Sitting of 27 January 1982

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
WESTERN ISLES ISLANDS COUNCIL (LOCH ROAG) ORDER CONFIRMATION
Mr. Secretary Younger presented a Bill to confirm a Provisional Order under section 7 of the Private Legislation Procedure (Scotland) Act 1936, relating to Western Isles Islands Council (Loch Roag); And the same was read the First time; and ordered to be considered upon Tuesday next and to be printed [Bill 54.]
Oral Answers to Questions
  SCOTLAND

    Local Authority Employees
    Mr. Michael Martinasked the Secretary of State for Scotland whether he has made an estimate of the likely job loss among local authority employees as a result of the cuts in local government finance for the year 1982–83.
    The Under-Secretary of State for Scotland (Mr. Malcolm Rifkind)No, Sir. It is for each local authority to consider its staffing policies in the light of all the resources available to it.
    Mr. MartinSurely with 3 million people unemployed in the United Kingdom—347, 000 in Scotland—the Secretary of State should not be considering making cuts in local government expenditure, thereby causing more unemployment. In view of the recent unemployment figures, should he not tell the Prime Minister that he does not want to be responsible for the misery and suffering that is being experienced in Scotland by the unemployed and be prepared, because of unemployment and cuts in local government in Scotland, to follow the example of the Solicitor-General for Scotland and resign?
    Mr. RifkindLocal authorities know that they can reduce their staff without compulsory redundancies. When the Labour Government called on the Scottish local authorities to reduce their staffing, they claimed that they could make 10, 000 redundancies. They reduced staffing over 18 months by approximately 12, 000, with hardly any compulsory redundancies.
    Mr. McQuarrieI am sure that what my hon. Friend has said is true of Scottish local authorities. Despite any economies which are necessary on the financial side, there are adequate numbers of administrative staff employed in local authorities.
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    Does my hon. Friend agree that the administrative staff in the overmanned planning, education and other departments of local authorities could be reduced in a manner that would do no harm to the authorities?
    Mr. RifkindMy hon. Friend is correct. It is regrettable that Scottish local authority staffing is still 11, 000 greater than it was in 1977. At the same time, local authorities in England and Wales have managed to reduce their staffing levels, without compulsory redundancies, to the lowest figure since the reorganisation of local government. If it can be done in England and Wales, it can be done in Scotland.
    Mr. Home RobertsonHow many jobs have been lost as a result of the so-called natural wastage that the Minister has imposed on local authorities? Does the hon. Gentleman accept that such wastage is far from natural and that all it does is to deprive thousands of young people of jobs and the community of urgently needed services?
    Mr. RifkindIf the hon. Gentleman were to consider his remarks for a moment he would realise that one of the significant causes of job losses in his area and elsewhere in Scotland has been excessive rate increases. These have had to be paid by small and large businesses irrespective of their profitability. Therefore, they have had to pay by reducing their manpower.

    Common Fisheries Policy
    Mr. Mylesasked the Secretary of State for Scotland what level of agreement has now been reached in negotiations for a common fisheries policy.
    The Secretary of State for Scotland (Mr. George Younger)Agreement has been reached on a revised marketing regime, on important areas of the external regime and on a further interim scheme for the construction and modernisation of fishing boats. Agreement in principle has also been reached on a comprehensive range of conservation measures.
    Although useful progress has also been made in some other areas, including control and structure, the important issues of access and quotas remain to be resolved. To this end my colleagues and I are pressing for a resumption of the negotiations at the earliest possible date.
    Mr. MylesI know that my right hon. Friend is fighting strongly for those acceptable access and quota arrangements, but will he ensure that any necessary conservation measures are taken after due consultation with the industry so that no undue damage is done? Will he also make a categoric statement that, if no agreement can be reached this year, there will be no fishing up to the beaches after the end of 1982?
    Mr. YoungerI assure my hon. Friend that in any conservation measures that are taken we shall do our best to consult the industry beforehand and to take it with us on all points.
    I also assure my hon. Friend that our objective is to reache an acceptable common fisheries policy, but if by the end of the year there is no such policy the Government will have to look hard at the interests of British fishermen to consider what should happen thereafter.
    Mr. GrimondI thank the Secretary of State for his final remark that the Government will look carefully at the interests of British fishermen. Will he set a time limit on

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    the negotiations and inform our colleagues that unless agreement on access and quotas is reached by a certain date we shall take our own measures to conserve our fisheries?
    Mr. YoungerI appreciate the point that the right hon. Gentleman makes. We have made it clear to our partners in the Community that, as we have been near to agreement, it would be tragic if it were missed at this stage. We shall be pressing as hard as possible to get an agreement as soon as possible
    Mr. Donald StewartIs the Secretary of State aware that failure to reach agreement means that Common Market countries will have the same rights at the end of this year as our own vessels? Therefore, will the Government make it clear that, failing an acceptable agreement within that time, we shall revert to our rights over a 200-mile limit?
    Mr. YoungerAs the right hon. Gentleman knows, that is not part of the treaty obligations. I assure him that there are good reasons for the other countries concerned, without exception, to want a common fisheries policy agreed. There is a strong incentive on everyone to try to reach agreement.
    Mr. John MacKayDoes my right hon. Friend accept that the best way to achieve our aim on conservation is to proceed with local fishing plans and the licensing of boats that can operate in those areas, with preference being given to boats from the local area?
    Mr. YoungerI agree with my hon. Friend. That concept has found favour with the Commission in the past. We have been pressing strongly for such fishing plans, where appropriate, with particular reference to The Hague agreements, which give special preference to local fishing communities that depend on fishing for their living.
    Mr. MillanWhat are the Government's minimum conditions for an acceptable CFP? Do those conditions still include an exclusive 12-mile limit? What are the Government's views on the 12 to 50 miles zone, or have they abandoned that concept?
    Mr. YoungerThe Government's objectives in the negotiations have not changed. We intend to proceed with them in close negotiation with the fishing industry at all stages. Our objectives remain to provide for a broadly exclusive 12-mile zone, taking account of some essential historic rights of other countries, and further measures of preference to protect coastal communities that depend heavily on fishing.

    Unemployment
    Mr. Robert Hughesasked the Secretary of State for Scotland if he will make a statement on the level of unemployment in Scotland.
    Mr. YoungerOn 12 January 1982, seasonally adjusted unemployment in Scotland stood at 307, 900, or 13·6 per cent. The Government's main priority is to reduce inflation, which has been the main reason for the loss of markets and jobs.
    Mr. HughesDoes the Secretary of State realise that, as the unadjusted seasonal figure is 346, 500, the whole of Scotland will be outraged by his pallid apology and his abject failure to protect employment in Scotland? Will he
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    stop acting like a quivering jellyfish? Will he show some courage, stand up to the Prime Minister, say that enough is enough and demand action to arrest this inexorable slide to total disaster?
    Mr. YoungerI agree with the hon. Gentleman that unemployment is a matter of extreme concern to everyone in Scotland, including myself. The hon. Gentleman will be glad to note that his local area has an unemployment level of 7·1 per cent., which is approxiamately half the Scottish average. What I have to stand up against are policies which, over many years have weakened British industry and forced it to lose markets and jobs. That is what the Government are trying to reverse.
    Mr. MaclennanIn regard to unemployment in the Moray Firth area caused by the closure of the Invergordon smelter, I recognise that the Secretary of State may not wish openly to indicate the precise terms that would be acceptable to the Government for an incoming operator, but has the right hon. Gentleman empowered the Highlands and Islands Development Board, in its approaches to companies, to be completely open-ended about the terms that can be offered relating to power and the acquisition of the site and plant?
    Mr. YoungerI am not sure what the hon. Gentleman means by "open-ended". I assure him that the Highlands and Islands Development Board, in conjunction with the Scottish Office, has been encouraged to do everything that it can to find another operator and to discuss with such an operator a power contract on the best terms that can be achieved. The same applies to the acquisition of the site. The Government are pressing ahead with the board as strongly as possible on these points.
    Mr. AncramWill my right hon. Friend confirm that there is some hope for Scotland, in that the seasonally adjusted figures show a rate of increase in Scotland of only about half the rate of increase for the rest of the United Kingdom? Does he accept that there is genuine concern on the Conservative Benches about the human problems encompassed by unemployment, in sharp contrast to the largely synthetic and politically motivated protests by Opposition Members?
    Mr. YoungerI am grateful to my hon. Friend for his remarks. I repeat that no one in any party in Scotland can be anything but extremely concerned about the level of unemployment. My hon. Friend is right to contrast the present situation with what has prevailed throughout my lifetime. The whole of Britain has suffered severely, but on this occasion Scotland has not suffered so severely as the rest of the United Kingdom. That indicates some recovery in the relative position of Scotland, and that we must work upon.
    Mr. MillanIs the Secretary of State saying that a record figure of unemployment in Scotland of 347, 000 demonstrates that Scotland is not suffering severely under the present Government? Does he not appreciate the wave of anger and bitterness that swept Scotland following yesterday's figures—a bitterness that was added to by his pathetic attempt yesterday, as on earlier occasions, to pretend that things are getting better when they are obviously continuing to worsen? Does he realise that the need now is not for tiny doses of reflation but for massive reflation in terms of help to industry and public

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    expenditure if we are to get people back to work? The sooner this happens the better. Otherwise, he does not deserve to be in office.
    Mr. YoungerThe right hon. Gentleman has invented his own version of what I said a few moments ago. That version bears no relation to what I actually said. If the right hon. Gentleman has not yet appreciated the real reason for the rise in unemployment, he occupies a much stranger position than I thought. He should know that the real reason is that too many of our companies and firms have lost markets through being uncompetitive. The Government are working successfully towards reversing that situation. That has been needed for many years.

    Small Businesses
    Mr. Pollockasked the Secretary of State for Scotland if he is satisfied with the state of the small business sector of the economy in Moray and Nairn; and if he will make a statement.
    The Under-Secretary of State for Scotland (Mr. Alexander Fletcher)As in other parts of the country, the small business sector in Moray and Nairn is facing difficulties from the effects of the world recession, but it is benefiting from the various financial and other incentives introduced by the Government since 1979 and is currently being promoted under the business opportunities programme. The Highlands and Islands Development Board and the Scottish Development Agency are active in support of small firms in their respective areas.
    Mr. PollockI note the terms of my hon. Friend's reply. Will he confirm that one of the most pressing worries in the constituency is the continuing threat of the withdrawal of assisted area status later this year? Will my hon. Friend give an undertaking that there will be no such withdrawal until there has been the fullest and most careful consideration of all the representations in favour of retention?
    Mr. FletcherYes, Sir.
    Mr. FoulkesAre not small businesses in Moray and Nairn suffering to the same extent as all small businesses in Scotland from high energy costs, high interest rates, the doubling of value added tax and the slump, caused not by world recession but self-induced by the Government? Is it not time that the Minister followed the example of the former Solicitor-General for Scotland and resigned?
    Mr. FletcherThere is no justification for saying that the recession applies only to Scotland and not to the rest of the Western world. The hon. Gentleman has listed some of the problems. I agree that there are serious problems. I should, however, like to mention some of the 70 measures introduced by the Government since 1979 to help small businesses. We have amended employment legislation, we have introduced the loan guarantee scheme and the venture capital scheme, we have cut the absurdly high marginal rates of income tax and we have also cut corporation tax. These are only a few of 70 measures that help small businesses in Scotland today.
    Mr. MylesAs my hon. Friend knows, the Moray district covers part of my constituency. Will he pay attention to the fact that the Grampian region scheme for expanding small businesses has a 90 per cent. success
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    rate? Does he agree that this is a vital factor in an area where small businesses are more important than in some other areas?
    Mr. FletcherI am delighted with my hon. Friend's remarks. The business opportunities programme seminars held all over Scotland, not least the seminar held in Aberdeen, have been successful.
    Mr. Harry EwingIn view of the important assurance that the Minister has just given about reconsideration of the withdrawal of assisted area status in the Moray and Nairn area and in view of worsening unemployment throughout the whole of Scotland, will he give a similar assurance to every area in Scotland, including the Central region from which assisted area status is to be withdrawn? Will the most serious reconsideration be given to every area before the Government go ahead with their decision?
    Mr. FletcherYes, Sir. In reply to my hon. Friend the Member for Banff (Mr. Myles), I was referring to areas which have been downgraded by more than one step.

    British Leyland
    Mr. Dalyellasked the Secretary of State for Scotland if he will make a further statement on the contact between his Department and the office of the Comptroller and Auditor General on matters relating to the sale of British Leyland assets at Bathgate.
    Mr. YoungerMy Department has provided all the information so far requested by the Comptroller and Auditor General's staff. The conduct of the investigation is a matter for the Comptroller and Auditor General.
    Mr. DalyellIn view of the delicacy of the situation at BL, may I ask a question of the Secretary of State of which I gave his office notice at 10 o'clock this morning? Had the position been clear-cut, assuming that the Comptroller has been given the co-operation promised by Ministers and BL, would he not have reported weeks ago? Therefore, should not the Secretary of State—
    Mr. SpeakerOrder. The hon. Gentleman knows the rules as well as anyone. Copious use of notes is one thing, but the hon. Gentleman should lift his eyes occasionally.
    Mr. DalyellShould not the Secretary of State have used the good offices of the Government machine to help a factory which was brought to Bathgate by Mr. Macmillan? May I add—
    Mr. SpeakerOrder. The hon. Gentleman will be unfair to his colleagues if he adds to that.
    Mr. DalyellIn view of Sir Michael Edwards' statement this morning that he will not be chairman of Leyland in January 1983, should not the situation at Bathgate be left until such time as there is a new chairman?
    Mr. YoungerI appreciate the hon. Gentleman's concern about this matter, which relates to his constituency. However, I repudiate any suggestion that my Department has not been totally helpful in every respect to the Comptroller and Auditor General. It has given every bit of information for which is has been asked as quickly as possible. It is for the Comptroller and Auditor General to decide how to conduct the inquiry. It is his responsibility to produce a report. However much we might wish to do so, it is not up to the Government to

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    interfere in industrial relations at the site and the factory. Indeed, the right hon. Member for Cardiff, South-East (Mr. Callaghan) made that very clear when he appointed Sir Michael Edwardes.
    Mr. MillanYes, but, on the last point, does the Secretary of State appreciate that an extremely worrying situation has developed not only at Bathgate but in the bus and truck division of British Leyland as a whole? The House will not forgive Ministers if they simply sit back and allow the situation to deteriorate further. I appreciate the difficulties involved in direct intervention, but will the Secretary of State at least give a pledge that he will take a personal interest and see whether Ministers can do anything urgently to try to resolve some of the difficulties? Is the Secretary of State aware that the whole business is extremely worrying?
    Mr. YoungerMy right hon. Friend the Secretary of State for Industry and I take the closest interest in British Leyland's affairs, including those at Bathgate. However, we do not run the company, nor do we intend to run it. It is neither possible nor right for the Government to force a company to keep open a factory that has lost markets for its products. Having said that, we do, of course, take a close interest in it and will do everything that we can to help.

    Local Government Finance
    Mr. Ancramasked the Secretary of State for Scotland what representations he has received about the reform of the local government finance system in Scotland.
    Mr. RifkindFrom May 1979 to date my right hon. Friend has received about 170 representations mainly concerned with the rating system. He has also had between 30, 000 and 40, 000 representations about the need to protect ratepayers against excessive rate rises, and some of them have also expressed objections to the rating system.
    Mr. AncramDoes my hon. Friend accept that the present rating system is becoming increasingly unfair as it reflects less and less the ability of the ratepayer to pay? Does he agree that the system is causing severe financial hardship in regions such as Lothian and that there is an urgent need for reform? Will he urge local authorities to recognise the hardships? Further, will he urge the Lothian region to reduce its rates this year to give ratepayers a break?
    Mr. RifkindOn the general issue, my hon. Friend will be aware of the Green Paper, on which all interested parties have been asked to comment by 31 March. The Government will consider the representations urgently. Lothian region could reduce its rates without any reduction in spending. If it reduced its spending in line with other local authorities, the ratepayers would benefit enormously.
    Mr. Home RobertsonHas the Minister seen the report today in The Scotsman, which reveals that the Government have increased the burden on Scotland's ratepayers by £72 million by manipulation of the rate support grant? As the Government are handling the present system of local government so deviously, how can we trust them to introduce a new fair system of local government?
    Mr. RifkindAny additional burden on ratepayers is the result of certain local authorities refusing to moderate expenditure. The hon. Gentleman will recall that his right hon. Friend the Member for Glasgow, Craigton (Mr. Milian) said that the best way to persuade local authorities to reduce their spending was to reduce the rate support grant percentage.
    Mr. PollockPending the reform of local government finance, has my hon. Friend had drawn to his attention the Moray district finance committee's recommendation for the forthcoming year of a reduction of 2p in the rates?
    Mr. RifkindI congratulate Moray district council if that is its intention. I have not the slightest doubt that many local authorities, if they have the will, can either reduce rates or impose only moderate increases.
    Mr. MaclennanIs the Minister aware that the Government's decision in their Green Paper to examine domestic rating in isolation has caused widespread disappointment in Scotland, particularly in the commercial community? Is he further aware that it would be more appropriate to review local government finance generally? Does the hon. Gentleman accept that the Green Paper is inadequate, because it deals only with local authorities' existing functions? Does he agree that not to consider structure at the same time as finance is to consider only half the problem?
    Mr. RifkindI am sure that hon. Members on both sides of the House will accept that this is not the time to embark upon another major reorganisation of local government. The business and industrial community should appreciate that the Government have already suggested in the Green Paper that if domestic rates are abolished it might be desirable to examine the possibility of further protection for the non-domestic ratepayer against the consequences that might flow from that.
    Mr. David SteelDoes the Minister agree that the Government must consider whether a two-tier system of local government is any longer viable in the sparsely populated areas of Scotland?
    Mr. RifkindThe Stodart committee examined a whole series of questions affecting the structure of local government. The main representations from all political persuasions, particularly from the main political groupings, reveal that Scotland does not want another major reorganisation of local government. The right hon. Gentleman should recognise that.

    Weather Damage (Costs)
    Mr. Norman Hoggasked the Secretary of State for Scotland if he will adjust the rate support grant settlement for the next financial year to take account of the cost to local authorities of frost damage to local authority properties.
    Mr. David Marshallasked the Secretary of State for Scotland if he will make special financial provision for local authorities which have incurred additional expenditure as a result of adverse weather conditions.
    Mr. RifkindAs my right hon. Friend announced on 12 January, a special grant will be available to Scottish local authorities which have incurred exceptional expenses in dealing with the effects of severe winter

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    weather—mainly the additional costs of snow clearing operations and the repair of damaged roads. A circular will be issued shortly to authorities giving details of the conditions governing assistance. This special assistance will be over and above the grant that the Secretary of State proposes in the Rate Support Grant (Scotland) Order 1982.
    Mr. HoggI acknowledge that the Government are taking some action, but when Cumbernauld is faced with an extra cost of £200, 000, Strathkelvin and district with an extra cost of £500, 000 and the city of Glasgow with a bill of between £25 million and £35 million, surely the Government recognise that they alone should bear the cost and that none of it should fall on the districts.
    Mr. RifkindI thank the hon. Gentleman for welcoming the Government's initiative. If he believes that the Government's initiative is insufficient he should remember that the criteria under which aid will be given to local authorities in Scotland is on all fours with the response of the Labour Government when similar problems arose several years ago. We have proposed exactly the same type of help for local authorities. I am sure that the hon. Gentleman will accept that that is a reasonable response by the Government.
    Mr. MarshallWill the Minister confirm that, even after a levy on the rates and 75 per cent. Government assistance, there could be a minimum increase of 6p on Glasgow district council's rate for this one item alone? Does he agree that Government assistance is totally inadequate and that the Government should meet 100 per cent. of the costs?
    Mr. RifkindIt is an extraordinary proposition, which has not been followed by previous Governments, to suggest that 100 per cent. of expenditure should be met by the Government. The weather conditions affecting Glasgow were not significantly different from those affecting other west central Scottish local authorities. If there has been disproportionately greater expenditure in Glasgow, that may be for reasons within the control of Glasgow district council.
    Sir Russell FairgrieveWill my hon. Friend remind Labour Members that there is no such thing as Government money—only taxpayers' money?
    Mr. RifkindMy hon. Friend does the House a service in educating Labour Members on the realities of life.
    Mr. George RobertsonAs one of the major costs, especially for district authorities, will be repairs associated with burst pipes, it is remarkable that the Minister has made no mention of any assistance to local authorities in meeting the cost of house repairs. Hamilton district council's assessment of these costs is in excess of £3 million. Are the Government to give no assistance to local authorities to meet these additional costs?
    Mr. RifkindThe present position was stated by the Labour Government. In a circular that they issued in 1976 they advised local authorities to insure themselves against the consequences of excessively inclement weather. Some local authorities have accepted that advice. If others have not, they may have to bear some of the consequences.
    Sir Hector MonroWill my hon. Friend take this opportunity to congratulate the vast number of local authority employees, especially those concerned with the
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    roads, the water boards and the police forces, on the tremendous work that they have done during the past six weeks to make life bearable in Scotland?
    Mr. RifkindYes, I have done so already. I am happy to repeat from the Dispatch Box the unqualified praise of all who experienced the superb contribution made by local authority employees.
    Mr. DewarIs the Minister seriously saying that there will be no Government help to local authorities for the formidable costs that they will incur in repairing the fabric of housing and in dealing with burst pipes? That is a totally unsatisfactory response, which cannot be allowed to continue, especially when local government finance is being mercilessly squeezed by the Government's policies, at the diktat of the Treasury. Will he reconsider what help he can give to avoid a disastrous situation in the west of Scotland and, no doubt, in all other parts of Scotland?
    Mr. RifkindI have stated the advice that was given and the recommendation that was made by the Labour Government. Scottish local authorities were informed at the time that, if they did not choose to take out insurance, it might be necessary for them to bear some of the consequences. We have received no detailed submissions from the local authorities on the issues to which the hon. Gentleman has referred. We shall have to consider to what extent any damage that was caused might have been covered by insurance. If it could have been covered by insurance and the local authorities failed to insure, we shall have to take that matter into account.
    Mr. HoggOn a point of order, Mr. Speaker. In view of the Minister's hopelessly inadequate reply, I reserve the right to raise this matter on the Adjournment, with your permission.

    Mentally Handicapped Patients
    Mr. Canavanasked the Secretary of State for Scotland whether he is satisfied with the standard of hospital provision for mentally handicapped patients in Scotland.
    The Under-Secretary of State for Scotland (Mr. Allan Stewart)Although many improvements have taken place at these hospitals in recent years, my right hon. Friend told health boards in 1980, following recommendations by the Scottish Health Service Planning Council, that services for the mentally handicapped should be in the group of services deserving top priority in the allocation of resources. We recently announced arrangements for monitoring boards' progress in implementing these recommendations.
    Mr. CanavanIn view of the recent SHAS report on Lennox Castle hospital, which states that over 1, 300 mentally handicapped patients are living in grossly overcrowded and insanitary conditions, some of them in huts that were built over 40 years ago and were supposed to last only 5 to 10 years, will the Minister take urgent and immediate steps to provide the additional finance and other resources? Does he agree that this background is a damning indictment of the National Health Service's inadequacies? In particular, will he take steps immediately to provide the additional 100 nursing staff necessary to raise standards at Lennox Castle hospital even to the average for hospitals that cater for some of the most underprivileged but most deserving members of society?
    Mr. StewartThe Government accept that the SHAS report identified a number of unsatisfactory features at Lennox Castle hospital. In the first instance, this is a matter for the Greater Glasgow health board. We shall await its comments, although we keep in close touch with it. I understand that it is the health board's intention to phase out the unsatisfactory accommodation to which the hon. Gentleman referred. I am glad to be able to tell the hon. Gentleman that the number of qualified qualified nursing staff at the hospital has increased by 14 percent. in the past two years.
    Mr. HendersonIs my hon. Friend aware that the extension of hospital building that the Government announced last year was warmly welcomed in Fife, although there is continuing anxiety about psychiatric nurse recruitment, especially among males? In view of that, is my hon. Friend surprised that letters from the chairman of the medical committee of Stratheden hospital and myself to Fife health board on this very subject since July 1981 have met a stone wall of indifference and silence from the board? Will he use his good offices to get a better response than that?
    Mr. StewartThe Government place a high priority on recruiting and retaining skilled nursing staff and on increasing the proportion of male nursing staff in mental hospitals. If my hon. Friend cares to let me have the details in writing of the issue that he has raised, I shall consider them.
    Mr. William HamiltonWill the Minister extend the review to include all the rights of the mentally handicapped? A Bill that is passing through the House deals with mental health in England. When can we expect similar legislation to cover the well-known and well-publicised shortcomings confronting mental health patients in Scotland?
    Mr. StewartI know of the Gentleman's interest in these matters. He will remember that we had an Adjournment debate before Christmas on one aspect of the general subject that he has raised. I have said that my right hon. Friend will be introducing legislation at an appropriate time to deal with the decision of the European Court of Human Rights on detained patients.
    Sir Hector MonroIs my hon. Friend aware that one of the premier hospitals for the mentally handicapped is the Crichton Royal at Dumfries? Will he consider as sympathetically as possible the plans of the area health board to provide accommodation for the adolescent mentally handicapped so that parents in South-West Scotland do not have to travel to Larbert to see their children?
    Mr. StewartI accept the general point that my hon. Friend is making. There are plans for new units at Dumfries and these will be considered sympathetically.
    Mr. Harry EwingDoes the Minister accept that hospitals such as Lennox Castle and, to some extent, Larbert are far too large? Why do not the Government embark upon a programme of building new hospitals to reduce the size of existing hospitals and to provide decent conditions for patients and staff? Does the hon. Gentleman accept that that is the only answer to the disgraceful problem that has been revealed at Lennox Castle and elsewhere?
    Mr. StewartThe SHAS stated in its report that it had produced similar reports in 1974 and 1977. It referred to the absence of sufficient action by the Labour Government in the light of those reports. The current capital programme of about £20 million will provide a total of 900 new beds in Scotland.

    Dogs
    Mr. Hendersonasked the Secretary of State for Scotland if he will introduce measures to improve the control of dogs and to provide for a means to compensate persons who suffer damage from the uncontrolled actions of dogs.
    Mr. RifkindThe Civic Government (Scotland) Bill at present before Parliament provides a discretionary power for local authorities to assist the police in rounding up stray dogs, and the Scottish Law Commission is currently reviewing the law on liability in relation to animals. My right hon. Friend will consider carefully any recommendations when the commission submits its report.
    Mr. HendersonI acknowledge the useful step forward to which my hon. Friend has referred, which will be especially helpful in urban areas. Is he aware that there is great concern among farmers over the amount of sheep worrying that is taking place? Is he aware that a farmer in my constituency recently had a heartbreaking experience when 15 ewes were brutally savaged by dogs? Is he further aware that, although the owner of the dogs was taken to court and successfully prosecuted, my constituent received no compensation for the £2, 000 worth of damage suffered? Does my hon. Friend agree that dog owners should have insurance for third-party risks, which often arise in relation to personal injury compensation?
    Mr. RifkindThe whole question of civil liability for injury caused by animals is being considered by the Scottish Law Commission, which hopes to publish a consultative memorandum on the subject in the spring of this year.
    Mr. McQuarrieMy hon. Friend referred—[HON. MEMBERS: "Wag your tail, bulldog."] I am grateful for the Opposition's support. My hon. Friend referred to the Bill relating to the control of dogs that has been introduced in another place. Is he aware that under the Bill control rests with the police, who are given additional powers to deal with the matter? Before the Bill reaches this House, will my hon. Friend consider the privatisation of the control of dogs? [Interruption.] I have plenty of time, but the Opposition have not. Is my hon. Friend aware that privatisation has been most successful in England and is creating a considerable number of new small businesses?
    Mr. RifkindIf the alternative was to take dogs into public ownership, privatisation would certainly be attractive to the Government. I undertake to consider my hon. Friend's point.

    Rural Areas (Community Facilities)
    Mr. Home Robertsonasked the Secretary of State for Scotland what financial assistance is available from his Department for the provision or improvement of community facilities in rural areas.
    Mr. Alexander FletcherCapital grants are given by my Department to local voluntary youth and community

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    organisations in both rural and urban areas to assist them in providing or improving such facilities. Grants made in 1980–81 totalled £800, 000. I refer the hon. Gentleman to the reply on 21 January by my right hon. Friend to my hon. Friend the Member for Dumfries (Sir H. Morro).
    Mr. Home RobertsonIt has been written:
    "Joy shall be in heaven over one sinner that repenteth, more than over ninety and nine just persons".
    Is the Minister aware that hundreds of rural voluntary organisations will be grateful that the capital grant scheme has been reprieved? Will he now publicly repent that he ever proposed such a stupid scheme?
    Mr. FletcherI am glad to have the hon. Gentleman's support. The Government undertook extensive consultation, as a result of which my right hon. Friend decided to continue the scheme, although there may be some administrative changes, as the general public had made their wishes known so well.
    Mr. John MacKayIs my hon. Friend aware of the considerable pleasure and support for the decision announced to my hon. Friend the Member for Dumfries (Sir H. Monro)? Is he aware that throughout Scotland rural organisations, such as village hall committees, scouts and guides, greatly welcome the proposal to continue putting money into the rural areas rather than adding it to the already considerable sums given to urban areas?
    Mr. FletcherI am delighted that there is such agreement on both sides of the House today.

    Illegal Fishing (Prosecutions)
    Mr. Russell Johnstonasked the Secretary of State for Scotland how many cases have been brought against trawlers fishing illegally within the three-mile limit in the last 10 years.
    Mr. YoungerA total of 332 cases.
    Mr. JohnstonWhen will the Government consider repealing the law as established in the Dingwall court decision in 1979, which has had the effect of opening inland waters to the predatory attentions of trawlers and changing what had been understood to be the law since the beginning of the century in what appears to be a wholly capricious fashion?
    Mr. YoungerI do not think that it would be sensible to restore the legal position to what it was thought to be prior to that decision. I think that it is widely accepted that the whole body of legislation on inshore fishing is in need of revision. I should prefer to await the outcome of current consultations with the industry before formulating firm proposals for a comprehensive new regime for inshore fisheries.
    Mr. HendersonDoes my hon. Friend agree that the subsantial number of cases suggests that courts do not impose sufficiently stiff penalties to discourage this kind of activity?
    Mr. YoungerI do not fully agree with my hon. Friend, as the number is not exceptionally large, but very much in line with the number over the years, which is a measure of the effectiveness of our fishery protection services.
    Mr. Donald StewartIs the Minister aware that the position is exactly as described by the hon. Member for
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    Inverness (Mr. Johnston) and that all fishing communities recognise that the decision has allowed illegal trawling to take place with impunity, as nobody can prove whether vessels are trawling at half-water depth or on the bottom? Is he aware that unless that decision is reversed, through new legislation, there will be no protection for the inshore waters?
    Mr. YoungerThere may be a need for new legislation once we have received the comments of all sections of the industry. However, I think that the right hon. Gentleman will agree that there are conflicting interests and that we cannot make everything perfect for both the inshore mobile fishing industry and the inshore static fishing industry. We must try to take account of the interests of both.

    J. P. Coats (UK) Ltd.
    Mr. Adamsasked the Secretary of State for Scotland if he will consider measures to assist J. P. Coats (UK) Ltd., in view of the difficulties it is experiencing in retaining its present work force at its Paisley mill.
    Mr. YoungerYes, Sir. My Department if already having discussions with the company about possible financial assistance for investment under normal Government schemes. My hon. Friend went into this in detail when he met the managing director on 18 January.
    Mr. AdamsIs the Minister aware that 1, 000 jobs in Paisley are threatened by the company's action? Is he aware of the present serious situation in the area? Is he further aware that figures issued by the Department of Health and Social Services on 4 January showed that there were 17, 000 unemployed, or one in four of the male population? Is he also aware that that is the highest unemployment figure ever recorded in Paisley and at 18·1 per cent. is 3 per cent. above the figure for Scotland? Will he take firm and positive action to safeguard not only the 1, 500 jobs that the company intends to save but the 2, 500 existing jobs?
    Mr. YoungerI appreciate the hon. Gentleman's anxiety. There is a threat to about 1, 000 jobs over the next two years. He will agree, however, that it is encouraging that the company concerned is investing new money to make a new, modern and up-to-date process, which should secure jobs in that process for a considerable time to come. I appreciate his anxiety about the extremely severe unemployment in the area, but I am sure that he will be grateful that some firms, such as Babcock and Wilcox and Howden's, are doing very well.

    Biotechnology
    Mr. John MacKayasked the Secretary of State for Scotland if he will take steps to ensure that biotechnology is introduced into the school biology curriculum to enable senior pupils to appreciate the career potential of the biotechnology industry.
    Mr. Alexander FletcherThe biology syllabuses for the ordinary and higher grades of the Scottish Certificate of Education already contain a number of elements designed to foster understanding of some of the fundamental processes and applications of biotechnology. The certificate of sixth year studies course in biology

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    provides further scope through individual project work, which in some cases will involve local industry, for the study of biotechnology and its industrial uses.
    Mr. MacKayI thank my hon. Friend for that answer. Will he ensure that the curriculum for the ordinary and higher levels contains introductory work for biotechnology, so that, as this new and exciting industry develops in the next two or three years, pupils will leave school with some knowledge of the industry and of the career opportunities in it?
    Mr. FletcherI am grateful to my hon. Friend for his interest in this important subject. The consultative committee on the curriculum is keeping the science curriculum under review and in so doing will take account of developments in the industrial and scientific world. The use of microcomputers in schools allows pupils to simulate processes that cannot be carried out in the laboratories.
    Mr. FoulkesDoes the Minister agree that, with such a sophisticated curriculum, particularly in senior secondary classes, it is inappropriate to maintain discipline by the barbaric use of the Lochgelly belt? Will he welcome the decision by Strathclyde and Lothian regions to phase out the belt and repudiate the neanderthal view of the hon. Member for Argyll (Mr. MacKay)?
    Mr. FletcherI have more faith in the ability of headmasters and school teachers to maintain discipline in schools than I have in the advice of the hon. Gentleman.
    Mr. SpeakerWe now come to questions relating to matters for which the Lord Advocate is responsible.
    Mr. Hugh D. BrownOn a point of order, Mr. Speaker. On whose authority has the Order Paper been changed from the normal practice regarding questions relating to the Solicitor-General for Scotland? As far as I am aware, constitutionally the Secretary of State for Scotland has no responsibility for the Law Officers. Were you consulted about this change?
    Mr. SpeakerThe Government decide the order of the questions. Questions by hon. Members were readdressed by the Table Office to preserve the relative position in which they had originally been tabled. It is the Government's responsibility to decide who answers.

    Conspiracy and Protection of Property Act 1875
    Mr. Canavanasked the Secretary of State for Scotland how many recent prosecutions there have been under the Conspiracy and Protection of Property Act 1875.
    Mr. RifkindThere has been one recent prosecution for a contravention of the Conspiracy and Protection of Property Act 1875, which resulted in a trial at Edinburgh sheriff court on 17 and 18 December 1981. My noble and learned Friend the Lord Advocate is not aware of other recent prosecutions for contraventions of this Act, but such statistics are not recorded separately and could be obtained only at disproportionate cost.
    Mr. CanavanAre not the Scottish prosecution authorities guilty of a shameful distortion of priorities when they dig up a law more than 100 years old to prosecute a trade unionist whereas they decided not to prosecute in the recent horrific Glasgow rape case? Does not that deplorable decision by the Crown Office and the Scottish prosecuting authorities underline the need for the
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    Crown Office—more than ever before—to be accountable to the House of Commons, and for the next Solicitor-General for Scotland to be a Member of this House, so that he can answer questions in this place?
    Mr. RifkindThe age of an Act of Parliament is not a relevant consideration in deciding whether a prosecution ought to be brought. If a prosecution has been brought, it is for the court to decide whether the Crown has proved its case. As the hon. Gentleman will be aware, the case to which he referred is still sub judice, as an appeal is presently before the courts.
    Mr. DewarTo some extent the Minister has made the point that I was about to make. The issue raised by my hon. Friend the Member for West Stirlingshire (Mr. Canavan) is important and we may well want to return to it, but, as an appeal is pending, the less said at this stage the better.
    Mr. Norman HoggDoes the Minister accept that the use of this kind of statute in industrial relations matters does not help to achieve a settlement, and that is what happened in this case? Will he give an assurance—
    Mr. SpeakerOrder. Both sides of the House have indicated that this case, about which I know very little, is sub judice. We should, therefore, observe our normal rules.

    Animal Damage
    Mr. Hendersonasked the Secretary of State for Scotland if the Lord Advocate has discussed with the Scottish Law Commission the legal problems of loss, injury and damage caused by animals; and if he will make a statement.
    Mr. RifkindAs I indicated earlier to my hon. Friend, the Scottish Law Commission is examining the law on civil liability for animals as part of its review of the law of obligations and will publish a memorandum in the next few months. My noble and learned Friend the Lord Advocate has not discussed the matter with the commission, but the Government will give careful consideration to its recommendations in due course.
    Mr. HendersonDoes my hon. Friend recall that appendix B of the report of the working party on dogs in 1976 gave only the implications for English legislation? Will the Law Commission report, which we are now expecting, deal with the implications for Scottish legislation?
    Mr. RifkindThe Scottish Law Commission's consideration of this matter will cover all aspects of civil liability regarding injury as a result of actions by animals.
    Sir Russell FairgrieveA particular problem regarding dogs is the number of puppies that must be put down after Christmas. Will my hon. Friend suggest to his colleagues that the time is well overdue for a draconian rise in the cost of the dog licence, which over the last two decades is the only licence whose price has not increased? Should it not go up considerably?
    Mr. RifkindMy hon. Friend will appreciate that this question relates to the responsibilities of the Secretary of State, but I note his comments.
    Mr. SpeakerMr. Tam Dalyell, to ask Question 32.
    Mr. DalyellNot moved, Mr. Speaker.

    Victoria Hospital, Kirkcaldy (Fire)
    Mr. William Hamiltonasked the Secretary of State for Scotland if the Lord Advocate has yet received the procurator fiscal's report on the recent fire at the nurses' home at Victoria hospital, Kirkcaldy; and if he will make a statement.
    Mr. RifkindAn interim report of this tragic fire has been received from the procurator fiscal at Kirkcaldy. However, it will be some time before the full report will be completed and submitted to my noble and learned Friend the Lord Advocate. Every effort is being made to deal with the matter expeditiously. Until such time as the full report has been considered no statement can be made.
    Mr. HamiltonDoes the hon. Gentleman recall that the former Solicitor-General for Scotland gave a strong indication that he was in favour of a public inquiry and that he would probably take it himself? For reasons well known to the House, the hon. and learned Gentleman is no longer in a position to do that. Will the hon. Gentleman assure us that there will be a public inquiry? If so, will the new Solicitor-General for Scotland take it, and, if not, who will?
    Mr. RifkindAs the hon. Gentleman will appreciate, no final decision on an inquiry can be reached by the Lord Advocate until he receives the report submitted to the procurator fiscal. Having said that, I would not dissent from the general principle of what the former Solicitor-General for Scotland said.
    Mr. Harry EwingDoes the Minister appreciate that there is grave concern in Fife about the circumstances surrounding this fire? Against that background, will he impress on his noble and learned Friend the importance of my hon. Friend's point about the need for a public inquiry—either a fatal accident inquiry or some other kind of judicial public inquiry?
    Mr. RifkindI give the hon. Gentleman an absolute assurance that my noble and learned Friend is fully conscious of the great public concern occasioned by this fire. He will be taking factors of that type into account in coming to a decision on this issue.

    Warrant Sales
    Mr. Ancramasked the Secretary of State for Scotland what representations the Lord Advocate has received about the use of the warrant sales procedure in Scotland.
    Mr. RifkindMy noble and learned Friend the Lord Advocate has received representations on this matter suggesting either that warrant sales be abolished or that the present system be reformed. My noble and learned Friend has also received copies of the Scottish Law Commission's five consultative memoranda published in October 1980. The commission's view, with which we agree, is that it would not be right, and indeed would be misleading, for it to submit a report on warrant sales in advance of a report on the other aspects of enforcement covered by the four other memoranda. I am assured that the commission is working on its report and regards its completion as its first priority.
    Mr. AcramIs my hon. Friend aware that a number of ratepayers in Lothian region have been threatened and
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    pursued by this arcane procedure for failure to pay their exorbitant rate demands? Is not that a moral abuse of this procedure, illustrating the total hypocrisy of the Labour group in Lothian region, which is always shouting about its interest in people's rights?
    Mr. RifkindIt is for the local authority to decide the appropriate way to pursue those who have not paid their rates. The whole subject of warrant sales, including the point raised by my hon. Friend, is now being considered by the Scottish Law Commission.
    Mr. DewarI am grateful to the Minister for not following the personal vendetta of the hon. Member for Edinburgh, South (Mr. Ancram) against Lothian. I should like to press him about a reform of the law on warrant sales. We have been waiting for many years for the report on the law of diligence. While I welcome the fact that it is now to be a first priority, is the Minister aware that further substantial delay will bring into question the efficiency of our law reform procedures? When will the Law Commission be prepared to produce a considered statement?
    Mr. RifkindI fully accept that there is concern in some quarters about this subject, and I certainly accept that there should be no substantial or unnecessary delay. The fact that the Scottish Law Commission has confirmed that the completion of this report remains its first priority should give reassurance to all who have taken an interest in the subject. I cannot give the hon. Gentleman a specific date, but, as the Law Commission will be treating this as its first priority, he can be sure that there will be no unnecessary delay whatever.
    Lord James Douglas-HamiltonAs cases of hardship have been reported to the Scottish Law Commission, will my hon. Friend inform the commission that an early completion of its report will be welcomed?
    Mr. RifkindThe Government are as anxious as many hon. Members to hear the views of the Scottish Law Commission. This is an important and sensitive area, and I am sure that no one would want legislation to be rushed through in an ill-considered fashion. As soon as the Law Commission has made its recommendations my noble and learned Friend will give the fullest consideration to the proposals that are put forward.
    Mr. McKelveyWill the Minister give the House an assurance that he will ask electricity boards in particular and British Telecom not to use this medieval and barbaric way of securing debts in the meantime, because there are bound to be a large number of increased bills as a result of the heavy winter?
    Mr. RifkindThe hon. Member will appreciate that, as it was for local authorities, so it must be for electricity, boards and others to decide what means they use to pursue unpaid debts. I am sure that all public bodies and officials will take into account the effect on individuals of any action that they might take. However, the matter of the law is clearly one that must await the recommendations of the Law Commission.

  Questions to Ministers
  Mr. Tam DalyellOn a point of order, Mr. Speaker. It is an understandable tradition of the House

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  that right hon. and hon. Members do not read their questions, and on most normal occasions it is intolerable if they do so. There are certain delicate and difficult industrial situations involving thousands of jobs, such as the current position of Leyland and Bathgate, where it is sensible, if one is to have a serious answer, to give notice some hours before to a Secretary of State because the question may be complex and difficult. I therefore informed the Scottish Ofice. The difficulty in some situations is that if one were to repeat exactly the question of which one has given notice to the Secretary of State, who is geared to answer that precise question, it would involve reading it. I therefore apologise to the House if I have been discourteous, but that is the background to the matter.
  Mr. SpeakerI am much obliged to the hon. Gentleman. We must keep to our rule that questions are not read; otherwise we shall change the character of Question Time in the House. I am sure that the hon Gentleman will bear with me when I say that he has the ability to memorise the substance of the question that he wished to put—
  Mr. DalyellNot the exact words.
  Mr. SpeakerWell, it was the substance that was important.
  Mr. Christopher PriceOn a point of order, Mr. Speaker. I wish to pursue the question, to which you briefly replied, about the change in the form of the Order Paper on this occasion, because it is an important issue of which the House should take cognisance. It is constantly emphasised by Prime Ministers of both parties that the Law Officers are independent and are not subject to any Department. The English equivalent of what happened today would be the Home Secretary purporting to answer questions tabled to the Attorney-General.
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  I do not criticise either you, Mr. Speaker, or any Officers of the House, but is it not a grave discourtesy on the part of the Government to prevent the House, by the ordering of questions, about which the Government know perfectly well, from scrutinising a Law Officer in carrying out his specific responsibilities by putting up a member of the Government who, by his very office, is quite unable to give the sort of responses to questions that a properly appointed Law Officer could give?
  Mr. Dennis CanavanFurther to that point of order, Mr. Speaker. My question was the first question on the Order Paper to the Solicitor-General for Scotland today. I was not informed in advance that he would not answer it, or that it would be answered by one of the junior Ministers in the Scottish Office. This is the first time since I have been in the House that neither the Lord Advocate nor the Solicitor-General for Scotland has turned up for Scottish Question Time. I hear rumours that the five Scottish Tory advocates on the Government Benches are so out of touch or out of favour that the Government are likely to call in an outsider from the legal establishment in Edinburgh to take over the job of Solicitor-General. If that is so, would it be in order for the House of Commons to summon the Lord Advocate or the new Solicitor-General for Scotland to the Bar of the House at Scottish Question Time?
  Mr. SpeakerOrder. First, I remind the House that in 1974 the Secretary of State for Scotland answered this type of question. So the situation is not without precedent; it did happen in 1974.
  Mr. CanavanBefore I was here.
  Mr. SpeakerI was here. I can assure the hon. Gentleman that what I have said is factual.

Cardowan Colliery (Accident)
3.36 pm
Mr. John Smith(by private notice) asked the Secretary of State for Employment if he will make a statement on the accident at Cardowan colliery.
The Under-Secretary of State for Employment (Mr. David Waddington)It is with the greatest regret that I have to inform the House that there was an incident at the Cardowan colliery this morning, in which 25 miners were injured. I should like to express my deepest sympathy for the men concerned and their families, and I wish the men a speedy recovery.
The mine is about 7 miles outside Glasgow, and about 1, 100 men are employed there. This morning at 9 o'clock an ignition of gas occurred on a long wall coal face in the Cloven Seam—the reference number is V52. The face was in production and equipped with a modern power loader and powered supports. The seam thickness is 0·94 metres—38 inches—with a sandstone roof and a hard floor. Flame appears to have passed along the face during production operations. The power loader was about three-quarters of the way along the face.
There are 25 casualties, seven of which are stretcher cases. All have been taken to hospitals in Glasgow, suffering from various degrees of burns. All the men in the district have been accounted for and the ventilation re-established, but all work in the colliery has been suspended while the investigation proceeds. Investigation is proceeding by all the interested parties—the NCB, the NUM, Her Majesty's Inspectors—and the incident section for research and laboratory services division, Safety in Mines Research Establishment, Sheffield is on its way to the pit. There is no indication of the cause of ignition as yet.
Mr. SmithI am sure that the Minister will appreciate how grateful I am to him for making such a full statement to the House. Speaking as the constituency Member, and on behalf of my many hon. Friends who have constituents working in this colliery, I wish to express sympathy for those who have been severely injured in the accident, particularly the seven men who are apparently in intensive care in hospital, and wish them a full and speedy recovery.
I pay tribute to the miners of this and other collieries, who daily risk life and limb to extract coal for the nation. Does the Minister accept that the institution of early inquiries into the cause of the accident will be universally welcomed? Will the findings be made known after the facts have been established? Does he agree that if the need for more safety measures is revealed by the inquiry, such measures will be introduced with all possible speed, so that the colliery can be kept as safe as possible for those who work there?
Mr. WaddingtonI thank the right hon. Gentleman for his expressions of sympathy, which I am sure will give comfort to the families. I join in his expression of appreciation for the dangerous and important work that is done by miners. The findings of the investigation will be made available, and I assure the right hon. Gentleman that if the investigation reveals that further safety measures are required, they will be put into effect with no delay.
Several Hon. Members rose—
Mr. SpeakerOrder. I propose, exceptionally, to call the two hon. Members on the Government Benches and the four hon. Members on the Opposition Benches who have risen to their feet.
Mr. Alex EadieWe join the Minister and my right hon. Friend in extending to the people who have been injured and the seven men who are in intensive care, and their wives and families, our hope and wish that they will make a speedy recovery. Does the Minister agree that the question and his statement are timely reminders of the hostile environment in which miners toil every day in the pits?
If the circumstances warrant it, and if the Secretary of State believes it appropriate, will the hon. and learned Gentleman return to the House and report any measures that are adopted, or the nature of any inquiry that is undertaken, because that pit has a history of being what we in the mining industry describe as a gassy pit?
Mr. WaddingtonI am aware of the hon. Gentleman's knowledge of the mining industry, and it is appropriate that he should have risen today and said what he has. He is right in saying that what has happened today is a timely reminder of the dangers of mining, but I remind the House that our mining industry has a proud record. It has the best safety record in the world, and I am told that the accident statistics for 1981 will reveal that there were fewer fatalities in the mining industry in 1981 than ever before. I shall consider the hon. Gentleman's suggestion that when a report is available I should make a further statement to the House.
Sir Hector MonroAll Conservative Members, and especially those who have mine workers in their constituencies, will wish to be associated with my hon. and learned Friend's statement. Will he accept our wish that the injured recover speedily, and our thankfulness that there were no fatalities?
Mr. WaddingtonThere must be great consolation in the fact that there have been no fatalities. We can only hope that all those who have suffered injury will make a speedy recovery. I am grateful to my hon. Friend for his remarks.
Mr. Gregor MacKenzieAs a Member who is privileged to represent many colliery workers, I join my right hon. Friend the Member for Lanarkshire, North (Mr. Smith) and the Under-Secretary of State in expressing sympathy and good wishes to the injured for a speedy recovery. To allay any distress that might be caused, can the Under-Secretary of State tell us whether the entire colliery will be closed; and if so, the payment position of those who are laid off?
Mr. WaddingtonThe colliery will be closed while the investigation is carried out and until the cause of the accident is clear and work can be restarted. The men who are laid off will be entitled to the usual benefit, although that is not my province. I know that the right hon. Gentleman's expressions of sympathy for those who have suffered injury will be greatly appreciated.
Mr. Tim EggarI thank my hon. and learned Friend for a speedy and full statement and join in the expressions of sympathy made from both sides of the House for the miners and their families. Can my hon. and learned Friend assure us that any lessons that are learnt

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from such an appalling experience as this will be drawn to the attention of the National Coal Board and that all necessary safety measures will be installed in other pits?
Mr. WaddingtonI give my hon. Friend that assurance.
Mr. Dennis CanavanAs some of my constituents work at Cardowan and many more of the Cardowan miners are known to me personally, I join my right hon. Friend in extending sympathy to the injured men and their families. I hope that the victims of this tragic incident will make a speedy recovery.
What happened at this pit should be a timely reminder that, despite the great improvements in safety standards in the coal industry over the years, coal mining is still a dangerous, dirty and hazardous job. Conservative Members, who complain constantly that miners are overpaid, should go down pits such as Cardowan, as my right hon. Friend and I did, so that they can see the conditions for themselves. They would then agree with me that the miners are worth every penny that they can get.
Mr. WaddingtonIt is not appropriate now to make any political points. We are united in our expressions of sympathy and in recognising that mining remains a very dangerous job.
Mr. Dennis SkinnerIs the Under-Secretary of State aware that much concern has been shown by the National Union of Miners and other unions in the mining industry on the general question of the inspectorate? That was reflected in the parliamentary miners group putting down a question about the strength of the inspectorate in the coalfields. Many of us believe that it is below strength and that many additions must be made to bring it up to strength. I hope that the Under-Secretary of State will take the matter on board.
I associate myself with the remarks of my hon. Friend the Member for West Stirlingshire (Mr. Canavan). I remind the House that, despite the reasons put forward by the Minister for keeping it at a certain level, each miner who receives industrial injury benefit this year will lose £14 a week as a result of the Government's decision to stop earnings-related supplement.
Mr. WaddingtonI shall deal only with the part of the question that relates to the inspectorate. There was an inspector at the pit when the accident occurred, although he had gone there for another reason. It is worth reminding the House that 11, 980 inspections were carried out at coal mines in 1980. In the light of that figure it is difficult to say that there is not an adequate level of inspection. There are 95 mines and quarries inspectors in post. The Health and Safety Executive is trying to recruit additional inspectors up to a total of 102 in 1982. There is no question of its being prevented from carrying out that recruitment programme because of any expenditure restraints.

Foreign Affairs Council
3.47 pm
The Lord Privy Seal (Mr. Humphrey Atkins)With permission, Mr. Speaker, I shall make a statement on the progress of the discussions in the informal meetings of Foreign Ministers of the Community following the last European Council. I shall also make a statement on the Foreign Affairs Council that took place in Brussels yesterday.
On 25 January the Foreign Ministers had a lengthy discussion on the four key issues in the negotiations over the mandate that were remitted to them by the European Council. It was the third such discussion and I regret to say that it was not possible to reach agreement.
The main issue preventing agreement was the view of a number of other member States that the refunds to the United Kingdom should be arbitrarily and automatically reduced over time, regardless of the scale of the problem. We made it clear that we could not accept that. In the longer term we hope that the development of Community policies, including the reform of the common agricultural policy, will lead to a reduction in the size of our budget problem and we fully accept that, as that happens, our refunds should be reduced. What we cannot accept is a reduction totally unrelated to the underlying cause of our budgetary imbalance.
That was not the only difficulty. In addition, one or more of our partners had reserves on other aspects of the matters under discussion. For example, there was disagreement as to whether the duration of our budget refunds should be four or five years, with a review. There are also problems on agriculture where the formula proposed for controlling the milk surplus was very weak, and a number of countries, but not the United Kingdom, have reservations about the proposal that agricultural spending should grow less rapidly than the Community's resources.
It is disappointing that after so many rounds of negotiations we can still not reach agreement on the four key issues identified by the European Council, and therefore on the guidelines that were discussed there. But those are complex questions in which major national interests are involved and we never thought that it would be easy to find solutions that would enable each country to feel that it had a reasonable deal. I welcome the intentions of the President of the Council and the President of the Commission to try to find solutions to those problems. We hope they will be able to do so quickly.
To turn to the Foreign Affairs Council, it was decided to end further sales of food to Poland at specially subsidised prices and to use the funds originally earmarked for such sales for humanitarian aid, including food, through non-governmental organisations. There was a wide measure of support in Council for the proposal that the USSR should be upgraded from the "intermediate" to the "relatively rich" category in the OECD export credit concensus. The matter is to be considered further by the Committee of Permanent Representatives tomorrow, when I hope that it will be agreed that the Community should propose such an upgrading to its OECD partners. The Council also instructed permanent representatives in conjunction with the Commission to study the trade policy measures that the Community might take against Soviet

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exports to the Community and the implications of the undertaking by the Ten on 4 January not to undermine measures taken by the United States of America.
The Council considered the problem that has arisen over the adoption of the 1982 budget. In the view of member States, the European Parliament has not acted correctly over the classification of expenditure and the maximum rate of increase. No final decisions were taken, but it appears to be the view of most member States that as well as opening a dialogue with the European Parliament with a view to resolving the problem by mutual agreement they should, as a precautionary measure, place the matter before the European Court to determine the legality of those parts of the budget about which there is doubt.
I am glad to say that the Council agreed that the storage levy and refund scheme applicable to sugar from African, Caribbean and Pacific States should be suspended for three years, to the benefit of the cane refining industry. In those circumstances, I was able to agree to a revised Commission negotiating mandate on the price to be paid for ACP sugar for 1981–82. I hope that that will enable the present disagreement between the Community and the ACP to be resolved.
My hon. and learned Friend the Minister for Trade represented the United Kingdom for discussion by the Council of policy on imports of low-cost textiles. It was agreed that, to allow work to be completed on calculating the global ceilings, decisions on the various outstanding issues, including the terms for Community participation in the new multi-fibre arrangements, should be held over until 11 February, when there will be a further special meeting of the Council.
Mr. Eric S. HefferIs the right hon. Gentleman aware that the Opposition support the Government in all their efforts to ensure that Britain's contribution is fair and equitable, and also on the stand that they appear to be making? I say "appear", because the right hon. Gentleman's statement is by no means as forthright as that made by the Foreign Secretary, which was reported in The Times on 26 January. According to that report, he referred to the Community's agricultural prices and said:
"I do not see anything can be done until we have a solution."
What, precisely, does that mean? I trust that the Government intend to adopt that stance. Too often we hear tough statements from the Government, only to discover that they mean very little. Ultimately, there have been compromises which, in the long run have not been satisfactory to the British people and which have added to their burdens.
The Foreign Secretary has not been as forthright this afternoon in the other place as he was reported as being in The Times. What precisely do the Government mean by the statement? Will they make a stand and ensure that no agreement is reached on agricultural prices—which could mean an extra 10·5 per cent. for the British people—or on other matters until a solution has been found to the problem? For a long time we have staggered from one crisis to another. The British public are pretty fed up with the farcical trips made to Brussels to try to solve the problem. That problem has never been solved satisfactorily.
If the Government are serious, will they do anything about VAT payments? Have they considered other action,
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such as withholding Customs payments? That is pretty drastic, but we must know whether the Government are serious. The House and the country want a clear statement from the Government that this time they mean what they say and will not agree to anything until they have obtained a solution that is satisfactory to the British people.
Mr. AtkinsI thank the hon. Gentleman for his support of our position. It was unexpected, but most agreeable.
The hon. Gentleman asked me about what my right hon. and noble Friend the Foreign Secretary had said about agriculture. The position is simple. The mandate agreed by the Heads of Government on 30 May linked three areas in which progress had to be made: non-agricultural expenditure, agricultural policies and the budget. The Heads of Government and all the countries involved agreed that those three had to go forward together. There has been no departure from that. Until we have found solutions for all three, we cannot move on any of them
The hon. Gentleman said that we had made tough statements but reached compromises. I remind him of what happened in 1980, when we had discussed our contribution with the Community. In case the hon. Gentleman has forgotten, I remind him that the arrangements that we were eventually able to make resulted in a far better return than anything that his Government negotiated? We are on the same point now, and I have no doubt that we shall achieve what we want.
Several Hon. Members rose—
Mr. SpeakerOrder. I propose to allow 20 minutes for questions on the statement, but I remind the House that there is a Ten-Minute Bill to follow and that many hon. Members wish to speak in the debate on employment.
Sir Anthony MeyerIs my right hon. Friend aware that there will be general support for the Government's stand, that the question of budgetary refunds must receive not an arbitrary, but an organic solution, which is connected with the Community's progress? Does my right hon. Friend agree that the Government's ability to win acceptance for such an approach would be greatly strengthened if other Departments adopted the energetic attitude of the Foreign Office, which seeks to promote common policies within the Community?
Mr. AtkinsThe Government seek to improve the way in which the Community works in relation to agricultural and non-agricultural policies, as well as the budget. I am glad that my hon. Friend supports our position. We have consistently argued with our Community partners that to discharge the mandate agreed by all Heads of Government—that unacceptable budgetary situation should not be allowed to recur—we must produce solutions that stop that from happening. A system under which our refunds fall automatically every year—whatever happens to the rest of the Community's budgetary arrangements—will not necessarily prevent unacceptable situations arising. That is why we stood out against the proposal that that should happen. We believe that the Community's policies will change and that it will spend more, for example on the regional and social funds than before. That may help to solve our problem, but until we know that, we cannot agree to what, in Community jargon, is called "degressivity".
Mr. Russell JohnstonHow helpful has the Commission been on the budget, and to what extent does the Government's view differ from that of the Commission? Is the right hon. Gentleman aware that Liberals believe that to link disapproval of general Jaruzelski's regime, martial law and so on with food aid is unconstructive, unhelpful and, almost certainly, ineffective?
Mr. AtkinsThe Commission is well seized of our view and seeks to bring forward proposals to deal with the matter, but in the Council we are dealing with the other member States.
I repeat that the Community has decided to end the system of selling food to Poland at a discount, with the Community making up the balance. We have agreed to use the money to send food and other humanitarian aids to the Polish people, not through the military Government, but through non-governmental organisations, such as the Church, the Red Cross, Caritas and so on.
Mr. Jim SpicerMy right hon. Friend gave us one piece of good news about the ACP sugar agreement, but can he spell out in a little more detail what it will mean for the United Kingdom sugar refining industry and, over the next three years, for Commonwealth sugar producers, who depend so much upon it?
Mr. AtkinsThe suspension of the storage levy will make a considerable difference to United Kingdom cane sugar refiners. As my hon. Friend knows, it mainly involves only one firm, employing about 3, 000 people. It will help to preserve those jobs.
In the discussions that are to take place I believe that our Commonwealth partners will feel that the offer of an increased price will meet their case.
Mr. Nigel SpearingDoes the Lord Privy Seal recall that about 10 years ago it was said consistently from the Labour Benches that the system of own resources which the EEC is adopting and to which this country would be bound would mean a permanent and continuing deficit on the EEC budget for Britain, and that his hon. Friends said that the Community would change? Who has been proved correct?
Mr. AtkinsThe thrust of our arguments with our Community partners on agricultural policy is to reduce the proportion of Community money spent on agriculture in relation to the Community's resources. That is essential. The Community should devote itself more to matters connected with the social and regional funds—relieving unemployment, helping young people and so on. That is the line that we have pursued. It may not be surprising that there have been objections from basically agricultural countries, but we intend to pursue that line, because we believe that it is right.
Mr. Teddy TaylorAs Britain has already contributed over £3, 000 million more to the EEC than we have received—over £1 million a day net—will my right hon. Friend make it clear to the Community that, in the absence of a rebate agreement, we will not and cannot afford to make the massive payments next year? Although in 1980, after the invasion of Afghanistan, our exports of subsidised food to the Soviet Union broke all
896
previous records, in view of the Polish situation, will our exports of cheap subsidised food to Russia be reduced this year?
Mr. AtkinsThat is precisely what we have invited the permanent representatives to study, along with other trade matters concerning Russia. I hope that they will produce a comprehensive list so that we can consider how to handle our future trade with Russia.
I cannot tell my hon. Friend what the current year's contribution to the EEC will be, but our contribution in 1981 works out at not £1 million a day, but about £1 million a week.
Mr. Christopher Brocklebank-FowlerI support the Government's firm stand on the Community budget negotiations generally, but can the right hon. Gentleman assure the House that the part of his statement relating to the agricultural budget does not mean that Her Majesty's Government alone among Community Governments favour a reduction of Community support for her own agriculture?
Mr. AtkinsI said that we believe that expenditure in the Community budget on agriculture is too great and should be reduced in certain areas. We have tried to shift the weight of expenditure from being predominantly agricultural to the other areas that I mentioned, as is right. Many of our Community partners agree with that, although those who derive the greatest benefit from the current arrangement are less than enthusiastic.
Mr. Hugh DykesAs our budgetary contribution has been only about £1 million a week net, should we not keep the problem in perspective? Given the necessary economic revival in Britain, in a few years' time might the problem not appear far less serious?
Mr. AtkinsThat is what we all very much hope. In 1980 my right hon. Friend the Prime Minister negotiated an arrangement to ensure that our contributions were not excessive. The arrangement applied in 1980 and 1981 and can—and will, if necessary—be extended to 1982, but we are seeking a more permanent arrangement to ensure that Britain, which, unhappily, is not the richest member of the Community, is not the largest contributor. We shall continue to seek a more permanent arrangement of fairer contributions.
Mr. K. J. WoolmerIn the MFA talks, did the right hon. Gentleman make it clear to the other Ministers that the proposal to base the future growth of imports on 1982 quotas rather than on the existing level of trade would cause substantial further damage to the industries and was unacceptable to both the employers and the trade unions? If the Government intend to withdraw from the MFA in the event of unsatisfactory bilateral negotiations, may we know what the deadline is for the negotiations this year? Will the Minister of State concerned come to the House on 11 February so that we can properly question him?
Mr. AtkinsMy hon. and learned Friend the Minister for Trade has consistently made the point about the basis of future growth to our Community colleagues, and he will continue to do so. The Commission is under instructions to report back on the bilateral negotiations—which have not yet started—by the beginning of September. For the present discussions, certain global figures have only just been received by the Commission and we are studying

897
them. They will be considered again at the meeting on 11 February. My hon. and learned Friend has kept the House informed on the progress of the discussions and, as appropriate, he will continue to do so.
Mr. Tim Renton (Mid-Sussex)In view of the disappointing nature of the recent Council of Ministers' meeting, what will break the log-jam and bring about the fundamental reform of the CAP and the long-term review of Britain's budgetary contribution, which many of us who fully support our membership regard as essential.
Mr. AtkinsIn the end, I believe that it will be the realisation by our partners that our case is unanswerable.
Mr. David EnnalsI understand the desirability of food aid to Poland going through non-governmental channels, but does it mean that voluntary organisations such as the Salvation Army and the Ockenden Venture, of which I am chairman, will get additional assistance to perform the important task of helping the Polish people at a time of great difficulty?
Mr. AtkinsWe have instructed the Commission to examine the best ways of getting the aid to the Polish people. As I said, a certain amount of money was set aside in the Community originally to subsidise the sale of food to the Polish Government. It is now planned to use it in the way that I have described. I cannot say at present precisely how it will be done, but the Commission is actively seeking the best methods of ensuring that the aid gets to the people who really need it, and not just to the Polish Government. That is the important point.
Mr. Tony MarlowWould my right hon. Friend like to take the opportunity to correct his slight slip of the tongue about our contribution to the Community being about £1 million a week? Is he aware that a recent Treasury answer stated that net cash disbursements this year to Brussels would be £500 million a year, which is £10 million a week? Will he tell his Community colleagues that as long as the bulk of Community funds are expended on the CAP neither the House nor the British people find it acceptable to make a significant net contribution to the Community budget?
Mr. AtkinsThe figure that I gave was correct. Our net contribution after the adjustments that follow the arrangements arrived at by my right hon. Friend the Prime Minister will amount to approximately £55 million for 1981. That is marginally over £1 million a week, but only just.
Mrs. Shirley WilliamsDoes the Lord Privy Seal think that the entry of Mediterranean producers to the Community will provide a chance to change the basis of the common agricultural policy, so that it is more likely that we can control the ultimate budget?
Mr. AtkinsYes, Sir. The arrival of Mediterranean producers inevitably means a change in the way that the common agricultural policy works. That has also been under discussion. Those countries have different problems from those of more temperate producers. As the right hon. Lady knows, we are convinced that far too much of the Community budget is spent on agriculture and not enough on other matters, particularly the social and regional funds of the Community.
Mr. Sydney ChapmanHowever disappointing the outcome of the meetings on which my
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right hon. Friend has reported may have been, will he recognise that there will be wide support for his stance in insisting that the massive budget reductions negotiated by the Prime Minister should not be reduced, at least until the common agricultural policy has been reformed? Given the way in which our trade has increased with other EEC countries in recent years and that our visible balance of trade is now in surplus, and provided that we can get our budget contribution correct, there are wide economic advantages to be had from our belonging to this great home market.
Mr. AtkinsAbout 43 per cent. of our trade is now with our European partners. It is recognized, not only by the Government but by all the other Heads of Government who were assembled at the European Council meeting on 30 May, that there should be adjustment and reform in three areas of Community activities—the non-agricultural policies, the agriculture policies and the budget. That was agreed by the Heads of Government. What we have been seeking ever since—and are continuing to seek—is the method of implementing that agreement.
Mr. Leslie Spriggs (St. Helens)Will the Lord Privy Seal inform the House, in view of the agreement reached by the Prime Minister on Britain's budgetary contribution to the EEC, what will happen next year, after that agreement ends later this year? What will follow the present agreement between the Prime Minister and the EEC?
Mr. AtkinsThat is precisely what we are negotiating.
Mr. Kenneth CarlisleDoes my right hon. Friend agree that the satisfactory level of refunds over the past two years resulted from our tenacity over several meetings? Will he therefore reassure the House that this time the Government will show similar tenacity to secure a long-term solution to our contribution problem?
Mr. AtkinsI give my hon. Friend that assurance. It takes a long time to reach a solution, and much discussion and patience with our Community partners, which was shown in 1980, and is being shown by Her Majesty's Ministers now.
Mr. James LomondWill that determination to stand resolutely shoulder to shoulder against the Soviet Union and trade with that country extend to expecting the West German Government, the French Government and the other Governments of the EEC, who are scrambling to sign the same sort of agreements, to cancel their agreements to buy many hundreds of millions of pounds' worth of natural gas from the Soviet Union, or, as usual can we expect self-interest to prevail?
Mr. AtkinsI cannot give the hon. Gentleman a categoric answer. We are currently exploring in detail through our permanent representatives in Brussels, the areas where we can act together and persuade, and perhaps be persuaded by our Community partners to join in the kind of action that the hon. Gentleman has described.
Mr. David MylesAlthough, as a farmer, I regret the delay that may be caused to the annual agricultural price-fixing, I congratulate my right hon Friends on the robust stand that they have taken in defence of the nation's interests. May I urge my right hon. Friend to ensure that in any agreement that is made our agriculture

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industry is in no way disadvantaged? Our agriculture industry has set an example to the other agriculture industries to such an extent that we are now suffering from surpluses, whereas Poland and the Soviet Union are suffering from dreadful scarcities.
Mr. AtkinsI give my hon. Friend the assurance that he seeks. We are seeking to act in defence of the interests of the whole country, including the agriculture industry, which is a much better example of how an agriculture industry should be run than anything east of the Iron Curtain.
Mr. HefferI should like to explore a little further the point made in the Lord Privy Seal's statement about Poland. He referred to the undertaking by the Ten
"not to undermine measures taken by the United States."
Will the right hon. Gentleman confirm that that in no way implies that we are accepting a policy that could undermine detente and peace in Europe? Will he make it clear that the British Government, while taking every sensible step with regard to Poland, will not go as far as anything that could undermine peace?
In answer to a question by his hon. Friend the Member for Mid-Sussex (Mr. Renton) the right hon. Gentleman said that our case was unanswerable. That may be so to us, but it may not be unanswerable for our nine Community partners. If they do not find our case unanswerable, what do we intend to do? Are we serious this time, or will we again end up with a compromise so that we do not reach a permanent solution, which the Prime Minister unfortunately failed to obtain in 1980, despite all the brave words at the time?
Mr. AtkinsThe hon. Gentleman is making a mistake to attack my right hon. Friend the Prime Minister for what she did in 1980. The agreement was of great benefit to this country than anything ever done by the Labour Government. We are determined to reach an agreement with our colleagues. We believe that our case is unanswerable. At any rate, no one has answered it yet. It is not surprising that we are taking a long time. Each country has its own national interests to consider. If we continue to argue our excellent case, eventually—I cannot tell the hon. Gentleman when—our European partners will agree on the justice and logic of our case and come to an agreement with us.
The hon. Gentleman also asked about Poland. As I said in my statement, we are studying the implications of the undertaking by the Ten, which was given at the meeting on 4 January, not to undermine measures taken by the United States. Much careful consideration is required on how we should proceed. However, I can easily give the hon. Gentleman the assurance that it is in our minds that the prior necessity is to preserve the peace of the world.

Local Authority Finance (Education Costs) (Report)
4.18 pm
Sir Brandon Rhys-WilliamsI beg to move,
That leave be given to bring in a Bill to require the Secretary of State to carry out a further review of the reform of local authority finance; to prepare proposals for the introduction of a special rate support grant to bear the full cost to local authorities of providing public education; and to report to Parliament not later than 31st July 1982.
The House has had acrimonious discussions recently on local authority finance. I am seeking leave to introduce a Bill to deal with the cost of education and to ask for a report on that subject before the House rises for the Summer Recess.
Although there is much controversy over local authority finance, there is general agreement on both sides of the House on the need for a major reform of the present rating system. The plain fact is that over the years Parliament has placed burdens on ratepayers that are greater than they can bear. We have recognised that fact in that we agree that we must accept a large part of the cost of local government expenditure as a charge on the national budget.
If we consider services that are analogous to education, we see that the decision has been taken already. I am thinking of the services that we provide to pensioners, particularly the payment of pensions. I am also thinking of the National Health Service. These services are now accepted as proper to be paid for mainly by central Government. But although education has become a national service with, to a great extent, nationally regulated standards, it is still administered locally and the ratepayers contribute a net figure—as I calculate it—of at least £4, 000 million to £5, 000 million. That is much too heavy a burden to continue to place on the rates. It is an item of expenditure which has to be brought on to central Government resources.
I have already advocated on a number of occasions that the entire cost of education should be taken over by central Government. The Government's recent Green Paper looks at this possibility in annex B. This is the reform that could be implemented most quickly and simply of all the possibilities that are analysed in the Green Paper. It should have the general effect of halving the rates in one single reform. There is much still to be said about the responsibilities of ratepayers in respect of other services, but I hope that I shall have the agreement of the House that the time has come for education to be made a genuinely national service.
If the burden of finding the money for education fell on to income tax instead of on the rates, it could be said that what the ratepayers would gain the income tax payers would lose and that there would be no significant difference. But there would be a significant and worthwhile improvement in the way the burden of the cost of education would be spread. The reform would bring help precisely to those ratepayers who are finding the rates most onerous, that is, those on the lowest incomes.
Inevitably in making a recommendation of this kind one is bound to arouse consideration of the future of education policy. I am not in this Bill seeking to do that. I am not trying with this reform to change the total amount spent on education, only to spread the cost more acceptably.

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Annex B to the Green Paper deals with various options that could be adopted by the House to implement the reform. First, education could be made entirely a central Government responsibility and taken away altogether from local authorities. That would be highly controversial and there would be little support for it on either side of the House. So I would not suggest pursuing that idea.
A proposal that has often been recommended, and which has something to be said for it, is that teachers' salaries should be paid for centrally, but that local authorities should remain responsible for the rest of the cost of education. I have thought for some time that this was an attractive and reasonable suggestion, but I note that the Green Paper says that it would probably prove unsatisfactory.
As for the third possibility, which is dealt with in the annex, the introduction of a special education block grant, I shall not take up the time of the House by reading the whole section of the Green Paper. It is only 10 to 12 lines and I had intended to read it; but I will leave it to hon. and right hon. Members who are interested in the idea to look at it. It puts the proposal succinctly. In effect, it would mean that Government would introduce a special block grant that would bear the whole or a large part of the national education standard cost, but local authorities would still be free, within reason, to add to that if they chose. That would be a matter between them and their ratepayers.
The purpose of my Bill is to add urgency and direction to the consideration of the Green Paper and to show the strong feelings of the House that reform is overdue. Because of the rules of order, I have not been able to bring in the Bill in such a form as would implement the proposal in due course on the passage of the Bill, but I am content that the House at this stage should simply ask for a further report, supplementing what is written by the Government in the Green Paper.
To prevent any delay, however, I have specified in the long title that the report should be presented to Parliament by 31 July this year. That gives a reasonable length of time. I hope that the House will make it clear to ratepayers that something positive has to be done before the Summer Recess and that hon. Members are aware of it. Then we would still have time to introduce a major reform of the rates in the lifetime of this Parliament. That is my aim and I hope that the House will give me leave to introduce my Bill.
Question put and agreed to.
Bill ordered to be brought in by Sir Brandon Rhys Williams, Mr. Tom Benyon, Mr. Peter Bottomley, Mr. John Hunt, Mr. Michael Shersby, Mr. Martin Stevens and Mr. John Wheeler.

Local Authority Finance (Education Costs) (Report)
  LOCAL AUTHORITY FINANCE (EDUCATION COSTS) (REPORT)
  Sir Brandon Rhys Williams accordingly presented a Bill to require the Secretary of State to carry out a further review of the reform of local authority finance; to prepare proposals for the introduction of a special rate support grant to bear the full cost to local authorities of providing public education; and to report to Parliament not later than 31st July 1982: And the same was read the First time; and ordered to be read a Second time upon Friday and to be printed. [Bill 55.]

Employment Situation
4.25 pm
The Secretary of State for Employment (Mr. Norman Tebbit)I beg to move,
That this House, greatly concerned about the difficulties facing those who cannot find jobs, supports the Government's policies which are helping to make British industry more competitive and which therefore offer the best prospects of a permanent improvement in job opportunities for people in this country.
Mr. SpeakerI have selected the amendment in the name of the right hon. Gentleman the Leader of the Opposition for the main debate.
Mr. TebbitThe Government were clear that the House would wish to have this early opportunity to discuss the employment situation.
There can be no doubt that we stand on common ground in our attitude to and in our feelings about the plight of those individuals, the people who make up the unemployed, those sad statistics, and their families. None of us can have any doubts or differences about the problems which unemployment can bring, even though there is now, of course, a comprehensive safety net of the sort which did not exist in the past.
Nor can there be any disagreement that the 3 million unemployed in this country represent a tragic waste of our human resources—something which none of us can contemplate with other than deep regret. We all want to improve employment prospects for our people and we all have every reason to do so.
Regrettably we can agree across the Floor of the House on not much more than that. Indeed, apart from the fact of 3 million unemployed, the Opposition are hardly willing to agree the facts. So in an effort to extend that common ground let us try to establish some facts.
Are the Opposition today ready to deny that there is a world recession and that that has been brought about by the succession of oil price rises? Do they believe that we can insulate ourselves from the impact of that recession?
I must say that if the Opposition line is, as it has so often been recently, that it is solely Government policies that have brought unemployment to its present level, they will have to explain how it is that President Mitterrand's France has 2 million unemployed or West Germany 1·7 million—their highest figures since the early post-war years.
Mr. D. N. Campbell-SavoursIt is not Mitterrand's France; it was d'Estaing's France. Mitterrand has been in office months only.
Mr. TebbitThe hon. Gentleman is anxious, as always, to push the blame on to somebody else. President Mitterrand's France and Germany have, in addition, conscripts in the army which, of course, takes them out of the labour market. Germany has almost a quarter of a million conscripts; France has well over 200, 000. Germany's foreign labour farce fell by half a million between 1973 and 1978.
Indeed, in Germany, Holland and Sweden unemployment has increased by about 50 per cent. in the past year, and in the last few months unemployment has been rising faster there than in Britain. Surely not even Opposition Members can argue that those rises stem from the policy of this Government.
Mr. Donald StewartIf, as the right hon. Gentleman claimed, the effect of Government policies on unemployment is minimal, does he agree that the Saatchi and Saatchi posters before the election were completely dishonest?
Mr. TebbitNo. What I am saying is that no one can pretend that the increase in unemployment in Britain in the midst of a world recession is solely the Government's responsibility.
During the first 32 months of the present Government's time in office oil prices have risen from about $15 to about $34 a barrel. During the equivalent period the Labour Government suffered a rise of about $2 a barrel. I have the figures here. The world economic position was very different then compared with what it is now.
Any Government is affected by events outside the country. In recent months there has been an extremely large increase in unemployment in other countries. It is a common problem.
Mr. Geoffrey RobinsonDoes the Secretary of State know of any set of forecasts for unemployment in countries comparable to ours showing unemployment rising to 3 million-plus? Does he think that any other Government in Europe would allow those figures to be attained?
Mr. TebbitI do not speak for the forward policies of other Governments in Europe. I am speaking for what is actually happening in Europe, not for the forward policies of other Governments. Whatever their policies are, they all face extremely rapid rises in unemployment. The sole exception at present, perhaps, is Japan, which has done extremely well. [AN HON. MEMBER: "What about Austria?"] I shall give the figures for Austria, and I shall give the figures for France, which has managed to suppress the rise in its rate of unemployment for the moment, but has an increase in its unit labour costs of no less than 13 per cent.—with all that that implies for the future.
Mr. Frank Hooley(Sheffield, Heeley) rose—
Mr. TebbitI shall not give way to the hon. Gentleman. I have already given way sufficiently.
We had other long-lasting and deep-seated problems which some of our major competitors did not fully share. [AN HON. MEMBER: "Rubbish".] I should be obliged if the hon. Gentleman would listen to what I have to say and then decide on the merits of the case instead of on his own blind prejudice.
Mr. Peter ShoreThe Secretary of State was on a very important point when he spoke about the effect of oil prices. Nobody would deny that they are very important. The right hon. Gentleman pointed out that they had doubled in 1979–80, and we accept that, but he denied, implicitly or explicitly, that they had risen in previous years. Will he confirm that oil prices rose by four times between 1973 and 1974, and, furthermore, that his right hon. Friends in Opposition never drew attention to that in any economic debate?
The Prime Minister (Mrs Margaret Thatcher)We did so many times.
Mr. TebbitIf the right hon. Gentleman checks the figures, he will find that the price of a barrel of oil—
Dr. John CunninghamOil prices rose by four times.
Mr. TebbitI wish that the hon. Gentleman would not act as a juvenile parrot. I heard the right hon. Gentleman's question, and I am answering it. There is no need for it to be parroted by the hon. Gentleman. I am telling the right hon. Gentleman, in the intervals between the hon. Gentleman's discourtesy, that the price of a barrel of oil was $9·60 when the Labour Government came into office. Thirty-two months later—the same span as this Government have had in office—it had risen by about $2. In the equivalent period of the present Government's time in office the price has risen from less than $15 to about $34 a barrel.
Mr. ShoreWhat the right hon. Gentleman is saying is absurd. It is torturing figures to the point of lunacy. It is true that in the period that the right hon. Gentleman is describing, beginning in March 1974, the price rose in that way, but the Labour Government came to power three months after the quadrupling of oil prices. The right hon. Gentleman must address his mind fairly to that fact.
Mr. TebbitThe right hon. Gentleman is fond of using statistics for his Government's period in office, and I am giving him figures for the same period.
Who, even among the Opposition, would deny that much of our industry when the present Government came to office was and had been for some time, as had our commerce and our local and national Government, both inefficient and overmanned? It is possible to take examples from where one will. I ask hon. Members to read again the Central Policy Review Staff report on the motor industry, to look at how manning levels have now fallen in the steel industry, and to ask whether it would not have been better had those manning levels been achieved five years, three years or even two years earlier—and, in particular, achieved without a damaging and needless steel strike.
I ask hon. Members to ask managers throughout the country what has been happening to the efficiency of their firms. Indeed, if hon. Members want to see what problems still exist, they should take an independent view and read what Paul Routledge said in The Times yesterday. Referring to what is going on in British Telecom, he quoted the chairman on a catalogue of labour inefficiency as follows:
"Out of date methods of work; 'over 40 per cent. of field supervisors' time is spent on paperwork'.
Inter-union arguments on operating computer terminal…Time-wasting in putting in telephones."
All those matters, which are, regrettably, typical of the overmanning and inefficiency which have characterised much of British industry in the past, have been largely rooted out now in the private sector, but we still, unhappily, have a long way to go in much of the public sector.
Mr. John GoldingDoes the right hon. Gentleman understand that the increase in productivity in British Telecom since 1970 has exceeded that of almost any other industry? It is certainly higher than anything achieved in the private sector.
Mr. TebbitI quote again:
"staff levels and wages grew by 18 per cent in 1979–80 and by 31 per cent. in 1980–81, 'far outstripping growth'"
That makes it very difficult to achieve increasing levels of productivity.
When the recession struck Britain, we had hardly begun to face the stored-up problems of years of poor industrial

905
performance: years of stunted and inadequate growth in productivity and years of excessive growth in wages compared with productivity—that is, years of uncontrolled increases in unit labour costs.
I have quoted the figures before, and no doubt I shall do so again. 1 despair of the Opposition's understanding them, but at least they might remember them.
Between 1970 and 1980 money incomes rose by 345 per cent. and output by 17 per cent. Prices rose by 188 per cent. and unemployment rose by 193 per cent. That could qualify for the description of a dismal decade.
Mr. Michael FootAsk the right hon. Member for Sidcup (Mr. Heath) about those figures.
Mr. TebbitThe right hon. Gentleman may choose to use different figures, but those are the figures published by the Central Statistical Office. [Interruption.] Does the right hon. Gentleman want to dispute the basis of official statistics that were issued when he was in Government? He does not. The right hon. Gentleman has a new system. He disputes the official figures issued by Conservative Governments, not those issued by Labour Governments.
For more than five years of that decade, let me emphasise, we enjoyed, if that is the word, the policies of Tweedledum Foot and Tweedledee Williams. Between them, ably assisted by the right hon. Member for Bristol, South-East (Mr. Benn), although, to be fair, hampered from time to time by the happy and sometimes successful partnership of the IMF and the right hon. Member for Leeds, East (Mr. Healey), they left our industry set up to be the fall guys of the world as the recession bit.
Unemployment was still falling as a consequence of the policies of the IMF years, but inflation was already being stoked up again. Inevitably, as the recession struck, unemployment rose, exacerbated by our lack of competitiveness. Through that decade of decline, each recessionary trough was marked by a new peak of unemployment.
None of this should have come as a surprise, because what was happening was clear all the way through. There are those who still believe that we could have fudged our way through this recession, as we have with others, and let the British disease run its course until the sick man of Europe became the pauper of Europe.
For the Conservative Government that is not an option. It would perhaps have been easier to tackle these accumulated problems without the added dificulties of the recession. But we had no choice. The recession was there and the old problems had to be met. Without tackling the old problems of poor product design, poor marketing, slow delivery, unnecessarily high costs and inflexible use of manpower—
Mr. Foot indicated dissent.
Mr. TebbitDoes the right hon. Gentleman think that those problems did not exist or that they should not be tackled?
Mr. FootThe right hon. Gentleman is not fit to answer for any Government; not even this Government.
Mr. TebbitAlthough that may be the view of the right hon. Gentleman, it was not the view of the electorate. What is more, having lost 25 members of his party in the last two years, he should keep quiet.
Dr. David OwenIs the right hon. Gentleman aware that he has been speaking for 15
906
minutes and that we have not yet had a constructive proposal about the serious problem of unemployment? We have had a long catalogue of scapegoating and party politics. When will the right hon. Gentleman address himself to the real problem?
Mr. TebbitThe right hon. Gentleman must be fully aware that attempting to deal with problems without first going into their background is most unwise. If he, as a doctor, treated his patients without first diagnosing their problems, then I can see why he came to the House of Commons.
There is little doubt that there can be no prospects of a recovery which would lead to new, better paid, more secure and more productive jobs unless we tackle the problems that I have listed. Some of the problems are undoubtedly on the manpower front. They have to be tackled. Would British Steel be the better if it returned to the manning levels of 1979? Would British Leyland's chance of survival be enhanced by going back to the overmanning of three or five years ago?
We have removed some of the barriers to progress to that end. The Employment Act 1980, the new initiatives on reforming training, the Government's support for training in new technologies, and our moves to get more realistic wages for young people have helped to that end. We have improved the incentives for entrepreneurs by creating new schemes of encouragement and help for small businesses. It is managers and work forces who will take advantage, and are taking advantage, of the chances and the incentives to improve the performance of their firms.
It is in the interests of Opposition Members to claim that the economy is heading downhill. They enjoy it, they love it, they sit and giggle at it, but it is clear that the trough of the recession was passed in the second quarter of last year. In the three months to November, industrial output rose by 1½ per cent. and manufacturing output by 1 per cent. Perhaps most important of all, output per man hour in manufacturing rose by 8 per cent. between the fourth quarter of 1980 and the third quarter of 1981. Output per head rose by 10 per cent. over the same period.
At last, we have begun to gain on our competitors in terms of unit labour costs. At last, we have seen a year in which our unit labour costs rose less than 4 per cent. against over 5 per cent. for our main competitors. In Germany it was 4 per cent., in Japan it was 6 per cent. and in France it was 13 per cent. if 13 per cent. in France is not good news for any motor manufacturer other than Renault and the other French companies, I do not know what is.
At last, after years of decline, our international competitiveness is being regained. The gains are showing through in, for example, an increase of more than 20 per cent. in engineering export orders in the second half of last year. No one outside the Opposition pretends that there is an instant solution to the problems. Equally, it is only the Opposition who resolutely refuse to give any weight or credence to the indicators—the measurements—of what is going on in the economy and the extent to which they are pointing to and recording a recovery from the trough of recession.
Obviously, output is one measure, but, perhaps of critical importance to unemployment, the figures for short-time working are falling and the figures for overtime working are rising. This month, for the third month running, we have seen figures for unfilled vacancies

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higher than those for the same month a year earlier. The numbers of vacancies notified to the jobcentres and to my Department have been rising since April 1981. That trend line of vacancies has always led the unemployment figures, both up and down, and after some hesitation it now seems to be established on a firm upward trend.
Mr. J. Enoch PowellIf the right hon. Gentleman is leaving the topic of competitiveness, I wonder whether he would address himself to a problem that worries many people. We have a persistent and massive surplus on our trading account. That being so, the effect of an increase in our international competitiveness must be an increase rather than a decrease in unemployment.
Mr. TebbitThat is not necessarily so. As the right hon. Gentleman rightly hinted, the effect would be an upward pressure on sterling. That would have a favourable effect on the inflation rate and perhaps allow us to have lower interest rates than would otherwise be possible. That could then begin a benign spiral of holding down costs and might allow us to live better rather than worse as we have been doing in recent years.
Mr. John Grant rose—
Mr. TebbitI should get on.
Amidst the tragedy of 3 million unemployed we can now see, unless we are blinded by prejudice or spite, the hopeful signs for the longer term health of the economy upon which job security and job creation can be built. But there is no instant solution. Who could seriously suggest that the problems of 30 years could be solved in 30 months? I shall leave it to my right hon. Friend the Secretary of State for Industry to detail the measures—
Mr. John Grant rose—
Mr. TebbitThis is a short debate and I really should get on.
I shall leave it to my right hon. Friend the Secretary of State for Industry to detail the measures that he is undertaking to help industry. They include aid for the traditional industries—steel, motor cars and shipbuilding—and for the new: data processing, information technology and the like. Unlike the handouts of previous times, which merely insulated inefficient and overmanned businesses from the need to change, the aid today is linked to measures to bring them into viability and independence.
For many businesses, with or without Government aid, the choice has been stark. As markets contracted in the world recession, they had to shed labour both to meet shrinking order books and to increase efficiency because the happier option of expanding production without taking on new labour was not available. Businesses that did not do so ran the risk—the risk often became the reality—of collapse with the loss of every job in the firm. So the great shake-out of labour, aimed at and talked about so often in the past, happened. It happened not at a time of our choice, but at a moment dictated by events.
Alongside these weaknesses in our economy and alongside the world recession we, in common with our predecessors, faced a third factor—demographic change. The total population of working age increased by nearly 900, 000 in the five years to 1980 and will increase by
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about 1 million in the five years to 1985. In the second half of the 1980s, the demographic factors, in that sense, become more favourable. By the early 1990s, our population of working age will fall back to the level of the mid-1970s. At present, however, we need 200, 000 new jobs a year merely to keep pace with demographic change. In particular, we face a bulge in the number of 16-year-old school leavers coming on to the job market. The numbers reaching school leaving age peaked in 1980–81 at about 920, 000—about 180, 000 above the level of a decade earlier. Happily for the job market, the number is now declining again but only slowly initially. That is why, in examining what the Government can do to ease the shocks and pains of the inevitable but long overdue adjustments in our economy, it was the plight of young school leavers that caused me most concern.
As a result, the lion's share of the £4, 500 million expenditure over three years on special employment and training measures will go to young school leavers. There is in any experience, however unhappy, the prospect of gaining some advantage. In dealing with the crisis of unemployment, I have taken the opportunity to improve our standards of industrial training. It is common ground between us that in industrial training we have fallen behind our competitors abroad. Far too many of our youngsters entering the work force have lacked any training at all. Our apprenticeship system may have been admirably suited to the first half of the twentieth century, but it certainly is not suited to the last quarter.
By welding together our special measures programme to meet the problems of unemployment and our training programme to meet the competition of better trained work forces abroad, we have set out to meet that challenge. The House should not underestimate the scale and scope of these programmes. It is all very well for the SDP in its amendment to call for a two-year programme of training for young school leavers. What stopped the right hon. Members for Crosby (Mrs. Williams) and Plymouth, Devonport (Dr. Owen) from implementing even a one-year scheme when they were in office? Was it the Lib-Lab pact? Was it the then Secretary of State for Employment? Did they not possess the weight to take it through the Cabinet? Were they unable to obtain the credit from the IMF to take it through? Whatever the reason, they did not invent it until they got into Opposition and after they had left the Labour Party.
Today, there is also in being the community enterprise programme, and that has been increased to 30, 000 places.
Mr. John GrantIt should be doubled.
Mr. TebbitNo doubt. Everyone would like double everything—double wages, double jobs, double all. That is the SDP programme.—[Interruption.] I do not believe that the hon. Gentleman seriously thinks that I am frightened of him. Some fishes are too small for serious fishermen.
The job release scheme is being extended from 1 February to men of 62. For the disabled, it is already 60. The young workers scheme is also in operation. There has been a good response from industry. This can open up jobs to youngsters willing to take realistic wages. I hope that it will not only be employers who promote this scheme to would-be workers but that youngsters of 16 will go to employers and point out that they can be paid £40 a week at a wage cost to employers of only £25.

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The youth opportunities programme is a continuing success. I freeely give credit to the previous Administration for the inception of the scheme. The number of youngsters seeking places speaks for its success. At the latest count, about 240, 000 people were benefiting from the scheme. In all, more than 1 million young people have benefited. It is right that the House should congratulate the Manpower Services Commission, the employers, the voluntary services, education departments, the local authorities and all the others who have helped to operate the scheme. [An HON. MEMBER: "And the trade unions".] And the trade unions. Indeed, everyone who has been concermed. The trade unions are, of course, included within the MSC, which is a tripartite body.
The Christmas undertaking was all but achieved, and 280, 000 of this year's unemployed summer school leavers have been taken into the YOP. Only 15, 000 youngsters could not be offered places by Christmas. I hope that support will be extended and increased this year and next as the YOP fills the gap until the youth training scheme is in full operation from September 1983. Indeed, in 1982-83, I hope that 100, 000 of the YOP opportunities will be 12-month enhanced quality places approaching or even reaching the YTS standard.
Alongside these measures, we shall continue to offer support to apprentice training, although this will be increasingly orientated to late twentieth century style apprenticeships and to other adult training schemes. I have mentioned the Department of Industry's spending of £3 billion and my Department's plans to spend £1·5 billion a year on these programmes by 1983–84.
Contrary to what is implied by the economic illiteracy of Labour's "Plan for Expansion", to which the Opposition amendment refers, unlimited spending out of limited resources is a recipe for economic disaster, not recovery. There are no short cuts. Our industry and commerce must provide the goods and services that the customer wants at a price that he can afford. If not, someone else will. Jobs will be created in Germany and Japan and lost here in Britain. [AN HON. MEMBER: That has already happened."] That is the problem. Over the last 10 years and beyond we have lost against these growing economies. Like it or not—the Opposition generally dislike it—there is a growing mood of realism which, even if not too widely evident in the upper echelons of some unions, is evident among their members. Restrictive practices are being removed. Pay claims are being related to what employers can afford—and settlements certainly are.
Pay is far from being the sole cause of inflation, but excessive labour costs feeding through into prices are a major cause of job losses. Cleaning up the mess of the winter of discontent—honouring the Labour Party's commitments to the Clegg commission—left a rate of wage settlements approaching 20 per cent. in 1980. By the end of the 1980–81 pay round, it was down to about 9 per cent. [Interruption.] We honoured the Clegg commission recommendations; we said we would. It was set up as the only answer to the mess into which the previous Government had got themselves during the winter of discontent.
The CBI figures suggest that settlements are now running at about 6 per cent. to 7 per cent. That is the common sense of managements and work forces showing through. Together with an outstanding good record in strikes—the figures to be published later today show that
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in 1981 the number of days lost was less than one-third of the average over the last 10 years—these real advances have shown through in terms of increased productivity, increased competitiveness, increasing export success and an increasingly firm foundation for future expansion.
Nothing in life is certain.
Mr. Clinton DavisWill the Secretary of State give way?
Mr. TebbitI suspect that this is certain.
Mr. DavisAmidst the "Tebbits" of information that the right hon. Gentleman drops from time to time. can he say whether the Government accept any responsibility at all for the 3 million unemployed?
Mr. TebbitI accept, and the Government accept, responsibility for some of the consequences of getting the economy back into a shape in which it can compete across the world. The House must ask whose responsibility it is when overmanning is tackled and cured. Is unemployment the responsibility of those who tackle the problem or of those who allowed it to build up? The common sense of management and work forces is now showing through.
Nothing in life is certain. Nothing can be taken for granted. All the gains could be thrown away in the mistaken belief—in the persistent heresy—that forcing demand into the system at a time when inflation is still too high, when Government borrowing and taxation are too high, can do other than bring the shortest term relief at the expense of the longest term disaster.
I began by referring to the common ground of our concern for the plight of the unemployed and our determination to beat the problem of mass unemployment, but from there the common ground disappears.
Both the amendments—the amendment that you, Mr. Speaker, have chosen from the old Labour Party. led, if that is not to overstate the case, by the right hon. Member for Ebbw Vale (Mr. Foot), and the amendment from the new Labour Party led by… led by—Somebody help me. Who is it led by? Come on, give me a hint. According to the amendment on the Order Paper today it seems to be led by the rather shy right hon. Member for Crosby. Both parties have retreated straight back to their common ground of spending resources that they know we do not have. They do not even know how much they want to spend.
Yesterday the right hon. Member for Chesterfield (Mr. Varley) was asked by Mr. Ian Ross of ITN how much reflation he wanted. The right hon. Gentleman said "Oh, I am talking in terms of billions." We guessed that, but of how many billions was he talking? Was it £1 billion, £2 billion, £3 billion, £4 billion or £5 billion? Has the right hon. Gentleman become another arithmophobic?
Memories, particularly political memories, are short. Blessed, selective amnesia can strike the House in the same spot time and again. I bet that the right hon. Member for Crosby has forgotten that in The Times of 2 February 1977 she said that we were seeing the increase of unemployment throughout the industrialised world and that it was a problem for which we still had no real answer. That is, until today. Today she has found it.
As the House considers the motion and the amendments, I invite hon. Members to recollect that the Government have been in office for 32 months and will be in office for much longer yet. I invite hon. Members to

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cast their minds back to events 32 months after the Labour Government took office in February 1974. That takes us to October 1976.
I am sorry that the right hon. Member for Leeds, East is not in his seat because he would remember his conversion to monetarism on 28 September on the occasion of his U-turn on M4. Of course, he had started to believe when in his July Budget he cut £1 billion off expenditure and raised national insurance contributions by £1 billion. That was when he said that the long-awaited economic miracle was in our grasp. Fumbled again. In September he had just raised MLR to 13 per cent., sterling was tumbling out of control and he had to apply to the IMF for aid—for a loan of £2·3 billion.
By 25 October sterling was down to $1·57. The right hon. Gentleman had raised MLR to 15 per cent. on 7 October. All that was in pursuit of a sound Socialist economy. By 15 December he had introduced a Budget of £2·5 billion, cutting foreign aid, cutting housing, cutting education and social services and putting up prices. The right hon. Member for Cardiff, South-East (Mr. Callaghan) then said "Pessimism is overdone." That is true. It was. When the right hon. Gentleman and the then Chancellor were monetarists on dog leads from the IMF things went fairly well, but as soon as they broke free the troubles, culminating in the winter of discontent, were upon them.
There is no sensible alternative to our policies. There could be a return to the Socialist planning policies that brought the Labour Government to their humiliating plight after 32 months in office—policies that left us a nation in debt, industries overmanned and uncompetitive and inflation stoked up to go through the roof. Those policies were supported by members of the SDP in Government, even in the last vote of confidence, and endorsed when they stood for election as Labour candidates in the days when the right hon. Member for Crosby still said that the right hon. Member for Bristol, South-East was a moderate. What comfort can there be for the unemployed in going back to those policies? There can be none whatsoever.
The Government have combined firmness of purpose and steadfastness in pursuing the long-term objectives of more, better and secure jobs based on the ability to meet and defeat our competitors. We have taken that view with a determination to fund and operate special employment and training measures to help people damaged by the toll of unemployment. I am happy to say that, under that dismal toll of unemployment, the signs are that the economy is growing and that the returns for the efforts and hardships are coming through.
Mr. Dennis SkinnerRubbish.
Mr. TebbitThe hon. Member for Bolsover (Mr. Skinner) might not be able to read the figures, but the Employment Gazette publishes graphs so he can see the way that the figures are moving up.
To throw that away in a wave of self-indulgence, mistaking it for constructive help, would be madness—economic madness. It would be a disaster for both the 12·7 per cent. unemployed and the 87·3 per cent. employed alike. What is more, I remind a few of my hon. Friends, it would also be electoral madness for them, as it was for the Labour Party in 1979.
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I repeat that no one can guarantee success in these affairs. Much progress has been made. We know well that any improvement in unemployment must lag behind the gains in productivity, the gains in competitiveness and the increased flow of jobs on to the register which we have seen. It would be folly to throw all that away in repeating a failed Socialist experiment, even with the Labour SDP, in the mistaken belief that the softer option is the better option.
Above all, it would be a cruel and heartless deception of those who have been hardest hit by the mutual follies of Governments—yes, Governments—industry, commerce, unions, workers, management, and all of us in the past. There can be no turning back now. Let us have the courage to take these policies through the rest of the way to success.
5.10 pm
Mr. Eric G. VarleyI beg to move, to leave out from "House" to the end of the Question, and to add instead thereof,
"appalled at the toll of unemployed people, which now exceeds 3 millions, and is among the highest proportionately in Western Europe, calls upon Her Majesty's Government to institute a programme of capital investment in civil engineering works, house construction and improvement and energy conservation, to make employment subsidies available for jobs for the long-term unemployed and to initiate a proper two year skill training scheme for school leavers and a re-training programme for those with obsolete skills; deplores the official Opposition's unrealistic and ill-considered policies which take no account of their impact on inflation; and urges Her Majesty's Government to include fiscal and incomes policies among the means for curbing inflationary pressures instead of relying on high interest rates and lengthening dole queues."
When I was elected to the House in 1964, I never believed that I would take part in a debate about 3 million unemployed. We expected something better from Her Majesty's Secretary of State for Employment. We have just listened to a thoroughly nasty speech. When it exuded sympathy, it was at best unconvincing and at worst positively repulsive. It was full of the lame excuses that we have come to expect from the Conservative Party. It contained some selective statistics about oil prices, but the right hon. Gentleman failed to remind the House that for the whole of the period during which the Government have been in office they have had North Sea oil, to the full value of the British economy. That has been a tremendous boost, and it was not available when oil prices quadrupled under the Labour Government.
When the Secretary of State dealt with what he called the realities of the situation, he showed himself in his true colours. He insulted not only the Opposition—we can take that from the right hon. Gentleman—but some of his right hon. and hon. Friends, and particularly his right hon. Friend the Member for Sidcup (Mr. Heath) and his Administration. No one would believe now, listening to what the right hon. Gentleman said, that that Administration included the present Prime Minister. The Prime Minister's appointment of the Secretary of State to his present position is an insult to the unemployed.
Mr. Geoffrey DickensRubbish.
Mr. VarleyThe Secretary of State is the wrong man in the wrong place at the wrong time. Looking at his qualities, it is impossible to imagine that he will have a distinguished career as Secretary of State for Employment,

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but it is certain that he will go down in history—it is his unenviable fate, for which he will be remembered—as the Minister who presided over 3 million unemployed. Judging from what he said this afternoon, he actually blames them for it. Overmanning is a subject about which the right hon. Gentleman talks from time to time—it is necessary to reduce overmanning—but why does he not occasionally, instead of running down British industry, point out that there are some superb successes? That has always been the case.
There is no part of the country or no type of worker that is immune to the Government's destructive policies. Practically every family in the land now has some direct or indirect experience of unemployment. Its tentacles stretch from Scotland to the South-East, infecting the country in areas which never knew it, even in the worst days of the 1930s.
In previous recessions, unemployment increased in different parts of the country in a manner that maintained the ratio between the regions. The present Government's unique achievement is that they are spreading unemployment more evenly than ever before across the face of our country. As one might expect, the areas in which unemployment has always bitten deep and which have never fully shared in national prosperity have been very hard hit by the present slump, but regions that have never known serious unemployment before now shiver in the grip of it. The picture is both appalling and instructive.
Mr. DickensWhat would the Labour Party do about it?
Mr. VarleyIn Northern Ireland, for every 100 people who were without jobs under the Labour Government, there are now 186. In Scotland the figure is 197. A similar picture is to be seen in the South-West and in Wales, where the figure is 209. In East Anglia there are now 224 unemployed for every 100 when Labour left office. In the North-West the figure is 225. In Yorkshire and Humberside the figure is 243.
Those figures are terrifying enough, but I come to areas which, until now, have always known prosperity. In the South-East—an area represented by the Secretary of State for Employment and the Prime Minister among others—for every 100 people unemployed when Labour left office the number now seeking work is 252. The same is true in the East Midlands. Now we come to the Government's extraordinary achievement. In the West Midlands, for every 100 unemployed when the Prime Minister walked into Downing Street, there are now 297. It has taken the right hon. Lady to bring the percentage of unemployed in the West Midlands to the same level as in Scotland. It takes a special sort of incompetence to turn the West Midlands into a depressed area.
The Prime Minister waffles on about the paramount importance of competitiveness, but it is her special achievement that the most competitive industries have suffered, along with the less competitive. All have suffered—industries with high wages, industries with low wages, industries with high prices, industries with low prices, industries which are heavily unionised and industries which are thinly unionised. The Thatcher blight has hit them all. It has hit metal manufacturing and textiles, engineering and footwear, distribution, both wholesale and retail, local government and the building industry. Nobody has escaped. Companies have fallen like ninepins.
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The Department of Trade has recently confessed that last year the number of company liquidations reached an all-time record level. Small firms, damaged as never before under the present Government, are laying off workers, as are large factories. Yet the Prime Minister, in her new year message, had the nerve to say:
"We must do something to help small businesses develop and grow, because that is where the new jobs come from."
At Question Time yesterday the Prime Minister filibustered and answered only two or three main questions. She force-fed the House with statistics which were irrelevant, inaccurate and misleading. She made great claims about the number of vacancies—"vacancies up", she said—but she was very careful not to give figures, and she was very careful to choose a base date that suited her. In fact, when Labour left office, there were five unemployed for every job vacancy, and heaven knows that was bad enough. Today there are not five unemployed workers chasing every vacancy, but 25. That is the triumph over which the Prime Minister was crowing yesterday.
Mr. Clinton DavisIs my right hon. Friend aware that in the area of East London that I represent nearly 1, 300 youngsters are chasing 22 jobs? Presumably the Secretary of State would regard that as a triumph.
Mr. VarleyMy hon. Friend is right.
The figures are available for individual areas. The entire country is a depressed area. The South-East and the West Midlands have been reduced to a level that previously would have attracted development area status. An even more devastating fact, which the Prime Minister concealed when addressing the House yesterday. is that production in manufacturing industry has fallen by 15·4 per cent. In looking around her for some body or someone else to blame for these intolerable unemployment figures, the Prime Minister tried to make something of the fact that the population of those who had reached working age had been rising.
It is the Government's special achievement that the number of workers in employment has been falling. Even though unemployment rose under Labour, the number of workers in employment rose as well. When the Labour Government left office the employed population stood at 25, 120, 000. In June 1981, the latest period for which figures are available to me, it had declined to 23, 418, 000. Bearing in mind the other figures that are available, I am sure that it is worse now.
The Prime Minister tries to minimise the grim significance of the figures by saying that some people are losing jobs but others are getting them all the time. She makes it sound like a conveyor belt. I have heard Conservative Members use that sort of analogy outside the House. The number of people who have been out of work for more than a year has more than doubled in 12 months. The number is now 874, 000. The long-term unemployed, in the jargon of the Department of Employment, are not travelling merrily along the conveyor belt. They are imprisoned in a lift that is soaring upwards out of control.
There are others. There are those who cannot be thrown out of a job, because they have never had a job. There are those who find, when they leave school, that the community has no use for their talents and ideals. Bright-eyed youngsters are given the impression that once their formal education is over society has no use for them. It is among young people that the toll is worst—for every 100

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unemployed when the Labour Government left office the number is now a terrifying 404. All that the Secretary of State can offer those young people is that by the end of 1983 they will be eligible for his new training scheme, with its princely recompense of £15 a week. What is more, any young boy or girl who has the impertinence to turn down that unrivalled opportunity will be punished by being made to forfeit supplementary benefit.
That is not the only form of blackmail in which the Secretary of State is indulging. He has come up with a new scheme, which is being tried out in selected parts of the country. My hon. Friend the Member for Merthyr Tydfil (Mr. Rowlands) has informed me that it is being conducted in his constituency and in other areas. The unemployed are being ordered to fill in a new, long questionnaire in which they are required to answer detailed personal questions—my hon. Friend has provided me with a copy of the form—and told that if they refuse to comply they will forfeit their unemployment benefit. That is the penalty for refusing to co-operate in the Tebbit inquisition. When questioned on this today the Department of Employment was unable to point to any parliamentary authority authorising the questionnaire or the withholding of benefit. Perhaps the Secretary of State will investigate this, as it is a matter of great interest to the House.
Mr. TebbitI think that it is a long-established practice that if people are not available for work, which is what the form asks, they do not receive benefit.
Mr. VarleyThat may be a long-standing practice, but this is certainly a new one. I assume that the questionnaire was approved by the Secretary of State before it was sent to selected offices in the Northern region, Yorkshire and Humberside and South-East London. It arises out of the Rayner report and is a new exercise involving long and detailed personal questions, some of which, of course, relate to whether the person is available for employment. People are being told by local offices that if they do not fill in the form, which is not required by the vast majority of offices, they will lose their unemployment benefit. If the Secretary of State does not know about this, perhaps he will take the matter on board and report to the House in due course.
Mr. Tim Renton (Mid-Sussex)rose—
Mr. VarleyThe debate has already been truncated. If I give way to the hon. Gentleman. I shall not be able to give way again.
Mr. RentonThat is an extraordinary statement. With regard to the new training initiative, is not the right hon. Gentleman showing his normal characteristic attitude, which is that if he finds a gold bar in the street he tries to make it look like a wooden leg? Would he really recommend that parents should advise their children to take home £18 per week in supplementary benefit rather than a training allowance of £15 per week? Is it not significant that when the right hon. Gentleman was Secretary of State all that he did was to produce Green Papers about training, whereas my right hon. Friend has gone ahead and is bringing in a scheme?
Mr. VarleyThe Secretary of State is taking an initiative that was launched by the Manpower Services Commission, but he is likely to spoil it by the level of
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allowances offered. An allowance of £15 a week will be regarded as derisory. I wanted a proper training scheme for young people. In view of the facts that I have outlined, it is now more urgent than ever. When the youth opportunities programme was introduced by the Labour Government, 70 per cent. of those going through the scheme found a job. The proportion is now less than 30 per cent., and goodness knows what it will be under the new scheme. The Opposition are in favour of training, but it must be proper training, with a proper rate of payment. I hope that the Secretary of State will do something about the questionnaire to which I referred.
The unemployment benefit, which the Secretary of State may find it necessary to cut in selected areas as a result of the Raynor report, has been shown to be less in real value than it was in 1971. Under the Conservatives, the real value of unemployment benefit has fallen to its lowest level since that time. Soon, as in the 1930s, it will be possible to distinguish the children of the long-term unemployed by their physical appearance from those whose more fortunate fathers were able to hang on to their jobs. In the face of the damage that they have inflicted on the country, instead of taking action to improve the situation the Government are trying to talk their way out of it.
The Secretary of State referred to the international statistics. Has he seen the reports in today's newspapers about the Common Market? On the Brian Walden show he said that before the end of the Government's term of office unemployment would begin to fall and people would flock back to support the Conservative Party. That is not the Common Market's view, which is that:
"when the next General Election is due—3, 600, 000 people will be out of work in Britain".
But, according to the same statisticians, it will be falling in West Germany and in France. [Interruption.] The right hon. Gentleman had better join the club if he wishes to become an anti-Marketeer.
No weekend is complete these days without another effusion of complacency from the Chief Secretary to the Treasury, the Pangloss of the Conservative Administration, but it is the Prime Minister who doles out the most liberal doses of syrup. Not only does she not fool the people, however—she does not even fool her own colleagues. The right hon. Member for Lowestoft (Mr. Prior), who was sacked as Secretary of State for Employment and sent away to Northern Ireland for daring to tell the truth, is perhaps a good example. I wonder who he had in mind when he said at the weekend:
"Nor is it any use simply proclaiming that the only solution to inflation is to set oneself flint-faced against any request for extra Government spending."
Whoever the Secretary of State for Northern Ireland had in mind, tomorrow the Prime Minister will be holding a crisis Cabinet.
The Prime MinisterNo.
Mr. VarleyThe right hon. Lady says that it is not a crisis Cabinet. I can only say that it should be, because we have a crisis of unemployment. The country will be interested to know that instead of taking unemployment seriously the Prime Minister has decided to laugh about it. I thought that she cared. There will be no point in that Cabinet meeting unless the top item on the agenda is how to tackle unemployment.
The Prime Minister will say that our proposals to deal with unemployment will cost a great deal of money, but

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unemployment is costing a great deal of money. Unemployment is costing about £13 billion per year. The nation is spending more and more on financing unemployment. It is spending more on unemployment than on the National Health Service. It is spending more on unemployment than on education. It is spending more on unemployment than on the rate support grant, and the precious revenues from North Sea oil are being squandered to finance unemployment.
That £13 billion could be used as a fund to finance long-term, secure jobs. Public money can be used to finance worthwhile public investments. Only this week British Aerospace unveiled its new Jetstream aeroplane at the Scottish Aviation factory at Prestwick. Orders are already coming in. Without public ownership and public investment, that factory would have been closed long ago.
I do not know whether any of my hon. Friends heard the Secretary of State on the radio this morning lavishly extolling the merits of Smith's Dock Ltd., the shipyard on Teesside, and the showpiece vessel that it has just launched. Smith's Dock is part of the nationalised British Shipbuilders. It would not exist today had British Shipbuilders not been nationalised by the Labour Government. It would have disappeared ages ago.
It is particularly rich that the Secretary of State, of all people, should lavish praise on that company, because as a Back Bencher in the last Parliament he spent 58 sittings in the Standing Committee on the Aircraft and Shipbuilding Industries Bill doing his worst to try to kill that measure. If the right hon. Gentleman had his way today, there would be no Smith's Dock, no showpiece vessel, no aerospace factory in Scotland and no Jetstream. What was done there can, should and must be done elsewhere.
A fraction of the money being frittered away unproductively on unemployment could be used to provide about 100, 000 jobs for building workers to build homes for our homeless, because there will be a colossal housing problem in a few years' time. The Prime Minister, the Secretary of State and the Cabinet know that.
The disaster threatening some of our older cities, with their crumbling sewage systems, could be put right by creating jobs in the construction and material industries. Instead of picking on the nationalised industries and using them as their scapegoat, the Government should use their potential to get the British economy moving again. Local authorities, which are taking such a hammering from the Government, could be used to provide massive support for customers in the private sector. I do not know about Conservative Members but private firms in my constituency tell me they are kept going by orders from the public sector.
The right hon. Lady says that she cares about unemployment—
Mr. Richard Needham rose—
Mr. VarleyI should like to give way, but I must proceed, because of the shortage of time.
The right hon. Lady says that she cares about unemployment. If so, she must cast aside her dogma and obstinacy. Instead of telling us that she cares, she must take action to prove that she cares, but I fear that that is too much to ask of her and her colleagues.
The Secretary of State said that there was no alternative. I do not know how that went down with the
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right hon. Member for Chesham and Amersharn (Sir I. Gilmour), the former Lord Privy Seal. This is a no plan, no hope Government, who in their first Queen's Speech in May 1979 promised to
"create a climate in which commerce and industry can flourish… and increased employment in all parts of the United Kingdom"—[Official Report, 15 May 1979; Vol. 967, c. 48.]
What a shoddy deception those words have turned out to be. I wonder what St. Francis would have said about 3 million unemployed. It is richly ironic that in the month when the number of registered unemployed has topped 3 million, the Tory Party has provided a new contract for Saatchi and Saatchi. At least this time they will not have to recruit the Hendon Young Conservatives to pose as a phoney dole queue for them.
The Government have failed. They have failed on inflation, which is higher now than when they came to office. They have failed on production, which is lower now than when they came into office. They have failed on humanity. They are ready to see unemployment soar above even this week's criminal figure. It is time that they went. It is time that the Prime Minister went. Sooner or later the country will get rid of her.
5.34 pm
Sir Russell FairgrieveI am somewhat surprised to find myself so high in the batting order. I was disappointed by the speech of the right hon. Member for Chesterfield (Mr. Varley), because he said nothing constructive about what the Opposition might do.
The right hon. Gentleman's speech also disappointed me for historical reasons. He will recall that during the last Parliament I had the pleasure of serving as the Tory Whip on the Petroleum and Submarine Pipe-lines Bill, which he steered through the House until he was replaced by his right hon. Friend the Member for Bristol, South-East (Mr. Benn)—someone who understood absolutely nothing about industry.
No political party has a monopoly of sympathy for those who are unemployed or a monopoly of the causes for it. Having said that, nothing can remove the trauma of being unemployed or what it does to a person's dignity or morale, especially when the bread-winner gets up in the morning, sees the children going to school, his wife begin the housework and he has no proper job to go to. The only redeeming feature is that today unemployment is not accompanied by the deprivation and hardship that went with it in the 1930s, when there were families short of clothing and short of food.
I am of an age to remember well the dole queue stretching right round the market place of the small Scottish textile town of Galashiels, where I grew up. Fortunately, I had parents who made sure that my sister and I as children understood what that meant, because we were made to visit and help where there were whole families living in single rooms. As a result, we saw and understood what real hardship was.
I never really saw unemployment again until after the Korean war, when our firm went on short time for a few weeks. That experience taught me another lesson—that the head of the firm must be its chief salesman. Other matters can be delegated to competent managers, but the head of the show must take full responsibility for marketing the firm's products and keeping people employed.

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The trouble today is that it has taken Britain 20 years to arrive at our present situation, and any idea that it can be cured in a couple of years should be forgotten. We have made so many mistakes during that period, which started about the time that we missed going into Europe with our now main competitors. About 20 years ago we had about the highest standard of living in Western Europe and today we have about the lowest. That can be measured by many statistics, such as pay, pensions, holidays and all the other things that go to making up the standard of living in any developed country.
We have only to look around us to understand the causes of unemployment. British unemployment is seen in German cars, Japanese television sets and Italian refrigerators, or by going to Europe and seeing how many British vehicles are among the German, French and Italian ones, or what proportion of British-made consumer durables are being sold in Europe. If we were only buying and only selling a higher proportion of British-made goods, unemployment would drop considerably.
Also, one has only to enter our restaurants and hotels and see the number of people of non-British origin working there to witness another aspect of British unemployment, because either we cannot or will not do these perfectly respectable jobs. If we add overmanning and outdated labour practices that have been allowed to continue, and even grow, over so many years, it is not surprising that we have reached our present state of affairs.
Of coure, one has to accept two other facts: we are in the middle of probably the most severe world recession that we have ever experienced, and the last few years have seen the horrific increase in energy prices.
Having said all that, in a debate of this nature one must try to be constructive and see what might be done to start bringing down unemployment over the years ahead. I want to consider some of the possibilities. Already the private sector of British industry, which faces tough competition, has taken major steps to make itself more efficient. This can be seen right across the board, but, regrettably, this does not apply to the public sector, particularly the nationalised monopolies, where we have yet to find a discipline that can take the place of competition. Ideas about job sharing are sound, but have to be left to the individual. We all know of families, with children away from the home, where the husband and wife can have three or four jobs between the two of them. It could be that this is unnecessary when other families have no jobs at all. I think that we can fairly look to a reduction in overtime giving jobs to others, and early retirement for those who would like to take it.
There is only one area where I cannot agree entirelyginwith the Government's arguments, and that is on bringing down the age of male retirement. In this day and age, with women's lib and all that type of talk, there is no real justification or point in both sexes not having the same retirement age. However, we are told of the phenomenal sums that it would cost to bring the male retirement age down to 60. I cannot go along with that argument fully, as it must surely mean the interchange of some unemployment benefits for pension payments. But even if this full course is difficult, surely a start can be made now on the gradual reduction from 65 to 60.
Again, we must look at our industry. There is no point any longer in making steel that nobody wants or ships that
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no one will sail. However, there are areas of expansion in the service industries. There is tremendous scope in tourism and the hotel trade, and those industries could expand. We must consider retraining people, because we know that there are many unfilled vacancies in the new industries of electronics and electrical engineering. We have out-of-date apprenticeship schemes, which take too long to train at too high a price compared to our competitors.
Surely the evidence of the past 20 years is there for all political parties and Governments to see. Every time that we have tried to throw only money at our problems, more inflation has arrived and we have ended up with a higher plateau of unemployment. We cannot go back to that proven failed palliative. We must beat inflation right out of the economy so that there is a sound financial and industrial base upon which competitive industry can grow. As we become competitive, so there will be a greater demand for our products and more people will be required to produce them and the scourge of unemployment can start to be taken out of our industrial and national life.
5.44 pm
Mrs. Shirley WilliamsFirst, I should like to associate my party with the regrets that were expressed about the accident at Cardowan colliery. We, too, very much hope that the men who were injured will make a rapid recovery.
For the moment, I shall not follow the speech of the hon. Member for Aberdeenshire, West (Sir R. Fairgrieve). This afternoon we have seen the Secretary of State for Employment rise to his usual high level of party cracks, cheap insults and not a single constructive idea in the 33 minutes during which he spoke. That is what we have come to associate with him. It is sad for Parliament that that is the best that we can do at a time when 3 million men and women are unemployed.
Yesterday, the Prime Minister was rather different. She put up a brilliant piece of stonewalling. However, what emerged from that stonewalling, which might have qualified her for the Test match in India, was a clear indication that unemployment had risen, that it would continue to rise, and that Her Majesty's Government had not the faintest idea how to bring it down. In saying that, she was doing everything that she could to avoid answering some of the difficult questions, although the Prime Minister knew very well that sooner or later those difficult questions would be asked.
At a time when Britain as a whole has 12·7 per cent. unemployment, there are areas of the country where unemployment is 18 per cent., 19 per cent., 20 per cent. and even 25 per cent. In the area that I have the honour to represent, Merseyside, the figure is now 18·2 per cent., and that has been the kind of figure we have had for many months. The proportion of long-term unemployment is steadily rising, and people who have been unemployed for more than a year now constitute almost one-third of the unemployed.
However, that is only the beginning. Regional differentiations are not as great as the generation differentiations. Within the generations we now have youth unemployment at 25 and 30 per cent., and in the inner cities in some cases it is approaching 50 per cent. and more. Heaven help the person who is young and unskilled,

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and heaven help the person who is young and unskilled and black, because his chances of getting a respectable job are now less than evens.
The Government know very well that the unemployment figures for 1983 will be higher than the figures for 1982. Every respectable independent forecast, and that of the Treasury itself, demonstrates that. Most of the independent forecasts go on to say that unemployment in 1984 will be worse than in 1983. To give the pathetic news that vacancies are increasing when they are only half what they were in 1979 or 1978 and that overtime is increasing hardly seems to me to be much of a credit to the Government. These things are only signs, but the Government are looking at a situation that is getting steadily worse. I shall say something constructive, and I hope that Parliament will think constructively about the tragedy that now faces many of our people.
The Secretary of State for Employment said—and it was a fair point—that there is no simple solution. There are, however, two simple solutions. The first, which has been tried during the past two and a half years and found profoundly wanting, is monetarism. It has been applied as though one could simply take an economic doctrine and apply it to a complex, highly organised society of imperfect competition, assuming that it would operate as it operates in the economics textbooks. It does not operate that way at all. What happens is that unemployment rises long before prices fall, and long before wages fall. What happens is that investment collapses before inflation is got under control.
However, there is an equally simple solution, and that is to throw money at the problem, to talk about merely increasing public expenditure, to talk about import controls, and increasing and inflating the economy until everyone is back in employment. That does not work either, for the straightforward reason that inflationary pressures rapidly get out of control if one pursues that course.
May I say to the official Opposition that they must face two questions before their policies can be taken seriously. I say this to the right hon. Member for Chesterfield (Mr. Varley), who made a good and constructive speech. The first question is: when will they face the question of competition in the economy? The second question is: when will they face the necessity for an incomes policy? That is something that they must face, regardless of the views of some trade union leaders who support them.
What of the Government? They will introduce a Budget next month. We are told that it will be able to bring about a reflation of between £1½ billion and £2 billion. Good, but what are the Government likely to do with that reflation? First and foremost, they must restore the value of unemployment and other social benefits. Anything less would be to cheat the people of this country on the pledges that the Government themselves made. Secondly, the Government must restore the indexing of personal allowances, not least of the age allowance, which has led to the most profound disillusionment and confusion among old-age pensioners, who now pay tax earlier than they paid it last year, because the age allowance was never increased in line with inflation in 1981–82.
Thirdly, I hope that the Government will decide not to spend whatever else they can afford on reducing the standard- rate of income tax, because there is no way more expensive in PSBR terms of creating new jobs than that. Hon. Members know well that it leads to more imports.
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What do we suggest instead? We have constructive proposals. First and foremost, we suggest that the time has come to reset the context in which Britain's competitiveness must be restored by public investment within an overall programme amounting to between £5 billion and £6 billion gross a year, concentrated on the labour intensive programmes of house improvement and modernisation, energy conservation and civil engineering works on the basic infrastructure. Sound and reali5tic economic groups, including the Cambridge Econometrics Group, have estimated that the PSBR cost of creating jobs in those areas is between £2, 500 and £3, 500, which is less than the cost of keeping a roan or woman unemployed.
The Government should devote themselves to a modest programme of public investment in areas that are labour and skill intensive, and not capital intensive—for that is not the sensible way in which to do it. But as well as setting the context in which employment might recover, the Government must also set the direction.
The Secretary of State for Employment accused me—I shall not waste much time on it—of doing nothing about training and education of a technological nature when I was Secretary of State for Education. But as a result of the initiatives that I took then—co-operative industrial awards, teaching companies and engineering scholarships—the increase in young men and women trying to enter engineering and technology course:3 in 1979–80 and 1980–81 was the greatest since the Second World War. Today, those young people are facing unemployment as a result of their willingness to move to subjects that would be of long-term help to Britain. I fear for them, because the promises to them will once again have been broken.
What does the Secretary of State propose to do? He is introducing a youth training scheme that is essentially cosmetic. He has seen apprenticeships decline by 25 per cent. while the Government have been in office, apprenticeships that were not replaced by any effective skill training scheme. The youth training scheme is not that. It is a one-year, cosmetic attempt to take young men and women off the unemployment rolls and to give them nothing resembling a real skill or qualification. One does not receive that in one year of a cobbled together, cheap scheme.
Mr. TebbitWill the right hon. Lady give way?
Mrs. WilliamsI shall finish what I wish to say first, because the Secretary of State may also wish to reply to that.
The scheme does not begin until September 1983. There seems to be no evidence that the Government have attempted to recruit training officers, to establish where redundant educational premises can be made available for the purpose or to take up the many vacant places in training schools that would be available for proper skill training schemes if the Government put their back into the job in a way which there is no evidence they have tried to do.
Mr. TebbitThe right hon. Lady should think carefully about what she is saying. My criticism of her is that, in her amendment, she calls for a two-year training scheme for all school leavers, but she could not in her time organise even a one-year scheme. I have secured the financial resources for that. The right hon. Lady has not seen any details, but she is convinced that it will be a failure. By saying that, she is doing all that she can to

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make it a failure and to deprive youngsters of that training. She seems unaware of the fact that the scheme will spend £1 billion a year on about 300, 000 youngsters, which is sufficient to give them a good, sound basis of training and to repair some of the omissions of their education, which occurred despite the system set up by the right hon. Lady. She is doing a great disservice to them.
She also asked me to identify the schools and workshops. She seems to have forgotten that the Manpower Services Commission is charged with that responsibility and has the resources with which to do it.
Mrs. WilliamsThe Secretary of State's intervention was useful and I am glad that he chose to make it. I do not deny that the youth training scheme may have its uses, although I believe that it will not work because it is an exceptionally cheap scheme. The Secretary of State has not addressed his mind to the creation of a genuine skill training scheme, which is modulated, and which leads us to fill some of the terrible gaps in the numbers of technicians and technologists.
The Secretary of State has something else to answer for. If he has looked at the files—I suspect that he has—he knows that in 1979 the Labour Government left behind them a scheme agreed with the CBI and the TUC, which was meant to start in 1980, for a two-year training programme. The Government of whom he is a member chose to pigeon-hole that scheme and are introducing nothing until 1983. I refute what he said, because he made no attempt to carry on with that scheme. The money was available.
Britain suffers from a serious shortage of technicians, technologists and skilled craftsmen and women, which is becoming more serious all the time. The Secretary of State should ask his industrial friends about that. The evidence is that if there is a recovery—heaven knows when that will come—it will run more rapidly into the bottleneck of skill shortage than any previous recovery.
I ask the Secretary of State to address his mind to changing Britain round from becoming increasingly an up-market Third world economy into a country with the skills and qualifications to enable it to move into the technologically advanced societies to which it should belong. He should speak to his right hon. Friend the Secretary of State for Education who, the more he ponders, the more likely he is to make the wrong decision. He is carving up the higher education system not by trying to change it, which many of us would welcome, but by trying to destroy it. In a country with the lowest proportion of highly qualified manpower of all the Western European advanced countries, he is trying to chop back on what was already a disgracefully low proportion of young people able to have higher skills.
I do not believe that we shall make any constructive proposals about reducing the 3 million unemployed, which shames Britain today, unless we face up to the need for a programme of public investment in a context in which private industry can again flourish. Secondly, we must consider our long-term direction, which means the upgrading of manpower in a way that the Government have failed to tackle.
Thirdly, I say to all the parties in this House that the evidence given by Professor Barker of Cambridge and many others is that the single most effective way in which
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to create an answer to long-term unemployment is to reach a basis for a sensible and lasting incomes policy. I do not pretend that any of us have succeeded in doing that so far. If we are serious, and not just scoring off one another, in an attempt to help the unemployed, we must address ourselves to that problem. We must do so not by considering the doctrine that says that it is wrong because it is not part of monetarism, nor should we fear a reaction from a small number of trade unions. We owe it to those who are unemployed in our society to face up to the problem seriously and honestly and to try to save what may well become a doomed generation.
6 pm
Mr. John TownendI looked forward to the remarks made by the right hon. Member for Crosby (Mrs. Williams) because I thought that we might get some original ideas on how the Social Democratic Party would deal with the terrible unemployment problem. I am afraid that I was disappointed. I noted her suggestion that there should be a massive increase in capital expenditure on the nationalised industries. However, she gave us no idea how to control those industries, which we have lamentably failed to control in the past. The return on capital in them has been deplorable, as everyone agrees.
Mr. Bob CryerGive us some figures.
Mr. TownendThe right hon. Lady said that we should increase the benefits. Where will the money come from? She said that she would reduce taxation by upgrading the allowances. We have heard that before; spend more, do not tax more and reduce taxation. Where would we get the money from? Either we borrow more and, therefore, interest rates rise, thus increasing the burdens on industry, or we print more money, which leads to inflation. That policy will end in the same way as it did before—an application to the IMF and massive inflation.
Mr. Cyril SmithI shall ask the hon. Gentleman two simple questions. First, what nationalised industry runs housing and energy conservation? The right hon. Member for Crosby (Mrs. Williams) asked about that. Secondly, is not the hon. Gentleman aware that it can be cheaper, in national expenditure terms, to pay people to work than to pay them not to work?
Mr. TownendThe right hon. Member for Crosby referred to massive expenditure in the nationalised industries. I accept her point about energy conservation. The other point that the hon. Member for Rochdale (Mr. Smith) made, is the same as the one that used to be made by the Leader of the Opposition when I was a county council leader. His solution for unemployment on Humberside was to put more and more people on the local authority payroll and to increase the rates. If it was as simple as that unemployment could be solved overnight, but we all know that the creation of jobs costs far more money than unemployment. No one would deny that the tragic level of unemployment is a major problem—nowhere more so than in my constituency.
The level of unemployment in Bridlington is 18·5 per cent. and there is male unemployment of over 23 per cent. However, it was unfair of the right hon. Member for Chesterfield (Mr. Varley) to blame that on the Government because, with respect, no fair-minded man could do that. We must consider the factors that have caused the long-term problem.

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I agree with the Secretary of State that the principal reasons for the problem is that for several decades we have seen a decline in British industry's competitive position compared with that of its overseas competitors. That is principally due to a refusal to accept new technology, to overmanning, restrictive practices and low productivity. Many of the problems have been caused by excessive union power, but there is also a significant responsibility on management which, in many areas, has been weak and poor.
When industrial survival depends on reducing overmanning, it is inevitable that unemployment should rise. Demanning occurred principally in the private sector, but in two nationalised industries—British Steel and British Leyland—much progress has been made.
It has recently been publicised that in the last financial year British Leyland expected to produce the same number of cars using 30, 000 fewer people. If its workers had not lost their jobs, the rest of the firm's jobs would have been at risk, because the company would have collapsed. Much needs to be done to improve the competitive position of other nationalised industries. Over the past couple of weeks, there has been much publicity about British Rail. There is great scope for British Rail, just as there is for local authorities and water authorities.
There was a very high level of real unemployment for a considerable time, but it was disguised by overmanning; two men doing one man's job. The second cause of the problem has been the world recession.
That is being acknowledged more and more by the general public. A fortnight ago, I called on a man in Bridlington who had just been made redundant. In those circumstances, I expected to receive much criticism about the Government's policies. On the contrary, I was heartened that he took such a realistic view. He said "Mr. Townend, this is not just a British problem. The firm where I worked was owned by an American company. We made the machines and the Americans sold them throughout the world. There are no orders at the present time and if American salesmen cannot sell them, this is a world problem."
There is a third cause for the problem. I shall not be popular for raising it, because it is often swept under the carpet by both Front Benches. If the House had listened to the advice of the late Sir Cyril Osborne and legislated to restrict Commonwealth immigration much earlier, we would not have brought in so many people to do jobs on the railways and buses which should have been disappearing even then.
Opposition Members must accept a considerable share of the responsibility because, if the Labour Party had supported strict immigration control when it was first mooted, our unemployment problems would have been greatly reduced.
Assisted area status policies have been followed by this and the last Government and they have adversely affected Bridlington. I have always doubted the cost effectiveness of the whole programme, particularly when one considers the cost per job created in places such as Invergordon.
I have been perturbed for some time about the effect of assisted areas on adjacent areas, which receive less help or none at all. There is always the danger of a creeping malaise setting in. For example, if one area is helped, it attracts jobs and that makes it difficult for the adjoining area. That happened in Bridlington, an intermediate area bordered by the Hull development area. That made it
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practically impossible to attract any new jobs to the town and discouraged the expansion of existing businesses and creation of new businesses. When a business man sets up a new firm, why should he not go 10 miles down the road and get greater help and larger grants? The policy has resulted in a most unfortunate situation. Bridlington now
More significantly, out of the 102 travel-to-work areas in Britain, in special development or development areas, no fewer than 67 have lower unemployment than Bridlington and only 33 have higher unemployment. The situation will continue to worsen until the Government rectify that anomaly.
I was disappointed when the Minister replied to a parliamentary question that I tabled this week. He said that the Government were not prepared to uprate Bridlington to development area status. That answer is not acceptable and I shall not let the matter rest until we get justice for the area.
On the national scene, an aspect of the figures has been ignored by Opposition Members. They overlooked the fact that the unemployment figures are significantly overstated because of the growth of the black economy in recent years, particularly in the more prosperous parts of Britain.
Although there are some encouraging signs, there will be fairly high unemployment for some time. I support my right hon. Friend and am heartened by the high level of exports and the improved competitiveness of much of British industry. Although business is improving and orders will increase over the next year, that will not halve an immediate effect on unemployment, because most firms can increase production without taking on substantial additional labour.
With the development of the microchip and the increasing introduction of the robot, manufacturing industry is unlikely, in the foreseeable future, to create the number of jobs required. In the middle of a technological revolution that will affect the pattern of employment for the next 50 years, it is strange that the Opposition should completely ignore that point. It is only after wealth has been created by efficient manufacturing industry, using the microchip and the robot, and after that wealth has been spent through public expenditure, taxes and private expenditure that new jobs will be created in the service sector.
Given the natural time-lag between the recovery of manufacturing industry and the creation of service jobs, I congratulate my right hon. Friend the Secretary of State on his new training initiative. It will cushion the problem of youth unemployment in the two or three years before demographic changes result in a reduced number of school leavers.
he Government could take some useful initiatives to create jobs in the service sector. They could remove some of the fiscal disadvantages that discriminate against the service sector. For example, useful incentives have been given to build small nursery units, but tax incentives are given only if they are used for a conforming use, which is a manufacturing industry. In future, it will be as important to create service jobs as manufacturing jobs.
One of the tourist industry's problems is that, unlike many of our EEC partners, such as France and Italy, Britain is prejudiced against the service industries. Many people think that it is servile to have a job in the service industries. It is incredible that more than 600, 000 people are registered as unemployed in the South-East, when there are nearly 200, 000 foreigners working in the area.

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A significant proportion of them work in the catering, hotel and restaurant industry, because many British people refuse to take such jobs. If only youngsters in Brixton would take the Tube to the West End, many of them could get jobs—if they were prepared to do so—as kitchen porters. It is important that the Government should educate people so that they are prepared to accept the jobs available.
To an extent, I support the suggestions made by the right hon. Member for Crosby. In the past 20 years there has been a significant increase in the amount of maintenance, painting and decorating done at home on a do-it-yourself basis. Often, people do the work not because they like it, but because of financial necessity. The Government might well consider giving tax allowances to those who spend money on maintaining their houses. The cost would not be as high as might be imagined. In order to be eligible for the allowance, people would have to keep invoices and that would be a major blow to the black economy and would result in many small contractors being drawn into legitimate business, registering for VAT and filing returns with the Inland Revenue.
My next suggestion will not be popular with the Opposition, but may offer significant job opportunities. I refer to personal and ancillary services, such as gardening. Many old people with substantial and inflation-proof pensions need domestic help. Some form of tax allowance might offer substantial opportunities and, once again, we might be able to hit at the black economy.
It is important to do everything possible to create real, not make-believe, jobs. I strongly support the new young worker scheme, introduced by the Government, to subsidise employers who take on young people in the first year. In Bridlington, we are not just waiting for Government help, but have recently formed an employment liaison commitee to co-ordinate the activities of all the agencies and bodies interested in creating jobs. One of its purposes is to draw the attention of employers and small businessmen to all the aids given to those taking on young people. At the first meeting, I strongly urged employers to take on young people and to take advantage of the young workers scheme. The chamber of trade and the hotel and restaurant association made a significant point. They said that they could not take advantage of that worthwhile scheme, despite their wish to do so, because the minimum wages council rate is more than £40 per week. It is nonsense that the Government should bring forward proposals to encourage employers to take on young people at under £40 per week and should give a subsidy of £15, when another set of Government regulations say that that is against the law.
The right hon. Member for Crosby mentioned apprentices. An increase in the number of apprentices is far more important than anything else. In my constituency small employers in particular find that apprentices in their first year are quite uneconomic. The staffing rates are very high compared with those found in our industrial competitors, such as Germany and France. I hope that the Government will open discussions with the CBI and the trade unions to discover whether it is possible to reduce the starting rate to below £40 for the first year of an apprenticeship, so that people can take advantage of the scheme.
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I strongly support the Government's policy. The problem is not of their creation. The solution is not easy. Changes will affect us into the next century. Anyone who thinks that the problem can be solved by spending a lot of money in six months is doing the unemployed and the country a disservice. After some short-term benefit, there would be even higher unemployment.
6.16 pm
Mr. Jim CraigenWhen I listened to the hon. Member for Bridlington (Mr. Townend), my spirits were uplifted. Until he spoke, I thought that there was little prospect that the Government would change their policy. I never thought that I would hear the hon. Gentleman argue the case for development status, tax incentives and all these other items that will add to the public sector borrowing requirement.
Mr. Campbell-SavoursThe hon. Gentleman was a hard-liner when he was elected.
Mr. CraigenThat is the point. He was very much a cut, cut, cut man in all our previous dealings with him.
Mr. John TownendI have made my position clear on assisted area status. I am doubtful about the cost-effectiveness of the scheme. I should like the whole lot to be abolished so that we can compete on an equal basis.
Mr. CryerThe hon. Gentleman is wriggling.
Mr. TownendWhile we have assisted area status, we want justice.
Mr. CraigenThe hon. Member for Bridlington wants equality plus.
I am puzzled why the Government should choose to debate employment. At this mid-term stage, the right hon. Gentleman's policy on employment and the economy as a whole offers little hope. The right hon. Gentleman spoke about overmanning in British industry, and at that point I felt that the Department of Employment was overmanned by one Secretary of State.
There is no doubt that the working population is growing despite a reduction in the number of those in employment. Obviously an international recession will affect Britain's economic fortunes, but 30 per cent. of unemployment within the EEC is attributable to Britain. That shows that there are domestic economic problems for which the Secretary of State and his Cabinet colleagues are responsible.
As I listened to the Secretary of State, an anecdote about President Calvin Coolidge came to mind. In the 1920s, when it was not the done thing for Governments to be involved in economic policy, a newsman asked the President what he thought about the state of the United States economy. The answer was "Why ask me?" We received a similar response from the Government today. Apparently they do not feel that they are responsible for the state of the economy. The Minister gave us precious little hope about where we are going over the next 3, 5 or 10 years.
One fact has emerged. We shall not see a resuscitation of our manufacturing base. Industry will contract. The higher productivity that we want will inevitably mean that, although there may be new opportunities, there will not be the same number of opportunities in our existing and established industries. Therefore, we look to the service sector, to which the hon. Member for Aberdeenshire,

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West (Sir R. Fairgrieve) referred, but I could have intervened during his speech to point out that the number of people employed in the service sector is falling. The fall in the buoyancy of the economy will inevitably affect many of the small businesses which we want to see developing.
When the Chancellor of the Exchequer presents his Budget in March, I hope that he will have weighed up the effects of his fiscal measures on employment opportunities. All of us are receiving representations from vested interests about the effects of possible changes in VAT or other fiscal measures on employment opportunities. I hope that the Chancellor will produce a manpower or employment Budget at the same time as his normal fiscal Budget.
The hon. Member for Bridlington expressed anxiety about intermediate and development area status. I am reaching the conclusion that regional policy is a dead duck. I see little sign of a renewal in the possibilities of regional policy. Many of us face higher unemployment in our constituencies—even higher than the figures given by the hon. Gentleman. It is incumbent upon the Government to think ahead and contemplate the measures needed to shape our economy.
Leaving aside the inner London boroughs, which have special problems, I would be pessimistic about the future employment fortunes of the Home Counties. Central London depends to a considerable extent on office employment. Two-thirds of the people who work there are employed in the great glass houses. Office technology is developing. Indeed, the Government are encouraging it. They have no alternative. However, the fact remains that in the long term such developments will have a profound effect on employment opportunities in the South-East. When unemployment hits, it will hit hard. Government Back Benchers may for once be less complacent about its impact. Many of us have experienced high unemployment in our constituencies, year in and year out.
I originally felt that a Channel tunnel might damage prospects north of the Wash, particularly in Scotland, and was sceptical about the project, but I now believe that the United Kingdom needs a significant and imaginative project in the 1980s. The Government threw away an opportunity to help the economy of Scotland, indeed of the whole of the United Kingdom, in deciding not to back the gas-gathering pipeline.
The Government should weigh seriously the psychological impact of a Channel "brunnel" or tunnel. Scotland, although it may be far removed from it geographically, has the steel, shipbuilding and construction and power engineering capacity. We may seem like mercenaries providing jobs on a project 400 or 500 miles away, but it may have a longer term beneficial effect on central Scotland's economy, as well as giving the United Kingdom the necessary significant project for the 1980s.
As I say, regional policy is dead, but a disturbing aspect of today's speeches has been that a dog-eat-dog feeling is developing between different areas.
My right hon. Friend the Member for Chesterfield (Mr. Varley) mentioned the change to voluntary registration for the unemployed and the pilot schemes to be conducted in various benefit offices. The most disappointing aspect of the change is that the Government appear to have shifted from the jobcentres' role to place people in employment. One difficulty is that they are running out of jobs.
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The benefit offices will have problems with the scheme, which will be designed not to hand out more public money but to winkle out people and stop them from receiving benefits.
Mr. TebbitI find much of what the hon. Gentleman has said interesting and relevant to the debate, but let me tell him a little more about the pilot scheme and the new form. The first question asks whether the applicant is available for any job that he could do. If the answer is "Yes", there is no need for him to fill in the rest of the form. If the answer is "No", further questions require to be answered to see whether he is available for work or why he may not be.
Mr. CraigenI have seen the questionnaire. There may be a check to see whether people have answered the form correctly.
I believe that there will be problems. There will be unpleasantness, and the staff will have the difficulties. People will rightly be indignant about the way that the staff are obliged to treat them because of the questionnaire.
I wanted to see something done about new training initiatives. The right hon. Member for Crosby (Mrs. Williams) has now left the Chamber—
Mr. David LambieThe whole Social Democratic Party has gone.
Mr. CraigenThat is right.
I did not want to interrupt the right hon. Lady when she was speaking, but I believe that, apart from giving the initial training to young peope when they leave school, the important thing is to train them for the skills that are required. We are creating an escalator effect so that young people have not only qualifications, experience and skills, but the possibility to move into permanent employment, with recognition of the time that they spent in the new training initiative.
There is a danger that we could be training young people in yesterday's skills for tomorrow's requirements which do not call for those skills. That is why I believe that one cannot divorce the overall employment opportunities from what the Government—whether it is a past or future Labour Government or the present Conservative Government—seek to do. Young people are rightly looking for permanent employment. They are not looking for cul-de-sac opportunities which do not lead anywhere, but which create the illusion and promise that they will.
The remarkable thing about the young workers scheme, the inadequate YOP allowance and the disgraceful trainee allowance that has been promised under this scheme is that a Conservative Government, who are pledged through their philosophy to free and unfettered collective bargaining, are for the first time intruding noticeably in the wage settlements that young people will have. The hon. Member for Bridlington used to talk about the wages council rates, which he thought were too high. He is now complaining that they are too low.
Mr. John TownendI should make it clear that I objected to the fact that the starting rates for the wages council were higher than £40 a week, which prevented employers from taking advantage of the young workers scheme.
Mr. CraigenThat brings me to the point that I was about to make, that the Government will have to concentrate on reducing the price for employers to employ

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people. Employers are not concerned only with wages and salaries. They must pay national insurance contributions and other taxes. They must also train young people. The Government will have to reduce those other factors much more in their considerations, so that employers' payments are at reduced prices.
I found some interesting statistics recently about the number of people who are emigrating. Hon. Members have talked about the number of people coming into this country, but more people are deciding that there are opportunities abroad. Apparently, despite the international recession, those people are finding those opportunities. Nearly 250, 000 left this country in 1980.
Today's outline of the Government's economic strategy was threadbare. The remark of the former Lord Privy Seal about the country heading for the rocks is true. The trouble is that the Prime Minister is sitting on a rock like a mermaid, half in and half out of the water. She is not clear about what she should do. If she reflates the economy, she will be in trouble. The alternative is to continue to submerge the economy.
Therefore, I have not been particularly uplifted by today's debate, apart from the twinkle from the hon. Member for Bridlington, who hinted that in some Conservative quarters there was a prospect that at long last the significance of high unemployment was being recognised.
6.35 pm
Mr. Kenneth LewisMore years ago than I care to remember, when I first came into active politics as a young Conservative—in those days we were called the Junior Imperial League, but we have since lost our Empire—I thought that unemployment was the greatest scourge in social terms. I have not changed my mind.
A debate about unemployment must enable us to discuss how we can create more jobs. It is not a debate about how we make the nation more efficient because if one can make a nation more efficient only by creating more unemployment, if one is in Government or a party behind Government, there is something wrong. People do not expect Governments to solve problems of efficiency, new technology and so on in industry by allowing unemployment to rise.
Listening to the Opposition, one gets the impression, as one might expect, that the Government are wholly to blame for present unemployment. The truth is that there is unemployment in the whole Western world. The Western world has to decide how it can best solve that problem, because if it does not, society and the whole Western world will go more and more to the Left. The Government have a high unemployment rate, partly due to the international situation. There is rising unemployment in Europe, in the countries of our main competitors and also in the United States.
Unemployment has also risen because of some self-inflicted wounds. I have not yet heard much about that in Opposition speeches. The hon. Member for Glasgow, Maryhill (Mr. Craigen) did not mention the fact that in recent years the trade unions have produced policies that have been agreed even by the Trades Union Congress—which should be more responsible, although
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some of its constituent unions are not—which have put their own members out of, work. Those policies have priced their members out of jobs.
It is remarkable that even today while we are discussing an escalating rate of unemployment a railway union is on strike. That strike is losing British Rail £6 million a day, thereby putting it further into the red and making it more difficult for it to employ people, let alone increase the pay of those it employs.
The Western world is also faced with the employment effects of the new technology. We have a backlog of problems brought about through not having faced up to it over the last few years. The Minister spoke about that. The new technology is gathering momentum and coming on stream much quicker than Governments, people in industry and myself thought likely. That momentum has been given a push by countries in the Far East such as Japan, Taiwan and Hong Kong that are forcing the pace.
Have the Government got a plan for dealing with new technology in relation to its effect on jobs? As fast as Government stimulates new jobs other jobs may be lost, because, as technology develops, it cuts back the labour force.
It is time that a Cabinet committee was set up to look ahead to the need for reduced hours, an earlier pension age or whatever to deal with this new technology. We need an "Industrial Beveridge". We had a Beveridge during the war to provide a report on welfare needs after the war. We now need an industrial Beveridge to assess what can be done to deal with the need for less work. If we have no plan and just sit and wait for things to develop, what will happen is that 3 million unemployed will become 4 million and 5 million and no Secretary of State for Employment will be able to do anything about it.
We know that 3 million unemployed now is too many and that it blights young persons, who grow from school into adulthood without getting other than temporary jobs or skills, believing that there is no permanent job ahead. We know that the careers of people in their fifties are spoiled when they suddenly find themselves out of work and are unable to get the promotion that they were expecting when they were in their forties. That is a devastating thing to happen to anyone.
The total number of unemployed will grow in the short term, as the Secretary of State said. He could give us little comfort on that, not only in his speech but in various television and radio performances in the last two days. Unemployment is not something that he can exactly control. The ghosts of the 1930s are walking abroad. As I said, I came into politics to try to exorcise those ghosts.
We have to ask two questions, however. Where does the responsibility of Government lie and what can the Government do about unemployment? The Government are not responsible for all the unemployment but, I believe, their policies are responsible for some of it. If some of my hon. Friends say that no part of the Government's policy is responsible for any of the unemployment I can only say that we cannot persuade the people that that is so. Where people rest their votes they expect their problems are rested. When people elect Governments they expect those Governments to help solve the problems.
What can the Government do? Clearly they must do something to try to stimulate and initiate new jobs. People do not expect miracles. I do not believe that, coming to the next general election, the people will expect a miracle.

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However, they will expect some progress and light at the end of the tunnel. They will not accept the word from the driver on the train—the Prime Minister—or from the guard—the Chancellor of the Exchequer—that the light is coming at the end of the tunnel. They will expect to see that light themselves.
The Treasury and the Government cling to one or two fetishes that are debilitating any opportunity of improving the situation. First, the Government have a good record on inflation, which they are bringing down. At the end of this year I believe that inflation will have come down to 7 or 8 per cent. The Treasury should make do with that until the next general election. If they try to bring inflation down lower, to 5 or 4 per cent., they will leave nothing to be done in the next Parliament and they will ruin their chances of bringing down unemployment and, therefore, of winning the next election. That is one fetish to go slow on.
I am pressed frequently, as we all are, to reduce Government expenditure. Again, the Government have a good record in the reduction of expenditure. When Ministers are looking at further possible cuts in expenditure they should ask themselves if whatever they propose will mean the loss of many jobs. With rising unemployment I do not believe that it is acceptable that Government expenditure should be cut in those areas where it would result in the loss of more and more jobs.
The third impediment that is causing problems is the Treasury's wish to hold down too tightly on the borrowing requirement. It is lower today in percentage terms than it was in 1970 and 1974. We have North Sea oil and we have just had an announcement of the most successful trading month and of an accumulation of successful trading months. When the country as a business is making money in every direction it does not seem to make sense that it cannot borrow more. Any company that is making money strongly can borrow easily. The Government ought to be able to relax on the borrowing requirement by at least £3 billion when the Budget comes up.
What should the Government do with that £3 billion? They should first recognise that they control a large section of the economy. In the Conservative Party we believe that the Government control too much of the economy. The Labour Party took more and more into the public sector. The Government have been handing back to the private sector from the public sector as much as they could, and quite rightly. They could not do it all in three years. They cannot do a great deal more in the next two years. They can do a bit but there is a limit.
The Government will, therefore, still have, in the public sector, a large area of activity. In the private sector labour is being cut because of new technology and because of trade being less buoyant. Therefore, there will be a limit to new jobs in the private sector. That is why I believe it is necessary for the Government to boost the public sector, that sector that they might wish they did not have but with which they are stuck, to make up for what the private sector cannot do.
We need a capital works programme, and it needs to be spread about. I am not one of those who believe that the Channel tunnel is necessarily the right kind of capital programme at this moment. It is too slow to come on stream in terms of jobs. I want capital programmes in housing, building, local government and roads—the kind of things that employ people in various parts of the country, because unemployment is not now in only one or
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two areas. It is all over the place—in the West Midlands, the East Midlands, the area where I have my constituency and where we never expected to see it at anything like so high a level.
Next, the Government need to help private industry by cutting some of the weight of taxation—not corporation tax, but the national insurance surcharge. We can take £ billion or more off that.
We hear a great deal about what the Government have done for small businesses. They have done a great deal for new business start-ups, but my hon. Friend the Minister for Industry and Information Technology might look at existing small businesses to see whether they could do with a little support, with a reduction in Government taxation. It is pointless to start new small businesses if some of the older small businesses find the climate so difficult that they fall flat on their backs.
I fought in the 1945 general election. There are not many hon. Members left, on either side of the House, who fought in that election. All of us on the Tory side thought that we would win, but the then Government lost heavily. Many who expected to gain seats lost, and some who held safe seats lost them. The Tory party's defeat in that election arose from a myth, one that stuck, after being propagated all through the war in the Daily Mirror. The myth was that the Tories had created unemployment in the 1930s. It was indeed a myth, because when the Labour Party was in office unemployment was at its peak between 1929 and 1931. It was the Tory Government, from 1935 to 1937, that started to bring unemployment down.
My father was out of work for two years during that period, and he was in and out of work after that. That was when I said that I would never sit quietly if such a problem were repeated.
We have two years before a general election. We must be careful to see that the old myth is not attached to our party when we enter that election. We must begin to bring unemployment down, and show that we are in business by being successful in doing so. We do not even have to get it below the 2 million mark—I do not think that arty Government can do that now—but if we do not bring it down and are not seen to be giving people hope we shall not be fighting a myth this time. The myth will have become reality.
6.54 pm
Mr. David LambieOne of the important aspects of this debate, as those of us who have been present since the beginning will recognise, is that no one, apart from the Secretary of State for Employment, has yet spoken in support of the Government's policy. Irrespective of party, every hon. Member who has taken part in the debate has spoken against Government policy and called for a change in it.
We are more than halfway between elections, and Conservative hon. Members are beginning to realise that soon they will have to fight an election. Going to the country with 3 million unemployed—or 4 million, as I think it will be next year—they have not a snowball's chance in hell of being elected.
In Scotland, it is not a myth that the Tories have always been the party of unemployment. They were the party of unemployment during the 1930s, and they are the parry of unemployment again today.
Part of my speech has already been made by the hon. Member for Rutland and Stamford (Mr. Lewis), who made

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a good Socialist speech and provided a good Socialist solution. It was much better coming from the heart of the hon. Gentleman, as a Conservative, than from many of us on the Opposition Benches who have experienced the problems of unemployment in our own areas and sometimes speak from the head as well as the heart.
There are 3 million unemployed. The Prime Minister has said that there are encouraging signs, but the Secretary of State said on the radio yesterday that a more honest estimate of the future was that we had not reached a peak and that we should still see unemployment rising.
Many hon. Members have said that unemployment is now a national problem. In the old days an hon. Member from an area of high unemployment, such as Scotland, had no problem when he wanted to take part in debates on unemployment, because the only hon. Members who were interested were those from Wales, the North-East of England and Scotland. One did not need to put in one's name. One was called immediately, because the House was empty. Now it is difficult for us to take part, as hon. Members from the North of England, the Midlands, London and the South-East are demanding the right to speak about unemployment, because it affects them. Although they cannot equal the averages that we experience in the old industrial areas, they can prove that the increase in unemployment is much higher in their areas than in the old heavy industry areas.
My right hon. Friend the Member for Chesterfield (Mr. Varley) said that the whole country was a distressed area. That is correct, but some of us represent what can only be described as disaster areas.
Unemployment last reached the 3 million mark 49 years ago—in 1933. The apologists for the present level say that the problem is not so acute today, because in 1933 the rate was 22 per cent., whereas the average over the United Kingdom today is 12·7 per cent. Their percentage for the United Kingdom is correct, but in Scotland it is 15·3 per cent., and yesterday in my area it reached 24·7 per cent. Not only is unemployment in Central Ayrshire much higher than it was in the the 1930s, but it is now more than double what it was there. It is hitting every family. Unemployment at 24·7 per cent. makes my constituency the black spot for unemployment in the United Kingdom. It has the highest district rate of unemployment in the United Kingdom. Male unemployment is now 28·9 per cent. In the Garnock valley, which is a steel area where the open-hearth furnaces have been closed, the male unemployment rate is 33·6 per cent. If people working on the short-time subsidy and young people doing dead-end jobs under the youth opportunities programme are excluded, in the Garnock valley nearly every second person is unemployed or facing unemployment.
I do not think that hon. Members representing English constituencies, whether Labour or Conservative—especially in the South of England where the average is 12 or 13 per cent. unemployment—understand the seriousness of the problem facing the people in Ayrshire and the West of Scotland.
Mr. David ClarkThe same applies in the North-East.
Mr. LambieMy hon. Friend points out that the same applies in the North-East. These people come from areas which we would consider prosperous. If Central Ayrshire
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had an unemployment rate of 12·7 per cent., I should consider it to have full employment, because it has never had such a low level of unemployment.
I am not looking for a miracle. I am not asking the Government to introduce Socialist policies or to carry out the demands made by the hon. Member for Rutland and Stamford, who wanted increased public investment. I hope that at the crisis meeting of the Cabinet tomorrow there will be a majority for some change in the Government's policy. We need a U-turn. If we do not get it, unemployment will rise to an unacceptable level. I sometimes wonder why my constituents are so complacent about and accept unemployment. I do not think that the people of Britain will accept unemployment at the 4 million mark. We are heading towards a dangerous situation.
At the beginning of the year Cunningham district council called a crisis meeting to deal with the problem of unemployment. We brought together the regional councillors, the district councillors, the Members of Parliament for the area, the Scottish Development Agency, the PSE industries, and every group that could do something to ease unemployment. We made an estimate of the problem, what solutions were needed, and asked the Secretary of State for Scotland to arrange a meeting. We have not yet received word from the Secretary of State that he is willing to meet us. Yet the area is the unemployment black spot for the United Kingdom.
I hope that the Secretary of State for Employment will take my complaint to the Prime Minister. Why is the Secretary of State for Scotland not here today? Why is the Minister at the Scottish Office with responsibility for industry not here? Where are they? Scotland has the highest regional unemployment rate in the United Kingdom and the appropriate Minister is not present. He has not been here today. We have had one or two Ministers for Scotland, but they have no responsibility for industry. The Secretary of State for Employment should take this matter up with the Prime Minister.
If this is a mark of the interest shown by the Scottish Minister with responsibility for industry in an employment debate, he should be out. We hope that the Prime Minister will reorganise the Scottish Office. She has got rid of the Solicitor-General. I hope that she will take this opportunity of getting rid of the Secretary of State for Scotland and the Minister with responsibility for industry at the Scottish Office at the same time and appoint somebody who will at least attend debates.
Mr. TebbitI shall certainly inquire what it is that has kept my hon. Friends away from the debate, and the hon. Gentleman's speech. I shall mention to the Leader of the Opposition the absence of the Shadow Secretary of State for Scotland at the same time, if that will help him.
Mr. LambieIt is no use making excuses. No one in Scotland can justify that the Secretary of State is not here or that the Minister of State for Scotland is not here when he is directly responsible for the manpower services in Scotland. He does not have to go through the Secretary of State for Employment. I hope that point will be taken up.
I hope that the Secretary of State for Employment will find out from the Prime Minister why the Secretary of State for Scotland has not answered Cunningham district council's request for a meeting, especially as the area is the black spot for unemployment in the United Kingdom.
Mr. CraigenMy hon. Friend may know that the Shadow Secretary of State for Scotland was here, but walked out in disgust after he had heard the statement by the Secretary of State for Employment.
Mr. LambiePerhaps he should have waited to hear me.
To give some idea of how Scotland has been discriminated against—because we have weak Ministers who are interested not in the problem but only in the glory of position—I should like to draw the Secretary of State's attention to another point.
On 13 November the Under-Secretary of State for Industry announced details of a new enterprise allowance. The Manpower Services Commission, in a press notice, said:
"Under the scheme, the MSC will pay an 'enterprise allowance' for up to one year to provide a regular income during the early stages of a new business. Applicants will have to live and propose setting up their business in the pilot areas."
I have recently been interested in the setting up of a workers' co-operative with unemployed construction workers. I thought that here was a good idea to get them launched. I applied for the new enterprise allowance, which would give them the opportunity of still receiving their unemployment benefits, or a sum equivalent to that, during the first year of the operation of the new company. I contacted the office of the Manpower Services Commission in Scotland and asked for information about the new enterprise allowance. The MSC replied:
"The pilot scheme will start on 25 January and applications will be taken until March 1983. The Government has made available just over £2 million to finance the scheme which should allow about 1, 500 successful applications."
I thought that was a good idea, and I wanted to apply for the co-operative to receive the new enterprise allowance.
I then discovered that the pilot schemes were not to be found in Scotland. They were in Coventry, the Medway towns and North-East Lancashire. There was not one in Scotland. I represent the unemployment black spot for the United Kingdom, but it does not qualify for the new enterprise allowance.
I was told that the Minister responsible for industry in Scotland read about the scheme in the newspaper. The Government started a new initiative and did not even tell the Scottish Office that the initiative did not apply to Scotland. The Minister read about it in the newspapers. He will also read about this debate in the newspapers tomorrow. He will read about it and say "I am sorry".
I should like to know from the Secretary of State for Employment why the north Ayrshire area is not part of the pilot study. Is this discrimination against Scotland, which has the highest unemployment rate in the United Kingdom? I suggest that we forget about the Scottish Minister. I should like to hear an assurance from the Minister who is to reply to the debate that the north Ayrshire area will be included in one of the pilot zones for the new enterprise allowance.
Unless the Government change their policy, unemployment will rise to 4 million. My hon. Friend the Member for Glasgow, Maryhill (Mr. Craigen) said that regional policies had failed. I agree with him to some extent. But regional policies work only within the framework of Government economic policy. It is Government economic policy that has failed. I hope that the Government will change their policy at tomorrow's Cabinet meeting. If they
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cannot change their policy with the present Prime Minister, they should ask her to go. She has outlived her usefulness as Prime Minister.
7.11 pm
Mr. Kenneth CarlisleThere have been many debates on this subject during the three years that I have been an hon. Member. The seriousness of the problem has been recognised. All parties are concerned that unemployment stands at 3 million. I take a contrary view to that of the hon. Member for Central Ayrshire (Mr. Lambie), who assumes that compassion is to be found only on the Labour Benches. Concern is felt just as keenly on the Conservative Benches, as shown by my right hon. Friend the Secretary of State and also by my hon. Friend the Member for Rutland and Stamford (Mr. Lewis).
There is general recognition that the present level of unemployment cannot be tolerated for long, not only on human and economic grounds, but because a democratic and capitalist system would be put under intolerable strain if it continued. I am surprised that the Opposition often treat this subject so frivolously. They suggest that unemployment is the creation of the last two years. In their hearts they know that today's problems have grown from the mistakes of 20 years or more. The cause can be found in the deep structural problems in our way of life and our economy. To suggest that the crude remedies put forward by the Opposition will succeed is no succour to the many unemployed who genuinely want work.
People know that more reflation and the pumping of money into an unreformed economy, as suggested by the Opposition, will merely fuel inflation and create further unemployment. That is surely the lesson that history has taught us. If we are to show genuine concern for the unemployed, we must also have the rigour to lay open the real causes of the disease. That is what my right hon. Friend the Secretary of State tried to do. In the same way, compassion for the elderly is shown not simply by mouthing concern, but much more by demonstrating where the money and effort can be found to tackle the problem. Our unemployment is part of a world crisis. It is also partly of our own making over the years.
Despite our trading strength, we no longer possess sufficient clout in the world to change events greatly. We are, however, responsible as a society for what happens in the United Kingdom. Events in Poland during the last year have shown how an economy can disintegrate through the inability of a country to create the right political and economic system. Poland has perhaps an excuse. Its system is imposed from outside. We have no real excuse. We possess the freedom to find our own solution. Before that can happen, we have to recognise and face the cause
Our unemployment has been caused overwhelmingly by our inability to compete. Our failings have perhaps been disguised over the past 20 years by a falling pound and unprecedented world prosperity. A world recession has ended this process and made us face our problem fully. It is possibly nostalgic to think of those days following the Second World War when Britain possessed over 40 per cent. of the world market for ships. The figure is now less than 3 per cent. Even 15 years ago, we and the French were producing 1 million cars each a year. Now we produce fewer than a million, while the French make 3 million.
If only this country had remained competitive in these two fields, one can imagine the extra jobs that would now

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be available, not merely in building ships and producing cars, but in the supplying industries, such as steel, engineering and electronics. Our inability to compete in those two spheres has been mirrored elsewhere. The effect on unemployment has been catastrophic. It is sad even today to see ASLEF pulling the railways in the same direction. Unless the railways become as productive as possible their plight will echo that of shipbuilding and even more jobs will be lost.
Any Government who are genuinely concerned about unemployment must look to the central problem of our ability to compete. At the heart of the problem is our record on productivity and unit costs. It is only fair to recognise the outstanding achievements of the Government, which have brought home to the public for the first time since the war a sense of understanding of the reality of the problem.
One has to understand the problem if one is to find a solution. Opposition Members must face that. People now accept that a solution to the crisis of unemployment lies to a great extent in our own actions. As a trading nation we have to match and then beat the very best in the world. The realism of recent pay settlements and the wholesale abandonment of restrictive practices are proof of this growing sense of realism. The first step that we have achieved is therefore an understanding of the problem.
The results of this realism are beginning to show. They will be remarkable. We should speak of these growing areas of success consistently and proudly. Our unit costs, which were stressed by my right hon. Friend the Secretary of State as being so important, are rising at a rate of only 2 per cent. a year, the lowest of any industrial country. I hope that that will be welcomed by the Opposition. Individual stories in various industries are just as good. There has been the much publicised success of some of the public corporations. Productivity in British Steel has grown dramatically. Hon. Members welcome the success at Llanwern. At British Leyland, productivity on the Metro is as good as that achieved on the Continent.
Most achievements occur in the private sector far from the glare of publicity. A recent interesting survey carried out by the CBI in the West Midlands promises great hope. The report stated that companies throughout the Midlands had undergone change and improved performance on a scale sufficient to raise hopes of an economic resurgence. Of the 197 companies covered by the survey, the majority have introduced new products, and even whole new product ranges in the last two years. New technology has been introduced and efficiently and productivity raised. Seventy per cent. have broken into new markets, half have expanded exports, and many have more than doubled exports.
In the very tough conditions, with a high pound, that have prevailed during this time, that is a tremendous achievement. It is happening both in the West Midlands and in the East Midlands and elsewhere throughout the country, even, I am glad to say, in Scotland. Hon. Members would be wrong to underestimate the massive structural changes that are taking place. These offer the best hope for the future. The managements and work forces that are now earning success deserve to be congratulated. A change need not bring unemployment. Japan, where new technology has been embraced more
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vigorously than in any other country, has only 2 per cent. unemployment. If we do not do these things, our unemployment will become worse.
The Government have been active in establishing the structures within which work can be created. In many ways that is the real role of the Government. They must create the structures within which we can develop our energies. One such success, of which the public perhaps knows too little, demonstrates what the Government have been doing. It is the setting up of the projects and exports policy division of the Department of Trade. That was established in 1980 to co-ordinate the full range of Government services which help firms pursuing major overseas projects. The new division has helped.
We are now winning huge export orders which total more than ever before. Included in those orders are an Indian steel plant worth £1·5 million, a power station in Hong Kong worth £1 billion, a mill contract in Mexico worth £330 million and a university in Oman worth £150 million. They are diverse projects, but they all help to create jobs in numerous small businesses in Britain which supply materials for those massive contracts. In that and in other ways the Government have created the climate for change. They have given good help where the Government have a genuine role.
We must recognise that if our competitve ability is to continue to improve the Government must achieve more. They must continue to attack inflation and to do their best to hold interest rates down. Both steps demand a sensible rather than a rash reflation.
I ask the Opposition parties, and some of my hon. Friends, to consider the danger which an over-hasty reflation would bring, with increased inflation and even higher interest rates. Just as important is our need to curb public sector costs. We must succeed in that respect this year. For too long the Government, by failing to curb public sector costs, have put an unfair burden on the struggling private sector, which, rightly, has complained ceaselessly.
The goals of reflation, lower interest rates and lower public sector costs must be achieved to improve our ability to compete. One cannot pretend that our competitive ability will solve unemployment just like that. One must not take too narrow a view of the problem. It is essential to create the wealth that can give us the economic freedom to tackle the crisis in a serious manner.
For example, if we generated sufficient wealth we should be able to extend even the excellent new training initiative announced by the Government, under which spending on the young is to be doubled. We could also develop a national community service, about which there has been much talk. We could look for even earlier retirement and we could establish more meaningful training for people who are made redundant in middle age.
Increased vigour in the economy would spawn many new businesses. All types of schemes could spring up in the community and they would employ people constructively. All such ideas—education, training and community schemes—have to be funded ultimately by competitive business.
The Government have an understanding of the central problem. They have examined the heart of our national problem. There are growing signs that success can be won. I believe that the Government have the determination to win through to that success. Only when we are truly competitive can we hold out real hope that unemployment

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will be diminished and that many more people will find work. That is the goal that the country, the Government and the Opposition wish to achieve. Only if we are competitive can we seek to achieve that goal.
7.25 pm
Mr. Doug HoyleThe hon. Member for Rutland and Stamford (Mr. Lewis) is about to leave the Chamber. He made a constructive speech. I was sorry that he was not speaking from the Front Bench. The Secretary of State made a disgraceful speech. From him we heard the most unfeeling comments from the most uncaring person in the House. He showed that he was prepared to sacrifice the people on the anvil of political dogma, whatever the cost. He did not have the humility to say to the House that in the two years that the Government have been in power unemployment has doubled. He did not say, as he might have, that during the last 18 months of the Labour Government unemployment went down month by month. The trend was towards a reduction in unemployment. If we are to have a constructive debate we must start from there. It is not true to say that there is no solution to unemployment. We were showing that there is. The tragedy was that we were not in power to continue that trend.
Mr. TebbitThe hon. Gentleman could not have been listening carefully. I said that during the latter part of the Labour Government's term of office unemployment was falling. I referred particularly to it as being one of the benefits of the time when the IMF dictated economic policy to the Labour Government and it came through after the normal lag that one expects with unemployment figures.
Mr. HoyleThe Secretary of State referred to the latter months of the Labour Government. I said that unemployment was reduced over the last 18 months. The trend continued. We were developing our policies and they would have carried us to prosperity. The Secretary of State did not explain the reversal of those policies when his Government came to power. That is what led to a doubling in unemployment. It will not stop there. Unless there is a change in policy along the lines outlined by the hon. Member for Rutland and Stamford unemployment will reach 4 million. At what point will the Government begin to reflate to bring down unemployment? We failed to get an answer from the Secretary of State.
The Secretary of State provided no recognition that the Government were to blame. I was dismayed by the lack of recognition of what lies behind the statistics. We are talking about 3 million unemployed, the poverty of our people, the despair and the tragedy in the regions. There is no hope. Somehow we must restore hope. There is no sign from the Government Front Bench that the lesson has at last been learnt.
Mr. TebbitI am sorry to intervene again, but the hon. Member is an old friend and he is being indulgent. What makes him think that inflationary policies reduce unemployment? The fall in unemployment during the Labour Government's period in office came after the appropriate lag following the institution of IMF policies. That was the whole point. When the policies were reversed in the latter part of the Labour Government's period in office they stoked up matters ready for the great rise in unemployment again. It is simple.
Mr. HoyleThere we go again. The right hon. Gentleman is not prepared to accept any responsibility. At one time he was a pilot. That was before he went into bicycling. If he had flown a plane in the way in which he is running the Department of Employment it would have crashed long ago. Unfortunately, he is taking the country in that direction. Neither he nor the Cabinet will take any of the blame for what has occurred. The problem cannot be solved in that way. Now we need not more deflationary measures but expansion. The hon. Member for Rutland and Stamford said that in his able and courageous speech. I only hope that some of that comes through at tomorrow's crisis meeting of the Cabinet.
Mr. Campbell-SavoursCould it be that the Secretary of State was wrong when he suggested that the cause was the IMF's intervention when it was in 1976 that the Labour Government decided to pursue an incomes policy in agreement with the trade unions?
Mr. HoyleMy hon. Friend makes an interesting point. However, that was not the reason for our recovery. I am sorry that I cannot address my remarks to the right hon. Member for Crosby (Mrs. Williams) because after she spoke she left the Chamber.
Mr. Arthur LewisThe right hon. Lady always does and she always has.
Mr. HoyleIndeed, for long periods during this important debate, there has been no representative of the Social Democratic Party in the Chamber, and there is now no representative of the Liberal Party present. That shows the contempt with which they view the unemployed. That does not surprise me, because I have always thought that the SDP was a party more interested in dinner suits than boiler suits. It is more interested in dining rooms than board rooms and more interested in fashionable places than work places. The absence of SDP Members proves once again the contempt in which they hold the House. They would far rather go about the country than be in the House where policy can be effected.
Mr. Ian WrigglesworthWill the hon. Gentleman also point out to the House that for most of the time that he and his predecessors have been speaking there have been only about 10 out of over 200 Labour Members present?
Mr. HoyleThat is a higher proportion than the proportion of SDP and Liberal Alliance Members, which has been nil. When, nought is multiplied by any number, it is still nought.
There is only one way to reduce unemployment. I say to my hon. Friend the Member for Workington (Mr. Campbell-Savours) that it cannot be done by an incomes policy. It can be achieved only by trying to plan our economy and by trying to get public investment going again. There is a theory on the Conservative Benches that there is no connection between the public and private sectors. The prosperity of the private sector depends upon the prosperity of the public sector.
We need a vast investment in the public sector. We need about £24 billion over the next four years. It seems that the right hon. Member for Crosby is trying to steal the clothes of the Labour Party by going for investment in the public sector. I disagree with her on the scale of that

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investment. It must be far higher in the first year due to the collapse of the economy under the Conservative Party. That figure must be in the region of £8 billion.
All Labour Members have their favourite targets in the public sector. They may be housing, the Health Service, the gas pipeline, electrification of the railways or the Channel tunnel. All such projects would create jobs. However, that would not be enough because we must stop the export of capital overseas that has occurred under the present Government.
By removing exchange control restrictions, we find that pension funds of British workers are being invested in Japan to put British workers out of work. That is ludicrous. We should set up a national investment bank and use some of the pension and insurance funds to back it. We need to draw in the new science and technological industries of the future. We should be investing in biotechnology. This could create new jobs and initiate a breakthrough in pharmaceuticals, help to cure disease and use waste to create cheaper fuel.
All this is possible. The tragedy is that while the Government are talking about short-term measures our competitors are investing in new industries, as they have been for some time in microelectronics. This is where we should be going in future. However, once again we are falling sadly behind.
Whenever Conservative Members speak they bemoan the fact that we are not as competitive as many of the countries with which we must compete. The real reason for that is that investment has not gone into those industries in the past. That is what has happened in the shipbuilding and the motor industries and it is now occurring in the electronics industry. The only way to achieve investment in those industries is through public investment. That is the way to get back. It may be painful for the Secretary of State to listen to this, but I can assure him that that is not as painful as having to listen to his address today. It can be done and there is only one party to do it.
Mr. RentonWill the hon. Gentleman give way?
Mr. HoyleI am sorry, but I shall not give way. The hon. Gentleman has only recently returned to the Chamber. He has been absent for most of the debate.
We can carry out those policies only by planning. We can do it only be extending the public sector. That is the way to move forward. Only the Labour Party has the plan to do it. I believe that the Labour Party can do for Britain what Roosevelt did for America during the depression years. We can begin to bring a new spirit and to revive our economy. The sooner we get the opportunity, the better, because the people, particularly the unemployed, are crying out for a change of Government.
7.38 pm
Mr. Keith WickendenI hope that I shall be forgiven if I begin my speech with a gentle criticism. The problem of unemployment is too deep-seated, too structural and too important to be the subject of the many petty party political points that have been made during the debate.
We have heard many statistics. As an accountant, statistics are always highly suspect to me. However, there is one statistic about which every one of us should be ashamed, and about which the unemployed and the nation
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will be infuriated if they come to hear it. During the past two and a half hours, 96 per cent. of right hon. and hon. Members have not been present. To be absent for a debate on such a serious issue, one of the most serious problems facing the country, is a matter for shame and nothing else.
I have tried hard to listen to all of the speeches in the debate. I have heard again and again expressions of concern and worry, but very little in the way of constructive suggestions. The first suggestion from the Opposition Benches was not made until the speech of the right hon. Member for Crosby (Mrs. Williams). The right hon. Lady suggested that what was needed was a public investment programme of £5 billion to £6 billion. She did not explain how it was to be paid for. She did not say that if it were to be paid for by increased borrowing the inevitable result—as we have seen for the past 30 years—would be an increase in inflation and, after a short period, a further increase in unemployment. That is the inevitable result of public sector borrowing and it cannot be avoided.
Mr. Ron LeightonNo.
Mr. WickendenThe hon. Gentleman says "No", but that is the history of the past 30 years. Surely no intelligent person could gainsay that.
If we are to increase public sector borrowing, we must realise precisely what that will do to every family, including the unemployed. The present level of public sector borrowing, by which I mean Government and local authority borrowing, is £150 billion. To convert that into figures that at least I can understand, it represents more than £10, 000 for every family in the country, including the unemployed. All those families have to find almost £20 a week in tax to pay the interest on public sector borrowing that has been incurred to sustain a standard of living that has not been earned. Some wish to increase it still further. The measure of irresponsibility that that implies is, in my view, outrageous.
In addition to there having been few suggestions on how we should cure unemployment, there has been little understanding of what creates employment. I was astonished to hear the hon. Member for Warrington (Mr. Hoyle) say that the only reason why British industry is uncompetitive is that we have not invested sufficiently. It is true that we have not invested enough, but that is only one facet of the problem.
I refer the hon. Gentleman to a survey that was carried out by an independent American consultancy team, which contrasted the performances of two almost identical factories with modern production plant, one at Speke in Liverpool, the other on the Continent. The Continental factory was nearly twice as competitive and efficient as the British one. It does the unemployed no good for hon. Members to bandy about false facts and to hide from the truth.
The cause of unemployment, like the cause of most things, is terribly simple. The cure, unfortunately, is not so simple. The cause of unemployment is simply that our factories and centres of service industries no longer sufficiently provide goods and services at prices which the rest of the world is prepared to pay. If they did, the rest of the world would flood to our shores for those goods and services and we should have no unemployment problem.
Mr. HoyleI have listened with rapt attention to what the hon. Gentleman has said. In the textile industry,

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although many factories are old-fashioned and family ownership is common, people have invested—albeit a little late—and are investing much money and have created a modern industry. There are no restrictive practices. Indeed, the unions have bent over backwards to assist. The textile industry has been destroyed by the flood of cheap imports, so the picture that the hon. Gentleman paints is not always true.
Mr. WickendenI accept that the textile industry faces special problems, but the hon. Gentleman's point bears out what I have said. We are not producing goods as competitively as other countries.
I have considerable experience of the shipbuilding industry. I regret that I have been forced at times to place orders abroad, not always because of price—although, regrettably, British prices are not always competitive—but simply because British yards were unable to meet the required delivery dates and competitors abroad were. That is dreadfully sad.
I return to my main theme. We concern ourselves, rightly, so much with unemployment that we do not spend enough time looking at the true answer, which is the creation of real employment. I readily accept the criticism made by the hon. Member for Central Ayrshire (Mr. Lambie) that those of us from more fortunate parts of the country do not have direct experience of the tragedy of unemployment, and I concede that I represent a fortunate constituency. In Surrey we do not have anything like the problems faced by other parts of the country. We have a great deal of industry, but it is more diverse and not engaged in the heavy trades.
Although I have no direct experience of unemployment, I hope that I am not being too immodest if I say that I have considerable experience of creating employment. The company with which I have been fortunate enough to be associated for the past 10 years has, in the past 15 years, increased the number of its employees from 300 to 7, 500. I am proud to have played some small part in the creation of that employment. The only way to create employment is not to create fictitious jobs, although that is a palliative and will do in the short term, but to encourage those sections of industry that are capable of growth in such a way—not by subsidy, which usually does more harm than good—that they develop through organic growth.
Our major employers have slimmed down considerably in employment terms over the past three or four years. Most of them have now reached the stage at which they are almost uniquely in a position to compete with many of our foreign competitors. I do not for a moment believe that if the world recession were blown away tomorrow major areas of private industry would take on large numbers of employees. Nor do I believe that the State industries would do so, because, as we know only too well, they are for the most part heavily overmanned.
If those two major employment sectors do not do that, and if we are not to have unacceptably high unemployment for ever, we must ask ourselves where employment is to come from. I believe that we must look at the way in which we created employment in the first place. ICI and GEC were not created overnight. Incidentally, I should say with a certain personal bitterness that if the Office of Fair Trading and the Monopolies and Mergers Commission had been as active in the 1960s as it is in the 1980s GEC would not have been allowed to happen, which would have been a disaster in terms of unemployment.
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We must go back to the small industries that were created in days gone by and formed the cornerstone of the whole of our present industry. It is not just a question of pouring money into them. If there is one lesson that we should have learnt from our regional aid policies it is that, sadly, so much of the taxpayers' money that has been put in has been wasted. If the Opposition do not believe that, I will give examples.
Only last week we debated the tragedy of the Invergordon smelter, which has cost the taxpayer £100 million to provide 900 jobs for a relatively short period. That is more than £100, 000 per job.
Mr. Campbell-SavoursMany more jobs than that are involved.
Mr. WickendenIn all the discussions last week, the figure was 900. If that is not correct, the Opposition were citing incorrect figures. But even if it were double that figure, that would still be £50, 000 per job. How much could be done with £50, 000 in a small business to employ three or four people and really create something, rather than trying to create a fictitious industry, which at the end of the day failed?
Mr. John Home RobertsonThe hon. Gentleman oversimplifies the situation. Organic growth of the type that he describes might be possible in Dorking, but how on earth can he expect to create the kind of employment necessary to revitalise central Ayrshire, or Easter Ross, where Invergordon is, without massive public expenditure of some kind?
Mr. WickendenI shall give a perfect example. Last year the Dunlop Rubber Company closed an old factory in Coventry. Unemployment is as grave in the West Midlands as anywhere else. That factory, built in the 1920s, was closed with the loss of a considerable number of jobs. If it had remained empty for long, it would have been demolished. Due to the foresight of a business acquaintance in Coventry, my company was persuaded to buy the factory at a knockdown price and to invest a relatively small sum in turning it into 28 small factory units ranging in size from 800 sq ft to 3, 000 sq ft. We advertised it once and 102 people applied, many of them wishing to start up in business with their redundancy money from Massey-Ferguson, Chrysler and other companies in the area.
Mr. Campbell-SavoursHow many jobs w ill be created?
Mr. WickendenThree hundred jobs will be created. If somebody had not done something about it, there would have been none.
Mr. Campbell-SavoursThe hon. Gentleman makes a very important point. He is trying to prove that this would work in our constituencies in the Northern region, and I should like to believe that it would. In the Northern region, many local authorities, in line with what the hon. Gentleman has said and in conjunction with private business, have tried to restore mills and convert them into units. In one case in my constituency a number of small nursery units are lying empty because we cannot get the kind of organic growth that the hon. Gentleman advocates. I only wish that it were possible to generate that growth. How can people in those constituencies be put back to work if the hon. Gentleman's theory does not work?
Mr. WickendenThe hon. Gentleman said that it does not work, but it has done so in an area with some of the highest unemployment in the country. It has worked in Corby and other places. It cannot necessarily work everywhere, but it is something that has not been properly tried.
Mr. TebbitI agree with what my hon. Friend says. If it is any comfort to the hon. Member for Workington (Mr. Campbell-Savours), let me tell him that I saw such a scheme on a smaller scale in operation when I visited Middlesbrough last week. Small workshop factories of the sort described by my hon. Friend were being established in an old biscuit factory that had been taken over as a joint project between the Manpower Services Commission, the officials of my Department and the local authority.
Mr. WickendenI am grateful to my right hon. Friend. That is exactly the point that I am trying to make.
I give further examples of public investment in large companies that have not worked. There is the De Lorean works in Northern Ireland. I believe that the sum invested so far is £80 million, which created 2, 500 jobs, but sadly it now looks as if they are seriously at risk. Chrysler at Linwood never did work almost from the day it started, but perhaps the most monstrous creation of all was British Leyland, which was put together for all the wrong reasons—[Horn. MEMBERS: "Absolute nonsense."] I know a lot about how British Leyland was put together, because I was involved in many of the discussions that took place at the time. It should never have been put together in the first place. Sadly, it is probably too late to break it down into its constituent parts, which could be successful given the opportunity.
I spoke of the need for a completely different re-think and said that instead of trying to attack unemployment we should create employment. The problem goes much deeper than that. We need a truly radical look at the whole system of our economy.
Our tax system is absurd, in that direct taxation starts below the official poverty level. Therefore, as a nation we employ bureaucrats to give our citizens money with one hand through social security and to take it away, through taxes, with the other. One cannot envisage a more damaging or foolish system. Indeed, it specifically sets out to discriminate between those who work, those who save and those who invent and create. As a trading nation, we cannot afford to do that.
If we are to solve our economic and unemployment problems, we must go back to the root causes. We should look at things such as our taxation system and perhaps stand it on its head.
Housing is another reason why so many of our competitors have been able to cope with their unemployment problems more flexibly than we have done. Britain has the most inflexible housing system that it is possible to imagine, even though it was created for good and high-sounding reasons. We have a system of security of tenure—quite rightly—to protect the tenant, but in the process we have destroyed the very fabric of the private rented system. We have created a private sector of slums because we cannot provide the housing that our people demand.
Two years ago I took my son to Colorado in North America to train for a specific task. I went with him to find him somewhere to live and to make sure that he was
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properly settled in in his training course. I asked an American colleague how I should find him some accommodation. He looked at me as though I was slightly mentally deficient and said "Look in the classified advertisements section of the newspaper". I did so, and for that small town in Colorado there were three full pages of flats to rent at very reasonable cost. They do not have security of tenure, and consequently a market is created. Our well-meaning policies actually hurt the people whom they are designed to help, and that is the tragedy of our system.
Had she been present, I should have liked to address a question to the right hon. Member for Crosby. She said—
Mr. Arthur LewisOn a point of order, Mr. Deputy Speaker. On the last occasion on which the right hon. Lady spoke she left the Chamber immediately afterwards. I raised a point of order on that occasion. Once again she has made her speech and walked out. The hon. Member for Dorking (Mr. Wickenden) now wishes to refer to the right hon. Lady's speech, and in so doing will take more time and delay my hon. Friends who still wish to take part in the debate.
Until the new Social Democratic Party came along, the custom in the House was that hon. Members remained and listened to the debate. I again ask the Chair to point out that if a right hon. Member is lucky enough to use the back of the Labour Party to get a Privy Councillorship, which gives her privilege to get called whenever she wants, she ought to remain and listen to the debate.
Mr. WickendenI hope that the hon. Gentleman will forgive me if I do not follow him. Having complained about party political points earlier, I can hardly make one against the right hon. Lady now.
Perhaps another member of the SDP can answer my question. Reference was made to the need for an incomes policy. As a point of information, I genuinely want to know whether that means a permanent incomes policy, because I do not believe that any other sort of incomes policy stands any chance of success. We have tried incomes policies in the past and have always discovered that in the end the lid comes off, there is a mad scramble and the situation is exacerbated.
My remarks so far have been gloomy. I come to a few of the bright spots that exist. The right hon. Member for Chesterfield (Mr. Varley) referred, uncharacteristically and ungenerously, only to the record level of bankruptcies. It is perfectly true that the level of bankruptcies is now the highest ever, at 180 a week. It is also true that new businesses are starting up at the highest level ever—2, 500 a week. New company registrations in the first nine months of last year—during the Civil Service dispute when one would have expected registrations to be lower—were running at the rate of 1, 000 a week. They are bright spots which should not be overlooked. We should not always concentrate on our deficiencies. Occasionally we should concentrate on the good points.
Unit costs are now at more competitive levels than they have been for years, and our balance of payments is now healthily in surplus. That could provide for many of the things that we ought to be doing.
I draw a personal bright spot to the attention of the House. To my astonishment, I discovered only a few weeks ago that by volume my company accounts for about

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45 per cent. of our nation's exports. No doubt that had something to do with the recent decision of the Monopolies and Mergers Commission. In the last two years the amount of freight carried by my company has been severely depressed, but 17 weeks ago an upturn began. At first we feared that it was yet another false dawn. It is not. That upturn has been sustained and is increasing. Most important and encouragingly of all for the nation, for the first time in four years the freight forwarders who place the orders are booking space six months ahead.
We shall never solve our unemployment problems until we tackle the root—the necessity to create real employment. We must do so in a way that does not drain the taxpayer or cause inflation, but which allows our nation's natural talents to flourish in the way that I know they can.
8 pm
Miss Joan LestorI entirely agree with the final sentiments of the hon. Member for Dorking (Mr. Wickenden).
My complaints about the Government are twofold. First, it is now almost three years since they came to office, yet they sit there today saying "There is nothing that we can do about it. We have not really found a way of creating more jobs and dealing with long-term unemployment", implying—and, in some instances, saying—that it is all the fault of the people in industry who ask for too much.
Secondly, and perhaps more important, the Government fought a general election on the basis of the Saatchi and Saatchi slogan "Labour isn't working", when unemployment was in fact falling. Unemployment has soared under this Government, while they sit there helplessly saying that they do not quite know what to do about it. If the Government continue to cut the purchasing power of the people who are in work and the purchasing power of the people who are drawing benefits, they will cause further unemployment, because people will not be able to buy the goods produced by the people in work. That is simple, basic economics, and that is the situation in which we now find ourselves.
I want to remind the House of something that the then Leader of the Opposition said in April 1979. She said:
"But we Tories believe in policies that will create real jobs—not just in paying youngsters to do artificial jobs without a future."
Nevertheless, any youngster who reviews the schemes now before us knows that they represent an artificial job, a job that offers no guarantee of work in the future, and that society is saying to him "We shall keep you off the streets and keep you occupied so that you are not reflected in the unemployment figures". It is worth putting on record that between 60 and 70 per cent. of the young people on the schemes that were created under the Labour Government got jobs. I wish that it had been 100 per cent.
One of the worst aspects of the figures that we have been given is that a high percentage—40 per cent.—of the unemployed people are under the age of 25. That is a horrific figure. The tragedy is that many of those young people will be unemployable, if the situation goes on much longer.
The effect is rubbing off on our children and young people who are still at school who, instead of being able to say what they would like to do when they leave school, know that the prospects of doing what they would like to
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do are becoming gloomier all along the line. The opportunities for many of them in higher and further education are being drastically cut, as we have heard during the past two weeks, and the schemes that are available to them offer very little. So the outlook is gloomy.
Long-term unemployment has doubled in the past year. That is a cause of grave concern to all of us. However, listening to the debate today, and indeed to debates on unemployment generally, what strikes many of us is that, in the main, people are talking about male unemployment, for many reasons, which I shall elaborate. Unemployment among women is rarely mentioned. However, yesterday's figures demonstrated that female unemployment has grown by 250, 000 since this Government came to office. Under the Conservative Government, female unemployment has quadrupled. Every month, an average of 12, 300 women come on to the the job market. That figure conceals the large number of women who do not register The figure given by economists now is that there are probably 2 million unemployed women workers in this country.
From October of this year, the unemployment figures will be compiled in a different way—on the basis of those claiming benefits, not those registering at unemployment exchanges. Thus, large numbers of women will be excluded from the official figures, including married women unemployed for more than one year and, of course, part-time workers.
A Government Minister recently said that a mother does not have the same rights as a father in work. The hon. Member for Aberdeenshire, West (Sir R. Fairgrieve), in a speech in which he sought to be constructive, spoke of how damaging it must be for a man to get up, not be able to go to work, and to see his wife doing the jobs around the house, and so forth. Society has not been like that for a long time. Unless we wake up to the fact that nearly the same proportion of women as men are financially responsible for dependent children, we shall still fail to understand the employment situation. In the main, women are not sitting at home being kept by husbands who are now becoming unemployed. Many women are the sole breadwinners in their homes, and many of them, married to men on low incomes, have been able to keep the family above poverty line. Only 18 per cent. of men in the labour force today provide the sole support for wives and their dependent children. So that is one matter that deserves consideration.
In areas where women are either the sole breadwinner—because the man's job has gone—or have been working to try to improve the family's standard of living, we now find that the wife's job, too, is threatened. That aspect has not been considered by the House tonight. Eighty-four per cent. of part-time workers are women who, in the main, are not covered by any redundancy legislation. Their jobs, in the main, are the first to go.
There is the scandal of the women in the school meals service. Many of them are not covered by redundancy payments. They receive no unemployment money, and they are not included in the official unemployment figures. Officially, those women have simply ceased to exist. When we talk about unemployment—and, as my hon. Friends have said, it is far higher than the official figure that was given—we tend to forget the large numbers of women, in particular, who are excluded from the official classification.

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Mention was made earlier in the debate of the textile industry, and the way in which it has been decimated, in spite of the fact that, in terms of investment and co-operation, it is one of our best industries. Since 1979, 60, 000 jobs went in the clothing industry, where 90 per cent. of the workers were women. In the past two years, 50, 000 jobs have gone in the school meals service, and 100 per cent. of those workers were women. In the retail trade, 123, 000 jobs have been lost since 1979, and 70 per cent. of those employees were also women.
There is another matter that we should bear in mind. It was said earlier that unemployment was not regional, but spread throughout the country. That is true in areas such as mine, which has traditionally managed to escape the ravages of recessions. Now we have rising unemployment. I have news for the hon. Member for Bridlington (Mr. Townend), who said that one of the reasons for this was that we did not stop Commonwealth immigrants coming in. My area, which escaped this problem in recent years, and still has amongst the lowest unemployment figures, is also an area to which people have come from all over the country and from all parts of the world. To say that one causes the other is a way of trying to apportion blame in a society that should be looking for the fundamental reasons.
The rapid increase in female unemployment over the past two years has been in areas that were earlier called areas of industrial growth, not in areas where there has been a decline in our traditional industries. For example, in the South-West, female unemployment has increased by 80 per cent. In the South-East, it has increased by 135 per cent. In the West Midlands, I am told by my colleagues that it has increased by 153 per cent.
This country is suffering not from a shortage of work, but from a shortage of jobs. We have people with skills that are not being used. We have resources that are not being used, and we have colossal unmet social need.
How anyone can argue that we cannot pay for investment in industry because unemployment is costing between £12 billion and £13 billion a year is beyond me. We are told that we must have public expenditure cuts and that we must not spend so much money, but while we are doing that public expenditure has soared because we are paying people not to work.
Yet if we consider hospitals, education and the housing problem—in my constituency it is the worst it has been since I became a Member of Parliament and house building is at its lowest for 70 years—there is a demand for those gaps to be filled. The work is there. The contradiction that the Government do not seem to face or understand is that they are paying people not to perform the skills for which they have been trained, and in which money has already been invested, to provide the services to and meet the needs of other people who find themselves in economic, social and cultural decay.
Mine is not an easy answer, but it is one way in which, by investment, by using money constructively rather than destructively, by selecting the industries that we must save and create, by investing in labour intensive areas and recognising that investment in industry will be in capital investment areas so that we must find the balance in social areas and by extra expansion in the public sector, we can begin to redress the balance. Others have done it, but we do not yet seem to have got the message.
Mr. WickendenIf it were simply a question of diverting resources from unemployment benefit into salaries and giving people jobs, that would be a simple and easy answer and we would build houses. The problem is that when we try to create jobs in the construciton industry or elsewhere the labour content is only 30 per cent. of the total cost. If we are at present spending £30 billion a year on unemployment benefit, it would cost £50 billion a year to employ those people productively.
Miss LestorI do not wish to pursue that too much, but one should consider the tremendous loss to Britain in terms of the wealth that would be produced if people were put to work to build houses needed by other people and the saving to the nation if we did not have to put children into care because they are homeless or put people into bed-and-breakfast establishments because there is nowhere for them to live. We must get our sums right. I accept that we must borrow to invest. Every business begins by doing that. However, do not let the Government try to persuade people that we are so impoverished that we must cut public expendture and that there is no money for anything else. That has been the Government's biggest "con". Public expenditure soars while people with skills, who are prepared to meet other people's needs, are paid to be unemployed.
I accept what has been said about the desire for a shorter working week, a shorter working day and the lowering of the retirement age. That has always been among the aspirations of my movement, but that in itself is neither the cause nor the cure of unemployment. The Government, whose contribution to the debate has been pessimistic—they fought an election saying that they would cure unemployment—are presiding over the biggest slide in unemployment that we have seen. The nation will judge them soon on the fact that they are now creating a situation where social unrest is bound to happen because of the misery, desperation and the lack of hope that they have inflicted upon our society.
8.14 pm
Mr. Tony MarlowThe fact that 3 million of our people are unemployed is a tragedy. The fact that hundreds of thousands of our young people have nothing positive to do—no sense of purpose, no role and no exciting prospects and, by lacking the stimulation and adventure that young people crave so much, turn instead to riot and misadventure—is an even greater tragedy.
As my right hon. Friend the Secretary of State for Employment so ably said, what has happened during the past few years would have happened whatever Government had been in power. During the world recession, as the most uncompetitive economy where for generations Governments of both complexions have neglected our industrial problems, we have had the recession worst and first.
At last, as we can see from the productivity figures that have recently been released, industry is on the way to a cure and is getting better. However, tragic though the position is, it would be wrong to add unnecessary callousness and insensitivity to it by Opposition Members using such previously unimaginable miseries as a golden vein of propaganda or as an endless ammunition train for sustaining petty party warfare. I do not believe that will

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happen. All hon. Members—Opposition and Conservative—are appalled and stirred by what they see. Deep inside we all care.
The Opposition know that we are all in this together. Although we may disagree on certain aspects of philosophy or policy they, like us, know that unemployment is our main priority. Our paramount need is to do something about it. We have some common ground, and I beseech Opposition Members, in the national interest, on those areas of policy on which we can agree, to join us so that we can work together.
I wish to concentrate upon the subject of young people. We are very much in uncharted waters, where the change in circumstances has been so great and the speed of the current so fast that our attitudes, our institutions and our approaches will change. In that new environment we have an immense opportunity and a duty to guide those changes in a radical and virtuous direction. We are not looking for ad hoc solutions or day-to-day palliatives. We are not looking for a calamine lotion with which to swab the spots of urban unrest and rural vandalism. What we wish and need now is a new deal. So dire and dramatic is the vista that has now seared deeply into our national subconsciousness that we shall have the national support and good will to give us the willpower to achieve such a new deal.
Hon. Members will have read, seen or heard about an excellent pamphlet produced last week by an organisation called "Jobs in the Eighties" written by Bob Tyrell. That sets out the challenges and the new conditions that we shall face. We are talking now about jobs in the 1980s, not in the 1960s or 1970s. My hon. Friend the Member for Bridlington (Mr. Townend) made the proper point that we must do something about apprenticeships. However, we must bear in mind that in the 1980s only a quarter of jobs will be in manufacturing industries. We must also bear in mind that in the 1980s and 1990s people will increasingly move from one job to another. That means that they must have not only flexibility so that they can learn the skills with which to go from job to job, but the flexibility of approach.
In the 1980s some people will face the prospect of long periods without jobs. We must train and prepare them, if that happens, to accept it so that they can do something worthwhile with their lives. We must prepare them for the enforced leisure that may come their way so that they may still have a worthwhile, satisfying and active life.
Just as 150 years ago many 12-year-olds expected to spend their adolescent years climbing chimneys or crawling under looms—perhaps the few who did not felt that they were deprived because they were not given the opportunity—so now every 16-year-old has been brought up to believe that he should have a job at 16. Why is that? Is it civilised and right to expect children to start on the conveyor belt of working life at such a young, unformed and uneducated age? How, at that age, can the majority expect to choose a vocation, career or life's activity? What do they know of the world outside? What experience have they had to make a committed choice in such a way that they can pursue an activity or job to satisfaction and effectiveness?
Necessity may be the mother of invention. So what? Sometimes that does no harm. Necessity has now given us the chance to set up a new, structured and varied preparation for our young people.
Those who have read the excellent document produced by "Youth Call" will be aware of the great vista of unmet
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and, presently, unmeetable needs of society which young people, properly encouraged. eagerly and challengingly could satisfy.
I am delighted, as are my hon. Friends, to see the Government's new programme—£l, 000 million a year—giving almost unlimited scope to the imaginative development of new and radical approaches. At the moment, young people have a developing range of opportunities. They can go into further education, higher education or apprenticeships. We should not dream of stopping their desire to go into jobs. They will soon be going into the new youth training scheme, but I seek to offer something additional—wider and perhaps more exciting than the range that we have already got.
It would be for those who want adventure and experience before setting out on their working lives.
Mr. George FoulkesLet them join the Palestine Liberation Organisation.
Mr. MarlowThe scheme will be for those who wish to serve their community and for those who do not yet know what sort of job or activity they want or who cannot locally find what they need. In short, it will be for those who want a training for life—for the 1980s, the 1990s and the new century awaiting them.
Those who have spent time in the Services or who did national service recognise the "educational" benefits of that experience: the chance to grow up in a helpful environment, to meet, mix and travel, assess, to develop self-confidence, self-assurance and initiative. I would not dream of proposing nor would it be sensible to do so that we went back to national service. There is no need, and the circumstances are not appropriate for that. However, I suggest that we set up a pilot scheme for what—for want of a better expression, although I do not much like it—has been called "national community service" to cater for 4, 000 young people.
I should dearly like to give full details about that scheme, but time will not allow because other hon. Members want to speak, but I assure hon. Members that details have been worked out, as have costs, and that the proposal has been discussed with other people. I assure the House that it is workable. In Canada, there is a project called Katmavik, which is going like wild-fire at the moment and is very workable. In short, I suggest a one-year voluntary scheme for young people, not necessarily just for 16-year-olds or those who are unemployed.
Young people would start off for the first three months on a period of preparation, induction and sorting to decide what they are going to do next and getting the necessary training and preparation. They would have three main areas of activity during that period: outdoor work and adventure, vocational training and specific preparation for the remaining nine months.
The remaining nine months could be in three basic areas. I am not saying that we cannot have other areas as the programme develops. We could devise other activities for the young people, but the three basic areas would be community service—we have many excellent community service schemes now—environmental activities—we have many excellent environmental schemes now—and. perhaps, as a recruiting sergeant, some form of cadet service training. I do not mean only military service training. It could be emergency service training or anything of that sort. However, one could propose such a

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scheme for the more machismo kids in the city centres—"Come and join us and have some adventure for nine months." They could join the professionals, have some excitement and become men. There would, of course, be suitable courses for women.
Mr. R. C. MitchellI am intrigued by this scheme, but is the hon. Gentleman saying that it would be nine months of voluntary service or that the participants should be paid? If they should be paid, who will pay them?
Mr. MarlowI can reassure the hon. Gentleman that it must be voluntary. There is no way that it could be done through conscription because people would vote with their feet. One cannot throw a manual of military law at 16-year-olds these days. It must be voluntary and something that people want to do. It must be worthwhile and something that will benefit society.
I see the scheme as being a distinct part of the new Manpower Services Commission scheme, which will cost some £55 per person a week. We would provide the instructors, accommodation, food, clothing and pocket money within the scheme. Within the money that the scheme is providing, we could provide something more exciting and more wide-ranging than we now have. It would be part of the 300, 000 places that the Government are now setting up. We are not seeking additional funds. We shall get a great deal of support and sustenance from industry. We should be looking to industry to give us a degree of sponsorship. On top of that, we should ask industry to let us have some of its young managers to join our scheme at the lower levels of management as part of their training as managers.
I shall add some of the principles involved. The cost would be less or no more than other schemes. Hopefully, it would be residential throughout, and within, but a distinct part of, the youth training scheme that my right hon. Friend projected. I know that it will have the support of industry. It will also have a great element of self-sufficiency.
Other aspects we could go for would be a degree of horticulture and agriculture. Children from city centres could set up small farms and some of the food and products they grow could be fed back into the scheme. Accommodation, for example, in the inner city areas could be provided by those on the scheme. We could take over an abandoned terrace and make it habitable for our own use.
Another basic principle of the scheme would be that activity within the community and local areas would largely be done on an agency basis. We would set up the induction training, but the field activity would be done by voluntary organisations and the local authorities now doing it. We should be able to say to them that we have people who have been together for three months with skills available to do jobs and ask them if they want them. I am sure that they would come running to us.
There are many other excellent schemes that I fully support and admire. This scheme is different and, in many ways, more challenging. It provides something that others do not. Like the well-known advertisement, it reaches the parts that other schemes do not yet reach. As anyone who has experience will know, it offers the value of a sustained residential experience. There would be a great deal of
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group activity and people would realise that they were responsible for others within the group. That would help to build loyalty, responsibility and esprit de corps. We would include vocational training. We would help to develop in young people a positive attitude towards the community in which they will grow up, live and work. Most importantly, we would also develop a sense of self-dependence and initiative so that, whatever job the young went for and whatever their circumstances, they would make the best of them.
Many people say that people should look upon their problems as opportunities. The sad circumstances in which we find ourselves and the difficulties in which our young people are placed are an opportunity. I am sure that the Government will grasp that opportunity with both hands.
8.30 pm
Mr. Stan ThorneAs you probably know, Mr. Deputy Speaker, since the beginning of the debate Conservative Members have spoken for 142 minutes and Opposition Members have spoken for 99 minutes. On a simple mathematical calculation, I could quite reasonably speak for 43 minutes and balance the account. I do not propose to do so, because I am sure that other Opposition Members would like to speak, but, given that the next speaker will be a Conservative Member, it is doubtful whether they will be able to.
In January 1982, in the Preston travel-to-work area there are, in cold figures, 18, 393 unemployed people, and that is equivalent to 12·4 per cent. of the employee population. In January 1979 the figures were 7, 751 or 5·3 per cent. of the employee population. In two and a half years of Tory rule, economic lunacy and total disregard for humanity—as the figures reflect—there has been an increase in unemployment of 137 per cent. in my area. If British Leyland has its way, a further 1, 800 redundancies will affect my area.
The Secretary of State says that everything is the fault of the recession, forces beyond our control, and so on. As briefly as possible I shall deal with some of the causes of the problem, and I shall refer specifically to Leyland Vehicles. As hon. Members will know, about 8, 000 workers are on strike at Leyland Vehicles. The strike began last Thursday and stems from the management's refusal to negotiate with the trade unions about a plan that the trade unions had produced, which refers to productivity and jobs.
Of course, the plan conflicts with Sir Michael Edwardes' corporate plan. If the management believes that the corporate plan is too strong to be questioned, that demonstrates the management's weakness, because it is not even prepared to consider the trade union plan. Unfortunately, it also illustrates what passes for industrial relations in the empire that Sir Michael Edwardes rules over. What are the trade union suggestions?
Mr. DickensOn a point of order, Mr. Deputy Speaker. The debate concerns employment, yet we have heard nothing other than a speech about an internal dispute at British Leyland. I think that that is quite out of order.
Mr. Deputy Speaker (Mr. Bryant Godman Irvine)The hon. Gentleman may think that, but each hon. Member must be responsible for how he interprets his speech.
Mr. ThorneIt is an appalling suggestion, but understandable, considering whence it came. The hon.

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Gentleman clearly does not read much and does not know that a plant that had 9, 000 workers only a few months ago now has only about 5, 000. If that fact is not relevant to employment, I do not know what is.
When I was rudely interrupted, I was about to give some of the trade union suggestions. They say that Leyland Vehicles must retain its manufacturing capacity. Eight out of 10 jobs at Leyland are in component manufacture. The key components threatened with outsourcing are engines and gearboxes. Five of the seven United Kingdom truck manufacturers are owned by United States companies. Only Leyland Vehicles and the much smaller ERF are in United Kingdom ownership. If the United Kingdom is to remain in international truck manufacturing, Leyland Vehicles must continue to design and manufacture its engines and other key components. That factor is relevant to employment. However, management plans are moving towards handing over control to United States multinationals—Cummins for engines and International Harvester—yet the Government have the temerity to talk of British competitiveness. What irony!
Out-sourcing is detrimental to our balance of trade. The International Harvester DT466 engine which Leyland Vehicles is planning to buy will be built in the United States and shortly in Spain. That is tantamount to exporting jobs. The Cummins engines supplied to Leyland Vehicles are likely to come from Cummins' United States factory, with only "screwdriver assembly" in the United Kingdom. The increase in imports will make the management of our economy that much more difficult.
Management's phasing out of in-house component manufacture will be irreversible. The design teams, the particular work force and the skills entailed in the present production team will be dissipated and Leyland Vehicles will fall into a permanent state of dependence on other—mostly foreign—engine manufacturers. The trade unions at Leyland therefore demand that the Leyland Vehicles management and the Government maintain and extend the in-house manufacture of major components at Leyland Vehicles, which would obviate the need for the present round of redundancies which the management is seeking to promote.
If Leyland is to remain an engine manufacturer it requires a new foundry, which will cost about £30 million. The new trend is towards lighter alloy engines, made from thin-walled castings. Leyland Vehicles has the expertise for the new technology and has, indeed, produced prototype engines, but for mass production a new foundry is essential.
Investment is long overdue in machine tools. Machines are still being used at Leyland stamped "WD". In the past four years only a derisory £2½ million has been spent on new machine tools at Leyland Vehicles, with the bulk of investment money going to the new assembly plant, the technical centre and in parts.
Leyland Vehicles management did not carry out the programme of renewal of worn out and outmoded equipment envisaged in the 1975 Ryder plan. Had it done so, British Leyland might be in a much more realistic competitive position. At Leyland there is an increasing demand for investment in a new foundry and in machine tools. The Government have a responsibility to ensure that that investment is provided if we are to maintain a truck manufacturing interest of any value in the United Kingdom.
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The Leyland Vehicles management policy of cutting back investment is in direct contrast to the expansion of Cummins, the American engine manufacturer. Despite a loss of $6 million last year, Cummins has launched a massive investment programme amounting to 150 mill ion per year in new plant and engines for the big upswing in demand that it expects in the mid to late 1980s. The company is backed by money from the giant oil company Teneco Incorporated. What can be done and should be done by the Government, given our North Sea oil revenues, to provide investment in British manufacturing rather than to promote imports from the United States of Cummins engines?
There are one or two problems with regard to outsourcing. Some things that have happened have disturbed the trade unions at British Leyland. Selling off has much to do with the present position at British Leyland. We all remember Kenaton. Leyland Vehicles' pattern making shop was closed and some of its machinery was sold to Kenaton Engineering, a company owned by a senior member of Leyland Vehicles management. Kenaton now makes patterns for Leyland Vehicles.
In 1981 the British Leyland subsidiary, Prestcold, was sold to a private company, Suter Electrical, of which the chairman and chief executive is David Abell, who was formerly manager at Leyland Vehicles. Before that he was in charge of Prestcold. It is curious that the person who bought Prestcold is the same person who, on leaving it in April 1979, publicly admitted in the Financial Times of 11 April that
"he must take the responsibility for their present financial near-collapse."
It was that profit squeeze that decided British Leyland to sell Prestcold. I only hope that the Comptroller and Auditor General will examine closely some of the financial arrangements involved in selling not only Prestcold, but Kenaton.
Mr. Tam DalyellI should like to make the point, particularly in the presence of the Secretary of State for Industry, that when, on 30 November, I made a long speech at the Public Accounts Committee debate on related topics, and subsequently on 1 December went to see Mr. Gordon Dawney, the Comptroller and Auditor General, at Audit House, I hoped that there would be a report in a few weeks. Some of us believe that the Comptroller and Auditor General, who I understand is working hard, has a difficult task. Had it been clear-cut, surely he would have had the report by now.
Mr. ThorneLike my hon. Friend, I am perturbed about the situation. There have been various reports, some in the financial press and some in The Times and The Guardian, which raise curious issues, particularly in regard to the selling of Prestcold.
My hon. Friend will also be aware of the Bathgate tractor situation. About half the investment at Bathgate has gone into the new tractor range. Now that it has been designed, developed and proven, it is being sold off. British Leyland refuses to disclose the price. A key figure in the negotiations has been Mr. Jack Smart, the former deputy managing director of Leyland Vehicles.
Mr. Arthur LewisHas my hon. Friend notified the Secretary of State for Trade of the point that he is making which is that the Auditor General may be busy? Will the Secretary of State for Trade listen, or will he say that he

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will have an investigation made because this is taxpayers' money? Will he give an assurance that he will have the matter investigated?
Mr. ThorneI am sure that the Secretary of State is familiar with the situation. What he is probably hesitant about, and what the House ought to demand, is a public inquiry into all the selling off that has taken place at British Leyland.
I am anxious to let others speak in the debate. A relevant factor in the employment situation is the action of the Secretary of State for the Environment in regard to the block grant and its impact on the ability of local authorities to purchase new fleets of buses. That has affected the production of buses at British Leyland. We are also anxious to promote the sale of buses in Third world countries. Why management considers that the elaborate and sophisticated Olympian bus is the sort of thing we can take into Third world countries I have no idea.
I could deal with some other aspects of the trade union report which the management is still reluctant to discuss. The worsening employment situation in the North-West demands that the plan that the trade unions have prepared should receive urgent and full consideration not only by those involved in the industry but by the Department of Industry. The Department of Employment should use its influence to ensure that that is done, in order to guarantee jobs at Leyland and the long-term future of this part of our manufacturing base, without which in the late 1980s and early 1990s we will have even higher unemployment figures.
8.49 pm
Mr. Raymond WhitneyThe hon. Member for Preston, South (Mr. Thorne) has done the House a service by dwelling in detail on the problems of British Leyland and in particular on the present dispute. Nothing else points up more clearly the problems and the causes of the unemployment with which we are trying to deal in the debate.
The hon. Member may have been listening to the "Today" programme on Radio 4 this morning when a speaker from the trade union side in that dispute was making the sort of case that he has made tonight. In another item shortly afterwards a representative of Opel motors was telling listeners that the great benefit of selling in this country was that all other manufacturers of motor cars around the world could sell at 40 per cent. above prices obtaining elsewhere precisely because we have been landed with a price structure that is related to British Leyland, despite the fact that hundreds or, indeed, billions of pounds of British taxpayers' money have been put into it. That is precisely the problem that we must recognise and deal with.
If Opposition hon. Members would stop their understandable political hysterics and recognise the realities, we should have a much more fruitful debate. They should acknowledge that our problems are suffered by the whole industrialised world, and in particular the older industrial world—the Western European nations. Their rates of unemployment are climbing fast and coming very much into line with ours. When we consider the effect in Germany, for example, of the loss of guest workers we can see clearly that they are not immune from the problems that we face.
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Moreover, we should accept that the percentage of our population in civil employment is higher than anywhere else in Western Europe, with the single exception of Denmark. We suffer from the problems of hardening of the industrial arteries. We have old-style industries, long-based industries and a population with a high standard of living and high expectations. There are many restrictions in our society, where there have been, and are, more problems than anywhere else. We know all of those problems. In particular, our real distinction is the range of blockages to high productivity, to which, sadly, our antiquated union structure has contributed.
Western Europe as a whole is now under fierce pressure from the newly industrialised countries. We all know about the pressure of Japan, but it will not stop with Japan. There are Korea, Hong Kong, Taiwan, Singapore and all the rest. The countries of Western Europe that survive will be those that show flexibility and a readiness to adapt to the challenge.
We at last have a chance to break out of the vicious circle into the much talked about virtuous circle. The vicious circle that we have been locked into is poor productivity, high prices, inevitably low sales and low profitability—therefore low investment and, therefore, loss of jobs. We all know that position too well. Now we have begun to move in the other direction.
We have heard about increases in productivity. Over the past 12 months our unit labour costs have increased by only 2 per cent.—lower even than in Japan. That is a marvellous start. According to a recent estimate, our manufacturing competitiveness improved between 1978 and 1981 by 10 to 15 per cent., taking into account the improvements in unit labour costs and the recent falling pound. That is going in the right direction.
The move having been started, that is the way to go, if we have the courage to hold on to what has been achieved. It is the way to create profitable industries, to lift our incredible average rate of return of 2 per cent. There can be no sensible investment at that level, but if we can hold on to the increase in productivity there will be investment and then more jobs. That must be the only way forward.
Another sign of hope is to be found in the improvement in the savings ratio. An interesting article in The Economist in December, entitled
"Hands off next year's recovery",
said that savings ratios, which had been so high, showed signs of falling, and one way of making sure that the fall was checked would be to indulge in another orgy of reflation, or further inflation, with all that that would do to interest rates, and indeed to the level of the pound, and what that would do to inflation. If that happens it has been shown again and again throughout history that the savings ratio goes up because people, understandably, become scared. However, if they come to understand that inflation is being held in check, every experience gives reason to hope that that savings ratio will fall and demand will be put into the economy. The Economist says:
"This potential for extra spending exceeds anything that a giveaway budget would achieve."
That is a lesson that giveaway Budgets cannot create genuine growth.
The figures show that we already have the opportunity in the demand we still have in the economy. It is easy to forget, in the doom and gloom that we often hear in the media and inevitably in our debates, that our imports

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increased by 14 per cent. in 1981. That must not be forgotten, although our balance of trade is marvellous. That 14 per cent. represents a challenge to British industry and to the sort of people referred to by my hon. Friend the Member for Dorking (Mr. Wickenden) in his splendid speech, which was based on deep experience of industry. He pointed out that all those small industries can look for their markets from the imports and that is where their challenge and opportunities lie.
The ultimate essential is that we do not do what has happened four, five or six times in the economy under Governments of both complexions since the war. We have embarked on a policy of common sense; not one of crazy monetarism but one recognised by Governments all over the world. The Government have followed sensible fiscal policy, but each time that we came within a measure of success, just as the lift-off was coming, Governments lost their nerve. That has led to an injection of funny money or the creation of paper money put into the economy at a time when the economy was generating demand. The country has gone straight back into the whirlpool of inflation.
When my right hon. Friends are taking important decisions tomorrow I beg them to recognise the lessons of the past, to understand fully the signs, that the only genuine jobs can come from the private sector, and to take full account of the fact that, as the Treasury's statistics have shown, since 1971 the return on investment in the public sector has never been significantly above zero.
Already built into the Government's spending plans is a major increase in public sector spending. The burden must be removed from the private sector and it must be given every opportunity. It will respond—the market and the demand are there and we still have the talent. What we now need is the courage to stick to the Government's convictions. I hope that they will recognise this.
I hope too that the Government recognise what they have achieved so far and that if they turn away now the sacrifices that have been extracted from the private, non-guarded sector will have been in vain. If they do that, the country will not forgive them. If they hold their nerve the country will recognise their courage and jobs will return in the only sensible way they can—through being genuine jobs, created by real demand, of which there is plenty.
8.59 pm
Dr. David ClarkI share the deep concern over the 3 million people without work throughout Britain. As the representative of a constituency with over 26 per cent. male unemployment in a region—the Northern region—that traditionally has, and continues to have, more unemployment than any other part of Britain, I find it strange that a Northern voice has not been heard today. It would be an insult to the 222, 000 unemployed people in the North if I attempted, in one minute today, to put their case.
9 pm
Mr. Stanley OrmeThis major debate, part of a two-day debate on unemployment and the economy, takes place against the background of 3 million unemployed and the need to create another 5 million jobs by the mid-1980s. That is the size of the problem facing Britain and our economy. The opening speech of the Secretary of State for Employment was a disgrace. The right hon. Gentleman did not face the problem. Nor did
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he give any real answers about how the Government intended to tackle it. Even some of his hon. Friends were critical of the Government's policy, or lack of policy.
Reference has been made to the special Cabinet meeting—a crisis meeting as it was called—that is to take place tomorrow morning. It is not a special Cabinet meeting. It is the normal Cabinet meeting at which there will possibly be a short debate lasting about an hour. That will not be sufficient to discuss the problem and all that needs to be done.
The Opposition recognise that there have been problems in British industry over a number of years. The Labour Government took measures through the National Enterprise Board and other agencies to create employment. When we left office, unemployment was coming down. However, in the metal manufacturing industries, there has been a 28 per cent. fall in employment during the last two years. A total of 1·25 million jobs directly related to the manufacturing sector have been lost. That is a tremendous increase. With a reduced manufacturing sector, the job becomes more difficult than ever.
There must be another way. Critics of the Government's policy can be found far beyond the Labour Party and the trade union movement. They include Conservative Members, members of the Cabinet, the CBI and parts of the City. The Labour Party believes that tinkering with the problem cannot achieve the major changes that are required. We believe that a fundamental change must take place in our economy and in industry. That is why the Labour Party is putting forward an alternative strategy. That is why we have linked the debate to Labour's "Plan for Expansion". We say that there is a Socialist alternative. I wish to spell out some of the main factors of that alternative.
A drastic increase in public expenditure directed to creating jobs must be a first major priority. There are areas that cry out for such investment—the construction industry dealing with new housing and inner cities, railways electrification, investment in telecommunication, replacement of the nineteenth century sewerage system in many major industrial cities, new power station capacity, road maintenance and construction, and the provision of the gas pipeline.
Mr. Arthur LewisWill my right hon. Friend add to his list that thousands of hotel and catering workers from foreign countries are allowed to work in Britain, but 116, 464 British catering workers are unemployed? How crazy can we get? There is high unemployment in the industry, yet we allow workers to come in from foreign countries.
Mr. OrmeI hope that my hon. Friend will allow me to develop our strategy. I believe that we can create jobs for residents of the United Kingdom.
The Government, through the National Enterprise Board, could invest in coal, oil and gas extraction, biotechnology, mining equipment, heating, ventilation, air conditioning, refrigeration equipment, solid fuel technology, electronics, scientific instruments and energy savings. They are only a few of the areas in which there could be investment.
Investment in the public sector overflows into the private sector and creates jobs in both the private and public sectors. To make that investment the borrowing requirement must be increased. We face that squarely.

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Against that, one must set increased employment, increased savings and a reduction in payments of unemployment benefit, as my right hon. Friend the Member for Chesterfield (Mr. Varley) said earlier.
The PSBR might rise for a time, but, in the long term, growth in the economy will cause a return flow of money into the Exchequer. That will increase resources which can be allocated to benefit the whole community. The nation would be borrowing to finance productive investment instead of borrowing to finance increased unemployment, as is happening now. We accept that there would be a need to borrow and that the PSBR would be increased.
A pamphlet produced this month by the CBI asks in a heading
"How can it be done?".
The answer in the pamphlet is "By higher Government borrowing". That is what the CBI says today. If we were in a position to implement such policies, it would be seen how we could put that increased borrowing into effect.
The Secretary of State for Industry (Mr. Patrick Jenkin)The right hon. Gentleman has given an astonishing list of projects ranging through industry for public investment. He must tell the House how much the Labour Party wishes to see invested hi such projects, how much extra borrowing would be necessary and how much higher interest rates would have to be to finance such investment.
Mr. OrmeIn my opinion, a minimum of about £8 billion or £9 billion would have to be put immediately into the economy. That is based on the TUC's annual report for this year. That report gives the figures and the facts. Such investment would lead to increased borrowing. It would be an investment to borrow. It would not be detrimental to the economy. I am sure that my right hon. and hon. Friends support that.
Conservative Members often ask what effect there would be on inflation. Measures could be taken. One would be to cut VAT, which has had a dramatic effect on inflation. Action could be taken on interest rates. There could be a relaxation in nationalised industries' external borrowing limits and in the employers' national insurance surcharge. We now spend more on unemployment benefit than on the National Health Service and something must be drastically wrong. A great deal of discussion—not least from the Government Benches—has dealt with overmanning and productivity. Productivity is one of the key areas that must be tackled by a Labour Government.
Planning and industrial democracy are urged by the Labour Party. Over recent years, British industry has suffered from lack of investment and low productivity. Despite the intrinsic wealth that Britain possesses from resources of North Sea oil, gas and coal, the crisis affecting the advanced countries of the world is worse in the United Kingdom than in any of our main competitor countries. Therefore, a policy of direct Government intervention in industry through planning is crucial.
That intervention can come through sector working parties, the Manpower Services Commission, a strengthened National Enterprise Board dealing especially with research and development—which is an area that has been greatly neglected and that the Government have played a part in running down—and the setting up of a
964
planning commission to examine overall strategy. By those means a policy on which to base growth in our economy could be achieved.
We must look at some of our competitors. France has a Minister responsible for planning. The Japanese have created a planning organisation. These are both indications of Government intervention. The difference between Britain and its main competitors is that the competitors intervene directly in many ways into industry while our Government have washed their hands of industry. It is worth examining the type of intervention that has taken place in Japan and the effect that this has had on its economy and the world economy.
In the 1960s, capital intensive products such as steel, motor cycles and ships were priorities within the Japanese economy. By the mid-1970s, more complex products such as cars and colour televisions dominated the Japanese industrial strategy. For the 1980s, knowledge intensive industries such as computers, special chemicals, robotics, machine tools, telecommunications and energy-saving equipment have been identified as priorities. Many of the ideas that were developed in the United Kingdom are now being exploited elsewhere. We need a policy of intervention in the economy.
When we refer to planning, we are talking about both management and workers who produce, design and instigate. We hope that it will be possible for workers to participate in the decision-making machinery, because if productivity is to increase such co-operation is essential.
There is also a clear and long standing case for strengthening the rights, the status and influence of workers and their unions in the work place as part of the process of extending democracy throughout society. The measures that the Secretary of State plans to introduce in his trade union Bill will have an adverse effect on such developments. Instead of achieving the co-operation of work people in industry, the Secretary of State will bring about hostility and consequential problems. The problems of overmanning and productivity will be pushed to one side and will not be discussed.
Therefore, we believe that it would be possible to negotiate development contracts in major areas of the economy, including the multinationals.
What are the Secretary of State's views on the Davignon proposals on disclosure of information by the multinationals now situated throughout Western Europe? That disclosure of information is important, but the Opposition feel that it should go beyond that, into investment prospects and that the Davignon proposals are not sufficient in that respect. We believe that it would be in the interest of many major companies in our economy, in both the public and the private sectors, to have such agreement and to be able to arrive at such understanding.
Sir William ClarkWhat does that mean?
Mr. OrmeIt means that if one has a planning agreement one can look at investment, forward planning and projects and the work people who will be asked to produce the products will be taken into consultation and will play a part in decision making. That sort of action is long overdue.
The need for long term investment is obvious. The Opposition believe that this should be achieved through the use of North Sea oil revenues and other forms of

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investment. As my right hon. Friend the Member for Chesterfield said, £13 billion or £14 billion are being wasted. That is the cost to the economy of unemployment or social security benefit and the loss of tax and savings. It all adds up to a tremendous drain on the economy at a time when that money should be invested in it.
The abolition of exchange controls, of which there has been little public notice, is of major importance. The abolition of controls and the subsequent outflow of money for investment abroad instead of in Britain is a disgrace. That money could have helped industry in the form of research and development and investment at a time when it is greatly needed. As the Secretary of State knows, more than £5 billion has left the country since the abolition of exchange controls. We regard that outflow of money as a factor of major importance. [Interruption.] I thought that hon. Members were listening. I am explaining the proposals that the Labour Party is now discussing throughout the country and that we are putting forward as our policy. Conservative Members often ask "What is your policy? What are you doing?" We now have a policy of "plan for jobs"—an overall collective policy that we intend to put into operation at the earliest opportunity.
If the economy achieves growth and gets back to prosperity in any shape or form, there will be a danger of sucking imports into the United Kingdom. If we are to implement a sensible trade policy, there must be planning for trade with a properly negotated policy on import ceilings and quotas with our main trade partners. Many of our competitors—for example, the EEC, Japan and the United States—now operate various forms of import controls against British goods. There have been complaints from Conservative Members and continous complaints from Opposition Members about British goods being excluded from foreign markets. We should be able to discuss the matter on a sensible basis. That does not mean that we would not allow imports, but they could be controlled by quotas and ceilings. We can also plan for import substitution and help to produce goods within the United Kingdom from which I am convinced our economy can benefit. Our objective is to secure a growth in imports consistent with balance of payments stability.
We have seen what the Government have done. We have seen their attitude to public ownership. They have given away some of the most profitable public sectors of our economy. The word they use is "privatisation", but the real word is "denationalisation". Those sectors have been disposed of at give-away prices. That action has affected some of the most central parts of our economy.
Recently I saw a newspaper report that the Secretary of State and the Government were keen to make a major inroad into telecommunications. In the steel industry debate the other night, we heard that they wanted to privatise steel. Tens of millions of pounds of public money have been put into these industries and they are to be handed away.
Mr. MarlowWhat nationalised industries have the Government given away? What has been sold has been sold at the market price.
Mr. OrmeThe BNOC comes to mind, as does British Aerospace. The Government want to get rid of parts of British Leyland and the steel industry. They want to get rid of sections of the telecommunications industry. The list is considerable. Perhaps the Secretary of State will give
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that list to the House. It is a policy of giving away assets which belong to Britain and which have been paid for by British money. I want to make it clear that the next Labour Government will renationalise those assets at the earliest opportunity.
We have been talking about public ownership and its success. A future Labour Government will extend public ownership in key sectors of the economy, not least in the areas where new industries, such as microelectronics and high technology, will have to be created. This is where public money can go, where investment can take place and where we can give a positive lead to industry. A Labour Government, not a Tory Government, created Inmos. That should be firmly taken on board.
I come now to the employment not least of young people leaving school and of women. Those two sections have suffered drastically. The training measures that the Secretary of State has introduced are inadequate. Much more needs to be done. We need to train for skill. If we get an upturn in the economy, as I think the Secretary of State would agree, we would be short of skilled workers. Nevertheless, his Department has closed 17 training centres. We shall have to reopen training centres arid provide training for skill.
Mr. TebbitIs the right hon. Gentleman referring to training boards or training centres? The training boards were doing no training. That is why they were closed.
Mr. OrmeThat will not wash at all. We must train young people between the ages of 16 and 19. We must also face the fact that many school leavers will have had no training at all by the time they reach their twenties. The trade union movement will have to face the fact that m many instances people will enter industry when they are older simply because of the problems that the Government have created. I have no doubt that the trade union movement will accept its responsibility.
I represent part of the city of Salford, which has seen a 44 per cent. staff cut in a university that was training for skill. The Prime Minister went there the other day and told the Vice-Chancellor "John, you are doing very well. I hope you will succeed". The staff in that university have been reduced by almost half. Industry and the trade unions in the area have amalgamated to oppose the policy, but everyone over the age of fifty, irrespective of ability—be they manual workers or academic staff—will have to go by March.
Mr. John GrantThe Secretary of State dodged the chronic problem of the hardcore, long-term adult unemployed, of which there will be more than 1 million before the end of the year. All that the right hon. Gentleman could offer was 30, 000 places on the community enterprise programme. Is that not scandalous?
Mr. OrmeWhen I left: the DHSS, the long-term unemployed totalled 300, 000. It is now 1 million. Drastic measures will have to be taken to overcome the Government's attitude.
Some Conservative Members have treated with levity the measures that I have put forward. We have outlined a constructive package of proposals that will create jobs within the economy and reverse the type of policies that the Secretary of State and the Government are pursuing. The right hon. Gentleman must have heard his hon. Friend the Member for Rutland and Stamford (Mr. Lewis) make

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it plain that if the Tory Party does not act on this issue it will again become known as the party of unemployment. The electorate will judge the Government at the appropriate time, and we shall then be able to undo some of the tremendous damage that they have done to the economy.
I was trained in the private sector of manufacturing industry. As I travel the country, I now see efficient firms forced to the wall because they find it impossible to maintain production and employment.
The Government's policies have failed. An hour's discussion at a Cabinet meeting tomorrow morning will not resolve these problems. It is time that these issues were taken to the electorate so that the people can judge. If they were, we firmly believe that we would see the return of a Labour Government.
9.24 pm
The Secretary of State for Industry (Mr. Patrick Jenkin)We have been warned. The right hon. Member for Salford, West (Mr. Orme) has spelt out with horrifying clarity the madcap ideas upon which his party seems to be bent. It will never have an opportunity to put all those horrors into action. The only thing that he did not spell out was how long it would be before the IMF was called in. Last time it was two years. If he goes on with policies of the sort that he has outlined to the House it will be two months, not two years.
It would be difficult to imagine a more grossly irresponsible approach to the management of our economy. If the right hon. Gentleman still harbours the illusion that that sort of policy mix will solve anything at all, it is a triumph of hope over experience. The right hon. Gentleman has suffered from a degree of amnesia about what happened when his Government tried to carry out some of those policies. I find it rather depressing that he has learnt so little.
Until the right hon. Gentleman spoke the debate was characterised by a profound concern on both sides about the level of unemployment. There was an acknowledgment—not, I might say, by the right hon. Member for Salford, West, but by many speakers on both sides—of some of the causes of the high unemployment that we face: the successive oil price shocks, which affected not only us but the whole consuming world, and the effect of the world recession. There was agreement on both sides—I do not know whether the right hon. Gentleman agrees—that there are no simple solutions.
There was an interesting contrast between the right hon. Gentleman's speech and that of his right hon. Friend the Member for Chesterfield (Mr. Varley), in that the right hon. Member for Chesterfield did not mention Labour's "Plan for Expansion". He opened the debate, yet he said nothing about it even though it is mentioned in the amendment that he moved.
I did not hear the speech of my hon. Friend the Member for Dorking (Mr. Wickenden), but I gather that it was of very high quality. He put forward the simple proposition on which the Government's policy is based: that the way to more secure and better-paid jobs depends upon industry becoming more competitive.
My hon. Friend the Member for Aberdeenshire, West (Sir R. Fairgrieve) referred to the flood of imports of consumer goods that fill our shops and showrooms—cars
968
from Germany, refrigerators from Italy, and television sets from Japan. The list is endless. We have lost customers to the competition.
When we discuss unemployment we should remember that Governments do not create jobs. Not even employers create jobs. It is the customers who provide jobs. Despite all the talk about whether this or that policy will cut unemployment, the acid test is whether, as a result, industry will become more competitive and find more customers. Both the right hon. Member for Salford, West and his right hon. Friend completely ignored the fact that in the disastrous period at the end of their last period of Government the effect of the overspill from Clegg and the post-dated cheques was felt and this country lost about 50 per cent. of its competitiveness—[Interruption.] That was the case in 1978. When I say "competitiveness", I mean in real terms and not phoney price competitiveness because of the depreciation of the pound.
Mr. ShoreThe Secretary of State has made either a serious or a frivolous point. Will he tell us what the exchange rate for the pound was in May 1979 and what it became 12 months later, because that decisively influenced the competitiveness of British goods in export markets?
Mr. JenkinThe right hon. Gentleman is trying to duck the responsibility of his Government—the massive pay explosion that surrounded the events at the end of 1978. The right hon. Gentleman knows that the explosion in private sector wage costs and the explosion that followed the Clegg report were the direct responsibility of his Government. He left us the post-dated cheque.
Customers provide the jobs and pay wages. A nation that cannot keep its customers is unable to earn its living, and a nation that cannot earn its living cannot keep its people in jobs. Our present unacceptably high unemployment is a direct reflection of our ability as a nation to earn our living. The House will be depressingly familiar with the phenomenon that we have seen during the past 30 years or more—with each downturn in the economy, unemployment has risen higher than in the previous downturn. The process is accelerating. During the recession over which the Labour Party presided it doubled, and during this recession it has doubled again. Steadily, and inexorably, British industry was becoming less and less competitive.
Mr. Michael FootRubbish.
Mr. JenkinThe right hon. Gentleman says "rubbish", but it is true. It has been recognised in this debate by some wise speeches from hon. Members on both sides of the House.
I come now to the thoughtful speech of the hon. Member for Glasgow, Maryhill (Mr. Craigen), during which he said—I hope that I quote him correctly—
"No way will we see the resuscitation of the manufacturing base in Britain".
I do not accept that for one moment. We are and will remain, as far as ahead as can be seen, an industrial country. I do not accept or even understand what people mean when they talk about a post-industrial society.
Mr. CraigenWill the Secretary of State explain why the proportion of people working in manufacturing industry has gone down from 31 per cent. of the working population to 28.5 per cent. during the lifetime of the Government?
Mr. JenkinThat has happened because we have lost business to competitors. A jibe that has been made again and again by trade union leaders is that the British worker spends Monday to Friday making British goods and Saturday buying foreign goods. That is why we have lost jobs.
For the foreseeable future—I agree with my hon. Friend the Member for Rutland and Stamford that it includes service industries as wel1 as manufacturing—industry will be the main source of jobs for our people and wealth for Britain. Upon the success of industry will depend our ability to raise the standard of living, increase pensions, improve the National Health Service and do all the things that all hon. Members wish to do. Above all, our success in the manufacturing and service industries will provide jobs for our people.
The message that I can bring to the House is that after the long years of decline the long haul back has begun. The British disease is beginning to yield to treatment because we are treating not just the symptoms but the causes; overmanning. restrictive practices, outdated production methods, poor industrial relations, weak management and pay rising far faster than output—the familiar litany of shortcomings that we know so well. That is beginning to change right through industry.
Firms have made themselves more efficient. Manufacturing productivity has improved. Overmanning has been cut. Restrictive practices have been abandoned. Pay settlements have been at a far more reasonable level and days lost through strikes have become fewer and fewer. Managers are once again managing. The result is that we are now winning hack customers. Manufacturing output in the third quarter of last year rose 2½ per cent. and in the three months to November was a further 1 per cent. higher.
Productivity, measured as output per head, rose by no less than 10 per cent. between the end of 1980 and the third quarter of 1981. Some hon. Members have suggested that higher productivity must inevitably mean more unemployment, but the right hon. Member for Chesterfield knows perfectly well what he said when he occupied my job and when he addressed the British Council of Productivity Associations in April 1978. His words are significant when we consider the country today. He said:
"Whatever the short-term implications of improving productivity, we must realise that without it our industry's competitiveness will drop further and further behind our rivals."
I call the right hon. Gentleman's attention to the short-term implications. Whatever he meant, he recognised that in the short term it meant higher unemployment. He knew and recognised that, and he was frank about it when talking to the association.
I shall quote some figures relating to unit labour costs which are the most remarkable indicator of what happened in the past 18 months. I hope that I have the attention of the House. The figures are for wages and salaries per unit of output in manufacturing industry. Unit labour costs, 18 months ago, were running 25 per cent. higher than a year earlier—a far faster rise than in any other major industrial country. This relates to internal unit labour costs and is nothing to do with the exchange rate.
In the first quarter of 1981 the figure fell to 16 per cent., in the second quarter to 8 per cent. and by the third quarter it was only 5 per cent. The latest figure is now only—[Interruption.]
Mr. SpeakerOrder.
Mr. JenkinThe latest figure for unit labour costs is now only 2 per cent. higher than it was a year earlier. To move from a 25 per cent. increase to 2 per cent. increase in 18 months is, by any standards, a remarkable performance.
Mr. Jack Straw rose
Mr. JenkinNo.
Mr. Straw rose—
Mr. SpeakerOrder. It must be clear that the Secretary of State is not giving way. Therefore, he must be allowed to continue.
Mr. JenkinIt is even more significant that the improvement is far more striking than in any other advanced industrial country. We are now beginning to beat the competition. No other major industrial country comes anywhere near our rate of improvement in unit labour costs. That augurs extremely well for the future.
We are now well placed to increase our market share; in other words, to win customers who provide jobs and pay the wages. Of course we still have some way to go, because we have not recovered the 50 per cent. of competitiveness lost between 1978 and 1980. We cannot let up. The improvements must be held and built on. That is why the battle against inflation is vital. It is not a question of either more jobs or lower inflation. Lower inflation makes us more competitive and that brings us more customers and, in turn, more jobs.
My hon. Friend the Member for Rutland and Stamford drew a distinction between making the country more efficient and providing more jobs. He expressed a worry—often held—that new technology will inevitably lead to fewer jobs. That fear has hampered progress down the centuries. I shall reassure him by quoting from an authoritative report by the Advisory Council for Applied Research and Development. It said that:
"more unemployment results from loss of market share following a failure to innovate than from the introduction of new technology. Conversely, if new technology leads to an increase in market share, there is generally an increase in employment opportunities."
The House should accept that important and authoritative statement from a very high-powered council, which has served Governments of both parties well.
Japan has been cited. The rate of unemployment there is very low, because the Japanese have innovated and won markets. That is why we have taken specific measures to encourage the spread of new technology, to promote innovation and competitiveness and to make our economy more responsive and adaptable.
Mrs Shirley Williams rose—
Mr. JenkinI shall turn to the points raised by the right hon. Lady in a moment.
We have maintained and expanded the product and process development scheme and introduced schemes to accelerate the spread of modern microprocessor technology. Under the microprocessor applications project, £55 million has been allocated to make industry more aware of that enormously important revolution and to help with investment schemes. In addition, £55 million has been allocated to the microelectronics support scheme to help the industry develop its products.
Schemes in other countries were mentioned, but there was a notable forgetfulness about mentioning schemes in this country. There are schemes to support the

971
development of fibre optics, of robot machine tools and integrated robot systems—[HON. MEMBERS: "They are on the Conservative Benches."] Opposition Members may have their joke, but these matters are important. We have renewed, for four years, the manufacturing advisory service. My right hon. Friend the Prime Minister has designated 1982 Information Technology Year—[Interruption.] The Leader of the Opposition is foolish to scoff. That initiative has been warmly commended by all the industries involved in information technology.
Mrs. Shirley Williams rose —
Mr. JenkinThe right hon. Member for Crosby (Mrs. Williams) mentioned schools. We have embarked on a project to put a micro-computer into every secondary school in the land by the end of the year. We hope to follow that with a scheme for primary schools. We need to expand those programmes. The help and support being given to industry to modernise, to introduce new technology and to innovate is crucial if it is to become more competitive. Even in public sector industries, such as British Leyland and British Steel, new technology is being introduced. I am grateful for the remarks made on that point by my hon. Friend the Member for Bridlington (Mr. Townend). In the lines making the Triumph Acclaim and the Mini Metro, British Leyland now has facilities and robots that are every bit as productive as those of any other European motor company.
Steel production at the South Wales strip mills was reaching levels equivalent to the best in Europe. Until the ASLEF strikes forced cuts in production, steelmaking on Teesside was breaking all plant records. It must be heartbreaking for those who, with the new spirit of co-operation in steel, have achieved a record level of output and competitiveness to find their efforts torpedoed by the locomen, who are clinging to the letter of a 62-year-old agreement.
Mrs. Shirley Williams rose —
Mr. JenkinI shall give way in a moment. Central to the debate—the right hon. Lady forcefully made this point—is whether firm monetary control is part of the solution, as my hon. Friends have recognised, or part of the problem, which is the view of the Opposition parties. They fail to recognise that every major OECD country protects its currency by controlling the money supply. Moreover, they have been doing so for some years. I quote these words:
"I am convinced that a firm control of the growth of money and credit is an essential part of our strategy against inflation."
Those were not the words of my right hon. and learned Friend the Chancellor or even the President of the United States. That is what the right hon. Member for Leeds, East (Mr. Healey) said when addressing the International Monetary Fund in 1976.
All over the world Governments are aiming to reduce the level of borrowing to bring down interest rates. I have a long list of the countries, but I shall not weary the House with it. In their efforts to curb spending and relieve the upward pressure of interest rates the British Government have for most of the year been conspicuously more successful than our overseas competitors.
There are always those—to her discredit the right hon. Member for Crosby is one of them, although she used not
972
to be—who will argue that there is an easier way. The right hon. Lady called for a £5 billion to £6 billion public expenditure reflation. I remind her that her former right hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) at the Labour Party conference in 1976 stated:
"We used to think that you could just spend your way"—
[Interruption.] I am not surprised that the Opposition do not want to hear this, but they are going to.
"We used to think that you could just spend your way out of a recession and increase employment by cutting taxes and boosting Government spending. I tell you in all candour that that option no longer exists, and that insofar as it ever did exist, it worked by injecting inflation into the economy. And each time that happened the average level of unemployment has risen. Higher inflation, followed by higher unemployment. That is the history of the last 20 years."
I am willing to bet that no one cheered louder than the right hon. Lady.
Mrs. Shirley WilliamsThe Secretary of State's intelligence is such that he will realise that there are not only two alternatives. He referred earlier to new technologies. Will he tell the House why, when the major barrier to the acceptance of new technologies is the shortage of electronic engineers, the Government have seen fit to cut grants to the universities?
Mr. JenkinI am not surprised that the right hon. Lady wanted to change the subject. Even after the reductions being made by the University Grants Committee there will still be an increase in the number of students studying engineering in all disciplines. That is a fact. The right hon. Lady should know that.
The right hon. Lady spoke about a £5 billion to £6 billion expansion plan. The right hon. Member for Ebbw Vale (Mr. Foot) put forward an even more ambitious plan. The right hon. Gentleman and the right hon. Lady also hope to get reduced interest rates. We all know that the right hon. Gentleman believes in fairies, higher spending, lower taxation and lower interest rates. It is surprising that, in asking for higher spending and lower taxation, the right hon. Lady did not have the brass in the House to say that she wanted to see lower interest rates. It does not fit in with what she said during her election campaign. At the top of her list of what the SDP would do on economic growth is "Bring interest rates down." How can she square a massive increase in Government spending with a reduction in taxation and lower interest rates? The right hon. Lady once had a reputation for intellectual integrity, but if she carries on like that she will destroy it.
The SDP says that all those factors will be controlled by an incomes policy, but if ever there was a case of tot homines tot sententiae it is the attitude of SDP members to an incomes policy. No two of them can agree. The right hon. Lady wants an incomes policy backed by law. Mr. Roy Jenkins wants a Layard type of tax on employers. The right hon. Lady said that she wants an incomes policy backed by an inflation tax on those who get more. She wants it paid by the employees. Professor Meade, who advises the SDP, wants arbitration. The right hon. Member for Stockton (Mr. Rodgers)—he is the simplest of them all—wants an agreement between the CBI, the TUC and the Government. If that is not possible, he says that "the Government would have to go it alone". That reminds me of the character in the films who was always being tied to railways—with one bound he was free.
We are progressively bringing down pay increases to more reasonable levels, and we are winning through. Why

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does the SDP believe that next time it will be different? Members of the SDP have been in Government. They have tried and failed. At least the Liberals have never been in Government. They have not tried anything. We can leave that rag bag of politicians—those who have tried and failed and those who have never tried at all—to their own devices. We are now beginning to win through. Output is beginning to rise. Productivity is increasing. We have been winning more spectacular orders throughout the world than we have done for many years—£½ billion business in Nigeria in six months, a £¼ billion bank construction project in Hong Kong, a £170 million contract for a transpacific cable, a £150 million contract for a university in Oman and a £140 million gas storage project in Abu Dhabi.
Mr. Eric S. HefferHow much in Liverpool?
Mr. JenkinThose orders are on top of the massive steel plant orders won by the Davy Corporation in India, Mexico, New Zealand and elsewhere. We are laying the foundations for a solid, lasting recovery leading to a restored strength to our economy. We are beginning to win back the customers we lost. As this debate is about jobs, I repeat that it is customers who provide jobs. It is customers who pay the wages. It is our customers putting their money on Britain who will provide work for our people.
The Opposition's amendment would throw us all back to the disasters of earlier years. I ask the House to reject the amendment and support the Government's motion.
Question put, That the amendment be made:—
The House divided: Ayes 213, Noes 293.

Division No. 51]

[10 pm

AYES

Abse, Leo

Cunliffe, Lawrence

Adams, Allen

Cunningham, DrJ. (W'h'n)

Allaun, Frank

Dalyell.Tam

Alton, David

Davidson.Arthur

Anderson, Donald

Davies, Rt Hon Denzil (L'lli)

Archer, Rt Hon Peter

Davis, Clinton (HackneyC)

Ashton, Joe

Davis, Terry (B'ham, Stechf'd)

Atkinson, N.(H'gey)

Dean, Joseph (Leeds West)

Barnett, Guy (Greenwich)

Dewar, Donald

Barnett, Rt Hon Joel (H'wd)

Dixon, Donald

Benn, Rt Hon Tony

Dobson, Frank

Bennett, Andrew(St'kp'tN)

Dormand, Jack

Booth, Rt HonAlbert

Douglas, Dick

Boothroyd, MissBetty

Dubs, Alfred

Bottomley, RtHonA(M'b'ro)

Dunlop, John

Bray, Dr Jeremy

Dunnett, Jack

Brown, Hugh D. (Provan)

Dunwoody, Hon Mrs G.

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

Eadie, Alex

Brown, Ron (E'burgh, Leith)

Ellis, R.(NED'bysh're)

Callaghan, Jim (Midd'tn&P)

English, Michael

Campbell, Ian

Ennals, Rt Hon David

Campbell-Savours, Dale

Evans, loan (Aberdare)

Canavan, Dennis

Evans, John (Newton)

Cant, R. B.

Ewing, Harry

Carmichael, Neil

Faulds, Andrew

Carter-Jones, Lewis

Field, Frank

Clark, Dr David (S Shields)

Fitch, Alan

Cocks, Rt Hon M. (B'stolS)

Fitt, Gerard

Cohen, Stanley

Flannery, Martin

Coleman, Donald

Foot, Rt Hon Michael

Concannon, Rt Hon J..D.

Ford, Ben

Conlan, Bernard

Forrester, John

Cook, Robin F.

Foster, Derek

Cowans, Harry

Foulkes, George

Craigen, J. M. (G'gow, M'hill)

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

Crowther, Stan

Freeson, Rt Hon Reginald

Cryer, Bob

Garrett, John (NorwichS)

974

George, Bruce

Parry, Robert

Golding, John

Pendry, Tom

Graham, Ted

Powell, Raymond (Ogmore)

Grant, George(Morpeth)

Prescott, John

Hamilton, James(Bothwell)

Price, C. (Lewisham W)

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

Race, Reg

Harrison, Rt Hon Walter

Radice, Giles

Hart, Rt Hon Dame Judith

Rees, Rt Hon M (Leeds S)

Hattersley, Rt Hon Roy

Richardson, Jo

Heffer, Eric S.

Roberts, Albert (/vbrmanfo/T)

Hogg, N. (EDunb't'nshire)

Roberts, Allan('eoof/e;

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

Roberts, Ernest (Hackney N)

HomeRobertson, John

Roberts, Gwilym(Cannock)

Homewood, William

Robertson, George

Hooley, Frank

Robinson, G. (Coventry NW)

Howell, RtHon D.

Rodgers, RtHon William

Hoyle, Douglas

Rooker, J. W.

Huckfield, Les

Ross, Ernest (Dundee West

Hughes, Mark(Durham)

Rowlands, Ted

Hughes, Robert (Aberdeen N)

Ryman, John

Hughes, Roy (Newport)

Sever, John

Janner, HonGreville

Sheerman, Barry

Jay, Rt Hon Douglas

Sheldon, Rt Hon R.

John, Brynmor

Shore, Rt Hon Peter

Johnson, Walter (Derby S)

Short, MrsRenée

Jones, Rt Hon Alec (Rh'dda)

Silkin, Rt HonJ. (Deptford)

Jones, Barry (East Flint)

Silverman, Julius

Jones, Dan (Burnley)

Skinner, Dennis

Kaufman, Rt Hon Gerald

Smith, Cyril(Rochdale)

Kilfedder, JamesA.

Smith, Rt Hon J. (N Lanark)

Kilroy-Silk, Robert

Snaps, Peter

Lambie, David

Soley, Clive

Lamborn, Harry

Spearing, Nigel

Lamond, James

Spriggs, Leslie

Leadbitter, Ted

Stallard, A. W.

Leighton, Ronald

Stewart, Rt Hon D. (W Isles)

Lestor, MissJoan

Stoddart, David

Lewis, Arthur (N'hamNW)

Stott, Roger

Lewis, Ron (Carlisle)

Strang, Gavin

Litherland, Robert

Straw, Jack

Lofthouse, Geoffrey

Summerskill, HonDrShirley

Lyon, Alexander (York)

Taylor, Mrs Ann (Bolton W)

McCartney, Hugh

Thomas, Dafydd (Merioneth)

McDonald, DrOonagh

Thomas, DrR. (Carmarthen)

McElhone, Frank

Thorne, Stan (PrestonSouth)

McKay, Allen (Penistone)

Tilley, John

McKelvey, William

Torney, Tom

MacKenzie, Rt Hon Gregor

Varley, Rt Hon Eric G.

McNamara, Kevin

Wainwright.E.(DearneV)

McTaggart, Robert

Walker, Rt Hon H.(D'caster)

McWilliam, John

Watkins, David

Marks, Kenneth

Weetch, Ken

Marshall, D(G'gowS'ton)

Welsh, Michael

Marshall, Dr Edmund (Goole)

White, Frank R.

Marshall, Jim (LeicesterS)

White, J.(G'gowPollok)

Martin, M(G'gowS'burn)

Whitehead, Phillip

Mason, Rt Hon Roy

Whitlock, William

Maynard, MissJoan

Wigley, Dafydd

Meacher, Michael

Willey, Rt Hon Frederick

Mikardo, lan

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

Millan, Rt Hon Bruce

Wilson, Rt Hon SirH(H'ton)

Mitchell, Austin(Grimsby)

Wilson, William (C'trySE)

Morris, Rt Hon A. (W'shawe)

Winnick, David

Morton, George

Woodall, Alec

Moyle, Rt Hon Roland

Woolmer, Kenneth

Newens, Stanley

Wright, Sheila

Oakes, Rt Hon Gordon

Young, David (BoltonE)

O'Halloran, Michael

Orme, Rt Hon Stanley

Tellers for the Ayes:

Palmer, Arthur

Mr. James Tinn and

Park, George

Mr. Frank Haynes.

Parker, John

NOES

Adley, Robert

Arnold, Tom

Aitken, Jonathan

Aspinwall, Jack

Alexander, Richard

Atkins, Rt Hon H.(S'thorne)

Alison, Rt Hon Michael

Atkins, Robert(PrestonN)

Amery, Rt Hon Julian

Baker, Kenneth(St.M'bone)

Ancram, Michael

Baker, Nicholas (N Dorset)

975

Beaumont-Dark.Anthony

Gardiner, George(Reigate)

Bell, SirRonald

Gardner, Edward (S Fylde)

Bendall, Vivian

Garel-Jones, Tristan

Benyon, Thomas(A'don)

Gilmour, Rt Hon Sir lan

Benyon, W. (Buckingham)

Glyn, Dr Alan

Best, Keith

Goodlad, Alastair

Bevan, David Gilroy

Gorst, John

Biffen, Rt Hon John

Gow, lan

Biggs-Davison, Sir John

Gray, Hamish

Blackburn, John

Greenway, Harry

Blaker, Peter

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

Body, Richard

Griffiths, Peter Portsm'thN)

Bonsor, SirNicholas

Grist, lan

Bottomley, Peter (W'wich W)

Grylls, Michael

Bowden.Andrew

Gummer, JohnSelwyn

Boyson.DrRhodes

Hamilton, Hon A.

Braine, SirBernard

Hamilton, Michael(Salisbury)

Bright, Graham

Hampson, DrKeith

Brinton, Tim

Hannam, John

Brittan, Rt. Hon. Leon

Haselhurst, Alan

Brooke, Hon Peter

Hastings, Stephen

Brotherton, Michael

Havers, Rt Hon Sir Michael

Brown, Michael(Brigg&Sc'n)

Hawksley.Warren

Browne, John(Winchester)

Hayhoe, Barney

Bruce-Gardyne, John

Heath, Rt Hon Edward

Bryan, Sir Paul

Henderson.Barry

Buchanan-Smith, Rt. Hon. A.

Heseltine, Rt Hon Michael

Buck, Antony

Hicks, Robert

Budgen, Nick

Higgins, Rt Hon Terence L

Bulmer, Esmond

Hogg, HonDouglas(Gr'th'm)

Burden, SirFrederick

Holland, Philip(Carlton)

Butcher, John

Hooson, Tom

Butler, HonAdam

Hordern, Peter

Cadbury, Jocelyn

Howe, Rt Hon Sir Geoffrey

Carlisle, John (LutonWest)

Howell, RtHonD.(G'ldf'd)

Carlisle, Kenneth (Lincoln)

Hunt, David (Wirral)

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

Hunt, John(Ravensbourne)

Chalker, Mrs. Lynda

Hurd, HonDouglas

Channon, Rt. Hon. Paul

Irving, Charles(Cheltenham)

Chapman, Sydney

Jenkin, Rt Hon Patrick

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

JohnsonSmith, Geoffrey

Clark, SirW. (Croydon S)

Jopling, RtHonMichael

Clarke, Kenneth (Rushcliffe)

Kaberry, SirDonald

Clegg, Sir Walter

Kellett-Bowman, MrsElaine

Cockeram, Eric

Kershaw, SirAnthony

Cope, John

King, Rt Hon Tom

Cormack, Patrick

Knox, David

Corrie, John

Lamond, James

Costain, SirAlbert

Lamont, Norman

Cranborne, Viscount

Lang, Ian

Critchley.Julian

Langford-Holt, SirJohn

Crouch, David

Latham, Michael

Dean, Paul (North Somerset)

Lawrence, Ivan

Dickens, Geoffrey

Lawson, Rt Hon Nigel

Douglas-Hamilton, LordJ.

Lee, John

Dover.Denshore

LeMarchant.Spencer

du Cann, Rt Hon Edward

Lennox-Boyd.HonMark

Dunn, Robert (Dartford)

Lester, Jim (Beeston)

Dykes, Hugh

Lewis Kenneth (Rutland)

Eden, Rt Hon Sir John

Lloyd, Ian (Havant & W'loo)

Edwards, RtHon N. (P'broke)

Lloyd, Peter (Fareham)

Eggar, Tim

Loveridge, John

Elliott, SirWilliam

Luce, Richard

Emery, Sir Peter

Lyell, Nicholas

Eyre, Reginald

McCrindle, Robert

Fairgrieve, SirRussell

Macfarlane, Neil

Faith, Mrs Sheila

MacGregor, John

Farr, John

MacKay, John (Argyll)

Fell, SirAnthony

Macmillan, Rt Hon M.

Fenner, Mrs Peggy

McNair-Wilson, M.(N'bury)

Finsberg, Geoffrey

McNair-Wilson, P. (NewF'st)

Fisher, SirNigel

McQuarrie, Albert

Fletcher, A. (Ed'nb'ghN)

Madel, David

Fletcher-Cooke, SirCharles

Major, John

Fookes, Miss Janet

Marland, Paul

Forman, Nigel

Marlow, Antony

Fowler, Rt Hon Norman

Marshall, Michael(Arundel)

Fox, Marcus

Marten, RtHon Neil

Fraser, Peter (South Angus)

Mates, Michael

Fry, Peter

Maude, Rt Hon Sir Angus

976

Mawby, Ray

Shelton, William(Streatham)

Mawhinney, DrBrian

Shepherd, Colin (Hereford)

Maxwell-Hyslop, Robin

Shepherd, Richard

Mayhew, Patrick

Shersby, Michael

Mellor, David

Silvester, Fred

Meyer, Sir Anthony

Sims, Roger

Miller, Hal(B'grove)

Skeet, T. H. H.

Mills, lain(Meriden)

Speed, Keith

Miscampbell, Norman

Speller, Tony

Mitchell, David(Basingstoke)

Spence, John

Monro, SirHector

Spicer, Jim(West Dorset)

Montgomery, Fergus

Spicer, Michael(S Worcs)

Moore, John

Sproat, lain

Morris, M. (N'hamptonS)

Squire, Robin

Morrison, HonC. (Devizes)

Stanbrook, lvor

Morrison, Hon P. (Chester)

Stanley, John

Mudd, David

Steen, Anthony

Murphy, Christopher

Stevens, Martin

Myles, David

Stewart, A. (ERenfrewshire)

Neale, Gerrard

Stewart, lan (Hitchin)

Needham, Richard

Stokes, John

Nelson, Anthony

Stradling Thomas.J.

Neubert, Michael

Tapsell, Peter

Newton, Tony

Taylor, Teddy (S'end E)

Normanton, Tom

Tebbit, Rt Hon Norman

Nott, RtHon John

Temple-Morris, Peter

O'Halloran, Michael

Thatcher, Rt Hon Mrs M.

Onslow, Cranley

Thomas, Rt Hon Peter

Oppenheim, Rt Hon Mrs S.

Thompson, Donald

Page, Richard (SW Herts)

Thorne, Neil(llfordSouth)

Parkinson, RtHonCecil

Thornton, Malcolm

Parris, Matthew

Townend, John (Bridlington)

Patten, Christopher(Bath)

Townsend, CyrilD.(B'heath)

Patten, John(Oxford)

Trippier, David

Pattie, Geoffrey

Trotter, Neville

Pawsey, James

van Straubenzee, SirW.

Percival, Sir lan

Vaughan, DrGerard

Pink, R.Bonner

Viggers, Peter

Pollock, Alexander

Waddington, David

Prentice, RtHon Reg

Wakeham, John

Price, Sir David (Eastleigh)

Waldegrave, HonWilliam

Prior, Rt Hon James

Walker, Rt Hon P.(W'cester)

Proctor, K. Harvey

Walker-Smith, RtHon Sir D.

Pym, Rt Hon Francis

Waller, Gary

Raison, Timothy

Walters, Dennis

Rathbone, Tim

Ward, John

Rees, Peter (Dover and Deal)

Watson, John

Rees-Davies, W. R.

Wells, Bowen

Renton, Tim

Wells, John(Maidstone)

RhodesJames, Robert

Wheeler, John

Rhys Williams, SirBrandon

Whitelaw, RtHon William

Ridley, HonNicholas

Whitney, Raymond

Ridsdale, SirJulian

Wickenden, Keith

Rifkind, Malcolm

Wiggin, Jerry

Roberts, M. (Cardiff NW)

Williams.D.(Montgomery)

Roberts, Wyn (Conway)

Winterton, Nicholas

Rossi, Hugh

Wolfson, Mark

Rost, Peter

Young, SirGeorge(Acton)

Sainsbury, HonTimothy

Younger, RtHon George

St. John-Stevas, Rt Hon N.

Scott, Nicholas

Tellers for the Noes:

Shaw, Giles (Pudsey)

Mr. Anthony Berry and

Shaw, Michael (Scarborough)

Mr. Robert Boscawen.

Question accordingly negatived.
Main Question put:—
The House divided: Ayes 291, Noes 246.

Division No. 52]

[10.12pm

AYES

Adley, Robert

Atkins, Robert(PrestonN)

Aitken, Jonathan

Baker, Kenneth(St.M'bone.)

Alexander, Richard

Baker, Nicholas (N Dorset)

Alison, Rt Hon Michael

Beaumont-Dark, Anthony

Amery, RtHon Julian

Bell, SirRonald

Ancram, Michael

Bendall, Vivian

Arnold, Tom

Benyon, Thomas(A'don)

Aspinwall, Jack

Benyon, W. (Buckingham)

Atkins, RtHonH.(S'thorne)

Best, Keith

977

Bevan, David Gilroy

Gow, lan

Biffen, Rt Hon John

Gray, Hamish

Biggs-Davison, Sir John

Greenway, Harry

Blackburn, John

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

Blaker, Peter

Griffiths, Peter Portsm'thN)

Body, Richard

Grist, lan

Bonsor, SirNicholas

Grylls, Michael

Bottomley, Peter (W'wichW)

Gummer, JohnSelwyn

Bowden, Andrew

Hamilton, Hon A.

Boyson, Dr Rhodes

Hamilton, Michael(Salisbury)

Braine, SirBernard

Hampson, DrKeith

Bright, Graham

Hannam, John

Brinton, Tim

Haselhurst, Alan

Brittan, Rt. Hon. Leon

Hastings, Stephen

Brooke, Hon Peter

Havers, Rt Hon Sir Michael

Brotherton, Michael

Hawksley, Warren

Brown, Michael(Brigg&Sc'n)

Heath, RtHon Edward

Browne, John (Winchester)

Henderson, Barry

Bruce-Gardyne, John

Heseltine, RtHon Michael

Bryan, Sir Paul

Hicks, Robert

Buchanan-Smith, Rt. Hon. A.

Higgins, RtHon Terence L

Buck, Antony

Hogg, HonDouglas(Gr'th'm)

Budgen, Nick

Holland, Philip(Carlton)

Bulmer, Esmond

Hooson, Tom

Burden, SirFrederick

Hordern, Peter

Butcher, John

Howe, Rt Hon Sir Geoffrey

Butler, Hon Adam

Howell, RtHon D.(G'ldf'd)

Cadbury, Jocelyn

Hunt, David (Wirral)

Carlisle, John (Luton West)

Hunt, John(Ravensbourne)

Carlisle, Kenneth (Lincoln)

Hurd, HonDouglas

Carlisle, RtHon M. (R'c'n)

Irving, Charles (Cheltenham)

Chalker, Mrs. Lynda

Jenkin, RtHon Patrick

Channon, Rt. Hon. Paul

JohnsonSmith, Geoffrey

Chapman, Sydney

Jopling, RtHon Michael

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

Kaberry, SirDonald

Clark, SirW. Croydon S)

Kellett-Bowman, MrsElaine

Clarke, Kenneth (Rushcliffe)

Kershaw, SirAnthony

Clegg, SirWalter

King, RtHon Tom

Cockeram, Eric

Knox, David

Cope, John

Lamont, Norman

Cormack, Patrick

Lang, lan

Corrie, John

Langford-Holt, SirJohn

Costain, SirAlbert

Latham, Michael

Cranborne, Viscount

Lawrence, lvan

Critchley, Julian

Lawson, Rt Hon Nigel

Dean, Paul (North Somerset)

Lee, John

Dickens, Geoffrey

LeMarchant, Spencer

Douglas-Hamilton, Lord J.

Lennox-Boyd, HonMark

Dover, Denshore

Lester, Jim (Beeston)

du Cann, Rt Hon Edward

Lewis, Kenneth(Rutland)

Dunn, Robert(Dartford)

Lloyd, lan (Havant & W'loo)

Dykes, Hugh

Lloyd, Peter (Fareham)

Eden, RtHon Sir John

Loveridge, John

Edwards, Rt Hon N. (P'broke)

Luce, Richard

Eggar, Tim

Lyell, Nicholas

Elliott, SirWilliam

McCrindle, Robert

Emery, Sir Peter

Macfarlane, Neil

Eyre, Reginald

MacGregor, John

Fairgrieve, SirRussell

MacKay, John (Argyll)

Faith, MrsSheila

Macmillan, Rt Hon M.

Farr, John

McNair-Wilson, M.(N'bury)

Fell, Sir Anthony

McNair-Wilson, P.(NewF'st)

Fenner, Mrs Peggy

McQuarrie, Albert

Finsberg, Geoffrey

Madel, David

Fisher, SirNigel

Major, john

Fletcher, A. (Ed'nb'ghN)

Marland, Paul

Fletcher-Cooke, SirCharles

Marlow, Antony

Fookes, Miss Janet

Marshall, Michael (Arundel)

Forman, Nigel

Marten, Rt Hon Neil

Fowler, RtHon Norman

Mates, Michael

Fox, Marcus

Maude, RtHon Sir Angus

Fraser, Peter (South Angus)

Mawby, Ray

Fry, Peter

Mawhinney, DrBrian

Gardiner, George(Reigate)

Maxwell-Hyslop, Robin

Gardner, Edward (S Fylde)

Mayhew, Patrick

Garel-Jones, Tristan

Mellor, David

Gilmour, RtHon Sir lan

Meyer, Sir Anthony

Glyn, Dr Alan

Miller, Hal(B'grove)

Goodlad, Alastair

Mills, lain(Meriden)

Gorst, John

Miscampbell, Norman

978

Mitchell, David (Basingstoke)

Skeet, T. H. H.

Monro, SirHector

Speed, Keith

Montgomery, Fergus

Speller, Tony

Moore, John

Spence, John

Morris, M.(N'hamptonS)

Spicer, Jim (West Dorset)

Morrison, Hon C. (Devizes)

Spicer, Michael (S Worcs)

Morrison, Hon P. (Chester)

Sproat, lain

Mudd, David

Squire, Robin

Murphy, Christopher

Stanbrook, lvor

Myles, David

Stanley, John

Neale, Gerrard

Steen, Anthony

Needham, Richard

Stevens, Martin

Nelson, Anthony

Stewart, A.(ERenfrewshire)

Neubert, Michael

Stewart, Ian (Hitchin)

Newton, Tony

Stokes, John

Normanton, Tom

Stradling Thomas, J.

Nott, RtHonJohn

Tapsell, Peter

Onslow, Cranley

Taylor, Teddy (S'end E)

Oppenheim, Rt Hon Mrs S.

Tebbit, Rt Hon Norman

Page, Richard (SW Herts)

Temple-Morris, Peter

Parkinson, RtHonCecil

Thatcher, Rt Hon Mrs M.

Parris, Matthew

Thomas, Rt Hon Peter

Patten, Christopher(Bath)

Thompson, Donald

Patten, John (Oxford)

Thorne, Neil (llfordSouth)

Pattie, Geoffrey

Thornton, Malcolm

Pawsey, James

Townend, John(Bridlington)

Percival, Sir lan

Townsend, Cyril D, (B'heath)

Pink, R.Bonner

Trippier, David

Pollock, Alexander

Trotter, Neville

Prentice, Rt Hon Reg

van Straubenzee, SirW.

Price, SirDavid (Eastleigh)

Vaughan, DrGerard

Prior, RtHon James

Viggers, Peter

Proctor, K. Harvey

Waddington, David

Pym, Rt Hon Francis

Wakeham, John

Raison, Timothy

Waldegrave, HonWilliam

Rathbone, Tim

Walker, Rt Hon P.(W'cester)

Rees, Peter (Dover and Deal)

Walker-Smith, Rt Hon Sir D.

Rees-Davies, W. R.

Waller, Gary

Renton, Tim

Walters, Dennis

Rhodes James, Robert

Ward, John

RhysWilliams, SirBrandon

Watson, John

Ridley, HonNicholas

Wells, Bowen

Ridsdale, SirJulian

Wells, John (Maidstone)

Rifkind, Malcolm

Wheeler, John

Roberts, M. (Cardiff NW)

Whitelaw, RtHon William

Roberts, Wyn (Conway)

Whitney, Raymond

Rossi, Hugh

Wickenden, Keith

Sainsbury, HonTimothy

Wiggin, Jerry

St. John-Stevas, Rt Hon N.

Williams.D. (Montgomery)

Scott, Nicholas

Winterton, Nicholas

Shaw, Giles (Pudsey)

Wolfson, Mark

Shaw, Michael(Scarborough)

Young, SirGeorge(Acton)

Shelton, William(Streatham)

Younger, RtHon George

Shepherd, Colin (Hereford)

Shepherd, Richard

Tellers for the Ayes:

Shersby, Michael

Mr. Anthony Berry and

Silvester, Fred

Mr. Robert Boscawen.

Sims, Roger

NOES

Abse, Leo

B rown, Ron (E'burgh, Leith)

Adams, Allen

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

Allaun, Frank

Campbell, lan

Alton, David

Campbell-Savours, Dale

Anderson, Donald

Canavan, Dennis

Archer, Rt Hon Peter

Cant, R. B.

Ashton, Joe

Carmichael, Neil

Atkinson, N.(H'gey)

Carter-Jones, Lewis

Barnett, Guy (Greenwich)

Cartwright, John

Barnett, Rt Hon Joel (H'wd)

Clark, Dr David (S Shields)

Benn, Rt Hon Tony

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

Bennett, Andrew(St'kp'tN)

Cohen, Stanley

Booth, RtHon Albert

Coleman, Donald

Boothroyd, MissBetty

Concannon, Rt Hon J. D.

Bottomley, RtHonA(M'b'ro)

Conlan, Bernard

Bradley, Tom

Cook, Robin F.

Bray, Dr Jeremy

Cowans, Harry

Brocklebank-Fowler, C.

Craigen, J. M. (G'gow, M'hill)

Brown, Hugh D. (Provan)

Crawshaw, Richard

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

Crowther, Stan

979

Cryer, Bob

HomeRobertson, John

Cunningham, G.(IslingtonS)

Homewood, William

Cunningham, DrJ. (W'h'n)

Hooley, Frank

Dalyell, Tam

Horam, John

Davidson, Arthur

Howell, RtHonD.

Davies, Rt Hon Denzil (L'lli)

Howells, Geraint

Davis, Clinton (Hackney C)

Hoyle, Douglas

Davis, Terry (B 'ham, Stechf'd)

Huckfield, Les

Dean, Joseph (Leeds West)

Hughes, Mark(Durham)

Dewar, Donald

Hughes, Robert (AberdeenN)

Dixon, Donald

Hughes, Roy (Newport)

Dobson, Frank

Janner, HonGreville

Dormand, Jack

Jay, Rt Hon Douglas

Douglas, Dick

John, Brynmor

Douglas-Mann, Bruce

Johnson, Walter (Derby S)

Dubs, Alfred

Johnston, Russell (Inverness)

Dunlop, John

Jones, Rt Hon Alec (Rh'dda)

Dunn, James A.

Jones, Barry (East Flint)

Dunnett, Jack

Jones, Dan (Burnley)

Dunwoody, Hon Mrs G.

Kaufman, Rt Hon Gerald

Eadie, Alex

Kilfedder, JamesA.

Ellis, R.(NED'bysh're)

Kilroy-Silk, Robert

Ellis, Tom (Wrexham)

Lambie, David

English, Michael

Lamborn, Harry

Ennals, Rt Hon David

Lamond, James

Evans, loan (Aberdare)

Leadbitter, Ted

Evans, John (Newton)

Leighton, Ronald

Ewing, Harry

Lestor, Miss Joan

Faulds, Andrew

Lewis, Arthur(N'ham NW)

Field, Frank

Lewis, Ron (Carlisle)

Fitch, Alan

Litherland, Robert

Fitt, Gerard

Lofthouse, Geoffrey

Flannery, Martin

Lyon, Alexander(York)

Foot, Rt Hon Michael

Lyons, Edward (Bradf'dW)

Ford, Ben

Mabon, Rt Hon Dr J. Dickson

Forrester, John

McCartney, Hugh

Foster, Derek

McDonald, DrOonagh

Foulkes, George

McElhone, Frank

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

McKay, Allen(Penistone)

Freeson, Rt Hon Reginald

McKelvey, William

Freud, Clement

MacKenzie, Rt Hon Gregor

Garrett, John (NorwichS)

Maclennan, Robert

George, Bruce

McNally, Thomas

Ginsburg, David

McNamara, Kevin

Golding, John

McTaggart, Robert

Graham, Ted

McWilliam, John

Grant, George (Morpeth)

Marks, Kenneth

Grant, John (IslingtonC)

Marshall, D(G'gowS'ton)

Grimond, RtHonJ.

Marshall, Dr Edmund (Goole)

Hamilton, James(Bothwell)

Marshall, Jim (LeicesterS)

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

Martin, M(G'gowS'burn)

Harrison, Rt Hon Walter

Mason, Rt Hon Roy

Hart, Rt Hon Dame Judith

Maynard, MissJoan

Hattersley, Rt Hon Roy

Meacher, Michael

Haynes, Frank

Mikardo, lan

Heffer, Eric S.

Millan, Rt Hon Bruce

Hogg, N. (EDunb't'nshire)

Mitchell, Austin (Grimsby)

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

Mitchell, R. C. (Soton Itchen)

980

Morris, Rt Hon A. (W'shawe)

Spearing, Nigel

Moyle, Rt Hon Roland

Spriggs, Leslie

Newens, Stanley

Stallard, A.W.

Oakes, Rt Hon Gordon

Steel, Rt Hon David

Ogden, Eric

Stewart, Rt Hon D. (W Isles)

O'Halloran, Michael

Stoddart, David

Orme, Rt Hon Stanley

Stott, Roger

Owen, Rt Hon Dr David

Strang, Gavin

Paisley, Rev Ian

Straw, Jack

Palmer, Arthur

Summerskill, HonDrShirley

Park, George

Taylor, Mrs Ann (Bolton W)

Parker, John

Thomas, Dafydd(Merioneth)

Parry, Robert

Thomas, Jeffrey(Abertillery)

Pendry, Tom

Thomas, Mike (Newcastle E)

Penhaligon, David

Thomas, DrR.(Carmarthen)

Powell, Raymond(Ogmore)

Thorne, Stan (PrestonSouth)

Prescott, John

Tilley, John

Price, C.(Lewisham W)

Tinn, James

Race, Reg

Torney, Tom

Radice, Giles

Varley, Rt Hon Eric G.

Rees, Rt Hon M (Leeds S)

Wainwright.E.(DearneV)

Richardson, Jo

Wainwright, R.(ColneV)

Roberts, Albert(Normanton)

Walker, Rt Hon H.(D'caster)

Roberts, Allan(Bootle)

Watkins, David

Roberts, Ernest (Hackney N)

Weetch, Ken

Roberts, Gwilym(Cannock)

Wellbeloved, James

Robertson, George

Welsh, Michael

Robinson, G. (Coventry NW)

White, Frank R.

Rodgers, RtHon William

White, J.(G'gow Pollok)

Rooker, J. W.

Whitehead, Phillip

Roper, John

Whitlock, William

Ross, Ernest (Dundee West)

Wigley, Dafydd

Rowlands, Ted

Willey, RtHon Frederick

Ryman, John

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

Sandelson, Neville

Williams, Rt Hon Mrs (Crosby)

Sever, John

Wilson, RtHonSirH.(H'ton)

Sheerman, Barry

Wilson, William (C'trySE)

Sheldon, RtHon R.

Winnick, David

Shore, Rt Hon Peter

Woodall, Alec

Short, Mrs Renée

Woolmer, Kenneth

Silkin, Rt Hon J. (Deptford)

Wrigglesworth, lan

Silverman, Julius

Wright, Sheila

Skinner, Dennis

Young, David (BoltonE)

Smith, Cyrill (Rochdale)

Smith, Rt Hon J. (N Lanark)

Tellers for the Noes:

Snape, Peter

Mr. Lawrence Cunliffe and

Soley, Clive

Mr. George Morton.

Question accordingly agreed to.
Resolved,
That this House, greatly concerned about the difficulties facing those who cannot find jobs, supports the Government's policies which are helping to make British industry more competitive and which therefore offer the best prospect of a permanent improvement in job opportunities for people in this country.

Walkie-Talkie Equipment
Motion made, and Question proposed, That this House do now Adjourn—[Mr. Cope.]
10. 24 pm
Miss Joan LestorI shall try not to delay the House too long. I know that the Minister is aware of the matter that I wish to raise. It is a somewhat complicated situation. My object is to gain some clarification pending, I hope, changes in the law to put the matter in order. As the Minister is aware—I have corresponded with him about the issue—it is now possible to buy in this country what are commonly known as walkie-talkie sets from various shops dealing in electrical equipment. Usually the sets are bought by young boys and girls. They can operate at a distance of about one-quarter of a mile.
The sets are make in Taiwan or elsewhere. The packages are often marked "No licence required". They are made for the American market where no licence is required. In Britain the problem is that the use of such equipment is illegal because it interferes with various frequencies.
It is strange that the sale of such sets is legal but their use is illegal. When I first stumbled upon the anomaly my reaction was to assume that, because the use of the equipment was illegal, the selling of it was also illegal. I probed and inquired and discovered that retailers and importers could not be taken to task because they were not breaking the law, but users of the equipment were breaking the law.
That is not known and youngsters are buying the sets and will be in trouble if they use them. I have discussed the problem with the police and they are as confused as everybody else. On occasions they tell young people to stop using the equipment because of the difficulties caused to frequencies. Such sets also interfere with television reception.
The matter has become further complicated since the legalising of citizens band radio. That has caused confusion. Many people believe that that move also legalised the use of walkie-talkie equipment. The press has made inquiries and the impression is that walkie-talkie sets were legalised with CB radio. What worries me is that shops can sell the equipment legally, perhaps caring little. Many shops sell the equipment in all innocence because the packaging states that no licence is required, implying that their use is legal.
Many young people spend between £18 and £20 on equipment for communicating with their friends. In the event, they are told that it is an offence against the Wireless Telegraphy Act. I have asked the Minister to amend that Act. He has said that he will do so when parliamentary time permits. I believe that such an amendment could be made soon. In the meantime, it would be useful for the young people and the retailers, who seem to be as ignorant as everybody else about the position, if a statement were made about the exact situation. Perhaps young people could be advised against purchasing such sets.
The legal position is confusing and misleading. Most of the sets are imported and that adds to the confusion. The packets say that no licence is needed. Many people believe that they need a licence but the Home Office, in response
982
to many telephone calls, has said that it is not a question of a licence but that such sets should not be used. It will be enormously helpful to retailers, young people and the police if the matter is clarified, if the distinction between walkies-talkies and citizens band radio is made clear and if the right hon. Gentleman makes it clear how he intends to deal with the issue, and whether he will introduce legislation in the fairly near future.
10.30 pm
The Minister of State, Home Office (Mr. Timothy Raison)I am grateful to the hon. Member for Eton and Slough (Miss Lestor) for raising this subject tonight. She has performed a useful service in raising it and I shall try to provide the clarification for which she is asking. I hope that she will not mind too much if I first make it clear that the 49 MHz walkie-talkie equipment to which she has drawn attention is not citizens band equipment as it is known anywhere in the world. The subject of her Adjournment debate rather implies that it is citizen's band equipment but I think that she now realises that that is not so
Miss LestorI have gone to great lengths to explain to everybody that I was not talking about citizens band radio. The press has constantly jumped to the conclusion that that is what I am raising and it has put the two together.
Mr. RaisonI do not want to be churlish, but if the hon. Lady reads the Order Paper she will see that it states:
"On the motion for the Adjournment of the House under Standing Order No. 1 Miss Joan Lestor proposes to raise the subject of the continued legal sale of citizens' band radio"—
Miss LestorI did not put that on the Order Paper.
Mr. RaisonThat is the dilemma.
The important thing is to establish the facts and I shall try to help do that. We are not dealing with citizens band radio as it is generally known. These walkie-talkies are usually limited in range to about half a mile. They were first produced for the American market, where the United States Administration permits their use without the requirement of a licence. I think that that may be part of the cause of the difficulty to which the hon. Lady has referred. Citizens band operates in a different frequency band of around 27 MHz as well as being higher-poweredyet CB does spring to mind in at least one respect as a parallel because some people operating in that area have been less than honest and have sold equipment that they know perfectly well may not legally be used in the United Kingdom.
The function of radio regulations for which I am responsible within the Home Office is to allow the maximum number of people to use radio as freely as possible. This means without causing interference to other users of radio or suffering it themselves. Interference is a major problem. It causes considerable annoyance, and is expensive and time-consuming to deal with.
Our controls are basically of two sorts. First, we can specify the standards that radio equipment should meet, and secondly, we issue licences authorising users to use equipment upon certain conditions. The position under the Wireless Telegraphy Act 1949 is perfectly clear. All radio equipment requires a licence issued by the Secretary of State unless it has been exempted from that requirement. The only exemptions that have been made are broadcasting or amateur radio receivers, which were exempted in 1970, and model control and metal detecting equipment, which

983
were exempted in 1980. All other radio equipment, both transmitting and receiving, without exception requires a licence, although we hope that it may be possible in future to extend exemption to some other very low powered non-speech devices.
The 49 MHz walkie-talkies to which we have referred operate in this country in the frequency band used for 405-line television broadcasting. We cannot add a different service at the same place without causing interference. I would not suggest that the 49 MHz walkie-talkies are creating or are capable of creating problems on the scale of CB, but their potential effect should not be underrated. 405-line television broadcasting will cease by the end of 1986, but a decision has not yet been reached on the future use of the band. We cannot prejudice this decision, and limit our freedom to replan the band with the maximum degree of flexibility by permitting in the middle of it a non-essential speech service. Furthermore, legal CB of course provides a simple and better alternative. Thus the 49 MHz equipment we are discussing is illegal and will remain so. It is not licenseable in this country, and anyone using it is committing an offence.
I would add at this stage that the police are not the most appropriate source of advice for anyone unsure of what is required in connection with any use of radio. The police do not even take the lead in enforcement, although they do give a great deal of assistance to the radio interference service in their task. Any questions about radio regulatory requirements should be directed to the Home Office radio regulatory department, which will do its best to help.
As the House and the hon. Lady know, there are at present no powers under wireless telegraphy legislation to control the sale or advertising for sale of any wireless telegraphy apparatus. We have the powers to ban the manufacture or import of wireless telegraphy equipment, but the only occasion on which this power has been exercised was in 1968 in relation to 27 MHz CB equipment. That remains the position, although provision has now been made for the import and manufacture of CB equipment that meets our published specifications. The hon. Lady has written to me recently about a case of this kind, to which I hope to reply before long, but it seems to be a matter of confiscation by Her Majesty's Customs of articles whose import into the United Kingdom is forbidden under the Control of Importation and Manufacture Order to which I have just referred.
We have for some time been conscious of weaknesses in the enforcement powers under this legislation. There are two or three areas in particular. First, some of the penalties available under the legislation are outdated and inadequate, and we should like to bring them into line with modern practice, as well as recognising the seriousness of some present-day offences. In this context, the Criminal Justice Bill now before the House will, by its across-the-board uprating of summary fines, make at least a contribution towards this. For example, the maximum fine for the offence of unlicensed transmission will be
984
increased from £400 to £1, 000 and this will apply whether we are talking of private mobile radio or CB or pirate broadcasting.
Secondly, we are concerned that while courts can and frequently do order forfeiture of equipment that has been used illegally, there are no powers available to enforcement officers to detain such equipment until a court can decide. We have all too much evidence of equipment that has, prima facie, been illegally used continuing to be so used before a case comes for trial, and we should like to do something about that. Finally, we should like to seek powers to ban the sale or advertising for sale of designated wireless telegraphy apparatus. In these three areas at least, we intend to bring proposals before the House when parliamentary time permits.
Two important points, however, flow from the fact that our main concern is the prevention of interference. First, we might not be justified in using sweeping powers if there were not a real problem. Illicit 27 MHz CB apparatus certainly falls into this category, harming as it does many other radio services and even in certain circumstances the legal CB service itself.
At this stage at least the 49 MHz walkie-talkies that we are discussing today present a much lesser problem. On the other hand, their more widespread use would worsen the position, and they prejudice the future use of the band in which they operate, which will be vital for the development of certain radio services in the next few years.
Secondly, our concern under the wireless telegraphy legislation is the regulation of radio and the protection of radio services. It would not be appropriate for us to use radio regulatory powers for the protection of consumers, although I recognise that in certain circumstances there can be a useful and welcome spin-off.
The hon. Lady has referred to the packaging of these walkie-talkies or the leaflets which accompany them as stating "No licence required". That may be true of the United States, where the pattern of use is different, but is quite wrong of this country. I strongly deplore the practice of retailers in selling equipment labelled in this way, which misleads a purchaser as to the requirements in this country. I shall be drawing the attention of my right hon. Friend the Minister for Consumer Affairs to this point. She will doubtless wish to consider whether the practice falls within the scope of the Trade Descriptions Act 1968, and if so, whether trading standards officers can help.
I can assure the hon. Lady that we keep this whole subject under careful review. If and when we obtain a power to ban the sale or advertising for sale of wireless telegraphy equipment, we would expect to apply that power to the 49 MHz walkie-talkies.
I hope that I have answered the hon. Lady's points. I have made quite clear what the position is. I repeat that I am grateful to her for raising this subject today.
Question put and agreed to.
Adjourned accordingly at twenty-one minutes to Eleven o'clock.

ATTORNEY-GENERAL
  Judge Bertrand Richards
  Judge Bertrand Richards
  Public Records (Burgess-Maclean)
  Public Records (Burgess-Maclean)
TRADE
  Coastguard Service
  Coastguard Service
  "Leros Island"
  "Leros Island"
  Balance of Trade
  Balance of Trade
  Manufactures
  Manufactures
  European Community (Trade Balance)
  European Community (Trade Balance)
  Banks (Foreign Loans)
  Banks (Foreign Loans)
  Aviation Security Fund
  Aviation Security Fund
NORTHERN IRELAND
  De Lorean Car Company Ltd.
  De Lorean Car Company Ltd.
  Slab Steel
  Slab Steel
NATIONAL FINANCE
  Government Car Service
  Government Car Service
  Poland
  Poland
  National Savings Bank, Glasgow
  National Savings Bank, Glasgow
WALES
  Mentally Handicapped Children
  Mentally Handicapped Children
  Education (Grant-related Expenditure)
  Education (Grant-related Expenditure)
HOME DEPARTMENT
  Overladen Lorries (Prosecutions)
  Overladen Lorries (Prosecutions)
  Parliamentary Boundary Commission
  Parliamentary Boundary Commission
  Policemen (Back Injuries)
  Policemen (Back Injuries)
  West Yorkshire Police
  West Yorkshire Police
  Disaster Appeals
  Disaster Appeals
  Mr. Paul Worrell
  Mr. Paul Worrell
  Polish Nationals
  Polish Nationals
PRIME MINISTER
  Poland
  Poland
  British Rail
  British Rail
ENERGY
  British National Oil Corporation
  British National Oil Corporation
  North Sea Oil
  North Sea Oil
  Britoil Ltd.
  Britoil Ltd.
  Electricity Prices
  Electricity Prices
  European Gas Pipeline
  European Gas Pipeline
  Diesel Fuel
  Diesel Fuel
  Conservation and Consumption
  Conservation and Consumption
  Sellafield (Safety Review)
  Sellafield (Safety Review)
EMPLOYMENT
  Hotel and Catering Workers
  Hotel and Catering Workers
  Redundancy Fund Payments
  Redundancy Fund Payments
  Youth Training Scheme
  Youth Training Scheme
  Coventry
  Coventry
  Young Persons (Concessionary Fares)
  Young Persons (Concessionary Fares)
  Unemployment Statistics
  Unemployment Statistics
  Redundancies
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  Youth Opportunities Programme
  Youth Opportunities Programme
  Jobcentres (Unpaid Work)
  Jobcentres (Unpaid Work)
AGRICULTURE, FISHERIES AND FOOD
  European Community (Expenditure)
  European Community (Expenditure)
  Aflotoxin
  Aflotoxin
  Food Irradiation
  Food Irradiation
  Poultry Packing Plants
  Poultry Packing Plants
  Deep Sea Catches
  Deep Sea Catches
  Tortoises
  Tortoises
SCOTLAND
  Unemployment Black Spots
  Unemployment Black Spots
  Local Authority Rents and Rates
  Local Authority Rents and Rates
  House Building
  House Building
  Prestwick (Infrastructure)
  Prestwick (Infrastructure)
  Unemployment
  Unemployment
  Police (Complaints)
  Police (Complaints)
  Young Persons (Training)
  Young Persons (Training)
  Agricultural Research
  Agricultural Research
  A75 (Gretna-Stranraer)
  A75 (Gretna-Stranraer)
  Aluminium Smelter (Invergordon)
  Aluminium Smelter (Invergordon)
  Herring
  Herring
  Breach of the Peace (Prosecution Policy)
  Breach of the Peace (Prosecution Policy)
  Bail
  Bail
  Advocates-Depute
  Advocates-Depute
  Warrant Sales
  Warrant Sales
  Food Intervention Stores
  Food Intervention Stores
  Housing Support Grant (Supplement)
  Housing Support Grant (Supplement)
  Unemployment Statistics
  Unemployment Statistics
  Scottish Office (Cleaners)
  Scottish Office (Cleaners)
EDUCATION AND SCIENCE
  Full-time Education
  Full-time Education
  Chiropractics (Bournemouth College)
  Chiropractics (Bournemouth College)
SOCIAL SERVICES
  Abortions
  Abortions
  Unemployed Persons (Travelling Expenses)
  Unemployed Persons (Travelling Expenses)
  Hospital Beds
  Hospital Beds
  Benefits
  Benefits
  Death Grant
  Death Grant
  Nurses
  Nurses
  Kings Mill Hospital, Sutton in Ashfield
  Kings Mill Hospital, Sutton in Ashfield
  Fuel Bills (Assistance)
  Fuel Bills (Assistance)
  Community Health Councils (Journal)
  Community Health Councils (Journal)
  Dental Services
  Dental Services
  Hypothermia
  Hypothermia
  Child Benefit
  Child Benefit
  Injuries (Research)
  Injuries (Research)
  "An Element of Rough Justice"
  "An Element of Rough Justice"
  Chiropractors
  Chiropractors
TRANSPORT
  M1
  M1
  Young Unemployed (Reduced Fares)
  Young Unemployed (Reduced Fares)
  Motor Cycles (Indicators)
  Motor Cycles (Indicators)
  Headrests
  Headrests
  Car Seat Design
  Car Seat Design
  Tyre Sealants
  Tyre Sealants
ENVIRONMENT
  Richmond Park (Papal mass)
  Richmond Park (Papal mass)
  Area Improvement (Report)
  Area Improvement (Report)
  Mineshafts and Quarries
  Mineshafts and Quarries
  European Community (Disaster Relief)
  European Community (Disaster Relief)
  Rate Support Grant Settlement (Computer Time)
  Rate Support Grant Settlement (Computer Time)
INDUSTRY
  Empty Factory Space
  Empty Factory Space
  National Maritime Institute
  National Maritime Institute
  Job Creation (South Yorkshire)
  Job Creation (South Yorkshire)
  Advance Factories
  Advance Factories
  Aid to Industry
  Aid to Industry
  Industrial Development Certificates
  Industrial Development Certificates
  Northern Region
  Northern Region
DEFENCE
  Tornado
  Tornado
  Nuclear Powered Submarines
  Nuclear Powered Submarines
  Information Officers
  Information Officers
  Aid to Civil Authorities
  Aid to Civil Authorities
  Trident Programme
  Trident Programme
  Polaris Missiles
  Polaris Missiles
FOREIGN AND COMMONWEALTH AFFAIRS
  Hong Kong
  Hong Kong
  Israel
  Israel
  Iran
  Iran
  Democratic People's Republic of Korea
  Democratic People's Republic of Korea
  Dutch Horticulture (Gas Prices)
  Dutch Horticulture (Gas Prices)

Preamble
The House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Liverpool.
The Viscount Hood—Sat first in Parliament after the death of his brother.

Disabled People: Benefits
Baroness Lane-Fox: 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 by how much the expenditure on social security benefits for disabled people has risen in real terms since 1978–79.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Elton): My Lords, the estimated expenditure on cash benefits for long-term sick and disabled people in 1981–82 is £2,781 million. This represents an increase of about 6 per cent. in real terms over the 1978–79 figure.
Baroness Lane-Fox: My Lords, in congratulating my noble friend the Minister on that very encouraging reply, particularly in this difficult time and especially in regard to the substantial improvement in the mobility allowance, I ask for his assurance that improvement in the benefits for disabled people will still be a priority with the Government.
Lord Elton: My Lords, although the numbers of people who are in receipt of benefit have increased, the amount of benefit paid has increased out of proportion to that, and mobility allowance has in fact gone up by 65 per cent. since this Government came into office. We are committed to a coherent system of benefits for disabled people. Our success in this will of course depend on the success we have with the economy as a whole.
Baroness Jeger: My Lords, before the Minister gets too complacent about that situation, may I ask him how much of this total increase is due to the fact that there are more people applying for benefits and therefore the per capita increase is not related to the figure he has given? I should also like to ask him how much of the increase is due to benefits which were introduced by the previous Government. Secondly, does the noble Lord not agree with the Minister in another place who on 27th July honestly admitted
948
that the invalidity pension for single persons and married couples had fallen by 4 per cent. since 1979 due to the abatement of the 1980 uprating? What compensation are this Government giving to those people who have suffered a decrease?
Lord Elton: My Lords, I hesitate to give an answer as long as the question, particularly as in fact it is not possible to state the number of beneficiaries in receipt of benefit because many individuals receive two or more benefits. I have here a table of the numbers of benefits broken down under the different benefits paid, and I will have that placed in the record. In fact, I acknowledged in my original Answer that the number of beneficiaries has gone up and that the increase in benefit is not pro rata, but the increase in the money is proportionately greater than the increase in the number of beneficiaries.
Baroness Lane-Fox: My Lords, may I ask my noble friend the Minister to state whether the Government are satisfied with the present level of take-up of benefits by disabled people?
Lord Elton: My Lords, it is not easy to tell how many people are not taking up benefit, but there has been a steady increase in the numbers taking up benefit, and we did at the outset of the IYDP last year publish a pamphlet, Help for the Handicapped, which has been widely taken up itself, and I think this contributes to the increase in take-up.
Baroness Jeger: My Lords, I apologise for asking another question, but I did not hear the noble Lord answer my question about what the Government are proposing to do about the admitted fall of 4 per cent. in pensions for single and married people getting invalidity pensions. Are the Government going to make up that shortfall or not?
Lord Elton: My Lords, I cannot say when the abatements will be made up. I can say that the Government stand by their undertaking on the 2 per cent. with which your Lordships are familiar. Reverting to the noble Baroness's earlier question, the increase in expenditure over the period since we came to power is in fact 6·4 per cent. more than the general movement of prices between July 1978 and November 1981. That quantifies my previous answer.
Lord Campbell of Croy: My Lords, are the Government ready to make adjustments in future so that there is more emphasis on benefits and services made available to severely disabled people who are able to live in their own homes rather than in hospitals or institutions, since this is more cost effective and also much better for them since most of them want to be as independent as they can be?
Lord Elton: My Lords, your Lordships will know that attendance allowance and invalidity care allowance are already covered by our undertaking on benefits for long-term sick and disabled people. I shall

949
certainly bear my noble friend's remarks in mind at any time when this is reviewed.

Following is the table referred to above:

Latest figure

1979

Invalidity benefit … …

614,500 (May 1980)

609,000 (June)

Non-contributory invalidity pension … … …

125,900 (May 1980)

119,000 (June)

Non-contributory invalidity pension for married women … … …

44,700 (May 1980)

42,900 (June)

Attendance allowance …

295,000 (September 1980) (estimated)

267,000 (June estimated)

Mobility allowance …

210,000 (December 1981)

116,000 (June)

Industrial disablement pension … … …

195,000 (September 1980) (provisional)

198,000 (September)

War disablement pension …

259,000 (September 1981)

278,000 (September)

Old scheme (workmen's compensation) … …

6,000 (September 1980)

6,000 (September)

Supplementary Benefit: Sick and Disabled—with invalidity benefit for non-contributory invalidity pension … …

83,000 (December 1980)

79,000 (November)

—without another incapacity benefit (these figures include short-term as well as long-term sick) … …

99,000 (December 1980)

109,000 (November)

The National Freight Corporation
2.42 p.m.
Baroness Elliot of Harwood: 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 when they expect the National Freight Corporation to be sold to the management and employees as previously agreed.
The Earl of Avon: My Lords, an agreement was announced on 18th January for the sale of the National Freight Company Limited to the National Freight Consortium public limited company, for £53·5 million. This consortium company has been set up expressly for the purpose of enabling the managers and employees to buy the Government's shares in the National Freight Company. It has arranged finance from its bankers for the acquisition, subject to the consortium raising a minimum of £4,125,000 from employees and pensioners of the National Freight Company. The consortium expect to complete the purchase during February.
Baroness Elliot of Harwood: My Lords, while thanking my noble friend for that reply, may I ask him whether the response in taking up the shares has been as enthusiastic as we hoped it would be, and does he think the scheme will go ahead the moment it starts?
The Earl of Avon: My Lords, we have every hope the scheme will indeed go ahead. In fact, to answer my noble friend, the scheme was published only a few days ago and as yet we cannot monitor the response.
Lord Underhill: My Lords, as the management of the new corporation will be precisely the same as the management of the National Freight Corporation, may I ask the noble Earl to say what is to be gained by the transfer, except possibly to carry out the doctrinaire policy of the Government? What will be the net result to the Treasury, after making allowance for the payment of British Rail pensions?
The Earl of Avon: My Lords, as the noble Lord will anticipate, this is of course a privatisation exercise of which we are very proud. The net result will be £6 million.

The Arts: Business Support
2.44 p.m.
Lord Jenkins of Putney: 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 have any estimates of the total amount of business support for the arts in 1976, 1978, 1980 and 1982.
The Earl of Avon: My Lords, the Government do not maintain estimates of their own but believe that those compiled by the Association for Business Sponsorship of the Arts to be reliable. Their figures are: 1975–76, £½ million; 1977–78, £3 million; 1980–81, £6 million; and the Association's estimate for 1982–83, £7 million. In addition, many other companies donate considerable sums to the arts through a variety of means, but unfortunately no figures are available.
Lord Jenkins of Putney: My Lords, I am most grateful to the noble Earl for that reply, and I am glad to see that the relatively small amount which business contributes to the arts in this country is gradually increasing. May I ask the Government also to encourage local authority support for the arts in every way they can? In particular, will they consider offering to match local authority subsidy by an equal grant from Government funds?
The Earl of Avon: My Lords, I am grateful to the noble Lord for his encouragement and will indeed take his view on broad.
Lord Ferrier: My Lords, do the figures which the Minister gave include Scotland?
The Earl of Avon: Yes, my Lords, they are for the whole of the United Kingdom.
Lord Harmar-Nicholls: My Lords, while the subsidised arts are entitled to some sort of special consideration such as the noble Lord, Lord Jenkins, suggested, may I ask my noble friend also to remember

951
that the private sector, the privately-owned theatres, have grave problems today and that some examination of the VAT level would be very helpful in keeping alive an important part of this country's industry?
The Earl of Avon: My Lords, I am sure my noble friend is aware that the Government take particular pride in the amount of money they are giving to the arts, and will continue to do so.
Lord Strabolgi: My Lords, is the noble Earl aware that the BBC is still somewhat reluctant to give credit in cases of arts sponsorship, and would he not agree that that is not always encouraging to obtaining further business support for the arts? Could something be done in this field?
The Earl of Avon: My Lords, what the noble Lord suggests is novel, but I shall certainly look into it.
The Earl of Gosford: My Lords, is the Minister able to say what proportion of the figures he gave went to visual artists?
The Earl of Avon: No, my Lords, we have no break-down of that sort of denomination.

BNOC: Legislation
2.47 p.m.
Lord Orr-Ewing: 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 are their plans for the British National Oil Corporation following the publication of the Oil and Gas (Enterprise) Bill.
Lord Skelmersdale: My Lords, this Bill gives powers to introduce private capital into the oil-producing business of BNOC. It enables the corporation to establish a subsidiary, to be named Britoil, and to transfer all its oil-producing business to it if the Secretary of State approves. Subject to the progress of the Bill through Parliament, the Government hope to establish Britoil as an operating concern in the autumn. Initially 51 per cent. of the shares will be offered for sale as soon as market conditions allow, which we hope will be before the end of the year. BNOC itself will continue in being, trading primarily in participation oil. Your Lordships will be aware that the Bill received its Second Reading in another place last week. Due to the great interest of your Lordships in this subject, I have, unusually, seen that notes on clauses are already available in the Printed Paper Office.
Lord Orr-Ewing: My Lords, while thanking my noble friend for that reply, may I ask whether he is aware that the Government will have the support of the majority of taxpayers and electors in this country for making the public sector somewhat smaller and the private sector somewhat larger as a result of this
952
measure? Is it not a great advantage of these proposals that Britoil will not henceforward come under the restrictions of the public sector borrowing requirement and therefore may be able to advance its progress—with exploration, in development and in the production of North Sea oil—rather more quickly?
Lord Skelmersdale: My Lords, I very much agree with my noble friend in the first part of that supplementary question. While in the public sector BNOC's financial requirements, which will not always remain within the size of its internally generated resources, must compete with other claims on the public purse, thus stunting the spirit of enterprise, privatisation will allow Britoil to finance its operations free of the public sector.
Lord Strabolgi: My Lords, would the noble Lord not agree that BNOC has a very fine record and is it not important that Britain should retain some stake in the North Sea?
Lord Skelmersdale: I would agree that BNOC has a very fine record, my Lords, but I would not agree that there is any necessity at all for the public sector in Britain to be concerned with the vast capital requirements of North Sea Oil operations. I should point out to the House that of the total North Sea operation only 7 per cent. is in BNOC's hands.
Lord Davies of Leek: My Lords, is the Minister aware that he has given one reason that is often given for selling off assets that belong to British taxpayers, whatever one's politics may be? As we are here dealing with something which is of paramount importance to all the British people—to our security, strategy and everything else—may I ask the noble Lord whether the Government have studied in depth what the realities are of shedding this real asset that the British people possess?
Lord Skelmersdale: Yes, of course, my Lords, the Government have studied this in depth, and we have come to the conclusion that we do not agree with many of the remarks that the noble Lord has just made. As I said earlier, BNOC is responsible for only 7 per cent. of current North Sea production, with over 90 per cent. of the remainder efficiently in the hands of the private sector. Our oil and gas resources—which I think is the point that the noble Lord is getting at—are vested in the nation by virtue of the Petroleum Production Act 1934 and the Continental Shelf Act 1964. Oil companies, whether in the public or the private sector, act as licensees of Government in developing these resources. There is no loss of a national asset, and I shall not he accused of the rape of Britain.
Lord Gisborough: My Lords, will the noble Lord ensure that, as with British Aerospace, enough shares will be made available for purchase by the employees and that they will be encouraged to buy shares in their own firm?
Lord Skelmersdale: My Lords, I am very grateful to my noble friend. Naturally, we shall keep very

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firmly in mind the interests of the employees of Britoil, but it is too early to say what will be the result of current discussions on this subject.
Lord Molloy: My Lords, would not the noble Lord agree that BNOC not only has a future in regard to the British economy, but perhaps even more vitally, particularly in these dangerous days in which we live, it has a role, and can have an increasing role, à propos the defence of our nation in relation to the three armed services? Therefore is it not vital that British oil should remain in British hands?
Lord Skelmersdale: My Lords, through the participation agreements, up to 51 per cent. will continue to be offered for sale to BNOC, and I think that this is the defensive role that the Government ought rightly to require BNOC to play.
Lord Blyton: My Lords, is the Minister aware that many members of the general public view as obnoxious the selling off of the assets of nationalised industries to private enterprise, while leaving the uneconomic sections of nationalised industries to be carried by the taxpayer? That is real robbery, my Lords.
Lord Skelmersdale: My Lords, I cannot see the purchase and sale of assets by a private individual or a nation as being at all improper. The nation raised the capital to put into the nationalised industries. Why on earth, when the circumstances are right, should it not free this capital for other uses?
Lord Mackie of Benshie: My Lords, can the Minister say whether there will be any restriction on foreigners buying the 51 per cent. of the shares?
Lord Skelmersdale: Yes, my Lords; naturally we do not want any single company to gain control of Britoil. A scheme is currently being worked out through the articles of association, and this will be presented to Parliament when it has been worked out. I would hope that this will take place during the passage of the Bill through one or other of the two Houses.
Lord Strabolgi: My Lords, will the Government still be able to maintain control of our depletion policy?
Lord Skelmersdale: Yes, my Lords, certainly. We have a depletion policy which affects equally the private sector and the public sector. It is going to make not one scrap of difference.

Council of Ministers: Brussels Meeting
2.54 p.m.
The Secretary of State for Foreign and Commonwealth Affairs (Lord Carrington): My Lords, with your Lordships' permission, I shall take the opportunity to bring the House up to date on the discussions on the 30th May Mandate, which have been continuing in informal meetings of Foreign Ministers in fulfilment of the request of the last European
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Council. I shall also make a Statement on the Foreign Affairs Council which took place in Brussels on 25th and 26th January.
On 25th January, the Foreign Ministers had a lengthy discussion on the four key issues in the negotiations over the mandate which were remitted to them by the European Council. This was the third such discussion, and I regret to say that it was not possible to reach agreement. The main issue preventing agreement was the view of a number of other member states that the refunds to the United Kingdom should be arbitrarily and automatically reduced over time, regardless of the scale of the problem. I made it clear that we could not accept this. In the longer term, we hope that the development of Community policies, including the reform of the common agricultural policy, will lead to a reduction in the size of our budget problem, and we fully accept that, as this happens, our refunds should be reduced. What we cannot accept is a reduction totally unrelated to the underlying cause of our budgetary imbalance.
That was not the only difficulty. In addition, one or more of our partners had reserves on other aspects of the matters under discussion. For example, there was disagreement as to whether the duration of our budget refunds should be four or five years, with a review. There are also problems on agriculture, where the formula proposed for controlling the milk surplus was very weak, and a number of countries, but not the United Kingdom, have reservations about the proposal that agricultural spending should grow less rapidly than own resources.
It is disappointing that after so many rounds of negotiations we have still not been able to reach agreement on the four key issues identified by the European Council, and therefore on the guidelines which were discussed there. But these are complex questions in which major national interests are involved, and we never thought it would be easy to find solutions that would enable each country to feel that it had a reasonable deal.
I welcome the intentions of the President of the Council and the President of the Commission to try to find solutions to these problems, and we hope that they will be able to do so quickly.
To turn to the Foreign Affairs Council, I would say that it was decided not to make further sales of food to Poland at specially subsidised prices and to use the funds originally earmarked for such sales for humanitarian aid, including food through non-governmental organisations. There was a wide measure of support in the Council for the proposal that the USSR should be upgraded from the "intermediate" to the "relatively rich" category in the OECD export credit consensus. The matter is to be considered further by the Committee of Permanent Representatives tomorrow, when I hope it will be agreed that the Community should propose such an upgrading to its OECD partners. The Council also instructed Permanent Representatives, in conjunction with the Commission, to study the trade policy measures which the Community might take against Soviet exports to the Community, and to study the implications of the undertaking of 4th January of the Ten not to undermine measures taken by the United States.
The Council considered the problem which has

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arisen over the adoption of the 1982 budget. In the view of member states, the European Parliament had not acted correctly over classification of expenditure and the maximum rate of increase. No final decisions were taken, but it appears to be the view of most member states that, as well as opening a dialogue with the European Parliament with a view to resolving the problem by mutual agreement, they should, as a precautionary measure, take legal action to ensure that the problem is resolved.
I am glad to say that the Council agreed that the storage levy and refund scheme applicable to ACP sugar should be suspended for three years, to the benefit of the cane refining industry. In those circumstances I was able to agree to a revised Commission negotiating mandate on the price to be paid for ACP sugar for 1981–82. This will, I hope, enable the present disagreement between the Community and the ACP to be resolved.
My honourable and learned friend the Minister for Trade represented the United Kingdom for discussion by the Council of policy on imports of low-cost textiles. It was agreed that in order to allow time for work to be completed on calculating the global ceilings, decisions on the various outstanding issues, including the terms for Community participation in the new Multi-Fibre Agreement, should be held over until 11th February, when there will be a further special meeting of the Council.
Lord Bruce of Donington: My Lords, the House will wish to thank the noble Lord for the Statement that he has just made. I should like, with respect, to point out to him that we on this side of the House received a copy of the Statement only five minutes before he rose to his feet, which has not given us very much time to study it. I willingly acquit the noble Lord of any responsibility in this regard, but I hope that he will make arrangements through his own usual channels to make quite sure that this does not occur again.
We on this side of the House should like initially to say, in response to the noble Lord's Statement, that we of course support the very considerable efforts he has made in the Council in order to obtain a more equitable contribution by the United Kingdom to the budget of the Community. This has been a running sore for many years, and your Lordships may recall that I have myself repeatedly raised the matter in the House over the last four years.
The Statement mystifies me a little because, although the noble Lord has indicated that he regrets to say it was not possible to reach an agreement, and that he could not accept the proposals that were put forward, he does not go anywhere as far as he apparently intended to go prior to the Council meeting itself. He was quoted in the Financial Times of 26th January—and I quote from the Financial Times report, which has been widely, I will not say copied but versions of which appeared in other parts of the press, too—as saying:
"At the end of a fruitless day-long negotiating session Lord Carrington, the British Foreign Secretary, said that Britain would prevent any agreement on the annual price increases for Community farmers envisaged for the end of March until it had secured a satisfactory budget deal. Without a budget statement, he said, ' the guidelines for the Community reform already agreed were frozen and as a result farm price rises could not yet be concluded '".
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My Lords, as the Statement that the noble Lord has made today does not go half as far as that, I want to ask: What is the position of Her Majesty's Government on the matter? Is it now the position that not only has the noble Lord refused to accept the proposals put forward in regard to the budget but, also, that he has declined to agree to any increases in farm prices until a satisfactory agreement has been reached? I should be very glad if he would confirm that.
In another part of his Statement the noble Lord refers to the position of the European Parliament over the Community budget. The construction of the appropriate budget articles in the Treaty of Rome are subject to some ambiguity, but from my reading of what has transpired in Strasbourg and elsewhere I feel that the differences expressed in terms of money between the Council of Ministers and the Parliament are very small. All they in fact cover is a definition of compulsory and non-compulsory expenditure, and also the amount of the maximum increase which is permissible in the terms of the treaty.
I ask the noble Lord this question: Is it wise, even as a precautionary measure, to take the Parliament before the European Court? Would it not be far better to see whether an agreement could be arrived at between the Council and the Parliament? Because, my Lords, many of us feel that in the progress that has been made in Europe over the last six years the Parliament has in fact shown a far greater trend towards progress than has so far been visible from the Council.
As I say, we received this Statement only some five minutes before the noble Lord rose to his feet. There are other questions that will undoubtedly arise, and would have arisen if we had had more time to study the noble Lord's Statement in detail, but it would help if, in the meantime, he could answer the questions that have been put to him.
3.4 p.m.
Lord Gladwyn: My Lords, we, too, should like to thank the Foreign Secretary for making this important Statement, but on these Benches, at any rate, we would regard the outcome of the meeting of the Council of Ministers as, on the whole, with certain exceptions to which I might make a reference, pretty lamentable. I would ask: Is no proposal for limiting our contribution to the budget (including, perhaps, some extension of the present system, which, after all, has not worked out so unfavourably from our point of view, as I understand it) acceptable before total agreement on the reform of the CAP? What happens if, in the long run, our partners just do not agree? What happens then? Does the Community just break up, or what is the result anticipated?
Anyhow, must we really break with them on the question of the duration of the agreement? Would not four years be acceptable? I do not quite understand this enormous distinction between five years and four years. On the face of it, I would have thought that four years would be something that we could accept, anyhow as part of a compromise deal.
More generally, may I ask: Were we in a minority of one in contesting the various proposals put forward by the Commission or by our colleagues? In which

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cases were we not in a minority of one? If we were in a minority of one, is it possible that we may be able to arrive at some compromise in order to get agreement in the general interest? As regards the Parliament and the budget aspect, I must say that I agree with the noble Lord, Lord Bruce of Donington. What he said was sensible, and I hope that on reflection the Government will agree. On Poland, as regards food exports, may I ask whether we can be assured that humanitarian aid (food aid, presumably) is in fact likely to get through to those who are chiefly affected—namely, the suffering Polish people—and, if so, why we are so confident?
Finally, I am glad to see that there was agreement on a tougher policy as regards credit in respect of trade with the Soviet Union. I think that is a very good thing. But I noticed in the press, either yesterday or today, I think, some suggestion that the French, having agreed there, might not agree in the event to any such policy.
3.6 p.m.
Lord Carrington: My Lords, I must apologise if the noble Lord opposite did not get the Statement early. It was actually handed in to the Opposition Whips' Office 20 minutes before; but I think we shall have to see why the noble Lord did not get it. If, perhaps, 20 minutes is not enough, or something went wrong—I think the noble Lord, Lord Gladwyn, got it—then perhaps we shall look at it. But I do apologise if the noble Lord did not get it. I apologise if it is my fault, or my side's fault: if it is his fault, that will be different.
On the two subjects that both he and the noble Lord, Lord Gladwyn, have raised, perhaps I could take the parliamentary budget first. No final decision has been reached about taking the European Parliament to the European Court, but the general feeling in the Council yesterday, I think, was that that might be a wise thing to do because, although it is the intention of the Council to talk to the Parliament and try to get an agreement which is satisfactory to both, there is rather an important issue of principle here. Even though the sums of money are small, it is an important issue of principle and I think there is something to be said for getting it cleared up so that it does not happen again. But I, of course, will certainly take into account what the noble Lord opposite and the noble Lord, Lord Gladwyn, have said.
On the specific question which Lord Bruce asked me, the position is that at the beginning of this exercise all ten members of the Community linked the three chapters which we were discussing—which were, if the noble Lord will recall, regional and other Community policies, agricultural policy and the budget—and it was agreed by all of us that progress on all three of these chapters had to proceed at the same time. Consequently, I cannot myself see either that the regional policies or that the agricultural policy, on which the prices depend, can go forward independently; all these things must be done together.
The noble Lord, Lord Gladwyn, asked me about food for Poland. Before that he asked whether the Community was going to break up. There have been a good many of these setbacks before. I think it
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would be very premature to say that the Community is going to break up. When we all get down to it, we usually find a solution. The difficulty with the Community is that whereas most people decide at the 59th minute of the 11th hour, the Community is in the habit of deciding about three o'clock the next morning. This makes it a very lengthy and tedious business, but nobody with the noble Lord's outlook on the Community, I know, will be more patient or try harder to support the search for a solution than he himself.
With regard to food aid to Poland, there are, as of now, over 35 million ECUs—and I think that there are 60 ECUs to the pound—which were to be used for a 15 per cent. discount on food to be sold to Poland. The decision taken yesterday means that that 35 million Ecus will be available to give humanitarian food to the Poles but given through non-governmental organisations such as Caritas which we can monitor and see that the food gets to the people we wish it to reach. There is a limit to the amount of food that can be sent in this way. We must see how we get on.
With regard to credit policies, the noble Lord is right. The French put a reservation on this yesterday but I hope very much that at the COREPA meeting tomorrow they will lift it.
Lord Gladwyn: My Lords, by a minority of one!
Lord Carrington: My Lords, not on everything. There were a number of issues on the guidelines which were not agreed. For example, the growth of the agricultural budget in relation to the rest of the budget. There were reservations about how our refunds were going to be financed. There were other things than degressivity which were not agreed; but, from the point of view of the Government, it is not possible for us to agree to a scheme in which we get less and less money every year regardless of whether our problem is solved.
Lord Kennet: My Lords, I have two questions on the CAP. Can the noble Lord say what would be the size of our deficit in three or four years' time if the refund was phased out—as we are trying to avoid? Is it still of the same order of magnitude as when the trouble started? Would it not be possible to cast these differences between ourselves and the others less in terms of " Britain versus the Rest " and more in terms of the difficulties which are bound to be suffered by whichever member state has the smallest and most efficient agricultural sector—and if it is not us, it will be somebody else—and to point out to the world that that is the structural defect which always penalises that country?
On Poland and the Soviet Union, although the Statement was not very exciting, I think it was right. Would the Foreign Secretary agree that there is not much point in penalising the Soviet Union for not intervening with military force, and not much point in penalising the Polish military régime for not retreating when, in its words, it has nowhere to retreat to? Lastly, on the question of taking the Parliament to court, I should like to join those noble Lords who ask that the Council of Ministers should think once, twice—
Lord Shinwell: My Lords, this is a speech.
Lord Kennet:—once, thrice and nine times before doing that.
Lord Shinwell: My Lords, I thought that this was question time, and not a time for making speeches. I ask the noble Baroness the Leader of the House to intervene.
Lord Kennet: My Lords, it is a Statement.
The Chancellor of the Duchy of Lancaster (Baroness Young): My Lords, we have had a Statement and the noble Lord, Lord Kennet, is putting a series of questions. Perhaps he will make this his final question on the Statement.
Lord Kennet: My Lords, I am grateful to the noble Baroness the Leader of the House. My last question was about the Council taking Parliament to court within the first two years of its directly-elected life. It would be worth going a long way to avoid that if it can be avoided.
Lord Carrington: My Lords, I think that our unadjusted net contribution is speculative in some sense because of the world price of food, which has an enormous effect on our contribution for the reasons which noble Lords have stated. I think our estimate would be that the situation would be rather worse if we had no adjusted contribution than it was at the time when we were having our negotiations in 1979–80. This makes it very important that we should get an adequate refund. What we have been doing is exactly what the noble Lord has suggested. It is because agriculture is a small part of our economy that the imbalance in the budget exists. The fear we have is that the guidelines which have been produced by the Council—which have not been agreed; but which are agreed except, generally speaking, for us—are very weak in that they will not mean that less money will be spent on agriculture and more money on other things. Consequently, if that is so and we are right, it means that the underlying British problem will not be solved—which makes degressivity all the more unacceptable.
With regard to what the noble Lord said about Russia and Poland, there are three things which the Polish Government could do: they could do away with martial law; release the detainees; and, talk to Solidarity and the Church.
Lord Harmar-Nicholls: My Lords, is my noble friend aware that people who have studied the actual mechanics of the Community will support his view that, on the question of contributions and agriculture, it means a long-term solution rather than a piecemeal and temporary one? Otherwise the general unity of the spirit of the Community will suffer from time to time when it is considered. Is my noble friend aware that the agricultural policy, the contribution and the regions are agreements that should run together and that to try to separate them would only bring confusion—such as we are suffering in this country at the moment where we have two agreements which are apparently in conflict and which have brought
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the railways to a standstill? Is my noble friend aware that the people who have studied it agree that those decisions must be taken together and that, although it may take another week or two weeks to get agreement, it is worthwhile hanging on to get it?
Lord Carrington: My Lords, I agree entirely with my noble friend that these things hang together. The guidelines on agriculture are of absolutely vital importance if we are to get an adequate solution to our problem. The noble Lord, Lord Gladwyn, asked what was so special about five years compared with four years. The more often you have this dispute, then the worse it is for the Community and for the cohesion of the Community; and incidentally, the worse it is for all of us who have to negotiate this over God knows how many hours and days. I think that if we can get a solution which will last as long as possible it would be sensible for everybody.
Lord Mackie of Benshie: My Lords, will the noble Lord not agree that what he has said means that the agricultural community will have to wait for the settlement of the whole of the problem before they know what the prices will be for the produce in the next year? May I ask whether the very sensible Commission plan for a super-levy on surplus milk has now been dropped, or whether there is any possibility of success?
Lord Carrington: My Lords, the agricultural prices, by and large, never get settled until April and I hope we shall get this out of the way before April. We have all got to do the best we can. The super-levy (which in my judgment is an excellent way of reducing the surplus on milk) is one of the issues on which we are in a 9 to 1 minority.
Lord Molloy: My Lords, will the noble Lord not agree that, in so far as the CAP covers 60 per cent. to 70 per cent. of the EEC budget, this is vital and that incidents of the kind that he has reported this afternoon have been going on ever since we joined the EEC; and moreover that it is almost a classic example of a self-inflicted wound? Is he not aware that, notwithstanding that hitherto we seem to have put up very little resistance, his stance on this occasion would receive the congratulations of every sane person in the country who is interested in British agriculture? Will he not continue to do so in the knowledge that people who are now criticising this matter regarded those of us who made these criticisms in the past as treating the matter with some form of lèse majesté? Will the noble Lord the Foreign Secretary stick to his guns and make sure that there is no surrender, as has happened in the past, since this might bring in a new era for Great Britain as regards the EEC?
Lord Carrington: My Lords, there were so many parts to that question, to some of which the answer was, Yes, and to some of which the answer was, No, that perhaps the noble Lord will accept from me the answer that we intend to get a good result.
Lord Stewart of Fulham: My Lords, regarding the arrangements made at the Foreign Affairs Council

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about food aid to Poland, is it possible to say whether the net effect of those changes will be to increase or decrease the amount of help going to the people in that unfortunate country? Will the Foreign Secretary agree that, when one considers any kind of sanctions in this context, it is sometimes difficult to say what wisdom or effectiveness there can be? There can be no doubt at all about the wisdom and need for assisting food aid to Polish people.
Lord Carrington: My Lords, perhaps I may explain—it is a little complicated—the question of food aid to Poland. What was happening before 13th December was that the Community was selling food at a discount of 15 per cent. to Poland, and the other 85 per cent. was a matter for the country concerned which was selling the food. As the Poles did not have any foreign exchange, it was in fact an 85 per cent. credit from the country concerned. Therefore, if we as a country had gone on as we were before 13th December last year we would actually have been giving the food free to Poland—15 per cent. Community money and 85 per cent. British taxpayers' money. What we have decided to do is to use the money which the Community has set aside—35 million ECU—for humanitarian aid; that is, aid in the form of food to the non-government agencies in Poland, where we know it will get to the right people. But we do not intend to give credit for food at the moment to the Polish Government at the expense of the British taxpayer.
Lord Cledwyn of Penrhos: My Lords, will the noble Lord the Foreign Secretary be kind enough to clarify the reply that he gave to the noble Lord, Lord Mackie of Benshie, about the annual agricultural price proposals? He said that a settlement takes place about April. As he well knows, the proposals are made just about now and will be conveyed to Her Majesty's Government and specifically to the Ministry of Agriculture now. Later they will be considered by them and by this House, among others. Can he say whether there is likely to be a delay in the proposals, not in the final settlement?
Lord Carrington: My Lords, the Commission will produce the proposals in the normal time scale. They will be discussed in the normal way by the Agricultural Council. I have no evidence of it but I imagine that the Commission will base their proposals on much of the guidelines on agriculture as has so far been agreed.
Baroness Llewelyn-Davies of Hastoe: My Lords, before we leave the Statement, with the leave of the House may I ask the noble Lord the Chief Whip whether he could consider reviewing the procedure by which Front Bench spokesmen get Statements of this kind? With great respect to the noble Lord the Foreign Secretary, the difficulty is always particularly serious with the Foreign Office. As those Statements are of great importance and are usually complicated, even 20 minutes is not enough time to consider them properly. I think that I am right in saying that the Liberal Front Bench received the Statement only 10 minutes before it was made to the House. I know how difficult these matters are, but may I ask the noble
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Lord to reconsider the situation? It would be helpful to the House—and indeed the Government—if there could be a considered response to Statements.
Lord Carrington: My Lords, may I answer that question in some of my old capacities as well as my present one? I am sorry if the Foreign Office is at fault. These Statements, as the noble Baroness knows, are prepared at very short notice in a considerable hurry. As we know, they have to be looked at and passed by all those concerned. Sometimes it is impossible to get them to noble Lords in time for noble Lords to have a long period to look at them. It is a courtesy to send them. However, what we ought to do is to give as much notice as we possibly can—and I have in the past been in the same position myself—and we will look to see what we can do.
Baroness Llewelyn-Davies of Hastoe: My Lords, I am most grateful to the noble Lord for saying that. Perhaps we could have an indication on a subject like this whether it is on the whole of the two-day summit, a review of the summit, or is confined to specific aspects only.

The European Monetary System
3.25 p.m.
Lord O'Hagan Lord O'Hagan rose to call attention to the question of the United Kingdom joining the European monetary system; and to move for Papers.
The noble Lord said: I am grateful that the House has been given the opportunity to continue our European discussions by debating the Motion which is in my name on the Order Paper. I am grateful too that many noble Lords have put down their names to speak. I welcome particularly the intervention of my noble friend Lord Soames. They, like me, will have to be somewhat telegraphic in contributing to the debate in view of the need to give the Minister plenty of time to reply to the various contributions. Indeed, the Motion itself is telegraphic, because it is shorthand for asking for a discussion on the question of Britain's full participation in the European monetary system by taking up our position within the exchange rate mechanism.
The European monetary system is an arrangement between member states of the Community which has had hiccups but it has been proceeding by and large with success since 13th March, 1979. We participated in the initial discussions but we have yet to make the final leap into the exchange rate mechanism itself. When—as I hope we shall do soon—we return to this subject under less pressure of time we shall be discussing it as a full member of the European monetary system.
Until recently there have been good reasons why we should not belong fully. Some of these reasons are of continuing validity; others, when put forward, do not have validity at all. They represent the type of point of view put forward by the noble Lord, Lord Molloy. We read in the Financial Times this morning an article written by Mr. Peter Shore, in which he came to the following conclusion:
"The EEC, in the straitjacket of a clearly obsolescent Rome Treaty, is coming to the end of its potential".

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I take the view that, even under the Rome Treaty, which needs modernising, updating and making more effective, there are developments which are of advantage to all member states. We can point to the European monetary system as one of the most recent advances which have been a success for the Community. I was interested to read the statement by the Financial Secretary to the Treasury during a conference in London shortly before Christmas, which was attended by the noble Lord, Lord Lever. Mr. Ridley said:
"The EMS exchange rate arrangements have so far been perhaps surprisingly successful".
It is the success of these arrangements to which I should like to draw attention today.
What is now clear is that many of the objections which we in this country have felt to be valid before have been overtaken by time and events. I should like in my own modest and brief introduction to this debate to go through a few of the objections that have been levelled against our joining in the system fully.
Why should we bother about this scheme? Does it matter? There would be little doubt in any quarter of the House that since the collapse of the Bretton Woods system some 11 years ago we have all suffered from the wild and unpredictable fluctuation of exchange rates. This has done few people in the free world any good whatsoever. It has helped to destabilise all our economic systems and it has contributed significantly to the dangers that the world recession has brought, particularly unemployment. We need to find a path out of this dark wood, and the European monetary system is a guide towards the light.
What is it that has prevented this country from following the torch in the correct direction? There is the belief that we need to retain the freedom to float. I was interested to read earlier this week in the Daily Telegraph—not, as I am sure the noble Lords, Lord Banks and Lord Bruce of Donington, would agree, normally to be found among the ranks of the wild cavorters on the frontiers of European federalism—
"Although in a sense we may have become accustomed to grotesque exchange rate fluctuation which bears little or no relation to underlying economic performance, in no sense have we shown ourselves able to cope with it.
"In a volatile world, the European Monetary System has had some success in limiting violent exchange rate movements among the member currencies ".
Since 54 per cent. of our overseas trade is with countries linked directly with the Dm. and its zone, these exchange rate fluctuations are particularly unpleasant for our exporters, and I think the argument about the sacredness of the floating exchange rate needs at least some re-examination.
Then there is the argument that the level is wrong, the pound is too high or too low, it may go up or it may go down; there is the eternal uncertainty of timing. But this argument, if pursued to the fullest extent, can always prevent action of any sort. I believe everyone now would be reasonably entitled to consider that the pound is at a more realistic level for entry to the system than it was when the present Government first came into office.
There is also what seems to me the most intractable argument of all—and I try to speak as an unbiased witness—which flows from Britain's role as an oil
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producer. How can we discern correctly what the nature of the effect of capacity as an oil producer will have on the standing of the pound? It is impossible to be confident. Equally, it is interesting to note that the current of opinion among the pundits and soothsayers is moving towards the view that we are reasonably entitled to believe that there are some grounds for thinking that there will be reduced pressure on oil price increases. While accepting that this argument is one that is hard to prove either way, I believe that if we were able to have something like the 6 per cent. fluctuating limit which has been demanded by the Irish and Italians, it would perhaps mean some amelioration of our position as an oil producer even though we are unique in the Community.
Then there is the argument about sterling's international role and the sensitivity of the pound to external factors. Again, no one can deny—not I, not any noble Lord nor anyone else who believes in the European monetary system—that this is a true statement. Nevertheless, the special nature of Britain and all its arrangements has throughout the history of the European Community been a major block, first, towards our admission and, secondly, to our progress within the Community. We must not allow this dusty old argument to be trundled out once again with exaggerated importance to inhibit our membership and participation in the exchange rate mechanism, when all the other arguments have begun to take their place in the history book and are irrelevant.
Briefly, may I give one or two points as to why we need to belong. If your Lordships were to make a study, as I am sure you have, of the pattern of our trade, the change in the distribution of our exports over the last 20 to 30 years is remarkable. In 1958, 20 per cent. of our total United Kingdom exports went to the nine other member states; in 1973 the figure was 32 per cent.; in 1980 the figure was 43 per cent.; and now it is 46 per cent. The pattern is shifting. We are European as traders; we need the trade to survive as a nation. Figures which came out only the other day show that we are successful and doing better. We are part of the European trading community as well as of the European political community, and by being a full part of the monetary system that position is not only safeguarded but considerably favoured.
Then there is another topical point. However prolonged the tortures that my noble friend the Foreign Secretary has been undergoing in recent days, on the European agenda at the moment there is, under the Belgian presidency, the question of the next stages of the European monetary system—how it can be widened, deepened and developed more fully. These steps may lead nowhere—Community initiatives often come to nothing—but it would be extremely bad for the national as well as the Community interest if we were excluded from real participation in those important discussions because we had not even taken a full part in the initial stage, which is what we have today.
I understand that it would be difficult for my noble friend Lord Cockfield to make a full statement today and reveal in its totality the nature of the Government's response to this interesting debate, as I hope it will prove to be. Apart from anything else, there would he a constitutional uproar if something dramatic

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on the subject we are discussing today were to be announced in this House rather than in another place. I also appreciate that there may be arguments for saying that any move in this field might be more appropriately displayed to the world during discussions of the budget as a whole. But I do not think that any kindness and courtesy on the part of your Lordships about these matters should inhibit the putting of penetrating questions to my noble friend about what the attitude of the Government really is going to be on joining the exchange rate mechanism.
I would suggest that what we are debating today is a modest step forward towards fully participating in a success story in the European Community. It will not change the weather; it will not ensure that we win the World Cup; it is not an all-purpose mechanism for a magic solution to all our problems in the Community. We should neither exaggerate nor diminish its importance. Nevertheless, on the other hand, it is neither an arcane nor a technical matter solely of interest to the City, the financial journals and economists. It is an important part of building the European Community, internally and externally. It has a substantial importance for businessmen, farmers, housewives, holidaymakers and for everyone in Britain who is affected by the level and rate of our currency against the currencies of our Community partners. I hope that today's debate will serve to underline that as well as being important for Britain within the Community, and important for the future development of the Community itself, as I believe, it is fundamentally in the British interest as well that we should be a full member of the European monetary system. My Lords, I beg to move for Papers.
3.38 p.m.
Lord Lever of Manchester: My Lords, I am sure the House is grateful to the noble Lord for giving us an opportunity—alas! all too rare—to debate Europe other than on a degraded level of fighting over whether the halfpenny in the pound of our national income which we contribute to the European budget is being adequately returned to us. There are very much larger issues involved, and this is one of them.
There are two central purposes of the European monetary system, one of which the noble Lord has emphasised—that is, to regulate in a more stable manner than would otherwise be the case, the relations between European currencies. But I shall not deal at any length with that, because, although that is a valuable role, it is a limited one. The crucial role, in my opinion, of the European monetary system is that the stabilisation process and the machinery involved in the EMS is a necessary step in producing that relationship with the dollar and the yen—the United States and Japan—which will start to restore order to the world monetary system, which is at present in a dangerous state of near anarchy; a state which, if it gets worse, will very soon prove to be gestating the worst financial crisis of this century, including the one which some of us experienced in 1933.
A second reason for my regarding the crucial role of the EMS as being a step in world co-operation in relation to the monetary system is that, unless you move on with the EMS into a stage of world co-opera-
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tion, the EMS will have the greatest difficulty in surviving in an isolated state. It was rather disappointing to hear a strong pro-EEC man, like the former Prime Minister, Mr. Edward Heath, talking about having a ring fence around Europe. That is not the purpose of the European Community. It is not the purpose, certainly, of the European monetary system. The purpose of the Community and of the monetary system, in particular, is to link us effectively together sufficiently to produce a coherent negotiating force, not in any hostile sense but in a co-operative sense with the rest of the trading world.
Can the EMS take this step without Britain? Quite frankly, a European monetary system that does not have Great Britain in it is a little like Hamlet without the Prince, because we are still the biggest monetary centre in Europe. Therefore, as long as we stay out, or are half-hearted, shadowy members, the EMS is likely to remain linked to its narrower purpose, which is marginally useful, of stabilising the currencies among themselves.
I have said that there is a dangerous state of near anarchy. Parity relations at the present time between the great currencies are in an incredible state of volatility, which, so far as I can recall, is unique in my life-time. The Club of 30, which is a leading group of bankers and economists of very considerable standing—and I endorse every word they said—reported in the following words. They said that changes of parity of 10 per cent. in a week and 40 to 50 per cent. in a year have become the order of the day for our great currencies. Changes of that kind not only cannot reflect economic fundamentals; they must dislocate and disrupt them, because parity changes affect not only the trading relationships between nations—being brutally disruptive of trade—but also investment.
When this Government—and I see the noble Lord, Lord Cockfield, in his place—rejected the notion of some kind of parity policy, the noble Lord said in this House in June, 1980, that we were helpless. The Government certainly proved themselves to be helpless, but they did not have to be helpless when the pound soared to 2·42 dollars. That change not only disrupted our competitiveness at home against imports and our competitiveness abroad against exports; it also encouraged a vast flow of export capital, because, of course, at those rates it became immensely attractive to invest in other countries.
Worse still, such a situation affects politics, too. You cannot have political and strategic co-operation in the western world on the one hand, and the rat-race in economics and finance on the other. The two will not last long together. So we have to end these yo-yo currencies and restore European-US-Japanese co-operation, to bring about some kind of stable relationship between the European currencies as a group and these other currencies—particularly the dollar.
I ask your Lordships to look at what the present situation leads to. If, as is very possible and as is predicted by many influential American bankers, the American dollar rate of interest once again jumps to 20 per cent., this will impose upon our Government and upon every European Government, even if they are all united in the European monetary system, an intolerable dilemma. They will either have to watch their currencies depreciate if they maintain their interest rates at

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their present level against a 20 per cent. dollar rate, as billions flow rapidly out towards America—in which case they will suffer a sharp blow to their anti-inflation policies, as their currencies proceed to depreciate rapidly to accommodate the vast outflow that will occur—or, in order to avoid the outflow, they can move to match the American interest rates, in which case they will knock on the head, quite irrelevantly to their own needs and interest rates, the potential recovery of western Europe.
In a small way, that is exactly what the Government have done, because when they abandoned their nonsensical, indefensible and intellectually reprehensible position that they had no parity policy—they had no parity policy until the pound collapsed against the dollar and then they found one—they, very largely, halted the downward trend of our interest rates and dealt quite a sharp blow to our economic recovery. That dilemma can be solved only if Europe as a group, with its credit and with its purpose, arranges swap arrangements with the United States which do not bring about this irrelevant dilemma for the Europeans.
If the Europeans know that under the system they have a swap arrangement with the Federal Reserve, which is sufficiently large to recycle the outflow of funds that will occur if they hold their interest rates below the United States rate, and if they know that that money will be recycled by arrangement with the Federal Reserve—and, to some extent, by using their own reserve— then they will be able to continue with rates of interest which are apt for their own economic needs and will not have them irrelevantly imposed from outside.
After all, we managed to recycle the OPEC money. People tell me that it is impossible to get this kind of agreement, but we recycled 60 billion of OPEC money to Brazil, 26 or 28 billion dollars to Poland, a similar amount to Yugoslavia and so on. It seems very odd that we cannot have these intelligent recycling arrangements to maintain target zones for our European currencies against the dollar and the yen—particularly the dollar. Without these arrangements, we are committed to the highest common denominator of interest rates or the lowest common denominator of economic progress.
The truth is that floating rates are quite incompatible with a prosperous interdependent world or, indeed, with political co-operation in the world. They have been sold to the world on a bogus prospectus. Because of the shortness of time, I shall recite very briefly a catalogue of false promises made by the floaters. It is said that they reduce speculation, but they have increased it to an all-time record size in world history. In that speculation, they have turned the major currencies from stable trading media into gambling counters. Seventy-five billion dollars a day are traded every market day on the spot markets of the world, and probably two or three times as much on the futures market. The spot market trade alone is some 15 to 20 times the amount which is required to finance the movements for trade and investment. Floating was supposed to reduce Government intervention. Government intervention, in this false floating, has been higher than it ever was in the period
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under Bretton Woods. They were supposed to produce parity changes which smoothly reflected fundamental economic factors. I have recited the figures on that. Speculation is supposed to smooth the changes. If ever it went too badly, speculators would come in and correct it, said all these pundits—I must say, pundits whose knowledge of the market was so limited that it is doubtful whether their wives would have trusted them with the Saturday morning shopping. To a large extent the western world has trusted them with their economic and financial destinies. These gentlemen, who know very little about the practices of the market, believed that the speculator would move in to counter the trend, whereas the normal reaction of the speculator is to move in behind the trend and create a kind of stampede.
If you compare the disastrous volatilities of parities and interest rates, you have got the highest real interest rates in the great countries ever recorded in world history—not nominal rates; the real interest rates are the highest ever recorded in world history and there is the greatest volatility in currencies. This is the achievement of the floating system. Bretton Woods was much criticised because, like all human systems, it was not perfection. But it begins to look like near perfection compared with this anarchic, dangerous situation of deformed parities which we have brought about under floating rates. No anti-inflation policy can work in any country for long if the unit of currency is jumping about like a yo-yo. That should have been obvious to bankers, of all people. No concerted world recovery is possible with these fluctuating parities and with these fluctuating interest rates.
I want to say a final word about the position of the Labour Party. It will have become apparent to the House that I find myself at some variance with the concepts on these matters of the leaders of the Labour Party. That causes me great unhappiness, though not so great an unhappiness as I should feel if I agreed with their views. I understand that the leader of the Labour Party and Mr. Eric Heffer are to go on a ceremonial visit to the leaders of the Socialists in the European Community. I wonder what they will have to say to each other. I wonder whether Mr. Foot and Mr. Heffer are going to be able to announce—
Lord Denham: My Lords, I wonder whether the noble Lord would refrain from referring to Members of another place by name.
Lord Lever of Manchester: I wonder, my Lords, what these two gentlemen will have to say to their Socialist comrades about the shameful repudiation of the great and honourable tradition in the Labour Party of internationalism which is involved in their position on the European Community. I wonder whether their Socialist comrades will draw their attention to the moral shabbiness of making large claims for international co-operation while combining them with hostility to every concrete opportunity in that area. It seems that they are able without any intellectual distress to combine the rhetoric of internationalism and interdependence with the actual practice and support of policies which in this area are nothing better than the dangerous national chauvinism which has brought the world to its present great difficulties.

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I conclude by saying that floating rates do not work and that fixed rates did work. Under them the world enjoyed a prosperity unique in world history—fixed but adjustable rates. We have got to get back to some flexible, orderly, co-operative system. I am hoping that we can treat the reaction to international co-operation of the Labour leadership at the present time as being a momentary spasm of a dangerous and negative kind which will he corrected in due course and that they will join the view which I have expressed; namely, that the world must move back to enhanced co-operation unless we are to suffer deep economic crisis, deep financial crisis and a great social danger to the systems of the world.
3.55 p.m.
Lord Banks: My Lords, I should like to begin by thanking the noble Lord, Lord O'Hagan, for raising this important subject this afternoon, and also to thank him for the way in which he did so. I fully support the plea which he made that the United Kingdom should become a full member of the European monetary system. I am glad that the noble Lord, Lord Lever of Manchester, who speaks to us with such knowledge and authority on these matters, should have supported that plea as strongly as he did.
When we discussed this subject on 28th November 1978, just over three years ago, I said then that we on these Benches were committed to the concept of an economic and monetary union in the European Economic Community. I confirm that commitment today. But of course that may be dismissed as unrealistic aspiration, remote from the practical problems which we now have to face. I believe, however, that such a judgment would be short-sighted, because what we are saying is that the European Community will not realise its full potential, economic or political, until there is one economy instead of 10 or 12, as there may soon be, within the European Community.
On present evidence—and we had some of that just before we began our debate this afternoon—it will be a very long time before that stage is reached, but I think it is important to know where we want to go. Direction is vital. Of course, an economic and monetary union would have to be complemented by a political union. That, too, will take time. But, if you have these aims of economic, monetary and political union, then you do welcome any steps which are taken, however small, on the road towards them. That is one reason why we on these Benches at the present time welcome, for example, the initiative on European union of the German Foreign Minister, Herr Genscher. This is the reason why we welcomed the establishment of the European monetary system in March 1979.
We see the establishment of this system as a separate issue from the question as to whether the currencies of the world should be fixed, floating or crawling. That is a vitally important question, there can be no doubt, and it has been emphasised to us this afternoon by the noble Lord, Lord Lever of Manchester. When Mr. Roy Jenkins put economic and monetary union back on the European agenda during his presidency of the Commission, he envisaged large areas of stability, of which Europe would be one, linked by floating exchange rates. Perhaps the noble Lord, Lord Lever of Man-
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chester, would not see it in quite that way, but certainly he has this afternoon argued, as the noble Lord, Lord O'Hagan, argued and as I argue, that we want within Europe to have the system of monetary co-operation that is incorporated in the European monetary system and to see Britain as a member of it.
When this matter was discussed in this House in November 1978, the European monetary system was planned to proceed but it seemed likely that Britain would not join it. In initiating that debate, the noble Lord, Lord Soames, whom we are looking forward to hearing later this afternoon, attacked the Government for having, " such a moth-eaten and weak-kneed attitude on so vital a matter ". " What a sad commentary ", he said, " on the affairs of this country ". The noble Lord, Lord Cockfield, who is to reply to this debate, said it was perfectly true that membership of the European monetary system would entail severe financial disciplines, but these are just the sort of disciplines that we need here at home if we are to beat inflation. Much to our regret on these Benches, the Labour Government decided not to join the currency link, while taking part in some of the other aspects of the system. To our continuing regret, when a Government including both the noble Lord, Lord Soames, and the noble Lord, Lord Cockfield, came into office in May 1979, that Government did not join either, and so things have continued until today.
In the Green Paper on the European monetary system which the Labour Government issued in November 1978, at the time when the question was being argued as to whether Britain should join, they set out eight characteristics which, in their view, the system should embody. Among these was a requirement that it should be durable and effective. I think we can say after three years that it is durable and effective. Also, it should be truly European and be capable of containing all the members. Again, I think we can say after three years that it is so. Another requirement was that it should provide a basis for improved growth and higher employment. If there has been precious little improved growth and if there has been lower employment, I do not believe that the European monetary system can be blamed for that. Also, there should be provision for realignments. There have been four realignments, but on the other hand I do not believe it can be argued that there have been too many. And so one could go on through the whole eight points.
I do not believe that the operation of the European monetary system has militated against the Labour Government's conditions in any way. It is true that that Government did not like the parity grid system proposed as much as the basket of currency system, and they had good reasons for their preference, but surely that is insufficient reason for not joining then, and I imagine that it is not questions about the mechanism which prevents the British Government from joining now. Is it perhaps, as it has been suggested earlier in the debate, concern as to whether, because of our oil and our inflation, the pound is too highly valued in relation to the other European countries? It has, of course, fallen hack a bit now in relation to them. Would a small devaluation on joining be such a bad thing? And had we been in the European monetary system, might not our manufacturing industry

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have escaped the loss of competitiveness on the scale which has taken place?
May I say in conclusion that, if the Government could now see their way clear to join the European monetary system, I am sure that the political bonus for Britain would be considerable, and this would be a great advantage for us at a time when the delicate negotiations of which we were hearing earlier this afternoon, about the contribution to the budget, are taking place. If Britain joins, I am sure that it would be taken as a welcome indication of Britain's commitment to wholehearted support of the Community.
4.3 p.m.
Lord Soames: My Lords, now that we are discussing the European monetary system, I must first say how glad I am that my noble friend Lord O'Hagan has chosen this subject. As the noble Lord, Lord Lever of Manchester, said, we should look at this not only in parochial Community terms, but also in the widest international terms. We joined the Community, not just in the hope that we would enrich ourselves by so doing by being in a larger market but also because, off a European base, we could have a greater influence in the world than we could off a purely national base. The same argument holds with the European monetary system.
The main reason leading us to join the system would be that of a wider international character to which the noble Lord, Lord Lever of Manchester, referred. It is worthwhile at this time, some two or two and a half years after the European monetary system was set up, during which period we have seen enormous swings of parties, to consider how the monetary system has worked and how it has succeeded in the prime task that it had in its early days, which was to ensure that it was to some extent at least an island of stability in what was in a monetary sense a very unstable world.
I do not know whether your Lordships have looked at the figures recently and seen what has happened in the last two years. Taking 1st January 1979 as my base line, I looked at the parities then compared with 1st January 1982. I took the Deutschemark as the pivotal currency and I looked at the changes of parity during those two years, of the Deutschemark with other currencies within the EMS, and of the Deutschemark with the dollar and the yen outside it. I found that the difference today compared with two years ago between the Deutschemark and other currencies within the EMS varied between one half per cent. with the Dutch florin to a maximum of 13 per cent. with the Italian lire, the most volatile of the EMS currencies. Indeed, if one were to put to one side for the sake of argument the Italian lire and the Belgian franc, both of which have suffered particular difficulties during the last year or so, all parity movement among all the other EMS currencies have been within single percentage figures. But when one comes to look at what has happened between the Deutschemark and the major currencies outside the EMS, the dollar and the yen, one sees a very different picture.
With the dollar, compared with two years ago, the difference in the Deutschemark parity is 36 per cent. and with the yen it is 40 per cent. Let me put it to
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your Lordships another way. If one looks at the worst picture of the volatility of currencies during this two-year period, what does one find? If one takes the high and the low points of the currencies within the EMS one finds that the worst it ever was (between the Deutschemark and the lire, which is the most volatile of the EMS currency currencies) was 16 per cent. But if one takes the high and low points between the Deutschemark with the dollar and the yen one finds it was 51 per cent. against the dollar and 54 per cent. against the yen.
Now, if one departs from the simple premise that money is there to encourage the exchange of goods and services, what do we think we are doing allowing the parities to move around like this, to this sort of order of 40 and 50 per cent., over a two-year period? For this makes a mockery of forward planning by industrialists or traders. Also enormous profits or losses are made just by luck due to how the currencies of seller and buyer happen to move between the contract and sale. What has this done for employment? It has created a lot of extra unemployment.
I must agree that if you take my argument to a conclusion, one would expect to see a far greater degree of trade within the EMS countries than you would between them and the outside world, because their movements of parities have been much less. We have seen a change, but it is not all that phenomenal. If you take a base figure of 100 for 1975, the exports from the Nine among themselves has gone from 100 to 212 between 1975 and 1980, and with the outside world from 100 to 185. But an element we must bear in mind here is that the growth within the countries of the European currencies has been far less in these two years than has the growth in the dollar zone, and particularly the yen zone. So I believe the wide parity movements have had a significant effect on our trade, have had their effect upon our industries, and have had their effect, therefore, upon the levels of unemployment in western Europe.
Of course, I realise that there are difficulties in our joining the EMS. As my noble friend Lord O'Hagan said, there were those who were against it. I remember hearing certain individuals telling me that the pound was much too high at 2·40 dollars; then they said it was much too low at 1·70. Here it is at 1·80 to 2·00, somewhere in that area. I do not know quite where they want it to be. I do not want to take the Labour Party's arguments. To begin with, I do not understand them; but, secondly, the noble Lord, Lord Bruce of Donington, will tell us why he does not want to join the EMS. I suspect that anything that might be said from that Dispatch Box opposite will be related to the fact of the Labour Party's enormous capacity to wish to commit economic suicide by leaving the Community. This will have something at least to do with their desire not to join the EMS. So I ignore that argument.
Turning to our own real problems, the fact that we are a petro-currency of course makes a difference. Of course it does not make it easier for us to join. On the other hand, we have been through the two big oil hikes of the 1970s and they have had their effect. If we look to the future I do not think we can be expecting the kind of very rapid movement of oil prices which had the impact upon sterling that we

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saw in the 1970s when there was a conjunction of circumstances where two big rises in oil prices coincided with North Sea oil coming on stream. I should have thought that was a once-or twice-for-all phenomenon which is unlikely to be repeated, although of course there will be some movements in oil prices. But I do not think that that is sufficient to outweigh the advantages which I see in our joining the EMS.
Then of course one must face the fact that sterling is uncomfortably high in relation to the Deutschmark today. This, I agree, must be put into the balance as well, but I do not think that either of these points detracts from what I would call the tactical economic advantages of joining the EMS.
I move to the strategic arguments, the ones that were set out so ably by Lord Lever, and there I think one makes a very decisive case. The kind of movements of parities that I have described—30, 40, 50 per cent. over two years—everyone dislikes; there is not any country in the world that would not sooner get that put right, or at least get it dampened down. I do not believe that we could aspire to go back to fixed, although not immutable, currencies. But at least, if the will was there, there could be agreement between the zone of the European currencies, the zone of the dollar and the zone of the yen to build in a certain discipline with the combined objective which we all contribute towards reducing these wild parity swings. It could be done, but it must be done through zones. I do not believe that it could be done by individual European countries, and I do not believe that the United Kingdom could play its part in that unless we were in the EMS.
Although sterling does not carry anything like the international weight it did 20 years ago, nevertheless there is still a fund of knowledge in this country, in the City of London in particular, and in the Treasury, of international money markets which I think would be of enormous value when the EMS come to discuss these matters with the United States. I believe the United States is ready for it. If there was benign neglect in days gone by, it is not there today. It seems to me that we should at least try it, and we are not going to be able to play an effective part if we remain outside the EMS. Though I must tell your Lordships that this is not a matter, certainly on the tactical side, that I would go to the stake over—though I have been deprived of my stake and I have not got a stake to go to any longer—but, if I would not go to the stake for the tactical reasons, I think the strategic ones lead us into stake country. Because this is one of the few areas where all the Governments concerned would be seeking the same objective of reducing exchange rate movements.
The noble Lord, Lord Banks, was kind enough to quote a passage from a speech of mine in November 1978. That tempts me to quote another one which I was intending to quote anyway. He has given me a good peg to hang it on. I said:
"So I do not believe it is possible to exaggerate the need for a degree of international co-operation in the management of exchange rate movements if trade is to grow rather than diminish, with all that means in terms of employment and prosperity within the free world".
I think it was true in 1978 and how agreeable to be able to say so again in 1982.
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So I would make a plea to my noble friend Lord Cockfield, and it is this. I ask him to cast aside the prejudices of the past. We all know that there are certain individuals who have husbanded these prejudices for a long time. I would let somebody else have a look at it, let people with a fresh eye come to this. Of course there are arguments both ways, but let them consider them, the political, social, economic arguments. I am quite prepared to listen, but at the moment I am of the opinion that, if we were to start that ab initio, we should get the answer without peradventure that one of the great contributions this country could make to the world in general and to itself in particular would be to help to dampen down these vast swings of currency parities, and the way to do that is by our full entry into the EMS.
4.18 p.m.
Lord Roberthall: My Lords, I, too, am grateful to the noble Lord, Lord O'Hagan, for giving us this opportunity to discuss this very important subject, which, as we have been reminded several times in this debate, has been before your Lordships on several other occasions; the most recent one was the one that Lord Banks and Lord Soames referred to, the debate introduced by Lord Soames himself. At that time, while I was in favour of joining the EMS, I had some hesitations because of the timing. It seemed to me then that there were difficulties about our own position which made it rather risky to join just then. Since then I have become a wholehearted supporter not only of our joining but of doing it as soon as possible. All the speakers who have spoken so far have been enthusiastic supporters, and I am left with very little to say on the subject, but I will perhaps try to add a few words.
It seems to me in very broad terms that there are two reasons for joining, the political and the economic. The political reason, which I think is a very strong one, is that the EMS has a symbolic significance in connection with the general movement towards European unity. To me, the main achievement is the coming into being of what is practically a free trade area. I know that many people think that the CAP is the main achievement, but I doubt whether that is really a factor for unity. However, it is, I am sure, the case that our partners in Europe often think that we are rather uncomfortable bedfellows—all elbows and knees—and that although like everyone else we profess the need for unification, for working together, when it comes to particular cases we do not do that as much as we should.
Great importance is attached, symbolically, to our joining the EMS, because it is an area in which we shall have responsibilities to carry out as well as the benefits that we hope to receive. I feel that a lot of our negotiations in the EEC as a whole would be softened if we took opportunities like this for showing that we really do want to get together.
On the economic side, I suppose that it has been agreed for a very long time that stable currencies are very desirable in the economic world. In my active time, we enjoyed stable currencies because of the Bretton Woods system and because of the general agreement under GATT to reduce tariffs. There was a long period of growing world trade from Bretton Woods to 1971 under the influence of those two factors. As

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we know, the currency system broke down in 1971 and the reason was twofold. The main reason was that the problem of inflation hit different countries at different speeds so that prices became out of control and the preservation of the parity rates put too much of a strain on especially those countries whose costs were going up too fast. That led to great speculative movements which accentuated the difficulties.
As regards what has happened since then, I do not think that I need go any further into the chaos into which we are moving. However, it is clear that there was very little call for the sigh of relief that many people felt when we went over to floating currencies. The noble Lord, Lord Lever of Manchester, and the noble Lord, Lord Soames, both in their different ways have stressed the horrors of the present exchange rate system. I do not think that one can underemphasise the dangers into which we are now drifting—the breakup of the economic unity that we had been developing in the early years. There is a tremendous amount of movement back towards protectionism of one kind or another. We certainly are not getting together at the moment to try to overcome the recession. In my time that was the first step that Governments took when there was a concerted recession.
I was against joining this system at the time of our last debate, which was just after the new system had come into being, because I thought that our currency was then too weak and I remembered that we joined the first experiment in this connection, which was the old "snake", and had to leave almost at once. I thought that it would be unfortunate to join this system and then to have the same experience. Economic forecasters often have red faces and this was a wonderful example of that. I was afraid of joining because I thought that our currency was too weak to stand, but in a very short time we were propping up at, I think, £2.42 against the dollar. So instead of having to deflate like anything, because otherwise we could not have stayed in the system, if we had been a member of it then we would have had to inflate or sell the currency to bring it down—or both—or have a new parity.
But the European monetary system has, to some extent, become something of an island with a very stable position in a very shifting world. Our own rate has come down. Of course we are in a dilemma about our rate, because the oil surpluses suggest that we ought to have a higher rate than the exports which we have to depend on in the long run. The rate is perhaps a hit high, but it is not such a bad rate as it was, and our exports are holding up very well. So I think that now is a good time and that it really is incumbent on us, for the reasons already given, to join as soon as possible. I do not know, but from looking at the figures it looks as though the Bank of England is now trying to stabilise the currency, and it might even be—perhaps the noble Lord, Lord Cockfield, can tell us—that the Government are moving a bit more towards having an exchange rate objective rather than one of the very uncertain ones like M3. Anyway, I think that now is a good time.
There is one further reason which has already been referred to, and that is that the three years which we have had of the European monetary system have shown that the possibilities for changing the rate if it
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gets too much of a strain are much easier than they used to be in the days when it caused a great disturbance. I remember vividly the horrors of 1949 and, to a lesser extent, 1967. But changes have now been made inside the EMS. The French have made a change. It was quite a smooth and easy one. Therefore, we cannot in the long run, until we get the business of inflation going at the same rate, expect always to keep the same parities. But we want to get them stable for as long as we can and have not too much disturbance when we have to make the change. I think that that is offered to us now.
So I join the very eloquent pleas which have already been made, especially by the distinguished speeches of the noble Lord, Lord Lever, and the noble Lord, Lord Soames, and I hope that the Government—although I agree they cannot tell us today—are thinking much more kindly about this matter than they seem to have done.
4.28 p.m.
Lord Ardwick: My Lords, I am in agreement with the arguments of my noble friend Lord Lever of Manchester, but noble Lords on the Benches opposite must not assume from that that this is a common view in the Labour Party. Indeed, I think that when, later on, they hear my noble friend Lord Balogh on the subject they will discover that he is verily a doubting Thomas. I have no doubt that my noble friend Lord Bruce of Donington when he comes to wind up this debate will show a very restrained enthusiasm for the EMS.
Once again we are indebted to the noble Lord, Lord O'Hagan, for giving us the opportunity to debate a subject which is both important and topical. It is topical because the desirability of Britain entering fully into the EMS and participating in the exchange rate mechanism is now, so we are told, being seriously discussed in the corridors of decision. I myself hope that the Bank, the Treasury and the Foreign Office will at last find it possible to agree that full membership is in Britain's long-term interest, and that they will be able to convince the Prime Minister of that fact. I hope, too, they will agree that it is not against Britain's immediate interest to do so and that, therefore, the time is ripe for full membership. Of course, it is possible that the Government are waiting for our major problems in the Community to be resolved; I mean the problems of fishing and of our budgetry contribution. I should like to express sympathies with the noble Lord the Foreign Secretary in the struggle that he had in Brussels on Monday. However, I think that the Government might consider whether a European gesture as significant as our becoming full members of the EMS, might inspire a solution of those intractible problems.
The right honourable Member for Bexley and Sidcup spoke at the weekend of the difficult phase through which the Community is going. The last two years have been years of economic turbulence. For the second time the world has been shocked by the ineluctable demands of the oil producers, and the subsequent recession has produced cruel and unacceptable levels of unemployment. The members of the Community have no common economic policy. The dreams of Vice-President Ortoli of a co-ordinated, concerted attempt at expansion, have not been realised

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and it has been agreed that for the present each member state should seek its own solution—a kind of despairing recourse to sauve qui pent.
Until about 10 years ago—several speakers said 11 years ago—we had a world of comparative monetary stability as currencies were traded at rates based on the values of the United States dollar. Then President Nixon found it impossible to maintain convertibility, and the eventual consequence was that currencies began to float. Then the nations of the Community, which we were about to join, tried to create what was called at the time—if I may complete the phrase which the noble Lord, Lord Soames, recalled—an island of stability in a sea of chaos. However, the metaphor was swiftly changed; the island became a snake. Britain, France and Italy found the pressures against their currencies too great and they had to leave. The snake became a Deutschmark zone, with the smaller European currencies around it.
But this, of course, was too small a group to cope with the consequences of an unstable dollar and a soaring Deutschmark which threatened Germany's export trade. So the idea was born of this new monetary system with built-in safeguards to allow Britain, France and Italy to return to it. Professor Triffin wrote that:
"The Bremen initiative was an instinctive reflex, a desperate desire to make their countries less dependent on the unpredictable vagaries of a shaky US dollar ".
But it was not only that. It was to be inspired and to be supported by a co-ordinated economic expansion. However, of course, that has not come.
But this initiative came to Europe shortly after the utopian and federalist dream of economic and monetary union had been reborn and nourished by President Jenkins' fervent and eloquent oratory. The nascent EMS was, however, not that. It was an urgently needed practical arrangement. It implied the ceding of a little more sovereignty than Bretton Woods had required. Each nation was to remain in charge of its own economy and must intervene if the rate could not remain within the permitted margin.
Between this and monetary union, which demands a single currency for all countries or its equivalent national currencies at externally fixed, unadjustable parities, there is a major qualitative difference. But this difference was not clearly perceived and it caused great confusion in the debates which took place in this country and in Europe at the time. I was the rapporteur on the subject in the European Parliament and I could never stop the federalists from commending the EMS as monetary union; nor could I dissuade the anti-federalists from opposing it for the very same reason.
This afternoon the noble Lord, Lord Banks, has advanced the same idea: this is a step on the road to complete economic and monetary union. It is only a step, but every time that argument is brought forward, it is used by the sceptics to oppose the EMS. I wish that they would forget about economic and monetary units, and simply say that monetary units are perhaps something for the very distant future; and that all the EMS does is to provide an experience which, after long duration, could give an indication whether or not monetary union is desirable and feasible. In short, the EMS is a thing in itself, performing a useful
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and necessary function for a group of states which do about half their external trade with one another and which have close political links. As several speakers have pointed out, it has, of course, proved possible, in a time of turbulence, for its members to keep their exchange rates within the set limits, and when modest adjustment to a rate has been necessary the change has been accomplished smoothly and without political drama.
The EMS has earned high marks for exchange rate stability, but it has not yet had, as was hoped, a conspicuous effect on prices. One more economic axiom has been disproved. It was thought that for strict discipline over prices it was essential to ensure exchange rate stability. Not so. It is, the pundits are now saying, only in the medium-term or longer that sustained inflation inevitably affects the exchange rate. When the United Kingdom took part in the negotiations it was judged that the time was not ripe for Britain to join, and the Government thought that the EMS was too much like the snake. Some people in that Government seemed to think that the snake shared the divine displeasure which the creature in the Garden of Eden had incurred.
Then, of course, there were many members of my party who were haunted by the ghost of domestic deflation which they thought would have to be summoned if sterling got into trouble. Of course, the time was politically inopportune. An election was imminent and many voters had recently become disenchanted with the Community because they had recently learned of the unfairness of our contribution; and, of course, they had become well aware of the extravagances of the CAP. Of course, it says much for human insufficiency that nobody predicted that Britain would soon be embarrassed by a pound soaring to an inconvenient and unjustified height.
But surely today the pound is somewhere near a realistic level, and the prospect is of oil prices remaining stable or even declining because of depressed demand. Is the time still not ripe? I shall make no attempt to answer, because I think that the question is beyond any individual. But obviously some of the obstacles have been cleared away. Of course, the strict monetarists who give a pivotal role to money supply still believe in floating rates, but whether there are any such people outside the academies is rather doubtful. There may be some people with a voice in monetary policy who fear that the obligation to buy or to sell foreign exchange at a given rate might make them miss their quantitative target. But that target is so elusive that it has become something of a joke. As The Times said today, money supply is no longer the touchstone of national virtue.
But for those who may still have doubts about the effect of the intervention on money supply, perhaps I could quote the Director-General for Economic and Financial Affairs, Signor Padoa-Schioppa. He said in London not long ago:
"There should be no systematic conflict between exchange rates and monetary targets if the two objectives are set as part of a consistent policy.
"Serious problems only arise if the targets are contradictory ".
And he pointed out that most countries in the EMS have had quantitative monetary targets and have not encountered insuperable difficulties.

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Then there is the fear that if the pound was fully integrated into the EMS, the special financial relationship with the United States might be weakened and London's ability to compete for business on a world-wide scale would be lessened. Again I must quote Signor Padoa-Schioppa, who believes that these fears are exaggerated; that there is nothing in the EMS to diminish the City's role as a provider of services throughout the world. Indeed, as the ECU develops into a reserve currency there should be a growing business in new financial instruments denominated in ECUs. But if the United Kingdom does not join the EMS fully, the use of the ECU will be held back and the City's share in the new business will be smaller.
Another argument against our full participation has faded. It is no longer true that other members of the Community are more involved in intra-Community trade than we are. About 53 per cent. of the Community's exports are traded within the Community and Britain's exports to the Community are close to that figure. My Lords, is there anybody who still regards a floating currency as a magic solution for our problems? Is there anybody who does not look back with yearning to the Bretton Woods days of growth and full employment?
Surely in the interests of trade and investment we must work for reasonable monetary stability, internally and externally. Surely we should be preparing to enter the stabilised zones where we do half our trade, in the hope that it will, as the noble Lord, Lord Lever of Manchester, has said, provide an example, an incentive, and an opportunity for a systematic liaison with those who control the dollar and the yen.
The Times points out today that the Europeans are now trying to create what is analogous to this; that is, they are trying to create a pool of lower interest rates to protect their nascent recovery from another surge of American interest rates. But, they ask, what will they do when it comes, as seems possible? This is the economic question which overhangs the petty cash of Sir Geoffrey's Budgets. There are answers; we need not be flotsam on the high seas.
4.43 p.m.
Lord Hankey: My Lords, my noble friend Lord O'Hagan has done a good job in bringing this question once more to your Lordships' attention. I agree with all that he says and wish to support him strongly, because I think that this is very much in our national interest. What an advantage it is that we have well-informed Euro-MPs of such ability in your Lordships' House here in Westminster. It is now very important that the Government should at long last make this country a full member of the European monetary system.
First, industry and commerce really do need a much more stable exchange rate. It is very bad for our exports when the exchange rate goes unreasonably high. It gives an undue encouragement to imports and to excessive exports of capital. The period of high rates we have gone through was really a calamity for our manufacturing industry. It made firms very anxious to reduce their staffs as export orders declined and as imports increased. Import prices were of course kept down, and this pressed on the retail price
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index. But looking at our inflation rates over the last three years I find it very hard to believe that that discouragement of inflation balanced in any way the effects of greater unemployment on the public sector borrowing requirement, on the morale of our workforce, and on the general reputation of the Government.
In my view, we should all have learned more from the sad experience of this country in the late 1920s when Mr. Churchill, as Chancellor of the Exchequer, revalued the pound upwards by 10 per cent. in order to facilitate the payment of our war debts to America. Coming to our own time, it was a disaster when the pound appreciated by 15 per cent. to 20 per cent. for a period last year.
If we were full members of the EMS I believe that our exchange rate would be more easily held within the permissible limits of the 2½ per cent. swing either way because our membership would discourage a lot of speculative movements of the enormous, loose-footed funds that now swing around the world, and the EMS as a whole would represent a more weighty inertia. In fact, I find it difficult to believe that the EMS would not be made very much more effective if we were full members.
The pound exchange rate looks about right to me now. This is a matter of judgment and I know one should fear to tread, but that is really what I think. I have an idea that my noble friend Lord Roberthall, for whose wisdom I have for many years had a prodigious admiration, feels about the same way. So for goodness sake let us seize this favourable opportunity and make this country a full member.
I also think that our joining as full members would tend to strengthen and build up the new Europe as a whole, and that in itself is worth working for and is very greatly in our own interests.
Having worked a good deal with this type of problem at OECD I do most fully realise the nervousness felt in some Treasury and Bank of England circles, that if we tie our hands in this way we might not be able to defend the new rate permanently. Such defensive action has cost us dear in the past. But I want to say in this connection that if the other members of the EMS can do it successfully, then it would be ridiculous if we could not also do so now that we have a petro-currency.
The Italians have, I believe, a special latitude of a permissible swing of 5 or 6 per cent. instead of 2½ per cent. Perhaps we could secure the same concession. But in any case experience shows quite clearly that no set of rates can be expected to become permanent, and the EMS rates have of course been altered from time to time. So I see no reason why we should do worse than all the others provided the Government take care to look after industry, especially export industry, as they ought to, and provided they continue to wrestle with inflation including both monetary and cost-inflation.
This brings me to industry and commerce, both of which desperately need stability of conditions if they are to progress. I hope, and believe, that our full membership of the EMS would not only produce a vitally needed foreign exchange stability; I believe it would also tend to encourage a greater stability of interest rates, and perhaps a better comparability of rates within the EMS countries. This would really be of great assistance to industry and commerce.
I am not just plugging a few technical points, important as they are. This whole question is really

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vital for the economic and financial future of this country, and I think that it needs to be looked at on a broad economic background. There are encouraging signs that our industries are at last beginning to pick up after the recession, but they have a very long way to go, and many businesses, like the Invergordon aluminium smelter, are still going bust. It is really essential to look back at our very, very slow recovery from previous recessions and to see the great present danger to our economy, and to the Government, if we do not at once remove the factors which hold our boards of directors back all over the country from making further progress. They have very little confidence at present. They cannot trust the exchange rates; the interest rates; the trades unions; the rating system; or the various taxes and levies. So they really cannot easily invest in new plant, new processes, or new factories. Yet we are in the middle of the greatest industrial revolution of the present century. There is an enormous technological revolution going on while we watch. This country is in real danger of being left behind, with potentially disastrous results on our unemployment and standard of living, for which our politicians of all parties will inevitably be blamed.
In previous slow recoveries since 1950 the Government of either main party have in the end always expanded general demand, with disastrous results, which this Government have rightly condemned. We absolutely must avoid that. What we need is a régime of intelligent exceptions designed to help industry; and, I repeat, intelligent exceptions designed to help industry. Let the Government now join this country to the EMS as full members and make a good start there. Let them use the occasion to have greater stability of interest rates and a greater regard for the effects of our interest rates on the economies of our neighbours. A greater regard for the effects of one's economic policies on neighbouring countries is something which used to be very strongly felt in OECD and has become much weakened in recent years. I hestitate to blame just the monetarists, but they certainly have less regard for that factor than others do. And my noble friend Lord Roberthall mentioned the danger of a relapse into protectionism—and it is a great danger if we are to make a proper recovery.
The Government have no chance of curing inflation unless they get industry going again soon. I have mentioned many factors that need immediate attention and there are many others which I have not mentioned; tax questions, local rates planning questions and many others all need dealing with. The monetary factor is only one, but an important one. The others are vital to the men in the boardrooms, to management and to those on the shop floor, and they are at least equally important. To make this country a full member of the EMS would be a most useful measure to take among the many that are now required.
4.52 p.m.
Lord Balogh: My Lords, I was suspecting that I should be followed by a horde of noble Lords agreeing with me. In fact, I think I am the first and sole representative of those who have certain misgivings about the step that is proposed. Economists cannot produce experiments, except perhaps Mrs. Thatcher,
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but what we can do is look back and see how certain policies came out, in favour or against the Community.
British monetary and fiscal policy has been dominated, in my opinion, by the passionate desire, especially on the part of the Bank of England but also of the Treasury, to return to the economic liberalism and freedom of the pre-1914 period. It was a repetitive performance. Even in those days a rather boring pattern was adopted, the Community reinforced by the EMS through those Keynesian doctrines, which had some influence, especially in the immediate period after the war, when we were still supported by wartime controls and some planning. That has now been swept away, to some people's delight.
The first real taste of what might be threatening was in 1947. Dalton, against United States' advice, restored convertibility; the loan which was supposed to underpin and support British reconstruction was exhausted in a matter of hours or days, certainly a maximum of weeks; and next we had the armaments crisis, when Gaitskell, contrary to most Chancellors, pressed for increased expenditure on armaments. That experiment expired in about two years, in 1950 or 1951. It resulted in the collapse of a number of our foreign markets never to be regained. The possibilities opened by the devaluation of 1949 were missed. Fortunately for the Conservative Government, the price of raw materials declined abruptly, giving the country over £1,000 million of new resources to sustain the balance of payments. A new liberalism was set in train with investment increasing very slowly. A new crisis followed in 1960, and another in 1967, and the latter gave a foretaste of what was to come. All of that happened while the Bank loosened its control over foreign payments and plunged the country into deflation, rectified only in election years.
Much more important in this respect was our joining the Community. I recall the debates which went on then, in many respects very similar to the debates going on today—that is, an overwhelming proportion of those who wanted to join tried to match those who were in opposition. Most noble Lords supported the move and most among those partisans pointed to the great potential gains which would accrue to the country by the opening up of a vast market of over 200 million people. Those were in their view the fabulous opportunities. Some noble Lords, however, suggested the dangers due to our opening our markets, as against the Germans opening the German markets. Nevertheless, the new liberalisation measures were accentuated and in the end the pound was floated, much to the displeasure of the majority of this House.
Our relatively more acute slump today finds its explanation in the problems created by Governments of both parties. In the meantime, however, the magnificent discovery of gas and oil increasingly made itself felt; at the moment some £6 billion of relief has been afforded to our balance of payments, with more to come. Regrettably, of course, the Government are giving away a large part of the profits to mainly American companies; 61 per cent. of British oil is really owned by the Americans. Hot money however regained confidence and fled to Britain, having first been diverted to America. The Government and the Bank, acting on foolish monetary lines, refused to

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intervene against the stream of foreign exchange streaming into the country, wrongly believing that the increase in money supply as such would have an inflationary impact. In fact, most of the moneys did not enter the income stream but were put to precautionary balances in either banks or other institutions.
The pound however, not being managed, rose precipitately, under the influence of hot money, from 1.56 to 2.45 dollars, and it is now back at about 1.82 to 1.83 dollars. That resulted in increasing British imports and stifled British exports. It must be stressed that the pound is still at least 20 per cent. over-valued.
As I have already pointed out, our balance of payments would be in a terrible state without the revenue from the North Sea. The non-oil balance is horrifying and the loss of domestic industries' potential is serious and is threatening to become permanent. It is in this sombre framework that some noble Lords wish to enter fully the monetary system. I do not disagree that that compact is flexible. It can accommodate changes in parities which seem necessary at the time. Unfortunately it is less flexible downwards than upwards, because an upward revaluation would attack exports.
The worldwide depression caused by monetarism is pressing on us, and we must not open a further breach in our defences, especially now when exchange control has been abruptly abolished and an enormous amount of capital is flowing out of the country—estimated at £4 billion since monetary exchange control was finished. Entry into the system might be accomplished if one is lucky, but it is unforseeable what will happen. It seems to me that to take that measure in a situation of inferiority—and despite oil and gas we are still in a vulnerable position—would fit Talleyrand's famous dictum:
"It is worse than a crime, it would be a mistake".
5.2 p.m.
Lord Dunleath: My Lords, I, too, am grateful to the noble Lord, Lord O'Hagan, for having given us an opportunity to debate this subject, which I believe is one of fundamental importance. Many of the points to which I had intended to refer have been covered by other noble Lords with much more skill and authority than I would have been able to command. Therefore, and bearing in mind that we are approaching the end of a short debate, I should like to refer merely to two points, the first of which is perhaps rather peculiar to Ireland.
I start by expressing an interest because I am a non-executive director of the Northern Bank, and with your Lordships' permission I should like briefly to quote the experience of the bank. Historically, the Northern Bank has had branches in all parts of Ireland, both North and South of the Border, and that worked well until the Republic of Ireland joined the EMS, while the United Kingdom did not. Thus we found ourselves faced with fairly massive exposure to the currency of the Republic of Ireland, the punt, and agonising decisions had to be made. In the event, believe it or not, we reckoned that it has probably cost us £7½ million to extract ourselves from that exposure.
None of us likes having a potentially profitable
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situation eroded in that way, but I think that in banking if you are going to make losses, you should try to make them properly; in other words, by taking calculated risks and lending to trusted customers. On the one hand, there will always be bad debts; so one loses money like that, and one regrets each and every loss. But against that, for every bad debt there are many good lendings, and they offset the bad debts. The bank is thus performing its duty by helping farmers to improve their farms and helping industrialists to install more modern machinery. In those circumstances the odd bad debt, while regretted, is not as resented as anything like as much as is the £7½ million, which is completely wasted—money down the drain. It is not going to do any good for anyone, unlike the other lendings which might he a little dodgy, but which at least are providing employment and, with any luck, making industry and agriculture more competitive.
There is another thing. The withdrawal of Republic of Ireland currency which was in circulation in the North of Ireland cost hundreds of manhours and womanhours—and to what good was that? It was not doing anyone any good at all. Then there is the ongoing cost of reconciliation between the two currencies, and no one knows from one month to the next how the disparity will vary.
I should like to mention one personal, bitter experience that I had. I sold a small parcel of land in the Republic of Ireland for housing development, and in order to assist the developer in his cash flow I came to an agreement with him that I would accept a slightly higher price if he deferred payment by giving me bills of exchange. In the event, over the nine or 10 months that elapsed before the bills of exchange came to maturity the punt had gone down from about 99·5p to 77·5p. I would have done much better had I accepted a lower price at the start and got cash on the nail. But there it is; that is water under the bridge.
I quote that example because I think that it is typical of what is being suffered by many firms and individuals, too, who have operations both within and without the EMS. The inconvenience and the extra bookwork that is involved is not inconsiderable. Therefore, I entirely support noble Lords who say that we would be well advised to join the EMS, and I think that the advantage thereof would be even more greatly appreciated in Ireland than perhaps in any other part of the United Kingdom.
Another factor is that when one goes to the South of Ireland and then on returning with some punts in one's pocket one tries to get rid of them by buying a meal on the train, a surcharge is imposed. If one takes sterling to the South, it is much welcomed, but there is no discount. So there we have inequitability, and were the United Kingdom to join the EMS, this inequitability would be removed.
The other point, to which I shall refer very briefly, is that were we to join the EMS, I understand that monetary compensatory amounts in the field of agriculture would no longer be required. That would be a much cleaner way of doing it and it would save bureaucratic work, which would be most desirable. People keep on telling me that we have a common agricultural policy, but I sometimes wonder myself. I had every sympathy with the noble Lord, Lord Carrington, in what he told us this afternoon regarding his vigorous

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and sincere attempts to thrash out this question. But we are part of the European Economic Community, and I suggest that it would be only logical that we become part of the European monetary system as well.
5.10 p.m.
Lord Kaldor: My Lords, I had not intended to take part in this debate, and my only reason for doing so is because I feel that to many noble Lords on both sides it almost appears that joining the EMS is one of those very rare acts for which there is everything to be said with nothing to be said against it. I feel I ought to introduce a slight note of discord into this almost universal harmony and say that we ought to consider what possible disadvantages this may bring, which may also be very important, and not just the advantages.
First, I fully agree with the noble Lord, Lord Soames, that this chaotic situation of 50 per cent. variations in the relative currency, which is the dollar and the deutschmark, is absurd and ought somehow to be brought to an end. But it will not be brought to an end by our joining the EMS. I think it is megalomanic to think that the fact that we join the European monetary system will make the world currency system any more stable or any less stable than it would be otherwise. I do not think that, from that point of view, it will make any difference.
My second point is this. Is it really so desirable for us to reduce our currency variations in relation to the European countries if that means enlarging the scope of the variations in relation to the dollar area, or possibly the yen area? I can quite imagine that if we maintain our independent situation and vary that much less in relation to the dollar and the deutschmark, even though we may vary it a little more in relation to the deutschmark than we would inside the EMS we would be in a far more favourable position. In other words, I would rather have a situation where the pound/dollar rate varies only by 25 per cent. and not by 50 per cent. if a 50 per cent. variation would be the cost of joining the EMS.
But my third and main point, to which I think completely insufficient consideration is given, is that the pound is still very over-valued. According to the IMF, even after a recent adjustment we have lost 35 per cent. of our competitiveness in terms of unit labour costs in manufactures since 1977. I feel that this is a very important consideration. Of course, it is possible within the EMS to have devaluations, but it will be much more difficult. If you look at the trade figures—I am looking at those for the last three months, which have just come out—you find that imports are still rising much faster than exports. In relation to 1975, our imports of manufactures went up by 75 per cent. taking the average for the last three months, whereas our exports of manufactures have gone up by only 20 per cent.
If you look at the position in relation to last year and take the last three months of 1981, again you find that despite the fact that in 1980 we went into an increasing depression, which should have reduced our imports very much, our imports rose by 12 per cent. whereas our exports rose by only 2 per cent. This is a disastrous record, and I think we ought to bear it in mind before we rejoice too much at our joining the
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EMS or doing anything which curtails our freedom of action.
Lord Lever of Manchester: My Lords, could the noble Lord help me to understand his argument? As I understand it, he is complaining of what he rightly describes as the disastrous effect of the parities achieved under the floating system as it now exists. Why is that an argument against going into a system which would eliminate or mitigate many of the movements which have produced these deplorable results?
Lord Kaldor: My Lords, may I say very simply that we ought to achieve a far more competitive exchange rate before we join the EMS. We ought to be far more competitive vis-à-vis the Germans and the Europeans than we arc now; and if we should join it now we shall just make a bad bargain.
5.15 p.m.
Lord Bruce of Donington: My Lords, the House will be grateful to the noble Lord, Lord O'Hagan, for having raised this subject today. It has been discussed by your Lordships this afternoon (if your Lordships will perhaps forgive me for saying so) in largely academic and perhaps monetarist terms. It is therefore important, I think, to set this whole debate within its context. While we are debating here today there are over 3 million unemployed individuals in this country. This is rather more than a statistical aberration. It is much more than figures. It expresses itself in the lives of millions of our citizens and their families. Its social consequences are enormous, and still have to be fully apprehended. I wonder whether the confidence in Parliament of those people is going to be enhanced by a feeling, perhaps, that at Westminster these questions become largely institutionalised in the detailed discussions of monetary and exchange control theory. They may not see the relevance of it, and I am very fearful of that. If our debates are to have relevance, they must surely have very serious regard to the state in which many of our countrymen find themselves today.
It seems to me, after having listened very carefully throughout the debate, that most of the contributions that have been made, some of them with eloquence and skill, have been based on an assumption that fundamentally there is nothing very wrong in the way in which the western world and the countries comprising it conduct their economies. There seems to me to be a tacit assumption that, while the ordinary people of the country are expected to have their loyalties to their family, their loyalties to their firm, their loyalties to their region, perhaps, and, last but not less importantly, their loyalties to their country, and are supposed to have specific responsibilities in those fields of which they are often reminded, yet the owners of capital are not required to have any responsibility to anyone whatsoever—no social responsibility at all; money can go exactly where it wishes without regard to the fortunes of the people in the country in which much of the wealth originated. I would suggest to your Lordships that this is a very dangerous supposition indeed.
Perhaps I may say to my noble friend Lord Lever of Manchester that I do not accept that my own

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political record in public life, which is as long as his, gives him any justification for saying that I am somehow less a socialist than he is—I do not know whether he still acknowledges adherence to that particular philosophy—purely because I may have misgivings about membership of an organisation of a comparatively few countries that might be conveniently classified, and so often is classified, as a rich man's club. The noble Lord may have many more international contacts and carry on international co-operation in many financial fields, and in that he is very eminent; but I think it is dangerous for one to regard one's political philosophy by any reference to that touchstone.
The fact is that the people of the western world—including our own country where there are over 3 million unemployed, Europe where there is total unemployment of 10,200,000 according to the latest figures, and the USA where the figure is approaching 12 million—are not going to accept as a kind of relentless logic that while they are idle there have to be so many human wants unsatisfied. It may satisfy the academics but it is not going to satisfy them. They are not going to be satisfied that their present lot is due to the mysterious onslaught of something which is supposed to be from Heaven or from Hell or from wherever but, anyway, from a supernatural source called recession. They know, as your Lordships know, that it is precisely the way in which human society in the West has for the moment sought to organise itself.
It has been said (and it was emphasised by the noble Lord, Lord Soames, who unfortunately cannot be with us at this moment) that we have had the most volatile exchange rate. This is true. There is one growth industry in the world at the moment and that is the growth of the money speculators. They produce no goods or valuable services for any individual, no goods for the use of mankind nor even any social services for them. Yet the people of this country, of Europe and of America are invited to observe the results of their speculation which is, of course, carried out by the simple transmission of key-tested telex from one capital to another in a matter of minutes where, as the noble Lord, Lord Lever, has already said, £75 billion can be changed within a very short time.
One thing is certain: the volatile rates of exhange have been caused largely by the actions of Her Majesty's Government themselves. When they first put up the interest rates—and they themselves put it up—in 1979 this was followed, as the noble Lord will be able to check from his various graphs, by a rise in the exchange rate due to the inflow of hot money and also to petrocurrency. Beyond argument (and the professor to whom my noble friend Lord Ardwick referred made it clear) is the linkage between high interest rates and high exchange rates. High interest rates very largely have been the direct result, first of all, of the deflationary policies and of the monetarist policies followed in the United Kingdom, and also of the monetarist policies and the deflationary policies followed in the United States.
This has had important results because high exchange rates have meant, first, that it is becoming increasingly difficult to expand exports to anything like the level that they would have expanded had exchange rates been more favourable and, secondly, encouragement
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of the inflow of imports. It is somehow assumed that if exchange rates were lower, and therefore import costs would rise, this would have an adverse effect on inflation. That is not necessarily so. Because what is not always realised is that only one-tenth of our imports are raw materials and go into the process of production. The remaining imports, after making allowance for imports of food under the special conditions of the CAP, go into manufacturing. What has been happening progressively over the past few years, owing to the very high exchange rates, is that this has amounted to a subsidy to overseas manufacturers whose prices have progressively undercut domestic firms. This is what has happened.
In consequence of this subsidy of the exchange rate—also helped by subsidised energy prices in many countries—there has been a flood of imports into this country of manufactures which is most difficult for our own domestic manufacturers to deal with. They have been beset by other matters. If one looks at the figures for import penetration over the past three years, one finds in field after field where we had previously been net exporters we are now net importers. So this policy of high exchange rates and of high interest rates itself has contributed to the progressive decline of the fortunes of most of the manufacturing sections of our industry.
Therein lies, so far as I am concerned, the anxiety—and I put it no higher than that—about joining the EMS. Despite the association of the EMS with the European Economic Community—of which I am not a devout supporter in view of the fact that, as Mr. Jenkins indicated, it consists at the moment of little more than the CAP and a few peripherals—the reason I am hesitant about joining the EMS is that I am afraid that under this Government we should join it on terms that would seek to perpetuate the disastrous policies that they are carrying out at the present time. As my noble friend Lord Balogh has indicated, the pound is probably over-valued at the present time by some 20 per cent. If we went into the EMS at the pound's existing level there would be a danger—and I put it no higher than that—of fossilising the situation of import penetration into this country, which has already reached very dangerous proportions and has been one of the principal causes of the unemployment from which this country suffers at the present time. These are the things which gave me misgivings.
The noble lord, Lord Soames, thought that perhaps I was going to be dogmatic about this. Not at all. I willingly concede that if it is possible for this country, in conjunction with other countries, to arrive at some kind of organised arrangements whereby one can establish a firm but flexible rate of exchange, I can see the advantages of that. It may well be, as the noble Lord, Lord Lever, has said, that the EMS is the best instrument for this purpose. Indeed, I concede that if that be so there is the advantage in the strategic approach of supporting the EMS on the basis that it is another step towards being able to obtain agreement within a wider context, possibly within the IMF or in conjunction with the various other organisations that have the support of the United Nations and some indeed with the support of the World Bank. I am all in favour of that.
What I do not believe is that it is right at this stage

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to dogmatise about it. I am convinced that the quicker we start abandoning these wretched, miserable deflationary policies that have scourged the country and produced this large-scale unemployment that exists at the present time, the better it will be for everyone, and it will make it easier for us to participate profitably and co-operatively in an organisation such as the EMS.
5.31 p.m.
The Minister of State, Treasury (Lord Cockfield): My Lords, this has been an interesting and indeed illuminating debate. The fact that many of the opinions expressed have transcended party boundaries will be thought by most people to be a good thing and not a bad thing. The House owes a debt of gratitude to my noble friend Lord O'Hagan for instituting this debate and for the very thoughtful contribution that he made to it.
I must take issue with the noble Lord, Lord Bruce of Donington. We face of course very great problems as a nation and I realise that the noble Lord, in common indeed with all of us, feels very strongly and sincerely about these subjects. But this does not in any way mean that the House should not be debating subjects of the kind that we have been debating this evening. Many people may think that the House is uniquely placed to perform that function.
May I say in that connection that one must be very much struck by the great sense of vision shown by the noble Lord, Lord Lever of Manchester, in his portrayal of the EMS and the European Community as a step towards world-wide international and trading co-operation. My noble friend Lord Soames was equally right in looking at the European Community as much more than a purely economic community. It is an important step forward in international co-operation and has great political as well as economic importance. A number of noble Lords—my noble friend Lord O'Hagan himself, the noble Lord, Lord Lever of Manchester, my old friend—if I may so call him—Lord Roberthall, Lord Ardwick, and others—looked back with nostalgia towards Bretton Woods, as indeed I do.
For 25 years the Bretton Woods system of fixed but variable exchange rates maintained a degree of stability to the great benefit of international trade. Indeed, the benefits which flowed from the system went wider than that. The system imposed a degree of discipline in the conduct of economic affairs: and it provided every incentive for the prudent conduct of economic policy.
The breakdown of the Bretton Woods system in the 1970s was not the result of any weakness of principle in the system itself. It was the result of a number of factors which unfortunately came together at one particular moment in the world affairs. It was the result of rising world inflation, disparities in economic performance and above all the weakness of the dollar. A fixed rate system could not have coped with the oil price shocks of the past decade, and the huge increase in the volume of internationally mobile funds, which today dwarf the size of official reserves. This breakdown in the exchange rate stability while inevitable was of course a great loss, not only with repercussions on international trade; it also removed, as I have indicated, an internal discipline.
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It is not surprising that in these circumstances people should search diligently for a successor to Bretton Woods and perhaps least surprising of all that the search for the successor should be made within the context of the European Community.
The greater stability we all seek can in the end only be achieved through a return to more stable world conditions; and, in particular, lower and more uniform rates of inflation. The EMS is a product of this search, as well as a step towards European economic convergence and intregration.
Although it has become customary for people to talk in terms of "When will we join the EMS?"—as indeed my noble friend's Motion does—the position in fact is that we became a founder member of the EMS when it was launched three years ago. Twenty per cent. of our official gold and dollar reserves are deposited in the European Monetary Co-operation Fund; and the Government participate fully in all discussions on the operation and future development of the system. My right honourable and learned friend the Chancellor of the Exchequer chaired the most recent realignment conference.
My noble friend Lord O'Hagan mentioned the discussions currently going on about the possibility of making some useful—though essentially technical—improvements in the present arrangements. I can assure him that Her Majesty's Government are already playing a full part in those discussions.
What is at issue is not simply membership of the EMS but whether we should join the exchange rate mechanism. The Government fully support the aims of promoting an area of greater currency stability within the community, and the contribution that the EMS and the exchange rate mechanism can make towards closer economic convergence and integration in Europe. Nevertheless it was decided when the EMS was launched that we should not at that stage join the exchange rate mechanism. That decision was right at the time; but, not unnaturally, people ask, as my noble friend Lord O'Hagan and other noble Lords have asked, whether the time has not come when a further step forward might be taken. A number of your Lordships spoke in this sense in the debate and powerful voices have been raised outside to the same effect.
There is, however, a difficult balance of advantages and disadvantages to be weighed up in considering sterling's possible relationship to the exchange rate mechanism. Some of the issues are more technical and complex than is commonly realised. I should like to touch on a few of these.
Participation in the exchange rate mechanism places an obligation on Governments to ensure that their exchange rates against other EMS currencies remain stable for a reasonable period of time. The mechanism is not of course one of immutable exchange rates—there have to be periodic realignments of rates to permit the necessary economic adjustments between European Community countries. But too frequent realignments would undermine the raison d'etre of the mechanism and bring it into disrepute.
One implication of this is that United Kingdom economic policy would inevitably become more directly affected by the decisions of our partners and by the policies that they in turn followed. This would

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clearly be a complicating factor for our own policies. A second implication, not perhaps always sufficiently recognised, is that membership is by no means necessarily an easy option. Maintaining a fixed parity—whether inside or outside the EMS—would often require a restrictive monetary and fiscal stance. Membership of the exchange rate mechanism presupposes a willingness to accept these disciplines and can indeed reinforce the need for them.
It is quite wrong, therefore, to regard membership of the EMS, including the exchange rate mechanism, as freeing us from the need to conduct our affairs responsibly and to accept the necessary disciplines in fiscal and monetary policy. In no sense would membership be a licence to pursue lax or expansionist fiscal or monetary policies.
At the same time our experience in the 1960s and 1970s has shown that it can be extremely difficult to resist underlying market pressures on exchange rates by intervention alone. The attempt to participate in the "snake" in 1972—and our membership lasted a few weeks only—the attempt to halt the depreciation of the pound in 1976, and the attempt to cap its appreciation in 1977 were all overwhelmed by market forces despite massive exchange market intervention.
The noble Lord, Lord Lever, has widened the argument and suggested that an EMS reinforced by the United Kingdom would be able to introduce stability vis-à-vis the dollar. This may very well be a desirable objective, but there is no reason to suppose that the United States authorities would co-operate in such a move. They have a policy, firmly stated, of only intervening in the foreign exchange markets in extremis, and whatever those like the noble Lord, Lord Lever, may wish, a fixed exchange rate system could not have coped with the instabilities of the last decade.
Lord Lever of Manchester: My Lords, does the noble Lord recall that the United States had precisely the same exchange rate policy of not intervening except in extremis, and when the 1978 difficulties arose they mounted the biggest exchange rate intervention ever known in history?—and that was the same Government which had the two opposite positions. There is no reason why this one could not.
Lord Cockfield: My Lords, the noble Lord is an optimist. One of his major attacks upon the United States Administration has been on their interest rates policy, and he himself has repeatedly drawn attention in your Lordships' House, and did so again today, to the damaging effect that the interest rate policy followed by the United States Administration had on the economies of Western Europe. Why he should now think that the United States authorities would bail him out in these circumstances I am not sure; I think it is most unlikely.
Experience has shown that attempts to maintain the exchange rate within the agreed bands would have to involve action on interest rates and perhaps fiscal action as well. Sometimes there measures would supplement the stance of the Government's policies to secure low inflation and continued recovery, but
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on occasions there could be conflicts which could be very difficult to resolve. There would clearly have been a conflict of this kind for the United Kingdom in 1979 and 1980—and also for long periods in 1981.
The noble Lord, Lord Ardwick, quoted Signor Padoa-Schioppa on these conflicts between domestic monetary policies and membership of the exchange rate mechanism; but I doubt whether even the most ardent advocates of the interest rate mechanism would deny that we would have had such a conflict had we been members in 1979, in 1980 and in early 1981. The Government have since 1979 made it clear that they have to give immediate priority to getting inflation under control and tackling the United Kingdom's deep-seated economic problems. So we would need to be as confident as we could be that sterling's participation would not result in early or frequent difficulties of this kind. Were it to do so we would scarcely be a welcome participant.
As yet the exchange rate mechanism, with its current members, has operated fairly successfully and has not encountered excessive problems. But there are two special factors relating to sterling which differentiate it from most of the other EMS currencies and whose effects must be carefully weighed. First, sterling retains its role as a major currency for international trade and finance. The sophistication of the banking and financial markets in London make the pound attractive for international funds and particularly susceptible to wide fluctuations in demand in response to changing levels of interest rates abroad and varying expectations of future exchange rates. This sets sterling apart from all other EMS currencies except the Deutschemark. Whereas the experience since 1979 has shown that the mechanism can be successful with one such international currency—as indeed one would expect—greater problems may emerge when one tries to link two, as they did in 1972.
The second factor relates to the pound's role as a petro-currency. Sterling's exceptional strength in 1980, and the comparative weakness of other EMS currencies, reflected among other factors the market's contrasting view of the effect of higher oil prices on these economies. As the pressures in the international oil markets have eased and expectations of future price movements been reversed, so their effect on sterling's exchange rate has moderated. But some of the economies affected have still to complete their adjustment to the 1979–80 oil price rises. The factor works in both directions and it would be premature to discount this. Even in recent months developments in international oil prices have been reflected in sharp, short-term movements in sterling against the other EMS currencies. These special characteristics of sterling do not automatically rule out sterling's participation in the mechanism, but they add to the complexity of the judgment on this issue.
Much has been said by my noble friend Lord O'Hagan himself, by my noble friend Lord Soames, by the noble Lord, Lord Hankey, and others about the need for greater exchange rate stability. But stability is something which cannot be imposed simply by Government decision or by joining an arrangement such as the EMS exchange rate mechanism. It is only possible to achieve stability if we tackle the underlying

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causes of instability. The most important of these is inflation, and particularly inflation at high levels and varying greatly from one country to another. Correspondingly, and in some degree linked with this, we have the high level and volatility of interest rates. Success in dealing with these problems would make joining the exchange rate mechanism of the EMS that much easier and that much subject to less risk. And I have no doubt that if, in this way, we could successfully avoid fluctuations in sterling's parity against the other EMS currencies, much of British industry would regard this as an important benefit. Nearly 40 per cent. of our non-oil exports are to other EMS countries. But it would not help those more concerned with the sterling/dollar exchange rate.
In times of difficulty, people cast around looking for the easy solution, the panacea for our troubles. It is not surprising that the EMS should be cast in this role. But the purveyors of instant solutions do the EMS no good service by this kind of advocacy. We need to recognise that full membership of the EMS, including the exchange rate mechanism, poses great problems and has disadvantages as well as advantages. It is all too easy for people standing on the sidelines, for people or parties out of office and, indeed, with little expectation of office, to see—and talk—only of the advantages and ignore the disadvantages. That is not the way that a responsible Government can approach major issues of this kind.
It is in the light of a careful assessment of all the circumstances that we do not, at the present time, feel able to join the exchange rate mechanism. We must wait until conditions are right, both for the system and for ourselves. But I do assure your Lordships that the Government will keep the situation under constant review. We will study with great interest the points which have been made by all noble Lords who have contributed to what, by any standards, has been an interesting and instructive debate.
Lord Boothby: My Lords, may I—
5.52 p.m.
Lord O'Hagan: My Lords, I should like to thank all noble Lords who have taken part in this debate, and particularly my noble friend Lord Cockfield, who was kind enough to describe me as thoughtful. When I was at university a person who was described as thoughtful was said to have some pretentions to intelligence, but to be fundamentally wrong. I am sure he will take it kindly from me when I say that I deeply admire the eloquent and elegant way in which he evaded many of the most important questions in dealing with the subject under debate tonight. Many of us will forgive him, because of the position he is in and because of the time of year and the approaching Budget. We will forgive him today, but not forever. I thank your Lordships very much. My Lords, I beg leave to withdraw my Motion.
Lord Boothby: My Lords, before the noble Lord sits down—
Motion for Papers, by leave, withdrawn.

Transport (Finance) Bill
Brought from the Commons, read a first time, and to be printed.

Traffic Congestion: Inner London
5.53 p.m.
Lord Balfour of Inchrye Lord Balfour of Inchrye rose to call attention to problems of Inner London traffic congestion over the next six years resulting from growth of public, private and commercial road usage; and to move for Papers. The noble Lord said: My Lords, this is an entirely non-party issue, because it affects members of all parties and members of no party at all. I have drafted my Motion to cover only short-term problems for a traffic organisation which is out of date by 20 years. I propose to leave entirely alone consideration of long-term issues, such as how much public transport we ought to have and who pays for that transport. I propose, also, to leave entirely alone the effect of any roads which are likely to be opened over the next five years. Incidentally, there are no significant roads which are likely to be opened in that time. When the M25 is opened, it will have very little effect without feeder lines, which are as yet unbuilt, and, as it takes 10 to 15 years for planning, designing and negotiating for any road, they come right outside the province of my Motion this evening.
I wish to concentrate on the need for a dynamic effort for short-term relief, if traffic in London is not to be snarled up in the comparatively near future. There is a very real danger of this. I do not want to bemuse your Lordships—nor do I want to bemuse myself—with too many figures, but I must use three. First, figures show a steady increase of traffic levels throughout the GLC area. The increase has been approximately 10 per cent. in the last five years and 16 per cent. in the last 10 years. The second figure which I should like to give to your Lordships is of the number of cars entering central London in normal peak hours. The number has risen from approximately 120,000 daily in 1976, to 140,000 in 1981; and we must remember that a 1 per cent. increase in overall traffic in London means a slowing down of all traffic by roughly 1 mph.
I should like to deal briefly with three categories of London's traffic which we have to consider—public, commercial and private. On each of these I shall say a few words, and be so bold as to make certain suggestions as to what might be carried out. First, let me take public transport. In order to attract, public transport must be what it is not at present; that is, efficient punctual and reasonably priced. But as London Transport will tell you, it is virtually impossible to run such a road service with those qualities under present conditions.
Any reduction in private and commercial transport must have the immediate effect of helping transport efficiency, but such a reduction will come about only when public transport can show a greater ability to satisfy customers than it does at the present time. As public transport improves, so do the chances of road traffic being reduced voluntarily or, possibly, by agreed regulation in the future. It is no good harassing private motorists now, while public transport's short-

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comings can be seen. It is something like a vicious circle. Until public transport improves, private transport will go on increasing. As and when public transport improves, then, possibly, private transport will be reduced. It is rather like the chicken and the egg—which came first?
The second category on which I want to touch for a moment is commercial transport. I think that one can divide commercial transport into two broad categories—transit through London and originating in London, by which I mean point of departure in the GLC area and point of completion of journey in the GLC area. For transit vehicles there is only one course which we should follow. We should introduce, with enforcement powers, designated routes for all such heavy transit vehicles. I regret that the proposed North London big transport inquiry was abandoned by the present GLC pending what they termed, "a large scale traffic inquiry". We all know what "large-scale traffic inquiry" means. It means a very, very long period of time and, at the end of it, a rather doubtful conclusion.
There has been a Government admission that lorry transport is unsatisfactory. I have here an admission by the Minister dealing with transport in a debate in the House of Commons. He said that there are several areas in South London where the presence of heavy traffic merely exacerbates road conditions and is offensive to local residents. The Minister went on to say that the Government are dissatisfied with existing conditions and are trying hard to find a way of making progress. I very much hope that when he replies tonight to that admission by one of his colleagues the Minister will be able to tell us what is to happen and when it is to happen. Only when that occurs shall we see some improvement in lorry transport in North London.
That traffic which originates in London fills many streets with unnecessary congestion at the busiest hours. Again I would suggest the designation of certain central streets which should be marked, "No stopping for commercial vehicles between 8 am and 5 pm". I appreciate the social change which such an introduction would involve—staggered hours of work for drivers and staffs. But we all know that social change must be accepted. Equally, in some streets where loading and unloading is an essential part of our commercial life, particularly around places like markets and docks, I should like there to be notices which read, "No stopping for private cars".
The third and last category of traffic, which I think is the most important category, is private cars. I believe we should provide considerable assistance if the Government and local authorities were to encourage commuter parking development to a much greater degree than has occurred hitherto. The more commuters who park their cars and finish their journey in public transport the better for British Rail, on which they may travel, and for London Transport, on which they may travel. The more cars that are kept out of London because of the provision of commuter car parks the better for the traffic and the better for the GLC. The more commuter car parks there are the better also for local authorities, because they will obtain rates from them. There is much to be said for
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the development of commuter car parks. Those in authority should consider whether it would be possible to have a series of partnerships for commuter car parks based on a combination of British Rail, London Transport and local authorities. It might be possible to link commuter travel from the car park to the centre by the issue of rail tickets combined with car park tickets.
I come to parking in Central London, a very vexed question. I say: do not further reduce resident or meter parking but, rather, enforce—that is a word which I think needs much stressing—enforce strictly existing regulations and also increase penalties for unauthorised parking and all-day parking by feeding meters, a practice which we all know too well.
Enforcement is the key to any early traffic improvement. I will give an example. Recently the police, in conjunction with the local authority, conducted a 14-day experiment in Tottenham Court Road of strict enforcement of regulations. The result was astounding to the authorities and certainly astounding to the travelling public. Traffic flow was revolutionised, compared with hitherto. I should like to see further development of such enforcement experiments and then a general level of enforcement. We all know that very shortly we are going to have to pay £10 for illegal parking. I do not think this is sufficient. For double parking or for parking on a pavement I should like there to be a pink ticket. I believe there should be two coloured tickets; a white one for an ordinary offence and a pink one for parking on a double yellow line or for parking on the pavement. I would certainly make the pink ticket carry an automatic penalty of £20.
That brings me to the question of traffic wardens. By and large, with certain exceptions, they are an admirable body of people who are doing a very unpleasant job under not easy circumstances, and they are doing it, in the main, thoroughly courteously and efficiently. Enforcement would require a considerable increase in the number of wardens. But let wardens concentrate not on easy residential squares. Let wardens concentrate to a greater degree on main thoroughfares and adjacent roads to those thoroughfares. I only hope that the Minister will note that point and make suggestions to those in charge of the organisation of parking that they should concentrate more upon the main thoroughfares and less on the side streets.
Turning to finance for more wardens, although I have tried to find out, I am puzzled about the standard practice of local authorities over the revenue received for parking. Some earmark it specifically for road improvements, others designate it for traffic wardens, while others make a considerable profit from it. I should like the revenues from parking to be concentrated upon traffic wardens in order to enlarge the army of traffic wardens. Next I come to the matter of late evenings. I would leave the matter of late evenings in London alone. There is no great traffic problem there. Dangerous parking can be dealt with by the Metropolitan Police with their tow-away organisation. So it is really at particular hours during the daytime that congestion is greatest, that new regulations are required and that enforcement is imperative.
I would like to see more one-way streets—I believe we all would—more bus lanes, and possibly even

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temporary flyovers, if only we could stop the tremendous delay which takes place in planning and consent for temporary structures. Every measure I have suggested would affect some public or private interest and is bound to meet with resistance in some quarters, but unless we all accept the need for urgent action now, in an understanding frame of mind, we are going to get nowhere. May I finish by quoting a phrase not unknown in our political life and in the political history of this country: something must be done.
6.12 p.m.
Lord Underhill: My Lords, I am certain that the whole House will be grateful to the noble Lord, Lord Balfour of Inchrye, for opening this debate and for giving us an opportunity to discuss this important matter as well as for the practical way in which he has put forward some valuable suggestions. I only hope that my suggestions will be equally valuable. I am pleased also that we are going to have the advantage of a maiden speech by the noble Lord, Lord Plummer of St. Marylebone, whose vast experience as a previous leader of the Greater London Council will be very helpful to us in this debate. I recall that a former Prime Minister is alleged to have telephoned the noble Lord in Tokyo and told him to clear Parliament Square. Perhaps we may know tonight what proposals the noble Lord made.
I agree with the noble Lord, Lord Balfour of Inchrye, that we must deal with the situation as it is at the moment, which could be aggravated by the possible and almost certain increase in the number of cars and lorries. The situation today would be even more desperate but for the services which are provided by our public transport system. The noble Lord referred to the number of cars which come into London each day. Over and above that figure, during the morning rush hour each day, some 900,000 passengers come into London using British Rail and London Transport's bus and underground services. Over and above that, far more people use public transport services on cross routes, and vast numbers use cars on cross routes. It is often where the cross routes converge with traffic bound for central London that huge congestion occurs.
Whether it is practical or not, I certainly agree with the noble Lord, Lord Balfour of Inchrye, that we know that where there have been temporary flyovers a great benefit has been achieved—and if it is possible to do this elsewhere, let us see it done. Anyone who uses the Southend arterial road who knows what the conditions were like at Gallows' Corner long before we had the temporary flyover, will appreciate what great benefits can be secured. Setting aside all arguments about 40 tonne lorries which we shall have later, I am glad that the noble Lord referred to the problem of large lorries. When I travel into London by car I cross Graham Road in Hackney, which was featured in a BBC programme not so long ago. This suffers a continual procession of extra-large lorries, and not only does this interfere with traffic flow, but, in addition, this is a road which large numbers of people use as their residential road. We have to live with the lorry, but I believe we must contain its effect both on traffic flow and on the environment.
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There are already powers for excluding lorries from certain areas and for defining lorry routes. One thing we must always be aware of is that, whenever one defines a lorry route, one pleases some people but upsets others. I believe that the GLC found this out in a survey they conducted a few years ago. Speaking for myself, there is one thing I am very definite about. Any suggestion of a general ban on lorries in London is absolute nonsense, both for economic reasons and because it would be impracticable to administer. Lorries of more than 40 feet are already excluded from a six square mile central area. This helps that particular area, but it also presents acute problems for the roads just adjacent to the area from which those lorries of 40 feet or more are excluded.
I am glad that the noble Lord, Lord Balfour of Inchrye, referred to the M25 orbital road because, while that may bring some improvement, the Armitage Report has stressed that benefits would be limited—and I quote,
"to a maximum of 5 per cent. of all lorries because so great a proportion of the lorries have business in London".
So while there will be some benefit in moving around London, there is always that problem in the end. In paragraph 235, the Armitage Report also points out the difficulty of enforcing the present limited controls on lorries. I quote:
"The GLC have found a 40 per cent. infringement rate in central London for their length restriction in spite of improved signing, a number of prosecutions, and the involvement of significant police resources".
The next paragraph of the Armitage Report disturbingly points out that the police do not give high priority to devoting resources to lorry control. Perhaps the Minister will deal with that point in the Armitage Report, because if it is correct there is not much use our talking about further control to expedite the flow of traffic by dealing with lorries if the police do not regard this as a high priority.
I wonder also whether greater encouragement could not be given to the development of transhipment centres. These could be established on the M25 and other motorways, and also near the start of some urban clearways, where loads of large vehicles can be broken down into smaller vehicles for delivery. I know it will be suggested by road haulage interests that this is costly, but we must consider the present cost to the environment and the cost of congestion on our London roads.
On the question of car parking, I completely agree with the noble Lord, Lord Balfour of Inchrye, that the problem is the avoidance of obstruction—and that is the real purpose of on-street parking control—and this obviously means enforcement. No one wants to harass private motorists—most of the Members of your Lordships' House are motorists—but this important question of enforcement is one to which we must pay some regard. In our debate the other night on the orange badge scheme for the disabled the noble Baroness, Lady Gardner of Parkes referred also to the shortage of traffic wardens at the present time. The latest figure I have, which comes from a GLC document, is that the number of traffic wardens is down to 1,200, while the required strength is 2,500. We must ask why. Is it because conditions of work

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are unfavourable? Is it because people do not like the way they are treated by motorists? Or is it a question of wages? Someone needs to tell us why it is, especially in these days of unemployment in London as elsewhere, that we cannot get the number of traffic wardens we need. Without an effective number of traffic wardens, all our talk of enforcement is pie in the sky.
We are also concerned to learn that the courts are able to deal with only 20 per cent. of parking tickets not paid within the statutory period for payment as a fixed penalty. If that is so, then, together with the other factors to which reference has been made, it means that the system of parking control is in absolute disrepute and people take no notice of it. Yet I believe we all agree that the enforcement of parking control is essential. A way must be found to see that parking penalty tickets are paid. There must be both a foolproof system and a cheatproof system. I cannot believe that with our modern computer records at the licensing department in Swansea there should ever be any problem in "chasing" individuals who have offended.
I agree completely with the criticism of the noble Lord of the large contravention of the regulations through meter feeding and exceeding the time paid. I understand that no less than one-third of the users of the 15,000 meter spaces in central London come under that offence. The number of illegal parkings on yellow lines which impede traffic flow, and in many cases cause traffic flow to be in one lane instead of two, is very substantial. I am told that 20,000 cars each day are parked illegally on yellow lines in central London alone. Enforcement again is the important factor if you are going to reduce obstruction of traffic flow. The GLC has sought legal powers to introduce wheel clamps. This was discussed in the debate on the 1981 Traffic Act and I was prepared to second the Motion. I think the Minister was looking at this matter. But I regard this as a last resort. I believe that clamp sets are expensive. Obviously this is the thing to do for removal from a dangerous position, but again, if there is shortage of police resources in dealing with obstructions, that is a factor which we have to consider. Again it comes down to the question of resources available to those who have to carry out enforcement.
Then we must look at the question of the provision of off-street parking. I know noble Lords would not want too many figures, but in central London I understand there are 32,000 spaces provided in public off-street parking, one-third of which are controlled and owned by local authorities. But there are another 60,000 spaces provided in office buildings. How far should the number of cars coming into the centre be controlled by increasing charges? The GLC can tackle this matter on the public car parks, but it has no powers at present—I do not believe there is legislation—to deal with the position of the 60,000 which are in the private car parking provided in office buildings and so on. The 60,000 is something more than half of the non-resident parking places in central London.
We are also told that 70 per cent. of all new car purchases in London are for companies. I must ask the question, is travel by car always essential because
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there are business visits that have to be made during the day, or in many cases is the car an employment benefit?—in which case one ought to look at this problem. The effect of the company car situation is reflected by a survey conducted of parkers in central London. This showed that 38 per cent. had company cars; 68 per cent. were persons whose work made other trips necessary after they had parked, and therefore their situation is understandable. Some 40 per cent. actually had their parking provided for them. If we take 68 per cent. of parkers needing to move their cars later for important business engagements, which one can understand, that still leaves 30 per cent., and 30 per cent. is something like 40,000 cars coming into the centre which have no need to move again once they are parked.
For many years I worked not far from here, in Smith Square. I never travelled up by car unless I was going to a late-night meeting either in London or in the provinces. But I looked across the road yesterday at the Abingdon Street car park, with 250 places, at quite an early time; there were "House Full" notices, " Season Tickets Only ". If I tell your Lordships that the parking fee for between six and nine hours is £3.15, which is £16 a week, then it must be people with very high salaries or people who have the whole of their expenses paid by the company. I am certain I could never have afforded that.
There is always the danger, too, that whatever we do in central London could worsen the situation in adjacent inner London areas. We have to consider the problem of making a worse situation in the near inner London areas; often that is where congestion occurs. When I travel to this House by car, as I do when we are sitting late—I never travel when I have an early morning meeting because it takes longer—I have to cross central London through the City. I can assure your Lordships that the worst congestion is in the inner London areas, not the central London areas, where the routes cross over and where all the lorries are diverted.
I am glad the noble Lord, Lord Balfour, referred to encouraging the maximum number of motorists to leave their cars at car parks and travel in by public transport. It was a very welcome step when we found BR stations and London Transport making this provision. I make two pleas in regard to this: first, charges must be kept to a minimum if we are to encourage people to do it; secondly, the number of parking places in the suburban areas must be adequate—and this affects outer London as well as the GLC. I am in the first district council over the London barrier. I can tell your Lordships that quite a number of travellers put their cars in the car parks, but the car parking facility is very limited and people overflow into neighbouring residential streets and shopping areas and create a nuisance or an obstruction to traffic flow.
It is, I believe, impracticable to carry out what has been suggested in some quarters, a system of licensing for entry into central London. I believe the administration would be almost impossible. If we cannot cope with the illegal operation of meters and illegal car parking on yellow lines, I am certain we are not going to cope with a customs place at every entry into London to see that people have the entitlement to come in.
Surveys show that in most cars travelling into

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central London there is only the driver; I am told the average is 1·3 persons per car. We must ask ourselves: why do people travel in and out each day by car, with all the inconvenience and frustration, despite travelling at the same time morning and night and not shifting their car once they get here? We have to understand why. A number do it because of the cost of public transport. This applies particularly to those in the south of London—I live in the north-east—who have no underground service to speak of and rely mainly on British Rail. The costs to many people are prohibitive, and they find it worthwhile having all the frustration of travelling in by car to central London. We have to consider what will encourage car owners not to suffer this frustration and to make use of other methods of travelling into central London. It surely can only be by the provision of suburban car parks reasonably priced, and the provision of adequate and reasonably priced public transport.
I do not want to go into the political arguments surrounding the recent House of Lords judgment, but we must consider what is to be the policy. How do we encourage an efficient public transport system, which already in London carries, on average, 4½ million persons a day? If we take out Saturday and Sunday it means something like 5½ million people using public transport services already. How are we going to increase that number? Whatever one says about the Fair Fares policy, it was an effort to try to meet the needs of people in London and to get cars off the roads. Therefore, I must ask: What do the Government propose to assist the GLC to meet this situation?—because we are going to be faced in the very near future with higher fares on public transport in London as a result of the Lords judgment. We are going to be faced in the immediate future with a reduction of services, a contraction of services. Frankly, unless we tackle this problem we are not going to find it possible to divert people from using cars and come in by some other method, because public transport will be the only means. I agree we want it to be efficient. I am reasonably satisfied with my Underground service. I get from Buckhurst Hill, even though I have to change at Mile End. Unless the Government have some policy for assisting the GLC, I believe we are going to have increased traffic problems in the years ahead.
6.30 p.m.
Lord Donaldson of Kingsbridge: My Lords, I must agree with the last speaker. I am absolutely certain that, as things stand at present, we shall have increased traffic problems, and I am particularly grateful to the noble Lord, Lord Balfour of Inchrye, for raising this question at this moment. It seems to me that all of us are going to say variations on the same theme. However, there are three or four absolutely obvious things which could be done, which must be done, and I hope that this debate will make them clear.
First, I should like to support the noble Lord, who opened the debate in his demand for a dynamic effort, because that is what there conspicuously is not. There are a number of different people working very hard on different problems but there is no dynamic effort at the moment and that is what we must have. The situation was already visibly deteriorating even before the GLC capers, and after the legal decision
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it is perfectly clear that it will be deliberately worsened and two things will be done which are the opposite to what ought to be done; fares will be increased and services will be reduced. They are the opposite of what everybody in this Chamber not only wants, but knows must happen. Therefore, we must look for some kind of concerted effort.
It is ridiculous not to recognise the social and commercial side of passenger transport. I found the views on commercial transport of the noble Lord who opened entirely satisfactory and I shall not talk about commercial transport because I think that he has dealt with it, with some additions from the noble Lord, Lord Underhill. I shall confine myself to passenger transport which is something about which I know, because I use it every day. The waste of time, the waste of petrol, the damage to the nerves, the noise, the fumes, the accidents, the deaths and the terrible conditions for old people humping their baggage about and all the rest of it is a disgrace to this country. We must have a comprehensive plan. I think that the noble Lord was absolutely right to limit it to six years. It is no good going too far ahead. But the money should be set aside in a phased plan and this Government, the next Government and the one after that should either keep to it or be seen clearly not to be keeping to it and we the public can then blame them for it.
I should like to tell your Lordships one or two short facts. In London the buses carry three times as many passengers as does the Underground—5½ million; 1¾ million every day. Secondly, each train mile more or less breaks even financially: each bus mile costs 80p. Therefore, the common sense approach here is that we should try to extend the scope of the Underground and switch more passengers to it. How can that be done? To extend the Underground is expensive and long term and comes outside the six years, to some extent, but it is a good investment. The LPTB suggest various extensions which they think would be not only efficient but economic, but they say that there is no immediate prospect of capital becoming available for any of them. That is the counsel of despair and that is what is so fearfully frustrating. Sir Peter Masefield somewhere suggests that at least two miles a year of Underground extensions should be undertaken; I think that we should demand a minimum of that. We must not succumb to the hope-destroying rule of the Treasury; never buy today what you can pay more for tomorrow. But I admit that the Underground extensions are long term. If the service were better, more people would use it. Therefore, that is the next common sense approach which has been made by both the previous speakers.
At present the current capital investment of the Underground is about £140 million a year and it is perfectly clearly inadequate. What would make it adequate I do not know, but that could easily be found out. When I was a boy trains used to run every two minutes. Last night I left this House at a quarter to six, which was absolutely the middle of the rush hour. I waited for five minutes on Westminster station and for eight minutes on the Embankment station. Both plat-forms were dangerously crowded and the trains were only fit for sardines. Nobody will travel by tube in these conditions if he can avoid doing so. This is a

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perfectly simple question. Sir Peter Masefield and his colleagues know how to make a railway run properly, but they are not given the money to do it.
The only point on which I differed from the noble Lord who opened, is that it is no good not talking about money. There is not any other serious problem. Given the money you can make all the stations as good as the new Embankment station or Charing Cross, both of which are very nice. If you came to Chalk Farm, you would see a very serious difference—the wind is so strong going down the stairs that you cannot stand up. There are all sorts of things which are dreadful about the tubes but they need not be—the skeleton of the service is absolutely first-class. So at least we should extend the tubes every year by a small amount and at least we should give them the necessary money to run them properly.
I turn to the buses. The buses lose 80p, a bus mile. So the more people we put on the buses the more we shall have to subsidise, but that I think must be accepted. We are told that if they ran every day at the same speed as they run on the less congested Saturday roads, they would go 15 per cent. faster and save £30 million a year.
There are two main reasons why they are congested, both of which are perfectly obvious and have already been mentioned. First, parking; and secondly, private cars—too many, and many of them with just the driver. Common sense suggests, which the noble Lord worked towards, that a heavy fine—I said £30 and he said £20 or £25; I do not mind the figure, so long as it is a heavy fine—should be substituted and there should be enough traffic wardens to enforce it. The GLC say that they have just about half as many traffic wardens as they need. There may be difficulty in getting them. I do not believe that that difficulty is insuperable. In my view, with a little bit more money and a little bit more attention, they could get it.
The first debate I ever opened in this House was on penal affairs and as an example of the fact that sanctions sometimes work, I said that if any parking offender was strapped to the parking meter and given 40 strokes of a split bamboo there would be no more parking offences. That is clearly true. I am not suggesting that, but I am suggesting a heavy fine which is rigidly enforced. My belief is that that by itself would do more to let the buses run not in triple ranks as they invariably do now. If you want a No. 137, you cannot get less than three. It is not their fault: it is the fault of the traffic. I believe that such a situation could be avoided by this matter aloned—dealing properly with parking. In my view, we must, between us today—and I think that everybody will, as it were, vote for it—insist that whatever else you do not do, you must do this.
When it comes to too many cars and solo drivers, there is only one way to deal with that; namely, to make motoring short distances in London so disagreeable and expensive that people stop doing it. I stopped driving here in a car years ago, although it is the one place where we have the splendid perk of a car park, so you can do so. But nobody can drive legally around London and hope to park legally. It simply is not possible. If people want to go shopping, they have to stop and that is the end of the matter.
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So we must do what we can. The price of petrol and maintenance is doing the best for us and, if we could enforce the car parking, it would be all right.
Thirdly, British Railways—who run, in London and the South East, the most intensive commuter service in the world—are in exactly the same position as the Underground although, of course, on a larger scale. If we look at what Sir Peter Parker says, we find that they do not have enough money to maintain their stocks, their signalling and the other things they have to do to make travelling by rail attractive. Actually, they are already full and pretty well up to capacity in the commuter times. By careful advertising and salesmanship they have increased their passenger traffic between peak hours by about 25 per cent. This is very valuable and very good; it takes people off the roads.
But Sir Peter said that he had had to extend the use of his coaches from 30 to 40 years. A 40-year old coach is getting on. Clearly, the equipment is deteriorating in a way that will make it more expensive to put right when it becomes too old, and so on. I do not want to go on too long because I think that everybody will agree with me, and I shall agree with everybody else; and I hope that we shall get somewhere.
However, I should like to refer to the noble Lord's vicious circle. This is not quite a vicious circle. One remedy will not deal with this situation; it needs several remedies. In my opinion, if you dealt with car parking, if you dealt with the Underground, and if you dealt with the bus service, one by one, they would improve one another. If a few more people went on to the Underground, if fewer cars were parked in the way, the buses would go faster and gradually the service would become better. Without a good public service there is no hope of putting matters right.
I just want to conclude with these few words. I never understand what lawyers are doing and it seemed to me, after a very superficial look through the papers, that someone had suggested that public passenger transport should not be subsidised. This cannot be true. If someone did suggest that, it should be altered at once. There is not the slightest question that public passenger transport must always be subsidised. It must be subsidised a good deal more than it is at the moment. We must face that. I hope that the dynamic effort which sets out those things that must be done as an absolute minimum can be phased over six years, and that we can force our Governments at least to allow that expenditure in order to keep this great capital a place in which we can live.
6.42 p.m.
Lord Plummer of St. Marylebone: My Lords, I am very grateful to my noble friend Lord Balfour of Inchrye for enabling me to join in this debate. I enter into it with some caution as the subject of central Inner London congestion has been a matter of contention for a very long time. As the noble Lord, Lord Underhill, remarked, a Prime Minister was forced to comment upon this on another occasion.
I hope that your Lordships will accept that the points which I shall endeavour to make are in no way intended to be provocative, but are merely to seek a solution. My credentials are that I was at one time Opposition Leader on the Roads Committee of the London County Council and on the Highways and

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Traffic Committee of the Greater London Council. Subsequently, for some six years I had overall responsibility as Leader of the Greater London Council. From the 1960s to 1973 there was largely a bi-partisan policy at County Hall which enabled several much-needed long-term measures to be taken to alleviate the problems of road congestion in London and Greater London. This agreement became even more important on the advent of the Greater London Council because of the likelihood of a change of political control from time to time.
My experience on this has been that traffic congestion in Inner London cannot really be solved only by measures that are taken there. Unless long-term commitments are adhered to, the necessary changes simply cannot be made. As I see it, the solution to Inner London's congestion must surely be found in an overall strategy, which will, in fact, take many years to implement, and also be part of an integrated transportation plan with public transport, which has a vital part to play.
From the start—and, indeed, with very few exceptions—London's roads were unplanned and just grew up from the centre, like the spokes of a wheel, to meet the needs of the horse and carriage. Little or no action was taken in building roads to enable movements to be made round or across the area during the rapid expansion of London in the 19th century and of the suburbs during the early 1920s. As a result of this, traffic is constantly directed towards the centre to find its way across the area, and long-term solutions are conveniently shelved while conditions become steadily worse.
Although successive Governments planned and constructed massive motorways pointing to the Greater London area from all sides, little or nothing was done to receive and disperse this traffic, which could only force its way through suburban shopping centres and down residential roads. As a result, hundreds of thousands of people are condemned to live on the principal radial routes within a few feet of heavily trafficked roads and all the damaging effects there are of noise and fumes. On the few routes which have been planned and completed, it is very striking indeed that, in the long interim period to completion, housing and offices have been successively constructed so that the design minimises the environmental problems and gives much improved living and working conditions for those alongside.
I agree that lorries cannot just be banned from the central area. I do not think that that is any solution. If they are to be put on lorry routes, as has already been suggested by the noble Lord, Lord Underhill, then what is good for some people will be bad for others. Ninety-two per cent. of goods in Inner London are carried by road, and nearly everything that one eats, wears, uses or reads comes by a motor vehicle. Surely it is time that provision was made for this flexible form of transport and thus reduce costs to the consumer. The hidden costs of congestion must now be enormous and, with the high cost of fuel, the need for action is even more urgent.
If I may say so, it is only when one deals with the huge area of Greater London and the impact of the built-up areas beyond it that one can appreciate how large it is. It is evident that the decline in industrial
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development in London has to some considerable extent been brought about by the poor quality of the capital's inadequate road system. A great deal has been said about the need to complete the outer orbital route known as the M.25, which it is said will syphon off traffic passing through the central area. But I think that this ignores the enormous generation of essential traffic journeys actually created within the area surrounded by the M.25.
Traffic in London is made up of a complex mass of cross-country journeys, not only for commercial purposes but also by the more than 50 per cent. of households who own a car; over 90 per cent. of those journeys originate and finish within Greater London. In order to relieve the congestion in Inner London from time to time various palliatives have been taken, starting with white lines, yellow lines, on-street and off-street parking schemes, traffic management schemes, one-way streets and banning right-hand and left-hand turns. Most of the opportunities to do more on these have run out and all depend, as has already been said, on enforcement, which is so clearly lacking at the moment.
One of the matters for which I pressed the Government very strongly when I was on the GLC was owner liability. This meant that when the car was transgressing one could serve the summons on the owner and not on the driver. It was surprising how many people suffered from amnesia when they were asked who was driving on a particular day. We got the legislation, but it was not taken further. When the licensing of vehicles was removed from the GLC to Swansea and to the large computer, which we all hope is working now, it was then intended that an offence should be marked on the computer and when the driver came to renew his licence he was told, " Yes, when you have paid your fines. " I still think that this would be a very good penalty, and would deal only with those who transgress.
Now everywhere cars are parked on the pavements, which is a danger to pedestrians and of course breaks the pavingstones. Unless regulations are enforced they inevitably fall into disrepute. More and more people find that the regulations can be ignored. Thus the congestion escalates and the problem is compounded. I would submit that over the next six years it is essential to strengthen enforcement, and at the same time to invest in a long-term programme of primary roads in Greater London, especially to exist with the existing motorways outside.
Although I would very much like to comment on London Transport, I feel that this would not be the occasion. But, as has been said by other speakers, an improved road system is not the only consideration. It is also vital that we maintain, and indeed improve in order to obtain, an efficient public transport system, as each—that is, dealing with enforcement and the public transport system—is essential to London and a solution to congestion. But I agree with my noble friend Lord Balfour that something must be done, and quickly.
6.53 p.m.
Lord Mancroft: My Lords, I know that your Lordships would wish me to congratulate the noble Lord, Lord Plummer, on one of the most knowledgeable

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maiden speeches we have listened to for a long time. I am very happy that the luck of the draw should give me the privilege of congratulating him because he and I both served together on Marylebone Borough Council many years ago, and I then had the privilege of congratulating him on his maiden speech in that council. I am very happy indeed to tell your Lordships that it was just as good as the speech he has made tonight. I hope that we shall hear him frequently because he obviously speaks with great knowledge.
The noble Lord, Lord Balfour, who introduced this valuable debate, was, like Lord Plummer and myself, an inhabitant of St. Marylebone. He and I lived in the next street to each other. He will remember that the streets in those days were peaceful and quiet little backwaters. If he went down them now he would find—leaving aside today as being a special occasion because of the strike—that they are once again parking places, and on the pavement at that. I therefore endorse the remark that he has made, as many other noble Lords have too, about the need for enforcement. I hope that the noble Lord who is to reply to this debate will be able to confirm that some steps are being taken to increase the number of wardens who, with all their misfortunes, are at least doing a job as best as they possibly can.
The noble Lord, Lord Plummer, also referred to the horse and cart. When I first joined your Lordships' House—and I had the honour of joining here some 39 or 40 years ago—I remember hearing with pleasure one of the senior policemen here telling me that as a young policeman one of his duties was to hold my father's horse when he dismounted at the riding block, which was then at the front door of Westminster Hall, and help him off with his spurs because he was not allowed to wear spurs in the House. I think my father was the last Member of Parliament to ride there on horseback and take his place. He had to give it up because he could not get across Marble Arch in safety. My Lords, you could not get across Marble Arch in safety now in an armoured car. You only have to stand and look at the traffic outside our own door during the rush hours to realise how serious the traffic on that main artery is. Only this country would allow a main artery to drive right through the main capital city of the country.
The noble Lord, Lord Balfour, went out of his way to say that we are not to discuss long-term remedies. I quite understand that. But the noble Lord, Lord Plummer, has endorsed the fact that we must not forget them; we must not overlook them. I think it was Voltaire who said that the best was the enemy of the good. The best, of course, is putting a main road system right; but I quite agree that we should not over-look some of the smaller things that can be done.
I agree with two noble Lords opposite who praised the Underground. It is far and away the best way of travelling around London. We have done a good deal since the war: the Jubilee line; the Victoria line; the extension out to Heathrow; the rebuilding of several stations. If there are any pennies going spare I would say give priority to the Underground. Reinforce success. It is by far and away the best way of getting around.
Let me turn to two or three of the smaller things which have been ventured in the past but seem to have
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gone by default. We have moved out Billingsgate and Covent Garden. There was an appalling row when this was started but it seems to be working all right. What about Smithfield? What about Spitalfields? What about many of the other congested centres of London which could be moved out—only, of course, after a considerable row; we have to face that.
We used to talk did we not?, about the staggering of working hours. This was done to a considerable extent, but that seems to have gone by default. I have asked many people in businesses with which I have contact whether they stagger their working hours, and only a few do. Why cannot we revive that? Why cannot we revive the movement of business out of London to the country and the suburbs? I think it was the noble Lord, Lord George-Brown, who was the Minister who started that.
Croydon, which used to be a small suburban town, is now a large commercial city. Some of the seaside resorts have also followed suit. But this is lagging. It should be revived. We should find more means of encouraging people, and private firms as well to move, out. What about shops on Saturdays? There was some talk of that in days gone by. Do your Lordships realise that Fifth Avenue in New York, one of the principal shopping centres of the world, is open all Saturday? I believe that a few of our principal shops in the centre of London are open on a Saturday, but very few indeed.
What about taxis? taxi meters, that is, not the taxes you pay. The noble Earl, Lord Selkirk, has a Question down on 4th February about taxis. I shall be interested to see how the Government deal with it. Taxis are a paradox. They are never there when you want them. If you do get them you cannot afford them. And always, if you want one urgently in the rain, they are travelling home in the opposite direction from yourself with their lights switched off. When I was a boy there used to be many taxi ranks around London. They have almost entirely vanished. I know of half a dozen, and no more. There is one in Sloane Square; a very obvious one. They take the taxis off the street where they are cruising, wasting time, money and petrol, and blocking up the streets. They are there where you want them, where you know the taxi rank is, and they always do a good business there. Why cannot we revive the taxi ranks that we had in the old days?
I appreciate that these are only small remedies, and when we get up and try to go home after this debate we shall see the big trouble that the noble Lord, Lord Balfour, told us that we must not discuss: that is, enormous, thundering hordes now going up to 40 tonnes, past our own front door in the House of Lords—where, incidentally, I should like to see a taxi rank installed as soon as possible. How serious the situation is was brought to my notice only a few weeks ago when I was coming down to listen to a debate on defence in your Lordships' House. I was stuck behind a lorry for about 10 minutes in Belgrave Square. The taxi driver said sympathetically " I hope you are not pressed for time, gov'nor ", to which I replied, " I am, rather. I am going to listen to a debate on defence in the House of Lords ". " Defence? Don't worry about that, " he said. " If the Russians ever get here, they'll never get any further than Hyde

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Park Corner ". Voltaire said that we must not let the best be the enemy of the good. We have discussed the good today and have left the best, which is the main road, strictly alone. But let us remember Voltaire's next line:
" The best is the enemy of the good, but it is often an excuse for doing nothing ".
I hope today we can prove Voltaire wrong.
7.1 p.m.
Lord Broadbridge: My Lords, I wish at the outset to add my congratulations to the noble Lord, Lord Plummer, on his maiden speech, coupled with the hope that he will draw from the well of experience of his distinguished career often to address your Lordships' House in the future. The terms of the Motion for the debate are drawn very simply, but, while supporting their irrefutable contention that traffic in Inner London is getting more congested, I cannot agree with the implication that that applies equally to commercial, public and private transport. My own experience and the data from the supervising bodies which I shall quote shows that some of those categories are increasing, some rather steady and others decreasing, albeit with a marginal overall increase, which is not quite what the Motion says.
I have no special vested interest to declare except that, as president of the Islington Society, I am committed to trying to support that arguably worst affected United Kingdom borough from total traffic strangulation. I warmly thank Transport 2000 and LATA, the London Amenity and Transport Association, for the collection of data I shall use, but in all cases I shall quote the origin of the data and, as is the custom in your Lordships' House, take personal responsibility for any errors and omissions.
London traffic is like an onion and is best analysed in the same way; that is, by peeling it layer by layer and examining the result. I believe the true picture to be mercifully simple and clear, although many would obscure and confuse it to make themselves wiser by their understanding, and—to use that awful modish word— "interpretation" of it to the rest of us. To try to present a balanced picture, I may wish to repeat some figures we have already heard, and I hope noble Lords will bear with me.
The first layer of my transport onion is total traffic density. Inner London percentage changes in traffic levels increased by only 1 per cent. in the seven years from 1973 to 1979, or on average less than .2 per cent a year. That may surprise many, but my figures are drawn from an impeccable source, the historical data in the Greater London Council Traffic Planning Programme for 1981–84 published, as required by the department, annually, and in this case in 1980. Indeed, these total traffic figures are so full that the changes in level are stated month by month for all the 84 months of the 1973 to 1979 seven-year period. If the actual level in 1973 is taken as a base of 100, the corresponding levels for the next six years, to 1979, were 99, 97, 97, 98, 101 and 101, or a 1 per cent. net increase, as I mentioned—very moderate.
The second layer of my transport onion is that of all commercial traffic. Evidence given by the department to the Armitage Inquiry, which reported last year, showed that in the five years from 1973 to 1977, goods
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lifted by road transport fell from 1,672 to 1,422 million tonnes, or by 14·95 per cent.; let us call that 15 per cent. or on average 5 per cent. a year. More recent figures were not quoted to that fairly new inquiry and therefore, subject to anything the Minister may tell us, are not available. However, while I understand that the trend in national commercial road tonnage is again upwards, so far as I have been able to discover, it does not look like approaching anything like the 1973 levels in the foreseeable future. So the total weight of freight on all United Kingdom roads was down from 1973 to 1977 and now rises only slowly. And, without specifying actual figures, the department confirmed to Armitage that the figures for London were similar.
Contributory causes for that, perhaps surprising, fact may be conjectured in the closing of the London Docks and the fact that the resident population of London is falling sharply, combined with the greater part played in commercial freight movement by airports and other United Kingdom seaports. But, although it may never reach 1973 levels, the trend of commercial traffic is again upwards, and what is of more concern to us here today perhaps, the vehicles used are getting bigger and less manoeuvrable, causing more congestion by virtue of their size than by their change in number.
Next I wish to consider public transport. The GLC TPP, already quoted, states in Annex C the number of passengers entering Central London between 7 and 10 a.m. daily. By London Transport bus it was 157,000 in 1969, 144,000 in 1973 and 103,000 only in 1980, a fall in 11 years of 34 per cent., of which over half took place in the last two years. I shall return in a few moments to the part buses must play, but, on present evidence, there is no congestion from that vehicle category's passenger demand. Indeed, simple arithmetic projection of the rate of decline of passenger travel into Central London by bus over the last four years of the period quoted—that is, for 1977, 1978, 1979 and 1980—predicts that the decline is so staggering that the last passenger will be carried in 11.13 years from 1980—or, more digestibly, that every present Central London bus will be empty by 1992, which is in 10 years time. I wonder whether the Minister realises that. Did the bus passenger levels fall or were they pushed is a question I shall return to shortly?
Although tube and rail cannot contribute to Inner London traffic congestion, they are closely related and it is essential to see what has been happening to them. The London Underground passenger level has fallen by 20 per cent. over the 11 years 1969 to 1980. But, after a low in 1976 of 316,000 passengers each morning, there was an upwards trend in the next four years to 1980 of 8,000 per morning or ¾ per cent. per year. But these last years should surely have seen increasingly full use of the two completely new and extensive lines, the Jubilee and Victoria lines, which is hardly the interpretation I can get from an increase of ¾ per cent. per annum. So we add two complete underground lines to the seven existing, making, crudely, 29 per cent. extra underground lines, and get ¾ per cent. extra utilisation. There is something very wrong here.
Passengers entering central London by British Rail have fallen from 450,000 each morning in 1969 to 411,000 in 1980. Taken together, rail, underground and bus passenger numbers fell by 178,000, from 1,016,000 in 1969 to 838,000 in 1980, that being

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17·5 per cent. or roughly 1½ per cent. a year, accounted for by falls of 9·5 per cent. on British Rail; 20 per cent. (but now rising again slowly) on the tube; and 34 per cent. down (and sharply worsening) on the buses.
The next and last category to consider is cars, together with motor and pedal cycles. Each morning, 105,000 cars entered central London in 1969, and by 1980 that had risen 31 per cent. to 138,000. Significantly, nearly one-third of the whole 11-year increase took place over the very last recorded year; namely, over 1979 to 1980. Motor and pedal cycles nearly doubled over the 11 years to reach 26,500 in 1980—surprisingly to me at least—to one-fifth of the level of all cars.
Consolidating the figures I have quoted for the 11-year period 1969 to 1980, the changes in inner London traffic levels were as follows: All traffic up 1·1 per cent., of which rail was down 9·5 per cent., tube down 20 per cent. but rising slowly again, buses down 34 per cent., and fast declining, cars up 31 per cent., and accelerating, and motor/pedal cycles nearly double.
Doctors say that fast performance is generally a reliable guide to future behaviour. Over the next six years specified in the wording of the Motion all traffic seems likely to move very slowly upwards in level. Those types using roads and contributing to congestion will exhibit widely different patterns; the tube will rise very slowly, buses will be over halfway to disappearing altogether, motor/pedal cycles will proliferate, and cars look like rising by an extra one for every five that we now have.
The total number of people entering central London each morning from 1969 to 1980 fell 17·5 per cent., but the proportion using private cars rose from 12·4 per cent. of the total in 1969 to 17·5 per cent. in 1980—an increase in cars approaching half as many again! We may calculate that if enough people switched from private cars to increase the usage of public transport by just 10 per cent., there would be a reduction in private cars of 45 per cent.
Older, but nevertheless interesting, information from the Greater London Development Plan inquiry of 1970, based on 1967 figures, showed that 67 per cent. of road traffic in central London was then cars, and I understand that there are approximately double the number of cars now.
Inner London has, I believe, got itself into a closed travelling-thought loop along the lines of, (as we have already heard) " I cannot rely on the number and frequency of buses, the tube only marginally attracts me, rail less, so I'll use my car ". Traffic management schemes are not working in diverting traffic, still less in restricting it, for, in 1968 (the latest year for which I have been able to discover the figures) the Metropolitan Police district issued 1½ million tickets—1,499,634 to be precise. Of those 1½ million, 52·3 per cent. were paid, 44·8 per cent. got away with it for seven different and specified reasons—some of them quite amusing—and a tiny 2·9 per cent. were brought to prosecution. So if you did not choose to pay, you had a 15 to 1 chance of getting away with it.
I believe that the Metropolitan Police commissioner has about only 1,200 wardens towards an agreed establishment of 2,000, and needs 4,000, he says to do the job effectively. I wonder whether the Minister
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believes that there is now an argument for separating all aspects of traffic management—parking, speeding, et cetera—away from the responsibility of the police, who I believe find the work inappropriate and disagreeable to their endeavours to maintain good relations with as many of the general public for as much of the time as possible.
The national game in Italy is avoiding paying income tax, and in London it seems to be " playing chicken " with the traffic wardens. Most illegal parking risks a £46 total fine if towed away, and usually is from within a few hundred yards of an organised, established parking facility usually at a rate (as we have already heard) of £3 to £4 per day.
The solution must be to attract travellers in, and into, Inner London back on to the buses, to reinforce an under-utilised tube network, and thereby provide the carrot, obviating the necessity to use the seductive, but in practice totally ineffective, stick of parking restriction penalties.
But, alas! just as the figures seem to show that passengers are being drawn back on to the tubes, I heard Mr. Tony Riley, manager of the London Transport Executive's Underground service say on LBC radio last week in an interview that he has been required by the executive to trim £10 million from the 1982 part of his forthcoming budget, equivalent to £15 million in a full year, and that he proposes to do this by cutting all tube operating hours from a 5.30 to a 6 a.m. start and back to a midnight from a half after midnight close down. This must surely encourage those planning to enjoy London nightlife to bring their cars in in the morning to be sure of getting home afterwards. But Mr. Riley did say that his measures need the approval of the Secretary of State under the Act. Please will the noble Earl restrain the Secretary of State from giving his approval?
GLC figures show, however, that the number of London Transport buses entering central London each morning between 7 and 10 o'clock has fallen from 4,000 in 1969 to 2,600 for each year from 1978 to 1980—that is, by 35 per cent. So, having had one-third of our buses taken away, is it surprising that people are collapsing, disgruntled into their motor-cars, exhausted, fed up, and half awake?—and each full double-decker bus is replaced by 80 to 90 single-passenger private cars, which must lead to rampant congestion.
Whatever the national debate on the "Fares Fair" policy has or has not decided, it has shown conclusively that the demand is there and that seats will be taken up again if the right financial deal is offered, for in the first three months the number of passengers, on each of what must have been the same number only of buses and tube trains, increased by about 10 per cent. That is an increase that is doubly significant when it is remembered that these increases were both in the teeth of adverse conditions; protracted bomb scares on the Underground, and bitter, icy weather—the coldest October for years, and protracted pre-Christmas snow—for the buses.
A comparison of subsidies for public transport for London compared with other capital cities show subsidies at the following levels: New York, 45 per cent.; Paris, 65 per cent.; West Berlin, 61 per cent.; Brussels, 70 per cent. And London? Livingstone

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would have given London 55 per cent. Full implementation of the Law Lords' recent judgment reduces this to only 25 per cent.—just over one-third of that of Paris.
Others more expert than I in law and economics must argue the mechanism for legal and affordable increased support, but one thing is certain: if we do not offer greater encouragement—and this means financial subsidy—to extensive, but under-utilised tubes and our dying bus service, congestion by private car will soon strangle Inner London.
Building more roads, reliefs, and by-passes is certainly no effective treatment for increasing congestion, which simply follows Parkinson's Law, fills the space available, and leaves our roads with Parkinson's disease. Maybe it is time to reconsider a toll on all vehicles entering this city. But these are "stick" techniques really. What the donkey needs is the "carrot" of financial subsidy for tubes and for buses. I see no alternative. Does the noble Earl who is to reply? I warmly welcome the spirit and the intention fo the noble Lord, Lord Balfour of Inchrye, in setting down this Motion for debate.
7.17 p.m.
Baroness Sharples: My Lords, first, I should like to add my congratulations to those already extended to my noble friend Lord Plummer of St. Marylebone. We are extremely fortunate that he chose this evening to make his maiden speech. I am also very grateful to my noble friend Lord Balfour of Inchrye for initiating the debate, because it enabled me to go to Scotland Yard last evening and very early this morning to visit its central traffic control and area traffic control, both of which I found extremely interesting. I was able to see at first-hand the enormous problems which the police face and to hear from them how they think things might be eased.
We all have the right of free passage on the highway, but it seems that we are becoming increasingly selfish and aggressive to achieve this ideal; and I also feel that we are less law-abiding, possibly because of lack of enforcement of regulations on parking in our cities. I think that we all have different figures, but from the figures that I have received I understand that of 12,000 vehicles illegally parked in central London each day, only one driver in 10 gets caught, despite 5,000 parking tickets being issued every day. I also agree with my noble friend Lord Balfour and the noble Lords, Lord Underhill and Lord Donaldson of Kingsbridge, that a fine of £6 or £10 is completely unrealistic and that in this day and age we should think more in terms of £25. It is an extraordinary state of affairs that the car costs the London community more than crime.
I entirely agree with my noble friend Lord Balfour that there should be more, and larger, car parks alongside suburban stations, as is the case outside Paris. His suggestion that one should be able to buy a rail ticket at the same time as one pays for a car parking ticket seems to be an extremely good one, which surely would not cost much.
I do not understand why taxis cannot be called for from, for example, the Hyde Park car park, which is not the most convenient of car parks. I understand there are no means of getting a taxi there. I wonder whether the GLC should not have direct control over all public
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car parks, in the commuter areas as well. Another thing I should like to know is this. I walk and I use London buses a great deal; I do not like the Underground very much, but that, I think, is a female reaction. Why are our buses not controlled centrally by computer, as in many major cities? This would surely prevent the bunching which infuriates one as a passenger, and in itself causes congestion. Are there enough bus stations in the centre of London, so that these vehicles, when they are not needed, can be parked?
The noble Lord, Lord Underhill, mentioned the scheme which was used in Tottenham Court Road to enforce regulations. I understand that the £20,000 experiment roughly equated with the resulting fines; and, hopefully, this might be used again. I was hearing from the police, and was shown by them, what happened when there is a breakdown. If one lane of a two-lane highway is blocked—it was the Blackwall Tunnel, I think, this morning—a mile of queue forms every six minutes; so any noble Lord who is sitting in his car about six miles from Blackwell Tunnel may have some sympathy with the police who are trying to sort out the problem. It is not their fault if it takes a little time.
My Lords, I appreciate that I have not really produced anything in the way of a solution but have posed a number of questions, and decisions will have to be taken. But what can we do now to alleviate the congestion? This evening, no one has mentioned the clamp—I believe it is called the Denver clamp—or the Hannibal wheel lock, and I wonder whether, if it is introduced, it might be called either the Howell Hasp or possibly the Avon Arm lock. But in this clamp, which I saw today—and I hope it will be accepted—it seems we have an excellent deterrent. I tried it out for size, and it weighs about 24 lbs, so 50 of these could be taken in a van with a team of four policemen. The great advantage of it is its simplicity, and, being bright yellow, it is easily visible. I feel sure it would deter any of your Lordships who saw it attached to an offending car in the street. I understand that the cost is about £200 to £250 per clamp—that was the price I was given today—and police in Central London would require 300 of them to do the job effectively.
Another reason for using the clamp is that car manufacturers—and they include British Leyland, with their new, wonderful Mini Metro—are making their vehicles far more thief-proof. This means that in some cases, whereas previously the police have been called and have been able to get into a car and drive it to the pound, they are now unable to do that. That is so even in the case of the small cars; and very often, as your Lordships know, the transporter which takes these cars to the pound is a large vehicle and in narrow streets cannot get near to the transgressing car; so we have an unending problem.
Like other noble Lords, I feel that decisions to deal with congestion in our capital city must not be taken on any political grounds. Co-ordination between all interested parties is absolutely vital, and I hope that this evening the Minister will give us some encouragement as to the future of our great city.
7.25 p.m
Lord Vaizey: My Lords, I should like to add my thanks to those expressed to my noble friend Lord

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Balfour for putting this subject down on the Order Paper, so enabling this debate to take place; and I should also like to congratulate the noble Lord, Lord Plummer, on a most admirable and well-informed maiden speech. We long, I think, to hear Lord Plummer's second speech, which may be more controversial, because his views on the operations of London Transport and the Law Lords would indeed be fascinating; and doubtless we shall have the opportunity to do so.
I should also like to thank Lord Underhill for the tone in which he spoke for the Opposition; and the fact that the great majority of speakers in this debate will be agreeing on some of the major questions at issue is, I think, in itself significant. But, if I may, I should like to go slightly wider than Lord Balfour himself did in introducing the debate because Lord Balfour said he was specifically going to exclude the long-term ideas about how much public transport there should be and who should pay for it, and personally I think this is the heart of the question of congestion in Inner London.
First, I think I should say, as someone who uses London Transport regularly, frequently and intensively, that it really ought to be said, in relation to the figures that Lord Broadbridge drew to the attention of the House in what I think was a fascinating contribution, that the reason why the private motorist uses his private car in London is because the service on the public system has been deteriorating. The regrettable situation resulting from the industrial dispute on the railways has revealed that there are immense advantages to individuals and to the community as a whole in having private transport available, so that they can in fact get into London even when the railways are not operating.
I remember on one occasion when we had a London Transport strike as well—I think it was in 1958, as I recollect—that even so the city continued to function, even in those days, when there were many fewer private car owners than there are today, largely because the private car was there. So I think we must not take it as axiomatic that the person who uses a private car is necessarily acting against the public interest. The reason why he is using a private car, as I think almost all your Lordships have said tonight, is because of the problem of public transport, and it is that particular question that I want to raise tonight.
There have been repeated suggestions for a co-ordinated strategy for public transport in Inner London, or in Greater London as a whole, and this is a view which I myself used to share; it seemed to me sensible that all public transport throughout the capital should be co-ordinated. But that, I must say, is a view which I have ceased to hold, largely because I have come to the view, regrettably, as a London Transport user, that the present structure of London Transport cannot long survive. I think that if London Transport had added to it responsibility for what effectively was the old Southern Railway, the commuter routes of Southern Region, I hate to think how soon confusion would become worse confounded than it is at present.
At the moment we have in London Transport a managerial structure which manifestly, for one reason or another, is not capable of coping with the problems
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of serving a great city. That is not an attack on Sir Peter Masefield, for whom I personally have the highest regard—he is an immense public servant of tremendous experience and ability—but the whole managerial structure clearly is not standing up to the strain of taking the radical decisions which need to be taken. So the first proposal I would suggest for the noble Earl who is to reply, and through him to the Secretary of State for Transport, who clearly must be thinking about London Transport pretty radically at the moment, is that I do not see why it is necessarily logical that the organisation which runs the tubes should also be the organisation which runs the buses.
I happen to share very much the view of the SDP spokesman in the debate that the gradual extension of the tube service throughout the capital would make a radical improvement over (I think, in fact) a quite short time, but it would require a more efficient tube service. I mean, we all have horrible stories of the tube. The other day I stood on St. James's Park Underground Station, which is beneath the kind of skyscraper in which the London Transport Executive actually lives, and I waited literally for over 35 minutes before a train arrived. By the time the train arrived, the Black Hole of Calcutta had nothing on it. I complained to London Transport and they wrote back and pretended that this was a one-off incident. Anyone who travels regularly by tube knows that it happens frequently. It does not happen in Paris. It is caused by poor quality management. Perhaps the management is blackmailed by the unions or perhaps the unions are blackmailed by the management. I do not care. All I can say is that if the management cannot run the London tube they cannot run anything.
It is clear that this set-up cannot run the buses. I have been using buses all through this winter. From my home in Chiswick to Richmond is a 10-minute drive and a 20-minute walk, but you must allow 50 minutes by bus. Sometimes it takes 10 minutes by bus but, more often, 50 minutes. To say that this is caused by traffic congestion is absurd. It is caused by rostering duties and by buses being abandoned in the middle of the street while the crew go and have their dinner. Then there are the poor old-age pensioners who form 99 per cent. of the people who travel on the buses. They are pleased to be on a vehicle which, at least, is warm so that they are not at home paying high heating bills. Whoever runs the buses cannot do it properly.
I have a drastic solution to the bus problem. One of the few pieces of recent legislation which seem to work well and efficiently is the 1980 Transport Act. Independent bus operators now run coach services which people previously said could not be made to run. I met a man who lives in Bournemouth. There is now a regular coach service from Bournemouth to Heathrow. Previously he had to go by Southern Rail to Waterloo, change, and get on a British Airways coach—and it took about a day and a half! The journey is done now in two hours. The reason why the ASLEF dispute will not bring the whole of England to a grinding halt is because people take coaches. And when they do that, very few return to British Rail.
I know that the reason why London Transport was set up allegedly was to stop the pirate buses who were

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driving down the living standards and working conditions of the people who were working on the London General Omnibus Company buses in London in the 1920s. Personally, I would de-regulate bus travel in the Greater London area and allow people to ply for hire and to operate vehicles according to the demand in the market. Why should it be thought that the present double-decker bus, plus or minus a few cosmetic variations, should be the sole form of public transport available in the London area apart from black taxis? Anybody of whatever class of income who wants to go about the City rapidly uses a mini-cab. This is because the black taxis will not go to the suburbs where people live, but only across town, and the buses are unreliable.
I think—and I now introduce a partisan note into the debate—that the Conservative Government, who are supposed to believe in the working of the market, might try to see whether the market works in the case of the London bus system. I cannot believe that it is beyond the wit of man to devise some alternative transport mode on the roads of the capital.
I have an interesting study from the World Bank of urban transport provisions throughout the world in the developed and developing countries. There are enormous cities which run on Jeep-links, as they call them, in Manila—converted Jeeps bought by enterprising Filipinos, which provide an adequate and rapid system in Manila. There is a whole variety of transport systems which are monolithic urban monopolies like London Transport which, as the noble Lord, Lord Broadbridge, showed, are failing to provide a service on the buses which people will use. Can we not replace this monopoly by some more radical form of transport? We must be more ingenious in thinking about what form of public transport provision we can make on the roads if we are to talk in terms of reducing private passenger car usage, which is something we all favour.
7.35 p.m.
Lord Paget of Northampton: My Lords, may I express my gratitude to the noble Lord who has just spoken for having left a reasonable time. I am grateful. I apologise to the House for not having put my name down previously. I spoke to the noble Lord, Lord Balfour of Inchrye, yesterday, who asked me if I should like to speak. What I want to express is my satisfaction, as a motorist who has driven in London regularly for over half a century, with the improvement which I see has happened. When I was driving in the early 1920s, traffic blocks lasting half an hour were regular. There was a lot of horse traffic and no one-way streets. Steadily, the situation has improved. Apart from the exceptional occasions, one can now get from here to a motorway inside half an hour, and from a motorway to here from any direction within half an hour. I call that very good indeed. I have driven in, and shopped in, every capital in Europe. I do not think there is one which is as good. I feel that this pretty satisfactory state of affairs in our being able to get about better, even as the number of vehicles increases, is something we should be proud of.
It is certainly not brought about by a system of strict enforcement. I remember a friend of mine, now a Member of your Lordships' House, who, as a young
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man, was rash enough to summons, and summons successfully, a police car for exceeding the 30 mph limit. For every single day of the next six weeks, he got a summons for something. If you tried to enforce the traffic laws strictly you would bring the traffic to a total standstill. Look out and think on it!
Traffic laws are there as a moderate deterrent to get people to behave sensibly. The noble Lord, Lord Underhill, says that at any given time there are 20,000 people in the Greater London area parked on yellow lines. The conclusion I draw from that is that that is a measure of the parking capacity of the yellow lines which is probably about right. It works this way. Nobody has mentioned the zig-zag lines. Where the police put zig-zag lines, I have noticed that they are almost totally observed. They are the places which the police think are dangerous. Where you have double lines, in effect they say, "You are at risk here and pretty serious risk; but we will not worry too much if you pop out to get a newspaper or make a single purchase". On single yellow lines, I would say the message is: "Do it at your own risk, probably but if you are inside half an hour you arc all right".
That is the way, I think, in which those lines are understood by the motorist. In bringing about the balance between the transit motorist who wants an open road and the shopping or business motorist who wants the opportunity to stop, we have not got it far wrong. I would suggest, from the point of view of the motorist who uses his car in London, that one does not want to expel him. A large proportion of motorists use their cars because they like doing so. It is a free country. It is something we like to do. We ought to try to make parking more available. In a tremendous number of areas the streets are over-used and pavements under-used. It is only at exceptional times and in exceptional places, that the pavements are anything like fully occupied.
I believe that a system whereby vehicles were parked with two wheels on the pavement and two in the gutter would subtract very little from the road and would be an absolute minimum inconvenience to the people on the pavement, because there is lots of room for them anyway. I think this is a very good idea.
Another point is that we do not make use of the room available in our parks. Whenever there is a garden party at Buckingham Palace look at the number of cars that can be fitted into St. James's Park. Why can we not do that every day? They are not inconveniencing anybody. There is a great deal of area where cars can be parked, preferably on meters, because one does not want car owners to turn the park into a garage and to leave their vehicles for a month in the park. There should be a reasonable control of time and a reasonable level of deterrence which is tremendously short of strict enforcement. I believe that we start from a very good level of the most satisfactorily trafficked city in Europe, one in which the standard of driving has improved quite astonishingly during my lifetime, in which the accident and injury record is the lowest in the world, and for which I should like to say "Thank you".
7.42 p.m.
The Earl of Avon: My Lords, I should like to start by congratulating my noble friend Lord Balfour on secur-

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ing this debate on a subject which is of interest to so many people and which is always topical because it is intimately related to everyday matters of life in this capital city. I also much appreciated his constructive introduction. I should also like to congratulate my noble friend Lord Plummer of St. Marylebone for his excellent maiden speech. I am sure he is correct about his overall strategy, although I will have some more to say on that. The whole House will join me in saying how much we look forward to him speaking in the future.
I welcome the occasion for having an opportunity to outline the position of Her Majesty's Government in regard to traffic and transportation matters in the inner area of Greater London and on roads in particular. It may be wise if I say something on the responsibilities because I have been asked a lot of questions which fall way outside the brief of the Department of Transport.
My right honourable friend the Secretary of State for Transport is highway authority for the national system of trunk roads and motorways. In that capacity he is responsible for reviewing the adequate functioning of the system in terms of its extent, its safety for those travellers who use it and its maintenance. There are no national trunk roads in the inner area of London. However, my right honourable friend carried on behalf of Her Majesty's Government an overseeing responsibility for the safety and proper management of all public roads in England which are under the ownership and management of the numerous local highway authorities.
The Greater London Council are responsible for the main or metropolitan roads in their area—but not the trunk roads—while the London boroughs are responsible for the network of minor roads; Inner London is the area covering what was previously administered by the old London County Council. It is now made up by 11 London boroughs plus the Cities of London and Westminster; and, apart from GLC's metropolitan roads, these authorities are responsible for all the roads in their areas. As well as being highway authority for metropolitan roads GLC is also the traffic authority for all roads in Greater London except, of course, for my right honourable friend's trunk roads.
My Lords, I am sure you will agree that this explanation is essential background if there is to be proper appreciation of the Greater London Council's responsibilities in regard to road and traffic matters in the inner area. I have a few statistics and was going to say a word on them. The House is indebted to the noble Lord, Lord Broadbridge, for his excellent resumé. I am not quite sure that I appreciate him using the idea of an onion. That always leads me to tears, and I am not at all sure that traffic matters will not do so as well!
I think I should say a word of warning. Some of his statistics were, I thought, a little selective. Perhaps they did not reflect, for instance, the changing work patterns in London and the growth of suburban centres such as Kingston and Croydon. Also, his statistics about the subsidy were not quite complete so far as London Transport is concerned because the total grants mean that London Transport has had over 50p for every £1 earned from fares over the past few years.
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My noble friend Lord Balfour mentioned something on traffic growth. Statistics are not easy matters to consider, and there are different ones going round. My statistics are that traffic growth in the inner area has been only about 10 per cent. in the past 10 years—this compares nationally in the country with 30 per cent.—with growth in the next six years likely to be at a lower rate. There has been a one mile per hour reduction in speed for the 10 per cent. growth. However, whatever the statistics, nearly all speakers are agreed that inner area traffic flow conditions are not satisfactory. I do not think that we should be too critical. Here I agree to a certain extent with the noble Lord, Lord Paget, but not on his abuse of a lot of the laws which he seemed to he encouraging us to break.
Your Lordships may recall the submission in 1969 to the Minister of the day, of the Greater London Development Plan. Foremost in that plan was the proposal to build a primary road network in Greater London consisting of 13 radial routes and three ringways. This plan was examined in great detail by a monumental inquiry headed by Sir Frank Layfield, QC. The panel presented their report and recommendations in December 1972. But the issues were so controversial in a time of shifting attitudes to major urban road programmes that the plan was not finally confirmed by the Secretary of State for Environment until seven years after its original submission. By then the GLC, elected in 1973, had announced that no new motorways could be built in London and abandoned all the major road plans of their predecessors. The plan therefore emerged with the primary road proposals reduced—particularly in relation to the three ringways.
There was a further change of administration in 1977 and that council sought to redress the balance of new road building in Greater London in a fairly modest manner. But, as my noble friend Lord Plummer mentioned, such is the time needed for preparing major urban road schemes that none of their proposals was under construction last year when a new administration, with a distinct leaning towards a public transport solution, decided against proceeding with the preparation of some of these major road proposals.
Of the originally proposed innermost ring road (the so-called " Motorway Box ") only the Blackwall Tunnel and its north and south approaches have been built. Ringway 2 north of the river is essentially my right honourable friend's North Circular trunk road, which is being consistently improved as many noble Lords who use it will know, and who see the frequent roadworks. The M.25, which a number of noble Lords have mentioned, now incorporates a substantial part of Ringway 3, mainly to the north and north-east of London. I believe that when it is finished, in 1986, it will alleviate the problem of some of the through traffic in Hackney and that area.
The pattern of radials remained much as it was because these are essentially the existing main roads converging on Inner London. However, since the Greater London Development Plan was confirmed in 1976 the M.11 has been constructed so far as the North Circular Road. The largest casualty in the GLC's road programme has been the West London relief road which was intended to connect the Chelsea Embankment to the M.41 at Holland Park. The last known estimate

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for this 2½ mile long scheme was £220 million and this will give the House some indication of the astronomic costs of road building on a large scale in Inner London. However, two or three very large GLC schemes in the outer area are proposed, and the council is seeking general public reaction to them. This is not a satisfactory story; but I believe it is unreal to argue these days in favour of new roads on the scale of the " Motorway Box ". However, it is not unreal to expect that the largest local authority in the country should be able to proceed towards an agreed objective which maintains a reasonable balance between highway investment and public transport investment.
If I may turn to one subject which I do not believe any speaker mentioned—traffic control—I feel this is a pertinent subject to the central issue of this debate and it is one way of combating traffic congestion. In recent years there have been considerable advances in traffic control techniques, in which British equipment manufacturers and the Department of Transport have played a leading part. A problem can arise with existing fixed-time computer-controlled traffic-light systems which are set to traffic patterns predetermined by extensive traffic measurements. To maintain the efficiency of the control system, these measurements have to be repeated as traffic patterns change. This is a laborious process and it has proved particularly difficult to keep the complex control plan of signals in central London up to date.
The new computerised systems that have been developed are traffic responsive and can make the necessary adjustments continuously and automatically. The GLC's decision to make a substantial investment in the new split-cycle offset optimisation technique system is to be welcomed, and it is hoped that it may lead to significant improvements in traffic speeds in the central area.
I shall now turn to illegal parking, which I think almost every speaker has mentioned. The Government, of course, recognise—
Lord Paget of Northampton: My Lords, regarding the strict enforcement referred to, these automatic timing devices are in fact based upon a speed of nearer 50 mph than 30, are they not?
The Earl of Avon: My Lords, I hope they will be based on the maximum speed limit, which is 30 mph, and I am sure they are able to be set correctly. I know that the noble Lord, Lord Paget, has a lovely way of trying to beat the law, but we shall make a point of ensuring that they will keep a speed of 30 mph. The Government recognise that the extent of illegal parking in London is a constant frustration to the authorities in implementing their traffic management plans. The GLC and the London boroughs have a statutory duty to secure the expeditious, convenient and safe movement of traffic. They are greatly hampered in that objective when very large numbers of people feel free to disregard parking regulations—regulations which are made in the public interest to safeguard the capacity of the roads, for the movement of traffic and to preserve essential access.
We acknowledge that there is far too much illegal parking and that the risk of a penalty being imposed, from the point of view of the person who parks illegally,
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is low. These problems are being given detailed attention, and legislation will be introduced this Session to secure a major reform of the fixed penalty system. The changes will be based on proposals published in the report of the inter-departmental Working Party on Road Traffic Law in May 1981. They should make the system much more effective and substantially strengthen the disincentives to illegal and irresponsible parking. My right honourable friend the Home Secretary has announced an increase in the fixed penalty for parking offences to £10, in association with the proposed legislation, and I look forward to our debates in this House on those measures when they come before us, because I have a feeling there is going to be some pressure to increase them.
I should like to pay tribute to the traffic wardens in their efforts in law enforcement. As many noble Lords have said, they are very short of staff. My figures show that they number just over 1,300 at the moment, which represents an increase from the level they have been, but their establishment is about 500 more than that. Until we get up to establishment we shall not know whether that is a satisfactory number for law enforcement or not. However, we are looking at ways to try to get more recruits. It does seem strange, as my noble friend Lady Gardner said the other night, that with unemployment in London of over 300,000, there should be 500 vacancies for traffic wardens.
The noble Lord, Lord Broadbridge, mentioned that law enforcement might not continue to be the responsibility of the police, but I am sure that on reflection he will feel that law enforcement must remain the duty of the Metropolitan Police.
My right honourable friend the Secretary of State for Transport has consulted interested organisations on the case put forward by the Metropolitan Police for the introduction of wheel clamps to deal with illegal parking. My noble friend Lady Sharpies mentioned that. They can be called the Denver Shoe or the Bulldog Clamp, and we think that possibly the Bulldog Clamp is a rather more successful mane. If wheel clamps are introduced—and I emphasise that no decision has yet been reached because the responses to consultation are still being evaluated—they would be complementary to the fixed penalty system, and not a substitute. Their supporters claim that they would improve traffic conditions through a general deterrent effect, although vehicles causing serious obstruction would still have to be towed away or moved to a position where they could he immobilised.
Turning now to London Transport, one cannot get very far in discussing traffic conditions in any major city without considering their effect on public transport and the effect of public transport on traffic. There is no doubt that for London Transport's bus services, road traffic congestion is a major problem. There are three main reasons which make the problem in London worse than in other provincial cities. First, the congestion is over a wide area and not just confined to the innermost areas; secondly, the congestion tends to last longer; and, thirdly, the traffic flow is so delicately balanced that any minor disruption such as a traffic light failure or vehicle breakdown can cause widespread disruption. Your Lordships will recall that my noble friend Lady Sharpies gave a descriptive

1023
example. I have spoken earlier about congestion in general and about some of the ways in which things might be improved. So far as buses are concerned, the use of bus lanes is a further option, but I cannot pretend there are any overnight, magic solutions.
It has been said that the imminent fares increase on London Transport will force masses of passengers to travel by car instead of by public transport. We believe that this is fancy. There is no evidence to suggest that significant numbers of car-users switched to public transport when the lower fares were introduced and there is no reason to believe that the reverse will happen later. Such increase in the use of public transport as occurred under the low fares policy is likely to have been mainly through the greater use of the system by those who already use it. I do not deny that the increase on fares may lead to lower use of the system, and this is to be regretted. We should all like to see a better public transport system with lower fares, but let us not delude ourselves on two issues. First, such a system has to be paid for by someone. Secondly, it is unlikely to tempt many car-users out of their vehicles. We have had some quotations given about Paris and, if I may, I would take that as an example where, despite a highly-regarded and relatively cheap transport system, road congestion is still a major problem.
London Transport has been very much in the news since the noble and learned Lords gave their judgment just before Christmas on the GLC fares policy. The House may recall the discussion that followed the Statement made on 18th January by my noble friend Lord Bellwin. I shall not dwell long on this matter, but I wish to make quite clear where the Government stand on the question of subsidies and, in some measure, to answer a question of the noble Lord, Lord Underhill. Like our predecessors, we believe that subsidy should continue to be paid where this is needed to keep necessary public transport going. Indeed, last year some £1·2 billion went in support to the bus and rail services of this country. The transport supplementary grant settlement approved by my right honourable friend the Secretary of State for Transport reflected this policy; and over one-third of the expenditure accepted for revenue support within that settlement was for the GLC and London Transport.
We deplore the fact that Londoners will shortly be faced with much increased fares on London Transport services. But let there be no mistake about where the blame for this lies. This state of affairs arises from the irresponsible policies of the present administration in County Hall, which deliberately increased the costs of the services at the same time as they reduced the fares.
We, like the noble Lord, Lord Donaldson, want to see healthy and efficient public transport in London, with a fair balance being struck between the costs to the fare-paying passengers and the costs to the public purse and the ratepayers of London. An important factor in achieving such a system is for London Transport to review its operations to try to ensure that the services meet real demand and are provided as efficiently and cost-effectively as possible. To this end London Transport is already making to the Greater
1024
London Council proposals which have been published in the press, and which were particularly referred to by the noble Lord, Lord Broadbridge. It is not for me to comment on them individually but where closures are concerned they must be agreed by my right honourable friend the Secretary of State for Transport. I understand that London Transport are concentrating on those parts of its operations which carry few passengers or where facilities are duplicated close by. So far as bus services are concerned, I understand that the bus miles it is proposed to run this year are still above the level operated in 1979. I hope that this will put the matter in proportion.
My right honourable friend the Secretary of State has already made it clear that the Government will legislate to enable the GLC to provide travel concessions for old people. He has also said that he will if necessary, introduce legislation to allow London Transport to spread the cost of paying off this year's deficit over a reasonable period. But the Government will not legislate to enable the GLC to return to its unbalanced policies at the expense of the ratepayer.
I began by reciting the responsibilities of my right ho nourable friend the Secretary of State for Transport. I should like now to remind you, if I may, of the contributions which Her Majesty's Government are making to the problems of transport and environment in the Inner Area. My right honourable friend is concentrating his programme of trunk road works in the London area on routes such as the North Circular Road, the extention of that route in North-East London through the proposed South Woodford to Barking Relief Road and subsequent linking to the London—Dover route A.2 at Falconwood to South-East London, via the programmed East London River Crossing. I hope that this will please my noble friend Lord Balfour. In this way, the Government are making a very substantial contribution towards providing a means of keeping longer-distance traffic out of London's Inner Area. To relieve Greater London of its element of through traffic, the Government's most noteworthy contribution is the pressing ahead with the M.25, which, as I said earlier, we hope to complete during 1986. These trunk road improvements in and near Greater London amount to an investment of about £1 billion over the next decade.
It might be appropriate at this point for me to remind noble Lords of the substantial financial support which the GLC receives from my right honourable friend by way of Transport Supplementary Grant. London has over the years consistently received the lion's share both of resources, in terms of its share of accepted eligible expenditure, and actual cash grant. In the settlement for 1982–83 which was announced recently, London's share of approved resources was nearly 25 per cent. of the national total of just over £1,600 million. Also, its cash grant of nearly £200 million was close to 40 per cent. of the national total.
Before closing, I think that I ought to say something about heavy lorries. Each year about 250 million tons of freight is carried by road, rail and water in Greater London. Over 200 million tons is freight generated by London itself and of this, as my noble friend Lord Plummer said, about 90 per cent. goes by

1025
road. It is, therefore, no exaggeration to say that London life, as we know it and see it, depends on lorries.
The GLC have set up an independent inquiry panel to assess the benefits and costs likely to arise from imposing bans on heavy lorries within the Greater London area and the conclusions are awaited with interest, although I think that my noble friend Lord Balfour slightly jumped the gun by saying what his views of the conclusions could be. But I look forward to the current year, 1982, as the year in which we shall at last be able to take action on the heavy lorry. The Government have put forward a comprehensive and realistic approach to the problems of heavy lorries that holds out the first serious hope for years that the whole issue will be dealt with constructively and vigorously. Proposals were set out in the White Paper, Lorries People and the Environment, published on 1st December. Our aim is to get safer, quieter and cleaner vehicles on to the roads as fast as possible, to keep these vehicles away from people as much as possible, to make full use of alternative forms of freight transport where practicable and to give our enormous and vitally important transport industry a full chance to move freight competitively.
Far from making the present unsatisfactory situation worse, these proposals go in the opposite direction. For instance, they point the way out of the present deplorable pattern under which lorries are not allowed to carry the full load for which they were designed, with the result that there are more of them on the roads than there need be. Our proposals will make a very significant contribution towards reducing congestion on our roads. We estimate that if the proposed regulations were in force now, there would be over 9,000 fewer heavy lorries on the road. None of them would be bigger than the large ones we see now, but they will carry up to one-fifth more. They would run fewer miles in total and most would be required to have additional axles to spread the weight more evenly on the road.
There are those who are resisting the Government's initiatives for civilising the lorry and coping with the growth of environmental damage. I find it odd that those genuinely concerned to improve our environment should align themselves against the approach outlined both by the Government and in the report by Sir Arthur Armitage. Attempts to block the Government's measures for making the lorry more acceptable amount to condoning the present pattern. I am sure it is in the interests of every community suffering from heavy lorry traffic to see that the opportunity presented by the Government's proposal is seized and built upon. Reduced congestion is just one of the benefits that can be gained.
To answer one or two specific questions which were raised, my noble friend Lord Mancroft mentioned staggered working hours and shop opening hours. It is, of course, for individual firms to decide themselves whether it is in their own interest to stagger working or opening hours. Her Majesty's Government do not want to impose this, but any initiatives by firms will be welcomed if congestion is eased. There is, of course, a restriction on shopping hours, which I
1026
believe my noble friend Lord Mancroft may have had some responsibility for bringing in when he was in the Home Office in the 1950s. There is also a new Bill by my noble friend Lady Trumpington to change shopping hours, which would, of course, help this.
I was asked about the parking revenue and what it is used for. It is used mainly for making up deficit in parking accounts, for road improvements and for the support of public transport. I should like to join my noble friend Lord Mancroft in his tribute to the Underground. I find it hard to take some remarks which were made by noble Lords. I, too, have travelled on the Underground and have always found it excellent, and considerably better than in many other countries. Of course, over the last few years they have opened up new lines and stations, and it has been a fairly good success story.
I should like to remind noble Lords that car sharing has now been legalised and that is one piece of legislation of this Government. Business cars have, of course, been caught in the last two Budgets and are no longer as acceptable as they were. There are, of course, still taxi ranks around. However, I have a slight feeling that they wait outside the more expensive hotels rather than around Sloane Square. The noble Lord, Lord Vaizey, mentioned coaches and the 1980 Act. I appreciate his kind remarks on that. Of course, it is early yet to know what will be the final results of the freeing of coaches to private enterprise, but if it is highly satisfactory it may well produce further legislation.
All London road users cannot but be interested in the many points which have been raised this evening. If I have not answered them all, it is because there were so many. But the Department of Transport and, I am sure, those in County Hall and local governments in Inner London who are interested in traffic will study the numerous points made by various speakers in this debate. All noble Lords have contributed interesting suggestions, which show that no one involved in traffic laws can rest on his laurels. We have stretched from pink tickets to car parks, to shopping on Saturdays, to owner-liability. Tonight's short debate can only be of value in the continuing discussion of this capital's congestion problems.
8.8 p.m.
Lord Balfour of Inchrye: My Lords, in asking permission to withdraw my Motion, may I say that I think it has been a two-way debate. We have received from the Minister a most admirable and full reply, the contents of which I hope will be circulated well beyond the limits of your Lordships' House. Secondly, the Minister has received something. He has received the views of many noble Lords on all sides of the House, views which are varied and of which, I am quite sure, Her Majesty's Government will take notice.
I should like to thank all the speakers who have taken part in the debate today, and particularly do I thank and congratulate the noble Lord, Lord Plummer, who has enhanced the quality of our debate today by his maiden speech. I beg to leave withdraw my Motion.
Motion for Papers, by leave, withdrawn.

National Museums and Galleries: Scotland
8.9 p.m.
The Earl of Perth The Earl of Perth rose to ask Her Majesty's Government what consideration they are giving to the Williams Committee Report, A Heritage for Scotland—Scotland's National Museums and Galleries, The Next 25 Years.
The noble Earl said: My Lords, I have asked the Unstarred Question which stands in my name, because I believe the views of your Lordships will be of real value to the Government. The Government are asked for comments on the Williams Report, which deals with the future of the museums and galleries of Scotland over the next 25 years. I want to thank all noble Lords who are here tonight, despite the difficulties and despite the hour. Hit were not for the difficulties I have mentioned I know that many other noble Lords, Scottish in particular, would have wished to be present.
As a member of the Williams Committee I must say that I do not think I have ever had more papers to read, more oral evidence or more written evidence to receive or more visits to make. But all members of the committee were grateful for what they were given. The committee was very widely chosen. It was set up by, I think, the noble Lord, Lord Ross of Marnock. In any case, it was set up by the last Labour Government. If one looks at page vii, noble Lords will see that the committee consisted of local and regional authority members, representatives of the trade unions and local museums, an architect, an art critic and even somebody from England. It was a very well chosen, valuable and representative committee for the work that it had to do. I must refer also to the two secretaries. Without good secretaries one is nowhere. Mrs. Nicola Munro and Miss Elizabeth Glass were splendid and kept everything in order, including most of us. But keeping us in order was really the task of our chairman, Dr. Alwyn Williams, who did a splendid job. As noble Lords will know, we made 116 recommendations, which must be some sort of a record, all of which were unanimously supported by the committee.
I am not going to speak on all 116 recommendations, but the first and most important one recommends the establishment of a Museum of Scotland. All of us felt that for far too long what surely should be the main theme of our national museums and galleries has been neglected. When people from home or overseas come to Edinburgh they want to know where they can learn about Scotland from the start of its history and of things connected with Scotland. There is no one adequate centre for this purpose. The Museum of Antiquities has Scottish artefacts, but over its 200 years it has suffered shameful neglect while other museums have prospered.
I am not criticising the other museums. Indeed, the National Gallery of Scotland is my favourite picture gallery in size and in the quality of its pictures, the way they are displayed and its general liveliness. All of this, including running the Museum of Modern Art and the National Portrait Gallery is achieved on a running budget annually of £1,200,000. Let us take the Royal Scottish Museum with its outstanding main hall which recalls, it seems to me, nothing more nor better than the Crystal Palace. It is far and away the
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most popular of all Scottish museums. It has a running budget of £1,600,000.
Then we come to the Museum of Antiquities, the museum which we recommend should in due time become the Museum of Scotland. What is its budget? It is £550,000, one-third that of the Royal Scottish Museum and less than one-half that of the National Gallery. It is not only a question of money. The museum shares its premises with the National Portrait Gallery. It has nowhere to show its treasures properly. The working conditions are unbelievable. When I went to see some of them I asked whether the fire authorities had passed them. I was assured that they had. I do not understand it. As for somewhere to store many of their artefacts, it just does not exist. They have been promised the York Buildings, just across the way, which will be of help, certainly, as offices. But the museum's annual report shows that even then they will have only 28 per cent. of what they really want for their purposes. I will quote to your Lordships, to illustrate the total inadequacy of what they have got, two short passages from the bi-centenary annual report of the Museum of Antiquities. They say
"We wish to record our thanks to the Trustees of the National Galleries and to the Keeper and Staff of the Scottish National Portrait Gallery for kindly allowing us the use of their premises to hold various functions, for which there was no room in the Museum itself".
Or again:
"A major exhibition [has been set up] on the main stair".
Or, lastly:
"In collaboration with the Scottish National Portrait Gallery [we put on a fine new exhibition] in the Gallery's Ambulatory. The Scottish National Portrait Gallery also kindly helped by giving facilities for displaying the Strathmore table carpet [one of the great new acquisitions of the Gallery] under the Rossend Ceiling (which belongs to the National Museum of Antiquities)…"
and which is housed in the National Portrait Gallery. I could go on illustrating these points but it is quite clear that the accommodation which they have at the moment is totally inadequate. If we are to have a Museum of Scotland it will obviously become more inadequate.
The question is: where are they to go if they are not to stay where they are? The committee remain convinced that the right answer is for them to go to John Watson's School. We remain convinced, even after the Secretary of State for Scotland came to the conclusion, after a review, that the Museum of Modern Art, which had been promised this location, should stay there. I hope very much—this is certainly the wish of the committee—that even at this late date (and it is not too late because nothing very much has been done in the way of completing the reconstruction of the building) that John Watson's will in fact become the site for the Museum of Scotland. It would give all the space that is needed over the next 25 or even 50 years. On finance—one of the main reasons why the Secretary of State for Scotland said that it could not be done—the building, stage 1, which would double the accommodation the Museum of Scotland has in its present premises and in York buildings, would cost about £4 million, a capital sum which I well understand the Government do not want to make available at this time. But the Crown Estates have

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come to the rescue. They have said that they will finance the project. They already own the building. This is of great importance. Originally, the Museum of Modern Art was agreeable to such a change—or, should I say, its parent, the National Galleries, were agreeable. They went back on that agreement for a reason which I well understand; namely, that they were fearful that if the change were made nothing would happen for them. They would obtain no advantage. There would be no reconstruction of the buildings which Antiquities were going to vacate, even if they were given York Buildings at the same time.
I believe that we might be able to change the mind of the Museum of Modern Art if the Government could make a firm promise that, if the Museum of Scotland went to John Watson's School, then the Museum of Modern Art would have the interior of the existing buildings reconstructed, when it would be more centrally located than otherwise. The Government will undoubtedly say, "We cannot promise that because it is going to cost £1 million or £2 million".
I understand this difficulty but there is a way around it. Once again, the Crown Estates would be prepared in principle to come to the rescue. They have said that they would be prepared to take over the building on a sale-and-lease-back basis. The Government would have the money then released—some £1½ to £2 million—to spend on reconstruction.
What does all this amount to? So far as the Government are concerned, it would mean virtually no capital expenditure at all. The Government would have to pay rent of some £600,000. They would have to finance new staffing; let us say £400,000. Therefore, the Government would have to pay in a year about £1 million more than they do at the present time. But this would not be at once. With the best will in the world, with all the planning and so forth, this expenditure would not be completed for five or six years. So is it asking too much that what is undoubtedly the right scheme of things for the whole location of the museum should not be turned down, when there is such a chance of such a good bargain at so little cost at the present time?
In case the Government say " No ", we have to look at what would happen elsewhere for the Museum of Scotland as it now would be. It would stay in existing buildings, although perhaps getting rid of the National Portrait Gallery, which would be a problem of its own, and both the York Buildings. The Property Services Agency have offered them a building in Waterloo Place, near Register House. I do not know whether your Lordships know where this Waterloo Place building is, but it is surrounded by swirling traffic. It is six or seven storeys high. I can only liken it to Centre Point in London, and Centre Point would not be a suitable building for museum purposes—nor would the building in Waterloo Place be suitable for a Museum of Scotland. Just think of it—the Museum of Scotland in three separate buildings, one of them a quarter of a mile from the others and two of them totally unsuited for museum purposes. I hope this idea will not be pursued because it really is not good enough. What we want is a Museum of Scotland of which we can all be proud and one which is located properly. I believe that what is at present in the planning is a
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disaster, a waste of money and a waste of space—and space is valuable.
From location, let me turn to another point, about the Museum of Antiquities if it is to become the Museum of Scotland. As constituted at the present time, it is too top-heavy. There are 24 trustees, about half of them ex-officio. That is not good enough. In this day and age we have to make changes and we must have a shake-up. It is rather similar, your Lordshps will recall, to what happened at the British Museum when changes had to be made there. Our proposal is that there should be a smaller board of 12 trustees, some of whom would still be ex-officio and representing the old interests. That is a necessary change, and the very fact that the Museum of Antiquities has fallen so far behind over the past 60 years is proof that something is wrong in the present set-up. I am afraid that some of the trustees, for the very reason that they see a threat to the old rule of things, are opponents of what we are proposing. I can only ask that the Government do not pay too much attention to what may be understandable but are not, I believe, wholly unbiased opinions.
Another of the recommendations I want to touch upon is another new museum—a museum of industry. That should be located on the West coast, somewhere near Clydebank, which was the cradle of so much of the Industrial Revolution and of pioneering engineering in this country. I know that this is something that we cannot afford to set up now, but the committee recommends that we set up a trust, partly private and partly public—involving local authorities and the rest—which would start the thing going, in the sense that it would try to get together the right people, to ensure that one day the museum could be launched.
In the meantime—and this is the important point—there should be somewhere where the sort of things that are needed as exhibits in such a museum can be stored. If your Lordships will look at pages 14 and 15 of the report, you will see that plant has been offered at the present time for such a purpose but has been turned down because there is nowhere to put it. The result is that the plant, whatever kind it may be, is sold as scrap and is lost forever, whatever its historical importance. There are plenty of large vacant factories around in Scotland which could be used for storage purposes.
I now wish to touch on one last recommendation—namely, the Scottish Museums Commission, which should advise the Secretary of State for Scotland on all policy matters pertaining to the national museums and galleries and to the Scottish museum movement generally. As you Lordships will know, that Scottish museum movement is making great progress throughout the country. We considered combining the work of such a commission with the Council for Museums and Galleries which already exists to help local museums and spends money for that purpose. We felt that this was not advisable and that we should set up what will admittedly be a new quango, which would help ensure that in the future the money devoted to museums all over Scotland should be used in a more careful and planned way than has been the case up to now.
I understand why some of the museums and galleries, whether they be at national or local level, are nervous

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about the concept of a Museum of Scotland and might even he against it. Their reasoning is that they think such a museum would get all the money in the future, and that it would somehow pre-empt the other museums which would otherwise get something. That is precisely why I think, and the committee think, that a new quango is necessary—to allay their fears.
Of course there is some truth in the fact that if one set up this museum it will get more money than would otherwise be going to the Museum of Antiquities; but if we believe in a Museum of Scotland, that is what must happen. As the Convention of Scottish Local Authorities has advised, we in Scotland really should be entitled to more money for our museums. One cannot help but look at what is happening in England, where the Natural History Museum, the V & A, the Tate Gallery, the British Museum and the British Library all seem to be getting money, while very little is coming to Scotland.
The Government have soon to decide whether they accept our key recommendation, for which they have already shown some sympathy, a Museum of Scotland with all that that implies for Scotland, a museum of which Scotsmen can be proud and a must to all who visit Edinburgh. Our Committee is in no doubt on the answer. My noble friend Lord Home, if he could have been here, would have equally supported the concept, and I hope that all your Lordships who take part in this debate will do the same.
8.31 p.m.
Lord Mackie of Benshie: My Lords, I must begin by asking the House and the Minister to forgive me for not waiting until the end of the debate. I have a long-standing engagement of some importance to myself in default of which I would be letting people down, so I must ask the forgiveness of the House for not staying until the end.
We must be extremely grateful to the noble Earl for asking this very important Question. I did not always consider museums as one of the great things in my life, but I was converted many years ago in another place. I was the duty Member of Parliament on the Liberal Bench and I had to listen to the late Lord Boyle speaking on museums. I thought this a terrible bore, until he had been speaking for about two minutes, when I suddenly realised that this subject was very much a part of life, of immense importance and enormously fascinating.
My contribution to this debate tonight is not to go into the details of the report, which the noble Earl has already stressed, and the importance of a National Museum in Edinburgh. I would like to give my experience of the genuine desire of the Scottish people in various parts to have an understanding of the past in order to understand the present and the future, and their own basic efforts to do so. I would like to take two local museums I know about. The first is a Hound croft called Laidhay in Caithness about 20 miles south of Wick. It is absolutely typical, a long house with the house at one end, a door through into the byre, thatched and furnished with all the original equipment of a Caithness croft.
This was entirely done by the efforts of a small committee in Caithness headed by a friend of mine,
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Robert Moward, who raised the money with innumerable ceilidhs and raffles and all the other things. They have made an absolutely splendid job of this croft, and it is visited by thousands of tourists and a great number of people from Caithness itself who are fascinated to see how their forebears lived. This is an example of the interest in Caithness in what is nowadays called a folk museum.
In the county where I live, my own county of Angus, we have at Glamis a row of cottages, with the Angus folk museum, which is absolutely fascinating. This work was instigated and carried through by Lady Maitland of Burtonside, who died the other day at the age of 90. She with great enthusiasm and great support got together a whole lot of furniture, farm implements, churns, all the paraphernalia of life in the past, and assembled it in this excellent row of cottages. The Glamis estate, the noble Earl, Lord Strathmore, gave the cottages. The result is that we have another absolutely fascinating local museum entirely as the result of the initiative of local people. I think these two examples show that there is a tremendous desire among the ordinary people of Scotland to see that their past is properly illustrated and available to them and their children.
For that reason alone I think the noble Earl's Question ought to be answered in a favourable manner. He is talking well into the future, and I hope that under a Tory Government we are not always going to be as hard up as we are at present. I think the noble Earl, Lord Mansfield, might well and should give a favourable answer to this essential and very important Question that has been asked by the noble Earl, Lord Perth.
8.36 p.m.
Baroness Elliot of Harwood: My Lords, I think we are very much indebted to the noble Earl for raising this question and making such a fascinating speech himself about an extremely fascinating document. I think this is a subject which we have never before aired in your Lordships' House, and I am very glad that it has been brought up tonight. We in Scotland have some of the loveliest museums and galleries in the United Kingdom. I so much agree with the noble Earl when he talks about the National Gallery in Edinburgh. I think it is one of the most beautiful galleries, certainly in the United Kingdom, and I would even say further afield, in Europe. It is a really marvellous little gallery. What is more, our galleries attract very large numbers of people. Any of us who have attended, as I have since the very beginning, the Edinburgh Festival, will have noticed that a tremendous number of people are fascinated by the galleries and the exhibits that are shown, especially on those special occasions. We get a very good return for the money that is spent on our galleries.
The Williams Report makes fascinating reading and it covers all the galleries in Scotland. I so agree with Lord Mackie that some of these small museums, which are spread throughout Scotland—and there are some in the Borders, too—are extremely attractive and represent a great interest in the locality and in the type of life which people led in the past. I am particularly interested in the proposal for the National Museum of Antiquities of Scotland, which I agree very strongly

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should be renamed "the Museum of Scotland", and for which it is obviously vital that we should have more accommodation. This museum has a wonderful collection covering all the history of Scotland, from the earliest days of primative civilisation to the present day. It was started in Queen Street in 1781 and is still there. I wonder how many museums begun in 1781 are now in the same premises. Much of the collection has to be hidden away and is only shown when space allows or on special occasions. I wonder what other great museum has been so limited over those many years.
I know that all the museum authorities and different Governments—because it was Lord Ross of Marnock who appointed the committee—realise that this is a very important matter. The museum should be enlarged, and many plans have been made but always questions of finance have frustrated any action. I have a letter here from the Director of the National Museum of Antiquities in which he says:
"Efforts to get more space to show the great collections to the public have now been going on for nearly half a century. The Government agrees the need for a new national museum with 90 per cent. more space than is at present possible. But in 1976 the proposed museum for which plans had been made and the site cleared were cancelled because of Government economies. The project was then within a few weeks of being put out to contract".
That is a quotation from Dr. Fenton, who is the Director of the National Museum of Antiquities.
I do hope that we may give this proposition further support. The John Watson site would provide the accommodation needed. The trustees of the museum have put forward proposals for the John Watson site, and there have also been suggestions concerning other sites. I do so agree with Lord Perth, that to put the museum in Waterloo Place would be most unsatisfactory. It would be very much better that it should be on the John Watson site, and the Museum of Modern Art could go to the site in Queen Street. An exchange could be made. I think that it would be an advantage to both museums.
There are other suggestions put forward which would relieve the congestion and allow the collection to be rehoused. I would like to add my plea to the Government for action on this matter. I believe that it would be an investment which would pay dividends as it would attract so many more visitors. Once the public had learned of the treasures that they are unable to see, and once the tourists had heard of the developments, the capital expenditure would certainly earn interest. More people—both the young, learning about Scottish history and Scottish heritage, and the old, who love to see beautiful things—would find the attractions of this gallery very great indeed.
I should also like to back up the proposal in the Williams Report about which the noble Earl, Lord Perth, has spoken, as regards the museum of industry which I hope very much can be located in Glasgow or in the West. I have a great personal interest since my family, the Tennant family, were the earliest people to develop the chemical industry and were involved in the beginning of the great industrial revolution in Glasgow. I think that it would be very appropriate that there should be a museum of that kind in the West, but I would stress more strongly that, while that should be
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the aim for the future, the particular suggestion concerning the national museum of Scotland should be adopted now or as soon as possible.
I beg the Government to consider the present position and to see whether something cannot be done to fulfil some of the recommendations of the Williams Report, not because they are going to be spending money, but because they are going to be earning money and interest and will redound to the credit of Scotland. I hope very much indeed that the Government will view this matter with some sympathy and some support.
8.42 p.m.
The Earl of Cromartie: My Lords, we are most grateful to my noble friend Lord Perth. He has gone through the main points very thoroughly indeed, and so I shall not detain your Lordships for long. However, there are just one or two points that I should like to make. There is an idea which rather follows on from what the noble Lord, Lord Mackie of Benshie, was saying, about the localised museum. It might be possible to have some travelling exhibitions. We know that in Edinburgh a considerable number of things are never seen or never shown because there has never been room to do so. Some things might be lent even to the local museums.
I had the honour of opening a very good museum at Gairloch in Wester Ross, and it is quite one of the best small museums that I have seen. Most of the work was done by Sheriff Murdoch. It is quite excellent and among the exhibits there is a most beautiful pot still, and I think I know where it probably came from. In any case there was a terrible panic about it. An excise man came up, probably from Inverness, to take a bit away so that it could not be used again. There was a perfectly good sheriff with me at the time and I was very surprised that there was such a panic. Anyway, if the local museums could be helped in some way it would be of assistance and could perhaps take some of the overload which is carried by the more central museums in Edinburgh.
The idea of an industrial museum on the West Coast is excellent. But we do not want to wait too long for all this, because the way things are going at the moment, if we do not watch the situation we shall lose many of our indigenous population who are very interested in these things. We have only to consider what has been happening recently. I shall mention just three things: the cancellation of the gas-gathering pipeline; the shutdown of the Corpach pulp mill and the quite inexcusable closedown of the Invergordon smelter. I hope that the Government will realise that a bit of money spent on the kind of thing involved in the Question can help, and also might make them a little more popular.
8.46 p.m.
Lord Ferrier: My Lords, I join with other noble Lords who have expressed their thanks to the noble Earl, Lord Perth, not only for his speech in introducing this debate but for his long years of attention to the whole subject, which we greatly appreciate. In my view this is a very important report and the matter it raises is very important. This should be an important debate, which it is not. I say that because it is tucked away into a corner, which it should not be. The noble

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Earl, Lord Perth, is much too goodnatured to be as irritable as I am over a matter of this sort, but I feel that the usual channels should have seen to it that we had a proper occasion to call attention to this extremely important matter, the importance of which has been referred to by so many speakers.
I am very glad that the noble Lord, Lord Ross of Marnock, is to speak because, as has already been said, it was he who, as Secretary of State, in February 1979 established this committee. The noble Lord shakes his head. I may be wrong, but we shall hear from him who was responsible. I understand that it was not him, but the fact remains that this excellent committee was created and launched at that time and its work has been recorded by the report which we are discussing today. Along with my noble friend Lord Cromartie, I feel that this is a matter as regards which, as he said, we do not want to wait too long. We cannot hang about over this because there is a great deal to be done.
I was born in Edinburgh and I was educated at the Edinburgh Academy. I lived at one time a few hundred yards from John Watson's within sight of Donaldson's Hospital across the Water of Leith. So I am not only intimate with the area involved, but extremely interested in the powerful Addendum, Chapter 10 on pages 89 to 93. Oddly enough, my grandfather, the eminent Victorian artist, is buried, as is my father, in the Dean Cemetery nearby where lies Lord Cockburn, whose spirit and influence is perpetuated by the Cockburn Association. I mention my grandfather not only because of his connection with the Royal Scottish Academy (RSA) but because his today priceless collection of medieval arms and armour found its way into the Royal Scottish Museum early in this century.
The committee's recommendations deserve most careful study, and, as I have said, they should not have been tucked away, as it were, into this corner. But it is to the Addendum, Chapter 10, to which close attention should be drawn, and particularly to paragraph 10.8. Yes, indeed, legislation should be "immediately introduced" as it "will take time to enact". That appears in the report and bears out what my noble friend Lord Cromartie has said.
At this stage I must say that in a way I am deeply dismayed by the speech of the noble Earl because my information is that the John Watson's site is off as regards the Royal Scottish Museum. I have turned over in my mind what is happening there, and perhaps when my noble friend Lord Haig speaks he will be able to tell us where we stand in regard to it. But it is clear from what the noble Earl, Lord Perth, said that an enormous number of ramifications have to be researched and brought together. I think that these can best be dealt with in the recommendation which is included in Addendum 10.8.2:
"… a Chairman independent of museum and gallery interests, [to be] appointed by the Secretary of State for Scotland ".
As the noble Earl has pointed out, it seems to me that the present number of trustees is too many, that the body does not work very well, that there are internal jealousies and that, therefore, we must concentrate on this recommendation that a working party must be established under a man who has a powerful personality, with position and qualities which will be of paramount importance, demanding, as they will, talents
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such as those of, say, Sir Mortimer Wheeler or Sir John Marshall, who was his predecessor in India. Let us pray that a suitable forceful character can be found to get this whole thing going and so establish the importance of the various propositions in their true sequence.
It is a very complex subject. Its ramifications for Scotland's heritage are enormously diverse. I say this because they extend from, say, the fact that the Royal Scottish Academy building is private property—and there is a legal problem—to Scotland's industrial heritage, as my noble friend Lady Elliot pointed out, and I agree with everything she said. I look forward to the speech of the noble Lord, Lord McAlpine; Glasgow is the place for that—Lord Kelvin and electricity, right back into the mists of time. It also extends from, say, folk museums like the Gladstone Court Museum in Biggar, which I daresay was in the mind of my noble friend Lady Elliot when she spoke—and the noble Lord, Lord Mackie of Benshie, referred to the one in Caithness—to the Western Isles; from Scotland's medical and surgical traditions to the Christian Churches and so on. Some working party it must be; that is my view.
Then what about the question of wind and water-tight storage? I think that the noble Earl will agree that that will be a tremendous transitional problem. I think the House will agree that there must be a provision for space to store a large amount of precious material. As for the Museum of Scotland, I think it is agreed that it should be in Edinburgh. That is fair enough. As the problem unfolds and in the light of decisions already reached, it is also clear that if the John Watson's site is not to be available, a variety of solutions still exists. I would join with speakers who have already said " No " to Waterloo Place, especially when you think of the sites that can be made available for the purpose.
In the circumstances that I have outlined—namely, that the John Watson's site may not be available—at this moment Donaldson's Hospital seems to me to be the best bet. Of course, it is a hospital for the deaf. But my information is that that is the sort of undertaking which need not necessarily be situated in such a monumental building, in this huge space which will provide accommodation for developments far into the years ahead. Incidentally, you would not expect me to fail to point out, if you are worrying about the traffic passing Donaldson's Hospital, that the pattern of the traffic of Edinburgh will change with the completion of the southern by-pass road.
There is one final point to which one of my consultants, in whom I place great faith, draws attention, and that is " Outreach " on pages 8 to 10. He says " Golly! what a word ". He also says in a letter:
"It is very difficult to mount travelling exhibitions and to exhibit the contents properly ".
I see such an exercise as more educational than historical. It crosses my mind, from listening to the noble Earl, Lord Cromartie, and to the noble Lord, Lord Mackie, that travelling exhibitions, which maybe difficult and expensive to mount, might conflict up and down the country with existing folk museums, which as we all agree, are so important and so attractive to Scotsmen from all over the country. I believe that a decision with regard to outreach can wait, and wait upon the current amazing developments of video

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cassettes, slides, films and the like. These developments. which were almost inconceivable a few years ago, are likely to reach fruition fairly soon.
Therefore, I come to the question of cost. Let us suppose that the arrangements which the noble Earl, Lord Perth, has outlined will involve £50 million. It is as well to remember that this is approximately the same amount as a small part of the cost of expanding the nuclear base at Coulport. I look forward to the later speeches with the greatest interest and, again, I thank the noble Earl for raising the subject. I hope that another time we may be able to deal with it to a fuller extent.
8.57 p.m.
Earl Haig: My Lords, like other noble Lords, I welcome the opportunity given to us by my noble friend Lord Perth to discuss some of the various proposals which have been made by the Williams Committee as part of their valuable work. The part of the report to which I want to refer is where it deals with problems arising from shortage of accommodation. These problems affect in particular the National Museum of Antiquities of Scotland and the Scottish National Gallery of Modern Art, and solutions to these two problems are urgently needed.
In the report the rival claims upon the use of the converted John Watson's School are discussed and the committee have come out in favour of the Museum of Antiquities. The long standing promise of a permanent gallery site for the Gallery of Modern Art, now about to be implemented, is again under attack. With great emphasis it is proposed that a new museum of Scotland should be created and should have a prior right to occupy John Watson's School. I very much welcome the proposal for a museum of Scotland. I think that it is a very fine concept which would hold exhibitions, encompassing the art and culture of Scotland over the centuries. But ideally this museum should be housed somewhere near the centre of the city so that visitors from abroad many of them of Scottish origin—would manage during a brief visit to Edinburgh to include it in their itinerary of visits to our main sites and buildings.
My noble friend Lord Ferrier has suggested that I might explain the position of the Gallery of Modern Art. A permanent home for the Gallery of Modern Art is long overdue, and indeed was promised over 30 years ago. Space at Inverleith House is extremely limited, and I understand that last autumn there was not enough space to show even the pictures collected during the past 18 months. A beautiful painting, "Queen Maeve" by Yeats, which was purchased for £12,000 some 15 years ago when I was a trustee, has hardly ever been shown. A proper home has now been found and offered, and plans for reconstruction are well under way.
It would be quite wrong to alter course now whatever alternative homes might eventually become available. On the score of alternative homes, I submit that the Williams Committee have been less than fair. Their proposal to move the gallery to Glasgow would mean removing it from the nation's capital. The suggested Botanic Garden alternative has never been an option to the Modern Gallery, and I doubt whether
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the objections to it could ever be overcome. The view that John Watson's is too big for the Gallery of Modern Art and the restoration department is disputed by the National Gallery trustees, who maintain that the acquisition of Watson's in place of Inverleith and Ainslie Place will mean a barely adequate provision of space.
The plan to move John Weston's has been supported by the Secretary of State with great perseverance. The National Gallery trustees are happy about it. The alterations are already under way. Only the Williams Committee are trying to upset things, and I hope that their view will not be heeded. The publication of the Williams Report has pointed out the need for some kind of consultative body which will meet regularly, and will advise the Secretary of State particularly, when alternative plans have to be considered and one has to be given priority over another. I suspect that the Williams Committee are slightly biased in their approach since they have tried to ride rough-shod over the National Gallery of Modern Art.
A properly constituted Scottish museums commission, which I agree should be established, could give advice which would reflect the views and opinions of all the museums and galleries concerned, who would have representation on it. This would provide a body able to co-ordinate the needs and wishes of galleries and museums in Scotland. The Williams Committee have given some indication as to how such a body would operate. They have highlighted many of the problems which face the museums and galleries in Scotland. They have shown the need for a permanent body to carry on the work they have begun with such distinction. We should be grateful to them even though we do not accept all that they have proposed.
Lastly, I should like briefly to refer to the discrepancies in what is paid to the three national galleries in Scotland, compared with the equivalent London galleries, the National Gallery, the Tate Gallery, and the Portrait Gallery. I understand that the allocation of money is reviewed from time to time, and that the review was instituted some time during the 1960s at a time when I was a trustee. Perhaps I should have been more alert about the problem and the wisdom of accepting a ratio which was somewhat unfair to Scotland.
Originally in 1960 the allocation for Scotland to cover salaries and wages and general expenses was £57,000 compared to £184,000 for London. Then, at the first review some five years later, Scotland received £1,373,000 compared to London's £7,297,000, which represented an increase of only 23·7 per cent. for Scotland, compared with an increase of 39·5 per cent. for London. I should like to ask my noble friend Lord Mansfield if he would look into these discrepancies.
Public attendance in our galleries is related to the services provided. The quality of our exhibitions which, in the case of the Gallery of Modern Art, have had to be curtailed; the numbers and pay of staff required to man the proposed extensions; the costs of a good public relations staff—all these depend on the amount of money to be provided. This question of a fairer distribution was not part of the findings of the Williams Report, but it is perhaps a legitimate question for me to ask at a time when money is liable to run short. Money will be in short supply no matter how

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you divide the cake. If the size of the cake is not to be large enough to cater for the increasing volume of museum visitors, then the possibility of making some form of museum charges may eventually have to be considered.
9.6 p.m.
Lord McAlpine of Moffat: My Lords, enthusiasm is a very important thing in life; a quality that is dangerous, exciting, but essential to the nation and the world. It seems to me that one of the prime duties of your Lordships' House is to guide enthusiasm into channels that are of benefit to the nation, the country, and the individual. In regard to this Scottish heritage we have a great opportunity to do a very important thing. Enthusiasm is latent in the Scottish breast. The Scots can be roused to tremendous enthusiasm, but do not let them be got hold of by politicians arousing a nationalistic spirit of politics. Let us be proud of the emblems of our contribution to civilisation which are constructive, and not be destructive.
It is rather amusing to me that I am suggesting that we guide enthusiasm, when my enthusiasm has been entirely guided on this particular subject by my son, who happens to be on this committee, but obviously the child is father of the man. I should like to confine my remarks to Chapter 2, clauses 8 and 9, of the report. That is the question of original engineering in the Clyde Valley, which is to some extent the home of the industrial revolution, being preserved. The most beautiful craftsmanship, things that are in factories, shipyards and works that are becoming redundant, will be scrapped unless the Government can be persuaded to provide somewhere to put them on a bridging basis until we are ready to house them in our ultimate museum. I urge noble Lords to do everything they can to that end. I do not think it would cost a lot of money. With a little brainpower and some help from the various authorities, it could be simply achieved. I may be something of an extremist, but I believe genuinely that we have steam engines, pumps and other beautiful things that have been built which generations to come will classify as equivalent to the works of Mr. Chippendale. I will not waste the time of the House at this hour. That is the one point I wanted to dwell on—the importance to Scotland of preserving our emblems of construction—because we do not want to concentrate just on daggers and claymores showing what a lot of violent men we were in the good old days. Let us be proud of the things we should be proud of and do our best to preserve them.
9.10 p.m.
Lord Ross of Marnock: My Lords, we are grateful to the noble Earl, Lord Perth, for initiating this debate and unlike the noble Lord, Lord Ferrier, I believe it is an important one. You cannot tuck Scotsmen into a corner for long, and I am glad to see that the Principal Deputy Chairman of Committees saw fit to be clad in a kilt as she presides over our proceedings tonight. Let us appreciate exactly what the committee had to do. We have heard from a member of the committee and from the father of a member. Let me make it clear at the outset that I was not the father of that committee. We are talking about February 1979,
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although some people seem to think that I was the Secretary of State for Scotland for ever.
Lord Peart: It is a tribute to you, Willy.
Lord Ross of Marnock: Be that as it may, my Lords, but at that time I was a humble Back-Bencher.
Baroness Llewelyn-Davies of Hastoe: Never humble.
Lord Ross of Marnock: Always humble, my Lords, even as Secretary of State. It was my successor, Mr. Bruce Millan, who set up the committee in February 1979. I wish to express my appreciation to the members of it and the way in which they worked, and I was glad to hear tribute paid to Dr. Alwyn Williams, the principal of Glasgow University. They invited me there to speak in October of last year, about a week after the report had been published, and I got, rather than the job I was on, lobbying by Alwyn Williams about the Scottish Heritage Report. And if that was not enough, it was followed by a letter from the noble Earl, followed by another letter from a friend of mine who happened to be the chairman of the trustees of the National Museum of Antiquities of Scotland, Mr. Kennedy. I am therefore well enough briefed on this matter, apart from which I have a little place in the history of it as well.
The committee worked with speed and they did not miss much. That is evidence itself of how quickly they appreciated the time of almost crisis within the whole national museum and gallery scene in Scotland. Today, three of the 25 years about which they speak have already gone. This is a time for decision and, having made decisions, to lay plans. I appreciate that the committee had to work at a time of depression; indeed, they were reminded of that in their terms of reference, in that they had to bear in mind that things were difficult and resources limited. Nevertheless, it is at such a time that one must not get in the mood of thinking that the depression will last for ever.
If we believe in our country, then now is the time to advance, certainly ambitious schemes but not over-ambitious ones, and I was glad to hear the noble Lord, Lord McAlpine, make his speech in the tone in which he made it. We have something to be proud of in our past and we shall have something to be proud of in our future. Therefore, we should have our plans prepared so that, when the recession lifts, we shall he able to go in straight away and not have to start de novo, because that is what has happened time and again in respect of museums. We want and must have a museum for Scotland and that is the first decision that must be taken because the position of the National Museum of Antiquities is really a crying scandal.
I thought that I had done something in, I think 1967 or 1968 when, with the very considerable help of the (now) noble Baroness. Lady Lee of Asheridge, we got Treasury approval in respect of the Chamber Street site. We thought that all was well, the National Museum of Antiquities was going there. That was a long time ago. Eventually the land was bought, and cleared, and then we were into a financial trough again; it is obvious that this is no longer an option that is open to us. It would cost at least £18 million, and now in the light of the new duties and responsibilities

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that we see, and the development of the museum scene, that is not on.
Having made the decision, the Government must very quickly make up their minds as to whether they are going to listen to what is said in the report itself about John Watson's School, or whether they are going to make some other temporary arrangement, because we must remember that the York Buildings arrangement is not satisfactory from a long-term point of view. As the noble Earl, Lord Perth, said, it provides only 28 per cent. of the space that in 1952 was adjudged to be necessary. 1952! There has been very considerable development since then in regard to what should be done and what could be done with the museum. So that possibility is out.
Now what are the Government going to do? Anybody who has read the report will appreciate, first of all, they considered it so important that they had an interim report. That interim report went to the Government—there was not a very satisfactory reply—and it re-emphasised what was seen as the right solution to the gallery scene in Edinburgh. There was also an addendum stating what should be done if what was recommended was turned down.
I am sorry that I have to disagree with the noble Earl, Lord Haig, but he was very courageous in putting his point of view tonight with regard to the National Gallery of Modern Art. He will appreciate of course that this is an argument which on the one hand involves a body that is 20 years old. I remember the Bill going through the other House. I think it was in about 1958 or 1959, and I believe that the gallery itself was started in 1960. On the other hand, the National Museum of Antiquities was started 201 years ago, with a £20 grant from the Earl of Buchan, who was a friend of Burns. I had to get that one in! But you are not going to get The Cotter's Saturday Night; you got Tam o' Shanter last night, and that is enough. I think that the museum was at The Mound originally, and then it moved, hut not when the noble Baroness said. It moved to its present site in 1891, and let us not forget that the building was donated by Mr. Findlay, who was the proprietor of the Scotsman; and it has been there ever since.
We had a Royal Commission in 1927, and it said that the time was not far distant when the Museum of Antiquities would require a separate building if it was to play the part it ought to play as an educational institute specially designed to stimulate Scottish archaeological studies and the teaching of history. That was in 1927, over 50 years ago. In 1949 the Standing Commission on Museums and Galleries, after visiting Edinburgh, stated that it was quite lamentably cramped, and had only a quarter of the space that it needed. It has the same space today.
In the Philips Report in 1952 we had again the same thing; and we had the lamentable report from the Earl of Perth as to what has to be done in order to mount an exhibition. Some of the valued exhibits have to be taken out and stored away somewhere; I think that some of them are silver. We heard about another exhibition mounted on a stairway. This is not good enough for what is one of the oldest museums in Britain. It is really one of the most important of the galleries from the point of view of the whole spread of
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Scotland's life, Scotland's living, Scotland's—not culture, but cultures, and the whole history of men and Scots in Scotland.
I think that Scotland lacks pride if we allow this to go by the board. We must bear in mind John Watson's School, with all the surrounding possibilities of development. I think that the school is far too large for the Gallery of Modern Art. It could be nearer, and indeed the present building in Queen Street would suit it, and with the National Portrait Gallery as well, that would be fine. Remember, too, that we have to do something with the National Portrait Gallery, because I was impressed by the fire risks to valuable records of Scottish life that are there; and, once again, it is an appreciation of exactly what it is we are up against in this particular situation.
So I hope there will be a speedy decision by the Government. Think again about what was put forward by the Williams Committee and, having done that, having made the principal decisions, get on with the business of preparation. I think the financial aspects of it were well covered by Lord Perth. There is no doubt about it: in what is put forward by the committee—I mean, the intervention of the Crown Commissioners—there is far less by way of public expenditure that worries the Chancellor than some people would imagine. But that has to be done.
On the question of the Scottish museums commission, I was a wee bit chary about this at the start because in the case of a committee like this, if the Government do anything they will deal with the organisational aspects; that costs them nothing. But the museums commission itself, without the upgrading of the status and the creation in principle, for a start, and then the plans in relation to the accommodation, would be just a bit of whitewash. But I do not think, as some people fear, it need be a separate tier coming between the museums and the Secretary of State.
I think that most people who have looked into this question—and I had a letter, too, from the Council of Museums and Galleries of Scotland—see this as the first recommendation, in fact. They refer to it because they think it is time there was a look at the whole museum field in Scotland, taking in the points that were raised about the folk museums. I think this is a very important point. It was referred to by the noble Earl, Lord Cromartie, by the noble Lord, Lord Ferrier, and by the noble Lord, Lord Mackie of Benshie. I could list all the other places. There has been an upsurge of interest in this connection, and it is one that we must harness and use in this respect.
But this small body—which is not meeting every day and all day and should not be an expensive Quango, to my mind, because people in this field, I find, are more ready to give their services for nothing because of the importance they feel belongs to their subject—could advise the Government on overall policy. They could advise the Government in relation to many aspects of it, but not get too mixed up with the division and distribution of monies because that would be fatal—and, remember, there is a certain jealousy from the smaller and outer museums which are supported through the rate support grant, for instance, that the more that is given in the centre, the less they will be able to get. But I think their enthusiasm is going to carry them through.

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I was fascinated by what had been done in the Shetlands, by what had been done on the Island of Arran, and even what is being done in Ayr. I never thought the day would ever come when the council of Ayr would buy a Henry Moore, but they did. There was great discussion about it, of course, but they came to the right decision in the end. So there is this out-reach. A lot of travelling exhibitions are being shown at the present time. They could be expanded; and I like that part of the report that covered this. Of course, it may require changes in respect of the rules and the inhibitions upon the galleries at home. I was interested to see that there is 16 years' experience in, I think it is, the council arranging these things, and they feel that this could be done and they could help very considerably.
It is one of the things on which the committee reported, and I think it was their first recommendation that struck me:
"A more general awareness of the extraordinary range and wealth of the heritage that they house ".
That is their first point. Then:
"This should be achieved not by dispersing national collections but by increasing the number of loans and travelling exhibitions ".
This is important, but it means, too, that the question of security and environment has to be tackled. But it is altogether the question of the general awareness. I do not think that the Scottish people themselves are aware of what is contained in the National Museum. It is probable that people outside Scotland are more aware. In Vienna, which I visited during the Recess, an American woman started to tell me about all that was in the National Gallery. She had gone there to see two or three pictures. I had gone to Vienna to see only one.
The same thing is true about Glasgow and what they have done there. We have a Museum of Transport in Glasgow run by the local authority. We can build upon that. I was grateful for what was said about the Museum of Industry. We must do that. We must make arrangements in relation to the storage and getting funds—and not necessarily, I think, from the Government but from some private sources. Let us get the storage space and decide on the things which have to be discarded at the present time and keep them pending the production of that.
The focal point, undoubtedly, is the National Museum of Antiquities being raised in status to that of the Museum of Scotland and the determination that it will be not merely a change of name but a change of status and the development of that idea. More and more attention should be paid to the people's aspect of it, to the popular aspect. I do not know whether the noble Earl, Lord Haig, has read the survey; but one thing which troubled me in that survey of people who visited the various galleries and how long they stayed—and the survey cost £7,500—was that the average stay in the Gallery of Modern Art was 15 minutes. Let no one be deceived in relation to how popular it is. It is in the Botanic Gardens in Edinburgh. Many people go to it because of where it is and not perhaps because of what it is. Nevertheless, I think it is a good thing. But it troubled me that the average visit was of a quarter of an hour.
We have a lot to do. We have all the stuff; but they cannot display it because they do not have the room.
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This is a challenge to the Government and to the whole of Scotland and I hope that we take it up. I express my appreciation once again to the noble Earl, Lord Perth, for introducing this matter.
9.28 p.m.
The Minister of State, Scottish Office (The Earl of Mansfield): My Lords, first of all, I should like to add my voice to those who have thanked the noble Earl, Lord Perth, for giving us the opportunity to debate the Williams Report this evening. I also welcome the opportunity, which the Question raised, to mention the work of the museums and galleries service in Scotland. I would suggest that we give insufficient recognition to this service, to the dedication of those employed in it and to the high standards achieved, both in the presentation of the nation's collections to the public and in the important sphere of research and of conservation of these collections. It was in order to ensure the maintenance of these standards and the expansion and adaptation of facilities to meet changing needs that the previous Secretary of State set up the Williams Committee.
Before turning to the points raised by the noble Earl and by the other noble Lords who have spoken, I would like to thank Dr. Williams and all the members of his committee, which, of course, includes the noble Earl, Lord Perth, for the very considerable work they undertook in investigating the issues put to them and in preparing their report. The committee was given the broad remit of looking at the future of Scotland's national museums and galleries and assessing their needs over the next 25 years.
The committee took evidence from a large number of organisations and individuals and they visited not only the national museums and galleries but a number of local museums in order to see for themselves the institutions at work. They took account of all aspects of the museums' life including their educational role, their inter-relationships, their management and their accommodation needs.
The committee produced an interim report in August 1980 which is a commendably short time; and then in September last year their final report was published. As has been said, they make no less than 116 recommendations, covering all areas of the national institutions. Broadly, the recommendations fall into two groups. There are first those which could be said to be directed at the national institutions themselves and indeed many of the recommendations are already reflected in the policies adopted by these museums and galleries so in effect the report re-affirms the good practices that already exist. In so far as the recommendations contain additional proposals, these will be for the national institutions themselves to consider and to implement as appropriate.
The other recommendations are those where it is for Government to give a lead and we will be studying these recommendations closely, at the same time taking full account of the views we have received in response to our consultation on the report. We will also be taking into account the numerous unsolicited comments we have received—and are indeed still receiving. Your Lordships will understand that until we have given full consideration to all the views received it would not be helpful for me tonight to prejudge any

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issues. The debate is, however, most timely in the helpful contribution it makes to our deliberations. We are now considering the comments, and the Government will make a Statement as soon as possible; but the issues are important and difficult and I cannot say tonight when decisions on all the recommendations may be reached.
Turning to the particular points which the noble Earl and other noble Lords have raised, I should like to take first what the committee consider to be their most important recommendation—the proposal for the establishment of a Museum of Scotland. This they envisage would be based upon the collection of the National Museum of Antiquities of Scotland, which necessarily links with the question of accommodation for that collection. The question of housing was indeed the subject matter of the interim report submitted by the committee in August 1980 when they pressed that the site at John Watson's school be reserved for the purpose. I hope it may be helpful to noble Lords if I give some background on this complex and difficult matter to avoid any misunderstanding.
The John Watson's building, in Belford Road, Edinburgh, was offered to the trustees of the National Museum of Antiquities in 1977 but rejected by them in favour of the provision of a city centre site for the museum at some future unspecified date. The building was then offered to the trustees of the National Galleries of Scotland who accepted it as a home for the Scottish National Gallery of Modern Art at present entirely inadequately housed in Inverleith House in the Royal Botanic Garden. If the noble Lord, Lord Ross, wonders why folk do not stay there for very long, he only has to go there and soon all will be revealed.
Lord Ross of Marnock: I have been there.
The Earl of Mansfield: My Lords, by the time the Williams Committee submitted their interim report, planning for the conversion of the former school for use by the Gallery of Modern Art was already well advanced. Here thanks are due to the Crown Estate Commissioners who are generously bearing the costs of the conversion.
In the light of the Williams Committee recommendations, however, the whole subject of the future use of John Watson's was re-opened and Scottish Ministers conferred at length with the trustees of both the National Museum of Antiquities and the National Galleries. The trustees of the galleries agreed to relinquish their claim to the John Watson's building on the understanding that they would then receive in return the use of the building presently occupied by the National Museum of Antiquities.
The trustees of the National Museum of Antiquities said that they were willing in principle to accept the John Watson's site but only if certain conditions were met. They required the immediate construction of further extensions to the building, plus assurances on staffing levels and on priorities within the museums and galleries building programme. These were not conditions to which the Government could agree in the present financial climate but the trustees were not prepared to accept the building on other terms.
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Various other possible accommodation rearrangements were then discussed, but none was found which could satisfy both parties without considerably greater financial expenditure than could be incurred. My right honourable friend the Secretary of State therefore announced in April 1981 that the work on converting the former school for use by the Gallery of Modern Art would continue. There has been no change in circumstances since that time to give reason for questioning that decision. One of the matters which the noble Earl, Lord Perth, claimed, was that it was not too late for John Watson's to be given to the Museum of Antiquities as not too much work had been done. But since my right honourable friend announced his decision in April 1981 further work to convert John Watson's for the Gallery of Modern Art has gone forward. To change that decision now would involve a considerable waste of expenditure on work which has already been done for the needs of the Gallery of Modern Art. Those needs are significantly different from those which the Museum of Antiquities, either as itself or as a Museum of Scotland would demand, so the position is, to all intents and purposes, irreversible except at great public expense.
The Earl of Perth: My Lords, may I ask the noble Earl whether he would be good enough to look at that again? As I understand it, the main work which has been done up to date represents such things as the eradication of dry rot, and the main extra work has not in fact reached an irrevocable stage. I would therefore ask that he makes quite sure of what he has been told at the present time.
The Earl of Mansfield: My Lords, I used the word " irreversible " rather than the word " irrevocable ". What I said was:
"irreversible except at great public expense".
That is the information I have been provided with. Having said that—and I quite appreciate that it may not be welcome to the noble Earl—let me also say quite categorically that we are fully aware of the difficulties faced by the National Museum of Antiquities in its present accommodation. Conditions are cramped and there is insufficient space to display adequately the extensive collections the museum holds. Work is already under way for the conversion of a building across the street from the museum's headquarters and its opening later this year, I am glad to say, will ease the museum's most pressing accommodation problems. It will contain an extra 1,300 square metres of gallery space, almost doubling the area available to the museum for display in central Edinburgh, together with another 1,000 square metres for additional office and laboratory facilities. At the same time, we are studying how best to meet the museum's needs in the longer term.
This relates directly to the committee's recommendation, which was strongly supported this evening by the noble Earl and by other noble Lords, for a Museum of Scotland. I can well understand the strength of feeling which has grown in support of this concept. At the same time, I would suggest, in common with many supporters of the proposal, that it is misleading to speak as though this would be the founding of an entirely new institution. The collections in the National Museum of Antiquities already provide a

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substantial foundation for the museum envisaged by the Williams Committee. Therefore, what is needed, in my view, is to build on this strong foundation—which brings us directly up against the inhibition I have already mentioned: that is to say, the inadequacy of the present accommodation.
There is no doubt that the present difficulties severely limit the scope for expanding activities and for fulfilling the role of prime repository for artefacts representing the cultural heritage of Scotland, as proposed by the committee. As I have said, we fully recognise these inhibitions and the serious difficulties imposed on the staff working in conditions that are far from ideal. That is why we are looking urgently for ways in which the museum can be expanded, while necessarily taking account of the extent and timing of available resources.
I hope that I am not being unfair to the noble Earl, Lord Perth, in saying that he was really posing two options; that is, either we build a new Museum of Scotland or, more cheaply, we convert John Watson's. From what I have said, I hope that I have dispelled any impression that we are confronted simply with a need to choose between housing the National Museum of Antiquities in an entirely new building in the centre of Edinburgh, or else in John Watson's. The latter course has been rejected by the parties concerned; the former would require resources that simply are not available. We are, therefore, proceeding step by step in meeting the accommodation needs in the manner I have described. I have to say, although a number of noble Lords were not over-enthusiastic, that one of the possibilities which is currently being considered for the longer term is the site in Waterloo Place, and no doubt we shall consider Waterloo Place in the light of the comments which have been made by your Lordships this evening.
The noble Earl raised another matter regarding finance. In effect, he suggested that the Crown Estate Commissioners could finance improvements to the Queen Street building by buying it from the Government and leasing it back at the same rate, as in the case of John Watson's. We are, of course, grateful for the generous assistance of the Crown Estate Commissioners in providing the resources for the purchase and refurbishment of the former John Watson's School, but we must not forget that, at the end of the day, there would be a cost to the Government and to the taxpayer in terms of the annual rental charges which are levied to pay for the cost of these developments.
If the plan suggested by the noble Earl were adopted, the sum realised could be used towards the cost of refurbishing the building. But even assuming that the resources realised would be sufficient to pay for the conversion work necessary at Queen Street, the proposal would have the disadvantage that there would remain a significant cost to the Government in terms of increased rental charges for the foreseeable future. But this is certainly one of the issues that we shall be considering, before coming to decisions about ways in which it would be possible to meet the future accommodation needs of the national museums and galleries. However, as I have already indicated, it does not seem to us to offer a reasonable basis for questioning again the decision which we have taken on the use of
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John Watson's School; a decision which, as I have said, is now being implemented.
The committee also suggested that a working party be set up to facilitate the creation of the Museum of Scotland. I agree with the committee that, if a new museum is to be set up, careful thought will be required on the steps needed to plan for it. It will be necessary, for instance, to identify the precise role for a new museum, taking into account, in particular, the roles already filled by the other excellent national institutions in Edinburgh—the Royal Scottish Museum and the National Galleries of Scotland. We will also have to consider whether the development of ideas for a new museum should be the task of an ad hoc working party, such as the Williams Report has suggested.
As I have pointed out, the Museum of Scotland is already present in embryo in the National Museum of Antiquities of Scotland. This is clearly reflected in the range of its current collections, though many of them are not at present on display to the public. I would repeat that what the present museum needs is additional space and resources to become the Museum of Scotland. I recognise that all these matters are difficult issues. Conflicting views have been expressed on them, and we shall have to consider them very closely before coming to any final conclusions.
Returning to the question of forward planning, some have advocated that this planning for a Museum of Scotland should be the first task of the Scottish Museums Commission, which the report proposed should be established and which has been referred to this evening. The proposal for an independent body to co-ordinate a museums policy for Scotland has elicited a great deal of support, although here again it is only right to say that other suggestions equally worthy of consideration have been put to us. Here, too, we shall need to weigh the issues carefully and to have particular regard to the roles in respect of Scottish museums played by the United Kingdom's Museums and Galleries Commission and the Council for Museums and Galleries in Scotland, which in recent years has done much splendid work on behalf of Scotland's network of local museums.
Another interesting suggestion from the committee to which a number of noble Lords have referred to-night, not least my noble friend Lord McAlpine of Moffat, is the setting up of museums specifically directed to industry, a concept which, as the committee recognised, would need to be considered in relation to the role of the Royal Scottish Museum with its acknowledged expertise in science and technology and having regard to the extensive collections of material from Scotland's early industrial heritage held both by that museum and by Glasgow museums and art galleries.
I fully share the committee's concern that we should aim to preserve for future generations adequate examples of industrial plant and developing technology. Scotland was outstanding in the van of such developments in the past and we must not allow this to be forgotten. Suitable preservation would be of value not only in historical and educational terms, as I have implied, but in increasing tourist interest possibilities, particularly in lesser known areas. But even the construction or adaptation of a suitable store for the often bulky items involved would have significant cost impli

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cations and we have, I fear, to study those before we reach any conclusions.
The committee also considered the status of the Royal Scottish Museum which, unlike the other national institutions in Edinburgh, is not governed by an independent board of trustees and whose staff are Scottish Office officials. The committee did not see any particular drawbacks in the continuation of this arrangement but it recommended that an advisory council be established for the Royal Scottish Museum to provide a source of independent advice to the director on the wide range of the museum's activities. This, too, is a recommendation which we will be considering with care.
Only some of the 116 recommendations in the report have been discussed tonight. If I may refer to the criticism of my noble friend Lord Ferrier as to the form which this debate has taken, I am afraid that I have not been privy to any discussions which there may or may not have been through the usual channels, but what I suggest that we have had is a very valuable airing of views on the major proposals which the Williams Committee made. I would repeat that in our current consideration of the report close attention will be paid to all that has been said by your Lordships.
I think I must make a little mention of the comments which were first made by the noble Lord, Lord Mackie of Benshie, about the part which local museums can play in displaying and interpreting the history and traditions of the more rural parts of Scotland. He instanced the Caithness Museum and the Angus Folk Museum. We are fortunate to have such a wealth and variety of museums throughout Scotland. Many of them, as the noble Lord, Lord Mackie, said, are created and run by voluntary effort. But I should remind your Lordships that the Government, for their part, give help towards local museums in two distinct ways: first, by means of grants for the purchase of items for their collections through the Local Museums Purchase Fund, administered by the Royal Scottish Museum, and, secondly, via the Council for Museums and Galleries in Scotland which gives advice and financial assistance to local museums for the conservation of objects in their care and for the improvement of displays and fittings and which also organises touring exhibitions to local museums. We recognise the excellent work which many local museums are doing and we will continue to give them help in this way.
The mention of touring exhibitions brings me to the point which was made by a number of noble Lords—last, but not least, by the noble Lord, Lord Ross of Marnock. I note what noble Lords have had to say about the committee's suggestion that the national museums should organise their own travelling exhibitions of objects in their collections. The committee's view was that those who do not have ready access to the permanent displays of the National Museum in Edinburgh should nevertheless be able to see from time to time selections of the objects they hold. It is suggested that in so doing the National Museum should consult with the Council of Scottish Museums and Galleries and the Scottish Arts Council, who already organise travelling exhibitions to avoid unnecessary duplication. The Government support in principle the view that selections of our national
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museums should be available to as many people in Scotland as possible. How that can best be achieved in practice is another of the matters we shall want to study closely in the light of the comments in the report.
Lord Ferrier: My Lords, on this question of outreach, my point was that this might be something which is first class, but which in view of the financial problems could well wait and might come later.
The Earl of Mansfield: Yes, my Lords, the setting of priorities is something on which the Government will have to decide, bearing in mind the parlous state of our national finances. The noble Earl, Lord Cromartie, also spoke about travelling museums and I agree with much of what he said.
I come now to the points made by my noble friend Lord Haig. I was very glad to have his support on the decision to house the Gallery of Modern Art at the former John Watson's School. As an artist of considerable distinction, if I may say so, the noble Earl's comments have particular value. The noble Earl also went into the question of finances. He said first of all, in effect, that the funds for galleries in Scotland and England are determined by periodical reviews which reflect badly on the Scottish galleries. I believe that is a fair way of summarising his remarks. What I have to say to the noble Earl, is that the figures are not set, so far as Scotland is concerned, at periodic reviews. For some years past the figures have been determined annually in the light of current needs and resources.
If it is said that Scottish museums and galleries come out badly in comparison with those in England, I have to say to my noble friend that the funds in question are not coming out of the same cake. Scottish museums and galleries are financed by the Secretary of State for Scotland out of his block. He has to determine how best to allocate the resources available to the very many competing requirements in Scotland. He has to bear in mind such problems as severe industrial dereliction and social deprivation. Against that background, I say that the share which has gone to the museums and galleries is commendable and reflects the importance which we attach to the preservation of our heritage.
We as a Government will have to take a number of difficult decisions, and I make no apology when I say that necessarily they will be bound by financial considerations. Therefore the Government's task is to plan the most effective deployment of the resources available. Our aim in so doing will be to build on the collections we are so fortunate in holding already, and on the reputation and skill of those manning our museums and galleries, so to ensure in the years ahead proper acquisition, display and conservation of these vital elements of our heritage.

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