Sitting of 11 December 1980

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

  GREATER LONDON COUNCIL (GENERAL POWERS) (NO. 2) BILL (By Order)
  Order for consideration, as amended, read.
  To be considered upon Thursday 18 December.

  BRITISH RAILWAYS BILL (By Order)
  Order for consideration, as amended, read.
  To be considered upon Tuesday 16 December.

  GREATER MANCHESTER BILL [Lords] (By Order)
  Order for Second Reading read.
  To be read a Second time upon Thursday 18 December.

Oral Answers to Questions
  National Finance

    Coinage
    Mr. Greville Jannerasked the Chancellor of the Exchequer whether he will now introduce a £1 coin.
    The Minister of State, Treasury (Mr. Peter Rees): The possibility of introducing a £1 coin has been considered, but no decision has been reached.
    Mr. Janner: As the value of the pound has dropped by nearly 75 per cent. since the 50p coin was introduced, can the Minister at least assure the House that the Government are considering the various possibilities for £1 coins and the size and shape that they will have when they are introduced?
    Mr. Rees: As I indicated, the Government are certainly considering the possibility. They will consider closely the size, shape and, indeed, the weight, which is an important consideration for users.
    Mr. Waller: Will my hon. and learned Friend consider the advantages of bringing in a new tier of currency involving 20p, 50p and £1 coins? Does he agree that that would get rid of the present unpopular 50p piece and introduce a new 20p piece, which would be for the convenience of many people?
    Mr. Rees: I am not sure how unpopular the 50p piece is. The need for an intermediate coin was recognised by the Decimal Currency Board. We shall certainly bear it in mind.

    Interest Rates
    Mr. Sheermanasked the Chancellor of the Exchequer if, having particular regard to the position of industry in West Yorkshire, he will immediately seek further to reduce interest rates.
    The Chief Secretary to the Treasury (Mr. John Biffen): I am fully aware of the problems which high interest rates have caused for industry in West Yorkshire and elsewhere. The minimum lending rate was cut by two points on 24 November. Further changes will take place as and when economic circumstances indicate.
    Mr. Sheerman: Is the Chief Secretary aware that industrialists in West Yorkshire and elsewhere are in such grave difficulties that the 2 per cent. cut is almost an insult to their intelligence? Is he aware that they have for a long time struggled against the strength of the pound in the exporting centre of Britain and that they cannot manage for much longer unless they have help from the Government?
    Mr. Biffen: I do not believe that the 2 per cent. cut is an insult to the intelligence of business men in West Yorkshire or elsewhere. Any future reductions in the minimum lending rate will be widely welcomed in the business community.
    Mr. Richard Wainwright: Does the Chief Secretary realise that in view of the Government's known doctrinal approach business men do not know whether the next move in MLR will be up or down? In order to give them a basis for their business planning, will he issue a revised version of the Government's financial strategy?
    Mr. Biffen: No. I think that the business men of West Yorkshire are a damned sight more shrewd than the hon. Gentleman suggests.
    Mr. Speaker: Order. I do not like that sort of language here.

    Manufacturing Industry
    Mr. Campbell-Savoursasked the Chancellor of the Exchequer which measures in his statement of 24 November will most benefit manufacturing industry.
    The Chancellor of the Exchequer (Sir Geoffrey Howe): The two percentage point reduction in the minimum lending rate.
    Mr. Campbell-Savours: Within the boundaries of a monetarism which is characterised by soaring Government borrowing and a money supply figure which is out of relationship with what the Government want, does the Chancellor accept the need to restore output and demand in the economy? Is not that the root of the problem which has put nearly 1 million people out of work in the last 18 months.?
    Sir Geoffrey Howe: The hon. Gentleman must understand, as more people are coming to understand, chat the way to restore the health of our economy is not by the Government seeking to reflate demand and generate a false surge of output in that way. The reduction of inflation, to which the Government are committed, and the other changes in the fiscal system are the right methods of securing a healthy and sustainable growth in output.
    Mr. Eggar: Are the figures in the medium-term financial strategy achievable in the light of my right hon.

    1055
    and learned Friend's announcement on 24 November? If not, when may we expect a re-basing of the sterling M3 and PSBR monetary targets?
    Sir Geoffrey Howe: My hon. Friend will recall that at the time of my statement on 24 November I said that I should be considering and making announcements about the monetary target at the time of the Budget, when I shall also make announcements about the prospective size of the borrowing requirement next year.
    Mr. Woolmer: Why did the Chancellor on 24 November seek to give the misleading impression that he was increasing Government tax revenues from North Sea oil and gas by £1 billion on top of the levels previously forecast, saying that there was
    "scope for a further increase in oil taxation"? — [Official Report, 24 November 1980; Vol. 994, c. 317.]
    Why did not the right hon. and learned Gentleman tell the House that his own private forecast was that those revenues would be £1 billion short next year unless he took action? Is not the Chancellor giving the distinct impression that, on top of the employers' national insurance contributions chaos, either his budgetary policies are in chaos or he does not know what is going on?
    Sir Geoffrey Howe: The hon. Gentleman gives me an opportunity to correct at once the entirely false report on the front page of today's issue of The Times to the effect that the position about the yield from North Sea oil was not fully presented to the House on 24 November. He will recall that I said in my statement that the changes proposed in the oil tax regime would
    "together yield around £1 billion in 1981–82, mostly from the new tax."—[Official Report, 24 November 1980; Vol. 994, c. 317.]
    The hon. Gentleman will also recollect that the forecast published on the same day, and republished in the Economic Progress Report Supplement for December, made perfectly clear that
    "After taking account of the proposed tax changes announced on 24 November, revenues from North Sea oil and gas in 1981–82 are expected to be in the range of £4½-5 billion, a little higher than forecast at the time of the Budget."
    It was made absolutely clear that the new tax revenues were being taken into account in the figures set out plainly in the forecast.
    Mr. Budgen: In view of the money supply figures for the past two months, will my right hon. and learned Friend explain the technical, as opposed to the political, arguments for reducing minimum lending rate by 2 per cent. without there being compensating and contemporaneous cuts in public expenditure and increases in taxation?
    Sir Geoffrey Howe: I explained to the House as well as to my hon. Friend that the well-justified reasons for the welcome reduction in minimum lending rate were, first, the prospect of declining monetary growth, particularly when the public sector moves into surplus in the new year, and, secondly, the fact that the inflation rate has been coming down and is continuing to come down very sharply, so that the real rate of interest has been rising at the same time. In those circumstances, for monetary and other reasons, I have no doubt about the justification for the reduction in MLR.
    Mr. Shore: Following the Chancellor's initial reply that he thought that the benefit of his measures was embodied in the reduction of MLR by 2 per cent., does he
    1056
    really think that that is a satisfactory move, taking account of the plight of British manufacturing industry and the fact that in his own forecasts introduced at the same time as his mini-budget he expected a further fall in manufacturing output next year of another 5 per cent.? Does not that suggest to the Chancellor something far more dramatic—that the basic problem is indeed a lack of effective demand in the economy? Will he not be concerned with the kind of points made by his hon. Friend the Member for Wolverhampton, South-West (Mr. Budgen) about whether he is achieving or under-achieving his so-called money supply targets? In our view, these are matters which are totally irrelevant to the successful management of the economy.
    Sir Geoffrey Howe: May I take the opportunity of welcoming the right hon. Gentleman to his new Shadow portfolio and wish him a long tenure of that role?
    It is plain from what the right hon. Gentleman said that he intends to signal a change of management, since he has taken the first opportunity to discard the respect for monetary policy which was at least the one hallmark of his predecessor. That is a signal of economic and financial irresponsibility.
    The answer to the point specifically raised by the right hon. Gentleman cannot be repeated too often. We are not likely to succeed in restoring the health of our economy if we continue to deceive ourselves that we can do so by expanding demand within the United Kingdom. The crucial cause of declining prosperity in this country has been the continuing loss of competitiveness by British industry, attributing itself far more to high and rising wage costs than to any other cause. The right hon. Gentleman must cease deceiving himself in looking for an increase in demand as the right economic prescription.
    Mr. Shore: The Chancellor is absolutely right in what he attributes to me as my attitude towards monetary policy. But what the House would like to know in the light of the Chief Secretary's speech to Conservative Back Benchers yesterday is whether the Government themselves have at last seen sense and are prepared to abandon their obsession with money supply targets.
    Sir Geoffrey Howe: The Government are united in their determination not to follow the right hon. Gentleman down the path of economic irresponsibility.

    Value Added Tax
    Mr. Dubsasked the Chancellor of the Exchequer what was the average recovery in under-declared value added tax achieved in the most recent year by Customs and Excise control visits to large business organisations.
    Mr. Peter Rees: Precise information is not readily obtainable. In broad terms, however, Customs and Excise identified, on average, about £1,000 additional VAT per control visit to the larger businesses in 1979, compared with an overall average of about £200.
    Mr. Dubs: Does not that figure show the incompetence of the Government's housekeeping? Does not the hon. and learned Gentleman agree that if Customs and Excise visits to large organisations can yield an income to the Revenue of £1,000 per visit it is the height of folly to cut staff, because the consequence will be a net loss of money?
    Mr. Rees: No doubt the hon. Gentleman is in sympathy with the aspirations of the Society of Civil and

    1057
    Public Servants Although it is pressing for 1,000 extra VAT control officers, it recognises that, despite the moral justification for seeking to eliminate tax evasion completely, there must be a threshold on the level of control beyond which extra staff would be non-productive and uneconomic.

    Inflation
    Mr. Parryasked the Chancellor of the Exchequer when he expects the inflation rate to return to single figures.
    Mr. Biffen: As I indicated in reply to a similar question from the hon. Gentleman on 6 November, inflation is falling, but I do not wish to anticipate when the rate of inflation will, reach single figures.
    Mr. Parry: If the Chancellor does not know when he will reduce inflation to the level that he inherited from the Labour Government more than 20 months ago, can the right hon. Gentleman at least explain how he expects employees of the National Health Service and local authorities to accept an increase of 6 per cent. when inflation is more than two and a half times that level and probably will increase next year?
    Mr. Biffen: The cash limits for local authorities, which contain a pay factor of 6 per cent., are deemed to be consistent with a prudent public expenditure policy. The hon. Gentleman may like to reflect that there was a time when pay increases of that sort could be secured against a background of much lower inflation.
    Mr. Archie Hamilton: Does not my right hon. Friend accept that one of the main factors leading to the lower rate of inflation is the strength of the pound, which has led to cheaper raw materials and other imports?
    Mr. Biffen: That is undoubtedly so. In particular, the strength of the pound can be reflected in the wholesale price index, which suggest that the trend in retail prices can be continued in an advantageous direction for some time to come.
    Mr. Jay: Cannot the Chancellor justifiably claim one unique record of having inflated the money supply, the borrowing requirement and unemployment all at the same time?
    Mr. Biffen: I have no doubt that those three indicators will be in such a relationship that we shall fight the next election in good heart.
    Mr. Latham: While the decline in inflation is obviously very welcome, will my right hon. Friend confirm that one of the main factors; still affecting inflation is price increases imposed by nationalised industries, and that we expect those industries to absorb increases as much as they can and not simply pass them on?
    Mr. Biffen: I can confirm both parts of my hon. Friend's question.

    European Community Funding
    Sir Anthony Meyerasked the Chancellor of the Exchequer whether United Kingdom applications for European Economic Community funding now correspond with the sums available under the revised European Economic Community budget arrangements negotiated by the Prime Minister.
    Sir Geoffrey Howe: Yes, Sir. Expenditure on the programmes for which the Government have invited Community support is more than sufficient to cover the refunds to which the United Kingdom is estimated to be entitled under the 30 May agreement.
    Sir Anthony Meyer: Is my right hon. and learned Friend aware that that reply will satisfactorily answer allegations that the Government are prejudicing their chances of getting a full refund by dogmatic opposition to increases in the total EEC budget?
    Sir Geoffrey Howe: I am glad to confirm my hon. Friend's point.
    Mr. Spearing: Why have not the Government published the applications of the programmes to which the Chancellor has referred? When will the Government announce what the Commission or Council has decided to do with our money?
    Sir Geoffrey Howe: As soon as the decisions have been taken, they will be announced. I can assure the hon. Gentleman that the agreement of 30 May will be fulfilled.

    National Insurance
    Mr. Cryerasked the Chancellor of the Exchequer what representations he has received regarding the recent national insurance surcharges which be announced on Monday 24 November.
    Sir Geoffrey Howe: I have received representations from three bodies and a larger number from individuals and businesses about the effects on employers of the changes in national insurance contributions.
    Mr. Cryer: Is it not true that the representations have been concerned, in common with representations from Labour Benches, with the enormous loss of jobs caused by the insurance charges? Does not the speech of the Chief Secretary, in which he said that the Government should be more flexible about public borrowing and money targets to combat the grave recession, mean that the Chief Secretary at least recognises that the Government's monetary and borrowing targets are a combination of disastrous catastrophe for the manufacturing sector?
    Sir Geoffrey Howe: If the hon. Gentleman believes that, he will believe anything. My right hon. Friend is devoted, as are the Government, to the reduction of the undue burden of public sector borrowing and the achievement of monetary control. The increases in national insurance surcharges as part of the national insurance contribution changes are a necessary part of putting the public sector in balance in the next financial year to ensure the achievement of conditions that will work to the benefit of British industry.
    Mr. Hal Miller: Does my right hon. and learned Friend understand the resentment in industry at the fact that the public sector borrowing requirement is being brought under control at the expense of private industry by increasing levies on it? What consideration was given to the capacity of industry to pay additional national insurance charges?
    Sir Geoffrey Howe: Very close attention was given to that. It is for that reason that the measures that I have announced to restore balance to the nation's accounts next year are directed first, at the revenue from the North Sea

    1059
    and, secondly, at raising additional revenue from the employees' side of the national insurance account. The changes for employers are the consequence of inflation and inflation alone. However, they represent a reduction in the real burden. The increase on that side is about 8·3 per cent. while the increase on the employees' side is about 27 per cent. I am sure that my hon. Friend will remember that these changes have enabled me to announce substantial reductions in the burden of the stock relief arrangements.
    Mr. Shore: I understand that the Chancellor is raising the national insurance surcharge by £1,000 million. That is roughly the global sum. What is his prime objective in raising this additional and unwelcome sum? Does he think that it will help to diminish or to increase unemployment next year?
    Sir Geoffrey Howe: The right hon. Gentleman would do well to remember that the national insurance surcharge was the invention of the Government of whom he was a member. He would do well to remember also that the additional income being raised by the changes that I made on 24 November is coming, as I have emphasised, not only from the surcharge but from national insurance contributions on which the surcharge is imposed. The burden beyond inflation there imposed will be on employees. The reason for making the changes is to ensure that the borrowing requirement is moving towards balance so that there is some prospect of interest rates coming down rather than going up. That is a matter of prime concern to industry.

    Budget Incentives
    Mr. Strawasked the Chancellor of the Exchequer what evidence he has that the opportunities and incentives provided to business and to individuals in his 12 June 1979 Budget are working as intended.
    Sir Geoffrey Howe: The large income tax cuts in my first Budget, together with later improvements in the taxation of enterprise, have greatly helped business and industry.
    Mr. Straw: Is the right hon. and learned Gentleman aware that he is the only person in the House who believes that answer?
    Hon. Members: No.
    Mr. Cryer: Who believes it? Hands up those who believe it.
    Mr. Marlow
    Mr. Straw: Will the right hon. and learned Gentleman publish in the Official Report details of the evidence that suggests that these incentives are helping business? Is the absence of such real evidence the reason why the Chief Secretary came out with his extraordinary about-turn before the Conservative finance committee on Monday? For the third time, will the right hon. and learned Gentleman confirm or deny that the Chief Secretary said that the time had come to abandon monetary targets in favour of a flexible policy to help meet the grave economic recession? Did the right hon. Gentleman use those words?
    Sir Geoffrey Howe: My right hon. Friend will no doubt answer the question himself if he has the opportunity to do so. [HON. MEMBERS: "Get up".] However, I am
    1060
    happy to repeat his assertion that he did not use those words. The Government, including my right hon. Friend as much as myself, are committed to the maintenance of firm monetary policy by the measures that we have outlined.
    I turn to the proposition underlying the hon. Gentleman's supplementary question. Far from it being the case that nobody in the House believes what I have said, I am happy to cite the support of the right hon. Member for Stepney and Poplar (Mr. Shore), who in a distinguished lecture that he gave about two years ago said:
    "financial incentives … play an important part".
    He went on to pay tribute to the record of the Government of whom he was a member by saying:
    "in the last four years … the whole nation has been enmeshed … far more deeply in the tax net than anyone planned or indeed wished."
    The Government are undoing the net that that Government created.
    Mr. Beaumont-Dark: Is my right hon. and learned Friend aware of the considerable unease of manufacturing industry in the interpretation that the Revenue is placing upon his excellent idea of helping industry with the new stock relief scheme? I can quote a company that may lose £8 million as a result of the new scheme, which is supposed to help manufacturing companies. If companies suffer losses in this way, will my right hon. and learned Friend examine the scheme and consult the Revenue to ensure that the benefit accrues not only to storage and service industries but to the sector that needs most to benefit—namely, manufacturing industry—which, I believe, was his intention?
    Sir Geoffrey Howe: I am happy to confirm to my hon. Friend the Government's concern for manufacturing industry and the need to restore success and profitability in that part of the economy. The stock relief changes that I announced were designed to provide that sort of help. A substantial part of the help that is intended to result from the changes is designed to go to manufacturing industry. My proposals were deliberately put out in consultative form. The Revenue will be prepared to listen to representations from my hon. Friend or anyone else. It is not possible to give an assurance that the changes are bound to have an automatic effect of the same sort in every company. There are different circumstances in different cases.
    Mr. Stoddart: Does the right hon. and learned Gentleman recall that before the 1979 election he and his right hon. Friend the Prime Minister held out as their main incentive the prospect that they would leave more money in people's pockets for them to spend as they wished? Is it not a fact that over these past 18 months people have had less money left in their pockets to spend and that they are having to spend out more of it in higher prices, higher VAT and other increased taxes on products?
    Sir Geoffrey Howe: No. The proportion of tax being raised by the direct tax system is lower now than when we came into office. The change was designed precisely to give people a greater choice as to how they spent their money.

    Inflation
    Mr. Marlowasked the Chancellor of the Exchequer what has been the annualised rate of inflation based on the last four months.
    Mr. Biffen: The increase in the retail price index over the four months to October was 7·2 per cent. on an annualised basis.
    Mr. Marlow: Will my right hon. Friend accept that that is very encouraging news, as it is well below the rate of inflation? Bearing in mind that the right hon. Member for Leeds, East (Mr. Healey), on the basis of three months, talked about a rate of inflation some years ago of 9 per cent., will my right hon. Friend accept that the House is massively impressed by the success of a major plank of the Government's economic policy?
    Mr. Biffen: My hon. Friend is right to be encouraged, but I hope that he will recollect that there were certain reservations about the statistical techniques of the right hon. Member for Leeds, East (Mr. Healey)—although I must say that we are learning to miss him already. Therefore, I hope that we would try to avoid taking three months' figures and annualising them as a means of talking about rates of inflation.
    Mr. Cook: When the Chief Secretary looks at the figures over the past 12 months, will he acknowledge that the public sector component of the RPI has risen at a level of 25 per cent., nearly double the level for the private sector, as a direct consequence of his policy in public expenditure? Will he grasp the fact that it flies in the face of reason to argue that cuts in public expenditure cut inflation when they are achieved by putting rents up by 30 per cent., electricity by 33 per cent. and rail fares by 38 per cent.?
    Mr. Biffen: The point that the hon. Gentleman makes is not unlike that made earlier by my hon. Friend the Member for Melton (Mr. Latham). The reason why there has been such a sharp rise in those component parts of the retail price index is that we inherited nationalised industries whose finances had been plundered in the pre-election period by the previous Government.
    Mr. Dorrell: I welcome the recent fall in the rate of inflation, but can my right hon. Friend tell the House what steps he intends to take to ensure that the revival of demand that the Government expect next year is not preempted by inflation, as has happened so many times in the past?
    Mr. Biffen: The prudent pursuit of fiscal and monetary policies.
    Mr. Meacher: If the Chief Secretary is predicting a major economic U-turn by the Government, do they still believe that there is much connection between the money supply and the rate of inflation? If so, what is his estimate of the rate of inflation in about two years' time, with sterling M3 now escalating at 20 per cent. a year?
    Mr. Biffen: In respect of the first and more tantalising part of the hon. Gentleman's question, despite the unquestioned reputation of the author of the article in The Guardian today I must tell the House that it does not accurately reflect the speech that I gave to a private meeting of the Conservative Party finance committee—and I have the modest advantage of having been there. As
    1062
    far as the second part of the question is concerned, those who like myself, have been deeply committed to the policy of the Government have always been extremely chary of trying to make mechanical relationships between money supply and rates of inflation. We have stated our cautionary position from the very outset.
    Mr. Shore: Is the Chief Secretary aware that the whole House will accept what he says — that the words reported in The Guardian were not the words that he used at that meeting of Back Benchers last night? However, in view of the great interest that there is—properly—bound to be in what he said, will he tell us what he did say about monetary supply targets?
    Mr. Biffen: I believe that what I said was of sufficient moment not to be contained in a mere answer to a question. Since the right hon. Gentleman now sits in the distinguished position that he does, I look forward to many months of economic debate with him, when all the issues will be debated and measured in a proper forum.

    Tax and Price Index
    Mr. Ioan Evansasked the Chancellor of the Exchequer what is the latest estimate of the taxes and prices index.
    Mr. Peter Rees: The value of the tax and price index for October is 137·3, based on a January 1978 figure of 100.
    Mr. Evans: With over 12,000 notified price increases this year alone, is not the gimmick of a tax and price index that the Government put forward backfiring? Will the hon. and learned Gentleman accept that while the annual rate of the RPI has increased by over 50 per cent. since the Conservative Government took office, the annual rate of TPI is at 16·8 per cent.? With national insurance contributions increasing and with possible tax increases in the Budget, would it not be preferable to have a prices and unemployment index rather than a tax and price index, which would truly reflect the economic situation in the country?
    Mr. Rees: I am glad that the hon. Gentleman has become reconciled to the tax and price index. I hope that it has enlarged his perception of the problem. Quite how one could incorporate unemployment into an index I do not know, but we shall certainly consider the point.
    Mr. Adley: Will my hon. and learned Friend merely ask the Opposition whether they are glad or sorry that inflation is falling rapidly?
    Mr. Rees: I am sure that the Opposition will take note of my hon. Friend's question and answer it in their own way in their own time.
    Mr. Foulkes: Who has ministerial responsibility for prices? Is the hon. and learned Gentleman aware that my questions have been passed from the Department of Trade to the Department of Employment and then to the Treasury and from one Minister in the Treasury to another, and even then he could not tell me the increase in the prices of turkey and Christmas pudding?
    Mr. Rees: I condole with the hon. Gentleman. However, the allocation of functions is not a matter for me. It is a matter for my right hon. Friend the Prime Minister.

    National Insurance
    Mr. McQuarrieasked the Chancellor of the Exchequer if he will take steps to give compensatory relief to employers to offset the effects of the increase to be paid in national insurance charges in consequence of his recent financial statement.
    Mr. Biffen: While I appreciate the current difficulties of employers, I believe that the provisions of the Social Security (Contributions) Bill strike a fair balance in respect of their contributions.
    Mr. McQuarrie: I thank my right hon. Friend for that reply, but does he agree that, as the employers' share of the national insurance contribution has grown steadily over the past few years, the additional surcharge imposed on them should be abolished, because they gain nothing whatsoever from it?
    Mr. Biffen: I have noted my hon. Friend's recommendation. The House should know that the national insurance surcharge now yields £3,500 million a year. Doubtless any assessment made will be undertaken by my right hon. and learned Friend the Chancellor when he frames his Budget.
    Mr. Whitehead: Will the Minister tell employers in my constituency and elsewhere in the country in what way the recent measures, which were not in fact announced but which are to take effect, aid the competitiveness of British industry?
    Mr. Biffen: I am sure that the hon. Gentleman will realise that the measures are intended to finance social expenditure. If he denies the end, he can complain about the means.
    Mr. Nicholas Winterton: I fully appreciate the very astute responses of my right hon. Friend. Does he agree that industry at present is suffering from a severe cash flow problem? Was it not very unfortunate of the Government, having reduced the minimum lending rate by 2 per cent., which was very welcome and provided relief for industry, to take back a great deal of that by increasing national insurance contributions from April next year and putting industry almost back to square one? When will we help the manufacturing base of the country to survive?
    Mr. Biffen: I thank my hon. Friend for his kind words about the reduction in MLR, but I have to say to him that I believe that the financing of the welfare benefits that has been decided upon in the current legislation is wholly legitimate. It is in keeping with past practice. I can see no way of departing from it that would not otherwise require additional revenue. Givern that, the alternatives for business could be equally damaging.

    Sterling M3
    Mr. Knoxasked the Chancellor of the Exchequer what is the underlying rate of growth of sterling M3 since the beginning of the present target period.
    Sir Geoffrey Howe: Sterling M3 grew by about 17 per cent. between February and November. After allowing for corset distortions, this is probably equivalent to an underlying annual rate of about 20 per cent.
    Mr. Knox: Will my right hon. and learned Friend confirm that he does not expect a similar percentage
    1064
    inflation rate at some time in 18 to 30 months from now? If so, does that not cast some doubt on the theory of monetarism?
    Sir Geoffrey Howe: One has to have regard to monetary growth over a long period. The prospects are for a slower rate of monetary growth for the remainder of the financial year. Bank lending is showing signs of deceleration. The borrowing requirement, particularly in the new year, will be running at a lower rate, and the new index-linked savings certificates will yield substantial sums to fund the borrowing requirement. Those factors will make changes that will avoid the consequences suggested by my hon. Friend.
    Mr. Richard Wainwright: Is the right hon. and learned Gentleman aware that the figures for the growth of money supply and public borrowing and the share of taxation are so contrary to his published financial strategy as to destroy its credibility? In order to assist business planning, will he replace the discredited strategy with a revised version?
    Sir Geoffrey Howe: The figures underline the importance of pursuing the thrust of that strategy. It is crucial to achieve effective control of the size of the borrowing requirement if interest rates are also to be controlled. I shall welcome the hon. Gentleman's support in pursuing that strategy.
    Mr. Jessel: Is my right hon. and learned Friend aware that most of my constituents comprise one of the most intelligent communities in the country? Most of them think of M3 as the name of a motorway. Is he further aware that they are very pleased by the falling rate of price increases and the fact that there are fewer strikes?
    Sir Geoffrey Howe: I am delighted to join my hon. Friend in paying tribute to the supreme wisdom of his constituents and endorsing their wisdom in that respect. Price inflation is coming down and is likely to continue to fall. We are facing the lowest level of industrial disputes for 30 years, and realism and common sense are spreading widely throughout British industry.
    Mr. Shore: The Chancellor's reply of 20 per cent. is, the House recognises, a matter of obvious embarrassment to him. May I ask him, however, to be neither heartened nor depressed by the movements of the money supply? May I ask him once again to turn his attention away from what is now generally accepted as an exploded obsession to the real economy, to the level of unemployment and to the actual measures of output of the economy?
    Sir Geoffrey Howe: The real economy is no less important than monetary statistics, and in the real economy we see inflation falling, interest rates recently reduced and wage bargaining at a much more sensible level. It is now crucial to achieve the same moderation in pay settlements in the public sector in order to diminish that burden on the trading economy.

    North Sea Oil (Taxation)
    Mr. Douglasasked the Chancellor of the Exchequer if he will make a statement on his proposed changes in taxation on North Sea oil, giving his estimates of the "Government take" from each of the fields affected and the anticipated revenues in the next five years.
    Mr. Peter Rees: Forecasts of Government take from the North Sea depend on a number of factors — including changes in the price of oil, costs and the production programme — which cannot be precisely estimated. Looking one year ahead, I expect total Government revenues in 1981–82 from oil and gas production to be in the range of £4½ billion to £5 billion at 1980–81 prices with about £900 million attributable to the proposals outlined in the statement of my right hon. and learned Friend the Chancellor on 24 November. For reasons of confidentiality, I cannot provide estimates for individual fields.
    Mr. Douglas: Will the hon. and learned Gentleman confirm that the estimates that he has just given show no change from the forecast he made some months ago? Does he agree that his Government are being extremely profligate with this finite resource by using all these revenues to sustain social expenditure, unemployment benefits and so on instead of putting them aside to sustain our manufacturing base?
    Mr. Rees: My right hon. and learned Friend made it clear in the documents published alongside his statement of 24 November that there had been a diminution in our expectation of the take next year apart from the new tax. On the question of profligacy, North Sea oil revenues are not hypothecated to any particular form of activity. We could just as easily pray in aid the additional sums being put into various employment measures and the capital requirements of the nationalised industries.
    Mr. Eggar: What is the net increase in the Government take as a result of the 24 November announcement about a windfall profits tax?
    Mr. Rees: We hope about £900 million.
    Mr. Grimond: In view of the large take from the North Sea, and since British industry now has to buy the most expensive fuel in Europe, will the Government consider taking the tax off oil?
    Mr. Rees: I cannot anticipate my right hon. and learned Friend's Budget.
    Mr. John Home Robertson: Does the Minister of State accept that the whole of the Government's take from North Sea oil revenues in the current year and next year is already being swallowed up by unemployment benefits?
    Mr. Rees: I do not. The figures do not match up in the way suggested by the hon. Gentleman.

    Economic Policy
    Mr. Canavanasked the Chancellor of the Exchequer what steps he is taking to monitor the effects of the economic measures he announced to the House on Monday 24 November.
    Sir Geoffrey Howe: I shall continue to watch the relevant economic indicators closely and to review other evidence about developments in the economy.
    Mr. Canavan: Does the right hon. and learned Gentleman admit that the increased national insurance contributions will cut the living standards of those in work end, with the cuts in public expenditure, will increase the number of people out of work? In view of forecasts that unemployment may reach 3 million some time next year
    1066
    and that the financial cost of unemployment will be bigger than the total public sector borrowing requirement, how much worse are things to get before the Chancellor changes course and invests more money to provide more real jobs?
    Sir Geoffrey Howe: The increase in national insurance contributions is a fair and sensible way to secure revenue to maintain social benefits and social services upon which the nation insists.

    Prime Minister (Engagements)
    Mr. Bob Dunnasked the Prime Minister if she will list her offical engagements for Thursday 11 December.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I presided at a meeting of the Cabinet. In addition to my duties in this House, I have also held further meetings with ministerial colleagues and others. This evening I have been invited to speak at the Welsh CBI dinner in Cardiff.
    Mr. Dunn: Is my right hon. Friend aware that business men in my constituency, while welcoming the reduction in MLR and the announcement of a 6 per cent. cash limit for public sector pay, still regard public expenditure as an enormous millstone round their necks and express complete support for the Government's intention to reduce it further?
    The Prime Minister: I wholly agree with my hon. Friend that we cannot continue putting increasing burdens on the wealth-producing sector of the economy. That would result in fewer wealth-producing firms. We must, therefore, have regard for public expenditure, and I hope that the local authorities will think twice before they make severe increases in local rates.
    Mr. John Morris: Would it not be both better and more honest for the people of Wales if the Prime Minister clarified the position of the steel industry before going to South Wales today? I always welcome meaningful and proper consultation with the trade unions, but will the Prime Minister tell us the basis upon which Mr. MacGregor is having his consultations today before he talks to the steel board? What is the purpose of the steel board today?
    The Prime Minister: Mr. MacGregor is charged with the duty of producing a plan for the future of the British Steel Corporation. He is carrying out the duties of consultation, and he would be under very severe criticism if he did not consult before that plan went to the board for approval. I have not seen the plan. I do not know its content. I shall not see it until it is presented to the Government, and that will not be until after the board has approved it.
    Mr. Farr: Will my right hon. Friend have any chance today to consider whether it is possible for her to make an official statement on her discussions in Dublin with the Irish Prime Minister? The feeling is that whilst no one in the House dreams for a moment that she would agree to anything that would weaken the longstanding and historic link between Great Britain and Northern Ireland, the interpretation of the talks that is coming from Dublin alone means that a somewhat misleading point of view is now being received.
    The Prime Minister: There never have been statements on bilateral talks such as these between the United Kingdom and Ireland. I think it most unwise to set a precedent. That would elevate the meeting far beyond its importance or significance. The agreement was set out in a communiqué. There is nothing behind the communiqué—it is all there.
    Mr. Foot: May I plead once again with the Prime Minister to give her report to the House of Commons on her discussions in Dublin so that hon. Members on all sides will be able to question her? Will she take into account before she replies the full debate that is taking place in the Dail? We ask her to return to the subject next week.
    May I refer to her answer on the steel industry— [HON. MEMBERS: "No."] I know that Conservative Members are not very interested in the steel industry and never have been. In view of the right hon. Lady's remarks a few minutes ago, will she give us an absolute guarantee that there will be a debate in the House before Christmas and before any decision is taken on the plan for steel that Mr. MacGregor may be making public tomorrow? Does she accept that great numbers of jobs are involved and that it is partly direct Government policy that has led to the collapse in the steel industry and the reduction in demand for steel in our economy? Will she give an absolute assurance to the House this afternoon?
    The Prime Minister: On the right hon. Gentleman's point about the talks between the United Kingdom and the Republic of Ireland, the agreed statements are in the communiqué. If the right hon. Gentleman has any particular question to put to me, I hope that he will do so. I am here for a quarter of an hour every Tuesday and Thursday. Although everyone is asking for a statement, precious few hon. Members have put pertinent questions about the agreed communiqué which has already been issued and published.
    Secondly, on the question of steel, the right hon. Gentleman will have to pursue that matter with my right hon. Friend the Chancellor of the Duchy of Lancaster. I doubt whether there would be time for a debate next week. With all due respect, it would be far better to take time thoroughly to consider the report before any of us reach conclusions upon it.
    Mr. Foot: The two matters are important for the people of this country. Does the right hon. Lady realise that it is not satisfactory for her to say that we should leave the steel issue until after Christmas? We demand a debate on that subject in the House next week. Will the Government provide the time? On the Dublin meeting, as the right hon. Lady has put it in those terms, does she agree with the statement made in the Irish Parliament this morning that it was the most important visit to the Republic since the foundation of the State? Does she agree with that statement made by the Taoiseach in the Dail, and, if so, why?
    The Prime Minister: It is the first time that four members of the Cabinet, in pursuit of the bilateral talks that we now have between fellow members of the EEC, have attended such talks in Dublin. It is the first time that they have been held in Dublin. Last time they were held at No. 10 Downing Street between similar Ministers. That does not seem to me to be unusual.
    On the question of steel, I agree that it is extremely important to the future of this country, and to many parts
    1068
    of this country—not only to those who work in steel but to those who work in industries that depend upon it. For that reason, I think that the report requires thorough consideration before we rush in to make comments upon it.
    Mr. Foot: On the question—[Interruption.]
    Mr. Speaker: Order. The sooner we have order, the more likely I shall be to call other hon. Members.
    Mr. Foot: On the question of steel, if the right hon. Lady will not provide a debate, we shall have to force one. That is our answer to her on that issue. On the Dublin meeting, which is a matter of great importance, does the right hon. Lady agree that if four Ministers think that it is important to go to Dublin to take part in the talks, at least one of them should have the courage to come and report to the House?
    The Prime Minister: On the right hon. Gentleman's latter point, four Ministers is the usual number that we take to bilateral talks. It is far more natural than the right hon. Gentleman is willing to concede for this Government to have regular talks with the Government of the Republic of Ireland in the same way as we have regular talks with France, Germany and Italy. We have been trying to establish that regularity and trying to achieve better co-operation and understanding. We have received excellent security co-operation along the border.
    On the question of steel, of course the right hon. Gentleman is free to use his Supply days precisely as he wishes. I can say only that the Government will wish to study the report very carefully indeed. Doubtless my right hon. Friend the Secretary of State will wish to have talks with Mr. MacGregor. We shall wish to discuss the matter in the Cabinet before we rush into a statement about it. It would be reasonable to give a certain amount of time to that study for consultations to take place and to find all the facts before we make important pronouncements upon it.
    Mr. McQuarrie: Has my right hon. Friend's attention been drawn to the action of the Norwegian authorities yesterday in banning 18 trawlers fishing legally in proper waters? If it has, will she hold urgent talks with her right hon. Friend the Minister of Agriculture, Fisheries and Food to get something done about that matter before we have another Icelandic position, which would do nothing towards the completion of the common fisheries policy?
    The Prime Minister: I understand the importance that my hon. Friend attaches to the issue. I shall draw my right hon. Friend's attention to the matter so that he can give urgent attention to it.
    Mr. Barry Jonesasked the Prime Minister what are her official engagements for 11 December.
    The Prime Minister: I refer the hon. Gentleman to the reply which I gave a short time ago.
    Mr. Jones: Will the Prime Minister please reconsider her refusal to tell us anything about the widespread speculation about steel closures? Does she truly understand the awesome scale and the distressing consequences of a major steel closure? Does she really wish to go down in history as the Premier who turned No. 10 into the slaughterhouse of the steel industry and the abattoir of British manufacturing industry?
    The Prime Minister: It would be futile and irresponsible to make statements on a report that I have not seen. I do not intend to do so.
    Mr. Hill: Is my right hon. Friend aware that we are approaching a critical stage in the formation of the British Leyland five-year corporate plan, which is of great importance to the whole country? Can she assure me that she will use hex powers to enable the Leader of the House to allocate a day's debate when the corporate plan is released?
    The Prime Minister: The corporate plan has been presented to the Government. It will shortly be considered. When decisions have been reached, they will be announced to the House. I imagine that my hon. Friend will make representations to the Leader of the House to have a debate on these important matters.
    Mr. David Steel: Does the Prime Minister understand that those of us who wish to applaud the initiative that she took in going to Dublin and in having wide open talks with the Irish Government on new relationships between our two countries — having noted the Irish Premier's statement that it was the most important meeting since the creation of the Republic—are absolutely baffled by her refusal to make a statement to the House and also at her insult to the House in pretending that it was a routine Common Market discussion?
    The Prime Minister: Equally, does the right hon. Gentleman understand that I am baffled by the fact that, after about 10 questions about whether I will make a statement, few hon. Members have asked substantive questions about the communiqué?
    Mr. William Shelton: Has my right hon. Friend seen the report that two British cars were among the three cars of the year? Is that not an encouragement to British industry?
    The Prime Minister: I was pleased to hear that two British cars were included. I hope that it will raise the
    1070
    proportion of the car market that goes to British cars. In so doing, it will also raise the proportion of steel bought from British Steel and the components and other items bought from Britain.
    Mr. Donald Stewart: Is the Prime Minister aware of the widely divergent versions of the Dublin meeting both in Dublin and in London? Is she further aware that unless the matter is clarified by a statement or a debate the Dublin version will pass into history in Eire?
    The Prime Minister: I am responsible in part for the agreed communiqué. Upon that communiqué I stand. Upon that communiqué the right hon. Gentleman may ask me any questions that he wishes.
    Mr. Trippier: Will my right hon. Friend find time today to warn the country of the attempts by the British Communist Party to increase its influence in the Labour Party? [Interruption.] Was she not appalled to read the article in this morning's Daily Mail pointing out that a Communist played a leading role in the party political broadcast on behalf of the Labour Party on Tuesday right?
    The Prime Minister: To many of us it seems that there is precious little difference between the policies of the Communist Party and the policies of the Labour Party.
    Mr. Garel-Jones: On a point of order, Mr. Speaker. Will you give some guidance to me and to hon. Members in all parts of the House? We appreciate that the Leader of the Opposition is anxious to make his points at Question Time, but I think that the whole House is surprised and upset at the way in which he seems to be occupying well over half of Question Time—and, indeed, keeping out many of his own Back Benchers.
    Mr. Speaker: I have said on previous occasions that I always allow extra latitude to the Leader of the Opposition. It is a matter for his judgment and for mine —[Interruption.] Order. I am not handing that over.

Business of the House
Mr. Michael Foot: Will the Leader of the House state the business for next week?
The Chancellor of the Duchy of Lancaster, Leader of the House of Commons and Minister for the Arts (Mr. Norman St. John-Stevas): The business for next week will be as follows:
MONDAY 15 DECEMBER—Private Members' motions until 7 o'clock.
Afterwards, Proceedings on the Anguilla Bill [Lords].
Motion on the Imprisonment (Temporary Provisions) Act 1980 (Continuance) Order.
TUESDAY 16 DECEMBER—Supply [2nd Allotted Day]: Subject for debate to be announced.
The House will be asked to agree the Civil and Defence Votes on Account and the Winter Supplementary Estimates.
Motion on Community tariff quotas for newsprint on the Department of Trade's unnumbered explanatory memorandum of 28 November and supplementary memorandum of 11 December.
Motion on the Redundant Mineworkers and Concessionary Coal (Payments Schemes) (Amendment No. 3) Order.
WEDNESDAY 17 DECEMBER — Proceedings on the Consolidated Fund Bill.
THURSDAY 18 DECEMBER—Supply [3rd Allotted Day]: Debate on developments in the European Community January-June 1980, Cmnd. 8042.
FRIDAY 19 DECEMBER—It will be proposed that the House should rise for the Christmas Adjournment until Monday 12 January 1981.
[Debate on European Community proposal relating to newsprint quotas: The relevant reports of the European Legislation Committee are the Second and Fourth Reports of 1980–81 (HC 32-ii and 32-iv, 1980–91). Neither report has been published, but photocopies are available in the Vote Office.]
Mr. Foot: May I remind the right hon. Gentleman that there is a series of extremely important interlocking economic and industrial questions on which we have asked him to ensure that we have statements before the house rises for the Christmas Recess? Will he now tell us about them?
Will the right hon. Gentleman make sure that the Secretary of State for the Environment makes a statement to the House on the rate support grant, which will affect local authorities in a very special way this year and may affect the employment levels throughout the country in a very special way this year? May we therefore have a statement from the Secretary of State for the Environment on Tuesday?
Will the right hon. Gentleman also tell me when we shall get the statement—for which I have asked for two weeks now, or at any rate for one week — on the financial crisis in the railways, which is a matter of major importance for the country's economy as a whole?
With regard to the steel industry, which we were discussing a few minutes ago, we do not believe that the Government's response to what I have said and to what has been said generally in any way meets the position. We believe that it is essential for the House to have a debate on the matter first. [Interruption.] In that case, we shall
1072
on Tuesday table for discussion the question of the Government's direct responsibility for the difficulties of the steel industry, which carries it very much further. When the Home Secretary intervenes from his reclining position to tell me how to—[Interruption.] It sounded to me as though he was saying "Supply day, Supply day". He has been saying it for quite a long time. May I tell him that we believe that we had every right to urge—the Government have so far refused to agree—that there should be a general debate next Tuesday on unemployment.
We are confronted, therefore, with a mounting industrial and economic crisis of huge dimensions throughout the country, and we shall have to take that into account in all the business next week, including the motion for the Adjournment for the Christmas Recess, if that is, tabled. We may have to table an amendment to that motion to get the Government to report to the House properly on all these questions.
Mr. St. John-Stevas: The right hon. Gentleman has in part answered his own question. Of course, these important matters should be debated by the House, but we have made available a Supply day on Tuesday and it is open to the Opposition to choose what subjects they wish. On Thursday next week there is a second Supply day, which is at present devoted to European matters.
With regard to the statements for which the right hon. Gentleman has asked, I cannot promise an early statement on transport, one of the reasons being that the demand for statements next week is becoming so heavy that we are in danger of their cutting into the Opposition Supply day or into private Members' time. I have consulted my right hon. Friend the Secretary of State for the Environment and he is more than willing to make an oral statement on the rate support grant in the House next week. If necessary, I shall ask him to make an additional statement on other matters.
Mr. Foot: The right hon. Gentleman must take into account that it is not the Opposition that is responsible for the series of economic crises; it is the Government. The Government have a duty to report to the House upon them. The Government have a duty to ensure that the House does not go away for Christmas without these matters being properly debated and discussed. We are seeking to do our best to assist the Government in relation to the steel debate, although it will mean that we shall not be able, as a result, to have the more general debate on unemployment which I am sure is desired by many hon. Members, certainly on the Opposition Benches.
The right hon. Gentleman has now answered the question about the financial crisis on the railways. I hope that there will be a statement about that, too. I hope that at the beginning of next week he will let us have a look at the series of statements that he is proposing, because they will govern our attitude to the motion that he may seek to move on Wednesday.
Mr. St. John-Stevas: I shall do my best to ensure that statements on a variety of subjects are made next week, but there is a physical limit to the number of statements that can be made in any one week in this House. There is the opportunity to raise a number of subjects on the Consolidated Fund Bill. I am proposing to table on

1073
Wednesday the motion for the Christmas Adjournment, when there will be further opportunity for hon. Members to raise subjects of importance and interest to the House.
Mr. Edward du Cann: If the MacGregor report merits the serious study that the Prime Minister wisely recommends, will my right hon. Friend ensure that we in the House see it as early as possible? So often we have to read parts of these reports, which are leaked somewhat selectively.
Secondly, in the context of today's report by the Select Committee on the Treasury and Civil Service, will my right hon. Friend arrange, in the new year, for an early debate upon the subject of the Civil Service?
Mr. St. John-Stevas: I shall bear in mind the second request. I shall have to consider it in the context of the programme when we return after the recess. It is essential that the responsible Minister should have time to study Mr. MacGregor's report, and that the House should have an opportunity to assess it seriously. I shall do what I can to see that the report is made available to hon. Members.
Sir Harold Wilson: When the main spate of Second Readings—usually held at this time of the year—has; been completed, will the right hon. Gentleman provide time to debate the final report of the committee of inquiry into the financial institutions, which was published more than six months ago? In that way we should be following the example of the Macmillan report, the Radcliffe report and, I think, every report of that type since 1720.
Mr. St. John-Stevas: I welcome the right hon. Gentleman back to the House after his recent illness. We are delighted to see him. I congratulate him on his excellent report on the financial institutions of the City, which disappointed so many of his friends. A debate was held on the Radcliffe report. The right hon. Gentleman's report ranks with that, and I shall do my best to see whether we can arrange a debate at an appropriate moment.
Sir Bernard Braine: Given the spontaneous and overwhelming opposition expressed on both sides of the House to the recent strange and unacceptable proposals for the future of the Falkland Islands, and given that anxieties have been expressed to some of us by the Falkland Islanders, will my right hon. Friend give an assurance that this subject will be debated at an early stage?
Mr. St. John-Stevas: I cannot give that assurance, but I can assure the right hon. Gentleman that the Government are determined to protect the rights of the Falkland Islanders.
Mr. Arthur Lewis: As the Leader of the House said that we would have various oral statements next week, will he ask the Home Secretary to make a statement on the extent to which the Government have taken positive steps to prevent lawlessness, and the growing number of muggings, and so on? Does the right hon. Gentleman not accept that the Government were elected to prevent lawlessness and to increase law and order? They have given the police extra pay, but there has not been any improvement in the suppression of lawlessness.
Mr. St. John-Stevas: My right hon. Friend is pursuing a vigorous policy against lawlessness, principally by
1074
strengthening and supporting the police. That is important. I cannot promise a debate, but the subject might well be relevant to the debate on the Consolidated Fund Bill.
Mr. Nigel Forman: What progress has been made on the use of the Public Bill procedure? That is a matter of great interest to the House. May we have an early debate in the new year on the important subject of data protection, on which the Lindop committee reported as long ago as 1978? In due course the House will have to legislate on that.
Mr. St. John-Stevas: I shall consider my hon. Friend's request for a debate on data protection. Following the endorsement by the House of the Government's proposal to undertake an experiment, in which Standing Committees on Public Bills will be permitted to have up to three sittings in Select Committee form, Standing Committees will be able to take evidence in public. The first two Bills selected for the new procedure are the education special needs Bill—which will be introduced in this House shortly after Christmas—and the Deep Sea Mining (Temporary Provisions) Bill, if and when that Bill comes from the other place. I shall make a further announcement about the third Bill as soon as possible.
Mr. Stephen Ross: Given that we are not going to get a statement on the recent visit to Dublin, can we not at least have a debate on it? The situation in Northern Ireland is serious, and to be allowed one and a half hours after midnight to discuss the Northern Ireland (Emergency Provisions) Act is insufficient.
Mr. St. John-Stevas: Hon. Members did not have only one and a half hours after midnight in which to debate Northern Ireland. They had a full day's debate on the Northern Ireland (Appropriation) Order. That is equivalent to the Consolidated Fund Bill. Indeed, the House rightly sat until late last night debating Northern Ireland affairs. I cannot promise another full debate or. Northern Ireland in the immediate future.
Mr. John Silkin: Will the Leader of the House reconsider including the British Nationality Bill in the new Select Committee procedure? It fits into that procedure. If such Bills are not included, I suspect that the new Select Committee will be like a neutered tabby cat.
Mr. St. John-Stevas: I shall not follow the right hon. Gentleman into animal metaphors. I am certainly willing to consider his suggestion. It is important that major Bills should be included in this procedure, and I shall be happy to discuss this subject further with the right hon. Gentleman.
Mr. John Farr: Given the remarks made by my right hon. Friend the Member for Taunton (Mr. Du Cann) about the Civil Service, can my right hon. Friend tell us when the Government expect to receive the report on index-linking for civil servants' pensions? Will he give the House an assurance that we shall have an opportunity to debate it at the earliest possible opportunity?
Mr. St. John-Stevas: We have not got a date for the reception of the Scott report. However, I imagine that the report on index-linked pensions will be before us early in the new year. The Government will then consider the matter, and will draw conclusions. As my hon. Friend raised the subject of the Civil Service, I take this

1075
opportunity to pay tribute, on behalf of all hon. Members, to the work of the Civil Service and to the impartial service that it gives to the House and to all parties.
Mr. David Winnick: Does the right hon. Gentleman recognise that as Leader of the House he has an obligation to all hon. Members? Given that there is a demand for a statement on the Dublin talks, and given the importance of those talks, will he provide sufficient time for a statement? Will he bear in mind that a debate on those talks is taking place in the Dublin Parliament? If those talks can be debated in the Dublin Parliament, why cannot there be a debate in the British House of Commons?
Mr. St. John-Stevas: As the hon. Gentleman knows, the subject was raised yesterday during the debates on Northern Ireland. As Leader of the House, I am conscious of my duty to all hon. Members. However, the precedents are against the hon. Gentleman. When the right hon. Member for Huyton (Sir Harold Wilson) and the right hon. Member for Cardiff, South-East (Mr. Callaghan) held the office of Prime Minister, six meetings were held with the Taoiseach. Not once was a statement made in the House after a meeting. The precedents are there for hon. Members to see. The fact that the Prime Minister of Ireland described the meeting as "historic" is not a reason for the Prime Minister of the United Kingdom to make a statement in the House.
Mr. Foot: The right hon. Gentleman appears to be claiming that there are precedents for the Prime Minister's action. On how many of those previous occasions did the Taoiseach hold a debate in the Irish Parliament and describe the matter in such terms?
Mr. St. John-Stevas: No Minister, whether the Prime Minister or the humblest Under-Secretary, has any responsibility for what the Prime Minister of Ireland says in his own Parliament.
Mr. Dudley Smith: My right hon. Friend will be aware that a debate has been promised on the possible introduction into Britain of heavier lorries. When is that debate likely to take place? Together with the Patronage Secretary, will my right hon. Friend bear in mind the fact that influential sources have suggested that there should be a free vote at the end of the day?
Mr. St. John-Stevas: I shall certainly consider those matters. I always welcome a free vote which applies to everyone, including the Front Bench. However, free votes have become progressively rare. I cannot promise a debate on this important subject next week.
Several Hon. Members Several Hon. Members rose—
Mr. Speaker: Order. I propose to call only those right hon. and hon. Members who have been rising.
Mr. A. E. P. Duffy: May I draw the attention of the Leader of the House to early-day motion 19 on unemployment in South Yorkshire?
[That this House deplores the rapidly increasing level of unemployment in South Yorkshire, where nearly 60,0.00 people were out of work in November, which amounts to 10 per cent. of the county's workforce and represents an increase of 3,300 jobless in just one month;
1076
notes that unemployment in Mexborough is 16·2 per cent., the eighth highest in England, in Rotherham, a development area, it is 10·8 per cent., in Barnsley 10·6 per cent., in Doncaster 11·7per cent., and in Maltby 12·6 percent., all intermediate areas, whilst in Sheffield, which is due to lose its assisted area status in 1982, and where there is virtually no demand at all in the manufacturing sector and unfilled vacancies are the lowest on record, there are now 24,500 people out of work, an increase of 50 per cent. since May; further notes that gloomy though these figures are, they further conceal the even more serious unemployment problems of smaller areas and of particular groups of people in such towns as Penistone, Wombwell, Thorne, Goldthorpe and Dinnington; calls attention to the Monopolies Commission Report on the British Gas Corporation and its threat to jobs in South Yorkshire, where it has been estimated that at least 500 jobs are at risk; and calls upon the Government to recognise that the magnitude of the unemployment problems justifies a far higher level of aid to South Yorkshire, and urges it to match the vigorous employment promotion and development programmes of the county council and the district councils.]
How far can Ian MacGregor's proposals on South Yorkshire go? The right hon. Gentleman must know, even if the Prime Minister does not, that major surgery is contemplated. How far can those proposals be carried out without totally destroying the morale and commitment of men and management in private as well as public steel in its British heartland — Sheffield? Therefore, will the right hon. Gentleman look more seriously at the request by my right hon. Friend the Leader of the Opposition for a special debate next week, before the Christmas Recess?
Mr. St. John-Stevas: Everyone in the House is concerned about unemployment. The situation in South Yorkshire, though difficult, is by no means the most difficult facing the country. I shall certainly bear in mind what the right hon. Member for Ebbw Vale (Mr. Foot) said. However, I cannot fit in a debate in Government time next week.
Mr. Selwyn Gummer: Does my right hon. Friend agree that many hon. Members on the Government Benches regard defence as perhaps the most important subject that we discuss? In order that the Opposition should be properly represented on this occasion, will he arrange a debate on one of the two motions which are down for an early day which draw the attention of the House to the fact that the Leader of the Opposition, in distributing his Shadow Cabinet portfolios, thought defence so unimportant as not to be worthy of a seat in the Shadow Cabinet?
Mr. Michael Cocks: Be careful.
Mr. St. John-Stevas: I am grateful for the warning from the Opposition Chief Whip that I must not dissipate the ecumenical atmosphere which prevails at the moment.
I have noted the valid point made by my hon. Friend, but it is a matter for the Leader of the Opposition to decide. I am more concerned with the affairs of the real Cabinet than of the Shadow Cabinet.
Mr. Douglas Jay: As I understand that the Council of Ministers is to discuss the common fisheries policy again next week, may we be assured that

1077
there will be a statement by the Minister of Agriculture, Fisheries and Food on this important issue before the Christmas Recess?
Mr. St. John-Stevas: I shall certainly bear in mind the right hon. Gentleman's request.
Mr. Nicholas Winterton: Does my right hon. Friend accept that many hon. Members on the Government Benches share the deep feelings expressed by my hon. Friend the Member for Essex, South-East (Sir B. Braine) about the Government's intentions towards the Falkland Islands and believe that a debate on this vital issue is long overdue and should be held as soon as possible after the Christmas Recess?
Am I correct in believing that there will be a statement on the rate support grant next week and that it is the custom of the House to debate such announcements by the 3overnment before Christmas? Otherwise, Members of Parliament seeking to represent their constituencies are placed in a very difficult position, as are local authorities. Will he find time to debate this subject on Thursday, instead of the European debate?
Mr. St. John-Stevas: I hope that I reassured my hon. Friend on the status of the Falkland Islanders in the reply that I gave to my hon. Friend the Member for Essex, South-East (Sir B. Braine). I think that that statement shows that the need for an immediate debate is somewhat Jess pressing, but I shall consider that matter in future.
I have already said that the statement on the rate support grant will be made on Tuesday by my right hon. Friend the Secretary of State for the Environment. My hon. Friend is correct in saying that a debate is normally held shortly afterwards. But if he casts his mind back to the unfortunate events at the end of the last Session when this statement had to be deferred, he will see that it is not possible to fit in a debate because of the delay caused by that incident. However, shortly after we return from the recess, we shall have a debate on the rate support grant.
Mr. Donald Dewar: Has the leader of the House had an opportunity to study the grotesque happening on Tuesday in the Scottish Grand Committee when the Secretary of State for Scotland could not muster a single vote and, incredibly, not even his own vote in support of his policy to close colleges of education in Scotland? Has he also noted that the Under-Secretary of State for Scotland, the hon. Member for Edinburgh, North (Mr. Fletcher), is quoted in the press today as conceding that the whole business was a shambles? In view of that, despite the pressures, will he arrange for the Secretary of State for Scotland to explain what he proposes to do about it?
Mr. St. John-Stevas: I do not follow events in the Scottish Grand Committee as closely as does the hon. Gentleman. Nevertheless, I am aware of the issues involved. Indeed, I have had considerable correspondence from Scotland on this matter, and I have been in consultation with my right hon. Friend the Secretary of State for Scotland on the future of education colleges. My right hon. Friend is very much aware of the problems facing the Scottish education system as a result of the present proposals. I shall draw the hon. Gentleman's re narks to the attention of my right hon. Friend
Mr. John Bruce-Gardyne: My right hon. Friend's notice of the business for Tuesday reminds the
1078
House that we are again to be called upon to approve hundreds of millions of pounds of Supplementary Estimates on the nod. In the light of that, may I ask what progress has been made on the establishment of the new Procedure Committee?
Mr. St. John-Stevas: We are committed to setting up this Procedure Committee. Discussions are going on between myself and the new Shadow Leader of the House. Discussions are also going on through the usual channels. I hope to be in a position to table a motion next week.
Mr. Bruce Millan: The Leader of the House has acknowledged that there is serious concern in Scotland about the Secretary of State's proposals on colleges of education. Would not the simple answer be for the Secretary of State for Scotland to make a statement next week withdrawing his proposals? Will the right hon. Gentleman ask him to do that?
Mr. St. John-Stevas: I am sure that that would give satisfaction to some—[HON. MEMBERS: "All."]—but it would cause difficulties for others. In view of the importance of the matter, I shall see the Secretary of State for Scotland and discuss the matter with him.
Mr. Tony Marlow: Would not my right hon. Friend be able to overcome the problem that has become more than apparent recently, particularly today, by setting aside a quarter of an hour at a quarter to two every Friday so that the geriatric vandal and elderly windbag the right hon. Member for Ebbw Vale (Mr. Foot) can question the Prime Minister to his heart's content, thereby allowing other right hon. and hon. Members the opportunity to question my right hon. Friend on Tuesdays and Thursdays?
Hon. Members: Withdraw.
Mr. St. John-Stevas: Never mind about withdrawal at this stage. I do not know whether it is better to be an elderly or a juvenile windbag. [Interruption.]
Mr. Speaker: Order. Time is running out. The Leader of the House speaks for us all.
Mr. Edward Rowlands: The Leader of the House will know that for many weeks we have pleaded with him to arrange a debate on the report of the Select Committee on Welsh Affairs. As the Prime Minister is going to Cardiff this evening and will sense the wrath of the Welsh people at the present economic situation, will the right hon. Gentleman make an opportunity available for hon. Members to express similar anger and sense of frustration in the House by organising a debate on the Select Committee's report?
Mr. St. John-Stevas: There has just been a debate on Welsh affairs in the Welsh Grand Committee—
Mr. Rowlands: On housing.
Mr. St. John-Stevas: Yes, I know that it was on housing. It was not on the Select Committee's report. We must have a debate on the Committee's report when we return after Christmas. I cannot guarantee that it will be on the Floor of the House, but I can guarantee that there will be a debate. I suggest that the matter of where the debate should be held should be discussed through the usual channels.
Mr. Robert Kilroy-Silk: Is the Leader of the House aware that the White Paper on young offenders

1079
contains a number of proposals which will have serious consequences for juveniles and the criminal justice system? Will he give an assurance that we shall have the opportunity for an early debate on the White Paper?
Mr. St. John-Stevas: It is an important White Paper, and I know of the hon. Gentleman's interest in the subject. I shall bear that in mind when planning our programme after the recess.
Mr. Kenneth Marks: I draw the attention of the Leader of the House to early-day motion 53, which refers to the anomaly that the House has effectively abolished capital punishment in this country but that it still exists in the few colonies for which we are responsible.
[That this House reiterates its view that capital punishment for murder should not be reintroduced in the United Kingdom and urges the Government to advise Her Majesty to exercise the Prerogative of Mercy in all cases in British Colonies.]
Will the right hon. Gentleman urge the Minister in charge of the debate on Anguilla on Monday to make clear the Government's view on this matter?
Mr. St. John-Stevas: I will certainly pass that on to the Minister concerned. But, of course, there is no necessary connection between abolition of capital punishment in the United Kingdom and abolition in the dependent territories. There is, of course, an exercise of the Crown's prerogative of mercy in those territories, which is delegated to the Governors, who act on their own judgment after consulting their own executive councils. As hon. Members will be aware from the answer given by my hon. Friend the Minister of State to a question on 29 October, this does not preclude Her Majesty from exercising clemency on the advice of the Government here, but I should say to the hon. Gentleman that in practice such interventions are very rare.
Mr. Christopher Price: May I urge upon the right hon. Gentleman the great need for a statement on transport next week? Is he aware of the very real anger of my constituents—a large number of them hitherto solid supporters of his party rather than of mine—about the closure of four stations in my constituency and many more over the rest of South London, and the virtual prevention of those people from getting home at night by public transport? May we have a chance to question the Minister of Transport about the situation?
Mr. St. John-Stevas: I am aware of the situation in South London and of the latest developments today, and I express my concern about the situation. The difficulty lies in fitting in yet another statement next week, but I will certainly consider the matter to see what we can do. Meanwhile, I will raise the matter urgently with my right hon. Friend the Minister of Transport.
Mr. George Foulkes: Will the Leader of the House confirm that a guarantee has been given to the Prime Minister of Canada of unlimited time for the passage of the Canada Bill through this House, and that this is holding up other legislation, such as that for the registration of old people's homes and other residential homes?
Mr. St. John-Stevas: No, I cannot. No such guarantee has been given. No Government could promise any other Government unlimited time for a measure in this House. What my right hon. Friend the Prime Minister has made clear is that if a request for amendment of the Canadian constitution is received we shall act in accordance with precedent and respond to it. But it must be clear that the progress and implementation of any such request must depend upon the general state of business in the House. That is why I have made it clear that the earlier that request is received the more likely it is that it can be dealt with in this Session.
Mr. Peter Hardy: Would the Leader of the House agree that his answer to the right hon. Member for Taunton (Mr. du Cann) and the Prime Minister's answers earlier this afternoon justify our assuming that no decision will be made in regard to the MacGregor report until the matter has been fully considered in the House? May we therefore have his assurance that every hon. Member will receive details of Mr. MacGregor's proposals in order that, in the first week back after the recess, we shall have an opportunity to discuss those proposals and also the astonishing situation in regard to local government?
Mr. St. John-Stevas: I do not know whether one can draw the conclusions that the hon. Gentleman has from what the Prime Minister has said, but I believe that it is extremely important that a statement of Government attitude on the report should be made to the House after we have received the report and after we have had an opportunity to study it. Whatever proposals are put forward by the Government must be debated in the House.
Mr. Alfred Dubs: Is the Leader of the House aware that there is great concern about the Government's proposals on nationality? Can he tell the House when the nationality Bill is to be published? May I urge him to allow a decent interval between publication and Second Reading, so that what will be a very complicated measure can be fully considered by all those concerned?
Mr. St. John-Stevas: That is a perfectly reasonable request. I inquired only this morning about the state of the Bill. It is not policy difficulties that are holding up the Bill. It is the drafting of what is a complicated measure. I should like to see it published before the recess. I fear that it may be slightly later than that, but certainly it will be at the earliest possible opportunity. I will pursue the matter again as a result of what the hon. Gentleman said. There must be a reasonable interval of time, to give hon. Members an opportunity to consider it.
Mr. Ioan Evans: In view of fact that major Government policies are being made and dealt with in written answers, may we next week have a Government statement about their policy on statements to the House? With regard to the Dublin talks, is it right that when there are hon. Members representing constituencies in Northern Ireland, and when Northern Ireland was discussed in those bilateral talks, the House should not know what is happening, while Members of the Dail are having a debate today? That cannot be right.
Mr. St. John-Stevas: Judging from the reports of the debate in the Dail, I do not know that those Members are particularly well informed about what took place at the

1081
Dublin summit. But the text of the communiqué has been published. It is there for everyone to read. I reiterate that of course it is the custom of the House that major statements of policy are made to the House, when it is sitting. But this was not other than a routine meeting between Heads of State. I have pointed out that on all the previous meetings there was no statement, and on most of the bilateral meetings that have taken place between other members of the European Community and ourselves there was no statement, either.
Mr. Allen McKay: Do not I take it from the right hon. Gentleman's reply on the MacGregor report that every hon. Member will be supplied with a copy? May I also take it that there will be a statement next week from the Secretary of State for Industry regarding the situation, and that nothing in the MacGregor report will be implemented until the report has been fully debated on the Floor of the House?
Mr. St. John-Stevas: I am afraid that I cannot give the hon. Gentleman all the assurances that he requires. I certainly agree that we must do all that we can to make the report widely available. I will see how that can be done for the convenience of hon. Members. Once the Government have had time to consider the report and to make assessments, there will be a statement to the House, and I would presume that at some stage we would have a debate on the subject.
Mr. Bob Cryer: In view of the Prime Minister's obduracy in not making a statement, will the right hon. Gentleman at least ensure that the report of the debate in the Dail on the Dublin meeting is placed in the Library, so that we may see the kind of debate that ensues there, even if it does not take place here?
Secondly, may we have, early in the new year, a debate on defence, on the decision on the cruise and Trident missiles—a decision that is deeply opposed by many hon. Members on these Benches [Interruption.] It is opposed in the Labour Party outside by massive majorities. We would wish to congratulate those members in the East and West Midlands regions of UCATT—the builders' union—on expressing total opposition to work taking place on cruise missile sites.
Mr. St. John-Stevas: I do not think that we can have a debate on defence next week, although it may be relevant. With respect to the hon. Gentleman, I am dealing with next week's business, not with business after the recess. Defence is a matter of great importance and there is a variety of views in different parts of the House—and, indeed a variety of views on the hon. Gentleman's side of the House.
With regard to what I suppose is the Hansard of the Dail, that is not a publication to which I regularly subscribe, but I shall try to get hold of a copy of the relevant debate and place it in the Library. I hope, however, in the interests of public expenditure, that that will not constitute a precedent.
Mr. Dennis Canavan: On the question of the Scottish colleges of education, will the Leader of the House bear in mind that the Government were not merely defeated in the Scottish Grand Committee, but absolutely hammered by 40 votes to none? In view of that humiliating and unprecedented defeat, will he insure that the Secretary of State for Scotland does the
1082
only decent thing left for him to do and makes a statement to the House next week saying that he is very sorry and that he will scrap his proposals to merge Craiglockhart and to close down Callendar Park and Hamilton colleges?
Mr. St. John-Stevas: I am afraid that I cannot give that undertaking, but I shall discuss the matter of the education colleges with my right hon. Friend I have given an undertaking to that effect. Meanwhile, I am grateful to the hon. Gentleman for his graphic account of the proceedings in the Scottish Grand Committee. After listening to his account, I almost felt that I had been present.

Consolidated Fund Bill and Christmas Adjournment (Debates)
Mr. Speaker: I have two brief statements to make. For the debate on Wednesday 17 December on the Second Reading of the Consolidated Fund Bill, hon. Members may hand in to my office by 9 am on Tuesday 16 December their names and the topics that they wish to raise. The ballot will be carried out as on the last occasion. An hon. Member may hand in only his or her own name and one topic.
The Consolidated Fund Bill includes the Defence and Civil Votes on Account for 1981–82, presented in House of Commons Papers Nos. 9, 10 and 11, and the Supplementary Estimates for 1980–81, presented in House of Commons Papers Nos. 7 and 8. It will be in order on Second Reading of the Bill to raise topics falling within the ambit of the expenditure proposed in these papers. I shall put out the result of the ballot later on 16 December.
I also remind hon. Members that on the motion for the Adjournment of the House on Friday 19 December up to eight Members may raise with Ministers subjects of their own choice. Applications should reach my office by 10 pm on Monday next. A ballot will be held on Tuesday morning and the result will be made known as soon as possible thereafter.

BILL PRESENTED
  FORESTRY
  Mr. Peter Walker, supported by Mr. Secretary Younger, Mr. Secretary Edwards, Mr. Alick Buchanan-Smith and Mr. Jerry Wiggin, presented a Bill to amend the Forestry Act 1967, and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 17.]

Questions to the Prime Minister
Mr. Ivor Stanbrook: On a point of order, Mr. Speaker. This is a short point of order, but one which I am sure that you will appreciate. Today, my name appeared third on the list of hon. Members who sought to ask oral questions of the Prime Minister. Consequently, I sat quietly and patiently while questions were asked before mine, hoping and thinking that I would have my opportunity in due course. In fact, a dozen or perhaps 15 of my colleagues had the opportunity of asking questions of the Prime Minister, none of whom had tabled questions.
As we have a ballot for positions in respect of questions to the Prime Minister, would it not be possible to group questions that are the same? The first eight on today's

1083
Order Paper were more or less identical, and it seems unfair that those of us who have taken the trouble to table questions to the Prime Minister—certainly if we are within the first two or three — should not have the opportunity to ask those questions in preference to the hon. Members who come into the House on the day and are called.
Mr. Speaker: The hon. Gentleman has a good point. There is a sense of grievance on each side of the House if an hon. Member has tabled question No. Q3 or Q4 and is not called. The House will be aware of what happened this afternoon. Ten minutes were devoted to question No. 1 and five minutes were left for question No. Q2. I was unable to call many hon. Members. It may be worth while for the Procedure Committee to consider what the hon. Gentleman said about questions that are identical. Again I place on record the fact that I believe that Prime Minister's Question Time is being spoilt by the form of questioning that takes place.

Social Security (Contributions) Bill
Considered in Committee.
[MR. BERNARD WEATHERILL in the Chair]
4.13 pm
Mr. Andrew F. Bennett: On a point of order, Mr. Weatherill. The Committee is in some difficulty on this occasion. With regard to almost all social security measures during the previos Parliament and in this Parliament so far, the Department has issued notes which have made life a little easier for hon. Members who wish to table amendments. I am sure that you will appreciate that there is considerable difficulty in tabling amendments to this Bill. You will notice that no amendments have been tabled in the name of the Government or of any Conservative Back Bencher. Labour Back Benchers have had considerable difficulty in tabling amendments as well as in trying to ensure debates on various important topics.
I draw your attention, Mr. Weatherill, to amendment No. 1, standing in my name, which was an attempt to ensure that the Committee would have a proper debate on why it was necessary for the procedures to be rushed in order that all the stages on the Bill be taken today. New clause 2, to which my name is attached, was an attempt to ensure that we could have a debate on the whole question of the upper limit. Because of the difficulty in tabling amendments, neither proposal has been selected.
Is it possible within the selection of amendments to debate the central question why this measure should be stamped through the House within a week, and also the second question of the upper limit, which would enable us to make more sense of many of our earlier amendments with regard to alternative ways of raising revenue? I ask for your guidance on these matters.
The Chairman: I agree with the hon. Gentleman that this is an extremely complicated Bill. Fortunately, it is not for me to give guidance on it. That is a matter for the Government. The hon. Gentleman's amendments were not selected, but I can tell him that it will be in order for him to raise his points in the debate on clause 1 stand part.
Mr. J. W. Rooker: Further to that point of order, Mr. Weatherill. I am extremely grateful for the ruling that you have just given with regard to new clause 2. That may not be unconnected with the point about notes on clauses, which are almost traditional in respect of social security measures. Is there a printing error in the list of amendments? As you said, the Bill is complex, and it raises £1 billion of finance via a form of taxation. Can you say whether some amendments are missing because they did not reach the printer in time, or whether there is a separate sheet? I am not the only hon. Member to notice that not one amendment has been tabled by a Conservative Member. I just wonder whether they tabled them too late or whether, like my hon. Friend the Member for Stockport, North (Mr. Bennett), they were waiting for the notes on clauses. This is an astonishing situation — [Interruption.] — and it is no good the Secretary of State pooh-poohing the matter. It is not without significance that not one amendment by a Conservative Member appears on the Amendment Paper.
The Secretary of State for Social Services (Mr. Patrick Jenkin): Perhaps I can reply to the question about why my hon. Friends have not tabled amendments. I am

1085
a little puzzled about the notes on clauses. I have been advised that we gave infractions for 30 copies of the notes on clauses to be placed in the Vote Office, and I have been informed that they were sent yesterday. I must tell the House that for some reason they do not appear to be available in the Vote Office. They were sent by my department to the Vote Office, and urgent inquiries are being made to ascertain why they are not available for hon. Members. They are intended as a help, as I am sure, Mr. Weatherill, you will understand. In a sense they are help offered by the Department, but they are not an essential part of the Bill.
Mr. Rooker: Further to that point of order, Mr. Weatherill. This is the first social security measure either in the previous Parliament or in this one whose Committee stage has been taken on the the Floor of the House. Previously members of the Committee have been known, and the Department has provided addressed copies to them. If the Secretary of State has slipped in 30 copies to the Vote Office without telling anyone—[Hon. Members: "He has not."] They are not there, but the right hon. Gentleman has admitted that he intended to slip them in. My hon. Friend the Member for Renfrewshire, West (Mr. Buchan) and myself, as Opposition Front Bench spokesmen, have not received them, nor has any of my hon. Friends. Until copies are available for hon. Members who wish to participate in the debate, may I request that we have suspension of the proceedings?
The Chairman: We cannot do that. My responsibility is to select the amendments that are submitted. In answer to his former point of order, I assure the hon. Gentleman that I do not look at the names on the amendments. I look to ascertain whether they are in order. I do not know from which part of the House they come.
Mr. Norman Buchan: I recognise your difficulties, Mr. Weatherill, and I realise that the problem is not ore of your creation, but one created by the Government. Over the last week or two the Government have slipped through a series of measures rapidly and often by sleight of hand which have been discovered by public and other pressure. They introduced his Bill on Monday, with the Committee stage to be taken on Thursday, and they have failed to provide the necessary information for Members on both sides of the House in the customary way.
I understand your difficulties in relation to suspending the sitting, Mr. Weatherill, but it is within the bounds of the Government's discretion, in view of this situation, in view of their failure to give their Back Benchers an opportunity to table amendments, and in view of apparent inability to reconsider the Bill and to get it right at Committee stage, for them either to withdraw the Bill or 10 proceed only to the Committee stage and leave the remaining stages for another day. We are being asked not only to rush through the Bill within three days of its being introduced, but to consider the remaining stages in one day. That is unprecedented; and to compound that, the Government have failed to give us the correct information in order for us to be able to continue the debate. I ask the Secretary of State to say either that he will withdraw the Bill or that we shall not sit beyond 10 o'clock tonight.
Mr. Paul Dean: On a point of order, Mr. Weatherill. It is a fairly recent practice on the part of
1086
Governments of both colours to make available notes on clauses. As I understand it, that is purely at the discretion of the Government of the day. In my view, this Bill is exceptional in that it is accompanied by the Government Actuary's report, which gives full information as to the financial implications of the Bill, not quite clause by clause but virtually clause by clause. In view of that, and in view of the full explanation that was given to the whole House on Second Reading earlier this week, the Opposition are on weak ground in trying to pursue this point.
With regard to the specific points raised by the hon. Member for Birmingham, Perry Barr (Mr. Rooker) about the absence of amendments from this side of the House, it could be that, having studied the Bill and having heard the speech of my right hon. Friend the Secretary of State in introducing the Bill, Conservative Members were satisfied and did not wish to table any amendments.
Mr. David Ennals: Further to that point of order, Mr. Weatherill. I entirely agree with the point made by my hon. Friend the Member for Renfrewshire, East (Mr. Buchan) that this in no way your responsibility. However, I disagree with the hon. Member for Somerset, North (Mr. Dean). Will the Secretary of State tell us whether he can recall any precedents on this matter? I think he will agree that when I was Secretary of State for Social Services notes on clauses were circulated on every matter concerning health or social security. Simply to have the Actuary's report is an entirely different matter. We are dealing here with a situation in which a Bill is being rushed through the House, and putting Back Benchers at a great disadvantage. Is that not in line with the action that was taken earlier this week, when a statement was made in reply to a Select Committee report, when the Chairman of that Committee was not informed that a statement would be made? Is it not a reasonable request that if the Secretary of State has prepared the notes on clauses the House should stand adjourned until it has had an opportunity to see them? He intended hon. Members to see them, and he wishes us to see them, so let us see them before we proceed with the debate
Mr. Bob Cryer: On a point of order, Mr. Weatherill. You have said that this is a highly technical Bill. The House depends on precedent to a great degree. I am pleased that my right hon. Friend the Member for Norwich, North (Mr. Ennals), who was Secretary of State for Social Services in the Labour Government, pointed out that for several years notes on clauses have been provided. It is no good the present Secretary of State saying that they are not essential to the Bill, and that the Bill can proceed without them. The fact remains that it is a well-established precedent—a precedent to which the Secretary of State subscribes.
I do not think that it is unreasonable, in order to ensure that the precedent is followed, to suggest that this sitting should be suspended so that the information can be provided, read and comprehended. If the public at large heard this discussion, they would say that we were daft to carry on in this way. Apparently, the Secretary of State wants to help the House, but he cannot do so because of a procedural difficulty. I ask you, Mr. Weatherill, to consider suspending the sitting for as long as it will take to get the notes here and give us time to absorb them. I

1087
suggest that an hour would probably be sufficient. If the notes were here, we could probably peruse them sufficiently within half an hour.
Mr. Patrick Jenkin: Perhaps I can help the House. When I convey to hon. Members the information that I have they may feel that they could have done more to help themselves. The notes on clauses have been in the Library since yesterday. There is a notice to that effect in the Library. The Vote Office, which is an office of the House, and not my Department, said that it was unable to accept the notes, and they were therefore placed in the Library.
Hon. Members will know that it has been the practice of the Library for many years to prepare notes for the guidance of Members. It does not seem to be unreasonable to suggest that in these circumstances hon. Members might have informed themselves of the notes that were in the Library. I respectfully suggest, Mr. Weatherill that we should make progress with the Bill. The amendments that have been tabled by Labour Members are abundantly clear, and it is clear that those hon. Members who have tabled amendments have understood the Bill admirably. They are seeking to make changes, and there is no reason to doubt the capacity of Labour Members to debate their amendments successfully. We shall try to give replies that, I hope, will satisfy the House.
Several Hon. Members Several Hon. Members rose—
The Chairman: Order. Before I take any further points of order, I think that I should make my position clear. My responsibility is to ensure that those official documents that are necessary for the debate are in the Vote Office. I am not responsible for guidance notes or anything of that sort, so points of order to me on that subject are irrelevant. I cannot deal with them. I think that we should proceed with the Bill, because we have a very heavy day ahead of us.
Mr. Buchan: We understand your difficulties, Mr. Weatherill, and we accept your ruling. However, as you have expressed it very well in the past, it is partly your responsibility to ensure fairness to both sides of the House, and to ensure a free, well-informed and open debate. We are concerned about that and about the opportunity, under the guidance notes, to put forward the right amendments.
The Secretary of State is more than half disingenuous. I have served in several Departments, but this is the first time that I have been involved with the social security Department. It is also the first time that a Minister has failed to draw to the attention of Front Bench speakers the availability of notes. That responsibility is his, and it has not been fulfilled.
Some of us have been working hard in the Library for the past three days trying to understand some of the complexities of the Bill. At no time were the notes brought to our attention. However it was done, there was certainly a slip-up in the delivery of information to the Opposition Front Bench.
The easy way out of the difficulty is for the Secretary of State to join us in asking for a suspension so that we can study the notes and, if necessary, prepare manuscript amendments which, I hope, you will consider carefully, Mr. Weatherill.
4.30 pm
Mr. Ioan Evans: Further to that point of order, Mr. Weatherill. Occasionally papers are delayed in Committee upstairs and the practice is to adjourn for a short while so that hon. Members may study the papers, because that expedites the proceedings.
An eight-page document is now available, though the Secretary of State did not know when he arrived here that copies were available in the Library. If he had known, he would have informed the Committee. He became aware of it only as a result of information that reached him later.
The purpose of the change in our procedures and the provision of notes on clauses is to enable hon. Members to understand clauses better, and it is, therefore, a method of expediting discussion. A suspension of the sitting for half an hour would allow some of us to obtain the document, and we could return for a better-informed discussion.
Mr. John Farr: Further to that point of order, Mr. Weatherill. A number of us are staggered that the Opposition want time to consider the notes. The whole Bill appears to us to be childishly simple. Two documents have been made available in the Vote Office, and I assure the hon. Member for Renfrewshire, West (Mr. Buchan), whom we welcome to the Opposition Front Bench, that the only reason why my hon. Friends and I have not tabled amendments is that we understand the Bill with great clarity and are more than satisfied with it. It is unnecessary for us to consider wasting the time of the Committee to allow Labour Members the chance to absorb what they should know anyway if they were on top of their jobs.
Mr. Christopher Price: Further to the point of order, Mr. Weatherill. We all understood and agreed with your ruling on your responsibility as regards papers in the Vote Office, but beyond that the Chair has a responsibility in relation to established precedents of the House. The Secretary of State has told us candidly that a precedent has been broken. His first explanation was that there had been a breakdown in communications between the Elephant and Castle and Westminster. The second explanation was that, for some reason or other, the Vote Office refused to accept the papers.
That sort of thing has happened before. We understand that the notes are available. I urge a suspension of the sitting, because you know, Mr. Weatherill, as well as I that a short suspension can often save an enormous amount of time later. We do not want to go on like this all night, as we did on a previous occasion which you may remember.
If, Mr. Weatherill, you will not accept a suspension proposal, will you accept a motion to report progress? I agree that we have not made much progress yet, but such a motion is one of the established ways of coping with the sort of difficulty that the Secretary of State has put us in. I can remember many precedents—for example, on the Abortion Bill in the 1960s — when the device of reporting progress, however much or little progress had actually been made, has been used so that Members can study a Bill and get on smoothly. Clearly, we shall not get on smoothly as if we go on as we are.
The Chairman: I must rule on that major point of order. I cannot accept a motion to report progress. As the hon. Gentleman said, we have not made any progress. I

1089
am aware that guidance notes have sometimes been put out by Departments, but sometimes they have not. It is not an established precedent that every Bill should have guidance notes.
The most helpful suggestion that I can make is that we should proceed with the first group of amendments—the discussion will probably last for at least an hour—and that hon. Members who have not seen the document, which has been available, I understand, in the Library for day, should take the opportunity to look at it. If they wish to submit manuscript amendments, I shall certainly consider them. Shall we proceed with the first group of amendments?

Clause 1

  INCREASE IN CONTRIBUTIONS
  Mr. Rooker: I beg to move amendment No. 2, in page 1, line 12, leave out '£27' and insert '£28'.
  The Chairman: With this, it will be convenient to take the following amendments:
  No. 3, in page 1, line 12, leave out '£200' and insert '£190'.
  No. 4, in page 1, line 12, at end insert—
  '(1A) In section 1(2) of the Social Security Pensions Act 1975 after the words "not more than 49p less than" shall be inserted the words "or not more than 99p more than'".
  Mr. Rooker: It may be convenient for every other hon. Member to nip down to the Library to read the guidance rotes, but I have to present all the amendments. My hon. Friend the Member for Renfrewshire, West (Mr. Buchan) will wind up for the Opposition, but it will not be possible for me to read the notes.
  I start by distancing myself from amendment No. 3. No doubt my hon. Friend the Member for Stockport, North (Mr. Bennett) will wish to speak to that amendment. Amendments Nos. 2 and 4 are linked.
  Mr. Ioan Evans: Is my hon. Friend aware that the notes and clauses are still not available in the Vote Office?
  The Chairman: Order. The Secretary of State said that the documents were available in the Library, not in the Vote Office.
  Mr. Rooker: It seems that there is probably a sackload somewhere in the Library, but no one has told the Library staff about it.
  Mr. Andrew F. Bennett: Is my hon. Friend aware that some of us went through the Library box on the Bill yesterday evening and the copies were not there? Does he agree that it was disgraceful for the Government to send the documents to the Library yesterday when they knew that if we wanted to table amendments that were not starred and were therefore, likely to be selected, we had to put them down on Tuesday? Was that not a disgraceful but of trickery by the Government?
  Mr. Rooker: My hon. Friend is correct. Of course, the box in the Library does not contain all the documents shown in the index. It is well known that documents placed in Library boxes go adrift. The Library staff are always complaining about it. I know that the Low Pay Unit brief was missing from the box a few hours ago, because my copy was required for making a number of copies.
  Amendment No. 2 seeks to substitute £28 for £27 as the weekly earnings that trigger off payments of national
  1090
  insurance contributions. Several hon. Members referred on Second Reading to the fact that the increase was a hidden form of tax on the lowest paid. Most people do not appreciate that the national insurance system does not work like the income tax system. Once one passes the threshold at which contributions become payable, they are payable on earnings below the threshold, which is not the case in the income tax system.
  It is estimated that for that reason about 50,000 of the lowest-paid workers in the country will have a massive increase in their marginal rate of tax from next April, because they will pass into the earnings level at which they are required to pay national insurance. I shall give the Committee some examples so that we can see the scale of what the Government are proposing. The problem was referred to extensively in the LPU brief, and I do not want to reiterate what was said on Second Reading.
  I am pleased to see a Treasury Minister on the Government Front Bench. I hope that he will remain throughout the proceedings. The Chief Secretary to the Treasury said on Second Reading:
  "The hon. Member for Isle of Ely (Mr. Freud) said that there is a poverty trap difficulty in what is being proposed. I cannot deny that. It is a subject more suitable to the close, detailed examination that only a Committee stage can provide".—[Official Report, 8 December 1980; Vol. 995, c. 1072.]
  We could examine the Bill in more detail if we were provided with more information.
  Let us examine part-time workers. In 1979, part-time workers worked an average of 20·4 hours per week. The average pay was between £26 and £28. That is the point at which they are to be put into the national insurance system.
  I shall give some examples of people who will, because they earn an extra £1 or 50p, be subject to a national insurance impost in excess of £2. That will put them in an invidious position. I refer to wages council industries for which figures are available. A 19-year-old "service worker", working as a cloakroom/toilet attendant or night porter in a hotel, will earn £54 for a 40-hour week in London. It is not uncommon for such workers to split jobs. For 20 hours' work, that person will earn £27 a week and, therefore, be required to pay national insurance contributions of more than £2 a week.
  An 18-year-old "regular worker" working in a bar, pub restaurant or club outside London earns £57 a week, or £28·50 for a 20-hour week. Such a person would still be caught if our amendment were accepted, because the amendment increases the figure only to £28. There is a limit to how far we can go in amending the original Act to give the Government scope to move away from the original intention, which was to make the lower earnings limit equivalent to the old-age pension. Since 24 November, the pension has been £27·15 a week. Therefore, the Government's provision is within the law.
  As I made clear on Monday, the Government have changed the law. The old-age pension no longer goes up in line with average earnings. It goes up in line with prices. In this case, the price rise is less than the earnings rise The pension should have gone up to £28·30 if the Government had not changed the rule.
  We are trying to match the original bipartisan, consensus approach to the way in which pension details are organised. That approach has been changed by the

  1091
  Government. We chose the £28 figure because that is the nearest to what the pension would have been had the Government not changed the rule.
  We have not had a chance to cost our amendments, so I hope that Government Ministers will not tell us that we have not provided for the increased costs in our amendments. We have made some attempts to gain increased revenue, although you in your wisdom, Mr. Weatherill, have not selected all our amendments. We cannot cost this amendment because there has not been time to table the necessary questions. We have been pushed at a speed which is not commensurate with making good law. I should be interested to know the cost of our amendment, because that would help my hon. Friends when drafting manuscript amendments.
  4.45 pm
  The Government's view is contrary to the spirit of their election manifesto. It is contrary to the reality of the social security and income tax system in Britain. The Government are pushing more people into the poverty trap. The Chief Secretary has admitted that. I am surprised that some of the so-called experts who have campaigned for many years on the interaction of tax on the social security system are missing from the Government Benches. They know that the first debate is on a crucial subject. They know that more people will pay more combined tax and social security at a lower rate of earnings than is good for the nation.
  I shall quote from "The Wealth of Nations" on the consequence of taxing the low-paid. I suspect that Government Members are under strict instructions to keep their mouths shut and keep out of the Chamber because the Government wish to bounce the Bill through the House.
  Adam Smith said:
  "If direct taxes upon the wages of labour"—
  taxes mean social security contributions in this case—
  "have not always occasioned a proportionable rise in those wages, it is because they have generally occasioned a considerable fall in the demand for labour."
  What is the Government's estimate of the increase in unemployment following the enactment of the Bill?
  Adam Smith continued:
  "The declension of industry, the decrease of employment for the poor, the diminution of the annual produce of the land and labour of the country, have generally been the effects of such taxes".
  He meant taxes on the low-paid. By not raising the lower earnings limit to a level which is high enough to meet the requirements of the law, and certainly by not raising it to meet the requirements of the 50,000 low-paid who will be pushed into paying an impost of £2 a week for crossing over the threshold, the Government are doing a great disservice to the nation.
  I do not intend to stray into areas which do not relate to the amendment. I understand that we are to be allowed a debate on the upper earnings limit on clause stand part. I doubt that there will be much left to discuss then, but that is subject to what my hon. Friends find in the notes on the clauses.
  I ask the Government to come clean and to itemise the cost. The Government will say that they are bound by the law. However, they could have tabled a paving amendment. We are asking only for a 99p variation between the old-age pension and the lower earnings band. That is not an open-ended commitment that can be abused.
  1092
  The amendment is responsible. I hope that the Government show some good will during the passage of the Bill. The Bill is being bounced through the House. It is a massive tax measure which involves a £1 billion impost and will raise about £2.4 billion in 1981–82.
  There are one or two other points that I and some of my right hon. and hon. Friends should like to raise on this group of amendments, but we are in Committee and can raise them later. Therefore, I shall wait until some of my hon. Friends have spoken and the Secretary of State has given the Government's view on the amendments.
  Mr. Paul Dean: I have some sympathy with what the hon. Member for Birminghan, Perry Barr (Mr. Rooker) said. He reinforced the matters that have been raised with us by the Child Poverty Action Group and, in particular, by the Low Pay Unit about the possible regressive effect on the lower earnings limit. The hon. Gentleman's amendment proposes a very marginal change in this respect to increase the lower earnings limit from £27 to £28. I shall listen with interest to the Minister's reply to the amendment.
  The Committee should address itself also to a wider question which in my opinion, is directly relevant to the amendment— namely, what the loss of revenue would be if the amendment were accepted. I am sure that whichever Minister replies to this group of amendments will be able to tell us the financial implications. In the Government Actuary's report which is associated with the Bill, the estimate for the surplus on the national insurance fund, taking into account the revenue which will accrue as a result of the Bill and the outgo which is already agreed, will be £39 million in 1981–82. In my opinion, that is a very small surplus in view of the large outlay that is involved.
  If we accept this amendment and the similar amendments to which we shall come later, will we endanger the firm commitment that we have to maintain the real value of benefits? The pension and other long-term benefits—the retirement pension and widow's benefit are by far the biggest proportion of outlay—were increased by 16½ per cent. for the year beginning 24 November this year. That is a commitment that goes through this year and, no doubt, will be continued into a further increase in benefits in the year beginning November 1981. We are obliged to ensure in the Bill that there is sufficient revenue to the national insurance fund to meet these firm commitments, some of which are already in operation.
  I hope, therefore, that my right hon. Friend will be able to respond to what the hon. Gentleman said. I fully appreciate that the hon. Gentleman has not had time to do the full research. So I hope that my right hon. Friend will inform the Committee what loss of revenue will be involved and what the implications are for the firm commitment on expenditure that the Government have already embarked upon for pensions and other benefits.
  Mr. Rooker: The hon. Gentleman referred to the Government Actuary's report. An interesting question arises from appendix 3 to that report. The Government Actuary's estimates arrive at a surplus of £39 million on the basis of an 11 per cent. uprating of benefits in November 1981. That makes nonsense of all the figures. Will the Secretary of State and the Chancellor of the Exchequer abate those benefits under the Social Security (No. 2) Act 1980 so that the benefits will not go up by 11

  1093
  per cent.? That would throw the Government Actuary's forecast of any surplus and deficit completely haywire. We want this information now. Unless the facts about next year's uprating are made available, some of the costings the amendments or the Government Actuary's forecast are nonsense.
  Mr. Dean: I think the hon. Gentleman knows very well from his previous experience that it would be highly unusual for Governments to speculate on the likely level of uprating nearly 12 months from now.
  We know that there is a firm commitment for the uprating of the long-term benefits by 16½ per cent. and of the short-term benefits by a lesser amount. That is already in operation and has to be paid for. The Government Actuary has given his calculations in that respect. If we are to accept the hon. Gentleman's amendments regarding the lower earnings limit and also the upper earnings limit, together with a number of later amendments, what would be the likely effect on the national insurance fund? Would that fund then be able to meet its commitments? if the fund is unlikely to be able to meet its commitments—the Government Actuary's calculations suggest that the margin is very narrow—we are saying, in effect, in adopting the amendment that we are withdrawing from the pledge made regarding the increase in pensions and other benefits which began on 24 November.
  There is another matter which I think is relevant to the amendment and to later amendments. It concerns the balance which was struck, on the contributions side as well as the benefits side, in what is now called the Barbara Castle pensions Act. A balance was struck at the time and accepted by the then Opposition. So we now have, and I rejoice in it, a broadly bipartisan approach to the Castle Tensions Act. I am profoundly relieved that we are not now discussing a possible Jenkin pensions Act. If we are to take that bipartisan approach seriously, an approach which was agreed after much labour, we must be careful that we do not upset the balance between lower earnings limits and upper earnings limits, that being part of the bargain which was struck at the time. I hope, therefore, that my right hon. Friend will be able to give us information on those two matters.
  I listened sympathetically to some of the hon. Gentleman's arguments, but if my right hon. Friend is able to convince the House of the need for this additional revenue and the need to preserve the balance and to maintain the compromise in the Barbara Castle pensions Act I, for one, shall hold the view that those arguments outweigh the other arguments that have been adduced by the hon. Member for Perry Barr.
  5 pm
  Mr. Ennals: I was interested in some of the points raised by the hon. Member for Somerset, North (Mr. Dean). The bipartisan approach, which I am certain was warmly welcomed, came when Mrs. Castle and the late Mr. O'Malley were Ministers, which was in a very different age, when there were genuine attempts over many months to find such an approach for the new pension scheme. I understand that the hon. Gentleman does not want to see anything which would damage that, but we must accept that the bipartisan approach to pensions, the national insurance fund and benefits has been totally destroyed by the Government's actions over the past 18 months. Whatever they may have said before the election,
  1094
  they have introduced a whole series of Bills, until this one, concerned only to reduce benefit entitlements for the elderly and those on short-term benefits, including the unemployed.
  The Bill before us has a different role. After two Acts which removed the entitlements of national insurance beneficiaries, the question whether it has been introduced to ensure that there is enough money in the fund to fulfil the commitments to national insurance recipients is irrelevant. The Secretary of State himself in the Second Reading debate on Monday referred to what is proposed as a surcharge. That reference is to be found in column 947 of Hansard of 8 December. It is a surcharge. The Chief Secretary to the Treasury recognised that the Bill introduced a piece of taxation, that it had nothing to do with benefits but was a quick—and, we thought, very unfair—way simply to raise additional revenue to rescue the Government from the crisis that they have got into
  Therefore, to analyse whether the motive was to enable the fund to fulfil its commitments shows a naivety on the part of the hon. Gentleman that I would not have expected from him, with all his experience of the subject in office and in the House and in Standing Committees. As my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) said, we can see this only as a piece of straight taxation. I was going to say "straight but crooked". It is certainly straight but unfair.
  The amendments, modest as they are, aim to make the changes less unfair. My hon. Friend rightly pointed out that on Second Reading it was agreed that we should look again at the poverty trap. I wish to draw upon the notes made available to us all by the Low Pay Unit, because they are valid. The unit says:
  "The problem is compounded for the families of at least 90,000 low paid workers who are caught in the poverty trap by virtue of the fact that they receive Family Income Supplement and other means-tested benefits. In addition to the 37¾p in the pound deductions for income tax and National Insurance, each additional pound that such families earn also reduces the amount of benefit they are entitled to. The effective marginal tax rate faced by those caught in the poverty trap thus turns out to be either slightly below or slightly above 100 per cent. Indeed the latest DHSS figures indicate that a married man with two young children will have a total disposable income of around £63 a week whether his weekly wage is actually £39 or £79. The Government's decision to raise National Insurance contributions can only help to deepen the trap that these families find themselves in."
  That is illogical, because during the whole period when the Secretary of State was in Opposition he was concerned, as I was, with the poverty trap. We were devising methods, such as child benefit, to try to narrow it. The Bill can only widen the poverty trap and bring more people within it.
  Mr. Patrick Jenkin: I am grateful to the right hon. Gentleman for reminding the House of the debates that we had in earlier manifestations. Perhaps I may in turn remind him of the argument that he and his hon. Friends used to advance from the Government Dispatch Box when these points were made that two of the main means-tested benefits which give rise to the phenomenon to which the Low Pay Unit draws attention, family income supplement and the housing benefit, run on—FIS for a year and housing benefit for six months.
  Certainly, for the FIS benefit, the uprating of the entitlement figures each year means that there is not the snapshot effect that the Low Pay Unit has drawn attention

  1095
  to in its report, but a more dynamic effect, which greatly mitigates the phenomenon to which the right hon. Gentleman is drawing attention.
  The Low Pay Unit does not take account, in any of its figures, of that six-month or 12-month run-on. I remember the right hon. Gentleman advancing those same arguments from this Box.
  Mr. Ennals: I accept the value and significance of the run-on. My point is that the proposals before the Committee will deepen the poverty trap. The right hon. Gentleman cannot question that. He cannot question, either, that people on very low incomes — including many part-time workers earning between £27 and £29 a week—who would not have been touched by tax will be brought into payment.
  That is one of the reasons why my hon. Friends on the Front Bench have tabled an amendment to try, at least modestly, to raise the floor. I wish that it had been possible to raise the floor much higher and that the law had entitled us to raise the ceiling much higher, too, as the right hon. Gentleman accepts that this is a form of taxation. It is a form of taxation that is grossly regressive and gives easy opportunities for those at the higher end of the earnings rate to escape from its real significance, because of the ceiling.
  Therefore, I support the amendments, although I think that they are far too modest. They are as far as it is possible for us to go in this debate.
  I hope that the right hon. Gentleman will tell us some of the financial implications of what is being done. I did not share the belief of the hon. Member for Somerset, North that the estimated surplus, in the Government Actuary's view, was running dangerously low. That is why I said that I did not think that this measure was introduced to deal with the problem of a very low balance in the fund. It is introduced to deal with the deplorable economic situation that the Government have got themselves into.
  Mr. Frank Field: The argument of the hon. Member for Somerset, North (Mr. Dean) was persuasive—or was it? He said that the argument for the changes that the Government have made — that is, changing the lower limit at a lesser rate than that at which they are changing the higher limit—was to maintain the real value of benefits. Some hon. Members pointed out that the real value of some benefits was not being maintained. Those are the short-term benefits in the national insurance scheme, which are being cut for the first time since the 1930s—in fact, the first time since 1928—by five percentage points.
  The hon. Gentleman quickly recovered to say that the main benefits that we were considering were those for the long-term beneficiaries, particularly pensioners and widows. Is it true to say that the Government will maintain the value of those benefits? If not, presumably the arguments supporting the differential changes between the floor and the ceiling of contributions in the national insurance scheme will begin to fall apart.
  Mr. Paul Dean: I was endeavouring to advance two arguments. The first is by far the greatest cost in the national insurance scheme and lies with retirement pensions and widows' pensions. The real value of those pensions is being maintained.
  Mr. Ennals: It is not.
  Mr. Dean: In fact, their value is being somewhat improved this year as a result of the 16½ per cent. increase. No one can deny that. The facts are well established. I note that the former Secretary of State, the right hon. Member for Norwich, North (Mr. Ennals) is nodding.
  The totality of benefits was increased on 24 November. The increases will ricochet into forward years and they will have to be paid for. My judgment on the Government Actuary's figures is that the increases in the Bill will be needed to pay for those increased benefits. If I am wrong, I am sure that my right hon. Friend will correct me when he replies to the debate.
  Mr. Field: I am grateful for the hon. Gentleman's intervention. One of the problems is that the contribution years as laid down in the Bill do not coincide with the benefit years. If the Bill is enacted, it will take effect from April 1981. The pension increases announced on 24 November will run for a full calendar year. Therefore, there will be an overlap of six months.
  I ask the hon. Gentleman to take his argument forward. The rate of the retirement pension will be partly determined by this measure, but it will be determined in the early part of next year for November 1981. Is the real value of that benefit being increased? We know from statements made by the Chancellor of the Exchequer that the real value in one sense will not be maintained because of what is called the overpayment of 1 per cent. this year.
  I asked the Library to make researches to ascertain whether there was another example of a Government, at the beginning of a review period, making a statement to the effect that pensions, which the hon. Member for Somerset, North has said are one of the main benefits that take up much, if not most, of this expenditure, were to be increased by less than the anticipated rate of inflation—in other words, a cut.
  The Library found that the only other Government who announced that the coming pension increase would amount to a cut in money terms were the one in office in 1920. The Government then said that they were confident that there would be a real increase in pensions, irrespective of the review period in 1920. as the boom had collapsed and there would be a fall in prices.
  It seems that the Government have another first. We have had an announcement that the major national insurance benefit—that paid to old-age pensioners— will be cut in real terms next year. The Government have made an announcement to that effect. We must consider that pledge, promise or threat in the context of the floor and ceiling of the national insurance fund.
  As usual, my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) explained clearly the reasons why the opposition would ask for the support of the Committee—
  5.15 pm
  Mr. Reginald Freeson: It may be that my hon. Friend has overlooked a rather important issue in responding to the reasonably put argument of the hon. Member for Somerset, North (Mr. Dean). The balance to which the hon. Gentleman referred was struck in 1975. There was written into the 1975 Act for the uprating of pensions the earnings link. That has been killed by the Government, with the consequence that this year alone a

  1097
  £2 loss will be experienced by pensioners when account is taken of the sum by which they would have benefited had the Government not introduced the first Social Security Bill earlier this year. That is an important factor to bear in mind.
  The loss of £2 followed an earlier effective cut, in that there was a failure to make food certain excess of earnings figures over price figures early in the year. That produced a loss of 50p to 60p a week. This year, pensioners suffered an effective loss of about £2·50 per week before the Bill was introduced.
  Mr. Field: My right hon. Friend has put clearly the difference between the two major parties on how pensioners are being treated. That will be taken into account during our discussions in Committee. The Government rightly say that they made up the shortfall by the pens tort uprating that took place in their first year of office. However, they did not make good the shortfall for the short-term national insurance benefits. There was a cut in the first year, followed by a 5 per cent. cut in the second year. It is as plain as a pike staff that there will be a cut in the third year.
  Before my right hon. Friend intervened, I was about to turn to the arguments advanced by my hon. Friend the Member for Perry Barr. The change of one percentage point may not seem to be particularly important to sonic, but it is especially significant for those at the bottom of the earnings pile. My hon. Fiend was right to draw the Committee's attention to the importance of the change to part-time workers. His homework was better than mine, in that it included references to the new earnings survey to establish the groups of workers and the numbers of part-time workers who would be affected by the change.
  My hon. Friend advanced the valid argument that we must all make a distinction between national insurance and income tax increases. In the public's mind there is often confusion between the two We have a threshold, in the income tax system. That threshold is determined by personal allowances. As we move over the threshold we begin to pay tax at about the threshold point. However, the national insurance scheme is similar to what the old exemption system used to be in our income tax system, until Austen Chamberlain changed it in his famous Budget of 1920 or 1921.
  Until that Budget, tax allowances were valuable only if a person's income was below a certain level. Once the threshold was crossed, the whole of a person's income came into tax. Austen Chamberlain created the beginning A the personal allowances system by allowing everyone co claim value of the allowances and not to pay tax on the equivalent of the allowances — the allowances Hatched against one's personal income.
  There is a difference between crossing the tax threshold for the low-paid, who begin to pay tax only on the next £1 of earnings, and crossing the national insurance threshold, whereby the low-paid begin to pay tax on all their earnings up to that point as they would have done ender the old exemption system of taxation. That must be borne in mind and linked to my second point, which concerns the changes over the past few years in the threshold for national insurance contributions and the changes in the tax threshold, which are important in this debate.
  If we cast our minds back, we will recollect that we used to live in a world where the threshold for national
  1098
  insurance benefits was well below that for taxation. The two are now almost in alignment. My hon. Friend the Member for Perry Barr made the point that as the low-paid crossed the national insurance threshold they will pay tax at 7·75 per cent. on all their earnings up to that point, unless we are lucky with our amendment. They will also begin to pay tax on their marginal rates of tax. A cruel pincer movement will operate against them.
  Such arguments would not carry that much weight if the national insurance contributions bore only the burden that they were meant to bear in the original national insurance scheme. I was lucky enough to catch your eye, Mr. Weatherill, on Second Reading, and I drew to the attention of the House the fundamental change in the size of the contribution that comes from the Exchequer. That is relevant to our amendments, particularly No. 2.
  Beveridge considered it important that we should all earn our right to benefit. There were powerful arguments for that then, and there may be today'. He won the case for that argument on the basis that if there were a poll tax everyone would feel that he had earned his right to benefit and because that poll tax would bear heavily on low-paid workers we could expect to claim only a certain amount of revenue from the poll tax for the whole national insurance fund. Beveridge envisaged that as rights to benefit grew in the post-war years the employee and employer contributions should fall as a percentage of the total fund and an increasing percentage should be picked up by the Exchequer.
  Unfortunately, I do not have the exact figures with me, but they are in the 1944 White Paper on the Beveridge report. If I remember correctly the Exchequer contribution rose sharply throughout the post-war period until it was about 70 per cent. in 1965. In other words, the Exchequer was picking almost three-quarters of the cost of the national insurance fund, the cost being borne by general taxation, which was clearly much more progressive than the proportional system of taxation, which is what the income tax system is for most taxpayers in 1980–81.
  Governments of both parties allowed that major change to occur in the post-war period, but particularly the Conservatives. In 1961, with the introduction of earnings-related contributions, the Government decided that there would be no Exchequer supplement to those contributions. We shall return in later amendments to the considerable fall, under the Bill, in the Exchequer contribution from 18 to 14 per cent. To some people the change from 7·75 to 6·75 per cent. may seem trivial, but it is important for the reasons that I have tried to outline. As my hon. Friend the Member for Perry Barr said, as soon as a person crosses the national insurance threshold he pays tax on every pound of earnings.
  It is important also in a second respect. The threshold for national insurance contributions is now closely aligned to the tax threshold. At that stage, a person is also beginning to pick up a tax bill. Thirdly, over the post-war period we have seen that much more of the national insurance fund financed from contributions from employers and employees and a very significant decrease in the Exchequer contribution.
  Mr. Patrick Jenkin: That is not true.
  Mr. Field: I shall happily give way to the right hon. Gentleman if he wishes to take up that point.

  1099
  An increasing burden is being put on employers and employees, and changes in the rate are therefore that much more important than they would have been had the Exchequer, for example, been footing 70 per cent. of the bill.
  If we are concerned about the low-paid and the burden of taxation that they bear, there are powerful arguments for amendment No. 2. My right hon. Friend the Member for Norwich, North (Mr. Ennals) also stated that we cannot view those arguments as separate from the arguments about the poverty trap.
  In Opposition, one tends to think of the poverty trap as having a snapshot effect. In Government, one always stresses what wonderful administrative changes have been brought about so that people are not caught in the trap. The real test is how our constituents are affected by the changes. We do not have as much contact with our constituents as we should like, as we have many other tasks to perform. However, I know of people in my constituency who have been affected by the snapshot effect of the poverty trap, as the Secretary of State called it. They have not been released by the different time lags of changes in benefits and tax rates. The poverty trap argument must be taken on board. We know of families affected by it, in spite of the fact that the intellectual and academic arguments say that it is as a figment of our imagination.
  I am puzzled by amendment No. 3. I am an abolitionist for the ceiling on national insurance contributions. I am puzzled why my hon. Friends, whom I trust on these issues, ask us to support an amendment that appears to be a contradiction of our normal stance.
  I had the benefit yesterday of speaking to someone who helped to devise the 1975 Pensions Act. I was truly puzzled by the explanation that the Financial Secretary gave on Second Reading. I thought that perhaps I had missed something in the background to the 1975 Act, as though the ceiling was of crucial importance to the agreement that we had made with the occupational pension funds. If so, that argument should be spelt out. If that agreement is torn up, the Government have only themselves to blame. The Treasury has destroyed the consensus between the parties on pensions and must take the responsibility if the failure, break-up or tearing up of consensus is followed through.
  The real reason why the formula in the 1975 Act of six and a half or seven times the minimum was thought of was that it was then considered important to limit the contribution on those bands of income before taxpayers reached the old surtax rates. In other words, we did not want extra contributions or a proportional contribution from those taxpayers who would have then crossed the surtax band—now called the higher rates of tax.
  One change, particularly from the 1979 Budget, is that the thresholds for the higher rates of tax were changed dramatically. There is, therefore, a powerful case for saying that, given that fact, there is not now a problem of lifting the ceiling—certainly not in the terms that some of my hon. Friends have thought—and linking people into the surtax bands as well.
  As an abolitionist, I am puzzled that some of my hon. Friends should have put down amendments to bring the ceiling down from, I believe, £200 to £195. There is a powerful case for abolishing the ceiling. We on the Labour
  1100
  Benches must, sadly, accept that we shall be unable to influence the way the Government spend the revenue that arises from the Bill.
  5.30 pm
  Mr. Rooker: In case my hon. Friend concludes sooner then I had expected, and in order to muddy the waters a little, may I make one point clear? There were two Acts in 1975—one on pensions and one on social security. Much of those Acts was based on the 1973 legislation, which was the responsibility of the Conservatives.
  Mr. Field: I am grateful for that intervention, because it reminds me of a point that I should have stressed but did not, which is that if there was agreement between the parties on pensions we have to ask at what cost. The answer is that the scheme was satisfactory to the occupational scheme, and that in itself seems a good reason for questioning whether the State—that is, the taxpayer— obtained a good enough deal. In considering whether the private sector is satisfied with certain underwritings from taxpayers, perhaps we should consider whether the taxpayer's interest was pushed hard enough.
  The argument for lifting the ceiling is separate from that about whether the Government are right to bring in the Bill and to increase taxation by £2 billion-plus. There is a powerful Socialist argument for raising the ceiling on contributions, but now there is a High Tory argument for it as well. Although the Government will find the Bill helpful in meeting the public sector borrowing requirement this year, they are putting in their legislative programme a time bomb that will make it that much more difficult for them to achieve their targets in the coming year. That is why Labour Members keep returning to the real cuts in benefits by the Government.
  If earnings-related supplements are phased out and national insurance benefits are cut in real terms, more and more families and individual claimants will be pushed on to means-tested assistance. The more that happens, the bigger will be the bill to be met either by the taxpayer or from the PSBR to pay the supplementary benefit budget. The more claimants that are kept within the national insurance scheme, the easier it will be in coming years in this Parliament to reduce to the PSBR as a proportion of GDP, which is one of the Government's major objectives.
  While there is that High Tory argument, there is also a powerful Socialist argument. We wish to have a society in which people are not made dependent on means-tested benefits but claim them as of right, as citizens, free of means tests. The Treasury Bench talks about securing consensus, and here is a new consensus growing between both sides on the reforms needed in the national insurance fund to secure the Government's objective of meeting the PSBR and our objective of freeing people from means tests and making sure that those who have been conscripted into the army of the unemployed to fight inflation do not bear an undue proportion of the cost. Those of us who are lucky enough to remain in jobs will then put much more into the national insurance fund so that the unemployed can draw decent benefits as of right and free of means tests. I am puzzled by amendment No. 3, which seeks to lower the ceiling. I should prefer it to be abolished for those powerful arguments.
  We must bear in mind, in considering amendments Nos. 2 and 3, that we are dealing with a Government who have not only cut the real value of short-term national

  1101
  insurance benefits but have given notice—the first time that it has happened since old-age pensions were introduced in 1908—that in the coming review pensions will be cut in real terms by 1 per cent. below the inflation rate. It is another doubtful first for the Government.
  Some hon. Members may feel that a 1 per cent. change in contributions to the national insurance scheme is neither here nor there. I have tried to point out why it is important for low-paid workers. Their contribution is based on every pound they earn once they cross the threshold. That threshold is near the tax threshold, so that at about that point they start to pay tax as well. Many of them also begin at that point to lose other forms of means-tested help. My right hon. Friend the Member for Norwich, North pointed out the whole bands of income in which considerable numbers of families will be unable to improve their position.
  Mr. Andrew F. Bennett: I do not want to venture now into debating the removal of the upper limit, because we have had a clear undertaking that if we keep away from that subject while we debate the amendments we shall have an opportunity to explore it when we reach the clause stand part debate.
  With my hon. Friend the Member for Barking (Miss Richardson), I tabled amendment No. 3 in an attempt to discover how the Government arrived at their figure of £200. If I obtain a satisfatory answer, I shall not press the matter to a Division. If not—and so far we have not had satisfactory answers on this point—I hope that we shall be allowed a separate vote, because the matter is one of a separate principle.
  We tabled the amendment because the Government provided a lot of information about how they were increasing the amount they wanted to raise through national insurance, but surprisingly they did not make clear what would happen to employers. They did not explain, either, why they had decided to break away from precedent and, in setting the upper limit, go for the top of the range rather than stay at the mid-point.
  The regulations suggest that the upper earnings limit should be between six and a half and seven times the basic rate. That works out at between £176 and £203. Over the years, the Government have always gone for a mid-point of more cm less seven times the pension rate. The current mid-point of the range is £163, but the current operative figure is £165. In this new case, the Government have deliberately chosen to go virtually £10 above the midpoint. Why? In spite of their being pressed on Second Reading on Monday, they gave no explanation for not following custom and practice in this matter.
  The only explanation I can imagine is that, they must have asked themselves by how much pensions would have risen under the old regulations. The rise would have been based on whether earnings or prices had risen more. If pensions were increased in line with earnings, which the Government did not do, they would have reached £29 or slightly less. If that figure is multiplied by seven, the result is just over £200. It seems that the Government were assuming, in fixing the upper limit, that pensions would go up by the amount by which they should have risen but for the earlier legislation to take away the linkage. That is a perfectly reasonable explanation. Perhaps the Government could offer an alternative one.
  However, it appeared from the figures that the Government thought that pensions should have risen to
  1102
  £29 then multiplied that by seven, which comes to about £200. That is how they produced some logic for the figure of £200. If that logic worked for the upper limit, they should have applied the same logic to the lower limit. I am pressing the Government for an explanation of why they chose £200 instead of £190. We have tabled a modest amendment suggesting that the lower limit should be changed from £27 to £28. On reflection, perhaps we should have gone for £29.
  There is a major problem for the part-time workers who are trapped when there is a small improvement in their income—it may be only a few pence—and they have to pay national insurance contributions not based on those few pence but on the whole of their earnings. There is not sufficient recognition of the number of people who, for one reason or another, have been forced into living entirely on part-time earnings.
  I shall give three examples of constituents who fall into that category. One man worked until July and was then made redundant. He had to make decisions about his future. He concluded that he was in the wrong career and that he wanted to start again and undertake a different university course. He did not find any difficulty in getting into a university. His major difficulty was obtaining a grant. However, based on his redundancy money and the possibility of finding a part-time job he thought that he could struggle through as a student by financing himself. He had major difficulties meeting his fees. He was dependent upon his own money to finance him. When he looked for a part-time evening job, he found that he was entering a whole new world. Employers were talking not about a rate for so many hours but about a rate that took into account whether he could stay below the national insurance level. He discovered that, to some employers, that was important because it simplified their bookkeeping. The employers could then say that the employee preferred to keep below the limit because it saved him having any deductions.
  The man found not only that if he earned a little more he would lose money, but that it distorted the whole area of wage negotiation because it was more crucial to keep below the Government limit than to negotiate the rate for the job. The man discovered that h s interests were in conflict with the full-time workers whom he worked alongside. They would be happy to see the hourly rate raised by a few pence, because at least that would be an improvement. Yet, for him, a movement upwards meant telling his employer that he would have to work a few hours less, otherwise he would find himself above the national insurance limit.
  Another constituent qualified as a teacher but could not obtain a full-time job. He was entitled to draw benefit. Instead of doing that, he visited many colleges and found a little work here and there. Eventually he built up his work to a level where he was teaching almost more hours during a week than a full-time teacher. That was two years ago. As a result of the cuts that have taken place, he found that because he was a part-time teacher he was especially vulnerable. Every time a college had to make a cut, his hours were reduced rather than those of the full-time teachers. His hours have been cut back to the point where he has to consider whether it is better not to work and to apply for benefit or to remain in work. He is another person who has been caught by the national insurance trap.

  1103
  He would like to build up his work, because the more work that he obtains and the more places where he is seen, the more likely it is that he will obtain a full-time job.
  My final example is of a woman who worked in the textile industry for about 20 years. She has been made redundant. She is entitled to benefit but she prefers to work. She lives on her own. She says that unless she goes out to work she does not see anyone. She does not know her neighbours, because for so many years she has gone out to work and seen little of them. She feels socially isolated. With a struggle and much persuasion, she found herself a part-time cleaning job, which brings in a fraction more than she could obtain in benefits. It is very marginal. She now finds that she has a substantial amount of stoppages because she is just over the national insurance limit. She feels that there is little or no justice in that area.
  5.45 pm
  The Government should be offering a clear explanation of how they managed to pick £200 rather than £190 out of the air. They should say whether it was based on seven times what the pension should be. They should apply that same logic to the bottom end of the scale and allow that limit to rise to at least £28, if not to £29. I do not claim that by doing that they would remove all the problems of the poverty trap, but at least they would show, with a practical action, that they were moving in the right direction. Over the years we have heard about the Government's concern, but we have seen no practical action. We do not have the figures, but no doubt the Government Front Bench will tell us what that would cost. I believe that it would be a small cost and something that they should do.
  The Under-Secretary of State for Health and Social Security (Mrs. Lynda Chalker): In replying to the many points raised by Opposition Members, I shall go through them as logically as possible. We should start with amendment No. 2, moved by the hon. Member for Birmingham, Perry Barr (Mr. Rooker), which links with amendment No. 4. Of course, we understand that there will always be concern when the Government draw a line below which one does not come into a certain category but above which one comes into it. As my right hon. Friend the Secretary of State mentioned in an intervention, the effect of the poverty trap as explained in the brief by the Low Pay Unit—to which I shall return—omitted to note the duration of the family income supplement and the duration of housing benefit.
  We need to put on the record not only the effect of the amendments but also why we believe that they should not be accepted. If we increased the lower earnings limit from the £27 proposed in the Bill to the £28 proposed in the amendment, we should fail to do what we are required to do by section 1(2) of the Social Security Pensions Act 1975. That Act requires the lower earnings limit to be an amount equal to, or not more than 49p less than, the basic pension rate at the beginning of the tax year in question. It is customary to set the multiple at 50p, and the tolerance of 49p in the statute was designed to permit that degree of rounding down.
  As the Bill stands without the amendment, the amount of the lower earnings limit conforms to that rule. The £27 a week is the required rounded-down figure derived from the pension rate now payable for a single person of £27·15.
  Mr. Buchan Mr. Buchan rose—
  Mrs. Chalker: I have not yet finished the point. Perhaps the hon. Gentleman will give me a few moments so that he may hear what I have to say. I understand that any impact on the contributions of low earners will be difficult for them. Nobody is denying that. But there is just as sudden a jump between £27·99 and £28 as there is between £26·99 and £27. I understand that the amendment was tabled for illustrative purposes in order to discuss the issue and not the exact amounts. It may also be argued that by changing the pension formula to relate it to prices movements rather than the better of earnings or prices, the Government had already effectively held down the lower earnings limit and brought more people into the contributions net.
  The burden is a percentage contribution. That is why it is light where earnings are low. Although the contribution for an employee—£2.17 at £28 a week—may be a significant burden for people with such earnings, there are three things that we have to remember.
  We have had several discussions about part-time and full-time earners, and I want to go into that question for a few moments. There are very few people with full-time earnings at the level concerned. They are generally part-time earners, often with other sources of family income. We know from the Department of Employment statistics that only about 0.2 per cent. of all full-time male employees earn less than £40 a week and that about 2.3 per cent. of all full-time female employees earn less than £40 a week. Therefore, there are very few working full-time for £28 a week.
  It is important to remember that if we were to increase the lower earnings limit from £27, as in the Bill, to £28, as in amendment No. 2, we would reduce the accruing rights of the additional components and the guaranteed minimum pensions. Here we enter a very complicated area. I am sure that all hon. Members are well aware that very valuable benefit rights accrue from the contributions. Contributions paid on earnings at the lower earnings limits are sufficient to give full rights to all the basic benefits and pensions in the scheme. If there are any gaps in the year's record, there are credits and voluntary contributions which can rectify the deficiencies.
  Mr. Rooker: If I have followed the Minister's argument correctly, she appears to be saying that the more the Government cut the old-age pension, the more the lower earnings limit will be lowered. More people will come into national insurance and, therefore, gain the benefit, at the expense of the cuts in the old-age pension, because of the break with the link with earnings. Is the Minister saying that the cut with the link with earnings is the advantage, so that old-age pensioners have a lower pension and, therefore, the other people make this gain? Is that the Minister's argument?
  Mrs. Chalker: No, that is not my argument. I am sorry if what I said in some way gave rise to that thought. I was seeking to explain to the Committee that it was important that, even at low levels of earnings, these people had the opportunity, with those low levels of earnings, to be contributing. I am certain that the whole Committee would want to keep to that. It stems from the Social Security Pensions Act 1975, which sought to bring more people into earning pensions on their own account.
  Mr. Buchan: Will the Minister accept that she is advancing an extraordinary argument? She is advancing the argument that the more we drop the floor, the better off will people be. Why, therefore, are we increasing it? Es it suggested that we should have it at £20, £15 or £10, in order to get all the benefits that will flow? it really will not wash.
  Mrs. Chalker: What I was saying was not that we would drop the limits but that there are benefits that accrue for the people who come into the area of paying contributions. It has been widely accepted throughout the House of Commons and throughout the pensions industry that contributing towards a pension for one's old age is a good thing to do. If we wanted to raise the lower limit at which we began the process, the size of the contribution paid by those above that limit would be even harsher, and the effect of the poverty trap at that higher rate would be very much more abrupt.
  With regard to the whole question of part-time earnings, on which a number of hon. Members commented, we estimate that there are about 200,000 persons with part-time earnings between the lower earnings limit of £27 proposed in the Bill and the £28 proposed in the amendment. The census of employment for June 1977 shows that about 40 per cent. of part-time workers are earning less than £28.
  The important aspect, to which I referred earlier, is that those who are on low pay and who work for 30 hours a week—or, if they are single parents, for 24 hours a week—are entitled, if they have children, to family income supplement. That continues for 52 weeks and the housing benefits continue for £26 weeks, irrespective of any change in circumstances, whether it be brought about by a change in the lower earnings limit or by some other change in circumstances concerning taxation.
  Mr. Ralph Howell: What is the logic behind one benefit continuing for 52 weeks and the other benefit continuing for 26 weeks?
  Mrs. Chalker: Certainly, it is not—as the hon. Member for Birkenhead (Mr. Field) said from a sedentary position—in order to confuse. When the family income supplement was brought in in 1971, it was to try to help the families who were on low lay to increase their income and to help them over a continuing period of time. The housing benefits, as hon. Members will know, are not administered by my Department and are largely administered by local authorities. But, quite separate from anything that is before us tonight, there is the review of housing benefits. I shall note my hon. Friend's comment when we come to that review. In order that my hon. Friend should not be further confused, I felt that I should clarify the point as quickly as possible I do not intend to elaborate it any further.
  Some of the other comments made during the debate have concerned not simply the full-time and part-time earnings but the problems that obviously accrue for far lilies who are on low incomes. While it would be very easy to accept the arguments put forward by the hon. Member for Birkenhead, I do not believe that we shall resolve any of the problems that face us in this matter if we do away with the upper limit, to which I shall return when dealing with amendment No. 3, tabled by the hon. Member for Stockport, North (Mr. Bennett).
  1106
  The problem that the Opposition face when they suggest that there should be any change in the lower earnings limit is that they are seeking to move away from a formula that we have always hoped would stand the test of time. It is a formula that was painfully arrived at during the passage of the Social Security Pensions Bill in 1975. The formula included a lower earnings limit, which would be effective for the payment of contributions. The £28, as the hon. Member for Stockport, North said, might be justified if we were to look at the earnings movement, but there are now other considerations that quite genuinely outweigh this point. We have particularly the need to preserve the basic benefits for the lower-paid.
  My hon. Friend the Member for Somerset, North (Mr. Dean) asked about the financial effect of the amendment. The effect would be to reduce income by £9 million in respect of those employees earning between £27 and £28 but to increase income by £31 million by reducing the range over which the contracted-out contributions—of both employers and employees — benefit from contribution abatement. In other words, the amendment would result in a net increase.
  6 pm
  Both this Government and the Labour Government have kept to the formula because they wished to ensure that the lower earnings limit was linked to the level of pensions. As a result, those in employment whose earnings exceed the lower earnings limit contribute towards these basic benefits.
  Mr. Rooker Mr. Rooker rose—
  Mrs. Chalker: It might be better for me to finish my remarks first. It is important that contributions should be sufficient to support the benefit for which they provide cover. That is why the direct link between the contributions earnings limits and the pension rates remains an important criterion. The most important thing is to protect benefit rights for the future.
  As the hon. Member for Perry Barr said, amendment No. 4 is a paving amendment for amendment No. 2. Its effect would be to bring the £28 within the limits required by the Act. The Government believe that the link between the basic pension limit and the lower earnings limit should be maintained, but we do not want to lose the start of class 1 insurance cover. Some people would lose that if the Act were amended.
  I turn to the questions raised by the hon. Member for Birkenhead. Why cannot we do away with the upper earnings limit? That question is also relevant to the amendment tabled by the hon. Member for Stockport, North. We all accept that pensions—
  Mr. Rooker: On a point of order, Mr. Weatherill. We want to be co-operative, but we do not want to lose the opportunity that you granted us—namely, to debate the removal of the upper limit. My hon. Friend the Member for Stockport, North (Mr. Bennett) spoke not on the removal of the upper limit but on the issue of £190. If the Minister carries on in the way that she has begun, I fear that we shall be deprived of our opportunity to speak in the clause stand part debate.
  The Chairman: I said that I would allow a debate on clause stand part. That debate should be fairly brief, because many amendments have been tabled on clause 1. However, that guarantee still stands.
  Mrs. Chalker: If the hon. Member for Perry Barr so wishes, I shall leave those remarks until later. The House has never agreed that pensions should be unlimited for those who have earned high wages throughout their working lives. Therefore, there must be an upper earnings limit for pension purposes. Contributions above that limit will give no entitlement to benefit. They will be a straight subvention from the national insurance fund. Given the remarks made by the hon. Member for Perry Barr and the wish to discuss the matter in the debate on clause stand part, I shall not go into further detail.
  Those of us who have sat on Committees that have discussed social security Bills are used to hearing ingenious explanations for raising certain issues from the hon. Member for Stockport, North. Over the years we have got used to that. However, I assure the hon. Gentleman that his explanation today had nothing to do with the decision about the upper earnings limit.
  The amendment tabled by the hon. Member for Stockport, North seeks to change the upper earnings limit proposed for class 1 contributions from £200 a week to £190 a week. Section 1(3) of the Social Security Pensions Act requires that the upper earnings limit should be between six and a half and seven and a half times the basic pension rate, or between £176·48 and £203·63. In practice, the upper earnings limit has long been a multiple of £5, for ease of calculation.
  In 1980–81 the upper earnings limit was 7·08 times the pension rate. The proposal put forward by the hon. Member for Stockport, North would reduce that multiple to just under 7, at a time when income to the fund needs to be bolstered in order to match outgo. Cmnd. 8091, the report of the Government Actuary on the financial provisions of the Bill, shows that the total outgo for 1981–82 of £17,842 million is much higher than that of previous years. The amount goes up every year at a fast rate.
  On Second Reading, it was accepted that income should be kept in line with outgo. Even with the upper earnings limit of £200, the surplus expected in 1981–82 is under £40 million. Indeed, it is about £39 million. If there were an upper earnings limit of £190, there would be a deficit of £64 million on the estimated outgo according to the Government Actuary's report. The £200 mentioned in the Bill is 7·37 times the pension rate. In other words, it is well within the range of six and a half to seven and a half times the pension rate in the Social Security Pensions Act. If we were to accept the hon. Member's amendment, the House would have to make up the deficit that would accrue for 1981–82 in some other way.
  Mr. Andrew F. Bennett: What will the deficit be?
  Mrs. Chalker: I have already told the hon. Gentleman that if the upper earnings limit were set at £190 the deficit on the fund would be £64 million, according to the calculations that the Government Actuary has used.
  The £200 limit avoids the need for a further rate increase. It makes the impact of the contribution burden a little more progressive. It is important that the national insurance fund should be kept in balance, as far as that is possible. If we were to create a deficit purposely and knowingly, we should be wrong.
  Many comments have been made on this group of amendments. A rise in rates for national insurance contributions will never be welcomed. We have sought to
  1108
  keep within the terms of the Act that was agreed, after a great deal of discussion, by the late Brian O'Malley and other colleagues of mine in 1975. Not only was agreement reached between parties in the House and in the other place but also, for the first time in many years, agreement was reached between those in the occupational fields who have about 11 million contributors and those who run the national insurance pension fund. To break such an agreement would be a truly retrograde step.
  For those reasons, I believe that we must keep to the formula of the lower earnings limit for the single person's basic pension, that we ensure that the national insurance fund is kept in balance and that we do not go down a path that would lead it directly into deficit.
  Mr. Norman Buchan: I hope to say more later, but it might be useful, as I am at the Opposition Dispatch Box for the first time, as it were, to make some comments.
  I was surprised at some of the points made by the Minister in justification of these proposals relating to the lower-paid. I find extraordinary the suggestion that whereas, hitherto, we were told that we were keeping out the low-paid in order to save them money, we are now told that if we push up the figure to £28 we shall cause them to suffer. That seems to be a contradiction of the concept that we should leave the figure at £27 in order to assist and not to bring hardship. All who have discussed this proposal have said that the £27 level will increase the hardship on those who are already in the poverty trap. The excuse for choosing this figure is that the 3 million people on the £27 to £29 level are on part-time earnings and are in receipt of family assistance of one kind or another.
  I also find extraordinary the argument that the figure could not be moved up to £28 because the parent Act would not have permitted it. But the Opposition, despite all the difficulties that have been imposed upon them in dealing with amendments, have put forward a way of doing that successfully by introducing amendment No. 4 as a paving amendment.
  Much of the argument that we have heard has had little to do with the concept of the consensus on national insurance that the Minister has been defending, including using the name of Brian O'Malley. The consensus has been rapidly smashed by the Government. One aspect of the smashing is the heavy reduction in the taxation element—the shift from 18 per cent. down to 14½ per cent. that is envisaged. That is beginning to shift away from the consensus. We do not accept that there is justification for this proposal on the basis of previous Acts introduced largely by the Labour Party, usually with support from the Conservative Party, based mainly on the work of Brian O'Malley.
  This is not so much a national insurance measure as a tax measure. The Sunday Times reports:
  "As forecasts of the government's borrowing requirement mount higher, ministers are discussing possible increases in taxation. It would be against the government's principles to raise income tax, and its obsession with inflation figures makes it reluctant to increase indirect taxes. So it is now looking at the employees' national insurance contributions as a way of raising more revenue."
  The proposals set out in this clause, but more so in the following clauses, relate to tax and not to national insurance. That is one reason why we feel angry about this measure.
  Will the £27 cause hardship? Of course it will. Much has been made of the material brought forward by the Low

  1109
  Pay Unit. I have not heard anyone so far reject the arguments of the Low Pay Unit. It argues that the problem will be compounded for the 90,000 low-paid workers already caught in the poverty trap. It says that the effective marginal tax rate is about 100 per cent. It points out that
  "a married man with two young children will have a total disposable income of around £63 per week whether his weekly wage is actually £39 or £79."
  The whole argument is based on those who are caught in the poverty trap, and that should be crucial for the Government because they claim that they were elected to provide incentives. I cannot think of anything that will provide a greater disincentive than the £27, because the amount to be charged on that figure is based not on the last pound but on the total amount. Therefore, the Government are contradicting their own claim to try to achieve the non-workshy society.
  6.15 pm
  The balance has now been shifted, but it has not been shifted justly. One of the arguments for the £27 is that whereas on the upper limit—the ceiling—there has been a shift of about 22 per cent., the bottom level has been raised by only 17 per cent.
  Mr. Reg Race: Will my hon. Friend also comment on the Government's proposal to index the higher-rate tax bands? That is part of the equation, is it not? The difference between the lower-paid and the higher-paid is not only the level of national insurance contributions that they have to pay but the tax benefits that trey are are given.
  Mr. Buchan: We are accusing the Government not of having no pattern in their thinking but of having a pattern of that kind in their thinking.
  I turn now to the £190 figure, I hope that my hon. Friend the Member for Stockport, North (Mr. Bennett) treats this as a probing amendment rather than an amendment on which we would necessarily wish to vote. I do not think that he has received a satisfactory answer. We had hoped that there would be closer financial involvement in his multiplication by seven, because that would have aided us with the other amendments. We have not yet been given a clear explanation. It is clear that there was no mathematical thinking in the Government's mind.
  Approximately 3 million part-time workers will be c aught in the trap between £27 and £29. We have proposed these amendments because we see injustice developing further between higher-paid and lower-paid workers. Each shift by the Treasury towards contributions will result in a direct and highly regressive tax.
  I hope that we receive support and even a shift of mind by the Government, particularly on the lower level of £27.
  Mr. Frank Dobson: I rise with some trepidation to speak on social security, because I do not share the expertise of most Opposition Members. I do not subscribe to Orwell's view that "Ignorance is Strength". I hope that the simplicity of my understanding on one aspect of clause 1 will make more impact on the Secretary of State than the more learned and expert arguments that hate been adduced by my colleagues.
  Everyone—even the Secretary of State—accepts that this is a regressive measure. The amendment, which refers to raising the lower limit from £27 to £28, is at the heart of the most regressive aspect of this regressive Bill.
  1110
  I draw the attention of the Secretary of State to the manifesto on which he and his colleagues fought the general election. On page 13—which was unlucky for some—it states:
  "We shall cut income tax at all levels to reward hard work, responsibility and success; tackle the poverty trap"—
  we are discussing the poverty trap—
  "encourage saving and the wider ownership of property; simplify taxes…and reduce tax bureaucracy."
  It goes on:
  "It is especially important to cut the absurdly high marginal rates of tax both at the bottom and top of the income scale."
  We are here dealing with an even more absurdly high marginal rate of tax at the bottom of the income scale. The election manifesto goes on to say:
  "It must pay a man or a woman significantly more to be in, rather than out of, work. Raising tax thresholds will let the low-paid out of the tax net altogether."
  This is a lowering of the threshold. It is also a form of tax, so it is contrary to that undertaking. The manifesto goes on:
  "unemployment and short-term sickness benefit must be brought into the computation of actual income."
  That was on taxation. I turn to what the manifesto says about social security. This aspect may explain why the Chancellor got himself and the House so confused when he introduced his mini-Budget. The manifesto says:
  "Our social security system is now so complicated that even some ministry officials do not understand it."
  It appears that several Members, at least, of the Treasury Bench did not understand it, and probably do not understand it any more now. The manifesto also says:
  "Income tax starts at such a low level that many poor people are being taxed to pay for their own benefits."
  This is exactly that kind of tax, and because it is more regressive than income tax it taxes those at the lower end of the scale more heavily even than if this bit of revenue had been raised from income tax.
  I therefore strongly support the amendment to increase the minimum level from £27 to £28 because of that crucial, regressive aspect of this part of the existing legislation. I think that we all recognise that it has that impact, whatever the levels may be. There is, nevertheless, merit in raising the level, because this is not like income tax. When one moves from one income tax bracket to another, one pays the enhanced rate only on the income covered by the higher bracket. One does not have to pay the higher rate on all the income that one receives. In this case, as I understand it in my simple way, when people who previously made no contributions go over this benchmark, they must immediately start paying 7·7 per cent. not just on the income above the benchmark but on the whole of their income.
  This must be the most regressive aspect of anything in our taxation and social security system. The amendment is an admirable effort to alleviate to some extent the consequences of this general provision. I therefore strongly support it. As I have said, I hope that my simplicity and relative ignorance in this matter may have helped to convince the Secretary of State in a way that the expertise of my colleagues has not.
  Mr. Andrew F. Bennett: I am very puzzled by the Minister's reply, the whole thrust of which seemed to be that she was doing people a good turn by keeping the limit that bit lower, because she was ensuring that people paid for benefits. If that is her argument, she must be certain

  1111
  that for all part-time workers there are definite benefits to accrue from payments. Some people are unlikely to receive any benefit. It is a very difficult area.
  There are people who, if they do not pay contributions for only short periods in the course of a lifetime, lose very little, if anything of their pension. It is, therefore, dangerous to tell people now struggling to work their way through college or university by working part-time that it is in their own interests to pay contributions. For most of them, that small amount of money is far more crucial now than it is ever likely to be for their pension, as they will almost certainly be entitled to a full pension on the rest of their earnings record over the years.
  The only possible area in which those people might lose benefit is in regard to sickness benefit, but if the Minister really believes her own argument she should be saying that all people who are working and are below the £27 threshold should have the opportunity to make a contribution, taking into account their ability to pay, so that they may get benefits. She should be putting forward a graduated system of payments in order to give everyone that form of benefit, rather than have this cut-off point.
  Mr. Race: I think that my hon. Friend said that the only benefit that people might actually lose was either retirement pension or sickness benefit. Is he aware that many part-time workers, some of whom earn just over £27, are ineligible to register as unemployed part-time workers and, therefore, receive no national insurance unemployment benefit? Many employment exchanges will only register people, particularly women, for full-time work. That invalidates the argument that only sickness benefit and pensions are affected by this miserable proposal.
  Mr. Bennett: I accept that. I am suggesting that if the Minister is really concerned about the group that is losing as a result of the higher rate she should bring forward proposals so that some of those people can qualify for benefit and make a small payment, but not the penal tax contained in this proposal.
  With regard to the upper limit, we still have not had a proper explanation of the figure. All that it really amounts to is that the Government were looking for any extra money that they could find, and that is why they raised the limit. There was no logic in it at all.
  The Minister went on to say that it all came back to the supposed deal in relation to the Social Security Pensions Act. There is great concern among the Opposition as to what that deal actually was and what record there is of it. As I understand it, the Social Security Pensions Act provided that pensions would be linked with prices and earnings, and that they would be raised in line with whichever went up the most. If that was the deal, it was broken last year, when the Government took away the link with earnings, because that is the important aspect. If the Government wish to rest their case upon that, they must start moving these things in line with earnings and not merely in line with prices.
  The Minister must give the Committee a clear explanation. Was the deal based only on the link with pensions, irrespective of how they went up, or was the link with pensions based on the fact that they would go up with the best of both worlds—prices or earnings? That is my understanding of the deal. It is unfair of the Minister to
  1112
  claim that a deal reached in the past, based upon those principles, still holds when one of the fundamental principles has been withdrawn.
  Mr. Rooker: I may be wrong. I heard the Secretary of State muttering while my hon. Friend was making his point. I invite my hon. Friend to put the question directly, because I do not know what Ministers actually mean when they talk about the deal. Do they mean the consensus, the bipartisan agreement—the Social Security Pensions Act 1975 or the Social Security Act 1975, one or other, or both? That is the nub of the matter. The earnings link is in the Social Security Act, but the earnings limits are in the Social Security Pensions Act. We must know to which Act Ministers are referring, so that we know which pledge they are breaking.
  Mr. Bennett: I thank my hon. Friend for that intervention. I see no point in my repeating the question. I hope that the Minister will answer it and tell us on what basis the deal existed. If she is claiming that it existed merely on the basis of prices, most Labour Members would not accept that.
  If the argument is to rest on the link with earnings, the Government at least ought to accept the increase from £27 to £28. On that basis, I would have thought that the £200, rather than being the top point, could be the mid-point in a range between, say, £185 and £210. I believe that the Committee could accept such figures.
  We must be told the basis on which the deal was made. Was it based on one of those Acts, or on a combination of them? In my view, it would be acceptable only if it were done on the basis of earnings as well as prices.
  6.30 pm
  Mrs. Chalker: I come back to what I have said already. I am sorry that the hon. Member for Stockport, North (Mr. Bennett) did not grasp the point that I made about the upper earnings limit being changed in line with his amendment. I was pointing out that this would cause a deficit on the national insurance fund of about £64 million. In changing contributions limits, the previous Government, long before this Government, always sought to keep the fund in balance. The amendment would not permit that to happen. That is the advice of the Government Actuary's Department, and that is the reason why we are unable to accept the amendment. We have a duty to keep the fund in balance.
  Both the hon. Member for Stockport, North and the hon. Member for Holborn and St. Pancras, South (Mr. Dobson) made an interesting case. I shall want to go into it in some detail afterwards, but I do not think that it was tied directly to what was said earlier in the debate. I shall consider what the hon. Members said and see whether there is any information that I can give them directly by letter.
  I should like to reply to the point raised by the hon. Members for Birmingham, Perry Barr (Mr. Rooker) and for Stockport, North. When I referred to the earnings limit, I spoke of the Social Security Pensions Act 1975. As the hon. Member for Perry Barr said, it is in that Act that the upper and lower earnings limits are defined, as well as their relationship to pensions. For those who were not in the House at the time of that legislation, I should point out that the deal was to enable contracting out by companies that wished to have a company pension scheme that

  1113
  worked alongside the State pension scheme. That was brought into being from April 1978 by the Social Security pensions Act 1975. There has been no change in that deal. The upper and lower earnings limits are set out there for very good reasons, as I have sought to point out. I believe that we are right to maintain the formula that was agreed in that Act, thus ensuring that the contributions of those who earn eventually provide benefit.
  One Labour Member spoke of the regressive nature of national insurance contractions. I accept that the argument can be played that way, but I believe that most people in the country realise that it is net income on which most families judge their standard of living. On that basis, one must accept that national insurance contributions are mildly progressive up to the upper earnings limit, and that that contains the vast majority of families.
  We could engage in long discussions on this issue. However, the principle that was established by both parties in 1975, in the measure that went through the House speedily and with no difficulty whatever, has now been used as a vehicle. We understand the tactic, but we cannot accept the case that has been put forward by the Opposition.
  Mr. Rooker: I should like to make one point so that it is clear and on the record. We do not accept the Minister's, arguments. We sincerely believe that the agreements entered into in tie past have been broken by the Government's decision earlier this year to break the link between the old-age pension and earnings or prices, whichever is the higher. Our argument has hung on that point. We stick by it. We do not accept the Government's arguments, and we shall vote for the amendment.
  Question put, That the amendment be made:—
  The Committee divided: Ayes 226, Noes 284.

  Division No. 17]

  [6.35 pm

  AYES

  Abse, Leo

  Cowans, Harry

  Adams, Allen

  Cox, T. (W'dsw'th, Toot'g)

  Allaun, Frank

  Crowther, J. S.

  Anderson, Donald

  Cryer, Bob

  Ashton, Joe

  Cunliffe, Lawrence

  Atkinson, N.(H'gey,)

  Cunningham, G. (Islington S)

  Bagier, Gordon A.T.

  Dalyell, Tam

  Barnett, Guy (Greenwich)

  Davidson, Arthur

  Barnett, Rt Hon Joel (H'wd)

  Davies, Rt Hon Denzil (L'lli)

  Beith, A. J.

  Davis, Clinton (Hackney C)

  Bennett, Andrew(St'kp't N)

  Davis, T. (B'ham, Stechf'd)

  Bidwell, Sydney

  Deakins, Eric

  Booth, Rt Hon Albert

  Dean, Joseph (Leeds West)

  Boothroyd, Miss Betty

  Dempsey, James

  Bottomley, Rt Hon A.(M'b'ro)

  Dewar, Donald

  Bray, Dr Jeremy

  Dobson, Frank

  Brown, Hugh D. (Provan)

  Dormand, Jack

  Brown, R. C. (N'castle W)

  Douglas, Dick

  Brown, Ron (E'burgh, Leith)

  Douglas-Mann, Bruce

  Buchan, Norman

  Dubs, Alfred

  Callaghan, Rt Hon J.

  Duffy, A. E. P.

  Callaghan, Jim (Midd't'n & P)

  Dunn, James A.

  Campbell, Ian

  Dunnett, Jack

  Campbell-Savours, Dale

  Dunwoody, Hon Mrs G.

  Canavan, Dennis

  Eadie, Alex

  Cant, R. B.

  Eastham, Ken

  Carmichael, Neil

  Edwards, R. (W'hampt'n S E)

  Carter-Jones, Lewis

  Ellis, R. (NE D'bysh're)

  Cartwright, John

  Ellis, Tom (Wrexham)

  Clark, Dr David (S Shields)

  English, Michael

  Cocks, Rt Hon M. (B'stol S)

  Ennals, Rt Hon David

  Cohen, Stanley

  Evans, Ioan (Aberdare)

  Coleman, Donald

  Evans, John (Newton)

  Conlan, Bernard

  Ewing, Harry

  Cook, Robin F.

  Faulds, Andrew

  1114

  Field, Frank

  Morris, Rt Hon A. (W'shawe)

  Fitch, Alan

  Morris, Rt Hon C. (O'shaw)

  Fitt, Gerard

  Morris, Rt Hon J. (Aberavon)

  Fletcher, Raymond (Ilkeston)

  Moyle, Rt Hon Roland

  Fletcher, Ted (Darlington)

  Mulley, Rt Hon Frederick

  Foot, Rt Hon Michael

  Newens, Stanley

  Ford, Ben

  Oakes, Rt Hon Gordon

  Forrester, John

  Ogden, Eric

  Foulkes, George

  O'Halloran, Michael

  Fraser, J. (Lamb'th, N'w'd)

  O'Neill, Martin

  Freeson, Rt Hon Reginald

  Owen, Rt Hon Dr David

  Garrett, John (Norwich S)

  Palmer, Arthur

  Garrett, W. E. (Wallsend)

  Park, George

  George, Bruce

  Parker, John

  Gilbert, Rt Hon Dr John

  Pavitt, Laurie

  Ginsburg, David

  Powell, Raymond (Ogmore)

  Golding, John

  Price, C. (Lewisham W)

  Gourlay, Harry

  Race, Reg

  Grant, John (Islington C)

  Radice, Giles

  Grimond, Rt Hon J.

  Rees, Rt Hon M (Leeds S)

  Hamilton, James (Bothwell)

  Richardson, Jo

  Hamilton, W. W. (C'tral Fife)

  Roberts, Allan (Bootle)

  Hardy, Peter

  Roberts, Ernest (Hackney N)

  Harrison, Rt Hon Walter

  Roberts, Gwilym (Cannock)

  Hattersley, Rt Hon Roy

  Robertson, George

  Haynes, Frank

  Robinson, G. (Coventry NW)

  Healey, Rt Hon Denis

  Rodgers, Rt Hon William

  Heffer, Eric S.

  Rooker, J. W.

  Hogg, N. (E Dunb't'nshire)

  Roper, John

  Holland, S. (L'b'th, Vauxh'll)

  Ross, Ernest (Dundee West)

  Home Robertson, John

  Rowlands, Ted

  Homewood, William

  Ryman, John

  Hooley, Frank

  Sandelson, Neville

  Horam, John

  Sever, John

  Howell, Rt Hon D.

  Sheerman, Barry

  Howells, Geraint

  Sheldon, Rt Hon R.

  Huckfield, Les

  Shore, Rt Hon Peter

  Hudson Davies, Gwilym E.

  Silkin, Rt Hon J. (Deptford)

  Hughes, Mark (Durham)

  Silverman, Julius

  Hughes, Robert (Aberdeen N)

  Snape, Peter

  Hughes, Roy (Newport)

  Soley, Clive

  Janner, Hon Greville

  Spearing, Nigel

  Jay, Rt Hon Douglas

  Spriggs, Leslie

  John, Brynmor

  Stallard, A. W.

  Johnson, James (Hull West)

  Steel, Rt Hon David

  Johnson, Walter (Derby S)

  Stewart, Rt Hon D. (W Isles)

  Johnston, Russell (Inverness)

  Stoddart, David

  Jones, Rt Hon Alec (Rh'dda)

  Straw, Jack

  Jones, Barry (East Flint)

  Summerskill, Hon Dr Shirley

  Jones, Dan (Burnley)

  Taylor, Mrs Ann (Bolton W)

  Kaufman, Rt Hon Gerald

  Thomas, Jeffrey (Abertillery)

  Kerr, Russell

  Thomas, Mike (Newcastle E)

  Lambie, David

  Thomas, Dr R.(Carmarthen)

  Leadbitter, Ted

  Tilley, John

  Leighton, Ronald

  Torney, Tom

  Lewis, Arthur (N'ham NW)

  Varley, Rt Hon Eric G.

  Lewis, Ron (Carlisle)

  Wainwright, E.(Dearne V)

  Litherland, Robert

  Wainwright, R.(Colne V)

  Lofthouse, Geoffrey

  Walker, Rt Hon H.(D'caster)

  Lyon, Alexander (York)

  Watkins, David

  Lyons, Edward (Bradf'd W)

  Welsh, Michael

  McCartney, Hugh

  White, Frank R.

  McDonald, Dr Oonagh

  White, J. (G'gow Pollok)

  McGuire, Michael (Ince)

  Whitehead, Phillip

  McKay, Allen (Penistone)

  Whitlock, William

  McKelvey, William

  Wigley, Dafydd

  MacKenzie, Rt Hon Gregor

  Willey, Rt Hon Frederick

  Maclennan, Robert

  Williams, Rt Hon A.(S'sea W)

  McTaggart, Robert

  Wilson, Gordon (Dundee E)

  Marks, Kenneth

  Wilson, Rt Hon Sir H.(H'ton)

  Marshall, Dr Edmund (Goole)

  Wilson, William (C'try SE)

  Marshall, Jim (Leicester S)

  Winnick, David

  Martin, M(G'gow S'burn)

  Woodall, Alec

  Mason, Rt Hon Roy

  Woolmer, Kenneth

  Meacher, Michael

  Wrigglesworth, Ian

  Mikardo, Ian

  Young, David (Bolton E)

  Millan, Rt Hon Bruce

  Miller, Dr M. S. (E Kilbride)

  Tellers for the Ayes:

  Mitchell, Austin (Grimsby)

  Mr. George Morton and

  Mitchell, R. C. (Soton Itchen)

  Mr. James Tinn.

  1115

  NOES

  Adley, Robert

  Fenner, Mrs Peggy

  Aitken, Jonathan

  Fisher, Sir Nigel

  Alexander, Richard

  Fletcher, A. (Ed'nb'gh N)

  Ancram, Michael

  Fookes, Miss Janet

  Arnold, Tom

  Forman, Nigel

  Aspinwall, Jack

  Fraser, Peter (South Angus)

  Atkins, Robert(Preston N)

  Fry, Peter

  Atkinson, David (B'm'th,E)

  Galbraith, Hon T. G. D.

  Baker, Kenneth (St.M'bone)

  Gardiner, George (Reigate)

  Baker, Nicholas (N Dorset)

  Gardner, Edward (S Fylde)

  Banks, Robert

  Garel-Jones, Tristan

  Beaumont-Dark, Anthony

  Gilmour, Rt Hon Sir Ian

  Bell, Sir Ronald

  Glyn, Dr Alan

  Bendall, Vivian

  Goodhew, Victor

  Benyon, Thomas (A'don)

  Goodlad, Alastair

  Best, Keith

  Gorst, John

  Bevan, David Gilroy

  Gower, Sir Raymond

  Biffen, Rt Hon John

  Grant, Anthony (Harrow C)

  Biggs-Davison, John

  Gray, Hamish

  Blackburn, John

  Greenway, Harry

  Blaker, Peter

  Grieve, Percy

  Body, Richard

  Griffiths, E.(B'y St. Edm'ds)

  Bonsor, Sir Nicholas

  Griffiths, Peter Portsm'th N)

  Boscawen, Hon Robert

  Grylls, Michael

  Bottomley, Peter (W'wich W)

  Gummer, John Selwyn

  Bowden, Andrew

  Hamilton, Hon A.

  Boyson, Dr Rhodes

  Hamilton, Michael (Salisbury)

  Bright, Graham

  Hampson, Dr Keith

  Brinton, Tim

  Hannam, John

  Brittan, Leon

  Haselhurst, Alan

  Brocklebank-Fowler, C.

  Hastings, Stephen

  Brooke, Hon Peter

  Havers, Rt Hon Sir Michael

  Brotherton, Michael

  Hawkins, Paul

  Brown, M.(Brigg and Scun)

  Hawksley, Warren

  Browne, John (Winchester)

  Hayhoe, Barney

  Bruce-Gardyne, John

  Heath, Rt Hon Edward

  Bryan, Sir Paul

  Heddle, John

  Buchanan-Smith, Hon Alick

  Henderson, Barry

  Buck, Antony

  Heseltine, Rt Hon Michael

  Budgen, Nick

  Hicks, Robert

  Burden, Sir Frederick

  Higgins, Rt Hon Terence L.

  Butcher, John

  Hill, James

  Butler, Hon Adam

  Holland, Philip (Carlton)

  Cadbury, Jocelyn

  Hooson, Tom

  Carlisle, John (Luton West)

  Hordern, Peter

  Carlisle, Kenneth (Lincoln)

  Howe, Rt Hon Sir Geoffrey

  Carlisle, Rt Hon M. (R'c'n)

  Howell, Ralph (N Norfolk)

  Chalker, Mrs. Lynda

  Hunt, David (Wirral)

  Chapman, Sydney

  Hunt, John (Ravensbourne)

  Churchill, W. S.

  Hurd, Hon Douglas

  Clark, Hon A. (Plym'th, S'n)

  Irving, Charles (Cheltenham)

  Clarke, Kenneth (Rushcliffe)

  Jenkin, Rt Hon Patrick

  Clegg, Sir Walter

  Jessel, Toby

  Cockeram, Eric

  Johnson Smith, Geoffrey

  Colvin, Michael

  Jopling, Rt Hon Michael

  Cope, John

  Kellett-Bowman, Mrs Elaine

  Cormack, Patrick

  Kershaw, Anthony

  Corrie, John

  Kimball, Marcus

  Costain, Sir Albert

  King, Rt Hon Tom

  Cranborne, Viscount

  Kitson, Sir Timothy

  Critchley, Julian

  Knight, Mrs Jill

  Crouch, David

  Knox, David

  Dean, Paul (North Somerset)

  Lamont, Norman

  Dickens, Geoffrey

  Lang, Ian

  Dorrell, Stephen

  Langford-Holt, Sir John

  Douglas-Hamilton, Lord J.

  Latham, Michael

  du Cann, Rt Hon Edward

  Lawson, Nigel

  Dunn, Robert (Dartford)

  Lee, John

  Durant, Tony

  Lennox-Boyd, Hon Mark

  Dykes, Hugh

  Lester Jim (Beeston)

  Eden, Rt Hon Sir John

  Lloyd, Peter (Fareham)

  Eggar, Tim

  Loveridge, John

  Elliott, Sir William

  Luce, Richard

  Emery, Peter

  Lyell, Nicholas

  Eyre, Reginald

  McCrindle, Robert

  Fairbairn, Nicholas

  Macfarlane, Neil

  Faith, Mrs Sheila

  MacGregor, John

  Farr, John

  MacKay, John (Argyll)

  Fell, Anthony

  Macmillan, Rt Hon M.

  1116

  McNair-Wilson, M. (N'bury)

  Shaw, Giles (Pudsey)

  McNair-Wilson, P. (New F'st)

  Shaw, Michael (Scarborough)

  McQuarrie, Albert

  Shelton, William (Streatham)

  Madel, David

  Shepherd, Colin (Hereford)

  Major, John

  Shepherd, Richard

  Marland, Paul

  Shersby, Michael

  Marlow, Tony

  Silvester, Fred

  Marshall Michael (Arundel)

  Sims, Roger

  Marten, Neil (Banbury)

  Skeet, T. H. H.

  Mather, Carol

  Smith, Dudley

  Maude, Rt Hon Angus

  Speller, Tony

  Mawby, Ray

  Spicer, Jim (West Dorset)

  Mawhinney, Dr Brian

  Spicer, Michael (S Worcs)

  Maxwell-Hyslop, Robin

  Sproat, Ian

  Mayhew, Patrick

  Squire, Robin

  Meyer, Sir Anthony

  Stainton, Keith

  Miller, Hal (B'grove)

  Stanbrook, Ivor

  Mills, Iain (Meriden)

  Stanley, John

  Mills, Peter (West Devon)

  Steen, Anthony

  Mitchell, David (Basingstoke)

  Stevens, Martin

  Moate, Roger

  Stewart, Ian (Hitchin)

  Monro, Hector

  Stewart, J.(E Renfrewshire)

  Montgomery, Fergus

  Stradling Thomas, J.

  Moore, John

  Tapsell, Peter

  Morris, M. (N'hampton S)

  Taylor, Robert (Croydon NW)

  Morrison, Hon C. (Devizes)

  Taylor, Teddy (S'end E)

  Morrison, Hon P. (Chester)

  Tebbit, Norman

  Myles, David

  Temple-Morris, Peter

  Neale, Gerrard

  Thomas, Rt Hon Peter

  Needham, Richard

  Thompson, Donald

  Nelson, Anthony

  Thornton, Malcolm

  Neubert, Michael

  Townend, John (Bridlington)

  Newton, Tony

  Townsend, Cyril D, (B'heath)

  Normanton, Tom

  Trippier, David

  Nott, Rt Hon John

  Trotter, Neville

  Onslow, Cranley

  van Straubenzee, W. R.

  Oppenheim, Rt Hon Mrs S.

  Vaughan, Dr Gerard

  Osborn, John

  Viggers, Peter

  Page, Rt Hon Sir G. (Crosby)

  Waddington, David

  Page, Richard (SW Herts)

  Wakeham, John

  Parkinson, Cecil

  Waldegrave, Hon William

  Parris, Matthew

  Walker, B. (Perth )

  Patten, Christopher (Bath)

  Walker-Smith, Rt Hon Sir D.

  Pattie, Geoffrey

  Wall, Patrick

  Pawsey, James

  Waller, Gary

  Peyton, Rt Hon John

  Walters, Dennis

  Pink, R. Bonner

  Ward, John

  Pollock, Alexander

  Warren, Kenneth

  Porter, Barry

  Watson, John

  Price, Sir David (Eastleigh)

  Wells, John (Maidstone)

  Proctor, K. Harvey

  Wells, Bowen

  Pym, Rt Hon Francis

  Wheeler, John

  Raison, Timothy

  Whitelaw, Rt Hon William

  Rathbone, Tim

  Whitney, Raymond

  Rees, Peter (Dover and Deal)

  Wickenden, Keith

  Rees-Davies, W. R.

  Wiggin, Jerry

  Renton, Tim

  Wilkinson, John

  Ridley, Hon Nicholas

  Winterton, Nicholas

  Ridsdale, Julian

  Wolfson, Mark

  Rifkind, Malcolm

  Young, Sir George (Acton)

  Rost, Peter

  Younger, Rt Hon George

  Royle, Sir Anthony

  Sainsbury, Hon Timothy

  Tellers for the Noes:

  St. John-Stevas, Rt Hon N.

  Mr. Spencer Le Marchant

  Scott, Nicholas

  and Mr. Anthony Berry.

  Question accordingly negatived.
  6.45 pm
  Mr. Rooker: I beg to move amendment No. 5, in page 1, line 13, leave out subsection (2).
  The First Deputy Chairman (Mr. Bryant Godman Irvine): With this we may take the following amendments:
  No. 6, in page 1, line 15, leave out '"7·75 per cent."' and insert
  '"6·75 per cent. up to an earnings limit of £85 per week and thereafter 7·75 per cent.".
  No. 7, in page 1, line 15, leave out '7·75 per cent.' and insert '7·25 per cent.'.
  No. 8, in page 1, line 15, leave out '7·75 per cent.' and insert '7 per cent.'.
  No. 9, in page 1, line 15, at end insert
  '(2A) In section 4(6)(b) of the principal Act (amount of secondary Class 1 contributions) for the words "10·2 per cent." there shall be substituted "10·7 per cent.".'.
  Mr. Rooker: The doors are not closed, Mr. Godman Irvine. This is a debating Chamber, and I should have hoped that both doors could be closed before we commenced the debate. [Interruption.] Does the Secretary of State wish to say something?
  It is not without accident that only one Conservative Member, the hon. Member for Somerset, North (Mr. Dean), took part in the debate on amendment No. 2. I hope hat a few more Tory Members will seek to participate in this debate, if only because of the large sum of money involved accept that only a small sum was involved in the previous group of amendments—£9 million or £22 million net to the national insurance fund—but amendment No. 5 is in some ways the meat of the Bill. The Government are seeking to raise £1 billion by an impost of 1 per cent. on the national insurance contributions paid by employees.
  The Treasury notice issued last month, which was Landed out to selected journalists, broke down the figure. We are talking about £947 million raised from employees, but in the notes at the bottom of the notice it is indicated that a further £50 million has to be added. That will come basically from the self-employed and those who pay voluntary contributions. There is a later amendment on the self-employed. I had not realised on Second Reading that there was an impost on the self-employed. We are talking about a total of £997 million.
  Mr. Patrick Jenkin: So that there should be no misunderstanding, I should point out that the £997 million, includes the £50 million, as the note says, added far c lasses 2, 3 and 4 contributions. It is the £50 million added to the £947 million that appears in the first column of the Treasury note.
  Mr. Rooker: I thought that that was what I had said. I said £947 million at first, and I realised afterwards that there was an extra £50 million, in the note to the note. The grand total is £997 million, which includes the £50 million it impost on the self-employed. It is £1 billion, and that is a lot of money in anyone's language. I understand from a written reply that it is the equivalent of 1¼p on income tax.
  An increase in income tax would be a fairer way of raising the money, because the well-off who earn more than £200 a week would pay extra, but they will not pay proportionally more through national insurance contributions. The Bill does not come into effect until the next financial year, and we shall have a Budget before then, which will change tax rates, or at least tax allowances, for the next financial year. There would be no great problem about holding hack a 1¼p tax increase until tile Budget. The Government would get the same amount of extra revenue for 1981–82.
  Why the rush? The money did not have to be raised by the use of the Bill. Most of the contents of the Bill would have been included in an order that would have been
  1118
  debated for one and a half hours late at night, but the Government have chosen to use primary legislation to raise the money.
  Why did the Government not raise the money by an increase in income tax? The answer, of course, is that they are committed not to raise income tax. If ever a Government were hoist on their own election promises and hasty measures on taking office, this is that Government. After reducing the standard rate to 30p, they would have considerable difficulties with their Back Benchers if they started to increase it. They have therefore used the backdoor method of the national insurance fund to raise the money.
  In the debate on the Queen's Speech the Chancellor of the Exchequer had the gall to try to give the impression that it was the fault of the Government Actuary that the Bill had to be introduced. The right hon. and learned Gentleman was asked why he had not increased the upper earnings limit within the ceiling. His answer suffices for the general tenor of the Government's argument:
  "Because the figure arrived at by way of conclusion follows from the Government Actuary's analysis of what it is prudent to impose."—[Official Report, 27 November 1980; Vol. 994, c. 900.]
  I assume that that is an equally sufficient answer to those who ask why the impost is 1 per cent.
  The Secretary of State was fond of saying in Opposition that the Government Actuary's analysis was based on his assumptions. But those are assumptions that he is directed to use by the Government. The Government cannot try to dissociate themselves from the decision as the Chancellor of the Exchequer sought to do.
  The Government Actuary has been instructed to use average unemployment of 2·3 million for 1981–82, average earnings of 10½ per cent. more than in 1980–81 and the fact that there could be a benefit uprating in November in line with the expected movement in prices.
  Two qualifications to those instructions must be made. First, the Government are committed to knocking 1 per cent. off the old-age pension increase next year. Secondly, invalidity, unemployment, sickness, industrial injury and maternity benefits may be raised, under the powers that the Government have taken this year, by 5 per cent. less than the rise in prices. I suspect that when the Government Actuary issues his report on the current financial year of the national insurance fund we shall see a different estimate of surplus or deficit. I repeat our complaint that we are dealing with figures that will change substantially in the financial year for which we are legislating.
  The Government are telling the nation that they need £1 billion. Some of my hon. Friends will attempt, by amendments Nos. 7 and 9, to split the 1 per cent. impost half and half between employee and employer, as has been done in the past. That proposal has a certain equity about it. The Secretary of State must give us a little more detail and explain why the employee will have to pay the whole impost.
  It seems that of the 1 per cent. that vie are debating ¼ per cent. is required for the National Health Service. The questions that I asked about that in winding up Monday's debate were not satisfactorily answered, and I hope that the Secretary of State will answer them today.
  I questioned the split-up of the policy decision changes referred to in the White Paper that was issued this year. I am chasing up the £121 million that the Government expected to get for the NHS by imposing charges on road

  1119
  accident cases, removing the exemption from dental charges for young people, tightening up the use of the NHS by foreign visitors and charging for sight tests. The sight test was the only one for which we were given a figure for the extra input to the NHS. It was about £10 million or £11 million. That leaves £110 million split between the other three policy decisions with which the Government now say that they cannot go ahead. I hope that we shall have a breakdown of that. I hope also that the Minister has been provided with the figures.
  7 pm
  That accounts for only ¼ per cent. By no stretch of the imagination is that new money for the National Health Service, in view of the implication in the White Paper. Another ¼ per cent. is required in the normal course of the national insurance fund operations. There is not too much complaint in principle about that. It would have been required according to the Government's forecast of average unemployment in the same way as a ¼ per cent. increase took place in April this year. We claim that ¼ per cent. of the 1 per cent. is legitimate. It is a tragedy that the Government forecast an average unemployment level of 2·3 million. The implication is that the figure will be much higher than that.
  We take extreme exception to the remaining ½ per cent., which we shall debate at great length on clause 2. It involves the removal of the supplement from the national insurance funds to the Treasury. There is no good reason why that ½ per cent. should not be split between the employer and the employee. It is a shift of resources from the taxpayer to the backs of employees. The Government's only argument is that they do not wish to burden industry. The Secretary of State nods in agreements, but the Government are burdening industry substantially by the measure that we are debating.
  We have learnt from debates and press comment that the effect of the increase on employers is considerable, simply because of the spill-over effect of the national insurance surcharge, the change in the rates and the expected change in inflation. I accept that employers would have had to pay extra anyway. The Government say that they want to relieve employers of their burdens. But they have not done that, because they are imposing a burden. They are putting the impost on employees. Employers pay corporation tax and others pay capital transfer tax, capital gains tax and even income tax. The burden could have been shared. I suspect that the Government might change the income tax rate in the next Budget, but it is best to get this money under the belt for next year.
  Mr. Andrew F. Bennett: I am a little worried that my hon. Friend might be falling into the trap of talking too much about the employers' and employees' contributions, as though they can be kept separate. Many employers manage to shift the burden on to their employees. One must examine a firm's overall wages policy and costs to know whether the burden falls on the firm or on the employees. There is much danger in talking in simplistic terms, which we are forced to do on the amendments. The matter is more complicated than the Government admit.
  Mr. Rooker: My hon. Friend is correct. Some of the more detailed issues can be discussed on other
  1120
  amendments, one of which was tabled by Members from the Liberal Party. At least they could find time to table one amendment, unlike Conservative Members.
  Mr. Patrick Jenkin: Members of the Conservative Party provided the Bill.
  Mr. Rooker: We know that Conservatives are delighted and tickled pink with the contents of the Bill. That is proved by their absence from the Chamber tonight.
  Mr. John Major: The hon. Gentleman should look behind him.
  Mr. Rooker: When the number of the Conservatives participating in the debate equals the number of my hon. Friends who are participating, the Government will have a charge to make against the Opposition.
  One has to make points in simplistic terms because of the way in which the Bill is drafted and because of the restrictions on drafting amendments resulting from the timetable and the Ways and Means resolution.
  All of the 1 per cent. impost falls on employees. If any of it were put on to employers, many of them would simply lump the national insurance contribution with the wages bill and put the entire 20 per cent. on to the consumer. Employers do not attempt to take a share of the burden. I am drawing a distinction between the 0·5 per cent. due to removal of the Treasury supplement and the other 0·5 per cent. that is not due to its removal because it is related to general taxation, of which employers pay an unequal share.
  If not the most central issue, this is the most expensive one in terms of raising money from the 22 million people who are lucky enough to have jobs. Whatever the Government might do about tax allowances and the standard rate of income tax, they will not be able to claim that they are fulfilling their manifesto commitment to reduce taxation. They have increased the rate of taxation on the insured population twice this year. In just over 12 months, the burden has increased by 1¾p in the pound for the majority of people. It has changed by almost 8p in the pound for many low-paid workers at the margin.
  People are not worried about net income alone. They are worried also about the stoppages and the effect on the extra £1 that they might earn by way of bonus or overtime. The majority of low-paid workers are women who work part-time. Their tax burden is increasing apace under this Government and under the Bill. There is no doubt that £1 billion is a lot to impose upon employees. It is grossly unfair.
  I hope that my hon. Friend the Member for Birkenhead (Mr. Field) will not make the plea that he made on Monday for Government Members to seek to overturn the Government's case. We accept that they will not do that. We accept that we shall not win the vote. However, the majority of working people will understand what the Government are doing by pushing the Bill through. In short, it is to increase their tax burden.
  Mr. Richard Wainwright: I speak particularly to amendment No. 6, in the name of Liberal Members, which was tabled in response to an invitation from the Chief Secretary to the Treasury, given when he wound up for the Government in the Second Reading debate. He said:
  "The hon. Member for Isle of Ely (Mr. Freud)"—
  the Liberal spokesman on these matters—

  1121
  "said that there is a poverty trap difficulty in what is being proposed I cannot deny that. It is a subject more suitable to those, detailed examination that only a Committee stage can provide, but I took note of what the hon. Gentleman said."—[Official Report, 8 December 1980; Vol. 995, c. 1072.]
  Our amendment is a direct response, because it proposes that the additional 1 per cent. impost shall not apply to wages of less than £85 a week.
  There is no doubt that the Bill adds substantially to what was already the worst poverty trap that we have had in this country. On 8 December, reviewing the Bill, The Times said:
  Those effects are the opposite of the Government's declared aims of removing disincentives.
  The changes mean that 50,000 of the lowest paid will have their marginal tax rate increased by 6·25 per cent. next April compared with their position before the Budget.
  Those earning £40 a week will be able to keep only 62·25p of e very extra pound they cam. On earnings of £500 a week high earners will be able to keep 40p of every extra pound, compared with 17p before last year's Budget.
  In addition 90,000 families receiving family income supplement and other means-tested benefits will have an effective marginal tax rate close to 100 per cent."
  That is not what the Government told the people when they were seeking election in 1979. The House has so many times heard a recital of the broken promises that I do not want to weary the Committee with it at length tonight. It is sufficient to remind hon. Members of chapter 3 in the 1979 Conservative manifesto, with the bold heading
  "A more prosperous country"
  Under the sub-heading
  "Cutting Income Tax",
  we read:
  "We shall cut income tax at all levels to reward hard work, responsibility and success; tackle the poverty trap"
  and so on. It is just as well that the very subtle draftsman used the word "tackle". Indeed, the Conservatives have tackled the poverty trap to some tune, by elevating it to a degree of horror that we had not previously seen.
  The social policy research unit at York university recently declared that the poverty trap had never been worse. It is so far-reaching now that, in the opinion of the York university researchers,
  "it would be much more accurate to describe it as a poverty plateau",
  because instead of applying to a fairly narrow, although very hard-done-by, section of the population, it now any lies to a wide hand of people over a wide range of wage scales. Our amendment is an attempt to remove part of the addition to the poverty trap that the Bill undeniably creates.
  It will no doubt be said—because the House is often misled in this matter—that by removing the 1 per cent. addition from a number of wage earners we should create a deficit in the national insurance fund for one year. It cam tot be said too often that there is nothing wrong with that For example, in 1977, on the recommendation of the Government of the day, the House deliberately voted national insurance changes in the expectation of a deficit. As is well known, and as the Comptroller and Auditor General has pointed out before now, there is no statutory obligation that every year the fund's income shall at least balance its outgoings. The state of balance is very much to be over a period of time.
  There is no reason at all why this impost should be inflicted in this one year. That was another respect in which the Chancellor of the Exchequer on 24 November, in his mini-Budget, failed to spell out the real position as fully as the House was entitled to expect. That is the
  1122
  reasoning behind our amendment — that the poverty plateau was bad enough and extensive enough already, and that it was wrong and unjust that the Bill should further narrow the difference between being on unemployment benefit and being in work.
  7.15 pm
  I conclude by reminding the Committee—although I am sure that hon. Members will not require much reminding—of the appalling disincentives to taking a low-paid job. My constituency is by no means scattered—it is in two metropolitan boroughs—but I have many distressing examples of people who lose through going out to work, by the time they have paid their appalling bus fares and have had meals out, which working in a distant place involves, and have lost the former reduced rate of income tax, which this Government abolished. It cannot have been the intention of Conservative Members, when they took their seats on the Government Benches that people should lose in that way I beg them to repent of this further error before they add it to their catalogue of crimes.
  Mr. Ennals: The Secretary of State and I should be in agreement in strongly objecting to the use of national insurance contributions and payments into the national insurance fund as a simple but grossly unfair means of taxation. As I pointed out in an earlier intervention, when the right hon. Gentleman was in Opposition he voted against the concept of a surcharge, even though that surcharge affected both employers and employees.
  It is hard that the right hon. Gentleman has suffered this form of punishment—for that is what it is—from the Treasury, which has decided that it wants to minimise the extent to which it increases the rate of income tax, if that is what it will do, or increase taxes at all. The Treasury is in fact simply using the fund as a means of collecting money for itself.
  That means that the national insurance contributions bear no relationship whatsoever to the level of benefits and the entitlement of people who make the contributions. Beveridge and those Labour Ministers who created the national insurance fund and the National Insurance Act, which was the basis of it, would turn in their graves if they thought that Beveridge's concept would be used by Governments simply as a means of raising extra revenue—revenue that they did not have the guts to raise through ordinary taxation, particularly when carried our in such a retrograde way, imposing a tougher impost on the lower-paid than on the higher-paid.
  Mr. Keith Best: Does the right hon. Gentleman wish to dissociate himself wholly from the last Government's action in imposing a 2 per cent. impost, which did not even go into the national insurance fund?
  Mr. Ennals: I do. If the hon. Gentleman had been here for the Second Reading debate, he would know that I made precisely that statement. I said that it was wrong that any Government, including the Government of which I was a member, should use the fund in that way. I am being totally consistent. I was under an obligation, because decisions were taken that I had to carry through. I hope that the Secretary of State is in the same position, such is my respect for him from time to time—
  Mr. Race: When?
  Mr. Ennals: There are moments. The right hon. Gentleman has shown one or two examples of kindness to

  1123
  me. I shall not mention them now. I merely say that there are moments when I have this feeling for him. I am feeling neither sorry for him nor angry with him. One of the accusations that I have frequently made against him is that he is a Treasury Minister. I do not know whether the Bill proves that he is or whether the Bill has been forced upon him by his Treasury colleagues.
  There is logic in the Liberal amendment, which has been referred to by the hon. Member for Colne Valley (Mr. Wainwright). If the Government are to use this method of raising £1 billion, it would seem fair to use the principle that has been used over many years—namely, increasing the contributions of employers and employees at the same time. That has not been done. The burden has been placed almost entirely on employees. It is the equivalent of about 1p in the pound on the standard rate of tax.
  Mr. Patrick Jenkin: The right hon. Gentleman and the hon. Member for Birmingham, Perry Barr (Mr. Rooker) might like to explain how they can reconcile what they are now saying—namely, that the burden should be shared between employers and employees—with the most almighty row that they both made a couple of weeks ago because it was suggested that my right hon. and learned Friend the Chancellor of the Exchequer was somehow concealing the fact that there were to be increases for employers. It seems that the right hon. Gentleman is trying to have it both ways, and I hope that he will explain the inconsistency.
  Mr. Ennals: There was fury in the House as well as among employers, in the CBI, in the press and elsewhere, because it was felt that the House and the country were being misled by the Chancellor's statement. At that stage we did not enter into the argument whether the raising of the money should be shared between employers and employees on an equal basis. We argued that the gist of the statement was that the burden would be placed on one side. The right hon. and learned Gentleman gave no indication that another £1 billion would have to be paid by employers. That was the nature of the row, and the right hon. Gentleman knows it.
  What effect does the right hon. Gentleman think that these provisions will have on wage claims when the people realise what has happened? Will they not recognise these provisions as an impost upon their earnings at a time when inflation is higher than the Government's stated 6 per cent. norm? Even those who are forced to accept 6 per cent. settlements will be expected to pay the higher rate of contribution to national insurance. Surely the Government expect that there will be a reaction on the part of employees when the Bill comes into effect.
  As my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) stressed, there will be no more money for the National Health Service as a result of the division of the extra money that is being raised. There will not be an extra penny for the NHS. It will not be enabled suddenly to say "We shall contribute £25 million in response to the Select Committee on perinatal and neonatal mortality, or £X million for renal dialysis, or any other specialty. "The money will go to the Treasury. That was said honestly by the Chief Secretary, who replied to the
  1124
  debate on 8 December. We shall be dealing later with the reduction from 18 per cent. to 14½ per cent. of the Treasury supplement. The right hon. Gentleman said:
  "it plays a major part in reducing the public sector borrowing requirement."—[Official Report, 8 December 1980; Vol. 995, c. 1072.]
  That is the only way in which the Treasury is considering this operation. It considers that it is a simple way of getting itself out of a desperate financial situation of its own making. I hope that my right hon. and hon. Friends will support the amendment when the Committee divides on it.
  Mr. Race: These are important amendments because they relate to the form of taxation and insurance contributions that we should pay as employees and employers. They raise a number of general issues as well as the specific ones that are reflected in the amendments.
  I share the view of my right hon. Friend the Member for Norwich, North (Mr. Ennals) that the amendments should be supported on the ground that there is a degree of equity in the proposal that any increase that is thought to be required in national insurance contributions should come from both employers and employees on an equal basis. That has nearly always been the practice in the past when Governments have asked for increases in contributions. They have normally increased both sets of taxation. On this occasion, the Government propose to increase taxation by imposing an extra 1 per cent. on employees by a variety of methods and to make no specific increase in employers' contributions directly, although there will be indirect increases in employers' contributions.
  I am sorry that the Under-Secretary of State, the hon. Member for Wallasey (Mrs. Chalker), has left the Chamber. I wanted to refer to a remark that she made earlier about taxation.
  Mr. Andrew F. Bennett: On a point of order, Mr. Godman Irvine. As this is, in effect, a Finance Bill, is it not reasonable for the Committee to have a representative from the Treasury on the Government Front Bench?
  The First Deputy Chairman: The hon. Gentleman knows that that is not a matter for the Chair.
  Mr. Race: I was saying that I am sorry that the hon. Lady has left the Chamber. In the previous debate she referred to the form in which national insurance contributions are paid and spoke about their progressive or regressive nature. I think that she said that national insurance contributions were mildly progressive. When she said that, I pricked up my ears. It is the most extraordinary statement that I have heard in a long time in this place. It must have been made on the assumption that those who earn £200 a week, for example, pay a higher cash amount in national insurance contributions than those who earn, for example, £50 a week. That must be so because we pay the same percentage in national insurance contributions, although the cash outcome is different at different income levels. The more one earns, the more one pays.
  That cannot be described as mildly progressive. It merely means that the richer one is, the more one pays in cash terms. The percentage of income that is paid by someone earning £200 a week is the same, notionally, as the person who is earning £50 a week. Therefore, the argument that national insurance contributions are mildly progressive should not be tolerated by the Committee.

  1125
  That relates to the amendments, which seek to reduce the impact of the regressive form of taxation. They seek to reduce the regressive form of the taxation in a way that is more acceptable to employees.
  Much mention has been made of the effect on the low-paid of the increase in contributions. Low-paid workers, male and female, are hound to pay the same percentage of their total income above the threshold of £27 per week n contributions as the person earning £200 a week. The Minister cannot therefore argue that it is a mildly progressive form of taxation. It is regressive.
  7.30 pm
  It has other unacceptable features. It is an employment lax. It is as bad as selective employment tax, which was attacked at great length by the Conservative Opposition during the Government of my right hon. Friend the Member for Huyton (Sir H. Wilson) between 1964 and 1970. It is, therefore, absurd for this Government now to argue that it is a form of taxation as acceptable as income tax.
  Mr. Best: Does the hon. Gentleman accept that placing a greater burden on employers is likely to lead to further unemployment?
  Mr. Race: That is a valid point. However, we must remember the context in which the increases are being made. Substantial concessions are available to companies in the form of deferments on corporation tax. They pay only a small proportion of their before-tax profits in corporation tax and other forms of taxation. For example, tarts of the oil and banking sector have paid little, if any, corporation tax over the past few years. British Petroleum c id not pay any corporation tax in the last financial year far which it reported its pre-tax and after-tax profits. Companies are faced with serious problems over manpower and selling their goods in the market glace, but they pay less tax in real terms than the individual employee.
  Mr. Dobson: Reverting to the question whether these national insurance contributions are regressive, is it not true that even if they could be considered progressive they are much more unfair to the low-paid than a system that would take a similar amount from general taxation? However, my hon. Friend and I agree that they are regressive.
  Mr. Race: I agree. However, they are less so than a year ago. The Government have abolished the 25 per cent. tax band—the slice of earnings on which people paid only 25 per cent. tax instead of 30 per cent. That change was made in the Budget of 12 June 1979. However, national insurance contributions are still significantly more regressive than income tax on the present basis, even in the context of the Government's extraordinary measures to abolish the 25 per cent. tax band and to index the higher rate bands They have protected higher income earners and attacked the ability of the low-paid to defend themselves against tax increases at that level. The imposition of the 1 per cent. increase, the freezing of the lower point of starting national insurance contributions at £27 per week and the abolition of the 25 per cent. rate band penalise the lowest-paid for the economic policies of this Government.
  Amendments Nos. 7 and 9 raise a number of other points. Should the Government be introducing what is essentially an employment tax at this time? The hon.
  1126
  Member for Anglesey (Mr. Best) mentioned the problems created for employers by the increased national insurance contributions. The Government, through this Bill and other measures introduced a few weeks ago, are putting a tax on employment. They will encourage employers to shed as much labour as possible in order to reduce their national insurance contributions and cut costs. Unemployment is rising by 100,000 a month. It is irresponsible of the Government to bring forward proposals that will have a direct ill effect on employment.
  We must also consider the effect of the increases in national insurance contributions on the ability of low-paid workers to defend their living standards. We should not gloss over that. We must debate the extent to which they can defend their living standards against the Government. A worker taking home £45 or £50 a week needs to protect his real take-home pay against price and tax increases. The only way to do that is by boosting his wage packet, as the Government refuse to introduce price controls. The only way in which a worker can protect his real take-home pay is to increase the wage claim to his private or public sector employer.
  The increase in taxation through the increased national insurance contribution will therefore properly be reflected in trade union wage claims. Trade unions have to bear in mind not only the retail price index but the level of income tax and national insurance contributions.
  The Government pretend that we are talking about funding social benefits and not about taxation. That is a piece of hypocrisy, the like of which I have not heard for a long time. Nye Bevan used to say, when addressing Labour Party meetings throughout the country, "Comrades, I'll let you into a State secret. There ain't no fund." He argued that it was merely a bookkeeping exercise. It is myth and hypocrisy to regard the proposals to increase employees' contributions by 1 per cent. as necessary to balance the books. The Bill simply increases taxation, and our amendments say that if the burden is to be applied it should be shared equally between employers and employees.
  Mr. Best: The hon. Gentleman makes my point for me. He says that these matters will be taken into account in future wage negotiations. He neglects the other aspect of my argument, which is that employers do not have that facility. If the burden is placed upon them, they will have to shed labour, which will lead to greater unemployment. Surely the hon. Gentleman understands that.
  Mr. Race: That is a remarkable intervention, because the one facility that employers have which emloyees do not have is a captive audience. Not only are they able to reduce their static costs—labour, rates and so on—and reduce their marginal costs, but they can pass on through price increases any increased costs. That is precisely what they will do as a result of these changes. They will recoup higher national insurance payments through price increases or by reducing the amount of labour they employ.
  We are proposing that the 1 per cent. increase in contributions, with which we do not agree—because it is an attack on the low-paid, it reduces demand in the economy and is unnecessary—should be shared equally between employers and employees. Employees will be seriously affected if they alone bear the burden. The social cost to the community will be just as great as the hon.

  1127
  Member for Anglesey implied it might be if employers had to bear their part of the increase. The hon. Gentleman argues that if the burden is shared some labour might be shed. But if employees carry the whole burden family budgets will be seriously hit in terms of their ability to pay rent, rates and grocery bills.
  Mr. Field: I was following my hon. Friend's earlier argument about the effect of the Bill on wage negotiations in the coming year. He was arguing, I believe, that workers and their trade unions would take both price increases and tax increases into account. Can he provide technical information on that point? Whenever we debate national insurance contributions, there is always a discussion about whether they are a tax. As they clearly are a tax and should be thought of as such, will the increase show up in the tax and prices index which the Government produced early in their period of office as a way of showing that prices were rising less fast than the retail price index? Shall we see in the coming year, therefore, many more trade unions using the TPI as a more accurate way of judging changes in the living standards of workers?
  Mr. Race: That is a most interesting contribution. Trade unions have ignored the TPI because it does not include a large part of the extra tax burden that the Government have imposed. I have no doubt that trade unions will continue to rely, as they traditionally have, on the RPI as the main source of their prices information. They will add on to that, as is proper, any increases in income tax or national insurance contributions flowing from Government decisions.
  I am certain that that will have a major effect on wage claims over the next few months and for the next pay round. This 1 per cent. increase in contributions must be related to the Government's proposals this winter for a 6 per cent. pay policy. The Government are saying that earnings must rise by that amount only, certainly in the public sector. Cash limits in that sector are set at 6 per cent. But the Bill means that, before any price increases or tax rises likely to be included in next April's Budget are taken into account, 1 per cent. of that increase will already have been swallowed up. That action alone invalidates the 6 per cent. pay policy.
  Mr. Field: It makes it 5 per cent.
  7.45 pm
  Mr. Race: My hon. Friend is wrong, because it is 6 per cent. on earnings and that means 3½ per cent. on rates of pay. I have worked out that the hospital domestic can expect on that basis to get about £98 a year with a 3½ per cent. increase on the basic rate before stoppages.
  That is another reason why the Government are wrong to insist on employees bearing all the burden. If they want their 6 per cent. wages policy to be effective, they must persuade workers and trade unionists that the only way to obtain a real increase in wages is by agreeing with their 6 per cent. policy, and that will not happen if they introduce measures that undermine it from the outset.
  Mr. Field: Do I understand the point correctly? Is my hon. Friend arguing that the Government's wages policy of 6 per cent. on earnings would, if successful, mean 3½ per cent. on overall rates, and that of that 3½ per cent. 1 per cent. would be clawed back by the Bill?
  Mr. Race: That is right. [Interruption.] Does the Secretary of State want to intervene on this? Perhaps he or the Chief Secretary to the Treasury, who has just joined him, have information to which I am not privy.
  The cash limit specifically demands a 6 per cent. growth in earnings over the next 12 months, but the final figure will depend on earnings opportunities in particular industries. In the National Health Service, a 24-hour operation, earnings opportunities are substantially greater than in other industries. But that means that, in some parts of the public sector, the only increase will be 3½ to 4 per cent. on rates of pay, not the 6 per cent. specified.
  Mr. Field: I am more puzzled now by what my hon. Friend is saying. The Government's wages policy of 6 per cent. means 6 per cent. on rates of pay, the lower denominator. That will mean 3½ per cent. on earnings. The national insurance contribution is based on earnings and will therefore apply at the low level. Am I still wrong?
  Mr. Race: The Government's proposal is 6 per cent. gross on earnings, and that means that the increase in wage rates would have to be 3½–4 per cent. Therefore, some part of the 6 per cent. would be available for overtime, increased shift work premiums and so on. That has been built into the cash limits. The position under the Bill is that the national insurance 1 per cent. increase would be paid on earnings of 6 per cent. rather than on the rate of 3½ per cent.
  Some individuals will be seriously affected. They will not receive the full 6 per cent. increase. It is an illusion to believe that every worker will receive a 6 per cent. pay rise. Many workers will not receive the full 6 per cent. increase because they will not have the earnings opportunities to do so. That applies especially to those who Will be badly affected by clause 1—for example, the part-time workers who earn about £27 a week and who do not have earnings opportunities. They are specifically excluded from receiving overtime payments by their contract of employment. They have to work up to either 40 hours or 33 hours before they can claim any further overtime payments. A substantial number of people will be badly affected by the 1 per cent. increase in contributions. That is a good reason why it should be reduced to ½ per cent.
  There is a good argument for reducing the proportion paid by employees and loading some of the burden on to employers, especially in relation to the low-paid. Their jobs are being taken away and their earnings opportunities are being restricted. It is another serious blow to them. It is humbug for the Government to talk about national insurance contributions being mildly progressive. We should throw it back in their faces.
  Mr. Field: I apologise for not being in my place to hear the opening comments in this part of the debate. If I understand correctly the remarks of my hon. Friend the Member for Wood Green (Mr. Race), the gist of the case is that because the national insurance contributions and increases are regressive, rather than progressive, the burden should be shared between employees and employers.
  I wish to develop the idea that there is a case for the increase being put on to the shoulders of those in work and not on to those of the employers. The contribution of the hon. Member for Anglesey (Mr. Best) is important on this point. If we follow that line of argument, it is crucial that

  1129
  we consider the base on which we are asking workers to make a contribution to the insurance fund. Briefly, I am saying that there is a case for the increase to be shouldered by employees. I go further and say that there is a case for a further increase for employees if we receive concessions on rights to benefit. That argument can be entertained only if we consider the basis on which we take contributions from workers, especially the low-paid. I agree with the arguments put forward by my hon. Friend the Member for Wood Green on that matter.
  At this point I wish to speak to amendments Nos. 5, 6 and 7. Amendment No. 5 is a clear statement removing the increase, unless one shares or changes the whole basis on which we ask for national insurance contributions amendment No. 6, coming from the Liberal Benches, would divide the contribution between those earning up to £85, allowing them to pay at the old rate, and those earning above that level, who would pay the new increased rate. Amendment No. 7 would make the increase only ½ per cent. No doubt that ties in with the argument that there is a clear case for sharing the burden with employers.
  Unfortunately, I was not in the Chamber to speak again on the first set of amendments. However, the point that I wished to make then is relevant now. I was genuinely amazed by the Minister's comments. The hon. Lady put forward the argument that we should not be too concerned about the increased burden that the low-paid would endure under the Bill because they receive a range of other help—for example, family income supplement. The Secretary of State and the Minister were at pains to say that Opposition Members were mistaken about the way in which the poverty trap works. They said that we gave a snapshot of the real world and that the real world did not operate in that way. They said that the trap should be viewed rather like an old-fashioned time machine camera.
  Let us consider the effect of this measure and the contribution of the low-paid. If the clause is passed unamended, there will be an increase of about £2·17 a week for the low-paid. At a stroke, the Government will be taking £2·17 off the family income supplement as soon as the Bill comes into operation. If the Secretary of State replies t3 the debate., I hope that he will give us information about how many family income supplement recipients receive less that £2·17 per week. By this measure alone, how many people will lose the whole of their family income supplement?
  While we might have an academic argument as the evening progresses about how the poverty trap works, and whether this side or the other side of the Chamber has a more accurate vision of how the low-paid are affected, there cart be no question but that considerable numbers of those helped by the family income supplement payments will lose all their benefits because of this measure.
  I wish to return to some of the remarks that my hon. Friend the Member for Wood Green quite rightly made about the effects of the measure on the low-paid. Like him, I am sorry that the Minister is not in the Chamber. Obviously she will return, she will be told of our comments and she will respond to them. I see that my hon. Friend the Member for Barking (Miss Richardson) is in her place. She can help me with my figures. We have only 19 lady Members of the House. Perhaps I should say women Members. I had not intended to use a sexist term, but I have done so.
  Overwhelmingly, the issue of low pay affects women workers, yet one of the 19 women Members of Parliament
  1130
  is a Minister at the DHSS, which has a record of introducing measures that hit viciously at women workers. The Government have proposed a scheme for maternity pay that redistributes the benefits available. The proposals for a sickness scheme redistribute money from families to the childless, again hitting at women and the children that they look after. The measure that we are discussing tonight is a third prong in the attack on low-paid workers. It massively increases the contribution which low-paid workers, mainly women, make to the national insurance fund. Let us remember that most low-paid workers are women. If we are at all concerned about the least privileged, those who gain least from the community's resources — which is another way of discussing the inequalities between the sexes in our society—there is a powerful case for saying—
  Mr. Race: One of the points that I made earlier to my hon. Friend the Member for Holborn and St. Pancras, South (Mr. Dobson) was about the ability of women workers to register as unemployed. My hon. Friend the Member for Birkenhead (Mr. Field) referred to the attack on women workers. Is he aware that a school meals worker who is made unemployed by a county council education authority can say to the unemployment benefit office that she wants to register as a part-time worker and have a contribution record, yet she cannot register as unemployed and receive unemployment benefit? At the same time, however, because of the actions of the Government, she is expected to pay substantially more in insurance contributions for the advantage of having no benefits whatever.
  8 pm
  Mr. Field: Yes, I was aware of that and I shall return to the point before we cease debating this group of amendments. The point could be made again and at greater length on the other amendments that we shall discuss.
  Mr. Best: I hope that the hon. Gentleman will be fair. I think that he mentioned the maternity grant. It was my understanding that The proposals for redistribution would make it non-contributory, so that many more women would be eligible than are presently eligible under the rules. Will the hon. Gentleman clarify that?
  Mr. Field: The hon. Gentleman is correct in one way. That is just one part of it. We now have proposals to reform radically the whole form of support for women in the first weeks of the child's life. The objection is not that one cannot make more sense of the proposals and make sure that, within them, poorer women get more, but that men, who are as a group more privileged than women in our society, will not be asked to contribute one extra penny to those reforms.
  Women are a weak group in the community, and we have now come up with a wonderful way in which to reform the forms of support that we give to maternity, if I may use that term as a general heading. We are to redistribute from slightly richer women to slightly poorer women. There is a case for leaving the richer women with the benefits that they have and redistributing from richer men to women generally.
  That is the point that we ought to bear in mind with the sick pay proposals that we are discussing tonight. It applies particularly to amendments Nos. 5, 6 and 7, to which many of us will address ourselves. It is an attack on low-

  1131
  paid workers, who are overwhelmingly women workers, and, therefore, the proposal cannot be divorced from other measures which the Government are taking and which are putting women workers at a greater disadvantage.
  That is why I said that I regretted that the Under-Secretary of State was not in the Chamber, as she is in a privileged position, being one of the 19 women Members in the House of Commons. One would have thought that on these issues, which vitally affect the half of the population who are women, we would have had a better fight from within the Department to protect the interests of low-paid workers, who are overwhelmingly women.
  My next point, which has already been raised in the debate, is about which group should pay the increased contributions. Here I depart somewhat from the argument put forward by my Front Bench. If we make a case for the whole of this contribution increase, or any future contribution increases, to be borne only by those in work, that can be a just move only if we look at the basis on which we ask for contributions from those in work. In other words, I agree with the emphasis that my hon. Friend the Member for Wood Green put on drawing a distinction between the tax system and the national insurance system and showing how, on balance, the tax system was more progressive than the national insurance system.
  Given that the difference is such a small one, I am reminded somewhat of the medieval theologians who, for hundreds of years, happily debated how many angels and archangels could stand on the head of a pin. Now that the Government have abolished the lower rate of tax, the tax system is, for the vast majority of workers—apart from the 4 per cent. who pay surtax—a proportional system of taxation. That emphasises the point that it is still a fairer way to raise increasing contributions in this country than the national insurance scheme itself.
  I believe, as the hon. Member for Anglesey said, that to increase further the national insurance contributions of employers will put some employers out of a job. Obviously it will not affect most employees, but we are concerned with the people who are at the margin. It might be our children or our mum or dad who are at the margin and are made unemployed. It might be some of our own constituents who are at the margin and who are affected in that way. If we support that argument, given all that we have said here about how regressive the national insurance system is as a form of raising revenue, it is axiomatic that those of us who say that the cost should not fall on employers should say that we will try to persuade the Government to reform the whole basis of national insurance contributions for employees, so that we can build it into a progressive form of taxation or national insurance contribution.
  That is why, on Second Reading, several of us made the point about the need to raise the ceiling. I shall not dwell on that because we shall return to it in the debate on the clause. What is necessary is to lift out of the bottom of the scale a number of those who are paying tax. The important point is that once people cross the national insurance threshold they pay contributions on every pound, and the national insurance threshold now is almost the same as the tax threshold. This means that people not only start to pay tax; they start to lose their rights to means-tested benefits. If people are at the bottom of the FIS entitlement, they will lose that entitlement.
  Mr. Race: Is it not clear that the impact, in employment terms, of increased contributions on the employer—not the employee—is very much conditional on the context in which those increases are made? In other words, if we have full employment, relatively stable prices and a firm demand in the economy, with few industries threatened by imports on any substantial basis, an increase in national insurance contributions of the kind proposed by the Government for employers, and of the kind proposed in the amendments, is marginal indeed to employment prospects. It is only where a large number of economic variables are impinging on employers and causing them to reduce employment levels that it becomes slightly more significant.
  Mr. Field: That is right. I believe that many people are getting very near to the unemployment queues, apart from the millions who are already in the queues.
  My hon. Friend referred earlier to how similar this part of our taxation system was to the selective employment tax. We know that the National Institute of Economic and Social Research made a detailed study of the impact of that tax. We know that, wherever possible, that form of taxation was passed on in increased prices. That would be the effect here of increasing the employer's contribution. Where it could not be passed on, there would be an effect on job prospects. We should not do it without making a firm commitment to reform the basis of insurance contributions by employees as well.
  Mr. Best: As always, there is great persuasion in what the hon. Gentleman is saying. As I understand it, he is putting forward an argument for graduated payments by employees of national insurance contributions. Has he really thought that through? I accept that a form of regulation is fair—we have it in any event in income tax—but it is already graduated in a way, inasmuch as it is a percentage on earnings. Obviously, as the earnings increase, so the contributions increase. Has the hon. Gentleman thought of the administrative burdens that would be placed on employers as a result of what he is suggesting? He has been kind enough to accept my point that a further burden on employers in contributions is likely to lead to greater unemployment, but surely the greater administrative cost and administrative inconvenience would also lead to greater unemployment.
  Mr. Field: The hon. Gentleman should not underestimate the intelligence of employers in the public and private sectors. If the Revenue sends out tables showing how to work out deductions from pay, employers will be able to work them out, just as they have done in the past. No increased burden will result from devising a fairer way of getting contributions from employees.
  I am grateful to the hon. Gentleman for his intervention. We are agreed that any increases that are made should be put on employees, as long as the system is more progressive. To hint that the system is progressive because it takes a certain amount from income as income rises is to miss the fundamental point. As soon as a person crosses the threshold, he pays his insurance contributions on every pound earned.
  The hon. Gentleman must have been busy on parliamentary duties elsewhere when we debated the first group of amendments. At that time we dwelt on this matter for some time and showed how similar it was to the old exemption system, which was abolished by Austen

  1133
  Chamberlain, I believe in the 1920 Budget. At that time our tax system was based on the same principle,—namely, that allowances were of value to a person only if his income was below a certain level. Once that point had been crossed, the whole of a person's income was subject to tax. That is still true of the national insurance system, and that is why we fought—and lost—the debate to raise the starting point for national insurance contributions.
  I have been trying to show that a case can be made in part for debating these amendments. We are discussing amendments Nos. 5, 6 and 7 because we want to draw attention to the effects on lower-paid workers. If we are to hold a sensible debate, we must put a human face on those lower-paid workers. That face is the face of women. This measure cannot be considered separately from the other social security changes that the Government are making. They represent attacks on women workers and on women generally. I am sorry if I am beginning to bore the House by my pleas.
  Mr. Cryer: Very good.
  Mr. Field: I am grateful to my hon. Friend for his support.
  We must consider how we can spread the money, earned over a period of 20 to 40 years, over a lifetime of 30 or more years. As a group, men are more privileged than women. How can we achieve a redistribution of money from men to women? The Government have introduced a series of measures that have increased the status of men at the expense of women. This and other social security measures cannot be divorced from the tax changes that the Government have made.
  The Government are trying to balance their books, and they have got into difficulties. I have never accused the Government of dishonesty. Nevertheless, they have ruthlessly redistributed money in favour of the rich. The Government said that they were going to do that, and they have done it. No dishonesty is involved. However, it is wrong to elevate the issue of greed to an issue of principle. It is clear that the Government have a mandate for that. Men were the main beneficiaries of tax cuts. We are—
  The First Deputy Chairman: Order. I have allowed the hon. Gentleman a certain amount of latitude in the hope that in the clause stand part debate he would make some of the points that he had in mind. The hon. Gentleman should speak to the amendment.
  8.15 pm
  Mr. Field: I am grateful, to you, Mr. Godman Irvine, for that interjection. As you say, I shall have other opportunities to discuss this matter.
  I sought to plead in favour of amendments Nos. 5, 6 and 7. The Government are making an attack on low-paid workers, and those workers are mainly women. That cannot be divorced from other Government measures. There may be a case for not increasing the contribution on employers, but one must ask how regressive taxation and national insurance contributions are on employees. If we wish to increase the load, we must make the base progressive.
  The Government have had to introduce the Bill. It should have included a major change in the basis on which employees make contributions to the national insurance fund. There might be a case for further increases, provided
  1134
  that there is a quid pro quo by way of an increase in benefits. One could then sell that to one's constituents more easily than one can sell the present base.
  Mr. Cryer: I shall concentrate my remarks on amendment No. 5, which would delete subsection (2). As has been pointed out, that subsection would place a burden of about £2·17 a week on the low-paid. Therefore, it is deflationary. It will result in a diminution in demand and will create a higher level of unemployment. The Chief Secretary argued at Question Time today that it was a means of paying social benefits. He argued that the sum of about £1 billion, which is derived from the increase in primary class 1 contributions, is sufficient or will go towards the revenue necessary to maintain some of the social services. No doubt the Secretary of State would also argue along those lines.
  In reply to my hon. Friend the Member for Derby, North (Mr. Whitehead), the Chief Secretary said that if one wills the end—the maintenance of social services—one must will the means. The Chief Secretary is wrong. The Government will take money largely from the poor and give it back to the poor in a convoluted transfer that will subject them to further means tests. That is not good enough.
  I turn to a subject that was mentioned on Second Reading, because it is relevant. We are not supposed to talk about it, because it was featured on a television programme. I refer to the £1 billion that was obtained by the Rossminster group through tax avoidance, The Government could consider tightening up tax evasion and tax avoidance instead of adding another burden in the form of clause 1(2). The Government might argue that it would take a certain amount of time to smoke out those smart alec lawyers and to stop tax avoidance. There is no reason why the Government should not increase the public sector borrowing requirement as a temporary measure. The additional contribution of 1 per cent. found in subsection (2) will be contrasted against that televison programme in which well-heeled gents in well-laid-out offices ran schemes for well-heeled people to avoid paying tax. People will say that the measure is extremely unjust. They will want to change the society in which that—
  The First Deputy Chairman: Order. I cannot see any link between the hon. Gentlman's remarks and the amendment.
  Mr. Cryer: I shall spell it out for you, Mr. Godman Irvine. Subsection (2) proposes that there should be an increase in primary class I contributions from 6·75 per cent. to 7·75 per cent. That is a 1 per cent. increase. My argument is that the increase in this subsection, which is a burden upon the low-wage earner, will be seen as unjust. That is an argument for approving amendment No. 5, which seeks to delete subsecton (2).
  I make the point that a short time ago a television programme demonstrated how the payment of about £1 billion had been avoided by a tax avoidance scheme. I am making the point by way of illustration—
  The First Deputy Chairman: Order. That is exactly where we came in. I said that I was unable to follow how that could be linked to the amendment.
  Mr. Cryer: I am illustrating this in passing, by way of example. This is the usual way of—[Interruption.] Does the hon. Member for Lancaster (Mrs. Kellett-Bowman)

  1135
  wish to intervene? I do not like sedentary interjections being made by the hon. Lady in that stentorian voice of hers. I do not wish to go down the path that she is suggesting because you, Mr. Godman Irvine, would naturally and correctly call me to order. I was using that illustration by way of example, in passing. I think that it is an important point to make.
  I was saying that the subsection should be deleted because it is possible to consider alternative sources of income. I suggest the diminution of tax avoidance, but that might take some time. The Government's argument is that they must have this money in a fairly short time. That is why they are using this quick and easy administrative method of raising money.
  However, the Government have already indicated that they are not sticking rigidly to the public sector borrowing requirement target or, for that matter, to the figures for the growth of the money supply. I do not want to go into that, because it is not relevant to the point that I want to make.
  My claim that the Government have altered their PSBR target so that they could legitimately accept the amendment to delete subsection (2) is evidenced in The Guardian today. This point was mentioned during Question Time. The heading is:
  "Biffen's hint of U-turn startles the Right."
  That refers to the Chief Secretary—the right hon. Member for Oswestry (Mr. Biffen). This article by Ian Aitken, the political editor, was challenged at Question Time today. The Chief Secretary said that he had the advantage of being at the meeting where this claim was made. On the other hand, so did the person who spoke to Ian Aitken. [AN HON. MEMBER: "Who was that?"] Who indeed? A mole amongst the Conservatives. In the articles, IanAitken said that "in calculating"—
  The First Deputy Chairman: Order. I hope that the hon. Gentleman will soon explain how this can be linked to the amendment.
  Mr. Cryer: Certainly, Mr. Godman Irvine.
  Mr. Andrew F. Bennett: On a point of order, Mr. Godman Irvine.
  The First Deputy Chairman: Order. I should like to deal with one point of order at a time.
  Mr. Bennett: I understood that my hon. Friend the Member for Keighley (Mr. Cryer) was making a speech. We are talking about £1 billion of extra taxation. Therefore, the Committee ought to look at the alternatives if the amendment is carried. I think that it is unfair that each time my hon. Friend tries to develop that argument he is cut down.
  The First Deputy Chairman: The hon. Gentleman would be right if we were having a general Budget debate, but we are discussing a somewhat limited amendment and we must stick to it.
  Mr. Buchan: Further to that point of order, Mr. Godman Irvine. I accept a great deal of what you say. But the Opposition, at any rate, and many people in the country believe that fundamentally this is a Budget debate and that the Bill is about taxation rather than social security and national insurance. That is the problem.
  Mr. Cryer: That is the point. My argument is that subsection (2) should be deleted. I am putting forward
  1136
  reasons why subsection (2) should be deleted. I believe that it is unfair. At the same time, if the subsection is deleted, the Bill, which seeks to raise revenue, will be short by £1 billion. The Government will not get £1 billion if subsection (2) is deleted. Therefore, I submit that it is not out of order if, for example, there are alternatives.
  Parliament has debates to convince Members to vote in particular ways. That is the pretence through which we go. It is in order to do that. However, we know that, whatever we say, all Conservative Members will support the clause because they are hacks. As soon as the Whip goes out, they follow it. The basis of Parliament is to debate ideas. For example, I might be able to convince the Liberals—who are here in spirit—
  Mrs. Elaine Kellett-Bowman: How can the hon. Gentleman convince them if they are not here?
  Mr. Cryer:—or anybody else—some of my hon. Friends may have reservations—about the desirability of accepting the amendment by pointing out the alternatives if it is defeated.
  At Question Time today, the Chief Secretary said that if we wanted the end of maintaining social expenditure we had to will the means. The right hon. Gentleman said that in reply to a question about national insurance contributions—in other words, about this Bill. Therefore, I should not have thought that it was irrelevant to consider that comment and to suggest alternatives for subsection (2), which we wish to delete.
  The Government's claim that subsection (2) must be retained at all costs because their PSBR target has to be met is not true, in view of a speech made by no less a person than the Chief Secretary to the Treasury to a Back-Bench committee of the Conservative Party.
  Mrs. Kellett-Bowman: How does the hon. Gentleman know?
  Mr. Cryer: I am only quoting.
  Mrs. Kellett-Bowman: It is alleged.
  Mr. Cryer: It is alleged to have been said. However, one of my hon. Friends overheard the conversation. Not only is it a newspaper report; it is authenticated from another source.
  Mrs. Kellett-Bowman: By the Back-Bench committee?
  Mr. Cryer: No. My hon. Friend overheard the conversation between the mole and Mr. Ian Aitken, the political editor of The Guardian.
  Mrs. Kellet-Bowman: Will the hon. Gentleman tell us who it was?
  Mr. Cryer: I do not propose to reveal any secrets to the Conservative Party yet. Mr. Aitken wrote:
  "He argued that there was a considerable degree of imprecision in calculating such figures as the money supply and public borrowing, and that there were no grounds for despair when things went wrong. But his audience was startled to hear him say that the time had come to abandon such targets in favour of a flexible policy designed to meet the unexpectedly grave economic recession."

  1137
  8.30 pm
  That unexpectedly grave economic recession will be made even graver by the clause and by the raising of £1 billion under subsection (2). That is one of the reasons why we oppose it. By virtue of that quotation, which was hedged around by the Chief Secretary, we are arguing that public borrowing can be increased in order to get over the problem of the £1 billion that the Government are facing.
  I should like to go a little further and deal with a number of other alternatives. One short-term alternative is public borrowing. You, Mr. Godman Irvine, have said that this is not a Budget, but we think that it is at least part of the budgetary process. Let us suppose that there is a gap of three or four months between now and the next Budget. That could be covered by borrowing. In the next Budget, an alternative would be to shift this swingeing increase, which will bear heavily on those least able to pay, on to those who are most able to pay. As my hon. Friend the Member for Birkenhead (Mr. Field) said, we should introduce a more progressive basis. Income tax is a more progressive basis.
  I was reminded of that when I saw question No. 9 on today's Order Paper, in the name of my hon. Friend the Member for Blackburn (Mr. Straw), who asked the Chancellor of the Exchequer:
  'what evidence he has that the opportunities and incentives provided to business and to individuals in his 12 June 1979 budget are working as intended."
  Those incentives, which were tax concessions to the well-off, were designed to create jobs by stimulating entrepreneurial activity. It is beyond peradventure that that has not worked, and we knew that it would not. Therefore, the claim that this removal of tax from the well-off would produce an improvement in the economy is patently untrue. Therefore, there is a good case for restoring those tax cuts. That would produce more than the £1 billion which would be raised under subsection (2).
  The other alternative that I want to consider—assuming that subsection (2) is deleted, which I hope it is —relates to a rapid examination of expenditure on defence. If the Chief Secretary is right—
  The First Deputy Chairman: Order. The hon. Gentleman must realise that we are dealing with the case for or against raising the class 1 contributions. It follows from that that it would not be in order to follow the line of argument that the hon. Gentleman is now following about other aspects of taxation.
  Mr. Cryer: If amendment No. 5 is carried, I take it that the Government will be short of revenue. I do not think that that is a matter of controversy. I think that the Secretary of State would agree. If I am to persuade my hon. Friends to vote with me, I must convince them—because several doubters exist—that there are alternatives to which the Government could turn their attention. I know that you, Mr. Godman Irvine, would want me to be able to convince my hon. Friends on this matter.
  Therefore, as an illustration, I believe that there are areas of expenditure that are non-productive—indeed, they are inflationary because they produce nothing at all —which in the current financial year have risen by 2½ per cent. In my opinion, the Government should look at defence expenditure. They should do so in order to transfer
  1138
  that money to the social expenditure which the Chief Secretary says is a desirable end, although we must look at the means.
  Mr. William Hamilton: My hon. Friend mentioned alternative ways of raising the money if he persuades us to support the amendment. In fact, the sums about which he is talking are almost exactly covered by the Stingray torpedo, which is currently costing about £1 billion—
  The First Deputy Chairman: Order. I am not sure whether the hon. Gentleman has been in the Chamber this evening for very long, but I have tried to point out to the hon. Member for Keighley (Mr. Cryer) that alternative means of raising this money are not matters that we are discussing now.
  Mr. Cryer: Surely, Mr. Godman Irvine, we must consider alternatives, otherwise the Government will be £1 billion short. One of the arguments which the Secretary of State will use is that we should not vote for amendment No. 5, unless he—I am willing to give way—accepts it. If he opposes it, it will be on the ground that it is no alternative, because he must have this revenue. Therefore, if I am to persuade my hon. Friends, I must be able to point out to them that there are alternatives. I shall not deal with the question of Stingray, although my hon. Friend the Member for Fife, Central (Mr. Hamilton) is right in saying that it is costing about £1 billion.
  I turn now to a suggestion that was made by the hon. Member for Brentwood and Ongar (Mr. McCrindle) on Second Reading. I realise that I must not make a broad Second Reading speech, but we are dealing with that section on which the hon. Gentleman concentrated. He said that this was an unfair tax and that the clause was unfair and bore most heavily on those with moderate incomes. I think that the hon. Gentleman suggested a tax on banks' profits.
  Mr. R. A. McCrindle: I had no intention of intervening in the hon. Gentleman's speech, but I am sure that he would not like to misrepresent me. I said that, although there was a regressive element in the proposals, on that basis alone we should not turn back from the path along which we were treading. Instead, any regressive elements could be taken care of by increased family income supplement to those who are at work as soon as there can be any increase in social expenditure. The hon. Gentleman should represent both parts of what I said.
  Mr. Cryer: I do not wish to misrepresent the hon. Gentleman in any way, and, indeed, he can make his own speech. I was recalling from memory, and I think that he suggested that the regressive element in this legislation could be remedied to some extent by a tax on the windfall profits of the banks. He is at liberty to modify that and to make his peace with his Front Bench. Undoubtedly he is a man of ability, but he should not put himself too much out on a limb, because there will be a Government reshuffle shortly and I have my eye on him for consideration. Of course, I am very influential with the Leader of the Conservative Party—[Interruption.] I think that I have given the hon. Gentleman the kiss of death.
  I endorse the remarks of the hon. Member for Brentwood and Ongar—
  Mr. McCrindle: Which remarks?
  Mr. Cryer: The remarks about the windfall tax on the banks. As I recall, the right hon. and learned Member for Hexham (Mr. Rippon) said that the only people who seem to make a profit these days are the banks. With the current high interest rates, that is right.
  Mr. McCrindle: I hate to intervene yet again in the hon. Gentleman's speech, but he is deliberately taking two sections of my speech, putting them together and drawing conclusions that I did not reach. If he cares to look at the report of my Second Reading speech, in so far as I talked about the possibility of an impost on bank profits he will note that I went on to reject it.
  The First Deputy Chairman: Perhaps I should also encourage the hon. Member for Brentwood and Ongar (Mr. McCrindle) to appreciate that we are not discussing the merits of alternative ways of raising the money. We must return to the amendment.
  Mr. Cryer: I am grateful for your protection, Mr. Godman Irvine, from the diversions put before me, and I shall not engage the hon. Member for Brentwood and Ongar in a discussion about his speech. I do not want to misrepresent him in any way. He said on 8 December:
  "to raise income tax instead of charges would be preferable or, perhaps better, that they should impose a once-for-all excess levy on banking profits."—[Official Report, 8 December 1980; Vol. 995, c. 1050.]
  I merely wanted to demonstrate that if we agree to amendment No. 5 and delete subsection (2), this is the way to fill the gap created by the deletion of that subsection.
  The banks are making massive profits because of the Government's policy of raising interest rates to extortionate levels, and a tax on windfall profits would be one way of obtaining revenue for the social purposes to which the Chief Secretary referred and which, I have no doubt, the Secretary of State will maintain are necessary.
  The Opposition believe that this is an unfair tax—and it is a tax. It will be oppressive on those who are least able to pay. We want to shift the burden on to the backs of those who are most able to bear it, and I have no doubt that both sides of the House agree that the banks are well able to pay in order to maintain social services.
  The other amendments are an attempt to produce some element of fairness in a basically unfair and regressive tax position. I do not much like the Liberal amendment. It would make a slight improvement, but I should rather see subsection (2) deleted. If that happy situation were to occur, the Government would have to tell us by what means they intended to raise the money. I should welcome that, because I should like a fairer and better treatment of the ordinary working class than the Government are proposing.
  I hope that I have managed to convince any of my hon. Friends who had even an iota of doubt that there are alternatives to subsection (2) and that we ought to support amendment No. 5 and delete the subsection.
  Miss Jo Richardson: I appreciate the attempts of my hon. Friend the Member for Keighley (Mr. Cryer) to point to other areas where money can be raised if that must be done. I was staggered to hear that we may not discuss other projects where savings could be made. Stingray has already been mentioned, and there are other weapons and projects that could easily be cancelled. As Mr. Godman Irvine has now left the Chair, we may be able to suggest alternative savings.
  1140
  This morning I went on one of my periodic visits to the River plant of the Ford Motor Company, which makes the upholstery for Ford cars. Nearly all the workers are women, and several asked me what we would be doing in the House today. I said "We shall be putting up your national insurance contributions." Such is the power of the British press that few of the women had heard much about the contribution increases. One or two had heard but could not believe that on top of all the other increases that they have had to suffer as workers, taxpayers and ordinary members of society there was to be yet another blow inflicted by a Government who are mean enough to rush it all through just before Christmas.
  I asked many of the women what sort of Christmas they would have, how many children they had, whether they would be having family parties and so on. While not pleading poverty, several said that it would be a pretty hard Christmas, because they would not be able to buy as much for their kids and their homes as they had in previous years. They just do not have the money. They were appalled to find that as a result of the Bill, which is being rushed through the House with unseemly and indecent haste, they will be penalised further.
  8.45 pm
  The people already understand the result of the Government's actions. In almost every family in the land someone is on the dole, has to claim supplementary benefit or is in receipt of sickness, injury or invalidity benefit. All such families receive child benefit. They know how mean the Government have been in not increasing the benefits to bring them into line with inflation. I am talking about low-paid and average-paid workers. They are finding that times are hard as a result of Government action. My hon. Friend the Member for Keighley was absolutely right to suggest alternative ways of raising revenue.
  Amendment No. 5 seeks to delete a whole subsection. That is our aim. However, if we cannot persuade enough Government Members to that view, perhaps they would care to examine one or two other amendments which they might find more attractive. For example, amendments Nos. 7 and 9 divide in half the 1 per cent. which is to be raised under the clause. The intention is to raise half from the employee and half from the employer. I have not heard all the speeches tonight, but some hon. Members suggest that the levy should not be put on the employer because some employers might bounce it back on to the employee or consumer. However, even that seems to be more equitable. If we cannot get rid of the provision altogether, it is better to divide it down the middle so that employees and employers make equal contributions.
  Much has been said about low-paid workers—women and part-time workers in particular. I represent a solidly working-class constituency where, traditionally, women go out to work because money is needed to supplement the family income. In most cases women do not go out to work because they want a career, although some do. Some of the work that they do is poorly paid and boring. Mostly it is not work that they would choose to do, but they have to do it because they need the money.
  These are the kind of women that I have talked to, as I am sure have other Members in their constituencies, on council estates in particular, who are the first to be driven to the wall, losing their jobs or having to give up their jobs as a result of some of the actions of this Government. Hon. Members cannot fail to realise that some of the overall

  1141
  public expenditure cuts which have been made—for example, in charges for home helps and the cuts in the home help service, the closing, or the non-opening, of old peoples' homes and the fact that school meals provision is not as it used to be—have placed an extra burden on the woman of the family. In some cases, she has had to give up her job to look after children or elderly or sick relatives and is not able to carry on working, even though there may be a job for her.
  The Government have not given sufficiently careful consideration to the effects of their policies, including the policy that we are debating tonight, on married women and those who are in poorly paid and part-time jobs. I hope, therefore, that we shall consider, as an alternative to the amendment, to delete the subsection, amendments Nos. 7 and 9. I hope that we shall have a vote on amendment No. 9, assuming that the principal amendment, No. 5, is not carried. I hope that the Committee will support me in amendment No. 9 as an alternative to what has been proposed.
  Mr. Dobson: The nub of the clause lies in the rather remarkable statement made by the Chancellor of the Exchequer on 24 November, in which he said:
  "it is right that those who remain in employment should be invited to be in a percentage of that cost by the increase that I have described in national insurance contributions."
  If amendment No. 5 is not passed, we shall be turning the Chancellor's invitation into a godfather-type invitation which people cannot refuse because it will be the law of the land. That is a curious form of invitation, the sort of invitation which this Government seem to issue to everyone where money is concerned—that is, apart from their rich friends.
  In considering what the Secretary of State said about his taxation and benefits policy. I shall refer—unlike my hon. Friend the Member for Keighley (Mr. Cryer), I do not rely on what some Government Members regard as hearsay evidence of a reputable journalist when listening to a wet blue moan in the Lobby—to a piece of wet blue paper issued by the news service of the Conservative Central Office concerning the speech which the Secretary of State made to the Canton Conservative Club. For the uninitiated I should explain that Canton turns out to be not in China but in Cardiff. He said on that occasion, and I must admit that it is pretty true, even with the media not on our side:
  "It is easy for the Socialists to accuse us of cutting back on welfare in order to finance tax handouts for the better-off."
  He is absolutely right. It is easy for us to do that, because it is true and the most powerful forms of propaganda are always those which are true. For once in a while, the Secretary of State made an accurate statement in his speeches around the country. Having looked at many of the right hon. Gentleman's speeches in the past two hours, I think that that phrase stands out as the one that is probably the most accurate of all those that we could quote.
  I turn to the matters that my hon. Friend the Member for Birkenhead (Mr. Field) referred to, particularly in relation to those members of our poorer community who rely on family income supplement. As I explained earlier, I have a very simple view of these matters, because I do not have the expertise of many of my hon. Friends. I understood that my hon. Friend was talking about FIS to the value of £2·17 disappearing from many of those who can presently draw it, disappearing entirely as a result of the Bill. That would be a severe blow.
  Mr. Patrick Jenkin Mr. Patrick Jenkin rose—
  Mr. Dobson: I shall permit the right hon. Gentleman to demonstrate his expertise.
  Mr. Jenkin: I hope to enable the hon. Gentleman to avoid falling into the error that his hon. Friend the Member for Birkenhead (Mr. Field) fell into. Anybody on £28 a week pays 28p more—not £2·17—as a result of the clause.
  Mr. Dobson: Perhaps my hon. Friend can help me.
  Mr. Field: I am grateful to my hon. Friend for giving way so that I can put the argument a little more clearly. We were talking generally about low-paid workers. I was saying that I was sad that I had not received a reply in the debate on the first set of amendments. I was amazed that the Under-Secretary defended the increase in the national insurance contribution of low-paid workers generally by saying that we must not worry too much, because they would pick up FIS. My point was that many of them would have the whole of their FIS given by the DHSS and then taken back by the Inland Revenue. I hoped that the Secretary of State would tell us how many workers would, in effect, have the whole of their FIS payment cancelled out as a result of the clause. Perhaps when the right hon. Gentleman next intervenes he will give us that valuable information.
  Mr. Dobson: I think that when the Secretary of State gave the figure 28 he meant 28p and not the number of people who were being taken out of ITS. Apparently his officials, those whom he accused in his election manifesto of not understanding the system, do not understand it well enough to have been able to give him the necessary advice since my hon. Friend raised the point originally.
  According to the latest figures provided by the Department, figures which I believe are as recent as 1975, the take-up of FIS is roughly only 75 per cent. of those eligible. I also understand from the Department that it is believed that the bulk of those who do not draw it would not be entitled to a great deal. It seems to follow from my hon. Friend's point that a substantial number of people not drawing FIS would be taken out of eligibility for it by the methods that we are talking about.
  We all know that one of the reasons for the 1 per cent. increase is the substantial increase in unemployment. I seem to be following my hon. Friend rather closely tonight. He has already spoken of the exaggerated impact of unemployment on women. They have suffered disproportionately because there has been a disproportionate shedding of labour among people who are only in part-time employment. Women tend to be more often in part-time employment than men. Consequently, they have suffered considerably more as a result of the Government's other measures that have led to increased unemployment. Unless the Government accept amendment No. 5, a disproportionate share of the burden of paying for unemployment will fall upon the shoulders of women in part-time employment who are at the nodule point of the impact of these benefits. Once again, women will suffer more—I refer to those in employment, especially in part-time employment—as a result of the Government's policies.
  9 pm
  It was stated in the Conservative Party's manifesto that a Conservative Government would "tackle" the poverty

  1143
  trap. There may be numerous interpretations of the word "tackle". There is the tackle by a Third Division North half-back that is intended to knock the knees—
  Mr. Race: My hon. Friend is showing his age.
  Mr. Dobson: Was that interpretation intended by those who wrote the Conservative Party manifesto? I spoke of the half-back tackling a forward. That example applied to whatever Division One wanted to choose, whether it exists these days or whether it does not. The Bill will help pick up the forward in the role of the poverty trap. It will do nothing to harm the poverty trap. It is not tackling it at all but increasing it. That is another good reason for supporting the amendment to delete the proposed increase. That increase, taken with the other measures in the Bill, is bound to accentuate the poverty trap, especially for women who are in part-time employment or who have passed out of that employment as a result of the Government's policies.
  One of the problems is that those who occupy the Treasury Bench have little knowledge of the poverty trap except at a theoretical level. They see their problems as having to deal with the wealth trap. We have had the Treasury Bench graced with a member of the Government whose main reputation was gained outside the House. He is now dependent on his ability to alleviate the wealth trap to the tune of £1,000 million, which is equivalent to the amount to be raised—
  The Second Deputy Chairman (Mr. Richard Crawshaw): Order. The hon. Gentleman is padding everything out to such an extent that we are missing the point that he is trying to make. I ask him to come to the point. What he was saying was not relevant to the issue that we are discussing.
  Mr. Dobson: I stand corrected, Mr. Crawshaw. I felt that to refer to another method of raising £1,000 million, which is equivalent to the amount to be raised—
  The Second Deputy Chairman: Order. My predecessor in the Chair made it clear that to put forward alternative methods of raising £1,000 million is not relevant to the issue before the Committee. If the amendment is carried, it will be for the Government to decide how they will raise the money. It is not for Opposition Members to suggest where the money should come from. I hope that the hon. Gentleman will speak to the amendment.
  Mr. Cryer: Further to that point of order, Mr. Crawshaw. Your predecessor in the Chair raised this point when I was addressing the Committee. If we are to persuade enough hon. Members to vote for the amendment when the Committee divides, we shall have to convince them that there are sound alternatives if the amendment is carried. Surely we are debating whether the amendment should be carried. The arguments for that proposition depend on whether hon. Members regard it as a credible amendment, and that depends on providing the money.
  The Second Deputy Chairman: It is perfectly in order for hon. Members to state that money can be raised by cutting the defence budget, but not for them to go into the details of raising the money. Such suggestions may be
  1144
  made only in passing. We are not debating defence. The Government will decide where the money will come from if the amendment is carried.
  Mr. William Hamilton: Further to that point of order, Mr. Crawshaw. May I make a tentative suggestion? My hon. Friend the Member for Keighley (Mr. Cryer) attempted to get our support for the amendment by stating with considerable conviction how the sum of money that will be lost to the Government if the amendment is carried can be raised. The Minister will have costed the amendment and in his reply will state that, if accepted, it will cost £X million and that we have not suggested where the Government can find that sum. We are trying to save the time of the House by suggesting alternatives. I have proposals that I hope to put before the House on alternative ways of raising that money. The job of a responsible Opposition is to suggest alternative ways of raising revenue. It is a relevant part of the debate.
  The Second Deputy Chairman: As I have indicated, it is perfectly in order for an hon. Member to make a passing reference to a specific item, such as a cut in housing or defence expenditure. However, the proposal that the hon. Member for Holborn and St. Pancras, South (Mr. Dobson) wishes to make is a matter of argument. We are not discussing defence or housing. Hon. Members must make only passing reference to subjects outside the debate. I do not intend to let hon. Members go into detail; they can make only passing reference to such items.
  Mr. Dobson: I should hate to be diverted into a series of passing references to anything. I shall, therefore, deal with one consequence that will result if the Committee does not pass the amendment. I address my remarks more to Conservative Members than to my hon. Friends. My remarks have nothing to do with alternative means of raising the £1,000 million that the Government seek to raise by the 1 per cent. increase. I shall point out an inevitable consequence for the Government's economic policies and the general state of the economy if the amendment is not passed.
  The Government are in a trap. To date, according to official Government figures, price inflation has been a bit lower or about the same as the level of wage increases. If, however, as a result of the Government's policy, wage increases are kept roughly to the Government's target of 6 per cent. but inflation is not brought down to the same level, the impact on the people will be much greater than merely the official figures. Whatever the official figures, the disparity between pay increases and price increases will grow. The perceived rate of inflation will also increase. The Government would therefore be unwise, even within their own philosophy, to impose an additional £1,000 million tax on people in employment, when they should be seeking to keep to the minimum the perceived rate of inflation. If the Government impose the increase, they will raise the perceived rate of inflation at the very time when they should be doing all in their power to lower it.
  This measure is unfair in that it imposes a burden on those least able to bear it. It imposes a particularly harsh burden on women, because they constitute a disproportionately high proportion of those in part-time employment, the people whom the Bill will hit hardest. It shows a failure of the Government's policies because it will accelerate the perceived rate of inflation. The

  1145
  Government have available to them a host of other measures to raise the £1,000 million, including, if I may mention them in passing, some substantial cuts in the wasteful defence expenditure upon which they are now embarking.
  Mr. William Hamilton: When the Bill was first published, based as it was on the Chancellor of the Exchequer's statement, a number of commentators, hardly any of whom were sympathisers with my party, said that the increased contributions were the Government's admission of defeat for their policies. The fairest and most just course for the Government would have been to announce that they were increasing taxation. Their election manifesto commitment precluded that, however, and since the manifesto contained no comparable commitment about national insurance contributions they saw it as a convenient way of balancing the books.
  Although it gets them out of difficulty, it does so at the expense of social justice. The lower-paid will suffer most. Generally, part-time women workers will have to pay between £2 and £2·25 national insurance contribution out of wages of £27 or £29 a week.
  That is a curious comment on the Government's first Budget, of June 1979. Its clear objective was to remove the disincentive effect of heavy taxation on earnings at lower and middle levels and to strengthen financial incentives by allowing people to keep more of what they earned. It was to cut the marginal rate of tax on overtime and so on. That, at least, was the official reason given in the Budget snapshot produced by the Treasury on 12 June 1979.
  The proposal to increase the national insurance contributions of those at the low end of the incomes scale runs counter to all that. The hon. Member for Harrogate (Mr. Banks) has said repeatedly that, far from giving those people incentives, the proposal is the grossest disincentive, the grossest attack and the grossest example of social injustice. He said that the only people who were doing well out of the Government were the bankers and the moneylenders. I shall add the brewers also.
  9.15 pm
  Our charge is the sheer social injustice of the measure and the complete negation of incentives to people who desperately need some help, if not incentives.
  Mr. Field: Has my hon. Friend seen the document that the Low Pay Unit has distributed to some hon Members, in which it makes a valid point? It compares workers with income ranges from £40 to £500 per week and the marginal rates of tax—
  Mr. Hamilton: I was coming to that.
  Mr. Field: Then I shall not continue.
  Mr. Hamilton: I was about to mention that document. The Low Pay Unit points out that the marginal rates of tax at selected income levels show the gross disincentive under these and related proposals that have been put forward by the Government since they were elected. The document gives a table showing that by April 1981 workers earning the equivalent of £40 per week at 1979 prices will keep only 62·25p of every additional £1, compared with 68·5p before the June 1979 Budget. The Budget reduced their income by more than somewhat.
  1146
  Those earning £500 per week—not £40 per week—will keep 40p out of every additional £1, compared with 17p that they would have kept prior to last year's Budget.
  The document states:
  "Thus while the majority of workers have seen their marginal tax rate reduced by up to 20 per cent. by this Government, an estimated 50,000 workers have had theirs increased by 6¼ per cent."
  Those are the facts as produced by a reputable outside body.
  The obvious intention of this pan of the Bill is to transfer burdens from the Treasury, and, therefore, from the generality of taxpayers, to the national insurance contributors. Generally speaking, an unfair proportion of those increased national insurance contributions will be paid by the low-paid sections of our community. The most regressive provision in the Bill is the reduction of the Treasury supplement from 18 percent. of contributions to 14·5 per cent.—a drastic reduction in the commitment of the taxpayer to the national insurance fund.
  The increase in contribution rates over and above that required by the Government Actuary is to finance the cut in the contribution made by general taxation to the rational insurance fund. The Government Actuary's report on the Bill notes that an extra £529 million will have to be raised in contribution income to make up for the cut in the Treasury supplement. That is not coincidental. It is a deliberate part of Government policy to switch the burdens—not only in the national insurance area but in other areas—of social benefits, whether they be housing subsidies or anything else, away from the generality of taxpayers to others who are least able to bear them.
  We are moving further away—and the amendment and those linked with it are moving further away—from the original concept of financing the national insurance fund on a tripartite basis. I refer to the Beveridge report, produced 30 years ago. The forecast then was that by 1965—15 years ago—the Treasury would be contributing about 46 per cent. of the total charges on the fund and that that proportion would in all probability increase. Instead of that happening, the Government are reducing the proportion to 14·5 per cent.
  The Second Deputy Chairman; Order. The hon. Gentleman is making a valid point, but I think that it is more relevant to amendment No. 17 than to the amendment that we are discussing.
  Mr. Andrew F. Bennett: On a point of order, Mr. Crawshaw. Since we are being asked in this group of amendments to deal with ½ per cent., which was necessary only because of the National Health Service changes, surely it must be relevant to the amendment that we are discussing as well as to amendment No. 17.
  The Second Deputy Chairman: The hon. Gentleman has misunderstood me. It is relevant, and I made that clear. I do not think that it should be gone into in detail. A passing reference can be made to it. It can be debated later.
  Mr. Hamilton: I shall bring my remarks to an end in view of what you have said, Mr. Crawshaw, except that it will lengthen the proceedings later on. But if it will be more in order on a later amendment I shall be happy to deal with it then.
  Mr. Field: My hon. Friend mentioned the Beveridge report. There was no clear statement on how much the Exchequer contribution should be over the years. That was

  1147
  shown in the White Paper produced by the Coalition Government in 1944. There the figures are quite different from those in the note with which we have been provided as a brief. I mention it only because it strengthens my hon. Friend's argument. The then Government estimated that the contribution from the Exchequer would be towards the 70 per cent. level by 1965.
  Mr. Hamilton: My hon. Friend's point strengthens the case that I am making. The Government are moving in a different direction, because they are in the active process of dismantling the Welfare State. That is what they are doing, whether it is in relation to national insurance, the National Health Service or whatever it may be.
  The Library brief on these matters includes a table deriving from the social security statistics for 1975, showing the Exchequer contribution as a percentage of total contributions excluding contributions to the National Health Service where appropriate. It shows the percentage Treasury supplement as 16·7 percent. in 1975, compared with 38·7 percent. in 1951.
  The point that my hon. Friend the Member for Birkenhead (Mr. Field) was making is worth repeating. The Government are pursuing a deliberate policy, which is hidden a little in the technical detail of the Bill. It is a deliberate shift of burdens. We are moving from a relatively fair and progressive system of taxation to a most regressive and socially unfair system of flat-rate contributions under the national insurance scheme. That is the main charge against the Government. In addition, it accentuates the problems of the poverty trap.
  When the Conservatives were in Opposition, they—not least the Secretary of State and his underling, the Under-secretary—were eloquent about the evils of the poverty trap. They are now hell-bent on making it worse. That is most reprehensible. During a recent debate in another part of the building, one of our colleagues said that he was sick and tired of hearing Tories saying one thing in Opposition and another when they were on the Treasury Bench. That is what the Government are doing tonight, and that is why we strongly object to the Bill.
  Mr. Andrew F. Bennett: Like my colleagues, I find this clause to be one of the most obnoxious in the Bill. The Conservative Party has been trying to trick the country out of a proper debate. The Government have insisted on slipping through a tax measure to raise an extra £1 billion. This measure is designed to discourage debate outside the House and designed to discourage people from finding out what is happening. If the Government had introduced this measure in a Finance Bill, in the normal way, we should have had a period of three or four months for people to appreciate the measure and to make representations.
  The Government intend the Bill to be enacted and to increase people's stoppages next April. They do not want people to know why that is happening. That is objectionable. The Government should have the honesty to tell people that they do not want to increase income tax, because that would be a U-turn. They should say that they are doing the same thing in a more regressive way, by increasing national insurance contributions. It would have been fair if the Government had said that and had then received the country's support. It is particularly objectionable that the Government should try to sneak this measure through in such a way.
  1148
  It is a pretence to say that the measure involves national insurance, because no one will derive any benefit. If the Secretary of State can show me one benefit, I shall take back some of my words. There are cuts in every area. Pensions are being cut in real terms. Sickness benefit, unemployment benefit and industrial injury benefit are being cut in real terms. Even the Health Service has, in effect, been cut, because of the imposition of VAT. In all those areas for which people pay their contributions, there are cuts. They are being asked to pay more and to accept less. This is clearly a taxation measure that has nothing to do with national insurance.
  The Minister keeps insisting that the Bill must be rushed through before Christmas so that it can take effect from 6 April. However, the other fiscal measures will be announced in the Budget. We are being given only one measure and we cannot look at a package and a total effect. Why does not the Secretary of State introduce proposals to change personal tax allowances now? New tax tables could then be available from 6 April. That would be logical. However, the right hon. Gentleman seems to think that it is perfectly all right for those measures to be considered in the summer. Perhaps he will not change personal allowances this year.
  The Treasury does not intend to bring forward a measure for personal tax allowances this year. Does it intend to have the money and then, perhaps, to pay it back in the form of a refund later in the year? There is no logic in that. What about family income supplement? We have argued strongly about the low-paid. What are the Minister's proposals for FIS next year? That might give us some idea of the impact on the low-paid. Again, he wants to keep that information back. He is not prepared to give us a total package as regards the financial position next April. Some will find that their stoppages will increase in April as a result of this measure and will possibly go down later in the year because the Government will be trying to claim some credit for changing the personal tax allowances.
  9.30 pm
  The Liberal Party was challenged to propose something that was fairer than a lump sum, but the attempt that is made in amendment No. 6 is somewhat feeble. The hon. Member for Colne Valley (Mr. Wainwright) talked about the poverty plateau rather than the poverty trap. I suggest that the amendment would put into the plateau only one small peak. It would not do much to solve the problem of how to change from a regressive to a reasonably progressive tax.
  I hope that a separate vote will be allowed on amendments Nos. 7 and 9 because they deal with a different principle. We are reluctant to concede that the Government need to raise the extra £1 billion. However, if they are to raise it, we would argue that it should be done in a fairer way by sharing the burden between the employer and the employee.
  I accept that there are some problems. I do not believe that the imposition of this tax can be see in terms of half going one way and half the other. It depends entirely on bargaining power, labour relations and the employment situation how the money is split between the employer and the employee. However, it still seems fairer to split it in that way.

  1149
  The Government claimed that they were determined to help the employer and were not putting up his costs. Then it came out that they were putting up his costs considerably.
  I suggest that the Minister could accept the amendment and split the increase between the employer and the employee without doing any harm to the employer if he considered the real problems facing the employer—high interest rates and the exchange rate. If he could persuade the Treasury to bring down either of those by a small percentage, most employers would happily pay their extra national insurance contribution. That would be of more help to them than holding off their increase.
  Will the Minister say whether the ¼ per cent. is required 1 or the increased numbers of unemployed or for the extra numbers qualifying for pennon payments? I suggest that it is wrong to raise extra money to pay the unemployed. The emphasis should be on reducing the level of unemployment. The most depressing part of the Government Actuary's report on the extra ¼ percent. is the Government's acceptance that the average level of unemployment next year will be 2,300,000. If the Government could solve that problem, there would be no need for the ¼ per cent.
  I hope that the Committee will support amendment No. 5 to leave out subsection (2) Failing that, I hope that we shall be allowed to express oar preference for amendments Nos. 7 and 9.
  Mr. Patrick Jenkin: It is almost three hours since the hon. Member for Birmingham, Perry Barr (Mr. Rooker) moved amendment No. 5, which seeks to delete subsection (2), which he rightly described as the heart of the Bill and which would raise £1,000 million extra in national insurance contributions. I make no complaint that hon. Members have addressed themselves at length to the issues posed by subsection (2), and I shall do my best, I hope at not too great length to respond to the points that have been made.
  The hon. Member for Perry Bar, who was echoed by the hon. Member for Stockport, North (Mr. Bennett), asked why we had to have the Bill now. The hon. Member for Stockport, North asked why whatever tax changes my light hon. and learned Friend the Chancellor of the Exchequer may have in mind for the Budget should not be made known so that the tax tables may be issued or, alternatively, why this decision could not be put in the context of the Budget and dealt with at the same time.
  The answer really lies in the practicalities of the rational insurance contributions. I shall explain in a moment why the Government thought that this was the sensible way to proceed in the position in which we find ourselves.
  The difference between tax and national insurance contributions, purely as a matter of machinery, is that PAYE is cumulative and national insurance contributions are not. With PAYE, one can announce the rates in the Budget and issue the tables later in the year, perhaps about June—the hon. Member for Colne Valley (Mr. Wainwright), as a member of the accountancy profession, understands these things extremely well—and then catch up with the wrong payments that have been made in the first two or three months of the financial year, because PAYE operates cumulatively.
  One cannot do that with national insurance. The tables issued to employers for national insurance purposes must
  1150
  be issued in time to allow them to make the necessary changes in their pay arrangements, whether on computers or otherwise. We therefore have to issue those by the beginning of February so that the new rates of national insurance contributions can be deductable from 6 April. That is the mechanical reason why we have to do this.
  It was for exactly the same reason that the Labour Government, when they introduced the National Insurance Surcharge Act in 1976, had to proceed on almost exactly the same timetable—including, incidentally, taking that Bill through Parliament in the space of a very few weeks. That is why we have to do this, and that is why we must pass the Bill.
  I turn to the reason why we wish to add one percentage point to the national insurance contribution of employees. The House will remember, as this was discussed at some length on Second Reading, that one-quarter of that is to provide money for the National Health Service and thus to enable the Government to maintain the growth in spending on the National Health Service to which we committed ourselves in our election manifesto.
  A further ¼ per cent. is necessary to maintain the flow of funds to the national insurance fund, to meet the expected demand on that fund in the course of the next year. The reasons for that are spelt out in the Government Actuary's report published with the Bill.
  The third element, which aroused the indignation of the hon. Member for Fife, Central (Mr. Hamilton), and to which, no doubt, we shall return on clause 2, is a further ½ per cent. to allow for the reduction in the Treasury supplement, which, as my right hon. Friend the Chief Secretary said on Second Reading, makes a direct contribution to the reduction of the public sector borrowing requirement.
  It would not be light for me on this amendment to go into the economic arguments for the essential policy of containing the size of the public sector borrowing requirement. But no one has sought to deny that the case for raising extra money in this way, to allow the public sector borrowing requirement to be reduced, was made absolutely clear from the start—from the moment that my right hon. and learned Friend the Chancellor announced this—and it is at the heart of the Government's economic policy.
  The hon. Member for Perry Barr and a number of his hon. Friends asked why we must put this wholly on the employee and why it has not been shared, as perhaps in other circumstances it might have been, between employer and employee. It is fair to say that in the early days of the national insurance scheme employers' and employees' contributions were much the same and moved broadly in parallel. In recent years, even leaving aside the national insurance surcharge, the employers' contribution has moved up and is now more than 10 per cent., whereas the employees' contribution was 6¾ per cent., now rising to 7¾ per cent. as a result of the Bill.
  The Bill, to a modest extent, narrows the differential. But the real reason why we decided to make this impost on the employee and not on the employer is that the pattern and movement of the factors in the economy, particularly the high interest rates and the high exchange rates that have been referred to in the debate, press very much more hardly on employers than on employees. Standards of living over the last 12 months have on average risen quite significantly across the country. The increase in earnings has been four or five points higher than the increase in

  1151
  prices. In those circumstances, it seemed to the Government fair and right that the extra contribution should be paid by employees and others in work, such as the self-employed.
  I listened with great interest to the point made by the hon. Member for Birkenhead (Mr. Field), who courageously took issue with his hon. Friends who argued in favour of splitting the contribution half and half between employers and employees. The hon. Gentleman agreed with my hon. Friend the Member for Anglesey (Mr. Best), who argued for the burden being placed on employees. Before the hon. Member for Birkenhead gets to his feet, let me add that I appreciate that he said this was right provided that the base was altered. The base is settled by the pattern of the 1975 Act, and that base is not being altered in the Bill. However, he accepted the case that those in work should now bear the extra burden of financing the benefits for those not in work, whether they are old, unemployed or whatever.
  I take profound issue with the hon. Member for Wood Green (Mr. Race), who said that this would have as much effect on employment as it would if we put the burden on employers. With great respect, that simply does not make economic sense. If we put extra burdens on the employers in the present circumstances, they would have an immediate effect on the level of employment. The hon. Member for Birkenhead certainly accepted that case. At a time when price margins are being squeezed, and when prices in the high streets show that competition is extremely fierce—one can see that in the sales that take place week after week and month after month—there is no possibility whatever of placing the burden on employers. The hon. Member for Wood Green is living in cloud-cuckoo-land—the hon. Member for Barking (Miss Richardson) made the same point—if he believes that if the impost is put on employers they will simply pass it on in higher prices. That would put their profit margins under still tighter pressure and lead inevitably to more people being laid off. For that reason, we felt that it would be wrong to put any part of this additional national insurance increase on to employers.
  Mr. Ioan Evans: The Government have claimed that they have reduced taxes. In fact, in the first Budget that they brought before the House they reduced taxes for the wealthy. They have also imposed VAT on working people. Although working people have been told that there have been tax reductions, they will find a reduction in their take-home pay as a result of this increase in national insurance contributions, and that will lead to a feeling of injustice. Does not the right hon. Gentleman agree that when the tax and prices index which is issued by the Government shows the increase to be above 16 per cent., it will encourage workers to claim higher pay increases?
  Mr. Jenkin: I do not disagree with the hon. Gentleman. It may well be that unions will seek to use this as an argument in their negotiations for higher pay. However, in the mood of realism which is now dominating the pay scene in this country—where the question of how much extra pay private and public sector employers can afford is the determining factor—my guess is that this will have no significant impact on the level of pay increases that will be awarded.
  9.45 pm
  Mr. Race: The Secretary of State said that I had been living in cloud-cuckoo-land. Who is living in cloud-cuckoo-land? His Government have screwed employers' profit margins. His Government have undermined their profits. We are arguing for equity and fairness in the national insurance system. If he is so concerned about the plight of employers, let him change the overall economic policy and stance of the Government and stop messing about and accusing us of attacking the employers.
  Mr. Jenkin: That is a totally different tune from the tune that the hon. Gentleman sang during his speech an hour and a half ago, when he argued that if we put half the extra charge on to employers it would not fall on employers but would be passed on and that they could afford to do that. The hon. Gentleman must make his arguments a little more logical.
  Mr. Field: May we return to the point that there could be a case for putting this increased charge on employees, if only the base could be changed? We have again heard from the Government that it could be changed but for the 1975 Act. Clearly, that Act came down Mount Sinai on tablets of stone, to be unchanged in any way. Will the Secretary of State tell the Committee what there is in the 1975 Act that would prevent people earning below £27, £28 or £29 a week from paying 1 or 2 per cent. of their-wages in contributions, and allowing—as the Liberal amendment suggests—a graduation up the income scale?
  Mr. Jenkin: I shall deal with the Liberal amendment in a moment. I think the hon. Gentleman recognises the understanding that was reached in 1975 between the pension interests and the private sector. I should not use the phrase "private sector", because more public sector pension schemes are contracted out than private sector schemes. About 10 million employees are in pension schemes that have been contracted out on the basis of the structure that was agreed in the 1975 Act. The basis of that was a whole range of—
  Mrs. Kellett-Bowan: Relativities.
  Mr. Jenkin: I am grateful to my hon. Friend—between the contributions for contracted-in and contracted-out schemes, for the protections and limitations of the rights for transferred benefits, and a whole range of matters. That was a carefully constructed package that was felt by both sides of the House at the time to be fair to the occupational pension schemes and fair to the national insurance scheme. It has been the passionate desire of all those concerned with the pensions world outside the House that that carefully constructed package should not be upset.
  Mr. Ennals Mr. Ennals rose—
  Mr. Jenkin: I know what the right hon. Gentleman is going to say, but if he consults them he will find that nothing that the Government have done or are proposing to do will in any way upset the essence of that package.
  Mr. Ennals Mr. Ennals rose—
  Mr. Jenkin: With great respect, whether it is a question of the index-linking of benefits or taking the margins between the upper and lower earnings limits, we are acting entirely within the spirit of that concordat. Some of the changes that have been proposed, particularly in

  1153
  amendment No. 6—the Liberal amendment—upset that package. They are unacceptable to us and would be totally unacceptable to the pensions interests outside the House.
  Mr. Ennals: Surely, all the Secretary of State's arguments are in favour of taking extra money by taxation rather than mucking around with the national insurance system.
  Mr. Jenkin: That may be argued on another occasion. I am arguing for doing with the national insurance fund what is proposed in the Bill.
  The hon. Member for Perry Barr asked what had happened to the £121 million charges foreshadowed in Last year's public expenditure White Paper. Those charges have not been made, and ¼ per cent. of the increased contribution is required for making up the loss of revenue. Of the total, £100 million relates to England and, of that, £14 million relates to the income from sight tests. The Committee will remember Mat we dropped that proposal in response to objections from hon. Members.
  The remainder relates to other charging proposals that have been abandoned or modified, such as that for further measures to recover the cost to the NHS of treating road accident victims. We still hope to bring forward shortly proposals for recovering more of the cost of the use of the NHS by foreign visitors. We shall be announcing details in due course. Much the largest item was the road accident proposal, for which no practical scheme has emerged.
  The Liberal amendment would result in a loss to the national insurance fund of £613 million. The hon. Member for Colne Valley said blithely that that would run the fund into deficit. So it ruddy well would.
  Mr. Field: Language!
  Mr. Jenkin: The hon. Member for Colne Valley asked what was the matter with a deficit, since in 1977 the then Government planned for a deficit. I have looked up the planned deficit in 1977. Far from being £613 million, it was £25 million. For the hon. Gentleman to use that as an argument for cheerfully accepting a planned deficit of more than £600 million is exceeding the normal irresponsibility that we expect from the Liberal Party.
  Mr. Richard Wainwright: Despite the Secretary of State's excitable and lurid language, which almost rivals that of the Chief Secretary, who was rebuked by the Chair for swearing at Question Time, he ought to be fair to the Committee and give us details of the accumulated surplus in the national insurance fund this year and in 1977.
  Mr. Jenkin: The important point about the accumulated surplus is that as a proportion of the outgo—which is the key ratio—it has been steadily declining year by year. The figures are given in paragraph 16 of the Government Actuary's report. In 1979–80 the proportion was 36 per cent., in 1980–81 it is 34 per cent. and in 1981–82 it will be down to 30 per cent. Even with the modest surplus of £39 million for 1981–82 that our proposals will produce, the accumulated surplus represents only about four months' outgo.
  Mr. Wainwright: It is more than £4 billion.
  Mr. Jenkin: Yes, but that is only about four months' outgo. As someone said, "There ain't no fund." It is a working balance, and it is absurd for the hon. Gentleman to suggest that we should cheerfully plan for a massive deficit.
  1154
  I will not go into the obvious practical difficulties of adding yet another rate of contribution, which the amendment would involve. It would massively complicate the work not only of my Department but of every employer in the land. They would need three rates for their employees. The task of checking that and ensuring accuracy would be massive. I cannot advise the Committee to accept the amendment.
  We shall come to the question of the Treasury supplement when we discuss the next clause. There is nothing sacrosanct about the size of the Treasury supplement. It has changed over the years. It has been over 34 per cent. and below 12 per cent. It has fluctuated between 15 per cent. and 20 per cent in the last six or seven years. We are spending billions of pounds more on non-contributory benefits, and the general taxpayer is thus making a bigger contribution to social welfare payments. It is, therefore, not unreasonable, when trying to reduce the public sector borrowing requirement, to shift an, additional part of the burden of financing the national insurance fund to the contributors and off the general body of taxpayers, and thus off borrowing.
  Mr. Field: But they are taxpayers.
  Mr. Jenkin: With respect, I am speaking of the general level of public sector borrowing.
  The right hon. Member for Norwich, North (Mr. Ennals) will remember that the Select Committee criticised me in the summer because the changes made in the Social Security (No. 2) Act for reducing benefits in the next year or two did not affect the public sector borrowing requirement to the full amount of the cuts. We answered that argument by saying that it would depend on what happened to the contribution rates in November 1981. The right hon. Gentleman cannot complain if, in order that the changes in the national insurance fund feed through directly to the public sector borrowing requirement, a reduction is made in the Treasury supplement.
  The right hon. Member for Norwich, North also argued that the increase for the National Health Service would not give rise to extra spending on the service. That comes rich from the Minister who presided over cuts of one-third in the total capital expenditure on the Health Service rather than move an inch on charges. We have said that we shall preserve entirely intact the growth of the National Health Service. We are right to ask the House and the country to pay a little more for it.
  Mr. Ennals: The Secretary of State has criticised me, and I must reply. He knows that when I was Secretary of State the general growth of revenue and capital in the National Health Service was faster than it has been since the present Government came to power There is no point in touching only upon capital and leaving revenue aside.
  Mr. Jenkin: The right hon. Gentleman cannot escape the fact that, rather than impose extra contributions and higher charges, he preferred to cut the programme. We do not do that.
  I have the impression that the Committee is anxious to reach a conclusion. The changes that we are making in the clause—which is at the heart of the Bill, as the hon. Member for Perry Barr said—are realistic in the financial and economic circumstances. They are fair between different categories of our citizens. They put the burden upon people in work in order to preserve benefits

  1155
  for people who are not in work and in order to preserve the Health Service. The changes are sufficient and necessary, in part to maintain the solvency of the national insurance fund.
  Amendment No. 5, which would delete the subsection, amendment No. 6, the Liberal Party's elaborate and not very sensible plan, and amendments Nos. 7 and 9, which would shift part of the burden on to employers, are contrary to the best interests of the national insurance fund, the Health Service and the economy. Therefore, I cannot advise the Committee to accept them.
  Mr. Buchan: Perhaps the saddest aspect of tonight is the petty meanness of the Government's action. They face the biggest economic crisis for half a century, and what do they do? They take half of 1 per cent. from the workers alone; there is no half of 1 per cent. from the employers. They remove £1 billion from the workers' pockets to pay for the crisis that they themselves have caused.
  The measures that the Government are taking are exacerbating the crisis. They found a short-term crisis—
  It being Ten o'clock, THE CHAIRMAN left the Chair to report Progress and ask leave to sit again.
  Committee report Progress.

BUSINESS OF THE HOUSE
Motion made, and Question put,
That, at this clay's sitting, the Social Security (Contributions) Bill may be proceeded with, though opposed, until any hour.—[Lord James Douglas-Hamilton.]
The House divided: Ayes 293. Noes 203.

Division No. 18]

[10.00 pm

AYES

Abse, Leo

Buchanan-Smith, Hon Alick

Aitken, Jonathan

Buck, Antony

Alexander, Richard

Budgen, Nick

Amery, Rt Hon Julian

Burden, Sir Frederick

Ancram, Michael

Butcher, John

Arnold, Tom

Butler, Hon Adam

Aspinwall, Jack

Cadbury, Jocelyn

Atkins, Robert (Preston N)

Carlisle, John (Luton West)

Atkinson, David (B'm'th,E)

Carlisle, Kenneth (Lincoln)

Baker, Kenneth (St.M'bone)

Carlisle, Rt Hon M. (R'c'n )

Baker, Nicholas (N Dorset)

Chalker, Mrs. Lynda

Banks, Robert

Channon, Rt. Hon. Paul

Bell, Sir Ronald

Chapman, Sydney

Bendall, Vivian

Churchill, W. S.

Benyon, Thomas (A'don)

Clark, Hon A. (Plym'th, S'n)

Benyon, W. (Buckingham)

Clark, Sir W. (Croydon S)

Best, Keith

Clarke, Kenneth (Rushcliffe)

Bevan, David Gilroy

Clegg, Sir Walter

Biffen, Rt Hon John

Cockeram, Eric

Biggs-Davison, John

Colvin, Michael

Blackburn, John

Cope, John

Blaker, Peter

Cormack, Patrick

Body, Richard

Corrie, John

Bonsor, Sir Nicholas

Costain, Sir Albert

Boscawen, Hon Robert

Cranborne, Viscount

Bottomley, Peter (W'wich W)

Critchley, Julian

Bowden, Andrew

Crouch, David

Braine, Sir Bernard

Dean, Paul (North Somerset)

Bright, Graham

Dickens, Geoffrey

Brinton, Tim

Dorrell, Stephen

Brittan, Leon

Douglas-Hamilton, Lord J.

Brocklebank-Fowler, C.

du Cann, Rt Hon Edward

Brooke, Hon Peter

Dunn, Robert (Dartford)

Brotherton, Michael

Durant, Tony

Brown, M.(Brigg and Scun)

Dykes, Hugh

Browne, John (Winchester)

Eden, Rt Hon Sir John

Bruce-Gardyne, John

Eggar, Tim

Bryan, Sir Paul

Elliott, Sir William

1156

Emery, Peter

Lyell, Nicholas

Eyre, Reginald

McCrindle, Robert

Fairbairn, Nicholas

Macfarlane, Neil

Faith, Mrs Sheila

MacGregor, John

Farr, John

MacKay, John (Argyll)

Fell, Anthony

Macmillan, Rt Hon M.

Fenner, Mrs Peggy

McNair-Wilson, M. (N'bury)

Fisher, Sir Nigel

McNair-Wilson, P. (New F'st)

Fletcher, A. (Ed'nb'gh N)

McQuarrie, Albert

Fookes, Miss Janet

Madel, David

Forman, Nigel

Major, John

Fraser, Rt Hon Sir Hugh

Marland, Paul

Fraser, Peter (South Angus)

Marlow, Tony

Fry, Peter

Marshall Michael (Arundel)

Galbraith, Hon T. G. D.

Marten, Neil (Banbury)

Gardiner, George (Reigate)

Mather, Carol

Gardner, Edward (S Fylde)

Maude, Rt Hon Angus

Garel-Jones, Tristan

Mawby, Ray

Glyn, Dr Alan

Mawhinney, Dr Brian

Goodhew, Victor

Maxwell-Hyslop, Robin

Goodlad, Alastair

Mayhew, Patrick

Gorst, John

Mellor, David

Gower, Sir Raymond

Meyer, Sir Anthony

Grant, Anthony (Harrow C)

Miller, Hal (B'grove)

Gray, Hamish

Mills, Iain (Meriden)

Greenway, Harry

Mills, Peter (West Devon)

Grieve, Percy

Miscampbell, Norman

Griffiths, E.(B'y St. Edm'ds)

Mitchell, David (Basingstoke)

Griffiths, Peter Portsm'th N)

Moate, Roger

Grylls, Michael

Monro, Hector

Gummer, John Selwyn

Montgomery, Fergus

Hamilton, Hon A.

Moore, John

Hamilton, Michael (Salisbury)

Morris, M. (N'hampton S)

Hampson, Dr Keith

Morrison, Hon C. (Devizes)

Hannam, John

Morrison, Hon P. (Chester)

Haselhurst, Alan

Myles, David

Hastings, Stephen

Neale, Gerrard

Havers, Rt Hon Sir Michael

Needham, Richard

Hawkins, Paul

Nelson, Anthony

Hawksley, Warren

Neubert, Michael

Hayhoe, Barney

Newton, Tony

Heddle, John

Normanton, Tom

Henderson, Barry

Nott, Rt Hon John

Heseltine, Rt Hon Michael

Onslow, Cranley

Hicks, Robert

Oppenheim, Rt Hon Mrs S.

Higgins, Rt Hon Terence L.

Osborn, John

Hill, James

Page, Rt Hon Sir G. (Crosby)

Hogg, Hon Douglas (Gr'th'm)

Page, Richard (SW Herts)

Holland, Philip (Carlton)

Parkinson, Cecil

Hooson, Tom

Parris, Matthew

Hordern, Peter

Patten, Christopher (Bath)

Howe, Rt Hon Sir Geoffrey

Pattie, Geoffrey

Howell, Rt Hon D. (G'ldf'd)

Pawsey, James

Howell, Ralph (N Norfolk)

Peyton, Rt Hon John

Hunt, David (Wirral)

Pink, R. Bonner

Hunt, John (Ravensbourne)

Pollock, Alexander

Hurd, Hon Douglas

Porter, Barry

Irving, Charles (Cheltenham)

Price, Sir David (Eastleigh)

Jenkin, Rt Hon Patrick

Prior, Rt Hon James

Jessel, Toby

Proctor, K. Harvey

Johnson Smith, Geoffrey

Pym, Rt Hon Francis

Jopling, Rt Hon Michael

Raison, Timothy

Kellett-Bowman, Mrs Elaine

Rathbone, Tim

Kershaw, Anthony

Rees, Peter (Dover and Deal)

Kimball, Marcus

Rees-Davies, W. R.

King, Rt Hon Tom

Renton, Tim

Kitson, Sir Timothy

Rhodes James, Robert

Knight, Mrs Jill

Rhys Williams, Sir Brandon

Knox, David

Ridley, Hon Nicholas

Lamont, Norman

Ridsdale, Julian

Lang, Ian

Rippon, Rt Hon Geoffrey

Langford-Holt, Sir John

Rost, Peter

Latham, Michael

Sainsbury, Hon Timothy

Lawson, Nigel

Scott, Nicholas

Lee, John

Shaw, Giles (Pudsey)

Lennox-Boyd, Hon Mark

Shaw, Michael (Scarborough)

Lester Jim (Beeston)

Shelton, William (Streatham)

Lloyd, Peter (Fareham)

Shepherd, Colin (Hereford)

Loveridge, John

Shepherd, Richard

Luce, Richard

Shersby, Michael

1157

Silvester, Fred

van Straubenzee, W. R.

Sims, Roger

Vaughan, Dr Gerard

Skeet, T. H. H.

Viggers, Peter

Smith, Dudley

Waddington, David

Speller, Tony

Wakeham, John

Spicer, Jim (West Dorset)

Waldegrave, Hon William

Spicer, Michael (S Worcs)

Walker, Rt Hon P.(W'cester)

Sproat, Ian

Walker, B. (Perth )

Squire, Robin

Walker-Smith, Rt Hon Sir D.

Stainton, Keith

Waller, Gary

Stanbrook, Ivor

Walters, Dennis

Steen, Anthony

Ward, John

Stevens, Martin

Warren, Kenneth

Stewart, Ian (Hitchin)

Watson, John

Stewart, J.(E Renfrewshire)

Wells, John (Maidstone)

Stokes, John

Wells, Bowen

Stradling Thomas, J.

Wheeler, John

Tapsell, Peter

Whitelaw, Rt Hon William

Taylor, Robert (Croydon NW)

Whitney, Raymond

Taylor, Teddy (S'end E)

Wickenden, Keith

Tebbit, Norman

Wiggin, Jerry

Temple-Morris, Peter

Wilkinson, John

Thomas, Rt Hon Peter

Williams, D.(Montgomery)

Thompson, Donald

Wolfson, Mark

Thorne, Neil (Ilford South)

Young, Sir George (Acton)

Thornton, Malcolm

Younger, Rt Hon George

Townend, John (Bridlington)

Townsend, Cyril D, (B'heath)

Tellers for the Ayes:

Trippier, David

Mr. Spencer Le Marchant and

Trotter, Neville

Mr. Anthony Berry.

NOES

Abse, Leo

Dean, Joseph (Leeds West)

Adams, Allen

Dempsey, James

Anderson, Donald

Dewar, Donald

Ashton, Joe

Dobson, Frank

Atkinson, N.(H'gey,)

Dormand, Jack

Bagier, Gordon A.T.

Douglas, Dick

Barnett, Guy (Greenwich)

Douglas-Mann, Bruce

Barnett, Rt Hon Joel (H'wd)

Duffy, A. E. P.

Beith, A. J.

Dunn, James A.

Bennett, Andrew (St'kp't N)

Dunnett, Jack

Bidwell, Sydney

Dunwoody, Hon Mrs G.

Booth, Rt Hon Albert

Eadie, Alex

Boothroyd, Miss Betty

Eastham, Ken

Bray, Dr Jeremy

Ellis, R. (NE D'bysh're)

Brown, Hugh D. (Provan)

Ellis, Tom (Wrexham)

Brown, R. C. (N'castle W)

English, Michael

Brown, Ron (E'burgh, Leith)

Ennals, Rt Hon David

Brown, Ronald W. (H'ckn'y S)

Evans, Ioan (Aberdare)

Buchan, Norman

Evans, John (Newton)

Callaghan, Rt Hon J.

Ewing, Harry

Callaghan., Jim (Midd't'n & P)

Faulds, Andrew

Campbell, Ian

Field, Frank

Campbell-Savours, Dale

Fletcher, Raymond (Ilkeston)

Canavan, Dennis

Fletcher, Ted (Darlington)

Cant, R. B.

Foot, Rt Hon Michael

Carmichael, Neil

Forrester, John

Carter-Jones, Lewis

Foulkes, George

Cartwright, John

Fraser, J. (Lamb'th, N'w'd)

Clark, Dr David (S Shields)

Freeson, Rt Hon Reginald

Cocks, Rt Hon M (B'stol S)

Garrett, John (Norwich S)

Cohen, Stanley

George, Bruce

Coleman, Donald

Gilbert, Rt Hon Dr John

Conlan, Bernard

Ginsburg, David

Cook, Robin F.

Golding, John

Cowans, Harry

Gourlay, Harry

Cox, T. (Wdsw'th, Toot'g)

Grimond, Rt Hon J.

Crowther, J. S.

Hamilton, W. W. (C'tral Fife)

Cryer, Bob

Hardy, Peter

Cunliffe, Lawrence

Harrison, Rt Hon Walter

Cunningham, G. (Islington S)

Haynes, Frank

Cunningham, Dr J. (W'h'n)

Healey, Rt Hon Denis

Dalyell, Tam

Heffer, Eric S.

Davidson, Arthur

Hogg, N. (E Dunb't'nshire)

Davies, Rt Hon Denzil (L'lli)

Holland, S. (L'b'th, Vauxh'll)

Davies, Ifor (Gower)

Home Robertson, John

Davis, Clinton (Hackney C)

Homewood, William

Davis, T. (B'ham, Stechf'd)

Hooley, Frank

Deakins, Eric

Howell, Rt Hon D.

1158

Huckfield, Les

Richardson, Jo

Hughes, Mark (Durham)

Roberts, Allan (Bootle)

Janner, Hon Greville

Roberts, Gwilym (Cannock)

Jay, Rt Hon Douglas

Robertson, George

John, Brynmor

Robinson, G. (Coventry NW)

Johnson, Walter (Derby S)

Rodgers, Rt Hon William

Johnston, Russell (Inverness)

Rooker, J. W.

Jones, Rt Hon Alec (Rh'dda)

Roper, John

Jones, Barry (East Flint)

Ross, Ernest (Dundee West)

Jones, Dan (Burnley)

Ross, Stephen (Isle of Wight)

Kaufman, Rt Hon Gerald

Rowlands, Ted

Kerr, Russell

Ryman, John

Kilroy-Silk, Robert

Sandelson, Neville

Lambie, David

Sever, John

Lamborn, Harry

Sheldon, Rt Hon R.

Leadbitter, Ted

Shore, Rt Hon Peter

Leighton, Ronald

Silkin, Rt Hon J. (Deptford)

Lewis, Arthur (N'ham NW)

Silkin, Rt Hon S. C. (Dulwich)

Litherland, Robert

Silverman, Julius

Lofthouse, Geoffrey

Soley, Clive

Lyons, Edward (Bradf'd W)

Spearing, Nigel

McCartney, Hugh

Spriggs, Leslie

McDonald, Dr Oonagh

Stallard, A. W.

McGuire, Michael (Ince)

Stewart, Rt Hon D. (W Isles)

McKay, Allen (Penistone)

Stoddart, David

McKelvey, William

Stott, Roger

MacKenzie, Rt Hon Gregor

Straw, Jack

Maclennan, Robert

Summerskill, Hon Dr Shirley

McNally, Thomas

Taylor, Mrs Ann (Bolton W)

McTaggart, Robert

Thomas, Jeffrey (Abertillery)

McWilliam, John

Thomas, Mike (Newcastle E)

Marks, Kenneth

Thomas, Dr R.(Carmarthen)

Marshall, Dr Edmund (Goole)

Tilley, John

Martin, M (G'gow S'burn)

Tinn, James

Meacher, Michael

Torney, Tom

Mellish, Rt Hon Robert

Wainwright, E. (Dearne V)

Mikardo, Ian

Wainwright, R. (Colne V)

Millan, Rt Hon Bruce

Walker, Rt Hon H. (D'caster)

Miller, Dr M. S. (E Kilbride)

Watkins, David

Morris, Rt Hon A. (W'shawe)

Welsh, Michael

Morris, Rt Hon C. (O'shaw)

White, Frank R.

Morris, Rt Hon J. (Aberavon)

White, J. (G'gow Pollok)

Morton, George

Whitehead, Phillip

Moyle, Rt Hon Roland

Whitlock, William

Mulley, Rt Hon Frederick

Wigley, Dafydd

Newens, Stanley

Willey, Rt Hon Frederick

Oakes, Rt Hon Gordon

Williams, Rt Hon A.(S'sea W)

Ogden, Eric

Wilson, Gordon (Dundee E)

O'Halloran, Michael

Winnick, David

O'Neill, Martin

Woodall, Alec

Palmer, Arthur

Wrigglesworth, Ian

Parker, John

Young, David (Bolton E)

Pavitt, Laurie

Price, C. (Lewisham W)

Tellers for the Noes:

Race, Reg

Mr. Austin Mitchell and

Rees, Rt Hon M (Leeds S)

Mr. James Hamilton.

Question accordingly agreed to.

Social Security (Contributions) Bill
Again considered in Committee.
[Mr. RICHARD CRAWSHAW in the Chair]
Question again proposed, That the amendment be made.
10.15 pm
Mr. Buchan: I am sorry about the outcome of the interruption. We were hoping that Conservative Members would join us in recognising that such Bills should not be rushed through the House. We should stop the debate now and return next week to discuss the Bill in a proper businesslike fashion. If I have to keep the Committee up until the early hours of the morning, it is the fault of the Government Front Bench.

1159
One of the worst and saddest aspects of the Bill is that, in the face of the biggest economic crisis for 50 years—I believe that it is more serious even than the crisis of the 1930s—the best the Government can do is to extract yet another £1 billion out of the working people to deflate the economy. It is the meanness and pettiness of the action that annoys us as much as anything.
I was interested in the Secretary of State's reasons for this shambles of a method of dealing with the problem and pushing the Bill through tonight. He said that it was being done for mechanical reasons. He made a distinction between the problems with handling PAYE and those with national insurance contributions. He said that the measure had to go through tonight to get the tables in order. It does not have to go through tonight. If the Government want to take £1 billion out of the economy, they can do it through taxes. They do not do so because they are afraid. They made many promises to the country when they came to power to cut taxes. Even so, those cuts have been rendered nugatory by the indirect taxes that they have raised in an attempt to avoid raising direct taxes. There is no excuse for this shabby package being presented to us in this way.
The Bill has little to do with the National Health Service. It is an economic, a budgeting response and is not a matter of national insurance. By taking such measures, by trying to counter the crisis they have created for themselves largely by their deflationary methods, the Government have turned what could have been a short-term crisis of an interim cyclical recession into a major long-term decline. Measures such as this, petty as they are, are part of the package that has been destroying Britain's basic industrial economy. The Government must bear that in mind to understand some of our anger.
The Bill, purporting to be concerned with the national insurance fund but in reality a deflationary economic decision, is self-defeating. The Government have got themselves on a ratchet on which every measure they take creates yet another 100,000 unemployed, and every increase in unemployment leads to an increase in the public sector borrowing requirement. The very measures that they are taking to defeat inflation are therefore expanding the PSBR. If the Secretary of State disagrees with that, let him produce the figures for when his Government came to power and for now. The Government have increased the requirement.
The same applies to the money supply, with which the Government claim to have dealt. We say that the money supply is out of control, and they ask us why we are complaining because we do not believe in that type of policy. It is true that we do not, but they do. They regard it as the fount and origin of the actions they should carry out.
The Secretary of State spoke tonight about the new mood of realism among workers which, he said, would lead to lower wage settlements. The point was raised by my hon. Friend the Member for Wood Green (Mr. Race), who linked the Bill to the problem of wages. There is a new mood of realism, but it is the one referred to by my hon. Friend the Member for Keighley (Mr. Cryer) when he was quoting the speech by the Chief Secretary last night. We want a new mood of realism, and there it is. The
1160
Chief Secretary is beginning to see the error of his ways, and he is one of the pundits in that area. The Secretary of State should follow suit.
In what way do we regard this measure as being not only unnecessary but unjust? Let us compare it with the other financial measures taken by the Government during the past 18 months. In the first Budget, they fulfilled their promise by cutting £4½ billion of direct taxation, of which 37 per cent.—more than one-third—went to the richest 7 per cent. of the community. That is a redistribution of wealth with a vengeance. There was little justice in that. There might have been some economic argument for it if that top 7 per cent. had used the money for investment. They did not, and nor will they, because the other aspect of the Government's policy, the high bank rate and the level of the pound, have rendered nugatory even that release of resources to the investing class.
That increase in finances was at the expense of the workers' pockets. They are being soaked again to deal with the immediate crisis. They had to pay for that increase in the form of value added tax, savage cuts in the social wage and other proposals. We were told that the Government needed to take £1 billion out of the economy to save Britain. It is £1 billion from working people. Yet this week, on the basis of the Rayner proposals, the Secretary of State—for a paltry £50 million as against this £1 billion crisis—changed the method of allocation of money to working and other mothers in proposals for the child benefit allowance.
The Government do not understand how people live. Members on the Government side do not live, as do many Labour Members, with the problems of poverty. As an indication of the rise of poverty in Britain, let us consider the voluntary action of women drawing child benefit. They can draw it weekly, fortnightly, three-weekly or four-weekly. In the past year, the numbers drawing child benfit weekly increased by more than one-third. In June 1979, 35 per cent. drew the benefit weekly. In June 1980, the figure was 45 per cent. That increase of one-third is a direct indication of the strain that is being put not only on the poor but on many others. The 45 per cent. goes well beyond the 20 per cent. that the Government talk about in the peculiar view that they have of the poor in Britain as a caste that must be identified by family income supplement or something else. That 45 per cent. includes reasonably well-off working families. Yet they need to take that voluntary action. It is a nuisance to draw the benefit weekly. It is an indication of the poverty in Britain.
My hon. Friend the Member for Fife, Central (Mr. Hamilton) pointed out that workers earning £40 per week at 1979 prices would keep only 62·25p of every additional pound that they earned. They lose at £40 per week. They have dropped from keeping 68p to keeping only 62p. On the other hand, those earning £500 per week, who a year before could keep only 17p in the pound, can now keep 40p. That more than doubles the amount going into the pockets of the rich. There is a direct loss to the pockets of the poor through taxation.
That is the background against which we must consider the measure before us. Let us consider the arguments in favour of it. One argument was that it would produce incentives. Where is the incentive in the Bill? The Government are increasing contributions on the one hand, and on the other hand they are maintaining the lower limits at which contributions begin. Instead of increasing the incentives for people to work, they are almost deliberately

1161
creating disincentives. They are putting more people into the poverty trap and keeping them there. There will be little incentive for them to do other than campaign even more for higher wages.
The Bill purports to be about social security, but it is nothing of the kind. It is a Bill about taxation. It is a Bill about the failure of the Government to deal with the economic crisis which they themselves have largely created. It results from the Government's own decision to increase taxes. They were afraid to increase direct taxes. What they have done instead is to call for a further contribution from the workers.
Incidentally. Mr. Crawshaw, this has nothing whatever to do with the discussion that we shall be having—no doubt in the early hours of the morning—on the relative proportions of the Treasury allocation and contributions within the national insurance fund. Basically, the Bill is merely raising money.
It is said that the Bill can partly be excused on the ground that ¼ per cent. is given in the unemployment sector. We might have forgiven that ¼ per cent. if it had been allocated between employees and employers. The Government have created more than 2 million unemployed. Having created 2 million unemployed—
Mr. Paul Dean: The gist of the hon. Gentleman's remarks is that revenue which would be available under the Bill for pensions and other benefits and for the National Health Service will not now be available, according to the argument that he is using. If he accepts that—and he must, in view of what he said—where is he to raise the money? Is he to increase personal direct taxation? If so, candour requires that he should tell the Committee frankly that that is his proposition.
The Second Deputy Chairman: Order. I do not think that the hon. Gentleman was in the Chamber when the Chairman made some comments about debating where money is to be raised. I am sure that it is not a necessary part of the Opposition's case to say where it is to be raised. It is for the Opposition to press the amendment. I say this because the debate has been getting so wide as to cover every aspect of policy. It is no part of this Committee stage to be debating where the money would be raised. It is a matter of saying whether it is appropriate to raise it in this particular way.
Mr. Cryer: On a point of order, Mr. Crawshaw. There are one or two Conservative Members who are sniggering about this matter. You have been reiterating a position that you made clear earlier when those hon. Members were not in the Chamber and when several Opposition Members were setting out a number of very cogently argued alternatives for the money. I think that you can confirm that.
The Second Deputy Chairman: That is the reason why I did not want the debate to get any wider. That is why I said that I had already given a ruling on it.
Mr. Buchan: I am always in support of the Chair. I should very much have liked to suggest ideas, such as increasing the ceiling on contributions. I might even have been tempted to mention the word "defence", but, since you say that it is out of order, Mr. Crawshaw, I shall not mention it. I might even have said that we could reverse the taxation concept here in order to tax the rich to help the poor. But, again, since it is out of order, I shall not, of course, deal with it.
Mr. Ioan Evans: Does my hon. Friend agree that working people are concerned with their take-home pay and that it is kidology for the Government to try to tell people that they are reducing taxation when they are moving the burden from direct to indirect taxation? We recall that in their first Budget the Government gave massive concessions to the wealthy. Now, they are proceeding to increase the national insurance contributions of the less-well-off, the low-paid. The workers know this when they look at their take-home pay.
10.30 pm
Mr. Buchan: My hon. Friend has put it more succinctly than I have been able to do in the past 20 minutes or so. It is not only the working people who see these contributions as tax. Conservative Members also see them as a tax. The Secretary of State said:
"Strictly speaking, the sums involved here are not taxation, but I suspect that for most people increasingly their national insurance contributions have more the quality of taxation than they used to do".—[Official Report, 5 December 1978; Vol. 959, c. 1369]
The right hon. Gentleman accepts that. The Secretary of State for Trade raised a point of order. Conservatives seem to do a lot of their work through points of order. Perhaps we should learn from them. In 1976 the right hon. Gentleman claimed that the increases in national insurance were a "pure tax increase". I could not have put it better myself.
The Minister for Social Security is missing. Where is Reg? I was looking forward to seeing him. Perhaps he is having a day off. Perhaps his old conscience has surfaced. The right hon. Gentleman said:
"If we reduce the expenditure from the rational insurance fund and if the contribution is also reduced—I am saying 'if because other factors come into it"—
our Reg is a careful lad—
"we are still fulfilling the objective of reducing taxation because national insurance contributions are a form of tax."
That is how the Government see it.
Therefore, we are right to argue that, if it is a tax, it should have been introduced in that form. That would have been fairer. We object to the way in which the Government are dealing with this crisis. They are not helping the National Health Service. The cuts will still be there. Those who work as hospital cleaners will still come to our surgeries. The Bill will not raise money for the NHS.
Several objections can be made to the Government's method. They have undermined the people's faith and have attacked their confidence in the social insurance principle. They have increased contributions when the benefits that they are supposedly funding art being savagely cut. Benefits of every variety are being cut, including short-term benefits, such as those for sickness, invalidity, industrial injury and unemployment.
The Government are not content with merely breaking the connection between pensions and earnings or prices, whichever is the higher. We have been forced to accept the connection with prices. If my light hon. and hon. Friends and the leader-writers are right, the Cabinet meeting was a close-run thing. As I said on Tuesday, it was only the "wets" who saved the Government's face. Instead, the Government want to set pensions 1 per cent. lower than inflation. What for? Do they want to drive all our 75-year-olds out to work? What is the point? The only motive is meanness.
Sir Frederick Burden: On a point of order, Mr. Crawshaw. Is it right to engage in arguments about old-age pensions? I thought that such discussion was out of order.
The Second Deputy Chairman: I think that hon. Members on both sides of the Committee have discussed this matter.
Mr. Buchan: I thought that I was sticking more to the real nature and purpose of the Bill than did the Secretary of State. I am dealing with the reasons for and the purpose and effect of the Bill.
This measure cannot do anything but damage regard for the social insurance principle if the Government persist in increasing contributions when the benefits are being savagely cut.
There are other reasons why we object to specific parts of the Bill. My amendment seeks to wipe out the 1 per cent. impost. Therefore, it must be in order. The second objection is that the proposal is unjust. Income tax is paid on both earned and unearned income. National insurance contributions are paid only on earned income. Therefore, the workers and some sections of management will pay, and not those who live on interest, dividends and rents.
Income tax has a threshold before one starts to pay. That is not so with these contributions. Contributions begin at £27 a week, which is close to the supplementary benefit level for a single person. Income tax is paid at higher rates if one is better off and can afford it. But these contributions are not paid on earnings above a certain ceiling. I was asked about money. Here is one way in which we can look at money. We could remove the ceiling of £200 a week. After all, that is £10,000 a year. Should not that ceiling have been raised or even wiped out in favour of a graduated return in benefits following that?
There are other ways of dealing with this matter. At the moment, it is unjust—even in the Bill it is unjust—because those who are paying at the bottom end—my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) will keep my figures right on this aspect—will have the limit raised by 22 per cent., whereas the ceiling is raised by only 17 per cent. Have I got it right?
Mr. Rooker: No. It is the other way round.
Mr. Buchan: My hon. Friend is quite right; it is the other way round. The floor has been lifted by 22 per cent., so people are being brought in at £27 a week; but the other end of the scale has not been lifted by an equivalent figure. I have never claimed to be numerate, but I understand this. The imbalance between the two figures means that the poor are clobbered and the rich get richer.
This proposal is unfair also because income tax is graduated—higher earners pay more tax—but national insurance contributions are partly flat rate. By the way, this also affects the friends and supporters of the self-employed. It is a flat rate for the poorer self-employed and, for that matter, the better-off self-employed whom the Conservative Party wooed so assiduously at the election.
I do not want to go much further, although I think that some of my hon. Friends will want to comment on what I and the Secretary of State have said. I should like to finish by quoting from an article by David Wyn Williams in New Society:
"National insurance contributions have been quietly converted into a second income tax."
1164
He then goes on to analyse why they are more unfair than income tax:
"Thus in each of these ways, the present rates of national insurance contributions go a considerable way to negate the complex adjustments whereby the income tax system seeks to work social justice between differing taxpayers on account of differing commitments, needs, and sources of income. If the regressive effects of VAT and the other expenditure taxes were brought into the analysis".
The thing has become even more unfair because of the overburden of these taxes.
We shall shortly be discussing the relationship between the taxation element of the national insurance fund in relation to the contributions. For the moment, we reject this part of the clause, and I call upon hon. Members on all sides—because there must still be some "wets" here even at 10.40 pm—to vote with us.
Mr. Field: I rise once again to draw attention to the unsatisfactory nature of the Secretary of State's reply. I want to draw his attention to three points. If I am brief, it may encourage him to respond in a more positive manner than he has done so far.
I turn to the point made by my hon. Friend the Member for Wood Green (Mr. Race) about the Conservative Party's election manifesto, particularly that part which dealt with the high marginal rates of taxation. The Conservative election manifesto was quite clear on this point. It said that high marginal rates of tax operated at the top and the bottom. What we are partly discussing this evening is how effectively, or otherwise, the Government have delivered on that pledge in respect of those on the bottom.
As my hon. Friend the Member for Fife, Central (Mr. Hamilton) did not make full use of the Low Pay Unit brief, I direct the Secretary of State's attention to the figures that it gives for changes in the marginal rates of tax for those at the top and the bottom. For those on the 83 per cent. marginal tax rate when the Government came into power, the rate has been reduced to 60 per cent. If I am right, that is a reduction of just more than 20 per cent. But for those earning around £40 a week there has been an increase in the marginal rates from 31·5 percent. to 37·5 percent.—a 6·25 per cent. increase. If that is taken over the base, it is something like a 20 per cent. increase in their marginal rates of tax.
We have tabled these amendments to draw attention to that fact that while the Government have delivered in respect of high-rate taxpayers—because they believe that it was important—the exact opposite has occurred for the low-paid, although both groups were bound together in the same pledge in the Conservative election manifesto. I am sure that the Committee would be grateful to hear a reasoned reply from the Secretary of State about how he squares that election promise with the reality. If it was good enough for those on high pay, why was not that election promise good enough for those on low pay?
Secondly, I want to develop a little further the main point of the Liberal Party's amendment. It was said that if we adopted that proposal, or a much more modest one that I floated but did not table, given the fact that we accepted how regressive the national insurance contribution was—starting from each pound once one had crossed the national insurance threshold—there might be a case for graduating the contribution for those on low pay. We were told that that was not on, because it would somehow violate the covenant that was made between the

1165
parties in the House and between the House and pension schemes in the private sector. That does not stand up to reason. What private pension scheme will object because the House has decided that the regressive national insurance poll tax should be lessened for those at the bottom of the pile?
Earlier this evening we failed to raise the floor of the national insurance contributions, which was a way of helping low-paid workers, particularly women, who constitute the majority of low-paid workers. We were told by the Secretary of State that that would have covered a mere 200,000 workers. If his figures are right, the number would be equal to the electorate of Daventry, Wallasey and Wanstead. That is the size of the group that was affected adversely by the amendments that were rejected earlier.
10.45 pm
We ate trying to retrieve part of that position now by making sure that either some groups of workers—the lower-paid workers—have a lower rate of national insurance contribution or there is no increase in the national insurance contribution. Will the Secretary of State turn his mind to that point" Does he maintain that if the national insurance contribution were made fairer for the low-paid, the pension funds would be in revolt? If there is to be a further increase in the national insurance contribution next year—as no doubt there will be—and if the right hon. Gentleman expects hon. Members from both sides of the House to support him, as I do, in an increase only for employees, there is a duty on all of us to ensure that the regressiveness of the tax is less for those on low pay.
Thirdly, I should like to draw the Committee's attention to the increases in national insurance contributions, which are not classified as taxation increases in a technical sense, and to the reason why, in the past, we have not viewed national insurance increases as increases in taxation. No previous Government have increased the contributions and in the same benefit year planned reductions in benefits. It would have been easy for Governments to say that this was an insurance scheme and that they were asking for contributions because there would be increased benefits.
We are now at the stage when there will be increased contributions and less benefits. We should view that as an increase in taxation and discuss ways of raising it more fairly if the Secretary of State will not meet our points about the regressiveness of the tax and how it affects workers on low pay—particularly women workers, who compose the army of the low-paid. The more he stubbornly refuses to meet us on these points, the more difficult it is. I apologise for returning to the same point, but it is crucial. If, in the next few years, there is no growth, people will have to face sensibly the question of financing the Welfare State. We must get them to consider how they can spread their lifetime earnings of 40 years over a lifetime of about 80 years. We shall never be able to get that argument on the road if at the time that we are increasing contributions we are cutting benefits.
I should like to emphasise before you leave us, Mr. Crawshaw—I hope only temporarily—that I am asking the Secretary of State to respond sensibly and seriously to our points about the difference in the Government's election promises and their performance in fulfilling them. They have reduced the high marginal tax rates for the rich, but they have increased them for the poor, although they
1166
promised effective action to reduce the marginal tax rates for the poor. Does the Secretary of State seriously maintain that if we did something to mitigate the hardship on the lowest-paid the pension funds would clamour round and lobby and jostle him on his way to his office at the Elephant and Castle tomorrow morning? Does he maintain that this is not an increase in taxation when, at the same time, he is cutting benefits?
Mr. Andrew F. Bennett: We were disappointed with the Secretary of State's reply, because he seemed more concerned to sit down at 10 o'clock than to answer our questions. We wanted to know more about the ¼ per cent. that is being requested because of the problems of unemployment. I asked whether it was all necessary for the unemployed or whether more people were coming on to pensions. The right hon. Gentleman did not enlighten us.
The Secretary of State reiterated his belief in the so-called deal that he claims was reached on an agreed policy for pensions. He does not accept that he tore up the deal last year when he took away the link with earnings. The whole basis of the deal was that there would be a steady increase in pensions, because pensioners would get the benefit of rises in line with prices or earnings, whichever was the greater—the ratchet effect. That was an essential part of the deal. The right hon. Gentleman cannot change the rules and claim that the deal still exists.
The right hon. Gentleman did not say much about amendments Nos. 7 and 9. He did not answer our question whether the burden could have been shifted on to the employer rather than the employee. He did not give us the breakdown of the incidence of the burdens on the two groups. There is some evidence that the low-paid may benefit a little if the onus is placed on employers rather than on employees. The Secretary of State should have explained why the amendments are unacceptable.
We may be at fault on amendment No. 8, because we have not spent much time discussing it. It draws attention to the fact that if the Government's case were that payments had to go up because extra benefits were being paid, only the ¼ per cent. increase would be needed. As we have pointed out, individual claimants will get less in real terms in future. In that case, the Government's only argument can be that more people will be receiving benefits. I suppose that they will be the increasing numbers of unemployed for whom the Government are planning.
The other ¾ per cent. involves nothing but the Government's monetary policies—a saving on Exchequer NHS contributions and other Treasury money-saving decisions. The ¾ per cent. has nothing to do with the national insurance principle. If the Minister will not accept amendment No. 5 to delete the whole clause, he ought to agree that the only portion for which he has a case is the ¼ per cent. for the unemployed and pensioners. I hope that he will tell us how much is needed for extra pensions and how much for increased unemployment.
Mr. Cryer: The Secretary of State failed to answer a number of questions raised by the Opposition. While you were out of the Chair, Mr. Godman Irvine, several Conservative Members raised, in a rather jeering manner, the issue of alternative sources of income, and I had to point out that I had spent some time setting out what I thought should be the alternatives. It is important to present a credible alternative when one says that a clause should be removed.

1167
It is true that the Secretary of State did not go down that road, but he did say that the money was necessary for, among other things, the maintenance of the National Health Service, and he had an altercation with my right hon. Friend the Member for Norwich, North (Mr. Ennals) about the relative position under the present Government. But everyone understands perfectly well the situation of the NHS—that it is facing grave difficulties and that the position of the Government is not that they want to maintain the NHS but that they are quite happy to see it eroded. They welcome private schemes and private hospitals and a shift of resources from the public to the private sector. I thought that the Secretary of State's claim that the money was needed for the NHS was particularly weak, especially as we know that a very small proportion of this revenue is likely to find its way there in any event.
The other point that the right hon. Gentleman answered rather inadequately was the question of the 6 per cent. It was pointed out to him that the Government have a policy of a 6 per cent. imposition to limit wages in the public sector and yet wage earners will find that they have a 14 per cent. increase in their rate of national insurance contributions, if these amendments are not carried, at a time when we are facing an annual inflation rate of about 15 or 16 per cent. The increase in contributions is an increase in taxation, as was demonstrated by my hon. Friend the Member for Renfrewshire, West (Mr. Buchan), who pointed out that many hon. Members, not from the Labour Benches but from the Conservative Benches, have referred again and again to these national insurance charges as being a tax.
This rate of tax increase is very high indeed and simply does not square with the Conservatives' much-vaunted claim, in their manifesto, that they would reduce taxation for those at the lowest and the highest levels of income. They have simply said "This is not a tax", but the Secretary of State must accept that the rate of increase in the national insurance contribution under subsection (2) is about 14 per cent. That really is a very large increase, and it is contrary to the Conservative manifesto.
The only way in which the right hon. Gentleman can justify it is by saying that it is not a tax but simply a national insurance surcharge. But the effect of removing money from a wage packet is exactly the same, whether one calls it a surcharge, a contribution or a tax. It is a wholesale breach of the Conservatives' commitment, and it would be far and away better if the Government admitted it and said "We will restore some of the cuts that we made on the marginal rates of the rich"—they were massive cuts—"in order to give ourselves a proper, fairer and progressive source of taxation" rather than use this blunt instrument to raise the money.
Mr. Dobson: No doubt the Secretary of State will cavil about the wording, but on page 14 the Conservative manifesto said:
"We must therefore be prepared to switch to some extent from taxes on earnings to taxes on spending."
That was used to justify the increase in value added tax, but I think that it is clear that tonight we are talking about a tax on earnings.
Mr. Cryer: Yes, indeed. My hon. Friend confirms the precise principle of what I was saying—that the Bill represents a clear breach of that commitment; and I hope that the message goes out clearly to all those who were lured into voting Conservative. I must say that they are
1168
very thin on the ground these days. Not many people admit that they voted Conservative, and those who admit it do so with a shamefaced, grudging attitude, recognising the disastrous policies that the Government have been following.
11 pm
The Secretary of State is increasing the contributions on behalf of the Treasury. We learn from leaks that he is an enthusiastic supporter of the Treasury view, proffering cuts in his Department without any pressure. At the same time, there is a 5 per cent. cut in benefits. The Chief Secretary to the Treasury has said that if one wills the end one must will the means. The end is not quite the system that the Government inherited from the Labour Government; it is a diminishing end. Therefore, it represents a very bad bargain—contributions increased by 14 per cent. and a reduction in benefits of 5 per cent. If that were done by an insurance company, the organisers might well find themselves without many supporters and, depending on their prospectus, facing criminal charges. The Conservatives' prospectus claimed the reverse of what is happening.
The Chief Secretary is one of the few thinkers in the Cabinet. The Guardian, thanks to a mole among Conservative Back Benchers, tells us that he is now veering away from the targets. His is the right view. If the Conservatives are to prevent the present crisis enveloping us—the crisis that is the reason for raising £1 billion under the clause—they will have to be much more flexible and cease being so oppressive to the person least able to withstand their oppression, the ordinary wage earner.
The Secretary of State said that it was necessary to have the £1 billion. We have shown that the Government's means are not the only ones open. They are adopting them because they are a narrow-minded, petty Government of the rich, by the rich and for the rich. That is why they do not adopt a progressive taxation system. They prefer to put the burden on the backs of the poor.
That is why we oppose the clause and support the amendments. I hope that even at this late stage the Secretary of State will say that the Government are considering alternative ways of raising the £1 billion.
Mr. Race: It would be remiss of Opposition Members not to congratulate my hon. Friend the Member for Renfrewshire, West (Mr. Buchan) on his excellent speech. I am sure that all Labour Members hope that he will make a number of such scathing attacks on the Government over the next few months and in due course make some speeches from the Government Dispatch Box.
We must address ourselves to the Government's arguments for the 1 per cent. increase in the employee's national insurance contribution. As we all know, as we all read the newspapers, the increase was decided upon after a long discussion in the Cabinet about the way in which the Government would raise money for the public service and in particular to reduce the public sector borrowing requirement. It is clear from the Secretary of State's Second Reading speech that the Government's intention was simply to provide money for that purpose.
No doubt the Cabinet discussed alternative methods of financing the PSBR other than the proposals that are set out in the clause. If there were arguments in the Cabinet about the ways in which such a substantial sum could be raised, it is right for the Committee to discuss the

1169
alternatives and to draw attention to the way in which the Government might deal with the situation in which they find themselves.
Every time the unemployed increase by 100,000, the net cost to the PSBR is about £440 million. That is the figure produced not by the Labour Party research department but by the Library in an excellent document on the cost of unemployment. I have no doubt that the 1 per cent. increase in employees' contributions that is called for in the Bill is a direct and inevitable consequence of the Government's policy of allowing unemployment to rip ahead. The more that it rips ahead, the more Bills like this we shall get and the more the Secretary of State will be forced by his Cabinet colleagues to activate the sections in the Social Security (No. 2) Act 1980 that allow for the 5 per cent. cut in unemployment and other benefits in the next financial year as well as in this year.
My hon. Friend the Member for Keighley (Mr. Cryer) drew attention to the increases in employees' contributions hat have been called for at a time when benefits are being out. The No. 2 Act is on the statute book, and I have no doubt that in due course the Cabinet will be discussing whether the relevant sections are to be activated and whether benefits will be cut again in the next financial year.
The political purpose of the clause is clear. It is to fund the Government's central objective, which is to allow unemployment to rise. They will allow the pressure in the labour market to depress wages and to attack the real living standards: of ordinary working people. That is the only way in which they can pursue heir policy of reducing the power of labour in the overall economy.
The impact of such a change in the economy is bound to be substantially deflationary. National insurance contributions from employees or employers have an effect on the level of economic activity and on the level of employment in certain industries. The clawing back of £1,000 million from taxpayers is bound to increase unemployment substantially. It is a straightforward piece of economic deflation.
The Committee would be right to delete the clause. However, I refer to amendment No. 6, the Liberal amendment, which raises an important principle that the Committee should discuss fully. At what point, if any, should the national insurance system be based on the level of earnings of a particular employee? We have a floor and a ceiling, and between those two points the national insurance system tends to work on a uniform basis irrespective of the level of earnings of the individual.
Great play has rightly been made with the argument that the national insurance system is regressive and favours the well-off at the expense of the low-paid. The Liberal amendment seeks to reduce the regressive effects of a national insurance system, if we are to have one at all, by allowing the existing rate of employees' contributions to be levied on those who receive less than £85 a week and the new rate to be levied on those with incomes in excess of that sum.
Why has the Liberal Party chosen £85 as the cut-off point? If a system of graduated national insurance employees' contributions is operated, there is a great deal of sense in having a number of bands activated at different income cut-off points. For example, there would be a case for having a contribution band clearly linked to those groups in receipt of or eligible for certain State benefits, such as family income supplement. There could be a lower
1170
rate band of employees' contribution for a certain range of incomes. There could then be a series of bands of income contributions at higher earnings levels. If we are to have a progressive system of contributions, there should be a series of cut-off points that could be specified by Parliament and changed in accordance with changing circumstances.
However, for the life of me I cannot understand why the Liberal Party has chosen £85 as the cut-off point. It does not relate to the average earnings of the male full-time worker, which at the last count in the new earnings survey were about £125. Presumably it is an attempt to deal with the problems of the low-paid, but the level does not relate to the level of State benefits or the number of people in particular income bands.
If we cannot get the progressive changes that are required in the national insurance system, we should delete the clause and throw the political football right back to the Government to sort out. We should tell them that we do not want that form of extra taxation on the low-paid and workers generally. If they want to solve the problems of the economy, they should solve them in a totally different way and not by imposing further inordinate burdens on ordinary working people.
Mr. Dobson: One point not touched on by my colleagues causes me concern. With increasing unemployment, there is a danger of increasing social division. The Government's presentation of the increase in national insurance contributions may, either inadvertently or deliberately, be seeking to provoke enmity between the unemployed and people in work.
In his mini-Budget on 24 November, the Chancellor said about the national insurance fund:
"Thirdly, the fund at present receives a substantial contribution from the general taxpayer through the Treasury supplement.… In these circumstances, it is right that those in work should shoulder directly a larger share of the cost of contributory benefits."—[Official Report, 24 November 1980; Vol. 994, c. 316.]
11.15 pm
Ministers in the Treasury, and especially Ministers in the Department of Health and Social Security, constantly go on about scroungers and proudly announce that they have appointed more and more people to sort out scrounging among social security claimants. We may be witnessing an attempt by the Government to cause those who are in work and whose incomes are reduced to become antipathetic about the level of unemployment benefit paid to those whom the Government are driving to the dole. In that sense, the Bill sows the seeds of an unpleasant social division.
Our stand stems not so much from the content of the Bill but from the way in which it is being presented by the Government and the nature and history of those who have devised that form of presentation. That is a further reason why the Committee should support the amendment in its attempt to reject that concept lock, stock and barrel.
The Parliamentary Secretary to the Treasury (Mr. Michael Jopling)The Parliamentary Secretary to the Treasury (Mr. Michael Jopling) rose in his place and claimed to move, That the Question be now put.
Question put, That the Question be now put:—
The Committee divided: Ayes 251, Noes 81.

Division No. 19]

[11.17 pm

AYES

Alexander, Richard

Arnold, Tom

Ancram, Michael

Aspinwall, Jack

1171

Atkins, Robert (Preston N)

Greenway, Harry

Atkinson, David (B'm'th,E)

Grieve, Percy

Baker, Kenneth (St.M'bone)

Griffiths, E.(B'y St. Edm'ds)

Baker, Nicholas (N Dorset)

Griffiths, Peter Portsm'th N)

Banks, Robert

Grylls, Michael

Beaumont-Dark, Anthony

Gummer, John Selwyn

Bendall, Vivian

Hamilton, Hon A.

Benyon, Thomas (A'don)

Hampson, Dr Keith

Benyon, W. (Buckingham)

Hannam, John

Best, Keith

Haselhurst, Alan

Bevan, David Gilroy

Hastings, Stephen

Biffen, Rt Hon John

Havers, Rt Hon Sir Michael

Biggs-Davison, John

Hawkins, Paul

Blackburn, John

Hawksley, Warren

Blaker, Peter

Heddle, John

Bonsor, Sir Nicholas

Henderson, Barry

Boscawen, Hon Robert

Heseltine, Rt Hon Michael

Bottomley, Peter (W'wich W)

Hicks, Robert

Bowden, Andrew

Hogg, Hon Douglas (Gr'th'm)

Braine, Sir Bernard

Hooson, Tom

Bright, Graham

Howell, Ralph (N Norfolk)

Brinton, Tim

Hunt, David (Wirral)

Brittan, Leon

Hunt, John (Ravensbourne)

Brooke, Hon Peter

Hurd, Hon Douglas

Brotherton, Michael

Jenkin, Rt Hon Patrick

Brown, M.(Brigg and Scun)

Jessel, Toby

Browne, John (Winchester)

Johnson Smith, Geoffrey

Bruce-Gardyne, John

Jopling, Rt Hon Michael

Bryan, Sir Paul

Kershaw, Anthony

Buck, Antony

King, Rt Hon Tom

Budgen, Nick

Kitson, Sir Timothy

Butcher, John

Knight, Mrs Jill

Butler, Hon Adam

Knox, David

Cad bury, Jocelyn

Lamont, Norman

Carlisle, John (Luton West)

Lang, Ian

Carlisle, Kenneth (Lincoln)

Langford-Holt, Sir John

Carlisle, Rt Hon M. (R'c'n )

Latham, Michael

Chalker, Mrs. Lynda

Lawson, Nigel

Channon, Rt. Hon. Paul

Lennox-Boyd, Hon Mark

Churchill, W. S.

Lester Jim (Beeston)

Clark, Hon A. (Plym'th, S'n)

Lloyd, Peter (Fareham)

Clark, Sir W. (Croydon S)

Loveridge, John

Clarke, Kenneth (Rushcliffe)

Luce, Richard

Clegg, Sir Walter

Lyell, Nicholas

Cockeram, Eric

McCrindle, Robert

Colvin, Michael

Macfarlane, Neil

Cope, John

MacGregor, John

Corrie, John

MacKay, John (Argyll)

Costain, Sir Albert

Macmillan, Rt Hon M.

Cranborne, Viscount

McNair-Wilson, M. (N'bury)

Crouch, David

McNair-Wilson. P. (New F'st)

Dean, Paul (North Somerset)

McQuarrie, Albert

Dickens, Geoffrey

Madel, David

Dorrell, Stephen

Major, John

Douglas-Hamilton, Lord J.

Marland, Paul

Dunn, Robert (Dartford)

Marlow, Tony

Durant, Tony

Marten, Neil (Banbury)

Dykes, Hugh

Mates, Michael

Eggar, Tim

Mather, Carol

Elliott, Sir William

Maude, Rt Hon Angus

Emery, Peter

Mawhinney, Dr Brian

Eyre, Reginald

Maxwell-Hyslop, Robin

Fairbairn, Nicholas

Mayhew, Patrick

Faith, Mrs Sheila

Mellor, David

Farr, John

Meyer, Sir Anthony

Fell, Anthony

Miller, Hal (B'grove)

Fenner, Mrs Peggy

Mills, Iain (Meriden)

Fletcher, A. (Ed'nb'gh N)

Mills, Peter (West Devon)

Fookes, Miss Janet

Miscampbell, Norman

Forman, Nigel

Mitchell, David (Basingstoke)

Fraser, Rt Hon Sir Hugh

Moate, Roger

Fraser, Peter (South Angus)

Montgomery, Fergus

Fry, Peter

Moore, John

Galbraith, Hon T. G. D.

Morris, M. (N'hampton S)

Gardiner, George (Reigate)

Morrison, Hon C. (Devizes)

Gardner, Edward (S Fylde)

Morrison, Hon P. (Chester)

Garel-Jones, Tristan

Myles, David

Goodhew, Victor

Neale, Gerrard

Gorst, John

Needham, Richard

Grant, Anthony (Harrow C)

Nelson, Anthony

1172

Neubert, Michael

Steen, Anthony

Newton, Tony

Stevens, Martin

Normanton, Tom

Stewart, Ian (Hitchin)

Ogden, Eric

Stokes, John

Onslow, Cranley

Stradling Thomas, J.

Osborn, John

Tapsell, Peter

Page, John (Harrow, West)

Taylor, Robert (Croydon NW)

Page, Rt Hon Sir G. (Crosby)

Taylor, Teddy (S'end E)

Page, Richard (SW Herts)

Tebbit, Norman

Parkinson, Cecil

Temple-Morris, Peter

Parris, Matthew

Thomas, Rt Hon Peter

Patten, Christopher (Bath)

Thompson, Donald

Pawsey, James

Thorne, Neil (Ilford South)

Pink, R. Bonner

Thornton, Malcolm

Pollock, Alexander

Townend, John (Bridlington)

Porter, Barry

Townsend, Cyril D, (B'heath)

Price, Sir David (Eastleigh)

Trippier, David

Proctor, K. Harvey

Trotter, Neville

Raison, Timothy

van Straubenzee, W. R.

Rathbone, Tim

Vaughan, Dr Gerard

Rees, Peter (Dover and Deal)

Viggers, Peter

Rees-Davies, W. R.

Waddington, David

Renton, Tim

Wakeham, John

Rhodes James, Robert

Waldegrave, Hon William

Rhys Williams, Sir Brandon

Walker, B. (Perth )

Ridley, Hon Nicholas

Wall, Patrick

Ridsdale, Julian

Waller, Gary

Royle, Sir Anthony

Walters, Dennis

Sainsbury, Hon Timothy

Ward, John

St. John-Stevas, Rt Hon N.

Warren, Kenneth

Shaw, Giles (Pudsey)

Watson, John

Shaw, Michael (Scarborough)

Wells, John (Maidstone)

Shelton, William (Streatham)

Wells, Bowen

Shepherd, Colin (Hereford)

Wheeler, John

Shepherd, Richard

Whitelaw, Rt Hon William

Shersby, Michael

Whitney, Raymond

Silvester, Fred

Wickenden, Keith

Sims, Roger

Wilkinson, John

Smith, Dudley

Williams, D. (Montgomery)

Speller, Tony

Winterton, Nicholas

Spence, John

Wolfson, Mark

Spicer, Jim (West Dorset)

Young, Sir George (Acton)

Sproat, Ian

Squire, Robin

Tellers for the Ayes:

Stainton, Keith

Mr. Spencer Le Marchant and

Stanbrook, Ivor

Mr. Anthony Berry.

NOES

Ashton, Joe

Graham, Ted

Beith, A. J.

Hamilton, W. W. (C'tral Fife)

Bennett, Andrew (St'kp'f N)

Harrison, Rt Hon Walter

Brown, R. C. (N'castle W)

Haynes, Frank

Brown, Ronald W. (H'ckn'y S)

Holland, S. (L'b'th, Vauxh'll)

Buchan, Norman

Home Robertson, John

Campbell-Savours, Dale

Homewood, William

Canavan, Dennis

Hooley, Frank

Cocks, Rt Hon M. (B'stol S)

Howells, Geraint

Conlan, Bernard

Johnston, Russell (Inverness)

Cowans, Harry

Jones, Rt Hon Alec (Rh'dda)

Craigen, J. M.

Kaufman, Rt Hon Gerald

Crowther, J. S.

Kinnock, Neil

Cryer, Bob

Lamborn, Harry

Cunningham, Dr J. (W'h'n)

Leighton, Ronald

Dalyell, Tam

Lyons, Edward (Bradf'd W)

Davidson, Arthur

McCartney, Hugh

Davis, Clinton (Hackney C)

McDonald, Dr Oonagh

Deakins, Eric

McGuire, Michael (Ince)

Dobson, Frank

McWilliam, John

Dormand, Jack

Marks, Kenneth

Dubs, Alfred

Mellish, Rt Hon Robert

Dunn, James A.

Mikardo, Ian

English, Michael

Mitchell, Austin (Grimsby)

Evans, John (Newton)

Morris, Rt Hon A. (W'shawe)

Ewing, Harry

Morris, Rt Hon C. (O'shaw)

Field, Frank

Moyle, Rt Hon Roland

Ford, Ben

O'Halloran, Michael

Fraser, J. (Lamb'th, N'w'd)

O'Neill, Martin

Freeson, Rt Hon Reginald

Race, Reg

Freud, Clement

Richardson, Jo

Gilbert, Rt Hon Dr John

Roberts, Ernest (Hackney N)

1173

Rooker, J. W.

Stott, Roger

Ross, Stephen (Isle of Wight)

Taylor, Mrs Ann (Bolton W)

Rowlands, Ted

Tinn, James

Shore, Rt Hon Peter

Wainwright, R.(Colne V)

Silkin, Rt Hon S. C. (Dulwich)

Welsh, Michael

Silverman, Julius

Whitehead, Phillip

Snape, Peter

Winnick, David

Spearing, Nigel

Tellers for the Noes:

Steel, Rt Hon David

Mr. George Morton and

Stewart, Rt Hon D. (W Isles)

Mr. Terry Davis.

Question accordingly agreed to.
Question put accordingly That the amendment be made:—
The Committee divided: Ayes 79, Noes 251.

NOES

Dykes, Hugh

Alexander, Richard

Egger, Tim

Ancram, Michael

Elliott, Sir William

Arnold, Tom

Emery, Peter

Aspinwall Jack

Eyre, Reginald

Atkins, Robert(Preston N)

Fairbairn, Nicholas

Atkinson, David (B'm'th,E)

Faith, Mrs Sheila

Baker, Kenneth(St.M'bone)

Farr, John

Baker, Nicholas (N Dorset)

Fell, Anthony

Banks, Robert

Fenner, Mrs Peggy

Beaumont-Dark, Anthony

Fletcher, A. (Ed'nb'gh N)

Bendall, Vivian

Fookes, Miss Janet

Benyon, Thomas (A'don)

Forman, Nigel

Benyon, W. (Buckingham)

Fraser, Rt Hon Sir Hugh

Best, Keith

Fraser, Peter (South Angus)

Bevan, David Gilroy

Fry, Peter

Biffen, Rt Hon John

Galbraith, Hon T. G. D.

Biggs-Davison, John

Gardiner, George (Reigate)

Blackburn, John

Gardner, Edward (S Fylde)

Btaker, Peter

Garel-Jones, Tristan

Bonsor, Sir Nicholas

Goodhew, Victor

Boscawen, Hon Robert

Gorst, John

Bottomley, Peter (W'wich W)

Grant, Anthony (Harrow C)

Bowden, Andrew

Greenway, Harry

Braine, Sit Bernard

Grieve, Percy

Bright, Graham

Griffiths, E.(B'y St. Edm'ds)

Brinton, Tim

Griffiths, Peter Portsm'th N)

Britten, Leon

Grylls, Michael

Brooke, Hon Peter

Gummer, John Selwyn

Brotherton, Michael

Hamilton, Hon A.

Brown, M. (Brigg and Scun)

Hampson, Dr Keith

Browne, John (Winchester)

Hannam, John

Bruce-Gardyne, John

Haselhurst, Alan

Bryan, Sir Paul

Hastings, Stephen

Buck, Antony

Havers, Rt Hon Sir Michael

Budgen, Nick

Hawkins, Paul

Butcher, John

Hawksley, Warren

Butler, Hon Adam

Heddle, John

Cadbury, Jocelyn

Henderson, Barry

Carlisle, John (Luton West)

Heseltine, Rt Hon Michael

Carlisle, Kenneth (Lincoln)

Hicks, Robert

Carlisle, Rt Hon M. (R'c'n)

Hogg, Hon Douglas (Gr'th'm)

Chalker, Mrs. Lynda

Hooson, Tom

Channon, Rt. Hon. Paul

Howell, Ralph (N Norfolk)

Churchill, W. S.

Hunt, David (Wirral)

Clark, Hon A. (Plym'th, S'n)

Hunt, John (Ravensbourne)

Clark, Sir W. (Croydon S)

Hurd, Hon Douglas

Clarke, Kenneth (Rushcliffe)

Jenkin, Rt Hon Patrick

Clegg, Sir Walter

Jessel, Toby

Cockeram, Eric

Johnson Smith, Geoffrey

Colvin, Michael

Jopling, Rt Hon Michael

Cope, John

Kershaw, Anthony

Corrie, John

King, Rt Hon Tom

Costain, Sir Albert

Kitson, Sir Timothy

Cranborne, Viscount

Knight, Mrs Jill

Crouch, David

Knox, David

Dean, Paul (North Somerset)

Lamont, Norman

Dickens, Geoffrey

Lang, Ian

Dorrell, Stephen

Langford-Holt, Sir John

Douglas-Hamilton, Lord J.

Latham, Michael

Dunn, Robert (Dartford)

Lawson, Nigel

Durant, Tony

Lennox-Boyd, Hon Mark

1174

Lester Jim (Beeston)

Ridsdale, Julian

Lloyd, Peter (Fareham)

Royle, Sir Anthony

Loveridge, John

Sainsbury Hon Timothy

Luce, Richard

St. John-Stevas, Rt Hon N.

Lyell, Nicholas

Shaw, Giles (Pudsey)

McCrindle, Robert

Shaw, Michael (Scarborough)

Macfarlane, Neil

Shelton, William (Streatham)

MacGregor, John

Shepherd, Colin (Hereford)

MacKay, John (Argyll)

Shepherd, Richard

Macmillan, Rt Hon M.

Shersby, Michael

McNair-Wilson, M. (N'bury)

Silvester, Fred

McNair-Wilson, P. (New F'st)

Sims, Roger

McQuarrie, Albert

Smith, Dudley

Madel, David

Speller, Tony

Major, John

Spence, John

Marland, Paul

Spicer, Jim (West Dorset)

Marlow, Tony

Sproat, Ian

Marten, Neil (Banbury)

Squire, Robin

Mates, Michael

Stainton, Keith

Mather, Carol

Stanbrook, Ivor

Maude, Rt Hon Angus

Steen, Anthony

Mawhinney, Dr Brian

Stevens, Martin

Maxwell-Hyslop, Robin

Stewart, Ian (Hitchin)

Mayhew, Patrick

Stokes, John

Mellor, David

Stradling Thomas, J.

Meyer, Sir Anthony

Tapsell, Peter

Miller, Hal (B'grove)

Taylor, Robert (Croydon NW)

Mills, Iain (Meriden)

Taylor, Teddy (S'end E)

Mills, Peter (West Devon)

Tebbit, Norman

Miscampbell, Norman

Temple-Morris, Peter

Mitchell, David (Basingstoke)

Thomas, Rt Hon Peter

Moate, Roger

Thompson, Donald

Montgomery, Fergus

Thorne, Neil (Ilford South)

Moore, John

Thornton, Malcolm

Morris, M. (N'hampton S)

Townend, John (Bridlington)

Morrison, Hon C. (Devizes)

Townsend, Cyril D, (B'heath)

Morrison, Hon P. (Chester)

Trippier, David

Myles, David

Trotter, Neville

Neale, Gerrard

van Straubenzee, W. R.

Needham, Richard

Vaughan, Dr Gerard

Nelson, Anthony

Viggers, Peter

Neubert, Michael

Waddington, David

Newton, Tony

Wakeham, John

Normanton, Tom

Waldegrave, Hon William

Onslow, Cranley

Walker, B. (Perth )

Osborn, John

Wall, Patrick

Page, John (Harrow, West)

Waller, Gary

Page, Rt Hon Sir G. (Crosby)

Walters, Dennis

Page, Richard (SW Herts)

Ward, John

Parkinson, Cecil

Warren, Kenneth

Parris, Matthew

Watson, John

Patten, Christopher (Bath)

Wells, John (Maidstone)

Pawsey, James

Wells, Bowen

Pink, R. Bonner

Wheeler, John

Pollock, Alexander

Whitelaw, Rt Hon William

Porter, Barry

Whitney, Raymond

Price, Sir David (Eastleigh)

Wickenden, Keith

Proctor, K. Harvey

Wilkinson, John

Raison, Timothy

Williams, D.(Montgomery)

Rathbone, Tim

Winterton, Nicholas

Rees, Peter (Dover and Deal)

Wolfson, Mark

Rees-Davies, W. R.

Young, Sir George (Acton)

Renton, Tim

Rhodes James, Robert

Tellers for the Noes:

Rhys Williams, Sir Brandon

Mr. Spencer Le Marchant and

Ridley, Hon Nicholas

Mr. Anthony Berry.

Question accordingly negatived.
The First Deputy Chairman (Mr. Bryant Godman Irvine): Does the hon. Member for Stockport, North (Mr. Bennett) wish to move his amendment formally?
Mr. Andrew F. Bennett: Yes, Mr. Godman Irvine, formally.
Amendment proposed: No. 7, in page 1, line 15, leave out "7·75 per cent." and insert "7·95 per cent."—[Mr. Andrew F. Bennett.]
Question put, That the amendment be made:—
The Committee divided: Ayes 76, Noes 241.

Division No. 21]

[11.39 pm

AYES

Beith, A. J.

Howells, Geraint

Bennett, Andrew(St'kp't N)

Johnston, Russell (Inverness)

Brown, R. C. (N'castle W)

Jones, Rt Hon Alec (Rh'dda)

Brown, Ronald W. (H'ckn'y S)

Kinnock, Neil

Buchan, Norman

Lamborn, Harry

Campbell-Savours, Dale

Leighton, Ronald

Canavan, Dennis

Lyons, Edward (Bradf'd W)

Cocks, Rt Hon M. (B'stol S)

McDonald, Dr Oonagh

Conlan, Bernard

McGuire, Michael (Ince)

Cowans, Harry

McWilliam, John

Craigen, J. M.

Marks, Kenneth

Crowther, J. S.

Mellish, Rt Hon Robert

Cryer, Bob

Mikardo, Ian

Cunningham, Dr J. (W'h'n)

Mitchell, Austin (Grimsby)

Davidson, Arthur

Morris, Rt Hon A. (W'shawe)

Davis, T. (B'ham, Stechf'd)

Morris, Rt Hon C. (O'shaw)

Deakins, Eric

O'Halloran, Michael

Dobson, Frank

Race, Reg

Dormand, Jack

Richardson, Jo

Douglas-Mann, Bruce

Roberts, Ernest (Hackney N)

Dubs, Alfred

Rooker, J. W.

Dunn, James A.

Ross, Stephen (Isle of Wight)

English, Michael

Rowlands, Ted

Evans, John (Newton)

Shore, Rt Hon Peter

Ewing, Harry

Silkin, Rt Hon S. C. (Dulwich)

Field, Frank

Silverman, Julius

Ford, Ben

Snape, Peter

Fraser, J. (Lamb'th, N'w'd)

Spearing, Nigel

Freeson, Rt Hon Reginald

Steel, Rt Hon David

Freud, Clement

Stewart, Rt Hon D. (W Isles)

Gilbert, Rt Hon Dr John

Taylor, Mrs Ann (Bolton W)

Graham, Ted

Tinn, James

Hamilton, W. W. (C'tral Fife)

Wainwright, R.(Colne V)

Harrison, Rt Hon Walter

Welsh, Michael

Hattersley, Rt Hon Roy

Whitehead, Phillip

Haynes, Frank

Winnick, David

Holland, S. (L'b'th, Vauxh'll)

Tellers for the Ayes:

Home Robertson, John

Mr. George Morton and

Homewood, William

Mr. Hugh McCartney.

Hooley, Frank

NOES

Alexander, Richard

Buck, Antony

Ancram, Michael

Budgen, Nick

Arnold, Tom

Butcher, John

Aspinwall, Jack

Butler, Hon Adam

Atkinson, David (B'm'th,E)

Cadbury, Jocelyn

Baker, Kenneth(St.M'bone)

Carlisle, John (Luton West)

Baker, Nicholas (N Dorset)

Carlisle, Kenneth (Lincoln)

Banks, Robert

Carlisle, Rt Hon M. (R'c'n)

Beaumont-Dark, Anthony

Chalker, Mrs. Lynda

Bendall, Vivian

Channon, Rt. Hon. Paul

Benyon, Thomas (A'don)

Churchill, W. S.

Benyon, W. (Buckingham)

Clark, Hon A. (Plym'th, S'n)

Berry, Hon Anthony

Clark, Sir W. (Croydon S)

Best, Keith

Clarke, Kenneth (Rushcliffe)

Bevan, David Gilroy

Clegg, Sir Walter

Biffen, Rt Hon John

Cockeram, Eric

Biggs-Davison, John

Colvin, Michael

Blackburn, John

Cope, John

Blaker, Peter

Corrie, John

Bonsor, Sir Nicholas

Costain, Sir Albert

Boscawen, Hon Robert

Cranborne, Viscount

Bottomley, Peter (W'wich W)

Crouch, David

Bowden, Andrew

Dean, Paul (North Somerset)

Braine, Sir Bernard

Dickens, Geoffrey

Bright, Graham

Dorrell, Stephen

Brinton, Tim

Douglas-Hamilton, Lord J.

Brittan, Leon

Dunn, Robert (Dartford)

Brotherton, Michael

Durant, Tony

Brown, M.(Brigg and Scun)

Dykes, Hugh

Browne, John (Winchester)

Eggar, Tim

Bruce-Gardyne, John

Elliott, Sir William

Bryan, Sir Paul

Emery, Peter

1176

Eyre, Reginald

Mills, Peter (West Devon)

Fairbairn, Nicholas

Miscampbell, Norman

Faith, Mrs Sheila

Mitchell, David (Basingstoke)

Farr, John

Moate, Roger

Fell, Anthony

Montgomery, Fergus

Fenner, Mrs Peggy

Moore, John

Fletcher, A. (Ed'nb'gh N)

Morris, M. (N'hampton S)

Forman, Nigel

Morrison, Hon P. (Chester)

Fraser, Peter (South Angus)

Myles, David

Fry, Peter

Neale, Gerrard

Gardiner, George (Reigate)

Needham, Richard

Gardner, Edward (S Fylde)

Nelson, Anthony

Garel-Jones, Tristan

Neubert, Michael

Goodhew, Victor

Newton, Tony

Gorst, John

Normanton, Tom

Grant, Anthony (Harrow C)

Onslow, Cranley

Greenway, Harry

Osborn, John

Grieve, Percy

Page, John (Harrow, West)

Griffiths, E.(B'y St. Edm'ds)

Page, Rt Hon Sir G. (Crosby)

Griffiths, Peter Portsm'th N)

Page, Richard (SW Herts)

Grylls, Michael

Parkinson, Cecil

Gummer, John Selwyn

Parris, Matthew

Hamilton, Hon A.

Patten, Christopher (Bath)

Hampson, Dr Keith

Pawsey, James

Hannam, John

Pink, R. Bonner

Haselhurst, Alan

Pollock, Alexander

Havers, Rt Hon Sir Michael

Porter, Barry

Hawkins, Paul

Price, Sir David (Eastleigh)

Hawksley, Warren

Proctor, K. Harvey

Heddle, John

Raison, Timothy

Henderson, Barry

Rathbone, Tim

Heseltine, Rt Hon Michael

Rees, Peter (Dover and Deal)

Hicks, Robert

Renton, Tim

Hogg, Hon Douglas (Gr'th'm)

Rhodes James, Robert

Hooson, Tom

Rhys Williams, Sir Brandon

Howell, Ralph (N Norfolk)

Ridley, Hon Nicholas

Hunt, David (Wirral)

Ridsdale, Julian

Hunt, John (Ravensbourne)

Royle, Sir Anthony

Hurd, Hon Douglas

Sainsbury, Hon Timothy

Jenkin, Rt Hon Patrick

St. John-Stevas, Rt Hon N.

Jessel, Toby

Shaw, Giles (Pudsey)

Johnson Smith, Geoffrey

Shaw, Michael (Scarborough)

Jopling, Rt Hon Michael

Shelton, William (Streatham)

Kershaw, Anthony

Shepherd, Colin (Hereford)

King, Rt Hon Tom

Shepherd, Richard

Kitson, Sir Timothy

Shersby, Michael

Knight, Mrs Jill

Silvester, Fred

Knox, David

Sims, Roger

Lamont, Norman

Smith, Dudley

Lang, Ian

Speller, Tony

Langford-Holt, Sir John

Spence, John

Latham, Michael

Spicer, Jim (West Dorset)

Lawson, Nigel

Sproat, Ian

Le Marchant, Spencer

Squire, Robin

Lennox-Boyd, Hon Mark

Stainton, Keith

Lester Jim (Beeston)

Stanbrook, Ivor

Lloyd, Ian (Havant & W'loo)

Steen, Anthony

Loveridge, John

Stevens, Martin

Luce, Richard

Stewart, Ian (Hitchin)

Lyell, Nicholas

Stokes, John

McCrindle, Robert

Stradling Thomas, J.

Macfarlane, Neil

Tapsell, Peter

MacGregor, John

Taylor, Robert (Croydon NW)

MacKay, John (Argyll)

Tebbit, Norman

Macmillan, Rt Hon M.

Temple-Morris, Peter

McNair-Wilson, P. (New F'st)

Thomas, Rt Hon Peter

McQuarrie, Albert

Thompson, Donald

Madel, David

Thorne, Neil (Ilford South)

Major, John

Thornton, Malcolm

Marland, Paul

Tilley, John

Marten, Neil (Banbury)

Townend, John (Bridlington)

Mates, Michael

Townsend, Cyril D, (B'heath)

Mather, Carol

Trippier, David

Mawhinney, Dr Brian

Trotter, Neville

Maxwell-Hyslop, Robin

van Straubenzee, W. R.

Mayhew, Patrick

Vaughan, Dr Gerard

Mellor, David

Viggers, Peter

Meyer, Sir Anthony

Wakeham, John

Miller, Hal (B'grove)

Waldegrave, Hon William

Mills, Iain (Meriden)

Walker, B. (Perth )

1177

Lloyd, Ian (Havant & W'loo)

Sainsbury, Hon Timothy

Loveridge, John

St. John-Stevas, Rt Hon N.

Luce, Richard

Shaw, Giles (Pudsey)

Lyell, Nicholas

Shaw, Michael (Scarborough)

McCrindle, Robert

Shelton, William (Streatham)

Macfarlane, Neil

Shepherd, Colin (Hereford)

MacGregor, John

Shepherd, Richard

MacKay, John (Argyll)

Shersby, Michael

Macmillan, Rt Hon M.

Silvester, Fred

McNair-Wilson, P. (New F'st)

Sims, Roger

McQuarrie, Albert

Smith, Dudley

Madel, David

Speller, Tony

Major, John

Spence, John

Marland, Paul

Spicer, Jim (West Dorset)

Marten, Neil (Banbury)

Sproat, Ian

Mates, Michael

Squire, Robin

Mather, Carol

Stainton, Keith

Mawhinney, Dr Brian

Stanbrook, Ivor

Maxwell-Hyslop, Robin

Steen, Anthony

Mayhew, Patrick

Stevens, Martin

Mellor, David

Stewart, Ian (Hitchin)

Meyer, Sir Anthony

Stokes, John

Miller, Hal (B'grove)

Stradling Thomas, J.

Mills, Iain (Meriden)

Tapsell, Peter

Mills, Peter (West Devon)

Taylor, Robert (Croydon NW)

Miscampbell, Norman

Tebbit, Norman

Mitchell, David (Basingstoke)

Temple-Morris, Peter

Moate, Roger

Thomas, Rt Hon Peter

Montgomery, Fergus

Thompson, Donald

Moore, John

Thorne, Neil (Ilford South)

Morris, M. (N'hampton S)

Thornton, Malcolm

Morrison, Hon P. (Chester)

Tilley, John

Myles, David

Townend, John (Bridlington)

Neale, Gerrard

Townsend, Cyril D, (B'heath)

Needham, Richard

Trippier, David

Nelson, Anthony

Trotter, Neville

Neubert, Michael

van Straubenzee, W. R.

Newton, Tony

Vaughan, Dr Gerard

Normanton, Tom

Viggers, Peter

Onslow, Cranley

Wakeham, John

Osborn, John

Waldegrave, Hon William

Page, John (Harrow, West)

Walker, B. (Perth )

Page, Rt Hon Sir G, (Crosby)

Wall, Patrick

Page, Richard (SW Herts)

Waller, Gary

Parkinson,. Cecil

Ward, John

Parris, Matthew

Warren, Kenneth

Patten, Christopher (Bath)

Watson, John

Pawsey, James

Wells, John (Maidstone)

Pink, R. Benner

Wells, Bowen

Pollock, Alexander

Wheeler, John

Porter, Barry

Whitelaw, Rt Hon William

Price, Sir David (Eastleigh)

Whitney, Raymond

Proctor, K. Harvey

Wickenden, Keith

Raison, Timothy

Wilkinson, John

Rathbone, Tim

Williams, D.(Montgomery)

Rees, Peter (Dover and Deal)

Winterton, Nicholas

Renton, Tim

Wolfson, Mark

Rhodes James, Robert

Young, Sir George (Acton)

Rhys Williams, Sir Brandon

Ridley, Hon Nicholas

Tellers for the Noes:

Ridsdale, Julian

Mr. David Waddington and

Royle, Sir Anthony

Mr. Peter Brooke.

Question accordingly negatived.
Mr. Rooker: I beg to move amendment No. 10, in page 1, line 16, leave out subsection (3).
I suggest that the size of -be Conservative side of the Committee will reach 100 before we disappear. [HON. MEMBERS: "Rubbish."] It may be that some other Conservative Members have joined our proceedings, because, apart from the hon. Member for Somerset, North (Mr. Dean), no Conservative Member has so far taken part.
1178
The amendment seeks to leave out subsection (3). It may be that Conservative Members do not know I do not intend to read them a lecture, but I should tell them that it puts am impost on widows and married women.
I have looked through the Conservative manifesto to see what was said about national insurance benfits, especially in regard to widows and married women. There was nothing. However, I found a quotation at the front by the nurse of the nation which said:
"For me, the heart of politics is not political theory, it is people and how they want to live their lives."
It is signed by the Prime Minister. Given that since they came to power the Government have cut widows' benefit—slipped in through the Social Security (No. 2) Act earlier this year—I accept that we are now talking about a residual number of women who are still locked into the old married women's option scheme under the national insurance system. By and large, they are married women and widows. The Government now propose a 37 per cent. increase in their national insurance contribution. That is a large increase. It is larger in percentage terms than the one to which my hon. Friend the Member for Keighley (Mr. Cryer) referred previously. By any stretch of the imagination, a 37 per cent. increase takes a little beating, even under this Government.
Mr. Albert McQuarrie: Based on nothing.
Mr. Rooker: I do not think that the widows who are paying only 2 per cent.—[HON. MEMBERS: "Of what?"] Of their earnings. If hon. Members wish to intervene, I shall give way to the first hon. Member who rises.
Mr. W. R. Rees-Davies: Will the hon. Gentleman translate that into money terms and not percentages, because we might be able to understand it better?
Mr. Rooker: It is not my job to give answers from the Dispatch Box. That is the job of Ministers.
I want to ask the Minister a few questions. If she can answer them, we can reach a speedy conclusion to this debate. This is a quite narrow subject by any definition. The increase is from 2 per cent. to 2·75 per cent. [HON. MEMBERS: "How much is that?"] It depends on the earnings of the married woman. I should have thought that that was obvious. In an earnings-related scheme, the amount paid would depend on the earnings between the upper and lower income limits.
If the hon. and learned Member for Thanet, West (Mr. Rees-Davies) had been present earlier, he would probably have been able to work out examples for himself. For the purposes of this debate, however, it does not matter. The fact is that the rate is being changed for the first time in five years. It has been 2 per cent. since 1975. [Interruption.] One Conservative Member says that it is 2 per cent. of nothing, and another says that that is no reason for keeping it there for ever.
We have to look at what the women get for the payment. The number of national insurance benefits that a married woman or widow can obtain for paying the option is limited in the extreme. One is industrial injury benefit, but that is being cut by the Government in the Social Security (No. 2) Act. There is no evidence that more married women and widows paying the small stamp are suffering industrial injuries and creating an impost on the national insurance fund that requires this sort of

1179
increase. If there is evidence, will the Minister give it to the Committee? Given the limited range of benefits, there has to be a rational reason for such a large increase. It could have been ¼ per cent., and we could have accepted that because it is in line with the figure we accept for the Government's forecast of increased unemployment. We want to know why there is such a large increase.
I do not know how many married women and widows are still in this twilight area. The numbers are declining. There must be fewer each year, because no woman now entering the labour market is allowed to opt for this small payment. How much extra money will the Government raise from this declining band of married women and widows by this increase in the option that they pay?
How much is involved? How much will be raised, and why is there such a large increase, bearing in mind that one of the major benefits to which these people are entitled is being cut? Subject to the Minister's reply, I shall leave the matter there.
Mr. Field: I am sorry that the Secretary of State is not in his place, because I wanted to address some questions directly to him, partly linked to ideas that he put forward before the election. I wanted to make that link not to taunt him but to show that some of those ideas, had they been followed through, might have stood him in good stead in answering the questions posed by my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker).
Before the election, the Secretary of State was in favour of the idea of having what are called family impact statements in every Bill. In other words, just as we have a financial statement in the Bill, the Bill would carry a statement saying how families and different members of families would be affected by the changes that are proposed.
A number of measures that the Government have proposed and carried through during this Parliament have been favourable to single people and harmful to families. One of the interesting points about the national insurance scheme is that some aspects of it are favourable to women and children. Had we persuaded the Secretary of State to follow through his idea — his interest was second to none before the election—to preface all major Bills and departmental documents with impact statements, he would have been in a better position to answer the questions that my hon. Friend the Member for Perry Barr has raised. What sort of deal is the group that opted for the married women's option — a dying breed in the national insurance scheme—gaining from the scheme? Are the benefits that they receive so much greater than those of others in the scheme, particularly other women, that an increase in contribution was due?
It is sad that we do not have that information. We have been pincered into a debate in which we can consider only the distributional impact of increased contributions. The debate has been one-sided. We have considered only the groups on which contributions are bearing heaviest and most unfairly. If we had information about who benefits most from the national insurance scheme, we could make more sense of the argument about whether the increased contributions are fair.
12 midnight
What do the dying breed of women who have taken the so-called married woman's option get from the national
1180
insurance scheme, compared with other groups of women who pay the full contribution? Is it so disproportionately unfair that it is reasonable to ask them to pay a 35 per cent. increase in their contribution? With that information, we could make better progress.
I hope that the Under-Secretary will tell her right hon. Friend the Secretary of State that if one of his comments before the election had borne fruit afterwards, so that we had family impact statements on major Bills and Government statements, we should be better able to answer the pertinent questions asked by my hon. Friend the Member for Perry Barr.
Miss Richardson: I was startled at the start of the debate to hear groans from the Government Benches and a Conservative Member saying "Oh, it is so boring." I wish that the married women and widows whom we are discussing and whose national insurance contributions are being increased by 37½ per cent. had heard that remark. When we get such comments from the Government Benches, I sometimes wish that our late-night debates were broadcast live. Many would be ear-openers.
We need to know how many married women still exercise the option and how many widows are involved. The numbers must be small, because married women are now paying the full stamp. Those whom we are discussing must inevitably be older women who are probably on low earnings. The increase from 2 per cent. to 2.75 per cent. will have a disproportionate impact on them because of their low wages.
The Secretary of State said on Second Reading that married women who opted for the lower-rate contribution were still getting a good bargain. I do not know whether that is the right way to describe it. We are instructing those women that they must pay more tax, and they will not regard that as a good bargain.
I have always wanted to get married women away from this optional small contribution because I did not feel that it was the right way for them to be treated—indeed, not the right way for the whole concept of married women's earnings, contributions and taxation to be treated.
I hope that the Under-Secretary of State will be able to give us some facts and figures which will enable us to judge a little more accurately than we are now able to do precisely what the problem is. She might also care to give us an averaging of what some of the earnings might be of married women who fall into this category.
We have been talking about the fact that married women on the whole, with very few exceptions, earn very much less than men, even when doing similar jobs, I am sorry to say. It would be interesting to know whether the hon. Lady has some figures which would enable us to judge the situation properly.
Mr. David Winnick: I support the amendment. It is particularly vindictive that this substantial increase of 37 per cent. should take place, for undoubtedly it will hit most those married women and widows who are among the poorest in the community. On Second Reading, the Secretary of State gave no justification for the increase, apart from the fact that there had been no increase since 1975. That was it—there has been no increase since 1975, so this sum of money should be raised.
When one compares the manner in which the richer sections of the community have been well rewarded by this

1181
Government, it makes one extremely angry that again it is the poor, the elderly and all those who can least defend themselves who are being made the object of such an attack.
I am justified in pointing out again that in the Government's first Budget 37 per cent. of the tax reduction went to the top 7 per cent. in the community, while this year 14 per cent. went to the top 2 per cent. Those figures are hardly in dispute. If the Government's case is that there is really no alternative but to raise this sum of money, our question is simple. Why not take it from those who have been so well rewarded by the Government? Why take it from the poorest?
Does the Under-Secretary of State dispute that those who will be hardest hit by the clause are the sort of people we have been referring to? Will she deny that, in the main, they are the poorest amongst the wage earners? They contracted out because of their low incomes, because they wanted to retain more money, for the most obvious of reasons. It is therefore extremely unfair that this section of the community should be penalised.
Perhaps one of the reasons why the Tories are now in Government instead of the Labour Party, and with such a large majority, was the promise to reduce taxation. It would be wrong for me as a Labour politician to deny that the propaganda by the Tories worked very well. Many of my constituents who did not vote for me were perhaps swayed by the promise that under a Conservative Governments their taxes would be reduced. But when I ask people now "How much better off are you as a result of the tax cuts which have taken place?" they laugh. They are not better off at all.
At least some of my constituents have gained from the reduction in direct taxation, but it has been offset by the increase in indirect taxation, so there is no net gain. I sometimes try to persuade my hon. Friends that we should use this fact to show that a reduction in direct taxation does not help the average person.
I hope that the Under-Secretary will give us much more information. How many people are involved? Is it not true that they are mainly the elderly and the poorer sections of society? How much money will be raised as a result of what is proposed in the Bill? I hope that even at this late stage the Government will recognise the justice of the amendment and not oppose it.
Mr. Cryer: The Secretary of State justified the clause in a few lines of his Second Reading speech:
"Married women and widows who have opted out of the full payment will pay the increased NHS contribution. They also contribute to the cost of the national insurance scheme, from which they benefit. The increases for them are a little higher, proportionately."—[Official Report, 8 December 1980; Vol. 995, c. 955.]
How right he was! The increase is 37 per cent. I wonder why.
The beginning of this debate was greeted by sneers and sniggers from the Conservative Members present, none of whom has justified the swingeing increase in tax. One of those to sneer was the chairman of European Ferries, currently receiving around £12,000 a year plus expenses as a Member. It hardly behoves anyone in that position to talk about married women and widows or to criticise the Opposition, who are resisting taxes that we believe are unfair.
I want to speak particularly about the imposition on widows. As a proportion of total earnings, in cash terms
1182
the increase is relatively small, but we are talking about people who have low incomes anyway and for whom a 37 per cent. increase in national insurance contributions is a great deal. They have to budget from week to week and are not saving up to go abroad on holiday by means of European Ferries. They do not have a few thousand pounds in the bank. Instead of saying "Inflation is coming down", they say "Prices are still going up week by week." Their national insurance contribution is going up a good deal faster than prices in the shops, but prices are still going up by about 15 per cent. a year.
Mr. Winnick: My hon. Friend has spoken of the sort of people who will not be adversely affected. Does he agree that another group who have done well, and from whom the money could come, are those who have not paid their income tax as a result of the activities of Rossminster? It is they who have the money to contribute, instead of the elderly and poor, who are being attacked by the Bill.
Mr. Cryer: I was not saying that the elderly and poor would not feel the increase. I was pointing out that widows and married women would feel it, even though in absolute terms it might be thought relatively small. We are talking about people whose income is pledged up to the hilt week after week, for whom economic life is a struggle all the time. They do not have money to fall back on if they receive a bigger electricity bill or whatever.
When we were in Government, were there not many bleeding hearts on the Conservative Benches on the subject of widows? They stood shoulder to shoulder. They told us that widows were suffering and asked us what the Government were doing to improve the position of widows. We had it time after time. We still have a few bleeding hearts on the Conservative Benches. However, they do not show the little cross that they wear on their sleeves when they are in the Division Lobby. They slide away or vote for the Government. We know who they are. They were going to give the disabled, the pensioners and the widows so much assistance. Where are they now?
12.15 am
Mr. Dobson: On the Government Front Bench.
Mr. Cryer: Here is an impost on widows, hut where are the Conservative bleeding hearts?
Mr. Richard Page: Where are the hon. Gentleman's colleagues?
Mr. Cryer: If the hon. Gentleman wishes to intervene, let him stand up to do so and I will give way.
Mr. Page: In the previous Parliament that was absolutely true, but I did not notice your side coming into our Lobby when we were on about this. Let us see how many of your people will be voting here tonight. How many hundreds of the Labour Party will be defending the widows when it comes to the next Division? Come on.
Mr. Cryer: That was a garbled intervention without relevance or meaning. We are here tonight—
Mr. Page: "We"?
Mr. Cryer: There are enough Labour Members in the Chamber to demonstrate that we are not letting the Bill pass through the House of Commons—
Mr. David Waddington (Lord Commissioner of the Treasury): All 10 of you.
Mr. Cryer: The junior Tory Whip talks about 10 of us, but he knows that many Conservative Members will be kept in the House of Commons tonight to enable the Government to obtain the closures that they will need to force the Bill through the House of Commons. It is a legitimate effort by the Opposition to ensure that the Government cannot say that they obtained the Bill easily. We know that if the Liberals, the Scottish Nationals and all the other rag, tag and bobtail of the various parties on the Opposition Benches supported us in Divisions, the Tories would still win. We understand that. However, we are making sure that the Bill does not pass through the House of Commons easily. We are concerned that it represents an imposition on those who are least able to bear it.
Mr. Buchan: Does my hon. Friend agree that if Conservative Members are complaining about being kept up during bits of the night the fault is entirely that of the Government Front Bench?
Mr. Major: We are not complaining.
Mr. Buchan: They tried to smuggle the Bill through. That is what landed Conservative Members in this position. The fault lies on their Front Bench.
Mr. Cryer: If the Bill had passed through the House of Commons in an ordinary manner instead of being rushed through with all its stages having to be completed in one day and one night, it would have been dealt with in a more rational manner. It is entirely the fault of the Government Front Bench that the present procedures are being adopted. The Government are trying to force it through the House of Commons.
During the lifetime of the Labour Government, we had our arguments about widows. One of the improvements in benefit that was introduced during that period was due to the efforts of some Labour Back Benchers. My hon. Friend the Member for Ormskirk (Mr. Kilroy-Silk) was involved in organising a group of Back Benchers to obtain improved benefits for widows. That group voted for those improvements along with some Conservative and Liberal Members. Anyone who checks the record will find that the Labour Members on the then Government Benches were by no means the quiescent hacks that we see before us these days. That applied even with a narrow majority. The Conservative Members who were in the House of Commons during the administration of the previous Labour Government know that we were prepared on many occasions to vote if we felt that an issue was an important aspect of party policy. We were not prepared to adopt the hypocritical position that the Tories were using merely for political pretence.
I return to the position of widows. They will feel the imposition very keenly. It has been argued over the past few years that they have the same costs as a married couple. Heating and lighting cost the same. They cannot light or heat half a room. They have the same rates to pay. They feel particularly keenly that they are suffering as a result of existing legislation and could do with a better deal. Many other sections of the population consider that their lot should be improved, and any Government have to examine the priorities in the light of resources available. However, many widows feel particularly keenly that they are at a disadvantage because their partner is dead. They feel isolated, yet at the same time they have to bear costs which in the case of a married couple are shared.
1184
The imposition on married women is unfair, but widows will consider that it is even more unfair on them because of their isolation and the fact that they have to bear the extra cost on only one income.
It is a particularly cruel imposition. I recall the representations, agitation and speeches made about widows when we were in Government. It is, therefore, clear that the Government are making an about-turn in introducing the 37 per cent. increase in widows' contributions, particularly when their main benefit as a result of the contribution is cut. On the one hand, the contribution is increased. On the other, if they are unfortunate enough to be in receipt of industrial injury benefit, they receive less. That is singularly unfair. How can the Minister justify that position? The action is still unjustified and unfair, even if only a small number are affected.
The Minister may say that only a tiny number is involved and that the Government are interested in the extent of the imposition, but even if an injustice affects only one person we should try to remedy it. Hon. Members on both sides make a very good living out of trying to remedy, individual injustices in the courts. Should we, therefore, let this taxation injustice go through without question? Of course not. I hope that my hon. Friends will support the amendment to delete the subsection.
The voting will be interesting. Even though this is an imposition on widows, I suspect that Government Members will flock to the Lobby—there has been a three-line Whip — as good as gold to support the Government. Alack, alas, whatever the Government do, all Conservative Members troop into the Lobby. Whatever we say is not likely to change their minds.
Mr. D. N. Campbell-Savours: Even the rebels.
Mr. Cryer: I do not believe that there are any rebels. There were four abstentions about 10 months ago, which was the beginning of a controlled explosion, but that whimpered out like a damp squib after about 14 dinners that were widely publicised. All the young men of the Conservative Party, newly elected, believed that they could have a great deal of influence on the Government. That has not happened. They have submitted to the three-line Whip to vote for the measure.
It seems to us that the measure is extremely unfair. It affects a section of the population that is least able to bear the increased tax. It reflects badly on the Government. Those who have had the best tax deal from them are people like the chairman of European Ferries, who has done very well. Conservative Members are all pretty well heeled, with good jobs outside the House as well as their good salaries as Members of Parliament. It is the height of injustice for them all to vote for this imposition on widows.
Mr. Race: These women who opted many years ago for a low rate of contributions and benefits did so in order to maximise their incomes. That was the prime defining factor of the group. By their approach they categorised themselves as low-paid, as needing every penny they could get from their wages. It is most likely that since they were low-paid they will remain low-paid, and this swingeing increase in contributions will undermine their incomes.

1185
These women must be of advancing years because, as my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) explained, it is not now possible for new entrants into the labour force to opt for the lower level of contribution. That means that many of them will be approaching retirement, a lime when they least need to bear the burden of having their contributions increased more than those of any other group.
These older women are, for the most part, part-time workers with take-home pay of £25 to £30 a week. They are employed in the public sector or in the private sector as cleaners or domestics for people like the chairman of European Ferries. The Government must justify concentrating their attack on this group. We oppose all the contribution increases, but particularly this one, aimed as t is at this most defenceless group. For that reason, the Committee should throw out this obnoxious subsection and retain the 2 per cent. level of contributions.
12.30 am
Mr. Dobson: As my hon. Friend the Member for Wood Green (Mr. Race) has already said, this measure will bear most heavily on older women in part-time employment on low pay. All three of those characteristics generally go together. As has been pointed out already, the general trend of the economy is having a more damaging effect on the employment of women than it is even on the employment of men. A disproportionately high number of women work part-time. They tend to be the first to be pushed out of employment when companies shed employees. Considerable numbers are being pushed out of the public sector, almost as a deliberate part of the Government's policies.
As was pointed out when we discussed an earlier amendment, other women who suffer are those in the wage brackets round the minimum who are paying the full rate of national insurance contribution rather than opting for the reduced rate. I think that someone in the DHSS was Oven the task of looking to see whether there were any women that the Government were not getting at. He rushed in and said to the Secretary of State "Sir, Sir, I have found another little group. Perhaps we could damage them also. We could put them in our nasty, squalid, little Bill."
It is a nasty, squalid piece of legislation that is being peddled by the Secretary of State and his friends. This is an especially squalid little put of the squalid little Bill. It will not bring in a significant income for the Government. It will not even save very much money for the rich, whom the Government are trying to look after. It will not bring about the savings that the tax evasion companies have been bringing about for the well-off. It will not put the Government in a position in which they can make significant tax concessions to those who have already received tax concessions. It will not make much difference to the totality of the income or outgoings in this measure. It is as if someone went out for a vengeful look for people who had not been caught.
But those women have already been caught by the equally squalid Social Security (No. 2) Act 1980. The train benefit to which they are entitled is the industrial injury benefit, which the Act cut. This is another example of the way in which the Government, in their petty-minded, rotten way, are doing down any persons or groups who are not well-heeled, well-advised and, consequently, well able to protect themselves. It is the most disgraceful part of the Bill. It is not financially significant. I do not
1186
suppose that the Chief Secretary to the Treasury rubbed his hands with glee at the thought of the amount of money that the Treasury would not have to find.
I wish that some Conservative Members would show a little rebellion every now and again. The only rebellions are those on the question of whether they will have a two-line Whip on a Private Member's Bill on this very day—as we have now reached Friday. I understand that they are feeling rebellious about that. I wish that they would feel rebellious about matters that are more important. I hope that they will rebel over this miserable little measure and show that they have a little heart left, instead of trooping into the Lobby after the Secretary of State.
Mr. Andrew F. Bennett: At the start of this short debate, there seemed to be a good many comments from the Conservative Benches on how much money was involved. The trouble with money is that it depends on how much of it one has and how much it is worth. The extra amount to be paid each week by someone earning £50 is 37½p. Many Conservative Members would not think that that is very much, but I remind them that it still buys a dog licence. Most of the people concerned, on low income, have to save up for many of their expenditures, and they begrudge having money taken away from them, apparently for no good reason except that the Government feel that they can be taxed. There can be no pretence that it is other than a tax. The group of people concerned get no benefit other than industrial injuries benefit from the national insurance system.
My hon. Friend the Member for Keighley (Mr. Cryer) put most of his emphasis on widows, and I spent a good deal of time trying to devise an amendment that would separate widows from married women. Eventually I gave up in despair, because it was very difficult to devise an amendment which would have any chance of being in order. Then I started to reflect that there was no justice in trying to separate the two. The variation in individual cases is startling. In many instances married women can be in just as difficult a financial position as widows. What is needed is to take into account their ability to pay when the tax is being imposed.
Consider first the woman who is widowed relatively early in life and who has contracted out at an early stage of her employment. She then finds that she has to go back to work. She has a fairly small widow's allowance. On her small income she will be counting every penny. That was the sort of case that my hon. Friend the Member for Keighley was citing. What about the married woman whose husband has left her? She finds that she has to go back to work because she has no maintenance coming in. Having contracted out, she can get no benefits. She may well be forced to accept low-paid work. She still has a considerable number of commitments—a house and so on.
What about the married woman with a sick husband? She finds the payment of what Conservative Members may regard as only a few pence to be a considerable imposition.
Even worse off than that woman is the married woman in a low-paid job whose husband is unemployed and has been unemployed for a long time, so that he has exhausted his benefit. If he were the only source of income, the family would be entitled to go on to supplementary benefit, but because the wife goes to work he will not qualify for it. So, although the wife is not entitled to any benefits—or virtually no benefits— as a result of her contributions, she is supporting a husband who has

1187
exhausted his eligibility to benefits. I suggest that the woman in that category is at least as deserving as the widow.
Then there is the married woman whose husband is earning an average or above-average wage. The deduction from her income is of much less significance to that household.
One could go on with a whole series of examples, but they all make the point that this tax takes no account of the ability of the family to pay.
Mr. Dobson: Does my hon. Friend agree that if the Bill goes through several of the categories to which he has referred will be in the group referred to in the Conservative manifesto, where it speaks of far too many people who are
"little or no better off at work than they are on social security"?
Mr. Bennett: I am aware that those are the categories to which the document was supposed to refer. Most of these people want to work, not just because they want to be independent but because they feel that there are many other benefits. They are just the people who will be the least likely to give up work if it is drawn to their attention that they might be better off in work than out of it. They are the people who have the least right to be clobbered by this increase.
We ought to be told the global sum that the Government hope to raise and how they justify imposing this increase on this group of people. Some of them will find it extremely difficult to cope with this increase. I suggest that the Minister should take away this part of the Bill and accept our amendment.
Mr. Campbell-Savours: I do not profess to have any great specialist knowledge of this area, but I thank my hon. Friend the Member for Stockport, North (Mr. Bennett) for informing me that this amendment was to be put to the Committee. I say that because it is an important amendment for hon. Members who do not specialise in this matter. Those who do not specialise are inclined to look at sensitive areas of legislation such as this and to speak on such matters when given the opportunity.
We have the pleasure this evening of having with us the Minister of State, Treasury, the hon. and learned Member for Dover and Deal (Mr. Rees). He may recall that during our debates on the Finance Bill some months ago he said that whenever sensitive issues came before us he would price them—for want of a better term—and on a number of occasions when controversial measures were to be put to the Committee he was kind enough to ensure that the information was available to us prior to the debate. If this area of debate has dragged on this evening, it may be because that kind of information has not been made available to us. It might have helped us if we had had such information, because it might have enabled us to establish, not only in the minds of my hon. Friends but perhaps also in the minds of Tory Members, what our priorities should be.
I recall the occasion during our debates on the Finance Bill when one Tory Member, who has now left the Chamber, moved an amendment that would have added £200 million to the public sector borrowing requirement. It was only when the Minister of State made the necessary information available to the Committee that we were able
1188
to treat the amendment with the ridicule that it deserved and press our amendments to deal with far more sensitive and important areas of the Bill.
12.45 am
If there is a particular reason why we on this side rise to speak on amendments such as these, it is that we see within such measures great injustices. It might be worth establishing what sorts of Members organising what sorts of surgeries are inclined to attract to those surgeries people who have problems of the kind to which my hon. Friends have referred tonight. I wonder whether the hon. Member for Huntingdonshire (Mr. Major), who was enjoying the debate earlier with a few laughs at the comments of my hon. Friends, could think back to the last surgery that he held. I am sure that at that surgery he was confronted with people who fall within the groups to which the amendment refers. I am sure he would agree that invariably at surgeries we are inclined to attract the lower-paid groups, because they have problems. Therefore, one would have thought that when hon. Members, having been confronted by such people at their surgeries, come to the House of Commons they would do their best to protect the interests of those people.
However, that does not happen. Conservative Members are very quick to allocate tens—indeed, hundreds—of millions of pounds to the better off—the more well-heeled—in society and are often inclined to discard the interests of those who have very little. That is a derogation of our function as Members of Parliament, because my understanding has always been that we come here to protect the underprivileged.
Mr. Major: Is the hon. Member aware that, as a Member of Parliment, he should seek to look, as I believe that my hon. Friends do, at the problems of the country in the round rather than in the specific? Does he not realise that if an hon. Member picked up every individual case irrespective of the general circumstances of the country and pleaded the sort of dishonest case that his hon. Friend the Member for Keighley (Mr. Cryer) did, the borrowing requirement—about which the hon. Gentleman was sarcastic—would soar to unprecedented levels? Would the hon. Gentleman care to comment on what the level of taxation on everyone, including widows, might be if the borrowing requirement were the £18 billion that the right hon. Member for Leeds, East (Mr. Healey) suggested and the minimum lending rate were reduced to 12 per cent.?
Mr. Campbell-Savours: To refer to a borrowing requirement of £18 billion and a reduction in MLR to 12 per cent. is to state only half of the argument. One aspect of debate which characterises this Parliament is that whenever hon. Members question where my hon. Friends stand in the economic debate they are very selective and choose areas which they think will help them in their argument. Conservative Members do not mention such matters as import controls and the alternative economic strategy which is being pressed upon the Government by my hon. Friends.
Mr. Major: Will the hon. Gentleman give way on that point?
Mr. Campbell-Savours: Yes.
The First Deputy Chairman: Order. We are talking about widows.
Mr. Campbell-Savours: I take your point, Mr. Godman Irvine as does the hon. Gentleman, I hope.
The hon. Member referred to the need to deal in the general rather than in the specific. An examination of the distribution of personal incomes between 1949 and the last year for which figures are available—1977—shows that the bottom 30 per cent. of income groups increased their share of all income by only ⅓ per cent. When one considers the legislation that the Government have introduced—
The First Deputy Chairman: Order. We are dealing not with the low-paid but with married women and widows.
Mr. Campbell-Savours: I should have thought that it was in order to refer to those who will suffer as a result of the Government's refusal to accept the amendment tabled by my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker). I should have thought it in order to refer in passing to that group of people and their problems. Their share has increased by only one-third of 1 per cent. over a period of 28 years.
In the past year and a half, the Government have introduced two Finance Bills. It is clear that a massive redistribution is being made in favour of those who do not fall within that bottom 30 per cent. I remind the hon. Member for Huntingdonshire that the House is under an obligation. The amount of public expenditure involved is not vast. There will not be any draconian effect on the public sector borrowing requirement. Indeed, some of the amendments tabled by Conservative Members during discussion of the Finance Bill would have had a draconian effect. Such amendments would not have been of any benefit to my constituents.
Hon. Members would be unfair if they did not consider those who fall within these particular income groups. Income could be raised from several other sources. Only 10 days ago the Government made a statement to the effect that they would allocate a further £350 million to those who enjoyed stock relief. A marginal reduction in that amount—which would not have any great effect on the companies that claim stock relief—
The First Deputy Chairman: Order. The hon. Gentleman's remarks are not relevant to the amendment.
Mr. Field: On a point of order, Mr. Godman Irvine. Given that we are rushing through a Bill that seeks to raise taxation by more than £2 billion, is it not in order to ask where the Secretary of State is? Should he not be present at such deliberations?
The First Deputy Chairman: That is not a matter for the Chair, but it is for the Chair to ensure that hon. M embers discuss the specific amendment.
Mr. Campbell-Savours: You suggested, Mr. Godman Irvine, that my remarks were not in order. I suggest that they are in order. If the Government intend to use the increase from 2 per cent. to 2·75 per cent. as a means of raising revenue, I should have thought it in order to mention other ways in which the same amount of revenue could be raised.
The First Deputy Chairman: I am not sure whether the hon. Gentleman was in the Chamber earlier I have given a ruling on this subject.
Mr. Winnick: On a point of order, Mr. Godman Irvine. It is a perfect point of order. I refer to the absence of the Secretary of State. While I recognise—
The First Deputy Chairman: Order. The hon. Gentleman has been in the House long enough to know better than to proceed along those lines.
Mr. Winnick: Can we have an apology or an explanation for the right hon. Gentleman's absence?
Mr. Campbell-Savours: The House should reconsider the changes that have been introduced. A special case can be made for those who can ill afford to pay the Government's debts. The Government have clearly lost control of the economy because they are unable to reach the monetary targets that they originally set. They should not impose these costs on the underprivileged, who can ill afford to pick up the bill.
Mrs. Chalker: I was beginning to wonder when the moment would come for me to answer the many questions posed by Opposition Members.
One question was: how many married women are paying the reduced or opted-out payment? About 3½ million married women in employment pay the reduced payment. About a quarter of a million widows pay the reduced payment. A further quarter of a million women, not now in employment, who have been opted out from previous employments and are now in the immediate two-year post-employment period, are still eligible for reduced payments.
I was asked what money comes into the fund. The total is £47 million—not quite as small as some Opposition Members seemed to think—£31 million of which goes into the national insurance fund. The remaining £16 million will go into the National Health Service. If Opposition Members care to read the Government Actuary's report on the Bill, they will find many other useful figures.
We made clear in earlier debates—hon. Members who arrived after midnight will not have heard those debates, of course—that on the advice of the Government Actuary, working on estimates put to him by the Treasury, we must ensure that the national insurance fund remains in balance.
We have already discussed the full class 1 contributions. We are now discussing what happens to the reduced rate for married women and widows who for the past five years have been paying 2 per cent.
The hon. Member for Birmingham, Perry Barr (Mr. Rooker) made great play of the fact that the increase from 2 per cent. to 2·75 per cent. for women who are opted out was an increase of 37½ per cent. The hon. Gentleman failed to note that women who are opted out of the full contribution have always paid the National Health Service allocation. That is reflected as an increase of 0·25 per cent. in all the primary class 1 contribution rates. So of that 0·75 per cent. increase 0·25 per cent. is going direct to the National Health Service. The remainder is the general cost of the scheme from which married women and widows can benefit through additions to benefit for dependants and through industrial injuries benefit. They also benefit in the long term because they are making contributions to their retirement pensions.
When rates have not changed for some time, it may seem fair to ask "Why change them now?" Every speaker in the debate has missed one point. When the reduced rate was set in 1975, the standard class 1 rate was 5½ per cent.

1191
In other words, the reduced rate was 3½ per cent. below that. Even after the increase now proposed, the difference will be 5 per cent.—that is, 2·75 per cent. compared with 7·75 per cent. It will be slightly greater than the 4·5 per cent.—that is, the difference between the old basic 2 per cent. contribution and the 6·5 per cent. contribution which applied from April 1978. That was when the Labour Government's legislation required married women to consider their position in the light of the new pension scheme. Therefore, the married women's option will now represent a better bargain than when they made their decision to pay at the lower rate.
The Government are in no way impervious to the problems that face many widows and people on low pay. As the hon. Member for Stockport, North (Mr. Bennett) said, a woman earning £50 a week would experience an increase of 37½p as a result of this part of clause 1.
1 am
In view of the need to ensure that our national insurance fund remains in balance, and in order to make sure that the resources that we want for the NHS are available, I do not think that—at a better bargain than the Other increases—this is too much to ask of a group of the population that is by no means all in the categories so avidly described by Labour Members. I am sure that many will not begrudge contributing 37½p if they are on £50 a week.
Mr. Rooker: The Minister gave us the figures for which we asked. Perhaps she can give one more figure. She mentioned the 3½ million and the 250,000, the 250,000 being the widows. How much of the £47 million is attributable to the 250,000 widows?
Mrs. Chalker: I do not have my calculator with me, and I do not trust my mind at 1 o'clock in the morning, but I am quite sure that the hon. Gentleman and I can work out this figure.
Mr. Rooker: Is it proportional?
Mrs. Chalker: It is proportional, as far as I know. From what I have read, I cannot think of any reason to believe that it would be other than proportional. That was my immediate reaction, but I was trying to think whether there was anything that I should add. I believe that it is a proportional amount.
Mr. Dobson: It seemed to me that the Minister dismissed as virtually irrelevant and trivial the increase of 37½p a week for a woman earning £50 a week. Can she say what the sum was, or give us the total benefit in taxation, which such a woman would have received from the Government's changes in taxation that were introduced in their first Budget?
Question put, That the amendment be made:—
The Committee divided: Ayes 30, Noes 221.

Division No. 22]

[1.02 am

AYES

Buchan, Norman

Dobson, Frank

Campbell-Savours, Dale

Dormand, Jack

Canavan, Dennis

Dubs, Alfred

Cocks, Rt Hon M. (B'stol S)

English, Michael

Craigen, J. M.

Evans, John (Newton)

Crowther, J. S.

Ewing, Harry

Cryer, Bob

Field, Frank

Cunningham, Dr J. (W'h'n)

Freeson, Rt Hon Reginald

Davis, T. (B'ham, Stechf'd)

Graham, Ted

1192

Haynes, Frank

Rowlands, Ted

Johnston, Russell (Inverness)

Spearing, Nigel

Leighton, Ronald

Welsh, Michael

McCartney, Hugh

Winnick, David

McDonald, Dr Oonagh

Race, Reg

Tellers for the Ayes:

Richardson, Jo

Mr. Walter Harrison and

Rooker, J. W.

Mr. Andrew F. Bennett.

NOES

Alexander, Richard

Grant, Anthony (Harrow C)

Ancram, Michael

Greenway, Harry

Aspinwall, Jack

Grieve, Percy

Atkinson, David (B'm'th,E)

Griffiths, E.(B'y St. Edm'ds)

Baker, Kenneth (St.M'bone)

Griffiths, Peter Portsm'th N)

Baker, Nicholas (N Dorset)

Grylls, Michael

Banks, Robert

Gummer, John Selwyn

Bendall, Vivian

Hamilton, Hon A.

Benyon, Thomas (A'don)

Hampson, Dr Keith

Benyon, W. (Buckingham)

Hannam, John

Berry, Hon Anthony

Haselhurst, Alan

Best, Keith

Hastings, Stephen

Bevan, David Gilroy

Havers, Rt Hon Sir Michael

Biggs-Davison, John

Hawkins, Paul

Blackburn, John

Hawksley, Warren

Blaker, Peter

Heddle, John

Boscawen, Hon Robert

Henderson, Barry

Bottomley, Peter (W'wich W)

Heseltine, Rt Hon Michael

Bowden, Andrew

Hicks, Robert

Braine, Sir Bernard

Hogg, Hon Douglas (Gr'th'm)

Bright, Graham

Hooson, Tom

Brinton, Tim

Howell, Ralph (N Norfolk)

Brittan, Leon

Hunt, David (Wirral)

Brotherton, Michael

Hunt, John (Ravensbourne)

Brown, M.(Brigg and Scun)

Hurd, Hon Douglas

Browne, John (Winchester)

Jenkin, Rt Hon Patrick

Bruce-Gardyne, John

Johnson Smith, Geoffrey

Bryan, Sir Paul

Jopling, Rt Hon Michael

Buck, Antony

Kershaw, Anthony

Budgen, Nick

King, Rt Hon Tom

Butcher, John

Kitson, Sir Timothy

Butler, Hon Adam

Knight, Mrs Jill

Cadbury, Jocelyn

Knox, David

Carlisle, John (Luton West)

Lamont, Norman

Carlisle, Kenneth (Lincoln)

Lang, Ian

Carlisle, Rt Hon M. (R'c'n)

Langford-Holt, Sir John

Chalker, Mrs. Lynda

Latham, Michael

Channon, Rt. Hon. Paul

Le Marchant, Spencer

Churchill, W. S.

Lennox-Boyd, Hon Mark

Clark, Hon A. (Plym'th, S'n)

Lester Jim (Beeston)

Clark, Sir W. (Croydon S)

Lloyd, Peter (Fareham)

Clarke, Kenneth (Rushcliffe)

Loveridge, John

Colvin, Michael

Luce, Richard

Cope, John

Lyell, Nicholas

Corrie, John

McCrindle, Robert

Costain, Sir Albert

Macfarlane, Neil

Cranborne, Viscount

MacGregor, John

Crouch, David

MacKay, John (Argyll)

Dean, Paul (North Somerset)

McNair-Wilson, P. (New F'st)

Dickens, Geoffrey

McQuarrie, Albert

Dorrell, Stephen

Madel, David

Douglas-Hamilton, Lord J.

Major, John

Dunn, Robert (Dartford)

Marland, Paul

Durant, Tony

Mates, Michael

Dykes, Hugh

Mather, Carol

Eggar, Tim

Maude, Rt Hon Angus

Elliott, Sir William

Mawhinney, Dr Brian

Emery, Peter

Maxwell-Hyslop, Robin

Eyre, Reginald

Mayhew, Patrick

Fairbairn, Nicholas

Mellor, David

Faith, Mrs Sheila

Meyer, Sir Anthony

Farr, John

Miller, Hal (B'grove)

Fell, Anthony

Mills, Iain (Meriden)

Fenner, Mrs Peggy

Mills, Peter (West Devon)

Forman, Nigel

Miscampbell, Norman

Fraser, Peter (South Angus)

Mitchell, David (Basingstoke)

Gardiner, George (Reigate)

Moate, Roger

Gardner, Edward (S Fylde)

Montgomery, Fergus

Garel-Jones, Tristan

Moore, John

Gorst, John

Morrison, Hon C. (Devizes)

1193

Morrison, Hon P. (Chester)

Stainton, Keith

Myles, David

Stanbrook, Ivor

Neale, Gerrard

Steen, Anthony

Needham, Richard

Stevens, Martin

Nelson, Anthony

Stewart, Ian (Hitchin)

Neubert, Michael

Stokes, John

Newton, Tony

Stradling Thomas, J.

Normanton, Tom

Tapsell, Peter

Onslow, Cranley

Taylor, Robert (Croydon NW)

Osborn, John

Taylor, Teddy (S'end E)

Page, Rt Hon Sir G. (Crosby)

Tebbit, Norman

Page, Richard (SW Herts)

Thomas, Rt Hon Peter

Parkinson, Cecil

Thompson, Donald

Parris, Matthew

Thorne, Neil (Ilford South)

Patten, Christopher (Bath)

Townend, John (Bridlington)

Pattie, Geoffrey

Townsend, Cyril D, (B'heath)

Pawsey, James

Trippier, David

Pink, R. Bonner

Trotter, Neville

Pollock, Alexander

van Straubenzee, W. R.

Price, Sir David (Eastleigh)

Vaughan, Dr Gerard

Proctor, K. Harvey

Viggers, Peter

Raison, Timothy

Wakeham, John

Rathbone, Tim

Waldegrave, Hon William

Rees, Peter (Dover and Deal)

Walker, B. (Perth )

Rees-Davies, W. R.

Wall, Patrick

Renton, Tim

Waller, Gary

Rhodes James, Robert

Ward, John

Rhys Williams, Sir Brandon

Warren, Kenneth

Ridley, Hon Nicholas

Watson, John

Ridsdale, Julian

Wells, John (Maidstone)

Sainsbury, Hon Timothy

Wells, Bowen

St. John-Stevas, Rt Hon N.

Wheeler, John

Shaw, Michael (Scarborough)

Whitney, Raymond

Shelton, William (Streatham)

Wickenden, Keith

Shepherd, Richard

Wilkinson, John

Shersby, Michael

Winterton, Nicholas

Silvester, Fred

Wolfson, Mark

Sims, Roger

Young, Sir George (Acton)

Smith, Dudley

Speller, Tony

Tellers for the Noes:

Spicer, Jim (West Dorset)

Mr. David Waddington and

Sproat, Ian

Mr. Peter Brooke.

Squire, Robin

Question accordingly negatived.
Mr. Rooker: I beg to move amendment No. 11, in page 1, line 23, leave out '£3·40' and insert '£3·00'.
The Second Deputy Chairman (Mr. Richard Crawshaw): With this we may take amendment No. 12, in page 2, line 5, leave out '£5·15' and insert'£4·70'.
Mr. Rooker: The Committee will be pleased to hear that I shall be able to spend less time moving amendment No. 11 than I spent on amendment No. 10, but it is incumbent on me to explain why we dreamt up the figures of £3 and £4·70 in the amendments. Basically, we want to know why the Government have chosen the figures in the Bill.
1.15 am
Amendment No. 11 relates to the class 2 self-employed contribution, which is at present £2·50. We simply propose to increase that figure by 20 per cent. in line with average earnings. That is how we get the figure of £3. We want to know why such a large increase is proposed by the Government for this part of the self-employed contribution.
Amendment No. 12 relates to share fishermen. The hon. Member for Aberdeenshire, East (Mr. McQuarrie) is just about to walk out of the Chamber. Normally, when there is reference to fishermen, he rises to his feet. Perhaps he will be able to contribute to this debate. He may even be able to tell us whether we have share fishermen in the
1194
EEC. I do not know whether that is so. I asked an hon. Gentleman who is a member of the Liberal Party and is now on the night sleeper, but he could not give an answer.
The present impost on share fishermen is £3·90. The Government propose a substantial increase, to £5·15. We have taken the 20 per cent. increase that we propose for the self-employed, which would give a rise of 50p on the £3·90 in the case of the share fishermen; we have then taken ¼ per cent. of average earnings—which takes us back to the unemployment contribution to the national insurance fund. That gives us 30p. We have not endeavoured to be more accurate than that. That gives us an 80p increase on £3·90. Hence we arrive at a figure of £4·70. These figures have not, therefore, simply been dreamt up out of thin air.
We could not understand why the Government proposed such large increases. In any event, it seemed the worst possible time to impose a further impost, above what was required by the increase in average earnings, upon those involved in the fishing industry. Hence these two amendments.
Mr. Patrick Jenkin: I regret that I cannot advise the Committee to accept these amendments, but, judging by the tone in which the hon. Member for Birmingham, Perry Barr (Mr. Rooker) moved them, they are perhaps more in the nature of probing amendments than an indication of the Opposition's policy.
The short answer is that the increases that are proposed for the class 2 contributions, the flat-rats contribution for the self-employed and the special rate for the share fishermen, are precisely what would be required to maintain the same relationship between the self-employed class 2 contributions and the combined employer and employee class 1 contribution.
The reduction in the Treasury supplement would account for about 30p of the 90p increase. The increase in the NHS allocation would account for a further 15p of that total, and the balance would be the appropriate share to go to the national insurance fund for the self-employed, relative to the contributions of employees. The effect of the amendment—the hon. Gentleman did not say whether this was the intention—would be to leave only the contribution to the fund and make the self-employed flat-rate contribution contribute nothing for the reduction of the Treasury supplement or for the Health Service.
If amendment No. 11 were carried, the loss of revenue would be about £16 million, but much more important than the amount of money involved would be the fact that it would mean that the relationship between class 1 and class 2 contribution rates would no longer be maintained. That would upset the relativity that has existed for a number of years.
The hon. Member may ask how class 2 and class 4 are fixed. The answer is that they have been fixed precisely according to the rules that were explained in the Government Actuary's report of 1977, in paragraphs 27 and 28. I shall not weary the Committee by reading out the paragraphs. I shall simply summarise them.
The rates for the self-employed are fixed on the total class 1 rate, which itself is set at a level adequate to keep the national insurance fund broadly in balance, taking account of the Treasury supplement. For the self-employed, this class 1 rate is abated to take account of the benefits for which they are not eligible—unemployment and industrial injuries benefits—and the earnings-related

1195
components in the benefits. Nearly all the abatement is on account of pensions. It is based on the actuarial value of the pension rights forgone. This method was adopted by our Labour predecessors in 1977, and we see no reason to change it.
We have launched the promised investigation into the relative contributions and benefits to the self-employed. A paper was published in October, and that investigation is now under way. The increases do no more than maintain the existing relativity. They in no way prejudice the conduct or the possible outcome of the investigation.
I believe that we are treating the self-employed absolutely fairly, in exactly the same relationship as employers and employed. In those circumstances, the Committee may wish to reject the amendment.
I turn to amendment No. 12. The contributions and, therefore, the increases are somewhat larger for share fishermen, because they are based on the standard class 2 rate, but an addition is made in respect of the share fishermen's entitlement to unemployment benefit and industrial injuries benefit. The increase proposed in the Bill reflects the increases of 65p for inflation and 45p for the NHS and the effect of the Treasury supplement reduction, as for the normal class 2 rates, and 15p corresponding to the further ¼ per cent. on class 1, because they are eligible for unemployment benefit.
I hope that the Committee will agree that both increases are justified. They are entirely fair in relation to other groups whose contributions are being increased. I therefore advise the Committee to reject the amendments.
Mr. Buchan: The Secretary of State will not expect us to accept his proposition. We reject the 1 per cent. and the combined employer-employee ratio that he proposes in the rest of the Bill, and we reject them equally in relation to the groups in question. We are not being inconsistent; on the contrary, we are being consistent.
We heard a great deal before and during the election campaign about the Tory Party's affection for the self-employed. We have heard something about it since, but we have not seen much in the way of deeds. The right hon. Gentleman must know that the self-employed are among those who are being pressed hardest. Many small one-man businesses are going bust under the present Administration. The strain is as heavy upon the unemployed as it is on other working people. This is hardly the time to introduce the spurious 1 per cent. provision that the Government regard as an insurance levy. I know something about share fishermen, as does the hon. Member for Aberdeenshire, East (Mr. McQuarrie). I was in the hon. Gentleman's constituency a few weeks ago—
Mr. McQuarrie: The hon. Gentleman never told me.
Mr. Buchan: I was not there for political purposes. I was making a film for BBC on, among other things, fishermen.
As the hon. Gentleman knows, my family comes from the fishing folk of his constituency, I am sorry that they are being so badly represented. There is a problem facing fishermen. I declare an interest. I have no direct connection with fishing, but I have a sentimental interest in the industry and the people in it because of my family connections. The problem that they are facing was
1196
occasioned by the Conservative Party taking the United Kingdom into the Common Market without any guarantees on fishing policy. The fishermen are now facing the consequence. Herring is being landed in Boulogne while the fishermen off our shores have to dump herring into the sea and waste it if they catch it accidentally instead of sprats.
The problem facing the fishermen is in line with that faced by the unemployed. That is another reason for not accepting the impost that the Government have introduced.
Mr. McQuarrie: The hon. Gentleman will remember that when he was Minister of State, Ministry of Agriculture, Fisheries and Food in a previous Labour Government he said that he could not understand why that Government had not properly renegotiated the common fisheries policy. Surely, he is as much to blame as anyone else for the lack of a common fisheries policy today. The hon. Gentleman should not blame the Conservative Party for the lack of a common fisheries policy. As for the representation of my constituency, Lord Boothby well represented Aberdeenshire, East and I have tried to emulate him since entering the House of Commons in fighting for the fishermen. I shall continue to do so.
Mr. Buchan: I seem to have gaffed a pike. I resigned from the Labour Government to whom the hon. Gentleman has referred over the Common Market. A great deal of my reason for doing so was their failure to include the fishing element in the renegotiations.
Mr. McQuarrie: The hon. Gentleman said that he was surprised that there were not proper renegotiations on the common fisheries policy.
Mr. Buchan: Of course I did. That was why I resigned. What news is the hon. Gentleman giving me? I resigned because that was not done, among other things. Therefore, I take no blame. The main responsibility lies with the agreement, the Treaty and the Act that took us into the Common Market without first securing—
The Second Deputy Chairman: Order. We are going wide of the subject that we are discussing. I hope that we have got these other matters out of our system for the moment.
Mr. Buchan: I recognise that we are travelling wide. However, the Committee wants to know my history and I am giving it. Those fishermen face a particular problem because of the common fisheries policy. Therefore, this is not the time to place a fresh impost on them. That was the simple point that I was making when, innocent as always, I was led off it by the subtleties of the hon. Member for Aberdeenshire, East.
1.30 am
Mr. Campbell-Savours: Will my hon. Friend explain, for the benefit of those of us with no great knowledge of the fishing industry, what share fishermen are? I assume that they have some share equity in their boats. Are they affluent people who can afford the contribution, or are they reeling under the effects of the Government's policies in other areas that we are not discussing?
Mr. Buchan: They are reeling under the effects of Government policy. There have been periods of relative affluence in the fishing industry, but it is facing major

1197
difficulties now and for the future because of overfishing and failure to adopt proper conservation methods, partly because of the inhibitions placed on it by the EEC.
Share fishermen are men who go to sea, but they are not quite in an employee-employer relationship with the skipper or owner of the boat. Part of their earnings comes from their share in the catch. They are not only paid a wage. In fact, some are not paid a wage at all; they have a share of the profit of the boat as their payment. Fishermen, I am afraid, are highly individualist hunters, and they tend to prefer the chance of a haul—even a small haul—to a regular wage.
Mr. Campbell-Savours: Has my hon. Friend been able to assess the cost of the increase to the fishermen? What will the Exchequer gain by increasing the contribution.
Mr. Buchan: The latest figure that I have is £11 million for the self-employed and the share fishermen. I do not know what element of that £11 million will be lost if the amendment is carried. Perhaps the Minister can tell us.
Mr. Andrew F. Bennett: What happens to the share fishermen who, under Common Market regulations, have to put their catch back into the sea? If there is no catch, the share fisherman will get no income.
The Second Deputy Chairman: Order. The debate is ranging very wide of the mark. The hon. Gentleman will next be asking what happens if a fisherman goes out on a stormy day and has no catch.
Mr. Bennett: I was coming to the essential point, Mr. Crawshaw. Is the fisherman entitled to unemployment benefit, as it is supposed to be one of the privileges of the share fisherman? That is an important and relevant question.
Mr. Buchan: That question is better answered by the Government. However, the fisherman does not get a share if the catch is dumped overboard. The other day the equivalent of a £5,000 haul had to be dumped, when people in this country could have done with the valuable protein from the fish.
Mr. Campbell-Savours: My hon. Friend gave the figure by which he believed that the Exchequer would benefit. Perhaps the hon. Member for Aberdeenshire, East (Mr. McQuarrie) could intervene to tell us what effects he believes the increased contributions will have on fishermen in his constituency.
Mr. Buchan: I shall be generous, as always, if the hon. Gentleman wishes to intervene to defend his constituents.
Mr. McQuarrie: It must be remembered that share fishermen share in the catch, which can be small or large. The national insurance contribution will be based on the physical takings of each share fisherman on the catch. It is right that they enjoy a measure of unemployment benefit, again based on the amount of money they earn It s a question of the income from the catch. Fishermen can earn up to £2,000 on many occasions in a week or 10 days at sea. When, they come back, they pay a proportion of that. We are talking about the flat rate, and the increase on the flat rate will make the difference.
Mr. Buchan: I am surrounded by experts, but I am not sure that the hon. Gentleman is right. I understand that a flat figure rather than percentage applies. Perhaps the Secretary of State will confirm that.
Mr. Patrick Jenkin: The Committee seems to be getting into difficulty. We are concerned in amendments Nos. 11 and 12 with the flat-rate element of the self-employed national insurance contribution, amendment No. 12 relating to the special position of share fishermen, who, as my hon. Friend rightly said, are remunerated not by a normal wage or even a wage related to work but by a share or by a mixture of a wage and a share. They are, however, entitled to unemployment benefit, and in that way they are unlike the normal self-employed who are not entitled to unemployment benefit. That is why they pay a special, higher rate of contribution and why the increase, which is directly proportional, is, in money terms, bigger than for the self-employed.
The hon. Member for Renfrewshire, West (Mr. Buchan) asked me how much of the total sum for the self-employed would be attributable to share fishermen. We do not have up-to-date reliable information, but it would be unlikely to exceed £1 million. The principal issue here, therefore, is not the sum of money but maintaining the same relativity between the different categories of contributor when one is making a change such as that contained in clause 1. That is our justification for the increases for the self-employed and that special category, the share fishermen.
Mr. Buchan: It is for that reason that we shall oppose it. We do not accept the original impost, and we are being consistent in our opposition. I invited the hon. Member for Aberdeenshire, East to make a comment in the defence of his constituents. I am not sure that he has succeeded in doing that yet. No doubt the Buchan Observer would be glad to print his remarks if he were to support us. We would welcome him in our Lobby—indeed, we need him in our Lobby.
There remains the question of fish that is dumped. In such a case, the fishermen lose the benefit.
Mr. McQuarrie: I must take the hon. Gentleman to task on the question of the share fishermen. He should know as well as any hon. Member, because he comes from Buchan, that the fishermen there do not object to any increased contribution so long as the take from the share is coming in. Whether the Buchan Observer prints it or not, I am sure that my fishermen constituents will not object, if they can earn hard cash from good fish, to paying what the Government want.
Mr. Buchan: The hon. Gentleman is right in that my peole are notoriously generous. I am sure that they would not complain. Sometimes, however, we have to protect people from their own generosity. The House of Commons is magnificently empowered to do that. I do not doubt that all my family, past and present, would be willing honourably to serve society and pay the impost that is laid upon them, but I do not think that we should make the imposition upon them. They would pay just as willingly if the charge were a good deal lower.
Mr. Andrew F. Bennett: My hon. Friend still has not said what happens to the share fisherman whose catch has to be thrown away. He has no income from the catch. Is

1199
he entitled to unemployment benefit or not? He will have been employed, but it will not have brought him any money.
Mr. Buchan: Perhaps we should send for the Secretary of State for Employment to answer this question for us. It is interesting to ask whether, after a three-day trip, if the fisherman lost his catch, that would count as three days' unemployment out of seven. What is the definition of unemployment in such a situation? I do not know, but my hon. Friend—
Mr. McQuarrie: I might be able to help the hon. Gentleman. The fishermen are not entitled to unemployment benefit on a three-day catch if it is thrown overboard.
Mr. Buchan: That is as I thought. The hon. Gentleman has confirmed it. The extra amount for unemployment is if a fisherman is not employed or participating in a share position. I hope that that answers the question raised by my hon. Friend the Member for Stockport, North (Mr. Bennett). If anyone wants to know anything more about the fishing industry, I shall be glad to help.
Mr. Field: My contribution is a question to the Secretary of State. I am genuinely confused about his explanation of why the amendments should be rejected. I am confused whether his arguments relate to the self-employed or to the share fishermen. Was he saying that the contribution for the self-employed would be worked out on the basis of the increases that employees and employers would pay? If so, how can that be a special rating when employers are not paying any increase in their rates? If the former is correct, is it not a departure from the way that the increases for the self-employed have been worked out, which in previous years were based not on the weighted increase of both employers and employees but on the lesser rate? The lesser rate was justified because the self-employed do not receive equity and benefits compared with employees for whom benefits are paid from contributions based on both employees and employers.
Mr. Patrick Jenkin: I hope that I can help the hon. Member for Birkenhead (Mr. Field). I am not expecting my remarks to be printed in the Wanstead and Woodford Guardian. I wish to draw attention to the details in the 1977 Government Actuary's report, in which he spelt out precisely how the contribution of the self-employed was calculated. Paragraph 27 states:
"The Government have decided that after April 1978 the rates of contribution for the self-employed should be derived on lines similar to the rates for contracted-out employees, by making allowance for the average cost of self-employed contributors of providing for themselves benefits comparable to the new earnings-related additional components of pension to which the contributions of employees fully participating in the state scheme will be securing title."
Paragraph 28, the key paragraph, states:
"On this approach the contribution rates for the self-employed will be obtained by making two deductions from the joint rate for employees who are not contracted-out; first, an adjustment to exclude that part of the contributions for employees which relate to the, mainly short-term, benefits under the present scheme for which the self-employed are not eligible and, secondly, a deduction to allow for the value of the new earnings-related benefits to which employees will be building up title after April 1978."
It obviously does not matter in what ratio the employees' and the employers' contributions stand to each
1200
other, because it is the sum of the two—the joint contribution—that provides the basis on which the self-employed contribution is calculated, after making the deductions to which the Government Actuary's report refers. I beg to differ from the hon. Member for Birkenhead in his suggestion that the Bill creates any new position. On the contrary, we have gone to great lengths to ensure that we increase the self-employed contribution to maintain precisely the same ratio to the joint employer-employee contribution as has pertained hitherto. We have done that quite deliberately so as in no way to prejudice the investigation that is currently under way and which we promised at the last election.
Mr. Dobson: Does the Secretary of State recall his speech in Canton on 19 April? I mean Canton in Cardiff, not the one near the enterprise zone. At least, on that occasion the right hon. Gentleman had the courage to go to Cardiff. One understands from today's Daily Express that the Prime Minister is willing to go to Cardiff, but only if the chairman of the British Steel Corporation—
The Second Deputy Chairman: Order. The hon. Gentleman has already made this speech once tonight.
1.45 am
Mr. Dobson: The amendment refers to the self-employed. They are frequently referred to by the Secretary of State as small business men. I wonder whether he recalls his statement in Canton when he said:
"The list of what we are now doing to encourage small businesses is a long and exciting one."
I wonder whether this exciting little measure was included in the long and exciting list of measures that he was introducing to stimulate small businesses. As in many other instances, this is simply another effort to increase the take from the natural insurance fund in order to try to keep down the general level of taxation.
The argument that has always been put forward with regard to small businesses is that the general level of taxation was penalising them. This is another example of simply shifting the burden from the general taxpayer on to the small self-employed person—the small business man. It is likely to damage those people to whom the Secretary of State's party apparently pays so much attention.
Question put, That the amendment be made:—
The Committee divided:Ayes 25, Noes 212.

Division No. 23]

[1.47 am

AYES

Bennett, Andrew(St'kp't N)

Freeson, Rt Hon Reginald

Buchan, Norman

Haynes, Frank

Campbell-Savours, Dale

Johnston, Russell (Inverness)

Cocks, Rt Hon M. (B'stol S)

Leighton, Ronald

Craigen, J. M.

McCartney, Hugh

Crowther, J. S.

Race, Reg

Cryer, Bob

Richardson, Jo

Cunningham, Dr J. (W'h'n)

Rooker, J. W.

Dobson, Frank

Welsh, Michael

Dormand, Jack

Winnick, David

Dubs, Alfred

English, Michael

Tellers for the Ayes:

Evans, John (Newton)

Mr. Walter Harrison and

Ewing, Harry

Mr. Terry Davis.

Field, Frank

NOES

Alexander, Richard

Baker, Nicholas (N Dorset)

Ancram, Michael

Banks, Robert

Atkinson, David (B'm'th,E)

Bendall, Vivian

Baker, Kenneth (St.M'bone)

Benyon, Thomas (A'don)

1201

Benyon, W. (Buckingham)

Hunt, David (Wirral)

Berry, Hon Anthony

Hunt, John (Ravensbourne)

Best, Keith

Hurd, Hon Douglas

Bevan, David Gilroy

Jenkin, Rt Hon Patrick

Biggs-Davison, John

Johnson Smith, Geoffrey

Blackburn, John

Jopling, Rt Hon Michael

Blaker, Peter

Kershaw, Anthony

Boscawen, Hon Robert

Kitson, Sir Timothy

Bottomley, Peter (W'wich W)

Knight, Mrs Jill

Bowden, Andrew

Knox, David

Braine, Sir Bernard

Lamont, Norman

Bright, Graham

Lang, Ian

Brinton, Tim

Latham, Michael

Brittan, Leon

Le Marchant, Spencer

Brooke, Hon Peter

Lennox-Boyd, Hon Mark

Brotherton, Michael

Lester Jim (Beeston)

Brown, M.(Brigg and Scun)

Lloyd, Peter (Fareham)

Browne, John (Winchester)

Loveridge, John

Bruce-Gardyne, John

Luce, Richard

Bryan, Sir Paul

Lyell, Nicholas

Buck, Antony

McCrindle, Robert

Budgen, Nick

Macfarlane, Neil

Butcher, John

MacGregor, John

Butler, Hon Adam

MacKay, John (Argyll)

Cadbury, Jocelyn

McNair-Wilson, P. (New F'st)

Carlisle, Kenneth (Lincoln)

McQuarrie, Albert

Carlisle, Rt Hon M. (R'c'n )

Madel, David

Chalker, Mrs. Lynda

Major, John

Channon, Rt. Hon. Paul

Marland, Paul

Churchill, W. S.

Mates, Michael

Clark, Hon A. (Plym'th, S'n)

Mather, Carol

Clarke, Kenneth (Rushcliffe)

Maude, Rt Hon Angus

Colvin, Michael

Mawhinney, Dr Brian

Cope, John

Maxwell-Hyslop, Robin

Corrie, John

Mayhew, Patrick

Costain, Sir Albert

Mellor, David

Cranborne, Viscount

Meyer, Sir Anthony

Crouch, David

Miller, Hal (B'grove)

Dean, Paul (North Somerset)

Mills, Iain (Meriden)

Dickens, Geoffrey

Mills, Peter (West Devon)

Dorrell, Stephen

Miscampbell, Norman

Dunn, Robert (Dartford)

Mitchell, David (Basingstoke)

Durant, Tony

Moate, Roger

Dykes, Hugh

Montgomery, Fergus

Eggar, Tim

Moore, John

Elliott, Sir William

Morrison, Hon C. (Devizes)

Emery, Peter

Morrison, Hon P. (Chester)

Eyre, Reginald

Myles, David

Fairbairn, Nicholas

Neale, Gerrard

Faith, Mrs Sheila

Needham, Richard

Farr, John

Nelson, Anthony

Fell, Anthony

Neubert, Michael

Fenner, Mrs Peggy

Newton, Tony

Forman, Nigel

Normanton, Tom

Fraser, Peter (South Angus)

Onslow, Cranley

Gardiner, George (Reigate)

Owen, Rt Hon Dr David

Gardner, Edward (S Fylde)

Page, Rt Hon Sir G. (Crosby)

Garel-Jones, Tristan

Page, Richard (SW Herts)

Goodhart, Philip

Parkinson, Cecil

Gorst, John

Parris, Matthew

Grant, Anthony (Harrow C)

Patten, Christopher (Bath)

Greenway, Harry

Pattie, Geoffrey

Grieve, Percy

Pawsey, James

Griffiths, E.(B'ySt. Edm'ds)

Pink, R. Bonner

Griffiths, Peter Portsm'th N)

Pollock, Alexander

Grylls, Michael

Price, Sir David (Eastleigh)

Gummer, John Selwyn

Proctor, K. Harvey

Hamilton, Hon A.

Raison, Timothy

Hampson, Dr Keith

Rathbone, Tim

Hannam, John

Rees, Peter (Dover and Deal)

Haselhurst, Alan

Renton, Tim

Hastings, Stephen

Rhys Williams, Sir Brandon

Havers, Rt Hon Sir Michael

Ridley, Hon Nicholas

Hawkins, Paul

Ridsdale, Julian

Hawksley, Warren

Sainsbury, Hon Timothy

Heddle, John

Sr. John-Stevas, Rt Hon N.

Henderson, Barry

Shaw, Michael (Scarborough)

Hicks, Robert

Shelton, William (Streatham)

Hooson, Tom

Shepherd, Richard

Howell, Ralph (N Norfolk)

Shersby, Michael

1202

Silvester, Fred

Trotter, Neville

Sims, Roger

van Straubenzee, W. R.

Smith, Dudley

Vaughan, Dr Gerard

Speller, Tony

Viggers, Peter

Spence, John

Wakeham, John

Spicer, Jim (West Dorset)

Waldegrave, Hon William

Sproat, Ian

Walker, B. (Perth )

Squire, Robin

Wall, Patrick

Stainton, Keith

Waller, Gary

Stanbrook, Ivor

Ward, John

Steen, Anthony

Warren, Kenneth

Stevens, Martin

Watson, John

Stewart, Ian (Hitchin)

Wells, John (Maidstone)

Stokes, John

Wells, Bowen

Stradling Thomas, J.

Wheeler, John

Tapsell, Peter

Whitney, Raymond

Taylor, Robert (Croydon NW)

Wickenden, Keith

Taylor, Teddy (S'end E)

Wilkinson, John

Tebbit, Norman

Winterton, Nicholas

Thomas, Rt Hon Peter

Wolfson, Mark

Thompson, Donald

Young, Sir George (Acton)

Thorne, Neil (Ilford South)

Townend, John (Bridlington)

Tellers for the Noes:

Townsend, Cyril D, (B'heath)

Mr. David Waddington and

Trippier, David

Lord James Douglas-Hamilton.

Question accordingly negatived.
The Second Deputy Chairman: Is a Division required on amendment No. 12?
Mr. Rooker: Yes.
Amendment proposed: No. 12, in page 2, line 5, leave out "£5·15" and insert "£4·70".—[Mr. Rooker.]
Question put, That the amendment be made:—
The Committee proceeded to a Division.
The Second Deputy Chairman: Order. As a result of a report that I have received, I propose to call the Division off and to put the Question again, the Tellers to be put in.
Question put, That the amendment be made:—
The Committee divided: Ayes 22, Noes 211.

Division No. 24]

[2.08 am

AYES

Bennett, Andrew(St'kp't N)

Haynes, Frank

Buchan, Norman

Johnston, Russell (Inverness)

Campbell-Savours, Dale

Leighton, Ronald

Cocks, Rt Hon M. (B'stol S)

McCartney, Hugh

Crowther, J. S.

Race, Reg

Cryer, Bob

Richardson, Jo

Dobson, Frank

Rooker, J. W.

Dormand, Jack

Welsh, Michael

Dubs, Alfred

Winnick, David

English, Michael

Ewing, Harry

Tellers for the Ayes:

Field, Frank

Mr. Terry Davis and

Freeson, Rt Hon Reginald

Mr. Walter Harrison.

NOES

Alexander, Richard.

Braine, Sir Bernard

Ancram, Michael

Bright, Graham

Atkinson, David (B'm'th,E)

Brinton, Tim

Baker, Kenneth(St.M'bone)

' Brittan, Leon

Baker, Nicholas (N Dorset)

Brooke, Hon Peter

Banks, Robert

Brotherton, Michael

Bendall, Vivian

Brown, M.(Brigg and Scun)

Benyon, Thomas (A'don)

Browne, John (Winchester)

Benyon, W. (Buckingham)

Bruce-Gardyne, John

Berry, Hon Anthony

Bryan, Sir Paul

Best, Keith

Buck, Antony

Bevan, David Gilroy

Budgen, Nick

Biggs-Davison, John

Butcher, John

Blackburn, John

Butler, Hon Adam

Blaker, Peter

Cadbury, Jocelyn

Boscawen, Hon Robert

Carlisle, Kenneth (Lincoln)

Bottomley, Peter (W'wich W)

Chalker, Mrs Lynda

Bowden, Andrew

Channon, Rt. Hon. Paul

1203

Churchill, W. S.

Mawhinney, Dr Brian

Clark, Hon A. (Plym'th, S'n)

Maxwell-Hyslop, Robin

Clarke, Kenneth (Rushcliffe)

Mayhew, Patrick

Colvin, Michael

Mellor, David

Cope, John

Meyer, Sir Anthony

Corrie, John

Miller, Hal (B'grove)

Costain, Sir Albert

Mills, Iain (Meriden)

Cranborne, Viscount

Mills, Peter (West Devon)

Crouch, David

Miscampbell, Norman

Dean, Paul (North Somerset)

Mitchell, David (Basingstoke)

Dickens, Geoffrey

Moate, Roger

Dorrell, Stephen

Montgomery, Fergus

Douglas-Hamilton, Lord J.

Moore, John

Dunn, Robert (Dartford)

Morrison, Hon C. (Devizes)

Durant, Tony

Morrison, Hon P. (Chester)

Dykes, Hugh

Myles, David

Eggar, Tim

Neale, Gerrard

Elliott, Sir William

Needham, Richard

Emery, Peter

Nelson, Anthony

Eyre, Reginald

Neubert, Michael

Fairbairn, Nicholas

Normanton, Tom

Faith, Mrs Sheila

Onslow, Cranley

Farr, John

Osborn, John

Fell, Anthony

Page, Rt Hon Sir G. (Crosby)

Fenner, Mrs Peggy

Page, Richard (SW Herts)

Forman, Nigel

Parkinson, Cecil

Fraser, Peter (South Angus)

Parris, Matthew

Gardiner, George (Reigate)

Patten, Christopher (Bath)

Gardner, Edward (S Fylde)

Pattie, Geoffrey

Garel-Jones, Tristan

Pawsey, James

Goodhart, Philip

Pink, R. Bonner

Gorst, John

Pollock, Alexander

Grant, Anthony (Harrow C)

Price, Sir David (Eastleigh)

Greenway, Harry

Proctor, K. Harvey

Grieve, Percy

Raison, Timothy

Griffiths, B.(B'y St. Edm'ds)

Rathbone, Tim

Griffiths, Peter Portsm'th N)

Rees, Peter (Dover and Deal)

Grylls, Michael

Renton, Tim

Gummer, John Selwyn

Rhys Williams, Sir Brandon

Hamilton, Hon A.

Ridley, Hon Nicholas

Hampson, Dr Keith

Ridsdale, Julian

Hannam, John

Sainsbury, Hon Timothy

Haselhurst, Alan

St. John-Stevas, Rt Hon N.

Hastings, Stephen

Shaw, Michael (Scarborough)

Havers, Rt Hon Sir Michael

Shelton, William (Streatham)

Hawkins, Paul

Shepherd, Richard

Hawksley, Warren

Shersby, Michael

Heddle, John

Silvester, Fred

Henderson, Barry

Sims, Roger

Hicks, Robert

Smith, Dudley

Hooson, Tom

Speller, Tony

Howell, Ralph (N Norfolk)

Spence, John

Hunt, David (Wirral)

Spicer, Jim (West Dorset)

Hunt, John (Ravensbourne)

Sproat, Ian

Hurd, Hon Douglas

Squire, Robin

Jenkin, Rt Hon Patrick

Stainton, Keith

Johnson Smith, Geoffrey

Stanbrook, Ivor

Jopling, Rt Hon Michael

Steen, Anthony

Kershaw, Anthony

Stevens, Martin

Knight, Mrs Jill

Stewart, Ian (Hitchin)

Knox, David

Stokes, John

Lamont, Norman

Stradling Thomas, J.

Lang, Ian

Tapsell, Peter

Latham, Michael

Taylor, Robert (Croydon NW)

Le Marchant, Spencer

Taylor, Teddy (S'end E)

Lennox-Boyd, Hon Mark

Tebbit, Norman

Lester Jim (Beeston)

Thomas, Rt Hon Peter

Lloyd, Peter (Fareham)

Thompson, Donald

Loveridge, John

Thorne, Neil (Ilford South)

Luce, Richard

Townend, John (Bridlington)

Lyell, Nicholas

Townsend, Cyril D, (B'heath)

McCrindle, Robert

Trotter, Neville

Macfarlane, Neil

van Straubenzee, W. R.

MacGregor, John

Vaughan, Dr Gerard

MacKay, John (Argyll)

Viggers, Peter

McNair-Wilson, P. (New F'st)

Waddington, David

Madel, David

Wakeham, John

Marland, Paul

Waldegrave, Hon William

Mates, Michael

Walker, B. (Perth )

Maude, Rt Hon Angus

Wall, Patrick

1204

Waller, Gary

Wilkinson, John

Ward, John

Winterton, Nicholas

Warren, Kenneth

Wolfson, Mark

Watson, John

Young, Sir George (Acton)

Wells, John (Maidstone)

Wells, Bowen

Tellers for the Noes:

Wheeler, John

Mr. Carol Mather and

Whitney, Raymond

Mr. Tony Newton.

Wickenden, Keith

Question accordingly negatived.
Mr. Rooker: I beg to move amendment No. 13, in page 2, line 7, leave out '£3·30' and insert '£2·90'.
We take the same view on voluntary contributions as we took on previous amendments, and I do not need to go into detail on the amendment. Basically, we have put a 20 per cent. increase on what is being paid.
We should like up-to-date information on how many voluntary contributions are paid. I once paid such contributions, but I was never caught in the trap of changing rates. Students sometimes pay contributions in a lump sum in order to gain a pension accrual for the future. What rate will they pay? Will it be the rate that is current when they make their back payment or will they have to pay the rate that was in force during the period for which they are buying stamps?
Mr. Race: My hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) has raised an important matter. Students are often asked to catch up with contributions that they have not made because of their studies. Those in post graduate education in universities and colleges have to make up their contribution record in a lump sum.
At what rate will students have to make the lump sum payment? Will it be the rate at which contributions are levied when they make their payment, or will it be the rate that applied during the period when they should have been making contributions?
We are talking about substantial increases in such lump sums. The money will not be taken as weekly deductions from a wage packet. The amendment raises different problems from those that have arisen in our discussion of sometimes relatively small weekly amounts paid in increased national insurance employee contributions. The Government's proposals may have a detrimental effect on students and others.
Mr. Campbell-Savours: If students are unable to make contributions, when they take up work the DHSS informs them what contributions they must make in order to establish a full entitlement. I was abroad for some years in the 1960s and on my return I made arrangements with the Department to make up payments in line with the current provisions.
I do not understand why it is necessary to increase these contributions, because the payment would be made anyway, through supplementary benefits, if those concerned had insufficient pension entitlement at the age of 65. If the Bill goes through in its present form, the Government will have introduced a disincentive to people to make contributions.
I should have thought that it would be the Government's objective to ensure that people made as many contributions as possible, thereby relieving the State of the possibility that later in a person's life it might be required to pay supplementary benefits rather than pensions.
Mr. Andrew F. Bennett: I ask the Under-Secretary of State to give us a little more information. I presume that the hon. Lady will suggest that the reason for this increase and the figures proposed is that they are in line with and on the same scale as all the other figures. But there is a particular problem here.
We are looking at two groups of people. First, there are those who are out of the system at a particular time—now—and who want to make a contribution. Secondly, there are those who did not make a contribution in the past. In the case of those who for some reason do not make a contribution now, it is surely logical that they should be charged at whatever is the going rate. But those who, for example, did not make payments last year or some time in the year before should, if asked to make back payments, pay at the rate that applied at that time.
I hope that the hon. Lady can assure me that if a person is making a back payment he will pay at the rate that was current at the time his contribution was missing rather than at the rate pertaining now. It would be unfair to raise the repayment rate now, because of extra levels of unemployment, for those making back payments.
Mr. Race: As I recall it, people who have a contribution record which is deficient and which would affect their level of pensions or benefits in the future have a period of seven years in which to catch up on their contribution record. After that time, they are deemed not to want to make that contribution. Therefore, the point that my hon. Friend is making is a genuine one, because we could be talking about national insurance rates that were payable seven years ago and not last year alone.
Mr. Bennett: Some people are not able to make their back payments because of financial difficulty. Will the Under-Secretary of State tell us whether, under the uprated levels, their difficulties become greater or whether they are able to pay at the existing rates?
I come across a surprising number of people who opt out of the system. In several instances they are at very low income levels. It is marginal to them whether they are barter off trying to make up the payments. This sort of increase may well tip some of these people into not making up their contributions. The hon. Lady said earlier that it was important to encourage people to make contributions. Does she not agree that this son of increase is likely to discourage people from doing so?
I give the example of an artist who is not very successful at selling his pictures and may have virtually no income from that source for some period. Many people in that situation do occasional lecturing, which is their only source of income. They face problems in making up their contributions. This sort of increase may discourage them from trying to do so and cause them difficulties in the future.
Mrs. Chalker: This amendment is consequential upon amendment No. 11, which the Committee has declined to accept, but I will answer the questions asked upon it from the rather depleted Opposition Benches.
About 100,000 people pay class 3 contributions. I have been asked about the going rate for these voluntary contributions. The payment rate that is applicable is that for the period of the gap in the contributions record. Therefore, in the case of a student who can pay not up to seven years back but up to six years back the rate is the rate applicable where the gap in his contributions was.
1206
Another person able to pay up to two years back would similarly pay the applicable rate for the gap in the contributions record.
The reason for raising the class 3 rate from its present level of £2.40 to £3.30 is exactly the same as the reason for the increases in the other rates. The contribution paid leads to entitlement to retirement pension. The class 3 rate contribution paid by voluntary contributors is at present l0p less than the class 2 rate. The class 3 rate proposed in the Bill maintains that relationship. The amendment would alter that arrangement and not be acceptable to the Government.
Question put, That the amendment be made:—
The Committee divided: Ayes 20, Noes 204.

Division No.25]

[2.30 am

AYES

Bennett, Andrew(St'kp't N)

Harrison, Rt Hon Walter

Buchan, Norman

Haynes, Frank

Campbell-Savours, Dale

Johnston, Russell (Inverness)

Cocks, Rt Hon M. (B'stol S)

Race, Reg

Cryer, Bob

Richardson, Jo

Davis, T. (B'ham. Stechf'd)

Rooker, J. W.

Dobson, Frank

Welsh, Michael

Dormand, Jack

Winnick, David

English, Michael

Ewing, Harry

Tellers for the Ayes:

Field, Frank

Mr. Hugh McCartney and

Freeson, Rt Hon Reginald

Mr. Ron Leighton.

NOES

Alexander, Richard

Dunn, Robert (Dartford)

Ancram, Michael

Durant, Tony

Atkinson, David (B'm'th,E)

Eggar, Tim

Baker, Kenneth(St.M'bone)

Elliott, Sir William

Baker, Nicholas (N Dorset)

Emery, Peter

Banks, Robert

Eyre, Reginald

Bendall, Vivian

Fairbairn, Nicholas

Benyon, Thomas (A'don)

Faith, Mrs Sheila

Benyon, W. (Buckingham)

Farr, John

Berry, Hon Anthony

Fell, Anthony

Best, Keith

Fenner, Mrs Peggy

Bevan, David Gilroy

Forman, Nigel

Biggs-Davison, John

Fraser, Peter (South Angus)

Blackburn, John

Gardner, Edward (S Fylde)

Blaker, Peter

Garel-Jones, Tristan

Bottomley, Peter (W'wich W)

Goodhart, Philip

Bowden, Andrew

Gorst, John

Braine, Sir Bernard

Grant, Anthony (Harrow C)

Bright, Graham

Greenway, Harry

Brinton, Tim

Grieve, Percy

Brittan, Leon

Griffiths, E.(B'y St. Edm'ds)

Brooke, Hon Peter

Griffiths, Peter Portsm'th N)

Brotherton, Michael

Grylls, Michael

Brown, M.(Brigg and Scun)

Gummer, John Selwyn

Browne, John (Winchester)

Hamilton, Hon A.

Bruce-Gardyne, John

Hampson, Dr Keith

Bryan, Sir Paul

Hannam, John

Buck, Antony

Haselhurst, Alan

Budgen, Nick

Hastings, Stephen

Butcher, John

Havers, Rt Hon Sir Michael

Cadbury, Jocelyn

Hawkins, Paul

Carlisle, Kenneth (Lincoln)

Hawksley, Warren

Chalker, Mrs. Lynda

Heddle, John

Channon, Rt. Hon. Paul

Henderson,, Barry

Churchill, W. S.

Hooson, Tom

Clark, Hon A. (Plym'th, S'n)

Howell, Ralph (N Norfolk)

Clarke, Kenneth (Rushcliffe)

Hunt, David (Wirral)

Colvin, Michael

Hunt, John (Ravensbourne)

Cope, John

Jenkin, Rt Hon Patrick

Corrie, John

Johnson Smith, Geoffrey

Costain, Sir Albert

Jopling, Rt Hon Michael

Cranborne, Viscount

Kershaw, Anthony

Crouch, David

Kitson, Sir Timothy

Dean, Paul (North Somerset)

Knight, Mrs. Jill

Dickens, Geoffrey

Lamont, Norman

Dorrell, Stephen

Lang, Ian

1207

Latham, Michael

Ridsdale, Julian

Le Marchant, Spencer

Sainsbury, Hon Timothy

Lennox-Boyd, Hon Mark

St. John-Stevas, Rt Hon N.

Lester Jim (Beeston)

Shaw, Michael (Scarborough)

Lloyd, Peter (Fareham)

Shelton, William (Streatham)

Loveridge, John

Shepherd, Richard

Luce, Richard

Shersby, Michael

Lyell, Nicholas

Silvester, Fred

McCrindle, Robert

Sims, Roger

Macfarlane, Neil

Smith, Dudley

MacGregor, John

Speller, Tony

MacKay, John (Argyll)

Spence, John

McNair-Wilson, P. (New F'st)

Spicer, Jim (West Dorset)

McQuarrie, Albert

Sproat, Ian

Madel, David

Squire, Robin

Mates, Michael

Stainton, Keith

Mather, Carol

Stanbrook, Ivor

Maude, Rt Hon Angus

Steen, Anthony

Mawhinney, Dr Brian

Stevens, Martin

Maxwell-Hyslop, Robin

Stewart, Ian (Hitchin)

Mayhew, Patrick

Stokes, John

Mellor, David

Stradling Thomas, J.

Meyer, Sir Anthony

Tapsell, Peter

Miller, Hal (B'grove)

Taylor, Robert (Croydon NW)

Mills, Iain (Meriden)

Tebbit, Norman

Mills, Peter (West Devon)

Thomas, Rt Hon Peter

Miscampbell, Norman

Thompson, Donald

Mitchell, David (Basingstoke)

Thorne, Neil (Ilford South)

Moate, Roger

Townend, John (Bridlington)

Montgomery, Fergus

Townsend, Cyril D, (B'heath)

Moore, John

Trippier, David

Morrison, Hon C. (Devizes)

Trotter, Neville

Morrison, Hon P. (Chester)

van Straubenzee, W. R.

Myles, David

Vaughan, Dr Gerard

Neale, Gerrard

Viggers, Peter

Needham, Richard

Waddington, David

Nelson, Anthony

Wakeham, John

Neubert, Michael

Waldegrave, Hon William

Newton, Tony

Walker, B. (Perth )

Normanton, Tom

Wall, Patrick

Onslow, Cranley

Waller, Gary

Osborn, John

Ward, John

Page, Rt Hon Sir G. (Crosby)

Warren, Kenneth

Page, Richard (SW Herts)

Watson, John

Parris, Matthew

Wells, John (Maidstone)

Patten, Christopher (Bath)

Wells, Bowen

Pattie, Geoffrey

Wheeler, John

Pawsey, James

Whitney, Raymond

Pink, R. Bonner

Wickenden, Keith

Pollock, Alexander

Wilkinson, John

Price, Sir David (Eastleigh)

Winterton, Nicholas

Proctor, K. Harvey

Wolfson, Mark

Raison, Timothy

Young, Sir George (Acton)

Rathbone, Tim

Rees, Peter (Dover and Deal)

Tellers for the Noes:

Renton, Tim

Lord James Douglas

Rhys Williams, Sir Brandon

Hamilton and

Ridley, Hon Nicholas

Mr. Robert Boscawen.

Question accordingly negatived.
Mr. Rooker: I beg to move amendment No. 14, in page 2, line 10, leave out paragraph (a).
The Second Deputy Chairman: With this we may take the following amendments:
No. 15, in page 2, line 14, leave out '£3,150' and insert '£3,200'.
No. 16, in page 2, line 15, leave out paragraph (c) and insert—
'(c) the words "and does not exceed £8,300" shall be omitted.'.
Mr. Rooker: Let me at the outset say that amendment No. 16 seems pretty meaningless. In our drafting, or in its transmission to the Table Office, there has been an omission. It is technically deficient.
Mr. Andrew F. Bennett: If my hon. Friend looks at subsection (7) he will see that it reads:
1208
"In sections 9(2) and 10(1) of the principal Act".
If one relates the amendment to that, it makes sense.
Mr. Rooker: The amendment did not make sense to me when I originally read it, and I have not been able to make sense of it in the past couple of hours. However, my hon. Friend is probably right. I am not throwing the amendment away, but I am not happy about the drafting, and I shall not be too upset if the Government criticise it.
The main thrust of the amendments is to ease the burden on the self-employed, which is no contradiction coming from the Labour Benches. As the Secretary of State is aware, there was considerable dispute with the Government when the proposal was introduced in 1975. Originally, the figure was 8 per cent., and there was a major row over getting it changed.
We do not see why the self-employed should be subjected to these imposts. Most of the amendments have related to the 1 per cent. increase. I suspect that the Government's answer to this point, and in relation to the figures that they have used for the earnings band in which the self-employed pay their earnings-related contribution, will be more or less the same as their answers on the previous three amendments.
Did the Government take into account the possible consequences of the implementation of the Green Paper on sickness benefits? The self-employed are aggrieved about the proposal, as the Minister is well aware. We do not have a legislative proposal in front of us, but there will probably be a further change in the percentage rate for the self-employed, possibly in the same financial year as the legislation on sickness benefit, which the Government intend to put through this Session, according to the Queen's Speech. Will there be two changes in the rate for the self-employed in one year?
I can imagine that most big employers will be able to cope with the rate changes just as they can cope with the various tax changes, but I suspect that there will be a considerable outcry from the self-employed if they are asked to accept two changes in the rates, especially when the reason for the second change could have been foreseen when the first change was put through the House—that is, tonight.
2.45 am
Mr. Cryer: The amendment would delete the 0·75 per cent. increase in contributions on earnings and would raise the lower limit to above £3,200. I take it that amendment No. 16 would raise the upper limit, so that the overall effect of the amendments would be to improve the position by relating contributions by the self-employed to a lower level of earnings. I remember that when just over a million people were unemployed under the Labour Government the National Federation of Self Employed and Small Businesses Ltd. claimed that if only a few modifications were made to the Employment Protection Act its members could each take on one additional employee. Since there were around a million self-employed sole proprietors, it believed that it would solve the unemployment problem. That has clearly not happened. I never thought that it was realistic. A very large number of sole proprietors are literally just that. They are employed not in manufacturing industry but in shops, for example. Many of them could not sustain an additional employee.
The self-employed—the small businesses—are facing difficulties. This proposal will create even more difficulty

1209
for them. The burden will clearly increase. If the Government are serious in their claim that small firms—sole proprietors as well as incorporated enterprises—will provide jobs, they must accept that this provision will be more a disincentive than an incentive for that to happen.
These firms are facing the burden of high interest rates. The wife of a self-employed electrician contacted me last week to explain that she is having to pay more for the stock that her husband has to keep if he is to undertake the wide variety of jobs he is called upon to perform. Her husband is experiencing difficulty because he has a big overdraft. The high level of interest rates means that he faces a heavy outlay in that direction just to keep the firm ticking over.
The electrician in question is a Labour supporter, but I do not argue the case from a sectarian point of view. I suspect that the bulk of self-employed people voted Conservative at the last election. I doubt that they would do so now, but their inclination then was to favour the Conservative Party because it said that their enterprise would be rewarded. The Labour Government produced restrictive legislation on the employment of individuals, which they did not like. I did not agree with them. Clearly, they will not be impressed, to say the least, by these additional contributions.
I well, recall when the previous Labour Government increased contributions for the self-employed. The increase was first set at 8 per cent. and then changed to 5 per cent. That caused a considerable amount of controversy. Members of the National Federation of Self Employed and Small Businesses Ltd had a certain affinity with the view that the Labour Government were doing it because they were not sympathetic or understanding. I am sure that they will say exactly the same about the present Government—namely, that they are not a sympathetic or understanding Government because they are increasing the national insurance contributions.
Mr. Campbell-Savours: My hon. Friend said he thought that the small business lobby had pressured the Government. The Conservative Party 1978 guide refers to the pressure exerted through the Conservative Party by the small business organisations on the Labour Government. In the guide, the Conservative Party claimed the credit for the reduction from 8 per cent. to 5 per cent. It is there in black and white. If I am called, I shall quote from it.
Mr. Cryer: The reduction from 8 per cent. to 5 per cent. was claimed as a victory for the federation through its lobbying of the Government. Everyone wanted to get on to that bandwagon. The Labour Government of the day made the reduction as a demonstration of their genuine intention to help small firms.
I mention the matter because I think that the Secretary of State would agree that his Green Paper "Income During Initial Sickness: A New Strategy" has not met with warm enthusiasm from the federation. It has produced a critical document about his proposals. Paragraph 30 states:
"It is the Government's intention that employers as a whole should be; compensated for meeting these extra costs and that such compensation, to the extent that it did not take the form of direct reimbursement to employers … should be through a once-for-all reduction in their contribution liability. This reduction, it is estimated, would be of the order of one-half of a percentage point."
The Government propose that employers should have the burden of administering sick pay during the first eight
1210
weeks. They propose that that additional burden should be compensated by a reduction in the employer's national insurance contribution of one-half of a percentage point.
The self-employed could legitimately argue that the sickness scheme, which they do not like, is being imposed upon them and that they are being offered some very modest inducement to carry it out, after having had to face the burden of an increase in their own national insurance contributions. It is a case of taking with one hand and giving back a proportion with the other. That is the view that they will take. I should be grateful to hear the Secretary of State's comments about the relationship of those increases to the Government's proposals for a reduction in the employer's contribution under the sickness scheme.
I am opposed to the sickness scheme. I do not want to delve into it in any detail, but I am opposed to it. It is a wrong idea. Small firms will suffer, as will their employees, under the scheme. There is an indirect link, because my argument about taking with one hand and giving back a proportion with the other will be raised. I should like to hear the Secretary of State's comments on that position.
The Labour Government gave rather more assistance to small firms than has been generally recognised. We included among those small firms the self-employed and the sole proprietors, who often employ two, three or four people, although they call themselves self-employed. There are the plumbers, the electricians, the decorators, the shopkeepers, the restaurant owners and so on. We have from time to time instituted provisions for giving them assistance by means of the small firms; advisory service, the small firms counselling service and so on, which were instituted by the Labour Government on a nationwide basis. Those services proved to be of great help. The take-up has been high. The test of their helpfulness has been the reaction of the small firms themselves, not our own assessment.
It is reasonable to suggest that the self-employed will find the charges a burden which will inhibit their efforts to develop their businesses and to create jobs. We know that in today's economic climate it is the small firms that are being clobbered most of all. They are facing Slighter interest charges; they are facing difficulties with rate burdens. Local authorities, because of Government action, are desperately trying to maintain services and in some instances have had to raise a supplementary rate levy. That again is a difficulty. Now, the small firms are being faced with this additional charge on their national insurance contributions.
The big firms are also experiencing difficulties due to the Government's policy of high interest rates, the high exchange rate of the pound and cuts in public expenditure, so that they in turn are having to cut back on the smaller firms which supply them with components or services. Where a local authority cuts back on public expenditure, it is sometimes the small firms, the self-employed, who are finding that the contracts are being brought to an end.
The Government have a moratorium on new council house building contracts, new public sector building contracts. In England and Wales, 92 per cent. of council houses are built not by direct works departments but by private enterprise contractors. I have no doubt that there will be some self-employed or sole proprietor firms among

1211
that number. In Scotland, the figure is even higher—98 per cent. of the council houses are built by private enterprise firms.
The Government are inflicting a burden on the very people who, I imagine, in many instances supported the Conservative Party at the last general election. They have imposed this additional insurance charge, together with the high interest rates. There are the diminution in business and all the problems which the present crisis and recession are presenting to everybody. There is also the new sickness scheme. We know that it has not yet been instituted, but there is a Green Paper and the matter is causing uncertainty. It is causing a lack of confidence in the small business sector, among both employers and employees. I hope that it will never come into existence. Nevertheless, it is another matter of concern, and the insurance increase will be a yet further matter of concern.
What we have suggested is a fairer application of the burden. It can be reasonably stated to be a better and fairer arrangement than the Secretary of State's. Therefore, I hope that it will have the support of my hon. Friends. I also hope that it may have support from the Conservative Members who are here tonight to vote in great numbers for increased insurance contributions for the self-employed.
3 am
I have been to a couple of meetings of the National Federation of Self Employed and Small Businesses Ltd., one a big one at the Central Hall in Westminster, where I suppose there were about 2,000 people present, and the other the annual meeting at Blackpool, where I suppose there were 200 or 300 present. I was then a Labour Minister, and I suppose that the welcome that they gave me was not wildly enthusiastic. In fact, it was a bit wild, but not enthusiastic. The situation has probably changed. There are not many Labour supporters amongst their numbers—but I think that the number is growing—and I can therefore say that we are not doing this from a partisan point of view but are putting forward a case that a fairer position can be achieved, and we have tried to achieve a fairer position in their national insurance contributions.
There is a certain amount of irony and amusement in the Conservatives going into the Lobby on the principle of an increase in contributions by the self-employed, the sector which, during the Labour Government's period of office, they said was inhibited by burdens and charges and that if only they could get into office the energies of all those people would be released. Well, all their energies are being released — in the bankruptcy courts, in evergrowing numbers, I regret to say. It is a sad business that so many people should be in the dole queue and so many should be facing the trauma of bankruptcy, because it must be an enormous problem and sense of failure to get into that situation, even though it may not be the fault of the self-employed. Therefore, I urge even some of the Conservative Members here tonight to consider either abstaining or voting for these improvements.
Mr. Rooker: One reason for our complaint about the Bill being bounced through the House is that no one, so far as I am aware, has had adequate time for consultation. Perhaps my hon. Friend will invite Tory Members, or the Minister, to say what consultations the Government have had with the self-employed over this measure.
Mr. Cryer: I am grateful to my hon. Friend for that intervention, because I think that the federation, now that it has got over its teething problems, provides information for its members. It has produced a document on "Income During Initial Sickness: A New Strategy", of which it has kindly sent me a copy. I disagree with many of the points made by the federation, but it is a comprehensive document that represents its point of view. I should have thought that it would have been reasonable for the Secretary of State to have delayed the Bill a little so that the federation, which is specifically affected, could have got its comments together.
The Secretary of State does not know, but the federation might have been glowing in its praise of the right hon. Gentleman. It might have said that it wanted public expenditure to be curtailed—I imagine that that is the federation's view, although I do not know—and that this was the best way of doing it, that it was willing to make this contribution and that it was happy to put forward that point of view and support the Government. On the other hand, the federation might well have been critical of the Government and said that there were alternative means of raising this amount of revenue. I shall be interested to know the total sum that the Government envisage in a full year. I know that they cannot be completely accurate—because many of the people will be bankrupt by the end of a further full year of Conservative Government—but some sort of estimate would be of use to the Committee, and we look forward to that.
My hon. Friend is right in saying that in getting legislation through the House it is important that we provide people with the opportunity to give us their comments, particularly for a Committee stage. I well recall saying to members of the National Federation of Self Employed and Small Businesses, Ltd., when they were critical of legislation—I accept that they were critical of some of our legislation—that Parliament represented a democratic process. We must recognise that some of the members of the federation were not too enamoured of democratic endeavour. They said "You talk too much. You should get it done and get it out of the way." I explained to them that in the parliamentary process one of the possibilities was that in Committee on a Bill people and organisations could put forward ideas and hon. Members could table amendments for debate. In this case there has not been time to give full effect to that process. We have tabled amendments. It would have been proper to give representatives of the self-employed a breathing space in which to put forward their views. The National Widows' Association might well have been asked for its views.
Mr. Campbell-Savours: My hon. Friend referred to the number of bankruptcies. He may be interested to know that at a meeting of the parliamentary retail group yesterday the Retail Consortium produced statistics to show that 32,500 businesses have de-registered for VAT in the past 12 months. That is a horrifying statistic. Conservative Members challenged the figures. The director-general of the consortium confirmed that the figures were correct.
Mr. Cryer: That bears out my point that these increases in national insurance contributions will be hard-felt. If people are de-registering for VAT, it indicates a diminution in their turnover. We know that the cash flow of many small businesses is under pressure. In an earlier

1213
speech I referred to a constituent of mine who told me that her husband—an electrician—had had to increase his stock and pay higher interest charges to maintain that stock, and that she had had to raise money on property and had experienced difficulty in that regard.
The Government have floated the idea of enterprise zones on the basis of assisting small firms, including self-employed persons, to take premises in enterprise zones and to develop job opportunities. I do not think that enterprise zones will be of much advantage. I have always taken the view that small firms do not want to be seen to be inferior and that their standards of employment should be as good as those of large firms.
There is a lack of consistency in the Government establishing, on the one hand, enterprise zones to encourage firms and, on the other, increasing the national insurance contributions of small firms. There may be times when the national insurance contributions can be increased They were increased by the Labour Government, but at that time the number of bankruptcies was declining and the number of registrations of companies was increasing, certainly in the last two or three years of Labour Government. No account of size is taken in company registration, but the fact that they were new registrations is indicative of the fact that they were small firms. That indicated that there was a growth in the number of small firms.
It is inconsistent for the Government to impose this levy at a time when everybody knows and understands that manufacturing and service industries are going through a bad time. Through no fault of their own, they are losing profits and losing contracts. Indeed, they are losing their very existence. More and more firms are going to the bankruptcy courts.
The Secretary of State may argue that the Labour Government increased insurance contributions, but the climate then was different. Industry recognises that. Many industrialists, including those involved in small firms, have told me that they made a mistake when they voted Conservative. I recently visited one industrialist who had received a begging letter from his local Conservative association. He threw it on to the desk and said that it would not get a penny from him. He said that he had made a mistake at the general election and that he did not intend to repeat it.
The person who borrowed £80,000 at a much lower rate of interest under the Labour Government—because he wanted part of that sum for pollution control equipment—was deeply disillusioned with the Conservative Party. He did not make any claim, and neither do I-—
The Second Deputy Chairman: Order. The hon. Gentleman is stressing that point unnecessarily. He has said the same thing two or three times.
Mr. Cryer: I am talking about a specific firm, which I have not mentioned before, and—
The Second Deputy Chairman: Order. The hon. Gentleman cannot continue to mention individual firms all right. If he does, the debate could go on indefinitely. The hon. Gentleman can instance certain cases, but so far he has repealed several things.
Mr. Cryer: I am summing up, Mr. Crawshaw, and I am bound to repeat some of the items that I have mentioned.
Mr. Michael Welsh: Of all the letters that you have had—I have had many—have you had any that support the increase?
The Second Deputy Chairman: Order. "You" refers to the Chair. I have not had any letters.
Mr. Cryer: I have received several letters that have been very critical of the Government. They have covered a wide range of issues, such as energy prices. Indeed, those prices have caused grave difficulty to firms in my constituency. They have also covered postal charges. However, I have not received any letters on this subject, because, unfortunately, the self-employed have not had time to write. That is a serious criticism of the way in which this legislation has been introduced.
I hope that I have not strained your patience too much, Mr. Crawshaw. You have been very indulgent and patient. The measure represents an additional burden. Given the economic situation, the self-employed cannot bear it easily. Like the rest of the legislation the measure will prove regressive. It will serve to reduce the number of jobs and job opportunities.
Mr. Winnick: On Second Reading, the Secretary of State admitted:
"Some anxiety has been expressed about the impact of the Bill on the self-employed. No doubt this is something that we shall wish to explore in detail in Committee"—[Official Report, 8 December 1980; Vol. 995, c. 955.]
If we did not have to rush through the Bill in one night, we should have more opportunity to explore the impact of increases on the self-employed. My hon. Friend the Member for Keighley (Mr. Cryer) was right. The Secretary of State will correct me if I am wrong, but it appears that the self-employed have not been consulted. We can understand the reaction of the self-employed to these increases.
3.15 am
I have been glancing at the Conservative "Campaign Guide 1977". The Conservative Party in Opposition was very critical of the increases introduced by the Labour Government. It refers to the increases starting in April 1977 and describes them as a form of disguised tax. Under the heading
"National Insurance and the Self-employed"
it states:
"The Party voted against the measures due to be introduced in April 1977."
Clearly, in those days the Conservative Party's attitude was very different from what it is today. The increases were a disguised tax; they were terrible, shocking. Apparently the Labour Government were betraying the self-employed.
There does not seem to be any wish by hon. Members on the Government Benches to contribute to the debate. Conservative Members are here tonight as Lobby fodder. At least, we can ensure that they are present throughout the night.
Apart from the election manifesto, I have taken the opportunity—
Mr. Field: Before my hon. Friend leaves that point, will he make sure that we have all grasped what he was putting? Was the point that in 1977 the Conservative Opposition went into the Lobby to vote against a 5 per cent. rate and that now the Conservative Government are proposing a 5·75 per cent. rate?
Mr. Winnick: Yes, that is correct. My hon. Friend has illustrated the point very well. When the insurance contributions were proposed to be increased, the Conservative Opposition voted against them. If I am wrong, the Secretary of State will no doubt wish to intervene. I assume that he has no wish to deny that that was the position.
Mr. Field: Read it again.
Mr. Winnick: I shall not read it again. In the Conservative Party's manifesto there is a chapter headed "Small businesses". The Conservatives promised to do certain things. They said:
"The creation of new jobs depends to a great extent on the success of smaller businesses."
That is true to a certain extent. The point is that small businesses have understandably been feeling the brunt of the recession. A number have gone into liquidation. Many self-employed people have found the going increasingly difficult in the past 18 months. Recession, large-scale unemployment and severe cuts in public expenditure are bound to have an effect on the self-employed.
It is not surprising that many self-employed people, who were promised a new deal by the Conservative Party in Opposition, feel very bitter. They are getting not a new deal but a raw deal. Many of the self-employed who voted Conservative are not likely to forget it or to do so again.
When there is so much pressure on the self-employed because of the economic situation, it is wrong to add an extra burden. On Second Reading the Secretary of State said that he recognised some of the anxieties. I hope that he will explore those anxieties when he replies to the debate.
This important aspect of the Bill cannot be taken on the nod. It is often said that people are cynical about politics. It is not surprising when what is promised by the party in Opposition becomes the opposite when that party forms the Government of the day.
Conservative Members should think seriously about and ponder upon the attitude that they have adopted towards small businesses and the self-employed. Not so long ago, at the general election and previously, they made promises that have come to naught. Unfortunately, there is no opposition to this measure from Conservative Members, even though it will increase the difficulties of the self-employed. For example, a number of people in my constituency who have been affected by the cuts in housing—small builders and the rest—will not be very cheerful when they discover that, on top of all the other problems they face, they will face increased national insurance contributions.
I therefore hope that the amendment will be seriously considered by the Government and that it will not be dismissed out of hand, because I believe that there is a great deal of merit in it.
Mr. Andrew F. Bennett: I shall not follow my hon. Friends the Members for Birmingham, Perry Barr (Mr. Rooker), for Keighley (Mr. Cryer) and for Walsall, North (Mr. Winnick) in their advocacy of amendment No. 14, because they have, done a perfectly adequate job. Little more needs to be said.
I should like to devote a few minutes to amendments Nos. 15 and 16. I assure my hon. Friend the Member for Perry Barr that we got the wording of amendment No. 16 right, otherwise it would not have been selected. The
1216
amendment goes into the whole question of whether or not there should be an upper limit. We made it absolutely clear at the beginning that as we would have the opportunity, in the clause stand part debate, to go into the whole principle of the upper limit it would be unfair to press that amendment at this stage.
Amendment No. 15 would give some relief to some of the firms at the margin. It is the sort of amendment that the Secretary of State, at this time in the morning after a long sitting, ought to be prepared to concede in order to make some progress. That would be much welcomed by the self-employed. I suspect that the Secretary of State will not be able to make that sort of concession, because he will be worried about the progress of the Bill and the fact that there may have to be a Report stage, which can be avoided if no amendments are passed.
It would be a tragedy if, because the Government are so determined to chase the Bill through with such speed, he is not even prepared to consider a small amendment such as No. 15, which would do a lot to ease some of the problems of the self-employed.
Mr. Campbell-Savours: I shall be brief. We have had a remarkable debate. Conservative Members have been silenced in a discussion on the self-employed, and Labour Members have been rising to defend the interests of the self-employed. I am sure that many hundreds of thousands of people would be fascinated if only they could watch this debate on television, listen to it on radio or, indeed, read it in the national press tomorrow. Of course, they will not be given that opportunity.
One of my hon. Friends referred to the number of his constituents who send letters perhaps congratulating the Government on their policy as it affects the self-employed—inasmuch as it puts many of them into financial difficulties. It is significant to note that for years before I became a Member of the House Members of Parliament were frequently loaded down by mail from self-employed constituents who objected in principle—despite the efforts made by the Labour Government—to their existence and to the sort of measures that they were introducing, because they felt that such measures attacked their interests.
Many are now embarrassed, and it is only when one faces the self-employed across the business table that one finds that they are willing to pour out their hearts. I often ask them whether they will be willing to provide me with correspondence that I can use on the Floor of the House in debate. Few are willing to provide that correspondence. They cannot come to terms with the new reality that it is the Labour Party that stands for their interests and that the Conservative Party is letting them down.
When I talk about letting them down, it might be interesting to reflect on the comments of the present Secretary of State for Industry on 11 October 1977, in a pamphlet entitled "Small Business—Big Future". I am sure that Conservative Members will remember the publication of that document. It was produced by a committee chaired by the present Under-Secretary of State for Industry. In the foreword to that document, the Secretary of State for Industry outlined the need for a completely new economic climate. He said:
"Governments cannot create prosperity"—
which was followed by a further pearl of wisdom:
"but they can prevent other people from creating it".
That is what this Government are doing. They are preventing other people from creating prosperity. We all

1217
know that many hundreds of thousands of self-employed people art; being prevented from creating prosperity. The Under-Secretary went on to say:
"At present, that is what the Labour Government is doing"—
The cheek of it! He continued:
"Nothing less is needed for the revival of small businesses than a new economic climate. We believe that our approach and our proposals will create the conditions in which firms, both large and small, can thrive, prosper and expand."
Mr. Field: Read that again.
Mr. Campbell-Savours: Those were the comments of the Secretary of State for Industry. It is not surprising, and it is significant, that although the Conservative Benches have been fairly full the Secretary of State for Industry has not attended the debate. Perhaps he thought that some Labour Members would find it irresistible to bring forward quotations such as I have just made.
It is interesting that that same document—"The Campaign Guide Supplement" for the Conservative Party in 1978—said of the unemployed:
"In December l977, the Government announced new national insurance rates under which the self-employed, as from April 1978 will have their 8 per cent. earnings-related contribution cut to 5 per cent., and their flat rate contributions reduced from £2· 56 for week for men and £2·55 for women to £1·90 for both men and women."
The Conservative Party then claimed the credit. The document continued:
"These changes are a result of pressure exerted on the Government by the Conservative Party and the small firm sector".
We are entitled to know what that same small firm sector is saying.
Mr. Cryer: Does not my hon. Friend accept that the reason why the contribution went down from 8 per cent. to 5 per cent. was that the Labour Government recognised that in certain respects the benefits were being diminished, and we also wanted to end a burden that was the subject of criticism by the self-employed? Basically, we recognised that if the benefits diminished the contributions should also diminish. The Conservative Government are doing the reverse. They are reducing the benefits and increasing the contributions.
Mr. Campbell-Savours: That is something which one notes about all the legislation that the Government have introduced in this area. They seem to be increasing contributions all round while reducing benefits. I have just been informed that there is in the House one of the hon. Members responsible for producing the document, and I cannot believe that the hon. Member for Bath (Mr. Patten) will be able to resist the opportunity of intervening to comment on the words that he wrote two years ago.
3.30 am
It would be wrong for me to finish without commenting on the wider implications for small firms that will stem from any increase in any of their expenditure. All hon. Members know that small firms are going through a difficult period. I do not blame the Government alone. There is an international recession, and the Government's inability to follow a policy in line with the monetary targets that they set is only part of the problem.
Small firms are suffering other problems. Many have properties that are subject to old lease agreements. With the fall in rental values of property, many small companies arc paying rents that they would not be paying if their lease
1218
fell in tomorrow and had to be renegotiated. A number of charges fall on small businesses stemming from agreements made before the recession, and they should be taken into account by the Government when they introduce charges that affect small businesses.
A major problem affecting small firms is the collapse of demand. Hon. Members who were present at yesterday's meeting when the Retail Consortium outlined the problems in the economy will appreciate that it was clear from the document and the subsequent discussion that the downturn in demand is destroying much of our retail sector. Unless we preserve that sector, we shall damage considerably the possibility of its future expansion.
It may be easy to close a firm merely by putting a padlock on the door. But companies are far more difficult to reopen, and any firm that is forced out of business due to a policy introduced by the Government which effectively clobbers the cash flow of the company is in a position which could have been avoided if the Government had pursued another strategy.
In introducing any policy that may affect small businesses, the Government should reflect in depth on the possible damage that may be caused by that policy, because they may force out of business a company that will not be able to start up again and may have to lay off labour, which will fall as a burden on the Exchequer through unemployment and supplementary benefit payments.
After the memorable statement by the Chancellor of the Exchequer which led to a row that lasted all week and clearly shook the Prime Minister and the Government, I asked a question which remains unanswered. I asked how industry and business would be affected—
The Chairman (Mr. Bernard Weatherill): Order. I hope that it is a question that the Minister will be able to answer.
Mr. Campbell-Savours: The Secretary of State can answer it. He can tell us whether he feels that it is in order for his Department to introduce changes in national insurance contributions that have the effect of damping down demand in the economy, particularly when, the country is reeling in the current economic climate.
Mr. Dobson: My hon. Friend the Member for Workington (Mr. Campbell-Savours) has read out a number of statements issued by the paid propagandists of the Conservative and Unionist Party before the general election. They included a personal contribution setting out the hopes, aspirations and dreams of the man who is now Secretary of State for Industry.
In relation to small businesses, the Secretary of State for Industry was entitled to have his dreams. To anyone who thought about it, they may have seemed rather strange and to be based on some perverse Chicago economic doctrines. Nevertheless, the right hon. Gentleman was entitled to them, and to some extent we are criticising them with hindsight, because we know that what has happened to small businesses since the Government took office has been extremely bad.
But perhaps even more criticism can be levelled at the Secretary of State for Social Services, because he, apparently, does not realise even now that things are going badly. When he spoke in Cardiff on 19 April he said, according to the official press statement from Conservative Central Office:

1219
"The list of measures to help small businesses is a long and impressive one. Already there are signs that the climate is changing. Up and down the country there is beginning to be"—
The Chairman: Order. I am sorry to interrupt the hon. Gentleman, but he must relate his remarks to insurance and not to general matters.
Mr. Dobson: I was attempting to demonstrate that, despite the present economic circumstances of small businesses, the Government are proposing to introduce a further imposition on them by way of this increase in the national insurance contribution for the self-employed.
That springs partly from the apparent view of the Secretary of State for Social Services, as enunciated in his Cardiff speech, that things are actually improving for small businesses. He went on to say that new businesses were starting up and new ideas were being developed. That simply is not true. As my hon. Friend the Member for Keighley (Mr. Cryer) has pointed out, the number of bankruptcies is increasing while the number of new registrations is going down.
Mr. Buchan: My hon. Friend may be a little behind the times in suggesting that new ideas are not developing. The Prime Minister made a speech last night in Cardiff in which she said that a major plank in her programme was now constructive intervention—which sounds very much like a U-turn to me.
Mr. Dobson: I am sure that many people in small businesses in Wales would look forward to constructive intervention. I fear that a lot of people in Wales and in the rest of the country will find what the Government are proposing tonight to be destructive intervention, because it will destroy or reduce some of the funds at present available to small businesses and the self-employed, to whom the Government have attached so much importance in their economic policy.
The Secretary of State pointed out in his Cardiff speech that when larger firms invest it is often in new labour-saving machinery, so that increased output may not mean increased employment. He added, rather exaggerating his case:
"If small firms start up, then because they are labour-intensive more jobs are at once created."
That has always been a doubtful theory, though it applies in some cases. Nevertheless, on the right hon. Gentleman's own views, by these measures he will reduce the amount of money left in the pockets of small entrepreneurs, whom the Government intend to galvanise, to keep in their businesses and do whatever it is that small entrepreneurs are supposed to do with their money when putting it into their businesses.
It is not simply that the Secretary of State for Industry was indulging in wild dreams. Despite all the evidence, the Secretary of State for Social Services still believes that those dreams are coming to fruition.
I hope that the Committee will support the amendments, which will help in small measure to protect the small businesses on which the Government have set such store.
Mr. Patrick Jenkin: We had an enlightening, somewhat strange debate about the problems of the self-employed. Perhaps "crocodile tears" is not too unkind a
1220
phrase to use about what we have seen. I remember the rows when the Labour Government, immediately on coming to office in 1974, slapped up the class 4 rate for the self-employed from 5 per cent. to 8 per cent. It was only after two years' battling in the House and outside that they saw the light, and in 1978 the rate came back down to 5 per cent. Therefore, one treats the remarks of Labour Members about their sympathy with, and friendliness towards, the self-employed with several large handfuls of salt.
The hon. Member for Keighley (Mr. Cryer) was right when he said that overwhelmingly the self-employed supported parties other than Labour, because the Labour Party stands for principles and attitudes that are anathema to the vast majority of those who have the freedom and enterprise to run their own businesses. Therefore, I am not sure how seriously we need to treat the panegyrics from the Labour Party.
The self-employed are an important part of economy. My hon. Friend the Under-Secretary of State for Industry, the hon. Member for Basingstoke (Mr. Mitchell), has carried out a notable task in the past 18 months in a whole range of measures designed to help the self-employed and small businesses. He deserves every commendation for that.
Contrasted with the swingeing penalty that Labour imposed on the self-employed, the increase proposed in the Bill—from 5 per cent. to 5·75 per cent. in class 4—is small. It is wholly in line with the increases in contributions that are being sought from other classes of contributor.
On an earlier amendment I referred to the method by which the contributions of the self-employed are calculated, as spelt out in the Government Actuary's report in 1977. It is fair to maintain precisely the same relativity as has been sustained over the past three or four years, pending the outcome of the investigation that we launched in October. That is exactly what the clause achieves.
Mr. Winnick: Does not the right hon. Gentleman agree that at present—it has been so for the past year or so, despite the efforts of the Under-Secretary of State for Industry—the self-employed have been especially hard hit? There have been many bankruptcies. Surely it must be obvious to him that, however slight he might consider the increase to be, it will cause extra burdens to fall on those who are already under great pressure.
3.45 am
Mr. Jenkin: Businesses as a whole are going through a difficult period during a serious recession that is having an effect on the whole of the Western world. I do not detect any signs that the self-employed are undergoing any more serious difficulties than any other group. On the contrary, I have the impression that the general resilience and enterprise of the self-employed are keeping firms afloat and prosperous even in today's difficult circumstances.
Mr. Campbell-Savours Mr. Campbell-Savours rose—
Mr. Jenkin: I feel that at a time when the Government consider it appropriate to raise a substantial additional sum by way of national insurance contributions—the Bill was, of course, given a Second Reading—the self-employed will accept that they should pay a strictly proportional share on the same basis as that which has applied in the past.

1221
The hon. Member for Birmingham, Perry Barr (Mr. Rooker) asked about the statutory sick pay scheme. He asked whether there would be further changes when the statutory sick pay scheme took effect. In the clause and the amendments, we are talking about the national insurance contributions paid by a self-employed person in respect of himself and his family. There is nothing in the Green Taper, or in what I have called the mark 2 scheme, that has an effect on that. The self-employed person in business on his own account who falls sick will be entitled to sickness benefit from the national insurance fund as at present. There will, however, be changes in certain arrangements for the first eight weeks for employees, including those in small firms and employees of the self-employed. As the House of Commons will remember, in any speech on the Gracious Speech I outlined the substantial changes that the Government were prepared to make in response to the representations following the publication of the Green Paper. It was a consultative paper. We have listened to the representations that have been made, including many from my hon. Friends, and have come forward with a package of changes that have received a fairly warm welcome. There is no question of two changes as the hon. Member for Perry Barr suggested. We are talking of two different matters.
I am not sure that I can add much more to the debate. We have had long speeches from the hon. Members for Stockport, North (Mr. Bennett), for Keighley and for Workington (Mr. Campbell-Savours). However, apart from saying that a burden would be added to the self-employed, I am not sure that they said very much. It is a small additional burden that is being added that is directly proportional to that which others are being asked to accept.
Mr. Andrew F. Bennett Mr. Andrew F. Bennett rose—
Mr. Jenkin: No, I shall not give way. If I say that the reduction in the income to the national insurance fund would be about £6 million and the reduction in the contribution to the National Health Service would be about £3 million if the amendments were accepted, and the relationship that has existed for some years between the self-employed and other categories of contributor would be upset, I think that the Committee will recognise that it would not be wise to accept the amendments. I do not advise the Committee so to do.
Mr. Cryer: I shall make a brief contribution. The Secretary of State has been rather demeaning about our contributions and comments. I do not think that he is fair in answering the debate in such a brief way and saying that the loss of revenue would be about £9 million and, therefore, he cannot recommend the Committee to accept the amendments. It is such a small amount that we are justified in saying that the burden may be disproportionate having regard to the economic difficulties which small businesses, including the self-employed, are now undergoing.
The Secretary of State nude slighting remarks about the tone of our contributions. He said that the Labour Government did not help small businesses, so why should he take notice of our comments. I believe that the right hon. Gentleman used the phrase "crocodile tears". I remind him that we, the Labour Government, set up small firms information centres and the small firms counselling service nation-wide, involving the expertise of small businesses, including the self-employed. We introduced
1222
various grant schemes, such as the market entry guarantee scheme, to help small firms exporting—which the right hon. Gentleman's Government have continued, so it must have had value; but we introduced it. We, the Labour Government, had a small firms employment subsidy scheme to give direct cash assistance and stimulus to small firms to take on new employees, contributing to the employment of some 50,000 people.
Mr. Dobson: Will my hon. Friend give way?
The First Deputy Chairman (Mr. Bryant Godman Irvine): Order. We do not want to get into a debate on what the previous Administration did for small firms. Hon. Members must relate their remarks to the Bill.
Mr. Dobson: I should like to raise with my hon. Friend what the present Administration are doing to small firms.
The First Deputy Chairman: Relating to insurance?
Mr. Dobson: I shall try very hard. I have received representations, which I have passed to the Secretary of State for Trade, from small businesses, some of which will almost undoubtedly be affected by these measures. They complain to me that the export credit guarantee limits have been changed in a way that is damaging to them.
Mr. Cryer: I do not want to follow that path. However, it is fair, as I have done already, to emphasise that the Labour Government's record throughout their term of office with regard to small firms is very reasonable indeed. It is wrong for the Secretary of State to say that our comments tonight are not made from any genuine concern. Our record in office demonstrates that we have genuine concern. Many small firms claim that the CBI does not represent them accurately.
The increase may well tilt the balance for a small firm's existence—possibly a self-employed person employing a few people. It is no good the Secretary of State coming out with such platitudes as that the resilience of small firms will see them through. He knows, I know and the remainder of the House, including the Tory Members, knows that small firms are under great pressure and are increasingly going to the wall—to the bankruptcy courts.
Mr. Campbell-Savours: Is it not significant that when the Secretary of State referred to the international recession and its effect on small businesses he did not refer to the need to insulate them against it? It is particularly significant as we understand that the Conservative Party is preoccupied with insulating the groups that it believes have a contribution to make to the national economy.
The First Deputy Chairman: I appreciate that the hon. Member for Keighley (Mr. Cryer) was once the Minister with responsibility for small firms, but he must relate his remarks—I am sure that he will do so—to the insurance principle and not to these other matters.
Mr. Cryer: I shall conclude my remarks. I do not want to be accused of self-justification. I am picking up the Minister's attack. It is not unfair to say that self-justification occurs a few times too many.
The insurance increase may well tilt many small firms into bankruptcy. That is a danger and we do not want it to happen. That applies not only to small firms. This is not a good way of raising revenue. It is a bad part of a bad Bill. The self-employed will be affected by this clause and other groups by other clauses. That is why the Government should pursue alternative means.

1223
We are opposed to the Bill, but we have tabled our amendments in a spirit of compromise. We are doing what the Daily Express, The Sun and the Daily Mail want, and that is to be a united and constructive Opposition. We are trying to raise the lower income bracket of the self-employed to exempt those on the lowest incomes from the increases. We want to keep the increase down in any event.
Mr. Winnick: My hon. Friend referred to the undoubted burden that the self-employed will face from these increases. The Secretary of State regarded that as a slight matter, as no extra burden. However, not one Conservative Member has argued on matters related to the self-employed. Bearing in mind how frequently the Conservative Party claims to represent small business and the self-employed, is it not amazing that Conservatives do not argue points on this subject?
Mr. Cryer: The Secretary of State said that the majority of the self-employed support the Conservative Party. That raised a cheer from his Back Benchers. But he and his hon. Friends know that while that was true in 1979 it is true no longer. As the self-employed have experienced the bitterness and difficulties of being governed by a Conservative Administration, they have shifted their allegiance towards the Labour Party to provide them with the Government they need.
Question put, That the amendment be made:—
The Committee divided: Ayes 16, Noes 197.

Division No. 26]

[3.59 am

AYES

Bennett, Andrew (St'kp't N)

Johnston, Russell (Inverness)

Buchan, Norman

McCartney, Hugh

Campbell-Savours, Dale

Race, Reg

Cocks, Rt Hon M. (B'stol S)

Rooker, J. W.

Cryer, Bob

Welsh, Michael

Dobson, Frank

Winnick, David

Dormand, Jack

Ewing, Harry

Tellers for the Ayes:

Field, Frank

Mr. Walter Harrison and

Haynes, Frank

Mr. Terry Davis.

NOES

Alexander, Richard

Budgen, Nick

Atkinson, David (B'm'th,E)

Butcher, John

Baker, Nicholas (N Dorset)

Cadbury, Jocelyn

Banks, Robert

Carlisle, Kenneth (Lincoln)

Bendall, Vivian

Chalker, Mrs. Lynda

Benyon, Thomas (A'don)

Channon, Rt. Hon. Paul

Benyon, W. (Buckingham)

Churchill, W. S.

Berry, Hon Anthony

Clark, Hon A. (Plym'th, S'n)

Best, Keith

Clarke, Kenneth (Rushcliffe)

Bevan, David Gilroy

Colvin, Michael

Biggs-Davison, John

Cope, John

Blackburn, John

Corrie, John

Blaker, Peter

Costain, Sir Albert

Boscawen, Hon Robert

Cranborne, Viscount

Bottomley, Peter (W'wich W)

Crouch, David

Bowden, Andrew

Dean, Paul (North Somerset)

Braine, Sir Bernard

Dixon, Donald

Bright, Graham

Dorrell, Stephen

Brinton, Tim

Douglas-Hamilton, Lord J.

Brittan, Leon

Dunn, Robert (Dartford)

Brooke, Hon Peter

Durant, Tony

Brotherton, Michael

Eggar, Tim

Brown, M.(Brigg and Scun)

Elliott, Sir William

Browne, John (Winchester)

Emery, Peter

Bruce-Gardyne, John

Faith, Mrs Sheila

Bryan, Sir Paul

Farr, John

Buck, Antony

Fell, Anthony

1224

Fenner, Mrs Peggy

Normanton, Tom

Forman, Nigel

Onslow, Cranley

Fraser, Peter (South Angus)

Osborn, John

Gardiner, George (Reigate)

Page, Rt Hon Sir G. (Crosby)

Gardner, Edward (S Fylde)

Page, Richard (SW Herts)

Garel-Jones, Tristan

Parris, Matthew

Goodhart, Philip

Patten, Christopher (Bath)

Gorst, John

Pattie, Geoffrey

Grant, Anthony (Harrow C)

Pawsey, James

Greenway, Harry

Pink, R. Bonner

Grieve, Percy

Pollock, Alexander

Griffiths, E.(B'y St. Edm'ds)

Price, Sir David (Eastleigh)

Griffiths, Peter Portsm'th N)

Proctor, K. Harvey

Gummer, John Selwyn

Raison, Timothy

Hamilton, Hon A.

Rathbone, Tim

Hampson, Dr Keith

Rees, Peter (Dover and Deal)

Hannam, John

Renton, Tim

Haselhurst, Alan

Rhys Williams, Sir Brandon

Hastings, Stephen

Ridsdale, Julian

Havers, Rt Hon Sir Michael

Sainsbury, Hon Timothy

Hawkins, Paul

St. John-Stevas, Rt Hon N.

Hawksley, Warren

Shaw, Michael (Scarborough)

Heddle, John

Shelton, William (Streatham)

Henderson, Barry

Shepherd, Richard

Hooson, Tom

Shersby, Michael

Howell, Ralph (N Norfolk)

Silvester, Fred

Hunt, David (Wirral)

Sims, Roger

Hunt, John (Ravensbourne)

Smith, Dudley

Jenkin, Rt Hon Patrick

Speller, Tony

Johnson Smith, Geoffrey

Spence, John

Jopling, Rt Hon Michael

Spicer, Jim (West Dorset)

Kershaw, Anthony

Sproat, Ian

Knight, Mrs Jill

Squire, Robin

Lamont, Norman

Stainton, Keith

Lang, Ian

Stanbrook, Ivor

Latham, Michael

Steen, Anthony

Le Marchant, Spencer

Stevens, Martin

Lennox-Boyd, Hon Mark

Stewart, Ian (Hitchin)

Lester Jim (Beeston)

Stokes, John

Lloyd, Peter (Fareham)

Tapsell, Peter

Loveridge, John

Taylor, Teddy (S'end E)

Luce, Richard

Tebbit, Norman

Lyell, Nicholas

Thomas, Rt Hon Peter

McCrindle, Robert

Thompson, Donald

Macfarlane, Neil

Thorne, Neil (Ilford South)

MacGregor, John

Townend, John (Bridlington)

MacKay, John (Argyll)

Townsend, Cyril D, (B'heath)

McNair-Wilson, P. (New F'st)

Trippier, David

McQuarrie, Albert

Trotter, Neville

Madel, David

van Straubenzee, W. R.

Major, John

Vaughan, Dr Gerard

Marland, Paul

Viggers, Peter

Mates, Michael

Wakeham, John

Mather, Carol

Waldegrave, Hon William

Maude, Rt Hon Angus

Walker, B. (Perth )

Mawhinney, Dr Brian

Wall, Patrick

Maxwell-Hyslop, Robin

Waller, Gary

Mayhew, Patrick

Ward, John

Mellor, David

Warren, Kenneth

Meyer, Sir Anthony

Watson, John

Miller, Hal (B'grove)

Wells, John (Maidstone)

Mills, Iain (Meriden)

Wells, Bowen

Mills, Peter (West Devon)

Wheeler, John

Miscampbell, Norman

Whitney, Raymond

Moate, Roger

Wickenden, Keith

Moore, John

Wilkinson, John

Morrison, Hon C. (Devizes)

Winterton, Nicholas

Morrison, Hon P. (Chester)

Wolfson, Mark

Myles, David

Young, Sir George (Acton)

Neale, Gerrard

Needham, Richard

Tellers for the Noes:

Nelson, Anthony

Mr. John Stradling Thomas and

Neubert, Michael

Mr. David Waddington.

Newton, Tony

Question accordingly negatived.
Question proposed, That the clause stand part of the Bill.
Mr. Buchan: Thank you, Mr. Weatherill, for granting a clause stand part debate. We recognise that during the debates on the amendments we explored a great deal of what is in the clause, but there is one matter which, for technical reasons, could not be brought within the Bill and we appreciate the opportunity to raise it now.
We attempted to raise the matter in our new clause 2, but it was not technically in order and could not be brought into order. The point at issue is the upper limit for contributions. We had some discussions on this matter earlier, in the context of what we saw as an unfairness between the 17 per cent. lift at the bottom and the 22 per cent. lift at the top. We felt chat that constituted an element of unfairness between the rich and the poor, deliberately brought in under the Bill.
There is, however another aspect that I wish to raise. If we are right in saying that the clause—and, indeed, the Bill and what has been said by the Chancellor of the Exchequer—represents the development of a poll tax—a reduction in the Treasury element, with taxation coming later—perhaps we should treat it as a form of taxation and inject into it something of the social justice and fairness that we associate with taxation. The great advantage, in social terms, of taxation over contributions is that there can be graduations and social fairness.
We think that, on the figures that have been given, there is an element of social injustice here, and not parity of treatment. Secondly, by having a certain ceiling—now proposed at £200—there is an area of contributions that could be covered if we were to abolish the upper ceiling —an area of contributions that could help to finance the national insurance fund, which has brought all this on our heads over the last two weeks. If the contributions are to be used in the pension concept as a form of taxation, and if that is to be treated in all ways as a form of taxation, let us ensure that those who are richest pay more.
The problem that we had was to relate that to the return in benefits, because we wished to be just to the rich. It would not be possible, on the one hand, to treat as a form of contributions unlimited payment over that if it was technically an insurance scheme without some return. Equally, we are not prepared to allow that return to reach inordinate levels of benefit. Therefore, it would have been necessary to associate with it continually downward graduations of benefits in return for the contributions paid. That would make some sense of the concept that is developing of using national insurance pension methods as a form of tax to deal with an economic crisis.
Quite apart from that immediate consideration, other ideas are now emerging, such as the reduction in the Treasury element — the 18 to 14 per cent. element. There is also the breaking of the consensus that was established when Brian O'Malley spoke on our behalf as a Minister. There was a general consensus on pension problems, allied to the problem that affected the Conservative Party, namely, the question of private pensions.
All those things are getting cracked. The social basis of national insurance is getting cracked. Using the contributions to the fund in the way that we have seen over the last fortnight is cracking that consensus. Because of that, it is time that we considered the matter afresh. If we require revenue—and the Government say that this is a source of revenue — is there not now a case for the upper limit to be abolished?
1226
We should like to hear the Minister's views. I am sorry that the Secretary of State is not here. On the other hand, a Treasury Minister is on the Government Front Bench and he might like to reply to the debate. This is a serious matter. It is one that should be considered, because it has been brought to the forefront by the actions of the Government. If they wish to refer to the consensus, we may choose to be more considerate. If not, we shall have to give serious consideration to the matter.
4.15 am
Mr. Race: The case for abolishing the upper Limit is very strong. I shall contrast the Government's attitude to the upper limit with their attitude to the lower limit. The Government's attitude is scandalous. They say that they will increase the upper earnings limit by 22 per cent. That is an increase by the full amount. That means that they want to protect the highest-paid in society from this form of taxation and they are prepared to engage in that kind of policy for their own supporters, who are the highest paid in society. Yet they are not prepared to embark upon a policy of protecting the lowest-paid from their policy. That is the political contrast that needs to be made in this debate. The lower threshold is frozen at £27 per week. The upper limit is increased to the maximum possible under the primary legislation.
If and when national insurance contributions become tax-deductible there may be a different policy on the question of the upper earnings limit. Once national insurance contributions become tax-deductible, part of the pressure to protect the highest-paid in society from this kind of approach will disappear from the Treasury's thinking, because the ability of those in the highest-earnings section to trade off their national insurance contributions against tax may be a very attractive proposition. Some may argue that their contributions should be brought into the tax net for that purpose. For a person earning large amounts it is very important that he should be able to trade off some of his contributions against income.
This measure is inequitable, because at the same time as the Government are increasing contributions they are cutting benefits. An argument that has been used in the past is that increases in contributions protect the value of benefits. That is not an argument that can be sustained by this Government at this time, because of their action in the Social Security (No. 2) Act, which cuts benefits this year and provides for the Government to cut benefits by specified amounts in the next financial year. That is a denial of the principle that increases in contributions protect benefits.
This is an argument not about social welfare or social insurance but about income tax. That is why the upper earnings limit has been pushed to the limit, and that is why the Government are indexing the higher tax bands. They are trying to protect the better-paid from increasing unemployment. As has been said, the people will draw their own conclusions. They will see national insurance contributions as part of the stoppages that they suffer every week. People will not be able to distinguish between national insurance contributions and the amount of income tax that they pay each week, just as many council tennants do not distinguish between the amount of rent and the amount of rates that they pay each week. It is the overall sum that matters.

1227
Those at the lower end of the income scale will contrast their position with that of the higher-paid, who have once again been protected against the economic crisis. This measure is presumably part of the incentive package that the Conservative Party pledged to introduce before it came into office. When will we see a quantifiable result from that so-called incentive package?
Mr. Field: This debate will have been time well spent if it results in a clear statement from the Under-Secretary on why the Government cannot lift the ceiling. Those who have listened to and participated in the debates this week have formed the impression that the Government would like to lift the ceiling but that there are immutable forces acting against that.
There seem to be two forces at work. First, we are told that if the ceiling is raised it will break a crucial part of the pension settlement of 1975. I have talked to some of those who helped to formulate the 1975 Act. They are certain that the principle behind setting the ceiling was simple. They were concerned that the graduated national insurance contributions should hit a cut-off point just before reaching the higher tax rates. If that is so, the Budget changes, particularly those made in 1979, allow the Government to operate on that front.
We are all aware that the income tax bands have been greatly widened. The first band at the higher rate is now at a considerably higher level. If the Government wish to stick to the argument that there was some agreement in the Social Security Pensions Act 1975, will they spell it out? Do the Government maintain that those who have not contracted out, and who are now asked to pay a graduated contribution over a wider band of income, will have a significant effect on pensions in the private sector? I should like an answer. These are important questions to which all of us, including Conservative Members, would like answers.
It would be foolish for anyone to think that this is the last Bill of this kind that we shall see in this Parliament. Because of the Government's difficulty in meeting their monetary and public sector borrowing requirement targets, there will be a similar Bill next year. The argument that at a time of growing unemployment it would be wrong to put any of the increased cost of national insurance on employers and that therefore the total weight of the increase should be put on employees would gain greater weight in the country if the employees' contributions could be graduated in some way. That could be achieved if the ceiling were raised and if we took out of national insurance taxation those at the very bottom.
What is the argument to which the Government are sticking at this late stage in this one-week Bill? Is it something connected with the Social Security Pensions Act 1975 that prevents them from operating on the ceiling? If so, for the first time this week will they spell out what that connection is? If not, what is the reason? Am I right in thinking that those who drew up the 1975 Act saw it purely in terms of preventing those who were paying the old surtax or the higher rates of tax also paying graduated contributions above the then ceiling?
These are important, not academic, questions because as each year of this Parliament passes we shall have similar Bills to the one that we are considering today. If we can build some flexibility into the system by getting extra
1228
revenue from those at the top to make national insurance taxation less regressive, the passage of the next Bill may be slightly easier than this one.
Mrs. Chalker: The questions that have been posed in this stand part debate were put forward earlier by the hon. Member for Birkenhead (Mr. Field). I shall seek to answer those questions.
Whereas some hon. Members may feel that there is a strong argument for the abolition of the upper earnings limit, the Government do not. At the risk of repeating what I said in earlier debates, I shall try to make clear one of the firm reasons why we do not believe that with the arrangements that we have in the Social Security Pensions Act 1975 it would be advisable, practicable or even possible to abolish the upper earnings limit.
If the upper earnings limit were removed there would be no limit on the size of the pension that could be earned by the very high earners. If we were to limit that pension entitlement and at the same time were to remove the upper earnings limit, those high earners would not be getting value for their contributions.
There are several reasons why it would not be possible to remove the upper earnings limit. First, as I have said, we need an upper earnings limit for pension purposes and it needs to be fixed at about the existing level to accommodate the contracting-out arrangements. Those contracting-out arrangements represented the fundamental principle on which agreement was reached between all parties in the Social Security Pensions Act 1975. The contribution rates for the contracted-out would run at the full rate up to the lower earnings limit, the contracted-out rate from there up to the upper earnings limit, and the full rate from the upper earnings limit upwards.
If we were to abolish the upper earnings limit the change would emphasise the need to secure much greater accuracy in the employer's deduction documents in regard to earnings in the middle range. Although I cannot expect hon. Members to understand the detail of this, I can assure them that from my investigation and from the working processes that aim to get the pensions paid accurately it is crucial that the accuracy in the deduction documents that are handled by the employers should be maintained.
4.30 am
We would be in the state of having three variable rates, because without an upper earnings limit, the additional components for the State scheme pension simply could not be calculated without having three separate calculations. The guaranteed minimum pensions, which are a prime feature of the second pension scheme, depend entirely on these records.
I am not saying that at some future time, when all companies were computerised and kept their records absolutely perfectly, such a complicated arrangement could not be achieved, but I must tell the Committee that, from my knowledge of the present system and from the present information supplied to Government Departments by employers, it simply could not be done within the confines of the present system and the present computer capacity of a large number of employers. We would produce total chaos in the calculation of the added components. While that is not the complete argument, it is a severe practical restriction on what could be done at present.
We know that there have been heavy errors in the present deduction document recording system because of

1229
the inability of many employers to fill in the documents with the accuracy that is required to enable us to calculate the additional components and the guaranteed minimum pension that depend on them.
We have had so many years of political football with regard to the pension scheme.
Mr. Buchan: We are having it again.
Mrs. Chalker: We are talking about the upper earnings limit. Perhaps some Labour Members do not realise what an achievement it was in 1975 to reach this degree of success between the private occupational schemes and the State scheme. An enormous part has been played by industry. We sometimes forget that when we talk about the difficulties experienced by Government in calculating things correctly. Industry, particularly the pensions industry, has put in an enormous amount of work in order to accommodate the 1975 legislation. It would be totally undesirable, as well as quite unfeasible in the present computer capacity of employers' schemes, to start disturbing or dismantling the arrangements so soon after they have starred.
One hon. Member suggested that we might make national insurance contribution tax-deductible. Some hon. Members may remember that before 1965 part of the national insurance contributions that went towards the taxable basic pension was indeed tax-deductible, while the part of the contributions that went towards the non-taxable short-term benefits was not. In other words, they were not taxed twice. That was altered in 1965 by the right hon. Member for Cardiff, South-East (Mr. Callaghan), I believe. I shall give the reasns why the relief was then finally abolished and personal allowances increased at the same time.
First, there was a regressive anomaly in this. By that I mean that the higher an individual's contributions the higher was his relief. The compensating personal allowance was able to benefit more people than the original lax deductibility of the national insurance contributions. Looking back on old schemes, I have no doubt that the administrative complications between taxing one part and not taxing the other part of national insurance contributions were an added factor.
My hon. Friend the Member for Norfolk, North (Mr. Howell) asked some time ago what would happen if relief were applied to contributions and what would be the cost. It would be between £1½billion and £2 billion, which would then have to be made up by increases either in contribution rates or in taxes.
I hope that I have said enough at this late hour to explain that it is not feasible to dc away with the upper earnings limit, and there is not as strong a case for abolition as some hon. Members, would have us believe. We must maintain a period of constant working in our pensions industry if we are ever to make sure that those second pensions, for which we are encouraging people to contribute either through their occupational scheme or through the State scheme, are to become a reality without putting insuperable burdens once more on the British people. I hope that Labour Members will see the sense and wisdom that was shown by the late Brian O'Malley when we achieved this consensus before, and which I hope we shall retain this evening.
Mr. Buchan: I thank the Minister for making such efforts in anticipating the nature of the discussion and
1230
preparing for it. However, she will accept that it is less satisfactory to an Opposition to be told that there are difficulties than to have an outright rebuttal of the arguments involved. We are not satisfied.
On the question of the unevenness of payment, the concept that could be developed if we move towards abolition is to regard the insurance fund as a social fund, in the same way as taxation is a social income which is used for the good of the community and paid into according to the means of the individuals in the community.
There are considerable problems on private pension funds, and I admit that I do not know them. I have held this position for 48 hours, and I accept that there are major difficulties. I know that this area requires investigation. We can never use the practical difficulties of schemes as an excuse. It has happened too often in history that the practical has been used to prevent thought. I hope that the Department will look into the matters as deeply as possible—certainly Labour Members will—to see whether there is progress to be made. The attitude of the Government—I am being as pleasant as I can—has broken much of the consensus on both sides of the House in relation to the pension structure and its involvement and co-operation with the private sector. We shall have to look at the matter over the next 12 or 24 months.
Question put, That the clause stand part of the Bill:—
The Committee divided: Ayes 194, Noes 16.

Division No. 27]

[4.39 am

AYES

Alexander, Richard

Dunn, Robert (Dartford)

Atkinson, David (B'm'th,E)

Durant, Tony

Baker, Nicholas (N Dorset)

Eggar, Tim

Banks, Robert

Elliott, Sir William

Bendall, Vivian

Emery, Peter

Benyon, Thomas (A'don)

Eyre, Reginald

Benyon, W. (Buckingham)

Faith, Mrs Sheila

Berry, Hon Anthony

Farr, John

Best, Keith

Fell, Anthony

Bevan, David Gilroy

Fenner, Mrs Peggy

Biggs-Davison, John

Forman, Nigel

Blackburn, John

Fraser, Peter (South Angus)

Blaker, Peter

Gardner, Edward (S Fylde)

Bottomley, Peter (W'wich W)

Garel-Jones, Tristan

Bowden, Andrew

Goodhart, Philip

Bright, Graham

Gorst, John

Brinton, Tim

Grant, Anthony (Harrow C)

Brittan, Leon

Greenway, Harry

Brooke, Hon Peter

Grieve, Percy

Brotherton, Michael

Griffiths, E.(B'y St. Edm'ds)

Brown, M.(Brigg and Scun)

Griffiths, Peter Portsm'th N)

Browne, John (Winchester)

Gummer, John Selwyn

Bruce-Gardyne, John

Hamilton, Hon A.

Bryan, Sir Paul

Hampson, Dr Keith

Buck, Antony

Hannam, John

Budgen, Nick

Haselhurst, Alan

Butcher, John

Hastings, Stephen

Cadbury, Jocelyn

Havers, Rt Hon Sir Michael

Carlisle, Kenneth (Lincoln)

Hawkins, Paul

Chalker, Mrs. Lynda

Hawksley, Warren

Channon, Rt. Hon. Paul

Heddle, John

Churchill, W. S.

Henderson, Barry

Clark, Hon A. (Plym'th, S'n)

Hooson, Tom

Clarke, Kenneth (Rushcliffe)

Howell, Ralph (N Norfolk)

Colvin, Michael

Hunt, David (Wirral)

Cope, John

Hunt, John (Ravensbourne)

Corrie, John

Jenkin, Rt Hon Patrick

Costain, Sir Albert

Johnson Smith, Geoffrey

Cranborne, Viscount

Jopling, Rt Hon Michael

Crouch, David

Kershaw, Anthony

Dean, Paul (North Somerset)

Knight, Mrs Jill

Dickens, Geoffrey

Lamont, Norman

Dorrell, Stephen

Lang, Ian

1231

Latham, Michael

Ridsdale, Julian

Le Marchant, Spencer

Sainsbury, Hon Timothy

Lennox-Boyd, Hon Mark

St. John-Stevas, Rt Hon N.

Lester Jim (Beeston)

Shaw, Michael (Scarborough)

Lloyd, Peter (Fareham)

Shelton, William (Streatham)

Loveridge, John

Shepherd, Richard

Luce, Richard

Shersby, Michael

Lyell, Nicholas

Silvester, Fred

McCrindle, Robert

Sims, Roger

MacGregor, John

Smith, Dudley

MacKay, John (Argyll)

Speller, Tony

McNair-Wilson, P. (New F'st)

Spence, John

McQuarrie, Albert

Spicer, Jim (West Dorset)

Madel, David

Sproat, Ian

Major, John

Squire, Robin

Marland, Paul

Stainton, Keith

Mates, Michael

Stanbrook, Ivor

Mather, Carol

Stevens, Martin

Maude, Rt Hon Angus

Stewart, Ian (Hitchin)

Mawhinney, Dr Brian

Stokes, John

Maxwell-Hyslop, Robin

Stradling Thomas, J.

Mayhew, Patrick

Tapsell, Peter

Mellor, David

Taylor, Teddy (S'end E)

Meyer, Sir Anthony

Tebbit, Norman

Miller, Hal (B'grove)

Thomas, Rt Hon Peter

Mills, Iain (Meriden)

Thompson, Donald

Mills, Peter (West Devon)

Thorne, Neil (Ilford South)

Miscampbell, Norman

Townend, John (Bridlington)

Moate, Roger

Townsend, Cyril D, (B'heath)

Montgomery, Fergus

Trippier, David

Moore, John

Trotter, Neville

Morrison, Hon C. (Devizes)

van Straubenzee, W. R.

Morrison, Hon P. (Chester)

Viggers, Peter

Myles, David

Waddington, David

Neale, Gerrard

Wakeham, John

Needham, Richard

Waldegrave, Hon William

Nelson, Anthony

Walker, B. (Perth )

Neubert, Michael

Wall, Patrick

Newton, Tony

Waller, Gary

Normanton, Tom

Ward, John

Onslow, Cranley

Warren, Kenneth

Osborn, John

Watson, John

Page, Rt Hon Sir G. (Crosby)

Wells, John (Maidstone)

Page, Richard (SW Herts)

Wells, Bowen

Parris, Matthew

Wheeler, John

Patten, Christopher (Bath)

Whitney, Raymond

Pattie, Geoffrey

Wickenden, Keith

Pawsey, James

Wilkinson, John

Pink, R. Bonner

Winterton, Nicholas

Pollock, Alexander

Wolfson, Mark

Price, Sir David (Eastleigh)

Young, Sir George (Acton)

Proctor, K. Harvey

Raison, Timothy

Tellers for the Ayes:

Rathbone, Tim

Mr. Robert Boscawen and

Rees, Peter (Dover and Deal)

Lord James Douglas-

Renton, Tim

Hamilton.

Rhys Williams, Sir Brandon

NOES

Bennett, Andrew(St'kp't N)

Johnston, Russell (Inverness)

Buchan, Norman

Race, Reg

Campbell-Savours, Dale

Rooker, J. W.

Cocks, Rt Hon M. (B'stol S)

Wainwright, R.(Colne V)

Cryer, Bob

Welsh, Michael

Dobson, Frank

Winnick, David

Dormand, Jack

Field, Frank

Tellers for the Noes:

Harrison, Rt Hon Walter

Mr. Terry Davis and

Haynes, Frank

Mr. Hugh McCartney.

Question accordingly agreed to.
Clause 1 ordered to stand part of the Bill

Social Security (Contributions) Bill
  Clause 2

    ALTERATION OF TREASURY SUPPLEMENT TO CONTRIBUTIONS
    Question put, That the clause stand part of the Bill:—
    The Committee divided: Ayes 193, Noes 15.

    Division No. 28]

    [4.50 am

    AYES

    Alexander, Richard

    Hastings, Stephen

    Atkinson, David (B'm'th,E)

    Hawkins, Paul

    Baker, Nicholas (N Dorset)

    Hawksley, Warren

    Banks, Robert

    Heddle, John

    Bendall, Vivian

    Henderson, Barry

    Benyon, Thomas (A'don)

    Hooson, Tom

    Benyon, W. (Buckingham)

    Howell, Ralph (N Norfolk)

    Berry, Hon Anthony

    Hunt, David (Wirral)

    Best, Keith

    Hunt, John (Ravensbourne)

    Bevan, David Gilroy

    Jenkin, Rt Hon Patrick

    Biggs-Davison, John

    Johnson Smith, Geoffrey

    Blackburn, John

    Jopling, Rt Hon Michael

    Blaker, Peter

    Kershaw, Anthony

    Bottomley, Peter (W'wich W)

    Knight, Mrs Jill

    Bowden, Andrew

    Lamont, Norman

    Bright, Graham

    Lang, Ian

    Brinton, Tim

    Latham, Michael

    Brittan, Leon

    Le Marchant, Spencer

    Brooke, Hon Peter

    Lennox-Boyd, Hon Mark

    Brotherton, Michael

    Lester Jim (Beeston)

    Brown, M.(Brigg and Scun)

    Lloyd, Peter (Fareham)

    Browne, John (Winchester)

    Loveridge, John

    Bruce-Gardyne, John

    Luce, Richard

    Bryan, Sir Paul

    Lyell, Nicholas

    Buck, Antony

    McCrindle, Robert

    Budgen, Nick

    MacGregor, John

    Butcher, John

    MacKay, John (Argyll)

    Cadbury, Jocelyn

    McNair-Wilson, P. (New F'st)

    Carlisle, Kenneth (Lincoln)

    McQuarrie, Albert

    Chalker, Mrs. Lynda

    Madel, David

    Channon, Rt. Hon. Paul

    Major, John

    Churchill, W. S.

    Marland, Paul

    Clark, Hon A. (Plym'th, S'n)

    Mates, Michael

    Clarke, Kenneth (Rushcliffe)

    Mather, Carol

    Colvin, Michael

    Maude, Rt Hon Angus

    Cope, John

    Mawhinney, Dr Brian

    Corrie, John

    Maxwell-Hyslop, Robin

    Costain, Sir Albert

    Mayhew, Patrick

    Cranborne, Viscount

    Mellor, David

    Crouch, David

    Meyer, Sir Anthony

    Dean, Paul (North Somerset)

    Miller, Hal (B'grove)

    Dickens, Geoffrey

    Mills, Iain (Meriden)

    Dorrell, Stephen

    Miscampbell, Norman

    Dunn, Robert (Dartford)

    Moate, Roger

    Durant, Tony

    Monro, Hector

    Eggar, Tim

    Montgomery, Fergus

    Elliott, Sir William

    Moore, John

    Emery, Peter

    Morrison, Hon C. (Devizes)

    Eyre, Reginald

    Morrison, Hon P. (Chester)

    Faith, Mrs Sheila

    Myles, David

    Farr, John

    Neale, Gerrard

    Fell, Anthony

    Needham, Richard

    Fenner, Mrs Peggy

    Nelson, Anthony

    Forman, Nigel

    Neubert, Michael

    Fraser, Peter (South Angus)

    Newton, Tony

    Gardiner, George (Reigate)

    Normanton, Tom

    Gardner, Edward (S Fylde)

    Onslow, Cranley

    Garel-Jones, Tristan

    Osborn, John

    Goodhart, Philip

    Page, Rt Hon Sir G. (Crosby)

    Gorst, John

    Page, Richard (SW Herts)

    Grant, Anthony (Harrow C)

    Parris, Matthew

    Greenway, Harry

    Patten, Christopher (Bath)

    Grieve, Percy

    Pattie, Geoffrey

    Griffiths, E.(B'y St. Edm'ds)

    Pawsey, James

    Griffiths, Peter Portsm'th N)

    Pink, R. Bonner

    Hamilton, Hon A.

    Pollock, Alexander

    Hampson, Dr Keith

    Price, Sir David (Eastleigh)

    Hannam, John

    Proctor, K. Harvey

    Haselhurst, Alan

    Raison, Timothy

    1233

    Rathbone, Tim

    Thorne, Neil (Ilford South)

    Rees, Peter (Dover and Deal)

    Townend, John (Bridlington)

    Renton, Tim

    Townsend, Cyril D, (B'heath)

    Rhys Williams, Sir Brandon

    Trippier, David

    Ridsdale, Julian

    Trotter, Neville

    Sainsbury, Hon Timothy

    van Straubenzee, W. R.

    St. John-Stevas, Rt Hon N.

    Viggers, Peter

    Shaw, Michael (Scarborough)

    Waddington, David

    Shelton, William (Streatham)

    Wakeham, John

    Shepherd, Richard

    Waldegrave, Hon William

    Shersby, Michael

    Walker, B. (Perth )

    Silvester, Fred

    Wall, Patrick

    Sims, Roger

    Waller, Gary

    Smith, Dudley

    Ward, John

    Speller, Tony

    Warren, Kenneth

    Spence, John

    Watson, John

    Spicer, Jim (West Dorset)

    Wells, John (Maidstone)

    Sproat, Ian

    Wells, Bowen

    Squire, Robin

    Wheeler, John

    Stainton, Keith

    Whitney, Raymond

    Stanbrook, Ivor

    Wickenden, Keith

    Stevens, Martin

    Wilkinson, John

    Stewart, Ian (Hitchin)

    Winterton, Nicholas

    Stokes, John

    Wolfson, Mark

    Stradling Thomas, J.

    Young, Sir George (Acton)

    Tapsell, Peter

    Taylor, Teddy (S'end E)

    Tellers for the Ayes:

    Tebbit, Norman

    Lord James Douglas-

    Thomas, Rt Hon Peter

    Hamilton and

    Thompson, Donald

    Mr. Robert Boscawen.

    NOES

    Bennett, Andrew (St'kp't N)

    Race, Reg

    Buchan, Norman

    Rooker, J. W.

    Campbell-Savours, Dale

    Wainwright, R.(Colne V)

    Cocks, Rt Hon M. (B'stol S)

    Welsh, Michael

    Cryer, Bob

    Winnick, David

    Dobson, Frank

    Dormand, Jack

    Tellers for the Noes:

    Field, Frank

    Mr. Terry Davis and

    Harrison, Rt Hon Walter

    Mr. Hugh McCartney.

    Haynes, Frank

    Question accordingly agreed to.
    Clause 2 ordered to stand part of the Bill.

  Clause 3

    ALLOCATION OF CLAUSES
    Question proposed, That the clause stand part of the Bill.
    5 am
    Mr. Rooker: We wish only to ask about the order-making powers in subsection (4B). Is it right that there is no mechanism for changing the figures of 0·1, 4 and 0·2 per cent by order? If it is desired to change them, will it require primary legislation? Are the figures cumulative if used under subsection (4A)? In other words could the figure be 0·1 per cent. one year and change the following year?
    The Under-secretary of State for Health and Social Security (Sir George Young): The answer to the hon. Gentleman's second question is "Yes", the figures could be used cumulatively. We have made no decision on the rate of contribution for any years after 1981–82, so we cannot say in what circumstances the powers in clause 3(3) will be used. The subsection merely corrects an anomaly in section 122 of the principal Act. At the moment, one can only vary the NHS contributions as a consequence of changes in the national insurance contribution rates and
    1234
    limits. The purpose of the power is simply to provide flexibility to change the NHS contributions independently of the national insurance contribution rates.
    Mr. Cryer: Can the Minister confirm that the power to carry out the alterations which is contained in clause 4(5) will be by an affirmative order? I understand that that brings into operation part of the principal legislation which requires that any changes will be by affirmative order and not by negative procedure.
    Sir George Young: I confirm that that is the case.
    Mr. Race: Will the Minister answer the question raised by my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) about whether the 0·1 per cent, could be changed by order to 0·2 per cent., or 0·3 per cent. or whatever? Can this be done by affirmative order, as mentioned by my hon. Friend the Member for Keighley (Mr. Cryer), or will it need primary legislation.
    Sir George Young: One can change the figure by 0·1 per cent, by order. If one wants to change it by more than 0·1 per cent., it will need legislation.
    Question put, That the clause stand part of the Bill:—
    The Committee divided: Ayes 193, Noes 16.

    Division No. 29]

    [5.04 am

    AYES

    Alexander, Richard

    Eyre, Reginald

    Atkinson, David (B'm'th,E)

    Faith, Mrs Sheila

    Baker, Nicholas (N Dorset)

    Farr, John

    Banks, Robert

    Fell, Anthony

    Bendall, Vivian

    Fenner, Mrs Peggy

    Benyon, Thomas (A'don)

    Forman, Nigel

    Benyon, W. (Buckingham)

    Fraser, Peter (South Angus)

    Berry, Hon Anthony

    Gardiner, George (Reigate)

    Best, Keith

    Gardner, Edward (S Fylde)

    Bevan, David Gilroy

    Garel-Jones, Tristan

    Biggs-Davison, John

    Goodhart, Philip

    Blackburn, John

    Gorst, John

    Blaker, Peter

    Grant, Anthony (Harrow C)

    Boscawen, Hon Robert

    Greenway, Harry

    Bottomley, Peter (W'wich W)

    Grieve, Percy

    Bowden, Andrew

    Griffiths, E.(B'y St. Edm'ds)

    Bright, Graham

    Griffiths, Peter Portsm'th N)

    Brinton, Tim

    Gummer, John Selwyn

    Brittan, Leon

    Hamilton, Hon A.

    Brooke, Hon Peter

    Hampson, Dr Keith

    Brotherton, Michael

    Hannam, John

    Brown, M.(Brigg and Scun)

    Haselhurst, Alan

    Browne, John (Winchester)

    Hastings, Stephen

    Bruce-Gardyne, John

    Hawkins, Paul

    Bryan, Sir Paul

    Hawksley, Warren

    Buck, Antony

    Heddle, John

    Budgen, Nick

    Henderson, Barry

    Butcher, John

    Hooson, Tom

    Cadbury, Jocelyn

    Howell, Ralph (N Norfolk)

    Carlisle, Kenneth (Lincoln)

    Hunt, David (Wirral)

    Chalker, Mrs. Lynda

    Hunt, John (Ravensbourne)

    Channon, Rt. Hon. Paul

    Jenkin, Rt Hon Patrick

    Churchill, W. S.

    Johnson Smith, Geoffrey

    Clark, Hon A. (Plym'th, S'n)

    Jopling, Rt Hon Michael

    Clarke, Kenneth (Rushcliffe)

    Kershaw, Anthony

    Colvin, Michael

    Knight, Mrs Jill

    Cope, John

    Lamont, Norman

    Corrie, John

    Lang, Ian

    Costain, Sir Albert

    Latham, Michael

    Cranborne, Viscount

    Le Marchant, Spencer

    Crouch, David

    Lennox-Boyd, Hon Mark

    Dean, Paul (North Somerset)

    Lester Jim (Beeston)

    Dickens, Geoffrey

    Lloyd, Peter (Fareham)

    Dorrell, Stephen

    Loveridge, John

    Dunn, Robert (Dartford)

    Luce, Richard

    Durant, Tony

    Lyell, Nicholas

    Eggar, Tim

    McCrindle, Robert

    Elliott, Sir William

    MacGregor, John

    Emery, Peter

    MacKay, John (Argyll)

    1235

    McNair-Wilson, P. (New F'st)

    Shepherd, Richard

    McQuarrie, Albert

    Shersby, Michael

    Madel, David

    Silvester, Fred

    Major, John

    Sims, Roger

    Marland, Paul

    Smith, Dudley

    Mates, Michael

    Speller, Tony

    Mather, Carol

    Spence, John

    Maude, Rt Hon Angus

    Spicer, Jim (West Dorset)

    Mawhinney, Dr Brian

    Sproat, Ian

    Maxwell-Hyslop, Robin

    Squire, Robin

    Mellor, David

    Stainton, Keith

    Meyer, Sir Anthony

    Stanbrook, Ivor

    Miller, Hal (B'grove)

    Stevens, Martin

    Mills, Iain (Meriden)

    Stewart, Ian (Hitchin)

    Mills, Peter (West Devon)

    Stokes, John

    Miscampbell, Norman

    Stradling Thomas, J.

    Moate, Roger

    Tapsell, Peter

    Montgomery, Fergus

    Taylor, Teddy (S'end E)

    Moore, John

    Tebbit, Norman

    Morrison, Hon C. (Devizes)

    Thomas, Rt Hon Peter

    Morrison, Hon P. (Chester)

    Thompson, Donald

    Myles, David

    Thorne, Neil (Ilford South)

    Neale, Gerrard

    Townend, John (Bridlington)

    Needham, Richard

    Townsend, Cyril D, (B'heath)

    Nelson, Anthony

    Trippier, David

    Neubert, Michael

    Trotter, Neville

    Newton, Tony

    van Straubenzee, W. R.

    Normanton, Tom

    Viggers, Peter

    Onslow, Cranley

    Waddington, David

    Osborn, John

    Waldegrave, Hon William

    Page, Rt Hon Sir G. (Crosby)

    Walker, B. (Perth )

    Page, Richard (SW Herts)

    Wall, Patrick

    Parris, Matthew

    Waller, Gary

    Patten, Christopher (Bath)

    Ward, John

    Pattie, Geoffrey

    Warren, Kenneth

    Pawsey, James

    Watson, John

    Pink, R. Bonner

    Wells, John (Maidstone)

    Pollock, Alexander

    Wells, Bowen

    Price, Sir David (Eastleigh)

    Wheeler, John

    Proctor, K. Harvey

    Whitney, Raymond

    Raison, Timothy

    Wickenden, Keith

    Rathbone, Tim

    Wilkinson, John

    Rees, Peter (Dover and Deal)

    Winterton, Nicholas

    Renton, Tim

    Wolfson, Mark

    Rhys Williams, Sir Brandon

    Young, Sir George (Acton)

    Ridsdale, Julian

    Sainsbury, Hon Timothy

    Tellers for the Ayes:

    St. John-Stevas, Rt Hon N.

    Lord James Douglas-

    Shaw, Michael (Scarborough)

    Hamilton and

    Shelton, William (Streatham)

    Mr. John Wakeham.

    NOES

    Bennett, Andrew (St'kp't N)

    Johnston, Russell (Inverness)

    Buchan, Norman

    Race, Reg

    Campbell-Savours, Dale

    Rooker, J. W.

    Cocks, Rt Hon M. (B'stol S)

    Wainwright, R.(Colne V)

    Cryer, Bob

    Welsh, Michael

    Davis, T. (B'ham, Stechf'd)

    Winnick, David

    Dobson, Frank

    Dormand, Jack

    Tellers for the Noes:

    Field, Frank

    Mr. Walter Harrison and

    Haynes, Frank

    Mr. Hugh McCartney.

    Question accordingly agreed to.
    Clause 3 ordered to stand part of the Bill.

  Clause 4

    SUPPLEMENTAL
    Question put, That the clause stand part of the Bill:—
    The Committee divide: Ayes 193, Noes 15.

    Division No. 30]

    [5.14 am

    AYES

    Alexander, Richard

    Banks, Robert

    Atkinson, David (B'm'th,E)

    Bendall, Vivian

    Baker, Nicholas (N Dorset)

    Benyon, Thomas (A'don)

    1236

    Benyon, W. (Buckingham)

    Lang, Ian

    Berry, Hon Anthony

    Latham, Michael

    Best, Keith

    Le Marchant, Spencer

    Bevan, David Gilroy

    Lennox-Boyd, Hon Mark

    Biggs-Davison, John

    Lester Jim (Beeston)

    Blackburn, John

    Lloyd, Peter (Fareham)

    Blaker, Peter

    Loveridge, John

    Boscawen, Hon Robert

    Luce, Richard

    Bottomley, Peter (W'wich W)

    Lyell, Nicholas

    Bowden, Andrew

    McCrindle, Robert

    Bright, Graham

    MacKay, John (Argyll)

    Brinton, Tim

    McNair-Wilson, P. (New F'st)

    Brittan, Leon

    McQuarrie, Albert

    Brooke, Hon Peter

    Madel, David

    Brotherton, Michael

    Marland, Paul

    Brown, M.(Brigg and Scun)

    Mates, Michael

    Browne, John (Winchester)

    Mather, Carol

    Bruce-Gardyne, John

    Maude, Rt Hon Angus

    Bryan, Sir Paul

    Mawhinney, Dr Brian

    Buck, Antony

    Maxwell-Hyslop, Robin

    Budgen, Nick

    Mayhew, Patrick

    Butcher, John

    Mellor, David

    Cad bury, Jocelyn

    Meyer, Sir Anthony

    Carlisle, Kenneth (Lincoln)

    Miller, Hal (B'grove)

    Chalker, Mrs. Lynda

    Mills, Iain (Meriden)

    Channon, Rt. Hon. Paul

    Mills, Peter (West Devon)

    Churchill, W. S.

    Miscampbell, Norman

    Clark, Hon A. (Plym'th, S'n)

    Moate, Roger

    Clarke, Kenneth (Rushcliffe)

    Montgomery, Fergus

    Colvin, Michael

    Morrison, Hon C. (Devizes)

    Cope, John

    Morrison, Hon P. (Chester)

    Corrie, John

    Myles, David

    Costain, Sir Albert

    Neale, Gerrard

    Cranborne, Viscount

    Needham, Richard

    Crouch, David

    Nelson, Anthony

    Dean, Paul (North Somerset)

    Neubert, Michael

    Dickens, Geoffrey

    Normanton, Tom

    Dorrell, Stephen

    Onslow, Cranley

    Douglas-Hamilton, Lord J.

    Osborn, John

    Dunn, Robert (Dartford)

    Page, Rt Hon Sir G. (Crosby)

    Durant, Tony

    Page, Richard (SW Herts)

    Eggar, Tim

    Parris, Matthew

    Elliott, Sir William

    Patten, Christopher (Bath)

    Emery, Peter

    Pattie, Geoffrey

    Eyre, Reginald

    Pawsey, James

    Faith, Mrs Sheila

    Pink, R. Bonner

    Farr, John

    Pollock, Alexander

    Fell, Anthony

    Price, Sir David (Eastleigh)

    Fenner, Mrs Peggy

    Proctor, K. Harvey

    Forman, Nigel

    Raison, Timothy

    Fraser, Peter (South Angus)

    Rathbone, Tim

    Gardiner, George (Reigate)

    Rees, Peter (Dover and Deal)

    Gardner, Edward (S Fylde)

    Renton, Tim

    Garel-Jones, Tristan

    Rhys Williams, Sir Brandon

    Goodhart, Philip

    Ridsdale, Julian

    Gorst, John

    Sainsbury, Hon Timothy

    Grant, Anthony (Harrow C)

    St. John-Stevas, Rt Hon N.

    Greenway, Harry

    Shaw, Michael (Scarborough)

    Grieve, Percy

    Shelton, William (Streatham)

    Griffiths, E.(B'y St. Edm'ds)

    Shepherd, Richard

    Griffiths, Peter Portsm'th N)

    Shersby, Michael

    Gummer, John Selwyn

    Silvester, Fred

    Hamilton, Hon A.

    Sims, Roger

    Hampson, Dr Keith

    Smith, Dudley

    Hannam, John

    Speller, Tony

    Haselhurst, Alan

    Spence, John

    Hawkins, Paul

    Spicer, Jim (West Dorset)

    Hawksley, Warren

    Sproat, Ian

    Heddle, John

    Squire, Robin

    Henderson, Barry

    Stainton, Keith

    Hooson, Tom

    Stanbrook, Ivor

    Howell, Ralph (N Norfolk)

    Stevens, Martin

    Hunt, David (Wirral)

    Stewart, Ian (Hitchin)

    Hunt, John (Ravensbourne)

    Stokes, John

    Jenkin, Rt Hon Patrick

    Stradling Thomas, J.

    Johnson Smith, Geoffrey

    Tapsell, Peter

    Jopling, Rt Hon Michael

    Taylor, Teddy (S'end E)

    Kershaw, Anthony

    Tebbit, Norman

    Knight, Mrs Jill

    Thomas, Rt Hon Peter

    Lamont, Norman

    Thompson, Donald

    1237

    Thorne, Neil (Ilford South)

    Watson, John

    Townend, John (Bridlington)

    Wells, John (Maidstone)

    Townsend, Cyril D, (B'heath)

    Wells, Bowen

    Trippier, David

    Wheeler, John

    Trotter, Neville

    Whitney, Raymond

    Wan Straubenzee, W. R.

    Wickenden, Keith

    viggers, Peter

    Wilkinson, John

    Waddington, David

    Winterton, Nicholas

    Wakeham, John

    Wolfson, Mark

    Waldegrave, Hon William

    Young, Sir George (Acton)

    Walker, B. (Perth )

    Wall, Patrick

    Tellers for the Ayes:

    Waller, Gary

    Mr. John MacGregor and

    Ward, John

    Mr. Tony Newton.

    Warren, Kenneth

    NOES

    Bennett, Andrew(St'kp't N)

    Race, Reg

    Buchan, Norman

    Rooker, J. W.

    Campbell-Savours, Dale

    Wainwright, R.(Colne V)

    Cocks, Rt Hon M. (B'stol S)

    Welsh, Michael

    Cryer, Bob

    Winnick, David

    Davis, T. (B'ham, Stechf'd)

    Dobson, Frank

    Tellers for the Noes:

    Dormand, Jack

    Mr. Walter Harrison and

    Field, Frank

    Mr. Hugh McCartney.

    Haynes, Frank

    Question accordingly agreed to.
    Clause 4 ordered to stand part of the Bill.
    Clause 5 ordered to stand part of the Bill.

  New Clause 3

    AMENDMENT OF PRINCIPAL ACT (NO.2)
    'In section 4(6) of the principal Act, with effect from the tax year 1981–82, after the word "as" there shall be inserted the words "exceeds the current lower earnings limit and".'.—[Mr. Rooker.]
    Brought up, and read the First time.
    Mr. Rooker: I beg to move, That the clause be read a Second time.
    The effect of the clause has basically been debated throughout the debates on most of the other amendments, certainly those to clause 1. What we are seeking to do is to put into practice what many of us have advocated, namely, that a person should not pay the national insurance contribution on earnings that are less than the lower earnings limit. In other words, we want there to be a national insurance threshold in the same way as there is a tax threshold.
    We admit that we do not know how much the new clause would cost. We suspect that it would be a substantial amount, but we have had no time effectively to cost it, because of the way in which the Bill is being bounced through the House of Commons. [HON. MEMBERS: "A week."] No. It may be that the Bill has been in print for more than a week, but the Government secured the Second Reading of the Bill only on Monday. There has not been much time to consider what new clauses should be tabled.
    We believe that there is a case to be made for looking it the upper and lower earnings limits anyway. By implication, we have not quite tied ourselves to the complete abolition of the upper earnings limit We want to review the whole system. As regards low-paid workers, there is a substantial case for having a national insurance threshold. We cannot see anything technically defective in that method of proceeding. It would require a simple form of words to be inserted into the principal Act.
    Mr. Andrew F. Bennett: We on this side had hoped for some short comments from the Minister.
    Mr. Patrick Jenkin Mr. Patrick Jenkin rose—
    Mr. Bennett: If the Minister wishes to speak, I will give way and will seek to intervene later.
    Mr. Jenkin: I had thought that it might be for the convenience of the Committee if I heard the Opposition arguments first, but if it will be helpful for me to state the Government's views on the clause I am happy to do so.
    I must tell the hon. Member for Birmingham, Perry Barr (Mr. Rooker) that, with the possible exception of amendment No. 5, which would have renewed the entire revenue-raising function, this is by far the most momentous amendment tabled by the Opposition. It would have the effect of reducing the employee contributions by £1.7 billion, the employer contributions by £2.5 billion and the employer surcharge by £800 million. I make that a sum of about £4 billion. We shall be interested to see whether the Opposition vote in favour of their clause.
    What the Opposition have not recognised is that this first slice of income on which contributions is paid by anyone whose income is higher than the lower earnings limit is absolutely crucial to the whole structure of the 1975 pension scheme and is the basis on which agreement was reached with the occupational pension interests.
    Perhaps I should explain to the Committee why this is so. The Committee will remember that it was agreed in 1975 that the scheme would remain contributory and that people would receive benefits and pensions in return for their contributions. The basis of the new scheme was that the retirement pension would consist of two elements. First, there would be 100 per cent, replacement of income for the first slice of earnings. That was up to the lower earnings limit. Then, for income above the lower earnings limit, there would be a 25 per cent, replacement once the scheme had become fully mature, once one had the full 20 years of contributions. That would apply to earnings lying between the lower and the upper earnings limits. Nevertheless, contributions were to be levied at a uniform rate on all earnings up to the upper earnings limit. That was the basis on which the scheme was constructed.
    Thus pensioners will get a very good return on the contributions paid on the first slice of earnings and a less good return on the rest of their contributions. It was for that reason that it became so much more important after 1975 to ensure that as many people as possible had an opportunity to ensure that their contribution records, up to the lower earnings limit, were as complete as possible. That was an important part of their entitlement.
    5.30 am
    It was for that reason that credits were introduced for sickness and unemployment. In addition, the home responsibility protection was put in to ensure that people who had interrrupted work would still qualify for a full pension. Contributors were given the opportunity to pay voluntary class 3 contributions to repair gaps in their contribution records. All of that was to ensure that emphasis was placed on the need to secure a full record of contributions in respect of the lowest slice of earnings, the very slice that the new clause seeks to remove from contribution liability. For the slice of earnings between the lower and upper earnings limit, pension return was to be

    1239
    strictly contribution-related, and there was to be no help by way of credits, home responsibility protection, class 3 and so on.
    The back-up for ensuring that as many people as possible qualify for the basic pension—based on contribution records—is linked to that first slice of income. It goes right to the heart of the second pension scheme and to the arrangements negotiated and agreed with the occupational pension interests outside. If the Opposition are hooked on trying to exempt that first slice of income, the entire scheme will have to go back to the drawing board. The whole shooting match will have to be renegotiated.
    The hon. Member for Renfrewshire, West (Mr. Buchan) will discover, as he becomes acquainted with pensions interests outside, that the last thing they want is to see that concordat upset. After "ping-pong pensioneering" from Boyd-Carpenter to Crossman, from Crossman to Joseph and from Joseph to Castle, the Howe-O'Malley concordat was reached. They want to stick with that. The new clause would destroy its basis. In addition to costing £4 billion, it would destroy the basis of the 1975 scheme. I cannot recommend my hon. Friends to do that.
    Mr. Race: There is no reason why the House should not agree to £4 billion of reflation. Conservative Members may believe that it would be damaging to increase the public sector borrowing requirement by that amount. My hon. Friends and I do not. We want the economy to expand and unemployment to fall. To do that, one could increase public expenditure. The Secretary of State's argument to the effect that we cannot afford £4 billion does not stand up.
    One must consider the differences between the national insurance scheme and income tax. Why on earth is tax not paid on income below the tax threshold when under the national insurance scheme there is an impost on income below £27·50 a week? That is an unjustified impost on the lowest paid. We must find a way of protecting the pensions of those who are part-time workers. They pay a substantial marginal national insurance rate once they earn £27·50 per week. If the pensions system is based on people being discriminated against in that unjustified way, it ought to be changed. There ought to be a method of dealing with it during this Parliament.
    I believe that the new clause is correct in identifying this as a problem to be rectified. Many low-paid workers who are seriously affected by this form of taxation, whereby they pay national insurance contributions on anything below £27 a week, will welcome any attempt by Parliament to review that situation, especially as many more people will be brought into that position by virtue of the freezing of the lower threshold.
    For those reasons, the new clause is entirely justified. I hope that we shall vote for it.
    Mr. Andrew F. Bennett: The Secretary of State seems to think that the so-called concordat or agreement that he made can be infinitely varied and yet still hold good. Having broken the earnings link with pensions and having in the Bill started to put in extra expenses for the National Health Service and on cutting back the Treasury supplement, he is altering the rules and the agreement. If
    1240
    he is changing matters in that way, it seems reasonable for us to insist on making this form of taxation not regressive, as it is now, but more progressive.
    Clearly, there will be much argument on this issue in the future. We now have an extremely regressive tax. Introducing an allowance or pushing back a lot of expenditure into the income tax system rather than the national insurance system is the only way to make the system more progressive and less regressive.
    Therefore, I hope that, as an indication of our feeling that the national insurance system is particularly regressive, we shall vote for the new clause. We are dissatisfied with the present system. We want a change. We do not accept that the concordat that was made has any value now because of the way that the Government have torn so many holes in it.
    Mr. Rooker: When moving the new clause, I said that I suspected that the cost was high. I still think that I should not put my figure on record. However, I can correct the Secretary of State's arithmetic. The figure is £5 billion, not £4 billion. My record shows that I have been prepared to put my hand into the taxpayer's, or the Government's pocket, for large sums. In this instance the sum is £5 billion.
    I accept the point made by my hon. Friends that the fact that earnings up to the lower earnings limit pull in £5 billion show the unfairness in the system. In our own defence, because the wisdom of the Chair cannot be challenged, I must say that one of our intentions was to move new clause 2. One of our arguments would have been that one would basically pay for the other. But we could not do the costing in the time that the Government made available to the Committee.
    Because it is not possible for the Opposition to put on record their support for a proposal such as that in the new clause 2 as the other side of the equation, I have to advise my hon. Friends that we would be putting our heads in a noose, and that we would regret. [Interruption.] What is wrong with that? It is all very well for the Conservative Members to come into the Chamber at 5·39 a.m. This is a debating Chamber. We have been seeking information during the past 13 hours, some of which has been satisfactory and some of which has not.
    Given the fact that we cannot put the other side of the equation on record, I must advise my hon. Friends not to vote for the new clause. However, before Conservative Members pooh-pooh that fact, I should point out that the sum involved is the mythical surplus in the national insurance fund. It is of that sort of scale. It represents one-third of a year's outgoings in respect of the national insurance fund. It is roughly the same sum as the Government handed to the well-off within three or four weeks of taking office. A total of £5 billion is an enormous sum which people find difficult to comprehend. The fact remains that about £4·5 billion was handed out to the well-off.
    However, as we cannot put the other side of the equation on the record, I beg to ask leave to withdraw the motion.
    Motion and clause, by leave, withdrawn.
    Bill reported, without amendment.
    Mr. Patrick Jenkin: I beg to move, That the Bill be now read the Third time.
    Question put:—
    The House divided: Ayes 191, Noes 15.

    Division No. 31]

    [5.43 am

    AYES

    Alexander, Richard

    Jenkin, Rt Hon Patrick

    Atkinson, David (B'm'th,E)

    Johnson Smith, Geoffrey

    Baker, Nicholas (N Dorset)

    Kershaw, Anthony

    Banks, Robert

    Knight, Mrs Jill

    Bendall, Vivian

    Lamont, Norman

    Benyon, Thomas (A'don)

    Lang, Ian

    Benyon, W. (Buckingham)

    Latham, Michael

    Best, Keith

    Le Marchant, Spencer

    Bevan, David Gilroy

    Lennox-Boyd, Hon Mark

    Biggs-Davison, John

    Lester Jim (Beeston)

    Blackburn, John

    Lloyd, Peter (Fareham)

    Blaker, Peter

    Loveridge, John

    Boscawen, Hon Robert

    Luce, Richard

    Bottomley, Peter (W'wich W)

    Lyell, Nicholas

    Bowden, Andrew

    McCrindle, Robert

    Bright, Graham

    MacGregor, John

    Brinton, Tim

    MacKay, John (Argyll)

    Brittan, Leon

    McNair-Wilson, P. (New F'st)

    Brooke, Hon Peter

    McQuarrie, Albert

    Brotherton, Michael

    Madel, David

    Brown, M.(Brigg and Scun)

    Major, John

    Browne, John (Winchester)

    Marland, Paul

    Bruce-Gardyne, John

    Maues, Michael

    Bryan, Sir Paul

    Mather, Carol

    Buck, Antony

    Maude, Rt Hon Angus

    Budgen, Nick

    Mawhinney, Dr Brian

    Butcher, John

    Maxwell-Hyslop, Robin

    Cadbury, Jocelyn

    Mayhew, Patrick

    Carlisle, Kenneth (Lincoln)

    Mellor, David

    Chalker, Mrs. Lynda

    Meyer, Sir Anthony

    Channon, Rt. Hon. Paul

    Miller, Hal (B'grove)

    Churchill, W. S.

    Mills, Iain (Meriden)

    Clark, Hon A. (Plym'th, S'n)

    Mills, Peter (West Devon)

    Colvin, Michael

    Miscampbell, Norman

    Cope, John

    Moate, Roger

    Corrie, John

    Montgomery, Fergus

    Costain, Sir Albert

    Moore, John

    Cranborne, Viscount

    Morrison, Hon C. (Devizes)

    Crouch, David

    Morrison, Hon P. (Chester)

    Dean, Paul (North Somerset)

    Myles, David

    Dickens, Geoffrey

    Neale, Gerrard

    Dorrell, Stephen

    Needham, Richard

    Douglas-Hamilton, Lord J.

    Nelson, Anthony

    Dunn, Robert (Dartford)

    Neubert, Michael

    Durant, Tony

    Newton, Tony

    Eggar, Tim

    Normanton, Tom

    Elliott, Sir William

    Onslow, Cranley

    Emery, Peter

    Osborn, John

    Eyre, Reginald

    Page, Rt Hon Sir G. (Crosby)

    Faith, Mrs Sheila

    Page, Richard (SW Herts)

    Farr, John

    Parris, Matthew

    Fell, Anthony

    Patten, Christopher (Bath)

    Fenner, Mrs Peggy

    Pattie, Geoffrey

    Fraser, Peter (South Angus)

    Pawsey, James

    Gardiner, George (Reigate)

    Pink, R. Bonner

    Gardner, Edward (S Fylde)

    Price, Sir David (Eastleigh)

    Garel-Jones, Tristan

    Proctor, K. Harvey

    Goodhart, Philip

    Raison, Timothy

    Gorst, John

    Rathbone, Tim

    Grant, Anthony (Harrow C)

    Rees, Peter (Dover and Deal)

    Greenway, Harry

    Renton, Tim

    Grieve, Percy

    Rhys Williams, Sir Brandon

    Griffiths, E.(B'y St. Edm'ds)

    Ridsdale, Julian

    Griffiths, Peter Portsm'th N)

    Sainsbury, Hon Timothy

    Gummer John Selwyn

    St. John-Stevas, Rt Hon N.

    Hamilton, Hon A.

    Shaw, Michael (Scarborough)

    Hampson, Dr Keith

    Shelton, William (Streatham)

    Hannam, John

    Shepherd, Richard

    Haselhurst, Alan

    Shersby, Michael

    Hawkins, Paul

    Silvester, Fred

    Hawksley, Warren

    Sims, Roger

    Heddle, John

    Smith, Dudley

    Henderson, Barry

    Speller, Tony

    Hooson, Tom

    Spence, John

    Howell, Ralph (N Norfolk)

    Spicer, Jim (West Dorset)

    Hunt, David (Wirral)

    Sproat, Ian

    Hunt, John (Ravensbourne)

    Squire, Robin

    1242

    Stainton, Keith

    Walker, B. (Perth )

    Stanbrook, Ivor

    Wall, Patrick

    Stevens, Martin

    Waller, Gary

    Stewart, Ian (Hitchin)

    Ward, John

    Stokes, John

    Warren, Kenneth

    Tapsell, Peter

    Watson, John

    Taylor, Teddy (S'end E)

    Wells, John (Maidstone)

    Tebbit, Norman

    Wells, Bowen

    Thomas, Rt Hon Peter

    Wheeler, John

    Thompson, Donald

    Whitney, Raymond

    Thorne, Neil (Ilford South)

    Wickenden, Keith

    Townend, John (Bridlington)

    Wilkinson, John

    Townsend, Cyril D, (B'heath)

    Winterton, Nicholas

    Trippier, David

    Wolfson, Mark

    Trotter, Neville

    Young, Sir George (Acton)

    van Straubenzee, W. R.

    Viggers, Peter

    Tellers for the Ayes:

    Waddington, David

    Mr. John Stradling Thomas

    Wakeham, John

    and Mr. Anthony Berry.

    Waldegrave, Hon William

    NOES

    Bennett, Andrew(St'kp't N)

    Race, Reg

    Buchan, Norman

    Rooker, J. W.

    Campbell-Savours, Dale

    Wainwright, R.(Colne V)

    Cocks, Rt Hon M. (B'stol S)

    Welsh, Michael

    Cryer, Bob

    Winnick, David

    Davis, T. (B'ham, Stechf'd)

    Dobson, Frank

    Tellers for the Noes:

    Dormand, Jack

    Mr. Walter Harrison and

    Field, Frank

    Mr. Hugh McCartney.

    Haynes, Frank

    Question accordingly agreed to.
    Bill read the Third time and passed.

Statutory Instruments, &c.
Mr. Deputy Speaker (Mr. Bernard Weatherill): In order to save the time of the House, I propose to put together the Questions on the five motions to approve statutory instruments.
Mr. Andrew F. Bennett: On a point of order, Mr. Deputy Speaker. May we have the Questions put separately?
Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments, &c).

DOUBLE TAXATION REIEF
That the draft Double Taxation Relief (Taxes on Estates of Deceased Persons and Inheritances and on Gifts) (Sweden) Order 1980, which was laid before this House on 24 November, be approved.—[Mr. Newton.]
The House divided: Ayes 154, Noes 6.

Division No. 32]

[5.53 am

AYES

Alexander, Richard

Buck, Antony

Baker, Nicholas (N Dorset)

Budgen, Nick

Banks, Robert

Butcher, John

Bendall, Vivian

Cadbury, Jocelyn

Berry, Hon Anthony

Carlisle, Kenneth (Lincoln)

Best, Keith

Chalker, Mrs. Lynda

Bevan, David Gilroy

Channon, Rt. Hon. Paul

Biggs-Davison, John

Churchill, W. S.

Blackburn, John

Cope, John

Blaker, Peter

Corrie, John

Boscawen, Hon Robert

Costain, Sir Albert

Bottomley, Peter (W'wich W)

Cranborne, Viscount

Bright, Graham

Crouch, David

Brittan, Leon

Dean, Paul (North Somerset)

Brooke, Hon Peter

Dorrell, Stephen

Brotherton, Michael

Douglas-Hamilton, Lord J.

Browne, John (Winchester)

Durant, Tony

1243

Eggar, Tim

Newton, Tony

Elliott, Sir William

Normanton, Tom

Emery, Peter

Onslow, Cranley

Eyre, Reginald

Osborn, John

Faith, Mrs Sheila

Page, Rt Hon Sir G. (Crosby)

Farr, John

Page, Richard (SW Herts)

Fell, Anthony

Parris, Matthew

Fenner, Mrs Peggy

Patten, Christopher (Bath)

Forman, Nigel

Pawsey, James

Gardner, Edward (S Fylde)

Pink, R. Bonner

Garel-Jones, Tristan

Price, Sir David (Eastleigh)

Goodhart, Philip

Proctor, K. Harvey

Gorst, John

Rathbone, Tim

Grant, Anthony (Harrow C)

Rees, Peter (Dover and Deal)

Greenway, Harry

Renton, Tim

Grieve, Percy

Rhys Williams, Sir Brandon

Griffiths, Peter Portsm'th N)

Sainsbury, Hon Timothy

Gummer, John Selwyn

St. John-Stevas, Rt Hon N.

Hamilton, Hon A.

Shaw, Michael (Scarborough)

Hampson, Dr Keith

Shelton, William (Streatham)

Haselhurst, Alan

Shepherd, Richard

Hawkins, Paul

Silvester, Fred

Hawksley, Warren

Sims, Roger

Heddle, John

Speller, Tony

Henderson, Barry

Spence, John

Hooson, Tom

Spicer, Jim (West Dorset)

Howell, Ralph (N Norfolk)

Squire, Robin

Hunt, David (Wirral)

Stainton, Keith

Jenkin, Rt Hon Patrick

Stanbrook, Ivor

Johnson Smith, Geoffrey

Stevens, Martin

Jopling, Rt Hon Michael

Stewart, Ian (Hitchin)

Kershaw, Anthony

Stradling Thomas, J.

Lamont, Norman

Taylor, Teddy (S'end E)

Lang, Ian

Tebbit, Norman

Latham, Michael

Thomas, Rt Hon Peter

Lennox-Boyd, Hon Mark

Thompson, Donald

Lester Jim (Beeston)

Thorne, Neil (Ilford South)

Lloyd, Peter (Fareham)

Townsend, Cyril D, (B'heath)

Loveridge, John

Trippier, David

Luce, Richard

Trotter, Neville

Lyell, Nicholas

van Straubenzee, W. R.

MacGregor, John

Viggers, Peter

MacKay, John (Argyll)

Wainwright, R.(Colne V)

McNair-Wilson, P. (New F'st)

Wakeham, John

Madel, David

Waldegrave, Hon William

Marland, Paul

Walker, B. (Perth )

Mates, Michael

Waller, Gary

Mather, Carol

Warren, Kenneth

Mawhinney, Dr Brian

Watson, John

Maxwell-Hyslop, Robin

Wells, John (Maidstone)

Mayhew, Patrick

Wells, Bowen

Mellor, David

Wheeler, John

Meyer, Sir Anthony

Whitney, Raymond

Miller, Hal (B'grove)

Wickenden, Keith

Mills, Peter (West Devon)

Wilkinson, John

Montgomery, Fergus

Winterton, Nicholas

Moore, John

Wolfson, Mark

Morrison, Hon P. (Chester)

Young, Sir George (Acton)

Neale, Gerrard

Needham, Richard

Tellers for the Ayes:

Nelson, Anthony

Mr. Spencer Le Marchant and

Neubert, Michael

Mr. David Waddington.

NOES

Campbell-Savours, Dale

Winnick, David

Cryer, Bob

Dobson, Frank

Tellers for Noes:

McCartney, Hugh

Mr. Walter Harrison and

Race, Reg

Mr. Andrew F. Bennett

Question accordingly agreed to.
Mr. Deputy Speaker: Motion No. 3—
Mr. Peter Brooke: Motions Nos. 3 to 6 not moved, Sir.

Supplementary Benefit (School Leavers)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Brooke.]
6.2 am
Mr. Richard Wainwright: The threatened damage to secondary education which I put to the House tonight will be nationwide. It is causing deep concern to teachers and careers officers in all parts of the country. The full impact on parents and pupils has been deliberately blunted up to now, for the very good reason of not deterring pupils preparing for their examinations. Unfortunately, this low key can no longer be maintained.
The cause of the trouble is the radical alteration in supplementary benefit rules for school leavers flowing from the Social Security Act 1980 and regulations made under it, applying from the end of the present school term. My case is that regulations which the Government have recently made can be unmade so as to restore the much more satisfactory previous position.
Until now, those who left school and signed on were immediately eligible for supplementary benefit. Likewise, child benefit ceased immediately on their leaving school. Under the drastically changed rules, supplementary benefit will not be available to school leavers until the nearest of three fixed days in each year, roughly corresponding with the end of school holidays. A pupil leaving at Christmas will be able to claim from the first Monday in January and an Easter school leaver will be able to claim on the first Monday after Easter Monday, but—and this is the mischief—a pupil staying on at school until May in order to sit CSE or GCE O-level examinations will not be able to claim benefit until the first Monday in September, and during this long period of delay child benefit will continue to be paid to the parents.
For a school leaver under 18 years of age living at home, the average net loss—namely, the lost supplementary benefit minus the continuing child benefit—will be, at the very least, more than £8 a week. In most cases it will be about £10·50. If the youngster is living away from home, his or her loss will be much greater. These figures mean that a 16-year-old who abandons examinations to leave at Easter will draw about £250 or more in supplementary benefit before his or her mates who stay on to take examinations can draw even a penny. If we take into account child benefit, which is paid not to the youngster but to the parent, the discrepancy becomes £159 at the very least. It is these serious sums that will obviously be a severe disincentive to some youngsters to stay at school to take examinations or even to prepare for them.
The group of youngsters most seriously affected will be the 40 per cent, of fifth formers old enough legally to leave school next Easter. It is expected that 327,000 pupils will be legally able to leave school in England at Easter next year. In 1979, which is the most recent year for which figures are available, only 14 per cent, of those entitled legally to leave at Easter actually did so. My fear—it is not mine alone as it is the fear of informed opinion throughout the relevant professions and is now almost unanimous opinion—is that next year the 14 per cent, will tragically grow. It is feared that when the deplorable facts are more widely known the percentage will grow seriously in the following year.

1245
The new social security temptation will be added to the present attraction of leaving before examinations in order to get early into the desperate job queue and to have a first chance of YOP. The change comes at a most unsuitable time when modest examination qualifications probably seem to some school leavers not to provide much answer to unemployment. Equally, the change conies at this dreadful time when unemployment in the home will make it extremely difficult for many families to make the big financial sacrifice that will be called for to keep a child at school for examinations and when the child is unable to draw any supplementary benefit until September.
Within the schools, the damage will not be limited to the actual examination period or to children in their last few months at school. The Head Teachers' Association of the metropolitan borough of Kirklees describes the likely effect of these changes thus:
"There is no doubt that the prospect of sitting important examinations at the end of the fifth year is a powerful motivation to secondary school pupils. In the light of this new regulation, however, it is likely that substantial numbers of pupils will not be sitting such examinations, and that they may know this for two or three years before they actually leave. The implications of this situation both for the progress of these young people and for the work of the schools generally can only be described as daunting."
It is said that under the previous rules supplementary benefit could be and sometimes was abused by youngsters signing on for the summer although firmly intending all the time to return to school in September and not really seeking work in a meaningful way. I am not hers to dispute that. However, that belongs, unfortunately, to a vanished age when full employment was rightly an objective of Governments and when young people did not have to panic about work opportunities after leaving school.
My case is that if there is any merit in the change it belongs to a time which has unfortunately gone. This change has been brought cut of a pigeon-hole at a most inappropriate moment.
The old regulations enabled the DHSS to recover benefits paid where there had been abuse if it was able to do so. In today's dreadful circumstances, it is much more likely that a youngster will genuinely be seeking work, probably desperately, in the summer. If he or she returns to school in September, it will be merely as an alternative to further prolonged unemployment.
There is also the question of GCE resits, which take place in the early part of the autumn term. A child who goes back for a GCE resit, which may be of great importance to his or her future career, and then leaves school having resat the examination in September will not be able to draw any benefit until the first Monday in January, which is another disincentive to taking worthwhile examinations.
Of course, cynics might wrongly allege that many fifth formers will leave at Easter anyway under today's grim conditions, irrespective of the benefit regulations. However, certainly on the evidence that has been made available to me—and I have had a good deal—that is not so. I cite, for instance, a typical comprehensive school in the Coins Valley constituency and give the figures of those who have left at Easter rather than staying on into the examination term. In 1978 only 10 out of 213 fifth form pupils who could have left at Easter did so. In 1979 it was 10 out of 231. In 1980 it was seven out of 213. That shows how anxious children and their parents are for them to take these examinations, as long as there is no manifest and serious financial discouragement.
1246
I have heard it alleged—and this I find extremely difficult to understand, at any rate in West Yorkshire and Greater Manchester, where my constituency lies—that the summer months are not any good for job hunting anyway. The only possible grain of truth in that absurd and sweeping assumption is that perhaps apprenticeships tend to be recruited for in the autumn. Howev8r, unfortunately, in the North of England at any rate, the number of apprenticeships is dwindling rapidly. I entirely refute the general notion that the summer months are not suitable for job hunting. It is an out-of-date concept, if ever it had any serious validity.
These inhumane new regulations entirely ignore the very substantial cost nowadays of job hunting. A youngster going after a job has substantial fares to pay. He has to be properly dressed for the occasion, with an entirely different suit of clothes from the one that he or she wore at school. Then, it is important that visits are paid regularly to careers officers, which again require expensive fares.
I want to make it plain that my complaint is fully supported by at least the following bodies: the National Association of Head Teachers, the Society of Education Officers, the Institute of Careers Officers, the National Association of Probation Officers, the Assistant Masters and Mistresses Association, the well-known youth organisation Youth Aid and every secondary head teacher in the Colne Valley constituency. I have already mentioned the Kirklees Head Teachers' Association.
I wonder whether the Minister's constituency has made any representations on this point. I am also most anxious to know, and I am sure that the House will be, just what the extent was of the DHSS's careful consultations with educational interests and with the Department of Education and Science before the regulations were made. There is, I must confess, a prima facie suspicion that the old Whitehall insularity in which Departments do not readily take on board points from other Departments has prevailed in this case. I find it almost impossible to believe that the Department of Education and Science has willingly gone along with this backward step.
In the Standing Committee on the Bill, when the clause came up under which this regulation has been made, there was, unfortunately, no Liberal Member. However, the hon. Member for Stockport, North (Mr. Bennett) raised the matter. I must say that the Minister's arguments in Committee seem to me very thin. For instance, he stated:
"These proposals, however unwelcome they may be to the Committee, also provide a welcome relief in the burden on staff."
That illustrates the futility of simply playing the numbers game with the Civil Service.
We all want to reduce the cost of bureaucracy, but playing the numbers game, talking of getting rid of a relatively few clerks at the cost of irrevocable damage to children's careers and the atmosphere of secondary schools, is entirely out of proportion. I register a further protest, as my party always has, against playing the numbers game with the Civil Service Reductions should be made in a much more scientific way.
These harsh regulations for leavers who stay on at school to sit examinations are unsoundly based, partly on the false idea that a person who has left school still regards school holiday periods as meaningful. That is quite unreal. Further, this mean device has been brought out of a Whitehall pigeon-hole at the worst and most inappropriate

1247
time. Under conditions of full employment it might not have done anything like so much damage, but now the most disadvantaged young people will suffer and there will be a severe effect on motivation throughout secondary education.
I beg the Government at the least to take immediate action which is still open to them to prevent the change being made at the worst possible time for the welfare of children and for the well-being of our secondary schools.
6.16 am
The Under-Secretary of State for Health and Social Security (Mrs. Lynda Chalker): I am grateful to the hon. Member for Colne Valley (Mr. Wainwright) for raising the question of the deferment of school leavers' entitlement to supplementary benefit. My hon. Friend the Under-Secretary of State for Education and Science had hoped to be here. I hope that the hon. Member will appreciate why that was not possible. My hon. Friend will, however, examine the matter with me, and I shall come to that matter later. I am aware that this issue has caused some concern in the last couple of weeks—some of it rather alarmist in tone — and it is helpful to have the opportunity to put on record the background and reasoning behind the change.
The change was proposed originally in "Social Assistance", a consultative document prepared by a team of officials and published in July 1978 under the previous Government. Under the old arrangements, a school leaver could claim benefit immediately on leaving school provided he was then over 16. Reviewing the effect of this, the team noted that, notwithstanding changes in statutory school leaving arrangements, recruitment practices of employers and the holiday expectations of the young people themselves were as often as not based on the assumption of starting work in the autumn. Entitlement to benefit in the period between leaving school and the end of the next holiday period was out of phase with holiday and employment practices and, in addition, had a number of unwelcome consequences.
A heavy burden was placed on unemployment benefit and supplementary benefit offices at a time when the staff were already under considerable pressure—for example, in handling the uprating. It was a question not of saving posts but of other pressures in the offices at that time. Similarly, careers officers might have been hampered in their efforts to secure employment for those genuinely looking for work by also having to handle cases of people primarily using their services as an avenue to benefit. This tended to create an artificial picture of the extent of real unemployment amongst school leavers. Finally, there were temptations to abuse the system, as the hon. Member has recognised.
Benefit is, of course, payable only to those genuinely seeking work. Yet some young people quite genuinely do not know, since they are awaiting examination results, whether they have finally left school. And, less creditably, others might misrepresent their intentions in order to claim benefit.
"Social Assistance" received an extremely wide circulation. A number of outside educational interests were included on the distribution list, including the National Umion of Teachers, the National Association of
1248
Head Teachers and the National Union of Students. The report's proposals were then the subject of extensive consultation.
The proposal attracted a great deal of attention—indeed, throughout its consideration this change has been well publicised. Views tended to polarise. Some saw the proposal as an issue of principle that young people should be eligible for an income of their own right; that attitude goes rather wider than the question of deferment of benefit for a set period. Interestingly, the views of careers officers, who work with young unemployed people, were almost equally divided for and against the proposal. Those who supported the proposal tended to suggest that the immediate availability of benefit acted as an inducement to leave school, undermined a young person's determination to get a job and hampered careers officers' attempts at securing a placement.
Mr. Richard Wainwright: Concerning the careers officers' views, will the Minister say whether the consultation was with the professional body of careers officers or simply with individual careers officers?
Mrs. Chalker: I fear that I must speak from memory. The official bodies—there are more than one—were consulted. Bearing in mind the volume of correspendence that I received from individual careers officers and teachers, I am sure that they, in turn, had circulated the information sent to them in "Social Assistance" to their membership. I received widely flung correspondence and representations. They came from individuals and through the various associations that represent them. If I am in any way in error, I shall write to the hon. Gentleman.
The Supplementary Benefits Commission, in its comments, concluded that it saw good reasons for making the change, provided that the interests of a number of special groups were safeguarded. It was particularly concerned that a young person's first encounter with the social security system might be in circumstances which encouraged him to misrepresent his intentions.
Following consideration of views on this and other changes—and it must be remembered that this change is just one of very many in the revised supplementary benefits scheme—the Government announced in a White Paper, Cmnd. 7773 published in November 1979, that they intended to proceed with the change recommended by the review team in "Social Assistance".
The change has been implemented by regulations through an interlocking amendment to the child benefit scheme, which extends entitlement to child benefit during the period of deferment, and a corresponding regulation dealing with entitlement in the revised, regulated supplememtary benefits scheme. But our intention to use regulations in that way has been put clearly on record in the House on a number of occasions. There is no validity in the suggestion that this has somehow been smuggled through by the back door. When introducing the Second Reading debate on 20 December 1979 on what is now the Social Security Act 1980, my right hon. Friend the Secretary of State made clear that the change would be implemented, and he reiterated the reasoning behind the change.
It was also discussed, as the hon. Gentleman said, in greater detail during the Bill's Committee stage on 19 February 1980 on an amendment tabled by the hon. Member for Stockport, North (Mr. Bennett). Indeed,

1249
precisely the point on examinations was made on that ocasion and the educational implications were specifically raised. I remember the discussion well as it finished some time after five o'clock in the morning, which appears to be a regular habit. Since that occasion, the Government's intention to proceed has been reiterated on the record on a number of occasions—for example, in reply to the hon. Gentleman on 2 June: Hansard, Volume 985, column 551
I have explained the background at some length because it seemed to me light to emphasise the careful consideration that has been given to this change over the last two years or so, the widespread consultation and discussion that preceded it and the specific attention to the educational implications in the course of taking the decision.
What will be the position of future school leavers? The hon. Gentleman referred to the position since 24 November. A 16-year-old school leaver will not be able to get benefit in his own right until the first supplementary benefit pay day after either the first Monday in January, the Monday after Easter Monday or the first Monday in September, whichever of those three is the first to follow the date of leaving. For that period, the children will continue to be treated as dependent on their parents. But the deferment will not apply to a number of special groups that can claim benefit in their own right while still at school. That undertaking was given to the Supplementary Benefits Commission. Those groups are young people who have a child of their own, orphans who are not being cared for by a guardian or otherwise maintained, young people who are estranged from their parents and living away—a position mentioned by the hon. Gentleman—and pupils whose handicap is such that they would be unlikely to obtain employment in the foreseeable future were they to leave school. Nor will the deferment affect those who have reached 19 by the time they leave school. We have, therefore, protected the special groups whom the Supplementary Benefits Commission was concerned to safeguard.
Treating school leavers as dependent on their parents in the period of deferment has the further effect that their parents will continue to be entitled to social security dependency additions in the period of deferment, as well as continuing to receive child benefit in respect of the school leaver. This is important in relation to the accusation that the change is hitting those least able to cope with the expense of the extended responsibility for their child.
The fact is that a family which is already receiving supplementary benefit and which contains a 16-year-old school leaver does not lose out by the change. This is because the non-householder scale rate to which a 16-year-old would become entitled is the same amount of money—£13·10 a week—as the dependency addition that the parent of such a child has included in the assessment of needs for the purposes of supplementary benefit. That is to say, total income of a family already on supplementary benefit is unaffected by the change in the entitlement rules. The parents get what the young person is denied. We have, therefore, in implementing the change, taken care to protect the families most in need.
We are not convinced that pupils will choose to sacrifice their longer-term career interests for the sake of short-term financial gain. Of course, the Government would be most concerned if pupils were dissuaded from
1250
entering CSE or GCE examinations in order to be eligible for short-term financial gain, but, as I have said, we do not expect this to be the case, and I am sure that teachers need no guidance from the centre about advising their pupils on the value of obtaining qualifications. I have consulted my colleagues in the Department of Education and Science. They, with us, will pay careful attention to the number of entries in different parts of the country for public examinations in 1981.
I recognise the concern that this change has aroused. If there appears subsequently to be clear evidence that the change has had major unwelcome consequences, of course the Government will be prepared to review the position. We would have to take into account the wider considerations that I want to come to quickly in weighing the advantages and disadvantages of any further change. But I can assure the House that, should the fears that have been expressed prove valid, we shall look again at the merits of the change.
I should like to put the changes in the wider social context. Too often, Governments are accused of examining issues in a narrow context, ignoring the wider social choices that are at stake. This change is, by contrast, a clear example of a Government balancing priorities on expenditure and coming to a decision on where the money available might be deployed most usefully. As I mentioned at the beginning of my speech, the proposal for change was just one in the wide-ranging report "Social Assistance". All discussions on the change have therefore to be set in the wider context. That has been a major task and it has entailed conscious decisions on the best use of money and staff time.
We have implemented the revised supplementary benefits scheme as a package, in which the cost of the improvements that we have been able to introduce is broadly balanced by the savings made elsewhere. I make no apology for that. Those who call for increased expenditure in this or that area ignore the reality of the total bill for the taxpayer that the accumulation of separate bids represents. Of course, the change we have made will save money. We expect there to be a net saving of some £4 millon a year after taking account of the increased child benefit cost. Some families will receive less assistance from the State than they might otherwise have done, but we have protected those most in need.
We have simplified many aspects of the supplementary benefit scheme which concern children. We now have three scale rates for children rather than five, with an enhanced benefit on the change over ages. We are offering more help to families with young children under the age of five. We have reduced from two years to one year the qualifying period for the higher-rate long-term benefit rates for claimants under pension age who are not required to register and be available for work. That will help disabled people and lone parents.
These were changes that we wanted to make, and those who have objected to the school leavers' changes have not suggested that we should go back upon them. But the improvements were bought at the price of savings elsewhere, and it seems to me that we exercised proper social priorities. Put simply, we believed that the money could be better used in other areas. The improvements that we made outweighed the disadvantages.
I repeat to the hon. Gentleman and to the House that should my colleagues at the Department of Education and Science, in their monitoring of what happens, find that

1251
there are major welcome consequences of the type that the hon. Gentleman fears, the Government will be prepared to review the position. I think, however, that we have to bear in mind the weight of evidence on both sides of the case and see how we can bring together all the various opportunities for young people with the expanded youth opportuinites programme. We have to make sure that we
1252
are doing the best and the right thing, and I hope that the considerations that will take place this year will enable us to come up with the right answer for this very difficult period for school leavers.
I appreciate the hon. Gentleman's courtesy in putting the debate over in the way that he has done.
Question put and agreed to.
Adjourned accordingly at twenty-nine minutes to Seven o'clock a.m.

Employment
  Retail Price Index
  Retail Price Index
  Temporary Short-time Working Compensation Scheme
  Temporary Short-time Working Compensation Scheme
  Manufacturing Industry
  Manufacturing Industry
  Unemployment Statistics
  Unemployment Statistics
Energy
  Oil Sales
  Oil Sales
  Gas-gathering Pipeline
  Gas-gathering Pipeline
  Vale of Belvoir
  Vale of Belvoir
  Mail (Transportation)
  Mail (Transportation)
Civil Service
  Pensions
  Pensions
  Parliamentary Commissioner
  Parliamentary Commissioner
  Index to the Statutes
  Index to the Statutes
  Chronological Table of the Statutes
  Chronological Table of the Statutes
  Maternity Leave
  Maternity Leave
Home Department
  Domestic Wireless Licences
  Domestic Wireless Licences
  Immigration (X-ray Examinations)
  Immigration (X-ray Examinations)
  Parliamentary Constituencies (Northumberland)
  Parliamentary Constituencies (Northumberland)
  Commission for Racial Equality and Equal Opportunities Commission
  Commission for Racial Equality and Equal Opportunities Commission
  Firearms Offences
  Firearms Offences
  Local Radio
  Local Radio
  Police Surgeons
  Police Surgeons
  Gibraltarians
  Gibraltarians
  Private Security Industry
  Private Security Industry
  Widow's Pension
  Widow's Pension
  Vietnamese Refugees
  Vietnamese Refugees
  Immigration
  Immigration
  Falkland Islanders
  Falkland Islanders
  Parliamentary Boundaries (Greater London)
  Parliamentary Boundaries (Greater London)
  Prime Minister (Engagements)
  Prime Minister (Engagements)
  Agro-Forestry
  Agro-Forestry
  Prestonpans, East Lothian
  Prestonpans, East Lothian
  Cyprus
  Cyprus
  Falkland Islands
  Falkland Islands
  Paymaster General
  Paymaster General
  European Community
  European Community
  Leeds
  Leeds
  Wales
  Wales
  Sheffield
  Sheffield
  USSR
  USSR
  West Midlands
  West Midlands
  Industrial Productivity
  Industrial Productivity
  Poster and Tableau Exhibition Display
  Poster and Tableau Exhibition Display
  Regional Government Offices
  Regional Government Offices
  Non-departmental Bodies
  Non-departmental Bodies
  European Community (Import Policy)
  European Community (Import Policy)
  Industrial Productivity (International Comparisons)
  Industrial Productivity (International Comparisons)
  Wage and Salary Increases (Monitoring)
  Wage and Salary Increases (Monitoring)
  Price Increases (Monitoring)
  Price Increases (Monitoring)
  Rabbits
  Rabbits
  Taoiseach (Meeting)
  Taoiseach (Meeting)
Wales
  School Books (Expenditure)
  School Books (Expenditure)
  Hill Cows
  Hill Cows
Trade
  Civil Servants (Identification)
  Civil Servants (Identification)
  Air Traffic Control
  Air Traffic Control
  European Community (Food Exports)
  European Community (Food Exports)
  Steel
  Steel
  Looe (Coastguard Post)
  Looe (Coastguard Post)
  Textile Imports
  Textile Imports
  Petrol Pump Markings (Litre Sales)
  Petrol Pump Markings (Litre Sales)
  London Pilotage District
  London Pilotage District
  Local Authority Airports
  Local Authority Airports
Education and Science
  Nursery School Places
  Nursery School Places
  Microelectronics
  Microelectronics
  School Leavers (Statistics)
  School Leavers (Statistics)
  School Leavers
  School Leavers
  Fifth Form Children
  Fifth Form Children
  Religious Education
  Religious Education
  School Examinations
  School Examinations
  Magistrates
  Magistrates
Northern Ireland
  Upper Galwally (Police Post)
  Upper Galwally (Police Post)
  Maze Prison
  Maze Prison
  Irish Republican Army Prisoners
  Irish Republican Army Prisoners
  Mentally Handicapped Persons
  Mentally Handicapped Persons
  Community Service
  Community Service
  Prisoners' Families (Holidays)
  Prisoners' Families (Holidays)
  Road Gritting
  Road Gritting
  Voluntary Schools
  Voluntary Schools
Industry
  Steel Industry
  Steel Industry
  Direct Reduction Iron Plant (Hunterston)
  Direct Reduction Iron Plant (Hunterston)
  British Shipbuilders (Naval Orders)
  British Shipbuilders (Naval Orders)
  Videotex Technology
  Videotex Technology
  Deep Sea Bed Exploration
  Deep Sea Bed Exploration
  Export Controls
  Export Controls
  Civil Servants (Identification)
  Civil Servants (Identification)
  Rolls-Royce Limited
  Rolls-Royce Limited
  Mr. Jack Melchor
  Mr. Jack Melchor
  British Steel Corporation (Market Share)
  British Steel Corporation (Market Share)
  Shipowners (Tonnage Requirements)
  Shipowners (Tonnage Requirements)
  Manufacturing Industry (Investment)
  Manufacturing Industry (Investment)
  Work Premises (Insulation)
  Work Premises (Insulation)
  Small Firms
  Small Firms
  European Community
  European Community
  European Community Legislation
  European Community Legislation
Defence
  Air-to-Air Missiles
  Air-to-Air Missiles
  Small Businesses
  Small Businesses
Social Services
  Supplementary Benefit (School Leavers)
  Supplementary Benefit (School Leavers)
  Health Regulations (Enforcement)
  Health Regulations (Enforcement)
  Secure Accommodation
  Secure Accommodation
  National Insurance Stamp
  National Insurance Stamp
  Special Hospitals
  Special Hospitals
  Pharmacists (Salary)
  Pharmacists (Salary)
  Pharmacy Review Panel
  Pharmacy Review Panel
  National Health Service (Staffing)
  National Health Service (Staffing)
  Psychosurgery
  Psychosurgery
  Abortions
  Abortions
  Children in Care
  Children in Care
  Private Medicine
  Private Medicine
  Mentally Handicapped Persons
  Mentally Handicapped Persons
  European Community (Disability Care)
  European Community (Disability Care)
  London Advisory Group
  London Advisory Group
  National Insurance (Self-employed Persons)
  National Insurance (Self-employed Persons)
  Pharmaceutical Saks
  Pharmaceutical Saks
  Tuberculosis
  Tuberculosis
  Life Expectancy
  Life Expectancy
  Diseases (Mortality)
  Diseases (Mortality)
  Health Authority Members
  Health Authority Members
  Short-time Working
  Short-time Working
  Pharmaceutical Industry (Output)
  Pharmaceutical Industry (Output)
  School Leavers (Benefits)
  School Leavers (Benefits)
  Supplementary Benefits Handbook (Northern Ireland)
  Supplementary Benefits Handbook (Northern Ireland)
Industry
  British Steel Corporation (Reorganisation)
  British Steel Corporation (Reorganisation)
Scotland
  Youth Opportunities Programme
  Youth Opportunities Programme
  Psychiatrically Disturbed Young Persons
  Psychiatrically Disturbed Young Persons
  Horticulture Industry
  Horticulture Industry
  Perth Prison (Security)
  Perth Prison (Security)
  Drugs (Prescriptions)
  Drugs (Prescriptions)
  Unemployment
  Unemployment
  Job Losses
  Job Losses
  Job Vacancies
  Job Vacancies
  Parliamentary Constituencies
  Parliamentary Constituencies
  Education (Assisted Places Scheme)
  Education (Assisted Places Scheme)
Transport
  Trunk Roads (Traffic Statistics)
  Trunk Roads (Traffic Statistics)
  A45 (Ml—Weedon)
  A45 (Ml—Weedon)
  Lighting Schemes
  Lighting Schemes
  Roads (Winter Maintenance Programmes)
  Roads (Winter Maintenance Programmes)
  Motorway Service Stations
  Motorway Service Stations
Environment
  Sewers
  Sewers
  Architectural Competitions
  Architectural Competitions
  House Building (Moratorium)
  House Building (Moratorium)
  Property Services Agency Testing Station, RAF Cardington
  Property Services Agency Testing Station, RAF Cardington
  Departmental Staff (Identification)
  Departmental Staff (Identification)
  Vale of Belvoir
  Vale of Belvoir
  Stonehenge
  Stonehenge
  Departmental Circular 19/80
  Departmental Circular 19/80
  Council House Sales
  Council House Sales
  Rural Area Status
  Rural Area Status
  Vietnamese Refugees
  Vietnamese Refugees
  Home Improvement Grants
  Home Improvement Grants
  Public Houses (Cellar Lighting)
  Public Houses (Cellar Lighting)
European Community
  European Parliament
  European Parliament
  Wine Sales
  Wine Sales
  Non-Departmental Bodies
  Non-Departmental Bodies
Agriculture, Fisheries and Food
  Fisheries Policy
  Fisheries Policy
  Hard Wheat
  Hard Wheat
  European Community (Wine Sales)
  European Community (Wine Sales)
  Common Agricultural Policy
  Common Agricultural Policy
National Finance
  Age Allowance
  Age Allowance
  Manufacturing Industry (Profitability)
  Manufacturing Industry (Profitability)
  Economic Measures
  Economic Measures
  Private Sector Investment
  Private Sector Investment
  Inflation
  Inflation
  Family Incomes (Taxation)
  Family Incomes (Taxation)
  National Insurance
  National Insurance
  Value Added Tax
  Value Added Tax
  Borrowings (Interest Rates)
  Borrowings (Interest Rates)
  Money Supply
  Money Supply
  European Community Budget
  European Community Budget
  Public Service Contracts
  Public Service Contracts
  PAYE (Computerisation)
  PAYE (Computerisation)
  Oil and Gas Revenues
  Oil and Gas Revenues
  Public Sector Borrowing Requirement
  Public Sector Borrowing Requirement
  Tax Evasion
  Tax Evasion
  Gross Domestic Product
  Gross Domestic Product
  Economic Strategy (£ Sterling)
  Economic Strategy (£ Sterling)
  Retail Price Index
  Retail Price Index
  Budget 1979 (Policies)
  Budget 1979 (Policies)
  Interest Rates
  Interest Rates
  Minimum Lending Rate
  Minimum Lending Rate
  CBI
  CBI
  Departmental Manpower
  Departmental Manpower
  Company Taxation
  Company Taxation
  Eastern Bloc Countries
  Eastern Bloc Countries
  Warsaw Pact Countries (Debt)
  Warsaw Pact Countries (Debt)
  Personal Taxation
  Personal Taxation
  Royal Mint
  Royal Mint
  Debts and Currency Reserves
  Debts and Currency Reserves
  Currency and Proof Coins
  Currency and Proof Coins
  Civil Servants (Identification)
  Civil Servants (Identification)
  Retail and Tax and Price Indexes
  Retail and Tax and Price Indexes
  Tax Avoidance
  Tax Avoidance
  Rossminster Group
  Rossminster Group
  American Billion
  American Billion
  Public Records Act
  Public Records Act
  Oil and Gas Revenues
  Oil and Gas Revenues
Employment
  Retail Price Index
  Retail Price Index
  Temporary Short-time Working Compensation Scheme
  Temporary Short-time Working Compensation Scheme
  Manufacturing Industry
  Manufacturing Industry
  Unemployment Statistics
  Unemployment Statistics
Energy
  Oil Sales
  Oil Sales
  Gas-gathering Pipeline
  Gas-gathering Pipeline
  Vale of Belvoir
  Vale of Belvoir
  Mail (Transportation)
  Mail (Transportation)
Civil Service
  Pensions
  Pensions
  Parliamentary Commissioner
  Parliamentary Commissioner
  Index to the Statutes
  Index to the Statutes
  Chronological Table of the Statutes
  Chronological Table of the Statutes
  Maternity Leave
  Maternity Leave
Home Department
  Domestic Wireless Licences
  Domestic Wireless Licences
  Immigration (X-ray Examinations)
  Immigration (X-ray Examinations)
  Parliamentary Constituencies (Northumberland)
  Parliamentary Constituencies (Northumberland)
  Commission for Racial Equality and Equal Opportunities Commission
  Commission for Racial Equality and Equal Opportunities Commission
  Firearms Offences
  Firearms Offences
  Local Radio
  Local Radio
  Police Surgeons
  Police Surgeons
  Gibraltarians
  Gibraltarians
  Private Security Industry
  Private Security Industry
  Widow's Pension
  Widow's Pension
  Vietnamese Refugees
  Vietnamese Refugees
  Immigration
  Immigration
  Falkland Islanders
  Falkland Islanders
  Parliamentary Boundaries (Greater Landon)
  Parliamentary Boundaries (Greater Landon)
  Prime Minister (Engagements)
  Prime Minister (Engagements)
  Agro-Forestry
  Agro-Forestry
  Prestonpans, East Lothian
  Prestonpans, East Lothian
  Cyprus
  Cyprus
  Falkland Islands
  Falkland Islands
  Paymaster General
  Paymaster General
  European Community
  European Community
  Leeds
  Leeds
  Wales
  Wales
  Sheffield
  Sheffield
  USSR
  USSR
  West Midlands
  West Midlands
  Industrial Productivity
  Industrial Productivity
  Poster and Tableau Exhibition Display
  Poster and Tableau Exhibition Display
  Regional Government Offices
  Regional Government Offices
  Non-departmental Bodies
  Non-departmental Bodies
  European Community (Import Policy)
  European Community (Import Policy)
  Industrial Productivity (International Comparisons)
  Industrial Productivity (International Comparisons)
  Wage and Salary Increases (Monitoring)
  Wage and Salary Increases (Monitoring)
  Rabbits
  Rabbits
  Price Increases (Monitoring)
  Price Increases (Monitoring)
  Taoiseach (Meeting)
  Taoiseach (Meeting)
Wales
  School Books (Expenditure)
  School Books (Expenditure)
  Hill Cows
  Hill Cows
Trade
  Civil Servants (Identification)
  Civil Servants (Identification)
  Air Traffic Control
  Air Traffic Control
  European Community (Food Exports)
  European Community (Food Exports)
  Steel
  Steel
  Looe (Coastguard Post)
  Looe (Coastguard Post)
  Textile Imports
  Textile Imports
  Petrol Pump Markings (Litre Sales)
  Petrol Pump Markings (Litre Sales)
  London Pilotage District
  London Pilotage District
  Local Authority Airports
  Local Authority Airports
Education and Science
  Nursery School Places
  Nursery School Places
  Microelectronics
  Microelectronics
  School Leavers (Statistics)
  School Leavers (Statistics)
  School Leavers
  School Leavers
  Fifth Form Children
  Fifth Form Children
  Religious Education
  Religious Education
  School Examinations
  School Examinations
  Magistrates
  Magistrates
Northern Ireland
  Upper Galwally (Police Post)
  Upper Galwally (Police Post)
  Maze Prison
  Maze Prison
  Irish Republican Army Prisoners
  Irish Republican Army Prisoners
  Mentally Handicapped Persons
  Mentally Handicapped Persons
  Community Service
  Community Service
  Prisoners' Families (Holidays)
  Prisoners' Families (Holidays)
  Road Gritting
  Road Gritting
  Voluntary Schools
  Voluntary Schools
Industry
  Steel Industry
  Steel Industry
  Direct Reduction Iron Plant (Hunterston)
  Direct Reduction Iron Plant (Hunterston)
  British Shipbuilders (Naval Orders)
  British Shipbuilders (Naval Orders)
  Videotex Technology
  Videotex Technology
  Deep Sea Bed Exploration
  Deep Sea Bed Exploration
  Export Controls
  Export Controls
  Civil Servants (Identification)
  Civil Servants (Identification)
  Rolls-Royce Limited
  Rolls-Royce Limited
  Mr. Jack Melchor
  Mr. Jack Melchor
  British Steel Corporation (Market Share)
  British Steel Corporation (Market Share)
  Shipowners (Tonnage Requirements)
  Shipowners (Tonnage Requirements)
  Manufacturing Industry (Investment)
  Manufacturing Industry (Investment)
  Work Premises (Insulation)
  Work Premises (Insulation)
  Small Firms
  Small Firms
  European Community
  European Community
  European Community Legislation
  European Community Legislation
Defence
  Air-to-Air Missiles
  Air-to-Air Missiles
  Small Businesses
  Small Businesses
Social Services
  Supplementary Benefit (School Leavers)
  Supplementary Benefit (School Leavers)
  Health Regulations (Enforcement)
  Health Regulations (Enforcement)
  Secure Accommodation
  Secure Accommodation
  National Insurance Stamp
  National Insurance Stamp
  Special Hospitals
  Special Hospitals
  Pharmacists (Salary)
  Pharmacists (Salary)
  Pharmacy Review Panel
  Pharmacy Review Panel
  National Health Service (Staffing)
  National Health Service (Staffing)
  Psychosurgery
  Psychosurgery
  Abortions
  Abortions
  Children in Care
  Children in Care
  Private Medicine
  Private Medicine
  Mentally Handicapped Persons
  Mentally Handicapped Persons
  European Community (Disability Care)
  European Community (Disability Care)
  London Advisory Group
  London Advisory Group
  National Insurance (Self-employed Persons)
  National Insurance (Self-employed Persons)
  Pharmaceutical Sales
  Pharmaceutical Sales
  Tuberculosis
  Tuberculosis
  Life Expectancy
  Life Expectancy
  Diseases (Mortality)
  Diseases (Mortality)
  Health Authority Members
  Health Authority Members
  Short-time Working
  Short-time Working
  Pharmaceutical Industry (Output)
  Pharmaceutical Industry (Output)
  School Leavers (Benefits)
  School Leavers (Benefits)
  Supplementary Benefits Handbook (Northern Ireland)
  Supplementary Benefits Handbook (Northern Ireland)
Industry
  British Steel Corporation (Reorganisation)
  British Steel Corporation (Reorganisation)
Scotland
  Youth Opportunities Programme
  Youth Opportunities Programme
  Psychiatrically Disturbed Young Persons
  Psychiatrically Disturbed Young Persons
  Horticulture Industry
  Horticulture Industry
  Perth Prison (Security)
  Perth Prison (Security)
  Drugs (Prescriptions)
  Drugs (Prescriptions)
  Unemployment
  Unemployment
  Job Losses
  Job Losses
  Job Vacancies
  Job Vacancies
  Parliamentary Constituencies
  Parliamentary Constituencies
  Education (Assisted Places Scheme)
  Education (Assisted Places Scheme)
TRANSPORT
  Trunk Roads (Traffic Statistics)
  Trunk Roads (Traffic Statistics)
  A45 (M1—Weedon)
  A45 (M1—Weedon)
  Lighting Schemes
  Lighting Schemes
  Roads (Winter Maintenance Programmes)
  Roads (Winter Maintenance Programmes)
  Motorway Service Stations
  Motorway Service Stations
Environment
  Sewers
  Sewers
  Architectural Competitions
  Architectural Competitions
  House Building (Moratorium)
  House Building (Moratorium)
  Property Services Agency Testing Station, RAF Cardington
  Property Services Agency Testing Station, RAF Cardington
  Departmental Staff (Identification)
  Departmental Staff (Identification)
  Vale of Belvoir
  Vale of Belvoir
  Stonehenge
  Stonehenge
  Departmental Circular 19/80
  Departmental Circular 19/80
  Council House Sales
  Council House Sales
  Rural Area Status
  Rural Area Status
  Vietnamese Refugees
  Vietnamese Refugees
  Home Improvement Grants
  Home Improvement Grants
  Public Houses (Cellar Lighting)
  Public Houses (Cellar Lighting)
European Community
  European Parliament
  European Parliament
  Wine Sales
  Wine Sales
  Non-Departmental Bodies
  Non-Departmental Bodies
Agriculture, Fisheries and Food
  Fisheries Policy
  Fisheries Policy
  Hard Wheat
  Hard Wheat
  European Community (Wine Sales)
  European Community (Wine Sales)
  Common Agricultural Policy
  Common Agricultural Policy
National Finance
  Age Allowance
  Age Allowance
  Manufacturing Industry (Profitability)
  Manufacturing Industry (Profitability)
  Economic Measures
  Economic Measures
  Private Sector Investment
  Private Sector Investment
  Inflation
  Inflation
  Family Incomes (Taxation)
  Family Incomes (Taxation)
  National Insurance
  National Insurance
  Value Added Tax
  Value Added Tax
  Borrowings (Interest Rates)
  Borrowings (Interest Rates)
  Money Supply
  Money Supply
  European Community Budget
  European Community Budget
  Public Service Contracts
  Public Service Contracts
  PAYE (Computerisation)
  PAYE (Computerisation)
  Oil and Gas Revenues
  Oil and Gas Revenues
  Public Sector Borrowing Requirement
  Public Sector Borrowing Requirement
  Tax Evasion
  Tax Evasion
  Gross Domestic Product
  Gross Domestic Product
  Economic Strategy (£ Sterling)
  Economic Strategy (£ Sterling)
  Retail Price Index
  Retail Price Index
  Budget 1979 (Policies)
  Budget 1979 (Policies)
  Interest Rates
  Interest Rates
  Minimum Lending Rate
  Minimum Lending Rate
  CBI
  CBI
  Departmental Manpower
  Departmental Manpower
  Company Taxation
  Company Taxation
  Eastern Bloc Countries
  Eastern Bloc Countries
  Warsaw Pact Countries (Debt)
  Warsaw Pact Countries (Debt)
  Personal Taxation
  Personal Taxation
  Royal Mint
  Royal Mint
  Debts and Currency Reserves
  Debts and Currency Reserves
  Currency and Proof Coins
  Currency and Proof Coins
  Civil Servants (Identification)
  Civil Servants (Identification)
  Retail and Tax and Price Indexes
  Retail and Tax and Price Indexes
  Tax Avoidance
  Tax Avoidance
  Rossminster Group
  Rossminster Group
  American Billion
  American Billion
  Public Records Act
  Public Records Act
  Oil and Gas Revenues
  Oil and Gas Revenues
Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of London): The LORD CHANCELLOR on the Woolsack.

Paper and Board Quota Consultations
Lord Irving of Dartford: 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 the negotiations with the EFTA non-candidate countries for paper and board quotas have been concluded and whether they will make a statement.
Lord Trefgarne: My Lords, consultations with all interests including the EFTA countries have now been concluded. For 1981 supplies of paper and board from EFTA countries we intend to open duty-free quotas 15,000 tonnes, or 1·06 per cent., larger than this year. An order setting out the detailed allocation of the proposed new quotas was laid in another place by my right honourable friend the Secretary of State for Trade on 9th December.
Lord Irving of Dartford: My Lords, is the noble Lord aware that these increases have been greeted with incredulity by the industry? The word "incredulity" is theirs, not mine. Some of their other language is harsher. Is it not clear that, despite continuous appeals to Ministers, the industry is again being sacrificed to its overseas competitors? Is the Minister also aware that the largest increases have been in the areas of greatest difficulty and greatest sensitivity—for example, case liners and uncoated, wood free paper? Is it not time therefore that our home industry was supported and not put under further grave disadvantage in relation to its overseas competitors?
Lord Trefgarne: Yes, my Lords, but the difficulty is that more than one industry is involved. While the paper producing industry is the most important in this context, we also have to take into account the interests of the paper consuming industries—the printing and publishing industries—and also the interests of our trading partners.
Lord Irving of Dartford: My Lords, is the noble Lord not aware that the demand for paper and pulp is at its lowest ebb since 1974? Therefore it is the paper and board industry which needs the Government's support.
Lord Trefgarne: My Lords, of course it has our support within the limits of what we can do in the consultations which we have recently completed.
Lord Chelwood: My Lords, do Her Majesty's Government have any views about the export of
798
British timber to Scandinavian countries to be pulped over there and brought back here at very great expense? Is not this a most extraordinary economic situation which has an adverse effect upon the balance of trade and, worse still in the long run, a very adverse effect on the confidence of private growers of timber?
Lord Trefgarne: My Lords, that is another question; but I cannot imagine that the firms would do it if it did not make economic sense.
Lord Taylor of Gryfe: My Lords, yesterday a Statement was made by the Government about support for the development of domestic forestry as a supplier to the paper and pulp industry. Is not the noble Lord's Answer today inconsistent with the Statement made yesterday?
Lord Trefgarne: Certainly not, my Lords. As I said earlier, when we reach our decision on the size of these quotas we have to take into account the interests of all the parties concerned.

Ministry of Defence (Bath): Contract Cleaning
3.4 p.m.
Lord Plant: 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 still maintain that contract cleaning is cheaper than direct cleaning at the Ministry of Defence (Bath).
The Minister of State, Ministry of Defence (Lord Strathcona and Mount Royal): Yes, my Lords.
Lord Plant: My Lords, I thank the Minister for that brief reply. Is he aware that the contract cleaning firms indulge in malpractices? These reduce, for instance, the employer's national insurance contribution. As a result, women cleaners are being made redundant, on the basis of cost comparison. Is the Minister also aware that the Home Counties Cleaning Services Group Limited has insisted on some of its women cleaners accepting as payment for the week's work two cheques in different names to be paid into their account, thus avoiding the employer's national insurance contribution as well as income tax? The department have been given sworn statutory declarations, copies of which I have here. Further, is the Minister aware that an officer of the Civil Service Union has seen a contractor's attendance register, with such euphonious names as Mrs. Sunday, Mrs. Monday and Mrs. Tuesday? Finally, would the Minister—
Several noble Lords: Order, order!
Lord Plant: This is the final point. We on this side of the House treat this matter a little more seriously than those on the other side. Would the Minister—
Several noble Lords: Order, order!
Lord Plant: Perhaps the Minister would reply to the four questions I have put to him.
The Lord President of the Council (Lord Soames): My Lords, I wonder whether the noble Lord would ask his question. Then my noble friend would be delighted to answer it. His supplementary is, I think the noble Lord will agree, a little long.
Lord Strathcona and Mount Royal: My Lords, the noble Lord referred at some length and in some detail to a specific case which is being investigated. Even if it proves that one contractor has behaved improperly, this would not necessarily invalidate the principle involved.

Constituency Boundaries and Representation
3.7 p.m.
Lord Boyd-Carpenter: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is now the average number of voters in constituencies in England, Wales, Scotland and Northern Ireland respectively; which English constituency has the largest and which the smallest number of voters; and what are the numbers of voters in these two cases.
The Parliamentary Under-Secretary of State, Home Office (Lord Belstead): My Lords, the provisional figures for 1980 published last May show that the average number of electors is, for constituencies in England, about 67,500; in Wales 58,300; in Scotland 54,400; and in Northern Ireland 87,500. The constituency in England with the largest number of electors is Buckingham, with 110,100, and that with the smallest is Newcastle-upon-Tyne, Central, with 24,400.
Lord Boyd-Carpenter: My Lords, I thank my noble friend for that comprehensive and interesting reply. May I ask him whether he does not feel that the kind of disparity between the value of a vote in Buckingham and the value of a vote in Newcastle-upon-Tyne, Central is so large as to undermine a good deal of the credibility of our system of representative parliamentary democracy and whether, if that be so, it is not a matter of some urgency to put it right?
Lord Belstead: My Lords, I agree with my noble friend that there are serious disparities between constituencies, as is shown by the figures which my noble friend's Question has elicited. This will be redressed by the proposals which are to be put forward by the commissions for the different parts of the United Kingdom.
Lord Renton: My Lords, is my noble friend aware that some of the very largest constituencies, with over 100,000 voters, cover some of the largest areas and
800
that this creates an intolerable burden for the Members of Parliament concerned? Is my noble friend also aware that, although the last major local government reorganisation took place over seven years ago, the alterations in the parliamentary boundaries which ought to have followed such reorganisation have not yet taken place? May I therefore reinforce the plea of my noble friend Lord Boyd-Carpenter.
Lord Belstead: My Lords, so far as my noble friend's first question is concerned, the rules which guide the boundary commissions include Rule 6 which specifically enjoins the boundary commissions that they may depart from the norm if special geographical considerations, including in particular the size, shape and accessibility of a constituency, need to be taken into account. I absolutely agree with what my noble friend said on that point. So far as my noble friend's second question is concerned, I must admit that I was not aware of what he said. I will certainly look into it.
Lord Elwyn-Jones: My Lords, are not these the very matters which the boundary commissions are looking into? Have not these matters been notorious over the centuries? Did parliamentary democracy not survive even the rotten boroughs?
Lord Belstead: My Lords, I think that the machinery by which parliamentary democracy survives is sharpened up and generally made better if these reviews take place (as they do) between 10 and 15 years after the previous review. That is what is happening now, and as soon as the review is completed and as soon as practicable the Government will be laying orders for that purpose.
Lord Wynne-Jones: My Lords, does not the noble Lord agree that the high quality of the electorate in Newcastle-upon-Tyne fully justified the preferential treatment given to the electors there?
Lord Belstead: My Lords, I do not think even the electorate of Newcastle-upon-Tyne, Central, would claim that for themselves.
Lord Boyd-Carpenter: My Lords, arising out of the question put by the noble and learned Lord, Lord Elwyn-Jones, is it not a fact that all sincere defenders of democracy have been active and urgent in abolishing rotten boroughs?
Lord Belstead: My Lords, I think that is indisputable.
Lord Elwyn-Jones: My Lords, is the noble Lord aware that I was merely questioning the demise of parliamentary democracy which the noble Lord was so fearfully contemplating if there was no immediate change which would benefit the representation of the Conservative Party in the House of Commons?
Lord Belstead: My Lords, I do not think that the size of the largest and the smallest constituencies, with which we are concerned at the moment, will bear the interpretation that in some way a party political advantage can be construed from the reviews of the boundary commissions.

North-South Economic Relations Summit
3.11 p.m.
Lord Brockway: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether the Prime Minister has been invited to attend the summit meeting on North-South economic relations in Mexico City in June and if so whether she has accepted the invitation.
Lord Trefgarne: My Lords, no invitations have yet been issued. But the United Kingdom expects to be invited to the meeting and to attend.
Lord Brockway: My Lords, while welcoming that reply, may I ask the Minister whether he appreciates how much we welcome the reversal in policy which was in the paper on the Brandt Commission; how much we would wish to congratulate the Secretary of State, the noble Lord, Lord Carrington, on his influence in bringing that about; and can he give us an assurance that when the summit conference meets, an effort will be made by the Government to end the deadlock which has subsisted for seven years between North and South, by accepting the need for a new world economic order?
Lord Trefgarne: My Lords, the proposals for a new world economic order include, if I understand them aright, sweeping away the present economic order, and that poses some difficulties. As for the change in policy which the noble Lord thought he apprehended in the Government's present proposals, if that is what the noble Lord thinks, he misunderstood the earlier policy.
Lord Gladwyn: My Lords, is it not equally desirable to consider the possibility of a world political order?
Lord Trefgarne: My Lords, an interesting supplementary but not, I think, arising from the Question on the Order Paper.
Lord Oram: My Lords, since this meeting arises directly out of the work of the Brandt Commission, can the Minister inform the House a little more about the proposed composition of the summit meeting? Will it be purely governmental in character, or will members of the Brandt Commission be joining in? If that is so, can we anticipate that Mr. Edward Heath will be there to join in the conversations, with the Prime Minister?
Lord Trefgarne: My Lords, I understand that the conference is intended to be a summit conference and therefore attended principally by heads of state or heads of Government, and therefore I cannot say whether Mr. Edward Heath will be there.
Lord Brockway: My Lords, referring to the Minister's earlier reply to me, in which he said that there had been no reversal of policy, is it not the case that in the
802
paper issued on the Brandt Report the definite statement was made that Her Majesty's Government were opposed to the calling of a summit conference?
Lord Trefgarne: My Lords, I do not think that is correct at all. We have never opposed a summit conference of this nature; but we have said—and we maintain—that the ground for such a conference ought to be carefully prepared.
Lord Goronwy-Roberts: My Lords, can the Minister tell us whether the preparatory work, the preparation of the agenda and the scope and purpose of the conference is already in hand? The conference is to be held in June and will he agree that time is relatively short for the kind of work that is necessary to make such a conference of any utility at all to those who attend it?
Lord Trefgarne: My Lords, the noble Lord is quite right in suggesting, as I have maintained before, that the conference should be carefully prepared. That preparatory work is currently being done by the cosponsors. We are not one of the co-sponsors, but we would certainly hope to be involved in the later stages of this preparatory work.
Lord Paget of Northampton: My Lords, is the Minister aware that if it be true that Her Majesty's Government oppose a summit conference they have my heartiest congratulations?—because summit conferences almost always lead to mischief. But if we have a summit conference designed to extend the aid system, will he have regard to the situation in Africa? Universally, Africa has been the great recipient of aid, and with the assistance of that aid and in spite of the green revolution, which has increased agricultural production everywhere else by double, she has succeeded in reducing her agricultural production both in total and per head.
Lord Trefgarne: Quite frankly, my Lords, I am not sure that what the noble Lord asks arises out of the Question on the Order Paper, or indeed from the subsequent supplementary questions. Of course our aid is aimed at those most in need of it, and that is why so much of it goes to Africa.

Energy Conservation Bill [H.L.]
3.16 p.m.
The Minister of State, Department of Employment (The Earl of Gowrie): My Lords, in moving that the House give a Second Reading to this Bill, I should like to begin by explaining why the Government believe it is important to bring forward this legislation at this time.
Energy conservation has a central and permanent place in our energy strategy. The dramatic increase in oil prices following the revolution in Iran, and the present Iran/Iraq war, have reminded us—if we needed reminding—of the vulnerability of much of the Western world's energy supplies. The heads of state and Government at the Venice Economic Summit earlier this year recognised the important priority which each

803
of their countries had to accord to improving energy efficiency, and to reducing dependence on oil. North Sea oil and gas do not set our interests apart from those of other Western countries in this regard, not least because North Sea oil will not last for ever. The Government believe that energy conservation has an important role to play in enhancing the competitiveness of British industry and, more generally, in improving the efficiency of our economy.
The main intention of the Energy Conservation Bill is to promote the improved efficiency of a wide range of energy consuming appliances. It contains enabling powers for the Government to set, by means of orders, safety and efficiency standards for space and water heating appliances, and for gas appliances. The Government will be enabled to require that these appliances be tested for compliance with these standards either at the stage of manufacture or—in some cases—after installation.
The Government believe that the enforcement of efficiency standards under the Bill can, over time, make an important contribution to improved energy efficiency. I say "over time" because of course it will take time to improve the efficiency of new appliances, and time for users to replace existing appliances with newer and more efficient ones. But the Bill provides a mechanism to ensure that a progressive improvement in efficiencies does take place. Such improvements can save money for individual consumers and for firms, as well, of course, for the country as a whole.
Space and water heating accounts for no less than 30 per cent. of the country's use of energy; and gas appliances other than gas space and water heaters consume a further few per cent. This means that even a relatively small improvement in the efficiency of appliances of the sort dealt with in this Bill could make a significant difference to energy use at the national level. The individual consumer, of course, is not normally able to influence the design of space and water heating appliances or their efficiency directly. There are existing schemes for testing many sorts of appliances but those are voluntary, and their coverage is not universal. The Government therefore believe that this is an area where it is appropriate for there to be legislation.
That there is scope for increasing the efficiency of many sorts of appliances is beyond doubt. For many appliances, energy efficiency has become a significant factor in design only very recently. Many boilers, for instance, which are very efficient at full load are much less efficient at part-load. And, of course, many boilers are run at part-load for much of the year. British Standards relating to energy efficiency exist for some, but by no means all, categories of space and water heaters and gas appliances. But manufacturers and importers are not at present compelled to observe these standards. And there is a substantial body of informed opinion that current performance requirements in some British Standards are below the levels readily obtainable by manufacturers and desirable, therefore, from an energy conservation point of view.
The Bill is inevitably rather technical, and I should like to take a few moments to explain in untechnical language what it sets out to do. The Bill uses the term "heat generator" to describe an important group of
804
the appliances which it covers. This is a term of European Community origin. It means appliances designed for space heating or hot water production or both. It covers appliances ranging from small domestic fires, heaters and boilers, up to the very largest boilers used for heating blocks of flats or offices, schools or hospitals, or for providing them with hot water. A "heat generator" can be powered by any form of energy—coal, gas, oil, electricity—or a combination of them; and it can provide heating by various means—hot water, hot air, steam, et cetera. The Bill also talks about "gas appliances". Again this is a Community term, deriving from a draft directive on gas appliances which I shall discuss in a little more detail in a moment. It means gas-powered appliances for heating, hot water production, cooking, refrigeration, lighting or washing. There is an overlap between the terms "heat generator" and "gas appliance". Some appliances—gas fires; gas central heating boilers, et cetera—are both.
Part I of the Bill is concerned with setting up a system of what is called "type-approval" for new heat generators and gas appliances. Type-approval is a procedure for ensuring that appliances which are manufactured and sold in large numbers conform to specified standards. For such appliances, it is obviously not practicable to test each individual appliance as it is produced. Instead, a sample comprising a certain number of appliances of each model is taken and tested. If the sample is found to conform to the required standards, then a type-approval certificate can be issued for that model, and all appliances of that model can bear a type-approval mark to show that the model has been approved as conforming to the standards.
Under Part I of the Bill, the Government will be able to set standards of safety or efficiency for such categories of new heat generators and gas appliances as they may decide. They will be able to appoint type-approval bodies to test samples of appliances to see whether they conform to the relevant standards and to grant or withhold type-approval. The Government will be able to prohibit the sale of such categories of new heat generators and gas appliances as they decide unless they bear type-approval marks to show that they conform to the standards which have been set. If the relevant standards are changed (for instance, if technical progress makes it possible to up-grade them) the Government will be able to require that type-approvals granted under the old standards are withdrawn, after a period of grace if necessary. There are also provisions in Part I of the Bill intended to ensure that once a model has been type-approved, all further production of that model continues to conform to the standards. There are also provisions which would enable the Government to require operating and maintenance instructions for new heat generators to be approved; this is important since the way an appliance is used and is maintained can often affect its continued efficiency.
Part II of the Bill concerns setting efficiency standards for new heat generators for which the type-approval I have been describing is either not practicable or would be too expensive. In effect this means very large boilers which are produced in relatively small numbers, or which may even be purpose built to a particular specification. The boilers concerned are likely to be those with a capacity of 600 kilowatts or

805
over. We estimate that, even when the powers in Part II have been used to their fullest extent (which is very unlikely for several years) only about 700 new boilers a year are likely to be affected. For these boilers, Part II of the Bill enables the Government to set standards of efficiency, and to appoint testing authorities which will test each boiler concerned on-site after installation, to see that it meets the relevant standard. The Government will be able to prohibit the use of a boiler which is not tested within a specified period after it is installed, or which does not pass the test within a further reasonably specified period. It is unlikely, however, to be possible to anticipate in the orders under this Part of the Bill all the possible variations in individual circumstances which may arise, such as the problems of testing a boiler which is installed and brought into use before the building which it is intended to serve has been completed. For this reason Clause 10 of the Bill contains an important power which would enable the Government to authorise testing authorities to delay tests or apply modified standards in such circumstances as the Government may specify.
Part III of the Bill deals with various miscellaneous matters such as the creation of offences, the level of fines, and enforcement. I should like to draw the attention of the House to two specific provisions. Clause 15 empowers the Government to make grants for the purposes of energy advice schemes. No new policy departure is envisaged by this clause. Rather it is intended in accordance with well-established constitutional convention to provide specific statutory authority for the Government's existing energy advice schemes, such as the Energy Survey Scheme and the Energy Quick Advice Service which have proved to be valuable means of promoting greater awareness of the potential for energy conservation in industry and commerce. Clause 25(3) provides that before making any order under the Bill, the Secretary of State shall consult representatives of those he considers likely to be affected and such other persons as he considers appropriate. This represents an important safeguard, and an assurance that the views of manufacturers as well as consumers and others concerned will be sought and considered very carefully before orders under the Bill are made.
May I have a moment to talk about enforcement. It is not envisaged that extensive arrangements for enforcing the provisions of this Bill will be necessary. In the vast majority of cases, manufacturers, retailers and others concerned will have good sound economic reasons for complying with the orders which will be made under it. And Clause 5 of the Bill contains important powers—including the sanction of withdrawal of type-approval in some circumstances—which will enable type-approval bodies to ensure that a model continues to conform to standards after it has been approved. There are also provisions in the Bill for orders under Part I—that is, the orders concerning type-approval for heat generators and gas appliances—to be enforced by weights and measures authorities. In practice, we envisage that trading standards officers will make visual checks to see that heat generators which ought to bear type-approval marks in fact do so. Because this would in most cases be done in the course of visits to premises made for other purposes, there
806
is unlikely to be any significant implication for local authority manpower. Powers to enforce orders under Part II of the Bill—that is, the orders relating to the rather fewer cases of on-site testing—will under Clause 20 be vested in persons so authorised by the Secretary of State; these would in practice be officials of central Government. However the powers in Clause 20 are regarded by the Government very much as powers of last resort.
Because the number of boilers likely to be subject to on-site testing will be small—I mentioned the figure of 700, but it might well he far fewer in a year—it should be feasible to enforce orders under Part II by the Department of Energy matching the records of the boilers supplied against records of the boilers tested, and making simply further inquiries about apparent discrepancies. Thus, the manpower implications for central Government will also be extremely small. The powers which those authorised to enforce the orders under Parts I and II of the Bill will have are set out in Clauses 19 and 20. These provisions are closely modelled on those in comparable legislation; for instance, the Trade Descriptions Act 1968.
I should like to make a few comments about the European Community aspects. The Bill will enable the United Kingdom to implement a Community directive on heat generators. This directive obliges member states to ensure that all new heat generators installed in non-industrial buildings comply with minimum performance standards. The Bill will also enable us to implement two other directives which are still in draft and under discussion in Brussels. As I mentioned, one concerns the on-site testing of very large heat generators. The other concerns the setting of Community standards of safety and efficiency for new gas appliances. The Government do not believe that they can satisfactorily rely on the European Communities Act 1972 to enact the necessary legislation. There are several reasons for this: one is that the 1978 Heat Generators Directive does not state very precisely what appliances it covers; another is that the Government believe that it is desirable to cover heat generators used in industrial buildings (which are outside the scope of the directive) as well as those which are not used in industrial buildings. There is also a problem over the fact that the implementing directives under the draft Gas Appliances Directive will be optional—that is to say, it will be left to member states to decide whether to apply the Community standards or not.
The Bill contains enabling powers for the Government to establish systems of type-approval and on-site testing for such categories of appliances as they decide, by means of orders. I can assure the House that the Government have no intention of imposing standards which are unlikely to have any significant effect in raising safety or efficiency merely because the Bill will empower them to do so. We are conscious of the need to avoid imposing unnecessary costs on industry, and the requirement to place on the market products to a higher standard will only follow after the fullest consultations have been carried out with all concerned. And, as I have already pointed out, the Bill requires that the Government should consult representatives of those likely to be affected before the orders are made.
So, the Government's intention is in the first in-

807
stance to use the powers under Part I of the Bill to give statutory force to the existing voluntary arrangements, in many cases based on existing British Standards, which are already operated by many major United Kingdom manufacturers. These cover a large proportion of the gas appliances, the oil-fired boilers and air heaters, and the solid-fuel appliances which are sold in this country. The existing voluntary arrangements would thus be modified where necessary, extended to cover importers and manufacturers who do not participate in them at present, and made compulsory. It will, however, be important to move beyond this stage—the stage of giving statutory force to our existing arrangements—as soon as possible. We therefore intend to have continuing consultations with the British Standards Institution, with a view to reviewing existing standards of fuel efficiency for heat generators and raising them wherever this is practicable and cost-effective, and to setting fuel efficiency standards for appliances where none such exist at the moment. It is not, however, our intention that all categories of heat generator should be made subject to type-approval from the outset; it will be necessary to proceed step by step again, as I have said, in full consultation both with the manufacturer and others such as consumer organisations whose interests are crucially involved. Indeed, there are some types of heating appliances—in particular most types of domestic electrical space and water heaters—which the Government have no intention of making subject to type-approval procedures under this Bill, since most electrical heaters already convert electrical energy into heat to a high degree of efficiency.
The enabling powers relating to gas appliances are included in Part I of the Bill mainly for the purpose of allowing us to enforce the Community standards of safety and efficiency for these products when these are agreed. I have already mentioned, I think, that member states are likely to be free to choose whether or not to apply these standards. However—and I think this is an important point which your Lordships should take fully into account—the Government believe it is likely to be in the interest of the United Kingdom to implement the Community standards, since it will help United Kingdom manufacturers to export to other European Community countries. If British made appliances meet Community standards and carry a type-approval to show that they do so, the task will be made much easier. In addition, the Government will wish to consider using the powers relating to gas appliances to set and enforce standards—particularly safety standards—for some sorts of gas appliances for which agreement on Community standards is, within the Community, still rather a long way off.
Finally, the Government are in the process of consulting manufacturers and other interested groups in detail about the way in which the powers in Part II of the Bill concerning the on-site testing of large new heat generators, will be used. We will certainly consult both widely and fully before taking final decisions. However, we believe that it is important that the Bill contain these enabling powers to require very large boilers to be tested on-site, both in order that we can fulfil our present (and, indeed, our likely future) Community obligations, and also in the interests of
808
improving the efficiency of this country's use of its energy resources. Although the number of new boilers likely to be affected is, as I have said, small, they are generally very substantial consumers of fossil fuels.
I believe that this Bill should command wide support from all parts of the House. The Government commend it both as a measure necessary to fulfil properly our Community obligations and protect our trading interests, and as a most desirable measure in its own right. Improving the efficiency with which energy is used is a matter of concern and economic interest to us all. I move that the Bill be now read a second time.
Moved, That the Bill be read 2a —(The Earl of Gowrie.)
3.37 p.m.
Lord Strabolgi: My Lords, I am sure that we are grateful to the noble Earl, Lord Gowrie, for explaining the provisions of this Bill to the House. As your Lordships know, it is a Bill which is starting in this House, and I should like to congratulate the noble Earl for the way in which he has explained it and for the simple language in which he has described its various clauses, because it is a very complicated Bill.
As the noble Earl has said, the Bill is intended to enable the United Kingdom to fulfil her obligations under certain EEC directives relating to fuel efficiency standards for heat generators and for setting standards of safety and efficiency for gas appliances. As the noble Earl has also said, the Bill provides specific statutory authority under Clause 15 for the Department of Energy's existing energy advice schemes. I shall have a little more to say about that and the problem of energy conservation in general in a moment. But, for the present, I should like to say that we welcome the Bill as far as it goes, although I shall be rather more controversial later when I come to some of the Government's energy conservation policy.
I believe that the United Kingdom is a net importer of most of the appliances concerned and that the EEC is both our major market and our major source of imports, as the noble Earl implied. I understand that in the case of gas fires, refrigerators and water heaters, imports account for a sizeable share of the United Kingdom market. If we implement these directives it should help our ability to export approved models to the rest of the Community, which I am sure will be welcomed in all parts of the House.
I wonder whether the noble Earl would give me some idea of the likely cost of on-site testing for the larger boilers, as this will presumably have to be paid for by the commercial or industrial user. In the case of the smaller gas appliances, this will for the most part, of course affect the domestic consumer. If a type approval, granted under an old standard, is withdrawn after a period of grace, will that affect only models for sale and future manufacture, or will the householder be required to get rid of his old appliance and to buy a new one? If that is so—and perhaps the noble Earl will enlighten us when he comes to reply—it could be rather hard on some consumers, particularly the poorer consumers, as the prices of these appliances seem to be increasing monthly. For example, will there be financial help for people with lower incomes?

809
Turning to Clause 15, I note that:
"The Secretary of State may with the approval of the Treasury make grants … for the purposes"
of energy conservation, mainly, it seems, towards the costs of any survey, or for advice, But will the grants include financial help to householders—particularly poorer householders—and to the smaller businesses for installing insulation? Surely efficient domestic and business insulation is one of the best ways of conserving energy. I see that under Clause 15(2)(d) grants may be made:
"subject to such conditions as the Secretary of State may determine".
Will these include grants for insulation? I realise that insulation may be the responsibility of the Department of the Environment, but may I suggest that this should not preclude the noble Earl from letting the House know the position, as in this House, as your Lordships are aware, Government spokesmen speak for the Government as a whole; and anyway we all know the deep interest that the noble Earl takes in all questions relating to energy, even if they impinge on other departments.
As has been said before in these debates—and we cannot say it too often—conservation should be the third limb, with coal and nuclear power, of our energy policy. As the noble Earl said this afternoon, North Sea oil cannot be included in any long-term planning, as it is finite and will begin to run out around the turn of the century. I greatly welcome the way in which the present Government are continuing the broad lines of our conservation policy, and that this sector at least has not been subject to cuts. I understand that the Department of Energy is providing much help to domestic and industrial consumers, and a good deal of practical advice. There is a great deal, of course, that industry in particular can do, and there is room and scope for new thinking and innovation.
Some companies are leading the way. I believe that Marks and Spencers has done a great deal of pioneering work in this field; and one company that I know—Granada TV Rental Limited—has put all its energy control charts in selected area showrooms onto Prestel, so that both central management and individual showrooms can monitor progress of performance in energy saving. It found—and I am sure that this would apply to other companies—that a modern system, such as Prestel, creates more interest and makes for more competitiveness; and I understand that this is already resulting in a significant drop in consumption. That is just one example of what can be done.
I know that the Government are funding R and D to make for better use of energy, but I wonder whether we know enough about the human factor, and why some people are more aware of the need for energy saving than others. I wonder how much social research is being done. I know that the Department of Social Psychology at the London School of Economics has carried out a social research survey on the individual energy consumer, and its report, by Peter Ellis and George Gaskell, has been published. The authors of this report found that one of the problems is that it is not clear to many people whether or not there is an energy crisis. Further, for those who are conscious of it, the term "energy crisis" has become
810
deflated through constant use. There are other factors, such as the individual's attitude towards authority, and how people are affected by the examples set by others; for instance, how they may be affected by what is being done in local authority offices and civic centres.
There is also the effect on the individual of other social groups with which he is in contact or which he respects. It was found, for example that the lower income families were the most affected by price increases and made big efforts to conserve. The comfortably-off usually made the least effort. Those in the middle were probably the most conservation conscious of all. I know that these are generalisations, and I refer to them only to stress that it is no good exhorting people to save energy if you know little about their behaviour patterns. What do we know of the influences and ideas that a child brings home from school and the parents bring home from work, or from their community or leisure groups?
I suggest, therefore, to the Government that we need to study this aspect of conservation, and that they should consider putting in hand some social research of this kind, as a support and guide for their general publicity campaign, which I greatly welcome but which I suggest could then become more effective and less wasteful, because it would be based on more knowledge of human behaviour and would be directed into the right channels. I understand that the report to which I refer was sent to all relevant Government departments early last year, so they should have had time to study it by now.
I now intend, if I may, to be slightly more controversial within the ambits of the Bill. The Government are relying a great deal on the price factor—particularly over gas—but this is falling very severely on industry, and particularly on the energy intensive industries. I should like to remind the House that the CBI the other day said that British gas prices in the last year have risen 30 to 40 per cent., and in some cases 70 per cent. They point out that this is absolutely crippling for an energy intensive industry.
This is particularly hard on certain industries, such as the glass container industry (and here I must declare an interest) where energy costs—that is the price of oil and gas—account for 21.6 per cent. of manufacturing costs. British industry as a whole is also paying £8 per tonne in heavy fuel oil duty, which is, with Ireland, the highest rate in Western Europe. In Germany the rate is under half, at £3.55 per tonne, and in France—this is almost unbelieveable—industry pays under £1 at £0.08 a tonne, to the great benefit, of course, of French manufacture and trade.
The British Gas Corporation is making absolutely huge profits which will enable the corporation to give the Government what is virtually a loan of £400 million this year, presumably towards the public sector borrowing requirement, which, of course, may look good from the Treasury's point of view, but the effect on industry—particularly the energy intensive industries (the glass, ceramic, chemicals, paper and food manufacturers) — is crippling. Indeed, I believe that British industry is paying at least £300 million a year more for its gas supplies than it would be paying in other EEC countries. The result is heavy lay-offs, increasing unemployment and lost orders.

811
I am very glad to see that the whole question of energy pricing, which seems to be the main part of the Government's conservation policy, and its effect on industry, is to be investigated by the Select Committee on Energy of another place as a matter of urgency, that the Secretary of State will be asked to appear before it, and evidence will be invited from the CBI and those industries that are most affected and at risk. Therefore, as I say, we welcome this Bill on this side of the House and I shall not oppose it, and we shall do all we can to ensure that it receives a swift passage. However, I must say that it is the Government's energy pricing policy that is causing industry and noble Lords on this side of the House much concern.
3.51 p.m.
Lord Tanlaw: My Lords, we are grateful to the noble Earl for the presentation of this Bill that starts in this House. We on these Benches are pleased to give a welcome in principle to the technical parts of the Bill, which conform to one of the Liberal Party's resolutions at conference which urged Her Majesty's Government to introduce energy performance standards for domestic and industrial appliances. Also, as the noble Earl has said, this Bill is a response to the Community's legislation in this field, and although its implementation may be time expired from the Community point of view I feel certain that there will be no serious objections in its late arrival on the statute book in this country.
Our goals are very similar to what the noble Lord, Lord Strabolgi, has said. Our goal is an energy efficient society, and conservation must be one of the means through which we can achieve this goal. I should like to come to this part, the conservation part of the Bill, at a later stage. We too have heard that the manufacturers of the various types of heat generator covered in the Bill are, as the noble Earl says, on the whole in agreement with its intentions, which are to lay down certain approved standards. The exceptions to this mainly arise understandably from manufacturers of open hearth type fires, which I shall come to later, and certain electrical appliances.
I also wish to follow the point made by the noble Lord, Lord Stabolgi, that the difficulty is to find exactly where are the benefits to the consumers in this Bill, and again we hope to discover that they will lie in the conservation grant element contained in it. Although it is a Second Reading it would be helpful if Her Majesty's Government could clarify for the record some of the possible exclusions of the very general term "heat generator" which, as the noble Earl said, was invented by the Community. The far-reaching term "heat generator" could technically cover, so far as I can see, a combined heat and power station at one end of the scale and an outside barbecue at the other. I assume for the purposes of this Bill that both types are not included in the Government's intentions.
While it is clear that heat pumps or heat exchangers are covered by the term "heat generator", it would be helpful to know the Government's view on domestic refrigerators, which will fall of course under this category. Is it possible that refrigerators which use
812
the excess heat more efficiently by space heating attachments would be given type approval? A refrigerator of this type, although more efficient in energy terms, would of course be more expensive. So perhaps the Government might consider a reduction in VAT on refrigerators that operate on this efficient principle.
No mention was made of solar panels by the noble Earl, but on the other hand they would presumably not fall under the category of heat generator although they are used for water heating. If this is the case this is perhaps unfortunate because a number of models of solar panels available on the market are far from efficient and should require some kind of type approval in order that the public are not deceived into purchasing expensive and inefficient energy saving devices of this kind.
Then there are the open hearth type fires, which I should imagine are almost impossible to assess for type approval as heat generators as described under this Bill. It would be self-defeating for the constructive side of this Bill to be misunderstood by the general public in their use of a non-approved open hearth fire. I have taken some time to seek clarification in these areas on the very wide powers that this Bill could have, because it clearly states in Part I "that any heat generator could be required to have a type approval plate. While it is recognised that the Government are attempting to improve the efficiency of space and water heating both industrially and in the home, many of these improvements will be self-defeating if the individual heat generator attachments or radiators have no thermostatic controls, and therefore what efficiency could be gained from the heat source would be lost through inefficiency at the radiance source.
The practical effect, as the noble Earl said, of this Bill is really that the manufacturer, once he has achieved a type approval, is able to attach a plate which is clearly visible on the boiler when it leaves the factory. Once the appliance is installed on site the plate could indeed be obscured clue to the siting of the boiler. Therefore, inspectors of this could be faced with a dilemma if the plate was not visible due to the situation on the boiler site. If this regulation is to be effective, it must be clear that the installation of such boilers should allow for access by inspectors, as the noble Earl told us. But I am suggesting as an alternative that the boiler or heat generator should certainly have a type approved plate when leaving the factory, as well as a second plate which could be made visible from outside the building in which the boiler was installed.
I mention this because I should like the noble Earl to consider another point for a moment, if we take this concept one step further towards our goal of an energy efficient society. It concerns the metering of all heat generators in terms of all energy efficiency. Why is it that all electricity and gas meters are sited often in the most inaccessible part of the domestic dwelling? This involves a great deal of time and effort and, on occasions, aggravation from both the owners of houses and members of the gas and electricity boards who have to read these meters.
Why cannot we establish once and for all that the meters can be read without having to make access into a house. There would appear to me to be powers within this Bill to insist that any new heat generator

813
which is type approved should have this facility. Many of us consider that this would be a real saving in time and money for both the gas and electricity boards. It would also save what is often considered almost harassment quite unnecessarily to old people living alone, or to those families which all have to go out to work, and these constant approaches or constant postcards from the boards saying that they cannot read their meters.
I also have a suspicion that a percentage of those people who have been cut off, with the inconvenience that this involves, is due in part to the inability of the consumer and the supplier to agree a bill as a result of this lack of access to the meter itself. I do not wish to dwell on this point, but it would be helpful if the noble Earl could tell me that perhaps, if this is not the right Bill, what is the Government's, and indeed his department's, attitude towards this suggestion. Would the Government be prepared to look at this more seriously—if they cannot do so under this Bill—on another occasion?
There is another point. We are going on to the Weights and Measures Act which is also brought into the Bill as the operative one in which the inspectors have the various authorities to execute this Bill. Once more I wish to put forward a plea for consideration that some standard energy conversion unit recognised throughout the world would be an immense help to the consumer in his choice of what type of boiler or heat generator is best suited to his use. This, of course, is many years, if not decades, away.
But it leads me on to the type of scale that is fixed to any type approved heat generator, because we have all had the experience that a lot of these appliances do not have a proper scale on them. If they have a scale at all, it has a series of meaningless numbers. If the noble Earl could tell me, for instance, what temperature either in fahrenheit or centigrade, is the correct one to heat his bath, I shall be very surprised. I do not think many people know. Therefore, I feel that, if under Clause 2 of this Bill the Government clearly have powers to specify in detail these kinds of refinements to heat generators or boilers, I hope they will consider this, and especially about the difference between fahrenheit and centigrade scales, which is very confusing to the general public. It also can lead to accidents and to great inefficiency.
I just mention this in passing, because it is not often one has a chance except in a Bill of this kind, which is basically a technical one. I believe that the correct way to convert centigrade to fahrenheit is to multiply by five, divide by 9 and add 32. Of course we can all do this, but some can do this better than others. However, from these Benches I would suggest a more simple solution; namely, if there is no calibration on a boiler, one simply doubles the centigrade value and adds 30, which produces a near enough accurate answer. This simple short-cut is not generally known to members of the public and it would therefore be helpful to have it included in some of the department's literature, which, I might add, includes temperatures in fahrenheit and centigrade but does not give advice on how to convert.
I wish to emphasise—though I do not think it comes under the Bill—the worry businessmen have, in general and in the energy-intensive industries, about the high
814
cost of fuel. Thts is now beginning to affect us all, directly and indirectly (I speak as an industrialist as well as a member of the public) and I hope the Government will look at this more general aspect when they are talking about conservation and the so-called benefits which the North Sea is supposed to produce for us.
We shall of course be looking closely in Committee at the civil rights element contained in the Bill to ensure there is adequate protection from abuse or over-enthusiasm by officers under the Weights and Measures Act which could undermine the good intentions of the Bill. But, meanwhile, perhaps the noble Earl could reassure the House that there will be no penalty for members of the public who unknowingly jostle their molecules in front of a heat generator of a type not approved by Her Majesty's Government; as I understand it, only the manufacturer will be liable to prosecution in those circumstances.
In connection with conservation, I question whether adequate funds have been allocated for the implementation of this part of the Bill. We as a party have been pursuing one Government after another for loft insultation, for both domestic and industrial insulation, and we still have a long way to go before we will match that of the Community. If it is the main intention of the Bill to implement EEC Directive 78/170, then perhaps a further Bill will be necessary to bring the building regulations in the United Kingdom up to the standards of those required in the Community. I suspect that members of the public will not get any money from the grants in connection with the Bill, if my reading of it is correct, in that they will get only advice, presumably written or verbal, of a technical nature too, from the Department of Energy. It would be helpful if it were stated that advice should include making more public information available about the Homes Insulation Act 1978. It is very depressing to note that the money grants for insulation under this Government scheme have not been fully taken up by members of the public, apparently through lack of advice and information. I hope that, in the context of conservation advice coming from the department, that aspect will be looked at closely by the Minister.
I wish finally to express a personal disappointment, now that we are approaching the festive season, in that there appears to be no mention either in the EEC Directive 78/170 or in the Government's "type approval" specifications in Clause 2, of chimney dimensions for private dwellings. Is it possible that both the legislators in the Community and in Her Majesty's Government have forgotten that at this time of year this mode of entry to all dwelling houses is used by a most important caller? Can the Minister therefore assure the House that there is nothing contained in the Bill that will in any way delay or obstruct the arrival of this welcome visitor on Christmas Eve? Some of us may still believe in him.
4.4 p.m.
The Earl of Lauderdale: My Lords, noble Lords will not expect me to be sycophantic, even when I have come to praise, and I know the whole House is indebted to my noble friend Lord Gowrie for his constant and ready attention to problems of energy that are, alas! outwith the ambit of his department. We hope

815
that when the great reshuffle comes he will end up in the Department of Energy and not still be outside it. There is more joy in heaven over one sinner that repenteth—or, if I may put it another way, do you question my assertion that conviction led conversion?
The Government are now going for a measure of administrative controls and inspection. They are also going further than the EEC directive because they are including industrial boilers—and "any" is the critical word in the Bill—when the directive relates to domestic use and mass-produced generators. This is to be welcomed. But without of course suggesting that the Government have done a mini U-turn or swerve of any sort, I must say that the Bill proves that what is said in this House is not completely wasted gas. Twice I have raised the question of testing industrial boilers and each time previously I was told that the answer lay in pricing and price signals. Indeed when discussing an amendment to the Companies Bill on 16th July of last year, I raised this matter and asked:
"Has not the time come … for equipment which assists in the reduction of waste also to be made a compulsory feature—and I stress the word compulsory'—of all new installations?"—
I was referring to boilers. I was given this answer by my noble friend Lord Lyell:
"The object of any mandatory requirements, we believe, can be achieved by the soaring costs of all forms of energy".
The answer continued later:
"Company directors are watching very carefully their energy expenditure; and I wonder whether the House would deem it necessary that there should be a further mandatory requirement …".—[Official Report, 16/7/79; cols. 1190–8.]
If that was not enough, your Lordships took part in a debate on 19th March of this year on a Motion about energy conservation and the same point arose. I said in that debate:
"There is certainly tale after tale of boiler and furnace instruments in small factories being either not maintained, or ignored if they are working".—[Official Report, 19/3/80; col. 264.]
This was the answer I got from my noble friend Lord Gowrie:
"We feel that the key to effective energy conservation is economic and realistic prices which reflect the real long-term cost of supply".—[Official Report, 19/3/80; col. 299.]
One does not want to labour the matter, but the fact is that on both occasions the point I raised and the plea I made fell upon the Front Bench with the crisp ring of an underdone pancake. I asked at that time what was the good of making speeches in this House if the Government did not seem to do anything about them, and I think today in this Bill we have the answer. The Government are clearly learning that government by monetarism and the market place is an art and not a science, and so the Government have done well to fudge on this as on other issues; it is of course never too late to mend. Somebody once said that when in practice such trifles as principle were easily set aside, the faculty of ignoring them made the practical man, so today the Government see no point in excluding heat generators used in industrial buildings, as does the directive.
What is more, the Government now accept that it would be both technically feasible and cost-effective to raise the efficiency of all boilers, this not by price but, at the end of the day, by administrative procedure.
816
It is not juggling that is to be blamed, but much juggling, for the world cannot be governed without it. If all that is so, then does this Bill go far enough? wonder whether it would not have been prudent to extend it to include heat pumps, and air conditioning and ventilating equipment, which are also in many cases wasteful of energy and which in many cases could be subject to the same sort of procedures as are proposed here.
The Bill is a good first step, but we want to see others to follow, rather than procrastination. Many steps towards energy conservation were raised in the debate in March—points about pumped storage, about British Rail's electrification to cut the use of diesel, about the building regulations, which are still trailing behind the facts of life and the facts of energy costs, about restricting the use of cars in town centres, about the underground gasification of coal, about amending the Electricity Act 1947 in order to put heat sales on a level with electricity sales, and, finally, the encouragement of the use of petrol and diesel additives, to say nothing of energy audits.
All those points were mentioned. The only one to have surfaced so far is that relating to boilers, but for this we must be grateful, just as we must be grateful for the mood of consensus which has animated this debate. I was content to hear the noble Lord, Lord Strabolgi, say that he finds that this Bill, so far as it goes—and that was his phrase, and in that I go along with him—follows the broad lines of the previous Government's conservation policy; and with that I assent.
Noble Lords will remember that in our debate on the Coal Bill in the last Session there was a remarkable area of consensus within this House. It is for consensus in energy policy that I plead. It is the Government's flexibility in moving from exclusive reliance upon price and the turn to the necessity of administrative intervention that I welcome. I consider that the Bill is a good start to the new Session, and I wish my noble friend Lord Gowrie every success in piloting it through the House.
The Earl of Selkirk: My Lords, I should like to ask the noble Earl one or two questions. I am sure that the House welcomes in principle this Bill for the conservation of energy, though I must say that conservation should start at home. For instance, I think that this Chamber is far too hot today. Absolutely no attention has been paid to a rise in the temperature. This is a small matter, but it should be watched more closely in many Government departments.
I want to ask the noble Earl: Just what is the extent of the operation of the Bill? The noble Lord, Lord Tanlaw, said that it seems to go from boilers to barbeques. But I am not sure how far it goes. The greater part of the noble Earl's speech dealt with the question of type approval. Well, everything is a "type". I am not very clear as to whether this means existing types or only new types. The rubric states "supply", but the Bill does not. The Bill simply states, "any heat generator". I am not quite certain how far that goes. I notice that the noble Earl did not mention what is perhaps the oldest form of heat generation, wood. I do not know whether or not it is intended to include wood; but the noble Earl did not mention

817
it. I think that it is important that we should know this, since the Bill involves powers of entry. That means that any of the, I suppose, 18 million residences can be entered. I do not know quite at what point, but that power is apparently provided for and it immediately raises another point. It may be unnecessary to ask about this, but let us suppose that the heating arrangements are unsatisfactory. Would that affect the matter of insurance? I know that in Clause 17 it is stated that a contract is not affected, but it is important that it should be made abundantly clear that the insurance arrangements for houses are in no way affected. I wonder whether the wording in Clause 17 is clear enough.
I should like to draw the attention of the House to Clause 16, which contains a power to create offences. Parliament is generally fairly careful about creating offences. In this instance the offences would be created by order and would not be submitted to Parliament at all. That is my reading of Clause 16, and I wonder whether it really is the intention of the Government to do that. I know of no other instance where this is done, and I should very much deprecate such a practice. Parliament should have at least the negative procedure available to it, though in regard to creating offences I should have thought that the positive procedure should be available. I ask these questions of the noble Earl. I may not have read the Bill as carefully as I should have done, but it is not very easy to understand. I am certain that the purpose of the Bill will be welcomed, but I should like to know the extent to which it is intended, or likely, to operate.
4.15 p.m.
Lord Wynne-Jones: My Lords, I apologise for intervening in the debate without having given notice, but I should explain that it was not until today that I realised that I would be able to be present and so take part. This is a very interesting and important Bill, and I welcome its presentation to your Lordships' House. It has been particularly pleasant to find myself so frequently in accord with my noble socialist and interventionist friend and colleague, the noble Earl, Lord Lauderdale. Clearly we think along very similar lines, and I have no doubt at all that if Governments of all types paid more attention to what the noble Earl suggests, and what perhaps I occasionally am able to back up, as indeed is the noble Lord, Lord Tanlaw, our progress with energy legislation and practice would be much more rapid and much better than it has been.
There are only one or two points on the Bill to which I wish to make reference. It refers almost entirely to heat generators that are operated by fuel, not those operated by electricity or anything of that kind; and there is a very simple reason for this. If a generator is operated by electricity, there is virtually 100 per cent. conversion of the electricity into heat, whereas where a fuel is used the conversion may be down almost to zero, or, if one is lucky, 60 or 70 per cent. In certain cases that might be exceeded, but 100 per cent. is not attained. Therefore the amount of waste is enormous when using a generator heated by fuel. The Bill is important because it emphasises the fact that by proper design of appliances energy can be conserved.
However, certain points arise when a fuel is used. Almost inevitably there is corrosion. Some of your
818
Lordships may remember the old gas-heated geysers used in bathrooms. Your Lordships might also remember the amount of corrosion involved, as well as the considerable risk to health that there was at times if the geysers were installed and operated improperly. Proper operation is just as important as proper installation and original design. With a gas-heated appliance in the course of time the jet through which the flame is produced becomes corroded, and the efficiency of the jet deteriorates. So it is important that any gas-heated appliance should be kept in proper working order so as to function as intended.
I hope that the Bill will take into account type approval and the question of a guarantee that appliances as a whole are working; though I believe that there should be closer control than that. I was a little alarmed when the noble Earl, Lord Gowrie, suggested that a very small staff could deal with the whole situation throughout the country. That I very much doubt. If there is to be proper control, there will be needed a bigger, not a smaller, staff than that which the noble Earl suggested.
There is another point that matters, I think, with regard to all conservation of energy. Conservation is not just (as the noble Earl was I think suggesting) a long term programme: it is the only method by which, in the short term, we can save fuel. We cannot switch rapidly to a new system of producing energy, but we can almost immediately economise in the use of energy. Conservation is the one method which can be guaranteed to give quick results, and it is therefore one which the Government ought to encourage to the utmost. I regret to have to say—and I think the noble Lord, Lord Tanlaw, hinted at this—that this country is backward in spending money upon the conservation of energy.
I think I am right in saying that the total amount spent in this country, with a population which I think is about nine or ten times that of Sweden, is half the amount that the Swedes are spending on the conservation of energy. I believe there is only one country in Europe which is spending as little on conservation, and that is Italy. I think that, of the rest of the European countries, this country is spending not just a little less but very considerably less. This is a most deplorable thing, and I think the Government ought to look at this matter very urgently to see how we can improve our position with regard to conservation.
With regard to all forms of appliances, one of the things which is absolutely essential is to have good controllers and regulators. Today you can quite easily make and purchase thermostats, regulators and controllers of every type. With modern technical advances in electronics we can do almost anything in this way very much more simply than we were able to do it 10, 20 or 30 years ago—and we are not taking full advantage of this. There are firms in this country which produce these appliances, and it seems to me that it ought to become mandatory to instal them wherever one has any substantial area which is heated.
The noble Earl, Lord Lauderdale, referred to air-conditioning, and this, I think, is one of the most important fields which is being ignored in this Bill. When I was in America some time back I was informed that the consumption of electricity in New York City is greater in the summer than it is in the winter, and the

819
reason is air-conditioning. The amount of electricity consumed by the air-conditioning of New York is so enormous that they use more energy in the summer to cool the place than they do in the winter to heat it and to run it. This means that we need to look very carefully at all forms of air-conditioning in order to get the maximum efficiency out of them. With those few comments, I should like to approve of the Bill as a small step forward, but showing that the Government are prepared to learn, and I hope they will now begin to learn very quickly.
4.24 p.m.
Lord Hawke: My Lords, I apologise for not having put my name down on the list of speakers, but I did not know until one o'clock that I was going to be here today. The subject of energy conservation is an admirable one and we are all in favour of it. As to whether this particular Bill is necessary for that purpose, I have grave doubts myself; but if it is necessary for us to be able to sell our machines in the Common Market, then so be it, let us have the Bill. The great waste that is going on, as the noble Lord, Lord Wynne-Jones, has just said, was started off by the Offices, Shops and Railway Premises Bill—a good old Conservative nannying Bill—and since then all the young men in offices have always worked with their coats off, they are so hot. What is more, in the case of almost every shop you walk into, after 10 minutes I want to go out again because I am completely overheated. How the unfortunate assistants stand it, I do not know; but that is where savings are to be made. Also, of course, one goes into the City of London today and sees these hideous jungles of blocks of concrete inhabited by international bankers, all of them air-conditioned and putting a very heavy load on the electricity grid.
This Bill is not dealing with those things at all, so far as I can make out. It seems to me to be dealing only with new heating systems. When, a few years back, I was connected with an industry in which we used a great deal of heating and steam, our chief engineer was always coming along and saying, "We have an old Lancashire boiler, and if we install a new oil boiler we can pay for it in four years". Of course, those were the days when we were borrowing money at about, probably, 12 per cent. It was very well worth doing then, and we did an awful lot of it. I have no doubt that at the moment they are hastily converting to coal. But think of similar people today, particularly small people, who probably have to pay something like 20 per cent. to borrow money from a bank, if they can get it. It does not become a proposition. They have a good old wasteful boiler that ticks over; they do not want to burden themselves with a lot of debt for many years, in paying it off at 20 per cent. interest; and this situation is just stultifying the whole of industry.
I have mentioned to your Lordships before (and I apologise for doing it again) that I have always had the theory that the price level in this country depended very largely on the price of energy. If only Her Majesty's Government would pay a little more attention to that very plausible theory instead of swallowing the wilder assertions of Professor Milton Friedman, we might get out of the mess we are in now.
4.27 p.m.
The Earl of Gowrie: My Lords, I cannot resist repeating a remark I was forced to make to the noble Lord, Lord Lee of Newton, yesterday that among the sternest critics of the Government's policies at the moment is Professor Freidman. However, happily that is not connected with energy issues. When I was receiving my briefing for this debate I made a gentleman's small bet with officials that at some point in the debate the energy activities or the energy contents from use of your Lordships' House, in a physical sense of the word, would be raised, and I was very anxious as to whether under the Bill it could be described as a heat generator or a gas appliance! Of course it is not covered by the Bill, not being by any stretch of the imagination a new product or appliance, which is where the Bill is designed to fall.
I also took a small bet that I would be gently chided by my noble friend Lord Lauderdale for being in the Ministry I am and not in the one that he very kindly would like me to be in. Normally it is conventional on these occasions to say that I will bring this or that to the attention of my right honourable friend. I do not know whether it is proper for me to repeat this, but not a million miles from this debate—and I have watched him attending most assiduously all the way through—is the Minister responsible, so your Lordships have even a hotter line than I am normally able to provide.
I thank your Lordships for the general welcome that has been given to this Bill and I will try to spend the few minutes remaining to me to deal with some of the specific points rather than the general philosophy which your Lordships have raised. The noble Lord, Lord Strabolgi, asked about the likely cost of the testing of on-site large boilers. I pointed out that, though this represents quite a section of the Bill, in real life it will probably represent only some 600 or 700 very large appliances in any given year. One is thinking about schools, hospitals, special appliances and this kind of appliance. Of course it is difficult to give a precise answer here, and we still have to consult representatives of manufacturers and users, but our estimate is that the cost of any test may be around £500. This, in our estimate, is liable to be 1 per cent. or less of the annual cost of fuel used by a typical large boiler; so that on-site testing will need to result in only a relatively small improvement in average boiler efficiency to be thoroughly cost-effective. Could I say to the noble Lord, Lord Tanlaw, while the point is in my mind, and to other noble Lords who were anxious about the position of consumers, that most consumers, as individuals, are not affected; one is thinking of the manufacturers. But the consumers' associations with whom we have consulted have widely welcomed the Bill.
The noble Lord, Lord Strabolgi, also asked whether householders would have to change their appliances when a standard is changed. I think that this was also behind some of the anxieties expressed by my noble friend Lord Selkirk. This would not be the case. I can assure the noble Lord, and my noble friend Lord Hawke, that the Bill relates only to the supply of new appliances; appliances in use would in no way be affected. The noble Lord, Lord Strabolgi, asked whether grants under Clause 15 would include help

821
for poor householders, including grants for insulation. The clause is concerned only with the provision of advice on energy conservation and does not provide for the payment of grants for domestic insulation because such powers already exist. The Government already pay grants under the provisions of the Home Insulation Act 1978 for loft and hot-water tank insulation. In August, the Government introduced a special extension to the homes insulation scheme to enable elderly people on low incomes to get grants of up to 90 per cent. towards the cost of loft insulation materials and insulation compared with the normal ceiling of 66 per cent.
While on the subject, on the wider question of help for poor householders, I may say that the Government have accepted the responsibility for protecting those least able to help themselves in meeting higher energy costs. A general scheme of assistance was announced in another place in March which will provide worthwhile help with fuel costs this winter for those in most need and will provide the basis of protection against future fuel price increases. The package includes, as I have mentioned, special help for pensioners with insulation needs. Some two million people will benefit from the measures and expenditure on help with fuel bills will exceed £200 million this year. These measures are more generous than any provided in previous years to help with fuel costs.
The noble Lord, Lord Stabolgi, referred to Ellis and Gaskell's Review of Social Research on the Individual Energy Consumers. The Government agree that this is a useful report which provides a good insight into the attitudes of domestic consumers to energy conservation, and the Department of Energy has already been involved in discussions on the report with the authors, with the fuel industries and consumer bodies as well as with manufacturers of control devices. I can assure the noble Lord that research on public understanding of and response to our energy conservation information campaign is carried out and we study the results with care. But I agree that there may be scope for further research and we shall be glad to give consideration to the point mentioned.
The noble Lords, Lord Strabolgi and Lord Tanlaw, referred to the effect of gas prices on energy-intensive industries and my noble friend Lord Lauderdale talked about our attitudes towards price signalling. I think there is no change here. At a time of rising world energy prices, the Government continue to believe that economic energy pricing is essential if consumers are to receive reliable signals about the continuing cost of energy on which to base their decisions on fuel choice and energy conservation investment.
For industry in general, the energy bill is only 4 per cent. to 5 per cent, of their total costs, and this means that a 20 per cent. reduction in industrial energy prices, supposing that we were in a position to grant that, would cost £1,000 million, or more than a quarter of North Sea revenue, and yet would reduce total industrial costs by only some 1 per cent. I do not think that that would be an economically efficient way of helping energy-intensive industries which might be in trouble. I would draw noble Lords' attention to the greater proportion of costs which can be saved by concentrating on wage claims, or wage claims granted in excess
822
of productive capacity—as I know from the work within my own department.
The British Gas Corporation have, however, recognised the difficulties currently experienced by their customers and have tempered recent price increases to those users who are tied to gas and who cannot readily switch fuels. It must be recognised that the systematic and indefinite under-pricing of gas relative to competing oil products would lead to a demand which could not be met. Oil contributes at present 37 per cent. of heat supplied to industry, and gas 28 per cent. In no way, therefore, could gas replace all the oil used by industry.
I note that the noble Lord, Lord Strabolgi, referred to the duty on heavy fuel oil. Though not the highest, the United Kingdom duty is relatively high by EEC standards and has been criticised recently by the CBI and others as contributing to high United Kingdom heavy fuel oil prices. Our duty inclusive heavy fuel prices were high for some months earlier this year, but I would point out that for many years up to 1980 our heavy fuel oil prices, duty inclusive, were closely in line with other European levels and that in recent weeks, I am glad to say, as other European prices have increased in response to the high spot market, United Kingdom duty inclusive heavy fuel oil prices appear to have moved well towards to the bottom of the price league.
The noble Lord, Lord Strabolgi, raised the general conservation issue. It is difficult to quantify precisely how effective a given conservation campaign is in the short term, but I can say that in the period from July to September this year the total primary energy consumption in the United Kingdom was 8 per cent. lower than in the equivalent period in 1979 and consumption of oil fell by 11–2 per cent. A very large part of these reductions was due to the fall in the level of economic activity, but I do not think, given those figures, that one could seriously argue that our energy conservation activities are having a negligible impact. We have always—again may I say this to my noble friend Lord Lauderdale in this context—intervened or spent money on energy conservation matters—about £120 million in the current financial year—a large part of which is being spent on conservation in the public sector.
The noble Lord, Lord Tanlaw, asked what the exclusions would be. Would refrigerators be excluded? Open hearth fires were mentioned by my noble friend Lord Selkirk. He asked also whether the Bill would cover combined heat-and-power generators as well as barbecues. There are real difficulties in testing manufactured open hearth fires. We intend to consult fully about the possibility of setting standards for such fires, for despite the difficulties, they are, as the noble Lord recognised, very widely used. We do not regard refrigerators as heat generators at present and I would refer the noble Lord to the remarks made by the noble Lord, Lord Wynne-Jones, about the efficiency of conversion from electricity appliances. We agree that they might become so in future. The Bill gives powers which we could use if appropriate, after consultation. Apart from this, I can confirm that we would cover combined heat-and-power generators, but we do not at present have it in mind to cover barbecues in summer or Father Christmas in winter.
The noble Lord, Lord Tanlaw, asked whether it

823
would be possible to prosecute ordinary consumers or purchasers of appliances for buying non-type-approved appliances. The answer is a clear no. It will be an offence to sell or to supply appliances which ought to be type-approved but which are not; but the consumer is the innocent party in that. He also asked whether the Government would require electricity and gas meters to be sited where they can be read easily. We have discussed this with the fuel industries. There are many problems of safety, cost and practicality affecting the siting of meters. I am glad to say that the industries themselves have a good record of siting their meters in the best places.
We do not think it appropriate to be "nannying", if I may use the term used by the noble Lord, Lord Hawke, about this at present, but we will keep an eye on it. The noble Lord, Lord Tanlaw, also raised the question of powers to improve the insulation standards of buildings. That goes wider than the Bill and I can give the assurance that these powers already exist under other legislation: for example, the Homes Insulation Act 1978.
The noble Lord raised the question of controls and he was echoed by my noble friend Lord Selkirk. The Bill will enable the Government to require conformity with prescribed standards. These could include requirements for adequate controls to be built into appliances where this was necessary for the safe and economic running of the appliance itself. But the Bill does not provide powers to deal with heat distribution systems or such associated controls because the Department of the Environment already have adequate powers to deal with such controls, although the problem is not one of powers but of defining what is necessary and cost effective.
My noble friend Lord Lauderdale asked whether the Bill should not cover heat pumps and air-conditioning. Heat pumps are heat generators and are therefore covered by the Bill. It is possible—again I refer to the answer I gave to the noble Lord, Lord Tanlaw, in connection with refrigerators—that at some stage the Government might wish to set efficiency standards for air-conditioning, but that is not at present the situation.
My noble friend Lord Selkirk asked whether using an unapproved appliance might affect someone's home insurance policy. The answer again is, no. It would be an offence to supply an unapproved appliance for which type approval was required, but it would not be an offence for someone to use such an appliance. This also covers his anxieties about powers of entry. There is no power in the Bill to enter domestic premises without a warrant, and we are assured that justices of the peace would be extremely reluctant to grant warrants without proper cause.
My noble friend asked me about Clause 16. The purpose is to allow the Government to be less oppressive rather than more so, and the alternative surely would be to specify in the Bill that all breaches of orders would be offences and all punishable on conviction. The Government do not think that it would be sensible to make all breaches of orders punishable offences. For instance, if an applicant for type approval breaks the provision of an order he will not get the type approval that he is seeking. There is no point to, as it were, penalising him further by taking him to court. The
824
power in Clause 16 is therefore intended to allow the Government to specify in orders which breaches of orders are to be offences in law and which are not.
My Lords, we are all very glad to see the noble Lord, Lord Wynne-Jones, back in the House. He asked whether the Bill provided control over servicing of fuel-burning appliances. The Bill is not intended to provide powers to control the servicing. Such powers would have major implications for staffing, as the noble Lord pointed out, as well as raising issues of the rights of entry to premises which my noble friend Lord Selkirk: mentioned. These issues are very wide and require serious consideration indeed before we lay anything before Parliament in that regard.
I am grateful that nearly all the speakers in the debate welcomed this Bill and supported its objectives. I believe that this reflects the general recognition of this House, and, indeed, in the country, of the importance of conservation in the broad perspective not only in energy policies but of our general economic objectives. By the end of the century the industrialised countries will need to have effected a substantial transition in their energy economies. They will need, as the Venice summit recognised, to break the link between economic growth and growth in oil consumption. Breaking that link is a hard task for us all, but we have certainly been forced to start upon it.
In this task, in this transition, energy conservation has a vital role to play. There are no quick and easy solutions, of course. Energy is used by millions of consumers in many different ways and we have all become used to easy consumption. Apart from the use of the price mechanism, there is no single measure which the Government or anyone else can take which will affect more than a relatively small proportion of the changes which we all know will be necessary. We have instead to look at the individual areas in which energy is used and see what can be done in each of them.
In that context, this Bill is a significant and useful measure. It aims at the progressive increase in the efficiency with which energy is used in one of the most important single sectors: space and water heating. The Government commend this Bill to the House not only as a piece of legislation intended to fulfil our Community obligations, not least in the interests of our trade, but also as a valuable conservation measure in its own right and in all our interests.
The Earl of Selkirk: My Lords, when an appliance gets a type approval can the consuming public assume that it is an economic manner of operation? A case in point is heat pumps about which not a great deal is known in regard to domestic premises. If a type approval is given, can one assume that this is an economic appliance?
The Earl of Gowrie: Yes, my Lords. However, my noble friend will see from the Bill that we are also flexible in terms that this may need updating from time to time as technology advances. The aim is to give the public and the user a clear signal that this is an energy-efficient appliance.
The Earl of Lauderdale: My Lords, could the noble Earl say whether he would look kindly upon proposals

825
to expand the Bill to cover—if it does not already cover them—air-conditioning and ventilation equipment? They are energy-consuming appliances of great importance in factories and shops.
The Earl of Gowrie: My Lords, I will certainly look into that and notify the noble Earl.
On Question, Bill read 2a, and committed to a Committee of the Whole House.

Appropriation (No. 3) (Northern Ireland) Order 1980
The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Elton)The Parliamentary Under-Secretary of State, Northern Ireland Office (Lord Elton) rose to move, That the draft order laid before the House on 26th November be approved.
The noble Lord said: My Lords, this order is being made under paragraph 1 of Schedule 1 to the Northern Ireland Act 1974. The draft order provides for the appropriation of the autumn Supplementary Estimates of Northern Ireland Departments. I shall indicate some of the general features of the Estimates before drawing the attention of the House to one or two of the major items which they contain. Further information can be found in the Estimates volume itself, copies of which have been placed in the Library, and in the explanatory memorandum which has been circulated to noble Lords who have participated in recent appropriation order debates. The circulation of an explanatory memorandum on draft appropriation orders is a new arrangement which I hope will assist noble Lords in preparing for these debates.
The first general objective of the draft order is to provide additional cash to offset the effects of inflation on those votes which are exempt from cash limits control. This, as noble Lords will be aware, is one of the main purposes of Supplementary Estimates. The draft order also includes provision for the main 1980–81 Civil Service pay awards, for which no provision was made in the main Estimates. Thirdly, the draft order provides for the normal process of reallocation, both within and between Votes, which departments find necessary as the year progresses.
Noble Lords will be aware that the reallocation of Northern Ireland's public expenditure resources which was announced on the 6th August last entailed some very difficult decisions. I can only emphasise what has been said on previous occasions, that the spending plans of the public sector have to take account of the overriding need for the nation to live within its means. With limited resources, decisions on priorities are inevitable, and even with the addition of £48 million to Northern Ireland's allocation, it would have been quite impossible to respond to the greater demands which arose on the industrial and energy fronts without incurring some reductions on other programmes. It is the Government's view that the considerations which dictated the reallocation of resources earlier this year, essentially the need to create and sustain employment in the productive sector of the Northern Ireland economy, both explain and justify the action taken.
There are a number of points on the figures quoted in the autumn Supplementary Estimates, and in the schedule to the draft order, which it might be helpful
826
to mention at this stage. A simple addition of the net totals of the 1980–81 main Estimates and the autumn Supplementary Estimates would overstate the total amount of cash Northern Ireland Departments will actually spend this year on voted services. This is because the conventions which govern the presentation of Estimates to the House do not always permit savings or reductions to be shown. The explanatory memorandum lists the services on which such savings are expected to arise. Northern Ireland departments will, of course, take account of these planned savings in the day-to-day management of their voted expenditure.
It is also important to note that not all the public expenditure additions and reallocations announced during the summer are reflected in the Estimates. The principal reasons for this are that some of the services concerned are not borne on Vote, some cannot be dealt with until the spring Supplementary Estimates stage arrives and, some are undertaken by the Northern Ireland Office and, as such, are outside the scope of this draft appropriation order, which applies to the NICS.
Passing on to more particular aspects of the draft order now before the House, I should like to direct the attention of your Lordships to the additional provision sought for services administered by the Department of Commerce. As the department with primary responsibility for the maintenance and creation of jobs in Northern Ireland, its Votes are the main destinations of the resources which were made available from the Contingency Reserve and from other Northern Ireland programmes in the reallocation I referred to.
In Class II, Vote 2, subhead A1, provision is sought for an additional £13.1 million to enable a loan of £14 million to be made to De Lorean Motor Cars Limited in respect of their project at Dunmurry, which could employ up to 2,000 people. This loan is necessary due to increases in costs which have arisen since the project began.
Under subhead A4 of Class II, Vote 2, the increase in the provision for industrial development grants again reflects the decision taken during the summer to reallocate funds in favour of Northern Ireland's economic programme. The intention in this case is to enable the Department of Commerce to sustain its commitments to firms under existing agreements and to enable it to enter into new agreements aimed at maintaining employment. Noble Lords will appreciate the crucial importance of putting the Department of Commerce in a position to accommodate the higherthan-anticipated level of demand which has arisen for these grants. Under subhead B2 of Class I, Vote 2, there is provision for a further £8.2 million for Harland & Wolff Limited, which at present employs over 7,000 people. The yard simply could not continue to function without Government support.
I now turn to energy. Under Class II, Vote 3, provision is sought for a grant of £20 million to the electricity service. Noble Lords will be aware that the service depends heavily on oil for electricity generation. The rises in world oil prices in the last year or two have caused major financial difficulties for the electricity service and, without Government intervention, would have necessitated tariff increases well in excess of those in the rest of the United Kingdom. The additional

827
provision now sought will compensate the electricity service for limiting its tariff increases in the current year to the levels of increase applied in the rest of the United Kingdom.
Still in the energy field, under Class III, Vote 1, provision totalling some £9 million is sought for funds to facilitate the orderly run-down of the gas industry. Noble Lords will recall that the Government's Energy Statement on 23rd July 1979 indicated that financial support would be made available to assist the orderly run-down of those gas undertakings which decided to close, and that the position of consumers needing to convert their appliances would also be taken into account.
I have confined my remarks to those aspects of the draft order which relate to the industrial and energy sectors, as these are the main features of the autumn Supplementary Estimates to which the draft order relates. I am sure, however, that noble Lords will wish to raise other matters as well, and I am grateful to those who have given me advance notice of their intention to do so. I shall attempt to answer as many questions as possible at the end of this debate, and of course those which remain unanswered will be dealt with in correspondence later. I commend the draft order to the House.
Moved, That the draft order laid before the House on 26th November be approved.—(Lord Elton.)
4.56 p.m.
Lord Blease: My Lords, I should like to thank the noble Lord, Lord Elton, for his detailed breakdown of the financial elements in this appropriation order. I should also like to say that I am grateful for the arrangements making available the explanatory memorandum. I found it most helpful. While this is the third order in the annual cycle of orders to appropriate funds for services which are supplied to Northern Ireland and administered by Northern Ireland departments, it gives this House an opportunity to deal with the wider economic and social aspects of life in the Province.
If I may use art analogy, it enables us to ask those at the helm whether we in Northern Ireland who follow in the wake of the United Kingdom ship of state are on a set economic course, whether we are drifting, or whether indeed we are not slowly sinking as an industrial community. To help find whether we are on a set course, I would refer to words spoken by the Secretary of State for Northern Ireland, Mr. Humphrey Atkins, on the 8th June last year, when he declared:
"Our basic objective will be to put life back into the economy by creating a climate which is conducive to growth. I fully realise that the Northern Ireland economy has special problems. The significantly higher level of unemployment is one. This will be taken into account when framing new policies. On the public expenditure front, preference will be given to cuts which do not create unemployment".
This was, as I understand it, a set course to bring life back into the economy. For some indicators along the way, we have the statement made by Mr. Rossi, the Northern Ireland Minister of State who on 22nd July 1980 declared:
"The Government remains committed to its economic strategy, which is designed to create the basis for real national growth and prosperity. We are, of course, sensitive to the particular problems of Northern Ireland and this has been shown by the considerable
828
success in creating both new manufacturing jobs and also protecting employment".
"Considerable success"—I am afraid that few in Northern Ireland recognise this as a success story.
The noble Lord, Lord Elton, speaking at the Fermanagh College of Further Education on 29th November, said:
"Unemployment is at a figure which gives very great concern to us all and must loom very large in the lives of some young people".
The noble Lord went on to declare that the indications were that:
"…the tide of economic depression was beginning to turn".
Again, the noble Lord, speaking at Magherafelt High School on 3rd December, just two or three days ago, referring to industrial incentives, said this:
"We have made a good start in this connection in that some 5,460 new job promotions have been achieved in the first nine months of this year".
In passing, I should like to say that we have to be very careful when people mention jobs negotiated or jobs promoted. These are not at all new jobs created and therefore I look askance when the noble Lord refers to 5,460 new jobs promoted.
We are aware that only yesterday this order was debated at some length in another place, when many aspects of the Government's economic strategy were questioned. During a debate on the Queen's Speech on Thursday, 27th November, I made known my views on the degree of concern publicly expressed by many of us in Northern Ireland about the current economic and social deprivation in relation to jobs, housing and social conditions. I am compelled to ask: Is there any real evidence that the Government's policies are succeeding in creating economic growth and prosperity?
I do not wish to impute wrong motives to the noble Lord, nor do I wish to imply that he is deliberately misleading in his pronouncements. Indeed, I have the greatest sympathy with the Minister and with the Secretary of State, and his ministerial team, in tackling the difficult and deep-seated problems of Northern Ireland. But the fact is that we have over 16 per cent. unemployed, and one in every five of the male working population is looking for jobs. It is certainly not in accord with the facts of life in Northern Ireland even to whisper, in words of hope or encouragement, that the tide of economic depression is on the turn.
I would ask, in trying to see whether we are on course: is life being put back into the economy? Is a climate conducive to economic growth being created? Have the public expenditure cuts been given preference, so as not to create unemployment? Can we claim that the sum total of 5,460 new jobs promoted in nine months is a considerable success? It is with these declared objectives, and with the stated indicators in mind, that I approach this Appropriation (No. 3) Order and inquire just where we are. Are we on course or, at worst, is our economic and industrial base, as some would suggest, slowly sinking?
May I now turn to Schedule 1 to the order? As I understand it, and as I think the Minister has indicated, the six headings in Class I are all for pay awards. There is no new money requested to promote public works in the rural areas. So may I ask the Minister what is the present position and policy concerning the Urban and Rural Improvement Campaign—commonly known

829
as URIC? In the Estimates for Services, published in June 1980, the vote was for an amount of £2,570,000, which was a reduction of some £½ million compared with the 1979–80 expenditure on this proven, very useful rural improvement and employment scheme. Could the Minister indicate how many are now employed under this URIC scheme? Are there any plans to revitalise this campaign to undertake much of the necessary drainage work and useful improvements in rural amenities, as well as providing urgent employment outlets in the more remote areas of the Province?
In Class II Vote 2, under the heading of General Support to Industry, an amount of £39 million is required. I should like to indicate to the House that I warmly welcome and support monies that are considered helpful in conserving existing productive employment and in creating new jobs. But can the noble Lord indicate what amounts of this £39 million are earmarked for existing approved projects that are coming on stream, and what are the amounts designated to reinforce the Department of Commerce's industrial development efforts?
In this connection, it appears from recent statements by Ministers, especially during their visits abroad to stimulate investment in Northern Ireland, that the Department of Commerce has a clear and difficult role to attract suitable productive overseas investment. This calls for the strengthening of the DOC's industrial promotions division, especially in North America, Germany, Japan and the Middle East. Could the Minister indicate what measures are proposed to develop this important industrial promotional work? What are the numbers of officials and staff in the industrial branches of the industrial promotions division?
Some concern has been expressed about the developing administrative role of the Invest in Britain Bureau—commonly known as the IBB. It has been mooted that United Kingdom regional development organisations are being subordinated, perhaps unduly, in their oversea initiatives by the directive approval machinery of the IBB. Can the Minister indicate that the terms of reference, or the remit, of the IBB include Northern Ireland? Can we be assured that the Department of Commerce will be encouraged independently to seek out suitable projects for Northern Ireland anywhere, at home or abroad, and, if and when, necessary will be appropriately assisted by the IBB?
Under Class II Vote 2, there are a couple of points which I should be grateful if the noble Lord could explain. The points arise under Section A, Selective Assistance to Industry, and Section C, Other Support Services. Monies for loans and grants for industrial modernisation and reorganisation have been severely cut in this appropriation order. Loans and grants for firms in the inner urban area have been seriously curtailed. Support services, including market research, the energy enterprise scheme, the mineral exploration programme and the provision for factory buildings have been cut, decreased, curtailed or postponed. There has been a decrease of over £6½ million in these various industrial regeneration schemes. I respectfully ask the Minister: Do the Government consider that this is consistent with "creating a climate conducive to economic growth"?
I am pleased to note from recent press statements
830
that the Department of the Environment for Northern Ireland is seeking to amend the Planning (General Development) Order of 1973. This should enable the use of suitable premises of up to 2,500 square feet for small industrial and warehousing enterprises. May I ask the Minister what factory buildings—above this small premises facility—suitable for immediate occupation by a modern manufacturing enterprise, are available in the Province? Could the noble Lord also indicate what is the Government's present advance factory building programme in respect of new buildings, factory warehouses and factory refurbishing?
On page 13 of the autumn supplementary estimate, there is an item under Section B2, headed Assistance to the Shipbuilding Industry and Item 3, is Legal and Professional Fees. The amount voted in the June estimates was £22,000. The supplementary requirement is an additional £50,000, making a total of £72,000. The amount in the 1979–80 appropriation was a mere £10. As I understand it, this vote is in connection with the Governments appointment of an independent review team to investigate the possible additional uses of the skills and facilities available in Queen's Island. These proposed uses may be either in the form of joint ventures with Harland and Wolff, or completely separate enterprises.
If I am correct in assuming that the vote is for this review and the consultancy work involved, may I ask whether the report and recommendations will be available by next April as publicly indicated? Have the consultants been appointed and will there be an opportunity given to the trade unions and to others directly concerned to be acquainted with the general terms of the report and recommendations? I should add that I welcome the fact that Mr. Alex Cooke, the acting chairman of Harland and Wolff, is a member of this review team and, certainly, I know that he has support from this side of the House in the difficult task that he has with the shipbuilding enterprise of Harland and Wolff.
On Class II-3 and Class III-1, to which the Minister has already referred dealing with electricity and gas supplies, the question of energy supplies is, perhaps, the most long drawn-out saga in Northern Ireland's economic history. In my view, the monies requested in this appropriation order for electricity and gas do nothing to indicate that we are "on course" and putting life back into the Community. The Government's history of involvement in fuel in Northern Ireland is not a happy one. The investment in enormous oil-fired over-capacity generation of electricity at Kilroot power station has, in a small and isolated energy system, imposed a severe burden on the Northern Ireland public. The failures some years ago to connect the Province to supplies of electricity and natural gas is an instance of poor decision-making in both economic and political terms. Of course, I support the vote for £20 million to enable the Northern Ireland electricity service to avoid tariff increases, which are at present 25 per cent. greater than the highest rates in Britain. I find it difficult to understand that again we are waiting for the completion of a major review of future electricity arrangements in Northern Ireland. I understand that a major review took place five years ago.
In connection with Class III, Vote 1, an additional £9 million is asked for to facilitate the orderly running

831
down of the gas industry. We learned on 5th December that Mr. Giles Shore, the Minister for Commerce in Northern Ireland, had new information about gas supplies which may enable him to call a halt to the proposed further dismantling of the gas industry. I hope that the noble Lord, Lord Elton, may be able to indicate when there will be definite and specific decisions about the future of electricity and gas supplies in Northern Ireland. I hope he will be able to indicate when the review will be completed, and what arrangements are likely to be made suitably to inform and consult the public about the way ahead for energy.
I should like to refer to the absence from Schedule 1 of any reference to Class IX Votes. There must be good reasons for this, but I find it difficult to understand why the Votes under Class IX for health and personal social services are not required in the Supplementary Estimates. Class IX is the largest element of public expenditure in the Northern Ireland Estimates for Services, entailing an amount of over £450 million. The programme covers Vote-borne expenditure on hospitals, community health, personal social services and family practitioner services administered by the four health and social services boards. The Department of Health and Social Services was required to surrender some £10 million during the internal reallocation of resources in Northern Ireland carried out by the Government in August of this year. This meant a decrease, by over £6 million for current expenditure, by health and social services boards and a decrease of over £3½ million for capital expenditure.
In my opinion, this draft appropriation order does not reflect the publicly expressed views of members of the health and social services boards, nor of the trade unions in the personal and hospital services. I will mention only two aspects where I believe that Government policy is widely off course. The first relates to the abysmal conditions under which the mentally handicapped in Northern Ireland are compelled to exist and which they are required to accept. There is an urgent need for improvement and for the allocation of funds. Secondly, there is the utter waste of resources, apart from the human hardship and suffering created by the Government's decision not to use for the present the new and fully operational maternity hospital at Downpatrick. I hope that the noble Lord will be able to answer this point, if the information is available to him, this evening or, if not, at a later stage.
I will refer only briefly to the Vote under Class X.4. A request is made for £500,000 to cover the increased volume of printing and stationery. May I ask whether this is a side effect of the changed administrative arrangements arising from the transfer of the functions of the Supplementary Benefits Commission?
I should like to compliment the department upon their timely issue of the new guide to social security benefits. This is an excellent document and comes at a time when a great amount of information is required. In connection with the heading International Subscription, may I ask the noble Lord why the amount is not stated? While I welcome the voice of Northern Ireland being heard in international fora, it would be useful to know the full implications of this international subscription. The cuts relating to the Linen Hall
832
Library is a matter which I have raised on a previous occasion. May I ask for the Minister's sympathetic understanding of this worthy institution which is part of Ulster's life.
I should like to ask the Minister about publicity, which is dealt with under Class XI.7, Section B. It is with a twinge of regret that I note that the Northern Ireland Government's information magazine, Ulster Commentary, is to cease publication this month. It has been in existence since 1946 and over the years I have found it very useful, particularly when I was in full-time trade union work. The new format is, I understand, designed to reach a wider public and to be more effective. I hope that this publication will not be prevented from doing a necessary and important job because of cheeseparing financial constraints over production and distribution.
From this side of the House I wish to indicate support for the Appropriation (No. 3) (Northern Ireland) Order. I hope that the first issue of the new information publication will provide us with real evidence that Northern Ireland is on course for economic growth and general prosperity.
5.17 p.m.
Lord Hampton: My Lords, I, too, should like to thank the noble Lord, Lord Elton, for the way in which he introduced the order. I listened with great interest to the critical questioning by the noble Lord, Lord Blease, and I was surprised that at the end of his speech he said he supported the order. I thought he was on the other side.
May I put just a few questions to the noble Lord, Lord Elton. The first relates to Class II Vote 2, subhead B.2: assistance to the shipbuilding industry of £8·2 million, to which the noble Lord, Lord Blease, has referred. This does not seem to be a great deal of money. I realise that it is only a subsidiary appropriation, but is this sufficient to keep Harland and Wolff going in the present difficult economic climate?
My second question relates to Class II, Vote 3, subsidies to the electricity tariffs. The noble Lord, Lord Blease, mentioned the problems over the way ahead for energy. I understand that at present consumers are unable to pay their way and that we are having to subsidise them. I think we might be given some credit for this by those people on the other side of the water who say they have seen enough of us. This subsidy may be essential. However, I should be grateful if the noble Lord could give further information about the tariffs for electricity and gas, and about how he sees the way ahead for energy and how the problem can successfully be solved.
Turning to Class VI, Vote 2, the improvement of the environment, there is total expenditure of only £1,000, compared with expected economies of £2·9 million. I realise that things are difficult. However, may I make the point that I made on a previous occasion when I was contradicted by the noble Lord, Lord Vaizey, who I am sorry is not here today. I said then that the improvement of the environment was a very important matter. A great deal is happening in Northern Ireland but there are still many areas which could be improved. I accept that this economy may be essential, but it is very sad if we cannot do all

833
we possibly can to improve the less satisfactory parts of the environment.
There seem to be two economies which will be of very short-term advantage and which may lead to more necessary expenditure in future. Class I, Vote 2, shows that the provision for expenditure upon the eradication of brucellosis is being reduced by £1·3 million. I tried to check what exactly brucellosis is, and I was very surprised to find that the Oxford dictionary did not give it. However, I believe it is a disease from which cattle suffer and as a result of which they either die or have to be exterminated. If the disease is allowed to carry on, one will be faced in the future with continued compensatory expenditure. The second economy which I question relates to Class II, Vote 1, road services. This speaks of a reduction of £6·7 million on the operation and maintenance of roads. This may be inevitable, but I know that in my home county the roads are deteriorating extremely fast and that if there is a hard winter they will be in quite a bad condition. To put them right will be very costly. Following on the noble Lord, Lord Blease, and his extensive questioning, those are the few questions which I wish to put.
5.20 p.m.
Viscount Brookeborough: My Lords, I should like to start by thanking my noble friend for his explanatory document, which I found here when I arrived. It is a very readable document and I have been able to read and understand it between the time that I arrived and now, and I thank him for its very good description.
I should like to deal with only one subject. I find these appropriation orders difficult because there are so many things that one wants to say, but it takes too long to develop the argument and therefore I am inclined to stick to one particular subject. The noble Lord, Lord Blease, raised the question of the course of the economy in Northern Ireland. Whatever my support may be for the financial policy of the United Kingdom as a whole, I have to make it absolutely clear that for Northern Ireland the high rate of interest and the high value of the pound is leading to a totally disastrous situation. That view is supported by industrialists and by everybody else. Nobody should think anything else but that so far as Northern Ireland is concerned, isolated as it is with a water barrier, this is an appalling situation. Our textile industry was the largest concentration of artificial fibres in the United Kingdom—probably in Europe. It is being destroyed and it can never be resuscitated. To resuscitate it would cost an enormous sum. I feel that it is necessary to make that point.
I am a supporter of the general policy that we must live within our means, but when it comes to Northern Ireland, we are told that we must share and share alike with the rest of the United Kingdom. Let us share 6 per cent. unemployed; let us not share anything more than that. Let that be the basis of our sharing because that is our problem—unemployment, bad housing, and so on.
Having said all that, I must welcome this appropriation order. Unfortunately, it does not show us that there are other parts of the United Kingdom which, if they were isolated and separately accounted
834
for, would be costing every bit as much per head as Northern Ireland. Therefore, so far as I am concerned I do not feel that we are accepting charity.
I should like to deal with agriculture because that is in an exceptionally difficult situation. In the new account for use in negotiation in the price review it will be found that the net income of farmers is down by 70 per cent. That is a catastrophic figure for our greatest industry and, if I may particularise, it is on the pig industry that I wish to fasten attention. This industry is efficient by any terms, it is enterprising, it has been revolutionary, it has led Europe. Its marketing has been—not beyond criticism, but certainly quite excellent so far as its past history is concerned. Its plight today is not due to inefficiency.
The whole point has been that the weaker industries must fall by the wayside. But this is an efficient industry. Its plight is due to two separate decisions. The first was a failure to negotiate properly to protect the industry when we went into the EEC; and the second, by the Government of the other side and by our Government, was a failure to renegotiate and save our industry. Those are the decisions of Government, not the failure of our industry. The basic fact is that the industry was built up on cheap grain from America. The granaries were efficient, the industry was efficient. The whole thing was tied up on that, and it enabled our small farmers to extend their acreage and made it a viable business. As I have said before in this House, the position today is that grain is £15 a ton more expensive in Northern Ireland because of duty and because of transport problems. If we were to sell to Japan, for instance—and there is a market for us in Japan—in fact there are further handicaps which act against us as the bacon leaves our country, because duty is charged on the incoming grain to keep the EEC price up. We would normally expect to get what is called a restitution, as the whisky manufacturers get a restitution for the extra cost of their grain; but the method of calculating the restitution grant for our bacon is not realistic as compared with the extra cost. So the Government should renegotiate the method of calculating restitution.
Today in the press we see that there are large exports of food to Poland. These stocks are being sold from intervention. Before grain goes into intervention the transport of that grain is paid for by the EEC until it gets to the stores. What about the Government arranging for intervention stores to be in Northern Ireland if it is illegal for us to pay subsidies on the price of grain, because that is where it has got to be? If that is illegal under the CAP, why not have intervention silos in Belfast and Londonderry? That would overcome the problem and I believe that there would be great sympathy for it in the EEC.
The Government are in fact paying a feed grant at the moment, but in the 1980 price review there was an undertaking that the processing industry would receive a large injection of capital. This was to happen in June; then it was to happen this month; it is now not to happen until 1981, and we know that the price review in the EEC never finishes until about June or July, and then probably we shall be off again. In the meantime, confidence is diminishing and the industry is becoming much smaller. Ways and means must be found to save this very important industry of ours.

835
It is far cheaper to preserve the 5,000 jobs which are at stake in the bacon pig industry and to have independent people than it is to spend £28,000 on one job with De Lorean. I maintain that there is real discrimination. When the £48 million was redistributed, surely some of it could have been taken for the pig processing industry, which is part of the industry of Northern Ireland. So I hope that the Government will find some method of saving our pig industry.
5.28 p.m.
Lord Dunleath: My Lords, following what the noble Viscount, Lord Brookeborough, has said, I should like to add my thanks to the noble Lord on the Front Bench for having given us in advance an explanatory memorandum on this order. I entirely agree with what the noble Viscount, Lord Brookeborough, has said about agriculture. It occurs to me to wonder why in fact in Class 1, Vote 6 there is an increase of over £1 million for expenditure by the department on administration, in view of the fact that the service to farmers seems to be in the process of being curtailed—and I thought that was with a view to staff reductions, but it may be an inflation factor.
None the less, dealing not just with agriculture but with the situation as a whole, I have a nasty feeling that tile Government cutbacks in public expenditure and the squeeze on credit are tending to hit the soft targets rather than the hard ones. By the "soft targets" I mean people like the farmers, people like the small industrialists who perhaps employ 20 to 30 people and also people like those voluntary organisations such as Women's Aid, Age Concern, the handicapped, and so on.
The soft targets are not able to hit back. The farmer will not go on strike, nor will the man who runs a small industry in a rural area. When times get tough that man has his entire stake in his farm or his industry and therefore he will not let it go. He will forgo his holiday; even if his car is five years old he will put off changing it for another couple of years. He will work a 15-hour day, if necessary, to tide his farm or his firm over the rough period. And the chances are that his labour force, such as it may be, will be with him on that, because they realise that his job is their job, and that if his business goes to the wall that is their job lost, and there is no one going to bale them out. That farmer or small industrialist cannot clear off to America; there is no one going to bale him out.
My Lords, not for a moment do I wish to say that I in any way begrudge the money that has been pumped into the Belfast shipyard or into De Lorean, or the money that was pumped in to start up big multinational branches such as Courtaulds, or indeed the firm of which I am chairman, Carreras Rothman (Northern Ireland). No, I do not begrudge this at all. But it would seem that, in view of the fact that it would be a very difficult political decision and would create an international uproar if the hard targets were allowed to go, therefore the soft targets are suffering.
I do hope that Her Majesty's Government will take due note of that, and make sure that such people as a neighbour of mine, for whom I have been fighting for two years to get a small factory—he has been working
836
from a corrugated iron ex-gospel hall and would provide more jobs if he had decent premises—will get more consideration, because they are the salt of the earth in Northern Ireland; they are going to be the people who will stick with it through thick and thin, and no boardroom decision in Detroit or in London or in Amsterdam is going to make these people pull out until they have really reached the end of the line. Furthermore, their workforce is going to pull out every available stop to help them to make a go of it.
My Lords, it has already been mentioned that our industries in Northern Ireland are at a disadvantage on account of the higher energy costs, and, as the noble Lord, Lord Blease, said, this is something with which we have all had to live for a very long time indeed. But why, when we have surplus capacity for generating electricity in the North and it looks as though in the Republic of Ireland there is going to be a surplus of gas available, cannot we sell them electricity and let them sell us gas. I agree that the inter-connector has been blown up three times. Is this the sort of stuff that we are made of? Who rules in Crossmaglen and that area? Do Her Majesty's Government rule on one side of the Border? Do the Republican Government rule on the other side of the Border? Or is this no-man's-land, bandit country, where a few unfortunate electricity workers sent to repair the interconnector are chased away by gunmen and told not to come back? Could we not put the line underground? Could we not even put it under the sea? This would be a tremendous saving to both countries. Quite irrespective of politics, Ireland is geographically an island and the British Isles are geographically an entity.
I would further ask why, in the light of the Cooper and Lybrand Report, in the light of a report presented by civil servants some time ago, both of which supported the gas link between Scotland and Northern Ireland, Her Majesty's Government continue to propose spending large sums of money on the rundown of the gas industry, which is not only going to cost money directly but also is going to cost money as a result of the amount of jobs that will be lost by those workers in the gas industry. Is it not absolutely plain that it is far better to save jobs than to create them? Is it not clear that the expenditure on maintaining the gas industry and providing the electricity link would be money much better spent in paying unemployment benefit or compensating people for having to change their heating appliances?
The same really applies to the housing situation. It is much cheaper to save jobs than to create them. Economising on construction of houses for the Housing Executive and on the maintenance of houses, I respectfully submit, is false economy. Unemployment in the construction industry is, I think, as high as, if not higher than, anywhere else. Furthermore, the Housing Executive's stock of houses in need of repair but whose repairs are being postponed will either have to be repaired or replaced one of these days, and then it is going to cost even more. Similarly, as I think the chairman of the Housing Executive made clear, if finance available to the Northern Ireland Housing Executive is not increased at this stage, the housing stock in general is going to deteriorate and more money still will have to be found in the future.
There is, further, the matter that from a social point

837
of view bad housing, together with unemployment, is a very real factor indeed. It could well be that the violence which has been so much deplored and regretted by us all in Northern Ireland in recent years may be as much a protest against bad housing, bad environment and unemployment, frustration, boredom and the destruction of the human spirit, as a political protest. Therefore, I sincerely suggest to Her Majesty's Government that, in view of the fact that one in four houses in Northern Ireland is statutorily classified as being unfit, and whereas it would take £154 per capita of the population to bring the housing stock up to the Great Britain level, the present expenditure is £135 per capita, this is something that Her Majesty's Government should look at very closely indeed next year, because I appreciate that it is probably too late to do anything about it this year.
Lord Elton: My Lords, if the noble Lord will allow me to intervene, I might be able to deal with this point better at the end of the debate if he told me where he got these comparative figures from, because they do not agree with mine.
Lord Dunleath: I thank the noble Lord for his intervention. I was given those figures by my political research unit, who perhaps were in error. I accept it if the noble Lord has authentic figures which I do not have.
Lord Peart: It may be that the noble Lord's figures are wrong.
Lord Dunleath: I will check that anyway, my Lords. If I may say a brief word on education, a proposal has been made in the Chilver Report that the teacher training colleges should be amalgamated. This, I think, would be a useful economy as well as a valuable step towards social fusion in Northern Ireland, as indeed I think integration of schools, a subject about which I have spoken before in your Lordships' House, would not only be socially valuable but would also save money.
Generally, to wind up, your Lordships will be aware that Northern Ireland is a special case because it is disadvantaged, first, by its previous dependence on traditional industries, agriculture, shipbuilding and textiles. When the late Lord Faulkner saw the rundown of the linen industry taking place, I think he was absolutely right to encourage man-made fibres, and no one at that time, in the mid-1950s early 1960s, could have told that man-made fibres would run into the difficulties that they have all over the United Kingdom today.
That is one of our problems. Another is the higher fuel costs, to which reference has already been made. Another is remoteness from the markets of the products that we manufacture, and the cost of travel which is a very substantial factor indeed for representatives of firms who have to go to London, Manchester and even across to the Continent. The extra journey from Northern Ireland is a very significant factor.
Therefore, we are more dependent on public sector employment and, perhaps, the service industries, than the rest of Great Britain. And I cannot help feeling slightly anxious that too high a proportion of those
838
working in Northern Ireland are engaged in the service industries rather than in the manufacturing industries which are wealth-generating. Even so, it must be recognised that there is bound to be a greater dependence on public sector employment. Indeed, it was said to me by someone the other day: "It is more socialist policies that we require in Northern Ireland than Conservative ones". I hope that the noble Lord will not take offence. Also, there is the social danger of mass unemployment. I think that it is extremely risky to allow the situation to reach a stage where there is long-term unemployment. People can become completely dispirited, their morale is shattered and the will to work eventually becomes eroded. That is another reason, I think, why Northern Ireland is a special case.
So I sincerely hope that Her Majesty's Government will do all in their power to attract what assistance they can from the EEC. There has been some confusion about that, and I think that the noble Lord recently clarified the position. If he has anything to add today I should be glad to hear it. However, I hope that the Government will attract the maximum assistance from the EEC for stimulation of the economy and of jobs in Northern Ireland, and also to give as much incentive as they can for private enterprise—whether it be tax incentives or whatever. However, it is the generation of wealth and the provision of jobs which are needed, and I am sure that Her Majesty's Government will not be unaware of those two priorities.
5.43 p.m.
The Duke of Abercorn: My Lords, in this time of financial stringency I welcome this order and, in particular, the £20 million subsidy for electricity tariffs, which will be of undoubted assistance to industry, commerce, agriculture and, in particular, the housewife. In regard to the provision for a further loan for the De Lorean car company, I should like just to remind the constant critics of this project that in America there is widespread interest, indeed enthusiasm, for this project. Furthermore, this House should remember that the market place for this car is in America, not in this country.
As the Government's political initiative in regard to devolved government has duly run its course, I believe that it is not only opportune but essential for the Government, and in particular the Northern Ireland Office, to focus maximum attention on the rapidly deteriorating economic situation in Northern Ireland which in itself is a grave cause for concern. In fact, it is no exaggeration to say that this deteriorating situation represents a severe threat to the stability of the country. That viewpoint was expressed forcefully recently on television by the chairman of the Economic Council, Sir Charles Carter. Therefore, an economic initiative is not only opportune but, I believe, vital. In the context of the prevailing economic situation in the United Kingdom, it would, of course, be irresponsible and inequitable to suggest any further significant public expenditure for Northern Ireland, but the deteriorating situation calls for the implementation of original and radical policies.
Before putting forward suggestions for consideration by the Government, I would say that it is essential to remember that successive energy crises have resulted

839
in spiralling freight rates across the Irish Sea which, as a result, have reduced the consumer market for Northern Ireland goods to a localised market of £5 million within the island of Ireland. Furthermore, as a result of the strength of sterling and the dwindling value of the punt Northern Ireland trade to the Irish Republic has become complex, difficult and disadvantageous, particularly affecting the Border areas—areas of traditionally high unemployment.
Secondly, let us briefly examine the success story of the Irish Republic Industrial Development Authority who, in this extremely difficult year of worldwide recession, have promoted some 40,000 new jobs. Although Northern Ireland has undoubtedly an image problem in regard to industrial promotion, the Industrial Development Authority continues to enjoy significant advantages over Northern Ireland in the promotion of industrial development. First, as previously stated in your Lordships' House on two occasions, the IDA can offer incoming industry a tax-free holiday on all manufacturing exports, and now, as from next month, a stabilised rate of corporation tax at 10 per cent. until 1990. If Northern Ireland shares the same geographical peripheral disadvantages as the Irish Republic, then surely Northern Ireland should be entitled to have parity with the Irish Republic in regard to fiscal incentives and the removal of unnecessary red tape. As it is vital to attract long-term viable industry to Northern Ireland, I believe that fiscal incentives are just as important as grant inducements.
I understand that the Community regulations in themselves do not preclude the possibility of regionally differential levels of taxation. Perhaps my noble friend Lord Elton, when replying to this debate, could indicate if and when the Government intend to make representations to Brussels in regard to a corporation tax concession for Northern Ireland.
Secondly, the IDA in the Irish Republic, enjoys a track record of minimum red tape. One of the few disadvantages of direct rule is that it has resulted in a dramatic increase in bureaucratic red tape. In fact, a local businessman deciding to start up a new enterprise has literally to navigate a minefield of bureaucratic red tape prior to launching his project. Apart from the urgent need to roll back recent bureaucratic encroachment, the Government should seriously consider how the philosophy of encouraging able young people to make a career in industry can be converted into reality by creating and providing the right structure to improve the links between education and industry, since Northern Ireland desperately needs to attract its best talent into industry. I believe that if the Northern Ireland Office could take the lead in this direction, Northern Ireland could lead the rest of the United Kingdom in this vitally important concept.
Again, the links between industry and universities could be closer in the development of high technology. One can foresee the need in Northern Ireland for a Sanford University type of industrial enterprise on one of the university sites. I believe that the new University of Coleraine has just started a highly successful industrial unit. It really is essential for every vestige of talent in Northern Ireland to be encouraged and exploited to the maximum.
840
To encourage entrepreneurial development in Northern Ireland involves high risk investment, and I believe that the Government should encourage and allow private individuals to invest part of their income, free of income tax, in developments and ventures of this type. In this critical economic climate I hope that the Government will review yet again the right structure for the job promotion agencies in Northern Ireland. Northern Ireland has a population of only 1½ million, yet there is a proliferation of job-creating agencies; namely, the Department of Commerce, the Local Enterprise Development Unit and the Northern Ireland Development Agency, with back-up support from the Economic Council, the Low Cost Automation Centre, the Wolfson Signal Processing Unit, Manpower Services and several other excellent organisations. Surely this proliferation must result in a duplication of time, effort and talent which will inevitably obstruct the most effective and efficient method of job-creation in Northern Ireland, as this country must be equipped with the most efficient job-creation agency in Europe. If this deficiency is the considered opinion of many in industry, and I believe the trade union movement and the Economic Council, then surely the Northern Ireland Office should review once again the current situation.
In recent weeks the Ulster Farmers' Union has, as always, articulated the problems and concerns of the agricultural industry, as farming is in deep depression. As is the custom of this House, I should like to declare a vested interest for I am involved in farming and also in a wood-processing industry which supplies material to the farming community. I believe that the time is opportune to reassess the significance of agriculture to our economy, and how and where production could be improved, thus providing direct and downstrean employment; in other words, further employment in the food processing industry.
In counties Tyrone, Fermanagh and Londonderry there are literally thousands of acres of unproductive land requiring reclamation. Surely the Northern Ireland Office should encourage the reclamation of this land by acting as a vehicle for the European Investment Bank to lend long-term loans at fixed rates of interest to progressive farmers who want either to increase their existing acreage or to purchase these run-down farms, which have a viable potential, for their families. A European Investment Bank loan, currently at 11 per cent. including exchange risk cover, would assist farmers to plan reclamation expenditure without having to contend with fluctuations in the MLR. Perhaps, naively, I am attempting to persuade, if not cajole, the Northern Ireland Office to adopt a more initiating role to assist our economy. But as competition in Europe for new job-creating investments has become so severe—in fact, it has become a vicious, competitive, international battle—drastic action in a drastic situation must be taken.
5.55 p.m.
Lord Elton: My Lords, it is always easier to open a debate of this nature than it is to wind it up. I shall endeavour not to fall between the two stools by speaking too long to secure your Lordships' attention or by speaking so briefly that I do not answer your Lordships' questions. I hope that your Lordships will bear with

841
me. I have endeavoured to pick up most of the gauntlets thrown before me in some profusion, and occasionally some confusion. I shall try to set matters to rights.
The noble Lord, Lord Blease, who gallantly welcomed the order at the end of his very unwelcoming speech, raised a number of matters and set the debate in a somewhat sombre context. He reminded us of the acute social and economic difficulties of the Province. I would not want to belittle those difficulties; nor would I wish to leave us with an exaggerated impression of them, or a diminished impression of what Her Majesty's Government are doing to alleviate them.
I should like to start with the reference to 5,460 new jobs. I may say that I am deeply flattered that the noble Lord has read the speeches which I made at two of the many educational institutions which I have attended in the last few months, and in future as I draft those speeches I shall always consider not only the shining faces of the young at the front, but also the wise and critical eye of the noble Lord at the back, as if he were there. He referred to 5,460 new jobs, to which I referred in my earlier speech, as having been promoted in the first nine months of this year, and asked whether, in fact, they were real jobs. These are the result of an orchestrated effort carried out by the Department of Commerce, the Northern Ireland Development Agency and the Local Enterprise Development Unit. It includes a number of enterprises entirely new to Northern Ireland, such as the Learfan project, which will provide 1,250 jobs; the C.P. Trim Company, which will provide over 400 jobs; in addition, it includes new Northern Ireland projects and expansions of existing Northern Ireland enterprises, such as Glen Electric at Newry—about which, again, the noble Lord will have read in the same paper as he read my speech—which will provide a further 150 jobs. These are events that would not otherwise have happened.
I believe that the tide is turning because it is possible to bring them in. There is an outflow, but we are combating a process that has gone on for a number of years and which has accelerated and gained momentum over a number of years. It takes time to turn the tide, but I think that it is slackening in one direction, and I remain confident that, in fact, it will rise again.
The noble Lord, Lord Blease, went on to pick up a number of points in which I shall try to follow him. He was anxious about the absence of the DHSS Class IX Vote in the Estimates. The reason for this—and it may not allay his alarm or anxiety—is that the effect of the summer reallocations was to reduce provision in Class IX below the main Estimate level. As I explained at the beginning of the debate, there is no machinery for showing reductions in the Estimates. Therefore, the reference to them appears in the Explanatory Memorandum, and I am grateful to noble Lords for welcoming this. I thought that it would give me fewer questions to answer, but, quite clearly, it has given me a great many more.
The noble Lord referred, as did a number of noble Lords, to Harland and Wolff—which is something of a monument in the middle of Belfast—and to the difficulties of that company. Like him, I give the best wishes to the new chairman of that company. The review which is at present under consideration is not quite the statutory affair that he seems to think it is, but what is under consideration is any means of diversifying
842
the operations of the shipyards so that they are not tied to a single type of product. Indeed, some of that has already been evidenced.
The noble Lord turned to the urban and rural improvement campaign and expressed some concern about this. This is a campaign of the Department of Agriculture in Northern Ireland. Some 1,300 jobs provided by the department in minor drainage works and forestry and fishing amenities under this campaign will be phased out by March 1981. But these are temporary jobs, as I believe the noble Lord is aware. Arrangements to implement this policy decision have been agreed upon with the trade unions concerned through the mechanism of the department's Joint Industrial Councils. The need for further reductions in public expenditure continues, and additional reductions in the size of the DANI industrial labour force may therefore be expected.
The noble Lord then quoted a number of votes and classes in the matter of reallocation, starting with extra provision in Class II, Vote 2, sub-heads A1, A4 and B2, and asking whether this was financed from new money. The increases in these three sub-heads form part of the extra £48 million which was allocated to Northern Ireland during the summer, and the £50 million internal reallocation process. He asked whether the £98 million referred to in the 6th August announcement was used for new industrial investment projects. That is really to quantify in terms of money what I have just given in terms of jobs. The Department of Commerce's share of the £98 million is being used mainly to hold down electricity tariffs and for industrial support. Some £7 million is earmarked for Harland and Wolff and about £14 million for De Lorean. I am grateful to the noble Duke, the Duke of Abercorn, for reminding us that the motor car which is sometimes looked at rather lightly on this side of the Atlantic is the subject of great interest on the other side of the Atlantic, and dollars are very welcome. The remainder of the provisions for industrial support will mainly be used to enable the Department of Commerce to accommodate the higher level of expenditure required for industrial development grants.
The planning and formulation of certain projects for which provision has been made under loans and grants under A2 and A3 are not being taken up by industry for the reason that the projects are not coming on and being completed as quickly as anticipated. Some of the projects are now under way and will involve payment of the same grant in later financial years. Therefore, this is a question of timing and not of totality. The postponement of the ecological survey programme and the delay in introducing the mineral exploration programme, to which the noble Lord referred when talking to the provision for mineral exploration and grants, is a necessary consequence of the Department of Commerce's contribution to the reallocation of resources to which I have referred. It is not thought to have affected seriously the mineral exploration programme of companies already prospecting in the Province, but the matter is being kept under review.
The noble Lord referred to the market research grant scheme. The main purpose of this scheme, which was introduced in October 1979, is to assist in raising the standard of marketing by encouraging Northern

843
Ireland firms to engage in well planned market research programmes. There has been no cutback as such in the scope of the scheme, or the rates of grant paid. The reduction reflects an ability to predict more accurately the cash requirements of the scheme in the current financial year as a result of the experience of claims received to date. To put that in plain English, we thought it would get taken up quicker than it has.
The noble Lord asked whether the provision for energy saving interest relief grant has been reduced. The scheme is demand related and the provision again reflects the anticipated uptake by industry and commerce. No change of policy is reflected in the figures. As to the provision of energy enterprise schemes, the noble Lord asked whether that has been reduced. Energy conservation is receiving and will continue to receive high priority and we are moving forward on a number of fronts. We recognise the importance of this. We are continuing to exert ourselves to achieve savings, but our overriding aim is to reverse the trend in unemployment, the tide to which the noble Lord referred. That has to be the priority for expenditure, and it has to some extent to get its money from this source. It is a small indication of a change of emphasis in the Government's programme.
Several noble Lords are interested in gas and electricity. In regard to electricity, the whole matter of electricity supply is currently under review. The implications, both for industry and for domestic consumers, of the high cost of electricity in Northern Ireland compared with that in Great Britain are important factors in the deliberations of the review team. The work has a high priority, but the team has to consider complex matters and I cannot say when the outcome of the review will be known. It will, however, be completed as quickly as possible and there will be appropriate arrangements for public consultation and discussion.
In the case of the gas industry, its future has been the subject of a number of close studies which took account of a number of options, including the supply of natural gas by pipeline from Scotland. I have to tell the noble Lord, Lord Dunleath, that the recommendation of the Civil Service review was not that this should proceed. On the basis of that and other studies, the Government have concluded that this is not a viable option and that the continuation of subsidies for the industry could not be justified. It is, however, prepared to assist those undertakings who have decided to run down as a result of this decision.
I should mention, and noble Lords have raised it already, the recent talks which Mr. Shore had with Mr. Colley on the possibilities of the supply of natural gas from the Republic of Ireland. These covered the proposals for developing gas extraction from the Kinsale field. It has been agreed that the next step is for the South to provide more detailed information on such matters as price, quality and of any supply which might be on offer to Northern Ireland so that an evaluation can be made. I must make two points on this matter. First, the information from Mr. Colley is new and it would be wrong to adduce a firm prospect of supply until it has been fully evaluated. Secondly, such supplies, if they do materialise, will not provide alternatives to the existing operation of all 13 gas
844
undertakings in Northern Ireland, and would not therefore avoid closure in all cases. Work on the preparation of rundown plans must therefore continue. A further statement will be made as soon as a clearer picture of the way forward emerges.
Lord Dunleath: My Lords, would the noble Lord permit me to interrupt just for a moment, when he is dealing with that subject? In the event of worthwhile quantities of gas being found off Rathlin Island, would it alter the noble Lord's attitude towards that? Or even if there were a likelihood of gas flowing in the other direction, would it alter his view towards having a link between Northern Ireland and Scotland?
Lord Elton: My Lords, if circumstances change judgments change, and I could not tell what the circumstances would be if the noble Lord's hopes turn to be fact; but they certainly would be considered.
In order not to delay too long, I will note what the noble Lord, Lord Blease, said about the Linen Hall Library, without giving a résumé of the case of this interesting and ancient but independent body. Miscellaneous expenses increased under Class X, Vote 4, by £460,000. This provision reflects the costs of the reform of the supplementary benefits scheme amounting to £413,000 and needs the printing of new codes of operational instructions, leaflets, and forms. I think your Lordships were content with the proposals. This is what their contentment costs. I think those are the noble Lord's principal points.
May I now turn to the noble Lord, Lord Hampton, who spoke next? I should like first to thank him for welcoming this order, and secondly to reply to the points he raised. On the question of brucellosis eradication, the noble Lord is right to say that it is a disease of cattle and a damaging one. The reason why the Class I Vote 2 reduction is there is largely because the campaign has succeeded better than expected and the result is that there are fewer cases to treat.
Lord Kilbracken: My Lords, the Minister spoke of a programme for the eradication of the disease and then spoke about treatment.
Lord Elton: The noble Lord is quite right, my Lords, and perhaps I was tempted to go too fast; "treatment" is perhaps a rather Orwellian word for "elimination". The noble Lord also spoke about support for electricity and the necessity for it. I would point out that domestic tariffs are currently 22 per cent. and not, as the noble Lord, Lord Dunleath, said, 25 per cent. higher than the average comparable tariff in England and Wales. I doubt if the noble Lord would wish the Government to have permitted a further rise without careful consideration; it is a very considerable difference and constitutes one of the special features of the predicament of the Province which the Government recognise in making their allocations of funds.
Lord Hampton: While not disagreeing with that policy, my Lords, is the noble Lord aware that all I am saying that we should give credit where credit is due?
Lord Elton: My Lords, I was about to say that a great deal of credit is due for what the Government are trying to do to alleviate this special condition. The noble Lord referred to the housing grant. Revenue expenditure by the Northern Ireland Housing Executive on salaries and management costs, maintenance of the housing stocks and loan charges on borrowing to finance capital programmes exceeds the income it receives from rents. This deficit is met by housing grant paid to the executive and it is anticipated that this will amount to £102.2 million in 1980–81; I shall return to housing later.
The noble Viscount, Lord Brookeborough, told us—it is tempting to coin a phrase—first that small is beautiful and then that pig is beautiful. I accept his points. Having failed to get agreement in Brussels to a feed price allowance scheme or to the extension of the Italian levy abatement scheme to Northern Ireland, the Government are attempting to secure a European Community scheme under which approximately £8 million is to be made available over a four-year period to help relieve the difficulties facing the pigs, poultry and feedingstuff industries in Northern Ireland.
My noble friend the Duke of Abercorn asked whether the Northern Ireland job promotion organisation was adequate to cope with the present situation and whether it ought to be reviewed again. I would remind my noble friend of the review the Government undertook earlier this year of the main industrial development institutions in Northern Ireland; that is to say, the Department of Commerce, the Northern Ireland Development Agency, the Local Enterprise Development Unit and the industrial training responsibilities of the Department of Manpower Services. Following that review, it was decided that the Department of Commerce, NIDA and LEDU should continue to contribute to the industrial development effort in Northern Ireland but that new and improved coordination arrangements between these institutions should be developed at both policy and operational levels.
That has been affected through the setting up of a consultative forum chaired by my honourable friend Giles Shaw, who has responsibility for the Department of Commerce, and by regular meetings of the chief executive officers of the industrial development organisations. The forum comprises representatives of the Northern Ireland Economic Council and the heads of the industrial development bodies and provides Government with the benefit of the views of representatives of a variety of business and community interests on different aspects of industrial development policy. I am pleased to say that these new arrangements are working effectively. I recognise however, as does my noble friend, that the arrangements for industrial promotion are a vital instrument of Government economic policy in Northern Ireland and I reassure him that their effectiveness will be the subject of continuous monitoring to ensure that they are fully appropriate to the task.
That brings me directly to the question of the promotion of interest in, and connection between, schools and industry. I am very conscious of the need for strong links in this area and that young people should be made aware of the full range of opportunities open to them when they leave school. I believe there
846
is a false tradition that we must combat; namely, that there is something dishonourable in professions which do not have a brass plate screwed to the door and somebody with clean hands behind them. We must defeat that if we are to become a wealthy nation again.
My department has approved additional teaching posts in post-primary schools to strengthen the provision of careers education; in-service courses for careers teachers have been organised; each of the five boards has appointed a careers adviser; and as part of the careers education programme and in co-operation with local employers, most schools organise visits by pupils to places of employment, and pupils from over half the schools in the Province are now participating in work experience schemes. In addition this year some teachers from all board areas have benefited from a two-weeks' secondment to industry. In June, the new Northern Ireland Science and Technology Regional Organisation, SATRO, was established in the Northern Ireland Polytechnic and this will provide a further vehicle for active co-operation between schools and industry.
Another new development which I warmly welcome is the initiative by the main Northern Ireland business organisations in setting up an education co-ordinating group. This group is bringing together the heads of Northern Ireland industry and commerce, schools principals and education and library board officials, and initially it is concentrating on the Belfast area. The institutions of higher education in Northern Ireland are also well aware of the importance of links with industry and have taken steps to develop and formalise these links in many areas of work, including the low cost automation centre and materials testing station at Queen's University, the teaching company and the innovation and resource centre of the Ulster Polytechnic, and pollution management and translation and interpreting services of the New University of Ulster. I am not painting a picture of an ivory tower separated from industry. Does my noble friend wish to intervene to tell me I am? I have a rule that I give way once to each noble Lord and I think I see my noble friend wishing to intervene.
The Duke of Abercorn: I am obliged to my noble friend, my Lords, and I wish to refer back to the question of the job creation agency. When the Government decided not to restructure the job creating agency in Northern Ireland there was widespread criticism among industry, I believe I am right in saying among the trade union movement, and from the Economic Council. I urge my noble friend to reconsider who is right and who is wrong. Can the Northern Ireland Office be right when industry, trade unions and the Economic Council all criticised this decision?
Lord Elton: My Lords, I take note of my noble friend's feelings and will convey them to my honourable friend who has responsibility for these matters. I will not repeat what I said; my noble friend will read it in tomorrow's Hansard, but I will also see that my honourable friend reads what my noble friend said.
Lord Dunleath: My Lords, may I ask the Minister—
Lord Elton: I have spoken for 22 minutes, my Lords, and have already given way. Familiar faces opposite are beginning to look a shade impatient and I must get on, referring finally to another point raised by my noble friend the Duke of Abercorn, who wanted us to consider making arrangements for the Department of Agriculture to administer European Investment Bank funds or to set up a public sector body for a similar purpose. Facilities are available through the Department of Commerce already for the provisions of EIB loans to processing projects in the agricultural sector. No parallel arrangements have been made and none are at present being considered for agricultural production projects, which are normally on a much smaller scale than industrial projects.
Projects involving the manufacture or processing or agricultural products can qualify for loan on the same basis as other manufacturing projects from the EIB Exchange Risk Guarantee Scheme. The scheme does not, however, extent to loans for farm development and improvement projects, where I should remind my noble friend that generous rates of capital grant, up to 70 per cent., are available from existing agricultural schemes for land reclamation and drainage.
The criteria for obtaining an exchange risk guarantee is as follows. The scheme is primarily for manufacturing industry, but service industry projects may also be considered. All projects assisted under the scheme must involve either the creation of new jobs, or the safeguarding of existing ones, and meet the criteria for selective financial assistance. The scheme has recently been extended to tourism projects. The EIB has excluded certain difficult industrial sectors, particularly those suffering from over-capacity within the European Community, such as man-made fibres, and has indicated that projects in other sectors would require special attention.
I shall weary your Lordships too much if I go on longer. I repeat what I said at the beginning, and I repeat what I said in the school in the speech to which the noble Lord refers. I recognise that these are difficult waters. I realise that there is a tide that we have to turn. I think that that tide is slackening in the one direction. The noble Lord has 2 per cent. off interest rates since I last spoke to this House. There are many other factors, some against and some for, but I believe that what the Government are doing will bear fruit. What we need now is a steady nerve and as much compassion as we can afford. If we drown in compassion, if we do not put our money into new jobs, but spend it on helping even more those who are not in jobs, the fact is that there will be no jobs for anyone in the long run. We depend on our wit, our muscle, and our resources. It is the Government's intention to see that, using those, we come again to the proud and secure place in the world economy to which we have been accustomed for so many generations.
On Question, Motion agreed to.

Financial Provisions (Northern Ireland) Order 1980
6.22 p.m.
Lord Elton Lord Elton rose to move, That the draft order laid before the House on 26th November be approved.
The noble Lord said: My Lords, I beg to move that the draft Financial Provisions (Northern Ireland) Order 1980 be approved. This is a further order in a series, which has been enacted at intervals of approximately two years, to deal with miscellaneous matters of a financial nature. The last order was the Financial Provisions (Northern Ireland) Order 1978. The main purpose of those orders is to increase, as necessary, limits imposed by Northern Ireland legislation on certain financial transactions, and to deal with other matters with a financial content. They do not deal with the appropriation of cash for public services.
I propose to deal very briefly with the content of the main articles. Article 3 and Schedules 1 and 2 deal with two items in respect of which issues may be made from the Northern Ireland Consolidated Fund, the issues having a statutory limit placed on them. The first item is for capital expenditure for industrial development, where it is proposed to increase the present limit on aggregate issues from £550 million to £560 million. The second relates to issues to enable rebate payments to be made to employers from the maternity pay fund, where it is proposed to increase the present limit from £250,000 to £750,000. It is anticipated that these increases should accommodate estimated expenditure until mid-1982.
I have other details of the order, but I think that your Lordships would rather proceed to the next business, and so formally I beg to move that the order be agreed to.
Moved, That the order laid before the House on 26th November be approved.—(Lord Elton.)
On Question, Motion agreed to.

Northern Ireland (Emergency Provisions) Act 1978 (Continuing) (No. 2) Order 1980
6.24 p.m.
Lord Elton Lord Elton rose to move, That the draft order laid before the House on 3rd December be approved.
The noble Lord said: My Lords, I beg to move that the draft Northern Ireland (Emergency Provisions) Act 1978 (Continuance) (No. 2) Order 1980, which was laid before the House on 26th November, be approved. In the six months since we last debated the renewal of the emergency provisions for Northern Ireland I am pleased to say that the overall level of violence in the Province has continued to decline; yet death and violence still occur, bringing tragedy and grief for the victims and their families. The terrorists and their violence are now more alienated than ever from the people of Northern Ireland, whose economic, social, and political needs are made worse, and pushed further from realisation, by the division and destruction wrought by terrorism.
As we progress towards normality we must expect the path to be rough in places. The terrorists will not easily abandon their discredited cause. We must expect them to seek any desperate means to revive their flagging fortunes. One way is to create fear and suspicion within and between communities. The Provisional IRA has attempted to do this with a ruthless campaign of murder in the border areas around South Fermanagh and South Armagh; and in recent months so-called loyalist terrorists have carried out a

849
number of equally abhorrent murders. I condemn totally all those who commit these dreadful crimes, for which there can be no possible justification. Furthermore, let no one be in any doubt that the security forces will continue to act with determination and impartiality against all who break the law, whatever their political or religious persuasions. The same applies with equal force to those who take the law into their own hands, as some have recently threatened to do.
The return of normality is shown most clearly by the way in which the security forces are dealing with terrorism. They are not using the draconian measures advocated by some; they use the due process of law. This involves painstaking investigation, the gathering of evidence, the bringing of charges, and the proof of those charges in courts. This process, which is undramatic but relentless, is the very essence of policework, and it is increasingly the Royal Ulster Constabulary, supported where necessary by the Army, who are pressing home this fight against terrorism. It may not make many headlines, but it is a most effective form of attrition, gradually eating into the heart of terrorism. So far this year 539 people have been charged with terrorist crimes, including 62 with murder.
I know that this House would wish me to pay tribute, as we have done before, to the professionalism, courage and dedication of the men and women of the Royal Ulster Constabulary and RUC (Reserve), the Regular Army and the Ulster Defence Regiment, who daily continue their fight against violence and inhumanity on behalf of us all. I am also encouraged by the continuing number of successes against the terrorists by the security forces in the Irish Republic. Cross-border security co-operation is an essential component of our counter-terrorist effort.
Your Lordships will know that we are debating the renewal of these emergency provisions in the face of another threat of violence from the Provisional Irish Republican Army. It is the threat posed by the hunger strikes. That threat is not only to themselves; it is to the community from which, for a horrific list of crimes of violence, they have properly been banished. They seek by this means to force the Government to concede the legitimacy of their evil cause and to grant prisoner-of-war status to the convicted and sentenced republican criminals in prison. In this of course they must inevitably fail.
Thus failing, the terrorists hope to use the threat of the hunger strikers' deaths to precipitate widespread violence and bloodshed in the Province, and thus to promote the chaos and fear on which they thrive. This is a callous and ruthless exploitation of human life, to engineer confrontations within the community and with the security forces. So far the demonstrations in support of the hunger strikers have been peaceful. The Government believe that this support is misguided, but while the demonstrators behave lawfully their right to protest will be protected. The police will continue to control the demonstrations with the tact, discretion and common sense which they have demonstrated so far.
However, we must take account of those who at some time will seek to create violence from these peaceful demonstrations. I would ask the demonstrators to think hard about those who may try to manipulate
850
their sincerely-held feelings for evil and violent objectives. As tension rises, let us hope that the suffering and endurance of the last 11 years, and the positive gains which have been made, will not be swept away by the hypocritical rousing of emotions by men who regard death as a mere tool in their workofdestruction.
As for the hunger strike itself, your Lordships will be aware that seven men are in the seventh week of refusing to take food at the Maze Prison and that they were moved to the prison hospital on 2nd December so that closer medical surveillance could be maintained over them. Three women prisoners at Armagh also began to refuse food on 1st December. So far no one's condition is giving cause for concern, but if they persist in their fast, it may not be long before we begin to see signs of deterioration in the health of the men.
My Lords, this is not the time for a lengthy discussion of these issues. Let me make them clear once more. The object of the protesting prisoners is to secure political status. The Government cannot, and will not, concede that status. But the Government are ready to consider constructively any genuine ideas for further improvement for all prisoners in a regime which is already enlightened and humanitarian, as my right honourable friend's Answer to a Question in another place last Thursday, 4th December, made very clear. The prisoners' claim for political status within the prisons is only part of a wider attempt to discredit those measures which the Government have been compelled to introduce to protect the very fabric of society from terrorism. We are here today to debate those measures and, I hope, to renew them.
However, my Lords, the Government do not seek renewal lightly, without having weighted up carefully the advantages and the disadvantages of each of the emergency provisions, and taking into account the comments and recommendations of responsible bodies, particularly the Standing Advisory Commission on Human Rights, who are rightly wary of the use of temporary emergency legislation. The Government welcome the constructive advice of those who have the same objectives as we do—the return to normality. The terrorists themselves could most quicklybring about the dismantling of the emergency legislation by giving up violence and pursuing their aims by legitimate democratic means. But they dare not. The sterility of their creed of violence is all too evident, and yet by still pursuing it they push continually further out of reach the legitimate aspirations of those they claim to represent.
As I have said earlier, we are making progress towards normality, and a significant step six months ago was allowing the power of detention without trial to lapse. We are continuing to look for further opportunities as the position gradually improves. The measures to be given the closest scrutiny today are all provisions in the Act associated with the functions of the courts. They consist of the terms on which judges consider applications for bail in the High Court, in Section 2; the constitution of the so-called Diplock courts, in Section 7; and the rules governing the admissibility of statements by suspects in the case of allegations of ill-treatment while under interrogation, in Section 8.
So far as Sections 2 and 8 are concerned, we have discussed the arguments in detail in these debates over the last 18 months, and I know that the Govern-

851
ment's case for retaining the provisions in their present form for the time being is well known. Suffice it therefore to say that the position on bail has not changed, except that I notice that the High Court does indeed grant bail to suspects in a considerable number of scheduled cases. Again, I notice that the courts from time to time find reason to stop trials on the grounds that the prosecution have not fully discharged the obligation placed upon them in the Act to disprove the allegation that ill-treatment took place. It is clear to me that the spirit of the concern expressed in this House and elsewhere about Sections 2 and 8 is being taken into account by the courts, which therefore protect the defendants.
When we examine the constitution of the Diplock courts we should do well to remember their genesis. They exist because terrorists sought, and still seek, to pervert the course of justice by intimidating juries from doing their duty. They exist because, in the face of violence, they were, and are, the means considered by eminent jurists to be the most likely to ensure that justice is done in providing the protection of the law for those who are threatened with, and subject to, violence. If that violence and its threat, though diminished, have not been totally removed, then it would not be wise to remove our safeguards. We have managed to make things better, but it would be foolish to think that the job had been finished.
The other provisions of the Act are also safeguards against the use of force to overthrow democratic institutions. They are the minimum weapon required in our armoury to resist the terrorists, who stop at nothing to achieve their purpose. At this particular time, when we see the terrorists making a desperate effort to turn the clock back to public disorder, brutality and sectarian violence, I have no compunction about asking this House to maintain these safeguards and to renew the emergency provisions as they stand. Steadfastness now will bring us closer to the day when we can cast aside these unwelcome but necessary aids in protecting the lives of peaceful citizens against the brutality of terrorism. My Lords, I beg to move.
Moved, That the draft order laid before the House on 3rd December be approved.—(Lord Elton.)
6.35 p.m.
Lord Blease: My Lords, in thanking the noble Lord for his helpful and considered explanation of this Emergency Provisions (Continuance) Order, I would wish to repeat my support for the bipartisan approach to security matters in Northern Ireland. I join with the noble Lord in his tribute to the security forces and their work in Northern Ireland. I think it will be accepted that I am a frequent and, indeed, persistent critic of the Government's economic and social policies, which, as has been stated earlier this evening in this House, are having profound effects on Northern Ireland; but I feel I would be untrue to myself, and indeed to the people of Northern Ireland, if I engaged in nit-picking or a kind of mealy-mouthed support for the Government in any sincere attempts to deal with a very serious and potentially disastrous situation at present existing in the Province.
I support the Government in their attempts to find an acceptable way of resolving the H-block issue.
852
I applaud Mrs. Thatcher for going to Dublin, as I applauded her for having the courage and the commitment to visit the security forces in Northern Ireland, and especially at Crossmaglen, when she became Prime Minister. I cannot stress how important it is for it to be seen that the Prime Minister and her senior Cabinet colleagues are personally committed to finding reasoned and acceptable solutions to the problems of Ireland. Although I share the disappointment of my friends in another place at the way the Government have handled their communications following the meeting with Mr. Haughey, the Irish Prime Minister, I regard this as simply another example of how poorly the Government perform in this field—the field of sensible human and public relations. It is an example of poor communications, rather than an indication that the policy being pursued is at fault.
My Lords, in this House and throughout over 45 years of work within the trade union movement I have advocated closer cross-border and Anglo-Irish co-operation as being in the best interests of the communities of these islands, and I was glad to hear the noble Lord making remarks along those lines. If the day ever comes when Ulster people turn their backs on practical common sense economic matters, such as co-operation on energy, industry, agriculture and many other aspects of life and social problems, they will have betrayed an important Ulster characteristic.
I have also advocated political change by persuasion and peaceful methods, for I believe firmly that the rule of democratic law is paramount. I share with His Holiness the Pope his view on the sacredness of human life and the inescapable truth that "murder is murder". I also accept the democratic principle that Governments must govern, and that despite any undue criticism this Government, I am convinced, like their predecessors, are sincerely striving to find a just and lasting basis for peace in Ireland. I believe we can best help towards these ends by giving support to this part of the Government's work within the context of the parliamentary processes.
As to the relative necessity of renewing this order, I agree with the noble Lord that we must not become complacent, nor deal with it as a mere rubber stamp exercise. However, perhaps the time is coming when we ought to look at the setting up of a judicial review of the Act, as has been suggested on other occasions. Other noble Lords who live in most difficult areas of the Northern Ireland Province may well wish to speak, so I would conclude by saying that in supporting this order I at the same time feel we cannot ignore the past 11 years of cruel and violent acts of terrorism in Northern Ireland, much of which is still continuing. My Lords, for these reasons I support the renewal of the proposals in this order.
6.39 p.m.
Lord Hampton: My Lords, I, too, should again like to thank the noble Lord, Lord Elton, for introducing this order, and I welcome very much what he has said. I should also like here to refer briefly to the subject which is so much in the forefront of the news today, the hunger strikers in the Maze Prison. I want to add my support and the support of my party to the way the Government are handling this matter. With my

853
honourable colleague in the other place, Stephen Ross, I visited the Maze Prison earlier this year, and following this may I say how amazed I was to read in a report in The Times yesterday, under the heading,
"Time running out for hunger strike",
that,
"The Maze Prison sprawls across several acres of rich farming country …".
My recollection is that it is a vast complex covering in toto, as we were told, more than 100 acres. This highlights the ease with which the truth can be distorted, unintentionally (as I am sure was the case here) as well as by deliberate fabrication.
The first point that I want to make is that we left after our visit fully satisfied that conditions for prisoners are extremely good, better than in many of the older prisons in the United Kingdom except where, in the Maze, prisoners deliberately choose to make them otherwise. This cannot be said too often. When groups of demonstrators chant "H-Block, Hell-Block, Britain's concentration camp", they are guilty of pure fabrication and an evil perversion of the truth. Such behaviour does nothing but exacerbate the tense situation in Ulster today. The second point is that when well-meaning people plead for more reforms at the Maze "on humanitarian grounds", they are falling for the deceit that I mentioned just now—the implication being that the protesters "on the blanket" and those now on hunger strike are subjected to inhumane and degrading conditions. That is not the case. I join in repeating that the grievous discomforts they suffer are self-inflicted.
In an extremely tense situation, the Government must be seen by all who do not deliberately shut their eyes to be both fair and firm. It has been suggested to me that the so-called Diplock courts, to which the noble Lord, Lord Elton, has referred, might be helped if two judges sat instead of just one. None the less, I hasten to declare my great admiration for the courage of those men who undertake the present task. I would also pay tribute to the way that the prison staff continue to carry out their duties in dangerous and frustrating circumstances. I should like to join in the tributes already paid to the troops and to the Ulster Constabulary. One point which made a deep impression on me at the Maze was that over vast areas the prisoners and staff alike are starved of contact with any growing plant or tree. I find myself wondering whether in prisons in general the beauty of nature might not act as the necessary catalyst to break a bitter mood. I recall the words of Oscar Wilde about Reading Gaol:
"The shard, the pebble, and the flint,
Are what they give us there;
For flowers have been known to heal
A common man's despair".
I would describe it as concrete, corrugated sheeting and barbed wire; but the message is the same.
On the general position in Ulster today, I can only repeat my conviction that the bitterness and prejudice will take a very long time to heal. Everything that is possible must be done to bring the two sides together; for this is, of course, a problem which in the end the people of Ulster alone can resolve. We must not become impatient too easily if the path proves difficult. Finally, I should like to say that I was depressed to see on television some of the principal speakers after the
854
recent Cambridge Union debate unable even to agree whether it was better to look forwards or to look back. I should have thought that it was clear that while we must certainly look forwards, it is likewise essential to look back—to look back and to try to understand. For true understanding brings forgiveness, and reconciliation is the only solution to the problems of Ireland, Ulster and the Republic, today.
6.42 p.m.
Viscount Brookeborough: My Lords, I should like to join in the tributes to my noble friend Lord Elton on his introduction of this order and to say how impressed I was with the speeches of the noble Lords, Lord Hampton and Lord Blease. I think that together they covered an enormous amount. The speech by the noble Lord, Lord Hampton, was filled with compassion, sincerity and a good deal of determination. I appreciate that very much. I should like to join with my noble friend—and I hope that when he refers to me in his speech this time he will still call me his "noble friend", for I noticed the omission; but I feel it was a sin of omission rather than of commission—in assuring the House that so far the size of the demonstrations by the H-block supporters, the "Smash H-block" people, has been very small. There have been occasions in real Republican areas where only 50 people have turned up. This is a great tribute to the leaders in the area. Nobody knows, unless they go to those areas, of the intimidation and the appalling pressure that people in those areas are under. It is a very finely-balanced position at the moment. Every-thing should be done to make sure that there is no confrontation and nothing to produce a different frame of mind. I should like also to join with others in paying tribute to the forces, to the judges and to those who administer the law. They have a dangerous task and they do it with great fortitude and can be subject to no criticism.
Statistics show an improvement; but murders are still continuing and therefore that makes this order essential. There can be no relaxation and my noble friend has made it clear that there will be no relaxation. But in our area the problem still is very acute, with people able to come across the border for about 12 minutes—and that is about the limit at the moment. Last Friday, I had something to do with the evacuation of a farmer of 400 acres which he abandoned because of fear. That is the level to which the terrorists have succeeded in their prime intention of terrorising; that is the purpose and object of a terrorist. I shall probably appear to be not quite as hopeful as others about this; but I feel that it is right in this House to put the matter in the perspective of those—to use that horrible phrase—"at the grass roots", those totally involved in the local community, a community under attack but also with a considerable involvement in the business world, my friends in the whole of Northern Ireland.
There really is major tension in the Province of Ulster at this moment. It is not a figment of anybody's imagination. It is a tension of anticipation in case something goes wrong. I should like to start off by welcoming the initiative of the Prime Minister in trying to improve the links between the South and the North. To that extent, I welcome it very much. Let nobody

855
think that this is a new departure; it has been going on for over 50 years. The Unionist Governments of Northern Ireland have co-operated in many, many economic and industrial spheres. There is no question about the welcoming of measures of this sort.
The Earl of Longford: My Lords, without wishing to be too acrimonious, why then was it necessary for a Conservative Government to bring Stormont to an end?
Viscount Brookeborough: My Lords, I can only tell you that I think that that was one of the tragic mistakes of a misguided Government. That would be the opinion of many people. I should like to feel that at the meeting of the Prime Minister and Mr. Haughey the question of extradition was raised, because a very serious decision was made in the courts of justice in Dublin. Noble Lords will remember that we passed a Criminal Jurisdiction Act and, under that, the idealists believed that a man who committed a crime in the North of Ireland and was apprehended in the South would then be tried by those courts. We had a case which went before the courts, one only, and that case, before it went down, was examined by the Attorney-General and by the DPP in Northern Ireland and was passed to the Attorney-General and the DPP in the Irish Republic. The evidence was there, as far as they were concerned, for a prima facie case. It came before the judges who dismissed it without even going so far as to try it. I am not suggesting that the men were guilty, but I am suggesting that what the judiciary said in Dublin was, "No matter what the Government have done in passing that Act, we will not work the Criminal Jurisdiction Act". My Lords, something should be put in its place to achieve the same effect.
I am glad that the noble Lord restated that the people on hunger strike are convicted criminals, some of them proud of the crimes that they have committed. And in their name other crimes are daily being committed. We in Ulster, who have been the victims, feel that some publicity should be given to the horrific injuries that have been committed on our people. I welcome most sincerely the Government's intention, which is becoming clearer and clearer, to stand firm against the hunger strikers. It is far less dangerous to stand firm than pursue any other course. But there is no denying that there is tension in the two areas of Northern Ireland, the two communities—and I wish to God there was only one community, everybody united in loyalty to Ulster!
In the Roman Catholic community the issue is: Can the IRA intimidate the population there to support the H Block people in a way that can produce a sectarian clash? In the Unionist population there has been and is a genuine distrust of the operations of the Northern Ireland Office. On three separate occasions since the beginning of the hunger strike that suspicion has been fanned. The first one was on the announcement that prisoners could wear civilian-type clothes. The Northern Ireland Office somehow managed to mislead Cardinal O'Fee, Bishop Dailey, myself and lots of other people that this was not a concession against blackmail. It was so close to the start of the hunger strike that it is difficult not to say
856
that it looked like a concession. Now things are being made clearer; but at that point—supporting the remarks of the noble Lord, Lord Blease, on communication—it was bad communication.
The next thing that happened was the Written Parliamentary Answer by my right honourable friend the Secretary of State. It was represented as an initiative. Dublin accepted it as an initiative. Certainly the leader of the SDLP accepted it as an initiative. But nobody was present in Northern Ireland to go on to the media to explain exactly what was in that statement. It was published here and everybody had a chance of smashing it before it could even be read. Certainly so far as I was concerned I rang up at an early stage to find out what it meant, because what I believed it to mean was disastrous. In point of fact it turned out to be nothing of the sort. That is the second question. The misinterpretation is due to bad preparation, and that is not a good thing in the state of Northern Ireland.
I should like to say how much I welcome the appointment of Mr. John Concannon, the right honourable Member for Mansfield, and his remarks, in which he said in "Yorkshire government" terms:
"It is time we spoke plain English".
In Northern Ireland we do rather long for the plain English of the former Secretary of State and the Minister. It seems to me that the language is being couched in terms which are subject to misunderstanding.
I believe the problem is tied up not in what the Government are doing but where they are aiming their information. I believe that at the present moment they have been too worried about the reaction in Dublin, the United States of America and London. Too little thought has been given to the reaction to their statements in Northern Ireland. This has produced increasing mistrust. In the summit meeting, Mr. Haughey has been repeating, time and time again, that the institutions which are to be examined will lead inevitably towards a united Ireland. It is not unreasonable for us to contend that, when we have the present silence about what was discussed, this situation again feeds our suspicions.
Something requires to be done to reassure the Unionist opinion, and I believe that the Government now have to repeat the assurance under the 1949 Act with a further definition to say that no kind of diminution of the sovereignty of the Westminster Government over Northern Ireland will be considered or contemplated without reference to a referendum. I genuinely believe that this is necessary and it has a great deal to do with the stability at this particular time.
The fear and apprehension is very bad and can lead to violence. That fear and apprehension is based on a lot of experience. We have only to remember that our feeling in the North of Ireland is that the Foreign Office, which has been called by somebody a nest of vipers—and I certainly would not put it that way, but I think the honourable Member for South Antrim called it that—would like to slip, slide or in some way move us into an inevitable position of a united Ireland. This is why the Member for North Antrim, the Reverend Ian Paisley, can feed on these fears. It is therefore important that this position should be put right with a repeal of the 1949 Act. If he is to be prevented, the Government have Rot to take a firm stance.

857
My Lords, I see that the time is going on. I consider that the Dublin Government and the media are quite wrong at the moment to fan the fear that there will be sectarian violence. There will be no sectarian violence if the Government take a strong, clear line, as they appear to be doing at the moment. But they must speak with an absolutely clear voice in order to make sure that there is no sectarian clash. All of this will help the place where the real battle is, and that is a battle for those Roman Catholics in the Republican areas who are being subject to such intimidation and such pressure from the IRA and their associates. Let us keep absolutely calm. Let us have no more initiatives until this thing is out of the spotlight. If we are firm, if we are quiet, there will be no sectarian violence.
6.58 p.m.
Lord Kilbracken: My Lords, I had not intended to speak tonight. I do so since I cannot remain in my seat because the noble Lord, Lord Elton, referred in the course of his remarks to the discredited cause of the Provisionals, and later to what he called the evil cause of the Provisionals. This focuses attention on a problem that is felt by many of us who believe in that cause but who condemn violence with all the strength at our disposal. After all, the cause of the Provisionals is a united Ireland.
Lord Elton: My Lords, with respect, the prime aim of the Provisionals is the overthrow of the Government on both sides of the island. The unification of the island is incidental to that. The noble Lord should make it clear which is the cause to which he gives his support.
Lord Kilbracken: My Lords, I think that I made it absolutely clear. I said that the cause to which I gave my support was that of a united Ireland, the achieving of a 32-county Republican Ireland. That is a cause which I support and which I do not believe to be either evil or discredited, although I condemn with every strength of feeling that I can express the methods that are being used for its achievement. Having said that, now I am on my feet I will only add that I deeply hope that violence will continue to decrease and that this may be the last time on which this temporary order of 1978 will again have to be renewed.
7 p.m.
The Earl of Longford: My Lords, like the noble Lord, Lord Kilbracken, and other noble Lords present—perhaps not a majority tonight or on most occasions in this House—I certainly share the ideal which I have expressed many times in this House and elsewhere, of a united Ireland. I condemn, as I have condemned many times in this House, all violence from the Provisionals or the UDA. Perhaps I could just call for the attention of the noble Lords opposite—could they listen to me for just a moment? I should like them to bear in mind that the UDA, who are still a legal body by some odd quirk of the arrangements, have committed many murders, so do not let us talk as though all these murders were committed by the Provisionals. All murders on whatever side they come—and indeed the noble Lord, Lord Elton, condemned all murders—
858
should be condemned.
There are other things I can agree with including the tributes paid to the Security forces. I am not saying any of these things for the first time. I agree reluctantly with, and I share the hope of, the noble Lord, Lord Kilbracken, that this will be the last time it will be necessary. I agree with the tributes paid to Mrs. Thatcher on her expedition to Dublin. I agree with what I hope will be the outcome. We can all agree with what we hope will be the outcome but none of us knows what the outcome will be and therefore we can cherish these hopes.
Now I come to the terrible issue, this tragic issue. I did not think there was enough sense of tragedy in the words of the noble Lord, Lord Elton. It is a tragic question, the question of these people. I agree that political status should not be conceded. It is a great pity that a man for whom I have great respect in this country, the Conservative Minister at the time, conceded it originally. But I agree that it cannot be conceded now. On the other hand, if these people die it will be a tragedy which will not be forgotten perhaps for centuries. I do not think the noble Lord should take too happy a view of what victory would amount to in this case, supposing the course of the Government prevails and these people simply die on hunger strike. I did not notice in the House tonight sufficient recognition of what that is going to mean in the long future.
The Government have made some attempts to introduce more humane methods. I do not want to quibble, but if they introduced more humane methods presumably that meant that methods were not humane enough before, otherwise there would be no need to introduce more humane methods. But there is still room for still more humane methods and I hope they will be explored. I am not saying that the Government are not doing all that is possible: I do not know. I just do not know what they are doing.
I am very glad that some official went there yesterday to try to explain the situation, and I hope that everything possible will be done to avert a tragedy. But I get letters, as I daresay do other Lords—for example, the noble Lord, Lord Blease, who knows so much more about Northern Ireland than I do. I am sure that the noble Lord, Lord Kilbracken, will also get letters. Some of them are from parents and relatives of people in the H block. And I join my words to those of many much more respected people, for example, the leading clergy, who implore these hunger strikers, and particularly their relatives to try to persuade them, to give up the strike.
My words may not be of a great deal of importance, but I should like the noble Lord, Lord Elton, to realise that the sort of language he used, if it were ever retailed to the parents, would stiffen the resolve, probably produce a good many more on hunger strike. The noble Lord, with his historical knowledge, must realise that there is an element of nobility when people are willing to lay down their lives for a cause, even if it is a bad cause; and if the noble Lord cannot realise that he is not the sophisticated and civilised man I think he is—
Lord Monson: My Lords—
The Earl of Longford: May I just finish my remarks?

859
There is plenty of time and the noble Lord may go on talking afterwards as long as he likes and I shall be pleased to listen to him. I am saying that the noble Lord should realise that there is an element of nobility in what these people are doing at the moment. They are dying for a cause and I do not think one should despise them for that. I say all that, and at the same time join my words, which are likely to be slightly more effective, if I may say so, than the words of a Minister who spoke about them in the way the noble Lord has spoken about them. I join my plea to their parents to persuade these young people to give it up.
Lord Monson: My Lords, before the noble Earl sits down, he said there was an element of nobility in people who were prepared to die for a cause even if it was a bad cause. Would he say the same about Hitler's Wehrmacht?
The Earl of Longford: My Lords, I should think that was probably true, yes. I think there were a great many brave men who fought in the German army.
7.5 p.m.
Lord Elton: My Lords, may I reply briefly to this interesting debate? I should like to thank the noble Lord for his welcome for what I have asked the House to do and for his confirmation that the party opposite intends to pursue a bipartisan policy in this direction. The noble Lord, among his remarks, wondered whether the time for a judicial review of the powers was not approaching. My principal concern, as I have made clear already, is that the resolve of the Government in this situation should be apparent. That has led me to a strength of language which the noble Earl, Lord Longford, has regarded as intemperate. I will return to it. I should like to echo the congratulations of the noble Lord, Lord Blease, on the courage of the judiciary, congratulations which were also echoed by others.
The noble Lord, Lord Hampton, also provided us with an extremely welcome intervention and spoke with the authority of somebody who is not in Government but who has actually been there and seen the prison and the conditions which, he rightly says, are better than many elsewhere in the United Kingdom and indeed in many countries in Europe. He reminded us that the conditions from which the prisoners are suffering, whether relating to the blanket, the "dirty protest" or the hunger strike, are self-inflicted.
The Earl of Longford: My Lords, may I intervene? The noble Lord made it extremely difficult for me a little while ago to visit the Maze prison. It was only after persistent efforts that I was allowed in. I was allowed to see the prisoners in the H block but I was not allowed to see the conditions; so it has been made extremely difficult for noble Lords to see what has been going on.
Lord Elton: My Lords, I can only regret the noble Earl's feelings on this matter. I am not aware of the circumstances. My noble friend Lord Brookeborough then widened his view to Fermanagh and drew attention to the question of extradition. He referred to a particular case but, as he will understand, the judiciary
860
in the Republic, as in the North, is quite independent of the Executive and it would be wrong for me to comment on their decisions. The decision on whether or not to mount a prosecution is, of course, entirely one for the appropriate authorities in the Republic. I am sorry I cannot follow him further in that.
Really, we are talking about two things: a sense of confidence in the Government's resolve and their clarity of vision and the question of humanity in dealing with a passionately difficult situation. I have to reiterate, in spite of what the noble Earl, Lord Longford, has said, that the people in prison have committed crimes which it is difficult for any humane person to condone. Of course one must respect the courage of somebody's convictions if they are prepared to follow them to the lengths that they do. That does not alter the fact that the convictions are utterly mistaken and bear the most terrible fruits—
"and by their fruits shall ye know them".
I do not take a happy view of what might ensue from what the noble Earl imputes to me, regarding it as a victory if these people were to die. What triumph is there in that? The victory we seek is that of humane common sense, enjoined by the clergy of the church to which the noble Lord belongs and endorsed by all of us. But this is not the way to pursue either reconciliation or victory. If we are talking about the unification of the island of Ireland, then let us stop talking about victory, because nothing sets it further away than violence, my Lords. Every effort of these people puts their declared objective further afield, and that is why I say to the noble Lord, Lord Kilbracken, that the avowed aim, the ultimate aim, of these people, is the destruction of the State—and there is nothing worthy in that. So though I respect the courage of conviction, I cannot respect the use of violence, death, maiming and other reprehensible proceedings in proceeding down a course which self-evidently will destroy the objective it sets out to gain in the public eye. The public eye, that sees in this a great triumphal march towards the unification of an ethnic Ireland, does not only overlook the ethnic claims of the majority in the Province. It also overlooks the ineluctable logic of history that, by the clash of arms in this situation, you only determine and strengthen the resistance of those who feel threatened by it.
The danger which we seek to avoid is that those threatened people—and they are threatened on both sides of the divide—shall not feel it necessary to take violence into their own hands for their own protection. It is the function of the State to protect its citizens, and for that protection it is necessary to renew this order, and to renew it with an air of resolve, which I think your Lordships will endorse.
Lord Kilbracken: My Lords, may I just point out to the noble Lord that I, myself, had to spend five years of my life engaging in violence at the behest of the Sovereign of this country, who decorated me for what I did, and that when it comes to violence in this case I condemned it as vociferously as he did.
Lord Elton: My Lords, I understand the noble Lord's wish to make his position clear. I am aware of his gallant past. I do not wish to belittle him or his

861
achievements. But there is a difference in the violence of a State, or of two States, which is the delegation to the nation, or the State, of that which is evil in the hands of the individual, and which is the justification for the protection of that State's existence. But when elements within that State, whatever party they belong to, break that monopoly and take it into their own hands, that is a crime, and if we do not accept that it is a crime we destroy society. I think your Lordships were on the point of coming to a decision on this matter.
On Question, Motion agreed to.

Harbours, Piers and Ferries (Scotland) Act (Variation of Financial Limit) Order 1980
7.12 p.m.
The Minister of State, Scottish Office (The Earl of Mansfield)The Minister of State, Scottish Office (The Earl of Mansfield) rose to move, That the draft order laid before the House on 25th November be approved.
The noble Earl said: My Lords, I beg to move the Motion standing in my name on the Order Paper, and I hope that we come to much calmer and more peaceful waters. The underlying purpose of the order before the House is to increase from £200,000 to £600,000 the cost limit within which the Secretary of State for Scotland can authorise, without recourse to detailed parliamentary scrutiny, the construction or improvement of fishery and transport marine works mainly in the Highlands and Islands.
The present statutory position is as follows. The Harbours, Piers and Ferries (Scotland) Act 1937, as amended by the 1972 Act, gives the Secretary of State powers to authorise a local or harbour authority to undertake work by means of the relatively simple and expeditious procedure set out in the 1937 Act, only if the estimated cost of the work is £200,000 or less. Should the estimated cost be above £200,000, the authority concerned normally has to petition the Secretary of State seeking a provisional order under the Private Legislation Procedure (Scotland) Act 1936. This is a lengthy and time-consuming process. The only alternative to private legislation procedure is for an authority to ask the Secretary of State to make a Harbour Revision Order under the Harbours Act 1964. But even this, though quicker than private legislation, is more onerous than the corresponding procedure under the 1937 Act.
The proposal now before the House is that it is reasonable for this limit to be raised to £600,000. Perhaps the main argument in favour of such an increase can be summed up in one word: inflation. Indices show that the £600,000 proposed is equivalent at 1980 prices to the £200,000 limit set by Parliament in 1972. It is a measure of the problems facing this Government that this is the case. The delays involved with these alternative procedures have drawn criticism from local authorities, shipping operators, fishermen and all islanders who stand to benefit from the new provision. The Convention of Scottish Local Authorities has made strong representations to have the limit increased in line with increases in the costs of construction.
But your Lordships should not be left with the impression that proposals under these arrangements are not subject to public scrutiny. It is not uncommon for proposals to provide or redevelop piers and harbours to attract local opposition. The 1937 Act
862
provides for the authority proposing the development to give public notice of its intention, and for the Secretary of State to consider objections before taking a final decision. Increasing the Section 7 limit along the lines proposed in this order will help ensure that necessary minor improvement schemes are not delayed for long periods because of the need to use inappropriate procedures. I therefore commend this draft order to the House for its approval. My Lords, I beg to move.
Moved, That the draft order laid before the House on 25th November be approved.—(The Earl of Mansfield.)
Lord Peart: My Lords, I welcome this Motion, and in no way do I wish to delay the House on this matter. This is a sensible step and it certainly has the approval of the Opposition.
On Question, Motion agreed to.

Fishing Vessels (Acquisition and Improvement) (Grants) (Variation) Scheme 1980
7.16 p.m.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Earl Ferrers): My Lords, I beg to move that the Fishing Vessels (Acquisition and Improvement) (Grants) (Variation) Scheme 1980, a copy of which was laid before this House on 26th November, be approved. The purpose of this instrument is to extend for a further period a scheme of Exchequer grants towards the cost of constructing and improving fishing vessels. The scheme provides fishermen with a grant of 25 per cent. of the approved cost of projects, and it is administered by the White Fish Authority on the Government's behalf. As has been the practice in previous years, it is proposed that the scheme be extended for one year only: in this case, therefore, to the end of 1981.
It will, I think, be common ground in this House that our fishing fleet must be continuously adapted and renewed, if it is to operate effectively and economically. The grants scheme has played a valuable role in encouraging this adaptation and renewal and the Government consider that it remains appropriate to provide this financial assistance as the fishing industry continues to adjust to future fishing requirements. Your Lordships will be aware that in the negotiations on a common fisheries policy, which we hope will shortly be concluded, there is the prospect of financial aid from the Community for restructuring the fishing fleets. Among the financial proposals under discussion is a scheme for grant aiding the construction and modernisation of vessels. It would clearly be prudent to provide for our current scheme, which has an identical purpose, to remain in force until the Community arrangements for grant aid are settled and implemented. At that stage, the Government will wish to review the form of the scheme to judge what amendments would be appropriate to ensure that it fully complements the EEC measures.
I would not wish to anticipate parliamentary proceedings on the Fisheries Bill which was recently introduced in another place, but your Lordships may have seen that it provides for the abolition of the White Fish Authority, together with its sister body the Herring

863
Industry Board, and their replacement by a single new statutory body for the fishing industry, called the Sea Fish Industry Authority. As your Lordships would no doubt expect, the Bill contains provisions intended to ensure that the administration of the grants scheme before us today can be smoothly transferred from the hands of the White Fish Authority to its proposed successor, if Parliament so approves, so that the effective operation of the scheme is not prejudiced. My Lords, I beg to move.
Moved, That the scheme laid before the House on 26th November be approved.—(Earl Ferrers.)
Lord Peart: My Lords, may I say to the noble Earl what I said previously. I think that this is right and proper. After all, our fishing industry needs to have support. We had a major debate not so long ago, as the noble Earl will remember, in which the future of the fishing industry was discussed at great length and in great detail. This will complement it, in the sense that this is something to be done, with financial aid to be given. This is a case where subsidies of the kind which can be given are necessary to the industry because the industry has been in difficulties.
With these few words, I wish it well. I am certain that all parties will back the scheme.
On Question, Motion agreed to.

  PRISONERS: EXCEPTIONAL RISK CLASSIFICATION
  PRISONERS: EXCEPTIONAL RISK CLASSIFICATION
  CHARITY COMMISSIONERS: SALARIES AND ALLOWANCES
  CHARITY COMMISSIONERS: SALARIES AND ALLOWANCES
  CHARITY COMMISSIONERS: WORKING PERIODS
  CHARITY COMMISSIONERS: WORKING PERIODS
  PRINCIPAL CHARITY COMMISSIONER: QUALIFICATIONS
  PRINCIPAL CHARITY COMMISSIONER: QUALIFICATIONS
  CHARITIES: THE GOODMAN REPORT
  CHARITIES: THE GOODMAN REPORT
  HOME OFFICE STAFFING LEVEL
  HOME OFFICE STAFFING LEVEL
  CANTLIN STONE POLICE OPERATION: USE OF HELICOPTER
  CANTLIN STONE POLICE OPERATION: USE OF HELICOPTER
  HYDROCARBONS EXPLORATION: LICENSING
  HYDROCARBONS EXPLORATION: LICENSING
  HYDROCARBONS EXPLORATION AND PLANNING PERMISSION
  HYDROCARBONS EXPLORATION AND PLANNING PERMISSION
  WELLS DRILLED ON UK CONTINENTAL SHELF
  WELLS DRILLED ON UK CONTINENTAL SHELF