slide of the market share of the British Steel Corporation.
  We have heard that £1 billion of steel is imported, and no one can condone that. It should have been a challenge to the British Steel Corporation to go out and capture that market and keep it within the country.
  I am not ashamed to say that to me the word "profit" is not obscene. I bear in mind the facilities that came to Stewarts and Lloyds because it was producing profits. There is one thing worse than not making profits, and that is to have no industry, no job and no employment.
  We are here not to hold an inquest but to grasp constructive opportunities so that matters may be put right. The British Steel Corporation has failed to respond quickly to changes even though it is running at only 70 per cent. of its capacity.
  There is a good dialogue between the unions and management, and I commend Mr. Sirs. However, no matter how long management talks with unions, and no matter how much they get it right, it will not produce an order. The only way in which the British Steel Corporation will improve its performance is by implementing a vigorous marketing and sales policy to ensure that there are no competitors from overseas who use Britain as a soft touch or a dumping ground for subsidised steel.
  If we are to adopt that policy, we must have utter reliability in the product, in its performance and in its delivery. It is not the Government's job to run Britain's steel industry, nor was it the job of the Opposition when they were in office. There is no one in the House capable of running the industry. We are not trained to do it. We do not have the gift or the talent to do it. It is the job of the board of the Corporation to run the industry.
  We have large furnaces. We have a large investment programme. That has already been spelt out clearly. The workers in the steel industry, the nation
  514
  generally and taxpayers especially are entitled to say, not in the short term but in the long term, "We want to see a tremendous improvement in the productivity and performance of the industry." The Government's amendment states:
  "the future of the steel industry depends on much improved productivity, efficient use of costly investments and an early return to profitability."
  It is clear that we face a challenge.
  I am sufficiently old-fashioned to believe that it is much better to work within the bounds of arithmetic and not to indulge in fancy. I have a mandate to speak on behalf of the constituency that sent me to this place. On behalf of the steel workers who are now redundant in the northern end of my constituency and those who are to become redundant in the centre of my constituency, I say to the Government that their amendment sets out the only constructive way to secure all the things that we want from a viable British steel industry.
  9.10 pm
  Mr. Stan Crowther: I listened with great sadness to the Secretary of State. He has made it crystal clear that his prejudices and dedication to the free market ideology have completely blinded him to the reality of the position in the steel industry.
  At a time when every advanced industrial nation is experiencing a major recession in the demand for steel, he is saying to the BSC "Sink or swim. By next April the lifeline will be withdrawn, whatever the world trading conditions." But the industry was brought into public ownership to enable the necessary investment to be pumped in. That is bigotry of the worst possible sort. It is nonsense for the Secretary of State to pretend that he is following the policy of the previous Labour Government. That is what he appears to be saying. It is absolutely wrong and is a slur upon the previous Labour Government's policy. At no time did that Labour Government ever say to the BSC "If you are not able to meet your target of breaking even by April 1980, we will pull out all our assistance."
  With respect to the hon. Member for Brigg and Scunthorpe (Mr. Brown), he cut a slightly pathetic figure. He pleaded with his right hon. Friend to tell him that he did not really mean all

  515
  that he had said. The Secretary of State has made it crystal clear over and over again that he is cutting the lifeline to BSC if it does not match up to its target.
  We are not saying that no further rationalisation can take place in the steel industry. We all accept that more changes have to take place. No one is saying that every mill, melting shop or department of every works that exists will continue to exist, or even that every job that exists must remain for ever.
  Conservative Members have attempted to pretend that there is no difference between the two sides of the House, but there is an essential difference. We have always maintained that changes must take place in an orderly way and in agreement with the trade unions. Despite the allegations made, I think, by the hon. Member for Flint, West (Sir A. Meyer), the industry's trade unions have a long record of realism and responsibility.
  Changes should take place as part of a comprehensive and vigorous policy of regional development. That has not happened in the past. Matters tend to move in a piecemeal manner. Unless a scheme is developed under which jobs that are lost in the old traditional industries are replaced with new jobs, we will be constantly up against that problem.
  History has shown that the old idea of relying on financial incentive to private enterprise for that purpose provides perhaps half an answer, but little more and certainly not the full answer. The remedial measures described by the Secretary of State in respect of Corby are pie in the sky. Many of his hon. Friends acknowledged that during the debate.
  I do not wish to reopen yesterday's debate on the Industry Bill, but the emasculation of the NEB is relevant in this context. I was one of those who saw in the NEB the best hope for real future public involvement in the rejuvenation of those regions where the traditional industries are no longer able to provide all the jobs that are needed. The disastrous consequences of massive redundancies for places such as Corby and Shotton have been adequately described.
  When 10,000 jobs are lost at a stroke, the impact is much greater than when
  516
  10,000 jobs are lost over a number of years, as has happened at Redcar and Rotherham. The net effect is the same. Those jobs have still gone. Until some sensible regional policy is developed, we will always be up against that problem. The jobs are not there for the younger generation. However long it takes to lose them, the jobs are still being lost. We must look seriously at the enormous social cost.
  We in Rotherham have certainly developed a productive and profitable steelworks, but it has cost us a great deal in social terms. I have little confidence that the Government will be able to provide any kind of solution to deal with the regional problem or with the internal problems of the steel industry. I hope that the industry can survive the coming years of Toryism, but I doubt it.
  9.15 pm
  Dr. John Cunningham: I am pleased that I conceded some extra time for Back Bench speakers. First, I am practising what I preached in voting for shorter speeches. Second, it enabled my hon. Friend and constituency neighbour the Member for Workington (Mr. Campbell-Savours) to make an effective speech on behalf of his constituency and mine. Finally, it gives me the opportunity to express a large measure of agreement with my hon. Friend the Member for Rotherham (Mr. Crowther). Bearing all that in mind, I hope that hon. Members will forgive me for not referring to their speeches. I have heard them all with the exception of part of that of the hon. Member for Harborough (Mr. Farr).
  The interesting factor about the debate is that the questions and the real issues have in the main been raised by my right hon. Friend the Member for Deptford (Mr. Silkin) and by Government and Opposition Back Benchers. They certainly were not raised in any measure by the Secretary of State for Industry. He maintained his stance, which is nothing new to us. He gave no answers to questions. His attitude was the same—based on cash limits. We know it well. It is rather like the attitude of the Chief Secretary to the Treasury in his statement last week. The Secretary of State is effectively planning unemployment as part of his approach to the British Steel Corporation.
  The right hon. Gentleman claimed that the attitude that he now adopts and the

  517
  policy that he is pursuing are almost identical to those of the last Labour Government. We categorically reject that assertion. He has absolutely no ground for making that statement. He can confirm what I am saying simply by reading Labour's White Paper of March 1978. There it was made clear that there would be no unilateral or enforced closures of steelworks. The White Paper did not endorse the proposal of the chairman of the BSC to break even by March next year. I shall return to that point in a moment, but that statement is turning out to be one of the rashest by any chairman of a nationalised industry in this country for many years.
  It was also evident that the Secretary of State's speech left many of his supporters uneasy. The hon. Member for Harborough expressed his unease, as did the hon. Member for Rutland and Stamford (Mr. Lewis) and other Conservative Back Benchers. The Secretary of State announced a decision on special remedial measures for Corby, which indicates that my hon. Friend the Member for Kettering (Mr. Homewood) has virtually no chance of winning the tremendous battle that he and his colleagues in that area have maintained for the Corby steelworks.
  I can tell the Minister of State that it is not credible to suppose that the measures announced today can have the slightest effect on the catastrophic employment and social impact of closure at Corby. Every right hon. and hon. Member knows that that is so. The situation is in no sense satisfactory. There is not sufficient time or money, and the Government know that as well as we do. It is all about public expenditure. It comes ill from the Secretary of State to talk about what he proposes in Corby in terms of public expenditure when his case rests on the fact that public expenditure should be reduced and how quickly the new terms for that reduction can be brought about. In his usual economic, tutorial manner, he sounded like an old, cracked, gramophone record, playing the same old tune.
  Worst of all, the right hon Gentleman said not one word about the future of the British steel industry. He said something about taxpayers not wanting to bear the burden of propping up steelmaking losses. He knows as well as we
  518
  do that in one way or another the taxpayer will carry the burden. For many reasons, we believe that taxpayers would rather carry the burden of keeping people in jobs than on the dole. That is what the Secretary of State has in store for them. Development area status will not begin to tackle the problems of Corby. Indeed, in my constituency in 1968 the Millom ironworks were closed down in similar circumstances. It is an isolated community and 30 per cent. of the people were put on the dole at short notice. Anyone who visits that town will see that it has not recovered—11 years later. The Government know that to be the case. For Millom in 1968 read Corby—probably Shotton, too—in 1979.
  There was a lack of urgency in what the Secretary of State said about the size of the problems and the Government's will to tackle them. He said that their attitude is the same as the previous Government's. Where is the urgency that was displayed at the closure of Ebbw Vale, East Moors or Rutherglen, the constituency of my right hon. Friend the Member for Rutherglen, (Mr. MacKenzie)? There is a great difference in commitment and determination to tackle the problems.
  The hon. Members for Harborough and for Rutland and Stamford expressed their considerable unease at the proposals. I congratulate them, and I invite them to express it more formidably by joining us in the Lobby tonight.
  My hon. Friend the Member for Neath (Mr. Coleman) expressed with great force the difficult position in which the unions in the steel industry have been placed by the Government's policies. I shall return to that matter. My hon. Friend the Member for Consett (Mr. Watkins) made the same point. I know his constituency well. I live on its edge. I worked there as a trade union officer many years ago. The matter was also raised yesterday by councils from Deeside and Clwyd—Conservative almost to a man. They came to lobby Parliament to make clear the distaste with which they view their Government's policies.
  My hon. Friend the Member for Kettering made the point that BSC (Industry) Ltd. industry does not have the capacity or the financial resources to tackle the

  519
  financial problems which will be faced in Corby. If the Minister wishes to display any urgency, he should insist that the BSC pays attention to that matter. In a moving speech, my hon. Friend the Member for Kettering said that, faced with what has happened at Corby, the unions in the industry are left with no choice. They have no confidence in the Government and little or no confidence in the management of the BSC.
  The same point was made by my hon. Friend the Member for Central Ayrshire (Mr. Lambie). It is interesting to hear Conservative Members talking about the need for increased productivity. My hon. Friend pointed out that there have been closures for 10 years in the steel industry, yet we are still told that what we need are more closures to solve the problems.
  Last year alone, 17,000 jobs in the steel industry were lost. Apparently that did not solve the problem. That leads most, if not all, members of the Opposition to conclude that closures are not the answer. I should have thought that that was a fairly obvious conclusion for the Government as well.
  My hon. Friend the Member for Sheffield, Attercliffe (Mr. Duffy) referred to the same problems in the private sector of the steel industry. Surprise, surprise—the private sector is in difficulties too. The Secretary of State has been silent on that aspect of the problem of the steel industry. I agree with my hon. Friend's reference to the need to consider the financing of the British Steel Corporation. Almost every speaker made special pleas or asked for assurances, whether from the unions, the work force or Ministers. I support those requests. However, I think that our worst fears will be fulfilled, as the requests appeared to fall on deaf ears.
  If we need a steel industry—that was the central question asked by my right hon. Friend in moving the motion—we must support it. There is no other way in the present circumstances. We must be prepared to pay the price if we want an effective industry not only in terms of bulk capacity but with sufficient flexibility to produce special products and meet market demands and challenges at home and abroad. That situation will not obtain if the Government's policies are pursued in the present direction.
  520
  If the Government amendment were an addition to our motion, I do not think that many members of the Opposition would object. We recognise that reliability, profitability and the improvements in productivity to which it refers are necessary. Of course that is so. However, they will not happen in the short term and certainly not as a result of Government policies. Where is the evidence to support any argument that their approach—I would not dignify it with the word "policy"—will bring us to the situation described in the amendment?
  We are now talking about closing effective steel-making capacity. It is by no means agreed that there is hopelessly inefficient or unusable capacity either at Shotton or Corby. What is more important is that we are not talking just about Shotton and Corby. In a previous debate on this subject—on the EEC documents—we received no ministerial assurances about further closures or about protecting regional aid to industry.
  The chairman of the British Steel Corporation, in his famous statement and pledge on Shotton, said:
  "We shall want Shotton steelmaking for many years to come. The Shotton option remains open for technological progress, new commercial requirements."
  He added:
  "This plan is commercial, practical and prudent."
  Those are the words of the chairman of the BSC—the man to whom the Secretary of State is apparently happy to leave the running of the Corporation. If he is happy with the judgment of the chairman, why does he not accept that statement about the situation at Shotton?
  The Corby case was effectively put by the unions involved in the industry. They made clear their belief that a decision to close Corby, apart from all the social consequences to the community, would adversely influence the balance of payments by increasing opportunities for imports and add to rather than reduce the overall level of any Exchequer contribution required for the industry. They pointed out that those are not the ends—if, indeed, there are any ends—towards which productive capacity should be withdrawn and communities sacrificed.
  There is a very good argument in favour—
  Mr. Marlow rose—
  Dr. Cunningham: I am not giving way. I have already conceded a lot of time and the hon. Gentleman was one of the beneficiaries.
  The Corby case and the Shotton case stand on their merits. It has been made clear by my hon. Friend the Member for Rotherham that in his area and in areas such as Sheffield the old plants, the work force and the unions, given confident management and investment to support their case, can re-establish themselves in world markets and compete on the same terms as their competitors and win back business for this country. That is the way in which we should approach the problems that we face in our industries. We should not be abandoning them to the hopelessly antiquated attitude of the Secretary of State for Industry.
  Elsewhere in Europe, far less efficient plant remains in production, protected by Governments, and elsewhere in the EEC, in spite of the Davignon measures and in spite of the Vouel measures, which we opposed strongly for so long in Government, the industry is subsidised. But this Government are apparently prepared to see our industry, with better capacity, in many circumstances, go to the wall. That is not a credible situation. It is not a creditable situation. It is another reason why we have no confidence in the Government's approach to the problems of the steel industry.
  Where is the logic? What end is this approach meant to achieve for Britain or the British steel industry? The demand to break even by March next year is not based on any long-thought-out economic approach to the British Steel Corporation. It is almost plucked out of the air by the chairman. It does not have any credible economic basis, given the facts that surround the British Steel Corporation. Unfortunately, the chairman's rashness is now being used to throttle the industry. It may be used to throttle him before much longer. We shall see.
  What will happen after 1980? That is another question to which the Secretary of State paid no attention. What will be the situation in 1981 if the Corporation still is not breaking even? Will there be more closures? Will there, perhaps, be a major and modern steelworks closed? That would be the next and only option
  522
  left to the Corporation if its present policy is pursued. No one believes that the target is credible. No one believes, either in this House or outside, in the industry, in the press or anywhere, that this target will be achieved. If it is achieved, its effect could only be catastrophic for the long-term position of the British Steel Corporation and the many tens of thousands of people whose futures are bound up in it. It would lead to further de-industrialisation.
  This approach can result only in the most serious uncertainty in areas such as Consett, Workington, South Wales and elsewhere. It is no wonder that the unions have now reached what is almost breaking point. They have seen what has happened at Shotton. They have seen a pledge about the discussion of closures at Corby dwindle from two years to one year, then to six months, and now to six weeks. This is absolutely unacceptable. What will happen to the size and capacity of British Steel if this policy is continued? It is no wonder that, against this background, the unions have made clear that they cannot go on co-operating with the right hon. Gentleman and his Government.
  We are discussing not just the present closure proposals but the credibility of the BSC management to sustain an effective and co-ordinated industry. That is the problem, as my hon. Friend the Member for Central Ayrshire made clear. In the midst of the deepest world recession in steel demand for 40 years, the Government respond to the problems with policies of 40 years ago—closure after closure, with the downward spiral into further unemployment.
  At a time when it is operating nowhere in the world—not in America, not in Japan or Europe—the Government place their faith in the market economy. That approach would be anathema to us in reasonable circumstances, but when market forces are operating nowhere they are even more bound to fail if invoked in our domestic industries. So dogmatic a course is bound to lead, as it has done, to the unions expressing no confidence.
  We talk about competition and productivity. As has been made clear, France loses £32 per tonne of steel, Italy £21 and Belgium £20. The British steel industry loses £17 a tonne, and without

  523
  loan charges the loss is only £5. That is not evidence that our workers cannot compete with their counterparts in other countries. We reject the accusation that this problem can be laid at the door of the unions.
  The Government's own Back Benchers have made it clear that they do not like this policy. I emphasise that we do not like it much, either. Tory Back Benchers have shown more concern than the Secretary of State and no doubt more than the Minister of State will show.
  To someone of extreme views—the Secretary of State's views are extreme; they are not moderate, especially in circumstances such as these—balance sheets are apparently more important than jobs; financial rectitude is the goal at any cost, regardless of the price in terms of unemployment; tax cuts are more important than the job opportunities and careers of young people in areas of already high unemployment; public expenditure reductions at the cost of whole industrial communities are the order of the day.
  We cannot accept this. The complete absence of any policy content in the Secretary of State's speech—he apparently could not be bothered about the future of the industry and its workers—is the best justification for our motion.
  9.38 pm
  The Minister of State, Department of Industry (Mr. Adam Butler): Like the hon. Member for Whitehaven (Dr. Cunningham), I shall not be able to deal with all the points raised. We shall try to write to hon. Members if I do not cover their questions.
  One of the extraordinary assertions by the hon. Member for Whitehaven was that the Government were in no way following the Labour Government's policy towards the steel industry. An unbiased observer of recent history could not possibly agree with that. To a large degree, there has been a common approach to the industry.
  Dr. John Cunningham: Not at all.
  Mr. Butler: Let me go on. Would the Opposition agree on a determination to see an efficient and profitable industry? Would they agree that a reduction in productive capacity was necessary to achieve such an industry? There is ample evidence to support this conclusion for
  524
  anyone who is unbiased. Because some hon. Members were not here at the beginning of the debate, I shall give some of that ample evidence.
  The White Paper of March 1978 read:
  "The Government's present view is that further rationalisation will be necessary in future … To achieve financial viability it is necessary for capacity to move more into line with demand."
  That would be a clear statement even today. The White Paper went on:
  "The Corporation is suffering from substantial over-capacity now. This is likely to persist over the next few years"
  There is a realisation that something had to be done to meet that. Or let us take the much-quoted remark of the right hon. Member for Chesterfield (Mr. Varley). He set what most of us would have taken to be a firm financial target. It was considerably tighter in time scale than that proposed by my right hon. Friend.
  According to the target set by the right hon. Member for Chesterfield, the Corporation was supposed to break even during 1979–80, which is not the target set by my right hon. Friend. I do not know what a target is if it is incorrect to believe that a target was set when the right hon. Gentleman stated:
  "Part of the Government policy is that the financial objectives of the BSC should be to break even by the financial year 1979–80."—[Official Report, 22 May 1978; Vol. 950, c. 1105–6.]
  The problem was that it was not looked upon as any kind of target. British Steel did not think that it was necessary to meet that target. Due to the weakness and lack of determination shown by the right hon. Gentleman and his Government, BSC took not the slightest notice of that target, nor of the words used by him in this House. If that statement did not set a target, there is mention of it again in the public expenditure White Paper as late as January of this year. The White Paper states:
  "The Corporation are aiming to operate at a break-even basis by March 1980. The Government are giving full support to the Corporation in their efforts."
  There, surely, is a commonality—though of words only—on the part of the Labour Party. We have both words and intention on the Government Benches.
  Dr. John Cunningham: The hon. Gentleman cannot claim that the Labour

  525
  Secretary of State made a statement similar to that made by his right hon. Friend in July of this year about the future financing of the British Steel Corporation.
  Mr. Butler: It would be difficult to read much difference into the statement of my right hon. Friend from those that I have just quoted. If those statements are now being totally denied by the Opposition, right hon, and hon. Gentlemen are renouncing all responsibility for their time in Government. Regretful as they were, the previous Administration presided over closures which involved the loss of 25,000 jobs during their last two years of office. That was not a deliberate policy. It was necessitated by the circumstances. I ask, therefore, whether the Labour Party believes that closures are necessary or whether it is now renouncing its seemingly responsible attitude of that period.
  Governments of both parties share something else in common. They have presided over, and acquiesced in, some highly optimistic forecasts of demand. Against those forecasts, successive Governments have provided thousands of millions of pounds of taxpayers' money to enlarge and modernise productive capacity.
  Both parties, therefore, are to some extent responsible for the present overcapacity in the steel industry. If we are all responsible for the overcapacity, we are also responsible for some thoroughly modern plant with a potential for low-cost, high-quality output.
  I have been worried during the debate about right hon. and hon. Members' encouragement of obstruction and disruptive action. It is a gross disservice, as at least two of my hon. Friends said, to those who are directly affected by closures to raise their expectations. It does no good to them and no good to the prospects of those at other plants to encourage industrial action. If prolonged for any time, industrial action will put at risk the whole steel industry.
  The debate does not turn on whether there should be closure and restructuring. The previous Administration accepted the necessity for that. The debate turns on the need for an early return to profitability. That will come from improved productivity and the efficient use of
  526
  costly investments. It will not come from the continuation of plants which are actually or potentially loss makers. There is justification for keeping plants open only in two circumstances: if there are no worthwhile alternatives, and if there has not been full consultation.
  In the case of Corby it is not true to say that there were only six weeks of consultation. Discussions about the future of Corby began under the Labour Administration in February 1979. The consultations have occupied more time than has been taken in connection with any other closure. With reluctance, the chairman had to inform the trade unions at the final meeting that there were no workable alternatives.
  The only other reason for keeping open loss-making plants is if there is a massive increase in demand round the corner and a seller's market, instead of a buyer's market, develops, with prices to match. Then plants with out-of-date capacity have a chance of being economic. There is no indication of that occurring for some years. An increase in demand to take up 40 or 50 per cent, more of British Steel Corporation output is needed. There is no indication that that will happen.
  It is certain that the latest modern plant in BSC is among the best in Europe, and we should be proud of it. If such plant is not run at capacity, it will continue to lose money. Ravenscraig has a highly developed plant whch is operating at about three-quarters capacity. It is not possible to make profit out of a capital-intensive plant which is running at three-quarters capacity.
  Redcar, of which the hon. Member for Redcar (Mr. Tinn) spoke so proudly, must have a massive output if it is to run efficiently, let alone at a profit. Such plants must be run at or near full capacity. They should then be in the position to supply the finishing ends at Corby and Shotton. That will be to the benefit of those who work at those plants because full capacity means more jobs and job security in the future.
  The Government's responsibility is to look after the public's money. The hon. Member for Workington (Mr. Campbell-Savours) believes that they have no such responsibility, but certainly where a management decides to close plants the Government have a responsibility with regard

  527
  to the social consequences. There are fears and worries, which have been expressed as eloquently by my hon. Friends as by Labour Members.
  The Government must act. My right hon. Friend announced a very good package of aid, giving development area status, with its 15 per cent, grant on buildings and plant, eligibility for assistance under section 7, funds from Europe, and, particularly, increased factory building. I understand that, for example—[Interruption.] Labour Members might like to listen, because they claim that there is nothing in the package. If they do not take the steel industry's future as seriously as I do, they can go on chatting among themselves. This Government take the industry very seriously and are trying to do something about its future.
  Mr. Lambie: They are trying to kill it.
  Mr. Butler: I was about to say that the Earlstree industrial estate has a potential of nearly 4,000 jobs over the next few years. There is a further estate of 50 acres available, and a feasibility study is looking into the potential of a further 250 acres.
  Apart from that, Corby does have attractions. The nearest assisted area to London must be attractive to investors. Therefore, we believe that the package announced by my right hon. Friend will be of real help.
  If the decision to close Shotton is confirmed, my right hon. Friend the Secretary of State for Wales will make an announcement about what the Government can do to help,
  Various hon. Members spoke about the threat of imports, particularly from the Common Market. Imports of steel into this country have not varied in their proportion for four or five years. Secondly, we export more steel than we import. If we impose the sort of barriers that were requested by some Labour Members, the barriers will go up against our exports.
  There was also a reference to the performance of steel companies in Europe. In fact, the Luxembourg, Dutch and German steel industries will break even or be profitable this year. Evidence of this is the fact that some people are now showing increasing reluctance to renew the Davignon measures when they run
  528
  out, because they believe that they can compete without protection against the outside world.
  Because of the present condition of our industry, it is the Government's intention to press for the renewal of those measures. As I have said, there are others who have found it possible to compete in the world, and to get themselves into an efficient state, who will be arguing in the other direction.
  Mr. Lambie: They have done it with Government aid.
  Mr. Butler: The right hon. Member for Deptford (Mr. Silkin) said that British Steel was losing a significant proportion of its output because of the import of foreign cars. He produced some telling figures. What he did not add was the reason why there was such an import of cars from the Community. It is not that wages are lower there. I do not think that he was asserting that. I do not think that he was asserting that the cars were heavily subsidised, because I do not think that coking coal is used for cars. What matters is the reason why those cars are being bought. The British public exercises its choice and prefers foreign cars in terms of price, delivery, quality or some other reason. That is a useful illustration because that is the way in which British Steel can increase its sales and production and thereby provide the jobs that we want.
  A simple example is that, thanks to an inter-union dispute, the Hunterston terminal has not yet been used since it was opened five or six months ago. That has cost British Steel a large amount of money, and that must affect its prices and the quality of its output. It has particularly affected the output of Ravenscraig. It is intended that Ravenscraig should supply Shotton. If good-quality steel could be produced there, the result would be good-quality motor cars. If steel is produced at Ravenscraig and if that plant's capacity is used to the full, that will bring down the price. Then at least there is a better chance of having a better-quality and a better-priced British motor car. Only then will the imports become fewer.
  Mr. George Grant: Before the Minister leaves the question of the

  529
  competitiveness of EEC steel industries, will he tell the House by how much the German steel industry is subsidised by virtue of the subsidy on coking coal?
  Mr. Butler: The difference in price between imported coking coal from Australia and other places and that produced by the National Coal Board is about £10 a tonne. That is pretty significant. As the hon. Member knows as well as I do, the other problem in connection with British-produced coking coal is that it is not as good quality as the imported material. High-quality coking coal is particularly necessary for the operation of such plants as Redcar.
  Our amendment refers to the need to improve productivity, make use of costly investments and achieve profitabiilty as rapidly as possible. The interests of all those who work in the industry depend on reaching those targets, particularly that of profitability. I believe that the unions and their members know this. I urge them most carefully not to take any action that will put that future at risk as it will only do harm to their own members.
  Government policy is and will continue to be to bring about a proud and healthy steel industry. We are determined to achieve this. But we are also determined to help those who suffer from the closures which continuing overcapacity and uneconomic facilities make essential. Therefore, I ask my right hon. and hon. Friends to reject the Opposition motion and to support our amendment.
  9.59 pm
  Mr. Dennis Canavan: That was one of the most deplorable speeches that I have heard in this House. If this is the justification for the Government's industrial strategy, particularly for the steel industry, the House has no choice but to vote against it. The Minister tonight has insulted us—
  Mr. John Evans rose in his place and claimed to move, That the Question be now put.
  Question, That the Question be now put, put and agreed to.
  Question put accordingly, That the original words stand part of the Question:—
  The House divided: Ayes 248, Noes 307.

  Division No. 95]

  AYES

  [10 pm

  Abse, Leo

  Cook, Robin F.

  Field, Frank

  Adams, Allen

  Cowans, Harry

  Fitch, Alan

  Allaun, Frank

  Craigen, J. M. (Glasgow, Maryhill)

  Flannery, Martin

  Alton, David

  Crowther, J. S.

  Fletcher, L. R. (Ilkeston)

  Anderson, Donald

  Cryer, Bob

  Fletcher, Ted (Darlington)

  Archer, Rt Hon Peter

  Cunliffe, Lawrence

  Ford, Ben

  Armstrong, Rt Hon Ernest

  Cunningham, George (Islington S)

  Forrester, John

  Ashley, Rt Hon Jack

  Cunningham, Dr John (Whitehaven)

  Foster, Derek

  Ashton, Joe

  Dalyell, Tam

  Foulkes, George

  Barnett, Guy (Greenwich)

  Davidson, Arthur

  Fraser, John (Lambeth, Norwood)

  Barnett, Rt Hon Joel (Heywood)

  Davies, Rt Hon Denzil (Lianelli)

  Freeson, Rt Hon Reginald

  Beith, A. J.

  Davies, Ifor (Gower)

  Freud, Clement

  Bennett, Andrew (Stockport N)

  Davis, Clinton (Hackney Central)

  Garrett, John (Norwich S)

  Bidwell, Sydney

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

  Garrett, W. E. (Wallsend)

  Booth, Rt Hon Albert

  Deakins, Eric

  George, Bruce

  Boothroyd, Miss Betty

  Dean, Joseph (Leeds West)

  Gilbert, Rt Hon Dr John

  Bottomley, Rt Hon Arthur (M'brough)

  Dempsey, James

  Ginsburg, David

  Bradley, Tom

  Dewar, Donald

  Gourlay, Harry

  Bray, Dr Jeremy

  Dixon, Donald

  Grant, George (Morpeth)

  Brown, Hugh D. (Provan)

  Dobson, Frank

  Grant, John (Islington C)

  Brown, Robert C. (Newcastle W)

  Dormand, Jack

  Hamilton, James (Bothwell)

  Brown, Ronald W. (Hackney S)

  Douglas, Dick

  Hamilton, W. W. (Central Fife)

  Brown, Ron (Edinburgh, Leith)

  Douglas-Mann, Bruce

  Harrison, Rt Hon Walter

  Buchan, Norman

  Dubs, Alfred

  Hart, Rt Hon Dame Judith

  Callaghan, Rt Hon J. (Cardiff SE)

  Duffy, A. E. P.

  Hattersley, Rt Hon Roy

  Callaghan, Jim (Middleton & P)

  Dunn, James A. (Liverpool, Kirkdale)

  Haynes, Frank

  Campbell, Ian

  Dunnett, Jack

  Healey, Rt Hon Denis

  Campbell-Savours, Dale

  Dunwoody, Mrs Gwyneth

  Heffer, Eric S.

  Canavan, Dennis

  Eadie, Alex

  Hogg, Norman (E Dunbartonshire)

  Cant, R. B.

  Eastham, Ken

  Holland, Stuart (L'beth, Vauxhall)

  Carmichael, Neil

  Edwards, Robert (Wolv SE)

  Home Robertson, John

  Cartwright, John

  Ellis, Raymond (NE Derbyshire)

  Homewood, William

  Clark, David (South Shields)

  Ellis, Tom (Wrexham)

  Hooley, Frank

  Cocks, Rt Hon Michael (Bristol S)

  English, Michael

  Horam, John

  Cohen, Stanley

  Ennals, Rt Hon David

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

  Coleman, Donald

  Evans, Ioan (Aberdare)

  Huckfield, Les

  Concannon, Rt Hon J. D.

  Evans, John (Newton)

  Hughes, Mark (Durham)

  Conlan, Bernard

  Ewing, Harry

  Hughes, Robert (Aberdeen North)

  Hughes, Roy (Newport)

  Morris, Rt Hon Charles (Openshaw)

  Skinner, Dennis

  Janner, Hon Greville

  Morris, Rt Hon John (Aberavon)

  Smith, Cyril (Rochdale)

  Jay, Rt Hon Douglas

  Morton, Barry

  Snape, Peter

  John, Brynmor

  Moyle, Rt Hon Roland

  Soley, Clive

  Johnson, James (Hull West)

  Mulley, Rt Hon Frederick

  Spearing, Nigel

  Johnson, Walter (Derby South)

  Newens, Stanley

  Spriggs, Leslie

  Johnston, Russell (Inverness)

  Oakes, Rt Hon Gordon

  Stallard, A. W.

  Jones, Barry (East Flint)

  O'Halloran, Michael

  Stewart, Rt Hon Donald (W Isles)

  Jones, Dan (Burnley)

  O'Neill, Martin

  Stoddart, David

  Kaufman, Rt Hon Gerald

  Orme, Rt Hon Stanley

  Stott, Roger

  Kilroy-Silk, Robert

  Owen, Rt Hon Dr David

  Strang, Gavin

  Kinnock, Neil

  Palmer, Arthur

  Straw, Jack

  Lambie, David

  Park, George

  Summerskill, Hon Dr Shirley

  Lamborn, Harry

  Parker, John

  Taylor, Mrs Ann (Bolton West)

  Lamond, James

  Parry, Robert

  Thomas, Jeffrey (Abertillery)

  Leadbitter, Ted

  Pavitt, Laurie

  Thomas, Mike (Newcastle East)

  Leighton, Ronald

  Pendry, Tom

  Thomas, Dr Roger Carmarthen)

  Lestor, Miss Joan (Eton & Slough)

  Penhaligon, David

  Thorne, Stan (Preston South)

  Lewis, Ron (Carlisle)

  Powell, Raymond (Ogmore)

  Tilley, John

  Litherland, Robert

  Prescott, John

  Torney, Tom

  Lofthouse, Geoffrey

  Price, Christopher (Lewisham West)

  Urwin, Rt Hon Tom

  Lyon, Alexander (York)

  Race, Reg

  Varley, Rt Hon Eric G.

  Mabon, Rt Hon Dr J. Dickson

  Radice, Giles

  Wainwright, Edwin (Dearne Valley)

  McCartney, Hugh

  Rees, Rt Hon Merlyn (Leeds South)

  Walker, Rt Hon Harold (Doncaster)

  McDonald, Dr Oonagh

  Richardson, Miss Jo

  Watkins, David

  McGuire, Michael (Ince)

  Roberts, Albert (Normanton)

  Weetch, Ken

  McKay, Allen (Penistone)

  Roberts, Allan (Bootle)

  Wellbeloved, James

  McKelvey, William

  Roberts, Ernest (Hackney North)

  Welsh, Michael

  MacKenzie, Rt Hon Gregor

  Roberts, Gwilym (Cannock)

  White, Frank R. (Bury & Radcliffe)

  Maclennan, Robert

  Robertson, George

  White, James (Glasgow, Pollok)

  McNally, Thomas

  Robinson, Geoffrey (Coventry NW)

  Whitlock, William

  Magee, Bryan

  Rodgers, Rt Hon William

  Willey, Rt Hon Frederick

  Marks, Kenneth

  Rooker, J. W.

  Williams, Rt Hon Alan (Swansea W)

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

  Roper, John

  Williams, Sir Thomas (Warrington)

  Marshall, Dr Edmund (Goole)

  Ross, Ernest (Dundee West)

  Wilson, Gordon (Dundee East)

  Marshall, Jim (Leicester South)

  Rowlands, Ted

  Wilson, Rt Hon Sir Harold (Huyton)

  Mason, Rt Hon Roy

  Ryman, John

  Wilson, William (Coventry SE)

  Maxton, John

  Sandelson, Neville

  Winnick, David

  Maynard, Miss Joan

  Sever, John

  Woolmer, Kenneth

  Meacher, Michael

  Sheerman, Barry

  Wrigglesworth, Ian

  Mellish, Rt Hon Robert

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

  Wright, Sheila

  Mikardo, Ian

  Shore, Rt Hon Peter (Step and Pop)

  Young, David (Bolton East)

  Millan, Rt Hon Bruce

  Short, Mrs Renée

  Mitchell, Austin (Grimsby)

  Silkin, Rt Hon John (Deptford)

  TELLERS FOR THE AYES:

  Mitchell, R. C. (Soton, Itchen)

  Silkin, Rt Hon S.C. (Dulwich)

  Mr. James Tinn and

  Morris, Rt Hon Alfred (Wythenshawe)

  Silverman, Julius

  Mr. Ted Graham.

  NOES

  Adley, Robert

  Brown, Michael (Brigg & Sc'thorpe)

  Dunn, Robert (Dartford)

  Aitken, Jonathan

  Browne, John (Winchester)

  Durant, Tony

  Alexander, Richard

  Bruce-Gardyne, John

  Dykes, Hugh

  Amery, Rt Hon Julian

  Bryan, Sir Paul

  Eden, Rt Hon Sir John

  Ancram, Michael

  Buck, Antony

  Edwards, Rt Hon N. (Pembroke)

  Arnold, Tom

  Budgen, Nick

  Eggar, Timothy

  Aspinwall, Jack

  Bulmer, Esmond

  Elliott, Sir William

  Atkins, Rt Hon H. (Spelthorne)

  Burden, F. A.

  Emery, Peter

  Atkins, Robert (Preston North)

  Butcher, John

  Eyre, Reginald

  Atkinson, David (Bournemouth, East)

  Butler, Hon Adam

  Fairbairn, Nicholas

  Baker, Kenneth (St. Marylebone)

  Cadbury, Jocelyn

  Fairgrieve, Russell

  Baker, Nicholas (North Dorset)

  Carlisle, John (Luton West)

  Faith, Mrs Sheila

  Banks, Robert

  Carlisle, Kenneth (Lincoln)

  Farr, John

  Beaumont-Dark, Anthony

  Carlisle, Rt Hon Mark (Runcorn)

  Fell, Anthony

  Bell, Ronald

  Chalker, Mrs Lynda

  Fenner, Mrs Peggy

  Bendall, Vivian

  Channon, Paul

  Finsberg, Geoffrey

  Benyon, Thomas (Abingdon)

  Chapman, Sydney

  Fisher, Sir Nigel

  Benyon, W. (Buckingham)

  Clark, Hon Alan (Plymouth, Sutton)

  Fletcher, Alexander (Edinburgh N)

  Best, Keith

  Clark, Dr William (Croydon South)

  Fookes, Miss Janet

  Bevan, David Gilroy

  Clarke, Kenneth (Rushcliffe)

  Forman, Nigel

  Biffen, Rt Hon John

  Clegg, Walter

  Fowler, Rt Hon Norman

  Biggs-Davison, John

  Cockeram, Eric

  Fox, Marcus

  Blackburn, John

  Colvin, Michael

  Fraser, Rt Hon H. (Stafford & St)

  Body, Richard

  Cope, John

  Fraser, Peter (South Angus)

  Bonsor, Sir Nicholas

  Cormack, Patrick

  Fry, Peter

  Boscawen, Hon Robert

  Corrie, John

  Galbraith, Hon T. G. D.

  Bottomley, Peter (Woolwich West)

  Costain, A. P.

  Gardiner, George (Reigate)

  Bowden, Andrew

  Cranborne, Viscount

  Gardner, Edward (South Fylde)

  Boyson, Dr Rhodes

  Critchley, Julian

  Garel-Jones, Tristan

  Braine, Sir Bernard

  Crouch, David

  Gilmour, Rt Hon Sir Ian

  Bright, Graham

  Dean, Paul (North Somerset)

  Goodhew, Victor

  Brinton, Tim

  Dickens, Geoffrey

  Goodlad, Alastair

  Brittan, Leon

  Dorrell, Stephen

  Gorst, John

  Brocklebank-Fowler, Christopher

  Douglas-Hamilton, Lord James

  Gow, Ian

  Brooke, Hon Peter

  Dover, Denshore

  Gower, Sir Raymond

  Brotherton, Michael

  du Cann, Rt Hon Edward

  Gray, Hamish

  Greenway, Harry

  Marland, Paul

  Sainsbury, Hon Timothy

  Grieve, Percy

  Marlow, Tony

  St. John-Stevas, Rt Hon Norman

  Griffiths, Eldon (Bury St Edmunds)

  Marshall, Michael (Arundel)

  Scott, Nicholas

  Griffiths, Peter (Portsmouth N)

  Marten, Neil (Banbury)

  Shaw, Gies (Pudsey)

  Grist, Ian

  Mates, Michael

  Shaw, Michael (Scarborough)

  Grylls, Michael

  Mather, Carol

  Shelton, William (Streatham)

  Gummer, John Selwyn

  Maude, Rt Hon Angus

  Shepherd, Colin (Hereford)

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

  Mawby, Ray

  Shepherd, Richard (Aldridge-Br'hills)

  Hamilton, Michael (Salisbury)

  Mawhinney, Dr Brian

  Shersby, Michael

  Hampson, Dr Keith

  Maxwell-Hyslop, Robin

  Silvester, Fred

  Hannam, John

  Mayhew, Patrick

  Sims, Roger

  Haselhurst, Alan

  Mellor, David

  Skeet, T. H. H.

  Hastings, Stephen

  Meyer, Sir Anthony

  Smith, Dudley (War. and Leam'ton)

  Havers, Rt Hon Sir Michael

  Miller, Hal (Bromsgrove & Redditch)

  Speed, Keith

  Hawksley, Warren

  Mills, Iain (Meriden)

  Speller, Tony

  Hayhoe, Barney

  Mills, Peter (West Devon)

  Spence, John

  Heath, Rt Hon Edward

  Miscampbell, Norman

  Sproat, Iain

  Heddle, John

  Moate, Roger

  Squire, Robin

  Henderson, Barry

  Molyneaux, James

  Stanbrook, Ivor

  Heseltine, Rt Hon Michael

  Monro, Hector

  Stanley, John

  Hicks, Robert

  Montgomery, Fergus

  Steen, Anthony

  Higgins, Rt Hon Terence L.

  Moore, John

  Stevens, Martin

  Hill, James

  Morris, Michael (Northampton, Sth)

  Stewart, Ian (Hitchin)

  Holland, Philip (Carlton)

  Morrison, Hon Charles (Devizes)

  Stewart, John (East Renfrewshire)

  Hooson, Tom

  Morrison, Hon Peter (City of Chester)

  Stokes, John

  Howe, Rt Hon Sir Geoffrey

  Mudd, David

  Stradling Thomas, J.

  Howell, Rt Hon David (Guildford)

  Murphy, Christopher

  Tapsell, Peter

  Howell, Ralph (North Norfolk)

  Myles, David

  Taylor, Robert (Croydon NW)

  Hunt, David (Wirral)

  Neale, Gerrard

  Tebbit, Norman

  Hunt, John (Ravensbourne)

  Needham, Richard

  Temple-Morris, Peter

  Hurd, Hon Douglas

  Nelson, Anthony

  Thomas, Rt Hon Peter (Hendon S)

  Irving, Charles (Cheltenham)

  Neubert, Michael

  Thompson, Donald

  Jenkin, Rt Hon Patrick

  Newton, Tony

  Thorne, Neil (Ilford South)

  Jessel, Toby

  Oppenheim, Rt Hon Mrs Sally

  Thornton, Malcolm

  Johnson Smith, Geoffrey

  Osborn, John

  Townend, John (Bridlington)

  Jopling, Rt Hon Michael

  page, John (Harrow, West)

  Joseph, Rt Hon Sir Keith

  Page, Rt Hon R. Graham (Crosby)

  Townsend, Cyril D. (Bexleyheath)

  Kaberry, Sir Donald

  Parkinson, Cecil

  Trippier, David

  Kershaw, Anthony

  Parris, Matthew

  Trotter, Neville

  Kilfedder, James A.

  Patten, Christopher (Bath)

  van Straubenzee, W. R.

  Kimball, Marcus

  patten, John (Oxford)

  Vaughan, Dr Gerard

  Knight, Mrs Jill

  Pattie, Geoffrey

  Viggers, Peter

  Knox, David

  Pawsey, James

  Waddington, David

  Lamont, Norman

  Percival, Sir Ian

  Wakeham, John

  Lang, Ian

  Peyton, Rt Hon John

  Waldegrave, Hon. William

  Langford-Holt, Sir John

  Pink, R. Bonner

  Walker, Rt Hon Peter (Worcester)

  Latham, Michael

  Pollock, Alexander

  Walker, Bill (Perth & E Perthshire)

  Lawrence Ivan

  Porter, George

  Walker-Smith, Rt Hon Sir Derek

  Lawson, Nigel

  Powell, Rt Hon J. Enoch (S Down)

  Wall, Patrick

  Lee, John

  Prentice, Rt Hon Reg

  Waller, Gary

  Lester, Jim (Beeston)

  price, David (Eastleigh)

  Walters, Dennis

  Lewis, Kenneth (Rutland)

  prior, Rt Hon James

  Ward, John

  Lloyd, Ian (Havant & Waterloo)

  Proctor, K. Harvey

  Watson, John

  Lloyd, Peter (Fareham)

  Pym, Rt Hon Francis

  Wells, John (Maidstone)

  Loveridge, John

  Raison, Timothy

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

  Luce, Richard

  Rathbone, Tim

  Wheeler, John

  Lyell, Nicholas

  Rees, peter (Dover and Deal)

  Whitney, Raymond

  McAdden, Sir Stephen

  Rees-Davies, W. R.

  Wickenden, Keith

  McCrindle, Robert

  Renton, Tim

  Wilkinson, John

  McCusker, H.

  Rhodes James, Robert

  Williams, Delwyn (Montgomery)

  Macfarlane, Neil

  Ridley, Hon Nicholas

  Winterton, Nicholas

  MacGregor, John

  Rifkind, Malcolm

  Wolfson, Mark

  MacKay, John (Argyll)

  Rippon, Rt Hon Geoffrey

  Young, Sir George (Acton)

  McNair-Wilson, Michael (Newbury)

  Roberts, Michael (Cardiff NW)

  Younger, Rt Hon George

  McNair-Wilson, Patrick (New Forest)

  Roberts, Wyn (Conway)

  McQuarrie, Albert

  Ross, Wm. (Londonderry)

  TELLERS FOR THE NOES:

  Madel, David

  Rost, Peter

  Mr. Spencer Le Marchaot and

  Major, John

  Royle, Sir Anthony

  Mr. Anthony Berry.

  Question accordingly negatived.
  Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 32 (Questions on amendments).
  The House divided: Ayes 313, Noes 242.

  Division No. 96]

  AYES

  [10.15 pm

  Adley, Robert

  Dykes, Hugh

  Kimball, Marcus

  Aitken, Jonathan

  Eden, Rt Hon Sir John

  Knight, Mrs Jill

  Alexander, Richard

  Edwards, Rt Hon N. (Pembroke)

  Knox, David

  Alton, David

  Eggar, Timothy

  Lamont, Norman

  Amery, Rt Hon Julian

  Elliott, Sir William

  Lang, Ian

  Ancram, Michael

  Emery, Peter

  Langford-Holt, Sir John

  Arnold, Tom

  Eyre, Reginald

  Latham, Michael

  Aspinwall, Jack

  Fairbairn, Nicholas

  Lawrence Ivan

  Atkins, Rt Hon H. (Spelthorne)

  Fairgrieve, Russell

  Lawson, Nigel

  Atkins, Robert (Preston North)

  Faith, Mrs Sheila

  Lee, John

  Atkinson, David (Bournemouth, East)

  Farr, John

  Lester, Jim (Beeston)

  Baker, Kenneth (St. Marylebone)

  Fell, Anthony

  Lewis, Kenneth (Rutland)

  Baker, Nicholas (North Dorset)

  Fenner, Mrs Peggy

  Lloyd, Ian (Havant & Waterloo)

  Banks, Robert

  Finsberg, Geoffrey

  Lloyd, Peter (Fareham)

  Beaumont-Dark, Anthony

  Fisher, Sir Nigel

  Loveridge, John

  Beith, A. J.

  Fletcher, Alexander (Edinburgh N)

  Luce, Richard

  Bell, Ronald

  Fookes, Miss Janet

  Lyell, Nicholas

  Bendall, Vivian

  Forman, Nigel

  McAdden, Sir Stephen

  Benyon, Thomas (Abingdon)

  Fowler, Rt Hon Norman

  McCrindle, Robert

  Benyon, W. (Buckingham)

  Fox, Marcus

  McCusker, H.

  Best, Keith

  Fraser, Rt Hon H. (Stafford & St)

  Macfarlane, Neil

  Bevan, David Gilroy

  Fraser, Peter (South Angus)

  MacGregor, John

  Biffen, Rt Hon John

  Freud, Clement

  MacKay, John (Argyll)

  Biggs-Davison, John

  Fry, Peter

  McNair-Wilson, Michael (Newbury)

  Blackburn, John

  Galbraith, Hon T. G. D.

  McNair-Wilson, Patrick (New Forest)

  Body, Richard

  Gardiner, George (Reigate)

  McQuarrie, Albert

  Bonsor, Sir Nicholas

  Gardner, Edward (South Fylde)

  Madel, David

  Boscawen, Hon Robert

  Garel-Jones, Tristan

  Major, John

  Bottomley, Peter (Woolwich West)

  Gilmour, Rt Hon Sir Ian

  Marland, Paul

  Bowden, Andrew

  Goodhew, Victor

  Marlow, Tony

  Boyson, Dr Rhodes

  Goodlad, Alastair

  Marshall, Michael (Arundel)

  Braine, Sir Bernard

  Gorst, John

  Marten, Neil (Banbury)

  Bright, Graham

  Gow, Ian

  Mates, Michael

  Brinton, Tim

  Gower, Sir Raymond

  Mather, Carol

  Brittan, Leon

  Gray, Hamish

  Maude, Rt Hon Angus

  Brocklebank-Fowler, Christopher

  Greenway, Harry

  Mawby, Ray

  Brooke, Hon Peter

  Grieve, Percy

  Mawhinney, Dr Brian

  Brotherlon, Michael

  Griffiths, Eldon (Bury St Edmunds)

  Maxwell-Hyslop, Robin

  Brown, Michael (Brigg & Sc'thorpe)

  Griffiths, Peter (Portsmouth N)

  Mayhew, Patrick

  Browne, John (Winchester)

  Grist, Ian

  Mellor, David

  Bruce-Gardyne, John

  Grylls, Michael

  Meyer, Sir Anthony

  Bryan, Sir Paul

  Gummer, John Selwyn

  Miller, Hal (Bromsgrove & Redditch)

  Buck, Antony

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

  Mills, Iain (Meriden)

  Budgen, Nick

  Hamilton, Michael (Salisbury)

  Mills, peter (West Devon)

  Bulmer, Esmond

  Hampson, Dr Keith

  Miscampbell, Norman

  Burden, F. A.

  Hannam, John

  Moate, Roger

  Butcher, John

  Haselhurst, Alan

  Molyneaux, James

  Butler, Hon Adam

  Hastings, Stephen

  Monro, Hector

  Cadbury, Jocelyn

  Havers, Rt Hon Sir Michael

  Montgomery, Fergus

  Carlisle, John (Luton West)

  Hawksley, Warren

  Moore, John

  Carlisle, Kenneth (Lincoln)

  Hayhoe, Barney

  Morris, Michael (Northampton, Sth)

  Carlisle, Rt Hon Mark (Runcorn)

  Heath, Rt Hon Edward

  Morrison, Hon Charles (Devizes)

  Chalker, Mrs Lynda

  Heddle, John

  Morrison, Hon Peter (City of Chester)

  Channon, Paul

  Henderson, Barry

  Mudd, David

  Chapman, Sydney

  Heseltine, Rt Hon Michael

  Murphy, Christopher

  Clark, Hon Alan (Plymouth, Sutton)

  Hicks, Robert

  Myles, David

  Clark, Dr William (Croydon South)

  Higgins, Rt Hon Terence L.

  Neale, Gerrard

  Clarke, Kenneth (Rushcliffe)

  Hill, James

  Needham, Richard

  Clegg, Walter

  Holland, Philip (Carlton)

  Nelson, Anthony

  Cockeram, Eric

  Hooson, Tom

  Neubert, Michael

  Colvin, Michael

  Howe, Rt Hon Sir Geoffrey

  Newton, Tony

  Cope, John

  Howell, Rt Hon David (Guildford)

  Oppenheim, Rt Hon Mrs Sally

  Cormack, Patrick

  Howell, Ralph (North Norfolk)

  Osborn, John

  Corrie, John

  Hunt, David (Wirral)

  page, John (Harrow, West)

  Costain, A. P.

  Hunt, John (Ravensbourne)

  Page, Rt Hon R. Graham (Crosby)

  Cranborne, Viscount

  Hurd, Hon Douglas

  Parkinson, Cecil

  Critchley, Julian

  Irving, Charles (Cheltenham)

  Parris, Matthew

  Crouch, David

  Jenkin, Rt Hon Patrick

  Patten, Christopher (Bath)

  Dean, Paul (North Somerset)

  Jessel, Toby

  patten, John (Oxford)

  Dickens, Geoffrey

  Johnson Smith, Geoffrey

  Pattie, Geoffrey

  Dorrell, Stephen

  Johnston, Russell (Inverness)

  Pawsey, Jamas

  Douglas-Hamilton, Lord James

  Jopling, Rt Hon Michael

  Penhaligon, David

  Dover, Denshore

  Joseph, Rt Hon Sir Keith

  Percival, Sir Ian

  du Cann, Rt Hon Edward

  Kaberry, Sir Donald

  Peyton, Rt Hon John

  Dunn, Robert (Dartford)

  Kershaw, Anthony

  Pink, R. Bonner

  Durant, Tony

  Kilfedder, James A.

  Pollock, Alexander

  Porter, George

  Silvester, Fred

  van Straubenzee, W. R.

  Powell, Rt Hon J. Enoch (S Down)

  Sims, Roger

  Vaughan, Dr Gerard

  Prentice, Rt Hon Reg

  Skeet, T. H. H.

  Viggers, peter

  Price, David (Eastleigh)

  Smith, Cyril (Rochdale)

  Waddington, David

  Prior, Rt Hon James

  Smith, Dudley (War. and Leam'ton)

  Wakeham, John

  Proctor, K. Harvey

  Speed, Keith

  Waldegrave, Hon. William

  Pym, Rt Hon Francis

  Speller, Tony

  Walker, Rt Hon peter (Worcester)

  Raison, Timothy

  Spence, John

  Walker, Bill (Perth & E Perthshire)

  Rathbone, Tim

  Sproat, Iain

  Walker-Smith, Rt Hon Sir Derek

  Rees, Peter (Dover and Deal)

  Squire, Robin

  Wall, Patrick

  Rees-Davies, W. R.

  Stanbrook, Ivor

  Waller, Gary

  Renton, Tim

  Stanley, John

  Walters, Dennis

  Rhodes James, Robert

  Steen, Anthony

  Ward, John

  Ridley, Hon Nicholas

  Stevens, Martin

  Watson, John

  Rifkind, Malcolm

  Stewart, Ian (Hitchin)

  Wells, John (Maidstone)

  Rippon, Rt Hon Geoffrey

  Stewart, John (East Renfrewshire)

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

  Roberts, Michael (Cardiff NW)

  Stokes, John

  Wheeler, John

  Roberts, Wyn (Conway)

  Stradling Thomas, J.

  Whitney, Raymond

  Ross, Wm. (Londonderry)

  Tapsell, Peter

  Wickenden, Keith

  Rost, Peter

  Taylor, Robert (Croydon NW)

  Wilkinson, John

  Royle, Sir Anthony

  Tebbit, Norman

  Williams, Delwyn (Montgomery)

  Sainsbury, Hon Timothy

  Temple-Morris, Peter

  Winterton, Nicholas

  St. John-Stevas, Rt Hon Norman

  Thomas, Rt Hon Peter (Hendon S)

  Wolfson, Mark

  Scott, Nicholas

  Thompson, Donald

  Young, Sir George (Acton)

  Shaw, Gies (Pudsey)

  Thorne, Neil (Ilford South)

  Younger, Rt Hon George

  Shaw, Michael (Scarborough)

  Thornton, Malcolm

  Shelton, William (Streatham)

  Townend, John (Bridlington)

  TELLERS FOR THE AYES:

  Shepherd, Colin (Hereford)

  Townsend, Cyril D. (Bexleyheath)

  Mr. Spencer Le Marchant and

  Shepherd, Richard (Aldridge-Br'hills)

  Trippier, David

  Mr. Anthony Berry.

  Shersby, Michael

  Trotter, Neville

  NOES

  Abse, Leo

  Dempsey, James

  Home Robertson, John

  Adams, Allen

  Dewar, Donald

  Homewood, William

  Allaun, Frank

  Dixon, Donald

  Hooley, Frank

  Anderson, Donald

  Dobson, Frank

  Horam, John

  Archer, Rt Hon Peter

  Dormand, Jack

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

  Armstrong, Rt Hon Ernest

  Douglas, Dick

  Huckfield, Les

  Ashley, Rt Hon Jack

  Douglas-Mann, Bruce

  Hughes, Mark (Durham)

  Ashton, Joe

  Dubs, Alfred

  Hughes, Robert (Aberdeen North)

  Barnett, Guy (Greenwich)

  Duffy, A. E. P.

  Hughes, Roy (Newport)

  Barnett, Rt Hon Joel (Heywood)

  Dunn, James A. (Liverpool, Kirkdale)

  Janner, Hon Greville

  Bennett, Andrew (Stockport N)

  Dunnelt, Jack

  Jay, Rt Hon Douglas

  Bidwell, Sydney

  Dunwoody, Mrs Gwyneth

  John, Brynmor

  Booth, Rt Hon Albert

  Eadie, Alex

  Johnson, James (Hull West)

  Boothroyd, Miss Betty

  Eastham, Ken

  Johnson, Walter (Derby South)

  Bottomley, Rt Hon Arthur (M'brough)

  Edwards, Robert (Wolv SE)

  Jones, Barry (East Flint)

  Bradley, Tom

  Ellis, Raymond (NE Derbyshire)

  Jones, Dan (Burnley)

  Bray, Dr Jeremy

  Ellis, Tom (Wrexham)

  Kaufman, Rt Hon Gerald

  Brown, Hugh D. (Provan)

  English, Michael

  Kilroy-Silk, Robert

  Brown, Robert C. (Newcastle W)

  Ennals, Rt Hon David

  Kinnock, Neil

  Brown, Ronald W. (Hackney S)

  Evans, Ioan (Aberdare)

  Lambie, David

  Brown, Ron (Edinburgh, Leith)

  Evans, John (Newton)

  Lamborn, Harry

  Buchan, Norman

  Ewing, Harry

  Lamond, James

  Callaghan, Rt Hon J. (Cardiff SE)

  Field, Frank

  Leadbitter, Ted

  Callaghan, Jim (Middleton & P)

  Fitch, Alan

  Leighton, Ronald

  Campbell, Ian

  Flannery, Martin

  Lestor, Miss Joan (Elton & Slough)

  Campbell-Savours, Dale

  Fletcher, L. R. (Ilkeston)

  Lewis, Ron (Carlisle)

  Canavan, Dennis

  Fletcher, Ted (Darlington)

  Litherland, Robert

  Cant, R. B.

  Ford, Ben

  Lofthouse, Geoffrey

  Carmichael, Neil

  Forrester, John

  Lyon, Alexander (York)

  Cartwright, John

  Foster, Derek

  Mabon, Rt Hon Dr J. Dickson

  Clark, David (South Shields)

  Foulkes, George

  McCartney, Hugh

  Cocks, Rt Hon Michael (Bristol S)

  Fraser, John (Lambeth, Norwood)

  McDonald, Dr Oonagh

  Cohen, Stanley

  Freeson, Rt Hon Reginald

  McGuire, Michael (Ince)

  Coleman, Donald

  Garrett, John (Norwich S)

  McKay, Allen (Penistone)

  Concannon, Rt Hon J. D.

  Garrett, W. E. (Wallsend)

  McKelvey, William

  Conlan, Bernard

  George, Bruce

  MacKenzie, Rt Hon Gregor

  Cook, Robin F.

  Gilbert, Rt Hon Dr John

  Maclennan, Robert

  Cowans, Harry

  Ginsburg, David

  McNally, Thomas

  Craigen, J. M. (Glasgow, Maryhill)

  Gourlay, Harry

  Magee, Bryan

  Crowther, J. S.

  Graham, Ted

  Marks, Kenneth

  Cryer, Bob

  Grant, George (Morpeth)

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

  Cunliffe, Lawrence

  Grant, John (Islington C)

  Marshall, Dr Edmund (Goole)

  Cunningham, George (Islington S)

  Hamilton, James (Bothwell)

  Marshall, Jim (Leicester South)

  Cunningham, Dr John (Whitehaven)

  Hamilton, W. W. (Central Fife)

  Mason, Rt Hon Roy

  Dalyell, Tam

  Harrison, Rt Hon Walter

  Maxton, John

  Davidson, Arthur

  Hart, Rt Hon Dame Judith

  Maynard, Miss Joan

  Davies, Rt Hon Denzil (Lianelli)

  Hattersley, Rt Hon Roy

  Meacher, Michael

  Davies, Ifor (Gower)

  Haynes, Frank

  Mellish, Rt Hon Robert

  Davis, Clinton (Hackney Central)

  Healey, Rt Hon Denis

  Mikardo, Ian

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

  Heffer, Eric S.

  Millan, Rt Hon Bruce

  Deakins, Eric

  Hogg, Norman (E Dunbartonshire)

  Mitchell, Austin (Grimsby)

  Dean, Joseph (Leeds West)

  Holland, Stuart (L'beth, Vauxhall)

  Mitchell, R. C. (Soton, Itchen)

  Morris, Rt Hon Alfred (Wythenshawe)

  Rodgers, Rt Hon William

  Thomas, Dr Roger (Carmarthen)

  Morris, Rt Hon Charles (Openshaw)

  Rooker, J. W.

  Thorne, Stan (Preston South)

  Morris, Rt Hon John (Aberavon)

  Roper, John

  Tilley, John

  Moyle, Rt Hon Roland

  Ross, Ernest (Dundee West)

  Torney, Tom

  Mulley, Rt Hon Frederick

  Rowlands, Ted

  Urwin, Rt Hon Tom

  Newens, Stanley

  Ryman, John

  Varley, Rt Hon Eric G.

  Oakes, Rt Hon Gordon

  Sandelson, Neville

  Wainwright, Edwin (Dearne Valley)

  O'Halloran, Michael

  Sever, John

  Walker, Rt Hon Harold (Doncaster)

  O'Neill, Martin

  Sheerman, Barry

  Watkins, David

  Orme, Rt Hon Stanley

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

  Weetch, Ken

  Owen, Rt Hon Dr David

  Shore, Rt Hon peter (Step and Pop)

  Wellbeloved, James

  Palmer, Arthur

  Short, Mrs Renée

  Welsh, Michael

  Park, George

  Silkin, Rt Hon John (Deptford)

  White, Frank R. (Bury & Radcliffe)

  Parker, John

  Silkin, Rt Hon S.C. (Dulwich)

  White, James (Glasgow, Pollok)

  Parry, Robert

  Silverman, Julius

  Whitlock, William

  Pavitt, Laurie

  Skinner, Dennis

  Willey, Rt Hon Frederick

  Pendry, Tom

  Snape, Peter

  Williams, Rt Hon Alan (Swansea W)

  Powell, Raymond (Ogmore)

  Soley, Clive

  Williams, Sir Thomas (Warrington)

  Prescott, John

  Spearing, Nigel

  Wilson, Gordon (Dundee East)

  Price, Christopher (Lewisham West)

  Spriggs, Leslie

  Wilson, Rt Hon Sir Harold (Huyton)

  Race, Reg

  Stallard, A. W.

  Wilson, William (Coventry SE)

  Radice, Giles

  Stewart, Rt Hon Donald (W Isles)

  Winnick, David

  Rees, Rt Hon Merlyn (Leeds South)

  Stoddart, David

  Woolmer, Kenneth

  Richardson, Miss Jo

  Stott, Roger

  Wrigglesworth, Ian

  Roberts, Albert (Normanton)

  Strang, Gavin

  Wright, Sheila

  Roberts, Allan (Bootle)

  Straw, Jack

  Young, David (Bolton East)

  Roberts, Ernest (Hackney North)

  Summerskill, Hon Dr Shirley

  Roberts, Gwilym (Cannock)

  Taylor, Mrs Ann (Bolton West)

  TELLERS FOR THE NOES:

  Robertson, George

  Thomas, Jeffrey (Abertillery)

  Mr. George Morton and

  Robinson, Geoffrey (Coventry NW)

  Thomas, Mike (Newcastle East)

  Mr. James Tinn.

  Question accordingly agreed to.
  Mr. SPEAKER forthwith declared the main Question, as amended, to be agreed to, pursuant to Standing Order No. 18 (Business of Supply).
  Resolved,
  That this House believes that the future of the steel industry depends on much improved productivity, efficient use of costly investments, and an early return to profitability.

  BUSINESS OF THE HOUSE
  Ordered,
  That at this day's sitting the motion relating to Members' Interests may be proceeded with, though opposed, until half-past Eleven o'clock or for one and a half hours after it has been entered upon, whichever is the later.—[Mr. Wakeham.]

  MEMBERS' INTERESTS
  Mr. Speaker: Before I call on the Minister to move the motion relating to Members' interests, I should tell the House that I have not selected either of the amendments to it. However, I shall be prepared to allow reference to be made to the second amendment in a general debate and I propose that the part of the motion relating to names be debated as a whole. The Question on those names will be put at its conclusion. Is that agreeable to the House?
  Hon. Members: Yes.
  Mr. Speaker: As long as the House understands what it is doing. There will be one vote on all the names.
  10.29 pm
  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. Robert Adley, Mr. Joe Ashton, Mr. Andrew Bennett, Mr. R. B. Cant, Mr. Tony Durant, Sir Nigel Fisher, Mr. Percy Grieve, Mr. Geoffrey Johnson Smith, Mr. David Madel, Mr. Charles R. Morris, Mr. Arthur Palmer, Mr. Michael Shaw, and Mr. Frederick Willey, be members of the Select Committe on Members' Interests.
  The motion proposes the membership, for this Parliament, of the Select Committee that supervises the compilation by the Registrar of the register of Members' outside financial interests, to which the House agreed in 1975. It advises the House, as necessary, on problems and queries that arise.
  As the House is aware, it had been my hope that this Committee would have been fully established before the Summer Recess. On 18 July, the House agreed that a Committee on Members' interests should be established but there were objections to the proposed membership of the Committee. In view of the objections
  542
  that were then raised, I should like, in introducing the motion, to make one or two brief points with reference to the arguments against the proposed membership that have been made by the hon. Member for Keighley (Mr. Cryer).
  I emphasise that the decision taken by the House in 1975 to set up a register of Members' outside financial interests did not imply in any way that the House was opposed in principle to Members having such outside financial interests. It provided only that such interests should be made known to the House and to the general public. I recognise that there are those in the House who are strongly of the view that Members should not have any occupation other than their membership. I respect that view, although I do not share it. But that is not the issue before the House tonight.
  On the question whether it should be for the Committee of Selection to make nominations to this Committee, I remind the House that we agreed only recently that members of the new departmental Committees should first be proposed to the House by the Committee of Selection. It has still to be seen how this decision works out in practice. I suggest that we defer any further changes in the traditional method of nomination to Select Committees until we have seen how the new procedure is working.
  I recognise that the whole system of this register, its scope and methods of enforcement, is very much a compromise. Some hon. Members would undoubtedly like to see financial interests defined in much more detail. Others, no doubt, consider that the present arrangements are an undesirable intrusion into privacy. That is, in fact, the essence of the compromise. I accordingly ask all hon. Members to co-operate in accepting the decision of the House and in making the register as effective as possible. This Select Committee is an essential part of these arrangements. I invite the House tonight to agree to the membership proposed in this motion. I shall listen carefully to any points that hon. Members raise.
  10.33 pm
  Mr. Bob Cryer: I shall not detain the House for long, but a number of important points have to be made. It is deeply disappointing that an amendment to the Government's motion, signed

  543
  by nearly 50 Back Benchers, has not been called. That would have enabled us to discuss, possibly in wider terms, the job of the Committee of Selection, which should be competent to deal with the task entrusted to it of selecting a Committee in the terms laid down on the Order Paper. I feel that Back Benchers should have some right to participate in the framework of the agenda of this House and that their representations should be heard and debated through amendments that are tabled.
  I should like to relate the background of the establishment of the Select Committee on Members' interests to my present concern. The Committee was first established as long ago as 1969. Little was done towards drawing up a register until 22 May 1974, when Parliament agreed to start a register and the Select Committee on Members' interests was asked to draw up provisions.
  That five-year gap is an extraordinary length of time for a Committee of this House to exist and fail to produce anything. As is so often the case, lamentably, it was spurred into action not by anything that occurred in the House but by what went on outside, for at the beginning of 1974 there was a great volume of press material about the amount of corruption that was going on in both local and central Government, including the House of Commons. It was for that reason that the previous Select Committee was established and entrusted with the task of drawing up the register.
  It should not be left to people outside to put pressure on Parliament to do something; Parliament ought to exert standards to produce a sufficient amount of scrutiny without any eruption from outside forcing action to be taken. But that happens all too often.
  During the same period, the Royal Commission on standards of conduct in public life was set up in December 1974 because of further revelations of local and national affairs. Its report was presented to the House in July 1976, and it is a minor scandal in itself that it has never been debated by the House. It is continuing evidence of too careless an attitude to an issue which concerns the public very deeply. The report cost £300,000 to produce, and surely the least we could
  544
  have done was to examine the recommendations that the Royal Commission made. For example, in paragraph 311 it made a specific recommendation with regard to Members of the House of Commons. It said:
  "Nevertheless in view of our report as a whole, and especially in the light of the points set out in the foregoing paragraph, we recommend that Parliament should consider bringing corruption, bribery and attempted bribery of a Member of Parliament acting in his parliamentary capacity within the ambit of the criminal law. Our recommendation is limited to this single point, and we do not raise any questions about other aspects of Parliamentary privilege and related matters."
  The Royal Commission there made a specific recommendation, and I cannot recall that the previous Select Committee ever raised the issue before the House as a matter that should be debated. One of my reservations about the Select Committee is that it does not seem to have acted with the zeal and urgency that I and others think should be involved.
  Of course, from 1976 onwards, the Select Committee's membership was a six-six stalemate, reflecting the position in the House between the Labour Government and the Opposition parties at the time. But it did have wide powers, and the resolution establishing it was couched in terms identical to the resolution which the House passed on 18 July last.
  The Select Committee should have brought forward recommendations for improvement. For example, the register was published on only two occasions. Surely the Committee should have maintained publication whatever arguments it might have had with individual Members. That issue was a red herring. The main thing was to publish the register to ensure that Parliament could be seen to be laying everything out openly if members of the public chose to examine the financial involvements of Members. Quite apart from being published only on those two occasions, the register was less than adequate, and the Select Committee failed to bring forward recommendations to improve its adequacy.
  Mr. Robert Atkins: In view of the continuing interest of the hon. Gentleman and of many of his hon. Friends in the register of Members' interests, would he be prepared to accept further matters worthy of public scrutiny being added to it—for example, where

  545
  Members educate their children, or whether they purchase a council house, or even perhaps the extent of the financial support that they get from trade unions? That is something that I would like to know.
  Mr. Cryer: I shall deal with those additional matters that the Committee is empowered to look at. The hon. Member may jibe about trade union sponsorship, but if he examines the register he will find that hon. Members have been scrupulous in entering their interests. I would have no objection to Members discussing whether the register should include details of schools and the property in which hon. Members live. That has not happened. The scope of the register has never been discussed on the Floor of the House in the way that it should be.
  For example, Lord Lever, a former Member of this House, has a fair amount of personal wealth. His entry in the register was "Nil". That is less than satisfactory. Mr. Arthur Jones, a former hon. Member, had 36 company directorships. The register contained no indication of the revenue that he received from those directorships. This is a relevant and important point. We should not talk in the cosy and jokey terms used by Tory Members when we discuss outside financial interests. People outside this place have a right to know whether hon. Members have a deep financial involvement when they make decisions in this House.
  Let me remind hon. Members on the Government Benches, who make little jokes about this matter, that three or four years ago nobody in this place was smiling about the financial involvement issue, because the press then rendered one of its few services to the nation by exposing the financial corruption among Members of Parliament and those in local government. There was an improvement as a result of that, and the register was introduced.
  It is complacent to think that it could never happen again. If it does, the smiles will quickly be wiped off many faces. Why does the register not include the Lobby correspondents' interests? It is not widely known that until recently there was no rule in the Lobby that prohibited a correspondent from being employed by a public relations organisation. It was possible for an hon. Member to be asked
  546
  to ring a Lobby correspondent, who appeared to be a member of the press but was acting for a public relations company. I understand that the Lobby has recently introduced a rule forbidding that. So much the better. These are important interests close to the most important assembly in the country.
  The Committee should consider whether its Members should also register their financial interests. Should hon. Members declare an interest at Question Time, or when they table private Members' motions? The House has rejected the idea in the past, but I think that it is something that should be under continuous scrutiny. There is no doubt that there are moments during Question Time when certain matters are raised and one can see financial interests reflected—coincidentally or deliberately—by the hon. Members involved.
  We had an example recently in the case of the Royal Commission's report on legal services. There was hardly room in the House for lawyers asking questions. They were popping up one after the other—solicitors, Queen's counsel and banisters, all of whom were deeply involved and interested in the report. Should not those interests be declared even when an hon. Member is less well known than, say, a barrister who is appearing in court regularly, or is an obscure property developer asking a question in a similar context?
  Mr. Alexander W. Lyon: I gave up my practice after the election, so I do not have to declare an interest. How far does my hon. Friend intend to go? Are we to declare any interest that will prejudice our judgment of an issue before the House? If so, does my hon. Friend suggest that homosexuals should declare their interest in relation to the lowering of the age of consent?
  Mr. Cryer: I am talking about the area of activity into which the Committee should inquire. My hon. Friends may joke about the issue.—[HON. MEMBERS: "It is no joke."]—A sexual interest is not a financial interest. The Committee has not considered sexual interests. A scrupulous register which provides relevant and important information and is published regularly will achieve much. After that we might consider the finer, philosophical matters raised by my hon. Friend the Member for York (Mr. Lyon).

  547
  I want an up-to-date register published regularly containing a reasonable amount of relevant comprehendable information. Why has not the Committee extended its scope? Why has it not considered including such people as Lobby correspondents in the register? I hope that tonight's debate will be a salutary guide to the Committee. Should it consider the rules governing senior civil servants, for example? Concern has been expressed about permanent secretaries such as Sir Anthony Part leaping neatly from the Department of Industry to the chairmanship of Lucas.
  Other senior civil servants have received approval for breaches of the rules under Governments of either party. I deprecate such approval whether it is given by a Labour Government or a Conservative Government. They have moved into jobs where they could use important and valuable information gained when they were civil servants.
  My hon. Friend the Member for York raised one question rather more neatly than that which he asked a moment ago. He said that business men seem antagonistic to civil servants and yet they are only too eager to buy senior civil servants when they retire and to put them into their board rooms. Why is that, unless the civil servants have useful information gained in national service?
  Mr. John Bruce-Gardyne: I have some sympathy with the argument about the movement of civil servants out of Whitehall into private industry. How in God's name will a register foretell the jobs which civil servants will take when they retire?
  Mr. Cryer: That is not the point. The Committee has powers to consider. If the hon. Member for Knutsford (Mr. Bruce-Gardyne) had read the motion approved by the House on 18 July, he would have seen that the Committee is empowered to make recommendations on any relevant matters. That gives it scope. All I am doing is describing the concern which will remain unless there is further scrutiny.
  In many areas of this sort of activity, local authorities—Conservative-controlled in some instances—set a far better example. For instance, my own local authority of Bradford requires all coun-
  548
  cil members to register their shareholdings, directorships and savings, and their wives' shareholdings and any directorships. The Labour group there imposes an even stricter voluntary code on top of that. During council or panel meetings, any pecuniary interests must be declared. and anyone who declares them does not take part in the debate.
  I am told by a councillor colleague of mine that today, for example, a solicitor member of the council who was advising a club applying for a grant was debarred from a meeting because he had given the club advice. The authority was one of the authorities involved in the Poulson tentacles, when members faced prosecution. It has instituted a vigorous and rigorous examination, which seems to work.
  A Committee with a majority of members having financial interests is likely not to show zeal for considering wider applications for scrutiny. I do not say that those on the Committee, with or without financial interests, will not act with the utmost integrity, but we have another aspect to consider. Matters of financial action must be seen to be clear and open. If hon. Members, acting in the best interests of Parliament and the nation, as they see them, suggest that something should be diminished or that some information should be removed, it will not be seen by people outside like that if those hon. Members have private financial interests. People will say "They are trying to cover the matter up", even though those hon. Members having outside financial interests may put them completely to one side and genuinely say "We have taken this route because we really think that it is the best".
  Secondly, an active Select Committee would want to consider encouraging full-time membership of the House. I would prefer to see a Select Committee of this nature dominated by those who are prepared to consider a job on £10,000 a year, and increasing, as a full-time job.
  Against that, there is the argument that we must have some experience in the House through directorships and parliamentary adviserships outside, but no hon. Member thinks that the miners' case goes by default because nobody comes in to the House fresh from the morning shift down Glapwell colliery, or wherever.

  549
  Apparently, however, it seems to be necessary for people to come fresh from the board rooms. Nobody argues that hon. Members should come fresh from an engineering workshop, or from doing plumbing maintenance, or anything of that nature. People say "That is not terribly relevant".
  I have not heard one Conservative hon. Member argue that people should undertake skilled or unskilled manual labour, part-time, as a necessary pre-condition of their membership of the House. The only argument that the Conservatives put forward is that their experience should be gained in the board rooms or in some other occupation which, by happy chance, is always extremely well remunerated. The fact is that most of their constituents, and most of ours, receive smaller wages than we do. If they were offered jobs working full-time at around £10,000 most of them would say "I am prepared to dedicate my full time and my full effort to that job".
  It is not the Opposition side of the House that has double standards; it is the Conservative side. The Conservatives have double standards in arguing that they can have a full-time job and outside interests as well.
  Mr. Alexander W. Lyon: I accept the logic of what my hon. Friend says. Surely we should now campaign for full-time professional Members of Parliament instead of going along with the nonsense that all Members should expose their private lives to the view of a scurrilous press that has no effect upon public life except to demean it.
  Mr. Cryer: I know that my hon. Friend takes the view that there should not be a register and that this is pandering to the press. I disagree. I accept the point entirely that we should have full-time membership of the House of Commons, and this is one way in which we can move towards it and not away from it. If full-time Members were in the majority on this Committee they would be more likely to bring forward recommendations that would produce that sort of result.
  Mr. John Heddle: Would the hon. Member define his idea of "full-time"? Most of us have already worked a 15-hour day today, yet we are still here at 10.55 pm. We consider that we are all here full-time.
  Mr. Cryer: I think that most people understand the ordinary, common meaning of the term as it is applied to Parliament. That is the sort of thing that could be debated by the Committee in examining this issue carefully.
  Many hon. Members will complain about Parliament's being brought into disrepute, and about criticisms being made of Parliament, with the help of a press whose members are not exactly fulltime themselves, by people who do it simply because they want an institution to attack. It is worth pointing out that Parliament itself has a duty to ensure adequate scrutiny of such aspects.
  However much one might criticise the press for its deficiencies—and hon. Members on the Labour Benches fight the press much more often than do Conservatives—there are times when it manages to expose some sort of corruption or misplaced or wrong influence. On some occasions it has performed a service, and hon. Members should bear that in mind.
  In my view this Committee would be better with a majority of hon. Members who do not have outside financial interests. However, I hope that this debate—it has taken a great deal of effort to get it—will show the importance of the House's being seen to examine this matter. Thus, members of the public will not be able to say that we are indifferent. By examining it, we show that we have some measure of concern. We show that there is an element in Parliament that is not complacent and that will not just sit back and simply accept the Government's recommendations. I hope that the Committee will take note of this debate and make some recommendations along the lines that I have put forward.
  10.58 pm
  Mr. William van Straubenzee: Until the last 15 minutes of the speech of the hon. Member for Keighley (Mr. Cryer) I found myself agreeing with him. I warmly support the motion, and add just three comments.
  First, in my personal judgment the justification for outside interests of any kind at present is that progressively over the years there has been a steady increase of power at the centre of all our political parties. For example, we have seen this done financially by way of successive Government grants and grants given by

  551
  this House to the leaders of the Opposition parties, which is appropriate but which has increased the power of their patronage.
  I truncate a fairly complicated argument into one sentence, but I believe that the justification for having hon. Members on both sides of the House who are not solely dependent upon their parliamentary salaries is precisely to provide something of a balance against that increasing centralisation of power which rests with all party leaderships.
  Secondly, as I think the hon. Member for Keighley would agree, as one who has consistently spoken in favour of this register and has consistently pressed for it, the reason why I have done so is not—most emphatically not—that I believe that on either side of the House an appreciable number of hon. Members are engaged in an activity that is deleterious to the standing of this House. There are exceptions, of course, but the vast majority of hon. Members honourably perform their duties to it and do so quite regardless of any financial consideration. That has never been the reason why I have been in favour of this register.
  Thirdly, in recent years there has grown a new dimension in the whole of this business. Until recently, all persons performing in any kind of professional life were on registers, and still are. Any person performing in the life of a company could be looked up in a register—quite correctly—and they still are. But because Parliament, under all Governments, has increasingly concerned itself with the day-to-day life of business and commerce, there has grown up the business of the parliamentary adviser.
  I know of no better exposition of the work of the parliamentary adviser than a recent admirable speech by the right hon. Member for Down, South (Mr. Powell)—which I was privileged to read in full—given to a commercial organisation that was celebrating its first anniversary. If I do not give the name of that organisation, it is because the right hon. Gentleman would not wish me in any way to put forward its commercial interests on the Floor of the House.
  Mr. J. Enoch Powell: Mine.
  Mr. van Straubenzee: It is an admirable exposition of the way in which persons such as that should perform. But the fact is that unless we can look at a register there is no way in which any of us today, approached by a colleague or organisation, has any way of knowing whether one of our hon. Friends or an hon. Member is associated with that organisation. That is a perfectly honourable thing to do, but the information ought to be available for all of us to see. That is the overwhelming reason for proceeding with the selection of this Committee, and that is why we should encourage it in its work.
  I have one last thing to say. I say it in the regrettable absence of the right hon. Member for Ebbw Vale (Mr. Foot), which we all deplore, but I have said it to his face. Because of lack of energy on his part when Leader of the House, one right hon. Gentleman, and one only, was able to stop the publication of the register, and the whole House was made to look absolutely ridiculous in consequence. I therefore seek only one assurance from my right hon. Friend, who has shown commendable energy in bringing this matter before the House so quickly. I am grateful to him for so doing. Will he at least undertake that the register will be published, if necessary with one gap?
  I make it quite clear that there is one motive that I do not attribute to the right hon. Gentleman. I do not for one moment suggest that he has anything to hide. I entirely accept that for him it is a matter of principle. However, I believe that the rest of us would wish to have out in the clear our direct financial interests, of which none of us is ashamed. If one right hon. Member does not wish to obey the request of the House, at that time that will be a matter for the House to decide. Let us, I beg, no longer have this indignity of being held up by one of our colleagues—and one only.
  With those three short comments, I very much commend the motion to the House.
  11.5 pm
  Mr. J. Enoch Powell: As reference has just been made to my personal action in this matter, I think it would be discourteous to the House if I did not briefly state here—although I previously sought to do so in the debate

  553
  in June 1975—the reasons and considerations behind the decision in which I then announced to the House and which I have since followed.
  May I first clear the ground by saying that this House has an undoubted and unlimited power over its members? If it did not have that power, it could not be a sovereign assembly. If its rules as they apply to hon. Members were referable to any outside authority, if it could not at its own discretion proceed against its own Members who disobeyed its resolutions and orders, this would not be a sovereign House of Commons. It would be a subordinate assembly, and we should be unable to perform those purposes for which we and our privileges exist.
  I have knowingly and deliberately placed myself in disobedience of a resolution of this House; and I accept that the House has the right—indeed, it has the right without cause shown—to proceed against any hon. Member of this House to the point of expelling him. These are powers and attributes of this House which are essential to it, and I should be the first to defend them. I understand that a similar question has arisen in another assembly—the Congress of the United States. A number of members of the House who took exception to a somewhat similar resolution referred the matter—and it still stands referred—to the Supreme Court. That only illustrates the difference between a sovereign House such as ours and even the Congress of the United States, which is subject to having its decisions struck down by the Supreme Court under the constitution.
  Because, however, we do not have a written constitution, it does not follow that we have no constitution. Because there is no written constitution, it does not follow that this House cannot behave unconstitutionally.
  There are principles and propositions which, though they are not written in some fundamental Act, are nevertheless as binding as if they were, and binding even upon this sovereign House. I shall mention one of them. It is that the law of the land is made only by or under the authority of Parliament—that is to say, the Crown and both Houses acting in a particular way. That is what we call the rule of law—namely, that the laws under which we live are made only by or under
  554
  that authority of the Crown in Parliament. A resolution of the House does not make law. We cannot amend, and we cannot make, the law of the land, even in this House, by a resolution; and where a resolution of the House has binding effect as such, it has that effect only by virtue of a statute which specifically enables it so to do. In short, the House cannot by resolution make law.
  It is my belief that clearly the resolution of 1975 for the declaration of the financial interests of Members is not a regulation of the behaviour of hon. Members in the House but is a change, or purports to be a change, in the law, inasmuch as it adds an additional qualification for being an hon. Member. That was something that the Committee that made the recommendation discovered; for at the conclusion of its lucubrations it suddenly remembered candidates, and realised that the recommendation would also somehow have to apply to candidates. That is fairly clear evidence that the resolution is concerned not with the duties and behaviour of hon. Members in the House, not with how they conduct themselves in debate, not with how they discharge their duties in the House, but upon the qualification to be an hon. Member.
  I offer the House another consideration. Let us suppose that the House passed a resolution—which it could do and which it could enforce upon hon. Members on pain of expulsion—that every hon. Member should, each twelvemonth, place upon record the number of times that he had taken Holy Communion in his parish church. Does anyone doubt that such a resolution would be the imposition of a religious test for membership of the House? Of course, it would not specifically say "You can be a Member only if you are an Anglican"; but everybody would understand that the condition of being a Member, the qualification for being a Member, had been sought to be altered by such a resolution.
  The House cannot do that. The qualification for being a Member is not in the hands of the House. The qualification is a matter of law: it can be altered, amended and added to only by a change in the law. If we wish to change the law in this way, if we believe that being a Member should be conditional upon this or that declaration, whether of interests or anything else, there is only one way in which we can constitutionally proceed

  555
  and that is by setting about changing the law, by bringing in a Bill and passing it through both Houses until it receives Royal Assent.
  Mr. Tam Dalyell: It may be that I am a bit thick about this, but why is it conditional? I do not see why it is conditional that candidates should have to satisfy certain conditions? After all, what is important is what happens when a candidate becomes a Member of Parliament.
  Mr. Powell: The hon. Member for West Lothian (Mr. Dalyell) will perhaps refresh his memory on how the Committee got there. The Committee considered the case of an election at which the ex-Member who was standing had been obliged, or purported to have been obliged, by the resolution of this House, to declare his interests, but who would be the only candidate who was thus exposed to public scrutiny. The Committee recognised thereby that this resolution was placing a new condition upon the election of a person to serve in this House, that is, doing something which can be done only by a change in the law.
  I do not dispute that there is a conflict here. It is a conflict of two rights. One right is the right of the House to pass and enforce upon its Members any resolution that it pleases. The other is the right of all citizens of this country to live under the rule of law—in this case, for the conditions and qualifications for membership of this House to be determined and fixed by the law.
  Where there is a conflict of right, there is a conflict of loyalty—the conflict between the loyalty that a Member owes to this House and the loyalty which is owed to the constitution. That conflict has been drarnatised—I felt that I could do no other—by my own action. But we do not proceed in this country by way of conflict: it is a false theory of our constitution which teaches that it is the result, as it were, of conflicting forces held in suspension. We in this country proceed, if I understand it rightly, to the resolution of conflict by appeal to the superior tribunal, to the superior principle. I say, then, as one who yields to none in this reverence for the sovereignty and independence of this House, that the principle of the constitution is the
  556
  superior, and that we ought to resolve this conflict by observing it.
  11.17 pm
  Mr. Robert Adley: I hope that the right hon. Member for Down, South (Mr. Powell) will forgive me if I say that I do not quite see this issue as of such major constitutional importance as he would seek to suggest. I certainly would not like to recommend that the right hon. Gentleman be martyred, expelled from the House or subjected to any of the other suggestions coming from the Front Opposition Bench below the Gangway. Surely the simplest way of dealing with the right hon. Gentleman, if that is the expression to use, is merely to list him in the book as being unwilling to provide an entry. People would then have to draw their own conclusions from that.
  We have to accept that the status of Members of Parliment has changed. If providing a register shows people that we are being more open and straightforward, so that they are better able to understand the interests that we do and do not have, and helps to decrease any misunderstandings between people and Parliament, that register will be justified. The right hon. Member for Down, South may find that argument unattractive, but it is a low-key argument and in its way puts the register in its correct position.
  My hon. Friend the Member for Wokingham (Mr. van Straubenzee) touched on the key point in this issue by saying that financial independence is much more likely to be equated with political freedom than the reverse. Labour Members must try to understand that.
  I wish to deal briefly with a couple of points that the hon. Member for Keighley (Mr. Cryer) made. He suggested that the reason why the register is being set up is pressure from outside. He thought that to be a poor reason. Surely, the history of the House shows that hon. Members have rightly had to respond to pressure from outside. Where would the Tolpuddle Martyrs have been if they had not eventually been able to bring their action to the point of forcing Parliament to do what they wanted? Where would Gingerbread have been? We are all susceptible to outside pressure. That is the essence of the changing status of hon.

  557
  Members today, although we may or may not like it.
  Mr. Cryer: My contention is that Parliament did nothing between 1969 and 1974. Outside pressures produced action. The danger is that we are becoming complacent again because there is no outside pressure. We should be seen to be acting in anticipation of criticism.
  Mr. Adley: Is that not the point of the Government's motion? They are bringing forward a motion so that we can set ourselves up as a Select Committee to examine many of the matters of which the hon. Gentleman complains. Surely, he does not suggest that the TUC should be forbidden from trying to bring pressure on Parliament. That may be a nice thought, but I do not believe that he would support such a proposition.
  Mr. Geoffrey Johnson Smith: The House is being invited to set up the Select Committee but we would set it up in the full knowledge that the right hon. Member for Down, South (Mr. Powell) would refuse to have anything to do with it. We understand his reasons. Other hon. Members may refuse to have anything to do with that Committee, and some may declare only part of their interests. What value can be attached to a register that works under such conditions?
  Mr. Adley: I was about to come to that matter. It is a public relations exercise. Some may see it as a means to attract free advertising for those companies and organisations that appear in the register.
  Mr. J. W. Rooker: It would take you to say that.
  Mr. Adley: If the hon. Gentleman wants to intervene I will gladly resume my seat.
  We should not get too excited about the matter. I have insisted that the register publishes the organisations that supply me with free ties. I hope that people will look down the register, see British Aerospace and British Airways against my name, believe that I am a director of those august organisations, and think me frightfully important.
  Mr. Johnson Smith: There is no chance of that.
  Mr. Adley: My hon. Friend is right—it is little more than a farce. I am often asked why I wanted to come to this place. I reply that I receive free ties and free car parking in central London. I used to believe that one was likely to be seduced by Russian blondes. I have received many ties, and I use the car park from time to time. I hope that I will not be required to register my interests to the extent to which the hon. Member for York (Mr. Lyon) suggested, in terms of some of the moral issues that he wants included.
  The hon. Member for Keighley referred to our former colleague, Mr. Harold Lever. The illustration that he made shows the uselessness of the register. It would be technically possible to own 4 per cent. of the entire shareholding of British Petroleum, ICI and Unilever and still have a nil entry in the register. Howeven, if people outside believe that we are being open, above board and less corrupt than the hon. Member for Keighley believes us to be, the register is of some use.
  If the Select Committee is set up as established and I have the honour to serve on it, I shall want to investigate some of the points raised by the hon. Member for Keighley. He assumes that the only corrupting influence is money. I assume that there is a far more corrupting influence—power. Power over hon. Members by outside bodies is a far more insidious means of corruption than any amount of money that an hon. Member is likely to receive from outside interests.
  If the Labour Party goes through with the proposals for re-selection, with hon. Members being subjected to scrutiny by a handful of people who have a clear political motive in seeing how they behave in the House, that will be the sort of power and influence over hon. Members that is far more likely to corrupt hon. Members than is any amount of money that may be showered on us.
  I assure the hon. Member for Keighley that I have listened carefully to what he said and, if the motion is approved, I shall take up some of his points. I do not know whether the hon. Gentleman accepts a fee when he takes part in television interviews. Perhaps he would like to tell us? I am sorry that he does not wish to answer. He is, presumably, prepared to accept payments from outside. He may even occasionally write newspaper articles, for which he receives a fee.

  559
  All such activities are equally corrupting forms of influence.
  I assure my right hon. Friend the Leader of the House that, if the Committee is established, its members will take careful note of the hon. Member for Keighley's view that there are other matters that should be looked into.
  11.27 pm
  Mr. John Sever: It is surely right that in setting up the Select Committee we should put to the public a public relations exercise—to use the words of the hon. Member for Christchurch and Lymington (Mr. Adley)—that looks as though it is fair, honest and reasonable.
  I do not accept that we are setting up a public relations exercise. We are trying to convey to the public our desire that whatever we do in the House is above board, open to public discussion and honourable, in the widest sense of the word. That is a good reason for having a Select Committee comprising only hon. Members with no outside financial interests.
  There is a degree of public disquiet about the way in which the affairs of the House are conducted when it can be shown that an hon. Member may—only may—be arguing from the standpoint of having an outside interest that has galvanised him into making a speech or taking a particular interest in a drift of policy. That is one of the most powerful arguments in favour of the membership of the Select Committee being changed in the way proposed in the amendments that were not selected.
  It is desirable that the House should put its case in a way that cannot be challenged. One of the most serious potential challenges arises when the public are given cause to wonder whether an hon. Member has made a speech as a direct result of his philosophical views or for other reasons that the public are not too sure about.
  Mrs. Peggy Fenner: What about sponsored hon. Members?
  Mr. Sever: I do not intend to comment on the witless seated interventions of Conservative Members.
  Mr. Johnson Smith: The comment was not witless. I imply nothing improper to those who are sponsored Members, but I assume that if the hon. Gentleman wants a Select Committee composed of those who have no outside interests he would exclude sponsored Members.
  Mr. Sever: They are in the register anyway. If I am incorrect in that, I withdraw what I said, but I understand that their interests are clearly indicated in the register by those hon. Members who have them.
  The point at issue is whether there is any doubt about an hon. Member's motive in taking any line of action in this place. It is that which causes public disquiet, and it should, I think, encourage hon. Members to agree to the proposition that members of the Select Committee should not have any outside financial interest.
  11.30 pm
  Mr. Keith Wickenden: I thought that the hon. Member for Keighley (Mr. Cryer) made a most useful speech, and to my great surprise I found myself in agreement with a great deal of it. Indeed, if only he had not spoilt it in the last 15 minutes by allowing his prejudices to show it would have been much more telling a contribution.
  Nevertheless, the hon. Gentleman makes a valid point when he says that financial interests must be revealed on the register. I speak as somebody who has fairly significant interests to declare—which are, I hope, properly declared—and also as one who has outside occupations. [Interruption.] It woud be wrong for me to make a commercial tonight.
  Mr. Tim Sainsbury: Does my hon. Friend agree that the most important interest of any that he might have is that of being a director of that excellent, though perhaps temporarily unfortunate, football club, Brighton and Hove Albion?
  Mr. Wickenden: It finds itself in much the same position as the Labour Party.
  The hon. Member for Keighley concentrated, almost to the exclusion of all else, on financial interests. There are many other interests that may just as much affect a Member's judgment, and that, surely, is the reason for the register in the first place. For example, within the

  561
  last 48 hours a Labour Member has made a powerful and telling speech in this House about the effect of the Government's expenditure cuts on public service employees. He did not reveal that he was a leading member of NUPE. He should have done.
  An hon. Member who is a schoolteacher or a polytechnic lecturer should reveal that fact when he takes part in education debates. A lawyer should certainly express his interest in almost every matter that we debate. Those of us who take part in pressure groups—I suppose that almost all charities are pressure groups in one form or another and that most hon. Members subscribe to them—should reveal that fact when we speak in the House. It is not good enough to believe that only financial interests alter a Member's judgment.
  The hon. Member for Keighley said that a previous hon. Member had 47 directorships but they were not shown in the register. I surmise that there was a simple reason for that. He was probably a director of a group of companies and took his remuneration from the parent group, and the others were subsidiary companies.
  Mr. Cryer: I said that the 36 companies were on the register. The point that I was making was that they gave no indication of the amount of remuneration that the hon. Member received, whether it was a nominal £1 a year or £1,000 a year. As the hon. Gentleman will accept, there is a qualitative difference.
  Mr. Wickenden: I accept that. The whole purpose of the register, and of revealing our interests, wherever they may lie, is, I suspect, more that justice shall be seen to be done than that justice shall actually be done. Some hon. Members divest themselves of their interests so that they are not entered on the register. That is perfectly lawful. Trusts can be, and often are, created, and there is no longer any need to declare the interest. It is myopic to believe that hon. Members will be affected only by the financial inducements that they may receive in outside occupations. It is also wrong to believe that hon. Members with outside interests do not play a full part in this Chamber.
  I can think of no reason for my selection—I cannot think of any reason, any-
  562
  way, why I was selected—other than the fact that I had outside interests. My selection was certainly not due to any great political skill or knowledge. I suspect that the fact that 65 per cent. of the electorate in my constituency voted for me indicates that a fairly high proportion do not accept the view that hon. Members should solely be Members of the House. If that happened, one could envisage an arid wasteland of a Chamber in which polytechnic lecturers, sociologists, lawyers and public relations men hurled abuse at each other in mutual ignorance of the matters that they were discussing.
  11.36 pm
  Mr. R. B. Cant: I am anxiously awaiting the end of the debate to see whether I have been re-elected to this Committee. I should perhaps declare my interest in the matter. There has been a great deal of eloquence and wit in the debate. I have tried to recollect the years in which I and hon. Members here tonight were on this Committee in order to get down to some of the problems with which we were faced.
  The refusal of the right hon. Member for Down, South (Mr. Powell) brought the Committee to a halt. The right hon. Gentleman is, of course, a remarkable Member. One of the matters of principle that arose, whatever the right hon. Gentleman said, was that the Committee felt that it possessed no sanctions. If one is trying to do a job in a club—even one as distinguished as this House—in which a member says that he will not play according to the rules of the game, the inevitable consequence in so serious a matter is that one decides that one is not going to waste one's time. That was why the publication of the register ceased.
  The right hon. Member for Down, South may derive no satisfaction from that situation, but, so far as I can recollect, that is precisely what happened. We had a long discussion and decided not to continue. I believe, in the light of speeches made tonight, that we made a mistake. We should have said that, important as the right hon. Member for Down, South is, we intended to ignore him, put on a nil return, and get on with the job.
  There is another much more difficult point. Financial interest is obviously the

  563
  crux of the matter. We might have taken into account many other matters in deciding the questions to be placed on the form circulated to hon. Members.
  Eventually, of course, the issue really crystallised around the matter of financial interest. But when one had said that, one raised almost as many questions about what financial interest is as it is possible to raise. In the end, we had to say "Really, it is only that financial interest which is likely to influence the judgment of Members of Parliament in the conduct of their affairs as Members of Parliament". That raises difficulties, some of which have been mentioned in the debate. I have always worked for only one salary, but I am a member of a pressure group in the House.
  Mr. Alan Clark: The hon. Gentleman has put his finger on a very important defect in the whole process of compiling the register. As I understand it, the register is meant to show—preferably, in my opinion, in the fullest detail, but my right hon. Friend has suggested that a compromise is desirable—the financial interests of Members of Parliament. The hon. Gentleman said that the Select Committee took the view that these financial interests need be shown only where, in the opinion of the Committee, they might prejudice the Member's judgment.
  In other words, the Committee took it upon itself to interpose a further layer or filter between public scrutiny and the interests held by Members of Parliament. The Committee thereby arrogated to itself the right to interpose screens between the public's right to have access to all such relevant information and the Member's desire, where it occurred, to withhold it.
  Mr. Cant: I think that that is substantially correct, and of course it produces paradoxical situations in which I, as a member of the all-party road study group, must declare that I once went on a trip abroad financed by the British Road Federation. It is quite right that that should be declared, because if I rise during questions to the Minister of Transport, as I did today, I am likely to ask why only 36 miles of motorway have been built in the West Midlands during the last 10 years. The motivation for asking that question may be quite clear.
  564
  On the other hand, at the other extreme, there is the nil return. One of the cases quoted in the debate was that of a man who everybody knew had money. The Financial Times carried an article that said that because of foreign exchange speculation the family fortunes had declined from £13½ to £4¾ million. There was in that case a very extensive financial interest, which might not have affected the Member's judgment in the slightest.
  This was a difficulty on which we spent a great deal of time. We may have been wrong in arriving at the narrow definition that we did. If we are trying to redefine the terms of reference of the Select Committee I think that we should return to what my hon. Friend the Member for Keighley (Mr. Cryer) said about financial interest. For 26 years I have been a member of a local authority. I see that the right hon. Member for Down, South is about to rise in his place and say that of course local government is a different animal.
  Mr. J. Enoch Powell: That is imposed by statute.
  Mr. Cant: Exactly. I plucked up courage to ask the right hon. Gentleman to remain in his seat because, in effect, a member of a local authority must do two things. He must fill in the form required by statute and, as my hon. Friend the Member for Keighley said, he is also under very great pressure to fill in this voluntary declaration. It is worse than my hon. Friend states, because if a councillor has the slightest financial interest in any issue to be discussed by a council committee not only is he forbidden to take part in the discussion, or to vote; he must leave the room in which the discussion takes place.
  Mr. Adley: Does the hon. Member agree that we have in this Chamber influence rather than power? We should realise then when we talk of decisions that make or lose money the chairman of a local authority planning committee and his colleagues leave us absolutely standing. This is something which we should make clearer to other people.
  Mr. Cant: The chairman of the planning committee of which I am a member always tell me that he has got the power even though I may have a vote in this place. He is right, and for that reason

  565
  the possibility of corruption in local government is much greater than here. When we are thinking of the register that we have established it is important always to have in the back of our minds the much more stringent qualifications and requirements that are laid down for our lesser brethren in the local authorities.
  Mr. James Lamond: Did the Committee ever consider the possibility of requiring all Members of Parliament to publish their income tax returns, together with those of their wives? Does my hon. Friend think that if the Committee had suggested that method of exposing hon. Members' finances more than one hon. Member would have refused to comply?
  Mr. Cant: I cannot say whether the Committee ever considered that. It seems many years ago, but I am sure that my hon. Friend is right in saying that if such a condition had been imposed many more hon. Members would have refused.
  This has been a useful debate and I am certain that the Committee should be set up again.
  Mr. Arthur Palmer: I served on the Committee in the last Parliament, and there was never any question of including a wife's income. It cannot be assumed, these days, that a wife's earnings form part of the husband's income. That is a Victorian notion.
  Mr. Cant: Once again we are descending into the realms of philosophy, though the point made by my hon. Friend is a good one. I am certain that when it is set up again the Committee will profit by experience. The question whether its members should have outside interests is a minor issue. We must continue to publish the register even though more than one hon. Member refuses to fill in the form and we must continue to build on our experience.
  11.48 pm
  Mr. Alexander W. Lyon: I have always agreed with the right hon. Member for Down, South (Mr. Powell) about this issue, though it is the only one in 13 years on which we have agreed. I have taken the view, since I ceased to be a Minister, that I would not register any interest or return any form. I will continue to do that and my reasons are set
  566
  out in a speech that I made against the motion in 1975. I hold to that.
  In essence my argument is that if we go down this road there is no limit to it. The speech by my hon. Friend the Member for Keighley (Mr. Cryer) demonstrated that beyond any peradventure.
  We can reveal all our private confidential life, and someone will always want to know more. In the end, people must trust us as Members of Parliament. I shall take the same stand as the right hon. Member for Down, South in order to show that the House is wrong to continue the process. I hope that we come to a sensible conclusion.
  11.50 pm
  Mr. Merlyn Rees: I am not usually present to listen to debates such as this. I have found it fascinating. Right hon. and hon. Members have taken a more personal interest in this than in many other subjects.
  The Opposition want to see the Select Committee set up. It has a job to do in enforcing the 1975 resolution. My personal view on statutory enforcement is that the quicker we bring it to the Floor of the House the better. This matter must be cleared up, for the impeccably logical reasons argued by my hon. Friends. We must decide whether we want a statute or whether we should continue as before.
  Mr. Rooker: My right hon. Friend talks of impeccable logic. Can someone tell the House whether the requirement of hon. Members to affirm or swear at the Table is a requirement of statute or the result of a resolution?
  Mr. Rees: I have made similar inquiries. In the past four months I have learnt that it is better to leave such matters to those who have access to advice.
  I have never served in local government. In the 16 or 17 years during which I have been a Member of the House I have found remarkably little corruption. I was once the Minister responsible for the Air Force. It would have been extremely difficult for me to be corrupt. I placed no orders. I had no power in that respect, but I once owned Harland and Wolff. Someone in local government is nearer the levers of power than a Minister by virtue of the spread of responsibility.

  567
  As Home Secretary I moved a motion on the Royal Commission on corruption in public life. The Commission's report was not edifying. It talked of corruption and bribery being brought within the ambit of the criminal law. I did not feel that it understood what it was talking about. We should debate this important subject.
  We argue about the re-selection of Members. I have no complaint about that. I was chosen by my local Labour Party. It has every right not to select me. We are arguing not about that but about the method of selection. There is nothing corrupt about it. Party politics is what the House is all about. We do not talk about it enough. It is not corrupt. We are responsible to our electorates. The argument that we are having is not a bad argument to have, because it illustrates some of the fundamental matters that we face in public life. I hope that the Select Committee will be set up quickly.
  11.54 pm
  Mr. St. John-Stevas: This has been a wide-ranging debate, although the motion was narrowly drawn.
  I am not here to discuss whether Members should or should not have outside interests. Personally, I believe that the House benefits from having Members with outside interests. I think that a House made up of retired lawyers and amateur journalists would not be a very valuable House of which to be a Member. Nor, I think, is one concerned with arguments on the question whether there should or should not be a register of Members' interests. I think that there should not be. I do not think that it is necessary, and I voted against it.
  Like the right hon. Member for Leeds, South (Mr. Rees), I have had no offers of any kind since I became a Member—for 15 years, the same as he. I have never been able to understand whether that was because I was thought incorruptible or not worth corrupting. Apart from a seat in the Cabinet, nothing has come my way.
  I turn to the narrow question whether the Committee should be set up. The hon. Member for Keighley (Mr. Cryer) put his case with his usual thoroughness and conviction. He was particularly concerned with the actions of the last Committee.
  568
  He felt that it had not acted with zeal and urgency, and that there had not been sufficient public access. It is true that following the Dissolution of the last Parliament the register of interests of Members of that Parliament was not accessible, but before that it was available for inspection, although it had not been published in the full sense of the word. But that really is a matter to be decided by the Committee when it is set up.
  My hon. Friend the Member for Wokingham (Mr. van Straubenzee) is in favour of a register. I disagree with him on that, but I certainly agree with him that if the House has decided that a register should be set up that register should be published. It is for the new Select Committee to advise the House what to do if there are circumstances of difficulty. It must be left to the Committee in the first place.
  The right hon. Member for Down, South (Mr. Powell) argued, with his usual lucidity, that an obligation should be imposed by legislation only, and could not be imposed by a resolution of the House. The alternative would be to put forward legislation. It would be an extremely complex and difficult matter. But it is for the new Select Committee to consider what should be done and to advise the House on the matter. Certainly, as Leader of the House, I shall take its advice very seriously.
  Mr. Palmer rose—
  Mr. St. John-Stevas: I am sorry; I cannot give way, or I shall talk the motion out, and then we shall all be here for another hour and a half later on.
  The conclusion that I draw is simply that all these problems should be considered by the new Select Committee and that the duty of the House tonight, whatever our views are, is to let the Committee be set up and see where it goes from there. Let it have the opportunity tonight to get on with the job.
  Question put and agreed to.
  Ordered,
  That Mr. Robert Adley, Mr. Joe Ashton, Mr. Andrew Bennett, Mr. R. B. Cant, Mr. Tony Durant, Sir Nigel Fisher, Mr. Percy Grieve, Mr. Geoffrey Johnson Smith, Mr. David Madel, Mr. Charles R. Morris, Mr. Arthur Palmer, Mr. Michael Shaw, and Mr. Frederick Wiley, be members of the Select Committee on Members' Interests.
  Ordered,
  That the members of the Committee nominated this day shall continue to be members of the Committee for the remainder of this Parliament.
  Ordered,
  That this Order be a Standing Order of the House.—[Mr. St. John-Stevas.]

  POLICE (SPECIAL BRANCH)
  Motion made, and Question proposed, That this House do now adjourn.—[Lord James Douglas-Hamilton.]
  11.59 pm
  Mr. Robin F. Cook: It is entirely fitting that having debated the matter of Members' interests the House should now turn to consider the matter of the Special Branch, which undoubtedly has a fuller knowledge of the background and interests of the Members of the House than anything that has yet been filed with the Select Committee.
  As I think some of my hon. Friends are aware, this is my third time over this field. I welcome the Minister of State, Home Office to what I believe is his first time over the course. I also welcome the presence of my right hon. Friend the Member for Leeds, South (Mr. Rees).
  As my right hon. Friend is present, I should like to begin by saying that it is only fair to congratulate him on the very positive response that he made to our debate on the subject last year. I then drew his attention to the fact that only one chief constable in the length and breadth of Great Britain had included in his annual report a paragraph on the work and functions of the Special Branch. Since then a further 22 chief constables have done so. I am a modest man and I think it is reasonable to assume that it was not my comments that led to this development. It is reasonable to assume that it was some action on the part of my colleague that produced this expansion in the reports on the Special Branch, which I very much welcome.
  The situation that the Minister has inherited is that 50 per cent. of all chief constables are now including a report on the Special Branch in their annual reports. I urge him to ensure that the practice of some chief constables becomes the practice of all. In doing so, I hope
  570
  that he will look in particular at the release of information on the numbers in each Special Branch unit. If the Metropolitan Police, which has by far the largest Special Branch unit, can release the figures, I see no reason why any of the provincial forces should hesitate to do so.
  Most of the paragraphs relating to the Special Branch in these reports raise more questions than they answer. The principal explanation advanced for the function of the Special Branch is to monitor subversion, or to monitor subversive activity. The most vacuous was the report from Merseyside, which stated that the function of a Special Branch unit was
  "to keep in touch with the current climate in respect of subversive activities."
  The unsatisfactory part about this is that there is no crime of subversion on the statute book of this country. There is no authority from Parliament for this extensive programme of surveillance of subversive activities. I hope that the Minister will take the opportunity to comment on this issue and make plain to the House his understanding of the word "subversion". Does he accept the definition of Lord Denning, in 1963, that subversives are those who would
  "contemplate the overthrow of the Government by unlawful means"
  or does he adhere to the definition pronounced by the last Government that subversion consists of activities intended to undermine or overthrow parliamentary democracy by political, industrial or violent means? There is a vast difference between these two definitions. The first is a definition of illegal activity. It is precise and clear, and I have no difficulty in supporting it. The latter is worrying, because it can bring within the scope of its umbrella any form of legitimate political activity. If the Minister intends to adhere to that definition, which was adhered to throughout the period of the last Government, he has a further duty to the House to explain which political activities he considers subversive. We endanger our democracy if we leave to the discretion of the police the decision of defining a subversive political activity.
  In this connection, I am not reassured by the nature of the occasions on which the Special Branch has been spotted at work in the past 12 months. I do not

  571
  conclude, as a result, that shares the concept of subversion that this House would be prepared to support in the foreseeable future.
  It has been known for a long time that section 49 of the general orders of the Metropolitan Police obliges local police stations to report on any political meeting on their beat. It would appear from a couple of incidents in the past year that this system has been further formalised by the issue of a printed form, which must be filled in by the local officers. In March last year one such officer, in seeking help to fill in the form, approached the organisers of a demonstration against the closure of the Battersea law centre. This was a demonstration organised by NALGO—a union of such impeccable respectability that it has been unable to bring itself to affiliate with the Labour Party.
  If it is the case that the Special Branch regard demonstrations against the effects of the cuts in public expenditure as subversive it is only fair to warn the Government that it will have a very busy winter ahead of it.
  Then there was the case of the student at Hull who was recruited in February to inform on the political activities of his fellow students. I must be careful what I say in this case, because it is the subject of an official complaint. I am well aware that hon. Members from Hull propose to raise the matter when the report on that complaint is available. Tonight I shall merely emphasise that when the student was interviewed—it happened on two or three occasions—the information that was sought from him was information about perfectly lawful, legal, political activity. He was asked which students took part in the campaign for disinvestment of university funds in South Africa. He was asked which students were likely to take part in a demonstration on the level of grants. He was asked to recognise from photographs which students had attended an Anti-Nazi League demonstration. He was even asked, apparently without any sense of irony on the part of the police officers, to identify from photographs those students who were demonstrating outside the same police station at his own continued detention.
  The significant feature about all these activities is that they were all perfectly
  572
  legal, legitimate, political activities. Although none could reasonably be described as "subversive", it would nevertheless appear that a large number of students had become known to the Special Branch for no reason other than that they had participated in those activities and had thereby had files opened on them. The question to which the House must address itself is: what happens to those files?
  Here we come to one of the key developments since we last debated this issue—the Lindop committee report on data protection. As the Minister will be aware, that committee sought information on the computer "C" division of the Metropolitan Police, the greatest bulk of which is dedicated to the files of the Special Branch. As he will also be aware, it was defeated in its request for information. But it was able to discover that the bulk of the information stored in that computer was criminal intelligence, which it said was necessarily
  "speculative, suppositional, hearsay and unverified",
  or as the Police Review put it rather more bluntly, "unchecked bunkum'.
  As the committee properly pointed out, there are very real dangers of taking wrong and unreliable data such as this and feeding it into the most sophisticated and advanced computer systems. As the committee observed, that conjunction of unreliable data and sophisticated computer technology introduced what it described as
  "a new dimension of unease"
  so much so that it recommended that this House should approve a code of practice for the operation of that specific computer use and that that code of practice should be more stringent, because the information stored on the computer is by its very nature unverifiable. I believe that there is an urgent case for some check on the use of computer technology in this regard.
  I have seen the tender document issued by the Metropolitan Police in 1974, when it sought this computer. That document specified that 1·1 million places would be required on that computer for personal files held by the Special Branch in 1974. That number is to expand to 1·4 million by 1985. I am tempted to ask "Why not 1984?", because after all, 1984 is 10

  573
  years on from 1974 and it is most unusual to use an 11-year review period. I cannot escape the conclusion that someone within the Metropolitan Police has a literary background and realises that the forecasting of 1984 might invite invidious comparisons and comment.
  Whatever the date, or the number between 1·1 million and 1·4 million that has now been reached, that is an apallingly large slice of the adult population of this country. It certainly wildly exceeds the combined membership of the National Front and the Workers' Revolutionary Party. [HON. MEMBERS: "And the Labour Party".] Certainly the NEC of the Labour Party. There is a very real danger that if one creates and gives that capacity to any organisation, it will seek to fill that capacity, and that it will seek to open 1·4 million files.
  Of course, each time a new file is opened, the person named in that file will become subject to even more extensive surveillance by the very fact that a file has been opened upon him. I therefore believe that we need a check on this. It is a check that has been introduced in Sweden for some years. As I mentioned last year, it has now been introduced in New South Wales, and since last year it has also been introduced by New York State. I believe that we should follow their lead.
  One or two of my hon. Friends wish to make brief comments, so I shall close now. I would not wish the Minister to think that this subject is my own King Charles's head.
  I have pursued the matter for three years. In that time I have learnt a lot about the Special Branch, and no doubt it has learnt a lot about me. I appreciate that the bulk of its work is legitimate police activity, which poses no threat to our society. It is also plain that much of its work involves monitoring political activity, and that is also perfectly legitimate and poses no threat to our society.
  The time has come, however, for us urgently to impose a proper independent safeguard on the work and records of the Special Branch. Unless we do that, this mighty engine of surveillance, which we have set in motion in order to protect democracy, may come to represent a greater threat to privacy and democracy
  574
  than most of the organisations that it watches.
  12.10 am
  Mr. Tam Dalyell: My hon. Friend the Member for Edinburgh, Central (Mr. Cook) has done a service to the House. It may in one sense be his cause, because he has taken the lead, but he is speaking for many other hon. Members.
  I ask only one question of the Home Office. What work is being done on information that is put on a computer for reason X and is not used for different reason Y? I shall leave it at that.
  12.11 am
  Mr. Merlyn Rees: My hon. Friend the Member for Edinburgh, Central (Mr. Cook) does the House a service in raising these matters. When first he drew them to the attention of the House I know that some hon. Members did not agree.
  I was pleased to hear my hon. Friend say, at the end of his speech, that as he has looked into the matter more and more he has discovered that the greater part of the work of the Special Branch is perfectly reputable and a service to the public. I shall not argue about the other part of its work at the moment.
  For five and a half years I have not moved outside this House without a member of the Special Branch with me. I personally know a number of members of the Special Branch and they will be grateful to my hon. Friend for that comment. The work that the Special Branch does in respect of terrorists such as the Arab groups who come into the country is of the greatest value. It is not usually talked about, but I am glad for the sake of the people of this country that the Special Branch performs that service.
  No Home Secretary has control over chief constables, and that is a good thing. I have changed whatever views I may have held in the past about a national police force. Chief constables are their own men. There is a certain control through the inspectorate—although "control" is the wrong word. "Contact" would perhaps be a better word. Numbers are now published for the Metropolitan Police and certain provincial forces, but I believe that far more information could be given, and I hope that the process continues.

  575
  Three men are now required to protect one person, and that means that to protect 30 more people 90 more officers are required. Each conference that occurs in London makes a large demand on numbers. That ought to be understood, because by itself the numbers game gives the wrong impression. My hon. Friend prompted me a year ago to realise that, and he did a great service.
  12.15 am
  The Minister of State, Home Office (Mr. Leon Brittan): As the hon. Member for Edinburgh, Central (Mr. Cook) said, this is the third time that he has initiated a debate of this sort. It has become an annual event. I welcome the opportunity of making my debut on this annual event. It is especially appropriate that the subject should be raised this year because of the particular burdens that have been imposed upon the Special Branch.
  I know that those concerned will welcome the fact that this year the hon. Gentleman has felt able to say that most of the work of the Special Branch is of an entirely non-controversial character. It needs stressing that the role of the Special Branch is less dramatic than its critics seek to make out. It is concerned with offences against the security of the State, with terrorist or subversive organisations, with assisting the uniformed police in the maintenance of order, with certain protection duties, with keeping watch on airports and seaports and with making inquiries about aliens.
  In the year since the last debate on this subject there have been the deaths through terrorist activity of our late colleague Airey Neave and Earl Mountbatten of Burma, as well as three IRA car bombs and a spate of letter bombs, the murder of a former Prime Minister of Iraq, and a machine gun and grenade attack on an E1 A1 coach. In these circumstances, there can surely be no questioning the importance of the work of the Special Branch. Much of its work is painstaking and time consuming. To take an even more topical example, the burden imposed by the security arrangements associated with the current Lancaster House conference, or with the recent visit by the Prime Minister of the People's Republic of China, is considerable. I am glad to be able to pay tribute to the way
  576
  in which these burdens have been shouldered.
  There has been one other comparatively topical matter referred to in the debate—namely, the data protection committee chaired by Sir Norman Lindop, and the recommendations made in the report. An interim position has been reached. Wide-ranging consultations on the report were initiated by the right hon. Member for Leeds, South (Mr. Rees) when he was Home Secretary. The consultations are still proceeding. My right hon. Friend the Home Secretary intends to consider the committee's report in the light of the wide-ranging consultations that were initiated by his predecessor, which have not yet concluded. I am sure that the House will agree that that is the right course to adopt.
  I must remind the hon. Member for Edinburgh, Central that the committee recognised that special consideration must apply to computer data involving national security. How one relates that to the whole is something to which we may have to return on a future occasion.
  Mr. Dalyell: A feature that is worrying many in the consideration of the Lindop report—incidentally, when are conclusions likely to be reached?—is what consideration is being given to the use of information collected for one purpose and used for another.
  Mr. Brittan: That is bound to be one of the matters that is being considered When conclusions have been reached, they will be made public.
  The brunt of the remarks of the hon. Member for Edinburgh, Central was directed to the activities of the Special Branch concerned with subversion. The hon. Gentleman sought to ask whether we as the incoming Government continued to accept the definition of subversion that the previous Labour Government stated when asked about these matters. I think that the answer is "Yes." The definition that I shall quote is slightly different in wording from the one referred to by the hon. Gentleman, but it comes to much the same and it derives from a former Minister of State, Home Office, Lord Harris of Greenwich. The noble lord defined subversion as
  "activities … which threaten the safety or wellbeing of the State, and which are intended to undermine or overthrow Parliamentary

  577
  democracy by political, industrial or violent means."—[Official Report, House of Lords, 26 February 1975; Vol. 357, c. 947.]
  That suffices to show that even if what has been described as subversion does not, at least in its early stages, amount to criminal activity in itself, it is not just a question of taking an interest in activities of a political character for which one does not care, labelling them with an unattractive label and enabling scrutiny and surveillance to be exercised over them.
  I do not think that it is fair or right to suggest that the Special Branch is interested in legitimate political or industrial activity. Let us consider the example that was given concerning demonstrations against the Government's proposals for stabilising public expenditure. Whatever one's views about the proposals, one would not question a person's entitlement to express doubts about the wisdom of those proposals. Engaging in such demonstrations is not subversive.
  Mr. A. J. Beith: Does not the definition that the Minister has quoted extend to the man who stands for Parliament, quite properly and legitimately, on a platform that would involve the ultimate closure of Parliament?
  Mr. Brittan: I do not think so, because of the first limb of the definition. The definition is such that both limbs must apply before an activity can properly be regarded as subversive. That first limb is that the activities must be those
  "which threaten the safety or wellbeing of the State".
  I do not think that that limb would apply in the circumstances to which the hon. Gentleman referred.
  I wish now to take up the reference to the Hull university student. I note the point of the hon. Member for Edinburgh, Central. The chief constable of Humberside appointed a senior officer from another force to look into the matter. That officer's report was submitted in the usual way to the Police Complaints Board. The fact that that happened shows that the Special Branch is accountable to the public in the broadest sense of the word. That procedure illustrates that it is accountable in the same way as are the operations of any other members of the police.
  578
  I understand that the Board has recently found that the student's specific complaints were not substantiated and that no disciplinary proceedings against the officers concerned were called for.
  The hon. Member for Kingston upon Hull, Central (Mr. McNamara) raised more general points about the case with the right hon. Member for Leeds, South (Mr. Rees). These more general matters are still being looked into, and we shall shortly be contacting the hon. Gentleman on these points.
  It was suggested that more information should be available about the Special Branch than has been the case hitherto. There was reference to the degree of information about Special Branch activities contained in the annual reports of chief constables. The hon. Member for Edinburgh, Central was good enough to say that half of these reports now included references to the Special Branch. The right hon. Member for Leeds, South also indicated that for his part there need be no coyness about that. As the right hon. Gentleman readily made clear, however, what is or is not included in a chief constable's annual report is a matter for the chief constable. That is right.
  It would be wrong for a Home Secretary to direct that particular information should be contained in a report. If that happened, the concept of the special position of the police would disappear. None the less, those concerned with producing these reports have clearly heeded what has been said in the House on previous occasions. The dramatic increase of information has made that point clear. I do not doubt that today's debate will be similarly heeded, and I have no wish to dissuade those responsible for these matters from listening to the observations.
  We should face the fact that much of the work of the Special Branches precludes it from being conducted in the full glare of public scrutiny. It would be idle to pretend the contrary. The hon. Member for Edinburgh, Central speculated about the numbers of files and other matters. Little credence can be given to such figures. Those who seek to undermine our democratic institutions or put the public to fear often operate covertly and by stealth. Police action to counter that cannot be effective if it is conducted in public. It would not be in the public

  579
  interest for detailed accounts of Special Branch operations to be given, as these are often bound to be concerned with matters affecting security. The sort of information that is contained increasingly in chief constables' reports falls into a different category.
  The nature of the handling of complaints about the Special Branch shows that the complaint of lack of accountability is unfair. Indeed, there is no such things as the Special Branch. It is not a national organisation. The Metropolitan Police has traditional responsibility for co-ordinating the collection of information on certain activities but each of the 43 police forces in England and Wales has its own Special Branch. Postings to the branch are a normal part of ordinary police duty. Special Branch officers have no special powers but are subject to the police discipline code and the law of the land in exactly the same way as is any other officer. The complaints procedure, set up by the House, provides a measure of accountability for them in exactly the same way as it applies to other members of police forces.
  The work being carried out by members of Special Branches is of vital
  580
  national importance. That importance has been highlighted by the events of the last year. Although the opportunity to examine the extent and accountability that can be provided for these matters is welcomed, it should be recognised that in the nature of the work it is not possible to submit it to the full glare of publicity.
  Mr. Dalyell: Will the Minister clarify the time scale of action on Lindop? What will the Government do? Is it a question of "one of these days" or "none of these days"?
  Mr. Brittan: I assure the hon. Gentleman that the matter is being looked at with the normal and proper degree of urgency. It is a complex matter, and it is not easy to arrive at the right solution in response—
  The Question having been proposed after Ten o'clock on Wednesday evening and the debate having continued for half the House without Question put, pur-an hour, Mr. DEPUTY SPEAKER adjourned suant to the Standing Order.
  Adjourned at twenty-nine minutes past Twelve o'clock.

OVERSEAS DEVELOPMENT
  Aid
  Aid
  Bolivia
  Bolivia
  Guyana
  Guyana
CIVIL SERVICE
  Manpower Levels
  Manpower Levels
  Pay Dispute
  Pay Dispute
  Efficiency Levels
  Efficiency Levels
  Trade Unions
  Trade Unions
Staffing Levels
  Health and Safety Executive
  Health and Safety Executive
HOME DEPARTMENT
  Immigration
  Immigration
  Law Enforcement and After-Care Services
  Law Enforcement and After-Care Services
  Mentally Disordered Prisoners (May Report)
  Mentally Disordered Prisoners (May Report)
EDUCATION AND SCIENCE
  Burnham Committee
  Burnham Committee
  Jazz Bands
  Jazz Bands
  Local Authorities (Statutory Duties)
  Local Authorities (Statutory Duties)
  Overseas Students
  Overseas Students
DEFENCE
  Civil Servants (Pay)
  Civil Servants (Pay)
  St. Kitts (Exercises)
  St. Kitts (Exercises)
  Service Men (Accommodation)
  Service Men (Accommodation)
EMPLOYMENT
  Baking Industry
  Baking Industry
  Wages Councils
  Wages Councils
  Factory Inspectors
  Factory Inspectors
  Disabled Persons (Quota Scheme)
  Disabled Persons (Quota Scheme)
  Job Creation
  Job Creation
  Private Sector (Wage Settlements)
  Private Sector (Wage Settlements)
  Hunterston
  Hunterston
NATIONAL FINANCE
  State-owned Assets (Sale)
  State-owned Assets (Sale)
  Arrears of Tax (Remission)
  Arrears of Tax (Remission)
  Public Sector Borrowing Requirement
  Public Sector Borrowing Requirement
  Family Income Supplement
  Family Income Supplement
  Form 700A
  Form 700A
  Income (Pensions)
  Income (Pensions)
  Pay-as-you-Earn
  Pay-as-you-Earn
  Value Added Tax
  Value Added Tax
  Purchasing Contracts
  Purchasing Contracts
ENERGY
  Coal Mines (East Midlands)
  Coal Mines (East Midlands)
  Public Expenditure Cuts
  Public Expenditure Cuts
TRADE
  Transport Users' Consultative Committees
  Transport Users' Consultative Committees
  Human Remains
  Human Remains
AGRICULTURE, FISHERIES AND FOOD
  Poultry and Animal Rearing (Hygiene)
  Poultry and Animal Rearing (Hygiene)
  Apples
  Apples
  Bread
  Bread
  Liquid Milk
  Liquid Milk
  European Community (Meetings)
  European Community (Meetings)
  Fisheries
  Fisheries
  Fish Conservation
  Fish Conservation
  Fisheries Protection
  Fisheries Protection
  Fishing Vessels
  Fishing Vessels
  Fish
  Fish
  Departmental Officials (Powers of Entry)
  Departmental Officials (Powers of Entry)
  Fish (New Species)
  Fish (New Species)
INDUSTRY
  Rolls-Royce
  Rolls-Royce
TRANSPORT
  Long Sutton (Bypass)
  Long Sutton (Bypass)
  British Railways
  British Railways
  Channel Tunnel
  Channel Tunnel
  Nuclear Waste
  Nuclear Waste
  South Yorkshire-Manchester (Road Link)
  South Yorkshire-Manchester (Road Link)
  Motorway Service Areas
  Motorway Service Areas
  Traffic Commissioners (Licensing System)
  Traffic Commissioners (Licensing System)
  National Freight Corporation
  National Freight Corporation
  Driving Tests
  Driving Tests
  Port of London
  Port of London
  Severn Road Crossing
  Severn Road Crossing
  Community Buses
  Community Buses
  Rural Transport
  Rural Transport
  Humber Bridge
  Humber Bridge
  Commuter Rail Services
  Commuter Rail Services
  Roads (White Paper)
  Roads (White Paper)
  British Railways (Fares)
  British Railways (Fares)
  Motor Cycle Training
  Motor Cycle Training
  Blennerhasset Report
  Blennerhasset Report
  Provincial Rail Services
  Provincial Rail Services
  Gosport-Fareham Trunk Road
  Gosport-Fareham Trunk Road
  Freight (Water Transport)
  Freight (Water Transport)
  Sheffield-Manchester Rail Link
  Sheffield-Manchester Rail Link
  Blakedown, Worcestershire (Speed Limit)
  Blakedown, Worcestershire (Speed Limit)
  Tachographs
  Tachographs
  Pensioners (Bus Passes)
  Pensioners (Bus Passes)
  Lorries (Armitage Report)
  Lorries (Armitage Report)
  Kirkhamgate-Dishforth Motorway
  Kirkhamgate-Dishforth Motorway
  M23 Extensions
  M23 Extensions
  Purchasing Contracts
  Purchasing Contracts
  British Railways
  British Railways
  M1 (Roadworks)
  M1 (Roadworks)
ENVIRONMENT
  Local Authorities (Spending)
  Local Authorities (Spending)
  Local Authorities (Statutory Duties)
  Local Authorities (Statutory Duties)
  Historic Buildings
  Historic Buildings
  Purchasing Contracts
  Purchasing Contracts
  London Borough of Lambeth
  London Borough of Lambeth
EUROPEAN COMMUNITY
  Council of Ministers
  Council of Ministers
FOREIGN AND COMMONWEALTH AFFAIRS
  SALT III
  SALT III
  Restitution of Monetary Gold (Tripartite Commission)
  Restitution of Monetary Gold (Tripartite Commission)
  Albania
  Albania
  Diplomatic Immunity (Parking Fines)
  Diplomatic Immunity (Parking Fines)
WALES
  Music
  Music
  Paediatric Facilities
  Paediatric Facilities
  Rural Pharmacies
  Rural Pharmacies
  Mentally Handicapped Children
  Mentally Handicapped Children
  Epileptics (Gwynedd)
  Epileptics (Gwynedd)
  Historic Buildings
  Historic Buildings
  Pig Industry
  Pig Industry
  Freeholds
  Freeholds
  Leasehold Dwellings
  Leasehold Dwellings
  Welsh Development Agency
  Welsh Development Agency
SOCIAL SERVICES
  Harlow Wood Hospital, Mansfield
  Harlow Wood Hospital, Mansfield
  Area Health Authorities
  Area Health Authorities
  Child Benefit
  Child Benefit
  Family Incomes
  Family Incomes
  Supplementary Benefit Recipients (Rent Payments)
  Supplementary Benefit Recipients (Rent Payments)
  Royal Liverpool Teaching Hospital
  Royal Liverpool Teaching Hospital
  Orthopaedic Services (Birmingham)
  Orthopaedic Services (Birmingham)
  Prescriptions
  Prescriptions
  Community Psychiatric Nursing
  Community Psychiatric Nursing
  Crossroads Care Attendant Scheme
  Crossroads Care Attendant Scheme
  Bowthorpe Hospital, Wisbech
  Bowthorpe Hospital, Wisbech
  Disclosure of Information
  Disclosure of Information
  Local Authorities (Statutory Duties)
  Local Authorities (Statutory Duties)
  Disabled Persons (Transport)
  Disabled Persons (Transport)
  Pensions
  Pensions
  Family Income Supplement
  Family Income Supplement
  Heating Costs
  Heating Costs
NORTHERN IRELAND
  Secretary of State (Engagements)
  Secretary of State (Engagements)
  Historic Buildings
  Historic Buildings
  Ballygowan Road, Castlereagh
  Ballygowan Road, Castlereagh
  Housing Executive Property (Squatters)
  Housing Executive Property (Squatters)
SCOTLAND
  Education (Expenditure)
  Education (Expenditure)
  Corporal Punishment (Schools)
  Corporal Punishment (Schools)
  Elderly Persons
  Elderly Persons
  Historic Buildings
  Historic Buildings
  Royal High School
  Royal High School
  Scottish Development Agency
  Scottish Development Agency
  Devolution (All-Party Talks)
  Devolution (All-Party Talks)

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

BARONESS AIREY OF ABINGDON
Diana Josceline Barbara Mrs. Neave Airey, having been created Baroness Airey of Abingdon, of Abingdon in the County of Oxford, for life—Was, in her robes, introduced between the Lord Thorneycroft and the Baroness Young.

LORD GIBSON-WATT
The Right Honourable James David Gibson-Watt, MC, having been created Baron Gibson-Watt, of the Wye in the District of Radnor, for life—Was, in his robes, introduced between the Lord Cobbold and the Lord Glenkinglas.
Several noble Lords—Took the Oath.

OVERSEAS STUDENTS
2.46 p.m.
Lord GLADWYN: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they agree with the well-substantiated finding of the London Conference on Overseas Students that there is no question of such students being subsidised by the State to the tune of £100 million a year, and that, on the contrary, even from a strictly financial point of view, their presence results in a clear credit balance for the nation.
The MINISTER of STATE, DEPARTMENT of EDUCATION and SCIENCE (Baroness Young): My Lords, Her Majesty's Government remain of the firm opinion that in 1979–80 the quantifiable
812
demand made on public funds by overseas students will amount to about £100 million.
Lord GLADWYN: My Lords, I thank the noble Baroness for that reply. May I ask her whether she is aware that the findings of this conference, which no doubt she has read, seem to be broadly speaking acceptable to all those responsible for higher education in this country? Therefore, may I respectfully ask her also whether the Government would agree to give a detailed reply to the arguments advanced by the conference in this paper, so that we may all know the precise reasons for the assumption which has just been made—an assumption without any good reasons supporting it, apparently—that the students are in reality now being subsidised by the State to any extent whatever?
Baroness YOUNG: My Lords, the basis of the £100 million that I have indicated is that the fees currently paid by overseas students in 1979–80 will amount only to some 40 per cent. of the costs of their courses. The balance of 60 per cent. is currently provided through public funds, and that is the basis of the figure to which I have just referred.
Lord GLADWYN: My Lords, if the Minister will be kind enough to read this report she will see that that is simply not so. Indeed, the arguments that can be advanced against that assumption seem overwhelming.
Baroness YOUNG: My Lords, I have of course read the report to which the noble Lord refers, but the fact is that that is based on using marginal costs whereas for other purposes of public funding of institutions the basis is unit costs.
Lord WEDDERBURN of CHARLTON: My Lords, would the Minister tell the House what account the Government have taken of the unanimous plea of the Committee of Vice-Chancellors and Principals imploring the Government to reconsider this falacious belief? Secondly, may I ask her to recognise that this policy will debar universities—whose income is being cut by an average of 13 per cent. and in the case of certain institutions, including those in the University of London, in which I am proud to declare

813
an interest, of something over 30 per cent.—from recouping that income from overseas students, especially students from the Commonwealth, who have looked to Britain for many years? That is so because of the massive increase in tuition fees which the Government are insisting on placing on universities, of between £2,000 and £5,000 a year, which will make our universities have the highest tuition fee system in the world? Thirdly, would the noble Baroness not accept the words of the Secretary General of the Vice-Chancellors Committee two days ago, that this policy will inevitably end in universities, in a year or two, being unable to pay their staffs, being unable to meet their commitments—
Several noble Lords: Order!
Lord WEDDERBURN of CHARLTON: —and therefore will inevitably damage irreparably the education which they can offer—
Several noble Lords: Speech!
Lord WEDDERBURN of CHARLTON: —not only to overseas students—I am sure the Minister will wish to hear my final few words—but to home students who come from British schools as well?
Baroness YOUNG: My Lords, the Government have of course discussed the matter of overseas students with the Committee of Vice-Chancellors and it is our proposal that we shall be entering into detailed discussions with them for some means particularly of helping postgraduates. The fact is that every time the charges to overseas students have gone up, so the number of overseas students in this country has increased. It is perfectly clear that the numbers overall have increased from 32,000 in 1970–71 to 85,000 today, so we have to remember that in the background to our thinking. The Government have looked at all these matters in the context of their need to look at the costs of the total education budget and we believe, although we should prefer not to do many things, that in this context this is an appropriate saving that we can make to balance the budget in other respects.
Baroness DAVID: My Lords, is it true that there are to be certain reductions for EEC students? If so, would it not be suitable to make similar reductions for Commonwealth students?
Baroness YOUNG: There will be special arrangements for EEC students, my Lords, but the way in which many Commonwealth students are currently looked after through ODA will continue.
Lord LEATHERLAND: My Lords, may I ask the Minister, and I do so as a former university treasurer, whether it is a fact that as a result of these people being educated in Britain and then going back to their own countries, they forge a link with Britain which serves British industry very well indeed in future years?
Baroness YOUNG: My Lords, what the noble Lord says undoubtedly has some truth in it and there are those links, but it is very difficult to quantify in exact terms what the gains are. The figures I have given are the figures which apply to the education budget and it is very difficult to offset those against other figures which may be true but which are quite unquantifiable and would not in any event affect the need to cut Government expenditure.
Lord ROCHESTER: Nevertheless, my Lords, even if the subsidy is as high as £100 million a year, would it not be very hard to find another subsidy of the same amount which gave the same value for money in terms of our influence in the world at large?
Baroness YOUNG: That would be an extremely difficult question to answer, my Lords, because one would have to look at the complete budgets of Government spending. What I and my colleagues are concerned with is the education budget and we have had to look at all aspects of it.
Lord GLADWYN: My Lords, would the noble Baroness not agree that this is not an economy at all, that it is the reverse of an economy?
Baroness YOUNG: My Lords, that is a statement I am not prepared to accept. I have read the article to which the noble Lord referred, and if one tries to balance

815
it by the amounts of money overseas students might spend in this country, which in effect is describing them as a kind of invisible export, that is an unquantifiable sum, whereas the other sums are in fact on the education budget.
Lord ROBBINS: My Lords, will the noble Baroness realise that many of us have no objection to the raising of fees in general, provided that it is done after proper consideration of the financial situation and the benefits and losses accrued therefrom? But there are, I think, a substantial majority of those of us who have worked in universities who regard this discrimination as morally shabby. If I may be permitted to quote in one sentence the thought that goes through my head: I should have been ashamed if, in the mid-thirties when Dr. Emminger did the London School of Economics the honour of registering there, I had had to say to him, "Since you come from Germany I am obliged to charge you a higher price than someone who comes from Eton".
Baroness YOUNG: My Lords, I should like to assure the noble Lord, Lord Robbins, that this matter had not been gone into without very careful consideration of all the facts regarding it; but as an economist he will know better than I that the rate of the fees at universities that home students now pay is, to a certain extent, an artificial figure. When we are talking about students from overseas we should remember that they are now paying more nearly the true cost, and this has therefore put us into a particularly difficult situation. We have looked at this as one aspect in a very difficult exercise that we have had to carry out. The Government have been committed to cutting public expenditure and the education budget has had to take its share of it; and this is one way in which it is happening.
Lord PITT of HAMPSTEAD: My Lords, is the Minister aware of the fact that, because of the suggestion to charge a smaller fee to people from the EEC, it will be possible for a student from Martinique to come here and be educated at a cheaper rate than a student from St. Lucia, whereas in fact the Martinique
816
student, having been trained, will go back and use all the training he has received to aid France, while the St. Lucian would probably use his training to aid Britain?
Baroness YOUNG: My Lords, I should like to assure the noble Lord, Lord Pitt of Hampstead, that our proposals include, as before, the arrangements which have been made particularly, I think, for students from former British colonies to come and study through the Overseas Development Agency, and that is a separate exercise from the one that I am describing.

IMMIGRATION RULES: PROPOSED CHANGES
2.57 p.m.
Lord AVEBURY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how they reconcile their proposals for changes in the treatment under the law on immigration of husbands and fiancés of women with a right of abode in the United Kingdom with their obligations under the International Covenant on Civil and Political Rights and the European Convention on Human Rights.
The PARLIAMENTARY UNDERSECRETARY of STATE, HOME OFFICE (Lord Belstead): My Lords, my right honourable friend the Home Secretary will very soon be presenting a White Paper containing proposals for changes in the immigration rules. The Government do not believe that these proposals will contravene our international obligations.
Lord AVEBURY: My Lords, is the noble Lord aware that, according to the best advice that I have been able to receive, these proposals are contrary to Articles 3, 14, 16, 17, 23 and 26 of the International Covenant on Civil and Political Rights, and Articles 8, 12 and 14 of the European Convention? Is the noble Lord further aware that the Home Secretary publicly admitted that the proposed changes regarding husbands and fiancés are discriminatory, but refused to be drawn on

817
whether or not the Government's policy would be reversed if the European Court should subsequently find us guilty of an offence? In the circumstances, would it not be better to think again about this matter?
Lord BELSTEAD: My Lords, not one of the articles which the noble Lord has quoted so far as the International Covenant is concerned is relevant, because, when the previous Government ratified the covenant in 1976, the Government entered a reservation so far as this country's immigration control is concerned. So all the articles that the noble Lord quoted to me are not relevant at all. So far as the European Convention is concerned, I repeat that the Government do not believe that we shall contravene the convention, but perhaps your Lordships would prefer to see the actual text of the White Paper before we discuss that matter in detail.
Baroness BIRK: My Lords, is the Minister aware that a woman who is a citizen of any other EEC country may come to Britain and bring her overseas husband with her? This puts British women in an absolutely absurd and iniquitous position. Is the noble Lord further aware that countries such as the United States, Sweden, and Israel treat men and women citizens alike, and there is no bar on foreign spouses? Perhaps he could let me know whether there is any developed nation which discriminates against women in the way that is proposed by this Government.
Lord BELSTEAD: My Lords, I do not believe that the reply to a Question for Written Answer in another place on 1st November, from which the noble Lord's Question arises, in any way reflects proposals which are sexually discriminatory. The abuse of the arranged marriage system is in itself sexually discriminatory, and I am surprised that the noble Baroness does not recognise this. It uses girls in this country in such a way as to enable men to enter illegally, in effect. I think this is something which all fair-minded people in this country would wish to see brought to an end, and it is at this that the Government's proposals are aimed.
Baroness BIRK: My Lords, I am sorry to intervene again but, in view of
818
what the Minister has said, I think we ought to be presented with some evidence about this—what are the abuses, what are the numbers concerned?—so that we know on what basis this really reactionary proposal is made.
Lord BELSTEAD: My Lords, that is a perfectly fair question, and perhaps the noble Baroness, and indeed the House, would prefer it if detailed statistics were given when the White Paper is presented; but, in broad terms, the number of husbands coming into this country has changed since the concession was made by the previous Home Secretary, Mr. Roy Jenkins, in 1974, so that we now have husbands coming in at three times the rate at which they were coming in during 1974. So far as concerns the number of male fiancés coming in, the rate of increase is considerably greater.
Viscount MASSEREENE and FERRARD: My Lords, would my noble friend not agree that, regarding international civil and political rights, it would be equally apt to ask Members opposite how they reconcile their obligations under the European Convention on Human Rights with the trade union closed shop?
Several noble Lords: Oh!
The Lord Bishop of TRURO: My Lords, in view of the fact that there appears to be an admitted intention to discriminate on grounds of colour, may I ask the noble Lord whether the Government have sought the advice of the Commission on Racial Equality on the implications of such a step?
Lord BELSTEAD: My Lords, I should like to say to the right reverend Prelate that, if he cares to look at the Written Answer to a Question in another place given by my right honourable friend the Home Secretary on 1st November, he will see, I think, that it is not apparent that the proposals are racially discriminatory. They will mean that Asian and other girls from the new Commonwealth who are born here will benefit equally with women born in the United Kingdom from provisions enabling them to bring in the partners of genuine marriages.
The Lord Bishop of TRURO: My Lords, I asked whether the Commission on Racial Equality had been consulted. Js that so, or not, may I ask the Government?
Lord BELSTEAD: No, my Lords, so far as I know that is not the case, but it is not the case for the reason that I have given.
Lord HATCH of LUSBY: My Lords, will the noble Lord agree with his right honourable friend the Home Secretary that the proposals mentioned in this Question are both sexist and racialist; and, if so, does this not directly contravene the pledge given by the Conservative Party in its Manifesto that all British citizens should be treated equally?
Lord BELSTEAD: My Lords, the noble Lord is quite right about the Conservative Party Manifesto, but the Manifesto also said that firm immigration control is essential for good community relations, and it is this that the Government are attempting to achieve.
Lord SEGAL: My Lords, can the noble Lord say whether the immigration officers (who, by and large, do a difficult task with sympathy and humanity) will give priority to immigrants who are refugees from political and religious persecution; and will he not agree that these immigrants, in respect of whom this country has a great tradition, are likely to prove a far greater asset to the community than those who seek to enter the country because "the grass is greener on the other side"?
Lord BELSTEAD: My Lords, I should like to say this to the noble Lord, Lord Segal. I think it has run across party boundaries that in this country we really have attempted to do our best so far as concerns people who are fleeing from régimes which are harsh; and, of course, the latest example of this has been the tragedy of the Vietnamese boat people. I do not know whether it exactly answers the noble Lord's question, and indeed I think we ought to wait until we have the statement on the White Paper, but may I draw the noble Lord's attention to the second paragraph of the Written Answer given by my right honourable friend the
820
Home Secretary on 1st November, in which he refers to the discretion which the Secretary of State has in looking at applications for entry into this country.
Lord AVEBURY: My Lords, on the question of the abuse of the arranged marriage system, is the noble Lord aware that in an answer which I think he himself gave me it was shown that, since the change in the rules in March 1977, only 356 husbands have been refused leave to remain indefinitely in the United Kingdom following the 12 months' probationary period, and that this amounts to less than 3 per cent. of the total number of husbands admitted during that period? Further, is the Minister aware that in neither of the instruments I mention in my original Question, nor in the law of any civilised country, can there be found the notion of reasonable and unreasonable discrimination, introduced in the letter from the noble Lord to me of 3rd August? If the Government really believe in the rule of law, as they say, then why do they persist in doing something which is clearly contrary to the obligations we have assumed, at least under the European Convention on Human Rights, to which Great Britain has solemnly bound itself by its adherence to that instrument?
Lord BELSTEAD: My Lords, to the first part of the noble Lord's supplementary question I would simply repeat, without going into statistics, which I have but which I do not think the House wants at the moment—
Lord AVEBURY: Yes, my Lords.
Lord BELSTEAD: Very well, my Lords. In 1973, before the concession was made by the then Home Secretary in 1974, there were some 2,440 husbands who were already here and were allowed to settle. In that year, a further number of husbands were admitted for settlement, making a total of about 3,000 of these men who had then entered the country. In 1974, only one year later, after the concession, some 7,000 husbands were admitted; and last year that total had risen to 9,500. So far as fiancés are concerned, in 1973, before the concession, only a handful of male fiancés was admitted for settlement. Last year, the number was over 2,000. I think those statistics show that this is a practice

821
which not only is deliberately evading immigration control but is increasing. I say that because I think, if the noble Lord will forgive me for saying so, he really is ignoring the fact that there is a problem here, and it is a problem which is on the increase.
Lord AVEBURY: My Lords, the noble Lord's figures do not show anything of the kind. Is it not the case that, if the noble Lord wants to show that abuse is taking place, he has to demonstrate to the House that during the 12 months' probationary period, for which husbands are now admitted following the change in the rules in March 1977, further leave to remain is then refused? Is it not correct to say that in a Written Answer to me the other day the noble Lord himself gave the figure that only 356 husbands had been so refused leave to remain permanently in the United Kingdom since the change in the rules, and that this represents less than 3 per cent. of the total admitted during that period?
Lord BELSTEAD: My Lords, I have the pleasure of answering in writing so many Questions from the noble Lord on this subject that I am afraid that one or two of my replies slip my memory. Perhaps the details of this matter are something which we should now debate on the statement on the White Paper.

ANIMAL IMPORTS: RABIES ORDER CONDITIONS
3.7 p.m.
Lord GRIDLEY: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are satisfied that the legal conditions applicable under the Rabies Order 1974 to the import of animals through Heathrow Airport are being observed.
The MINISTER of STATE, MINISTRY of AGRICULTURE, FISHERIES and FOOD (Earl Ferrers): My Lords, the Government are satisfied that the terms and conditions of the 1974 order are widely observed.
Lord GRIDLEY: My Lords, while thanking my noble friend the Minister for his reply, may I ask him whether it is not a fact that, under an informal Ministry and airlines animal dealers agreement at Heathrow, live animals are being imported through Heathrow to transit sheds or cargo sheds, and not direct to the quarantine station, and that thus they are for many hours under no supervision at all? Does this not invite abuse of the Rabies Order?
Earl FERRERS: My Lords, when an animal is imported to Heathrow it goes into a holding facility, where it may stay for up to four hours, to be collected from there by an appropriate carrying agent, who will take it to the quarantine kennel. If it has to stay for longer than four hours, it will then go to the animal quarantine centre, where it can stay for 48 hours before going to a quarantine kennel.
Lord DRUMALBYN: My Lords, would my noble friend remind the House what animals are covered by the Rabies Order?
Earl FERRERS: Several, my Lords: dogs, cats, jackals, foxes, wolves, bears, raccoons, coatis, pandas, otters, weasels, martens, polecats, badgers, skunks, mink, ratels, flying lemurs, anteaters, sloths, armadillos, hyraxes, tree-shrews, lemurs, indrises, sifakas, aye-ayes, lorises, bush-babies, tarsiers, titis, uakaris, sakis, howlers and several others.

GOVERNMENT STATEMENTS
Lord DENHAM: My Lords, with the leave of the House, my noble friend the Foreign Secretary will be making a Statement on Rhodesia at approximately 3.30 this afternoon. This will be followed by a Business Statement to be made by my noble friend the Leader of the House.

THE NATION'S DIFFICULTIES AND OPPORTUNITIES
3.10 p.m.
Lord THORNEYCROFT Lord THORNEYCROFT rose to call attention to the difficulties and opportunities facing the country; to take note of Her Majesty's Government's policies in

823
dealing with them; and to move for Papers. The noble Lord said: My Lords, I rise to move the Motion in my name, which is couched in fairly unexceptional terms. It is to draw attention to the difficulties and opportunities facing the country and to take note of the policies to deal with them. At this time of year, it is indeed not unusual for the House to have a general debate which rises above the details of legislation and takes a view of the broad strategy of the Government of the day. For reasons well understood, we are not having that kind of debate on the gracious Speech this year. But it may be for the convenience of the House that we should at least have one such general debate.
My Lords, I do not speak as a member of the Government. I do not have the responsibilities and the heavy burdens of office. There is a small but positive gap between this Bench and the Front Bench there. I speak, however, as the chairman of a great political party and I think it is perhaps not unreasonable that we, all of us, on the Back Benches should have a chance of saying how we view the scene and what we think could usefully be done about it. If I start with the scene, I am going to put it shortly, drawing it on the canvas with a broad brush, but I put it this way. We are a country heavily in debt. It is said that the interest payments with which we support that debt could, of themselves, if devoted in another way, pay for a National Health Service or for the defences of the nation. It is a massive burden. We pay large sums in tax—not quite as large in direct taxes as we used to, but still very substantial. The gap between what a man earns at work and what he earns if he does not work is still, in many cases, a pretty narrow one. I observed that the Social Services Commission was urging that that should be kept narrow for a long time. I, myself, hope that such advice will not be followed.
We are a nation producing not much more than we produced at the time of the three-day week ; our productivity is among the lowest in Europe, and despite the enormous assets of North Sea oil and natural gas our balance of payments is only narrowly and sometimes uncertainly achieved. On top of that, we find ourselves faced with a planned overspend of
824
somewhere about £3,500 million. That is a plan to spend money of that kind, which is not available and with no plans to raise it. That is a grave and difficult series of problems to confront us. Those are facts and your Lordships will observe that I have not tried to apportion blame about them; I take them as the facts of the situation confronting us at the present time. I doubt whether in this debate they will really be controverted from either side of the House.
We could meet our problems by putting up taxes; but we would have to raise the taxes to something like 38 per cent. of a standard rate or VAT at 20 per cent. We could print the money—but this is something that we have tried before, with disastrous consequences. Or we could try to borrow even more; but, as I have already indicated, the cost of borrowing is now more than we can sustain. It is true that in these circumstances to cut the planned expenditure is the only option realistically open to this country at the present time. If anybody in this House thinks that there are any other realistic options one would listen to them in the debate, but it does not seem so at this moment.
It is true that after we have cut, after we have made all the efforts that the Government are making at the present time, that, of itself, will create no room for extra taxation. We shall still be spending as large a proportion of the gross national product as before. Public spending in the coming year will be as high as, indeed marginally higher than, it was last year. But this is not an argument against the policies. Rather, it is the measure of the need for them. Therefore, I conclude that the Government are right in their decision to impose cuts and the debate is more about where we spend and what we save.
My Lords, we were left with some pretty heavy burdens; we were left with a post-dated cheque on wages of £250 million. There is no cash ready available to pay for it. It is the equivalent of 10,000 hospital beds or looking after 300,000 patients for a year. When we talk about wages, I sometimes think it a good thing to translate wages into the terms of the real things that that money represents in the country in which we live. Every wage increase which is unmatched either

825
by increased production or by improved efficiency is a direct blow to the weak, to the sick and to the unfortunate in this country.
Of course, the best way of saving is not in services but in overheads. If I am an expert in anything, I would claim to have had some experience in cutting Government expenditure. My knowledge was learned the hard way. If your Lordships will bear with me for just a moment, as an old hand looking at the National Health Service, I think that, with a proportion of 100,000 administrators to 33,000 doctors, surely there is an opportunity there. Surely, there is something that could be done, or quite a number of things that could be done, inside the National Health Service without having any immediate or desperate effect on the patients.
Let us take my old friends in the Ministry of Defence. I remember in the old days if you approached them on cuts they would say, "Minister, it means the end of the First Armoured Division". I am not sure that there is a First Armoured Division at this moment, but the same kind of argument will be advanced all the time. The last thing they think of looking at is the enormous machinery at the centre—with the Navy, the Army and the Air Force, most of them, alas! still pursuing their separate policies for their catering services and the rest. Believe me, there is room for a good deal of movement together. And there are those who cut in most sensitive areas. I am bound to say that the Inner London Education Authority's choice of schools would bear a little examination, if I may suggest it to my noble friend.
In regard to a Government department, if one asks such a department to cut, the last thing they will offer is a deputy secretary. These are sacred to the organisation. That is why I rather favour as a profession putting in outside people to examine closely on the spot where the fat really is, and where it could most usefully be removed. Regarding the local authorities, I observe that my right honourable friend the Secretary of State for the Environment suggested that if we did not replace one person out of every four who left the Civil Service it would be a good thing. But what does the Brent Council do? I observe today
826
that, having lost their chief executive, they are appointing two chief executives in his place. These are the things which the public ought to go for.
The Lambeth Council now has one local authority employee for every 28 fortunate citizens of Lambeth. They have a debt interest payment of £34 million a year which somebody has worked out as £1 a day for every family of three. There is room for indignation in Lambeth, but not at the Government for cutting. There is room for indignation at the appalling waste of public money in one area after another. I should like the indignation that the people feel, the pain and suffering which we all feel in some of these cuts, to be diverted for a moment to examine together where we can cut overheads; where we can prune overblown bureaucracies; where we can cut down the amount of administration, and how best we can concentrate on providing the real services we require.
So far I have dealt with the facts and with the actions that are taken on them. I, however, know that the crisis that confronts this country is rather more subtle than that. Many of the problems that face us as a nation are moral as much as they are monetary. The Labour Government, when they were in office, were supported by a minority of the electorate and led by social democrats—
Several noble Lords: So are you!
Lord THORNEYCROFT: I know, my Lords. I accept this completely. If the noble Lord will follow me, he will see the point of what I have to say. The Labour Government were led by social democrats; yet they were determined to achieve a permanent shift to the Left, an irreversible shift to the Left. I am not absolutely sure—I know they lost the election—whether they succeeded or failed in that particular objective. What I do know is that the attempts to do it had some dramatic effects upon this nation when they were in office. I do know that the attempt to do it also has had a dramatic effect upon the Labour Party now that it is in Opposition. The attempt by the unions to obtain control of the Labour Party through the NEC is of much more than domestic importance to the Labour Party. It is a trend which goes to the very root of the prospects

827
of this country, its government and its constitution in the years to come.
Mr. Clive Jenkins was claiming at the Trades Union Congress that the unions provided a democratic alternative government for the British people. My Lords, the unions provide nothing of the kind. It is vital that in this House, as indeed in all parts of Parliament, this principle should be asserted. What, therefore, should be the attitude to the unions? Once every few weeks I leave the Central Office and go to Transport House. There I sit down with Mr. Moss Evans, Mr. Jack Jones and other leading trade unionists and industrialists on the Ernest Bevin Memorial Trust. There we plan together how best young trade unionists can go overseas to study the events in other countries, how they run their affairs, and so forth. That is not an important discussion so far as grand policy is concerned, but to me it represents a kind of small island of sanity in a world in which sometimes sanity is sadly missing, a tiny bridge in a world where bridges are singularly absent.
The Conservative Party approaches the trade union movement not as an enemy but as a friend. Millions of trade unionists voted for the Conservative Party in the last election. The Conservative trade union movement itself is growing constantly in size. Millions of trade unionists—look what is happening in British Leyland at the present moment—are demonstrating that they are really determined to try to get an atmosphere of reality into the world in which they live and into the relations which exist between their companies and the unions of which they are loyal members.
How do we then approach this matter? The trade union movement is based on privilege—and rightly based on privilege. Under our laws, the trade unions are placed above the law as it applies to other institutions or other individuals. But the public in this country are increasingly aghast at the abuse of trade union power; at the activities of NUPE; at the blackmail tactics of unions like SLADE; at their arrogance in refusing to participate even in an inquiry.
It is not just one section of the public; it is all sections of the public. It includes millions of trade unionists as well. The Government propose some modest reforms
828
in trade union legislation; reforms with regard to the ballot, the closed shop and the picket. As they go forward, I think that it would be a very brave man who would attack them for going too far. The criticism that they are likely to meet in the country is that they are not going far enough. I am, I claim, a friend of the trade unions. I believe in preserving the privileges which they have earned and which I believe were rightly given to them. I see the gravest danger that if those privileges are abused too far the British people will say: "Privilege is all right; but privileged men have special additional responsibilities themselves and these responsibilities have to be shown and exercised".
Going beyond the trade union side as to what happens in the places where we work, this country is pre-eminent in many things; it is pre-eminent in its capacity to invent and design; it is pre-eminent in its service industries. It is pre-eminent in agriculture; but when it comes to men working in large units, particularly when heavily unionised, we show a degree of inefficiency compared with our competitors which is going to place the gravest problems before us if we are to build up the kind of society which we want. If we are to pay the kind of wages which are earned in other parts of the world, if we are to have social services of the standards which all of us on all sides of your Lordships' House would wish to see, we must create wealth; we must earn profits; we must be able to have enough to distribute this wealth and these profits widely and for the benefit of all. We must provide opportunities for the strong and succour for the weak. My Lords, I beg to move for Papers.

RHODESIA: CONSTITUTIONAL CONFERENCE
3.30 p.m.
The SECRETARY of STATE for FOREIGN and COMMONWEALTH AFFAIRS (Lord Carrington): My Lords, I must apologise to the Leader of the Opposition but, with the leave of the House, I will make a Statement on Rhodesia. A similar Statement is being made in another place.
In my Statement of 24th October I described the proposals which the

829
Government had put to the constitutional conference for the holding of elections in Southern Rhodesia and the administration of the country in the pre-independence period.
The full proposals which the Government tabled on 2nd November have been placed in the library of the House. We have also published today as a White Paper the summary of the independence constitution accepted by the parties at Lancaster House.
At Lancaster House we have now achieved provisional agreement on a constitution, and have made considerable progress towards agreement on the interim period. I hope that we shall soon be able to proceed to negotiations for a ceasefire and the arrangements for monitoring it. The conference is therefore moving towards a conclusion. We must be able to act without delay to implement the final agreement for which we are working with all parties. Any delay in putting a settlement into effect would cost further lives and could place the settlement itself at risk.
The purpose of the enabling Bill which the Government are introducing later today is to enable us to implement the interim arrangements without delay. It will enable the Government to make the independence constitution, to introduce parts of it before independence, to allow elections to be held, and to provide for the appointment of a governor with full powers. Existing legislation is not adequate for these purposes.
The Salisbury delegation have accepted the proposals which the Government have put to them as a basis for a settlement. The Patriotic Front have also accepted the principles of a British governor and new elections. We are therefore very close to a settlement which is fully consistent with the communiqué of the meeting of Heads of Commonwealth Governments in Lusaka. In these circumstances the Government believe that it would be wrong now to take the positive action of renewing Section 2 of the Southern Rhodesia Act 1965. But, as the House will be aware, the great bulk of sanctions—those relating to direct trade and the transfer of funds—do not depend on Section 2 but on orders made under
830
other Acts, and they will continue until they are revoked. These sanctions will be lifted as soon as Rhodesia returns to legality with the appointment of a governor and his arrival in Salisbury.
The Bill which will be placed before the House enables the Government to take whatever action is necessary in relation to Rhodesia, depending on the state of progress at the conference. This includes the power to continue those sanctions at present imposed under Section 2. But, given the position now reached, the Government find it difficult to envisage circumstances in which this would be necessary.
While the Government would have preferred to give both Houses more time to consider the Bill, the timing of the introduction of the Bill has been related to the progress of the conference. It is essential that the governor should be in a position when, as we hope, agreement is reached to give effect to a settlement without delay and for elections to be held as soon as possible. A great deal of progress has been made in the talks. We were glad to hear this morning that President Kaunda will be coming to London tomorrow. This will be a most timely visit. His presence will, I am sure, assist our progress towards a peaceful settlement.
3.34 p.m.
Lord GORONWY-ROBERTS: My Lords, the House will be grateful to the noble Lord, Lord Carrington, for making that Statement. Clearly, the Zimbabwe-Rhodesia issue has reached a crucial and perhaps a decisive stage and, as throughout the past nine weeks, the Opposition—we on this side of the House—do not propose to say or do anything today which may in the least imperil the chances of an agreed settlement. The noble Lord will need all his very considerable skills to complete a settlement which will be agree-able to all parties.
We very much welcome the publication, even at this late stage, of a White Paper summarising the independence constitution. I have one question to put on the Statement we have just listened to. In paragraph 2, there are these words:
" the independence constitution accepted by the parties at Lancaster House ".

831
Then immediately after that there follows this sentence:
" At Lancaster House we have now achieved provisional agreement on a constitution …".
Perhaps the noble Lord may be able to assure us that there is in fact final agreement on the independence constitution. If so, it is a very big step forward indeed and, if there is such agreement—and by "agreement" we would mean the agreement of the two delegations from Rhodesia at Lancaster House and of the Front-Line Presidents as well as the British Government—then we would not cavil at the most expeditious way of putting into effect what flows from such agreement. Nevertheless, my noble friend the Chief Whip will be putting certain Business questions, probably with a certain amount of professional acerbity, after we have completed this particular set of exchanges.
I will say no more at this stage but will leave it to my noble and learned friend Lord Elwyn-Jones to raise one or two legal points affecting our position internationally. However, I will put these two questions to the noble Lord. They relate to the action which he clearly proposes to take, possibly in the next few days, in relation, for instance, to the nomination and accrediting or empowering of a governor. That may happen—I do not know—very quickly indeed.
First, as to sanctions, are the Government satisfied, and will they be in a position to satisfy the House, that nothing they propose in regard to sanctions will in the least place us in default with the United Nations, by whose resolutions in this matter we are morally and legally bound? Secondly, as to the management of the transition stage, which is possibly one of the most difficult aspects of this agreement that the noble Lord has had to cope with, is it intended that there shall be an assumption of legality, as we understand it, on the appointment and positioning of the governor with full powers in Salisbury ahead of the agreement on a ceasefire? If so, it seems to me that he and the country may be placed in a very difficult situation. We devoutly hope that the reference made by the noble Lord in his Statement to the possibility of proceeding quickly to negotiations for a ceasefire and arrangements for monitoring it will bear fruit.
832
Those are the two points I would leave with the noble Lord and the House at this point. However, he needs no reassurance from me that we shall seek to be as helpful as possible, subject to the completion of a truly agreed and durable solution. We have not yet seen the enabling Bill. We hope very much that it is an enabling Bill and that whatever flows from it in the form of regulations sanctioned by Orders in Council will in every case return to both Houses on the basis of Affirmative Resolutions.
3.40 p.m.
Lord GLADWYN: My Lords, we should like to be associated with the noble Lord, Lord Goronwy-Roberts, in welcoming this very important and extremely satisfactory Statement on the part of the Government. I must say that a month or two ago few people in this country thought that the noble Lord, Lord Carrington, would get as far he has. The fact that he has got as far as this seems almost to be approaching a miracle. If he brings it off, he deserves the congratulations of the entire nation. It is quite true that there is now one outstanding point which is very difficult, and which is, of course, the cease-fire and the arrangements for monitoring it. We can only hope that, with the arrival of President Kaunda, some kind of formula will be found at this stage. Perhaps we may even hope that it will be fairly soon. Of course, everything else depends on that.
I have one question to ask, which is virtually the same as that put by the noble Lord, Lord Goronwy-Roberts. I read in the Statement that,
" These sanctions will be lifted as soon as Rhodesia returns to legality with the appointment of a governor and his arrival in Salisbury ".
It rather depends on what is meant by "returns to legality". I imagine—I may be wrong—that when the governor arrives in Rhodesia, there will already have been some arrangement on a ceasefire. It is difficult to imagine that the governor will be able to do much without a return to a ceasefire. So one assumes that "returns to legality" means that there will be an agreement on a ceasefire, also.
If that is so, then the remaining question is the United Nations. We have always assumed that the United Nations would have to agree in principle. But if it

833
really is a question of returning to legality in the sense that I have already used the term, then a great many people in this country would certainly not be in favour of keeping on sanctions. How you get the agreement of the United Nations is an interesting question, and the noble Lord may like to make some reference to that aspect when he comes to reply.
3.42 p.m.
Lord CARRINGTON: My Lords, I am grateful to both noble Lords for their approach to the Statement that I have made. The White Paper on the constitution, which we have laid for convenience in the Printed Paper Office, has, of course, been available in the Library for about a month, so I think that any of your Lordships who would have cared to could have read it in that time. But I thought it would be convenient if it was put in the Printed Paper Office, in case any of your Lordships had not seen it.
The noble Lord, Lord Goronwy-Roberts, asked about the difference between accepting the constitution and the phrase following. The situation has always been that both delegations have accepted the constitution, on the understanding that they are satisfied both with the interim period and with the ceasefire; they arc happy with the constitution, provided that they are happy with the other processes. I thought at this conference that it was necessary to proceed stage by stage on that basis, because, if one can learn anything from the past, it is that if you try to do everything at once all the waters get muddied. It seemed to me that on this occasion the right thing to try to do was to separate the three issues of constitution, interim arrangements and ceasefire, and having got conditional agreement on the first two, then to tackle the last one.
I hope very much that we are now entering into a phase when things are going to happen very quickly indeed, and I agree very much with what the noble Lord, Lord Gladwyn, said about that. If things happen very quickly, I think that, in a sense, the sanctions issue will resolve itself, because we shall be able to take off sanctions legally very quickly. Sanctions will be taken off when the governor takes over in Salisbury, and he will take over
834
when a ceasefire has been agreed. I would not say that all the shooting will have stopped, but not until the ceasefire is agreed will he take over. Then, at that point, there is, of course, legality.
I said in the original Statement that the Government had taken powers, under the new enabling Bill which will be published this afternoon, to continue sanctions which are at present imposed under Section 2, which we do not intend to move. But I went on to say that, given the position now reached, the Government find it difficult to envisage circumstances in which this would be necessary, which means to say that I hope that we shall continue very quickly. But, of course, the bulk of the sanctions still remain and I think I am satisfied, and the Government are satisfied, that we would not be in breach of our United Nations obligations about sanctions, and we would be in a good legal position and a position which I, personally, would find unanswerable, if we could say to the United Nations that the rebellion was at an end, that Rhodesia was once more a legal part of Her Majesty's Dominions and that the governor was in charge.
3.45 p.m.
Lord ELWYN-JONES: My Lords, may I welcome what the noble Lord, the Foreign Secretary, has said and ask him to clarify the position as I understand it. Is it that the arrangements about a ceasefire are a pre-condition to the sending of the governor to Salisbury and the return to a state of legality? That is the first question that I wanted to ask, and I think it is implicit in what the noble Lord has just said that that is so. But I want a little clarification on that, if he will he kind enough to give it. Secondly, will he give an assurance that when the relevant orders are brought before Parliament they will be made subject to Affirmative Resolution? Thirdly, will opportunity be given for Parliament to consider the constitutional proposals. That is a little obscure at the moment. I imagine that that will be so, but it will be as well to get an assurance to that effect. If I may say so, the summary is a helpful one. It has, in fact, been in the Library only since a week today, but that is a point of detail and is of no great importance. But if the noble Lord will give that assurance, I think it will be very

835
helpful. May I, finally, ask whether the noble Lord is aware that we on this side of the House greatly welcome the arrival of President Kaunda?
Lord CARRINGTON: My Lords, if there is to be an agreement between all the parties at the conference, between the Patriotic Front and the Salisbury delegation, it is essential that there should be a ceasefire, because if there are to be elections in which everybody takes part it is not possible to have them until there is a ceasefire. Consequently, a ceasefire is necessary. In the context that we are talking about, it will obviously be necessary for a ceasefire and for the governor to go as soon as it is arranged. I wonder whether I might find out the answer to the second question put to me by the noble and learned Lord. I am afraid that I do not know the answer, as it is drafted in the Bill, and I ought to. But I will find out.
Also, I apologise for the three-week error that I have made about the placing of the document in the Library. It certainly should have been there a month ago and I will find out why it was not. I must apologise to the noble and learned Lord for that. As regards a debate on the constitution and so on, it will be necessary for an independence Bill to be put before your Lordships' House and Parliament, as well as, I am afraid, a number of other orders on which there will be—I promise your Lordships—plenty of opportunity for debating anything to do with Rhodesia and the proposals that we are making.
Lord CHELWOOD: My Lords, may I ask my noble friend whether he could say the briefest word about the scale on which international aid is likely to be available for Zimbabwe-Rhodesia after the return to legality? Also, to what extent is he satisfied that this will match reasonably well with their needs, bearing in mind the parlous state of the economy after many years of sanctions and civil war?
Lord CARRINGTON: My Lords, I think that my noble friend raises a very important question. It has not been possible—while we have been negotiating to see whether or not it is at all possible
836
to get an agreement—to ask those who might be prepared to contribute to the rehabilitation of the country, and to help, whether or not they will do so. We know for certain that the United States will help over the question of the resettlement of land, and I have on a number of occasions recently, when visiting my colleagues in Europe and elsewhere, pointed out that there will be need for funds to assist Rhodesia to recover from these last years. I certainly accept the implication behind my noble friend's question.
3.50 p.m.
Lord BARNBY: My Lords, as the Statement included information that legislation is to be promptly introduced with the hope of a rapid passage through Parliament, and in view of the recollection of the experience of the Pearce Commission and the misfortunes which that brought about, does the Foreign Secretary feel that he is in a position to indicate that after the passage of the legislation there will be a clear understanding that a maximum time will be set before the elections are completed?
Lord CARRINGTON: My Lords, in the interim arrangements, about which I think your Lordships know, the period set aside for the election is two months. This is two months after the ceasefire actually operates, so it is a little longer than two months. In ideal conditions I think that that is, in the circumstances, too short, but we are not, unfortunately, in ideal conditions. We have to take into consideration the problems. There will be the problem of what I am afraid will necessarily be a fragile ceasefire, and there will also be the problems that the British governor will have to face in managing affairs during that period.
If I may say so, I think it is an act of some courage on the part of Her Majesty's Government to assume this responsibility for a period of time, in view of the fact that the issues in Rhodesia are not entirely unknown to the people of Rhodesia. Ever since August it has been known that there was going to be a conference, and ever since 10th September we have been discussing the question whether or not elections could be held. I have no doubt that the parties are already getting themselves ready for the election. However,

837
I am absolutely certain that my noble friend is right when he says that if the period between the ceasefire and the actual taking place of the elections is too long we shall be in real danger of losing the settlement as a whole.
Lord WIGG: My Lords, would not the Foreign Secretary agree that this rebellion which is now coming to an end has been brought about entirely by the action of the Patriotic Front in carrying the war into Zimbabwe-Rhodesia, so that it is now recognised by the rebels in that country that rebellion does not pay? Would the Foreign Secretary make quite sure that the period which is necessary for there to be free and fair elections is wholly adequate from the point of view of those who have brought this rebellion to an end?
Lord CARRINGTON: My Lords, the noble Lord, Lord Wigg, speaks as if it were a foregone conclusion that the rebellion is at an end. And the noble Lord, Lord Gladwyn, was optimistic. I must tell your Lordships that the Patriotic Front has not yet accepted the interim arrangements, and it is by no means certain that the way ahead is clear—by no means certain. I hope very much that it is and I hope that tomorrow President Kaunda will enable us to come to a conclusion. However, with regard to the question asked by the noble Lord, Lord Wigg, No, I do not agree with him. If the rebellion is brought to an end I think it will be brought to an end by the good sense and statesmanship of all concerned.
Lord PITT of HAMPSTEAD: My Lords, will not the Foreign Secretary, in doing what is really a balancing act, accept that perhaps too short a period could be as dangerous as too long a period, if not more dangerous? In other words, does he not think that an extension of the period by a month or two may provide a more balanced election which would be seen to be fair and which would be accepted as fair, whereas an election that has been forced through in a short period may be regarded as a rigged election and therefore the rebellion does not end, or the problem which that area now faces may in fact continue?
Lord CARRINGTON: My Lords, the noble Lord says that I am doing a balancing act. It is about the best description that could possibly be used. If you lengthen the period of the election too much you fall off one way. If you shorten it too much, you fall off the other way. The only thing which any of us can do in these very difficult circumstances is to make a judgment about the time which is fair for both parties or for all the parties who are taking part in the election to be able to compete in and win a free and fair election. I think that we have got it right, though no doubt there will be arguments both ways. But since I am balancing and am still on the tightrope, I hope that your Lordships will support me.

BUSINESS OF THE HOUSE
3.56 p.m.
The LORD PRESIDENT of the COUNCIL (Lord Soames): My Lords, following on the Statement made by my noble friend and the questions put to him by a number of your Lordships, it may be for the convenience of the House if I make a Statement on the Government's intentions regarding the Bill on Southern Rhodesia which is being introduced in another place this afternoon.
It is expected that the Commons will complete their consideration of the Bill in time for it to be taken through all its stages in this House on Monday next. In these circumstances, the Public Bill Office will accept amendments to the Bill from tomorrow onwards. Any such amendments should be tabled by reference to the Bill as first printed for the Commons which will be available later today in the Printed Paper Office—in fact, very soon, I hope. Any amendments tabled will then be printed with their correct references and published on Monday at the same time as the Lords print of the Bill.
Baroness LLEWELYN-DAVIES of HASTOE: My Lords, the House will be very grateful to the noble Lord the Leader of the House for explaining about the Bill. I ought to say that if the Bill, which is obviously of overwhelming importance, takes an inordinate time on Monday, we might have to ask for an extra hour or two on Tuesday. I thought it fair to mention that. Secondly, we are most

839
grateful for the information about the amendments. May I take it that five o'clock on Friday, the usual deadline for amendments, is the same deadline for this Bill, and that anything after that would be a manuscript amendment?
Lord SOAMES: My Lords, as to the last question asked by the noble Baroness, that is indeed correct. As to her first question, I must say that it is very much the hope of the Government that we shall be able to deal with this Bill on Monday because it is a matter of great urgency and because there is a final moment by which we want to get it. Therefore, I hope very much that it will be possible, in view of the fact that it is an enabling Bill of, I agree, enormous importance, to complete all its stages on Monday.
Lord WIGODER: My Lords, whatever the reasons for the delay in bringing forward this enabling Bill, we on these Benches certainly recognise that it is now being brought forward at such a late stage that somewhat more haste in dealing with it is necessary than would really be desirable. We shall certainly not oppose the taking of the various stages of this Bill with more rapidity than is customary. However, could the noble Lord the Leader of the House indicate what procedural steps he will be taking in order to achieve that?
Lord SOAMES: My Lords, we shall put down a Motion to suspend the relevant Standing Order which will enable the House to take the Bill through all its stages on the same day.
Lord LEATHERLAND: My Lords, may I ask the Leader of the House to dispel some rumours which have been going around during the last day or two, one of which is that we shall be taking this Bill tomorrow and that we shall be sitting on Friday, although I understand from the Leader of the House that in fact we shall not be sitting on Friday?
Lord SOAMES: My Lords, not if I get my way ! The Bill will be taken through all its stages in this House on Monday. What happens in another place on Thursday, Thursday night or Friday I wot not of, but we shall not be here on Friday.
Lord WIGG: My Lords, will the Leader of the House be good enough to
840
inform me, because I have perhaps missed something, whether this enabling Bill will be subject to an affirmative order if it is passed? If that is so and we are not giving a blank cheque, one's attitude towards the Bill will be much more friendly than it otherwise would be, because I do not believe in giving the Tory Party blank cheques.
Lord SOAMES: My Lords, this will enable Orders in Council to be laid; whether some of them or all of them will be affirmative as opposed to negative orders I am afraid I cannot say at this juncture but I will inform myself as soon as may be.
Lord ELWYN-JONES: My Lords, surely the Bill itself will take the ordinary course of Second Reading, Committee stage, Report, Third Reading and so on?
Lord SOAMES: Absolutely, my Lords.
Lord WIGG: My Lords, if there is any doubt on any of these points, will the Leader of the House be good enough to make quite sure, not that the "usual channels" operate but that the House will be informed as to what the procedure will be?
Lord SOAMES: My Lords, the Bill will be published and it will be available in the Printed Paper Office at any moment now. It will go through all its stages. I thought the particular question that the noble Lord, Lord Wigg, was asking me was the same question as the noble and learned Lord, Lord Elwyn-Jones, asked my noble friend the Foreign Secretary—that is, whether all the orders that flow from this enabling Bill will require an affirmative vote or not. My noble friend regretted that he could not give an immediate answer to that and, as he cannot give an immediate answer, I am terribly sorry to say that I cannot either.
Lord WIGG: My Lords, if the noble Lord the Leader of the House cannot give an answer, before we pass this enabling Bill we must have an answer and I suggest therefore that we must get the answer not later than tomorrow, because otherwise, so far as I am concerned, I shall oppose this Bill tooth and nail.
Lord SOAMES: My Lords, it will be in the Bill.

THE NATION'S DIFFICULTIES AND OPPORTUNITIES
4.2 p.m.
Debate resumed.
Lord PEART: My Lords, now we turn to mundane matters. I should like first to address my remarks to the noble Lord who opened the debate. He said that he did not speak for the Government. All I can say is that he made a very good case for the Government and I remember listening to a very fine broadcast which be made on sound radio and thinking, "My goodness, Lord Thorneycroft is again like he used to be years ago when I first knew him in 1945—Captain Peter Thorneycroft who wrote a very fine pamphlet on development areas". I am afraid he has become a little more Right-Wing since then and I regret it. I do not think I have changed my stance at all. I am proud to be a member of the Labour Party and I am proud to say that I am a socialist, in the best sense.
I welcome this debate. The noble Lord is quite right; we need occasionally to have debates of this kind where there is no specific Motion but where we can discuss the broad strategy of Government policy, although I must admit that many of the points which have been raised by the noble Lord were covered in the debate which we had on the gracious Speech, which I thought was a good and effective debate.
I regret what the noble Lord said about unions. I think he has got it wrong. He is living in the world of fantasy. I know that he is now a distinguished businessman and has done much for the regions with one of his companies in the North-West, but I think he has got it wrong. I do not think we can blame every trade unionist for shifts to the Left or even shifts to the Right. Generally speaking the trade unionists that I meet in my party and at conference are reasonable men. Obviously in any organisation or any party one may get some unreasonable people, but broadly speaking the British trade union movement is sound at heart and I am not going to attack it as some of my own colleagues do sometimes. We had difficulties, of course. I believe that the long "winter of discontent" paved the way for the downfall of the Labour
842
Government. It was not so much the Tory Party, although now I believe that the British people are beginning to see that they have the most reactionary Right-Wing Government that I have known since the war. That is not heaping abuse on the Government. In the last debate I was accused of being abusive. I am never abusive but I believe in arguing vigorously, as does the noble Lord. I do not think that abuse wins the day: you have to win it by argument and I believe that what one has to do is to show to the British people, in particular in a democratic community, that we have a good case without abuse.
I will not take too long because there are now approximately 30 speakers. The noble Lord set a good precedent in his opening speech and I propose to confine my remarks to about a quarter of an hour or probably less. Above all I want regional policies to succeed and I want to debate regional policy today. I believe that we are still living under a two nation system. I believe strongly what Disraeli said in his novel Sybil, that we have two nations. We still have two nations. We have different emphases here and there on the regions, to which I have referred so often. There are the problems of the North-West, the problems of the North-East, the problems of industrial Wales and the problems of Scotland.
Lord BLEASE: And the problems of Northern Ireland.
Lord PEART: Yes, my Lords, and the problems of Northern Ireland, as the noble Lord, Lord Blease, has quite rightly said. When I think of regional aid I think also of Ulster. So I argue that here we are still having virtually a two nation system and a most important policy which I feel is wanted is a good regional policy to revitalise these areas by attracting industry. This is something about which we are very proud. Over the years the Labour Government have given much more regional aid than successive Tory Governments and I have a whole list of figures here to prove it. I was glad to know what was said at the CBI the other day. I do not know whether noble Lords have read the speech of Sir Alastair Pilkington: I am sure he is not a supporter of the Labour Party, but he emphasised the importance of regional aid. It was not

843
only what he said at that conference but I believe it was addressed to a wider audience.
I hope that there will be no slackening in this and I trust that whoever is winding up this debate tonight—I believe it is the noble Earl, Lord Gowrie—will return to this subject because I believe that aid has been cut. I know that the noble Viscount, Lord Trenchard, defended this well and he was kind enough to send me particulars and details, but I believe that regional aid has been affected and I get the feeling that the Tories in power arc not as enthusiastic as we were at that period. It is part of our national strategy to recreate wealth in these areas. After all the men and women of my old constituency, in the steelworks, the men and women of Durham and the miners and others in different parts of the region and the shipbuilders in Scotland, are the people who produce the wealth and they are the people who have to be helped. I hope noble Lords will read carefully what Sir Alastair Pilkington said at the CBI Conference.
Added to that, we not only have to see that we have proper distribution; we have to see also that we apply the right technology. I read today—or was it yesterday?—in the Financial Times, that the micro-electronic industry support programme which began with a £70 million budget has had its allocation cut by at least £15 million and possibly as much as £25 million. Goodness gracious! this country should be in the forefront of micro-technology. That is what the Labour Government did; that is what the National Enterprise Board did. That is what was announced by a Labour Minister in another place. Now we hear that there is to be an attack on this. I hope that the noble Earl will be able to reply on this matter.
I was very proud to serve as chairman of ACARD—the Advisory Council on Research and Development—which produced a very fine report for people to read carefully, as to what the problem was re the development of the chip processes. I asked the noble Lord, Lord Soames, in a debate what was to be the future of ACARD. I asked that because of the cutting down in many Civil Service departments of superfluous activity. I
844
hope he can now tell me that he is not cutting down ACARD, and I hope he can probably tell me at some later stage in the debate—I do not want him necessarily to get up now—whether ACARD is still there or whether it has been thrown into the dustbin. I think that is important.
So I argue again about the regions: Why cut down on the roads?—as mentioned in the White Paper. We need good infrastructure, we need technology; roads are essential. I cannot understand the mentality of Tory politicians who produce such a document detailing the cuts that we see before us. The expenditure cuts are going to harm the regions. Not only that, but I believe, turning quickly to the social services, that they are going to harm the Health Service. My noble friend Lord Wells-Pestell, I thought, delivered one of the finest speeches that I have heard in this House for a long time on this very matter. He indicated how we want to care for the family and he indicated what were the dangers facing us.
I have here a lot of figures. I shall not weary the House by reciting all the figures, but let me take the social services. Here are some examples of the steps which some local authorities have been forced to consider: one borough reducing home-help, cutting the service by 5 per cent.; another metropolitan district in London imposing a minimum charge of £1 per week for the home-help service, which was previously free; another authority postponing the opening of a newly-built home for mentally handicapped children; another authority closing homes for the elderly, for children, and for people recovering from mental illness, and a day centre for the physically handicapped; delaying starting a new intermediate treatment scheme for juvenile offenders; another one imposing a reduction of £900,000 on the social services budget of £11.7 million, a cut of 7.7 per cent.; another authority forced to delay appointment of specialist social workers to promote foster care of children. These are figures provided in the Social Services Parliamentary Review. What a tragedy that some of these services should be cut or postponed in this way. So I say to noble Lords opposite, I still have a feeling that they never really believed in a comprehensive National Health Service. I have heard whispers of the possibility of

845
the Health Service itself facing cuts in a big way. I hope that we can have a reply on this. I am proud of the National Health Service. I think it was one of the great achievements of the Labour Government and a great achievement of Aneurin Bevan, and his then Parliamentary Private Secretary is sitting here now. The Labour movement will always recognise that the Health Service must be comprehensive and must play a major part in our country's life and activity. Indeed, people in many other countries, even people in the United States, admire so much what we have created. And yet now, because of difficulties, we are to have cuts and we are to have blows at the Service itself. I hope the Government will think again.
Then, my Lords, what about education? Why attack there? The noble Lord mentioned the schools in London. I am very proud of some of the schools in London. I am very proud of the comprehensive school to which I sent my own boy, even though he passed the 11-plus exam when it was in existence. I am very proud that my family are connected with that school. I think the noble Lord will regret what he said. I do not think he should criticise schools unless he can really show in a broad general sense what he means.
Lord THORNEYCROFT: My Lords, I think the noble Lord may have slightly misunderstood me. I was not attacking the schools in London. I was saying that the Inner London Education Authority seemed to have a rather curious choice of schools.
Lord PEART: Actually, my Lords, ILEA has a fine record. I know the Tory Party in London are trying to destroy it and trying to bring in something different which will not work. I believe ILEA should be defended. Every local authority in London, even Conservative, accepts this. I think he should have been better briefed on this. I do not know who has advised him, probably Mrs. Thatcher's office. I think he has got it wrong. But there again we are still living in a strange society where we separate our children at an early age. I thought we were moving away from this. I speak as a former school-teacher who taught in a grammar school. I thought we were moving away from the tripartite system; we debated
846
that on a previous occasion when the Bill was mentioned. I think noble Lords should really look further afield. We have got to create a democratic system in the best sense, where boys and girls of all abilities are able to mix within a unit. That is why Eton and Harrow are very good comprehensive schools, as I once said before. There is no problem of a dull child at Eton or Harrow; they get the right education; they also develop the high flyer. That is what a comprehensive school is and that is what I want for our children. I do not want the tripartite system. I want a system where a child can be given within that school unit the type of education suited to his capabilities. So I regret this attack on comprehensive schools and I regret the subsidisation of the direct grant schools. This is what we are opposing.
I have been told my time is up. So I conclude by saying that this debate is a very important debate. We believe that we shall fight you continually on education, on the cutting down of health services, and we will have no holds barred, in the best sense; we will be vigorous parliamentarians looking critically at the legislation which will flow from the Government, and indeed at the policies. As I said at the beginning, I think this Government are one of the most reactionary Governments I have ever known, and that is now accepted even by parts of the British Press. I do not know whether noble Lords read the Observer this weekend. I hope the noble Lord will read the editorial there. So it is for these reasons that we reject the viewpoint being adopted by the noble Lord who moved the Motion.
4.18 p.m.
Lord MACKIE of BENSHIE: My Lords, I will not enter into competition in deciding which of the noble Lords, Lord Peart or Lord Thorneycroft, is further to the Right. I am perfectly certain that they are both fairly conservative (with a small "c"), perhaps the noble Lord, Lord Peart, even more so. I think this debate is very apt. I think it is perfectly true to say that the Government are not only doing a balancing act on Rhodesia but that they are in an extremely difficult position, and they are tackling the problems in a fresh way. It is also true to say that the Labour Government in the period after

847
the Lib/Lab pact did not really proceed to tackle anything, and we do need fresh thinking on the state of the nation. We wish the Government well in their efforts, which will not stop us criticising the detail as much as we think necessary.
Certainly it is true that a trade union cure for the evils of our economy is not possible. The last Government indeed tried to legislate in the way the trade unions wanted; in fact they went far too far in giving way to their demands, in the view of many people, in their own party as well as in others, and it simply did not work. You really cannot really cure a burst appendix by kissing it better. That we have got to take drastic action there is no doubt. Consider the oft-repeated figure, which cannot be repeated too often in my opinion, that making the same motor car by the same firm on the Continent and in Britain takes twice as long in Britain. It is a figure which cannot be ignored, and it is a result without any doubt of the attitude into which the whole country, particularly trade unionists through the trade union movement, has slipped.
Of course, I shall not attack trade unionists. This country is full of good men and good firms who can compete with anyone and who are doing so. But it is a fact that large sections of our economy are performing so badly that they are making our country a laughing stock in the world. Unions are not wicked, but such is the climate that is being created throughout this country that foolish, arrogant, wicked men can take advantage of trade union procedures and set up phoney picket lines which can do enormous harm. Because many people suddenly have the idea that anything a trade union does in a picket line is a form of holy writ, we are doing untold damage to our economy. Moreover, our attitude is keeping the working man of this country poor whereas his counterparts on the Continent and elsewhere, such as Hong Kong, Japan and Korea, are becoming richer and richer. We cannot dodge the issue.
I have just been on a visit to Hong Kong and China. It was most interesting. While in Hong Kong we were taken to see the new metro which has the horrible name, "Mass Transit System". However, it has opened three months ahead of schedule; the cost is below budget;
848
and the take is above the estimated budget. By comparison let us consider, for example, Glasgow. Her Majesty opened a line there which the public will not be able to use for another few months because of disputes. The line extension to Heathrow was over a year overdue and the cost was astronomical. The same is true of the Victoria Line. When we compare that with Hong Kong we realise that there is something wrong with our system. We should also consider that at the end of the war Hong Kong had a population of 600,000. Its population has multiplied—be it five, six or seven times—and is now about 5 million, and they rehoused over 3½ million people. That is a fantastic achievement and something which we in this country should be considering and trying to emulate instead of our present panacea, which is the only word that can be used.
We then crossed the border to China. China is changing. The Chinese have been held back enormously by the Cultural Revolution and by the foolish ideas spread by an aging leader and the Gang of Four. We were told appalling things about that period and about factories where the Red Guards preached against production. They said that the people should not think I too much of production because that is a capitalist attitude. We were told about the teaching schools and hospitals where they had to accept students who were politically proper but who, in terms of their ability to take the course, were way below par. We went to see a music conservatoire which had been shut for seven years during the Cultural Revolution. We went to see a cotton printing factory where they had overcome the troubles by using the old-boy network.
The point that I am making is that China has revolted against the system. The turn round is complete and I have no doubt that members of the Labour Party will be most interested in the statement that I am about to read from the Official News Bulletin No. 11222 of Saturday, 6th October, 1979. This extract gives the National Congress instructions on agricultural policy. The relevant paragraph says:
" Economic organisations, at various levels of the people's communes must conscientiously implement the principle of, 'from each according to his ability, to each according to his worth '."
I do not think that that is quite as the original, but it goes on:

849
" And shall give more pay for more work; no pay to anyone who does not work; and equal pay for equal work, irrespective of sex. It is imperative to work out payment in accordance with the amount and quality of work done, to establish the necessary system of reward and punishment, and firmly to overcome egalitarianism ".
That is an extraordinary statement, but it shows that the Chinese are really determined to overcome the stagnation into which they have fallen due to their system. That is what we must do here. Our Government, of whom I do not wholly approve, have the job of changing attitudes. They must change attitudes in this country. We must stop fighting over the kill and arrange to kill more. Perhaps I have used an unfortunate metaphor and I should say that we should stop fighting over the cake and arrange to bake more.
However, we clearly must show that we require production and that we can distribute. This is a wonderful country in which to live. We get on extraordinarily well with each other—at least we do in Scotland; I do not know about England—but what we lack is simply the means to keep up our present standard. Of course we must make cuts, and of course they will hurt. Every cut will be fiercely opposed, I dare say, and I hope that the Government will listen to reason and will deploy reasonable arguments; but when they are beaten in argument I hope that they will accept it. It occurs to me that quite a case was made as regards overseas students. I hope that the Government will look carefully at regional aid. I agree with what the noble Lord, Lord Peart, said about that.
I hope, too, that the Government will, look at the way in which savings are deployed in this country at present. The day is long past when money fructified in the pockets of the people. I have never quite understood the meaning of "fructified", but it is a fine word and I understand that it means "multiplied". As a result of a long series of legislative acts concerning tax concessions for insurance, high personal taxation, and so on, money does not fructify in the pockets of the people—it goes into the pockets of the insurance companies. The institutions supply the capital for many of the changes and advances in this country. It does not always go the right way. It might be true to say that many of the property
850
booms which did us no good in this country, really took place because the money was available in large quantities and it was a sure thing and better than manufacturing. That is the kind of attitude that must be changed. It is only by the success of the manufacturing industry that we can create wealth.
The Scottish Development Association (SDA)—I do not know about the NEB—has done a great deal of good. I must here declare an interest. It built a factory for my company in Perth and let it to us. We could not have expanded in that area without the availability of that capital in the form of a factory to let. I can give many examples in Scotland where the SDA has done a great deal of good. The Conservatives should not be frightened of it. If they back new ventures and they are successful, they can always sell the shares back at a profit—if they take shares. There is no reason why they should not do so as long as it is not a method of backdoor nationalisation. I ask them to look very carefully at this matter and to look at the good that has been done. We must have a system in this country which is fair and which is seen to be fair. We must encourage the strong and protect the weak. But in the protection of the weak, again we must watch legislation.
We have had a very unfortunate example of the working of the Redundancy Payments Act in the north-east of Scotland this year. In theory that Act is a fine thing, but in fact the factory of Lawsons which is a bacon factory, had to close down. Unilever wanted to close it; these big firms are not always as efficient as they think they are. A local cooperative and others wanted to take it over. The whole thing fell down because the workforce voted against the terms because, I am told, they could not bear the thought of passing up the lump sums which were due to them under the redundancy agreement. They would rather take a chance on getting another job than preserve this first-class and necessary adjunct to the bacon industry of the north of Scotland.
The Protection of Employment Act is a fine piece of legislation, but in my company the managing director and another busy director had to spend three days over a fatheaded appeal against dismissal, and in the end the dismissal

851
was upheld. Three days of valuable production time was lost by these able people. If we are to change the attitude, it must be seen that to raise production will benefit everyone. I was glad that the CBI recently had a great deal to say about getting really close to our own workpeople. Of course the directors of a firm have far more in common and far more benefits to share with their workforce than they have with the trade union organisations, which seem totally unable to control their branches which have got out of control. The directors, shareholders and the workpeople have a common cause which should be clearly seen by everyone.
A great process of education must take place and the extension of the profit-sharing provisions introduced under the Lib-Lab agreement needs to be examined by the Government. Already well over 200 firms have taken the opportunity afforded by this very small Bill. Profit-sharing schemes play a large part, but genuine productivity deals, which reward weekly and monthly, are probably more effective. They must be genuine. Where such schemes exist, they must be explained with great clarity to those concerned.
If we are to survive, we must see the prospect of one Britain—not two Britains or several Britains—where the people work together. We do not want dull uniformity; we want a chance for all. We want taxes to be fair, to be low and to allow enterprise a chance. However, some taxes need to be adjusted in order to be seen to be fair. I do not see why capital gains tax, which should be indexed, should not be as high as the tax on income. Tax on labour and the sweat of the brow or the brain should not be higher than capital gains tax after indexation. The capital transfer taxes are good taxes, as long as income tax is low; because nothing does more good to the son of a rich man than for him to pay off a hefty capital transfer charge when he starts, instead of starting where his father left off. If we had more of this and the chance to do it, perhaps the sons of rich men might work a little harder instead of playing as much as some of them appear to do.
Lord DRUMALBYN: My Lords, will the noble Lord not add to that "and so long as inflation is low"?
Lord MACKIE of BENSHIE: My Lords, I was very careful to mention indexation. To make £1 million is good for the nation, but to be a millionaire is not necessarily so good for the nation. We do not want the sort of candy-floss millionaires who sprang up in the City during the periods of both the last Governments and who got this country a very bad name. I see that one of them has returned to this country. even though he crashed his enterprise, and owes a bank £17 million. According to Lady Olga Maitland in the Sunday Express he is back in a £1 million house in Chelsea and has returned because Mrs. Thatcher and the Conservative Government are in power. I hope and trust that the Conservative Government are not as welcoming to him as he is to them. But this is a symptom and the sort of thing we must get over—we are living in a world that may be tough, but it is a world that should be fair. I do not think that this will come about by popular acclaim. I think that foolish and selfish men, power-drunk and hungry, will oppose sensible measures.
In the winter ahead the Government will face great difficulties. The people of Britain may have to empty their own dustbins and put up with great hardships, but it must be shown that striking does not always pay. We must ensure that the built-in procedures to stop this sort of thing arc used. The Government must represent the vast majority of the people in order to do that and to stand the strain. I am not sure that this can be done entirely on a party basis. The Government will need allies and the confidence of the nation. I hope that they have the wisdom and the character to gain that confidence.
4.36 p.m.
Lord SOAMES: My Lords, once again we are deeply grateful to my noble friend Lord Thorneycroft for having initiated this debate. I am sure that there are few in your Lordships' House who have had more experience over the years than my noble friend in the matters that he has discussed, both in Government—and I remember the happy days when he and I sat next to each other in Cabinet and used to pass each other rude messages from time to time—and later in industry. My

853
noble friend has a wide international as well as a national experience. We are grateful to him for originating this debate and for the excellent speech that he made.
The noble Lord, Lord Mackie of Benshie, made a very balanced speech, giving credit where credit was due. On the whole, I think we received more credit than attack. The noble Lord put us on notice that he would attack where he thought we were wrong, but I was fairly happy that the general thrust of his speech was that the Government were more or less on the right lines. I certainly agree with much of what he said and with his analysis of the problem. The noble Lord, Lord Peart, pinpointed two or three specific areas—the regions, the National Health Service, and education. He called ours the most reactionary Government Britain has ever had. I think that we are the most radical Government that this country has had since the war—I think that is a better description.
However, as I see it, my job this afternoon is to sketch out the picture—rather as my noble friend Lord Thorneycroft did—and to outline the context of policies within which the Government expect to be judged. On this occasion I do not want so much to go into the details of the policies themselves. We expect to be criticised. All Governments do, and they always will be and must be. But, I believe that criticism is sterile and unproductive unless there is some general agreement, some common ground, if you like, about objectives and about where we are trying to get. I believe that there is more common ground in the country than there has been for quite a long while. In that situation the criticisms have a context. They serve to identify and to highlight difficulties, and to help to overcome them.
Until just six months ago we on this side of the House were in Opposition for five years. We respect the role of Opposition and will be scrupulous in the way we deal with it. But we do not respect the kind of Opposition which professes that the world in which we have to earn our living is other than what it is. We are happy to argue, for instance, about the priorities we have determined in last week's White Paper on our expenditure plans. But it is a waste of our time and everyone else's time to argue with
854
people who believe that wealth is a kind of Christmas tree which a Government only has to shake and then pick up all the presents and hand them out to the most deserving; or who do not make any connections between Government borrowing and spending, or taxation and spending or who believe that if Governments only stimulate enough demand there will be jobs and social services for all; or who choose to deny or ignore the paramount need for our industries to be competitive in world terms; or who believe that you can pay for a Welfare State just by taxing earned income at 80 per cent. or more.
The Leader of the Opposition—Mr. Callaghan, not the noble Lord opposite—lent his authority to that view only last week. So we must try and stake out a common ground about the really fearsome decline of this country's industrial capacity and just what that means for the Government's—for any Government's—tax and borrowing base; for their ability to provide services; for jobs; for the maintenance of a civilised, open and plural society, where people can steer a decent course between individual freedom and collective responsibilities—which is what I understand to be the fundamental of a mixed economy.
I am going to try and stake out the common ground, and the context in which I hope our policies will be judged. It is against this background that my noble friend Lord Gowrie, when he comes to wind up, will deal with the particular arguments and representations which your Lordships choose to make. Britain has two great problems, two central difficulties affecting everything we want her to be. There is the particular problem of the decline of our manufacturing capacity and competitiveness through low productivity. There is the general problem, affecting others as well as ourselves, of world recession fuelled by the steep rise in energy costs. In other words, we are operating in a malign international economic atmosphere.
Following the first round of oil price increases most of the industrialised democracies, including ourselves, reacted by overspending—or, if you prefer, reflating demand—while they tried to pretend to their electorates that the problem would go away. There has been

855
the inevitable counter-reaction; a hard stamp on the brakes of money and credit; deflation. That is what we are seeing in the United States of America and elsewhere at the moment, and very unpleasant it will be for all of us. So it is against the background of a world recession that we have to tackle the chief difficulty: low output and our competitive decline, and that does not make it any easier.
If your Lordships are looking for the origins of cuts, or the source of threats to the Welfare State in the future, do not, I beg of you, look at these Benches. Look around and about you. Look at the goods that people buy with the money and credit available to them. Look at the names of the cars, of the television sets, of the household appliances that people buy, and consider where they come from. Look at the industrial items, the machine tools, the agricultural equipment, so much of the advanced electronic and automation marvels, and consider what they cost and where they come from. There is the source, there is the reason why no responsible Government can envisage at the present time the sort of expansion of public services which we would all like to see.
It is largely of course a supply problem; a failure on the part of our industry to compete adequately here at home, let alone in world markets. In the 1950s we were accustomed to living with a ratio of exports to imports of manufactured goods of the order of 3 to 1–3 of exports to 1 of imports. That ratio, coupled with the benefits that we derived from our invisible exports, enabled us to purchase the food and the raw materials that we needed. Now what is the ratio? It is just over 1 to 1. Perhaps 1·1 of exports to 1 of imports, and no higher than that, and that picture tells a sorry story.
Some people argue that we could fight the threat to our welfare system and our mixed economy imposed by our manufacturing decline by greater protection of our native industries, hoping thus to nurse them back to health. I am not talking here of the loony Left and their ideas, but of certain economic commentators like Mr. Wynne Godley and our own—I refer in the sense of this House's own not the Government's—Lord Kaldor. We
856
are of course ready to review any particular problem cases where our industry may be unfairly hit. But in general it remains true that, even if it were possible to disregard our Treaty of Rome obligations, it would not be in our national interest to turn protectionist for we are ourselves an importing value-adding, exporting country.
We do very well, as the noble Lord, Lord Mackie of Benshie, said, in many areas, and I include of course out highly successful invisibles: the City's overseas earnings were indeed at a record level last year. Foreigners may not buy many of our motor-cars but they still buy our banking, insurance, and other services. We would be very vulnerable to retaliation. The wealth and tax base on which our public services depend would shrink even further. I am absolutely convinced that our supply-side and output problems would not be solved by sheltering existing industries; and I am equally convinced, for it is obvious, that the industries of the future will require larger markets than our domestic one for their development. Nor do I believe that an international beggar-my-neighbour policy is a sensible, or humane, or internationally acceptable approach to a recession.
So we are left with the job of putting our own house in order and continuing to use the European and wider councils of the world to communicate what we are trying to do and relate it to the needs and policies of others. However difficult it is to get our own sums right, that remains the only way to give ourselves the credibility and viability to co-operate with any real effectiveness with the other industrialised democracies, and to find our way through the recession, and by so doing to lighten the even heavier load on the poorer countries of the earth.
The front line in our strategy has to be industry and enterprise itself—the wealth creators. We are determined to strengthen incentives. We have already reduced the standard rate of direct tax to 30 pence in the pound. We would like to be able to do more, and I am sure we will when we can. We have already reduced the top rates of tax on earned income to 60 pence in the pound. It may affect relatively few people, but we believe that among them are people crucial to the welfare of our economy. We also believe that it is important psychologically, and if it affects

857
relatively few people it is also comparatively cheap to do. The money lost is trifling, and has no relation to old people's homes, as Mr. Callaghan seemed to suggest—in direct contradiction, incidentally, to his own repeated and courageous insistence to the Labour Party of the counter-productive effects of high marginal rates, and the necessity for public spending to take a falling share of the nation's output.
Incentives are essential for revitalising the supply side of our economy, where everything starts. It is the supply side that has gone wrong, yet it is on the success of the supply side that the country in general depends, and so does the success of the Government's policies. We depend on it to get the wealth base, to get the tax base, to meet our responsibilities; the social services, the money we give to local authorities to supplement their tax base and pay for education and for their social services, the money we need for law and order and for our defence.
We cannot repeat this message too often. Governments of both parties have so far failed to get the message across that what we are able to offer in the way of services to the people depends essentially on the wealth that they themselves create, and that excessive pay rises claimed by people unrelated to production and wealth-creation must mean the erosion of among other things, public services.
The other side of the wage coin is, of course, employment. Wages rising faster than productivity inevitably result, sooner or later, in higher prices to customers, falling profits, less reinvestment, a less competitive position at home and abroad, greater vulnerability to import penetration; job after job is lost, people thrown on the mercy of what shrinking services a shrinking tax base could provide.
But if the front line has to be industry and enterprise, the Government's job is to provide a background in which the essential conditions for the creation of wealth are met. The most important condition for the creation of wealth is stable prices. So long as inflation is seen as an endemic problem in our islands there is not the confidence to put up money for investment prospects. People tend to prefer property or goods. It is to help to master inflation that the Govern
858
ment turn their face against printing money to underwrite inflationary pay settlements and against excessive borrowing.
Here of course is the direct connection with the public expenditure issue. We have to bring down the rate of inflation through control of the money supply and the consequent control ofGovernment borrowing. Even if a prices and incomes policy were on offer to this Government—and it is not on offer to us any more than it was to the last Government, as I argued in the debate on the gracious Speech—we would still have to control the money supply and control our own borrowing. We cannot expect private industry to submit to disciplines which we are not ourselves prepared to submit to. And "we" in this context have an enormous effect. We occupy not so much, I think, the commanding heights but the vast deeps of the economy, nearly half of the total—so we have to insist on the connection between pay and productivity in our own area. Industry would have every right to complain if we demanded that it should face the realities of pay bargaining alone while the Government were prepared to foot the bill for excessive increases in the public sector, or do so without making rapid compensations in the volume of services provided. The reality of public sector pay bargaining is that unjustified increases have to be paid for by fewer public sector jobs or reduced public services, or a combination of the two.
The strategy of last week's White Paper is to hold public spending at its present level, in volume terms, for the time being. The projected out-turn for the current year, 1979–80, and next year, 1980–81, is very close to the estimated out-turn of last year, 1978–79. And indeed, if we look back over the previous four years at the record of public spending, it rose fast. But what was the item that made it rise fast? It was the increased servicing of an increased debt. That was where there was the greatest rise by far—in the servicing of the debt in the four previous years. When translating volume into cash limits, we have made allowances for inflation. We have also allowed for an increase on present levels of unemployment, uncertain though forecasting in this area always is, particularly in view of the high number of vacancies that are on record at present.

859
In the whole social security area, therefore, planned expenditure for 1980–81 shows an increase in effect, and not a cut. I am not just thinking of the fact that there are likely to be additional people eligible. As I said earlier, we have allowed for an increase in unemployment. I am thinking, too, of this month's record uprating of pensions and other benefits, as well as the increase in child benefit premium for single parent families and the recently announced provision for assistance with fuel costs.
It is, I believe, a travesty to represent our efforts to contain the growth in public spending as a programme of "savage cuts" or an attack on our great public services. Let us be clear. The threat to the future development of our social services comes from the erosion of our wealth and tax base, or from pay claims that outstrip what the tax base is able to provide. It is utterly bogus for previous Ministers to claim otherwise—and here I exempt the noble Lord, Lord Peart, from this; he did not do so today. But others have described our reduction of Labour's planned expenditure, which was based on optimistic assumptions, both about high growth and low pay claims over the next two years, as an assault on the Welfare State, as if it were a machine for putting people out of work.
But I suggest that noble Lords opposite know every bit as well as we do that, had they been re-elected, the 2 to 3 per cent. growth that would be needed to finance the expansion which we have ended would not, in the real world, have materialised. Their own average rate in Government was, say, 1 per cent. during the four years. Nor would they have been able to tolerate politically, any more than the nation would have tolerated actually, the higher taxes, which would have resulted. The difference between their spending plans and ours is equal to the yield of an 8p increase in basic rate income tax. As I said at the beginning, we expect criticism, we expect opposition from able former Ministers and parliamentary colleagues. But we are entitled to require them to cost their criticisms every penny of the way.
My noble friend's Motion mentions the difficulties. I have not tried to shirk them and I have urged the Opposition not to do so either. But the Motion
860
also mentions the opportunities. It may surprise your Lordships that I really believe that the opportunities outweigh the difficulties. And I am not just whistling in the dark or looking for a kindly light amid the encircling gloom. Thanks to the flow of North Sea oil, we are the first Government since the war who, in the seemingly endless quest for greater growth, greater output, and productivity in the British economy, are not liable to wake up one morning and find themselves unable to pay the import bills for food and raw materials, which was one of the nightmares my noble friend had when he was at the Treasury. There are disadvantages to operating a petro-currency, but here is a clear advantage.
The Government also have a secure parliamentary majority to tide us over what will undoubtedly be difficult times and hard decisions, decisions which the mass of the people are in their hearts expecting us to take. We have a formidable will to succeed, greater again perhaps than at any time since the war because the difficulties are greater. We are the first Government since the war to take seriously the message to put our own house in order first and tackle inflationary spending in our own hack yard. We cannot be called divisive. The policies we are pursuing enjoy continuity with those pursued by the last Government during the period of their greatest success: monetary discipline; cash limits; public spending restraint. It did not last very long.
But within this framework of order we have placed a clutch of necessary freedoms. We have ended the rigidities governing pay and price structures and investment decisions; judiciously, I hope, relaxed planning controls and licensing requirements; introduced legislation to increase competition; and as a measure looking far into the future, we have removed exchange controls so that we may look again to benefits to our balance of payments from investment abroad.
This is all the positive side of our difficult task and the way we seek to stimulate activity and enable opportunities to be taken. But, my Lords, freedom is precious. It must be cherished, and not abused. We must as a country be willing to accept the disciplines necessary to preserve it.

861
Among other things this means restoring our competitive position; it means coming to accept that increases in income have to be linked to production rather than to inflation levels. As the noble Lord, Lord Mackie of Benshie, said—and I so much agree with him—it is going to require a sea-change of attitudes in regard, among other things, to our working habits; and are we not already seeing hopeful signs in this regard?
My Lords, in spite of all our difficulties, we in this country are immensely fortunate. We have little excuse if we continue on downhill. We should have everything going for us. We have the inherent social stability still guaranteed by our constitutional arrangements and by our great institutions: Parliament; the Judiciary; the unions, our manufacturing and financial enterprises; our cultural and educational institutions. In a hungry world we have the most advanced and efficient agriculture of any industrial country except America. In a world starved of energy we sit on a mountain of coal, surrounded by a sea of oil. We should "have it made", as the Americans say. Or to put that less selfishly, we should be able to use those opportunities, that capacity, to play a more impressive and more spiritually rewarding role in the history of these last years of our brilliant, yet horrifying century. The Government have made a start in setting the scene for our country's very survival—for that is what it is about—and we mean to continue.
5.3 p.m.
Lord STEWART of FULHAM: My Lords, I ask indulgence for someone who addresses this honourable House for the first time. The subject that we are discussing does not readily lend itself to a non-controversial speech, and I fear that my own temperament is not much help to me in that direction, either. But I will begin by saying that I do indeed agree with the noble Lord, Lord Thorneycroft, that the nation now faces, on a remarkable scale, both opportunities and dangers, though I hope without offence to venture to suggest a little later that I think that with regard to some of them the Government's approach is not quite right. I agree also with what has been said on both sides of the House about the importance
862
of productivity. Indeed, in my judgment this, rather than the rate of public expenditure, as the White Paper says, is at the heart of the matter, both long-term and short-term. If we can so arrange matters that an hour's work or a week's work will produce more wealth, then sooner or later we shall get all our other economic problems right. If we do not do that, we shall not get anything right—neither private incomes nor public services, nor defence, nor aid to other countries, and so on.
But it is not a simple process. Why do we not have higher productivity? It is not because we are not inventive. The noble Lord who opened the debate rightly said that we are an inventive nation. But we have this dread that every new invention can only mean unemployment for somebody. This was a point well made in a newspaper article not long ago by my noble friend Lady Wootton of Abinger. But this really is not so. If we can discover how to produce with less labour what we are now producing, there will he many options open to us. We could actually produce more of what we are producing; or if we are capable of moving labour from one industry to another—and that we shall have to do on a considerable scale—we can produce different kinds of things. We shall be in a stronger position to produce many things that we now have to buy from foreigners, or to produce things which foreigners will he willing to buy from us.
But of course all this depends on the labour force—men and women—being mobile, more mobile than it is today. That involves not only necessary arrangements for retraining, learning new skills, but also a willingness among the whole population to accept the idea of learning new skills. It involves accepting that in the future, unless we are going to be driven down into a stagnation of unemployment because we are inventive—which would be very silly indeed—there has to be a general acceptance that it is going to be normal for a man or woman in the course of working life to learn a new skill perhaps not once but twice, to have several different careers. If we do not get that right, I believe that in the end we shall not get anything right.
If one is to do that—this is what I really want to address myself to and invite the House to consider—what sort of

863
things are necessary'? It is not in dispute that the good will of the trade union movement will be necessary. It is quite natural, indeed up to a point it is a duty, for any trade union leader in the face of a new invention, to ask himself, "What's the effect going to be on my members' jobs?" What I am saying is that he must also ask himself the question, "What's going to be the effect on the standard of life of all of us if we don't introduce new inventions?" But you have got to get this good will and the good will of the men he represents.
I wonder therefore whether the Government's approach to the trade union movement is really on the right lines. Instead of approaching it with critical and repressive legislation, ought there not to have been a bold invitation to consider the problems posed to the country by new invention, by the need for productivity, the need for greater mobility of labour? I was happy to see that there was one speech—I do not think that there was more than one—on these lines at the conference of the Confederation of British Industry. The noble Lord, Lord Thorneycroft, considered whether the Government were going too far or not far enough on trade union legislation. What worries me is that they may not be going in the right direction, or starting from the right premises.
There is something else that will be needed if we are to have this movement into a more mobile society. There has to be the readiness to encourage new inventions, to encourage the setting up of new firms, the creating sometimes of new industries. It seems a little surprising that in those circumstances the Government should want to curtail the activities of the National Enterprise Board. I should have thought that rather it was a case for expanding them and making them more imaginative.
If I understand rightly the view of the party opposite, it is that if you reduce the taxation level, particularly on those people who in the main own and control industry, this will so stimulate them that the invention, the new industries, the new firms, will pour forth and the productivity problem will solve itself—well, it will not solve itself, but it will be solved as a result of the incentive regarding lower tax. What worries me is that we tried this before,
864
more than once, and it has not worked, as Mr. Edward Heath once lamented to employers.
By contrast, there was a period in our recent history where we made a great leap forward towards greater mobility. It was in the years immediately after the war, when we had to make a huge shift of man and woman power from making one kind of thing to making another, when we had to meet the challenge of regaining export markets. We did it very well. The noble Lord, Lord Soames, referred to the healthy state of our exports in the 1950s, and I am bound to say that we did it with a good deal of Government encouragement and direction, even; and we did it in an atmosphere of high, rather than low, taxation.
Then, another thing seems to me to be needed if we are to get the nation's general acceptance of a more mobile society, and that is connected with our education system. First, it cannot be a merely elite education. We want to get the mass of the population having a sensible understanding of the kind of society they are living in; and, as far as concerns that part of education which deals with learning a job, we shall not want narrowly vocational education to teach a person to do a job now which will be out of date in ten years' time, but the development among as many people as possible of a general quickness of mind, hand and eye. All this means, surely, a generalised (and I need not be ashamed of the word), a mass approach to education. I am doubtful, therefore, whether it is right for the Government now to pursue a policy of spending more on special education for a very limited number and less on the general education of the mass. I think they ought to reconsider that matter.
Finally, my Lords, I want to refer to something which I do not think has been referred to so far but which is in the White Paper and is certainly encompassed in the phrase "the dangers facing the nation." We have problems abroad, and there is provision in the White Paper for increased expenditure on defence. I believe that to be unavoidable if we are to fulfil our commitment to NATO. All the NATO countries are committed to increase their expenditure. The last Government accepted that; this Government must

865
accept it. But when you decide to spend more on defence, is that not pre-eminently the time when you ought to say to the nation, "This is something where everybody makes sacrifices, and, if anything, those who are best off will have to make most sacrifices?" That is a fair proposition when what you are proposing is an increase in the national defences.
Is it right, therefore, for the Government to arrange the impact of income tax and VAT, and various charges which are going to be imposed on people, in a way which is actually going to make some of the richest people in the country better off and some of the poorer people in the country worse off? I should have thought that that was the wrong way round. When one was obliged to make the demand for greater expenditure on defence, it was to the richer people that traditionally one used to look for an example. Now, apparently, contemporaneously with higher expenditure on defence, those who are really well off are going to have their tax burden lowered, and it is mainly working people who have got to pay more. It is they who are being asked specifically to set the example. It looks to me as if the Government take the same view as Oscar Wilde's character, Lady Bracknell, who said:
" Really, if the working classes cannot set us a good example, I fail to see what is the use of them".
I must not weary your Lordships' House further. I repeat that I am in agreement with the noble Lord who opened the debate that we face dangers and opportunities, and I am in agreement, I think, with many who feel the desperate importance of this question of productivity and mobility of labour. I merely suggest that there arc some topics—such as their attitude to the National Enterprise Board, to the trade unions, to education and to the burden of taxation—on which the Government may not have got their emphasis quite right.
5.14 p.m.
Lord BOYD-CARPENTER: My Lords, I must begin by offering an apology to your Lordships for the fact that a long-standing engagement, involving persons a great deal more eminent than myself, will mean that, unless the debate proceeds to the length which, on a pessimistic view, the number of speakers
866
might suggest, it will probably not be possible for me to be present at the end of the debate; and I would apologise in particular to the noble Lords on the two Front Benches who will be winding up.
Having said that, my Lords, I have a very special pleasure, as he will know, in congratulating the noble Lord, Lord Stewart of Fulham, on his most impressive maiden speech. My Lords, I can claim that, with the possible exception of the noble and learned Lord the Lord Chancellor, I have been listening to, had my mind improved by and ventured to argue with the noble Lord for, I think, longer than anybody else in this House. When I first listened to that same clear, logical, incisive speech at the Oxford Union 50 years ago—and it has not changed a jot, my Lords, over the years—I had only one thought, and that is that it seemed to me so extraordinary that a man who spoke such good sense so well could possibly be a member of the Labour Party. Fifty years later, in a wildly changed world, that wonderment, having listened to his admirable speech this afternoon, is even stronger. But I think the whole House acknowledges that the noble Lord is a great reinforcement to our strength. No one, I think, is going to agree with many of the things I am about to say, but I think everyone will agree with me when I express the view that I hope he will illumine our minds and entertain us with similar speeches with great and increasing frequency. It was a joy to listen to him.
No one, of course, could have initiated this debate more appropriately than my noble friend Lord Thorneycroft, because nobody (with the exception, of course, of the Prime Minister herself) has a greater degree of responsibility for the fact that we are now sitting on this side of the House. Noble Lords opposite will have noticed with rueful admiration my noble friend's skill, courage and endurance as chairman of the Conservative Party organisation, and the great part that he played in securing the (to us, though not, of course, to them) highly satisfactory outcome of last May's election. I know the House will agree with me when I say that he introduced this debate with a most admirable speech, which gave great pleasure and set the scene for subsequent speeches with extraordinary clarity. None of us, of course, within the reasonable

867
length of their own speech, can cover anything like all the grounds that are open on one of the widest-drafted Motions I think I have ever seen in this House; but I should like very much to welcome the start which the Government have made in the conduct of our affairs.
History is apt to repeat itself, and the bonfire of controls (to quote the father-in-law of the noble Lord the Leader of the House) which was set alight in 1951 has been repeated with similar arsonist activity by my noble friends and right honourable gentlemen in another place—and I welcome it. We have got rid of dividend control; we have gigot rid, as my noble friend the Leader of the House reminded us, of exchange control; and we are getting rid of the Price Commission and of price control. To noble Lords who are perhaps a little taken aback by the courage and determination of that approach, I would say there is reassurance to be got by studying what happened when we went over something like the same course in the early 1950s. The net result was a recovery and a revivification of the economy, an increase in activity, a fall in unemployment and a rise in standards of life; and in a number of years it became possible for the Prime Minister of the day to say with accuracy that we had never had it so good.
In this attack on excessive Government interference with the working of our economy we are not moving over uncharted ground. I think your Lordships can draw some reassurance from the fact that we have been there before, and when we were there before the medicine worked. Indeed, on that occasion we did something even more courageous, I think, than my noble friends are doing on this occasion. We abolished the food subsidies. Everybody protested that it would be disaster. I think that the noble Lord, Lord Peart, made rather the same sort of speech then as he made this afternoon. Everyone forecast disaster. But, on the contrary, we took full care that the poorest did not suffer by simultaneous increases in social services payments and, for the rest, relied on the general restoration of freedom for a general restoration of the economy—and it worked. And not only did it work in the interests of the economy, let me reassure noble friends, it did them no
868
political harm. Within four years we had a general election and trebled our majority and, five years later, another, when we doubled it again. So the path of courage, as so often in our history, is not necessarily the path to unpopularity and defeat.
My noble friends themselves will be the first to say that there is an enormous amount still to do. Their attack on the levels of personal taxation carried a great deal of support but personal taxation in this country is still very high. There are individuals with high salaries and a modest tranche of investment income who still pay, on certain parts of their income, a tax rate of no less than 75 per cent. which, I think, in most countries of the world would be regarded as confiscatory. Therefore, I would say—although, as it was a maiden speech, I would not wish to enter into argument as I hope I may in the future with (I call him) my noble friend Lord Stewart of Fulham; it is a technical inaccuracy—that it is relevant, when one considers how the burden of taxation should be adjusted to pay for defence, to have in mind the point we are starting from. And the point we are starting from in our system of personal taxation is a system which, even now, taxes the highest earnings at rates well above the level ruling in our competitors.
So I hope that the Government will go on attacking the problems of taxation. They have not yet touched the scandal of capital gains tax in an inflationary age in which that tax is paid on sales which may not represent, in real terms, any gain at all. That, again is confiscatory. If capital gains tax is to remain—and personally I think it should remain for at any rate short-term speculative gains—a major part of our taxation system, I am sure that it is necessary to introduce either indexation or a formula which reduces it in relation to the number of years an asset has been held. Capital transfer tax has also been the ruin of many small businesses and has caused many people to leave homes that their families have occupied for generations. There is much more to be clone. In expressing to my noble friends gratitude for what they have done so far, I would express it in accordance with the traditional construction of the word "gratitude"—a lively anticipation of favours to come.

869
The abolition of exchange control, I am sure is right. Noble Lords on the Benches opposite know that it could have been done years ago. With the growing strength of sterling based on our oil revenues, it was absurd to retain this restriction. It hampered investment abroad, which is in the national interest, and it was based on the impossible hypothesis that somebody at the Bank of England would have a better idea as to whether a particular overseas investment was viable or not than the company or individual who studied the particular project with a view to making that investment. This was a plain fallacy. Although in my own experience I have no criticism of the Bank of England, which administered this control with intelligence and tolerance, in principle to restrict investment in this way did nobody any good and must, cumulatively, have done a great deal of harm. It is a good thing that has been got rid of.
I come inevitably to the so-called cuts. I use the word "so-called" because, although they involve some reduction in particular expenditures, in total they involve, as I understand it, the stabilisation of expenditure at the very high levels which noble Lords opposite had attained when they were in Government. Therefore, there does not seem very much justification for heat or emotion on this subject. The Leader of the Opposition, Mr. Callaghan, in the other place referred to the Government in this context as "vandals and hypocrites". We all have some sympathy with Mr. Callaghan over certain of his other problems and should not judge the violence of his language too harshly, but I am bound to say that the word "vandal" puzzled me. A vandal is someone who destroys or damages something which is sacred or beautiful. Nobody certainly, in this House, would think that was a very good or precise description of the British economy as the last Government left it behind. My only doubts are as to whether these so-called cuts are adequate.
Baroness BIRK: My Lords, I wonder whether I may interrupt the noble Lord since he has said he would be leaving early. I am rather puzzled as to why he refers to them as "so-called" cuts. If they are only "so-called" why are inroads being made into education, the social services and everything else? I can understand
870
the argument in favour of cuts, but I do not understand the addition of the word "so-called".
Lord BOYD-CARPENTER: My Lords, I am sure that I owe the noble Baroness an apology. I tried to explain a moment ago why I used that expression. If I have failed to convey this clearly, I will attempt to do so again. I spelled out the fact that they will result in reduction of certain expenditures but that, overall, they will result in (and I recall that I used the expression) "the stabilisation of expenditure" at the level which the Government which she supported carried on. To describe such an overall financial operation as "cuts" without some qualifying adjective seems to me to be misleading and likely to confuse those people—and there may be some outside—who are not wholly aware of exactly what it is that is being done. I hope that I have made that clear to the noble Baroness.
Baroness BIRK: It is still not clear.
Lord BOYD-CARPENTER: My Lords, my doubt is whether the cuts go far enough and whether there ought not to be real cuts. The world economic situation is gloomy, there is a real need for reductions in the tax burden, and I wonder whether these cuts go as far as the economic situation justifies. Of course, I know the Government's problem. As I have told the House, I have been through this before. No Governments impose cuts if they can help it. It is unpleasant and an unpopular thing to do and naturally Governments seek to avoid it.
But even, I think, the noble Lord. Lord Peart, in spite of his speech this afternoon, is not really going to pretend—in this House at any rate—that there are no areas of Government expenditure where there is no waste. There must be a great deal of waste which good hard housekeeping by the Government, aided by the Public Accounts Committee in another place, can help to cut back. And the Government arc energetically pursuing this.
I should like to see them go a little further in monitoring these. Some of the subordinate bodies on whom cuts are imposed seem to me to be trying to be a little too clever. If given a reduction in expenditure as a target, there are many

871
bodies that seem deliberately to offer the most popular and admirable of their activities as the potential sacrifice. The calculation is that there will be such an uproar that the Government will have to let them go on spending as much as they have been spending. In concrete terms, there are local authorities who promptly close some old people's homes, if told to cut expenditure by x per cent. They do no consider removing the director-general of recreation.
And it is not only local authorities; it would be unfair to leave it there. I see that my noble friend the Foreign Secretary is no longer here; but even the Foreign and Commonwealth Office has, I think in one respect, not altogether resisted temptation to similar conduct. They offered, in reply to the Treasury's demand for reduction in expenditure, a very substantial cut in the BBC's Overseas Service rather than a reduction in their posts and establishments overseas. I think this was unwise, though I fully understand and I have seen that kind of thing before. But it must be a mistake to cut out some of these language services, particularly the service in the French language. As your Lordships know, the French are on the whole bad linguists—or prefer to pretend to be—and a translation in French could be particularly valuable at this moment when, if I may suggest it, it might help them—using their own language—to
" Revenir à nos moutons "!
There are other areas where the cuts could be made. I think with the abolition of exchange control foreign aid needs less. With no exchange control, viable projects in the developing countries will attract free private investment, and if they are not viable projects, it is probably better that they should not be backed at all. In that situation, of course private investment will only go where there is political stability. It is not a bad thing for the developing odd to see that countries—for example Kenya and Malawi—which have an admirable record of tolerance, of political stability, should gain in investments at the expense, if you like, of other countries which prefer to indulge in a more theatrical method of conducting their affairs. There are other areas where I hope that we will be told by the noble Earl who is to reply that further cuts can be made.
872
I want before I finish to touch on the most sensitive area of all: the position of the trade unions. Let me say at once that I am in no sense hostile to the trade unions. I can claim that the company of which I happen to be chairman, under my chairmanship for the first time recognised and entered into negotiation with the appropriate unions, and we have the most happy relations with them. But it is an indisputable fact that trade union power has grown and is excessive in this country. It is the lesson of history that when any body of people obtain excessive power there sets in the process of modifying their position and restoring the balance. It is not just an abstract question as to where power should reside; it is a highly practical question. I have already referred once in this House to Sir Nicholas Henderson's farewell despatch from Paris which I think is the locus classicus of an analysis of our country's present woes.
He is immensely revealing on this subject. He compares the position of our trade unions with those in France and Germany. He points out that in France and Germany the closed shop is contrary to the constitution, and illegal; that agreements between employers and workers are enforceable in the courts; that strikes do not take place when an agreement with the employer is still current. He says that his labour counsellor cannot recall a case in the past two years when a strike in France has been successful. He concludes with what I think is the most important part of his analysis: that the much weaker position of the unions in those countries has not resulted in their workers being overworked and victimised wage slaves; that indeed the converse is the case. I quote from the dispatch:
" The paradox of the British labour scene at the present time is that despite the contribution that our unions have made towards a better safety record in our factories, their influence and ready resort to strike pressures have not secured better general employment conditions than in France and Germany. Not only are real wages lower but hours of work are longer ".
In other words, if one compares the way the organisation of trade unions and the law governing them operates among some of our principal competitors and ourselves, one is driven to the conclusion that it is we who are out of step and not they.
The noble Lord, Lord Pearl, said that this was the most reactionary Government

873
of modern times. I agree with him if by "reaction" he means a reaction from failure, a reaction from discredited methods and a return to sanity and to reality. Time was overdue for such a reaction for us to get away from what the Chancellor of the Exchequer so rightly called the dream world, the world in which people think that the mere passage of time without any increase in productivity entitles one to increased remuneration—a world in which the mining union can put forward an enormous wage claim at the very moment that it has been demonstrated that the price of British coal is so uncompetitive that the British Steel Corporation is going abroad and paying for imports with all the added cost of transport.
It is because there was a subconscious but real feeling in the minds of the majority of our electors that we were living in an unreal world and things would not get better until cold reality returned, that my noble friends find themselves on the Benches on this side of the House. The greatest achievement—far more important than the measures they take—the greatest service to this country, will be simply to restore reality and make us all realise, as my noble friend Lord Soames said so well, that our standards of life, our individual standards, our social services, our power to defend ourselves, depend on our efficiency as earners in the world and on nothing else whatever.
5.37 p.m.
Lord HARRIS of HIGH CROSS: My Lords, in rising to address your Lordships' House for the first time, I am so bowed down by the great privilege and honour that I shall need all the customary indulgence you extend to maidens in distress. By way of all too inadequate preparation, I applied myself to reading your Lordships' proceedings in copies of Hansard. I must say that I found the results extremely impressive. Even the occasional irrelevancy is very telling. Last week the noble Baroness, Lady Phillips, countered a suggestion that your Lordships' House should be abolished (this emanated from another place, which sometimes seems like another world) with the proposal that there should be a referendum, and the referendum was to be on the question: "Which House will you have abolished?" If we can get
874
people to read Hansard, I believe her optimism about the outcome might well be justified.
The trouble is that it all sets a standard that is rather intimidating to someone who has not served an apprenticeship elsewhere. There is a particular obstacle for the maiden speaker to try to circumvent the requirement to avoid—I hope it is "undue"—controversy, at least to avoid extreme provocation. This is very difficult indeed for a working economist. All my life it has been very difficult to find any words that an economist can utter that will be regarded as wholly uncontroversial, particularly if other economists are within earshot. After many years of being myself denounced as a self-confessed monetarist, I was rather glad the other day to think that things are getting better when I heard a BBC producer ask where he might find the last living Keynesian. I am afraid I pointed him hopefully in the direction of Cambridge. Now I see from the list of speakers that Nemesis might be about to descend upon my head. So, my Lords, you may judge my difficulty in coming before you in the unlikely guise of a maiden. I will endeavour, however, to steer clear of Standing Order 29—which I enjoyed reading—dating back to 1626. I shall endeavour to forbear from personal or sharp speech, though it may be more difficult on this occasion altogether to avoid what it calls "taxing references".
Since my Introduction in July the thought of making any kind of speech in this great assembly has, in the words of Gilbert and Sullivan's Lord Chancellor, when confronted with a different kind of maiden:
" robbed me of me rest ".
It was only when I saw that the noble Lord, Lord Thorneycroft, had put down this Motion for Papers—which Papers I now discover he does not want anyway—that I though I should take the plunge.
I thought I should like to pay here and now a public tribute to the noble Lord for his resignation in 1958. It is difficult for people outside politics fully to understand the reluctance of Ministers to resign, whether from principle or from mere love of ease and pleasure; but evidently it is a rather rare condition. I think it was very memorable on that occasion that all three Treasury Ministers resigned together,

875
though it might be controversial to mention the name of at least one of the other two ! Looking back, I think 1958 was a bit of a watershed. It certainly seemed to me at the time that these Ministers sacrificed office in a vain attempt to prevent Government spending from rising, which it has gone on doing remorselessly ever since, under Administrations of both parties. It was the last brave stand until 1979.
I turn to the White Paper, which starts from the proposition that public expenditure is at the heart of Britain's present economic difficulties. Very well, I am prepared to go along with that. It is now almost 100 years since a little known German economist called Adolf Wagner formulated the law of increasing Government activity or, as I prefer to call it, increasing Government spending—if only other economic laws had proved equally prophetic, my Lords! When he produced his law, Governments were commonly spending between 5 and 10 per cent. of national incomes in Western economies; and here today it has gone on rising to reach a rate of between 50 and 60 per cent. of national income. We can argue over the precise figures, but it is impossible to doubt the direction and velocity.
It is plainly not a progession that can continue much further, even if we wished that it should. Therefore, I am glad to bring your Lordships news that there are a growing number of economists around the world who no longer believe that Government spending on anything like this scale has much to do with the public interest or with the welfare of the neediest sections of society. Indeed, the massive increase in what is called "Government welfare spending" does not seem to be an obvious prescription for countries where average real incomes have risen as rapidly as they have in recent decades, even in poor old Britain. It is surely a paradox that, as family prosperity has risen, both main parties have competed in providing more and more central and local government spending and services on an indiscriminate—literally a free-for-all—basis, without charge and therefore necessarily without sufficient concern for widely varying needs and urgencies.
A humble market economist, if such there be, would predict that the multipli
876
cation of so-called "free" services must end up by exerting a quite intolerable strain upon the Exchequer. The reason is perfectly simple. Citizens who voted for more Government services they thought free begin to vote for reduced taxes when the bills come home to roost in their pay packets and in their rate demands. The dilemma for this Government, as for the last one, is how to extricate itself and the voter who, by this time, has become thoroughly schizophrenic. All would like to have some of their taxes back, yet each logically wants to preserve the particular services that he values most. Everyone prefers to live well off the state, but as much as possible at somebody else's expense. All have a strong economic interest in becoming "free riders"; and that is the reason why there can never be a consensus within a party or between parties about where you can best cut "free" services.
I believe we must seek a more promising approach and I am going to quote a single sentence that provides a pointer. It does not come on this occasion from Adam Smith, but from the noble Lord, Lord Houghton of Sowerby, whom I am glad to see is with us at the present moment. In a prescient paper he wrote a few years ago, entitled, Paying for the Social Services, the noble Lord wrote as follows:
" While people would be willing to pay for better services for themselves, they may not he willing to pay more in taxes which may bear no relation to the services actually received ".
I must hope for another occasion to urge the Government and noble Lords on the other side that this homely, common sense insight of the noble Lord, Lord Houghton, points to a more rational alternative than the present indiscriminate and necessarily arbitrary cuts. It would mean calmly and unemotionally examining how far we can raise charges on a wide range of so-called "free" services, so as to allow individuals to retain a great deal more of their own incomes and to choose where they will economise, where they will draw in their horns, and also to choose where they will preserve or even increase particular lines of expenditure for the benefit of themselves and their families.
Such an approach, I accept absolutely, depends on a comprehensive policy of minimum income support, preferably along

877
the lines of a reverse or negative income tax; and that might be a task to challenge the versatile talents of the noble Lord, Lord Cockfield, who I have not seen about on this occasion. My Lords, I have done. I will only add that I hope that radical rethinking along such lines as these might find an echo in all parts of the House, although for some time perhaps a subdued echo; and I now brace my back for lofty chastisement.
5.48 p.m.
Lord KALDOR: My Lords, it is my pleasant duty to begin by congratulating the maiden speakers, of whom we have more today than on any previous occasion I can remember. I should like particularly to congratulate my noble friend Lord Stewart of Fulham on an admirably concise speech. In my view, he put his finger on some of the most important points which we on this side of the House see fundamentally differently from those on the other side. I should also like to congratulate the noble Lord, Lord Harris of High Cross, who, as an economist, stands at the very opposite end of the spectrum from myself. I think that in future there will be occasions when he will not be so restrained by tradition to be quit. so uncontroversial as he was today, but will express his views more forcefully and pointedly and will criticise anti-monetarists and Keynesians in a more radical manner. In any case, we welcome him as a Member of this House and I am sure we shall gain a great deal in the liveliness of debates by his presence.
I should like also to add, before I close this introductory and congratulatory section, my pleasure by anticipation that I am to be followed by another maiden speech from my noble friend Lord Lever of Manchester. I am sure he will surpass us all in wit, brilliance and amusement. I think he will add a note to the liveliness of this House which will distinguish the polite tone of our debates even more from that of another place. After saying all this—I have spent two minutes on congratulations—I must hurry on.
As noble Lords opposite know, we are not, on certain fundamental matters, divided, that this country is in a perilously difficult situation; that inflation is a terrible curse and it must somehow be brought to an end, and that our uncompetitiveness
878
has brought us down a slippery slope where the gradient gets ever steeper. Where I differ fundamentally from the other side is in their beliefs of how to turn things around. This is what I wish to speak about. This is a wide-ranging debate, the terms were carefully so chosen that one can speak on almost anything, and I should like to spend my time on one aspect only—a detailed textual criticism of the first page of the White Paper on Expenditure Plans which the Government issued last week. I apologise to noble Lords for going into such detail on a few paragraphs, but I feel that this is the only way in which one can hope to carry conviction and to convince them that they suffer from numerous delusions.
When I first read this page I was so surprised that I said, "Here is a neo-Conservative Manifesto, a testament of faith in monetarism, which is something quite new and distinguishes the present Government from the traditional Conservative Party." It is something that could not have been written when either Winston Churchill or Harold Macmillan was Prime Minister, or when the noble Lord, Lord Butler, was Chancellor. It is a neo-Conservative Manifesto which calls to mind, at opposite extreme, the Communist Manifesto of Marx and Engels which is well over 100 years old. The very boldness and vagueness of its assertions make the two documents rather similar.
It is very disconcerting to those of us who are accustomed to the studied moderation and carefully guarded language of traditional State papers in this country. In fact, when I first read it the first thing that came to my mind was a well-known remark by a great historical figure of your Lordships' House, the third Marquess of Salisbury, who said about the Daily Mail that it was a paper written by office boys for office boys. Reading the first page and a half of this White Paper, I felt that he might have said almost the same about this new manifesto.
When carefully examined, this manifesto collapses into a series of non-sequiturs, interspersed with assertions which can easily be proved false by an examination of relevant statistics. Since the truth or falsehood of its basic assertions are absolutely critical to the success of the present Government's whole economic

879
strategy, I hope I shall be forgiven if I deal with them at some length. I take my cue, in the same way as the preceding speaker, the noble Lord, Lord Harris of High Cross, did, from the opening sentence which reads:
" Public expenditure is at the heart of Britain's present economic difficulties ".
This raises many questions. It does not say which aspect—whether it is its size, its rate of growth or its composition—they regard as critical. By saying that it is at the heart of Britain's difficulties, the implication is that public expenditure is something which peculiarly plagues Britain and does not plague ether countries. Indeed, the next paragraph insinuates, without actually saying so, that public expenditure was responsible for Britain's dismal economic performance.
It goes on:
" Over the past five years output has grown less than half as fast as it did over the previous 20 years, and a little over a third as fast as in other industrialised countries ".
Economic historians would confirm, I think, that the same statement, or something very like to it, could be made about the Edwardian period, the first decade of this century. Perhaps public expenditure was responsible for that too—because it was too small rather than too large.
However, in the third paragraph the authors reveal that it is the growth of public expenditure rather than the size which they regard as the main cause of our difficulties. It runs:
" Over the years public spending has been increased on assumptions about economic growth which have not been achieved ".
This statement is quite inconsistent with the table on page 9, which shows in line 13 that at constant prices total public expenditure fell over the last five years by no less than 2½ per cent. It has not been growing. The noble Lord, Lord Soames, referred in his speech to the rapidly growing burden of public debt, and to anticipate critics I should like to add that total public expenditure in line 13 is defined so as to exclude the service of the public debt. But even if you add that item to it (from line 6) it still remains true that public expenditure, including debt interest, fell by 1 per cent. between 1974–75 and 1979–80. Over the same period our national output, unsatisfactory though it was, had risen by between 6 and 7 per
880
cent. So clearly, contrary to what th White Paper says, there has been an appreciable fall, and not a rise, in public expenditure both absolutely and even more, in relation to the national income.
It would be equally untrue to say that our public expenditure is large in comparison with other countries as a proportion of the GNP. In a recent book on Budgetary Policy, Ward and Neild have shown that our expenditure has been, and is, below the average of the 10 major European countries, and it remains below the average even if account is taken of our relatively low income per head and of the relationship of income per head to public expenditure in relation to the GNP. The manifesto is completely wrong on public expenditure, and all noble Lords opposite who believe it are wrong, because they just repeat to themselves certain slogans, and the more often they repeat them, the more strongly they believe them and the less they feel to be under the necessity to check their beliefs against the facts. They are equally wrong on taxation.
The MINISTER of STATE, DEPARTMENT of EMPLOYMENT (The Earl of Gowrie): My Lords, while we are on this point, if noble Lords on this side of the House are so wrong in all these assumptions, why were these assumptions shared by the previous Government and why did they cut expenditure?
Lord KALDOR: My Lords, I was not responsible for the previous Government, at least not after 1976 when I resigned as an adviser to that Government. However, I do not believe that they said that our public expenditure is larger than that of other countries. I should like chapter and verse to be quoted before I could accept this statement.
Turning to taxation, the author of the White Paper could not have seen the December 1978 issue of Economic Trends. Page 98 of that issue shows that Britain was the only one of 17 leading countries in the world which had reduced the sum of taxes and social insurance contributions in relation to gross national product between 1970 and 1976 and that it had done so by three percentage points of GNP. If noble Lords do not believe me, they should turn to page 98 of Economic Trends for December 1978 which is an

881
official publication of the CSO. All but two of the other 17 countries had increased their taxation in relation to GNP, some by as much as 12 percentage points.
Moreover, according to the evidence contained in this paper, in 1976, which is the latest year for which comparative figures are available, the United Kingdom occupied ninth place among the 17 countries. With a total burden of 40 per cent. of GNP it was bang in the middle between the upper extreme of Sweden, with 58 per cent., and the lower extreme of Japan, with 22 per cent. So we were the only country among the 17 which actually reduced taxation in relation to GNP, whereas all but two of the others increased it. We were right in the middle. So what justification has the White Paper for saying,
" increases in taxes have made inflationary pressures worse and reduced incentives ".
If the writers of the White Paper had looked up their facts and studied them, they should have said the opposite. They should have said that a reduced burden of taxation lightened the inflationary pressure and improved incentives.
Lord MACKIE of BENSHIE: My Lords, could the noble Lord tell us where Britain stood in that table with regard to personal income tax?
Lord KALDOR: My Lords, I cannot tell the noble Lord now, but so far as personal income taxation is concerned I can assure him that we are by no means the most heavily taxed country. There are the three Scandinavian countries, and Holland, whose personal income tax is higher than ours. But that is not the point, nor is it according to the point made in the White Paper.
Let us turn to paragraph 4. This contains even bigger blunders. It says that to bring down the rate of inflation,
" it is essential to contain and reduce progressively the growth of the money supply. This means that Government borrowing must in turn be firmly controlled. It is a main determinant of monetary growth ".
It is only an uneducated person, or a person who is not in the least familiar with the subject, who would not know that since 1970 there has ceased to be any correlation between the borrowing requirement and the change in the money supply. The facts are everywhere to be seen—in
882
all kinds of official publications of both the Government and the Bank of England. It is true that a relationship existed until 1969 and I believe that I was the first economist to draw attention to it in an article which was published in 1970. Almost immediately afterwards, however, the relationship ceased to exist because the new Tory Government which came into office in 1970 abandoned the old system of credit control by means of credit ceilings and introduced a new system called "Competition and Credit Control". I can tell those noble Lords who are familiar with the technical jargon—noble Lords such as Lord Harris—that I calculated the correlation coefficients by computer at Cambridge and that it comes out exactly at zero. So much for saying that the borrowing requirement is the main determinant of the money supply. There is a zero correlation between the change in the money stock in the United Kingdom and the borrowing requirement.
Equally, it is only a person who is totally ignorant of monetary statistics who could believe that it was the excessive rate of growth in the money supply which was responsible for Britain's high rate of inflation over the last five years. Anybody who cares to look up the facts needs to go no further than that admirable storehouse of information, International Monetary Statistics published by the IMF. From that it can easily be discovered that the rate of growth of the money supply, in the broad and only significant definition (on which the Government, the Bank of England and everybody else concerned with this matter are agreed), namely, M3, clustered around 10 per cent. a year, at an almost identical rate for the last five years, 1973 to 1978 in four countries: Germany, Switzerland, Belgium and the United Kingdom. All four countries had the same rate of growth in the money supply. Yet the rate of inflation averaged no less than 15 per cent. in Britain over that five year period, but only 4½ per cent. in Switzerland, 4¾ per cent. in Germany and 9 per cent. in Belgium.
I think it is obvious from these figures that the growth in the money supply no more explains the high rate of inflation in the United Kingdom than it explains the exceptionally low inflation rates of Switzerland and Germany. Indeed, if one relates the money supply to the gross

883
national income, Germany's money supply is twice as large as that of the United Kingdom. It is 67 per cent. of GNP as against our 34½ per cent., while Switzerland's money supply is nearer four times that of the United Kingdom. It is 125 per cent. of GNP against our 34 per cent. So monetarists please note that on their own chosen criteria the danger of inflation through excessive liquidity is greatest in Switzerland and Germany, while the United Kingdom ought to be the least vulnerable. Of course this is nonsense, but it is nonsense because monetarism is nonsense. It is not Germany and Switzerland which stand in real danger of a high rate of inflation, but this country.
In fact, the United Kingdom has by far the worst record and is in the most dangerous situation from the aspect of inflation, and the policies of the present Government are, I am afraid, more likely to speed up this process than to slow it down because they go so completely the wrong way about it. There is not a word about wages or a policy on wage settlements in the White Paper.
As far as output, employment and economic growth are concerned, the White Paper adopts a wholly fatalistic attitude. All it says is,
" that the prospects arc poor … both in this country and in the rest of the world ".
This reminds one of a statement attributed to Neville Chamberlain during the great depression that the Government is no more capable of regulating the general demand for labour than it is of regulating the weather. After a long circle we now seem to have returned to the same point.
The philosophy underlying the present Government's policy is that wealth can be created only by the private sector, not by the public sector, that wealth can be created only by giving incentives for risk bearing and so on, and that Governments cannot create wealth. Indeed, they say that
" to plan for more public expenditure before the required output is available to support it would ensure that the growth of output does not take place ".
The absurdity of this view is shown by the fact that this Government would be only too glad to see more motorways built if private enterprise built them—as is the
884
case in France—but it nevertheless feels that the same economic circumstances compel reducing the road building programme by £200 million merely because this is produced by the public sector and not by the private sector. Why do they not hand it over to private enterprise and be done with it? Then they can say "Ah, the private sector has increased our wealth or output, so now we can be allowed to spend more money."
There are certain expenditures, like defence, which are exempt from that philosophy. I only wish that we were in the same situation on defence as we are under the Common Agricultural Policy. We pay a disproportionate share of the burden. We only have to look at the proportion of the defence expenditure of Germany, which is two-thirds of ours; of France, which is less than two-thirds of ours and of a number of other countries which is only one-half of ours, As a percentage of GNP there is no other country in Europe which has as high a proportion of defence expenditure as we have, with the exception of the United States.
As to the rest, there is one thing on which I agreed with the noble Lord, Lord Boyd-Carpenter, when he mentioned the "so-called" cuts. The White Paper is full of "so-called" cuts. They are not cuts at all; they are not cuts in services, provided they are treated as negative public expenditure, which is a concealed form of taxation, hypothetical taxation of the most regressive kind. When they say that the country can no longer afford to send children to school by bus it is not that the buses will stop—on the contrary they cannot stop because the schools are to be concentrated in bigger villages. It is simply that a charge is made for the transport of the children. There is no change in the use of resources, but only a regressive change in redistribution of taxation. The road to national salvation is sought by making higher prescription charges for the same makes of prescription ; by compelling higher payments for school meals and school milk and goodness knows what else besides. It is a plain cheat to call these cuts in public expenditure. It is not that the resources are transferred from one use to another. It is just a way of putting more burdens on the poor; and they are worse than general indirect taxes, because if you put VAT of 15 per

885
cent. on clothes then everyone has to pay—not only the poor but also the rich. When you have private medicine along with public medicine and private education along with public education then you impose tax on the person who is not rich enough to have private education and private medicine whereas the person who is able to afford private education or medicine is wholly exempt.
I want to close my speech with one sentence, because I realise that I have spoken for a very long time. My Lords, I will conclude where I began, with a quotation. I began with the opening sentence of this neo-Conservative Manifesto. I think it is only fitting that I should end with the opening sentence of its counterpart, the Communist Manifesto, which runs:
" The history of mankind is a history of class struggles ".
I cannot say that I ever believed in this, but the present White Paper makes me feel that there must be more to it than I had once thought.
6.15 p.m.
Lord LEVER of MANCHESTER: My Lords, the House must be increasingly fatigued by the cries of soi disant reluctant maidens. However, I must say that the arrangements of the House have won my instant admiration. The noble Lord, Lord Kaldor, was put on to precede me thus being enabled, with good heart, to congratulate me. I wonder whether a delayed appearance by the noble Lord, Lord Kaldor, would necessarily produce the same result, because Lord Kaldor and I have long been friends and worked together in the Treasury; but there were only intermittently those points where our views met in harmony. I am glad to say that today he included one of those points in his speech.
I, too, resent the semi-theological passion which has lately accrued as the bogies of monetary aggregates. I am not an expert in this kind of algebraical economics, but my own impression is that those countries which are most successful in combating inflation preach vigorously about the control of monetary aggregates but practise whatever is convenient. Those countries which fail to cope with their balance of payments and inflation problems are constrained by their creditors
886
not only to preach monetary aggregates but actually to practice it, and that is far less convenient. I agree with the noble Lord, Lord Kaldor, that Germany and Switzerland have had monetary aggregates during a period of low inflation which do not appear to cohere with the uncritical enthusiasm of so many of the monetarists that I meet, but I claim no expertise in this area.
I also wish to express my gratitude to the noble Lord, Lord Thorneycroft, for this wide and stimulating debate, although as will appear I am going to concentrate on a very narrow part of the economic situation. I am grateful too to an old colleague in the House of Commons, the noble Lord, Lord Boyd-Carpenter, for refreshing my mind about those tragic events of 1958 when, for what now seems a derisory sum, Lord Thorneycroft resigned from the high office of Chancellor of the Exchequer. It seemed to me in itself to explain why resignations thereafter were less frequent; because the three Treasury Ministers could resign without much impact upon the then Prime Minister it was rather discouraging for those of us who held more modest positions to seek to emulate them.
The narrow area on which I am going to speak is that of the recent abolition of the remains of exchange control, and I hope the House will bear with me because so far it seems to me that a subject which my old Treasury experiences teach me should be largely devoid of party political excitement, has not yet been discussed without a great deal of party political excitement, at any rate in the other place. For when the Chancellor of the Exchequer announced the disposal of this residual exchange control he was, on the one hand, described as "a lickspittle of international capitalists", and, in the more approving sense, he was treated as the greatest liberator since Heracles struck the chains from Prometheus. Neither of those extreme views was well documented in the discussion, so far as Hansard has recorded it, and therefore, in my few minutes, constrained as I shall be from these excitements of party political hyperbole in relation to this matter by the conventions of a maiden speaker, I shall seek to examine what has been achieved, good or ill, in the abolition of these exchange controls.

887
It is of course no secret to Members of this House that the exchange control never existed until the war in 1939, but what is not so commonly remembered about this hangover from the wartime controls is that most of the exchange control of wartime has gone. The wartime exchange control was deliberately designed to put economic power into the hands of the Government by controlling all foreign sterling holdings, whether they were owned by United Kingdom residents or anybody else, in effect controlling all imports and exports, so as to give, rightly, priority to the prosecution of the war. Secondly, the exchange control was intended—whether or not this was desirable, I know not—to maintain the same rate of exchange rather artificially throughout the whole period of the war.
This power, of course, was sharply reduced by all Governments, stage by stage, after the war, very necessarily and rightly so. All that was abolished with so much elan and proclamation by the existing Chancellor of the Exchequer was a residual relic of those exchange controls. All the foreign holdings of sterling have long been exempt from control of any kind. Foreigners have been entirely free to do what they like with any external sterling that comes into their possession. The controls have had little or no relation to exports and imports. The only people controlled at all, and only very partially controlled, have been United Kingdom residents, and then only to a minor and not very rewarding extent.
So, since these exchange controls were effectively abolished before the recent announcement, we have to ask ourselves what good were they doing or what evil were they averting in that truncated form. I am very sympathetic to and conscious of the argument, especially in the trade union movement, that the final abolition of the exchange controls might in some way prejudice investment in our country. I have examined that very briefly, and although I understand the anxieties they feel, and especially in relation to the long industrial decline which is so frequently commented upon in the British industrial performance, we have to see whether the recent abolition of exchange controls really has the effect which causes them this anxiety.
888
The first thing that has to be noticed is that investment in this country depends upon the conjunction of three factors. First, there has to be profitable investment opportunity. I am not talking about State investment; I am talking about private investment, which is the only investment that is affected by these controls. There has to be a profitable investment opportunity. Secondly, there has to be the entrepreneurial skill and eagerness to exploit that opportunity. Thirdly, there has to be the investable funds to follow up those two essential ingredients.
Of those three crucial ingredients for heightened investment the one that has always been present in abundance has been investable funds. There has never been a shortage of investable funds. This has been established time and time again. Of course, it could be said that there are plenty of investable funds but our entrepreneurs are rather slack at searching out profitable investment opportunities. That is not true either. If anything, our investable funds are so pressing upon the market that their anxiety to find profitable outlet in our country often borders on credulity, and situations are chosen for investment which more hard-headed people on the Left of politics like myself would find it difficult to support. It is these barons, true blue contributors to the Tory Party's Central Office, which enables Lord Thorneycroft to be so well-informed when he addresses us, who all to readily give way to credulity.
So the great thing that has been wrong in our investment performance has been the lack of profitable opportunities, not the lack of investment funds. British investment abroad has never lost us investment here. On the contrary, if anything, it has added to investment here and added to the demand for our goods. That has all been established. I am not saying this because a Tory Chancellor brought in this measure. I was saying this throughout my years in Labour Government to anyone who was prepared to listen, including many of my colleagues, although not, apparently, all of them.
On the question of our long decline, I hope I may be allowed to say some blunt words without being too controversial. It is a relative decline. Our standard of life and production of wealth is higher

889
today than ever in our history. But relative to the top performers we have done badly. The most notable and apt comparison with which we are rightly often challenged is Germany. It has always struck me as somewhat anomalous that those who never tire of contrasting the inadequacy of our performance with that of the German economy, whose performance we are asked to admire and seek to emulate, never mention the methods by which they achieved this. We have to be quite frank and say that the Germans could hardly wait after the war to get rid of exchange controls.
A noble Lord: They had Marshall Aid!
Lord LEVER of MANCHESTER: In fact, the Germans got rid of their exchange controls just as speedily as they could, and as a matter of fact the only capital controls they have at the present moment are to save them from the embarrassment of too great a flow of money inwards. Well, I hope that we shall find ourselves similarly embarrassed in the not too distant future. I must say, however, that the problem of ending our lack of investment, or lower peformance in investment, is a very grave one. I have to tell the House (a) that I do not know the answer, and (b) if I did I could not hope to explain it within the confines properly assigned to a maiden speech.
One thing I will say is not the answer is to compel British fund holders to hold their funds in Britain in the hope that in despair they will invest them where no profitable opportunity exists. And the second point on which there has to be greater consideration before we rush in is the belief that Britain's industrial decline can be halted by Government good intentions, Government power and Government cheque book alone. I am not saying that Government power and Government cheque book will not have a role from time to time, but it is naive and dangerous to believe that that is the deciscive role in the light of the painful lessons of recent years.
We have to be honest and face reality. Reality is neither Left Wing nor Right Wing; I would immediately say to anyone who criticises this view. The reality is that with the best intentions in the world,
890
and with an enormous cheque book, we were worried about the decline, for example, of the motor industry. What happened? Did we reverse the decline or slow it up? On the contrary, unhappily, the mere recipe of Government intervention and Government genuine intentions, with learned and erudite officials to back it all up, resulted in an even swifter decline in the motor industry than in the previous years, made it in fact the most spectacular decline of a major industry, among many others in recent years, and very alarming too. Though I emphasise, especially to my noble friends, and for that matter to the other side, that anyone who for doctrinal reasons rules out the use of Government intervention or the use of public funds is as unjustified as anyone who believes that they are the automatic and simple remedy for the decline of industrial investment.
To return to and finish with the theme of exchange controls, one of the ways of getting more industrial investment is certainly not to coerce your citizens by exchange controls. That being so, we have to recognise that the only possible reason for retaining this residual relic of exchange control is to protect us from a run on sterling. Here again, anyone who knows the facts of this exchange control—and however wrong my views may be on other matters I have had some experience in this area—knows that the existing level of exchange control before the Chancellor acted was entirely futile to protect against a run on sterling. All it could do was to inhibit, veto, the marginal and relatively harmless expenditures of a few well-to-do citizens who go on holidays or who want to buy a house abroad, or the like. The great movement of funds came from sterling holders not within the control of the Government—from foreign sterling holders—and not a little of it from domestic sterling holders who cannot be controlled by exchange control.
In the modern world leads and lags dwarf the puny effects of the exchange control on the few harmless private spenders. If industry forms the view that the exchange rate will go down, it leads on its payments and lags on its receipts, and so does everyone else. The United States suffers that today without exchange control, and we suffered it with exchange control. So, it is not even a useful

891
machinery for protecting against a run on sterling.
In those circumstances, we should all be glad to know that we have got rid of a relic from the last war that was serving no useful purpose either as regards investment or in protecting us from runs on sterling. At the risk of sounding fulsome I must briefly pay a tribute to a rare institution—an institution with power that seeks to give it up and is active and persistent, and indeed pertinacious, in seeking to give it up. I do not often see eye to eye with the Bank of England on all these matters, but I am glad to see the noble Lord, Lord O'Brien of Lothbury, in his place, because I remember how anxious and, incidentally, how right he was about 20 years ago to give this up because it was serving no useful purpose. It is remarkable that the noble Lord, Lord O'Brien, and his successor Gordon Richardson, possessed of this power, spent a great deal of time urging Governments to take it away from them. That, I am sorry to say, is a rare phenomenon in the exercise of public power and one that I think is worth a passing tribute.
In so far as there is a longer term danger from the currency situation for Britain, it does not arise from the abolition of these last pieces of puny and irrelevant exchange control. It arises from the desperately dangerous situation in the world monetary system, especially as it relates to financing deficits. I urge the Government—I do not want to go into technical detail—to recognise that the area which they must look to is the effect of all this on the banking system, and not the more popular targets for criticism.
However, for all the reasons that I have given, I can, as a member of the Labour Party and of the former Government, welcome the end of this exchange control which has served no useful purpose, and the abolition of which could be a considerable encouragement to a great trading, insurance and banking nation like our own.
6.34 p.m.
Lord COBBOLD: My Lords, we have listened to three admirable maiden speeches today and it falls to me to congratulate in particular the noble Lord, Lord Lever of Manchester. I think
892
that in any event I should have enjoyed his speech very much, but I enjoyed it perhaps more because he spoke about subjects in which I have a very considerable interest. It so happens that in 1939 I spent a great deal of time putting on the exchange controls and throughout the 1950s, as he rightly said, we spent a great deal of time in getting rid of most of them. It would be very foolish for me to say to the noble Lord, Lord Lever, that the House will look forward to hearing from him more often. That appears to be a more than obvious self-evident fact.
My purpose in intervening in this debate is only to stress one point and to draw on my experience in the 1950s, when I carried some responsibilities for these matters. I propose to talk—and I am sorry to say that I propose to talk rather gloomily—about inflation. I make no apology for making once again the "central bank" speech which will be very well known to the noble Lord, Lord O'Brien, and to ex-Chancellors of the Exchequer who have heard me make it very often. Indeed, I make no apology if only because rather to my surprise inflation has not been mentioned often in the debate this afternoon.
Throughout the 1950s, when inflation was running at what seems today minimal figures, I and various others who sit in your Lordships' House today, made a great many speeches warning of the dangers of progressive inflation. It is a fairly dull subject and on the whole the speeches fell on deaf ears and were generally regarded as a routine form of central banking and economists' mumbo-jumbo. The very clear recollection which I have comes from my discussions during the 1950s with my colleagues in other central banks around the world. Some, like the Federal Reserve and the Bank of Canada, had the same difficulties as we did in getting across the message about the danger of inflation. We were almost envious of others, especially perhaps the West German Central Bank, which only had to mention the word "inflation" and everybody leapt immediately to attention and action. I can perhaps make the point best by quoting some words from a speech which I made to the Canada Club in April 1959. I emphasise that I said this 20 years ago. The extract begins:
"Obviously the dangers of inflation are more easily understood in those countries which have

893
known complete collapse of a paper currency: in those countries the bogey is familiar, and a call to defend the currency has a real personal meaning to every citizen. In other countries (it is happily the case both in the United Kingdom and Canada) no collapse of the currency has been known: such gradual decrease in the value of money"—
I repeat that I am talking about 20 years ago—
"as has taken place has brought benefit to some and suffering to others—it has not been seen in the stark terms of complete loss of savings, social upheaval and insolvency of the State. It has to be proved over the next few decades that paper currencies, and indebtedness expressed in terms of paper currency, can, by the will of democracy and with the support of democracy, retain public confidence as a store of value. This will require an ever wider understanding of the problem by the peoples of our countries, and a continued willingness to accept the disciplines without which the objective cannot be won".
I repeat that that was said 20 years ago.
In the last few years we have seen the beginnings of a wider appreciation in this country of what real inflation means. But there is still much to be done in bringing full realisation home to the public. Inflation is a bit like alcohol. A little alcohol makes most people feel good—quite a bit of it, over quite a long period, makes a lot of people feel good. So does inflation. But, it is not always easy to realise, or at any rate to realise in time, that if it gets out of hand, the one will destroy the body politic as the other will destroy the physical body. Nor is it always easy, in either case, to accept the necessary disciplines to prevent that from happening.
Both Administrations in recent years have set the attack on inflation as a primary objective. But every time that there have been signs of a check, inflation has moved up again to higher levels. There are very different views which have been forcefully put forward, and will again be forcefully put forward in this debate, about the right or wrong ways of pressing the attack home. There is, however, a view common to most people on all sides of this House, and increasingly accepted by the country as a whole, that inflation is the prime enemy and that the attack on it must have the highest priority. I hope that the debate in your Lordships' House today may help in some measure to make the dangers of failure to deal with inflation still more widely understood and increase the willingness of the
894
public to accept the disciplines which will surely be needed if failure is to be avoided.
6.40 p.m.
Lord IRVING of DARTFORD: My Lords, a maiden speech is perhaps a suitable occasion in a debate as wide as this for a newcomer from another place to make his views about your Lordships' House clear. I was very disappointed to be so unceremoniously and painfully dismissed from another place during the May election. When it happens to one twice in 10 years, there is no greater test for a democrat. Nevertheless, I was very pleased to come to your Lordships' House because I have always taken the view that it does a useful job, and a very good job indeed, as regards European legislation. In time I hope to make a modest contribution to that work. I have never wanted your Lordships' House to have more power than it has at present. Nor have I at any time wished it to make a real challenge to the elected House. I do not do so now. I do not wish it to be abolished; nor do I wish it to be elected because I believe that inevitable conflict will arise between the two Chambers.
Eighteen months ago I led a delegation to Australia which included two Members of your Lordships' House—the noble Countess, the Countess of Loudoun, and the newly-ennobled Baroness, Lady Skrimshire of Quarter. During that time we saw the bitterness that conflict between the two chambers had left in Australia. I should not like to see that take place in the United Kingdom. The great majority of our people take the view that this House is part of our history, and generally they respect the wide range of distinction and knowledge that your Lordships bring to debate. Once this ceased to be true, due to abolition or election, the bitterest controvesy would arise and many people would join in it. I submit that there are many more better things to do than to become involved in the time-consuming and destructive exercise that this would involve.
Leaving that subject, I should like to make a more parochial plea to the Government. One of the casualties of the last two or three years, because of our economic difficulties, has been the road programme. Although we have built some very fine roads in many parts of the

895
country, one part of the country that has been totally neglected is the road to the South-East—the road to the garden of England, the gateway to Europe. I am sure that those noble Lords who use that road will agree that it is absolutely appalling. There is an increase in delay, frustration and wear and tear, and it now takes about two hours to do the 20-mile journey up from the South-East. It reflects no credit on anyone, and I should like to urge the Minister to use his good offices to obtain a speedy improvement in this road before the traffic snarls up entirely.
I want to make another cry from the heart. For nearly 30 years I have been a member of a local authority. I believe that a healthy system of local government is essential to a sound democracy. I wish that more parliamentarians were involved in this kind of work. However, at present I am the chairman of a finance committee which is wrestling with the problem of trying to interpret the intentions of the Government in respect of local authorities. Local authorities face an impossible task. In my local authority our calculations show that in order to meet increased wages and salaries, comparability payments and such payments as interest charges, which we could not take into account nine months ago, there must be at least a 30 per cent. increase in the rates. That is after we have made serious attempts at cuts and, indeed, after we have for two years frozen many appointments. I hope that the Secretary of State will bear in mind that local authorities have been squeezed for the last two or three years, that many of them have run down their balances, and that there is little fat left.
I should like to make one other point clear. I believe in a mixed economy, because I believe that that is the best way of ensuring freedom of choice and efficiency. I believe in the need to make British industry profitable and I believe in the need for Government to create the environment in which this can happen. I am certain that we need a closer understanding, both between Parliament and industry, and between the two sides of industry. Two or three years ago a number of us co-operated to establish the Industry and Parliament Trust which has been at work for the last three years. The first 20 or 30 fellows have nearly
896
completed the task to which they committed themselves of attaching themselves to and working in industry for 25 days. I believe this has been completed to the mutual satisfaction of both the members themselves and, indeed, of industry. I hope that perhaps some of your Lordships may have an opportunity to take part in a similar exercise in the future.
However, our present situation is very serious. The economic facts are grim. We have an economy which has consistently been unable to compete in world markets. It is common ground that, although we disagree with the extent, there is a need to hold back expenditure, and we agree that the money supply is an important element in any Government's policy. But the Government themselves have withdrawn from the control of prices and profits and, indeed, from wage bargaining. I do not believe that that can continue because I am certain that the Government must become involved in the industries which they control. In setting the cash limits they will, in fact, be setting the going rate for industries outside those which they control. I do not believe that we can do without a wages policy. I am certain that sooner or later the Government will have to return to a wages policy, which I hope will be a voluntary one.
In the meantime I hope that the Government will seek to secure the closest cooperation with the trade union movement, because it is particularly important at this time. We face a new industrial revolution based on the technology of the micro-processor, which will alter beyond recognition so many of the industries upon which national wealth and employment prospects depend. In the last 10 years Japan has spent something like £500 million on micro-processors, while the United States has stimulated its industry through enormous defence and space exploration expenditure. France and West Germany have been investing at the rate of about £60 million per annum.
Until recently our programme has been very slight indeed. In its second report which the Advisory Council on Applied Research and Development presented to the Cabinet Office yesterday it says:
"We are in great danger of being left a long way behind in the application of programmable automation and robotics".

897
The new technology presents us with a dilemma. If we do not invest, we shall never be able to compete in world markets. If we use the new technology, we shall find that we need fewer people. One or two people like Arthur Little believe that many new jobs will be created, but they are very few in number. But the Think Tank and the Manpower Services Commission do not believe this at all. Professor Freeman said in his J. D. Bernal Memorial lecture last year:
"Developments in the micro-electronics industry are far more important than developments in aircraft, cars, steel, chemicals and in any other industrial sector because micro-electronics is a new 'heartland' technology".
Sir James Hamilton, the Permanent Secretary to the Department of Education and Science, this morning said that this was the most important new technology since the Industrial Revolution, although he did point to a number of other new developments. Mr. Ray Curnow and Professor Ian Barron of INMOS have talked of "a tidal wave of electronics" which will sweep through existing industries destroying some of them completely.
Information technology will affect 95 per cent. of the economy. Derek Roberts, the Managing Director of Plessey micro-systems division, believes that the electronics revolution will fairly swiftly lead to organisational investment and manpower changes in practically all established industries. The computer and telecommunications merger will be the first, and this will lead to a catastrophic loss of jobs.
I believe that we have a time-scale of about five years—10 years at the most. But the effects will be considerable. It will almost inevitably mean that, if we are to get more efficient and simplified production, we shall use more resources, and therefore we are concerned not just with the conservation of oil, but we must be concerned with the conservation ofmany other raw materials. It will require a new approach to our education system in terms of training and retraining. People and institutions will need to adapt to more extensive work sharing and a new relationship between work and leisure. It will require an increase in research and the search for alternate materials.
898
I believe that there should be a minister charged with the special responsibility of co-ordinating all these matters. Whether this is to be a threat or a promise of better things to come, whether it is to be a danger or an opportunity, will depend on the degree of co-operation between management and workers in securing the enormous adjustments which are involved. I believe that the British people are capable of achieving that co-operation.
It is in times of difficulties—difficulties like the present—when we should have faith in ourselves and the courage to plan for the future. I hope that the Government and all others concerned will act positively on the lines of the new report so as to enable all our people to enjoy the benefits, and a better life than ever before. The prizes are great, and although the hour is late I believe that the future is still in our hands if we, as a nation, are prepared to act sensibly, act together, and act in time.
6.52 p.m.
Lord NUGENT OF GUILDFORD: My Lords, it falls to me to have the privilege and pleasure of congratulating the noble Lord, Lord Irving of Dartford, on his maiden speech, which your Lordships obviously enjoyed very much in its highly constructive vein. It must have been a relief to your Lordships to know that there are some distinguished Members of the House of Commons who really wish the House of Lords to continue in existence. Of course, the noble Lord occupied an important position in the House as Deputy Speaker and Chairman of Ways and Means. I was interested to see in his wide-ranging career of public service that one of his jobs had been to help with raising the finance for the University of Kent. Here I can sympathise with him because I was chairman of the appeal for the University of Surrey, so he and I must put our heads together and console each other on what must have been many difficulties in the past. We all look forward to hearing the noble Lord, Lord Irving, often in the future, and hope that he enjoys our company as much as I know we shall enjoy his.
May I start by thanking my noble friend Lord Thorneycroft on making this debate possible. He must have been pleased to

899
hear the felicitous reference by the noble Lord, Lord Harris of High Cross, to the events of 1958 as, as he put it, the last brave stand against excessive public expenditure. I am bound to say that at that time I was a junior Minister in the Government and it seemed to me to cause quite a stir when the Chancellor of the Exchequer and all the Treasury Ministers resigned together. It is true that at the time it was classified officially as only a little local trouble, but the rest of us thought that it was very considerable. It must be good for my noble friend to be taking part with this Government today who are trying once again to stem the tide.
This debate starts from the point where we took over, as the White Paper describes, this record of the past five years of accelerating decline, national debt doubled, the pound sterling losing half its value, and the great enemy, of course, of inflation—to which the noble Lord, Lord Cobbold, so authoritatively referred—for ever working away and damaging everything. At the same time let us not forget that unemployment doubled. That is something that matters to all of us. We do not hear so much about that now. GNP slightly rising, but let us face it, only saved by the incredible bonus of North Sea oil. In fact, the output of our factories, as we know, is down on what it was five years ago.
This record of accelerating decline—and it is that acceleration which is such an anxiety to, I am sure, noble Lords on all sides of the House; heaven knows we have been accustomed to decline except in the 1950s—is really worrying. This has been achieved by a Government which has tried. And let me give personal credit to the former Prime Minister, Mr. Callaghan, for striving to keep the wage award level last winter to 5 per cent. My word, he strived hard in the interests of controlling that inflation which is at the bottom of it all. But at the end of five years of all the best intentions and enormously high spending by the Labour Government, here we are in Britain worse off and less competitive than any of our neighbours. I believe we are even about to be passed by Italy, which I hear is going to be ahead of us next year.
This is the background of the White Paper, and it is only right and proper that this Government should be making a
900
complete change. This is what we were elected to do. This was in our election manifesto, and so this is what we are now doing. The basis of the change is to put top priority on the creation of new wealth, which must come from private business. The start of this was of course in the Budget with the reduction of personal taxation to a very considerable measure, and then this to be followed by the restraint of public spending which we have before us today.
Let me make the point, because it needs making and making again throughout the debate, that the measure of the cuts is really not all that dramatic. I hope that noble Lords opposite, and indeed members of Her Majesty's Opposition generally, are not going to exaggerate this, because they are in fact no more than stabilising expenditure at the level they were themselves spending. In terms of public presentation this is no more than half the cut which the Labour Government imposed in 1976–77 as a result of the IMF conditions, when of course they had the support of the Conservative Opposition of the day. The Labour attack as the noble Lord, Lord Peart, presented it, which pitched in particularly to our cuts in the education service and the National Health Service, is not a serious contribution to the debate unless it can present a viable alternative to the path we are treading. Perhaps they can. I hope they are able to.
Unless we can reverse the present trend of decline, even the existing levels of social services will not be able to be maintained. The whole thrust of the Government's policy is to increasing growth in the private sector, which alone can create the new wealth, the new jobs, the higher living standards we all want. I firmly believe that the reduction in income tax is the basic step to encourage employers and employees alike. It makes men running their own businesses able to earn a better profit, and therefore they have a greater incentive and can develop their businesses and make savings. This is good for everybody. If it makes them richer at the same time, well this is something which is going to benefit the whole community in the end.
One aspect of this policy must be that the rich man is not to be seen as somebody to be persecuted. He is valuable to us.

901
He is not an enemy of society. He is not to be squeezed by the Chancellor of the Exchequer until he howls with anguish. For what does he do?—he goes. We all know about the brain drain. It is increasing and nobody knows its dimensions, and one of the more galling aspects of it is that the big fish get out whenever they want to. They move their money about the world without the slightest difficulty. The smaller ones get caught, and thus we all suffer.
Top talent today is in an international market, and men and women can move about and have a bigger part of their earnings left to them, so they feel they are better rewarded. I am not speaking just about the spectacular people, the sportsmen and "show biz" people, because it runs right through the professional and industrial world. We cannot afford to lose these wealth-creaters. We must make this place attractive for them to live in and to come hack to. I had contact with one such person the other day when canvassing for my Conservative Party. Somewhere in my neighbourhood I asked a man whether he would make a subscription to the party. He was obviously extremely wealthy—his large house and everything about it indicated that he was rich—and he obviously moved about a lot, and where his main residence was I do not know. In any event, his reply to me was, "Why do you think I should give money to your party, which has put out of office the Labour Party, when I was making so much money as a result of their mistakes?" I hope noble Lords will take the message, though I make it as a joke, that persecuting the rich simply impoverishes everyone.
I turn briefly to industrial relations, because this is part of what the Government are doing, and they have my support. It is necessary to redress the balance between trade unions and management, including individual workers, and I hope noble Lords opposite, Labour politicians generally and trade union leaders, will recognise that industry and commerce are not a battlefield for political power. Management must have a certain measure of authority if it is to function efficiently. It has a function to perform; it must take decisions and give leadership. If it is weakened by the labour force having too much of the power, it will become
902
inefficient in its function and then we all suffer. We shall have other debates on this subject when measures are produced by the Government, so more about this subject later.
These are only the bare bones of political policies, and we must now ask, what response will the nation give? Everything depends on that. I would accept something the economists have not said today; namely, that all the economic moguls predict this recession deepening. Therefore, there is only one thing which can change the present economic trend in our national life, particularly against a trend of world recession, and that is a change of heart by us as a nation. This I believe is possible, and I was glad to hear the noble Lord, Lord Mackie of Benshie, saying so; and others have said it.
What we need to get over to the nation is that there is no trick of Government policy, of financial arrangements, which will give us a soft option. Government can only spend money which the nation produces. Government can of course create short-term money, but unless that is covered by extra production from our factories and offices, inevitably there will have to be more borrowing, more taxation, higher inflation and the same cycle of decline to which we are all too accustomed. Let us face the fact that over the years Governments, perhaps all Governments, have been all too ready to create the impression that they can manage the money of the nation in such a way that they can provide what is wanted. Maybe this belief stems from past days of our Imperial greatness when we really were a rich nation; but we are certainly not today and we have only what we earn. I therefore hope that the Opposition attack will not encourage the great trade unions this winter, especially in the public sector, to make excessive wage claims, because that would exacerbate the situation and make greater difficulty in controlling the money supply and getting inflation under control.
There are, however, a few encouraging signs, perhaps the odd straw in the wind. There was the poll by the British Leyland labour force; about one-third of all the workforce in the engineering industry continued to work during the strike; and there has been the Talbot settlement—the employers are of course French, and

903
the employees knew they would not get more than 5½ per cent., so they settled for that. Those are just a few straws, and they are certainly nothing like enough to show that the message has got over; but I believe that more will follow so long as the Government stand fast and management plays its part too. Management has been making a lot of sense at its conference this week because basically what is needed in every factory and workplace is teamwork between management and workforce. Only by getting that team work, and the Government creating conditions in which that work can take place harmoniously, shall we get the extra production we want.
The precedents for making a recovery of this kind are not encouraging, but we have one which is very near us and we can take a great deal of comfort from it, namely, that of our neighbours in France. I can remember well 25 years ago motoring across France and having a conversation with a friend on how France could recover. Everything was going downhill, Governments w alked in and out of office, Ministers were unknown and the whole country was in a state of continuous decline, with endless industrial troubles and production falling. There seemed to be no hope whatsoever, yet look at France today; it is booming with prosperity. That was achieved by one man with courage and vision, General de Gaulle, who gave leadership with immense skill and trenendous courage—my word! he ran into opposition, people trying to kill him, but he survived—who led his country through to prosperity. France is now enjoying prosperity she has never known before, all done in the space of 25 years.
There is an example for us, and I do not think there is anyone in Britain who would not say, "What a Frenchman can do, I can jolly well do better!" We here in Britain today have a leader with courage and vision, and she has my support. The Prime Minister is giving us a policy which starts us on this road to recovery, which I believe will win a response from our people as a whole, and which will carry us through so that we will deploy the great strength, ingenuity and enterprise which we as a nation have, so that our standard of living could be rising again, with better social services and the whole of our lives made a great
904
deal better. I warmly support the Motion.
7.8 p.m.
Lord JACQUES: My Lords, I join with previous speakers in congratulating the four maiden speakers, and this is one occasion when we can say sincerely that we hope to hear from them very often in the future. It is accepted that this country is one of the poorest members of the European Economic Community. It is also true that we suffer from some of the disadvantages which inevitably overtake a pioneer, but our resources, both human and material, are such, especially our resources of energy and our experience of manufacture, that we should be one of the richest members of the Community; and we could be one of the richest if we could find a way of co-operating and working together rather than spending our resources fighting each other. That is putting it bluntly, but I believe that it is the core of the trouble.
I also believe that unfortunately we are further from reaching that position than we have been at any time in the post-war period. We now have an entrenched Right Wing Government locked in a combat of will power with a strong trade union movement, and there could never be a less propitious time for that to happen because it is against the background of a very sombre international situation. It is having, and it is going to have, tragic effects upon our economy.
I would direct the attention of the House to the work of a number of independent economists who represent a comprehensive cross-section of private and public industry, finance, and public administration. They are pooling together their knowledge and experience for the purposes of making forecasting more accurate, and they are using the Treasury computer forecasting model. Their last report—they are to report quarterly—was published in full in the Guardian of 15th October, 1979, and any figures that I use will be taken entirely from that report.
In a free-for-all organised workers can be expected to seek to maintain, and where possible to increase, their standard of living. The threat that we will not print the money has no effect whatever in the short run, and in the long run the effect is uncertain and is minimal. It is much more likely that the workers would com

905
mend their trade union leaders for having tried to maintain or increase their standard of living, and then blame the Government for any unemployment, even though some of it was consequential. Let us have no doubt about it—that will be the reaction of the workers.
The threat that we will not print the money is of course a bit of political shorthand. In practice the control of the quantity and the velocity of circulation of money and credit is both uncertain and difficult. The principal instrument in the control of money is the rate of interest. A high rate of interest strengthens sterling. That in turn makes exports dear and imports cheap, which in effect means that foreign competition is used to inhibit the increases of prices by home producers; and that is what is happening at the present time.
But, my Lords, the effect upon wages is minimal, and the effect upon wage applications is minimal for the simple reason that so often one man's increase in wages is another man's unemployment. It is only when the two things affect the same man that there is any relationship whatever that has any meaning. In consequence it is expected that despite the strict monetary policy of the Government, earnings will rise by a further 16 per cent. in 1980 and a further 14 per cent. in 1981. In the meantime the effect upon the economy is, and is going to be, devasting. For example, it is expected that in the next two years the gross domestic product will decline by 9 per cent. compared with the peak of 1978—a decline of 9 per cent. from 1978, in a period of two years.
It takes time to adjust to this decline in output. First of all overheads continue as before. Secondly, manning continues if not indefinitely, certainly for a period, and overmanning can be expensive. But of course in the end there is a shake-out and there is unemployment. It is expected that because of this fall in the GDP in the next two years there will be a gradual shake-out and unemployment will rise to 2.5 million by mid-1981. Many of these 2.5 million will be people who have never worked, and at the other end there will be many who will never work again. It is a very sad prospect.
In the meantime the proceeds of North Sea oil are being used not to help our economy, but to fuel the economies of
906
Germany, France, Japan and the other countries from whom we are importing goods. They are getting the benefit of the proceeds from the North Sea oil—not our economy. But even after using the North Sea oil proceeds to pay for imports, it is estimated that in the present year we shall have a deficit on current account of £3,000 million. It is further estimated that this deficit will be £3,500 million in 1980, and it will be 1981 before it becomes less than £1,000 million.
That is the devastating effect upon our economy that we can receive from present policies in the next two years. In the meantime the effect upon inflation is expected to be negligible. It is anticipated that inflation will rise to a peak of 19 per cent. in the spring of next year. This is pretty generally accepted, even by the Government themselves, I think. From then onwards it will decline, but in 1981 it is likely to be in the region of 13 per cent. In the meantime, the high rate of interest is attracting money into short-term uses, and consequently we have less long-term investment in the private sector. It is estimated that investment in the private sector will decline by 5 per cent. in 1980, and by another 4 per cent. in 1981. That is a sorry picture, and that is the picture we have to look forward to for the next two years.
I would accept that monetary policy is an essential element in the control of the economy, but I do not accept that inflation can be controlled by it alone. I believe that to try to control it by monetary policy alone is leading us to disaster. Even if we could cure inflation by the control of the money supply alone, it would take a very long time, and because it would take a long time the damage to the economy would be great and the bitterness left behind would be deep.
Britain can be a prosperous country, but not with free-for-all, but with a conscious and deliberate attempt to cooperate, involving restraint not only by trade unionists but by all concerned. Now I am not calling for a rigid, temperate incomes policy. That is inappropriate, I believe, but as I indicated when I spoke in the debate on the Queen's Speech, I consider that we should have a permanent, but flexible, policy.
I believe that we should have a national body, on which the trade unions, employers

907
and Government are represented, which lays down, not a norm but guidelines to be followed by negotiators and conciliators. I also believe that there should be an attempt to get both sides of industry to agree that before they take industrial action they will negotiate; that if they fail in their negotiations they will be prepared to conciliate; that at the end of the conciliation period (which should be relatively short; it should not be a delaying device) the conciliator should report, and that report should be circulated to all concerned; and that there should be a ballot before there is a strike.
My Lords, you cannot get that from the trade union movement without being prepared to pay some price for it, but it is worth a considerable price because it is the key to the situation. You will get better industrial relations in this country, and you will get more confidence, more investment and greater productivity. It is the key. It is more important than a reduction in taxation. I have always taken that view, and I still take it.
The Earl of GOWRIE: My Lords, would the noble Lord be so kind as to allow me to interrupt him? I am most grateful. Would he not agree, though, that those who are in the trade union movement and who, like the noble Lord and myself, wish to see improved industrial relations are the same people who are calling, and have been calling, for reduced taxation?
Lord JACQUES: My Lords, I did not want to deal with the subject of taxation, but I mentioned it so I think I must answer the question. As I said when I spoke in the debate on the Queen's Speech—and this was before the Budget—I would accept a moderate transfer from direct to indirect taxation; but, of course, I regard what happened in the Budget as an immoderate transfer. I believed there was a case for a moderate transfer.
But, my Lords, the price has got to be paid. It is inevitable that trade unionists will say, "What about prices and profits?" They said that to a Labour Government, and they would say that to any Government. I am not saying that we should go back and have all the paraphernalia of price and profit control that
908
we have had in the last few years, put I think there are changes which could be made which would go at least some part of the way. For example, I think we ought to change corporation tax. I believe that, when dealing with corporation tax, the profits assessed should be related to the value of the assets employed in the business, and that the tax should be graduated. In that way high profits, excessive profits, would be subject to a higher rate of tax. Many noble Lords on the other side of the House will put up their hands and say, "This is quite impossible", but that is the kind of price you will have to pay if you want to win the confidence and support of trade unionists—and, my Lords, I suggest that it is a price that will be well worth paying.
7.24 p.m.
Lord SELSDON: My Lords, I have just realised that if the pattern of previous speakers were repeated I would be in the very privileged position of congratulating the noble Lord, Lord Jacques, upon a maiden speech. It has indeed been a great pleasure to listen to maiden speeches of this sort, and to have the assurance that the House of Lords has, I suppose, a peerless or a glorious future! But in speaking today I recall advice that Lloyd George once gave to Harold Macmillan after Harold Macmillan's maiden speech. He called him up to his room and he said, "When you speak from the Back-Benches, make one point and make it as many times as you like. It is only when you are Prime Minister that you may have the luxury of making two".
My Lords, I propose to make two points. They are not new points, but points I have made before. Inspired by the noble Lord the Leader of the House, who spoke of industry and enterprise, I am going to be sufficiently enterprising to try to pass a message to the octopus of Government through the mediation of that honest broker of wit and wisdom, the noble Earl, Lord Gowrie. To him I would say that I should like to give him some advice, and if, through the chain of the octopus of Government, he can pass it back to the Mekon, I shall be very grateful to him.
The two points I seek to raise—and there are many one could choose—are, first, international, and, secondly, domes

909
tic. The Government of the day have taken steps which innumerable collective bodies urged them to take. They have been surprised, when they have taken these steps, that many of them have not been warmly received, whether it be a reduction in Government spending, a reduction in taxation or a removal of exchange control. Often the support that they would have anticipated they would get from the historic and traditional Conservatives has not been forthcoming. I do not believe that the reason is because there is not such support, for the Government have done almost everything one could have hoped they would do; but perhaps they have failed to recognise that if you wish to change the course of a river or reverse its flow, or stop a water wheel, there has to be the elapse of a period of time. It is only the great American nation which ever succeeded in making one river run backwards—the Chicago River.
My Lords, the French have a lovely saying. I think I would lead into it by pointing out that, recently, we who are not in Government—the private sector, or even large public sector bodies—have come to rely too much upon Government to lead us. We blame Government when things go wrong. Suddenly Government turn round and say, "You must lead us". The French say, "On ne doit pas mettre le chariot avant le boeuf". The Government have caught us all by surprise. They have perhaps done too much too quickly. I do not think they have done too much, but it may be that they have done it too quickly, and may be the great British people in the private sector are not yet ready to accept the trust and the glory the Government are willing to bestow upon them.
This leads me to try to draw some conclusions as to what might happen as a result of the Government's current policies. First, their restriction of spending. We are, whichever way we look, moving towards the father and mother of all recessions, unless certain things happen. There is to be a world recession. A reduction in Government spending reduces demand, in the United Kingdom perhaps to a far greater extent than one would have anticipated because of the high level of Government spending. That reduction in demand reduces the incentive to invest,
910
and thus industry steadily becomes more and more out-dated.
At the same time, we are faced with a world recession which could, among OECD or developed countries, reduce demand abroad; and, not wishing in any way to propound the themes of Keynes, I think there is a case, when we are planning to reduce our consumption abroad at a greater rate than world recession might force upon us, for seeing whether there are opportunities around the world where the demand for British goods and services could be increased. I submit that there are. There is going to be no real growth in the developed world, but there will be growth in the developing world. In order to benefit from that growth in the developing world, industry needs the support of Government. This may not be necessarily large volumes of financial support, but to remove the BBC French service when we really ought to be going all out to sell in French West Africa, to reduce aid at a time when little bits of aid can give the British an entry into a project or contract which otherwise might be denied to us, is in my view wrong.
I think that if the Government were to give more consideration to the potential of these Third World countries and to their desire to industrialise, we might be able to some extent to compensate for the reductions in expenditure at home, and thus not fall too far behind our major industrial competitors. Because we have the situation where recession is coming, and our own Government action—the right action—of reducing expenditure will accelerate the rate at which that recession hits us, and will delay our ability to recover when the world moves out of it.
Further, my Lords, in many of these Third World countries, particularly in the Commonwealth, there is an overwhelming amount of goodwill towards the British. It may be so in Africa—and the goodwill towards us in Africa will grow markedly if my right honourable friend the Foreign Secretary is successful in his negotiations, as we hope and believe he will be. We have a situation where Government across the board are cutting expenditure. This is right; but I hope they are perhaps cutting more than they would wish and may be thereby in a position to reinforce certain sectors at a later date. I come back to the question of the need for aid linked with

911
trade to support and encourage development in the Third World. We do not need large amounts of money, but we need to recognise that the Government should be active.
My second point is a domestic one. It relates to taxation. My right honourable friend the Chancellor of the Exchequer cut taxation. I think (and world opinion is) that he did right. He removed exchange controls; and he did right on that so long as there may be a stable pound. But the policies of the Government will take a long time to work. Thus, we need from the Government a strong assurance that they intend to be in power for the next 10 years. Without that assurance, people may be concerned about the stop-go of economic policies. Having reversed the flow of the river, unless the next Government, if they are not a Conservative Government, wish to do the same thing, we will all have wasted our time. But, at home, the Government say to the people: "We have given you a free hand. We have given you tax reductions which should provide incentives." My Lords, these tax reductions will not provide incentives. Most people believe that they are entitled to a fair rate of taxation and have been so entitled for a long time. Therefore, they think that the position is now about right; so that it is not necessarily an incentive for the future.
We forget that the bulk of the people in this country who are to regenerate and revitalise industry are not in the organisations which might be described by the collective nouns; the trade union movement, the CBI, the large corporations or in Government. They are the people who wish to start building their own businesses. Thus, I ask the Government to give immediate attention not to increase or reduce the level of tax but to shift the emphasis of tax; that is, let us examine who pays tax. Industry is not very profitable at the moment. At the CBI conference someone said that the real profitability is only 3 per cent. The Government wish to encourage profitability and then to receive revenue from that profitability by taxing profits.
At the moment the situation is extraordinarily unfair where the leading 500 companies in the United Kingdom pay an
912
average rate of tax well below the corporation tax that is stated; and yet they complain about it. Whereas the man in the medium-sized business, with no ability to take into account all the concessions made by the Government to offset his taxes or defer them, is faced with a high level of tax. It is true, too, that tax from companies has been relatively low in terms of the total tax take. It is under 20 per cent. I think that it was only under the stewardship of the noble Viscount, Lord Amory, that the amount of taxation paid by individuals fell.
I am not arguing about income tax on people who are employed by large bodies and corporations. I am arguing in favour of a move to remove taxation totally, or to reduce it effectively, from people who are struggling to start their own businesses and who are faced with high interest rates and all the difficulties that go with that situation. At the moment more people wish to start businesses than at any time in the last 10 years. That, I believe, is a direct result of the Government's action. But they are faced with difficulties. They start a business, they build it and after they have made a profit, after the first year or so, their accountant says, "You are going to have to pay some tax. Why not buy a new car or a new van?" They usually answer, "We like our old car; we would rather put the money into the business". But, because of the high level of corporation tax, they are advised that they should do something to offset their taxes. They have not generally paid themselves big salaries and perhaps they wish to pay a dividend. It is often a husband-and-wife business. Then they must pay a high level of taxation, even at the reduced rates, on the dividends that they pay.
There is a strange thing about people who start and own their businesses. They actually wish to put money back in the business. We spend all our lives encouraging the large organisations to put their money into expansion and we make rules and regulations to encourage them to do so; but the individual has a wish to build his own business. We suffer from too many collective nouns, too many big bodies. I looked up, before making my speech—and I always deliberately leave my notes at home—the Latin for the collective noun for a gaggle of geese; but I could not find it in the Library. Nor

913
could I find an English-Greek or English-Latin dictionary. It may be that some noble Lord after I have sat down can advise me. But it is a problem of collectivism.
I would urge the Government to pursue the course on which I have tried to set them. Perhaps the next Budget could make a major attempt, probably to reduce the overall level of corporation tax but to encourage the large corporations to be more profitable and to pay more tax, and to encourage the smaller companies to pay nil or less tax provided they plough the money back into the business. Those are simply my two points. I thought that I would "have a go" at my noble friend Lord Gowrie, because private enterprise has some ability. So I thought that in this speech I would give him due notice that I propose to use all the resources, although limited, available to rile to take up those two issues at greater length; hoping, therefore, that if eminent men—far more so than I could hope to be—were to write to give advice to the Government, they would gain support from the Government, particularly bearing in mind the words of my noble friend Lord Thorneycroft, who said that the Government are willing and eager to accept outside advice. I hope that they will accept mine.
7.37 p.m.
Lord MURRAY of GRAVESEND: My Lords, I should like first to add my congratulations to the four maiden speakers, the noble Lord, Lord Harris of High Cross, and three of my former colleagues in the House of Commons: the noble Lord, Lord Stewart of Fulham, with whom I served in the European Parliament; the noble Lord, Lord Irving, who is a neighbour of mine in North Kent and the noble Lord, Lord Lever. Lord Lever and I have something still in common after all this time out of the House of Commons. It is that he still makes erudite speeches on finance and I still cannot understand them.
My Lords, I think the problem with this debate is the fact that it is very cynical—as, I believe, the Conservative Party were very cynical during the last General Election. I do not necessarily want to fight the last General Election over again; particularly in view of the fact that we lost it. Nevertheless, I
914
should like to point out one or two things where I think the Conservative Party were dishonest—and I use the word advisedly. And not only were they in this category but the Daily Mail and other national newspapers fell into that category.
They are saying now, "We have a mandate for this. It was in our manifesto." We have to allow for the fact that the electorate sometimes take politicians at their word. But I do not think that the electorate were quite aware of what these cuts were intended to be and where the cuts were going to take place. Everybody thinks that public expenditure is wasted public expenditure unless it is spent in the area in which they are involved. Everybody wants there to be cuts; but if the cuts affect them, they say that it is not wasted public expenditure. We must be aware of that. Nevertheless I do not think that the public were fully informed by the Conservative Party of what exactly was going to happen.
I say this in the knowledge of what the Daily Mail printed at the end of April—which was known as "Labour's dirty dozen" which was a denial by the Daily Mail which they said came from the Conservative Central Office. Recently they were taken to the Press Council on this matter. I think that the Press Council behaved disgracefully in this matter in reply to the allegations made against them. But, having said that, there were 12 statements which they claimed the Labour Party had made and which the Conservative Party had categorically denied as being true. One of them, the most sensitive one, was the question of prescription charges. The Labour Party said that the Conservative Party would be raising prescription and health charges. Not only did Mrs. Thatcher deny this, which is fair enough—or the Conservative Party with Mrs. Thatcher—and Mrs. Thatcher nailed her colours to the mast, but when she did this I am assuming that she meant it.
What have we had? Not just one increase in prescription charges but two within 12 months of them taking office. Whether the Daily, Mail says that is one of Labour's dirty dozen or not is another matter; but I think that the Conservative Party ought to be fully aware that that was a lie when they denied it and they have in fact increased the charges subsequently.

915
Regarding value added tax, our Prime Minister at that time, Jim Callaghan, said that the Conservative Party would be doubling VAT. To be fair to the Conservative Party, they did not double VAT. They took it from 8 per cent. to 15 per cent., and, even though I am not an Einstein, realise that there is 1 per cent. difference. Nevertheless, it was a denial and it would take a smart mathematician to say that that is not almost double. I think that they misled the British public in this direction.
The selling off of various parts of British industry was again denied. Do not just take my denial, look at the Daily Mail for 26th April, and see on this House's own check-list where those denials have been abrogated. They are intending to sell off parts of British industry, which they denied; and also consider the health and prescription charges and VAT.
That is not just unfortunate for the Conservative Party, but it is unfortunate for politicians generally. People then say: "You are all the same; we cannot believe politicians". It raises cynicism about politicians from everybody. The Conservative Party has a lot to answer for. The recent cuts are measures that hit the poorest, those least able to protect themselves in our community. Just look through them again on the check-list, things like school meals. The Minister in the other House responsible for education in his speech on Monday said that there are children who "flog" their free school meal tickets. I would have thought that, with the attitude of this Government, they were in favour of entrepreneurs. Those who "flog" off meal tickets are a minimal number, so do we have to cut school meals because somebody has done that?
School milk and school transport charges are things that affect the hardest hit in our community anyway. Those who get the tax cuts from the Chancellor's recent Budget in our community are not affected by the question of school buses or school meals. Those that do not get a tax cut because they are earning too little are the ones who have to suffer, and they have to suffer with the increase of from 8 per cent. to 15 per cent. in VAT. Again it is hitting those in the poverty trap.
The Government's recent Education Bill (No. 2) they say is going to give a
916
wider choice to children. The Government know that is not true. They know that there are schools known as "sink" schools to which people do not want to send their children, but they are going to be forced to do so because the Government will not close the school down and enlarge another school.
I am sorry that the noble Lord, Lord Thorneycroft, is not in his place because I shall attack him slightly. He attacked the ILEA, he attacked Lambeth Council and various other councils, all Labour councils. He did not attack Kent County Council, who are responsible for the education of my children and are I think one of the least progressive councils in the country. That is where we ought to be looking. If we are talking about one nation, one society, let us cover the whole of our nation and society rather than just individual labour councils that he was prepared to attack. When we are in the midst of all these cuts and we are talking about sharing out among all of us, they decide that they are going to have special places for bright children, that they are going to spend by the middle of the 1980s, I presume—certainly they have denied that it will be very soon—something like £70 million on this scheme for 15,000 children, and we are told that everybody else has to cut. Those in the poorer authorities, or those who have average children, are not the ones who are going to get the benefit. If we are going to spread our resources, if we have to believe what the Conservative Party and the Government say, we have to share the responsibilities and hardships if we are going to have these problems.
Just after the General Election campaign, when Sir Geoffrey Howe made his post-Budget speech on how great a Budget it was for all of us, he started talking on 12th June about giving everybody some real incentive again to show those people, managers, doctors, skilled workers and even pop stars who are going to work abroad that it is worth while coming back to Britain to stay here. If "pop stars". means Tom Jones and Engelbert Humperdinck, I am not all that keen. Nevertheless, thought that Freddy Laker would have had air charters by the dozen fetching all these people hack.
One of the reasons that a lot of people go abroad is in many cases they get

917
overpaid. Pop stars go to the United States because they can earn more than in Britain. It is nothing to do with tax. They can appear for a week in Las Vegas or on a coast-to-coast hook-up that earns them much more. It is kidding people to say that the taxation system is causing problems, and causing people to leave the country. For doctors in the United States it is not a question of taxation; but the make-up of their health service, practitioners and specialists means that they earn hundreds of thousands of dollars. It is nothing to do with how much they are taxed. It is basically how much they can and do earn. People have been misled in this direction.
We have had almost every speaker from the Conservative Benches attacking in one way or another the trade unions. They seem to think that trade unionists are some little group, 50 people or something, without accepting that it is half of our working population that they are talking about. It is this continual attempt to divide one half of the working population from the other. If one accepts that it is a half of our working population, it is acceptable that it is half of our population involved with trade unionists whether they are the husbands, wives, or children of trade unionists. There is this constant division. The CBI, in their conference this week, were making some most primitive speeches about the closed shop. If they want to legislate on the closed shop, that is fair enough. I hope that when they are legislating on the closed shop, they will look at some of the professions like lawyers and doctors who operate a pretty fair closed shop, a pretty decent closed shop. You try and operate in those professions without being a member of what is their appropriate trade union. I am a trade unionist and I have been an active one all my life and I wish that I received their fees. This is one of the points about this division, dividing one from the other.
If we want to talk about the closed shop—and the Conservatives are very keen on this—I should like to see in any legislation that they bring in—and all the noises they and the CBI are making are moving towards legislation—some method devised so that if somebody does not want to pay their union dues and get involved in trade unions, then they do not get the benefits of that trade union activity. It is not fair
918
that people should give their contribution to a trade union and they fight, work and, indeed, go on strike to get their rights, and then they find that somebody who has not contributed, not taken any part, gets the same benefits. It is all right for the Conservative Party and anti-trade unionists to attack trade unionists. But, in my view—and I have no doubt that it will be contradicted—trade unionists have played the major part in altering conditions in British industry in terms of pay and holiday entitlement. However, what happens is that most of the non-trade union industry follows on the coat-tails of the benefits that trade unionists receive.
Neither management or the CBI have been criticised in this debate—it has all been "Britain's problems are the result of trade union activity". I think the Conservative Party have to look at the divisiveness they are creating. Another area where the Prime Minister is creating divisiveness is in foreign affairs. She has been named "Iron Lady" by the Soviet Union and she seems to want to live up to that tradition. She seems to be wanting to create troubles and arguments between the Soviet Union and the People's Republic of China. I do not know what she thinks that will achieve, but this is again part of the divisive approach which the Conservative Party has in regard to not only problems in this country but foreign affairs. Indeed, if she wants to use an element of propaganda against the Soviet Union or against communism I am surprised that they have cut the BBC's External Services. It seems to me that the weapon of propaganda by the human voice, whether to Greece, France or Italy, is very powerful. It is very interesting to me that she makes these very aggressive speeches—and I have no doubt that Mr. Brezhnev and one or two others rarely get a wink of sleep at night over all this—but then, on the other hand, cuts down the External Services of the BBC, which I think have made a valuable contribution.
The noble Lord, Lord Peart, said that we were again getting the two-nation syndrome. I think that is absolutely right. If you look at the nation, you see a nation which is divided politically. We have in the South of England, for instance, 160-odd constituencies, of which only 12 are Labour and the rest Conservative or Liberal. I do not think that is

919
good for democracy. Certainly I want to see a change, because there are only 12 Labour seats. Having said that, the sort of policies now being dreamed up by the Conservative Party will continue this division of the nation not only between the North and South but between trade unionists and non-trade unionists.
The noble Lord, Lord Soames—I think it was he—mentioned that foreigners do not buy our cars any more. Looking in the Lords' car park, it seems there are not many noble Lords who buy them; and I think you have to say that people ought to be supporting our car-makers because they are telling everybody else to support British industry. I think this Government have to make a realistic reappraisal of their present policies and certainly a realistic reappraisal of the White Paper, and come back to the people of Britain and say: "We have thought again and we are going to change it".
7.53 p.m.
Lord SPENS: My Lords, I should like to join in congratulating our maiden speakers today and in particular to support the noble Lord, Lord Irving of Dartford, both in his plea for better roads to the South-East, and also in what he said about the technological revolution brought about by micro-electronics which is now upon us. In a debate in June, I predicted that unemployment would rise to some 3 million by 1984—and I believe that the noble Lord would have supported me in that prediction—unless something very drastic is done very quickly. I said then I did not believe that ordinary market forces would solve this problem, however freed from Government controls they may have become. This needs a speedy but thorough review of the alternatives that are available. Your Lordships may remember that I rather stuck my neck out and suggested that a partial and temporary solution might be to persuade married women not to take paid employment. Such persuasion, of course, would have to be financial.
As unemployment increases there will be large numbers of people receiving sizeable redundancy payments, and it must be the Government's intention to encourage these people to invest their new capital in some form of business which will
920
allow them to make use of the skills they have learnt and practised in their former employment. So every encouragement must be given to these people to set up small businesses of their own. There are a lot of obstacles still in the way of small businesses. There are still far too many restrictions in the Employment Protection Acts. There are too many planning restrictions which will prevent people from working in and from their own homes, which I think is very important in these days of need to conserve energy. I hope we shall see more relaxation in those fields, but it must be made quickly in this Session; next Session may be too late.
The problem facing anyone who decides to start up his own business must be this Ought he or she to become self-employed, alone or in partnership, or ought he or she to start up a small company? The latter is expensive and requires the use of experts to keep the books and prepare annual returns to the Registrar of Companies. Why should directors' and auditors' reports have to be filed annually in such detail for new and very small businesses? That all costs money which would be far better employed as working capital. The owners of the company will not be able to benefit from the profits earned until dividends can be declared. But the great advantage of a company is that the directors can pay themselves salaries charged against tax and, in particular, can protect themselves through their National Insurance contributions for unemployment benefit if the company should collapse.
Becoming self-employed also has its snags, the most important one perhaps being that the owner is no longer protected for unemployment benefit: nor can he or she charge out his or her work against tax. When a self-employed person does make a profit he or she faces various tax assessments, and the noble Lord, Lord Selsdon, dealt with most of those very eloquently. I should like to add one more, and that is the Class IV National Insurance contribution. That, my Lords, I think is an iniquitous tax on the self-employed. I tried, through the Printed Paper Office, to get hold of a copy of NP 18 of 1979, which describes this tax. They told me they have not any. However, I did find one in the Library and had it photo-copied. That gives the reason for this tax. I say it is a tax and not an

921
insurance contribution, because the persons who pay it obtain no additional benefit whatsoever from paying that Class IV contribution. The reason, according to this pamphlet, is:
…to ensure that the self-employed as a whole pay a fair share of the cost of pensions and other National Insurance Benefits without the lower earners amongst them having to pay excessively high flat rate Class II contributions".
So what in effect is happening is that those self-employed who are making a bit of a success of their business are carrying the can for their not-so-successful competitors.
The tax starts at a profit of over £2,250 which, converted to wages—your Lordships must remember that the self-employed cannot charge against tax any drawings that they take—works out at just less than £44 a week. On a profit of £4,000 in the year, which works out at about £76 a week, a self-employed person would have to pay £87·50 in this tax, as well as having to pay the normal income tax on that profit—a profit which includes the full cost of his or her own labour. Surely, this is a tax which ought to be abolished at once.
Another snag, which affects both small companies and the self-employed, is value added tax. The present threshold for compulsory registration for VAT is a turnover of £10,000 per annum—turnover, not profit. No small business is going to earn very much for the company or the self-employed person with a turnover of that amount. Even a turnover of £75,000 a year is not going to earn more than something between £4,000 and £5,000 net profit. So that nearly every new small business is going to have to cope with value added tax.
I make a very small living out of looking after the VAT and income tax returns of a few small businesses, and I want to say this. The people who come to me do not have a clue as to how they should cope with VAT. They throw all their papers at me and leave me to organise what should be done. A business with a turnover of about £70,000 a year—that is, a corner shop—will probably have something like 1,200 receipts which must be recorded for VAT, and of course the returns have to be filled in fairly promptly once every quarter.
922
The report of the Customs and Excise for 1977–78 gave us some very significant figures on VAT and its collection. The net revenue raised by the tax was £4,234 million, raised from 1,274,000 traders. Of these, 881,000 traders had a turnover of less than £50,000 per annum and contributed between them only £190 million. Another 178,000 traders had turnovers between £50,000 and £100,000 per annum, and contributed another £140 million between them. So that more than I million traders out of the 1¼ million—that is, five-sixths of the traders in 1977–78—had turnovers of less than £100,000 and contributed between them less than 8 per cent. of the total net receipts.
Here, surely, is an area where the noble Lord, Lord Thorneycroft, could put in his cutters. Raise the threshold of VAT to £100,000 and five-sixths of those registered for VAT will disappear, leaving about a quarter of a million who will earn and return nearly £4,000 million. I believe that that, too, is something that should be done, and done quickly. So I ask the Government to give further help to small businesses in three areas—simplify the procedures for small companies; abolish the Class IV National Insurance contribution; and raise the VAT threshold to £100,000.
8.5 p.m.
Lord CASTLE: My Lords, one of the advantages of being a later intervener in this debate is that at least one has the pleasure of congratulating three old colleagues, and I hope one new friend, on their maiden speeches. With my three old colleagues and comrades—"comrades" is a word that I am not ashamed to use, even in this House—I have shared platforms from Muswell Hill Broadway to the Parliament of Europe. I have a particular regard for my leader in Europe, my noble friend Lord Stewart, who I believe, with others, is bound to make a very valuable contribution to the discussions in this House.
I also want to congratulate the Conservative Party on their good sense in staging a debate of this kind, because I cannot believe, despite his distinction, that the mover of this debate was entirely acting without consultation with his old colleagues. It has, of course, been a

923
liberal education in economics, and I use the word in the plural because we have had so many economics and economists, both professional and amateur, and I shall understand a little of what some of them said when I read the Official Report tomorrow morning. I do not mean to follow them into the labyrinth of economic theory, because it is much more important to reiterate some of the things which have been said in this debate, and which deserve an answer from the Government spokesman who will be replying.
As we all know, the noble Earl, Lord Gowrie, is well equipped to defend his own case on this, and I want particularly to direct his attention to one or two points which were mentioned earlier. But, more especially, I want to ask him whether there are any inconsistencies which we can expect from the Government, because up till now the basis of our complaint must be that the Government have been consistent in attempting in office to do what they promised in the Conservative Manifesto at the election. I am very sincere in saying that, because I believe that honesty in politics does pay, and it was not complete honesty which sent the Conservative Party to the Benches opposite. We, on our part, believe that the planned diversion of resources, which, by and large, was explicitly spelled out in the Election Manifesto, amounted to turning the governmental back on the time-honoured analyses of Beveridge and of Keynes, whose gospel had received almost general acceptance in most strata of our society. Properly interpreted, I believe that that is what was said in the White Paper last week. Beveridge is over; Keynes is over. We have different values now with which to establish ourselves—hence these proposals.
At the General Election, "So what?" said the electorate when on all sides the Labour Party pointed out the disasters, as they saw them, which would happen when the new philosophy of what is called "Thatcherism" was applied. Numbed, as we believe, by rising prices and rising unemployment, the British electorate committed the offence which has enabled us to present the charge sheet of the misdoings of this Government. The date on that charge sheet is not the date of the White Paper but the date of the election. Far be it from me to deplore in
924
this assembly how the other House got its majority, but one is shocked, when one examines the White Paper, by the intentions of the Party opposite. One is shocked at how much the White Paper differs in some particulars from what was advocated by the Conservative Party leadership during April.
I have said, that, by and large, the Government are fulfilling their promises—to the great disadvantage, I think, of this country's industrial health and economic future. There are three matters to which attention was drawn earlier in the debate, and I believe that some justification ought to be vouchsafed to us by the Front Bench opposite. To cut matters short, may I mention that the dismal three which seem to me to flag the retreat from the caring State are, first, the threat of still further increases in prescription charges; second, the curtailment of funds for school meals and transport services and, third, the abandonment of the Ministry of Overseas Development to the Foreign Office, about which such misgivings were so rightly expressed yesterday by your Lordships.
These three proposals share the same disagreeable nature of attempting to save national money at the expense of those least able to repair the injuries that they will receive and also of being wholly obscured during the propaganda of the last election. The White Paper proposals regarding prescription charges justify the fears of the great Aneurin Bevan when he fathered the National Health Scheme: that no matter how small the initial charge you impose for any of its services, you dislodge a pebble which will quickly start an avalanche. We have seen that he was right, because of the other threats that there are to impair the free nature of the service. It is said, in effect, that we are now to pay 14 times as much as was originally imposed at the beginning of the service. No amount of inflation can justify such an imposition.
The second indictment upon which the Government must stand alone in the dock is that of attempting to save £240 million on kids' meals and school buses. To my mind, this is both inhuman and socially unwise. It is hard for the more fortunate members of this House to realise what a fundamental change was brought about by the school bus and free school meals, especially in the British countryside.

925
May I impose upon your Lordships a personal memory. When I was first at school, aged five, in the village of Sunning-well near Oxford, I remember, without fully comprehending it at the time, how astonished I was, while sitting in the class damp through rain but at least fed upon lovingly prepared sandwiches, that other children—such was the poverty in those days—were sitting wet and unfed while learning lists of the rivers of Africa and the Kings of England and that at lunch time they should sit around me hoping that if there was something disagreeable to my palate in the sandwiches I would share them. Memories like that make socialists. I am unashamed that when I went hack to Sunningwell as a Labour Candidate in a by-election and stood against the late Airey Neave, people came up to me and said, "Thank God that things have changed since those days, Ted". How much I agree with them. This is why I feel angry that there should be a new attempt to put back the clock.
The third matter I want to mention is the micro-chip. The House deserves a full explanation from the Government regarding their default. We are all acquainted with what was said earlier this week in the Financial Times. There is no doubt whatever that this industry, upon which we place so much reliance in our attempt to regain our industrial health, has been very scurvily treated on account of the Government's doctrinaire adherence to their belief that handouts should not be given to industry.
In conclusion, may I thank the proposer of the Motion, and, I assume, those people who bear responsibility for it on the Government Front Bench for having, as they will have seen, completely united what was supposed to be a disunited party. We are utterly and completely united in our condemnation of at least those three matters which I have raised and, I believe, of the Government's general strategy as revealed in the White Paper.
8.19 p.m.
Earl DE LA WARR: My Lords, I should like to thank the noble Lord, Lord Thorneycroft, for giving us the opportunity to have this debate at such an opportune moment. We have been enabled to have a wide-ranging discussion about the
926
difficulties and opportunities facing this country, and we have been enabled to listen to a brilliant exposition by the noble Lord, Lord Soames, on what the Government are doing and the philosophies that lie behind their policies.
We have had a chance to see something of what lies on both sides of the watershed which it seems to me that this country is approaching: On the one side a resurgence in productivity and a return to an increase in prosperity, and on the other side the possibility of massive unemployment and a real fall in our standard of living. A frightening situation? Yes, it is, and it is enormously to the credit of this Government that they are not hesitating to tell the country in the starkest terms of the economic and social perils that beset us all. It is essential that they should go on doing so, particularly if things get worse, and worse I fear they will get. Simple statements are needed about productivity and the results of failing to improve it; warnings about the damage of paying ourselves more than we can afford and the terrible dangers of inflation ; the vital part that profits play in reinvestment; the effect of strikes upon the maintenance of people's jobs. These are simple lessons, my Lords, but ones which I believe are still very far from being accepted, or indeed understood, by millions of people in this country and I have to say, with reluctance and with regret, that it is not unnatural that this should be so because seldom, if ever, are these lessons taught by the trade union leaders and seldom, if ever, by the Labour Party.
I have just come back from the CBI conference in Birmingham, and a most encouraging conference it was. Noble Lords may have seen in the media some of the more dramatic parts, but the significance of the conference lay in its whole mood and it is about that that I want to say a few words tonight. There was a mood of intense gratitude that at last we had a Government that was engaged in setting industry free. There was a mood of certainty that the new policies would be further developed and, moreover, that they would be adhered to. Certainly there was no euphoria. Indeed, there was what I would describe as almost a "hair shirt" mood among some who felt and admitted that too often in the past management had abrogated its functions to the Government on the one

927
hand, and to the unions on the other. I was glad to hear the noble Lord, Lord Nugent of Guildford, refer to that.
The need for more direct communication between management and their staff was a message that came through with a bell-like clarity. I was glad to hear the noble Lord, Lord Mackie of Benshie, refer to that earlier in the debate. To be sure, there was a determination that industry and Government between them should set about redressing the balance between management and the unions; but let me emphasise—and emphasise very strongly—that there was no call for confrontation. The word "confrontation" was never used, nor was any speech made in which there was any sign that this was the feeling that existed. It was a call for the strengthening of the hand of management.
The reception of the CBI initiative in setting up a strike fund was seen—and in my opinion rightly seen—as an imaginative move by industry to help itself, and this again was something that ran through the conference. But very evident was the view that the Government had a vital part to play in redressing the balance of power. The voting on the need for agreements to be legally binding, the vote against the closed shop (which took place rather to the dismay of the platform), were both manifestations of this view, and speaker after speaker spoke of the affront to personal freedom implied by the closed shop. I believe that there was a feeling—and the noble Lord, Lord Thorneycroft, referred to this—among the delegates that possibly the CBI was not advising the Government to be as strong as they, the delegates, would have wished. This came through very clearly, and I hope that my right honourable friend the Secretary of State for Employment will take considerable note of what was said at that conference.
Because it was my intention to give your Lordships the general spirit of things, in summing up the attitude of the conference not to itself but to the Government, I think I can do no better than to quote very briefly from a speech of one senior delegate as he summed up at the end of one of the sessions of the day. He said:
" Let our message to the Government be this. You have made a start sorting out our taxation
928
system. Keep at it. Make it worth while to invest, to take risks, to expand and to work hard. Keep spelling out the economic facts of life because it will help us to communicate that information to our workforce. You have shown this country and the world that we have a Government of courage and spirit, that puts heart into us all. We will not like everything you do—no one will—but above all stand firm on the essentials, and bit by bit you will bring back that essential ingredient to prosperity—confidence in ourselves and in our country ".
I hope that noble Lords will take very special heart in the way that that great body of industralists reacted to the policies and the leadership which they perceived they were getting from this Government.
In conclusion, my Lords, I would say just this: I believe—and I hope I am not to be accused of being too pessimistic—that this country is indeed in fearful danger at this moment, and I believe that it is up to all of us to put it to rights. It will not be done overnight; the way will be long and the way will be hard. Nor can it be done by the Government alone. But I am convinced that under the leadership of our great Prime Minister and her courageous Government it can and, in the end, it will be done.
8.31 p.m.
Lord UNDERHILL: My Lords, as a comparative newcomer to your Lordships' House, I, too, would like to express warm appreciation of the four speeches from the four noble Lords who made their first speeches here this afternoon. I am certain that their collective experience and knowledge is going to be very helpful to the deliberations of this House. May I also thank Lord Thorneycroft for opening this debate, and, not being unfair to him, say that I thoroughly enjoyed his rumbustious speech, which I am certain, again without being unfair, was directed outside this Chamber as well as to those within it.
The noble Lord, Lord Soames, referred to the lack of emphasis and the lack of serious attention given to the importance of production and to the realities of the situation. I am certain that criticism cannot be levelled at any of the speeches during this debate today. And in case there is any innuendo in his remarks, reference to the Labour Party manifestoes of 1974 and 1979 will make it quite clear that the attention of the nation was

929
drawn to the seriousness of the situation, and the Labour Government itself took very stern measures, often very unpopular even with our own supporters.
The noble Lord, Lord Soames, also referred to consumers' choice and listed various imports that come in. I will not weary your Lordships by going through them, except to say that in the case of most of the things he referred to it is possible to get British made articles, and I hope all your Lordships will ask about those when purchasing anything. My mind goes back to the loss of the motor cycle industry, where we led the world, and yet management—and it can only be management—allowed the motor-cycle industry to slip completely from British hands, which I think is a thorough disgrace and tragedy for this country. There appears to be general agreement, which I am pleased to note, in criticism of the failure to invest adequately in manufacturing industries. But what I am concerned about is that the Government seem to be leaving this question to hope that there will be improved investment. I would like the Government, seeing that they shy away from intervention, to say how they will help to ensure that the tax reliefs go to investment in our manufacturing industries. We have in mind that on past occasions investment has gone into property speculation and into get-rich-quick candy-floss activities. What will the Government be doing to ensure that that does not happen on this occasion?
Referring to the tax cuts, the Government have announced their intention to appoint 600 additional inspectors to check social security abuses. We are told this will save £50 million. I am certain all your Lordships would wish to end any abuse, but surely all abuses. I would ask the noble Earl who is to reply if he would please tell the House what plans the Government have, if any, to deal with tax evasion and tax avoidance, which the authorities tell us run up to some £700 million a year, many times more than the social security cheating. While on the point, I am sure all your Lordships will not wish any check on social security abuses to be at the expense of hitting those who genuinely are entitled to benefits. They must be not given the feeling that they are unworthy in applying for benefits.
930
May I remind your Lordships that it is clear that millions will gain little or nothing from the tax reliefs. I would like to draw attention to the speech of the farmworkers' leader over the weekend. He explained that after allowing for tax cuts a family with two children at school in a rural area will be £9 a week worse off due to the doubling of VAT, the extra cost of school travel and school meals, the absence of school milk, and other public service cuts. And, of course, we are heading for a 17 per cent. inflation rate, double the rate when the Labour Government went out of office. Of course we can exhort, but of course people will expect and ask for wage settlements to cope with rising living costs. It is not much use the Government advising workers in nationalised industries and working for local councils that wage increases must be kept down otherwise they will exercise financial control. It is no use doing that while other people are allowed to go ahead, some with complete encouragement and support of the Government.
In view of a remark made, I think by the noble Lord, Lord Soames, I would ask how do you estimate the productivity of a nurse, how do you estimate the productivity of most of the council workers? Yet productivity was made a point in this debate. The Government have elected to follow the path of market forces. They cannot divorce wages from market forces if that is what they want. I speak as one who is in favour of incomes policy; I believe it will have to come. But you cannot divorce rising costs from the demands for increased wages. That is why co-operation with the trade unions is so vital and essential. There must not be any suggestion of confrontation. That would be the way to economic disaster.
May I echo what my noble friend Lord Murray said. I have been a trade unionist for 47 years, and we trade unionists also have a conscience; we have a conscience about people who will take benefits and not contribute towards getting those benefits. Therefore, conscience must work two ways. The Government must bring the unions into consultation, genuine consultation ; it will not be sufficient, as one union general secretary said at the Labour Party conference, to be summoned in to a Minister and told in a few minutes

931
what the Government's decision is. That is not consultation. I am pleased to learn the Government share my view. There must be genuine consultation. The workers of this country have a right to be consulted about their future and the future of their families. That is why there is so much anger and anxiety and worry in areas of closures.
The noble Lord, Lord Boyd-Carpenter, referred to the excessive power of the unions. Well, there is the excessive power of industrial concerns which can close down whole factories without any consultation with the workers. There is this great concern, which one can understand, of the workers in Shotton and in Corby, where we may be heading for 30 per cent. unemployment. It is not much use saying that the workers must go elsewhere to find jobs. If you have got a house and nobody wants to buy it because there is 30 per cent. unemployment you are in a real mess. I think these are things the Government have to consider. That is what the Social Contract was all about. There was cynicism about the Social Contract, but that is what it was all about. To millions of workers the social wage is a supplement to the wage which they draw in their pay packet. That point must be considered.
We have referred to the necessity for increased production and I think that we all agree that that is vital. But what we have not heard from the Government is exactly how they propose to achieve it. Again there appears to be a hope. Is Britain to put the clock back? Is Britain to be one of the few industrialised nations that put on one side Government intervention? Countries which have better production than we have; higher wages than we have: and greater investment in manufacturing industries, nevertheless follow the line of governmental intervention. I was pleased to note that, even at the CBI conference this weekend, concern was expressed that the Government are possibly going too far as regards the absence of governmental intervention.
The Labour Party accepts that we are in a mixed economy. Of course there must be an efficient and developing private sector. There must be adequate investment and the Government must help to achieve that objective. Equally,
932
there must be a thriving and efficient public sector. Most of the publicly-owned industries are essential to the well-being of this country and without them industry would not function. Why do the Government give the impression that they dislike public industry? Nothing is ordained that things must be produced by private industry. It is a matter of judgment as to whether certain things are best done privately or publicly. No one would think of giving the police forces over to the private security firms. There are many matters which are best left to the public industries to handle.
A number of speakers have referred to the fear of recession. What troubles me—and I am certain that it troubles many of your Lordships—is that many people speak as if we have to wait for the recession and can do nothing about it. I am sufficiently old-fashioned to believe that something can be done about it, but it will require Government activity, Government intervention. I hope, on the grounds of ideological conviction, that the Government will not reject that path.
8.43 p.m.
Lord VERNON: My Lords, we are reaching the end of this debate and I think that I have listened to nearly all the speeches, including the excellent contributions from our four maiden speakers. The debate has certainly given a wide scope for noble Lords opposite to criticise the Government, and indeed it is their duty to do so—at least, it is their duty to do so provided the criticism is constructive. It is on that particular issue that I have been somewhat disappointed by their contributions. They have given us rather the same recipe as before, and we know that that recipe is one of failure.
The noble Lord, Lord Jacques, to whom I always listen with great attention, suggested that there should be much closer co-operation between the Government and trade unions; that they should work together, and that there should be an incomes policy and so on. But the last Labour Government tried very hard to work with the trade unions. What happened?—it was the trade unions that would not work with the Government and they were finally responsible for the Government's defeat at the election. It does not seem

933
to me that the omens for close-working with the trade unions are very good, unless the trade unions are pepared to modernise their attitudes.
There has also been an element of hypocrisy in the criticism, because we all know that the Labour Party, if it had been returned to office, would have cut or made substantial economies in public expenditure; that has been admitted by the former Chancellor of the Exchequer, Mr. Healey. I only hope that some of the speeches that we have heard today are not a prelude to the same Opposition tactics which eventually brought down the Heath Government in 1974. They did the country no good then, and, in the long term, I do not believe that they did the Labour Party any good either. By stoking the fires of inflation it made their task in Government infinitely more difficult.
We have heard a great deal about the unfairness of the cuts. None of us likes the cuts, and I for one would have wished them to be more selective. For example, the decision to cut the external services of the BBC seems to me incredibly shortsighted and ill-advised. I hope that it will, in due course, be revoked.
The noble Lord, Lord Lever of Manchester, in his interesting maiden speech, referred to the abolition of exchange controls. In the short debate which took place in your Lordships' House last week on that subject, we were informed by the Minister that there would be a saving of £14 million as a result of this measure. The noble Lord, Lord Bruce of Donington, who was speaking from the Opposition Front Bench, described that saving as derisory. I think that that says a little about the attitude of the party opposite. Fourteen million pounds may not be worth what it was some years ago, but it is still a substantial sum with which many useful things can be done.
Reverting to the cuts in general, one must look at them in the context of the Government's philosophy as a whole—a philosophy which may be disliked by the Labour Party, but for which the country voted decisively at the general election last May. That philosophy has two prongs. On the one hand, we must strengthen our defences within NATO, in the light of the enormous Russian military and naval build-up which has taken place over the last few years. I
934
was very glad that the noble Lord, Lord Stewart of Fulham, endorsed the Government's decision to increase defence expenditure by 3 per cent. That will cost money; indeed, money which could otherwise have gone towards reducing the cuts on the social services. However, it is surely money well spent if it will help deter the Russians from their offensive attitude towards Western Europe and a possible attack on Western Europe. I believe that it will help to deter them. We all want disarmament and a reduction—indeed the elimination—of nuclear missiles. But it must be fair and genuine disarmament, which the Russians have so far been unwilling to negotiate. We are much more likely to achieve a successful negotiation if we do so from a position of strength.
The second prong of the Government's philosophy is to create more wealth by increasing dramatically our industrial productivity and efficiency so that we can once again compete effectively with the rest of the industrialised world. That matter has been referred to obviously by the noble Lord, Lord Thorneycroft, in opening, and by many other noble Lords. The Government's whole policy is geared to that end. What is the alternative? We know that under years of Labour administration, British productivity as compared with that of other countries went down and down and, as a nation, we became poorer and poorer. Are noble Lords opposite really suggesting that we should continue on that road? If they are, it is incomprehensible.
The present Government are trying a new approach. None of us knows whether it will work and whether the measures that they are taking will succeed. But we must all hope that they will, and I should have thought that they should at least be given the benefit of the doubt. If they do succeed and if British industry can be revived and again become competitive in world markets—and as a small over-populated island in the midst of a ruthless world we must be competitive to survive—we shall have the resources available to improve the social services, to give more generously in overseas aid to those countries which are less fortunately placed than ourselves, and to do all the other countless things which are so necessary here at home, and which we all want to see.

935
The theory advanced by many in the Labour Party that the Tories are out to grind down the faces of the poor would be laughable if it was not so malevolent. After all, the present Government would not be in office now if a large number of the less affluent members of society had not voted for them. The British people are not fools, and they are beginning to realise that the lot of the average man and woman will not be improved until the wealth has been created to pay for these improvements. That is what Government policy seeks to do, and I believe that it behoves all of us to give them a fair wind in the attempt.
8.52 p.m.
Viscount SIMON: My Lords, it is now a good many hours since the noble Lord, Lord Thorneycroft, rose to invite us to debate this Motion which, as has already been remarked, covers a very wide field. In the interests of brevity I want to make only a few observations, as a result of which your Lordships may find my remarks a little disjointed, but I hope I shall be forgiven for that. I want to take up a point made by the noble Lord, Lord Vernon. He is, of course, a supporter of the Government, but he very rightly said that he hoped that their policies would succeed. I am not a supporter of the Government, but I also hope that their policies will succeed and I hope that many noble Lords on this side of the House think the same way, because whether we like it or not they are the Government, the responsibility is theirs, and we must earnestly hope that they will succeed because the penalty of failure would be so serious for all of us.
That does not mean that we shall not critisise their policies. That is the duty of Opposition parties; and we, too, are an Opposition party. However, I do not want anyone to think that we want the Government to fail, and I hope that there is no one in the Labour Party who believes that their failure would be good for the Labour Party, for the situation is too serious for us to take that sort of view. I do not think that there is any point in saying any more about the difficulties we face and the opportunities before us. They have been well set out and argued, and I generally agree.
936
As regards the opportunities, I thought that the noble Lord, Lord Thorneycroft, was a little less than explicit but that gap was tilled to some extent by the noble Lord the Leader of the House. Therefore, I shall concern myself with the policies of Her Majesty's Government for dealing with these situations. First, I want to say something about the cuts. I do not want to argue whether they are cuts or stabilisations, or how they appear in any White Paper or Statement. What concerns people in the country is the effect that the Government's action has on them. It they are not to receive something which they used to receive, or if they have to pay more for something they used to receive, to them that is a cut.
Like my noble friend Lady Seear, who commented on the Statement when it was made last week, I feel very strongly that the cuts show insufficient discrimination. I recognise that it must be very much easier to impose a cut across the board. For one thing, I suppose it stops so many arguments in the Cabinet between Ministers, all of whom want to support the expenditure of their own departments. However, I believe that it is an abdication of the responsibility of Government to set priorities and to justify those priorities to Parliament.
My noble friend referred in particular to the question of the local authorities. As some noble Lords may remember, she raised the question whether the wise virgins would be penalised as much as those who had been foolish. I would rather use the analogy of the good husbands—are the authorities which have carefully husbanded their resources to be subjected to the same cuts as the authorities which have been profligate? In answer to my noble friend's comments on the Statement the noble Earl, Lord Gowrie, indicated that this was being locked into, and I hope that tonight he will be able to confirm that something will be done to ensure that there is protection for people who have been, as I say, careful in the husbanding of their resources.
There is also, of course, the question of education. I must repeat the comment that my noble friend, Lady Seear made on this and which I thoroughly endorse. It seems to me that of all our services education should be given the highest priority because. if the young people miss

937
out on education, it is something from which they will never recover. I know that it is common for people on the Government side to say, "What is it that you are suggesting?" I should like to stick my neck out a little and put forward some things that could be considered to be of relatively lower priority. I begin with one that may shock your Lordships. I should have thought that it is much more important to maintain the education of our children than it is to preserve the lives of old people in hospitals. I think that I am entitled to say that because I am an old person myself. These are very difficult matters. Of course, we want to do all these things, but if we cannot, we must ask the Government to assess priorities.
Turning to more simpler matters, I believe that all new capital expenditure could be postponed for a year or two. I know that we urgently need new schools and hospitals and new prisons; sometimes we may even need new town halls, although I should have thought that that was less likely. Surely, if we have lived under the conditions that we have for some years, to postpone that for a year or two until we get our finances straight would not impose an undue burden upon people.
What about the maintenance of roads? I believe that the noble Lords, Lord Underhill and Lord Murray of Gravesend, referred to roads, although they were speaking of new roads. I am thinking merely of normal maintenance. On the tape today it was said that the Automobile Association had pointed out that some of the damage to roads by weather last year would not be repaired for several years. It is a pity, but I do not think the country will come to grief because of that. I think that one might have to put up with that for a year or two. Although I recognise that it is a difficult problem, because deferred maintenance can be very expensive, I do not suggest that this is something that would be done for a long time; rather, a slowing up of the maintenance programme on roads should I think be given fairly low priority.
I have notes here which I can almost throw away. I was going to talk about unemployment, but the splendid maiden speech of the noble Lord, Lord Stewart of Fulham, said exactly what I wanted to say. I was astonished at how close it was to the notes I have before me, so shall save your Lordships' time and ask noble
938
Lords to read the speech of the noble Lord, Lord Stewart, in Hansard tomorrow, if they did not hear it. It was a splendid speech and I was a little surprised that he had the same line of thought as I did about the necessity for training, mobility, and so on.
Now I come to the question of encouraging business. Here I was very interested to hear the noble Lord, Lord Peart, speak of the importance of developing regional policies. As your Lordships know, this is something which we on these Benches are keen about, and I hope that this is something about which the Government will be able to give us some encouragement. On the general question of encouraging business, I have never been of the opinion that cuts in personal taxation would be a stimulus for investment. I do not think they have been. If there is a small stimulus it is, I suggest, completely outweighed by rising interest rates.
In another maiden speech the noble Lord, Lord Lever of Manchester, spoke very clearly about the conditions which encourage investment. I think he agreed that lowering personal taxation had very little to do with it. I hope that the Government will be able to help on the matter raised by the noble Lord, Lord Selsdon, and I think by the noble Lord, Lord Spens, about taxation on small businesses, because it is important. This is very difficult, but it would make an enormous difference to small businesses. It is those small businesses which very often, if they go well, turn into big businesses. It would make a great difference to them if something could be done about taxation on the lines that the two noble Lords suggested.
One other point on the encouragement of investment was put to me by a friend the other day. He said, "How can anybody be encouraged to invest here when they are always seeing on the television, or hearing on the radio, or reading in the newspapers, about strikes and trouble?" I recognise first that we have a free Press, and we do not interfere with it; secondly, that strikes, trouble and riots are news, and that successful businesses that are doing very well are not news. They may be news once a year when the annual meeting is held, but that is only in the Financial Times, which most people do not often read.

939
The suggestion my friend made to me is something which the Government obviously cannot act on because they are not supposed to control the Press or the radio, but perhaps they could just say a word in the right quarters, that if these unfortunately rather frequent reports could occasionally be balanced with some indication about the far greater extent to which business is going on without these troubles, it would do good to the people and would encourage them—or rather not discourage them to the extent that they are discouraged nowadays.
I have tried to be brief, but finally I come to this: I listened with great interest to what the noble Lord, Lord Thorneycroft, said about building bridges. I listened also to the noble Lord the Leader of the House and was a little surprised when he said he thought that the present Government's policies could not be called divisive. I will accept of course that he does not intend them to be, but they seem to me to have that sort of effect on a great many people.
I believe that the Government's most important task—and it would be the task of any other Government in power at this moment in our history—is to unite the country in facing the difficulties that we are facing. I ask myself, "Can they, and are they, really trying to do that?" The noble Lord the Leader of the House said that he thought that there was much more common ground than sometimes appeared to be the case. I am all for that. If there is common ground let us get to it, because I am a little worried about the image which appears to be growing around the Prime Minister, of her as a strong woman. I do not much like strong women—or strong men. I am not sexist about this. I do not know whether it is the image that she wants or whether it is being imposed upon her by the Press, but I do not find much joy out of her shaking her fist at the Russians or at the trade unions; and I think she does sometimes shake her fists at the trade union.
I thought that the great mistake of the Heath Government when they came in was that before bringing in their Industrial Relations Bill they did not really try to get the Trade Union Congress, or the trade union movement, among whom there were many people who recognised that things
940
were not absolutely right and proper or as they should be, to come and talk to them about how it could be done. No doubt there will be discussions, but discussions under duress really get one nowhere.
The Earl of GOWRIE: My Lords, I wonder whether the noble Viscount would allow me to intervene? I am most grateful to him. I am not going to go over the ground covered by the Heath Government, but I can say that my department, my Secretary of State, has been prepared to consult, and indeed has consulted, at every single step of the way, but the unions have made their position clear, that they are opposed to any legislation of any kind in this field. We have made our position clear, that we think that some limited legislation is necessary, but there must come a point in consultation when it is recognised that there are real differences.
Viscount SIMON: My Lords, I was going to say that in the earlier days I felt that Mr. Prior was being much more—what shall I say?—not flexible, but at any rate agreeable to the trades unions, but that he had become rather sterile. The noble Earl says that this is simply because the trade unions turned him down flat, and I can understand that. It is an annoying thing to happen. At any rate, the point I want to make in conclusion is that I believe that the secret of successful democracy is not forcing measures through with the aid of a majority in Parliament but really trying, before the measures are prepared, to get as near a consensus as is possible, even between two parties which take different views. If the Government felt that that was something they could move towards, then I certainly hope that the Labour Party—and I am fairly sure that the Liberal Party would be prepared to move also—would be prepared to try to find a consensus on these things. That has the added advantage that once you have your legislation, if it is with a reasonable consensus, then you have a reasonable hope that it will not be turned out next time there is a change of Government.
9.8 p.m.
Lord ROBERTHALL: My Lords, the debate has already gone on rather a long time and I hope to be brief, although one always finds on rising to one's feet that

941
one tends to speak rather longer than anticipated. I wish to say at the beginning how adorned the debate has been by the extremely good maiden speeches, and I am sorry that time will not permit me to say anything about, especially, the speeches of the noble Lord, Lord Harris of High Cross, and the noble Lord, Lord Lever of Manchester—I much enjoyed Lord Lever's speech—but perhaps I can say a little about Lord Stewart's speech.
The debate began with the noble Lord, Lord Thorneycroft, to whom we are grateful, outlining the gloomy state of the country—the high unemployment, high inflation, low production and low exports—and the noble Lord, Lord Soames, underlined that in calling attention to what to me is the most dangerous and difficult of all the problems at present, and that is the extent of import penetration; that sums up our troubles. Our economic troubles are mainly I think in two places, that of inflation and that of low growth, and I will comment briefly on both. As everyone knows, the biggest change in our whole system of recent years has been the growth of trade union power, and that is partly because of changes in the law and partly I think by the escalation of wages, which has forced a number of unions which would not have thought about industrial action into it to protect themselves, and one must sympathise with them; we can all look down our noses at postal workers, hospital workers, firemen and civil servants, but what can they do? The unions which we used to think were stronger get a big increase, and because the State will not protect them, they have to stick up for themselves; but in the process they too have learned that they have this great power.
The noble Lord, Lord Boyd-Carpenter, said he thought that when people got too much power events would intervene and take it away. I am not sure I altogether agree with that optimistic view; I do not see the Russians, for instance, taking away the power now enjoyed by the Communist Party. But the present position of the unions is extraordinary in one way. Everybody in the State who gets power in his hands uses it for its own benefit, and you cannot blame them for that. The difficulty about the present situation is that in my view trade union power is
942
exercised not for the benefit of the workers but against them.
Almost everybody will agree—I think even Lord Harris considers that this has something to do with it—that the main trouble about inflation is the high wage claims so far in excess of productivity and that these are enforced by trade union power. The first one in the round gets an increase. How does he get it? He gets it at the cost of all the others who have to pay a little more for his product. Then the next one comes in, he strikes a little against the first but mostly against the mass—and so it goes on. In the end who will the postmen, civil servants and firemen strike against? It is not the employers. They go on just the same; they will get their little bit back from the first people in the round.
Equally, low productivity, which in my view stems to a very large extent indeed from the wide prevalence of restrictive practices. The point has been made time and again in the debate that we will not get a higher social product and more expansion unless we get more productivity, yet—of course this does not apply to all unions—you only have to read the papers on any day to get a collection of accounts of disruptions; unions will not have a plant closed—why do you close a plant if not to make better use of the labour?—and soon.
What are we going to do about it? The present Government's policy, as I understand it, is to adopt mainly fiscal and monetary policy, and like the noble Viscount, Lord Simon, I hope very much they succeed, but I suppose those who know me and my long advocacy of incomes policy will know that I feel grave doubts about the use of monetary and fiscal policy, at any rate as the primary instrument, partly because monetary policy is a much blunter weapon than its advocates think it is, and of course we do not know how long it will go on, and one cannot help feeling afraid lest there will be a great deal of social and industrial unrest and disturbance.
What is the alternative? I suppose that temperamentally I incline to the view put forward by the noble Lord, Lord Stewart of Fulham. I think that he gave an admirable account of the need for productivity. He made the best speech of the debate about productivity. But,

943
at the end, he said he thought that we must go more gently in our aproach to the unions. Of course there is an obvious answer to this; it was given by the noble Lord, Lord Vernon. One sees it if one looks back at our history since 1944 (over the last 35 years) that began with the coalition White Paper—the coalition White Paper, mind you!—on full employment. That stressed very strongly the need for both restraint in wages and the end of restrictive practices and that sort of thing. Since then almost all Chancellors of the Exchequer have made similar statements in their Budget speeches. Perhaps the noble Lord, Lord Thorneycroft, did not mention it, but I expect that I slipped a bit in all the same about the need for restraint on wages and for an increase in productivity.
There have been any number of statements on behalf of various parties. I was thinking to myself, what is the policy of trade unions, and I found this document that I have here. It is the joint statement by the TUC and the Government made in February of this year entitled The Economy, the Government and Trade Union Responsibilities. I expect that everyone has forgotten about it by now. It is an admirable document. There is only one statement in it which I think is disingenuous, and that is that experience showed that
" legalistic intervention in the conduct of industrial relations is harmful ".
They ought to have added to that,
unless it is for the benefit of the unions ".
I say this because I think we all know that the unions are as much against the taking away of any of their present privileges as they are in favour of having more if they can get them. Well, that is by the way.
I return to the two points that I mentioned, thinking particularly now about inflation. This White Paper is full of admirable statements about being against inflation. It says:
" we must set ourselves the task of aligning our inflation rate to that of our main overseas competitors, and that means getting our annual rate, within three years from now, down below 5 per cent. and holding it there.… The TUC…is as committed to reducing inflation as to any other of the policies adopted by Congress…".
And so on. That is all fine stuff, but what has happened? As the noble Lord, Lord Vernon, pointed out, the trade unions then kicked the Government in the teeth.
944
That was why they lost the election, I do not doubt—because of the transport workers.
Coming back to productivity, there is an admirable statement about demarcation disputes, but anyone who heard the short debate on Monday about Hunterston will know how much we are still troubled by them. There are lots of good statements about productivity:
" we firmly believe in the adaptability and skills of our people which will be a principal factor in determining our economic fortunes "—
adaptability, mind you!
" One fundamental factor is the need to increase productivity—of both capital and labour ".
But what has happened to that? I doubt that our growth is now even 1 per cent. a year, which is the figure that someone has mentioned.
The fact is that in this sphere things are getting worse and worse. Why is it? It is because at present the TUC is not able to deliver the goods. It can sign marvellous statements such as this. I suppose that most of the leaders of the TUC feel as we all do about this, but they cannot get the troops to march, or perhaps to refrain from marching. The only suggestion that I have to make in this field is that, if there are any more discussions of this sort—which I think is the way that we ought to move—they must be much more in the form of tough bargaining, saying, "All right, you want us to do this. We want you to do that. Can you carry it out?"
After the Social Contract was announced I said in this House that I thought it was a mistake to give everything away at the beginning, in the hope that the other side would deliver—and how right I was! So it seems to me that either we are going to go ahead and have a great deal of industrial difficulty or we are going to have to try once more to tread this long and weary path, along which we have so far had no results at all. But it will not do any good unless the TUC itself can say what it is able to do, and whether it can or cannot implement policies which it appears to agree are desirable.
9.21 p.m.
Lord BROOKS of TREMORFA: My Lords, as one who made his maiden speech only a fortnight ago, I feel somewhat presumptuous in congratulating my noble friends Lord Stewart of Fulham, Lord Lever of Manchester and Lord

945
Irving of Dartford, and, of course, the noble Lord, Lord Harris of High Cross, because all these noble Lords have achieved great distinction in public life, certainly far greater distinction than I myself ever hope to achieve. I was particularly intrigued by the speech of Lord Harris and the speech which immediately followed it, that of my noble friend Lord Kaldor, most of which I understood; but, as one who gave up his study of the dismal science at A-level for the sake of his own sanity, I look forward to the future exchanges, which I am sure we shall all enjoy, between Lord Harris and Lord Kaldor.
Last Thursday I asked the noble Earl, Lord Gowrie, whether the Government had any plans to protect the vulnerable against those local authorities which could not be relied upon to implement the Government cuts in a humane manner. I am bound to say to the noble Earl, with the greatest respect, that I found his answer wholly unconvincing—not surprisingly; there was, I suppose, no other answer he could give, because, as the White Paper tells us, the Government have no direct control over local government spending. So I am able to say to your Lordships that, having listened to almost every word in this debate—and it has gone on for many hours—I shall, I think, not be repeating anything that has been said earlier. However, before I begin may I say that when I saw the list of speakers—I think there are 28 names on the list, which is just about the number of obstacles that the horses have to encounter in the Grand National—and found myself 25th on that list, I had some idea what those poor animals must be thinking as they set off on that 4½-mile journey.
My Lords, where will these cuts fall? Instead of living in dreamland, as some of the speakers opposite appear to have been doing, I wonder whether they have seen the document (I am sure they have, because it was produced for the benefit of the Government) by the Association of County Councils and the recommendations in that document to the Government as to where they felt cuts could be made. Indeed, the document is styled:
" Statutory obligations on local authorities which might be abolished in favour of discretionary powers ".
I was a member of the ACC for a number of years, and when I read those words they
946
struck fear in my heart, because in the ACC I dealt with the Conservatives and, believe me, they are the most hardhearted bunch of freebooters I have ever encountered in my political life. I am sure the noble Earl, Lord Gowrie, will never forgive me for saying so, but I find him and his colleagues on the Front Bench opposite somewhat civilised, and if I could be assured that these cuts were going to be implemented by the Government Front Bench then perhaps I would not have the fears that I have.
Let me tell your Lordships exactly what happens in real life. What I am going to say could be referred to as anecdotal evidence, but I assure your Lordships that it is what happens out in the field. I am a relatively newcomer to local government so that I was able to view it with a somewhat more subjective view than many of my colleagues who had spent a great many distinguished years of public service in local government. In 1971 or 1972, just after I arrived in local government, I attended a meeting of the board of governors of my local comprehensive school. We were having a debate on truancy. To my surprise, I was told that even some of our more academically bright children were playing truant. It did not seem right to me. I should have thought that academically bright children like to go to school, that they enjoy their lessons. I discovered that they had to go to other schools for their sixth form education.
We won the election following local government reorganisation—a rather unusual thing in my part of the world; but we did. I made some inquiries and I found that there were only four schools which did not have sixth forms. And where do you think they were? Without exception, all were in the working-class areas—all of them, on the council estates and in the working-class areas. We put that right immediately.
I give that illustration to your Lordships to give an indication where these cuts are going to fall. Indeed, let me spell out some of the suggestions that the ACC has made to the Government. They want standards laid down for school buildings and playing fields to be scrapped so that cheaper buildings and smaller playing fields can be provided; they want permission sought for charges to be levied for

947
nursery education, for borrowing of library books and refuse disposal facilities They want the statutory school age to be restricted, the starting age to be six years and the leaving age to be 15. They want to stop new regulations for the protection of old people's homes under the 1971 Fire Precautions Act, to relax the fire protection controls on hotels and to charge for advice on fire prevention matters. They want also to scrap the duty to provide services under Section 2 of the Chronically Sick and Disabled Persons Act, and they want to remove the duty of liaison between the health services and the social services. They want freedom to cut the pocket money allowed to residents of old people's homes; they want to cut back on social work reports to the courts and on community homes with education; and they want to reduce public participation requirements in planning. I could read the whole document and it would take an hour. But the warning signs are there. If the Government have no direct control over local government—and I am not suggesting for a moment that they should—the Government's eyes should be open to what is actually going to happen.
If I may continue with some more of this anecdotal evidence, many years ago (or perhaps not so many) in the early 1960s I read Galbraith's The Affluent Society, which was a book received with a great deal of praise but also with a great deal of criticism from his fellow economists; largely, I think, because Galbraith was one of those rare economists who can write in terms that ordinary people can understand. I think that he was giving the mystery away; and that was probably why he was attacked by his fellow-economists, or certain of them. In that book he wrote somewhere that there was more socialism in America than in any other country in the Western World; but it was socialism for the rich. He went on to illustrate how it was the more affluent in the American society who benefited most from public expenditure and here. I am just about to give one or two illustrations.
As a result of remembering that comment of Galbraith, I set in train a simple exercise and asked a team of brilliant researchers to discover who benefited from the money that we were spending—a simple enough exercise.
948
Although I have some notes, I have not all the detailed evidence with me. I assure your Lordships that my memory is excellent. We discovered that with the transport supplementary grant which the county was giving to the district transport undertaking in the three affluent areas that were picked out the population was getting £700 per thousand of the population. In the working class areas—the areas where the public transport was most used—it was something like £180 per thousand of the population. We discovered that there was a greater turnover of teachers in the poorer areas than the more affluent areas; we found that by all the poverty indicators the poorer areas were benefiting least from public expenditure.
Governments very rarely have the opportunity to sit back and think about these very serious problems. One of the charges which can be made against the Government, and which can be made to stick, is what they have done is not necessarily wrong—although we think it is—but they have acted too hastily. They have not sat down and thought about the consequences of their actions. Sometimes I think to myself that what is happening is that the poor people of Scotland, Wales, and the North of England are being punished for voting Labour. One of the previous speakers said that many ordinary people voted Conservative. If one looks at a map in class terms—if we have to use them—it is clear that the basic working class loyalties to the Labour Party are as strong as ever they were.
Many of my trade union colleagues agree with me that what happened was this: many, many trade unionists said: "We want more money". They said to the Labour Government: "You are not going to give it to us; she has promised us more so we are going to vote for her". I think my noble friend Lord Murray of Gravesend read out the list of denials that were made during the General Election. So in many respects the Government were elected, if not on a false prospectus, certainly in many areas by the statements of the present Prime Minister and her colleagues which misled the people.
The areas to which I have referred in the United Kingdom, in Scotland, the

949
North of England and in Wales depend so much on public expenditure. This figure staggered me somewhat: 60 per cent. of the people working in Wales rely on public expenditure for their jobs. That is not because we are necessarily beggars, because we are not. It so happens that many of the publicly-owned industries and utilities—
The Earl of GOWRIE: My Lords, I am most grateful to the noble Lord; this might save time later on. Is the noble Lord aware that, whatever the rights and wrongs of the way that we are proceeding, public expenditure in this country has this year been increased on the expenditure of last year, when the Government which the noble Lord supports were in power. We must stop consistently misleading ourselves and others with talk of reductions in public expenditure. Public expenditure this year—many of my noble friends think regrettably—has been increased on last year.
Lord BROOKS of TREMORFA: My Lords, I am grateful to the noble Earl, but I did say earlier that the indictment of the Government's policies is the speed at which they have arrived at them. The noble Earl seems to be implying in his intervention that nobody has been affected and that there are no cuts. If that is so, what on earth have local government been engaged upon in the last few months? I see the noble Earl wants to intervene again. I have given way once. I think I should be allowed to make my point. The fact is that in my county alone £2.3 million has been cut from current expenditure, from present plans which were arrived at over six months ago. The impression that the noble Earl is trying to give is that there are no cuts. If there are no cuts, what on earth have we got a White Paper for?
The Earl of GOWRIE: I am sorry to intervene my Lords, but I did not say there were no cuts. I am saying that public expenditure has increased over the last year. That is a different matter. We can have an argument about where the public expenditure distribution falls, and that is quite right: but the noble Lord was giving the clear impression that public expenditure is falling. It is not; it is rising.
Lord KALDOR: Not according to your own comments in the White Paper.
Lord SOAMES: Order! my Lords: one at a time.
Lord BROOKS of TREMORFA: My Lords, in any case I should have thought that the burden of my message is not so much that there are going to be cuts in Government expenditure but that there are poor wretches on whom these cuts are going to fall. That is what I was getting at. One noble Lord in this debate said that he did not want to finish on a pessimistic note. Neither do I. Somebody wrote somewhere that each nation has its secret collective dread. In America it is Communism; in France it is revolution; in Germany it is inflation and in Britain it is unemployment.
My right honourable friend the Leader of the Opposition in another place, James Callaghan, said the other night that the deferential society has gone—it has left us. My Lords, it has. Young people will not put up with what their parents put up with in the 'thirties. We have this underlying secret dread ; it is there. And I want to say this to many of your Lordships, and particularly to the noble Lord, Lord Boyd-Carpenter, who I am sorry was unable to stay: If he and those who have been attacking the trade unions understood how deep th ehistory of those years goes into people who are living and working today, they would also understand that they cannot erase froj their minds some of the things that were done for them.
I have not one ounce of personal bitterness about my experiences, but I will say that there were many years in the 'thirties when I never saw my father; he was away looking for work. That was the experience of so many people who, as I say, are still alive and still working. This secret dread is there. If unemployment grows to the level that the Government are complacently anticipating, coupled with the twin evil of Germany's secret dread, inflation, what kind of prospect is there for us? I think the complacency with which this Government are approaching our economic problems whatever the merits of the means they are using to attempt to solve them, is something that must be condemned.

951
My Lords, it has been a long day and I shall take no more time. I think I have already taken too long. I am grateful for the opportunity of speaking in this debate, and I hope that more wide-ranging Motions of this sort are put to us in order that we can express our views in the way they have been expressed today.
9.40 p.m.
Lord MOTTISTONE: My Lords, it really is a most interesting opportunity to follow the noble Lord, Lords Brooks of Tremorfa, which I have not had the privilege of doing before, because it seems to me that he absolutely epitomises in his own speeches, and so do other noble Lords opposite, the difficulties that my noble friend Lord Thorneycroft asked us to look at. The difficulties are that noble Lords opposite, and their supporters outside this place, do not seem to be able to learn from past experience; do not seem to be able to realise that the way in which they attempted to run this country when they provided the Government, during the last 35 years, has not worked. It is as simple as that. Every time they have tried with the very best of intentions. I shall always credit them with good intentions, and I shall not add any other points to that. But the fact is that it is extremely difficult to run everything, if you do not have the resources.
It is all very well grumbling, "There is not enough of this and that in the way of money for the local authorities and, therefore, there has to be a cut "; and," Is it a cut, or is it as my noble friend Lord Boyd-Carpenter said, a so-called cut "? That is not the point. The point is that we do not have the resources and we do not have them because, as a country, we have not been earning the money. And we have not been earning the money because people have been misled—perhaps "misled" is the correct word—into thinking that you can get money without having to work for it. The key to the matter is productivity. I am sorry, my Lords, but we do not have the money. The reason for not having the money is another matter. The point is that we do not have the money for doing the kind of things that noble Lords opposite wanted to do. I do not blame them for wanting to do them, but we just do not have the money.
952
It is not the least bit surprising that my noble friends on the Front Bench have had to do what they have done. There are several of us who would say that they have not done enough, and I think that the country will suffer therefrom. But be that as it may, the difficulty is that people are not prepared to change their attitudes, notwithstanding the fact that all the evidence shows that they should. This is very hard for the country, because the country is suffering and there are many people—people such as those the noble Lord, Lord Brooks of Tremorfa, has been talking about—who are in the local areas around the country and who perhaps do not fully understand what either Party is trying to say to them.
They are the people who are being misled. They are the people who are thinking that, somehow, if you take certain kinds of actions you will get certain kinds of results. For example, you may think that if you take industrial action you and your mates will improve your standard of living and that everything will be better than it was before. On the whole, that is not the case and has not been in the last 30 years. It is tragic that people should be so misled, and I am very sorry that noble Lords opposite—and there are not many left—should have this fixation about the kind of arguments that they have been putting forward. This is extremely important—Hooray! The noble Lord, Lord Murray, has come to join us.
Lord MURRAY of GRAVESEND: There are not so many noble Lords over there, either.
Lord MOTTISTONE: But the most important difficulty that we have as a country, forgetting the Government, is the fact that the message of the past that has been drummed home to us by fact—also, if you like, by the IMF and by other kinds of bodies—has not been hoisted in by noble Lords opposite. That is the difficulty. The opportunity is there, if only we can get latched on to the need for this country—for every country, for that matter—to give a free rein to freedom and enterprise. That is the key to success. If we endeavour, so far as is possible, to give individuals throughout the country freedom to get on, freedom to develop and freedom to use their bright ideas, and the opportunity

953
to use their enterprise, then the country as a whole will prosper. It is only in that way that the country will prosper. It is all very well for learned—" learned" is not the word because "learned" is applied to certain sorts of Lords; it is all very well for Lords who are well versed in economics to shake their heads. The fact of the matter is that one needs to talk about people rather than about figures. People respond to different sorts of pressures.
Another point which might be worth mentioning in passing is this. The noble Lord, Lord Underhill, spoke earlier about the wickedness of tax evasion. I support him entirely. Tax evasion demonstrates itself in many ways, but I am sure that the noble Lord was thinking of it in terms of the beastly capitalists who are evading tax. The noble Lord may put it that way, but one of the great worries at the moment is what people have called the black economy.
I heard only two days ago of a company that has a 12 per cent. absenteeism rate. Companies are now beginning to find that people work a rota. For instance, three chaps will work a rota between them. Two of them will come in on a particular day, while the third will be absent "moonlighting"; he will be engaged in some activity on which he does not pay any tax. The others will get overtime because they are covering for him. Later on they all shift round one; and they take it in turns to do that. Noble Lords opposite may laugh, but this is the way in which people react to excessive intervention in their lives by what they see as the great "they"—which includes all of us and the people in Whitehall.
As anybody who has ever had anything to do with fighting in wars will know, people who find that the pressures of officialdom are more than they can stand discover ways of getting round it. I do not blame people who "moonlight" or who evade taxes of the sort I am speaking about, because they are oppressed by central Government mechanisms which they find oppressive. However, the fact of the matter is that when this sort of thing happens you cannot put it right by increasing the amount of pressure, by getting more money out of the ordinary citizen in order to pay for more types of
954
local government expenditure, or whatever it may he. There is a limit to what people can stand.
My noble friends have tried to take the first faltering steps towards putting that sort of thing right. It may be that they have not done it well enough. It may be that the immediate effects do not look nice to certain kinds of people. However, the fact is that they are working in the right sort of direction. They are trying to give the opportunity—I come back to Lord Thorneycroft's Motion—to the rest of us to get on and earn the money which the country needs so that the welfare, which the country also needs, can be paid for. It must go forward like this. My noble friends must be given every encouragement. They must not be subjected to carping criticism from people who do not seem to be able to learn from their past mistakes.
Lord KALDOR: My Lords, before the noble Lord sits down may I ask him one question. He thinks that provided we return to the 19th century, provided government is driven back and the Welfare State abolished, provided everybody is after himself, with the maximum rein given to free competition, this country will return to a prosperous condition. Does the noble Lord realise that that period, the late Victorian period and the period preceding the First World War—when there were all the incentives in the world, there was no progressive taxation, no unemployment benefit, nothing—were more depressed?
Lord MOTTISTONE: My Lords, perhaps I may answer the noble Lord, Lord Kaldor. If I may say so, he is making another speech rather than asking me a question. I can certainly answer his question. I am looking forwards, not backwards; I am not looking to put this country back to the 19th century. I am looking forward to an environment in which we can develop forwards. The fact of the matter is that the experiments we have made—and I have supported many of them—in order to try to sort out our problems during the last 50 years have not all worked.
Everybody would agree that some parts of the Welfare State are absolutely essential and nobody would quarrel with them, but the fact of the matter is that the basic

955
over-control from the centre has been carried too far; it does not work, it does not produce the right results and it does not get the right reactions from the individuals whom it is supposed to benefit. Let us forget the 19th century and, for Gods' sake!, let us forget the first three-quarters of this century. Let us look
956
forwards rather than backwards and let us for Heaven's sake get ourselves going and give ourselves the opportunity. En this country we have all sorts of skills, interests, and energy. Give us the chance to do this, but do not tell us that we only have to respond to what Auntie Government sitting in Whitehall tells us to do. That is disaster.
9.52 p.m.
Baroness BIRK: My Lords, one of the most attractive features in this debate initiated by the noble Lord, Lord Thorneycroft, has been the four outstanding maiden speeches that we have had. Other noble Lords who have been in the House longer than I have will know whether this has been so on other occasions, but I should have thought that this occasion was probably unique. My very old friend the noble Lord, Lord Lever of Manchester, gave us a brilliant dissertation on exchange controls which has made me decide that perhaps I will not mention them again (because I do not quite agree with him about it), and also on general Government policy. My noble friend Lord Stewart of Fulham without a single note made a most felicitous speech. I had the feeling that if it had not been a maiden speech he might have taken rather a harder line, certainly on the question of the education cuts. My noble friend Lord Irving of Dartford concentrated particularly on the micro-chip industry and what was happening there, and it was so interesting that one did not have to go through the formality of offering empty thanks. The noble Lord, Lord Harris of High Cross, made an extremely witty speech. His economic feelings showed, of course, but we know them and, since his recreation is conjuring and devising spells against over-government, we shall evidently hear quite a lot from him about that in the future.
I want to deal with the Paper that came out last week, Government Expenditure Plans 1980–81. I do not mind whether people continue to call them the so-called cuts or a particular sort of tax. I really wonder where some of the Members opposite have been during this last week; to whom they have been talking and who they have met. The noble Lord the Leader of the House expressed the hope that we would not look at it as a programme of savage cuts. The noble Viscount, Lord Simon, was much more to the point when he pointed out how divisive it was. If one is speaking to people outside and not necessarily to people who support the Labour Party, there is tremendous concern and anxiety about this, and also about the indiscriminate nature of the cuts. This broad brush approach has ended in
958
what it may not have been intended to be a brutality and cruelty in approach but, frankly, I find it absolutely amazing.
The Government are in fact, in trying to face the 'eighties, pulling us back to the 'thirties; although I think my noble friend Lord Kaldor, who many years ago tried to teach me economic theory at the London School of Economics, said "back to the 19th century". Acknowledgment of economic realities which dictate the need to slim down expenditure and excise waste does not disguise the enormous philosophic gap between the Labour Party and the Conservatives. The Budget and now this White Paper have rolled back the carefully constructed carpet of social development with a complacency that I really find tragic, and I am not here making any political digs; I just find it quite amazing.
My noble friends Lord Peart, Lord Murray and Lord Castle, and I think it was the noble Lord, Lord Selsdon, on the other side, mentioned the cuts in education. Apart from all the humane reasons against the way this is being done, as was mentioned in a Question earlier today £3,000 to £5,000 fees will now be paid by overseas students, except students from Europe; incidentally we stand alone in fee charging, with the exception of Belgium which only charges in the case of medical students. This is an investment for the future and when we are talking about investment in this country we are not only talking about money or machinery, we really are talking about human beings as well, and among them are the children. I am not going to expand any further on education because so many of my noble friends have dealt with it so well.
The housing cuts, which the White Paper says reflect change in local authorities' priorities, mean less housing. We have also heard, from the Prime Minister yesterday, that it is very unlikely that the Government will be able to help with the likely increase in mortgage rates. The housing situation, it seems to me, will probably get worse, certainly for those who are less well off rather than for those who are better off.
We have had a considerable amount of discussion with regard to health, and my

959
noble friend Lord Peart made a great many telling points on that and discussed our anxieties. They say more money is being put into the Health Service, while at the same time wards are being closed and hospitals are on the brink at the moment; the anxiety in the professional services and among people, many of whom have no particular love for the Labour Party, needs to be heard, and then noble Lords opposite would know what the real response to this is. With inflation at 17 per cent. and possibly getting higher, it is quite impossible to say that there will not be a short-fall, and until we know what the cash limits are going to be it may mean that there will be further cuts.
In the social services, another area which my noble friends have touched on with considerable feeling as well as practical knowledge, the White Paper says the Government want to develop policies which help people to help themselves and others by collaboration with the voluntary sector. I am a great supporter, not just theoretically but in practice, of the voluntary sector: but with all the goodwill in the world there is a very severe limit to what volunteers can do without skilled social workers today, when there is so much specialisation and very much more sophisticated treatment and help to people, and also without resources and without local authority grants.
To what extent will the pinched authority feel that it can make grants to voluntary bodies when it cannot even carry out its own work? It is pie in the sky. Again, with the increase of the over-75s in our population by more than 2 per cent. per year—the projection for 1996 is something like 3 per cent. to 4 per cent.—more and not less residential care is needed; more and not fewer home helps are needed; and more visits and more mobile meals are needed. At present, there are long queues for old people's residential care, and that takes in voluntary homes as well as local authority and central government homes. Once again there is not only a human aspect, hut an economic one as well. The decline in services for the elderly will not only reduce their quality of life, which is had enough, but will put more pressure on
960
the health services. Surely that is an extremely foolish economy.
Similarly, families with problems, and children tipping over into delinquency will suffer, and the savings will almost certainly mean more criminal activity. So, a great deal of the law and order expenditure will be robbing social services "Peter", on the one hand, to pay penal services "Paul on the other. What a Monty Python's Circus this is! If we add to that the Government's expected 300,000 increase in unemployment—that is not a true figure as it does not include the school-leavers who are a very important and sensitive section of the unemployed—what do we get? We get a cut-down in preventive action and increased unemployment and unemployment benefits, which will not be covered by the social security cuts. Or, are these benefits—I do not know—hovering in the social wings waiting for the next Government chop?
In our debate last week on the family and the Government's policy, it was most extraordinary that there was the Sherlock Holmes' dog that did not bark in the night. In other words, there was a debate on the family, a matter about which the Government and the Members who support the Government are always talking, and to which they attach great importance. However, only one Back-Bencher spoke in support of the Government. When our side of the House were in Government and I was a Minister, I know that certainly our Back-Benchers were not slow in coming forward and telling Ministers where they thought the Government were going wrong. Sometimes it was rather annoying, but often it was very helpful because it strengthened one's own arm if one was not always in agreement with one's more senior colleagues about aspects of policy. However, it was quite amazing and to me it seemed to show—I do not say a lack of interest because I do not think that that applies to the individuals—a lack of communal compassion and real concern about what is being done, even if the people doing it felt that they had to do so.
There is another strange anomaly which threads its way through the Government's

961
expenditure plans. We have the first woman Prime Minister that this country has ever had. Yet this package will make women's lives much harder. Let us take as an example the nursery schools. Who will the cut-back in the nursery schools hit?—the children and their working mothers. Restrictions on school meals will add to the stress of mothers as well as detracting from their children's wellbeing. Who will the 70p prescription charges harm most?—they will harm the wives and mothers of the family, the type of women who, before the creation of the National Health Service, were always the last to go to their doctors because they had to pay. Who will some of the other severe social cuts hit?—mothers of disabled or handicapped children and daughters of frail elderly parents, usually mothers who are widows.
The debate last week was splendidly opened by my noble friend Lord Wells-Pestell who raised some points which he had read in the Guardian. The noble Baroness, Lady Young, when replying referred to him asking:
"… whether the Government intended, as the Guardian leaks suggest, to… abolish maternity and death grants; delay women's pensions until 65"
among some other things which apply not only to women but to men as well. On his her answer was:
" On all those matters I can only tell him that reports have recently appeared in the Press that the Secretary of State for Social Services is considering whether to achieve the necessary cuts in public expenditure by one or more of a range of options. The responsible Ministers have to explore the whole range of theoretical possibilities for savings, to assess what is involved."—[Official Report, 24/10/79; col. 173.]
We do not know what the next lot of cuts will involve when the cash estimates are being worked out. This, together with sex discrimination against British wives with foreign husbands, which arose earlier today, makes up a real anti-feminist package. Therefore, women have had a very bad deal out of a package from a Government which is headed by a woman. It seems a pity, does it not?
A great deal has been said about taxation and it has been examined pretty thoroughly. We have said one thing and the Government, on the whole, have said something else. But what worries me is that the Government's priorities are so
962
bizarre. For a long time the Government's war cry has been to cut taxation, and so it was when they were in Opposition. To cut taxation is perfectly all right if, first, you make it equitable and, secondly, you can do it without having the results too heavily weighted on the side of indirect taxation. For instance, we should certainly have had to raise VAT, but the Government raised it to 15 per cent. which was not expected and was not in the Conservatives' Manifesto for the last election, so people did not vote for a 15 per cent. rate of VAT.
It is the less well-off who are worse off and the better-off who are even better off. The taxation reductions cost around £4.5 million. Noble Lords opposite have asked, what would we have done? One thing we would not have done was to cut taxation in that way and to that extent. In any case massive cuts in income tax will not produce increased growth, as the Government have acknowledged.
So what do we see today? After six months of this Government—and I shall be fair and say that that is a comparatively short time, but during that time they have been very active—there is no sign of an incentive motivation. This is worrying for the country, not simply because we have a Conservative Government. In fact, business confidence is falling, as the report published by the CBI a few weeks ago pointed out. In addition, industrial production is falling, investment is falling, the pound is falling, inflation is rising and many small businessmen face bankruptcy due to tight monetary policies.
On my way to the House today I heard on the radio that more support is being given to small businessmen by the Government. In mentioning small businessmen, I must point out that it was my noble friend Lord Lever of Manchester who, during the last Labour Government, was responsible for initiating the schemes and getting help and action under way for small businesses. I believe that the noble Lord, Lord Selsdon, raised this matter. On exchange controls—a piece of ice on which I tread very warily—I would rather support the view that we should relax controls. The total removal of such controls worries me rather,
despite my noble friend's brilliant exposition.

963
I think we would have cut defence and certainly not increased it—I believe that my noble friend Lord Kaldor is right over that. It is disproportionate, in the same way as our contribution to the Common Market—and here I speak as a pro-Common Marketeer—is quite out of proportion to our resources and compared with what other people are paying. It is depressing to see in the White Paper that the sum put in for the EEC contribution is £1,000 million when we are all hoping that that will be brought down quite considerably, and that the Prime Minister will manage to do that.
At a time of recession, and certainly not forgetting the world recession which has been mentioned by many noble Lords, we could find another billion pounds on the borrowing requirement and in that way save some of the cuts. This is something over which there is often disagreement, but there is certainly a view today—and even in the Government's own party—that that is one of the viable alternatives. Cutting down the Manpower Services Commission and ending the short-term employment subsidy and job release scheme seems to me extraordinary with rising unemployment. The noble Earl shakes his head, but this is what paragraph 24 says:
" The provision for 1980–81 for measures operated by the Manpower Services Commission is held broadly at the reduced level for 1979–80. No provision is made for the extension of the Small Firms Employment Subsidy, the Job Release Scheme, or the Temporary Short-Time Working Scheme which are due to close for applications in March 1980. The statutory short-time working scheme proposed by the previous Government has been dropped."
I do not know whether the noble Earl saw last week's Spectator, which is not a periodical which supports the Labour Party. It says:
" The removal of subsidies received from the Manpower Services Commission provides two albeit small examples of an unthinking meanness on the part of government which is also directly contrary to Conservative principles of self-sufficiency."
At this time of night I shall not go into it any further, but they give some interesting examples of a workshop for offenders which is going to lose its subsidy, and also a number of Asians in Leicestershire who have been receiving a subsidy to enable them to grow vegetables and herbs in greenhouses which they are then able to
964
sell. This is an excellent example of private enterprise that is going by the board altogether because it is evidently in the wrong area. Work for unemployed is surely more productive than greater expenditure on law and order—about which the Government have really made a song and dance—when so many young people are out of work, idle, and disenchanted. I think my noble friends have pointed out that this is the time when vandalism and crime breaks out. What more do you need than having them unemployed—even though these alternatives may have been stopgaps—to make them more anti-social?
A great deal has been said about over-manning. Of course over-manning is not justified. I would be the first to agree that there must be room for cutting down staffs. There must be room for eliminating waste. I know that there is. But the reorganisation of local government, the reorganisation of the National Health Service enacted by the last Conservative Government, gave birth to brigades of bureaucrats. It set up structures which did this very thing. In fact, when we were in Government I personally was in favour of starting again: of throwing out these reorganisation Acts and having a simpler and more economic system. We have been either chivvied by some for not making cuts, or told by other noble Lords that we did make cuts. We did make cuts and imposed cash limits, this is true. But what we did not do, and what we could never do from this side of the House, is to slash the human services in what I can only call a clumsy, callous, indiscriminate manner, which has also not been very well thought out. Everybody will have to go back to the drawing board, if they are going to continue with this policy, and think it out further.
As has been said, inflation really is public enemy No. 1. In six months it has risen from 8 per cent. to around 17 per cent.—certainly not the time to abolish the Price Commission, which the Tories insisted on doing almost immediately on their arrival in office and which we strongly opposed and still oppose. The whole question of productivity, which is the essential card in the economic pack, has become quite a circular argument and, as my noble friend Lord Jacques said, Britain could be a prosperous country,

965
but not if there is a free-for-all. I am anxious not to delay the House further. We have the problem of management and trade unions and the whole problem of how one gets productivity; and whereas we all bemoan the lack of it I do not think anybody has come up with a miracle way of achieving it.
These financial slashes, cuts or whatever one calls them, will take the quality out of our lives and environment at a time when the Labour Government were enhancing it—too slowly for my taste, but not for that of the Treasury. I support the noble Lord, Lord Selsdon, and others who criticised the proposed £2 million off the BBC external services. There seems to have been such stupidity and pettiness over this whole matter, which makes me say that so many of these things have not been well thought out. Originally the cut was to be £4 million; then it was dropped to £2·7 million, and now we are given to understand that it may be worked out in a different way.
The resurrection and aesthetic improvement of inner urban areas will decline so that the decaying teeth of dereliction in our cities will remain. In their struggle with the mainstream of physical existence, I fear that authorities will cut down the cultural nourishment which feeds our eyes, ears and souls—the arts, libraries and museums. In sacrificing the quality of life, historic buildings, conservation areas and town schemes will, I feel, not be exempt. Again, strong central support is necessary to encourage local authorities to spend money. This is an area I know personally, where many local authorities have been starting to take an interest, realising that they can find other uses for old buildings and at the same time enhance their towns and cities. There is no mention of this in the White Paper. Perhaps the noble Earl will write to me about it. I am also concerned by how much the figure for the arts, libraries and museums will be reduced by their contribution to the National Heritage Fund—this is in the White Paper—since this is a new departure as the Land Fund came from the Treasury and not off the arts budget. Perhaps the Minister will write to me on those two points.
There is a case for making public expenditure efficient but there is no case for this vicious and retrograde reduction
966
in vital services. Underlying it all I feel there is a fundamental dislike of public expenditure except in those areas where even the most conservative of Conservative Governments cannot do a U-turn. The Government's expenditure plans cannot, I am afraid, be seen as a short-term economic expedient but, rather, as I fear, a deep and dangerous assault on our social and national values.
10.19 p.m.
The MINISTER of STATE, DEPARTMENT of EMPLOYMENT (The Earl of Gowrie): My Lords, in order to save public expenditure, would your Lordships please fasten your seat belts because I am going to go rather fast as I am sure you are all anxious to get the lights turned off and go home. I certainly agree with the noble Baroness, Lady Birk, that the most distinctive feature of our debate has been the quality of the maiden speeches. It is the convention here to be very effusive about maiden speeches, but I have never heard four better ones in a batch; it was remarkable.
We welcome of course the arrival in this House of the noble Lord, Lord Lever of Manchester, not least because since his appearance we tend to win the bridge game. I remember that when the noble Lord was a mere Privy Councillor he wandered into this House and was not aware that it was on the steps of the Throne that he was supposed to sit and he started meandering in towards this part of the Chamber. Your Lordships, ever vigilant for any breaches of procedure, shouted "Order!" at him, but I shouted, "Not yet". I am glad I was in the right on that occasion.
The noble Lord, Lord Harris of High Cross, gave us a pure breath of air in his analysis. Certainly some of the countervailing emphases in economics have changed slightly in recent years, perhaps out of ideology, perhaps because they have been forced upon Governments in this country. But it is rather pleasant to us to experience in the noble Lord, Lord Harris, the clear ear of someone who thinks that people do want extra wages, and that if they get extra wages, they may indeed be prepared to pay for some of their services directly.

967
In the speech of the noble Lord, Lord Stewart of Fulham, we heard his exceptional and famous clarity, and we hope that he will address us very often. He perhaps strayed a little into the area of controversy for a maiden speech, but we acquit him of that because I think it was the noble Lord, Lord Lever, who revised the standing rule and said that the violent expression of antipathetic views, or something like that, is not allowed in a maiden speech, but a certain amount of controversy is. In the voice of the noble Lord, Lord Irving of Dartford, we heard the Labour Party—if I may put it this way—at its best: rational, compassionate, but also spending some attention to the costing of whatever rationality or compassion it requires from the economy.
As I have said, I shall have to deal with the individual questions as fast as I can, but not so fast that I do not pay tribute to my noble friend Lord Thorneycroft, not only for his contribution in giving me the rather nervous and doubtful honour of addressing your Lordships at 10.20 in the evening but also of course for the fact that his is really a remarkable public career. The steps taken by my noble friend in 1958 have now made him a very considerable intellectual hero in all sections of the Conservative Party. This is really remarkable, and we are glad to pay our tribute to him.
The noble Lord, Lord Peart—and for brevity's sake may I include in these remarks some of the issues put to me by the noble Lord, Lord Castle—spoke about regional aid being cut, and about what the position is. The position is, of course, that this Government are maintaining the very massive intervention in all sectors of the economy on a regional basis that has been relative consensus between the parties since the war. Now whether we are right to do so only the development over the next few years will tell. Nevertheless our analysis is that the participation of Government in what my noble friend Lord Soames called the vasty deeps of the economy now being over 50 per cent. means that a massive or unthinking withdrawal is simply not to be contemplated.
Where there is a difference is in the emphasis on the regions. The last Government's regional aid was dispersed
968
over 43 per cent. of the population. Aberdeen, which I had the honour to visit last week, and which must be one of the most prosperous places in the whole of Europe, let alone in the world, was covered by some of the last Government's regional development programmes. So we are trying to concentrate on the areas of real unemployment and need, and we are doing this by population.
What else we can do—and this covers a number of points that have been raised in the debate—depends of course on the reversal of our industrial decline, which in our estimation requires stabilisation of public sector expenditure until we can reverse the decline of wealth-creating sectors which we inherited, and which in previous times no doubt we bear our own responsibility for creating. I think that the real difference between ourselves and the other side of the House is not on the issues of compassion or public expenditure, but simply on how you increase the wealth in order to increase the tax base, in order to maintain and expand these services. I consider that the wisest words that I heard on this came from my noble friend Lord Soames when he said that we are entitled to ask the Opposition to cost their criticisms every penny of the way. We expect the criticisms, but we expect them to be costed.
My Lords, the noble Lord, Lord Peart, the noble Lord, Lord Castle, and others put to me questions about cuts in education. We are trying to save £280 million over 1978–79 and 1980–81. We have found that we can save £250 million of these £280 million, the overwhelming majority, through school meals, school milk and transport. I have no doubt that noble Lords opposite cherish very dearly school meals and free transport and milk, and I do not cast any doubts on their motives for doing so. Nevertheless, it seems to me that we are at least right to ask ourselves whether it is the major function of the great education service to be involved in catering and transport to that degree. I should have thought that that was, or should be, relatively uncontroversial. We have decided that the emphasis of expenditure should be on what education is fundamentally designed to do.
As to the question of spending in the National Health Service I think I can do

969
no more than repeat the words of my right honourable friend the Secretary of State for Social Services. He said:
" Spending in the NHS in the coming year, as I have repeatedly promised, will remain at the previously planned level."
Here again is a stabilisation rather than a cuts programme. He went on:
" Though there has been a tight squeeze this year because of cash limits and the economic situation, the planned volume of spending for next year is in line with last year's White Paper, that is a 3 per cent. increase over the latest estimate for this year."
Lord PEART: My Lords, I am sorry to interrupt so late, but, very quickly, on school transport, it is essential in the rural areas. How are the children to get to school? They will probably have to go about six miles by bus. This is the pattern in the rural areas.
The Earl of GOWRIE: My Lords, there is no doubt that it is essential. The question is, Who pays for it? That is what is being discussed. No one is arguing that it is not essential. We are saying that we think that the public can make a greater contribution in that area in order to preserve the services elsewhere. As part of the reduction the Government are seeking in local spending generally, it is unavoidable, of course, that there has to be some curtailment of expenditure in the personal social services. Yet, despite this, as I said in an intervention when the noble Lord, Lord Brooks, was speaking, social security expenditure will in fact rise by about 1 per cent., £230 million, in the next financial year; and that point was covered by my noble friend Lord Soames.
My Lords, remarks were made about prescription charges. I certainly would regret the increase of any charges to the public. Ideally, one would like not to preside over charges of any kind whatsoever, but I would point out that, in real terms, prescription charges are only about 2 or 3 per cent. up on their level in 1971; and, again, our analysis is that people are perfectly able and willing to bear them.
Lord MURRAY of GRAVESEND: But, my Lords, why did not the Government say this during the election campaign? There was an absolute denial by Mrs. Thatcher that she would increase prescription charges. Now we find they
970
are being increased twice within 12 months of the election of a Conservative Government. That is what is so disreputable about the whole thing.
The Earl of GOWRIE: My Lords, I must say I cast very grave doubts on whether my right honourable friend made any such forward commitment in the context which the noble Lord has mentioned. The other thing I would point out to the noble Lord is that I am here to speak for the Government. I am not talking about what was said in a totally different context in an election campaign. If my right honourable friend made a remark which the noble Lord contests or which he thinks was unfair or out of court, I suggest he writes to her. He will get a very rapid reply.
The noble Lord, Lord Castle, I think raised the prescription charge issue, school meals and transport, with which I have tried to deal. As to the question of merging overseas development into the Foreign Office, I think it is a little cynical to be so critical of it or to assume that aid would fall consistently. As my noble friend Lord Soames said in his remarks, the provision of aid that we can make to other countries obviously has an influence on getting down our rate of inflation and on our being able to expand our services, including that one. I do not think that that kind of amalgamation is necessarily as gloomy as the noble Lord allowed.
The noble Lord, Lord Mackie of Benshie, and my noble friend Lord Boyd-Carpenter, as well as the noble Lord, Lord Roberthall, really gave the message that I would like to underline on the trade unions issues. I do not think it was fair to say that there were attacks from this side of the House on trades union affairs. What we were trying to point out to the union movement is that whatever has gone wrong, wherever the fault lies, whether with the Government, with the management or with the unions, the brutal fact is that workers in this country, who are more protected in law and have more powerful bodies to protect and look after their interests than in any other country in the Western industrial world, are, in fact, worse off And this share of wealth (if you like) is decreasing rather than increasing. That is something that we feel may have

971
something to do with the balance of power between management and the unions. I must say that all the information and research that we have done and all the information that we have suggests that this view is shared by an overwhelming majority of trades union members themselves, including many of those who do not support us politically.
I agree with the points made by the noble Lord, Lord Stewart of Fulham, in his excellent maiden speech, about mobility. It is a great worry; and we in the Department of Employment are looking for ways of improving it. But we do not think, with great respect, that the housing policies of the outgoing Administration were burning incentives to mobility. The noble Lord said that he thought there was a provocative element—and I recognise that he tried to be uncontroversial—about the upper rates of tax; although I still think that 60 per cent. is pretty high, I would say to him that the standard rate went down as well.
On the curtailment of the National Enterprise Board, again we have no doctrinaire objection to Governments funding programmes in the public sector or in industry. As my noble friend said, we are involved in over 50 per cent. of the economy. It is a question of choosing the most efficient location and of trying to find what we can afford. The noble Lord, Lord Harris of High Cross, I have already mentioned. His message was that we should not always confuse Governments with the people they govern. Often, there are conflicts of interest between them.
The noble Lord, Lord Kaldor, gave a fascinating speech. He said privately to me—and I hope he will forgive me for mentioning this—that perhaps he should have sent it to me a little earlier so that we could see what exactly he was asking us to do. If I got his points aright, he said he was critical of the fact that the White Paper says public expenditure growth is the cause of inflation. It also shows that the public expenditure planning fell by 2½ per cent. between 1974–75 and 1978–79. The White Paper says that high taxation and high Government borrowing fuelled inflation. I acknowledge that. I would have thought it a reasonably unexceptional statement. I would only
972
add to Lord Kaldor's figures that the inflation was also lower last year than in 1974–75. It was half the level of 1974 and one-third of that of 1975.
One of the reasons we believe that it was lower is because the last Administration courageously undertook not merely a stabilising exercise in public expenditure but the largest cut in one year in public expenditure—one of £4,000 million—that has happened since the war. We think they were on the right lines then and, in fairness to us, so do many of their outgoing Treasury Ministers. There has been evidence to this effect from Mr. Healey, from the noble Lord, Lord Lever, and from Mr. Joel Barnett. Also, we might put Lord Kaldor's question upside down. Does he think that greatly increased public expenditure and increased taxation would he a recipe for the kind of revival that we all want?
Lord KALDOR: My Lords, I am grateful to the noble Earl for giving way. He did not mention that the last Government brought down the rate of inflation from 25 per cent. to 7 per cent. very largely as a result of incomes policy and nothing to do with cuts of Government expenditure, some of which happened as a result of the initiative of the International Monetary Fund, as he knows.
The Earl of GOWRIE: Perhaps I could intervene and deal with that, my Lords. I know that that is the noble Lord's view; but it is not universally shared by the outgoing Administration. It has been of very great interest to me that the outgoing Administration—the Opposition now—is moving towards becoming a party which wants to give its experience and weight to incomes policies; and, if I may say so with every deference and humility, I think that is a wise and right move for the Labour Party to take. I have always argued that incomes policies are only workable if there is a massive degree of consent for them. It is also fair to say that this consent towards incomes policies does not exist in the present economy. It is not, as my noble friend said, on offer to this Government, and that might be because this Government is a Conservative Government. In fact, it was not on offer to the last Government, either.
I suggest—again with all humility—that the expenditure programmes and

973
monetary controls which the last Government introduced under the wing of the IMF, if you like, my Lords, or to their courageous benefit, if you prefer to put it that way, did the trick much more effectively. The difficulty about incomes policies is in a sense that they depend on a permanent political coalition on pay issues. Until that is achieved, I do not think they have a chance. To quote the old First World War joke: "If you know of a better hole, go to it". But, at the moment, we are trying to maintain continuity with the previous Government's more effective efforts to get down the rate of inflation.
The noble Lord, Lord Irving of Dartford, talked about road improvements in Kent. As one who had the privilege of living in Kent for some years, I share that view. He said that was a need to hold back expenditure, and money supply is important for any Government. But he then moved on to the same incomes policy point. I repeat that this would have more conviction if noble Lords opposite and the Opposition party in another place would tell us how they are going to obtain consent in this economy for a permanent incomes policy.
My noble friend Lord Nugent of Guildford made the point that the cuts which are being contemplated as a result of our stabilising public expenditure, and having to increase it in our judgment in certain key areas, such as defence and law and order, are not even 50 per cent. of the 1976 cuts of the Labour Government. I am not criticising them for making those cuts; I am saying that the association of savage cuts with this Government may or may not prove to be an effective piece of political propaganda; but I hope that noble Lords opposite are wise enough not to start believing it as anything other than propaganda.
The noble Lord, Lord Jacques, mentioned the incomes policy point, and I think that I have dealt with that. What I would say about social services—in which he has a long and distinguished interest—is that the provision of social services next year depends to a very large degree on what happens in the wage round this year. If I may say this with respect to the noble Baroness, Lady Birk, she did not, when talking about where we
974
were focusing our stabilising or reductions of expenditure, mention the wage factor in this equation. If people, let us say, in local government wish to take 70 per cent. or more of the rate support grant monies given by any Government—given by the Government of which she was a distinguished member, and a member in local government areas—in terms of wages, that leaves, obviously, much less for certain kinds of services. No one has worked out how one can distribute money in terms of wages and services simultaneously.
I would warn noble Lords, on my own side as well as opposite, that if local government expenditure continues to be absorbed by wages at the rate which has applied recently, because it is quite clear that there is not public or political tolerance for great rises in local taxation, the only way in which these wages can be met is by the reduction of services.
The noble Lord, Lord Murray of Gravesend, made a good roustabout political speech, much of which I enjoyed, and especially the bit where he said he was not fighting the last election over again. There will be many occasions for me, as a Minister concerned with employment, to return to him on the question of union legislation and our union proposals. He must not consider that the Daily Mail is the voice of the Conservative Party. There are many different emphases in the Conservative Party and, in fact, if we are swapping stories about journalism, one of the things that surprised and pleased me was that the most complimentary write-up of the Prime Minister's closing speech at the Tory Party Conference came in fact from the Guardian and was written by Mr. Peter Jenkins.
The noble Lords, Lord Spens and Lord Castle, mentioned micro-electronics. That, I think, is too vast a subject for me to go into now, but I would say I am personally very involved in this in our department. I hope we shall not take the fact that the noble Lord, Lord Spens, initiated an interesting debate earlier in the Government's tenure of office as meaning that we shall not hear some more. My department is bringing out a major study which was initiated by the last Government and, seeing that it is published, I can tell you that it is not nearly so gloomy about employment prospects as

975
some of the remarks we have heard here this afternoon.
The noble Lord, Lord Spells, mentioned taxation issues in regard to small businesses. My noble friend Lord Selsdon talked about corporation tax issues. I would just say to the noble Lord, Lord Selsdon, that of course inflation is an enormous form of tax on business; and if one can get down the rate of inflation, that is surely the way one can ease taxation on business. One must, as it were, mentally—if we still have not an economy developed enough to do this actually—index companies' profits, if they are to have any real meaning.
I am grateful to my noble friend Lord De La Warr for bringing us a message from the CBI Conference in Birmingham. It did not escape him, nor will it escape the rest of the House, that the CBI want us to go a great deal further on the closed shop than we are at present proposing. We will, of course, listen to what they have to say, but our instinct is that we wish to proceed at the same rate as we are suggesting in our Manifesto. We would not outlaw the closed shop, which many industrialists accept as being a way of continuing good industrial relations in this country, but we want to protect people who suffer as a result of its abuse. In that, we seem to be very near to the trade unions' own suggestions to the outgoing Government, though I acknowledge they would not like to see it enshrined in legislation. We think that is essential.
The noble Lord, Lord Underhill, was critical of management in respect of the loss of the motor-cycle industry. I think management was reasonably good in domestic terms, but what has gone wrong since the war is that the domestic market, as my noble friend Lord Soames pointed out, has not been enough to maintain the very costly high technology investment that modern industries need. In a sense, it is certainly management's and not the workers' fault that world markets in the motor-cycle industry were not picked up. I would agree with him there. He talked about failure to invest in manufacturing industry. I would point out to him the remarks made by the noble Lord, Lord Lever—I apologise for continuing to praise him in this way—namely, that there s no difficulty in getting money for invest-
976
ment in this economy; the difficulty is to find profitable ventures for the money to grow in.
Coming to the remarks of the noble Lord, Lord Vernon, he said the philosophy of our Manifesto was broadly expected and accepted by the electorate, and I certainly do not disagree with that. He also pointed out that Mr. Healey and outgoing Ministers would have had to make cuts in their expenditure as well; and I endorse that also.
The noble Viscount, Lord Simon, echoed the question put to me the other day by the noble Baroness, Lady Seear—a Liberal Party view. It is certainly the case that we must take measures in order to see that local authorities who try to retract their spending are not penalised against local authorities who do not. My right honourable friend the Secretary of State for the Environment will be making an announcement to that effect quite shortly.
The noble Lord, Lord Brooks, asked me how the Government would ensure that the vulnerable do not suffer, because the Government cannot impose their own priorities on local government. He made the case forcefully, but slightly weakened it, if I may say so, by saying that he did not want the Government, or any Government, to tell local authorities exactly what they should do. But as the White Paper recognises, individual local authorities—as I am sure he would agree—must have freedom to decide how best they should achieve savings in the light of local needs and conditions, and I would add to that local lobbying and local pressures.
I think the task which we have set local government must be kept in some perspective. The authorities in England and Wales have been asked to reduce their current expenditure by 2½ per cent. over the two-year period from now to 1981. Two and a half per cent. is what we are asking to come off there. But the key, as I said earlier, is wages. If local government cannot resist wages, then they may have to cut services. I think, therefore, that it has been a very useful debate. The difficulty to us of the contributions from the other side is not a wide philosophical gulf, but that we feel that those points should really have been addressed to outgoing Ministers, who have suffered some of the same difficulties and

977
problems as we do; and we want them to cost their criticisms as they make them.
To deal, finally and rapidly, with the points made to me by the noble Baroness, Lady Birk, I will of course write to her about the arts issue. As I understand it—and I say this provisionally—the arts have come off quite well exactly because of the presence of the Heritage Fund. But I think that even she would agree that in a general atmosphere of expenditure stabilisation the arts could not expect to be exempt altogether.
She put to me some points which particularly affect my department. Again, it is dull at this stage of the evening to swap figures, but the youth opportunities programme, of which I am in charge, and which has an excellent record for putting young people who are difficult to employ, and who are not getting employment, into real employment has, in fact, been expanded again and not cut. I regret, too, that the selective temporary employment programme, STEP, has had to be focused on the areas of greatest need. But the noble Baroness's Government, which set up STEP, designed it to deal with the long-term unemployed. Many of the STEP schemes that are going—and we regret this—are in areas with very small pockets indeed of longterm unemployed, and we are concentrating them in Merseyside and other places where long-term unemployed can be found.
We are trying to get back, if you like, to reality. Perhaps it is our fault—I do not know. Nevertheless, there seems to be a gap between the two sides of the House in this debate as to what is ideology and what is reality. I personally am not enormously interested in ideology. I rather like spending other people's money; it is one of the most enjoyable functions of a Minister's life. But I recognise that that money has to be earned. I also recognise that the only future for the kind of great public services which we admire in this country is that the wealth and tax basis, as my noble friend said, should increase; and until we can get it to increase we have no chances at all in this direction.
10.49 p.m.
Lord THORNEYCROFT: My Lords, it is some seven hours since I moved the
978
Motion which has been the ostensible basis of the debate, and I think I have listened to almost all of the speeches in the debate. If it had done nothing else than provide an opportunity for the noble Lord, Lord Lever of Manchester, to say in public what we always suspected he said to his colleagues in private, it would still, I think, have been well worth while. However, it did much more than that. I feel it has been a valuable debate and that the Motion has perhaps served its purpose. Therefore I ask for leave to withdraw it.
Motion for Papers, by leave, withdrawn.

  IMMIGRATION: MPs' CORRESPONDENCE WITH HOME OFFICE
  IMMIGRATION: MPs' CORRESPONDENCE WITH HOME OFFICE
  SCIENCE AND TECHNOLOGY FOR DEVELOPMENT: CONFERENCE CONCLUSIONS
  SCIENCE AND TECHNOLOGY FOR DEVELOPMENT: CONFERENCE CONCLUSIONS